franklin street properties corp. · 2020. 7. 31. · 0 franklin street properties corp. investor...

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Franklin Street Properties Corp.Investor Presentation – June, 2018

401 Edgewater Place ● Wakefield, MA 01880 (781) 557-1300 ● www.fspreit.com

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Forward-looking Statements and Other Legal DisclosuresThis presentation may contain forward-looking statements based on current judgments and current knowledge of management, which 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 arecautioned not to place undue reliance on forward-looking statements. Investors are cautioned that the Company's forward-looking statements involve risks anduncertainty, including without limitation, changes in the United States economy and the real estate industry and in performance of the financial markets; changes inenergy prices; competition in the leasing market; the demand for and market acceptance of the Company's properties for rental purposes; oversupply of officeproperties in the Company's geographic markets; the amount and growth of the Company's expenses; the Company's ability to remain in compliance with thecovenants under the Company's credit facilities and senior notes; future dividend levels of the Company; the Company’s ability to refinance existing indebtednessand/or to obtain new indebtedness; the Company’s ability to access the equity markets; tenant financial difficulties and general economic conditions, includinginterest rates and the effects of regulatory and fiscal uncertainty, as well as changes in market rental rates and economic conditions in the Company's geographicmarkets; the Company's ability to lease vacant space and the amount and/or timing of earnings derived therefrom; defaults or non-renewal of leases; the risksassociated with the ownership of real property, including risks related to natural disasters and actual or threatened terrorist attacks; an increase in interest rates;geographic concentration of the Company's properties; concentration by industry of the Company's tenants; the operating performance of the Company's assets; theCompany's dependence on key personnel; the outcome of claims and litigation involving or affecting the Company; compliance with environmental and otherregulations, including real estate and zoning laws; the Company's ability to maintain the Company's current credit ratings; and the Company's failure to maintain theCompany's status as a real estate investment trust (“REIT”), under the Internal Revenue Code of 1986, as amended. Readers are advised to refer to the “Risk Factors”section of the Company's latest Annual Report on Form 10-K, which the Company filed with the Securities and Exchange Commission (“SEC”) on February 13, 2018, asupdated by the Company from time to time in Quarterly Reports on Form 10-Q and other periodic reports the Company files with the SEC, for additional informationconcerning these risks and uncertainties. Although the Company believes the expectations reflected in the forward-looking statements are reasonable, the Companycannot guarantee future results, levels of activity, performance or achievements. The Company does not undertake to update or revise any forward-lookingstatements contained in this presentation, whether as a result of new information, future events or otherwise, except as required by law.

In considering any performance information contained herein, you should bear in mind that past or projected performance is not necessarily indicative of futureresults, and there can be no assurance that the Company will achieve comparable results or that illustrative returns, if any, will be met. Information in thispresentation is as of March 31, 2018 unless indicated otherwise, and the delivery of this presentation at any time shall under no circumstances create an implicationthat the information contained herein is correct as of any time after such date.

This presentation also contains market statistics and industry data that are subject to uncertainty and are not necessarily reflective of market conditions. Althoughthe Company believes that these statistics and data are reasonable, they have been derived from third party sources and have not been independently verified by theCompany. The Company makes no representation as to the accuracy of any third party data presented herein.

This presentation contains references to Funds From Operations (“FFO”) and to Adjusted Funds From Operations (“AFFO”). Such measurements are non-GAAP(Generally Accepted Accounting Principles) financial measures. Please refer to pages 20 through 23 for definitions and reconciliations of GAAP net income to FFO andAFFO.

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Corporate Overview

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Central Business District (CBD) and Infill Office Properties With Primary Focus on Sunbelt and Mountain West Markets of

Atlanta, Dallas, Denver, Houston & Minneapolis

____________________Source: Source: Public Company Filings and Disclosures(1) Excludes 801 Marquette Avenue, Minneapolis, MN, which is redeveloped and is classified as non-operating

Corporate Overview

Class A Office Portfolio

Value Creation Opportunities

Flexible Balance Sheet

• 34 Properties(1) • 88.5% leased(1) • Moody’s Baa3 Rating

• 9.8 Million RSF(1)• 500,000+ SF of potential

leasing for Q2 2018, including 801 Marquette

• 100% Unsecured Debt

• Disciplined core market focus• 1.1 Million SF of existing

vacancy presents upside potential(1)

