EX-99 3 ex99-2.htm

Exhibit 99.2

 

 

 

   

Supplemental Operating
and Financial Data

Second Quarter 2012

 

 

 

Franklin Street Properties Corp. ● 401 Edgewater Place ● Wakefield, MA 01880 ● (781) 557-1300

 

www.franklinstreetproperties.com

 

 
 
 
 
     Table of Contents

 

         
  Page     Page
         
Company Overview 3-5   Tenant Analysis  
      20 Largest Tenants with Annualized Rent and Remaining Term 17
Key Financial Data     20 Largest Tenants, Industry Profile 18
Financial Highlights 6   Lease Expirations by Square Feet 19
Income Statements 7   Lease Expirations with Annualized Rent per Square Foot 20
Balance Sheets 8   Percentage of Leased Space by Property 21
Cash Flow Statements 9      
Property Net Operating Income (NOI) 10   Transactional Drivers  
Capital Analysis 11   Capital Recycling 22
         
Portfolio Overview     FFO Reconciliation 23
Property by Form of FSP Participation 12   FFO Definition 24
Regional Analysis and Map 13   FAD Reconciliation and Definition 25
Owned Property List 14   EBITDA Reconciliation and Definition 26
Properties with GAAP Rent per Square Foot 15   NOI Reconciliation and Definition 27
Capital Expenditures 16      

 

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 general economic conditions, local real estate conditions, the performance of properties that FSP has acquired or may acquire, the timely lease-up of properties and other risks, detailed from time to time in FSP’s SEC reports. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 

June 30, 2012
  2
 
 
 
     Company Overview

 

Overview

 

Franklin Street Properties Corp. (“FSP”, “we”, “our” or the “Company”) (NYSE MKT: FSP) is an investment firm focused on achieving current income and long-term growth through investments in commercial properties. FSP’s portfolio of real estate assets consists primarily of suburban office buildings and includes select investments in central business district (CBD) properties. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management. FSP’s subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and registered broker/dealer that previously sponsored the organization of single-purpose entities that own real estate and the private placement of equity in those entities, which we refer to as “Sponsored REITs”.

 

Our Business

 

As of June 30, 2012, the Company owned and operated a portfolio of real estate consisting of 36 properties, managed 16 Sponsored REITs and held eight promissory notes secured by mortgages on real estate owned by Sponsored REITs. From time-to-time, the Company may acquire real estate, make additional secured loans or acquire one of its Sponsored REITs. 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, or for geographic or property specific reasons.

Strategy

 

FSP’s investment strategy is to make direct investments in real estate assets. Our primary type of real estate asset is suburban office properties. The Company believes that real estate, in general, and suburban office real estate, in particular, is a cyclical asset class, and FSP tries to minimize the risk of investing in that cyclical asset class by maintaining a low to moderate level of debt at the corporate level and historically has not had secured debt at the property level. FSP believes that matching a low to moderate leverage ratio with investments in the cyclical suburban office asset class will allow it to take advantage of disposition opportunities during peaks in the cycles and protect its investments from foreclosure or refinancing risk during the lows of the cycles. In addition to maintaining modest leverage, FSP believes that it can lower investment risk while enhancing current income and long-term appreciation potential through geographical diversification by owning a portfolio of properties in varied markets that have sound long-term economic growth potential. 

   
Snapshot  
(as of Juns 30, 2012)  
Corporate Headquarters Wakefield, MA
Fiscal Year-End 31-Dec
Total Properties 36
Total Square Feet 7.1 Million
Common Shares Outstanding 82,937,405
Quarterly Dividend $0.19
Dividend Yield 7.2%
Total Market Capitalization $1.4 Billion
Insider Holdings 12.1%
   

 

 

June 30, 2012
  3
 
 
 
     Company Overview

 

 

FSP selects acquisitions based on market and/or property specific criteria, and actively manages the properties to maximize current income and long term appreciation in value. Attempting to invest more heavily in property near the perceived bottom of market cycles and likewise disposing of properties near the perceived top of the market cycles is a natural consequence of our flexible lower leverage model. Proceeds from property sales are redeployed into other specific real estate assets, used for other corporate purposes and/or paid out to shareholders as special dividends.

Structure of the Company

 

FSP has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of our adjusted taxable income to our shareholders. Management intends to continue to adhere to these requirements and to maintain our REIT status. As a REIT we are entitled to a tax deduction for some or all of the dividends we pay to shareholders. Accordingly, we generally will not be subject to federal income taxes as long as we distribute an amount equal to or in excess of our taxable income to shareholders.

Dividend Philosophy

 

FSP has been able to offer shareholders high-quality, risk-adjusted returns. The ongoing and recurring rental revenue stream provides stability to our regular quarterly dividend. In addition, the possibility exists for the payment of annual special dividends resulting from the sale of properties in the portfolio.

Board of Directors and Management        
         
George J. Carter   Dennis J. McGillicuddy   Scott H. Carter
President, Chief Executive Officer   Director, Member, Audit Committee  and   Executive Vice President, General
Chairman of the Board   Member, Compensation Committee   Counsel and Assistant Secretary
         
Barbara J. Fournier   Georgia Murray   Jeffrey B. Carter
Executive Vice President,  Chief Operating Officer,   Director, Chair, Compensation Committee and   Executive Vice President and
Treasurer, Secretary and Director   Member, Audit Committee   Chief Investment Officer
         
Janet Notopoulos   Barry Silverstein   John G. Demeritt
Executive Vice President and Director   Director, Member, Audit Committee  and   Executive Vice President and
    Member, Compensation Committee   Chief Financial Officer
John N. Burke        
Director, Chair, Audit Committee and        
Member, Compensation Committee        

 

June 30, 2012
  4
 
 
 
     Company Overview

 

         
Corporate Headquarters   Trading Symbol   Inquiries
401 Edgewater Place, Suite 200   NYSE MKT   Inquires should be directed to:
Wakefield, MA 01880   Symbol: FSP   John Demeritt, CFO
(t) 781-557-1300       877-686-9496 or InvestorRelations@
(f) 781-246-2807       franklinstreetproperties.com
www.franklinstreetproperties.com         

 

Common Stock Data (NYSE MKT: FSP)                
   For the Three Months Ended 
  30-Jun-12 31-Mar-12 31-Dec-11 30-Sep-11 30-Jun-11 31-Mar-11 31-Dec-10 30-Sep-10
High Price $          10.84 $          11.14 $          13.08 $          13.91 $          14.25 $          15.63 $          14.42 $      12.86
Low Price $            9.57 $            9.43 $            9.90 $          10.49 $          12.00 $          13.52 $          12.20 $      10.99
Closing Price, at the end of the quarter $          10.58 $          10.60 $            9.95 $          11.31 $          12.91 $          14.07 $          14.25 $      12.42
Dividends paid per share – quarterly 0.19 0.19 0.19 0.19 0.19 0.19 0.19 0.19
Closing dividend yield – annualized 7.2% 7.2% 7.64% 6.72% 5.89% 5.40% 5.33% 6.12%
Common shares outstanding (millions) 82.94 82.94 82.94 82.94 81.44 81.44 81.44 79.84
                 

 

 

Quarterly and Annual results are expected to be announced during the week ending on these dates:

 

First Quarter: 3-May-13   Third Quarter: 2-Nov-12
Second Quarter: 2-Aug-12   Fourth Quarter: 1-Mar-13

 

June 30, 2012
  5
 
 
 
     Financial Highlights
(in thousands, except per share data)

