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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2023
Franklin Street Properties Corp. |
(Exact name of registrant as specified in its charter)
Maryland |
001-32470 |
04-3578653 |
(State or other jurisdiction |
(Commission |
(IRS Employer |
401 Edgewater Place, Suite 200, Wakefield, |
01880 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (781) 557-1300
|
(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol (s) |
|
Name of each exchange on which registered |
Common Stock, $.0001 par value per share |
|
FSP |
|
NYSE American |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
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 August 1, 2023, Franklin Street Properties Corp. (the “Registrant”) announced its financial results for the three and six months ended June 30, 2023. 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 August 1, 2023. |
|
|
|
99.2 |
|
Supplemental Operating and Financial Data for the Second Quarter of 2023. |
|
|
|
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: August 1, 2023 |
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 2023 Results
Wakefield, MA—August 1, 2023—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, 2023.
George J. Carter, Chairman and Chief Executive Officer, commented as follows:
“As the third quarter of 2023 begins, we continue to believe that the current price of our common stock does not accurately reflect the value of our underlying real estate assets. We will seek to increase shareholder value by (1) pursuing the sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) striving to lease vacant space. We intend to use proceeds from property dispositions primarily for debt reduction.
We look forward to the remainder of 2023 and beyond with anticipation and optimism.”
Financial Highlights
| ● | GAAP net loss was $8.4 million and $6.0 million, or $0.08 and $0.06 per basic and diluted share for the three and six months ended June 30, 2023, respectively. |
| ● | Funds From Operations (FFO) was $7.1 million and $15.5 million, or $0.07 and $0.15 per basic and diluted share, for the three and six months ended June 30, 2023, respectively. |
Leasing Highlights
| ● | During the six months ended June 30, 2023, we leased approximately 445,000 square feet, including 176,000 square feet of new leases. |
| ● | Our directly owned real estate portfolio of 20 owned properties, totaling approximately 6.1 million square feet, was approximately 75.7% leased as of June 30, 2023, compared to approximately 75.6% leased as of December 31, 2022. The increase in the leased percentage is primarily a result of leasing completed during the six months ended June 30, 2023, which was partially offset by lease expirations and a property disposition. |
| ● | The weighted average GAAP base rent per square foot achieved on leasing activity during the six months ended June 30, 2023, was $29.14, or 7.2% higher than average rents in the respective properties for the year ended December 31, 2022. The average lease term on leases signed during the six months ended June 30, 2023, was 6.6 years compared to 6.4 years during the year ended December 31, 2022. Overall, the portfolio weighted average rent per occupied square foot was $31.21 as of June 30, 2023, compared to $30.48 as of December 31, 2022. |
| ● | During the second quarter, we entered into a lease amendment with an existing tenant, Kaiser Foundation Health Plan, Inc., at our Greenwood Plaza property in Englewood, Colorado. The lease amendment extends the term applicable to all of Kaiser’s approximately 121,000 square foot premises by 5 years, from May 31, 2024, to May 31, 2029. |
| ● | During the second quarter, we entered into a new lease with the Commonwealth of Virginia, Department of General Services, at our Innsbrook property in Glen Allen, Virginia. The lease is for approximately 100,000 square feet, has a term of 10.5 years and is anticipated to commence during |
-2-
| December 2023. |
| ● | We are currently tracking approximately 500,000 square feet of new prospective tenants, including approximately 300,000 square feet of prospective tenants that have identified our properties on their respective short lists of potential locations. |
| ● | We believe that our continuing portfolio of real estate is well located, primarily in the Sunbelt and Mountain West geographic regions, and consists of high-quality assets with upside leasing potential. |
Investment Highlights
| ● | We remain committed to seeking to sell select properties during 2023 and using proceeds primarily for debt reduction. |
| ● | Since December 2020, we have completed the sale of properties resulting in gross proceeds of approximately $852 million and reflecting an average price per square foot of approximately $220. |
| ● | During the third quarter of 2023, we expect to close on the sale of Forest Park in Charlotte, North Carolina for approximately $9.2 million in gross proceeds. We recorded an impairment of $0.8 million on this property for the expected loss on sale and classified the property as an asset held-for-sale during the three months ended June 30, 2023. Proceeds will be used primarily for debt reduction. |
| ● | We have entered into purchase and sale agreements with three different (and unrelated) purchasers for the potential sale of three properties that would result in aggregate gross proceeds of approximately $156 million. These transactions remain subject to customary closing conditions, including without limitation, successful completion by the purchasers of due diligence inspection periods. If successful, these transactions are expected to close during the fourth quarter of 2023 and the proceeds are intended to be used primarily for the repayment of debt. |
| ● | Assuming that the three properties currently under purchase and sale agreement, together with our Forest Park property, close at their currently negotiated purchase prices, those four dispositions would reflect an average price per square foot of approximately $250. |
Dividends
| ● | On July 7, 2023, we announced that our Board of Directors declared a quarterly cash dividend for the three months ended June 30, 2023 of $0.01 per share of common stock that will be paid on August 10, 2023 to stockholders of record on July 21, 2023. |
Consolidation of Sponsored REIT
As of January 1, 2023, we consolidated the operations of our Monument Circle sponsored REIT into our financial statements. On October 29, 2021, we agreed to amend and restate our existing loan to Monument Circle that is secured by a mortgage on real estate owned by Monument Circle, which we refer to as the Sponsored REIT Loan. The amended and restated Sponsored REIT Loan extended the maturity date from December 6, 2022 to June 30, 2023 (subject to further extension to September 30, 2023), increased the aggregate principal amount of the loan from $21 million to $24 million, and included certain other modifications. On June 26, 2023, the maturity date was extended to September 30, 2023. In consideration of our agreement to amend and restate the Sponsored REIT Loan, we obtained from the stockholders of Monument Circle the right to vote their shares in favor of any sale of the property owned by Monument Circle any time on or after January 1, 2023. As a result of our obtaining this right to vote shares, GAAP variable interest entity (VIE) rules required us to consolidate Monument Circle as of January 1, 2023. A gain on consolidation of approximately $0.4 million was recognized in the three months ended March 31, 2023.
-3-
Additional information about the consolidation of Monument Circle can be found in Note 1, “Organization, Properties, Basis of Presentation, Financial Instruments, and Recent Accounting Standards – Variable Interest Entities (VIEs)” and Note 2, “Related Party Transactions and Investments in Non-Consolidated Entities - Management fees and interest income from loans”, in the Notes to Consolidated Financial Statements included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.
Non-GAAP Financial Information
A reconciliation of Net income 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.
2023 Net Income, FFO and Disposition Guidance
At this time, due primarily to economic conditions and uncertainty surrounding the timing and amount of proceeds received from property dispositions, we are continuing suspension of Net Income, FFO and property disposition guidance.
Real Estate Update
Supplementary schedules provide property information for the Company’s owned and consolidated properties as of June 30, 2023. 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.
Earnings Call
A conference call is scheduled for August 2, 2023 at 11:00 a.m. (ET) to discuss the second quarter 2023 results. To access the call, please dial 888-440-4368 and use conference ID 5398803. Internationally, the call may be accessed by dialing 646-960-0856 and using conference ID 5398803. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.fspreit.com) at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.
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 seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. 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.
-4-
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 expectations for future potential leasing activity, expectations for future potential property dispositions, the payment of dividends and the repayment of debt in future periods, 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 COVID-19 pandemic and other potential infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, inflation rates, increasing 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, and any delays in the timing of anticipated dispositions, 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, 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, 2022, which may be 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.
