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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
1
Item 2.02. Results of Operations and Financial Condition.
On July 28, 2026, Franklin Street Properties Corp. (the “Registrant”) announced its financial results for the second quarter ended June 30, 2026. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The press release references certain supplemental operating and financial data that is now available on the Registrant’s website. A copy of the supplemental operating and financial data is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
2
Exhibit No. |
|
Description |
99.1 |
Press Release issued by Franklin Street Properties Corp. on July 28, 2026. |
|
99.2 |
Supplemental Operating and Financial Data for the Second Quarter of 2026. |
|
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FRANKLIN STREET PROPERTIES CORP. |
||
Date: July 28, 2026 |
By: |
/s/ George J. Carter |
George J. Carter |
||
Chief Executive Officer |
||
4
Exhibit 99.1
PRESS RELEASE |
Franklin Street Properties Corp. |
401 Edgewater Place ● Suite 200 ● Wakefield, Massachusetts 01880 ● (781) 557-1300 ● www.fspreit.com
Contact: Georgia Touma (877) 686-9496 |
For Immediate Release |
Franklin Street Properties Corp. Announces
Second Quarter 2026 Results
Wakefield, MA— July 28, 2026—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE American: FSP), a real estate investment trust (REIT), announced its results for the second quarter ended June 30, 2026.
George J. Carter, Chairman and Chief Executive Officer, commented as follows:
“As we continue to move through 2026, our focus remains squarely on maximizing shareholder value through our expanded evaluation of strategic alternatives, proactive asset management, and efforts to improve leasing and occupancy.
During the quarter, we endeavored to make progress on several important strategic initiatives that we believe could help position the Company to potentially capitalize on incrementally improving market conditions, while maintaining financial and strategic flexibility.
Most notably, during the quarter, we expanded and formally launched our expanded strategic review process with BofA Securities and JLL Real Estate Investment Banking serving as our co-financial advisors. We believe this enhanced framework broadens our ability to identify, evaluate and execute upon a wide range of possible strategic opportunities, including potential corporate transactions, portfolio level transactions, individual asset dispositions and other initiatives intended to maximize shareholder value. We look forward to continuing to work closely with our co-advisors to carefully evaluate credible opportunities to maximize shareholder value.
Importantly, our recent refinancing of our outstanding debt has provided the Company with increased flexibility, allowing us to avoid making forced or rushed decisions and instead pursue strategic initiatives in a disciplined and thoughtful manner. This position allows us to act opportunistically as market conditions evolve and as attractive opportunities emerge.
Subsequent to the end of the quarter, on July 8, 2026, we sold our Greenwood Plaza property located in Englewood, Colorado to University of Colorado Health for a gross selling price of approximately $19.4 million. In addition, on July 8, 2026, we used approximately $8.5 million of the net proceeds from the disposition for the repayment of debt, including interest and fees. We believe that this disposition reflects disciplined execution, targeted owner-user marketing, and continued progress on our broader strategic objectives. We filed a Form 8-K on July 13, 2026 announcing the sale and presenting pro forma financial information as adjusted to give effect to the sale of the property in our unaudited pro forma condensed consolidated financial statements.
Nationally, the office investment market continues to exhibit incremental signs of stabilization. Leasing activity has generally improved, new office construction has declined dramatically, and investment sales activity has continued a modest recovery nationally. While capital markets remain selective and transaction activity continues to be below historical averages, we believe these trends represent the potential early stages of greater normalization in the office sector and could provide a potentially more constructive environment for well-located institutional quality office assets over time.
Operationally, we remain focused on improving occupancy, extending lease duration, prudently managing operating expenses, and allocating capital where we believe it can generate the greatest long-term value for our shareholders. Notably, we were successful in reducing general and administrative expenses for the six months ended June 30, 2026 by $1.7 million compared to the six months ended June 30, 2025 as a result of lower personnel costs.
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We continue to believe that the combination of an expanded and active strategic review process, disciplined execution, and leasing progress provides the best path to maximizing value. We remain focused on taking the actions necessary to deliver the strongest possible outcomes for our shareholders.”
Financial Highlights
| ● | GAAP net loss was $16.6 million and $26.1 million, or $0.16 and $0.25 per basic and diluted share for the three and six months ended June 30, 2026, respectively. |
| ● | Funds From Operations (FFO) was $1.6 million and $2.7 million, or $0.02 and $0.03 per basic and diluted share, for the three and six months ended June 30, 2026, respectively. |
| ● | General and administrative expenses for the six months ended June 30, 2026, were $1.7 million lower compared to the six months ended June 30, 2025 as a result of lower personnel costs. |
| ● | On July 8, 2026, we sold our property Greenwood Plaza property located in Englewood, Colorado for a gross selling price of approximately $19.4 million and used proceeds to repay debt of approximately $8.5 million, including interest and fees. We retained cash from the sale of approximately $8.9 million. |
Leasing Highlights
| ● | During the six months ended June 30, 2026, we leased approximately 170,000 square feet of space of which approximately 120,000 were from renewals and expansions of existing tenants. |
| ● | Our directly-owned real estate portfolio of 14 properties, totaling approximately 4.8 million square feet, was approximately 67.4% leased as of June 30, 2026, compared to approximately 68.9% leased as of December 31, 2025. The decrease in the leased percentage is due to lease expirations exceeding new executed leases during the six months ended June 30, 2026. |
| ● | The weighted average GAAP base rent per square foot achieved on leasing activity during the six months ended June 30, 2026, was $34.34, or 7.4% higher than average rents in the respective properties for the year ended December 31, 2025. The average lease term on leases signed during the six months ended June 30, 2026, was 6.3 years compared to 5.7 years during the year ended December 31, 2025. Overall, the portfolio weighted average rent per occupied square foot was $30.79 as of June 30, 2026, compared to $30.86 as of December 31, 2025. |
| ● | We believe that our continuing portfolio of real estate is well located within their respective markets, primarily in the Sunbelt and Mountain West geographic regions, and consists of high-quality assets with long-term upside leasing potential. |
Dividend
On March 9, 2026, the Company announced that the Board of Directors had determined to suspend the payment of quarterly dividends. The Board did so in part to redeploy that capital into leasing efforts intended to enhance the value of our portfolio.
The Company estimates that suspension of the dividend will preserve approximately $4.1 million in cash on an annualized basis. The Board and the Company will reassess, on a quarterly basis, when and if quarterly dividend payments can be reinstated and will announce any change to the dividend policy.
Consolidation of Sponsored REIT
As of January 1, 2023, we consolidated the operations of our Monument Circle sponsored REIT into our financial statements and on June 6, 2025, the property held by Monument Circle was sold and Monument Circle and the corporation that had been its sole member were dissolved on December 9, 2025. Additional information about the consolidation of Monument Circle can be found in Note 2, “Significant Accounting Policies - Variable Interest Entities (VIEs)”, Note 3, “Related Party Transactions and Investments in Non-Consolidated Entities -
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Management fees and interest income from loans” and Note 10, “Disposition of Properties and Assets Held for Sale”, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for year ended December 31, 2025.
Non-GAAP Financial Information
A reconciliation of Net loss to FFO, Adjusted Funds From Operations (AFFO) and Sequential Same Store NOI and our definitions of FFO, AFFO and Sequential Same Store NOI can be found on Supplementary Schedules H and I.
Real Estate Update
Supplementary schedules provide property information for the Company’s owned and consolidated properties as of June 30, 2026. The Company will also be filing an updated supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company will file this supplemental information package with the SEC and make it available on its website at www.fspreit.com.
Today’s news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.fspreit.com. We routinely post information that may be important to investors in the Investor Relations section of our website. We encourage investors to consult that section of our website regularly for important information about us and, if they are interested in automatically receiving news and information as soon as it is posted, to sign up for E-mail Alerts.
About Franklin Street Properties Corp.
Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets. FSP is focused on long-term growth and appreciation. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. To learn more about FSP please visit our website at www.fspreit.com.
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Forward-Looking Statements
Statements made in this press release that state FSP’s or management’s intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may also contain forward-looking statements, such as those relating to our review of strategic alternatives, expectations for future potential leasing activity, expectations for property dispositions, value creation/enhancement in future periods and expectations for growth and leasing activities in future periods that are based on current judgments and current knowledge of management and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, adverse changes in general economic or local market conditions, including as a result of the long-term effects of the COVID-19 pandemic, wars, terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, impacts of changes in tariffs that the United States and other countries have announced or implemented, as well as any additional new tariffs, trade restrictions or export regulations that may be implemented or reversed in the future, inflation rates, interest rates, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated, such as utility rate and usage increases, increases in the level of general and administrative costs as a percentage of revenues as revenues decrease as a result of property dispositions, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments. See the “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, which may be further updated from time to time in subsequent filings with the United States Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, acquisitions, dispositions, performance or achievements. We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.
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Franklin Street Properties Corp.
Earnings Release
Supplementary Information
Table of Contents
|
|
Franklin Street Properties Corp. Financial Results |
A-C |
Real Estate Portfolio Summary Information |
D |
Portfolio and Other Supplementary Information |
E |
Percentage of Leased Space |
F |
Largest 20 Tenants – FSP Owned Portfolio |
G |
Reconciliation and Definitions of Funds From Operations (FFO) and Adjusted |
|
Funds From Operations (AFFO) |
H |
Reconciliation and Definition of Sequential Same Store results to Property Net |
|
Operating Income (NOI) and Net Loss |
I |
|
|
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Franklin Street Properties Corp. Financial Results
Supplementary Schedule A
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
For the |
|
For the |
|
||||||||
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
June 30, |
|
June 30, |
|
||||||||
(in thousands, except per share amounts) |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
26,355 |
|
$ |
26,715 |
|
$ |
52,580 |
|
$ |
53,822 |
|