                           For the Year 
   For the Three Months Ended   For the Three Months Ended   Ended 
   31-Mar-12   30-Jun-12   31-Mar-11   30-Jun-11   30-Sep-11   31-Dec-11   31-Dec-11 
Income Items:                                   
Revenue:                                   
Rental  $36,668   $35,830   $31,099   $33,606   $33,672   $37,014   $135,391 
Related party revenue   2,616    3,045    808    1,150    1,037    1,051    4,046 
Other   34    39    7    6    7    29    49 
Total revenue   39,318    38,914    31,914    34,762    34,716    38,094    139,486 
                                    
Total expenses   33,900    33,901    28,288    31,201    31,772    33,685    124,946 
                                    
Income before interest income, equity in earnings in
non-consolidated REITs and taxes		   5,418    5,013    3,626    3,561    2,944    4,409    14,540 
Interest income   8    4    11    5    3    3    22 
Equity in earnings in non-consolidated REITs   391    494    968    1,166    573    978    3,685 
                                    
Income before taxes   5,817    5,511    4,605    4,732    3,520    5,390    18,247 
Income tax expense   79    77    50    68    67    82    267 
                                    
Income from continuing operations   5,738    5,434    4,555    4,664    3,453    5,308    17,980 
Income from discontinued operations   -    -    620    3,370    (139)   (246)   3,605 
Gain on sale of assets   -    -    19,592    2,347    -    -    21,939 
                                    
Net income  $5,738   $5,434   $24,767   $10,381   $3,314   $5,062   $43,524 
                                    
FFO*  $19,571   $19,041   $16,250   $20,140   $16,362   $18,457   $71,209 
                                    
Per Share Data:                                   
EPS  $0.07   $0.07   $0.30   $0.13   $0.04   $0.06   $0.53 
FFO*   0.24    0.23    0.20    0.25    0.20    0.22    0.87 
                                    
Weighted Average Shares (diluted)   82,937    82,937    81,437    81,437    81,600    82,937    81,857 
                                    
Balance Sheet Items:                                   
Real estate, net  $1,001,863   $997,345   $979,560   $976,131   $997,258   $1,006,221   $867,608 
Other assets, net   436,665    433,018    387,342    327,633    348,526    402,440    402,440 
Total assets, net   1,438,528    1,430,363    1,366,902    1,303,764    1,345,784    1,408,661    1,238,735 
Total liabilities, net   527,181    529,340    435,801    377,374    413,784    487,294    487,294 
Shareholders' equity   911,347    901,023    931,101    926,390    932,000    921,367    921,367 

 

* See page 23 for a reconciliation of Net Income to FFO and page 24 for a definition of FFO

 

June 30, 2012
 6
 
 
 
     Condensed Consolidated Income Statements
($ in thousands, except per share amounts)

 

 

                           For the 
   For the Three Months Ended   For the Three Months Ended   Year Ended 
   31-Mar-12   30-Jun-12   31-Mar-11   30-Jun-11   30-Sep-11   31-Dec-11   31-Dec-11 
                             
Revenue:                                   
Rental  $36,668   $35,830   $31,099   $33,606   $33,672   $37,014   $135,391 
Related party revenue:                                   
Management fees and interest income from loans   2,616    3,045    808    1,150    1,037    1,051    4,046 
Other   34    39    7    6    7    29    49 
Total revenue   39,318    38,914    31,914    34,762    34,716    38,094    139,486 
                                    
Expenses:                                   
Real estate operating expenses   9,077    8,828    8,730    8,765    9,328    9,862    36,685 
Real estate taxes and insurance   5,813    5,576    4,759    5,228    5,020    5,426    20,433 
Depreciation and amortization   13,256    13,224    10,745    12,029    12,351    13,124    48,249 
Selling, general and administrative   2,077    2,236    1,645    1,602    1,654    2,012    6,913 
Interest   3,677    4,037    2,408    3,578    3,419    3,261    12,666 
Total expenses   33,900    33,901    28,287    31,202    31,772    33,685    124,946 
                                    
Income before interest income, equity in earnings of non-consolidated REITs and taxes   5,418    5,013    3,627    3,560    2,944    4,409    14,540 
Interest income   8    4    11    5    3    3    22 
Equity in earnings of non-consolidated REITs   391    494    968    1,166    573    978    3,685 
                                    
Income before taxes on income   5,817    5,511    4,606    4,731    3,520    5,390    18,247 
Income tax expense   79    77    50    68    67    82    267 
                                    
Income from continuing operations   5,738    5,434    4,556    4,663    3,453    5,308    17,980 
Income from discontinued operations   -    -    620    3,370    (139)   (246)   3,605 
Gain on sale of assets   -    -    19,592    2,347    -    -    21,939 
                                    
Net income  $5,738   $5,434   $24,768   $10,380   $3,314   $5,062   $43,524 
                                    
Weighted average number of shares outstanding,basic and diluted   82,937    82,937    81,437    81,437    81,600    82,937    81,857 
                                    
                                    
Earnings per share, basic and diluted, attributable to:Continuing operations  $0.07   $0.07   $0.06   $0.06   $0.04   $0.06   $0.22 
Discontinued operations   -    -    0.01    -    (0.00)   (0.00)   0.04 
Gains on sales of assets   -    -    0.24    0.03    -    -    0.27 
Net income per share, basic and diluted  $0.07   $0.07   $0.30   $0.13   $0.04   $0.06   $0.53 
                                    

 

June 30, 2012
  7
 
 
 
     Condensed Consolidated Balance Sheets
(in thousands)

 

   March 31,   June 30,   March 31,   June 30,   September 30,   December 31, 
   2012   2012   2011   2011   2011   2011 
Assets:                              
Real estate assets:                              
 Land  $137,503   $137,503   $129,800   $129,800   $134,711   $137,503 
 Buildings and improvements   1,023,905    1,027,321    978,876    982,821    1,006,814    1,020,449 
 Fixtures and equipment   885    896    600    726    761    856 
    1,162,293    1,165,720    1,109,276    1,113,347    1,142,286    1,158,808 
 Less accumulated depreciation   160,430    168,375    129,716    137,216    145,028    152,587 
 Real estate assets, net   1,001,863    997,345    979,560    976,131    997,258    1,006,221 
                               
 Acquired real estate leases, net   87,073    82,769    85,290    81,455    91,585    91,613 
 Investment in non-consolidated REITs   87,061    86,658    88,652    88,654    88,225    87,598 
 Assets held for syndication, net   -    -    47,630    11,206    4,720    - 
 Assets held for sale   -    -    5,108    -    -    - 
 Cash and cash equivalents   29,283    22,620    49,488    28,881    44,047    23,813 
 Restricted cash   511    533    440    459    477    493 
 Tenant rent receivables, net   1,090    1,403    1,688    1,846    1,418    1,460 
 Straight-line rent receivable, net   31,932    33,142    20,838    23,745    26,067    28,545 
 Prepaid expenses   1,164    2,605    1,400    1,255    2,553    1,223 
 Related party mortgage loan receivable   172,286    177,536    60,116    61,916    61,916    140,516 
 Other assets   4,006    3,640    6,339    6,237    5,219    4,538 
 Deferred leasing commissions, net   22,259    22,112    20,353    21,979    22,299    22,641 
 Total assets  $1,438,528   $1,430,363   $1,366,902   $1,303,764   $1,345,784   $1,408,661 
                               