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 |
|
|
-5-
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) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
36,257 |
|
$ |
40,831 |
|
$ |
74,024 |
|
$ |
82,628 |
|
Related party revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees and interest income from loans |
|
|
— |
|
|
467 |
|
|
— |
|
|
927 |
|
Other |
|
|
9 |
|
|
6 |
|
|
9 |
|
|
13 |
|
Total revenue |
|
|
36,266 |
|
|
41,304 |
|
|
74,033 |
|
|
83,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating expenses |
|
|
12,140 |
|
|
12,344 |
|
|
24,830 |
|
|
25,178 |
|
Real estate taxes and insurance |
|
|
7,169 |
|
|
9,043 |
|
|
14,142 |
|
|
17,762 |
|
Depreciation and amortization |
|
|
14,645 |
|
|
18,186 |
|
|
29,372 |
|
|
33,856 |
|
General and administrative |
|
|
3,767 |
|
|
3,981 |
|
|
7,584 |
|
|
7,765 |
|
Interest |
|
|
6,084 |
|
|
5,664 |
|
|
11,890 |
|
|
11,030 |
|
Total expenses |
|
|
43,805 |
|
|
49,218 |
|
|
87,818 |
|
|
95,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
— |
|
|
— |
|
|
(67) |
|
|
— |
|
Gain on consolidation of Sponsored REIT |
|
|
— |
|
|
— |
|
|
394 |
|
|
— |
|
Impairment and loan loss reserve |
|
|
— |
|
|
(1,140) |
|
|
— |
|
|
(1,140) |
|
Gain on sale of properties and impairment of asset held for sale, net |
|
|
(806) |
|
|
— |
|
|
7,586 |
|
|
— |
|
Loss before taxes |
|
|
(8,345) |
|
|
(9,054) |
|
|
(5,872) |
|
|
(13,163) |
|
Tax expense |
|
|
75 |
|
|
56 |
|
|
142 |
|
|
105 |
|
Net loss |
|
$ |
(8,420) |
|
$ |
(9,110) |
|
$ |
(6,014) |
|
$ |
(13,268) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted |
|
|
103,330 |
|
|
103,193 |
|
|
103,283 |
|
|
103,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
|
$ |
(0.08) |
|
$ |
(0.09) |
|
$ |
(0.06) |
|
$ |
(0.13) |
|
-6-
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) |
|
2023 |
|
2022 |
|
||
Assets: |
|
|
|
|
|
|
|
Real estate assets: |
|
|
|
|
|
|
|
Land |
|
$ |
128,588 |
|
$ |
126,645 |
|
Buildings and improvements |
|
|
1,362,939 |
|
|
1,388,869 |
|
Fixtures and equipment |
|
|
11,612 |
|
|
11,151 |
|
|
|
|
1,503,139 |
|
|
1,526,665 |
|
Less accumulated depreciation |
|
|
421,180 |
|
|
423,417 |
|
Real estate assets, net |
|
|
1,081,959 |
|
|
1,103,248 |
|
Acquired real estate leases, less accumulated amortization of $20,962 and $20,243, respectively |
|
|
8,828 |
|
|
10,186 |
|
Asset held for sale |
|
|
8,860 |
|
|
— |
|
Cash, cash equivalents and restricted cash |
|
|
6,697 |
|
|
6,632 |
|
Tenant rent receivables |
|
|
1,938 |
|
|
2,201 |
|
Straight-line rent receivable |
|
|
50,267 |
|
|
52,739 |
|
Prepaid expenses and other assets |
|
|
5,648 |
|
|
6,676 |
|
Related party mortgage loan receivable, less allowance for credit loss of $0 and $4,237, respectively |
|
|
— |
|
|
19,763 |
|
Other assets: derivative asset |
|
|
— |
|
|
4,358 |
|
Office computers and furniture, net of accumulated depreciation of $1,149 and $1,115, respectively |
|
|
127 |
|
|
154 |
|
Deferred leasing commissions, net of accumulated amortization of $20,327 and $19,043, respectively |
|
|
34,985 |
|
|
35,709 |
|
Total assets |
|
$ |
1,199,309 |
|
$ |
1,241,666 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
Bank note payable |
|
$ |
75,000 |
|
$ |
48,000 |
|
Term loans payable, less unamortized financing costs of $529 and $250, respectively |
|
|
124,471 |
|
|
164,750 |
|
Series A & Series B Senior Notes, less unamortized financing costs of $412 and $494, respectively |
|
|
199,588 |
|
|
199,506 |
|
Accounts payable and accrued expenses |
|
|
32,501 |
|
|
50,366 |
|
Accrued compensation |
|
|
2,286 |
|
|
3,644 |
|
Tenant security deposits |
|
|
5,666 |
|
|
5,710 |
|
Lease liability |
|
|
550 |
|
|
759 |
|
Acquired unfavorable real estate leases, less accumulated amortization of $537 and $574, respectively |
|
|
153 |
|
|
195 |
|
Total liabilities |
|
|
440,215 |
|
|
472,930 |
|
|
|
|
|
|
|
|
|
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, 103,430,353 and 103,235,914 shares issued and outstanding, respectively |
|
|
10 |
|
|
10 |
|
Additional paid-in capital |
|
|
1,335,091 |
|
|
1,334,776 |
|
Accumulated other comprehensive income |
|
|
2,480 |
|
|
4,358 |
|
Accumulated distributions in excess of accumulated earnings |
|
|
(578,487) |
|
|
(570,408) |
|
Total stockholders’ equity |
|
|
759,094 |
|
|
768,736 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,199,309 |
|
$ |
1,241,666 |
|
-7-
Franklin Street Properties Corp. Financial Results
Supplementary Schedule C
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
For the |
|
||||
|
|
Six Months Ended |
|
||||
|
|
June 30, |
|
||||
(in thousands) |
|
2023 |
|
2022 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net loss |
|
$ |
(6,014) |
|
$ |
(13,268) |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
30,634 |
|
|
34,863 |
|
Amortization of above and below market leases |
|
|
(30) |
|
|
(54) |
|
Amortization of other comprehensive income into interest expense |
|
|
(1,726) |
|
|
— |
|
Shares issued as compensation |
|
|
315 |
|
|
394 |
|
Loss on extinguishment of debt |
|
|
67 |
|
|
— |
|
Gain on consolidation of Sponsored REIT |
|
|
(394) |
|
|
— |
|
Impairment and loan loss reserve |
|
|
— |
|
|
1,140 |
|
Gain on sale of properties and impairment of asset held for sale, net |
|
|
(7,586) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Tenant rent receivables |
|
|
263 |
|
|
(673) |
|
Straight-line rents |
|
|
322 |
|
|
(2,904) |
|
Lease acquisition costs |
|
|
(824) |
|
|
(2,426) |
|
Prepaid expenses and other assets |
|
|
(267) |
|
|
(1,153) |
|
Accounts payable and accrued expenses |
|
|
(8,747) |
|
|
(18,268) |
|
Accrued compensation |
|
|
(1,358) |
|
|
(2,452) |
|
Tenant security deposits |
|
|
(44) |
|
|
(400) |
|
Payment of deferred leasing commissions |
|
|
(4,137) |
|
|
(5,033) |
|
Net cash provided by (used in) operating activities |
|
|
474 |
|
|
(10,234) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Property improvements, fixtures and equipment |
|
|
(18,369) |
|
|
(21,496) |
|
Consolidation of Sponsored REIT |
|
|
3,048 |
|
|
— |
|
Proceeds received from sales of properties |
|
|
28,098 |
|
|
— |
|
Net cash provided by (used in) investing activities |
|
|
12,777 |
|
|
(21,496) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Distributions to stockholders |
|
|
(2,065) |
|
|
(51,924) |
|
Proceeds received from termination of interest rate swap |
|
|
4,206 |
|
|
— |
|
Stock repurchases |
|
|
— |
|
|
(4,843) |
|
Borrowings under bank note payable |
|
|
62,000 |
|
|
60,000 |
|
Repayments of bank note payable |
|
|
(35,000) |
|
|
(5,000) |
|
Repayments of term loans payable |
|
|
(40,000) |
|
|
— |
|
Deferred financing costs |
|
|
(2,327) |
|
|
(2,561) |
|
Net cash used in financing activities |
|
|
(13,186) |
|
|
(4,328) |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
65 |
|
|
(36,058) |
|
Cash, cash equivalents and restricted cash, beginning of year |
|
|
6,632 |
|
|
40,751 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
6,697 |
|
$ |
4,693 |
|
-8-
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 |
|
2023 |
|
177,038 |
|
2.8% |
|
2024 |
|
622,040 |
|
9.9% |
|
2025 |
|
438,551 |
|
7.0% |
|
2026 |
|
617,649 |
|
9.9% |
|
2027 |
|
334,289 |
|
5.3% |
|
Thereafter (2) |
|
4,081,091 |
|
65.1% |
|
|
|
6,270,658 |
|
100.0% |
|
| (1) | Percentages are determined based upon total square footage. |
| (2) | Includes 1,674,276 square feet of vacancies at our owned and consolidated properties as of June 30, 2023. |
(dollars & square feet in 000's) |
|
As of June 30, 2023 |
|
|||||||||
|
|
|
|
|
|
|
% of |
|
Square |
|
% of |
|
State |
|
Properties |
|
Investment |
|
Portfolio |
|
Feet |
|
Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colorado |
|
4 |
|
$ |
457,647 |
|
42.3% |
|
2,140 |
|
34.1% |
|
Texas |
|
9 |
|
|
330,946 |
|
30.6% |
|
2,424 |
|
38.6% |
|
Georgia |
|
1 |
|
|
52,444 |
|
4.9% |
|
160 |
|
2.6% |
|
Minnesota |
|
3 |
|
|
119,425 |
|
11.0% |
|
758 |
|
12.1% |
|
Virginia |
|
1 |
|
|
31,821 |
|
2.9% |
|
298 |
|
4.8% |
|
Florida |
|
1 |
|
|
70,152 |
|
6.5% |
|
213 |
|
3.4% |
|
Indiana |
|
1 |
|
|
19,524 |
|
1.8% |
|
214 |
|
3.4% |
|
North Carolina (a) |
|
1 |
|
|
- |
|
0.0% |
|
64 |
|
1.0% |
|
Total |
|
21 |
|
$ |
1,081,959 |
|
100.0% |
|
6,271 |
|
100.0% |
|
(a) Property was classified as an asset held for sale as of June 30, 2023.
-9-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary Information
(Unaudited & Approximated)
Recurring Capital Expenditures
|
|
|
|
|
Year to |
|
||||
(in thousands) |
|
For the Three Months Ended |
|
Date |
|
|||||
|
|
31-Mar-23 |
|
30-Jun-23 |
|
30-Jun-23 |
|
|||
Tenant improvements |
|
$ |
3,047 |
|
$ |
4,381 |
|
$ |
7,428 |
|
Deferred leasing costs |
|
|
908 |
|
|
3,230 |
|
|
4,138 |
|
Non-investment capex |
|
|
2,967 |
|
|
2,042 |
|
|
5,009 |
|
|
|
$ |
6,922 |
|
$ |
9,653 |
|
$ |
16,575 |
|
(in thousands) |
|
For the Three Months Ended |
|
Year Ended |
|
|||||||||||
|
|
31-Mar-22 |
|
30-Jun-22 |
|
30-Sep-22 |
|
31-Dec-22 |
|
31-Dec-22 |
|
|||||
Tenant improvements |
|
$ |
1,877 |
|
$ |
5,453 |
|
$ |
6,813 |
|
$ |
7,508 |
|
$ |
21,651 |
|
Deferred leasing costs |
|
|
3,032 |
|
|
1,327 |
|
|
2,053 |
|
|
1,152 |
|
|
7,564 |
|
Non-investment capex |
|
|
5,065 |
|
|
6,736 |
|
|
9,289 |
|
|
9,074 |
|
|
30,164 |
|
|
|
$ |
9,974 |
|
$ |
13,516 |
|
$ |
18,155 |
|
$ |
17,734 |
|
$ |
59,379 |
|
Square foot & leased percentages |
|
June 30, |
|
December 31, |
|
|
|
2023 |
|
2022 |
|
Owned Properties: |
|
|
|
|
|
Number of properties (a) |
|
20 |
|
21 |
|
Square feet |