Total revenue |
|
|
26,355 |
|
|
26,715 |
|
|
52,580 |
|
|
53,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating expenses |
|
|
10,006 |
|
|
10,701 |
|
|
20,296 |
|
|
20,796 |
|
Real estate taxes and insurance |
|
|
4,550 |
|
|
4,191 |
|
|
8,793 |
|
|
9,560 |
|
Depreciation and amortization |
|
|
10,432 |
|
|
10,626 |
|
|
21,012 |
|
|
21,450 |
|
General and administrative |
|
|
2,401 |
|
|
3,281 |
|
|
5,070 |
|
|
6,765 |
|
Interest |
|
|
7,987 |
|
|
6,339 |
|
|
14,799 |
|
|
12,030 |
|
Total expenses |
|
|
35,376 |
|
|
35,138 |
|
|
69,970 |
|
|
70,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
(3) |
|
|
(1,267) |
|
|
(5) |
|
Gain (loss) on sale of properties and impairment of assets held for sale, net |
|
|
(7,691) |
|
|
384 |
|
|
(7,691) |
|
|
(12,900) |
|
Interest income |
|
|
157 |
|
|
248 |
|
|
320 |
|
|
507 |
|
Loss before taxes |
|
|
(16,555) |
|
|
(7,794) |
|
|
(26,028) |
|
|
(29,177) |
|
Tax expense |
|
|
50 |
|
|
82 |
|
|
104 |
|
|
134 |
|
Net loss |
|
$ |
(16,605) |
|
$ |
(7,876) |
|
$ |
(26,132) |
|
$ |
(29,311) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted |
|
|
103,810 |
|
|
103,610 |
|
|
103,751 |
|
|
103,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share, basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
|
$ |
(0.16) |
|
$ |
(0.08) |
|
$ |
(0.25) |
|
$ |
(0.28) |
|
-7-
Franklin Street Properties Corp. Financial Results
Supplementary Schedule B
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
June 30, |
|
December 31, |
|
||
(in thousands, except share and par value amounts) |
|
2026 |
|
2025 |
|
||
Assets: |
|
|
|
|
|
|
|
Real estate assets: |
|
|
|
|
|
|
|
Land |
|
$ |
95,782 |
|
$ |
98,883 |
|
Buildings and improvements |
|
|
1,053,670 |
|
|
1,091,728 |
|
Fixtures and equipment |
|
|
11,220 |
|
|
11,572 |
|
|
|
|
1,160,672 |
|
|
1,202,183 |
|
Less accumulated depreciation |
|
|
402,633 |
|
|
408,461 |
|
Real estate assets, net |
|
|
758,039 |
|
|
793,722 |
|
Acquired real estate leases, less accumulated amortization of $15,468 and $14,648, respectively |
|
|
1,670 |
|
|
2,490 |
|
Asset held for sale |
|
|
17,987 |
|
|
— |
|
Cash, cash equivalents and restricted cash |
|
|
22,459 |
|
|
30,571 |
|
Tenant rent receivables |
|
|
1,436 |
|
|
471 |
|
Straight-line rent receivable |
|
|
37,411 |
|
|
38,744 |
|
Prepaid expenses and other assets |
|
|
4,445 |
|
|
4,080 |
|
Office computers and furniture, net of accumulated depreciation of $990 and $1,047, respectively |
|
|
132 |
|
|
136 |
|
Deferred leasing commissions, net of accumulated amortization of $13,832 and $14,571, respectively |
|
|
21,275 |
|
|
22,670 |
|
Total assets |
|
$ |
864,854 |
|
$ |
892,884 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
Initial Term Loans, less unamortized financing costs and OID of $21,864 |
|
$ |
253,136 |
|
$ |
— |
|
Term loans payable, less unamortized financing costs of $441 |
|
|
— |
|
|
125,555 |
|
Series A & Series B Senior Notes, less unamortized financing costs of $236 |
|
|
— |
|
|
122,686 |
|
Accounts payable and accrued expenses |
|
|
24,220 |
|
|
28,724 |
|
Accrued compensation |
|
|
349 |
|
|
2,394 |
|
Tenant security deposits |
|
|
6,207 |
|
|
6,198 |
|
Lease liability |
|
|
923 |
|
|
316 |
|
Acquired unfavorable real estate leases, less accumulated amortization of $59 and $56, respectively |
|
|
31 |
|
|
34 |
|
Total liabilities |
|
|
284,866 |
|
|
285,907 |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
Preferred stock, $.0001 par value, 20,000,000 shares authorized, none issued or outstanding |
|
|
— |
|
|
— |
|
Common stock, $.0001 par value, 180,000,000 shares authorized, 104,011,708 and 103,690,340 shares issued and outstanding, respectively |
|
|
10 |
|
|
10 |
|
Additional paid-in capital |
|
|
1,335,766 |
|
|
1,335,586 |
|
Accumulated distributions in excess of accumulated earnings |
|
|
(755,788) |
|
|
(728,619) |
|
Total stockholders’ equity |
|
|
579,988 |
|
|
606,977 |
|
Total liabilities and stockholders’ equity |
|
$ |
864,854 |
|
$ |
892,884 |
|
-8-
Franklin Street Properties Corp. Financial Results
Supplementary Schedule C
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
For the |
|
||||
|
|
Three Months Ended |
|
||||
|
|
June 30, |
|
||||
(in thousands) |
|
2026 |
|
2025 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net loss |
|
$ |
(26,132) |
|
$ |
(29,311) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
23,763 |
|
|
22,818 |
|
Amortization of above and below market leases |
|
|
(1) |
|
|
— |
|
Shares issued as compensation |
|
|
180 |
|
|
225 |
|
Loss on extinguishment of debt |
|
|
1,267 |
|
|
5 |
|
Loss on sale of properties and impairment of assets held for sale, net |
|
|
7,691 |
|
|
12,900 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Tenant rent receivables |
|
|
(965) |
|
|
(285) |
|
Straight-line rents |
|
|
951 |
|
|
(4) |
|
Lease acquisition costs |
|
|
(269) |
|
|
(115) |
|
Prepaid expenses and other assets |
|
|
239 |
|
|
(287) |
|
Accounts payable and accrued expenses |
|
|
(5,171) |
|
|
(10,924) |
|
Accrued compensation |
|
|
(2,045) |
|
|
(1,186) |
|
Tenant security deposits |
|
|
9 |
|
|
52 |
|
Payment of deferred leasing commissions |
|
|
(1,634) |
|
|
(2,247) |
|
Net cash used in operating activities |
|
|
(2,117) |
|
|
(8,359) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Property improvements, fixtures and equipment |
|
|
(5,834) |
|
|
(7,320) |
|
Proceeds received from sales of properties |
|
|
— |
|
|
6,099 |
|
Net cash used in investing activities |
|
|
(5,834) |
|
|
(1,221) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Distributions to stockholders |
|
|
(1,037) |
|
|
(2,071) |
|
Cost of extinguished debt |
|
|
(1,018) |
|
|
— |
|
Proceeds received from Initial Term Loans |
|
|
258,500 |
|
|
— |
|
Repayments of Term loans payable |
|
|
(125,995) |
|
|
(260) |
|
Repayments of Series A&B Senior Notes |
|
|
(122,922) |
|
|
(254) |
|
Deferred financing costs |
|
|
(7,689) |
|
|
— |
|
Net cash used in financing activities |
|
|
(161) |
|
|
(2,585) |
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
(8,112) |
|
|
(12,165) |
|
Cash, cash equivalents and restricted cash, beginning of year |
|
|
30,571 |
|
|
42,683 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
22,459 |
|
$ |
30,518 |
|
-9-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary Information
(Unaudited & Approximated)
Commercial portfolio lease expirations (1) |
|
|
|
|
|
|
|
Total |
|
% of |
|
Year |
|
Square Feet |
|
Portfolio |
|
2026 |
|
143,154 |
|
3.0% |
|
2027 |
|
551,951 |
|
11.5% |
|
2028 |
|
240,505 |
|
5.0% |
|
2029 |
|
505,301 |
|
10.5% |
|
2030 |
|
268,950 |
|
5.6% |
|
Thereafter (2) |
|
3,099,626 |
|
64.4% |
|
|
|
4,809,487 |
|
100.0% |
|
| (1) | Percentages are determined based upon total square footage. |
| (2) | Includes 1,568,810 square feet of vacancies at our owned properties as of June 30, 2026. |
(dollars & square feet in 000's) |
|
As of June 30, 2026 |
|
|||||||||
|
|
|
|
|
|
|
% of |
|
Square |
|
% of |
|
State |
|
Properties (1) |
|
Investment (1) |
|
Portfolio (1) |
|
Feet |
|
Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado |
|
3 |
|
$ |
397,037 |
|
52.4% |
|
2,143 |
|
44.6% |
|
Texas |
|
7 |
|
|
252,969 |
|
33.4% |
|
1,908 |
|
39.7% |
|
Minnesota |
|
3 |
|
|
108,033 |
|
14.2% |
|
758 |
|
15.7% |
|
Total |
|
13 |
|
$ |
758,039 |
|
100.0% |
|
4,809 |
|
100.0% |
|
(1) Excludes an asset held for sale in Colorado that was sold on July 8, 2026.
-10-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary Information
(Unaudited & Approximated)
Recurring Capital Expenditures
|
|
|
|
For the Six |
|
|||||
(in thousands) |
|
For the Three Months Ended |
|
Months Ended |
|
|||||
|
|
31-Mar-26 |
|
30-Jun-26 |
|
30-Jun-26 |
|
|||
Tenant improvements |
|
$ |
3,386 |
|
$ |
1,838 |
|
$ |
5,224 |
|
Deferred leasing costs |
|
|
1,386 |
|
|
248 |
|
|
1,634 |
|
Non-investment capex |
|
|
489 |
|
|
729 |
|
|
1,218 |
|
|
|
$ |
5,261 |
|
$ |
2,815 |
|
$ |
8,076 |
|
(in thousands) |
|
For the Three Months Ended |
|
Year Ended |
|
|||||||||||
|
|
31-Mar-25 |
|
30-Jun-25 |
|
30-Sep-25 |
|
31-Dec-25 |
|
31-Dec-25 |
|
|||||
Tenant improvements |
|
$ |
2,374 |
|
$ |
1,415 |
|
$ |
4,469 |
|
$ |
2,023 |
|
$ |
10,281 |
|
Deferred leasing costs |
|
|
545 |
|
|
1,702 |
|
|
929 |
|
|
1,050 |
|
|
4,226 |
|
Non-investment capex |
|
|
1,258 |
|
|
750 |
|
|
753 |
|
|
1,154 |
|
|
3,915 |
|
|
|
$ |
4,177 |
|
$ |
3,867 |
|
$ |
6,151 |
|
$ |
4,227 |
|
$ |
18,422 |
|
Square foot & leased percentages |
|
June 30, |
|
December 31, |
|
|
|
2026 |
|
2025 |
|
Owned Properties: |
|
|
|
|
|
Number of properties |
|
14 |
|
14 |
|
Square feet |
|
4,809,487 |
|
4,807,663 |
|
Leased percentage |
|
67.4% |
|
68.9% |
|
-11-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F
Percentage of Leased Space
(Unaudited & Estimated)
|
|
|
|
|
|
|
|
|
|
First |
|
|
|
Second |
|
|
|
|
|
|
|
|
|
% Leased (1) |
|
Quarter |
|
% Leased (1) |
|
Quarter |
|
|
|
|
|
|
|
|
|
as of |
|
Average % |
|
as of |
|
Average % |
|
|
|
Property Name |
|
Location |
|
Square Feet |
|
31-Mar-26 |
|
Leased (2) |
|
30-Jun-26 |
|
Leased (2) |
|
|
|
|
|
|
|
|
|
Jan-00 |
|
|
|
Jan-00 |
|
|
|
1 |
|
PARK TEN |
|
Houston, TX |
|
157,609 |
|
86.8% |
|
86.8% |
|
86.8% |
|
86.8% |
|
2 |
|
PARK TEN PHASE II |
|
Houston, TX |
|
156,746 |
|
76.3% |
|
76.3% |
|
78.3% |
|
77.6% |
|
3 |
|
GREENWOOD PLAZA (3) |
|
Englewood, CO |
|
196,236 |
|
65.0% |
|
65.0% |
|
65.0% |
|
65.0% |
|
4 |
|
ADDISON |
|
Addison, TX |
|
289,333 |
|
64.3% |
|
64.3% |
|
64.3% |
|
64.3% |
|
5 |
|
LIBERTY PLAZA |
|
Addison, TX |
|
217,841 |
|
66.9% |
|
66.9% |
|
64.3% |
|
66.0% |
|
6 |
|
ELDRIDGE GREEN |
|
Houston, TX |
|
248,399 |
|
100.0% |
|
100.0% |
|
100.0% |
|
100.0% |
|
7 |
|
121 SOUTH EIGHTH ST |
|
Minneapolis, MN |
|
297,744 |
|
75.2% |
|
76.4% |
|
75.5% |
|
74.8% |
|
8 |
|
801 MARQUETTE AVE |
|
Minneapolis, MN |
|
129,691 |
|
91.8% |
|
91.8% |
|
91.8% |
|
91.8% |
|
9 |
|
LEGACY TENNYSON CTR |
|
Plano, TX |
|
209,562 |
|
60.9% |
|
60.9% |
|
60.9% |
|
60.9% |
|
10 |
|
WESTCHASE I & II |
|
Houston, TX |
|
629,025 |
|
66.2% |
|
67.4% |
|
67.0% |
|
67.2% |
|
11 |
|
1999 BROADWAY |
|
Denver, CO |
|
682,639 |
|
50.7% |
|
50.7% |
|
47.5% |
|
48.6% |
|
12 |
|
1001 17TH STREET |
|
Denver, CO |
|
652,423 |
|
77.4% |
|
76.7% |
|
74.5% |
|
76.4% |
|
13 |
|
PLAZA SEVEN |
|
Minneapolis, MN |
|
330,096 |
|
48.9% |
|
48.9% |
|
45.3% |
|
46.5% |
|
14 |
|
600 17TH STREET |
|
Denver, CO |
|
612,143 |
|
69.7% |
|
69.3% |
|
69.7% |
|
69.7% |
|
|
|
OWNED PORTFOLIO |
|
|
|
4,809,487 |
|
68.4% |
|
68.5% |
|
67.4% |
|
67.9% |
|
| (1) | % Leased as of month's end includes all leases that expire on the last day of the quarter. |
| (2) | Average quarterly percentage is the average of the end of the month leased percentage for each of the three months during the quarter. |
| (3) | This property was sold on July 8, 2026. |
-12-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Largest 20 Tenants – FSP Owned Portfolio
(Unaudited & Estimated)
The following table includes the largest 20 tenants in FSP’s owned portfolio based on total square feet:
As of June 30, 2026
|
|
|
|
|
|
% of |
|
|
|
Tenant |
|
Sq Ft |
|
Portfolio |
|
1 |
|
CITGO Petroleum Corporation |
|
248,399 |
|
5.2% |
|
2 |
|
EOG Resources, Inc. |
|
169,167 |
|
3.5% |
|
3 |
|
US Government |
|
168,573 |
|
3.5% |
|
4 |
|
Kaiser Foundation Health Plan, Inc. |
|
120,979 |
|
2.5% |
|
5 |
|
Deluxe Corporation |
|
98,922 |
|
2.1% |
|
6 |
|
Olin Corporation |
|
81,480 |
|
1.7% |
|
7 |
|
Ping Identity Corp. |
|
71,523 |
|
1.5% |
|
8 |
|
Permian Resources Operating, LLC |
|
67,856 |
|
1.4% |
|
9 |
|
Hall and Evans LLC |
|
65,878 |
|
1.4% |
|
10 |
|
Cyxtera Management, Inc. |
|
61,826 |
|
1.3% |
|
11 |
|
Precision Drilling (US) Corporation |
|
59,569 |
|
1.2% |
|
12 |
|
PwC US Group |
|
54,334 |
|
1.1% |
|
13 |
|
Coresite, LLC |
|
49,518 |
|
1.0% |
|
14 |
|
Schwegman, Lundberg & Woessner, P.A. |
|
46,269 |
|
1.0% |
|
15 |
|
Ark-La-Tex Financial Services, LLC. |
|
41,011 |
|
0.9% |
|
16 |
|
Invenergy, LLC. |
|
35,088 |
|
0.7% |
|
17 |
|
Chevron U.S.A., Inc. |
|
35,088 |
|
0.7% |
|
18 |
|
Moss, Luse & Womble, LLC |
|
34,071 |
|
0.7% |
|
19 |
|
QB Energy Operating, LLC. |
|
34,063 |
|
0.7% |
|
20 |
|
WDT Acquisition Corporation |
|
30,913 |
|
0.6% |
|
|
|
Total |
|
1,574,527 |
|
32.7% |
|
-13-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule H
Reconciliation and Definitions of Funds From Operations (“FFO”) and
Adjusted Funds From Operations (“AFFO”)
A reconciliation of Net loss to FFO and AFFO is shown below and a definition of FFO and AFFO is provided on Supplementary Schedule I. Management believes FFO and AFFO are used broadly throughout the real estate investment trust (REIT) industry as measurements of performance. The Company has included the National Association of Real Estate Investment Trusts (NAREIT) FFO definition as of May 17, 2016 in the table and notes that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently. The Company’s computation of FFO and AFFO may not be comparable to FFO or AFFO reported by other REITs or real estate companies that define FFO or AFFO differently.