 Liabilities and Stockholders’ Equity:                              
 Liabilities:                              
 Bank note payable  $494,000   $494,000   $404,000   $345,000   $375,000    449,000 
 Term loan payable   -    -    -    -    -    - 
 Accounts payable and accrued expenses   23,311    25,408    20,562    21,431    28,258    26,446 
 Accrued compensation   446    944    603    1,070    1,383    2,222 
 Tenant security deposits   2,181    2,113    2,533    2,476    2,453    2,008 
 Other liabilities: derivative termination value   -    -    828    447    63    - 
 Acquired unfavorable real estate leases, net   7,243    6,875    7,275    6,950    6,627    7,618 
 Total liabilities   527,181    529,340    435,801    377,374    413,784    487,294 
                               
 Commitments and contingencies                              
                               
 Stockholders’ Equity:                              
 Preferred stock   -    -    -    -    -    - 
 Common stock   8    8    8    8    8    8 
 Additional paid-in capital   1,042,876    1,042,876    1,025,491    1,025,491    1,042,876    1,042,876 
 Accumulated other comprehensive loss   -    -    (828)   (447)   (63)   - 
 Accumulated distributions in excess of accumulated earnings   (131,537)   (141,861)   (93,570)   (98,662)   (110,821)   (121,517)
 Total stockholders’ equity   911,347    901,023    931,101    926,390    932,000    921,367 
 Total liabilities and stockholders’ equity  $1,438,528   $1,430,363   $1,366,902   $1,303,764   $1,345,784   $1,408,661 
                               

 

June 30, 2012
  8
 
 
 
     Condensed Consolidated Statements of Cash Flows
(in thousands)

 

 

    Six Months Ended June 30,    Twelve Months Ended December 31 
   2012   2011   2011   2010   2009 
                     
Cash flows from operating activities:                         
Net income  $11,172   $35,148   $43,524   $22,093   $27,872 
Adjustments to reconcile net income to net cash provided by  operating activities:                         
Gains on assets sold   -    (21,939)   (21,939)   -    (424)
Depreciation and amortization expense   27,495    23,670    50,261    39,627    36,561 
Amortization of above market lease   20    (62)   (47)   1,362    3,359 
Equity in earnings (losses) from non-consolidated REITs   (885)   (2,844)   (3,086)   (1,183)   (2,012)
Distributions from non-consolidated REITs   993    2,318    3,474    1,633    2,283 
Increase in bad debt reserve   65    (365)   (365)   980    111 
Changes in operating assets and liabilities:                         
Restricted cash   (40)   (39)   (73)   (86)   2 
Tenant rent receivables   (8)   441    827    (1,120)   (564)
Straight-line rents   (2,571)   (5,176)   (9,878)   (4,249)   (1,879)
Lease Acquisition Costs   (2,026)   (55)   (153)   (4,246)   (59)
Prepaid expenses and other assets   (1,512)   914    1,611    865    907 
Accounts payable and accrued expenses   (1,395)   (726)   4,213    (351)   2,760 
Accrued compensation   (1,278)   (733)   419    387    (238)
Tenant security deposits   105    546    78    122    (66)
Payment of deferred leasing commissions   (1,513)   (5,386)   (8,058)   (10,515)   (2,659)
                          
Net cash provided by operating activities   28,622    25,712    60,808    45,319    65,954 
                          
Cash flows from investing activities:                         
Purchase of real estate assets, office computers and furniture, capitalized merger costs and acquired real estate leases   (7,112)   (173,031)   (236,097)   (50,098)   (132,264)
Investment in non-consolidated REITs   (1)   (10)   (10)   (11)   (13,218)
Distributions in excess of earnings from non-consolidated REITs   834    664    1,582    3,537    3,345 
Investment in related party mortgage loan receivable   (37,020)   (4,232)   (82,832)   (21,149)   (35,410)
Changes in deposits on real estate assets   -    200    200    (200)   - 
Investment in assets held for syndication, net   -    (8,200)   2,230    1,319    8,159 
Proceeds received on sales of real estate assets   -    96,790    96,790    -    672 
                          
Net cash used in investing activities   (43,299)   (87,819)   (218,137)   (66,602)   (168,716)
                          
Cash flows from financing activities:                         
Distributions to stockholders   (31,516)   (30,946)   (62,177)   (60,586)   (55,313)
Proceeds (costs) from equity offering, net   -    (90)   17,295    21,868    114,695 
Borrowings under New Revolver, net   45,000    345,000    449,000    -    - 
Borrowings (repayments) under Revolver   -    (209,968)   (209,968)   100,960    41,540 
Borrowing (repayment) of term loan payable, net   -    (74,850)   (74,850)   (150)   - 
Deferred Financing Costs   -    (5,389)   (5,388)   -    - 
Swap termination payment   -    (982)   (983)   -    - 
                          
Net cash provided by (used in) financing activities   13,484    22,775    112,929    62,092    100,922 
                          
Net decreases in cash and cash equivalents   (1,193)   (39,332)   (44,400)   40,809    (1,840)
                          
Cash and cash equivalents, beginning of period   23,813    68,213    68,213    27,404    29,244 
                          
Cash and cash equivalents, end of period  $22,620   $28,881   $23,813   $68,213   $27,404 

June 30, 2012
  9
 
 
 
     Property Net Operating Income (NOI):
with Same Store comparison
(in thousands)

 

   Net Operating Income (NOI)* 
(in thousands)                                    
   Rentable           Six Months           Six Months         
  Square Feet   Three Months Ended:   Ended   Three Months Ended:   Ended   Inc   % 
Region  or RSF   31-Mar-12   30-Jun-12   30-Jun-12   31-Mar-11   30-Jun-11   30-Jun-11   (Dec)   Change 
East   1,181   $3,479   $3,094   $6,573   $3,019   $2,735   $5,754   $819    14.2% 
MidWest   1,699    4,034    3,983    8,017    4,438    4,012    8,450    (433)   -5.1% 
South   2,089    6,901    6,725    13,626    5,886    6,756    12,642    984    7.8% 
West   1,089    2,278    2,443    4,721    1,718    2,293    4,011    710    17.7% 
Same Store   6,058    16,692    16,245    32,937    15,061    15,796    30,857    2,080    6.7% 
                                              
Acquisitions   994    4,901    4,868    9,769    807    3,513    4,320    5,449      
Dispositions   -    -    -    -    495    133    628    (628)     
Property NOI   7,052   $21,593   $21,113   $42,706   $16,363   $19,442   $35,805   $6,901    6.7% 
                                              
Same Store       $16,692   $16,245   $32,937   $15,061   $15,796   $30,857   $2,080    6.7% 
                                              
Nonrecurring                                             
 Items in NOI (a)        599    20    619    1    -    1    618    2.0% 
                                              
Comparative                                             
Same Store       $16,093   $16,225   $32,318   $15,060   $15,796   $30,856   $1,462    4.7% 

 

                      
(a) Nonrecurring Items in NOI include proceeds from bankruptcies, 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.      
  See page 27 for a reconciliation and definition of Net Income to Property NOI GAAP.      