|
6,056,898 |
|
6,239,530 |
|
Leased percentage |
|
75.7% |
|
75.6% |
|
|
|
|
|
|
|
Consolidated Property - Single Asset REIT (SAR): |
|
|
|
|
|
Number of properties |
|
1 |
|
— |
|
Square feet |
|
213,760 |
|
— |
|
Leased percentage |
|
4.1% |
|
|
|
|
|
|
|
|
|
Total Owned and Consolidated Properties: |
|
|
|
|
|
Number of properties |
|
21 |
|
21 |
|
Square feet |
|
6,270,658 |
|
6,239,530 |
|
Leased percentage |
|
73.3% |
|
75.6% |
|
(a) Includes property that was classified as an asset held for sale as of June 30, 2023.
-10-
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-23 |
|
Leased (2) |
|
30-Jun-23 |
|
Leased (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
FOREST PARK (3) |
|
Charlotte, NC |
|
64,198 |
|
78.4% |
|
78.4% |
|
78.4% |
|
78.4% |
|
2 |
|
PARK TEN |
|
Houston, TX |
|
157,609 |
|
90.8% |
|
86.6% |
|
90.8% |
|
90.8% |
|
3 |
|
PARK TEN PHASE II |
|
Houston, TX |
|
156,746 |
|
95.0% |
|
95.0% |
|
95.0% |
|
95.0% |
|
4 |
|
GREENWOOD PLAZA |
|
Englewood, CO |
|
196,236 |
|
66.3% |
|
66.3% |
|
66.3% |
|
66.3% |
|
5 |
|
ADDISON |
|
Addison, TX |
|
289,333 |
|
83.0% |
|
83.0% |
|
83.0% |
|
83.0% |
|
6 |
|
COLLINS CROSSING |
|
Richardson, TX |
|
300,887 |
|
97.1% |
|
96.8% |
|
97.1% |
|
97.1% |
|
7 |
|
INNSBROOK |
|
Glen Allen, VA |
|
298,183 |
|
47.8% |
|
47.8% |
|
81.3% |
|
81.3% |
|
8 |
|
LIBERTY PLAZA |
|
Addison, TX |
|
217,841 |
|
72.9% |
|
72.9% |
|
71.6% |
|
71.8% |
|
9 |
|
BLUE LAGOON |
|
Miami, FL |
|
213,182 |
|
98.5% |
|
98.5% |
|
98.5% |
|
98.5% |
|
10 |
|
ELDRIDGE GREEN |
|
Houston, TX |
|
248,399 |
|
100.0% |
|
100.0% |
|
100.0% |
|
100.0% |
|
11 |
|
121 SOUTH EIGHTH ST |
|
Minneapolis, MN |
|
298,121 |
|
84.5% |
|
84.5% |
|
79.6% |
|
82.2% |
|
12 |
|
801 MARQUETTE AVE |
|
Minneapolis, MN |
|
129,691 |
|
91.8% |
|
91.8% |
|
91.8% |
|
91.8% |
|
13 |
|
LEGACY TENNYSON CTR |
|
Plano, TX |
|
209,461 |
|
49.0% |
|
49.0% |
|
62.5% |
|
53.5% |
|
14 |
|
ONE LEGACY |
|
Plano, TX |
|
214,110 |
|
69.3% |
|
69.3% |
|
73.8% |
|
73.8% |
|
15 |
|
WESTCHASE I & II |
|
Houston, TX |
|
629,025 |
|
59.0% |
|
60.3% |
|
58.7% |
|
58.7% |
|
16 |
|
1999 BROADWAY |
|
Denver, CO |
|
682,639 |
|
61.9% |
|
65.2% |
|
61.0% |
|
61.6% |
|
17 |
|
1001 17TH STREET |
|
Denver, CO |
|
648,861 |
|
70.8% |
|
70.3% |
|
71.0% |
|
71.0% |
|
18 |
|
PLAZA SEVEN |
|
Minneapolis, MN |
|
330,096 |
|
65.0% |
|
71.6% |
|
64.4% |
|
64.3% |
|
19 |
|
PERSHING PLAZA |
|
Atlanta, GA |
|
160,145 |
|
79.8% |
|
79.8% |
|
79.8% |
|
79.8% |
|
20 |
|
600 17TH STREET |
|
Denver, CO |
|
612,135 |
|
80.5% |
|
79.3% |
|
80.8% |
|
80.6% |
|
|
|
OWNED PORTFOLIO |
|
|
|
6,056,898 |
|
73.9% |
|
74.9% |
|
75.7% |
|
75.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21 |
|
MONUMENT CIRCLE (4) |
|
Charlotte, NC |
|
213,760 |
|
4.1% |
|
4.1% |
|
4.1% |
|
4.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OWNED & CONSOLIDATED PORTFOLIO |
|
|
|
6,270,658 |
|
71.5% |
|
72.5% |
|
73.3% |
|
73.2% |
|
| (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) | Property was classified as an asset held for sale as of June 30, 2023. |
| (4) | Consolidated property as of January 1, 2023, which was previously was a managed property. |
-11-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Largest 20 Tenants – FSP Owned and Consolidated Portfolio
(Unaudited & Estimated)
The following table includes the largest 20 tenants in FSP’s owned and consolidated portfolio based on total square feet:
As of June 30, 2023
|
|
|
|
|
|
% of |
|
|
|
Tenant |
|
Sq Ft |
|
Portfolio |
|
1 |
|
CITGO Petroleum Corporation |
|
248,399 |
|
4.0% |
|
2 |
|
EOG Resources, Inc. |
|
169,167 |
|
2.7% |
|
3 |
|
US Government |
|
168,573 |
|
2.7% |
|
4 |
|
Lennar Homes, LLC |
|
155,808 |
|
2.5% |
|
5 |
|
Kaiser Foundation Health Plan, Inc. |
|
120,979 |
|
1.9% |
|
6 |
|
Argo Data Resource Corporation |
|
114,200 |
|
1.8% |
|
7 |
|
Swift, Currie, McGhee & Hiers, LLP |
|
101,296 |
|
1.6% |
|
8 |
|
Commonwealth of Virginia |
|
100,010 |
|
1.6% |
|
9 |
|
Deluxe Corporation |
|
98,922 |
|
1.6% |
|
10 |
|
Ping Identity Corp. |
|
89,856 |
|
1.4% |
|
11 |
|
Permian Resources Operating, LLC |
|
67,856 |
|
1.1% |
|
12 |
|
Bread Financial Payments, Inc. |
|
67,274 |
|
1.1% |
|
13 |
|
PricewaterhouseCoopers LLP |
|
66,304 |
|
1.1% |
|
14 |
|
Hall and Evans LLC |
|
65,878 |
|
1.0% |
|
15 |
|
Cyxtera Management, Inc. |
|
61,826 |
|
1.0% |
|
16 |
|
Precision Drilling (US) Corporation |
|
59,569 |
|
0.9% |
|
17 |
|
EMC Corporation |
|
57,100 |
|
0.9% |
|
18 |
|
ID Software, LLC |
|
57,100 |
|
0.9% |
|
19 |
|
Olin Corporation |
|
54,080 |
|
0.9% |
|
20 |
|
Unique Vacations, Inc. |
|
53,119 |
|
0.8% |
|
|
|
Total |
|
1,977,316 |
|
31.5% |
|
-12-
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 income 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) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
||||
Net loss |
|
$ |
(8,420) |
|
$ |
(9,110) |
|
$ |
(6,014) |
|
$ |
(13,268) |
|
Gain on consolidation of Sponsored REIT |
|
|
— |
|
|
— |
|
|
(394) |
|
|
— |
|
Impairment and loan loss reserve |
|
|
— |
|
|
1,140 |
|
|
— |
|
|
1,140 |
|
Gain on sale of properties and impairment of asset held for sale, net |
|
|
806 |
|
|
— |
|
|
(7,586) |
|
|
— |
|
Depreciation & amortization |
|
|
14,633 |
|
|
18,141 |
|
|
29,342 |
|
|
33,802 |
|
NAREIT FFO |
|
|
7,019 |
|
|
10,171 |
|
|
15,348 |
|
|
21,674 |
|
Lease Acquisition costs |
|
|
91 |
|
|
86 |
|
|
169 |
|
|
165 |
|
Funds From Operations (FFO) |
|
$ |
7,110 |
|
$ |
10,257 |
|
$ |
15,517 |
|
$ |
21,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From Operations (FFO) |
|
$ |
7,110 |
|
$ |
10,257 |
|
$ |
15,517 |
|
$ |
21,839 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
— |
|
|
67 |
|
|
— |
|
Amortization of deferred financing costs |
|
|
672 |
|
|
481 |
|
|
1,261 |
|
|
1,007 |
|
Shares issued as compensation |
|
|
315 |
|
|
394 |
|
|
315 |
|
|
394 |
|
Straight-line rent |
|
|
653 |
|
|
(1,688) |
|
|
322 |
|
|
(2,904) |
|
Tenant improvements |
|
|
(4,381) |
|
|
(5,453) |
|
|
(7,428) |
|
|
(7,330) |
|
Leasing commissions |
|
|
(3,230) |
|
|
(1,327) |
|
|
(4,138) |
|
|
(4,359) |
|
Non-investment capex |
|
|
(2,042) |
|
|
(6,736) |
|
|
(5,009) |
|
|
(11,801) |
|
Adjusted Funds From Operations (AFFO) |
|
$ |
(903) |
|
$ |
(4,072) |
|
$ |
907 |
|
$ |
(3,154) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
(0.08) |
|
$ |
(0.09) |
|
$ |
(0.06) |
|
$ |
(0.13) |
|
FFO |
|
$ |
0.07 |
|
$ |
0.10 |
|
$ |
0.15 |
|
$ |
0.21 |
|
AFFO |
|
$ |
(0.01) |
|
$ |
(0.04) |
|
$ |
0.01 |
|
$ |
(0.03) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares (basic and diluted) |
|
|
103,330 |
|
|
103,193 |
|
|
103,283 |
|
|
103,441 |
|
-13-
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, (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.
-14-
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-23 |
|
31-Mar-23 |
|
(Dec) |
|
Change |
|
|||
Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East |
|
362 |
|
$ |
553 |
|
$ |
478 |
|
$ |
75 |
|
15.7 |
% |
MidWest |
|
758 |
|
|
1,718 |
|
|
2,239 |
|
|
(521) |
|
(23.3) |
% |
South |
|
2,797 |
|
|
8,128 |
|
|
7,933 |
|
|
195 |
|
2.5 |
% |
West |
|
2,140 |
|
|
6,412 |
|
|
6,422 |
|
|
(10) |
|
(0.2) |
% |
Property NOI* from Owned Properties |
|
6,057 |
|
|
16,811 |
|
|
17,072 |
|
|
(261) |
|
(1.5) |
% |
Disposition and Acquisition Properties (a) |
|
214 |
|
|
(240) |
|
|
668 |
|
|
(908) |
|
(5.1) |
% |
NOI* |
|
6,271 |
|
$ |
16,571 |
|
$ |
17,740 |
|
$ |
(1,169) |
|
(6.6) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sequential Same Store |
|
|
|
$ |
16,811 |
|
$ |
17,072 |
|
$ |
(261) |
|
(1.5) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Nonrecurring |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items in NOI* (b) |
|
|
|
|
301 |
|
|
1,292 |
|
|
(991) |
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sequential Same Store |
|
|
|
$ |
16,510 |
|
$ |
15,780 |
|
$ |
730 |
|
4.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-15-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to |
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
|
|
|
||
Net income (loss) |
|
|
|
30-Jun-23 |
|
31-Mar-23 |
|
|
|
|
|
|
||
Net income (loss) |
|
|
|
$ |
(8,420) |
|
$ |
2,406 |
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
|
|
— |
|
|
67 |
|
|
|
|
|
|
Gain on consolidation of Sponsored REIT |
|
|
|
|
— |
|
|
(394) |
|
|
|
|
|
|
Impairment and loan loss reserve |
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
Gain on sale of properties, net |
|
|
|
|
806 |
|
|
(8,392) |
|
|
|
|
|
|
Management fee income |
|
|
|
|
(427) |
|
|
(374) |
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
14,645 |
|
|
14,727 |
|
|
|
|
|
|
Amortization of above/below market leases |
|
|
|
|
(12) |
|
|
(18) |
|
|
|
|
|
|
General and administrative |
|
|
|
|
3,768 |
|
|
3,817 |
|
|
|
|
|
|
Interest expense |
|
|
|
|
6,084 |
|
|
5,806 |
|
|
|
|
|
|
Interest income |
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
Non-property specific items, net |
|
|
|
|
127 |
|
|
95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI* |
|
|
|
$ |
16,571 |
|
$ |
17,740 |
|
|
|
|
|
|
| (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. |
*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 2023 |
|
Page |
|
|
Page |
||
|
|
|
|
|
||
Company Information |
3 |
|
Tenant Analysis and Leasing Activity |
|
||
|
|
|
Tenants by Industry |
17 |
||
Key Financial Data |
|
|
20 Largest Tenants with Annualized Rent and Remaining Term |
18-19 |
||
Financial Highlights |
4 |
|
Leasing Activity |
20 |
||
Income Statements |
5 |
|
Lease Expirations by Square Feet |
21 |
||
Balance Sheets |
6 |
|
Lease Expirations with Annualized Rent per Square Foot |
22 |
||
Cash Flow Statements |
7 |
|
Capital Expenditures |
23 |
||
Property Net Operating Income (NOI) |