• Lengthened debt maturities: 77% of debt is fixed rate

• Growth potential in core markets

• Potential of energy to be a catalyst

• Increased liquidity with $502 Million available under the revolver

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Corporate Information

20.1%

12.6%

26.7%

12.2%6.4%

Atlanta Dallas Denver Houston Minneapolis

Core Markets by Square Feet

Headquarters

401 Edgewater PlaceWakefield, MA 01880

Equity Market Capitalization $0.9bn

TickerNYSE American: FSP

Total Enterprise Value $2.0bn

Directly-Owned Properties (1)34

Leverage Ratio(2) 47.7%

Directly-Owned Square Feet (1)~9.8mm

Fixed Charge Coverage Ratio(2) 3.6x

Directly-Owned Percent Leased (1)88.5%

Unencumbered Leverage Ratio(2) 51.8%

Unsecured Debt Structure100%

Unsecured Interest Coverage(2) 3.7x

Corporate Moody's RatingBaa3

Tangible Net Worth(2) $840.2mm

____________________Source: Source: Public Company Filings and Disclosures(1) Excludes 801 Marquette Avenue, Minneapolis, MN, which is redeveloped and is classified as non-operating(2) Calculated in accordance with the financial covenants in the Company’s debt agreements

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(1)

Investment Highlights

Focused Strategy on Five High Growth Potential Markets

High Quality CBD and Infill Office Portfolio

Strong Amenity-Rich Submarkets

Diverse and Stable Tenant Roster

Flexible, Well-Positioned, 100% Unencumbered Balance Sheet

Experienced Cycle-Tested Management Team 999 Peachtree StreetAtlanta, GA622,000 RSF

____________________Source: Source: Public Company Filings and Disclosures

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____________________Source: Bureau of Labor Statistics as of April 2018(1) Seasonally adjusted employment numbers. Atlanta represents the Atlanta-Sandy Springs-Roswell area. Dallas represents the Dallas-Fort Worth-Arlington areas. Denver represents the Denver-Aurora-Lakewood area.

Houston represents the Houston-The Woodlands-Sugar Land area. Minneapolis represents the Minneapolis-St. Paul-Bloomington area.

Focused Strategy in Five Core Markets

Five Core Investment Principles:

✓

✓

✓

✓

✓

Invest in Geographic / Economic Diversification ― Spread of geographic and economic concentrations of properties / tenancy across regions and industries

Invest in Markets Where FSP Has Long-Term Knowledge / Experience ― Market understanding and history combined with deep local contacts

Invest in “Hub” Markets ― Strong transportation and communications infrastructure that facilitates flow of goods, services, and people

Invest in Cities / Markets with a Track-Record of Committed Investment into CBD and Urban-infill Infrastructure Improvements ― Expanding infrastructure investments into transportation (rail), housing, education, medical research / patient services, and cultural attractions

Global Long-Term Drivers are Identified that can Potentially Increase Employment Growth Over and Above Broader US Averages ― Markets / cities with dynamic and globally significant industry clusters offer the potential of long-term above average growth rates

10 Year Job Growth (1)

Two Ravinia DriveAtlanta, GA

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Portfolio Overview

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(1)

____________________Source: Public Company Filings and Disclosures(1) Excludes 801 Marquette Avenue, Minneapolis, MN, which is redeveloped and is classified as non-operating(2) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at the period end multiplied by 12. Tenant reimbursements generally include payment of real

estate taxes, operating expenses and common area maintenance and utility charges.

Portfolio Transformation

• FSP has assembled a focused, well-amenitized office portfolio in key Sunbelt and Mountain West markets

• FSP has substantially repositioned its portfolio around CBD and infill assets in five strong growth potential core markets

• Properties are close to transportation, infrastructure, amenities and/or centers of business

• Sustainable buildings help to attract quality tenants and enhance operating efficiency

• Directly-Owned Properties: 34(1)

• Directly-Owned Sq.Ft.: ~9.8M(1)

• Percent of Rentable Square Feet in Core Markets: 78%(1)

• Percent Leased: 88.5%(1)

% of Square Feet in Core Markets (1)

PwC PlazaMinneapolis, MN

Annualized Rent / Square Foot (2)

60%

12/31/12 3/31/18

78%$22.02

12/31/12 3/31/18

$28.78

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• Gross sales proceeds of $20.8M

Since 2014 ~$236 million in dispositions and loan repayments redeployed into four Class “A” infill acquisitions with upside potential in our core markets.