Reconciliation of Net loss to FFO and AFFO: |
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
June 30, |
|
June 30, |
|
||||||||
(In thousands, except per share amounts) |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(16,605) |
|
$ |
(7,876) |
|
$ |
(26,132) |
|
$ |
(29,311) |
|
Loss (gain) on sale of properties and impairment of asset held for sale, net |
|
|
7,691 |
|
|
(384) |
|
|
7,691 |
|
|
12,900 |
|
Amortization of favorable leases |
|
|
(1) |
|
|
— |
|
|
(1) |
|
|
— |
|
Depreciation & amortization |
|
|
10,432 |
|
|
10,626 |
|
|
21,012 |
|
|
21,450 |
|
NAREIT FFO |
|
|
1,517 |
|
|
2,366 |
|
|
2,570 |
|
|
5,039 |
|
Lease Acquisition costs |
|
|
49 |
|
|
150 |
|
|
147 |
|
|
204 |
|
Funds From Operations (FFO) |
|
$ |
1,566 |
|
$ |
2,516 |
|
$ |
2,717 |
|
$ |
5,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From Operations (FFO) |
|
$ |
1,566 |
|
$ |
2,516 |
|
$ |
2,717 |
|
$ |
5,243 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
3 |
|
|
1,267 |
|
|
5 |
|
Amortization of deferred financing costs and OID |
|
|
1,732 |
|
|
683 |
|
|
2,752 |
|
|
1,368 |
|
Shares issued as compensation |
|
|
180 |
|
|
225 |
|
|
180 |
|
|
225 |
|
Straight-line rent |
|
|
730 |
|
|
(74) |
|
|
951 |
|
|
(4) |
|
Tenant improvements |
|
|
(1,838) |
|
|
(1,415) |
|
|
(5,224) |
|
|
(3,789) |
|
Leasing commissions |
|
|
(248) |
|
|
(1,702) |
|
|
(1,634) |
|
|
(2,247) |
|
Non-investment capex |
|
|
(729) |
|
|
(750) |
|
|
(1,218) |
|
|
(2,008) |
|
Adjusted Funds From Operations (AFFO) |
|
$ |
1,393 |
|
$ |
(514) |
|
$ |
(209) |
|
$ |
(1,207) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
(0.16) |
|
$ |
(0.08) |
|
$ |
(0.25) |
|
$ |
(0.28) |
|
FFO |
|
$ |
0.02 |
|
$ |
0.02 |
|
$ |
0.03 |
|
$ |
0.05 |
|
AFFO |
|
$ |
0.01 |
|
$ |
(0.00) |
|
$ |
(0.00) |
|
$ |
(0.01) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares (basic and diluted) |
|
|
103,810 |
|
|
103,610 |
|
|
103,751 |
|
|
103,589 |
|
-14-
Funds From Operations (“FFO”)
The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on mortgage loans, properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.
FFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.
Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner. We have included the NAREIT FFO as of May 17, 2016 in the table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.
We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.
Adjusted Funds From Operations (“AFFO”)
The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO. The Company defines AFFO as (1) FFO, (2) excluding loss on extinguishment of debt that is non-cash, (3) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (4) excluding the effect of straight-line rent, (5) plus the amortization of deferred financing costs and original issue discounts, (6) plus the value of shares issued as compensation and (7) less recurring capital expenditures that are generally for maintenance of properties, which we call non-investment capex or are second generation capital expenditures. Second generation costs include re-tenanting space after a tenant vacates, which include tenant improvements and leasing commissions.
We exclude development/redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property. We also exclude first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned for at acquisition.
AFFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs. Other real estate companies may define this term in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.
-15-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule I
Reconciliation and Definition of Sequential Same Store results to property Net Operating Income (NOI) and Net Income
Net Operating Income (“NOI”)
The Company provides property performance based on Net Operating Income, which we refer to as NOI. Management believes that investors are interested in this information. NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equity in earnings of nonconsolidated REITs, interest income, management fee income, hedge ineffectiveness, gains or losses on extinguishment of debt, gains or losses on the sale of assets and excludes non-property specific income and expenses. The information presented includes footnotes and the data is shown by region with properties owned in the periods presented, which we call Sequential Same Store. The comparative Sequential Same Store results include properties held for all periods presented. We exclude properties that have been placed in service, but that do not have operating activity for all periods presented, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees. NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income or loss as an indication of our performance or to cash flows as a measure of the Company’s liquidity or its ability to make distributions. The calculations of NOI and Sequential Same Store are shown in the following table:
|
|
Rentable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square Feet |
|
Three Months Ended |
|
Three Months Ended |
|
Inc |
|
% |
|
|||
(in thousands) |
|
or RSF |
|
30-Jun-26 |
|
31-Mar-26 |
|
(Dec) |
|
Change |
|
|||
Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MidWest |
|
758 |
|
$ |
1,466 |
|
$ |
1,372 |
|
$ |
94 |
|
6.9 |
% |
South |
|
1,908 |
|
|
4,479 |
|
|
4,692 |
|
|
(213) |
|
(4.5) |
% |
West |
|
2,143 |
|
|
5,607 |
|
|
5,397 |
|
|
210 |
|
3.9 |
% |
Property NOI* from Owned Properties |
|
4,809 |
|
|
11,552 |
|
|
11,461 |
|
|
91 |
|
0.8 |
% |
Disposition and Acquisition Properties (a) |
|
- |
|
|
— |
|
|
(10) |
|
|
10 |
|
0.1 |
% |
NOI* |
|
4,809 |
|
$ |
11,552 |
|
$ |
11,451 |
|
$ |
101 |
|
0.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sequential Same Store |
|
|
|
$ |
11,552 |
|
$ |
11,461 |
|
$ |
91 |
|
0.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Nonrecurring |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items in NOI* (b) |
|
|
|
|
347 |
|
|
52 |
|
|
295 |
|
(2.6) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sequential Same Store |
|
|
|
$ |
11,205 |
|
$ |
11,409 |
|
$ |
(204) |
|
(1.8) |
% |
|
|
|
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|
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|
|
|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
-16-
Reconciliation to |
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
|
|
|
||
Net loss |
|
|
|
30-Jun-26 |
|
31-Mar-26 |
|
|
|
|
|
|
||
Net loss |
|
|
|
$ |
(16,605) |
|
$ |
(9,527) |
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
|
|
— |
|
|
1,267 |
|
|
|
|
|
|
(Gain) loss on sale of properties and impairment of assets held for sale, net |
|
|
|
|
7,691 |
|
|
— |
|
|
|
|
|
|
Management fee income |
|
|
|
|
(311) |
|
|
(375) |
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
10,432 |
|
|
10,580 |
|
|
|
|
|
|
Amortization of above/below market leases |
|
|
|
|
(1) |
|
|
— |
|
|
|
|
|
|
General and administrative |
|
|
|
|
2,401 |
|
|
2,669 |
|
|
|
|
|
|
Interest expense |
|
|
|
|
7,987 |
|
|
6,812 |
|
|
|
|
|
|
Interest income |
|
|
|
|
(157) |
|
|
(163) |
|
|
|
|
|
|
Non-property specific items, net |
|
|
|
|
115 |
|
|
188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI* |
|
|
|
$ |
11,552 |
|
$ |
11,451 |
|
|
|
|
|
|
| (a) | We define Disposition and Acquisition Properties as properties that were sold acquired or consolidated and do not have operating activity for all periods presented. |
| (b) | Nonrecurring Items in NOI include proceeds from bankruptcies, lease termination fees or other significant nonrecurring income or expenses, which may affect comparability. |
*Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.
