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FSP Franklin Street Properties

Filed: 16 Feb 21, 4:32pm

Exhibit 99.2 

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Fourth Quarter 2020
Table of Contents

Page

Page

Company Information

3

Tenant Analysis and Leasing Activity

Tenants by Industry

18

Key Financial Data

20 Largest Tenants with Annualized Rent and Remaining Term

19-20

Financial Highlights

4

Leasing Activity

21

Income Statements

5

Lease Expirations by Square Feet

22

Balance Sheets

6

Lease Expirations with Annualized Rent per Square Foot

23

Cash Flow Statements

7

Redevelopment Activity

24

Property Net Operating Income (NOI)

8

Capital Expenditures

25

Reconciliation

Transaction Activity

26

FFO & AFFO

9

EBITDA

10

Loan Portfolio of Secured Real Estate

27

Property NOI

11

Net Asset Value Components

28

Debt Summary

12

Appendix: Non-GAAP Financial Measures Definitions

Capital Analysis

13

FFO

29

EBITDA and NOI

30

Owned and Managed Portfolio Overview

14-17

AFFO

31

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 adverse changes in general economic or local market conditions, including as a result of the COVID-19 pandemic and other potential infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, increasing interest rates, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, any inability to dispose of properties on acceptable terms and any delays in the timing of any such anticipated dispositions, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated such as utility rate and usage increases, delays in construction schedules, unanticipated increases in construction costs, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments.  FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

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Greenwood Plaza, Englewood, CO

December 31, 2020| Page 2


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Company Information

Overview

Snapshot (as of December 31, 2020)

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. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management.

Corporate Headquarters

Wakefield, MA

Fiscal Year-End

31-Dec

Total Properties

34 (1)

Total Square Feet

9.7 Million (1)

Trading Symbol

FSP

Exchange

NYSE American

Common Shares Outstanding

107,328,199

Quarterly Dividend

$0.09

Our Business

Dividend Yield

8.2%

As of December 31, 2020, the Company owned and operated a portfolio of real estate consisting of 32 operating  properties, two redevelopment properties and two managed Sponsored REITs.  From time-to-time, the Company may acquire, develop or redevelop 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.

Total Market Capitalization

$1.4 Billion (2)

Insider Holdings

4.38%

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Management Team

George J. Carter

Jeffrey B. Carter

Chief Executive Officer and

President and Chief Investment

Chairman of the Board

Officer

John G. Demeritt

Scott H. Carter

Executive Vice President, Chief

Executive Vice President, General

Financial Officer and Treasurer

Counsel and Secretary

John F. Donahue

Eriel Anchondo

Executive Vice President

Executive Vice President and

Chief Operating Officer

Plaza Seven, Minneapolis, MN

Inquiries

Inquiries should be directed to: Georgia Touma

877.686.9496 or InvestorRelations@fspreit.com

(1) Includes both operating and redevelopment properties.

(2) Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt

outstanding.

December 31, 2020| Page 3


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Summary of Financial Highlights

(in thousands except per share amounts, SF & number of properties)

31-Dec-20

    

    

30-Sep-20

    

30-Jun-20

    

31-Mar-20

31-Dec-19

 

Income Items:

Rental revenue

$

59,408

$

61,834

$

60,398

$

62,567

$

68,575

Total revenue

59,810

62,247

60,808

62,983

68,997

Net income (loss)

37,440

(1,679)

(2,075)

(1,071)

3,648

Adjusted EBITDA (a)*

26,409

29,334

29,139

30,325

35,632

FFO*

17,466

20,446

20,194

21,292

26,755

AFFO*

4,867

3,452

165

3,101

544

Per Share Data:

EPS

$

0.35

$

(0.02)

$

(0.02)

$

(0.01)

$

0.03

FFO*

$

0.16

$

0.19

$

0.19

$

0.20

$

0.25

AFFO*

$

0.05

$

0.03

$

0.00

$

0.03

$

0.01

Weighted Average Shares (diluted)

