WAKEFIELD, Mass.--(BUSINESS WIRE)--Franklin Street Properties Corp. (NYSE American: FSP), a real estate investment trust (REIT), announced its results for the third quarter ended September 30, 2020.

George J. Carter, Chairman and Chief Executive Officer, commented as follows:

“After slower-second quarter 2020 leasing results primarily due to the emergence of the COVID-19 pandemic and its negative effects on economic activity, the pace of third quarter leasing in FSP’s property portfolio improved with approximately 282,000 square feet in total leasing, of which approximately 181,000 square feet was with new tenants. Prior to the emergence of the COVID-19 pandemic, we were confident that the company was well positioned for new tenant absorption, increasing occupancy levels and higher rental rates during 2020, allowing us the potential to start realizing the longer-term value-add property proposition that was such an integral part of the strategy of recasting our portfolio.

We currently have approximately 240,000 square feet of potential net absorption over the next three to six months, consisting of new prospects for approximately 180,000 square feet and tenant expansions for approximately 60,000 square feet.

For the full third quarter of 2020, we collected approximately 98% of contracted rent and as of October 31, 2020 we have collected approximately 98% of October rents. However, at this time, we are not able to predict whether and to what extent our level of rental receipts may change in future months. Consequently, we are continuing suspension of Net Income and Funds From Operations (“FFO”) guidance and will not be providing additional guidance until such time as we have a better understanding of the duration of the COVID-19 pandemic and its impact on our business and the businesses of our tenants.

At this time, we believe the bulk of our tenants will be financially able to weather the COVID-19 pandemic and the inherent value of our property portfolio and our own financial resources and balance sheet flexibility will continue to see us through this difficult time. We believe that we will then be well positioned to resume the strong leasing activity that occurred in 2018, 2019 and the first quarter of 2020.”

Financial Highlights

• Net loss was $1.7 million, or $0.02 per basic and diluted share, for the third quarter ended September 30, 2020.
• FFO was $20.4 million, or $0.19 per basic and diluted share, for the third quarter ended September 30, 2020.
• Adjusted Funds From Operations (AFFO) was $3.5 million or $0.03 per basic and diluted share, for the third quarter ended September 30, 2020.
• As of September 30, 2020, we had $570 million available on our revolving line of credit.
• Our debt is entirely unsecured and we have no debt maturities until November 30, 2021.

COVID-19 Pandemic Update

FSP remains committed to the health and safety of its employees, tenants, vendors and visitors and will continue to implement recommended guidelines for social distancing and other safety protocols at our properties and corporate headquarters.

• We have implemented working from home policies for FSP employees.
• All of our properties remain open for business.
• As of October 31, 2020, we had collected approximately 98% of rental receipts due in October 2020. Due to the high level of uncertainty related to the COVID-19 pandemic, we are unable to predict the level of rental receipts in future months.
• During the past approximately 7 months, we have received rent relief requests from some of our tenants. The majority of these requests for relief have been in the form of potential rent deferrals for varying lengths of time. To date, we have been in discussions with tenants regarding potential rent deferrals representing approximately 1% to 2% of annualized rents. We will continue to review each request for rent relief on a case by case basis. Where prudent, we may grant deferrals and, in some instances, seek extended lease terms. We are unable to predict the outcomes of these ongoing negotiations, the amount of the rent relief packages, if any, and ultimate recovery of any deferred amounts.

Leasing Update

• During the quarter ended September 30, 2020, we leased approximately 282,000 square feet, of which approximately 181,000 square feet was with new tenants. During the nine months ended September 30, 2020, we leased approximately 606,000 square feet, of which approximately 347,000 square feet was with new tenants. During the year ended December 31, 2019, we leased approximately 1,417,000 square feet, of which approximately 534,000 square feet was with new tenants.
• Our directly owned real estate portfolio of 35 owned properties (including our 3 redevelopment properties) totaling approximately 9.9 million square feet was approximately 84.3% leased as of September 30, 2020, compared to approximately 83.3% leased as of June 30, 2020.
• On September 14, 2020, we announced that we entered into a lease agreement with a new tenant with an initial term of 16 years for approximately 94,000 square feet, approximately 23,000 square feet of which is at our property known as 121 South Eighth Street in Minneapolis, Minnesota and approximately 71,000 square feet of which is at our property known as 801 Marquette in Minneapolis, Minnesota. Together with leases signed previously, 801 Marquette was approximately 91.8% leased as of September 30, 2020.
• On September 24, 2020, we announced that we entered into a lease agreement with a new tenant with an initial term of 7 years for approximately 28,000 square feet, or 43.9% of the rentable square feet at our property known as Forest Park, in Charlotte, North Carolina. Together with leases signed previously, Forest Park was approximately 78.4% leased as of September 30, 2020.
• Despite delays caused by COVID-19, we currently have approximately 240,000 square feet of potential net absorption over the next three to six months, consisting of new prospects for 180,000 square feet and tenant expansions for 60,000 square feet.
• Lease expirations for the remainder of 2020 are approximately 78,000 square feet, or approximately 0.8% of our owned portfolio.
• The weighted average GAAP base rent per square foot achieved on leasing activity during the nine months ended September 30, 2020 was $29.61, or 11.8% higher than average rents in the respective properties as applicable compared to the year ended December 31, 2019. The average lease term on leases in the nine months ended September 30, 2020, shortened to 7.8 years compared to 8.3 years for the full year of 2019. Overall the portfolio weighted average rent per occupied square foot increased to $29.92 as of September 30, 2020 from $29.88 as of December 31, 2019.

Dividend Update

On October 9, 2020, the Company announced that its Board of Directors declared a regular quarterly cash dividend for the three months ended September 30, 2020 of $0.09 per share of common stock that will be paid on November 12, 2020 to stockholders of record on October 23, 2020.

Non-GAAP Financial Information

A reconciliation of Net income to FFO, AFFO and Sequential Same Store NOI and our definitions of FFO, AFFO and Sequential Same Store NOI can be found on Supplementary Schedules H and I.

Real Estate Update

Supplementary schedules provide property information for the Company’s owned and managed real estate portfolio as of September 30, 2020. The Company will also be filing an updated supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company will file this supplemental information package with the SEC and make it available on its website at www.fspreit.com.

Today’s news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.fspreit.com. We routinely post information that may be important to investors in the Investor Relations section of our website. We encourage investors to consult that section of our website regularly for important information about us and, if they are interested in automatically receiving news and information as soon as it is posted, to sign up for E-mail Alerts.

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. To learn more about FSP please visit our website at www.fspreit.com.