8 |
|
|
|
||
|
|
|
|
|
||
Reconciliation |
|
|
Disposition Activity |
24 |
||
FFO & AFFO |
9 |
|
|
|
||
EBITDA |
10 |
|
Loan Portfolio of Secured Real Estate |
25 |
||
Property NOI |
11 |
|
|
|
||
|
|
|
Net Asset Value Components |
26 |
||
Debt Summary |
12 |
|
|
|
||
|
|
|
Appendix: Non-GAAP Financial Measures Definitions |
|
||
Capital Analysis |
13 |
|
FFO |
27 |
||
|
|
|
EBITDA and NOI |
28 |
||
Owned and Consolidated Portfolio Overview |
14-16 |
|
AFFO |
29 |
||
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 geopolitical events, increasing inflation, the COVID-19 pandemic and other potential infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, increasing 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, any inability to dispose of properties on acceptable terms and any delays in the timing of any such anticipated dispositions, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy and expenditures that cannot be anticipated such as utility rate and usage increases, delays in construction schedules, unanticipated increases in construction costs, unanticipated repairs, 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. |
|
|
||||
|
|
|
||||
|
|
1999 Broadway, Denver, CO |
||||
June 30, 2023| Page 2
|
Company Information |
Overview |
|
|
|
|
Snapshot (as of June 30, 2023) |
||
|
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 seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. 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 & Consolidated Properties |
21 |
||
|
|
|
|
Total Square Feet |
6.3 Million |
||
|
|
|
|
Trading Symbol |
FSP |
||
|
|
|
|
Exchange |
NYSE American |
||
|
|
|
|
Common Shares Outstanding |
103,430,353 |
||
|
|
|
|
|
|
||
Our Business |
|
|
|
|
Total Market Capitalization |
$0.6 Billion (1) |
|
As of June 30, 2023, the Company owned a portfolio of real estate consisting of 20 owned properties and one consolidated Sponsored REIT. 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 |
6.43% |
|
|
|
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|
||
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 |
|
|
|
|
600 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, 2023| Page 3
|
Summary of Financial Highlights |
(in thousands except per share amounts, SF & number of properties) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-Jun-23 |
|
31-Mar-23 |
|
31-Dec-22 |
|
30-Sep-22 |
|
30-Jun-22 |
|
|||||
Income Items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
36,257 |
|
$ |
37,767 |
|
$ |
40,745 |
|
$ |
40,366 |
|
$ |
40,831 |
|
Total revenue |
|
|
36,266 |
|
|
37,767 |
|
|
41,211 |
|
|
40,836 |
|
|
41,304 |
|
Net income (loss) |
|
|
(8,420) |
|
|
2,406 |
|
|
(2,884) |
|
|
17,246 |
|
|
(9,110) |
|
Adjusted EBITDA* |
|
|
13,178 |
|
|
14,269 |
|
|
16,112 |
|
|
15,250 |
|
|
15,891 |
|
FFO* |
|
|
7,110 |
|
|
8,407 |
|
|
10,463 |
|
|
9,041 |
|
|
10,257 |
|
AFFO* |
|
|
(903) |
|
|
1,810 |
|
|
(8,681) |
|
|
(9,735) |
|
|
(4,072) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
(0.08) |
|
$ |
0.02 |
|
$ |
(0.03) |
|
$ |
0.17 |
|
$ |
(0.09) |
|
FFO* |
|
$ |
0.07 |
|
$ |
0.08 |
|
$ |
0.10 |
|
$ |
0.09 |
|
$ |
0.10 |
|
AFFO* |
|
$ |
(0.01) |
|
$ |
0.02 |
|
$ |
(0.08) |
|
$ |
(0.09) |
|
$ |
(0.04) |
|
Weighted Average Shares (diluted) |
|
|
103,330 |
|
|
103,236 |
|
|
103,236 |
|
|
103,236 |
|
|
103,193 |
|
Closing share price |
|
$ |
1.45 |
|
$ |
1.57 |
|
$ |
2.73 |
|
$ |
2.63 |
|
$ |
4.17 |
|
Dividend declared |
|
$ |
0.01 |
|
$ |
0.01 |
|
$ |
0.01 |
|
$ |
0.01 |
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate, net |
|
$ |
1,081,959 |
|
$ |
1,095,915 |
|
$ |
1,103,248 |
|
$ |
1,118,983 |
|
$ |
1,186,157 |
|
Other assets, net |
|
|
117,350 |
|
|
117,767 |
|
|
138,418 |
|
|
143,087 |
|
|
145,562 |
|
Total assets, net |
|
|
1,199,309 |
|
|
1,213,682 |
|
|
1,241,666 |
|
|
1,262,070 |
|
|
1,331,719 |
|
Total liabilities, net |
|
|
440,215 |
|
|
444,387 |
|
|
472,930 |
|
|
489,509 |
|
|
577,687 |
|
Shareholders' equity |
|
|
759,094 |
|
|
769,295 |
|
|
768,736 |
|
|
772,561 |
|
|
754,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Capitalization and Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Market Capitalization (a) |
|
$ |
549,974 |
|
$ |
562,080 |
|
$ |
694,834 |
|
$ |
701,510 |
|
$ |
960,494 |
|
Total debt outstanding (excluding unamortized financing costs) |
|
$ |
400,000 |
|
$ |
400,000 |
|
$ |
413,000 |
|
$ |
430,000 |
|
$ |
530,000 |
|
Debt to Total Market Capitalization |
|
|
72.7% |
|
|
71.2% |
|
|
59.4% |
|
|
61.3% |
|
|
55.2% |
|
Net Debt to Adjusted EBITDA ratio* |
|
|
7.5 |
|
|
6.8 |
|
|
6.3 |
|
|
6.9 |
|
|
8.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned Properties Leasing Statistics (b): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned properties assets |
|
|
20 |
|
|
20 |
|
|
21 |
|
|
22 |
|
|
24 |
|
Owned properties total SF |
|
|
6,056,898 |
|
|
6,049,466 |
|
|
6,239,530 |
|
|
6,433,954 |
|
|
6,915,715 |
|
Owned properties % leased |
|
|
75.7% |
|
|
73.9% |
|
|
75.6% |
|
|
75.9% |
|
|
76.3% |
|
| (a) | Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt outstanding on that date. |
| (b) | Excludes one property known as Monument Circle that was consolidated in our financial statements effective January 1, 2023. Please see the note: Consolidation of Sponsored REIT on page 25 for more information. |
* |
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 27. |
June 30, 2023| 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-23 |
|
30-Jun-23 |
|
30-Jun-23 |
|
|
31-Mar-22 |
|
30-Jun-22 |
|
30-Sep-22 |
|
31-Dec-22 |
|
31-Dec-22 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
37,767 |
|
$ |
36,257 |
|
$ |
74,024 |
|
|
$ |
41,797 |
|
$ |
40,831 |
|
$ |
40,366 |
|
$ |
40,745 |
|
$ |
163,739 |
Related party revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees and interest income from loans |
|
|
— |
|
|
— |
|
|
— |
|
|
|
460 |
|
|
467 |
|
|
466 |
|
|
462 |
|
|
1,855 |
Other |
|
|
— |
|
|
9 |
|
|
9 |
|
|
|
7 |
|
|
6 |
|
|
4 |
|
|
4 |
|
|
21 |
Total revenue |
|
|
37,767 |
|
|
36,266 |
|
|
74,033 |
|
|
|
42,264 |
|
|
41,304 |
|
|
40,836 |
|
|
41,211 |
|
|
165,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate operating expenses |
|
|
12,690 |
|
|
12,140 |
|
|
24,830 |
|
|
|
12,834 |
|
|
12,344 |
|
|
13,369 |
|
|
14,273 |
|
|
52,820 |
Real estate taxes and insurance |
|
|
6,973 |
|
|
7,169 |
|
|
14,142 |
|
|
|
8,719 |
|
|
9,043 |
|
|
8,951 |
|
|
7,907 |
|
|
34,620 |
Depreciation and amortization |
|
|
14,727 |
|
|
14,645 |
|
|
29,372 |
|
|
|
15,670 |
|
|
18,186 |
|
|
15,148 |
|
|
14,804 |
|
|
63,808 |
General and administrative |
|
|
3,817 |
|
|
3,767 |
|
|
7,584 |
|
|
|
3,784 |
|
|
3,981 |
|
|
3,232 |
|
|
2,888 |
|
|
13,885 |
Interest |
|
|
5,806 |
|
|
6,084 |
|
|
11,890 |
|
|
|
5,366 |
|
|
5,664 |
|
|
6,110 |
|
|
5,668 |
|
|
22,808 |
Total expenses |
|
|
44,013 |
|
|
43,805 |
|
|
87,818 |
|
|
|
46,373 |
|
|
49,218 |
|
|
46,810 |
|
|
45,540 |
|
|
187,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
(67) |
|
|
— |
|
|
(67) |
|
|
|
— |
|
|
— |
|
|
(78) |
|
|
— |
|
|
(78) |
Gain on consolidation of Sponsored REIT |
|
|
394 |
|
|
— |
|
|
394 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Impairment and loan loss reserve |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
(1,140) |
|
|
(717) |
|
|
(2,380) |
|
|
(4,237) |
Gain on sale of properties and impairment of asset held for sale, net |
|
|
8,392 |
|
|
(806) |
|
|
7,586 |
|
|
|
— |
|
|
— |
|
|
24,077 |
|
|
3,862 |
|
|
27,939 |
Income (loss) before taxes on income |
|
|
2,473 |
|
|
(8,345) |
|
|
(5,872) |
|
|
|
(4,109) |
|
|
(9,054) |
|
|
17,308 |
|
|
(2,847) |
|
|
1,298 |
Tax expense on income |
|
|
67 |
|
|
75 |
|
|
142 |
|
|
|
49 |
|
|
56 |
|
|
62 |
|
|
37 |
|
|
204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
2,406 |
|
$ |
(8,420) |
|
$ |
(6,014) |
|
|
$ |
(4,158) |
|
$ |
(9,110) |
|
$ |
17,246 |
|
$ |
(2,884) |
|
$ |
1,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding, basic and diluted |
|
|
103,236 |
|
|
103,330 |
|
|
103,283 |
|
|
|
103,691 |
|
|
103,193 |
|
|
103,236 |
|
|
103,236 |
|
|
103,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share, basic and diluted |
|
$ |
0.02 |
|
$ |
(0.08) |
|
$ |
(0.06) |
|
|
$ |
(0.04) |
|
$ |
(0.09) |
|
$ |
0.17 |
|
$ |
(0.03) |
|
$ |
0.01 |
June 30, 2023| Page 5
|
Condensed Consolidated Balance Sheets (in thousands) |
|
|
March 31, |
|
June 30, |
|
|
March 31, |
|
June 30, |
|
September 30, |
|
December 31, |
|
||||||
|
|
2023 |
|
2023 |
|
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
130,147 |
|
$ |
128,588 |
|
|
$ |
146,844 |
|
$ |
146,844 |
|
$ |
131,556 |
|
$ |
126,645 |
|
Buildings and improvements |
|
|
1,367,629 |
|
|
1,362,939 |
|
|
|
1,465,312 |
|
|
1,477,913 |
|
|
1,397,303 |
|
|
1,388,869 |
|
Fixtures and equipment |
|
|
11,411 |
|
|
11,612 |
|
|
|
11,819 |
|
|
12,192 |
|
|
10,656 |
|
|
11,151 |
|
|
|
|
1,509,187 |
|
|
1,503,139 |
|
|
|
1,623,975 |
|
|
1,636,949 |
|
|
1,539,515 |
|
|
1,526,665 |
|
Less accumulated depreciation |
|
|
413,272 |
|
|
421,180 |
|
|
|
436,627 |
|
|
450,792 |
|
|
420,532 |
|
|
423,417 |
|
Real estate assets, net |
|
|
1,095,915 |
|
|
1,081,959 |
|
|
|
1,187,348 |
|
|
1,186,157 |
|
|
1,118,983 |
|
|
1,103,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired real estate leases, net |
|
|
9,620 |
|
|
8,828 |
|
|
|
13,453 |
|
|
12,373 |
|
|
11,177 |
|
|
10,186 |
|
Asset held for sale |
|
|
— |
|
|
8,860 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Cash, cash equivalents and restricted cash |
|
|
13,110 |
|
|
6,697 |
|
|
|
10,983 |
|
|
4,693 |
|
|
8,717 |
|
|
6,632 |
|
Tenant rent receivables, net |
|
|
3,306 |
|
|
1,938 |
|
|
|
2,041 |
|
|
2,627 |
|
|
1,309 |
|
|
2,201 |
|
Straight-line rent receivable, net |
|
|
51,703 |
|
|
50,267 |
|
|
|
51,309 |