107,328

107,328

107,287

107,269

107,240

Closing share price

$

4.37

$

3.66

$

5.09

$

5.73

$

8.56

Dividend declared

$

0.09

$

0.09

$

0.09

$

0.09

$

0.09

Balance Sheet Items:

Real estate, net

$

1,602,016

$

1,649,649

$

1,645,898

$

1,639,196

$

1,637,210

Other assets, net

191,168

190,372

189,537

208,431

205,444

Total assets, net

1,793,184

1,840,021

1,835,435

1,847,627

1,842,654

Total liabilities, net

1,025,093

1,102,556

1,089,432

1,090,309

1,056,258

Shareholders' equity

768,091

737,465

746,003

757,318

786,396

Market Capitalization and Debt:

Total Market Capitalization (b)

$

1,392,524

$

1,392,821

$

1,546,301

$

1,614,653

$

1,888,224

Total debt outstanding (excluding unamortized financing costs)

$

923,500

$

1,000,000

$

1,000,000

$

1,000,000

$

970,000

Debt to Total Market Capitalization

66.3%

71.8%

64.7%

61.9%

51.4%

Net Debt to Adjusted EBITDA ratio (a)*

8.7

8.5

8.6

8.1

6.7

Operating Properties Leasing Statistics (c):

Operating properties assets

32

32

32

32

32

Operating properties total SF

9,331,489

9,526,822

9,508,226

9,506,513

9,504,634

Operating properties % leased

85.0%

85.6%

84.5%

85.4%

87.6%


(a)Includes a $3,084 (or $12,336 annualized) charge during the three months ended December 31, 2020 from a lease write-off of a tenant in the travel industry that filed for bankruptcy on December 21, 2020, and includes accrued rent (all of which was included within rental revenue). Management believes excluding the impact of this write-off may be more useful in making period to period comparisons of our leverage ratio, and if such write-off were excluded, our Net Debt-to-Adjusted EBIDTA* ratio would have been 7.8 at December 31, 2020.
(b)Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt outstanding on that date.
(c)Excludes redevelopment properties.

*

See pages 9 & 10 for reconciliations of Net income or loss to FFO, AFFO and Adjusted EBITDA, respectively, and the Appendix for Non-GAAP Financial Measures Definitions beginning on page 29.

December 31, 2020| Page 4


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Condensed Consolidated Income Statements

($ in thousands, except per share amounts)

For the

For the

For the Three Months Ended

Year Ended

For the Three Months Ended

Year Ended

31-Mar-20

30-Jun-20

30-Sep-20

31-Dec-20

31-Dec-20

31-Mar-19

30-Jun-19

30-Sep-19

31-Dec-19

31-Dec-19

Revenue:

Rental

  

$

62,567

  

$

60,398

  

$

61,834

$

59,408

    

$

244,207

  

  

$

63,359

  

$

65,485

  

$

68,108

  

$

68,575

  

$

265,527

Related party revenue:

Management fees and interest income from loans

403

405

400

402

1,610

1,352

1,322

426

417

3,517

Other

13

5

13

31

5

6

5

5

21

Total revenue

62,983

60,808

62,247

59,810

245,848

64,716

66,813

68,539

68,997

269,065

Expenses:

Real estate operating expenses

17,298

15,470

16,730

17,442

66,940

17,726

17,116

18,041

19,428

72,311

Real estate taxes and insurance

11,762

12,307

12,279

12,042

48,390

12,102

12,801

12,505

10,463

47,871

Depreciation and amortization

22,338

22,245

22,076

21,899

88,558

23,245

22,109

22,559

22,996

90,909

General and administrative

3,525

3,817

3,817

3,838

14,997

3,509

3,702

3,886

3,376

14,473

Interest

9,063

8,980

8,953

9,030

36,026

9,368

9,371

9,036

8,982

36,757

Total expenses

63,986

62,819

63,855

64,251

254,911

65,950

65,099

66,027

65,245

262,321

Gain on sale of property

41,928

41,928

Income (loss) before taxes on income

(1,003)