Exhibit 99.2
|
Franklin Street Properties Corp. Supplemental Operating & Financial Data 401 Edgewater Place ~Wakefield, MA 01880 781.557.1300.~ www.fspreit.com |
|
Second Quarter 2026 |
|
Page |
|
|
Page |
||
|
|
|
|
|
||
Company Information |
3 |
|
Tenant Analysis and Leasing Activity |
|
||
|
|
|
Tenants by Industry |
16 |
||
Key Financial Data |
|
|
20 Largest Tenants with Annualized Rent and Remaining Term |
17-18 |
||
Financial Highlights |
4 |
|
Leasing Activity |
19 |
||
Income Statements |
5 |
|
Lease Expirations by Square Feet |
20 |
||
Balance Sheets |
6 |
|
Lease Expirations with Annualized Rent per Square Foot |
21 |
||
Cash Flow Statements |
7 |
|
Capital Expenditures |
22 |
||
Property Net Operating Income (NOI) |
8 |
|
|
|
||
|
|
|
|
|
||
Reconciliation |
|
|
Disposition Activity |
23 |
||
FFO & AFFO |
9 |
|
|
|
||
EBITDA |
10 |
|
Net Asset Value Components |
24 |
||
Property NOI |
11 |
|
|
|
||
|
|
|
Appendix: Non-GAAP Financial Measures Definitions |
|
||
Debt Summary |
12 |
|
FFO |
25 |
||
|
|
|
EBITDA and NOI |
26 |
||
Capital Analysis |
13 |
|
AFFO |
27 |
||
|
|
|
|
|
||
Owned and Consolidated Portfolio Overview |
14-15 |
|
|
|
||
All financial information contained in this supplemental information package is unaudited. In addition, certain statements contained in this supplemental information package may be deemed to be forward-looking statements within the meaning of the federal securities laws. Although FSP believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from FSP’s current expectations include adverse changes in general economic or local market conditions, including as a result of the long-term effects of the COVID-19 pandemic, wars, terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, impacts of changes in tariffs that the United States and other countries have announced or implemented, as well as any additional new tariffs, trade restrictions or export regulations that may be implemented or reversed in the future, inflation rates, interest rates, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, expectations for future potential property dispositions, expectations for future potential leasing activity, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated, such as utility rate and usage increases, delays in construction schedules, unanticipated increases in construction costs, unanticipated repairs, increases in the level of general and administrative costs as a percentage of revenues as revenues decrease as a result of property dispositions, additional staffing, insurance increases and real estate tax valuation reassessments. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. |
|
|
||||
|
|
|
||||
|
|
Liberty Plaza, Addison, TX |
||||
June 30, 2026| Page 2
|
Company Information |
Overview |
|
|
|
|
Snapshot (as of June 30, 2026) |
||
|
Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets. FSP is focused on long-term growth and appreciation. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management. |
|
|
|
|
Corporate Headquarters |
Wakefield, MA |
|
|
|
|
|
Fiscal Year-End |
31-Dec |
||
|
|
|
|
Owned Properties |
14 |
||
|
|
|
|
Total Square Feet |
4.8 Million |
||
|
|
|
|
Trading Symbol |
FSP |
||
|
|
|
|
Exchange |
NYSE American |
||
|
|
|
|
Common Shares Outstanding |
104,011,708 |
||
|
|
|
|
|
|
||
Our Business |
|
|
|
|
Total Market Capitalization |
$0.3 Billion (1) |
|
As of June 30, 2026, the Company owned a portfolio of real estate consisting of 14 owned properties. The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, for geographic, property specific reasons or for other general corporate purposes. |
|
|
|
|
Insider Holdings |
5.49% |
|
|
|
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|
||
Management Team |
|
|
|
|
|
||
|
|
|
|
|
|
||
George J. Carter |
Jeffrey B. Carter |
|
|
|
|
||
Chief Executive Officer and |
President and Chief Investment |
|
|
|
|
||
Chairman of the Board |
Officer |
|
|
|
|
||
|
|
|
|
|
|
||
John G. Demeritt |
Scott H. Carter |
|
|
|
|
||
Executive Vice President, Chief |
Executive Vice President, General |
|
|
|
|
||
Financial Officer and Treasurer |
Counsel and Secretary |
|
|
|
|
||
|
|
|
|
|
|
||
Executive Vice President |
Executive Vice President and Chief Operating Officer |
|
|
|
|
1001 17th Street, Denver, CO |
|
|
|
|
|
|
|
|
|
Inquiries |
|
|
|
|
|
|
|
Inquiries should be directed to: Georgia Touma |
|
|
|
|
|
|
|
|
877.686.9496 or InvestorRelations@fspreit.com (1) Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt outstanding. |
|
|
|
|
|
|
|
June 30, 2026| Page 3
|
Summary of Financial Highlights |
(in thousands except per share amounts, SF & number of properties) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-Jun-26 |
|
31-Mar-26 |
|
31-Dec-25 |
|
30-Sep-25 |
|
30-Jun-25 |
||||
Income Items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
26,355 |
|
|
26,225 |
|
$ |
26,040 |
|
$ |
27,300 |
|
$ |
26,715 |
Total revenue |
|
|
26,355 |
|
|
26,225 |
|
|
26,040 |
|
|
27,300 |
|
|
26,715 |
Net loss |
|
|
(16,605) |
|
|
(9,527) |
|
|
(7,323) |
|
|
(8,326) |
|
|
(7,876) |
Adjusted EBITDA* |
|
|
9,554 |
|
|
9,186 |
|
|
9,680 |
|
|
8,582 |
|
|
8,790 |
FFO* |
|
|
1,566 |
|
|
1,151 |
|
|
3,441 |
|
|
2,323 |
|
|
2,516 |
AFFO* |
|
|
1,393 |
|
|
(1,602) |
|
|
79 |
|
|
(3,181) |
|
|
(514) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
$ |
(0.16) |
|
|
(0.09) |
|
$ |
(0.07) |
|
$ |
(0.08) |
|
$ |
(0.08) |
FFO* |
|
$ |
0.02 |
|
|
0.01 |
|
$ |
0.03 |
|
$ |
0.02 |
|
$ |
0.02 |
AFFO* |
|
$ |
0.01 |
|
|
(0.02) |
|
$ |
0.00 |
|
$ |
(0.03) |
|
$ |
(0.00) |
Weighted Average Shares (diluted) |
|
|
103,810 |
|
|
103,690 |
|
|
103,690 |
|
|
103,690 |
|
|
103,610 |
Closing share price |
|
$ |
0.52 |
|
|
0.66 |
|
$ |
0.95 |
|
$ |
1.60 |
|
$ |
1.64 |
Dividend declared |
|
$ |
— |
|
|
0.01 |
|
$ |
0.01 |
|
$ |
0.01 |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate, net |
|
$ |
758,039 |
|
|
788,571 |
|
$ |
793,722 |
|
$ |
799,622 |
|
$ |
803,412 |
Other assets, net |
|
|
106,815 |
|
|
93,215 |
|
|
99,162 |
|
|
101,410 |
|
|
99,831 |
Total assets, net |
|
|
864,854 |
|
|
881,786 |
|
|
892,884 |
|
|
901,032 |
|
|
903,243 |
Total liabilities, net |
|
|
284,866 |
|
|
285,373 |
|
|
285,907 |
|
|
285,695 |
|
|
278,543 |
Stockholders' equity |
|
|
579,988 |
|
|
596,413 |
|
|
606,977 |
|
|
615,337 |
|
|
624,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Capitalization and Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Market Capitalization (a) |
|
$ |
329,086 |
|
|
343,436 |
|
$ |
347,423 |
|
$ |
414,822 |
|
$ |
419,870 |
Total debt outstanding (excluding unamortized financing costs) |
|
$ |
275,000 |
|
|
275,000 |
|
$ |
248,917 |
|
$ |
248,917 |
|
$ |
249,818 |
Debt to Total Market Capitalization |
|
|
83.6% |
|
|
80.1% |
|
|
71.6% |
|
|
60.0% |
|
|
59.5% |
Net Debt to Adjusted EBITDA ratio* |
|
|
6.6 |
|
|
6.8 |
|
|
5.6 |
|
|
6.3 |
|
|
6.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned Properties Leasing Statistics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned properties assets |
|
|
14 |
|
|
14 |
|
|
14 |
|
|
14 |
|
|
14 |
Owned properties total SF |
|
|
4,809,487 |
|
|
4,809,487 |
|
|
4,807,663 |
|
|
4,807,663 |
|
|
4,807,663 |
Owned properties % leased |
|
|
67.4% |
|
|
68.4% |
|
|
68.9% |
|
|
68.9% |
|
|
69.1% |
| (a) | Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt outstanding on that date. |
* |
See pages 9 & 10 for reconciliations of Net income or loss to FFO, AFFO and Adjusted EBITDA, respectively, and the Appendix for Non-GAAP Financial Measures Definitions beginning on page 25. |
June 30, 2026| Page 4
|
Condensed Consolidated Income Statements ($ in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
For The |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the |
||
|
|
For the Three Months Ended |
|
Six Months Ended |
|
|
For the Three Months Ended |
|
Year Ended |
||||||||||||||||
|
|
31-Mar-26 |
|
30-Jun-26 |
|
30-Jun-26 |
|
|
31-Mar-25 |
|
30-Jun-25 |
|
30-Sep-25 |
|
31-Dec-25 |
|
31-Dec-25 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
26,225 |
|
$ |
26,355 |
|
$ |
52,580 |
|
|
$ |
27,107 |
|
$ |
26,715 |
|
$ |
27,300 |
|
$ |
26,040 |
|
$ |
107,162 |
Total revenue |
|
|
26,225 |
|
|
26,355 |
|
|
52,580 |
|
|
|
27,107 |
|
|
26,715 |
|
|
27,300 |
|
|
26,040 |
|
|
107,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating expenses |
|
|
10,290 |
|
|
10,006 |
|
|
20,296 |
|
|
|
10,095 |
|
|
10,701 |
|
|
10,671 |
|
|
10,573 |
|
|
42,040 |
Real estate taxes and insurance |
|
|
4,243 |
|
|
4,550 |
|
|
8,793 |
|
|
|
5,369 |
|
|
4,191 |
|
|
5,262 |
|
|
3,389 |
|
|
18,211 |
Depreciation and amortization |
|
|
10,580 |
|
|
10,432 |
|
|
21,012 |
|
|
|
10,824 |
|
|
10,626 |
|
|
10,550 |
|
|
10,609 |
|
|
42,609 |
General and administrative |
|
|
2,669 |
|
|
2,401 |
|
|
5,070 |
|
|
|
3,484 |
|
|
3,281 |
|
|
3,034 |
|
|
2,628 |
|
|
12,427 |
Interest |
|
|
6,812 |
|
|
7,987 |
|
|
14,799 |
|
|
|
5,691 |
|
|
6,339 |
|
|
6,348 |
|
|
6,340 |
|
|
24,718 |
Total expenses |
|
|
34,594 |
|
|
35,376 |
|
|
69,970 |
|
|
|
35,463 |
|
|
35,138 |
|
|
35,865 |
|
|
33,539 |
|
|
140,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
(1,267) |
|
|
— |
|
|
(1,267) |
|
|
|
(2) |
|
|
(3) |
|
|
(7) |
|
|
— |
|
|
(12) |
Gain (loss) on sale of properties and impairment of assets held for sale, net |
|
|
— |
|
|
(7,691) |
|
|
(7,691) |
|
|
|
(13,284) |
|
|
384 |
|
|
— |
|
|
(2) |
|
|
(12,902) |
Interest income |
|
|
163 |
|
|
157 |
|
|
320 |
|
|
|
259 |
|
|
248 |
|
|
249 |
|
|
230 |
|
|
986 |
Loss before taxes |
|
|
(9,473) |
|
|
(16,555) |
|
|
(26,028) |
|
|
|
(21,383) |
|
|
(7,794) |
|
|
(8,323) |
|
|
(7,271) |
|
|
(44,771) |
Tax expense |
|
|
54 |
|
|
50 |
|
|
104 |
|
|
|
52 |
|
|
82 |
|
|
3 |
|
|
52 |
|
|
189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,527) |
|
$ |
(16,605) |
|
$ |
(26,132) |
|
|
$ |
(21,435) |
|
$ |
(7,876) |
|
$ |
(8,326) |
|
$ |
(7,323) |