Portfolio Transformation

Centennial Technology Center Colorado Springs,

COSold in December

2014

Willow Bend Office Center

Plano, TXSold in February

2015

Eden Bluff Corporate Center I Eden Prairie, MN

Sold in March 2015

Park Seneca

Charlotte, NC

Sold in May 2015

Montague Center

San Jose, CASold in

December 2015

Lakeside Crossing IMaryland Heights,

MOSold in

April 2016

Pershing Park PlazaMidtown Atlanta, GA

Acquired in August 2016 160,000 RSF

Purchase Price - $45.5M

PwC PlazaDowntown Minneapolis, MN

Acquired in June 2016 325,796 RSF

Purchase Price $82M

Two RaviniaCentral Perimeter

Atlanta, GAAcquired in April 2015

442,130 RSFPurchase Price $78M

Federal WayFederal Way, WA

Sold in December 2016

HillviewMilpitas, CA

Sold in January 2017

East BaltimoreEast Baltimore, MD

Sold in October 2017

Dominion TowersDowntown Denver, CO

Acquired in December 2016613,527 RSF

Purchase Price - $154M




____________________Source: Public Company Filings and Disclosures

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$23.69

$25.61 $26.04$26.93

$27.92$28.87 $29.05

$10.00

$15.00

$20.00

$25.00

$30.00

2012 2013 2014 2015 2016 2017 Q1 2018

Weighted Average GAAP rent per occupied square foot

____________________Source: Public Company filings and disclosures as of December 31 for each year presented and as of March 31, 2018

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____________________Source: Public Company Filings and Disclosures(1) Excludes 801 Marquette Avenue, Minneapolis, MN which is redeveloped and is classified as non-operating(2) Represents Class 4 and 5 star properties per CoStar

High Quality Office PortfolioFSP Core Markets Comparison

FSP Owned Sq. Ft. (1) FSP % Leased (1) Class A Occupancy (2)

2.6M 89.2% 85.4%

2.0M 82.0% 86.5%

1.2M 76.5% 80.4%

1.2M 95.0% 82.9%

0.6M 82.0% 91.1%

Denver is recognized as a major center for commerce in the mountain-west region of the United States and has achieved significant growth in terms of both population and business. It is a major transportation and cultural center with meaningful infrastructure investments in light rail, highway / roads, and at Denver International Airport.

Atlanta is regarded as the economic capital of the Southeast and possesses a diversified economy with housing as a historically strong economic driver. As a major Sunbelt city, Atlanta has achieved significant population and business growth.

Houston is recognized as major center of business within the US Sunbelt region and as a major transportation hub. It is also regarded as the global energy capital of the world. Significant in-place infrastructure distinguishes Houston including the Houston Ship Channel / Port of Houston and the George Bush Intercontinental Airport.

Dallas is recognized as a significant center for business that is well positioned within the US and its Sunbelt region. It is regarded as major transportation hub that counts DFW International Airport, a strong highway system, and DART Rail among its assets. Dallas has a well-diversified economy that continues to be a leader in attracting both new residents and businesses.

Minneapolis is recognized as one of the best places for business in the United States. It has a diversified economy and committed investments into light rail expansion, sporting venues, and infill housing. Minneapolis maintains a reputation for high quality of life attributes and a strong sense of community.

Denver

Atlanta

Houston

Dallas

Minneapolis

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____________________Source: Public Company Filings and Disclosures(1) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at the period end multiplied by 12. Tenant reimbursements generally include payment of

real estate taxes, operating expenses and common area maintenance and utility charges.(a) Includes 180,444 square feet which expire in 2018. The remaining 70,060 square feet expire between 2019 and 2021.(b) Includes 38,293 square feet, which expire 3/31/19. The remaining 93,936 square feet expire 3/31/23.

