Franklin Street Properties Corp. Investor Presentation – June, 2018 401 Edgewater Place ● Wakefield, MA 01880 0 (781) 557-1300 ● www.fspreit.com
Forward-looking Statements and Other Legal Disclosures This 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 are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that the Company's forward-looking statements involve risks and uncertainty, including without limitation, changes in the United States economy and the real estate industry and in performance of the financial markets; changes in energy prices; competition in the leasing market; the demand for and market acceptance of the Company's properties for rental purposes; oversupply of office properties in the Company's geographic markets; the amount and growth of the Company's expenses; the Company's ability to remain in compliance with the covenants under the Company's credit facilities and senior notes; future dividend levels of the Company; the Company’s ability to refinance existing indebtedness and/or to obtain new indebtedness; the Company’s ability to access the equity markets; tenant financial difficulties and general economic conditions, including interest rates and the effects of regulatory and fiscal uncertainty, as well as changes in market rental rates and economic conditions in the Company's geographic markets; 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 risks associated 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; the Company's dependence on key personnel; the outcome of claims and litigation involving or affecting the Company; compliance with environmental and other regulations, 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 the Company'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, as updated 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 information concerning these risks and uncertainties. Although the Company believes the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. The Company does not undertake to update or revise any forward-looking statements 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 future results, and there can be no assurance that the Company will achieve comparable results or that illustrative returns, if any, will be met. Information in this presentation is as of March 31, 2018 unless indicated otherwise, and the delivery of this presentation at any time shall under no circumstances create an implication that 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. Although the Company believes that these statistics and data are reasonable, they have been derived from third party sources and have not been independently verified by the Company. 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 and AFFO. 1
Corporate Overview 2
Corporate Overview Central Business District (CBD) and Infill Office Properties With Primary Focus on Sunbelt and Mountain West Markets of Atlanta, Dallas, Denver, Houston & Minneapolis Class A Office Value Creation Flexible Balance Portfolio Opportunities Sheet 34 Properties (1) 88.5% leased (1) • • • Moody’s Baa3 Rating • 500,000+ SF of potential 9.8 Million RSF (1) • leasing for Q2 2018, including • 100% Unsecured Debt 801 Marquette • 1.1 Million SF of existing • Lengthened debt maturities: • Disciplined core market focus vacancy presents upside 77% of debt is fixed rate potential (1) • Increased liquidity with $502 • Growth potential in core • Potential of energy to be a Million available under the markets catalyst revolver ____________________ 3 Source: Source: Public Company Filings and Disclosures (1) Excludes 801 Marquette Avenue, Minneapolis, MN, which is redeveloped and is classified as non-operating
Corporate Information 401 Edgewater Place Wakefield, MA 01880 Headquarters Equity Market Capitalization $0.9bn NYSE American: FSP Ticker Total Enterprise Value $2.0bn 34 Directly-Owned Properties (1) Leverage Ratio (2) 47.7% ~9.8mm Directly-Owned Square Feet (1) Fixed Charge Coverage Ratio (2) 3.6x 88.5% Directly-Owned Percent Leased (1) Unencumbered Leverage Ratio (2) 51.8% 100% Unsecured Debt Structure Unsecured Interest Coverage (2) 3.7x Baa3 Corporate Moody's Rating Tangible Net Worth (2) $840.2mm Core Markets by Square Feet 26.7% 20.1% 12.6% 12.2% 6.4% Atlanta Dallas Denver Houston Minneapolis ____________________ Source: Source: Public Company Filings and Disclosures 4 (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
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 (1) Experienced Cycle-Tested Management Team 999 Peachtree Street Atlanta, GA 622,000 RSF 5 ____________________ Source: Source: Public Company Filings and Disclosures
Focused Strategy in Five Core Markets Five Core Investment Principles: 10 Year Job Growth (1) ✓ 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 ✓ Two Ravinia Drive Invest in Cities / Markets with a Track-Record of Committed Investment into Atlanta, GA 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 ____________________ Source: Bureau of Labor Statistics as of April 2018 6 (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.
Portfolio Overview 7
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