|
|
54,354 |
|
|
50,885 |
|
|
52,739 |
|
Prepaid expenses and other assets |
|
|
6,125 |
|
|
5,648 |
|
|
|
7,403 |
|
|
6,863 |
|
|
6,961 |
|
|
6,676 |
|
Related party mortgage loan receivable, less allowance for credit loss |
|
|
— |
|
|
— |
|
|
|
24,000 |
|
|
22,860 |
|
|
22,143 |
|
|
19,763 |
|
Other assets: derivative asset |
|
|
— |
|
|
— |
|
|
|
— |
|
|
1,951 |
|
|
4,266 |
|
|
4,358 |
|
Office computers and furniture, net of accumulated depreciation |
|
|
145 |
|
|
127 |
|
|
|
204 |
|
|
187 |
|
|
170 |
|
|
154 |
|
Deferred leasing commissions, net |
|
|
33,758 |
|
|
34,985 |
|
|
|
40,379 |
|
|
39,654 |
|
|
37,459 |
|
|
35,709 |
|
Total assets |
|
$ |
1,213,682 |
|
$ |
1,199,309 |
|
|
$ |
1,337,120 |
|
$ |
1,331,719 |
|
$ |
1,262,070 |
|
$ |
1,241,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank note payable |
|
$ |
75,000 |
|
$ |
75,000 |
|
|
$ |
40,000 |
|
$ |
55,000 |
|
$ |
65,000 |
|
$ |
48,000 |
|
Term loan payable, net of unamortized financing costs |
|
|
124,365 |
|
|
124,471 |
|
|
|
274,402 |
|
|
274,518 |
|
|
164,692 |
|
|
164,750 |
|
Series A & Series B Senior Notes |
|
|
199,547 |
|
|
199,588 |
|
|
|
199,383 |
|
|
199,424 |
|
|
199,465 |
|
|
199,506 |
|
Accounts payable and accrued expenses |
|
|
37,720 |
|
|
32,501 |
|
|
|
44,700 |
|
|
39,315 |
|
|
50,371 |
|
|
50,366 |
|
Accrued compensation |
|
|
1,189 |
|
|
2,286 |
|
|
|
1,206 |
|
|
2,252 |
|
|
3,159 |
|
|
3,644 |
|
Tenant security deposits |
|
|
5,740 |
|
|
5,666 |
|
|
|
5,837 |
|
|
5,819 |
|
|
5,726 |
|
|
5,710 |
|
Lease liability |
|
|
655 |
|
|
550 |
|
|
|
1,061 |
|
|
962 |
|
|
862 |
|
|
759 |
|
Other liabilities: derivative liabilities |
|
|
— |
|
|
— |
|
|
|
195 |
|
|
— |
|
|
— |
|
|
— |
|
Acquired unfavorable real estate leases, net |
|
|
171 |
|
|
153 |
|
|
|
450 |
|
|
397 |
|
|
234 |
|
|
195 |
|
Total liabilities |
|
|
444,387 |
|
|
440,215 |
|
|
|
567,234 |
|
|
577,687 |
|
|
489,509 |
|
|
472,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Common stock |
|
|
10 |
|
|
10 |
|
|
|
10 |
|
|
10 |
|
|
10 |
|
|
10 |
|
Additional paid-in capital |
|
|
1,334,776 |
|
|
1,335,091 |
|
|
|
1,334,383 |
|
|
1,334,776 |
|
|
1,334,776 |
|
|
1,334,776 |
|
Accumulated other comprehensive (income) loss |
|
|
3,544 |
|
|
2,480 |
|
|
|
(195) |
|
|
1,951 |
|
|
4,266 |
|
|
4,358 |
|
Accumulated distributions in excess of accumulated earnings |
|
|
(569,035) |
|
|
(578,487) |
|
|
|
(564,312) |
|
|
(582,705) |
|
|
(566,491) |
|
|
(570,408) |
|
Total stockholders’ equity |
|
|
769,295 |
|
|
759,094 |
|
|
|
769,886 |
|
|
754,032 |
|
|
772,561 |
|
|
768,736 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,213,682 |
|
$ |
1,199,309 |
|
|
$ |
1,337,120 |
|
$ |
1,331,719 |
|
$ |
1,262,070 |
|
$ |
1,241,666 |
|
June 30, 2023| Page 6
|
Condensed Consolidated Statements of Cash Flows (in thousands) |
|
|
Six Months Ended June 30, |
||
|
|
|
|
|
|
|
2023 |
|
2022 |
Cash flows from operating activities: |
|
|
|
|
Net loss |
$ |
(6,014) |
$ |
(13,268) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
Depreciation and amortization expense |
|
30,634 |
|
34,863 |
Amortization of above and below market leases |
|
(30) |
|
(54) |
Amortization of other comprehensive income into interest expense |
|
(1,726) |
|
— |
Shares issued as compensation |
|
315 |
|
394 |
Loss on extinguishment of debt |
|
67 |
|
— |
Gain on consolidation of Sponsored REIT |
|
(394) |
|
— |
Impairment and loan loss reserve |
|
— |
|
1,140 |
Gain on sale of properties and impairment of asset held for sale, net |
|
(7,586) |
|
— |
Changes in operating assets and liabilities: |
|
|
|
|
Tenant rent receivables |
|
263 |
|
(673) |
Straight-line rents |
|
322 |
|
(2,904) |
Lease acquisition costs |
|
(824) |
|
(2,426) |
Prepaid expenses and other assets |
|
(267) |
|
(1,153) |
Accounts payable and accrued expenses |
|
(8,747) |
|
(18,268) |
Accrued compensation |
|
(1,358) |
|
(2,452) |
Tenant security deposits |
|
(44) |
|
(400) |
Payment of deferred leasing commissions |
|
(4,137) |
|
(5,033) |
Net cash provided by (used in) operating activities |
|
474 |
|
(10,234) |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Property improvements, fixtures and equipment |
|
(18,369) |
|
(21,496) |
Consolidation of Sponsored REIT |
|
3,048 |
|
— |
Proceeds received from sales of properties |
|
28,098 |
|
— |
Net cash provided by (used in) investing activities |
|
12,777 |
|
(21,496) |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Distributions to stockholders |
|
(2,065) |
|
(51,924) |
Stock repurchases |
|
— |
|
(4,843) |
Proceeds received from termination of interest rate swap |
|
4,206 |
|
— |
Borrowings under bank note payable |
|
62,000 |
|
60,000 |
Repayments of bank note payable |
|
(35,000) |
|
(5,000) |
Repayment of term loan payable |
|
(40,000) |
|
— |
Deferred financing costs |
|
(2,327) |
|
(2,561) |
Net cash used in financing activities |
|
(13,186) |
|
(4,328) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
65 |
|
(36,058) |
Cash, cash equivalents and restricted cash, beginning of period |
|
6,632 |
|
40,751 |
Cash, cash equivalents and restricted cash, end of period |
$ |
6,697 |
$ |
4,693 |
June 30, 2023| 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 |
|
Inc |
|
% |
|
|||||||||||
(in thousands) |
|
or RSF |
|
31-Mar-23 |
|
30-Jun-23 |
|
30-Jun-23 |
|
31-Mar-22 |
|
30-Jun-22 |
|
30-Jun-22 |
|
(Dec) |
|
Change |
|
|||||||
Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East |
|
362 |
|
$ |
478 |
|
$ |
553 |
|
$ |
1,031 |
|
$ |
497 |
|
$ |
474 |
|
$ |
971 |
|
$ |
60 |
|
6.2 |
% |
MidWest |
|
758 |
|
|
2,239 |
|
|
1,718 |
|
|
3,957 |
|
|
2,478 |
|
|
3,038 |
|
|
5,516 |
|
|
(1,559) |
|
(28.3) |
% |
South |
|
2,797 |
|
|
7,933 |
|
|
8,128 |
|
|
16,061 |
|
|
5,817 |
|
|
5,611 |
|
|
11,428 |
|
|
4,633 |
|
40.5 |
% |
West |
|
2,140 |
|
|
6,422 |
|
|
6,412 |
|
|
12,834 |
|
|
8,070 |
|
|
6,609 |
|
|
14,679 |
|
|
(1,845) |
|
(12.6) |
% |
Property NOI* from Owned Properties |
|
6,057 |
|
|
17,072 |
|
|
16,811 |
|
|
33,883 |
|
|
16,862 |
|
|
15,732 |
|
|
32,594 |
|
|
1,289 |
|
4.0 |
% |
Disposition and Acquisition Properties (a) |
|
214 |
|
|
668 |
|
|
(240) |
|
|
428 |
|
|
2,719 |
|
|
3,386 |
|
|
6,105 |
|
|
(5,677) |
|
(15.3) |
% |
Property NOI* |
|
6,271 |
|
$ |
17,740 |
|
$ |
16,571 |
|
$ |
34,311 |
|
$ |
19,581 |
|
$ |
19,118 |
|
$ |
38,699 |
|
$ |
(4,388) |
|
(11.3) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store |
|
|
|
$ |
17,072 |
|
$ |
16,811 |
|
$ |
33,883 |
|
$ |
16,862 |
|
$ |
15,732 |
|
$ |
32,594 |
|
$ |
1,289 |
|
4.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Nonrecurring |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items in NOI* (b) |
|
|
|
|
1,292 |
|
|
301 |
|
|
1,593 |
|
|
273 |
|
|
1,258 |
|
|
1,531 |
|
|
62 |
|
(0.0) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store |
|
|
|
$ |
15,780 |
|
$ |
16,510 |
|
$ |
32,290 |
|
$ |
16,589 |
|
$ |
14,474 |
|
$ |
31,063 |
|
$ |
1,227 |
|
4.0 |
% |
| (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 27. |
June 30, 2023| Page 8
|
FFO* & AFFO* Reconciliation (in thousands, except per share amounts) |
|
|
|
|
|
|
|
Six Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|||
|
|
Three Months Ended |
|
Ended |
|
|
Three Months Ended |
|
Ended |
|
||||||||||||||||
|
|
31-Mar-23 |
|
30-Jun-23 |
|
30-Jun-23 |
|
|
31-Mar-22 |
|
30-Jun-22 |
|
30-Sep-22 |
|
31-Dec-22 |
|
31-Dec-22 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
2,406 |
|
$ |
(8,420) |
|
$ |
(6,014) |
|
|
$ |
(4,158) |
|
$ |
(9,110) |
|
$ |
17,246 |
|
$ |
(2,884) |
|
$ |
1,094 |
|
Gain on consolidation of Sponsored REIT |
|
|
(394) |
|
|
— |
|
|
(394) |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Impairment and loan loss reserve |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
1,140 |
|
|
717 |
|
|
2,380 |
|
|
4,237 |
|
Gain on sale of properties and impairment of asset held for sale, net |
|
|
(8,392) |
|
|
806 |
|
|
(7,586) |
|
|
|
— |
|
|
— |
|
|
(24,077) |
|
|
(3,862) |
|
|
(27,939) |
|
Depreciation & amortization |
|
|
14,709 |
|
|
14,633 |
|
|
29,342 |
|
|
|
15,661 |
|
|
18,141 |
|
|
15,114 |
|
|
14,773 |
|
|
63,689 |
|
NAREIT FFO* |
|
|
8,329 |
|
|
7,019 |
|
|
15,348 |
|
|
|
11,503 |
|
|
10,171 |
|
|
9,000 |
|
|
10,407 |
|
|
41,081 |
|
Lease Acquisition costs |
|
|
78 |
|
|
91 |
|
|
169 |
|
|
|
79 |
|
|
86 |
|
|
41 |
|
|
56 |
|
|
262 |
|
Funds From Operations (FFO)* |
|
$ |
8,407 |
|
$ |
7,110 |
|
$ |
15,517 |
|
|
$ |
11,582 |
|
$ |
10,257 |
|
$ |
9,041 |
|
$ |
10,463 |
|
$ |
41,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Funds From Operations (AFFO)* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds From Operations (FFO)* |
|
$ |
8,407 |
|
$ |
7,110 |
|
$ |
15,517 |
|
|
$ |
11,582 |
|
$ |
10,257 |
|
$ |
9,041 |
|
$ |
10,463 |
|
$ |
41,343 |
|
Loss on extinguishment of debt |
|
|
67 |
|
|
— |
|
|
67 |
|
|
|
— |
|
|
— |
|
|
78 |
|
|
— |
|
|
78 |
|
Amortization of deferred financing costs |
|
|
589 |
|
|
672 |
|
|
1,261 |
|
|
|
526 |
|
|
481 |
|
|
461 |
|
|
421 |
|
|
1,889 |
|
Shares issued as compensation |
|
|
— |
|
|
315 |
|
|
315 |
|
|
|
— |
|
|
394 |
|
|
— |
|
|
— |
|
|
394 |
|
Straight-line rent |
|
|
(331) |
|
|
653 |
|
|
322 |
|
|
|
(1,216) |
|
|
(1,688) |
|
|
(1,160) |
|
|
(1,831) |
|
|
(5,895) |
|
Tenant improvements |
|
|
(3,047) |
|
|
(4,381) |
|
|
(7,428) |
|
|
|
(1,877) |
|
|
(5,453) |
|
|
(6,813) |
|
|
(7,508) |
|
|
(21,651) |
|
Leasing commissions |
|
|
(908) |
|
|
(3,230) |
|
|
(4,138) |
|
|
|
(3,032) |
|
|
(1,327) |
|
|
(2,053) |
|
|
(1,152) |
|
|
(7,564) |
|
Non-investment capex |
|
|
(2,967) |
|
|
(2,042) |
|
|
(5,009) |
|
|
|
(5,065) |
|
|
(6,736) |
|
|
(9,289) |
|
|
(9,074) |
|
|
(30,164) |
|
Adjusted Funds From Operations (AFFO)* |
|
$ |
1,810 |
|
$ |
(903) |
|
$ |
907 |
|
|
$ |
918 |
|
$ |
(4,072) |
|