 

June 30, 2012
  10
 
 
 
     Capital Analysis
(in thousands, except per share amounts)

 

                         
   31-Mar-12   30-Jun-12   31-Mar-11   30-Jun-11   30-Sep-11   31-Dec-11 
Market Data:                        
Shares Outstanding   82,937    82,937    81,437    81,437    82,937    82,937 
Closing market price per share  $10.60   $10.58   $14.07   $12.91   $11.31   $9.95 
Market capitalization  $879,136   $877,478   $1,145,824   $1,051,357   $938,022   $825,227 
Total Debt   494,000    494,000    404,000    345,000    375,000    449,000 
Total Market Capitalization  $1,373,136   $1,371,478   $1,549,824   $1,396,357   $1,313,022   $1,274,227 
                               
Dividend Data:                              
Total dividends paid  $15,758   $15,758   $15,473   $15,473   $15,473   $15,758 
Common dividend per share  $0.19   $0.19   $0.19   $0.19   $0.19   $0.19 
Quarterly dividend as a % of FFO*   80.5%    82.6%    95%    76%    95%    86% 
                               
Liquidity:                              
Cash and cash equivalents  $29,283   $22,620   $49,488   $28,881   $44,047   $23,813 
Revolving credit facilities:                              
Gross potential available under current credit facilities   600,000    600,000    500,000    600,000    600,000    600,000 
Less:                              
Outstanding balance   (494,000)   (494,000)   (404,000)   (345,000)   (375,000)   (449,000)
Total Liquidity  $135,283   $128,620   $145,488   $283,881   $269,047   $174,813 
                               
                               
*See page 23 for a reconciliation of Net Income to FFO and page 24 for a definition of FFO

 

June 30, 2012
  11
 
 
 
     Portfolio Overview

 

  30-Jun-12 31-Mar-12 31-Dec-11 30-Sep-11 30-Jun-11
Owned portfolio of commercial real estate:          
  Number of properties 36 36 36 35 34
  Square feet 7,052,592 7,052,068 7,052,068 6,929,891 6,747,815
  Leased percentage 90% 89% 89% 88% 87%
           
Investments in non-consolidated commercial real estate:          
  Number of properties 3 3 3 3 3
  Square feet 2,003,968 2,004,953 2,001,542 1,998,575 1,996,457
  Leased percentage 89% 90% 87% 83% 82%
           
Single Asset REITs (SARs) managed:          
  Number of properties 13 13 13 13 13
  Square feet 3,322,589 3,322,570 3,322,639 3,322,638 3,322,569
  Leased percentage 85% 84% 80% 80% 79%
           
Total owned, investments and managed properties:          
  Number of properties 52 52 52 51 50
  Square feet 12,379,149 12,379,591 12,376,249 12,251,104 12,066,841
  Leased percentage 89% 88% 86% 85% 84%

 

June 30, 2012
  12
 
 
 
     Regional Analysis and Map

 

Owned:        
Name City State Region Square Feet
Park Seneca Charlotte NC East 109,550
Forest Park Charlotte NC East 62,212
Emperor Boulevard Durham NC East 259,531
Meadow Point Chantilly VA East 138,537
Stonecroft Chantilly VA East 111,469
Innsbrook Glen Allen VA East 298,456
East Baltimore Baltimore MD East 325,445
Loudoun Tech Center Dulles VA East 135,888
Southfield Centre Southfield MI MidWest 214,697
Northwest Point Elk Grove Village IL MidWest 176,848
909 Davis Evanston IL MidWest 195,245
River Crossing Indianapolis IN MidWest 205,059
Timberlake Chesterfield MO MidWest 232,766
Timberlake East Chesterfield MO MidWest 116,197
Lakeside Crossing Maryland Heights MO MidWest 127,778
Eden Bluff Eden Prairie MN MidWest 153,028
121 South 8th Street Minneapolis MN MidWest 472,712
Blue Lagoon Drive Miami FL South 212,619
One Overton Place Atlanta GA South 387,267
Willow Bend Office Center Plano TX South 117,050
Legacy Tennyson Center Plano TX South 202,600
One Legacy Circle Plano TX South 214,110
Park Ten Houston TX South 155,715
Addison Circle Addison TX South 293,787
Collins Crossing Richardson TX South 298,766
East Renner Road Richardson TX South 122,300
Eldridge Green Houston TX South 248,399
Park Ten Phase II Houston TX South 156,746
Liberty Plaza Addison TX South 218,934
Centennial Technology Center Colorado Springs CO West 110,405
380 Interlocken Broomfield CO West 240,184
Greenwood Plaza Englewood CO West 197,527
390 Interlocken Broomfield CO West 241,516
Hillview Center Milpitas CA West 36,288
Federal Way Federal Way WA West 117,010
Montague Business Center San Jose CA West 145,951
Total       7,052,592
 
Managed:        
Name City State Region Square Feet
1441 Main Street Columbia SC East 264,857
303 East Wacker Drive Chicago IL MidWest 844,953
Monument Circle Indianapolis IN MidWest 213,609
505 Waterford Plymouth MN MidWest 256,367
50 South Tenth Street Minneapolis MN MidWest 498,768
Grand Boulevard Kansas City MO MidWest 535,071
Lakeside Crossing II Maryland Heights MO MidWest 116,000
Centre Pointe V West Chester OH MidWest 135,936
Union Centre West Chester OH MidWest 409,798
Satellite Place Duluth GA South 134,785
5601 Executive Drive Irving TX South 152,121
Galleria North Dallas TX South 379,518
Energy Tower I Houston TX South 325,797
Phoenix Tower Houston TX South 623,944
Highland Place I Centennial CO West 139,142
385 Interlocken Broomfield CO West 295,891
Total       5,326,557

 

Properties by Division/Region
($ in thousands)
                   NBV (a)    % Leased 
    # of Properties    Square Feet    % of Portfolio    30-Jun-12    30-Jun-12 
                          
Mideast Division   8    1,441,088    20.4%   $222,692    88.8% 
East Region Total   8    1,441,088    20.4%    222,692    88.8% 
 East North Central Division   4    791,849    11.2%    99,828    81.3% 
 West North Central   5    1,102,481    15.6%    105,764    96.3% 
Midwest Region Total   9    1,894,330    26.8%    205,592    90.0% 
 Southeast   2    599,886    8.5%    117,176    95.2% 
 Southwest   10    2,028,407    28.8%    291,915    94.3% 
South Region Total   12    2,628,293    37.3%    409,091    94.5% 
 Mountain   4    789,632    11.2%    124,153    81.1% 
 Pacific   3    299,249    4.3%    35,817    79.3% 
West Region Total   7    1,088,881    15.5%    159,970    80.6% 
                          
Grand Total   36    7,052,592    100.0%   $997,345    90.0% 
                          
(a) NBV is for real estate assets, excluding intangibles       

 

 

 

June 30, 2012
  13
 
 
 
     Owned Property List
(in thousands)

 