(2,011)

(1,608)

37,487

32,865

(1,234)

1,714

2,512

3,752

6,744

Tax expense on income

68

64

71

47

250

(29)

81

113

104

269

Net income (loss)

$

(1,071)

$

(2,075)

$

(1,679)

$

37,440

$

32,615

$

(1,205)

$

1,633

$

2,399

$

3,648

$

6,475

Weighted average number of shares outstanding, basic and diluted

107,269

107,287

107,328

107,328

107,303

107,231

107,231

107,231

107,240

107,233

Net income (loss) per share, basic and diluted

$

(0.01)

$

(0.02)

$

(0.02)

$

0.35

$

0.30

$

(0.01)

$

0.02

$

0.02

$

0.03

$

0.06

December 31, 2020| Page 5


$ in thousands, except per share amounts)

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Condensed Consolidated Balance Sheets

(in thousands)

March 31,

June 30,

September 30,

December 31,

March 31,

June 30,

September 30,

December 31,

    

2020

2020

    

2020

    

2020

  

  

2019

2019

    

2019

    

2019

 

Assets:

Real estate assets:

Land

$

191,578

$

191,578

$

191,578

$

189,155

$

191,578

$

191,578

$

191,578

$

191,578

Buildings and improvements

1,941,952

1,964,308

1,983,979

1,938,629

1,872,082

1,886,294

1,900,131

1,924,664

Fixtures and equipment

11,917

12,250

12,714

12,949

9,153

10,607

11,099

11,665

2,145,447

2,168,136

2,188,271

2,140,733

2,072,813

2,088,479

2,102,808

2,127,907

Less accumulated depreciation

506,251

522,238

538,622

538,717

447,980

460,798

476,298

490,697

Real estate assets, net

1,639,196

1,645,898

1,649,649

1,602,016

1,624,833

1,627,681

1,626,510

1,637,210

Acquired real estate leases, net

37,270

34,022

31,011

28,206

53,948

49,475

45,066

40,704

Cash, cash equivalents and restricted cash

17,283

2,890

4,840

4,150

8,832

13,100

20,159

9,790

Tenant rent receivables, net

3,609

4,192

4,007

7,656

4,489

6,366

4,410

3,851

Straight-line rent receivable, net

68,317

69,062

71,033

67,789

55,836

61,438

64,111

66,881

Prepaid expenses and other assets

7,486

6,506

6,538

5,752

10,469

8,052

8,868

7,246

Related party mortgage loan receivable

21,000

21,000

21,000

21,000

72,795

21,530

21,265

21,000

Other assets: derivative asset

10,469

4,645

2,844

3,022

Office computers and furniture, net of accumulated depreciation

215

196

178

163

166

154

136

183

Deferred leasing commissions, net

53,251

51,669

51,765

56,452

49,408

50,901

49,781

52,767

Total assets

$

1,847,627

$

1,835,435

$

1,840,021

$

1,793,184

$

1,891,245

$

1,843,342

$

1,843,150

$

1,842,654

Liabilities and Stockholders’ Equity:

Liabilities:

Bank note payable

$

30,000

$

30,000

$

30,000

$

3,500

$

40,000

$

$

$

Term loan payable, net of unamortized financing costs

766,124

766,493

766,863

717,323

764,642

765,005

765,369

765,733

Series A & Series B Senior Notes

199,055

199,096

199,137

199,178

198,892

198,933

198,974

199,015

Accounts payable and accrued expenses

57,076

55,712

69,905

72,058

52,248

54,282

61,657

66,658

Accrued compensation

1,335

2,278

3,634

3,918

1,073

2,191

3,769

3,400

Tenant security deposits

9,615

9,155

9,435

8,677

6,352

9,118

9,008

9,346

Lease liability

1,803

1,716

1,627

1,536

2,141

2,059

1,976

1,890

Other liabilities: derivative liabilities

23,035

22,958

20,157

17,311

2,496

8,132

9,934

7,704

Acquired unfavorable real estate leases, net

2,266

2,024

1,798

1,592

3,414

3,114

2,810

2,512

Total liabilities

1,090,309

1,089,432

1,102,556

1,025,093

1,071,258

1,042,834

1,053,497

1,056,258

Commitments and contingencies

Stockholders’ Equity:

Preferred stock

Common stock

11

11

11

11

11

11

11

11

Additional paid-in capital

1,356,794

1,357,131

1,357,131

1,357,131

1,356,457

1,356,457

1,356,457

1,356,794

Accumulated other comprehensive income (loss)

(23,035)

(22,958)

(20,157)

(17,311)

7,973

(3,487)

(7,090)

(4,682)

Accumulated distributions in excess of accumulated earnings

(576,452)

(588,181)

(599,520)

(571,740)

(544,454)

(552,473)

(559,725)

(565,727)

Total stockholders’ equity

757,318

746,003

737,465

768,091

819,987

800,508

789,653

786,396

Total liabilities and stockholders’ equity

$

1,847,627

$

1,835,435

$

1,840,021

$

1,793,184

$

1,891,245

$

1,843,342

$

1,843,150

$

1,842,654

December 31, 2020| Page 6


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Condensed Consolidated Statements of Cash Flows

(in thousands)

Twelve Months Ended December 31,

2020

2019

2018

 

Cash flows from operating activities:

Net income

$

32,615

$

6,475

$

13,069

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

91,581

93,787

97,171

Amortization of above and below market leases

(313)

(402)

(556)

Shares issued as compensation

337

337

Gain on sale of property

(41,928)

Equity in income from non-consolidated REITs

(6,793)

Decrease in allowance for doubtful accounts
and write-off of accounts receivable

(13)

(71)

(50)

Changes in operating assets and liabilities:

Tenant rent receivables

(3,792)

158

(765)

Straight-line rents

(1,685)

(8,876)

381

Lease acquisition costs

(2,123)

(3,999)

(1,193)

Prepaid expenses and other assets

(129)

2,313

(1,940)

Accounts payable and accrued expenses

7,785

3,910

(4,077)

Accrued compensation

518

357

(598)

Tenant security deposits

(669)

3,027

936

Payment of deferred leasing commissions

(13,735)

(15,101)

(15,383)

Net cash provided by operating activities

68,449

81,915

80,202

Cash flows from investing activities:

Property improvements, fixtures and equipment

(77,919)

(70,746)

(51,057)

Investments in non-consolidated REITs

74,931

Distributions in excess of earnings from non-consolidated REITs

710

Investment in related party mortgage loan receivable

(2,400)

Repayment of related party mortgage loan receivable

52,060

1,060

Proceeds received from liquidating trust

��

1,470

Proceeds received on sale of property

88,958

Net cash provided by (used) in investing activities

11,039

(19,616)

25,644

Cash flows from financing activities:

Distributions to stockholders

(38,628)

(38,603)

(49,326)

Borrowings under bank note payable

105,000

45,000

38,000

Repayments of bank note payable

(101,500)

(70,000)

(91,000)

Repayment on term loan payable

(50,000)

Deferred Financing Costs

(83)

(2,162)

Net cash used in financing activities

(85,128)

(63,686)

(104,488)

Net increase (decrease) in cash, cash equivalents and restricted cash

(5,640)

(1,387)

1,358

Cash, cash equivalents and restricted cash, beginning of period

9,790

11,177

9,819

Cash, cash equivalents and restricted cash, end of period

$

4,150

$

9,790

$

11,177

December 31, 2020| Page 7


Graphic

Property Net Operating Income (NOI)* with

Same Store Comparison (in thousands)

Rentable

Year

Year

 

Square Feet

Three Months Ended

Ended

Three Months Ended

Ended

Inc

%

 

(in thousands)

    

or RSF

   

31-Mar-20

   

30-Jun-20

   

30-Sep-20

31-Dec-20

   

31-Dec-20

   

31-Mar-19

   

30-Jun-19

   

30-Sep-19

31-Dec-19

   