$ |
(9,735) |
|
$ |
(8,681) |
|
$ |
(21,570) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
0.02 |
|
$ |
(0.08) |
|
$ |
(0.06) |
|
|
$ |
(0.04) |
|
$ |
(0.09) |
|
$ |
0.17 |
|
$ |
(0.03) |
|
$ |
0.01 |
|
FFO* |
|
|
0.08 |
|
|
0.07 |
|
|
0.15 |
|
|
|
0.11 |
|
|
0.10 |
|
|
0.09 |
|
|
0.10 |
|
|
0.40 |
|
AFFO* |
|
|
0.02 |
|
|
(0.01) |
|
|
0.01 |
|
|
|
0.01 |
|
|
(0.04) |
|
|
(0.09) |
|
|
(0.08) |
|
|
(0.21) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares (basic and diluted) |
|
|
103,236 |
|
|
103,330 |
|
|
103,283 |
|
|
|
103,691 |
|
|
103,193 |
|
|
103,236 |
|
|
103,236 |
|
|
103,338 |
|
* |
See Appendix for Non-GAAP Financial Measures Definitions beginning on page 27. |
June 30, 2023| Page 9
|
EBITDA* & Adjusted EBITDA* Reconciliation (in thousands, except ratio amounts) |
|
|
|
|
Six Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
||||||
|
|
Three Months Ended |
|
Ended |
|
|
Three Months Ended |
|
Ended |
||||||||||||||||
|
|
31-Mar-23 |
|
30-Jun-23 |
|
30-Jun-23 |
|
|
31-Mar-22 |
|
30-Jun-22 |
|
30-Sep-22 |
|
31-Dec-22 |
|
31-Dec-22 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
2,406 |
|
$ |
(8,420) |
|
$ |
(6,014) |
|
|
$ |
(4,158) |
|
$ |
(9,110) |
|
$ |
17,246 |
|
$ |
(2,884) |
|
$ |
1,094 |
Interest expense |
|
|
5,806 |
|
|
6,084 |
|
|
11,890 |
|
|
|
5,366 |
|
|
5,664 |
|
|
6,110 |
|
|
5,668 |
|
|
22,808 |
Depreciation and amortization |
|
|
14,709 |
|
|
14,633 |
|
|
29,342 |
|
|
|
15,661 |
|
|
18,141 |
|
|
15,114 |
|
|
14,773 |
|
|
63,689 |
Income taxes |
|
|
67 |
|
|
75 |
|
|
142 |
|
|
|
49 |
|
|
56 |
|
|
62 |
|
|
37 |
|
|
204 |
EBITDA* |
|
$ |
22,988 |
|
$ |
12,372 |
|
$ |
35,360 |
|
|
$ |
16,918 |
|
$ |
14,751 |
|
$ |
38,532 |
|
$ |
17,594 |
|
$ |
87,795 |
Loss on extinguishment of debt |
|
|
67 |
|
|
— |
|
|
67 |
|
|
|
— |
|
|
— |
|
|
78 |
|
|
— |
|
|
78 |
Gain on consolidation of Sponsored REIT |
|
|
(394) |
|
|
— |
|
|
(394) |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Impairment and loan loss reserve |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
1,140 |
|
|
717 |
|
|
2,380 |
|
|
4,237 |
Gain on sale of properties and impairment of asset held for sale, net |
|
|
(8,392) |
|
|
806 |
|
|
(7,586) |
|
|
|
— |
|
|
— |
|
|
(24,077) |
|
|
(3,862) |
|
|
(27,939) |
Adjusted EBITDA* |
|
$ |
14,269 |
|
$ |
13,178 |
|
$ |
27,447 |
|
|
$ |
16,918 |
|
$ |
15,891 |
|
$ |
15,250 |
|
$ |
16,112 |
|
$ |
64,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
5,806 |
|
$ |
6,084 |
|
$ |
11,890 |
|
|
$ |
5,366 |
|
$ |
5,664 |
|
$ |
6,110 |
|
$ |
5,668 |
|
$ |
22,808 |
Scheduled principal payments |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Interest and scheduled principal payments |
|
$ |
5,806 |
|
$ |
6,084 |
|
$ |
11,890 |
|
|
$ |
5,366 |
|
$ |
5,664 |
|
$ |
6,110 |
|
$ |
5,668 |
|
$ |
22,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest coverage ratio |
|
|
2.46 |
|
|
2.17 |
|
|
2.31 |
|
|
|
3.15 |
|
|
2.81 |
|
|
2.50 |
|
|
2.84 |
|
|
2.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt service coverage ratio |
|
|
2.46 |
|
|
2.17 |
|
|
2.31 |
|
|
|
3.15 |
|
|
2.81 |
|
|
2.50 |
|
|
2.84 |
|
|
2.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt excluding unamortized financing costs |
|
$ |
400,000 |
|
$ |
400,000 |
|
|
|
|
|
$ |
515,000 |
|
$ |
530,000 |
|
$ |
430,000 |
|
$ |
413,000 |
|
|
|
Cash, cash equivalents and restricted cash |
|
|
13,110 |
|
|
6,697 |
|
|
|
|
|
|
10,983 |
|
|
4,693 |
|
|
8,717 |
|
|
6,632 |
|
|
|
Net Debt (Debt less Cash, cash equivalents and restricted cash) |
|
$ |
386,890 |
|
$ |
393,303 |
|
|
|
|
|
$ |
504,017 |
|
$ |
525,307 |
|
$ |
421,283 |
|
$ |
406,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA* |
|
$ |
14,269 |
|
$ |
13,178 |
|
|
|
|
|
$ |
16,918 |
|
$ |
15,891 |
|
$ |
15,250 |
|
$ |
16,112 |
|
|
|
Annualized |
|
$ |
57,076 |
|
$ |
52,712 |
|
|
|
|
|
$ |
67,672 |
|
$ |
63,564 |
|
$ |
61,000 |
|
$ |
64,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt-to-Adjusted EBITDA ratio* |
|
|
6.8 |
|
|
7.5 |
|
|
|
|
|
|
7.4 |
|
|
8.3 |
|
|
6.9 |
|
|
6.3 |
|
|
|
* |
See Appendix for Non-GAAP Financial Measures Definitions beginning on page 27. |
June 30, 2023| Page 10
|
Reconciliation of Net Income (Loss) to Property NOI* (in thousands) |
|
|
|
|
|
|
|
|
Six Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
||
|
|
Three Months Ended |
|
Ended |
|
Three Months Ended |
|
Ended |
|
||||||||||||||||
|
|
31-Mar-23 |
|
30-Jun-23 |
|
30-Jun-23 |
|
31-Mar-22 |
|
30-Jun-22 |
|
30-Sep-22 |
|
31-Dec-22 |
|
31-Dec-22 |
|
||||||||
Net income (loss) |
|
$ |
2,406 |
|
$ |
(8,420) |
|
$ |
(6,014) |
|
$ |
(4,158) |
|
$ |
(9,110) |
|
$ |
17,246 |
|
$ |
(2,884) |
|
$ |
1,094 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
67 |
|
|
— |
|
|
67 |
|
|
— |
|
|
— |
|
|
78 |
|
|
— |
|
|
78 |
|
Gain on consolidation of Sponsored REIT |
|
|
(394) |
|
|
— |
|
|
(394) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Impairment and loan loss reserve |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,140 |
|
|
717 |
|
|
2,380 |
|
|
4,237 |
|
Gain on sale of properties and impairment of asset held for sale, net |
|
|
(8,392) |
|
|
806 |
|
|
(7,586) |
|
|
— |
|
|
— |
|
|
(24,077) |
|
|
(3,862) |
|
|
(27,939) |
|
Management fee income |
|
|
(374) |
|
|
(427) |
|
|
(801) |
|
|
(291) |
|
|
(267) |
|
|
(274) |
|
|
(295) |
|
|
(1,127) |
|
Depreciation and amortization |
|
|
14,727 |
|
|
14,645 |
|
|
29,372 |
|
|
15,670 |
|
|
18,185 |
|
|
15,148 |
|
|
14,805 |
|
|
63,808 |
|
Amortization of above/below market leases |
|
|
(18) |
|
|
(12) |
|
|
(30) |
|
|
(9) |
|
|
(45) |
|
|
(34) |
|
|
(30) |
|
|
(118) |
|
General and administrative |
|
|
3,817 |
|
|
3,768 |
|
|
7,585 |
|
|
3,784 |
|
|
3,981 |
|
|
3,233 |
|
|
2,888 |
|
|
13,886 |
|
Interest expense |
|
|
5,806 |
|
|
6,084 |
|
|
11,890 |
|
|
5,366 |
|
|
5,664 |
|
|
6,110 |
|
|
5,668 |
|
|
22,808 |
|
Interest income |
|
|
— |
|
|
— |
|
|
— |
|
|
(451) |
|
|
(455) |
|
|
(461) |
|
|
(460) |
|
|
(1,827) |
|
Non-property specific items, net |
|
|
95 |
|
|
127 |
|
|
222 |
|
|
(330) |
|
|
25 |
|
|
(18) |
|
|
5 |
|
|
(318) |
|
Property NOI* |
|
$ |
17,740 |
|
$ |
16,571 |
|
$ |
34,311 |
|
$ |
19,581 |
|
$ |
19,118 |
|
$ |
17,668 |
|
$ |
18,215 |
|
$ |
74,582 |
|
* |
See Appendix for Non-GAAP Financial Measures Definitions beginning on page 27. |
June 30, 2023| Page 11
|
Debt Summary (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum |
|
Amount |
|
Interest |
|
Interest |
|
|
|
||||
|
|
Maturity |
|
Amount |
|
Drawn at |
|
Rate (a) |
|
Rate at |
|
Facility |
|
||||
|
|
Date |
|
of Loan |
|
30-Jun-23 |
|
Components |
|
30-Jun-23 |
|
Fee |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BofA Revolver |
|
1-Oct-24 |
|
$ |
150,000 |
|
$ |
75,000 |
|
SOFR |
+ |
3.00% |
|
8.23% |
|
0.35% |
|
BMO Term Loan Tranche B |
|
1-Oct-24 |
|
|
125,000 |
|
|
125,000 |
|
SOFR |
+ |
3.00% |
|
8.20% |
|
|
|
Series A Senior Notes |
|
20-Dec-24 |
|
|
116,000 |
|
|
116,000 |
|
|
|
|
|
4.49% |
|
|
|
Series B Senior Notes |
|
20-Dec-27 |
|
|
84,000 |
|
|
84,000 |
|
|
|
|
|
4.76% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
475,000 |
|
$ |
400,000 |
|
|
|
|
|
6.41% |
|
|
|
| ● | The table above is a summary of our debt as of June 30, 2023. Additional information on our debt can be found in our Annual Report on Form 10-K for the year ended December 31, 2022, as updated in our Quarterly Reports on Form 10-Q, on file with the U.S. Securities and Exchange Commission. |
| ● | On February 8, 2023, we terminated all remaining interest rate swaps applicable to the BMO Term Loan and, on February 10, 2023, we received an aggregate of approximately $4.3 million as a result of such terminations. |
| ● | On February 10, 2023, we entered into an amendment to the credit agreement evidencing our $165 million BMO Term Loan. On February 10, 2023, as part of the amendment to the BMO Term Loan, we repaid a $40 million portion of the BMO Term Loan, so that $125 million remains outstanding under the BMO Term Loan. On or before April 1, 2024, we are required to repay an additional $25 million of the BMO Term Loan. The amendment, among other items, extended the maturity date from January 31, 2024 to October 1, 2024, changed the interest rate from a number of basis points over LIBOR depending on our credit rating to 300 basis points over SOFR, and made certain changes to conditions and covenants. |
| ● | On February 10, 2023, we entered into an amendment to the credit agreement evidencing our BofA Revolver. The amendment, among other items, extended the maturity date from January 12, 2024 to October 1, 2024, reduced availability from $237.5 million to $150 million, with further reductions to $125 million effective October 1, 2023 and to $100 million effective April 1, 2024, changed the interest rate from a number of basis points over SOFR depending on our credit rating to 300 basis points over SOFR, and made certain changes to conditions and covenants. |
| ● | As of June 30, 2023, the BofA Revolver was subject to a 35 basis point facility fee on the unused portion of the facility. |
| ● | We incurred financing costs, some of which are deferred and amortized into interest expense during the terms of the loans we execute. |
| (a) | Interest rates exclude amortization of deferred financing costs and facility fees. |
June 30, 2023| Page 12
|
Capital Analysis (in thousands, except per share amounts) |
|
|
31-Mar-23 |
|
30-Jun-23 |
|
|
31-Mar-22 |
|
30-Jun-22 |
|
30-Sep-22 |
|
31-Dec-22 |
|
||||||
Market Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Outstanding |
|
|
103,236 |
|
|
103,430 |
|
|
|
103,152 |
|
|
103,236 |
|
|
103,236 |
|
|
103,236 |
|
Closing market price per share |
|
$ |
1.57 |
|
$ |
1.45 |
|
|
$ |
5.90 |
|
$ |
4.17 |
|
$ |
2.63 |
|
$ |
2.73 |
|
Market capitalization |