            NBV (1) % Leased
Region Division Name City State S.F. 30-Jun-12 30-Jun-12
               
West Pacific Hillview Center Milpitas CA 36 $          4,065 100.0%
West Pacific Montague San Jose CA 146 17,650 100.0%
West Mountain 380 Interlocken Broomfield CO 240 41,135 89.5%
West Mountain 390 Interlocken Broomfield CO 242 41,260 97.2%
West Mountain Centennial Technology Center Colorado Springs CO 110 11,417 85.4%
West Mountain Greenwood Plaza Englewood CO 197 30,342 48.9%
South Southeast Blue Lagoon Drive Miami FL 213 46,244 100.0%
South Southeast One Overton Place Atlanta GA 387 70,932 92.6%
MidWest East North Central Northwest Point Elk Grove Village IL 177 27,494 100.0%
MidWest East North Central 909 Davis Evanston IL 195 22,790 94.8%
MidWest East North Central River Crossing Indianapolis IN 205 34,886 96.1%
East Mideast East Baltimore Baltimore MD 325 53,776 58.2%
MidWest East North Central Southfield Centre Southfield MI 215 14,659 39.6%
MidWest West North Central Eden Bluff Eden Prairie MN 153 14,001 100.0%
MidWest West North Central 121 South 8th Street Minneapolis MN 473 24,813 95.6%
MidWest West North Central Timberlake Chesterfield MO 233 33,402 93.2%
MidWest West North Central Timberlake East Chesterfield MO 116 16,941 97.0%
MidWest West North Central Lakeside Crossing Maryland Heights MO 128 16,606 100.0%
East Mideast Park Seneca Charlotte NC 110 7,240 81.5%
East Mideast Forest Park Charlotte NC 62 5,968 100.0%
East Mideast Emperor Boulevard Durham NC 259 54,626 100.0%
South Southwest Addison Circle Addison TX 294 45,464 95.8%
South Southwest Liberty Plaza Addison TX 219 23,826 84.1%
South Southwest Park Ten Houston TX 156 18,794 96.1%
South Southwest Eldridge Green Houston TX 248 41,744 100.0%
South Southwest Park Ten Phase II Houston TX 157 29,882 100.0%
South Southwest Willow Bend Office Center Plano TX 117 18,343 77.8%
South Southwest Legacy Tennyson Center Plano TX 203 24,377 100.0%
South Southwest One Legacy Circle Plano TX 214 38,842 100.0%
South Southwest Collins Crossing Richardson TX 299 42,736 87.8%
South Southwest East Renner Road Richardson TX 122 7,907 100.0%
East Mideast Meadow Point Chantilly VA 139 22,340 100.0%
East Mideast Stonecroft Chantilly VA 111 18,719 100.0%
East Mideast Loudoun Tech Center Dulles VA 136 16,906 100.0%
East Mideast Innsbrook Glen Allen VA 298 43,116 98.3%
West Pacific Federal Way Federal Way WA 117 14,102 47.0%
          7,053 $      997,345 90.0%
    (1) NBV is for real estate assets, excluding intangibles        

 

June 30, 2012
  14
 
 
 
     Properties with GAAP Rent per Square Foot

 

 

                        Weighted    
                        Occupied   Weighted
            Year Built       Weighted   Percentage as of   Average GAAP
            or   Net Rentable   Occupied   December 31,   Rent per Occupied
Property Name   City   State   Renovated   Square Feet   Sq. Ft.   2011 (a)   Square Feet (b)
                             
Park Seneca   Charlotte   NC   1969            109,550               87,300   79.7%    $                     15.58
Forest Park   Charlotte   NC   1999              62,212               48,239   77.5%                           15.53
Meadow Point   Chantilly   VA   1999            138,537             137,817   99.5%                           26.23
Innsbrook   Glen Allen   VA   1999            298,456             149,944   50.2%                           20.82
East Baltimore   Baltimore   MD   1989            325,445             204,445   62.8%                           27.43
Loudoun Tech Center   Dulles   VA   1999            135,888             135,888   100.0%                           15.58
Stonecroft   Chantilly   VA   2008            111,469             111,469   100.0%                           37.40
Emperor Boulevard   Durham   NC   2009            259,531             259,531   100.0%                           34.58
  East total                     1,441,088          1,134,633   78.7%                           26.19
Southfield Centre   Southfield   MI   1977            214,697               97,215   45.3%                           11.83
Northwest Point   Elk Grove Village   IL   1999            176,848             176,848   100.0%                           19.38
909 Davis Street   Evanston   IL   2002            195,245             185,131   94.8%                           33.84
River Crossing   Indianapolis   IN   1998            205,059             191,833   93.6%                           23.75
Timberlake   Chesterfield   MO   1999            232,766             227,296   97.7%                           21.33
Timberlake East   Chesterfield   MO   2000            116,197             109,365   94.1%                           23.74
Lakeside Crossing   St. Louis   MO   2008            127,778             127,778   100.0%                           23.68
Eden Bluff   Eden Praire   MN   2006            153,028             153,028   100.0%                           27.21
121 South 8th Street   Minneapolis   MN   1974            472,616             419,021   88.7%                           15.64
  Midwest total                     1,894,234          1,687,515   89.1%                           21.68
Blue Lagoon Drive   Miami   FL   2002            212,619             212,619   100.0%                           22.03
One Overton Place   Atlanta   GA   2002            387,267             352,916   91.1%                           21.19
Willow Bend Office Center   Plano   TX   1999            116,622               74,801   64.1%                           20.23
Park Ten   Houston   TX   1999            155,715             108,533   69.7%                           28.67
Addison Circle   Addison   TX   1999            293,787             281,507   95.8%                           25.16
Collins Crossing   Richardson   TX   1999            298,766             217,830   72.9%                           24.37
Eldridge Green   Houston   TX   1999            248,399             248,399   100.0%                           27.20
Park Ten Phase II   Houston   TX   2006            156,746             156,746   100.0%                           28.75
Liberty Plaza   Addison   TX   1985            218,934             156,516   71.5%                           20.91
Denbury Park   Plano   TX   1999/2008            202,600             202,600   100.0%                           17.03
One Legacy Circle   Plano   TX   2008            214,110             198,608   92.8%                           33.10
East Renner Road   Richardson   TX   1999            122,300             122,300   100.0%                           10.00
  South Total                     2,627,865          2,333,376   88.8%                           23.56
Centennial Technology Center   Colorado Springs   CO   1999            110,405               73,817   66.9%                           16.39
380 Interlocken   Broomfield   CO   2000            240,184             204,349   85.1%                           27.64
Greenwood Plaza   Englewood   CO   2000            197,527               92,383   46.8%                           18.68
390 Interlocken   Broomfield   CO   2002            241,516             215,456   89.2%                           29.24
Hillview Center   Milpitas   CA   1984              36,288               36,288   100.0%                           14.19
Federal Way   Federal Way   WA   1982            117,010               43,773   37.4%                           18.94
Montague Business Center   San Jose   CA   1982            145,951             145,951   100.0%                           15.45
  West Total                     1,088,881             812,018   74.6%                           22.76
                             
  Grand Total                     7,052,068          5,967,542   84.6%    $                     23.42
                             
(a) Based on weighted occupied square feet for the year ended December 31, 2011, including month-to-month tenants, divided by the Property's net rentable square footage
(b) Represents GAAP rental revenue for year ended December 2011 per weighted occupied square foot.

 

June 30, 2012
  15
 
 
 
     Owned Property Capital Expenditures
(in thousands)

 

           Six Months         
   For the Three Months Ended:   Ended         
   31-Mar-12   30-Jun-12   30-Jun-12         
Tenant improvements  $3,014   $2,705   $5,719         
Deferred leasing costs   2,196    1,343    3,539           
Building improvements   746    1,003    1,749           
Total  $5,956   $5,051   $11,007           

 

                   Year 
       For the Three Months Ended       Ended 
   31-Mar-11   30-Jun-11   30-Sep-11   31-Dec-11   31-Dec-11 
Tenant improvements  $2,506   $3,215   $5,092   $8,219   $19,032 
Deferred leasing costs   2,819    2,567    1,324    1,348    8,058 
Building improvements   449    876    754    747    2,826 
Total  $5,774   $6,658   $7,170   $10,314   $29,916 

 

                   Year 
       For the Three Months Ended       Ended 
   31-Mar-10   30-Jun-10   29-Sep-10   31-Dec-10   31-Dec-10 
Tenant improvements  $1,305   $935   $3,634   $1,126   $7,000 
Deferred leasing costs   5,566    1,519    808    2,622    10,515 
Building improvements   380    498    671    1,053    2,602 
Total  $7,251   $2,952   $5,113   $4,801   $20,117 

 

                   Year 
       For the Three Months Ended       Ended 
   31-Mar-09   30-Jun-09   30-Sep-09   31-Dec-09   31-Dec-09 
Tenant improvements  $1,373   $912   $931   $1,528   $4,744 
Deferred leasing costs   162    1,395    645    457    2,659 
Building improvements   466    116    265    619    1,466 
Total  $2,001   $2,423   $1,841   $2,604   $8,869 