|
$ |
(44,960) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted |
|
|
103,690 |
|
|
103,810 |
|
|
103,751 |
|
|
|
103,567 |
|
|
103,610 |
|
|
103,690 |
|
|
103,690 |
|
|
103,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
|
$ |
(0.09) |
|
$ |
(0.16) |
|
$ |
(0.25) |
|
|
$ |
(0.21) |
|
$ |
(0.08) |
|
$ |
(0.08) |
|
$ |
(0.07) |
|
$ |
(0.43) |
June 30, 2026| Page 5
|
Condensed Consolidated Balance Sheets (in thousands) |
|
|
March 31, |
|
June 30, |
|
|
March 31, |
|
June 30, |
|
September 30, |
|
December 31, |
|
||||||
|
|
2026 |
|
2026 |
|
|
2025 |
|
2025 |
|
2025 |
|
2025 |
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
98,882 |
|
$ |
95,782 |
|
|
$ |
98,882 |
|
$ |
98,883 |
|
$ |
98,883 |
|
$ |
98,883 |
|
Buildings and improvements |
|
|
1,094,771 |
|
|
1,053,670 |
|
|
|
1,083,971 |
|
|
1,085,048 |
|
|
1,088,981 |
|
|
1,091,728 |
|
Fixtures and equipment |
|
|
11,562 |
|
|
11,220 |
|
|
|
11,289 |
|
|
11,399 |
|
|
11,355 |
|
|
11,572 |
|
|
|
|
1,205,215 |
|
|
1,160,672 |
|
|
|
1,194,142 |
|
|
1,195,330 |
|
|
1,199,219 |
|
|
1,202,183 |
|
Less accumulated depreciation |
|
|
416,644 |
|
|
402,633 |
|
|
|
383,815 |
|
|
391,918 |
|
|
399,597 |
|
|
408,461 |
|
Real estate assets, net |
|
|
788,571 |
|
|
758,039 |
|
|
|
810,327 |
|
|
803,412 |
|
|
799,622 |
|
|
793,722 |
|
Acquired real estate leases, net |
|
|
2,080 |
|
|
1,670 |
|
|
|
3,737 |
|
|
3,309 |
|
|
2,899 |
|
|
2,490 |
|
Assets held for sale |
|
|
— |
|
|
17,987 |
|
|
|
5,685 |
|
|
— |
|
|
— |
|
|
— |
|
Cash, cash equivalents and restricted cash |
|
|
23,753 |
|
|
22,459 |
|
|
|
31,559 |
|
|
30,518 |
|
|
31,575 |
|
|
30,571 |
|
Tenant rent receivables, net |
|
|
1,345 |
|
|
1,436 |
|
|
|
1,462 |
|
|
1,568 |
|
|
1,380 |
|
|
471 |
|
Straight-line rent receivable, net |
|
|
38,670 |
|
|
37,411 |
|
|
|
37,724 |
|
|
37,839 |
|
|
38,857 |
|
|
38,744 |
|
Prepaid expenses and other assets |
|
|
4,322 |
|
|
4,445 |
|
|
|
3,429 |
|
|
3,583 |
|
|
3,889 |
|
|
4,080 |
|
Office computers and furniture, net of accumulated depreciation |
|
|
124 |
|
|
132 |
|
|
|
62 |
|
|
55 |
|
|
48 |
|
|
136 |
|
Deferred leasing commissions, net |
|
|
22,921 |
|
|
21,275 |
|
|
|
22,381 |
|
|
22,959 |
|
|
22,762 |
|
|
22,670 |
|
Total assets |
|
$ |
881,786 |
|
$ |
864,854 |
|
|
$ |
916,366 |
|
$ |
903,243 |
|
$ |
901,032 |
|
$ |
892,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Term Loan payable, net of unamortized financing costs and OID |
|
$ |
251,527 |
|
$ |
253,136 |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
Term loan payable, net of unamortized financing costs |
|
|
— |
|
|
— |
|
|
|
124,861 |
|
|
125,124 |
|
|
125,114 |
|
|
125,555 |
|
Series A & Series B Senior Notes |
|
|
— |
|
|
— |
|
|
|
122,595 |
|
|
122,656 |
|
|
122,449 |
|
|
122,686 |
|
Accounts payable and accrued expenses |
|
|
26,391 |
|
|
24,220 |
|
|
|
27,510 |
|
|
22,010 |
|
|
28,785 |
|
|
28,724 |
|
Accrued compensation |
|
|
234 |
|
|
349 |
|
|
|
1,205 |
|
|
1,911 |
|
|
2,635 |
|
|
2,394 |
|
Tenant security deposits |
|
|
6,186 |
|
|
6,207 |
|
|
|
6,156 |
|
|
6,289 |
|
|
6,258 |
|
|
6,198 |
|
Lease liability |
|
|
1,002 |
|
|
923 |
|
|
|
612 |
|
|
515 |
|
|
417 |
|
|
316 |
|
Acquired unfavorable real estate leases, net |
|
|
33 |
|
|
31 |
|
|
|
41 |
|
|
38 |
|
|
37 |
|
|
34 |
|
Total liabilities |
|
|
285,373 |
|
|
284,866 |
|
|
|
282,980 |
|
|
278,543 |
|
|
285,695 |
|
|
285,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Common stock |
|
|
10 |
|
|
10 |
|
|
|
10 |
|
|
10 |
|
|
10 |
|
|
10 |
|
Additional paid-in capital |
|
|
1,335,586 |
|
|
1,335,766 |
|
|
|
1,335,361 |
|
|
1,335,586 |
|
|
1,335,586 |
|
|
1,335,586 |
|
Accumulated distributions in excess of accumulated earnings |
|
|
(739,183) |
|
|
(755,788) |
|
|
|
(701,985) |
|
|
(710,896) |
|
|
(720,259) |
|
|
(728,619) |
|
Total stockholders’ equity |
|
|
596,413 |
|
|
579,988 |
|
|
|
633,386 |
|
|
624,700 |
|
|
615,337 |
|
|
606,977 |
|
Total liabilities and stockholders’ equity |
|
$ |
881,786 |
|
$ |
864,854 |
|
|
$ |
916,366 |
|
$ |
903,243 |
|
$ |
901,032 |
|
$ |
892,884 |
|
June 30, 2026| Page 6
|
Condensed Consolidated Statements of Cash Flows (in thousands) |
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
||||
|
2026 |
|
2025 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
$ |
(26,132) |
|
$ |
(29,311) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization expense |
|
23,763 |
|
|
22,818 |
|
Amortization of above and below market leases |
|
(1) |
|
|
— |
|
Shares issued as compensation |
|
180 |
|
|
225 |
|
Loss on extinguishment of debt |
|
1,267 |
|
|
5 |
|
Loss on sale of properties and impairment of assets held for sale, net |
|
7,691 |
|
|
12,900 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Tenant rent receivables |
|
(965) |
|
|
(285) |
|
Straight-line rents |
|
951 |
|
|
(4) |
|
Lease acquisition costs |
|
(269) |
|
|
(115) |
|
Prepaid expenses and other assets |
|
239 |
|
|
(287) |
|
Accounts payable and accrued expenses |
|
(5,171) |
|
|
(10,924) |
|
Accrued compensation |
|
(2,045) |
|
|
(1,186) |
|
Tenant security deposits |
|
9 |
|
|
52 |
|
Payment of deferred leasing commissions |
|
(1,634) |
|
|
(2,247) |
|
Net cash used in operating activities |
|
(2,117) |
|
|
(8,359) |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Property improvements, fixtures and equipment |
|
(5,834) |
|
|
(7,320) |
|
Proceeds received from sales of properties |
|
— |
|
|
6,099 |
|
Net cash used in investing activities |
|
(5,834) |
|
|
(1,221) |
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Distributions to stockholders |
|
(1,037) |
|
|
(2,071) |
|
Cost of extinguished debt |
|
(1,018) |
|
|
— |
|
Proceeds received from Initial Term Loan |
|
258,500 |
|
|
— |
|
Repayments of term loans payable |
|
(125,995) |
|
|
(260) |
|
Repayments of Series A&B Senior Notes |
|
(122,922) |
|
|
(254) |
|
Deferred financing costs |
|
(7,689) |
|
|
— |
|
Net cash used in financing activities |
|
(161) |
|
|
(2,585) |
|
Net decrease in cash, cash equivalents and restricted cash |
|
(8,112) |
|
|
(12,165) |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
30,571 |
|
|
42,683 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
22,459 |
|
$ |
30,518 |
|
June 30, 2026| Page 7
|
Property Net Operating Income (NOI)* with Same Store Comparison (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Rentable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square Feet |
|
Three Months Ended |
|
Six Months Ended |
|
Three Months Ended |
|
Six Months Ended |
|
|
|
% |
|
|||||||||||
(in thousands) |
|
or RSF |
|
31-Mar-26 |
|
30-Jun-26 |
|
30-Jun-26 |
|
31-Mar-25 |
|
30-Jun-25 |
|
30-Jun-25 |
|
Inc (Dec) |
|
Change |
|
|||||||
Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MidWest |
|
758 |
|
|
1,372 |
|
|
1,466 |
|
|
2,838 |
|
|
1,356 |
|
|
1,758 |
|
|
3,114 |
|
|
(276) |
|
(8.9) |
% |
South |
|
1,908 |
|
|
4,692 |
|
|
4,479 |
|
|
9,171 |
|
|
4,331 |
|
|
4,393 |
|
|
8,724 |
|
|
447 |
|
5.1 |
% |
West |
|
2,143 |
|
|
5,397 |
|
|
5,607 |
|
|
11,004 |
|
|
5,849 |
|
|
5,516 |
|
|
11,365 |
|
|
(361) |
|
(3.2) |
% |
Property NOI* from Owned Properties |
|
4,809 |
|
|
11,461 |
|
|
11,552 |
|
|
23,013 |
|
|
11,536 |
|
|
11,667 |
|
|
23,203 |
|
|
(190) |
|
(0.8) |
% |
Disposition and Acquisition Properties (a) |
|
- |
|
|
(10) |
|
|
— |
|
|
(10) |
|
|
(193) |
|
|
(108) |
|
|
(301) |
|
|
291 |
|
1.2 |
% |
Property NOI* |
|
4,809 |
|
$ |
11,451 |
|
$ |
11,552 |
|
$ |
23,003 |
|
$ |
11,343 |
|
$ |
11,559 |
|
$ |
22,902 |
|
$ |
101 |
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store |
|
|
|
$ |
11,461 |
|
$ |
11,552 |
|
$ |
23,013 |
|
$ |
11,536 |
|
$ |
11,667 |
|
$ |
23,203 |
|
$ |
(190) |
|
(0.8) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Nonrecurring |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items in NOI* (b) |
|
|
|
|
52 |
|
|
347 |
|
|
399 |
|
|
55 |
|
|
52 |
|
|
107 |
|
|
292 |
|
(1.3) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store |
|
|
|
$ |
11,409 |
|
$ |
11,205 |
|
$ |
22,614 |
|
$ |
11,481 |
|
$ |
11,615 |
|
$ |
23,096 |
|
$ |
(482) |
|
(2.1) |
% |
| (a) | We define Disposition and Acquisition Properties as properties that were sold or acquired or consolidated and do not have operating activity for all periods presented. |
| (b) | Nonrecurring items in NOI include proceeds from bankruptcies, lease termination fees or other significant nonrecurring income or expenses, which may affect comparability. |
* |
See Appendix for Non-GAAP Financial Measures Definitions beginning on page 25. |
June 30, 2026| Page 8
|
FFO* & AFFO* Reconciliation (in thousands, except per share amounts) |
|
|
|
|
|
|
|
Six Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|||
|
|
Three Months Ended |
|
Ended |
|
|
Three Months Ended |
|
Ended |
|
||||||||||||||||
|
|
31-Mar-26 |
|
30-Jun-26 |
|
30-Jun-26 |
|
|
31-Mar-25 |
|
30-Jun-25 |
|
30-Sep-25 |
|
31-Dec-25 |
|
31-Dec-25 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,527) |
|
$ |
(16,605) |
|
$ |
(26,132) |
|
|
$ |
(21,435) |
|
$ |
(7,876) |
|
$ |
(8,326) |
|
$ |
(7,323) |
|
$ |
(44,960) |
|
Loss (gain) on sale of properties and impairment of assets held for sale, net |
|
|
— |
|
|
7,691 |
|
|
7,691 |
|
|
|
13,284 |
|
|
(384) |
|
|
— |
|
|
2 |
|
|
12,902 |
|
Amortization of favorable leases |
|
|
— |
|
|
(1) |
|
|
(1) |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Depreciation & amortization |
|
|
10,580 |
|
|
10,432 |
|
|
21,012 |
|
|
|
10,824 |
|
|
10,626 |
|
|
10,550 |
|
|
10,609 |
|
|
42,609 |
|
NAREIT FFO* |
|
|
1,053 |
|
|
1,517 |
|
|
2,570 |
|
|
|
2,673 |
|
|
2,366 |
|
|
2,224 |
|
|
3,288 |
|
|
10,551 |
|
Lease Acquisition costs |
|
|
98 |
|
|
49 |
|
|
147 |
|
|
|
54 |
|
|
150 |
|
|
99 |
|
|
153 |
|
|
456 |
|
Funds From Operations (FFO)* |
|
$ |
1,151 |
|
$ |
1,566 |
|
$ |
2,717 |
|
|
$ |
2,727 |
|
$ |
2,516 |
|
$ |
2,323 |
|
$ |
3,441 |
|
$ |