Largest 20 Tenants by % of Leased Sq. Ft.

Diverse and Stable Tenant Roster

Remaining Aggregate % of AggregateTenant Number of Lease Term Leased % of Total Leased

Name Leases in Months Square Feet Square Feet Annualized Rent

1 Quintiles IMS Healthcare Incorporated 1 98 259,531 2.70% $ 9,168,715 3.70%2 US Government (a) 4 2, 17, 30, 34 250,520 2.60% 7,718,222 3.10%3 CITGO Petroleum Corporation 1 47 248,399 2.50% 8,385,950 3.40%4 Newfield Exploration Company 1 47 234,495 2.40% 9,164,598 3.70%5 Centene Management Company, LLC 3 63, 63, 63 216,879 2.20% 5,582,310 2.20%6 Burger King Corporation 1 6 212,619 2.20% 5,351,620 2.20%7 Eversheds Sutherland (US) LLP 1 97 179,868 1.80% 5,334,134 2.10%8 EOG Resources, Inc. 1 105 160,937 1.60% 5,268,843 2.10%9 T-Mobile South, LLC dba T-Mobile 1 11 151,792 1.60% 3,969,427 1.60%

10 Citicorp Credit Services, Inc. 1 113 146,260 1.50% 4,886,547 2.00%11 Petrobras America, Inc. 1 20 144,813 1.50% 5,372,562 2.20%12 Jones Day 1 32 140,342 1.40% 4,919,841 2.00%13 Argo Data Resource Corporation 1 65 140,246 1.40% 3,973,169 1.60%14 Vail Corp d/b/a Vail Resorts (b) 3 12, 60, 60 132,229 1.40% 4,028,722 1.60%15 SunTrust Bank 1 6 127,500 1.30% 4,623,150 1.90%16 Federal National Mortgage Association 1 6 123,144 1.30% 4,483,673 1.80%17 Kaiser Foundation Health Plan 1 74 120,979 1.20% 3,262,715 1.30%18 Giesecke & Devrient America 1 81 112,110 1.10% 2,071,793 0.80%19 Northrup Grumman Systems Corp. 1 21 111,469 1.10% 4,702,115 1.90%20 ADS Alliance Data Systems, Inc. 1 99 107,698 1.10% 3,872,654 1.60%

Total 3,321,830 34.00% $ 106,140,759 42.70%

Annualized Rent

(1)

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Future Portfolio Upside

Denver

• Near-term upside primarily in two CBD assets (Dominion Towers and 1999 Broadway)

• There is approximately 280,000 square feet of vacancy

____________________Source: Source: Public Company Filings and Disclosures

Atlanta

• Occupancy has dipped to 82% in FSP’s Atlanta portfolio


• Anticipating positive net absorption in second half of 2018 and 2019

Houston

• FFO from the Houston properties was approximately $6 million less in 2017 versus 2014

• Occupancy trending up in 2018 - Energy has been a head wind for a few years, but 2018 appears promising


Minneapolis

• 801 Marquette signed leases with first office tenant and a full service café in the Atrium


FSP’s portfolio has approximately 1.2 million square feet of total vacancy (includes 801 Marquette)

There is significant near-term upside in four of the five core markets

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Financial Overview

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____________________Source: Public Company Filings and Disclosures(1) Excludes 801 Marquette Avenue, Minneapolis, MN, which is redeveloped and is classified as non-operating(2) Represents GAAP book value of Total Assets plus real estate asset accumulated depreciation (3) 77% fixed-rate debt and 23% floating-rate debt as of March 31, 2018(4) Equity market capitalization reflects March 31, 2018 FSP closing stock price of $8.41

100% Unencumbered Portfolio Strategy

Unencumbered Pool Summary (1)

Fixed vs. Floating (3) FSP Current Capitalization (3)(4)

FSP Portfolio

# of Directly-Owned Properties 34

Directly-Owned Square Feet ~9.8M

Total Gross Assets (2) $2.4B

Debt as a percentage of Total Gross Assets 45%

380 InterlockenBroomfield, CO

Park TenHouston, TX

Greenwood PlazaEnglewood, CO

FSP utilizes an entirely unsecured debt structure, maintaining an entire portfolio of unencumbered properties