June 30, 2012
  16
 
 
 
     20 Largest Tenants with Annualized Rent and
Remaining Term at June 30, 2012

 

      Remaining Aggregate % of Aggregate Annualized % of Aggregate
  Tenant Number of Lease Term Leased Leased Rent Leased
  Name Leases in Months Square Feet Square Feet (in 000's) Annualized Rent
               
1 TCF National Bank (a) 1 6, 42 268,984 3.81% $            2,903,475 2.12%
2 Quintiles Transnational Corp. 1 81 259,531 3.68% 8,279,077 6.04%
3 CITGO Petroleum Corporation 1 116 248,399 3.52% 7,363,001 5.37%
4 Burger King Corporation 1 75 212,619 3.01% 4,465,755 3.26%
5 Denbury Onshore, LLC 1 49 202,600 2.87% 3,510,042 2.56%
6 RGA Reinsurance Company 1 30 185,501 2.63% 3,803,069 2.77%
7 SunTrust Bank 2 52, 111 182,888 2.59% 2,856,446 2.08%
8 Citicorp Credit Services, Inc 1 54 176,848 2.51% 3,511,335 2.56%
9 C.H. Robinson Worldwide, Inc 1 108 153,028 2.17% 4,064,622 2.96%
10 Houghton Mifflin Harcourt Publishing Company 1 57 150,050 2.13% 5,696,915 4.15%
11 Murphy Exploration & Production Company 1 58 144,677 2.05% 4,017,514 2.93%
12 Giesecke & Devrient America, Inc. 1 32 135,888 1.93% 1,842,083 1.34%
13 Monsanto Company 1 31 127,778 1.81% 3,308,333 2.41%
14 AT&T Services, Inc. 1 72 122,300 1.73% 958,812 0.70%
15 Vail Holdings, Inc. 2 81, 129 122,232 1.73% 3,366,724 2.45%
16 Northrop Grumman Systems Corporation 1 70 111,469 1.58% 4,260,211 3.11%
17 Argo Data Resource Corporation 1 71 109,990 1.56% 2,690,829 1.96%
18 Alliance Data Systems 1 95, 108 96,749 1.37% 2,890,424 2.11%
19 Federal National Mortgage Association 1 14 92,358 1.31% 1,863,613 1.36%
20 County of Santa Clara 1 102 90,467 1.28% 1,399,304 1.02%
               
      Total 3,194,356 45.29% $        73,051,584 53.25%
               
               
(a) Tenant to contract by 5,141 sf of December 31, 2012.

 

June 30, 2012
  17
 
 
 
     Tenant Analysis – 20 Largest Tenants Industry Profile
(as a % of square feet at June 30, 2012)

 

 

 

 

June 30, 2012
  18
 
 
 
     Lease Expirations by Square Feet

 

Year   Total
Square Feet		   % of Square
Feet
Commercial
         
2012   155,148   2.2%
2013   450,290   6.4%
2014   415,284   5.9%
2015   812,702   11.5%
2016   921,681   13.1%
2017   756,940   10.7%
2018   721,612   10.2%
2019   720,848   10.2%
2020   181,879   2.6%
2021   590,748   8.4%
2022   475,730   6.7%
2023   144,640   2.1%
Vacant   705,090   10.0%
         
Total   7,052,592   100.0%

 

 

 

 

June 30, 2012
  19
 
 
 
     Lease Expirations
with Annualized Rent per Square Foot

 

 

      Rentable       Annualized   Percentage
  Number of   Square       Rent   of Total Final
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
June 30, Year   Leases   Leases (a)   Leases   Leases
2012 80 (b)   155,148   $       2,954,911   $            19.05   2.2%
2013 53     450,290   10,148,904   22.54   7.4%
2014 45     415,284   7,649,361   18.42   5.6%
2015 44     812,702   17,027,468   20.95   12.4%
2016 40     921,681   17,817,791   19.33   13.0%
2017 32     756,940   18,977,692   25.07   13.8%
2018 17     721,612   15,731,269   21.80   11.5%
2019 15     720,848   17,006,355   23.59   12.4%
2020 9     181,879   4,291,352   23.59   3.1%
2021 and thereafter 45     1,211,118   25,574,060   21.12   18.6%
  380     6,347,502   $    137,179,163   $            21.61   100.0%
 Vacancies as of 6/30/12     705,090            
 Total Portfolio Square Footage     7,052,592            

 

(a) Annualized rent represents the monthly rent, including tenant reimbursements, for each lease in effect at June 30, 2012 mulitplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(b) 51 leases are Month to Month

 

June 30, 2012
  20
 
 
 
     Percentage of Leased Space by Property

 

 

            Second   Third   Fourth   First   Second
          % Leased (1) Quarter % Leased (1) Quarter % Leased (1) Quarter % Leased (1) Quarter % Leased (1) Quarter
        Square as of Average % as of Average % as of Average % as of Average % as of Average %
    Property Name Location Feet 30-Jun-11 Leased (2) 30-Sep-11 Leased (2) 31-Dec-11 Leased (2) 31-Mar-12 Leased (2) 30-Jun-12 Leased (2)
                             