11,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Funds From Operations (AFFO)* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From Operations (FFO)* |
|
$ |
1,151 |
|
$ |
1,566 |
|
$ |
2,717 |
|
|
$ |
2,727 |
|
$ |
2,516 |
|
$ |
2,323 |
|
$ |
3,441 |
|
$ |
11,007 |
|
Loss on extinguishment of debt |
|
|
1,267 |
|
|
— |
|
|
1,267 |
|
|
|
2 |
|
|
3 |
|
|
7 |
|
|
— |
|
|
12 |
|
Amortization of deferred financing costs and OID |
|
|
1,020 |
|
|
1,732 |
|
|
2,752 |
|
|
|
685 |
|
|
683 |
|
|
677 |
|
|
677 |
|
|
2,722 |
|
Shares issued as compensation |
|
|
— |
|
|
180 |
|
|
180 |
|
|
|
— |
|
|
225 |
|
|
— |
|
|
— |
|
|
225 |
|
Straight-line rent |
|
|
221 |
|
|
730 |
|
|
951 |
|
|
|
70 |
|
|
(74) |
|
|
(37) |
|
|
188 |
|
|
147 |
|
Tenant improvements |
|
|
(3,386) |
|
|
(1,838) |
|
|
(5,224) |
|
|
|
(2,374) |
|
|
(1,415) |
|
|
(4,469) |
|
|
(2,023) |
|
|
(10,281) |
|
Leasing commissions |
|
|
(1,386) |
|
|
(248) |
|
|
(1,634) |
|
|
|
(545) |
|
|
(1,702) |
|
|
(929) |
|
|
(1,050) |
|
|
(4,226) |
|
Non-investment capex |
|
|
(489) |
|
|
(729) |
|
|
(1,218) |
|
|
|
(1,258) |
|
|
(750) |
|
|
(753) |
|
|
(1,154) |
|
|
(3,915) |
|
Adjusted Funds From Operations (AFFO)* |
|
$ |
(1,602) |
|
$ |
1,393 |
|
$ |
(209) |
|
|
$ |
(693) |
|
$ |
(514) |
|
$ |
(3,181) |
|
$ |
79 |
|
$ |
(4,309) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
$ |
(0.09) |
|
$ |
(0.16) |
|
$ |
(0.25) |
|
|
$ |
(0.21) |
|
$ |
(0.08) |
|
$ |
(0.08) |
|
$ |
(0.07) |
|
$ |
(0.43) |
|
FFO* |
|
|
0.01 |
|
|
0.02 |
|
|
0.03 |
|
|
|
0.03 |
|
|
0.02 |
|
|
0.02 |
|
|
0.03 |
|
|
0.11 |
|
AFFO* |
|
|
(0.02) |
|
|
0.01 |
|
|
(0.00) |
|
|
|
(0.01) |
|
|
(0.00) |
|
|
(0.03) |
|
|
0.00 |
|
|
(0.04) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares (basic and diluted) |
|
|
103,690 |
|
|
103,810 |
|
|
103,751 |
|
|
|
103,567 |
|
|
103,610 |
|
|
103,690 |
|
|
103,690 |
|
|
103,640 |
|
* |
See Appendix for Non-GAAP Financial Measures Definitions beginning on page 25. |
June 30, 2026| Page 9
|
EBITDA* & Adjusted EBITDA* Reconciliation (in thousands, except ratio amounts) |
|
|
|
|
Six Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
||||||
|
|
Three Months Ended |
|
Ended |
|
|
Three Months Ended |
|
Ended |
||||||||||||||||
|
|
31-Mar-26 |
|
30-Jun-26 |
|
30-Jun-26 |
|
|
31-Mar-25 |
|
30-Jun-25 |
|
30-Sep-25 |
|
31-Dec-25 |
|
31-Dec-25 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,527) |
|
$ |
(16,605) |
|
$ |
(26,132) |
|
|
$ |
(21,435) |
|
$ |
(7,876) |
|
$ |
(8,326) |
|
$ |
(7,323) |
|
$ |
(44,960) |
Interest expense |
|
|
6,812 |
|
|
7,987 |
|
|
14,799 |
|
|
|
5,691 |
|
|
6,339 |
|
|
6,348 |
|
|
6,340 |
|
|
24,718 |
Amortization of favorable leases |
|
|
— |
|
|
(1) |
|
|
(1) |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Depreciation and amortization |
|
|
10,580 |
|
|
10,432 |
|
|
21,012 |
|
|
|
10,824 |
|
|
10,626 |
|
|
10,550 |
|
|
10,609 |
|
|
42,609 |
Income taxes |
|
|
54 |
|
|
50 |
|
|
104 |
|
|
|
52 |
|
|
82 |
|
|
3 |
|
|
52 |
|
|
189 |
EBITDA* |
|
$ |
7,919 |
|
$ |
1,863 |
|
$ |
9,782 |
|
|
$ |
(4,868) |
|
$ |
9,171 |
|
$ |
8,575 |
|
$ |
9,678 |
|
$ |
22,556 |
Loss on extinguishment of debt |
|
|
1,267 |
|
|
— |
|
|
1,267 |
|
|
|
2 |
|
|
3 |
|
|
7 |
|
|
— |
|
|
12 |
Loss (gain) on sale of properties and impairment of assets held for sale, net |
|
|
— |
|
|
7,691 |
|
|
7,691 |
|
|
|
13,284 |
|
|
(384) |
|
|
— |
|
|
2 |
|
|
12,902 |
Adjusted EBITDA* |
|
$ |
9,186 |
|
$ |
9,554 |
|
$ |
18,740 |
|
|
$ |
8,418 |
|
$ |
8,790 |
|
$ |
8,582 |
|
$ |
9,680 |
|
$ |
35,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
6,812 |
|
$ |
7,987 |
|
$ |
14,799 |
|
|
$ |
5,691 |
|
$ |
6,339 |
|
$ |
6,348 |
|
$ |
6,340 |
|
$ |
24,718 |
Scheduled principal payments |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Interest and scheduled principal payments |
|
$ |
6,812 |
|
$ |
7,987 |
|
$ |
14,799 |
|
|
$ |
5,691 |
|
$ |
6,339 |
|
$ |
6,348 |
|
$ |
6,340 |
|
$ |
24,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest coverage ratio |
|
|
1.35 |
|
|
1.20 |
|
|
1.27 |
|
|
|
1.48 |
|
|
1.39 |
|
|
1.35 |
|
|
1.53 |
|
|
1.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt service coverage ratio |
|
|
1.35 |
|
|
1.20 |
|
|
1.27 |
|
|
|
1.48 |
|
|
1.39 |
|
|
1.35 |
|
|
1.53 |
|
|
1.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt excluding unamortized financing costs |
|
$ |
275,000 |
|
$ |
275,000 |
|
|
|
|
|
$ |
250,179 |
|
$ |
249,818 |
|
$ |
248,917 |
|
$ |
248,917 |
|
|
|
Cash, cash equivalents and restricted cash |
|
|
23,753 |
|
|
22,459 |
|
|
|
|
|
|
31,559 |
|
|
30,518 |
|
|
31,575 |
|
|
30,571 |
|
|
|
Net Debt (Debt less Cash, cash equivalents and restricted cash) |
|
$ |
251,247 |
|
$ |
252,541 |
|
|
|
|
|
$ |
218,620 |
|
$ |
219,300 |
|
$ |
217,342 |
|
$ |
218,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA* |
|
$ |
9,186 |
|
$ |
9,554 |
|
|
|
|
|
$ |
8,418 |
|
$ |
8,790 |
|
$ |
8,582 |
|
$ |
9,680 |
|
|
|
Annualized |
|
$ |
36,744 |
|
$ |
38,216 |
|
|
|
|
|
$ |
33,672 |
|
$ |
35,160 |
|
$ |
34,328 |
|
$ |
38,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt-to-Adjusted EBITDA ratio* |
|
|
6.8 |
|
|
6.6 |
|
|
|
|
|
|
6.5 |
|
|
6.2 |
|
|
6.3 |
|
|
5.6 |
|
|
|
* |
See Appendix for Non-GAAP Financial Measures Definitions beginning on page 25. |
June 30, 2026| Page 10
|
Reconciliation of Net Income (Loss) to Property NOI* (in thousands) |
|
|
|
|
|
|
|
|
Six Months |
|
|
|
|
|
|
|
Six Months |
|
||
|
|
Three Months Ended |
|
Ended |
|
Three Months Ended |
|
Ended |
|
||||||||||
|
|
31-Mar-26 |
|
30-Jun-26 |
|
30-Jun-26 |
|
31-Mar-25 |
|
30-Jun-25 |
|
30-Jun-25 |
|
||||||
Net loss |
|
$ |
(9,527) |
|
$ |
(16,605) |
|
$ |
(26,132) |
|
$ |
(21,435) |
|
$ |
(7,876) |
|
$ |
(29,311) |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
1,267 |
|
|
— |
|
|
1,267 |
|
|
2 |
|
|
3 |
|
|
5 |
|
Loss (gain) on sale of properties and impairment of assets held for sale, net |
|
|
— |
|
|
7,691 |
|
|
7,691 |
|
|
13,284 |
|
|
(384) |
|
|
12,900 |
|
Management fee income |
|
|
(375) |
|
|
(311) |
|
|
(686) |
|
|
(380) |
|
|
(334) |
|
|
(714) |
|
Depreciation and amortization |
|
|
10,580 |
|
|
10,432 |
|
|
21,012 |
|
|
10,824 |
|
|
10,626 |
|
|
21,450 |
|
Amortization of above/below market leases |
|
|
— |
|
|
(1) |
|
|
(1) |
|
|
— |
|
|
— |
|
|
— |
|
General and administrative |
|
|
2,669 |
|
|
2,401 |
|
|
5,070 |
|
|
3,484 |
|
|
3,281 |
|
|
6,765 |
|
Interest expense |
|
|
6,812 |
|
|
7,987 |
|
|
14,799 |
|
|
5,691 |
|
|
6,339 |
|
|
12,030 |
|
Interest income |
|
|
(163) |
|
|
(157) |
|
|
(320) |
|
|
(259) |
|
|
(248) |
|
|
(507) |
|
Non-property specific items, net |
|
|
188 |
|
|
115 |
|
|
303 |
|
|
132 |
|
|
152 |
|
|
284 |
|
Property NOI* |
|
$ |
11,451 |
|
$ |
11,552 |
|
$ |
23,003 |
|
$ |
11,343 |
|
$ |
11,559 |
|
$ |
22,902 |
|
* |
See Appendix for Non-GAAP Financial Measures Definitions beginning on page 25. |
June 30, 2026| Page 11
|
Debt Summary (in thousands) |
|
|
Outstanding |
|
Interest |
|
|
|
|
Balance at: |
|
Rate at |
|
|
|
|
30-Jun-26 |
|
30-Jun-26 |
|
|
|
|
|
|
|
|
|
Initial Term Loans |
|
$ |
275,000 |
|
9.00% |
|
Delayed Draw Term Loans |
|
|
— |
|
9.00% |
|
|
|
$ |
275,000 |
|
9.00% |
|
| ● | The table above is a summary of our debt as of June 30, 2026. |
| ● | On February 26, 2026, we entered into a Credit Agreement with Alter Domus (US) LLC, as administrative agent, and an affiliate of TPG Credit. The Credit Agreement provides for a secured credit facility for aggregate principal commitments of up to $320 million, consisting of (i) initial term loans in an aggregate principal amount of $275 million, and (ii) delayed draw term loans available upon the approval of the lenders after the closing date in an aggregate principal amount of up to $45 million. The delayed draw term loans may be used, subject to certain conditions, to fund tenant improvements, leasing commissions, building improvements and other uses approved by the lenders. We used the proceeds of the initial term loans on the closing date to refinance and retire all outstanding indebtedness under the BMO Term Loan, BofA Term Loan and the Senior Notes (as such terms are defined in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026). |
| ● | Additional information on our current and prior debt can be found in our Annual Report on Form 10-K for the year ended December 31, 2025, as updated in our Quarterly Reports on Form 10-Q. |
June 30, 2026| Page 12
|
Capital Analysis (in thousands, except per share amounts) |
|
|
31-Mar-26 |
|
30-Jun-26 |
|
|
31-Mar-25 |
|
30-Jun-25 |
|
30-Sep-25 |
|
31-Dec-25 |
|
||||||
Market Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Outstanding |
|
|
103,690 |
|
|
104,012 |
|
|
|
103,567 |
|
|
103,690 |
|
|
103,690 |
|
|
103,690 |
|
Closing market price per share |
|
$ |
0.66 |
|
$ |
0.52 |
|
|
$ |
1.78 |
|
$ |
1.64 |
|
$ |
1.60 |
|
$ |
0.95 |
|
Market capitalization |
|
$ |
68,436 |
|
$ |
54,086 |
|
|
$ |
184,349 |
|
$ |
170,052 |
|
$ |
165,905 |
|
$ |
98,506 |
|
Total debt outstanding excluding unamortized financing costs |
|
|
275,000 |
|
|
275,000 |
|
|
|
250,179 |
|
|
249,818 |
|
|
248,917 |
|
|
248,917 |
|
Total Market Capitalization |
|
$ |
343,436 |
|
$ |
329,086 |
|
|
$ |
434,528 |
|
$ |
419,870 |
|
$ |
414,822 |
|
$ |
347,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends declared for the quarter |
|
$ |
1,037 |
|
$ |
— |
|
|
$ |
1,036 |
|
$ |
1,035 |
|
$ |
1,037 |
|
$ |
1,037 |
|
Common dividend declared per share |
|
$ |
0.01 |
|
$ |
— |
|
|
$ |
0.01 |
|
$ |
0.01 |
|
$ |
0.01 |
|
$ |
0.01 |
|
Declared dividend as a % of Net income (loss) per share |
|
|
(11)% |
|
|
— |
|
|
|
(5)% |
|
|
(13)% |
|
|
(12)% |
|
|
(14)% |
|
Declared dividend as a % of AFFO* per share |
|
|
(65)% |
|
|
— |
|
|
|
(149)% |
|
|
(202)% |
|
|
(33)% |
|
|
1313% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*See page 9 for a reconciliation of Net Income (Loss) to AFFO and the Appendix for Non-GAAP Financial Measures Definitions beginning on page 25.