23%

77%

Floating Fixed

CommonEquity MarketCapitalization

$902M46%

Total Debt$1,068M54%

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Financial OverviewDividend Rationale:

• Fund capital expenditures for leasing

• AFFO payout ratio more in-line with peers

• Increased interest cost impact

DEBT MATURITY SCHEDULEAs of March 31, 2018

Short-Term Financial Plan:

• Extend Debt Maturities

• De-Lever via use of operating cash and disposition activity

• Improve Net Debt to EBITDA Ratio

• Leasing organically should increase EBITDA

____________________Source: Public Company filings and disclosures

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AppendixCollins CrossingRichardson, TX

Liberty PlazaAddison, TX

Legacy Tennyson CenterPlano, TX

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Owned Portfolio Overview

Percent Wtd Occupied GAAP Percent Wtd Occupied GAAP MSA / Property Name City State Square Feet Leased Percentage (a) Rent (b) MSA / Property Name City State Square Feet Leased Percentage (a) Rent (b) East Region Midwest Region Washington, D.C. Chicago Meadow Point Chantilly VA 138,537 100.0% 100.0% $ 27.13 Northwest Point Elk Grove Village IL 177,095 100.0% 100.0% $ 33.15 Stonecroft Chantilly VA 111,469 100.0% 100.0% $ 38.84 909 Davis Street Evanston IL 195,098 92.3% 78.2% $ 36.79 Loudoun Tech Center Dulles VA 136,658 95.7% 95.8% $ 18.64 Indianapolis Richmond River Crossing Indianapolis IN 205,059 96.1% 95.6% $ 23.77 Innsbrook Glen Allen VA 298,456 100.0% 100.0% $ 15.15 St. Louis Charlotte Timberlake Chesterfield MO 234,496 100.0% 100.0% $ 30.08 Forest Park Charlotte NC 62,212 100.0% 100.0% $ 13.63 Timberlake East Chesterfield MO 117,036 100.0% 100.0% $ 30.29 Raleigh-Durham Minneapolis Emperor Boulevard Durham NC 259,531 100.0% 100.0% $ 34.51 121 South 8th Street Minneapolis MN 293,422 77.7% 74.8% $ 21.69 Plaza Seven Minneapolis MN 326,483 85.9% 93.2% $ 34.61 East Region Total 1,006,863 99.4% 99.4% $ 24.83 Midwest Region Total 1,548,689 91.3% 90.5% $ 30.00

(a) Weighted Occupied Percentage for the three months ended March 31, 2018. (b) Weighted Average GAAP Rent per Occupied Square Foot.

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Owned Portfolio Overview

Percent Wtd Occupied GAAP Percent Wtd Occupied GAAP MSA / Property Name City State Square Feet Leased Percentage (a) Rent (b) MSA / Property Name City State Square Feet Leased Percentage (a) Rent (b) South Region West Region Dallas-Fort Worth Denver Legacy Tennyson Center Plano TX 202,600 86.4% 69.4% $ 19.13 380 Interlocken Broomfield CO 240,358 86.2% 86.2% $ 30.32 One Legacy Circle Plano TX 214,110 100.0% 100.0% $ 37.67 1999 Broadway Denver CO 676,379 80.6% 77.5% $ 30.21 Addison Circle Addison TX 288,794 100.0% 89.3% $ 33.50 Greenwood Plaza Englewood CO 196,236 100.0% 100.0% $ 25.13 Collins Crossing Richardson TX 300,887 100.0% 100.0% $ 24.32 390 Interlocken Broomfield CO 241,512 97.8% 97.8% $ 30.78 Liberty Plaza Addison TX 218,934 84.5% 88.6% $ 22.22 1001 17th Street Denver CO 655,413 96.8% 92.8% $ 35.26 600 17th Street Denver CO 598,626 84.6% 85.1% $ 32.63 Houston West Region Total 2,608,524 89.2% 87.4% $ 31.73 Park Ten Houston TX 157,460 75.8% 68.6% $ 29.13 Eldridge Green Houston TX 248,399 100.0% 100.0% $ 30.51 Total Owned 9,760,657 88.5% 87.1% $ 29.05 Park Ten Phase II Houston TX 156,746 1.4% 1.4% $ 2.80 Westchase I & II Houston TX 629,025 86.0% 83.4% $ 28.65 Miami-Ft. Lauderdale-West Palm Beach Blue Lagoon Drive Miami FL 212,619 100.0% 100.0% $ 22.49 Atlanta One Overton Park Atlanta GA 387,267 61.1% 61.1% $ 23.71 One Ravinia Atlanta GA 386,602 92.4% 91.1% $ 25.31 Two Ravinia Atlanta GA 411,047 76.0% 74.0% $ 27.07 Pershing Plaza Atlanta GA 160,145 97.4% 97.4% $ 35.75 999 Peachtree Atlanta GA 621,946 88.6% 90.5% $ 31.46 South Region Total 4,596,581 84.9% 83.0% $ 28.20