1   PARK SENECA Charlotte, NC 109,550 80.1% 79.1% 80.9% 80.5% 80.6% 80.6% 80.5% 79.9% 81.5% 80.9%
2   HILLVIEW CENTER Milpitas, CA 36,288 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
3   SOUTHFIELD Southfield, MI 214,697 39.2% 41.7% 39.2% 39.2% 39.2% 39.2% 39.2% 39.2% 39.6% 38.5%
4   FOREST PARK Charlotte, NC 62,212 100.0% 85.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
5   CENTENNIAL Colorado Springs, CO 110,405 66.9% 66.9% 66.9% 66.9% 85.4% 73.0% 85.4% 85.4% 85.4% 85.4%
6   MEADOW POINT Chantilly, VA 138,537 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
7   TIMBERLAKE Chesterfield, MO 232,766 97.7% 97.7% 97.7% 97.7% 97.7% 97.7% 97.7% 97.7% 93.2% 96.2%
8   FEDERAL WAY Federal Way, WA 117,010 42.0% 42.0% 42.0% 42.0% 47.0% 44.3% 47.0% 47.0% 47.0% 47.0%
9   NORTHWEST POINT Elk Grove Village, IL 176,848 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
10   TIMBERLAKE EAST Chesterfield, MO 116,197 100.0% 100.0% 85.9% 90.6% 85.9% 85.9% 85.9% 85.9% 97.0% 89.6%
11   PARK TEN Houston, TX 155,715 98.8% 98.8% 98.8% 98.8% 81.2% 81.2% 81.2% 81.2% 96.1% 91.1%
12   MONTAGUE San Jose, CA 145,951 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
13   ADDISON Addison, TX 293,787 95.8% 95.8% 95.8% 95.8% 95.8% 95.8% 95.8% 95.8% 95.8% 95.8%
14   COLLINS CROSSING Richardson, TX 298,766 79.7% 79.3% 88.4% 88.4% 88.4% 88.4% 87.8% 87.8% 87.8% 87.8%
15   GREENWOOD PLAZA Englewood, CO 197,527 54.3% 58.2% 54.3% 54.3% 48.9% 48.4% 48.9% 48.9% 48.9% 48.9%
16   RIVER CROSSING Indianapolis, IN 205,059 93.5% 93.4% 93.5% 93.5% 93.5% 93.5% 93.9% 93.1% 96.1% 94.6%
17   LIBERTY PLAZA Addison, TX 218,934 75.6% 75.6% 68.6% 68.0% 77.9% 74.8% 76.4% 77.4% 84.1% 78.9%
18   INNSBROOK Glen Allen, VA 298,456 63.7% 67.3% 86.8% 78.8% 98.3% 90.7% 98.3% 98.3% 98.3% 98.3%
19   380 INTERLOCKEN Broomfield, CO 240,184 85.1% 85.1% 85.1% 85.1% 85.1% 85.1% 89.5% 86.5% 89.5% 89.5%
20   BLUE LAGOON Miami, FLA 212,619 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
21   ELDRIDGE GREEN Houston, TX 248,399 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
22   WILLOW BEND Plano, TX 117,050 83.1% 76.8% 83.1% 83.1% 83.1% 83.1% 77.4% 77.4% 77.8% 77.8%
23   ONE OVERTON PARK Atlanta, GA 387,267 91.1% 91.5% 90.4% 90.6% 89.3% 90.0% 91.7% 90.9% 92.6% 92.3%
24   390 INTERLOCKEN Broomfield, CO 241,516 95.9% 95.9% 96.6% 96.9% 93.4% 94.3% 96.4% 94.6% 97.2% 96.9%
25   EAST BALTIMORE Baltimore, MD 325,445 55.7% 55.5% 55.7% 55.7% 55.7% 55.7% 56.2% 55.9% 58.2% 57.5%
26   PARK TEN PHASE II Houston, TX 156,746 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
27   LAKESIDE CROSSING I Maryland Heights, MO 127,778 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
28   LOUDOUN TECH Dulles, VA 135,888 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
29   4807 STONECROFT Chantilly, VA 111,469 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
30   EDEN BLUFF Eden Prairie, MN 153,028 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
31   121 SOUTH EIGHTH ST Minneapolis, MN 472,712 92.5% 92.1% 93.6% 93.1% 93.6% 93.6% 93.8% 93.8% 95.6% 94.4%
32   EMPEROR BOULEVARD Durham, NC 259,531 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
33   LEGACY TENNYSON CTR Plano, TX 202,600 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
34   ONE LEGACY Plano, TX 214,110 100.0% 94.6% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
35   909 DAVIS Evanston, IL 195,245 n/a n/a 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% 94.8% 94.8%
36   1410 EAST RENNER Richardson, TX 122,300 n/a n/a n/a n/a 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
                             
    TOTAL WEIGHTED AVERAGE (3)  7,052,592 86.9% 86.9% 88.1% 87.7% 88.7% 88.1% 89.0% 88.8% 90.0% 89.5%

 

(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 3 months during the quarter.

(3) 2011 Second Quarter Totals include Bollman Place (98,745 sf) located Maryland, which sold in June 2011.

 

 

June 30, 2012
  21
 
 
 
     Capital Recycling
($ in thousands)

 

 

Recent Acquisitions:                        
    State/Region   Property Type   Square Feet   Date Acquired   Purchase Price    
                         
2011                        
Emperor Boulevard   NC/East   Office            259,531   3/4/11    $             75,800    
Legacy Tennyson Center   TX/South   Office            202,600   3/10/11                   37,000    
One Legacy Circle   TX/South   Office            214,110   3/24/11                   52,983    
909 Davis   IL/Midwest   Office            195,245   9/30/11                   37,062    
East Renner Road   TX/South   Office            122,300   10/6/11                   11,282    
                         
2010                        
121 South 8th Street   MN/Midwest   Office            474,646   6/29/10                   39,405    
                         
2009                        
Stonecroft-Chantilly   VA/East   Office            111,469   6/26/09                   29,000    
Eden Bluff - Eden Prairie   MN/Midwest   Office            153,028   6/30/09                   22,784    
Fairview   VA/East   Office            252,613   9/30/09                   73,000    
                         
2008                        
Park Ten Phase II   TX/South   Office            156,746   5/15/08                   35,079    
Lakeside Crossing   MO/Midwest   Office            127,778   12/11/08                   20,003    
Loudoun Tech Center   VA/East   Office            135,888   12/23/08                   18,628    
                         
2007                        
East Baltimore   MD/East   Office            325,298   6/13/07                   63,592    
                         
                         
Recent Dispositions:                        
                     Net Sales   Gain (Loss)
    State/Region   Property Type   Square Feet   Date Sold    Proceeds   on Sale
2011                        
Fairview   VA/East   Office            252,613   1/21/11    $             89,382    $             19,592
Bollman   MD/East   Industrial              98,745   6/24/11                     7,408                     2,346
                         
2007                        
Piedmont Center   SC/East   Office            144,029   1/31/07                     5,830                   (4,849)
Royal Ridge   GA/South   Office            161,366   6/21/07                   32,535                     6,601
Goldentop Technology Center   CA/West   Office            141,405   6/27/07                   36,199                   14,741
Lyberty Way   MA/East   Office            104,711   7/16/07                   10,861                     1,942
Austin N.W. (Canyon Hills)   TX/South   Office              68,533   12/20/07                   10,429                        257

June 30, 2012
  22
 
 
 
     FFO Reconciliation
(in thousands, except per share amounts)

 

   For the Three Months Ended:   For the Year Ended: 
   31-Mar-12   30-Jun-12   31-Mar-11   30-Jun-11   30-Sep-11   31-Dec-11   2011   2010   2009   2008 
                                         
Net income  $5,738   $5,434   $24,767   $10,381   $3,314   $5,062   $43,524   $22,093   $27,872   $24,572 
Less gain on sale of assets   —    —    (19,593)   (2,346)   —    —    (21,939)   —    (424)   — 
GAAP income from non-consolidated REITs   (391)   (494)   (1,773)   (1,166)   (573)   (978)   (4,490)   (1,190)   (2,012)   (1,953)
Distributions from non-consolidated REITs   929    898    1,767    1,215    1,104    970    5,056    5,170    5,628    4,802 
Depreciation & amortization   13,295    13,203    10,812    12,047    12,332    13,248    48,439    40,724    39,652    26,146 
NAREIT FFO   19,571    19,041    15,980    20,131    16,177    18,302    70,590    66,797    70,716    53,567 
Acquisition costs   —    —    269    9    185    157    620    125    643    — 
Funds From Operations (FFO)  $19,571   $19,041   $16,249   $20,140   $16,362   $18,459   $71,210   $66,922   $71,359   $53,567 
                                                   
Per Share Data:                                                  
EPS  $0.07   $0.07   $0.30   $0.13   $0.04   $0.06   $0.55   $0.28   $0.38   $0.35 
FFO   0.24    0.23    0.20    0.25    0.20    0.23    0.89    0.84    0.98    0.76 
                                                   
Weighted Average Shares (basic and diluted)   82,937    82,937    81,437    81,437    81,600    81,600    79,826    79,826    73,001    70,481 

 

 

June 30, 2012
  23
 
 
 
     FFO Definition

 

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 (computed in accordance with GAAP), excluding gains (or losses) from sales of property 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, and after adjustments to exclude non-cash income (or losses) from non-consolidated or Sponsored REITs, plus distributions received from non-consolidated or Sponsored REITs.

FFO should not be considered as an alternative to net income (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 in our 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 and cash flows from operating, investing and financing activities in the consolidated financial statements.