June 30, 2026| Page 13
|
Owned & Consolidated Portfolio Overview |
|
|
As of the Quarter Ended |
|
||||||||
|
|
30-Jun-26 |
|
31-Mar-26 |
|
31-Dec-25 |
|
30-Sep-25 |
|
30-Jun-25 |
|
Total Owned Properties: |
|
|
|
|
|
|
|
|
|
|
|
Number of properties (a) |
|
14 |
|
14 |
|
14 |
|
14 |
|
14 |
|
Square feet |
|
4,809,487 |
|
4,809,487 |
|
4,807,663 |
|
4,807,663 |
|
4,807,663 |
|
Leased percentage |
|
67.4% |
|
68.4% |
|
68.9% |
|
68.9% |
|
69.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Includes property classified as an asset held for sale as of June 30, 2026. |
June 30, 2026| Page 14
|
Owned Portfolio Overview |
|
|
|
|
|
|
|
|
Percent |
|
Wtd Occupied |
|
GAAP |
|
|
|
|
|
|
|
|
|
|
Percent |
|
Wtd Occupied |
|
GAAP |
|
||
MSA / Property Name |
|
City |
|
State |
|
Square Feet |
|
Leased |
|
Percentage (a) |
|
Rent (b) |
|
|
MSA / Property Name |
|
City |
|
State |
|
Square Feet |
|
Leased |
|
Percentage (a) |
|
Rent (b) |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midwest Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dallas-Fort Worth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minneapolis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Tennyson Center |
|
Plano |
|
TX |
|
209,562 |
|
60.9% |
|
60.9% |
|
$ |
32.18 |
|
|
121 South 8th Street |
|
Minneapolis |
|
MN |
|
297,744 |
|
75.5% |
|
73.6% |
|
$ |
24.44 |
|
Addison Circle |
|
Addison |
|
TX |
|
289,333 |
|
64.3% |
|
64.3% |
|
|
35.59 |
|
|
801 Marquette Ave |
|
Minneapolis |
|
MN |
|
129,691 |
|
91.8% |
|
91.8% |
|
|
27.13 |
|
Liberty Plaza |
|
Addison |
|
TX |
|
217,841 |
|
64.3% |
|
65.7% |
|
|
25.66 |
|
|
Plaza Seven |
|
Minneapolis |
|
MN |
|
330,096 |
|
45.3% |
|
47.7% |
|
|
32.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midwest Region Total |
|
|
|
|
|
757,531 |
|
65.1% |
|
65.4% |
|
$ |
27.59 |
|
Houston |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Park Ten |
|
Houston |
|
TX |
|
157,609 |
|
86.8% |
|
84.8% |
|
|
27.40 |
|
|
West Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eldridge Green |
|
Houston |
|
TX |
|
248,399 |
|
100.0% |
|
100.0% |
|
|
27.86 |
|
|
Denver |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Park Ten Phase II |
|
Houston |
|
TX |
|
156,746 |
|
78.3% |
|
76.0% |
|
|
29.09 |
|
|
1999 Broadway |
|
Denver |
|
CO |
|
682,639 |
|
47.5% |
|
48.3% |
|
$ |
34.27 |
|
Westchase I & II |
|
Houston |
|
TX |
|
629,025 |
|
67.0% |
|
60.9% |
|
|
25.41 |
|
|
Greenwood Plaza (c) |
|
Englewood |
|
CO |
|
196,236 |
|
65.0% |
|
65.0% |
|
|
31.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1001 17th Street |
|
Denver |
|
CO |
|
652,423 |
|
74.5% |
|
73.4% |
|
|
34.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600 17th Street |
|
Denver |
|
CO |
|
612,143 |
|
69.7% |
|
67.8% |
|
|
34.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region Total |
|
|
|
|
|
2,143,441 |
|
63.7% |
|
63.0% |
|
$ |
34.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Region Total |
|
|
|
|
|
1,908,515 |
|
72.5% |
|
70.3% |
|
$ |
28.47 |
|
|
Total Owned Properties |
|
|
|
|
|
4,809,487 |
|
67.4% |
|
66.3% |
|
$ |
30.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Weighted Occupied Percentage for the six months ended June 30, 2026. |
| (b) | Weighted Average GAAP Rent per Occupied Square Foot. |
| (c) | This property was sold on July 8, 2026. |
June 30, 2026| Page 15
|
Tenants by Industry (Owned Properties by Square Feet) |
June 30, 2026| Page 16
|
20 Largest Tenants with Annualized Rent and Remaining Term (Owned Properties) |
|
|
|
|
|
|
Remaining |
|
Aggregate |
|
|
|
|
|
% of Aggregate |
|
|
|
|
Tenant |
|
Number of |
|
Lease Term |
|
Leased |
|
% of Total |
|
Annualized |
|
Leased |
|
|
|
|
Name |
|
Leases |
|
in Months |
|
Square Feet |
|
Square Feet |
|
Rent (a) |
|
Annualized Rent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
CITGO Petroleum Corporation |
|
1 |
|
81 |
|
248,399 |
|
5.2% |
|
$ |
8,100,292 |
|
7.7% |
|
2 |
|
EOG Resources, Inc. |
|
1 |
|
6 |
|
169,167 |
|
3.5% |
|
|
6,580,596 |
|
6.3% |
|
3 |
|
US Government |
|
2 |
|
54, 55 |
|
168,573 |
|
3.5% |
|
|
6,654,754 |
|
6.3% |
|
4 |
|
Kaiser Foundation Health Plan, Inc. (b) |
|
1 |
|
35 |
|
120,979 |
|
2.5% |
|
|
4,232,752 |
|
4.0% |
|
5 |
|
Deluxe Corporation |
|
1 |
|
133 |
|
98,922 |
|
2.1% |
|
|
2,988,497 |
|
2.8% |
|
6 |
|
Olin Corporation |
|
1 |
|
109 |
|
81,480 |
|
1.7% |
|
|
2,519,362 |
|
2.4% |
|
7 |
|
Ping Identity Corp. (c) |
|
1 |
|
0, 60 |
|
71,523 |
|
1.5% |
|
|
1,451,700 |
|
1.4% |
|
8 |
|
Permian Resources Operating, LLC |
|
1 |
|
64 |
|
67,856 |
|
1.4% |
|
|
3,052,903 |
|
2.9% |
|
9 |
|
Hall and Evans LLC |
|
1 |
|
8 |
|
65,878 |
|
1.4% |
|
|
2,857,011 |
|
2.7% |
|
10 |
|
Cyxtera Management, Inc. |
|
1 |
|
43 |
|
61,826 |
|
1.3% |
|
|
2,497,152 |
|
2.4% |
|
11 |
|
Precision Drilling (US) Corporation |
|
1 |
|
23 |
|
59,569 |
|
1.2% |
|
|
2,128,996 |
|
2.0% |
|
12 |
|
PwC US Group |
|
1 |
|
31 |
|
54,334 |
|
1.1% |
|
|
1,807,692 |
|
1.7% |
|
13 |
|
Coresite, LLC |
|
1 |
|
113 |
|
49,518 |
|
1.0% |
|
|
1,874,256 |
|
1.8% |
|
14 |
|
Schwegman, Lundberg & Woessner, P.A. |
|
1 |
|
19 |
|
46,269 |
|
1.0% |
|
|
1,414,005 |
|
1.3% |
|
15 |
|
Ark-La-Tex Financial Services, LLC. |
|
1 |
|
9 |
|
41,011 |
|
0.9% |
|
|
1,566,049 |
|
1.5% |
|
16 |
|
Invenergy, LLC. (d) |
|
1 |
|
114 |
|
35,088 |
|
0.7% |
|
|
1,134,527 |
|
1.1% |
|
17 |
|
Chevron U.S.A., Inc. |
|
1 |
|
14 |
|
35,088 |
|
0.7% |
|
|
1,546,328 |
|
1.5% |
|
18 |
|
Moss, Luse & Womble, LLC |
|
1 |
|
122 |
|
34,071 |
|
0.7% |
|
|
830,227 |
|
0.8% |
|
19 |
|
QB Energy Operating, LLC. |
|
1 |
|
80 |
|
34,063 |
|
0.7% |
|
|
1,506,266 |
|
1.4% |
|
20 |
|
WDT Acquisition Corporation |
|
1 |
|
118 |
|
30,913 |
|
0.6% |
|
|
1,134,816 |
|
1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
1,574,527 |
|
32.7% |
|
$ |
55,878,181 |
|
53.1% |
|
Footnotes on next page
June 30, 2026| Page 17
|
20 Largest Tenants with Annualized Rent and Remaining Term (Owned Properties) |
Footnotes:
(a) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at June 30, 2026 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.
(b) Kaiser Foundation Health Plan, Inc. is a tenant in our property, which was sold on July 8, 2026.
(c) Includes 16,559 square feet expiring June 30, 2026, which is rent abated and 54,964 square feet expiring in 2031.
(d) Includes 3,146 square feet commencing on January 1, 2027; and 3,929 square feet commencing on January 1, 2028.
June 30, 2026| Page 18
|
Leasing Activity (Owned Properties) |
|
|
|
|
|
|
Year |
|
Year |
|||
|
|
Six Months Ended |
|
Ended |
|
Ended |
|||||
Leasing Activity |
|
|
30-Jun-26 |
|
30-Jun-25 |
|
|
31-Dec-25 |
|
|
31-Dec-24 |
(in Square Feet - SF) |
|
|
|
|
|
|
|
|
|
|
|
New leasing |
|
|
50,000 |
|
16,000 |
|
|
93,000 |
|
|
171,000 |
Renewals and expansions |
|
|
120,000 |
|
171,000 |
|
|
320,000 |
|
|
445,000 |
|
|
|
170,000 |
|
187,000 |
|
|
413,000 |
|
|
616,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Other information per SF |
|
|
|
|
|
|
|
|
|
|
|
(Activity on a year-to-date basis) |
|
|
|
|
|
|
|
|
|
|
|
GAAP Rents on leasing |
|
$ |
34.34 |
|
31.89 |
|
$ |
32.42 |
|
$ |
30.06 |
Weighted average lease term |
|
|
6.3 Years |
|
6.3 Years |
|
|
5.7 Years |
|
|
6.3 Years |
|
|
|
|
|
|
|
|
|
|
|
|
Increase over average GAAP rents in prior year (a) |
|
|
7.4% |
|
4.2% |
|
|
5.7% |
|
|
8.2% |
|
|
|
|
|
|
|
|
|
|
|
|
Average free rent |
|
|
5 Months |
|
4 Months |
|
|
4 Months |
|
|
4 Months |
Tenant Improvements |
|
$ |
33.32 |
|
25.78 |
|
$ |
23.02 |
|
$ |
26.06 |
Leasing Costs |
|
$ |
11.31 |
|
11.15 |
|
$ |
9.24 |
|
$ |
9.72 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) The increase or decrease percentage is calculated by comparing average GAAP rents at properties that had leasing activity in the current year to average GAAP rents at the same properties in the prior year.