(a) Weighted Occupied Percentage for the three months ended March 31, 2018. (b) Weighted Average GAAP Rent per Occupied Square Foot.

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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 and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on 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 NAREIT may define this term in a different manner. We have included the NAREIT FFO as of May 17, 2016 in the table on page 22 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.

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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 our proportionate share of FFO and including distributions received, from non-consolidated REITs, (3) excluding the effect of straight-line rent, (4) plus deferred financing costs and (5) 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.

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FFO Reconciliation (in thousands, except per share amounts)

Reconciliation of GAAP Net Income to FFOFor the Year Ended December 31,

(in thousands): 2013 2014 2015 2016 2017 3/31/2018Net income (loss) $ 19,827 $ 13,148 $ 35,014 $ 8,378 $ (15,944) $ 1,425 (Gain) loss on sale, less applicable income tax (2,158) (940) (23,662) 2,938 18,481 - Equity in losses of non-consolidated REITs 1,358 1,760 1,451 831 3,604 105 FFO from non-consolidated REITs 2,148 1,930 2,732 3,041 3,173 884 Depreciation and amortization 79,090 96,550 91,201 92,556 100,227 23,950

NAREIT FFO 100,265 112,448 106,736 107,744 109,541 26,364 Hedge ineffectiveness - - - (1,878) 1,878 - Acquisition costs of new properties 568 14 154 479 18 -

Funds From Operations $ 100,833 $ 112,462 $ 106,890 $ 106,345 $ 111,437 $ 26,364

Per Share Data:EPS 0.21$ 0.13$ 0.35$ 0.08$ (0.15)$ 0.01$ FFO 1.07 1.12 1.07 1.03 1.04 0.25

Weighted Average Shares for year 93,855 100,187 100,187 102,843 107,231 107,231

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AFFO Reconciliation (in thousands, except per share amounts)

Reconciliation of FFO to AFFOFor the Year Ended December 31, Three Months

(in thousands): 2013 2014 2015 2016 2017 Ended 3/31/18Funds From Operations (FFO) 100,833$ 112,462$ 106,890$ 106,345$ 111,437$ 26,364$ Reverse FFO from non-consolidated REITs (2,148) (1,930) (2,732) (3,041) (3,173) (884) Distributions from non-consolidated REITs 107 107 107 1,023 1,396 355 Amortization of deferred financing costs 1,813 2,002 2,068 2,191 2,485 711 Straight-line rent (5,783) (4,736) (2,448) (1,977) (1,767) 40 Tenant improvements (14,405) (9,825) (11,938) (14,468) (20,477) (6,777) Leasing commissions (9,040) (5,848) (7,811) (12,609) (13,893) (1,021) Non-investment capex (2,866) (3,536) (4,306) (5,543) (9,051) (1,858) Adjusted Funds From Operations (AFFO) 68,511$ 88,696$ 79,830$ 71,921$ 66,957$ 16,930$

Per Share Data:AFFO 0.73$ 0.89$ 0.80$ 0.70$ 0.62$ 0.16$

Weighted Average Shares for year 93,855 100,187 100,187 102,843 107,231 107,231

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Franklin Street Properties Corp.Investor Presentation – June, 2018

401 Edgewater Place Wakefield, MA 01880

(781) 557-1300 www.fspreit.com

Investor Relations Contact: Georgia Touma(877) 686-9496

[email protected]

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