|
$ |
162,080 |
|
$ |
149,974 |
|
|
$ |
608,596 |
|
$ |
430,494 |
|
$ |
271,510 |
|
$ |
281,834 |
|
Total debt outstanding excluding unamortized financing costs |
|
|
400,000 |
|
|
400,000 |
|
|
|
515,000 |
|
|
530,000 |
|
|
430,000 |
|
|
413,000 |
|
Total Market Capitalization |
|
$ |
562,080 |
|
$ |
549,974 |
|
|
$ |
1,123,596 |
|
$ |
960,494 |
|
$ |
701,510 |
|
$ |
694,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends declared for the quarter |
|
$ |
1,033 |
|
$ |
1,032 |
|
|
$ |
9,360 |
|
$ |
9,284 |
|
$ |
1,032 |
|
$ |
1,032 |
|
Common dividend declared per share |
|
$ |
0.01 |
|
$ |
0.01 |
|
|
$ |
0.09 |
|
$ |
0.09 |
|
$ |
0.01 |
|
$ |
0.01 |
|
Declared dividend as a % of Net income (loss) per share |
|
|
43% |
|
|
(12)% |
|
|
|
(224)% |
|
|
(102)% |
|
|
6% |
|
|
(36)% |
|
Declared dividend as a % of AFFO* per share |
|
|
57% |
|
|
(114)% |
|
|
|
1017% |
|
|
(228)% |
|
|
(11)% |
|
|
(12)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash |
|
$ |
13,110 |
|
$ |
6,697 |
|
|
$ |
10,983 |
|
$ |
4,693 |
|
$ |
8,717 |
|
$ |
6,632 |
|
Revolver: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross potential available under the BofA Revolver |
|
|
150,000 |
|
|
150,000 |
|
|
|
237,500 |
|
|
237,500 |
|
|
237,500 |
|
|
237,500 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding balance |
|
|
(75,000) |
|
|
(75,000) |
|
|
|
(40,000) |
|
|
(55,000) |
|
|
(65,000) |
|
|
(48,000) |
|
Total Liquidity |
|
$ |
88,110 |
|
$ |
81,697 |
|
|
$ |
208,483 |
|
$ |
187,193 |
|
$ |
181,217 |
|
$ |
196,132 |
|
* |
See page 9 for a reconciliation of Net Income (Loss) to AFFO and the Appendix for Non-GAAP Financial Measures Definitions beginning on page 27. |
June 30, 2023| Page 13
|
Owned & Consolidated Portfolio Overview |
|
|
As of the Quarter Ended |
|
||||||||
|
|
30-Jun-23 |
|
31-Mar-23 |
|
31-Dec-22 |
|
30-Sep-22 |
|
30-Jun-22 |
|
Total Owned Properties: |
|
|
|
|
|
|
|
|
|
|
|
Number of properties (a) |
|
20 |
|
20 |
|
21 |
|
22 |
|
24 |
|
Square feet |
|
6,056,898 |
|
6,049,466 |
|
6,239,530 |
|
6,433,954 |
|
6,915,715 |
|
Leased percentage |
|
75.7% |
|
73.9% |
|
75.6% |
|
75.9% |
|
76.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Property - Single Asset REIT (SAR): |
|
|
|
|
|
|
|
|
|
|
|
Number of properties |
|
1 |
|
1 |
|
— |
|
— |
|
— |
|
Square feet |
|
213,760 |
|
213,760 |
|
— |
|
— |
|
— |
|
Leased percentage |
|
4.1% |
|
4.1% |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Owned and Consolidated Properties: |
|
|
|
|
|
|
|
|
|
|
|
Number of properties |
|
21 |
|
21 |
|
21 |
|
22 |
|
24 |
|
Square feet |
|
6,270,658 |
|
6,263,226 |
|
6,239,530 |
|
6,433,954 |
|
6,915,715 |
|
Leased percentage |
|
73.3% |
|
71.5% |
|
75.6% |
|
75.9% |
|
76.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Includes a property that was classified as an asset held for sale as of June 30, 2023. |
June 30, 2023| Page 14
|
Owned & Consolidated 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midwest Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richmond, VA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minneapolis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Innsbrook |
|
Glen Allen |
|
VA |
|
298,183 |
|
81.3% |
|
47.8% |
|
$ |
18.84 |
|
|
121 South 8th Street |
|
Minneapolis |
|
MN |
|
298,121 |
|
79.6% |
|
83.4% |
|
$ |
24.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
801 Marquette Ave |
|
Minneapolis |
|
MN |
|
129,691 |
|
91.8% |
|
91.8% |
|
|
24.14 |
|
Charlotte, NC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plaza Seven |
|
Minneapolis |
|
MN |
|
330,096 |
|
64.4% |
|
67.8% |
|
|
30.50 |
|
Forest Park (d) |
|
Charlotte |
|
NC |
|
64,198 |
|
78.4% |
|
78.4% |
|
|
23.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indianapolis, IN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monument Circle (c) |
|
Indianapolis |
|
IN |
|
213,760 |
|
4.1% |
|
4.1% |
|
|
31.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Region Total |
|
|
|
|
|
362,381 |
|
80.8% |
|
53.2% |
|
$ |
20.05 |
|
|
Midwest Region Total |
|
|
|
|
|
971,668 |
|
59.5% |
|
61.8% |
|
$ |
26.97 |
|
| (a) | Weighted Occupied Percentage for the six months ended June 30, 2023. |
| (b) | Weighted Average GAAP Rent per Occupied Square Foot. |
| (c) | Consolidated as of January 1, 2023, property held by Single Asset REIT (SAR). |
| (d) | Property was classified as an asset held for sale as of June 30, 2023. |
June 30, 2023| Page 15
|
Owned & Consolidated 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dallas-Fort Worth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denver |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Tennyson Center |
|
Plano |
|
TX |
|
209,461 |
|
62.5% |
|
49.0% |
|
$ |
30.09 |
|
|
1999 Broadway |
|
Denver |
|
CO |
|
682,639 |
|
61.0% |
|
63.2% |
|
$ |
34.35 |
|
One Legacy Circle |
|
Plano |
|
TX |
|
214,110 |
|
73.8% |
|
64.8% |
|
|
38.34 |
|
|
Greenwood Plaza |
|
Englewood |
|
CO |
|
196,236 |
|
66.3% |
|
66.3% |
|
|
27.80 |
|
Addison Circle |
|
Addison |
|
TX |
|
289,333 |
|
83.0% |
|
83.0% |
|
|
35.25 |
|
|
1001 17th Street |
|
Denver |
|
CO |
|
648,861 |
|
71.0% |
|
69.9% |
|
|
38.12 |
|
Collins Crossing |
|
Richardson |
|
TX |
|
300,887 |
|
97.1% |
|
96.4% |
|
|
26.54 |
|
|
600 17th Street |
|
Denver |
|
CO |
|
612,135 |
|
80.8% |
|
77.7% |
|
|
34.74 |
|
Liberty Plaza |
|
Addison |
|
TX |
|
217,841 |
|
71.6% |
|
72.4% |
|
|
24.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region Total |
|
|
|
|
|
2,139,871 |
|
70.1% |
|
69.6% |
|
$ |
35.05 |
|
Houston |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Park Ten |
|
Houston |
|
TX |
|
157,609 |
|
90.8% |
|
75.1% |
|
|
28.81 |
|
|
Total Owned & Consolidated Properties |
|
|
|
|
|
6,270,658 |
|
73.3% |
|
69.9% |
|
$ |
31.21 |
|
Eldridge Green |
|
Houston |
|
TX |
|
248,399 |
|
100.0% |
|
100.0% |
|
|
26.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Park Ten Phase II |
|
Houston |
|
TX |
|
156,746 |
|
95.0% |
|
95.0% |
|
|
29.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westchase I & II |
|
Houston |
|
TX |
|
629,025 |
|
58.7% |
|
58.5% |
|
|
26.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miami-Ft. Lauderdale-West Palm Beach |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blue Lagoon Drive |
|
Miami |
|
FL |
|
213,182 |
|
98.5% |
|
73.6% |
|
|
43.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atlanta |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pershing Plaza |
|
Atlanta |
|
GA |
|
160,145 |
|
79.8% |
|
79.8% |
|
|
38.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Region Total |
|
|
|
|
|
2,796,738 |
|
79.6% |
|
75.0% |
|
$ |
30.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Weighted Occupied Percentage for the six months ended ended June 30, 2023. |
| (b) | Weighted Average GAAP Rent per Occupied Square Foot. |
June 30, 2023| Page 16
|
Tenants by Industry (Owned and Consolidated Properties by Square Feet) |
June 30, 2023| Page 17
|
20 Largest Tenants with Annualized Rent and Remaining Term (Owned and Consolidated 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 |
|
117 |
|
248,399 |
|
4.0% |
|
$ |
7,064,468 |
|
5.0% |
|
2 |
|
EOG Resources, Inc. |
|
1 |
|
42 |
|
169,167 |
|
2.7% |
|
|
6,237,187 |
|
4.4% |
|
3 |
|
US Government (b) |
|
2 |
|
31, 91 |
|
168,573 |
|
2.7% |
|
|
6,416,990 |
|
4.5% |
|
4 |
|
Lennar Homes, LLC |
|
1 |
|
165 |
|
155,808 |
|
2.5% |
|
|
6,450,451 |
|
4.6% |
|
5 |
|
Kaiser Foundation Health Plan, Inc. |
|
1 |
|
71 |
|
120,979 |
|
1.9% |
|
|
4,029,672 |
|
2.9% |
|
6 |
|
Argo Data Resource Corporation (c) |
|
1 |
|
2, 86 |
|
114,200 |
|
1.8% |
|
|
3,444,272 |
|
2.4% |
|
7 |
|
Swift, Currie, McGhee & Hiers, LLP |
|
1 |
|
123 |
|
101,296 |
|
1.6% |
|
|
4,111,908 |
|
2.9% |
|
8 |
|
Commonwealth of Virginia (d) |
|
1 |
|
126 |
|
100,010 |
|
1.6% |
|
|
— |
|
0.0% |
|
9 |
|
Deluxe Corporation |
|
1 |
|
169 |
|
98,922 |
|
1.6% |
|
|
2,955,910 |
|
2.1% |
|
10 |
|
Ping Identity Corp. |
|
1 |
|
36 |
|
89,856 |
|
1.4% |
|
|
3,673,313 |
|
2.6% |
|
11 |
|
Permian Resources Operating, LLC |
|
1 |
|
100 |
|
67,856 |
|
1.1% |
|
|
2,876,416 |
|
2.0% |
|
12 |
|
Bread Financial Payments, Inc. |
|
1 |
|
36 |
|
67,274 |
|
1.1% |
|
|
2,828,872 |
|
2.0% |
|
13 |
|
PricewaterhouseCoopers LLP (e) |
|
1 |
|
67 |
|
66,304 |
|
1.1% |
|
|
2,323,323 |
|
1.7% |
|
14 |
|
Hall and Evans LLC |
|
1 |
|
74 |
|
65,878 |
|
1.0% |
|
|
2,516,081 |
|
1.8% |
|
15 |
|
Cyxtera Management, Inc. |
|
1 |
|
79 |
|
61,826 |
|
1.0% |
|
|
2,404,413 |
|
1.7% |
|
16 |
|
Precision Drilling (US) Corporation |
|
1 |
|
59 |
|
59,569 |
|
0.9% |
|
|
2,059,896 |
|
1.5% |
|
17 |
|
EMC Corporation |
|
1 |
|
15 |
|
57,100 |
|
0.9% |
|
|
1,727,275 |
|
1.2% |
|
18 |
|
ID Software, LLC |
|
1 |
|
71 |
|
57,100 |
|
0.9% |
|
|
1,715,855 |
|
1.2% |
|
19 |
|
Olin Corporation |
|
1 |
|
81 |
|
54,080 |
|
0.9% |
|
|
1,711,632 |
|
1.2% |
|
20 |
|
Unique Vacations, Inc. (f) |
|
1 |
|
131 |
|
53,119 |
|
0.8% |
|
|
— |
|
0.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
1,977,316 |
|
31.5% |
|
$ |
64,547,934 |
|
45.7% |
|
Footnotes on next page
June 30, 2023| Page 18
|
20 Largest Tenants with Annualized Rent and Remaining Term (Owned and Consolidated Properties) |
Footnotes:
(a) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at June 30, 2023 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.
(b) Includes 43,573 square feet expiring in 2026. The remaining 125,000 square feet expire in 2031.
(c) Includes 28,550 square feet expiring in 2023. The remaining 85,650 square feet expire in 2030.
(d) Lease with the Department of General Services commences December 1, 2023 and rent commnces on June 1, 2024.
(e) Lease assigned to PwC US Group on July 1, 2023.
(f) Lease commences on July 1, 2023 and rent commences on June 1, 2024.