June 30, 2026| Page 19
|
Lease Expirations by Square Feet (Owned Properties as of June 30, 2026, includes an asset held for sale that was sold on July 8, 2026) |
June 30, 2026| Page 20
|
Lease Expirations with Annualized Rent per Square Foot (SF) (Owned Properties as of June 30, 2026, includes an asset held for sale that was sold on July 8, 2026) |
|
|
|
|
Rentable |
|
|
|
|
Annualized |
|
Percentage |
|
|
|
|
|
Number of |
|
Square |
|
|
|
|
Rent |
|
of Total |
|
|
|
Year of |
|
Leases |
|
Footage |
|
Annualized |
|
Per Square |
|
Annualized |
|
|
||
Lease |
|
Expiring |
|
Subject to |
|
Rent Under |
|
Foot Under |
|
Rent Under |
|
|
||
Expiration |
|
Within the |
|
Expiring |
|
Expiring |
|
Expiring |
|
Expiring |
Cumulative |
|
||
June 30, |
|
Year (a) |
|
Leases |
|
Leases (b) |
|
Leases |
|
Leases |
Total |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2026 |
|
19 |
(c) |
143,154 |
|
$ |
4,129,218 |
|
$ |
28.84 |
|
3.9% |
3.9% |
|
2027 |
|
35 |
|
551,951 |
|
|
20,830,307 |
|
|
37.74 |
|
19.8% |
23.7% |
|
2028 |
|
25 |
|
240,505 |
|
|
7,928,382 |
|
|
32.97 |
|
7.5% |
31.2% |
|
2029 |
|
43 |
|
505,301 |
|
|
15,899,414 |
|
|
31.47 |
|
15.1% |
46.3% |
|
2030 |
|
20 |
|
268,950 |
|
|
8,806,981 |
|
|
32.75 |
|
8.4% |
54.7% |
|
2031 |
|
24 |
|
448,002 |
|
|
15,656,331 |
|
|
34.95 |
|
14.9% |
69.6% |
|
2032 |
|
9 |
|
82,393 |
|
|
1,758,286 |
|
|
21.34 |
|
1.7% |
71.3% |
|
2033 |
|
12 |
|
399,182 |
|
|
13,207,048 |
|
|
33.09 |
|
12.5% |
83.8% |
|
2034 |
|
9 |
|
101,344 |
|
|
2,642,283 |
|
|
26.07 |
|
2.5% |
86.3% |
|
2035 |
|
8 |
|
176,208 |
|
|
5,783,727 |
|
|
32.82 |
|
5.5% |
91.8% |
|
2036 and thereafter |
|
24 |
|
323,687 |
(d) |
|
8,663,080 |
|
|
26.76 |
|
8.2% |
100.0% |
|
Leased total |
|
228 |
|
3,240,677 |
|
$ |
105,305,057 |
|
$ |
32.49 |
|
100.0% |
|
|
Owned property vacant SF |
|
|
|
1,568,810 |
|
|
|
|
|
|
|
|
|
|
Total Portfolio Square Footage |
|
|
|
4,809,487 |
|
|
|
|
|
|
|
|
|
|
| (a) | The number of leases approximates the number of tenants. Tenants with lease maturities in different years are included in annual totals for each lease. Tenants may have multiple leases in the same year. |
| (b) | Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at June 30, 2026 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges. |
| (c) | Includes 3 leases that are month-to-month. |
| (d) | Includes 52,202 square feet that are non-revenue producing building amenities. |
June 30, 2026| Page 21
|
Capital Expenditures (Owned and Consolidated Properties) |
(in thousands) |
|
|
|
|
|
Six Months |
|||
|
|
For the Three Months Ended |
|
Ended |
|||||
|
|
31-Mar-26 |
|
30-Jun-26 |
|
30-Jun-26 |
|||
|
|
|
|
|
|
|
|
|
|
Tenant improvements |
|
$ |
3,386 |
|
$ |
1,838 |
|
$ |
5,224 |
Deferred leasing costs |
|
|
1,386 |
|
|
248 |
|
|
1,634 |
Non-investment capex |
|
|
489 |
|
|
729 |
|
|
1,218 |
Total Capital Expenditures |
|
$ |
5,261 |
|
$ |
2,815 |
|
$ |
8,076 |
|
|
For the Three Months Ended |
|
Year Ended |
|||||||||||
|
|
31-Mar-25 |
|
30-Jun-25 |
|
30-Sep-25 |
|
31-Dec-25 |
|
31-Dec-25 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant improvements |
|
$ |
2,374 |
|
$ |
1,415 |
|
$ |
4,469 |
|
$ |
2,023 |
|
$ |
10,281 |
Deferred leasing costs |
|
|
545 |
|
|
1,702 |
|
|
929 |
|
|
1,050 |
|
|
4,226 |
Non-investment capex |
|
|
1,258 |
|
|
750 |
|
|
753 |
|
|
1,154 |
|
|
3,915 |
Total Capital Expenditures |
|
$ |
4,177 |
|
$ |
3,867 |
|
$ |
6,151 |
|
$ |
4,227 |
|
$ |
18,422 |
First generation leasing and investment capital expenditures was $0 for the six months ended June 30, 2026 and the year ended December 31, 2025.
June 30, 2026| Page 22
|
Disposition Activity (in thousands except for Square Feet) |
Recent Dispositions: |
|
|
|
|
|
|
|
|
|
Gross Sale |
|
Gain (loss) |
|
||
|
|
City |
|
State |
|
Square Feet |
|
Date Sold |
|
Proceeds |
|
on Sale |
|
||
2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greenwood Plaza |
|
Englewood |
|
CO |
|
196,236 |
|
7/8/26 |
|
$ |
19,356 |
|
$ |
(7,645) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monument Circle |
|
Indianapolis |
|
IN |
|
213,760 |
|
6/6/25 |
|
$ |
6,000 |
|
$ |
(12,960) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collins Crossing |
|
Richardson |
|
TX |
|
300,887 |
|
1/26/24 |
|
$ |
35,000 |
|
$ |
(2,145) |
|
Innsbrook |
|
Glenn Allen |
|
VA |
|
298,183 |
|
7/8/2024 |
|
|
31,000 |
|
|
(13,247) |
|
Pershing Park |
|
Atlanta |
|
GA |
|
160,145 |
|
10/23/24 |
|
|
34,000 |
|
|
(27,511) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northwest Point |
|
Elk Grove |
|
IL |
|
177,095 |
|
3/10/23 |
|
$ |
29,125 |
|
$ |
8,391 |
|
Forest Park |
|
Charlotte |
|
NC |
|
64,198 |
|
8/9/23 |
|
|
9,200 |
|
|
(844) |
|
Liberty Plaza (a) |
|
Addison |
|
TX |
|
n/a |
|
8/23/23 |
|
|
157 |
|
|
53 |
|
One Legacy Circle |
|
Plano |
|
TX |
|
214,110 |
|
10/26/23 |
|
|
48,000 |
|
|
10,558 |
|
Blue Lagoon Drive |
|
Miami |
|
FL |
|
213,182 |
|
12/6/23 |
|
|
68,000 |
|
|
(18,872) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380 Interlocken |
|
Broomfield |
|
CO |
|
240,359 |
|
8/31/22 |
|
$ |
42,000 |
|
$ |
5,665 |
|
390 Interlocken |
|
Broomfield |
|
CO |
|
241,512 |
|
8/31/22 |
|
|
60,500 |
|
|
18,412 |
|
909 Davis |
|
Evanston |
|
IL |
|
195,098 |
|
12/28/22 |
|
|
27,750 |
|
|
3,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Ravinia |
|
Atlanta |
|
GA |
|
386,602 |
|
5/27/21 |
|
$ |
74,879 |
|
$ |
29,075 |
|
Two Ravinia |
|
Atlanta |
|
GA |
|
411,047 |
|
5/27/21 |
|
|
71,771 |
|
|
29 |
|
One Overton Park |
|
Atlanta |
|
GA |
|
387,267 |
|
5/27/21 |
|
|
72,850 |
|
|
(6,336) |
|
Loudoun Tech Center |
|
Dulles |
|
VA |
|
136,658 |
|
6/29/21 |
|
|
17,250 |
|
|
(2,148) |
|
River Crossing |
|
Indianapolis |
|
IN |
|
205,729 |
|
8/31/21 |
|
|
35,050 |
|
|
(1,734) |
|
Timberlake |
|
Chesterfield |
|
MO |
|
234,496 |
|
9/23/21 |
|
|
44,667 |
|
|
6,184 |
|
Timberlake East |
|
Chesterfield |
|
MO |
|
117,036 |
|
9/23/21 |
|
|
22,333 |
|
|
4,111 |
|
999 Peachtree |
|
Atlanta |
|
GA |
|
621,946 |
|
10/22/21 |
|
|
223,900 |
|
|
86,766 |
|
Meadow Point |
|
Chantilly |
|
VA |
|
138,537 |
|
11/16/21 |
|
|
25,500 |
|
|
1,878 |
|
Stonecroft |
|
Chantilly |
|
VA |
|
111,469 |
|
11/16/21 |
|
|
14,500 |
|
|
(4,768) |
|
| (a) | Conveyance of approximately 7,826 square feet of land as part of a road revitalization project. |
June 30, 2026| Page 23
|
Net Asset Value Components |
(in thousands except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-Jun-26 |
|
|
Assets: |
|
|
|
|
|
Other information: |
|
|
|
|
Total Market Capitalization Values |
|
|
|
|
|
Straight-line rent receivable |
|
$ |
37,411 |
|
|
Leased SF to be FFO producing |
|
|
|
Shares outstanding |
|
|
104,012 |
|
|
Assets held for sale |
|
|
17,987 |
|
|
during 2026-2028 (in 000's) |
|
|
75 |
Closing price |
|
$ |
0.52 |
|
|
Cash, cash equivalents and restricted cash |
|
|
22,459 |
|
|
|
|
|
|
Market capitalization |
|
$ |
54,086 |
|
|
Tenant rent receivables |
|
|
1,436 |
|
|
Straight-line rental revenue current quarter |
|
$ |
(730) |
Debt |
|
|
275,000 |
|
|
Prepaid expenses |
|
|
3,539 |
|
|
|
|
|
|
Total Market Capitalization |
|
$ |
329,086 |
|
|
Office computers and furniture |
|
|
132 |
|
|
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred financing costs and OID, net |
|
|
21,864 |
|
|
|
|
|
|
|
|
3 Months |
|
|
Other assets - Right-to-Use Asset |
|
|
906 |
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
$ |
105,734 |
|
|
|
|
|
|
|
NOI Components |
|
30-Jun-26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store NOI (1) |
|
$ |
11,552 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions (1) (2) |
|
|
— |
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
Property NOI (1) |
|
|
11,552 |
|
|
Debt (excluding contra for unamortized financing costs and OID) |
|
$ |
275,000 |
|
|
Footnotes to the components |
|
|
|
Full quarter adjustment (3) |
|
|
— |
|
|
Accounts payable & accrued expenses |
|
|
24,569 |
|
|
(1) See pages 11 & 30 for definitions and reconciliations. |
|||
Stabilized portfolio |
|
$ |
11,552 |
|
|
Tenant security deposits |
|
|
6,207 |
|
|
|
|||
|
|
|
|
|
|
Other liabilities: lease liability & acquired unfavorable lease liability |
|
|
954 |
|
|
(2) Includes NOI from acquisitions not in Same Store. |
|||
|
|
|
|
|
|
|
|
$ |
306,730 |
|
|
|
|||
Financial Statement Reconciliation: |
|
|
|
|
|
|
|
|
|
|
|
(3) Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary. |
|||
Rental Revenue |
|
$ |
26,355 |
|
|
|
|
|
|
|
|
|
|||
Rental operating expenses |
|
|
(10,006) |
|
|
|
|
|
|
|
|
(4) HB3 Tax in Texas is classified as an income tax, though we treat it as a real estate tax in Property NOI. |
|||
Real estate taxes and insurance |
|
|
(4,550) |
|
|
|
|
|
|
|
|
|
|||
NOI from dispositions & acquisition properties |
|
|
— |
|
|
|
|
|
|
|
|
(5) Management & other fees are eliminated in consolidation but included in Property NOI. |
|||
Taxes (4) |
|
|
(50) |
|
|
|
|
|
|
|
|
|
|||
Management & other fees (5) |
|
|
(197) |
|
|
|
|
|
|
|
|
|
|||
Property NOI (1) |
|
$ |
11,552 |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2026| Page 24
|
Appendix: Non-GAAP Financial Measure Definitions |
Definition of Funds From Operations (“FFO”)
The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on mortgage loans, properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.
FFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.
Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner. We have included the NAREIT FFO definition as of May 17, 2016 in the table on page 9 and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.
We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.
June 30, 2026| Page 25
|
Appendix: Non-GAAP Financial Measure Definitions |
Definition of Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)
and Adjusted EBITDA
EBITDA is defined as net income or loss plus interest expense, income tax expense and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA excluding hedge ineffectiveness, gains or losses on extinguishment of debt, gains and losses on sales of properties or shares of equity investments or provisions for losses on assets held for sale or equity investments. EBITDA and Adjusted EBITDA are not intended to represent cash flow for the period, are not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and are not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA and Adjusted EBITDA are presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA or Adjusted EBITDA the same way, this presentation may not be comparable to similarly titled measures of other companies. The Company believes that net income or loss is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA and Adjusted EBITDA.
Definition of Property Net Operating Income (Property NOI)
The Company provides property performance based on Net Operating Income, which we refer to as NOI. Management believes that investors are interested in this information. NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equity in earnings of nonconsolidated REITs, interest income, management fee income, hedge ineffectiveness, gains or losses on extinguishment of debt, gains or losses on the sale of assets and excludes non-property specific income and expenses. The information presented includes footnotes and the data is shown by region with properties owned in the periods presented, which we call Same Store. The comparative Same Store results include properties held for all periods presented. We also exclude properties that have been acquired, consolidated or placed in service, but that do not have operating activity for all periods presented, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees. NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income or loss as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.
June 30, 2026| Page 26
|
Appendix: Non-GAAP Financial Measure Definitions |
Definition of Adjusted Funds From Operations (AFFO)
The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO. The Company defines AFFO as (1) FFO, (2) excluding loss on extinguishment of debt that is non-cash, (3) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (4) excluding the effect of straight-line rent, (5) plus the amortization of deferred financing costs and original issue discounts, (6) plus the value of shares issued as compensation and (7) less recurring capital expenditures that are generally for maintenance of properties, which we call non-investment capex or are second generation capital expenditures. Second generation costs include re-tenanting space after a tenant vacates, which include tenant improvements and leasing commissions.
We exclude development/redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property. We also exclude first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned for at acquisition.
AFFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs. Other real estate companies may define this term in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.
June 30, 2026| Page 27
|
Investor Relations Contact Georgia Touma ~ 877.686.9496 InvestorRelations@fspreit.com Franklin Street Properties Corp. Supplemental Operating & Financial Data 401 Edgewater Place ~Wakefield, MA 01880 781.557.1300 ~ www.fspreit.com |
June 30, 2026| Page 28
