WAKEFIELD, Mass.--(BUSINESS WIRE)--Franklin Street Properties Corp. (NYSE American: FSP), a real estate investment trust (REIT), announced its results for the fourth quarter and year ended December 31, 2020.

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

“Reflecting on 2020, I would like to start by thanking everyone who contributed to the successful operation of our business during these challenging times that were headlined by the COVID-19 pandemic, including frontline workers, first responders, our tenants and their employees, FSP employees, our vendors and service providers, our Board of Directors, and of course, our shareholders. Notwithstanding the specific challenges caused by the pandemic, for full-year 2020, our monthly rental collections averaged approximately 99% and we achieved approximately 1,130,000 square feet of total leasing with new tenants, renewals and expansions.

For 2021, we are focused on two primary objectives: leasing progress and debt reduction. From a leasing perspective, we anticipate the potential for growing office space demand in our markets as a result of an improved economic situation due to increasing access to both therapeutics and vaccines. We believe that users of office space are now reconsidering the office densification trends of the past approximately 20 years. We also believe that, even with the continuation of some planned for level of remote/work-from-home flexibility, the potential reversal or slowing of office densification could bode well for future office space absorption. Our 2021 leasing focus includes both increased economic occupancy and longer-term renewals of existing tenants. We believe that successful leasing efforts will translate into higher property valuations.

In terms of debt reduction, we believe that the sale of our Emperor Boulevard property in Durham, North Carolina on December 23, 2020 for $89.7 million demonstrated our ability to identify and dispose of a property that we viewed as having reached its valuation objective, and then to apply substantially all of the proceeds to the repayment of debt. FSP intends to build upon our sale of Emperor Boulevard by pursuing additional dispositions, particularly where we believe that embedded values of properties may not be appropriately reflected in the price of our common stock, and then to apply the proceeds from any such dispositions primarily for the repayment of debt. We believe that further debt reduction will provide greater financial flexibility and position the Company for stronger shareholder returns. Accordingly, we have introduced full year 2021 disposition guidance in the range of approximately $350 million to $450 million in aggregate gross proceeds.

FSP remains committed to its Sunbelt and Mountain-West office focus that emphasizes markets/properties with compelling long-term population and employment growth potential. We look forward to 2021 with anticipation and optimism.”

Financial Highlights

• Net Income was $37.4 million and $32.6 million, or $0.35 and $0.30 per basic and diluted share, for the fourth quarter and year ended December 31, 2020, respectively.
• Funds From Operations (FFO) was $17.4 million and $79.3 million, or $0.16 and $0.74 per basic and diluted share, for the fourth quarter and year ended December 31, 2020, respectively.
• FFO for the fourth quarter and year ended December 31, 2020 includes a charge of $3.1 million, or $0.03 per share, as a result of a write-off related to the December 21, 2020 voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code by the parent of WorldVentures Holdings, LLC (the “WorldVentures Bankruptcy”). WorldVentures leases approximately 130,000 square feet at our Legacy Tennyson property in Plano, Texas.
• Adjusted Funds From Operations (AFFO) was $0.05 and $0.11 per basic and diluted share for the fourth quarter and year ended December 31, 2020, respectively.
• On December 23, 2020, we sold our Emperor Boulevard property in Durham, North Carolina for $89.7 million, or approximately $346 per square foot, and recorded a gain of approximately $41.9 million in connection with the sale.
• In December 2020, we repaid $87.3 million of debt under our revolving and term loan facilities using net proceeds from the sale of Emperor Boulevard.
• We have $600.7 million of liquidity as of December 31, 2020, consisting of $4.2 million of cash and $596.5 million available on our revolving line of credit.
• Our debt is entirely unsecured and we have no scheduled 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.

• All of our properties remain open for business.
• As of February 12, 2021, we had collected approximately 99% of rental receipts due in January 2021. 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.
• We collected approximately 98% of rental receipts due for the fourth quarter 2020 and approximately 99% of rental receipts due for the year ended December 31, 2020.
• For the year ended December 31, 2020, we had tenant write-offs of approximately $3.8 million, representing approximately 1.5% of annualized rents.
• During the COVID-19 pandemic, 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. Excluding any impact from the WorldVentures Bankruptcy, as of February 5, 2021, we are in discussions with tenants regarding potential rent deferrals representing less than approximately 1% 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 December 31, 2020, we leased approximately 524,000 square feet, of which approximately 21,000 square feet was with new tenants. During the year ended December 31, 2020, we leased approximately 1,130,000 square feet, of which approximately 368,000 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 34 owned properties (including our 2 redevelopment properties) totaling approximately 9.7 million square feet, was approximately 83.8% leased as of December 31, 2020, compared to approximately 84.3% leased as of September 30, 2020. The decrease in the leased percentage is primarily a result of the December 23, 2020 sale of our Emperor Boulevard property with 259,531 rentable square feet, which was 100% leased and is excluded from our statistics at year-end.
• During the quarter ended December 31, 2020, existing tenant Booz Allen Hamilton entered into an amendment to its lease to extend and expand its leased square footage at our Meadow Point property in Chantilly, Virginia by approximately 29,000 rentable square feet, from approximately 34,000 rentable square feet to approximately 63,000 rentable square feet. The term of the expansion is 67 months, with the term of the lease now expiring on July 31, 2027. Meadow Point was approximately 91% leased as of December 31, 2020.
• During the quarter ended December 31, 2020, existing tenant Centene Management Company entered into an amendment to its lease to extend and expand its leased square footage at our Timberlake Corporate Center in Chesterfield, Missouri by approximately 100,000 rentable square feet, from approximately 217,000 rentable square feet to approximately 317,000 rentable square feet. The term was extended by 84 months, with the term of the lease now expiring on June 30, 2030. Timberlake Corporate Center was 100% leased as of December 31, 2020.
• Lease expirations for 2021 are approximately 739,000 square feet, representing approximately 7.6% of our owned portfolio.
• The weighted average GAAP base rent per square foot achieved on leasing activity during the year ended December 31, 2020 was $28.47, or 7.7% 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 year ended December 31, 2020, was 8.3 years, matching the 8.3 years for the full year of 2019. Overall the portfolio weighted average rent per occupied square foot was $29.60 as of December 31, 2020 compared to $29.88 as of December 31, 2019.

Dividend Update

On January 15, 2021, the Company announced that its Board of Directors declared a regular quarterly cash dividend for the three months ended December 31, 2020 of $0.09 per share of common stock that will be paid on February 18, 2021 to stockholders of record on January 29, 2021.

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.

2021 Net Income, FFO and Disposition Guidance

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 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. However, we are introducing disposition guidance for full year 2021, as we execute on a strategy to dispose of certain properties where we believe our valuation objectives have been met. Anticipated dispositions in 2021 are estimated to result in aggregate gross proceeds in the range of approximately $350 million to $450 million. We intend to use the proceeds of any such dispositions primarily for the repayment of debt under our revolving line of credit and term loan facilities, any special distributions required to meet REIT requirements, and general corporate purposes. This guidance reflects our current expectations of economic and market conditions and is subject to change. We will update our disposition guidance quarterly in our earnings releases. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

Real Estate Update

Supplementary schedules provide property information for the Company’s owned and managed real estate portfolio as of December 31, 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.