June 30, 2023| Page 19
|
Leasing Activity (Owned and Consolidated Properties) |
|
|
|
|
|
|
Year |
|
Year |
|
||||
|
|
Six Months Ended |
|
Ended |
|
Ended |
|
||||||
Leasing Activity |
|
|
30-Jun-23 |
|
|
30-Jun-22 |
|
|
31-Dec-22 |
|
|
31-Dec-21 |
|
(in Square Feet - SF) |
|
|
|
|
|
|
|
|
|
|
|
|
|
New leasing |
|
|
176,000 |
|
|
171,000 |
|
|
275,000 |
|
|
370,000 |
|
Renewals and expansions |
|
|
269,000 |
|
|
105,000 |
|
|
160,000 |
|
|
665,000 |
|
|
|
|
445,000 |
|
|
276,000 |
|
|
435,000 |
|
|
1,035,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information per SF |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Activity on a year-to-date basis) |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Rents on leasing |
|
$ |
29.14 |
|
$ |
33.58 |
|
$ |
33.27 |
|
|
30.86 |
|
Weighted average lease term |
|
|
6.6 Years |
|
|
6.9 Years |
|
|
6.4 Years |
|
|
7.7 Years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase over average GAAP rents in prior year (a) |
|
|
7.2% |
|
|
4.7% |
|
|
10.6% |
|
|
2.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average free rent |
|
|
5 Months |
|
|
6 Months |
|
|
6 Months |
|
|
7 Months |
|
Tenant Improvements |
|
$ |
20.90 |
|
$ |
40.48 |
|
$ |
31.86 |
|
|
25.89 |
|
Leasing Costs |
|
$ |
10.27 |
|
$ |
13.72 |
|
$ |
11.80 |
|
|
11.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2023| Page 20
|
Lease Expirations by Square Feet (Owned and Consolidated Properties) |
June 30, 2023| Page 21
|
Lease Expirations with Annualized Rent per Square Foot (SF) (Owned and Consolidated Properties) |
|
|
|
|
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 |
|
||
December 31, |
|
Year (a) |
|
Leases (e) |
|
Leases (b) |
|
Leases |
|
Leases |
Total |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
18 |
(c) |
177,038 |
|
$ |
5,192,899 |
|
$ |
29.33 |
|
3.7% |
3.7% |
|
2024 |
|
47 |
|
622,040 |
|
|
19,715,809 |
|
|
31.70 |
|
14.0% |
17.7% |
|
2025 |
|
55 |
|
438,551 |
|
|
14,650,775 |
|
|
33.41 |
|
10.4% |
28.1% |
|
2026 |
|
44 |
|
617,649 |
|
|
21,660,048 |
|
|
35.07 |
|
15.3% |
43.4% |
|
2027 |
|
25 |
|
334,289 |
|
|
10,354,426 |
|
|
30.97 |
|
7.3% |
50.7% |
|
2028 |
|
21 |
|
274,932 |
|
|
8,129,320 |
|
|
29.57 |
|
5.8% |
56.5% |
|
2029 |
|
20 |
|
483,956 |
|
|
14,667,064 |
|
|
30.31 |
|
10.4% |
66.9% |
|
2030 |
|
11 |
|
292,715 |
|
|
10,033,361 |
|
|
34.28 |
|
7.1% |
74.0% |
|
2031 |
|
9 |
|
287,634 |
|
|
10,354,968 |
|
|
36.00 |
|
7.3% |
81.3% |
|
2032 |
|
1 |
|
4,240 |
|
|
28,683 |
|
|
6.76 |
|
0.0% |
81.3% |
|
2033 and thereafter |
|
52 |
|
1,063,338 |
(d) |
|
26,419,303 |
|
|
24.85 |
|
18.7% |
100.0% |
|
Leased total |
|
303 |
|
4,596,382 |
|
$ |
141,206,656 |
|
$ |
30.72 |
|
100.0% |
|
|
Owned property vacant SF |
|
|
|
1,469,231 |
|
|
|
|
|
|
|
|
|
|
Monument Circle vacant SF (e) |
|
|
|
205,045 |
|
|
|
|
|
|
|
|
|
|
Total Portfolio Square Footage |
|
|
|
6,270,658 |
|
|
|
|
|
|
|
|
|
|
| (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, 2023 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 66,666 square feet that are non-revenue producing building amenities. |
| (e) | Includes one property known as Monument Circle that was consolidated in our financial statements effective January 1, 2023. Please see the note: Consolidation of Sponsored REIT on page 25 for more information. |
June 30, 2023| Page 22
|
Capital Expenditures (Owned and Consolidated Properties) |
(in thousands) |
|
|
|
|
|
Six Months |
|||
|
|
For the Three Months Ended |
|
Ended |
|||||
|
|
31-Mar-23 |
|
30-Jun-23 |
|
30-Jun-23 |
|||
|
|
|
|
|
|
|
|
|
|
Tenant improvements |
|
$ |
3,047 |
|
$ |
4,381 |
|
$ |
7,428 |
Deferred leasing costs |
|
|
908 |
|
|
3,230 |
|
|
4,138 |
Non-investment capex |
|
|
2,967 |
|
|
2,042 |
|
|
5,009 |
Total Capital Expenditures |
|
$ |
6,922 |
|
$ |
9,653 |
|
$ |
16,575 |
|
|
For the Three Months Ended |
|
Year Ended |
|||||||||||
|
|
31-Mar-22 |
|
30-Jun-22 |
|
30-Sep-22 |
|
31-Dec-22 |
|
31-Dec-22 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant improvements |
|
$ |
1,877 |
|
$ |
5,453 |
|
$ |
6,813 |
|
$ |
7,508 |
|
$ |
21,651 |
Deferred leasing costs |
|
|
3,032 |
|
|
1,327 |
|
|
2,053 |
|
|
1,152 |
|
|
7,564 |
Non-investment capex |
|
|
5,065 |
|
|
6,736 |
|
|
9,289 |
|
|
9,074 |
|
|
30,164 |
Total Capital Expenditures |
|
$ |
9,974 |
|
$ |
13,516 |
|
$ |
18,155 |
|
$ |
17,734 |
|
$ |
59,379 |
First generation leasing and investment capital was $0.6 million for the six months ended June 30, 2023 and $9.0 million for the year ended December 31, 2022.
June 30, 2023| Page 23
|
Disposition Activity (in thousands except for Square Feet) |
Recent Dispositions: |
|
|
|
|
|
|
|
|
|
Gross Sale |
|
Gain (loss) |
|
||
|
|
City |
|
State |
|
Square Feet |
|
Date Sold |
|
Proceeds |
|
on Sale |
|
||
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northwest Point |
|
Elk Grove |
|
IL |
|
177,095 |
|
3/10/23 |
|
$ |
29,125 |
|
$ |
8,392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
3,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emperor Boulevard |
|
Durham |
|
NC |
|
259,531 |
|
12/23/20 |
|
$ |
89,700 |
|
$ |
41,928 |
|
June 30, 2023| Page 24
|
Loan Portfolio of Secured Real Estate (in thousands) |
(dollars in thousands, except footnotes) |
|
|
|
|
|
Maximum |
|
Amount |
|
Interest |
|
||
|
|
|
|
Maturity |
|
Amount |
|
Outstanding |
|
Rate at |
|
||
Sponsored REIT |
|
Location |
|
Date |
|
of Loan |
|
30-Jun-23 |
|
30-Jun-23 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loan secured by property |
|
|
|
|
|
|
|
|
|
|
|
|
|
FSP Monument Circle LLC (1) |
|
Indianapolis, IN |
|
30-Sep-23 |
|
$ |
24,000 |
|
$ |
24,000 |
|
7.51% |
|
|
|
|
|
|
|
$ |
24,000 |
|
$ |
24,000 |
|
|
|
| (1) | Includes an origination fee of $164,000 and an exit fee of $38,000 when repaid by the borrower. |
On June 26, 2023, the maturity date of this mortgage loan was extended to September 30, 2023. The mortgage loan is secured by the property and has been eliminated in consolidation, which is explained below.
Consolidation of Sponsored REIT
As of January 1, 2023, we consolidated Monument Circle into our financial statements. On October 29, 2021, we agreed to amend and restate our existing loan to Monument Circle that is secured by a mortgage on real estate owned by Monument Circle, which we refer to as the Sponsored REIT Loan. The amended and restated Sponsored REIT Loan extended the maturity date from December 6, 2022 to June 30, 2023 (subject to further extension to September 30, 2023), increased the aggregate principal amount of the loan from $21 million to $24 million, and included certain other modifications. On June 26, 2023, the maturity date was extended to September 30, 2023. In consideration of our agreement to amend and restate the Sponsored REIT Loan, we obtained from the stockholders of Monument Circle the right to vote their shares in favor of any sale of the property owned by Monument Circle any time on or after January 1, 2023. As a result of our obtaining this right to vote shares, GAAP variable interest entity (VIE) rules required us to consolidate Monument Circle as of January 1, 2023. A gain on consolidation of approximately $0.4 million was recognized in the three months ended March 31, 2023.
Additional information about the consolidation of Monument Circle can be found in Note 1, “Organization, Properties, Basis of Presentation, Financial Instruments, and Recent Accounting Standards – Variable Interest Entities (VIEs)” and Note 2, “Related Party Transactions and Investments in Non-Consolidated Entities - Management fees and interest income from loans”, in the Notes to Consolidated Financial Statements included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.
June 30, 2023| Page 25
|
Net Asset Value Components |
(in thousands except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-Jun-23 |
|
|
Assets: |
|
|
|
|
|
Other information: |
|
|
|
|
Total Market Capitalization Values |
|
|
|
|
|
Straight-line rent receivable |
|
$ |
50,267 |
|
|
Leased SF to be FFO producing |
|
|
|
Shares outstanding |
|
|
103,430.4 |
|
|
Asset held for sale |
|
|
8,860 |
|
|
during 2023 (in 000's) |
|
|
203 |
Closing price |
|
$ |
1.45 |
|
|
Cash, cash equivalents and restricted cash |
|
|
6,697 |
|
|
|
|
|
|
Market capitalization |
|
$ |
149,974 |
|
|
Tenant rent receivables |
|
|
1,938 |
|
|
Straight-line rental revenue current quarter |
|
$ |
(653) |
Debt |
|
|
400,000 |
|
|
Prepaid expenses |
|
|
3,040 |
|
|
|
|
|
|
Total Market Capitalization |
|
$ |
549,974 |
|
|
Office computers and furniture |
|
|
127 |
|
|
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred financing costs, net |
|
|
3,040 |
|
|
|
|
|
|
|
|
3 Months |
|
|
Other assets - Right-to-Use Asset |
|
|
509 |
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
$ |
74,478 |
|
|
|
|
|
|
|
NOI Components |
|
30-Jun-23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store NOI (1) |
|
$ |
16,811 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions (1) (2) |
|
|
— |
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
Property NOI (1) |
|
|
16,811 |
|
|
Debt (excluding contra for unamortized financing costs) |
|
$ |
400,000 |
|
|
Footnotes to the components |
|
|
|
Full quarter adjustment (3) |
|
|
— |
|
|
Accounts payable & accrued expenses |
|
|
34,787 |
|
|
(1) See pages 11 & 30 for definitions and reconciliations. |
|||
Stabilized portfolio |
|
$ |
16,811 |
|
|
Tenant security deposits |
|
|
5,666 |
|
|
|
|||
|
|
|
|
|
|
Other liabilities: lease liability |
|
|
550 |
|
|
(2) Includes NOI from acquisitions not in Same Store. |
|||
|
|
|
|
|
|
|
|
$ |
441,003 |
|
|
|
|||
Financial Statement Reconciliation: |
|
|
|
|
|
|
|
|
|
|
|
(3) Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary. |
|||
Rental Revenue |
|
$ |
36,257 |
|
|
|
|
|
|
|
|
|
|||
Rental operating expenses |
|
|
(12,140) |
|
|
|
|
|
|
|
|
(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 |
|
|
(7,169) |
|
|
|
|
|
|
|
|
|
|||
NOI from dispositions & acquisition properties |
|
|
240 |
|
|
|
|
|
|
|
|
(5) Management & other fees are eliminated in consolidation but included in Property NOI. |
|||
Taxes (4) |
|
|
(75) |
|
|
|
|
|
|
|
|
|
|||
Management & other fees (5) |
|
|
(302) |
|
|
|
|
|
|
|
|
|
|||
Property NOI (1) |
|
$ |
16,811 |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023| Page 26
|
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, 2023| Page 27
|
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, 2023| Page 28
|
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, (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, 2023| Page 29
|
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, 2023| Page 30