 

June 30, 2012
  24
 
 
 
     Funds Available for Distribution (FAD)
Reconciliation and Definition
(in thousands, except per share amounts)

 

 

   For the Three Months Ended: 
                                         
   31-Mar-12   30-Jun-12   31-Mar-11   30-Jun-11   30-Sep-11   31-Dec-11   31-Mar-10   30-Jun-10   30-Sep-10   31-Dec-10 
                                         
Net income  $5,738   $5,434   $24,767   $10,381   $3,314   $5,062   $5,562   $5,954   $4,757   $5,820 
(Gain) Loss on sale of assets   —    —    (19,593)   (2,346)   —    —    —    —    —    — 
GAAP income from non-consolidated REITs   (391)   (494)   (1,773)   (1,166)   (573)   (978)   (253)   (380)   (404)   (153)
Distributions from non-consolidated REITs   929    898    1,767    1,215    1,104    970    1,407    1,324    1,192    1,247 
Acquisition costs   —    —    269    9    185    157    —    129    (4)   — 
Depreciation & amortization   13,295    13,203    10,812    12,047    12,332    13,248    9,934    9,675    10,510    10,605 
Funds From Operations (FFO)  $19,571   $19,041   $16,249   $20,140   $16,362   $18,459   $16,650   $16,702   $16,051   $17,519 
                                                   
Funds Available for Distribution:                                                  
Funds From Operations (FFO)   19,571    19,041    16,249    20,140    16,362    18,459    16,650    16,702    16,051    17,519 
Straight-line rent   (1,516)   (1,054)   (2,303)   (2,873)   (2,228)   (2,474)   (1,018)   (740)   (1,203)   (1,288)
Capital expenditures   (746)   (1,003)   (449)   (876)   (754)   (747)   (380)   (498)   (671)   (1,053)
Funds Available for Distribution (FAD)  $17,309   $16,984   $13,497   $16,391   $13,380   $15,238   $15,252   $15,464   $14,177   $15,178 
                                                   
Per Share Data:                                                  
EPS  $0.07   $0.07   $0.30   $0.13   $0.04   $0.06   $0.07   $0.07   $0.06   $0.07 
FFO   0.24    0.23    0.20    0.25    0.20    0.22    0.21    0.21    0.20    0.22 
FAD   0.21    0.20    0.17    0.20    0.16    0.18    0.19    0.19    0.18    0.19 
                                                   
Weighted Average Shares (basic and diluted)   82,937    82,937    81,437    81,437    81,600    82,937    79,681    79,681    79,751    80,187 

 

The Company defines FAD as the sum of (1) FFO, (2) less the effect of straight-line rent, (3) less recurring capital expenditures that are generally for maintenance of properties and are not recovered through rental income from tenants, and (4) plus non-cash compensation expenses, if any. FAD should not be considered as an alternative to net income (determined in accordance with GAAP), 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, FAD should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

 

 

June 30, 2012
  25
 
 
 
     EBITDA Reconciliation and Definition
(in thousands, except ratio amounts)

 

 

   For the three                   Year Ended                   Year Ended 
   months ended:   For the three months ended:   31-Dec-11   For the three months ended:   31-Dec-10 
   31-Mar-12   30-Jun-12   31-Mar-11   30-Jun-11   30-Sep-11   31-Dec-11       31-Mar-10   30-Jun-10   30-Sep-10   31-Dec-10     
                                                 
Net income  $5,738   $5,434   $24,767   $10,381   $3,314   $5,062   $43,524   $5,562   $5,954   $4,757   $5,820   $22,093 
Interest expense   3,677    4,037    2,408    3,578    3,419    3,261    12,666    1,652    1,735    1,892    2,004    7,283 
Depreciation and amortization   13,295    13,203    10,812    12,047    12,332    13,248    48,439    9,934    9,675    10,510    10,605    40,724 
Income taxes   79    77    50    68    67    82    267    (68)   5    (37)   317    217 
EBITDA   22,789    22,751    38,037    26,074    19,132    21,653    104,896    17,080    17,369    17,122    18,746    70,317 
                                                             
Interest expense  $3,677   $4,037   $2,408   $3,578   $3,419   $3,261   $12,666   $1,652   $1,735   $1,892   $2,004   $7,283 
Scheduled principal payments (1)   —    —    —    —    —    —    —    —    —    —    150    150 
Interest and scheduled principal payments  $3,677   $4,037   $2,408   $3,578   $3,419   $3,261   $12,666   $1,652   $1,735   $1,892   $2,154   $7,433 
                                                             
Interest coverage ratio   6.20    5.64    15.80    7.29    5.60    6.64    8.28    10.34    10.01    9.05    9.35    9.65 
                                                             
Debt service coverage ratio   6.20    5.64    15.80    7.29    5.60    6.64    8.28    10.34    10.01    9.05    8.70    9.46 

 

EBITDA, a non-GAAP financial measure, is defined as net income, plus interest expense, income tax expense and depreciation and amortization expense. EBITDA is not intended to represent cash flow for the period, is 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 is not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA is 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 the same way, this presentation of EBITDA may not be comparable to similarly titled measures of other companies. The Company believes that net income is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA.

  

June 30, 2012
  26
 
 
 
     Reconciliation of Net Income to Property NOI
and Definition
(in thousands)

 

 

   Three Months Ended   Three Months Ended   2011   Three Months Ended   2010 
   31-Mar-12   30-Jun-12   31-Mar-11   30-Jun-11   30-Sep-11   31-Dec-11   Total   31-Mar-10   30-Jun-10   30-Sep-10   31-Dec-10   Total 
                                                 
Net Income  $5,738   $5,434   $24,767   $10,381   $3,314   $5,062   $43,524   $5,562   $5,954   $4,757   $5,820   $22,093 
Add (deduct):                                                            
Investment banking segment net loss (income)   —    —    (160)   (3,274)   139    (132)   (3,427)   479    (263)   401    (1,352)   (735)
Gain on sale of assets   —    —    (19,593)   (2,346)   —    —    (21,939)   —    —    —    —    — 
Management fees (before elimination)   (488)   (479)   (364)   (428)   (439)   (563)   (1,794)   (484)   (359)   (362)   (535)   (1,740)
Depreciation and Amortization   13,256    13,224    10,781    12,065    12,279    13,195    48,320    9,184    9,205    10,348    10,453    39,190 
Amortization of favorable leases   40    (20)   (39)   (23)   (57)   72    (47)   716    432    96    119    1,363 
Selling, general and administrative   2,077    2,236    1,644    1,602    1,656    2,011    6,913    1,447    1,854    1,400    1,698    6,399 
Interest expense   3,677    4,037    2,408    3,578    3,419    3,260    12,665    1,652    1,736    1,892    2,003    7,283 
Interest income   (2,340)   (2,774)   (600)   (910)   (790)   (810)   (3,110)   (338)   (374)   (431)   (491)   (1,634)
Equity in earnings of nonconsolidated REITs   (391)   (494)   (968)   (1,166)   (573)   (978)   (3,685)   (253)   (380)   (404)   (229)   (1,266)
Non-property specific income and expenses, net   24    (51)   (1,513)   (37)   67    305    (1,178)   461    690    421    (268)   1,304 
Property NOI   21,593    21,113    16,363    19,442    19,015    21,422    76,242    18,426    18,495    18,118    17,218    72,257 

 

Property NOI is a non-GAAP financial measure equal to net income, the most directly comparable GAAP financial measure, plus selling, 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, gains or losses on the sale of assets and excludes non-property specific income and expenses. Property NOI presented 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 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, 2012
  27
 
 
 

 

   

Investor Relations Contact

 

(877) 686-9496

InvestorRelations@franklinstreetproperties.com

 

 

 

Franklin Street Properties Corp. ● 401 Edgewater Place ● Wakefield, MA 01880 ● (781) 557-1300

 

www.franklinstreetproperties.com