31-Dec-19

   

(Dec)

   

Change

 

Region

East

 

573

 

$

1,325

 

$

1,552

 

$

922

$

1,047

 

$

4,846

 

$

1,153

 

$

1,286

 

$

1,184

$

1,217

 

$

4,840

 

$

6

 

0.1

%

MidWest

 

1,557

 

5,485

 

5,089

 

5,069

 

5,292

 

20,935

 

5,163

 

5,174

 

5,297

 

5,243

 

20,877

 

58

 

0.3

%

South

 

4,387

 

13,290

 

13,025

 

13,619

 

10,481

 

50,415

 

14,272

 

15,196

 

17,456

 

17,589

 

64,513

 

(14,098)

 

(21.9)

%

West

 

2,620

 

11,463

 

11,211

 

10,976

 

11,006

 

44,656

 

10,558

 

11,240

 

11,134

 

11,975

 

44,907

 

(251)

 

(0.6)

%

Property NOI* from Operating Properties

 

9,137

 

31,563

 

30,877

 

30,586

 

27,826

 

120,852

 

31,146

 

32,896

 

35,071

 

36,024

 

135,137

 

(14,285)

 

(10.6)

%

Dispositions and Redevelopment Properties (a)

519

 

1,311

 

1,319

1,611

1,554

 

5,795

 

1,828

 

1,800

1,796

1,909

 

7,333

 

(1,538)

 

(0.5)

%

Property NOI*

9,656

 

$

32,874

 

$

32,196

 

$

32,197

$

29,380

 

$

126,647

 

$

32,974

 

$

34,696

 

$

36,867

$

37,933

 

$

142,470

 

$

(15,823)

 

(11.1)

%

 

Same Store

 

$

31,563

 

$

30,877

 

$

30,586

$

27,826

 

$

120,852

 

$

31,146

 

$

32,896

 

$

35,071

$

36,024

 

$

135,137

 

$

(14,285)

 

(10.6)

%

Less Nonrecurring

Items in NOI* (b)

 

26

 

810

351

345

 

1,532

 

35

 

706

3,434

4,402

 

8,577

 

(7,045)

 

4.9

%

Comparative

Same Store

 

$

31,537

 

$

30,067

 

$

30,235

$

27,481

 

$

119,320

 

$

31,111

 

$

32,190

 

$

31,637

$

31,622

 

$

126,560

 

$

(7,240)

 

(5.7)

%


(a)We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized. We also include properties that have been placed in service, but that do not have operating activity for all periods presented.
(b)Nonrecurring items in NOI include proceeds from bankruptcies, lease termination fees or other significant nonrecurring income or expenses, which may affect comparability.

*

See Appendix for Non-GAAP Financial Measures Definitions beginning on page 29.

December 31, 2020| Page 8


Graphic

FFO* & AFFO* Reconciliation

(in thousands, except per share amounts)

Year

Year

Three Months Ended

Ended

Three Months Ended

Ended

    

31-Mar-20

    

30-Jun-20

    

30-Sep-20

    

31-Dec-20

    

31-Dec-20

 

 

31-Mar-19

    

30-Jun-19

    

30-Sep-19

    

31-Dec-19

    

31-Dec-19

 

Net income (loss)

$

(1,071)

$

(2,075)

$

(1,679)

$

37,440

$

32,615

$

(1,205)

$

1,633

$

2,399

$

3,648

$

6,475

Gain on sale of property

(41,928)

(41,928)

Depreciation & amortization

22,265

22,170

21,989

21,820

88,244

23,133

22,028

22,448

22,898

90,507

NAREIT FFO*

21,194

20,095

20,310

17,332

78,931

21,928

23,661

24,847

26,546

96,982

Lease Acquisition costs

98

99

136

134

467

182

108

61

209

560

Funds From Operations (FFO)*

$

21,292

$

20,194

$

20,446

$

17,466

$

79,398

$

22,110

$

23,769

$

24,908

$

26,755

$

97,542

Adjusted Funds From Operations (AFFO)*

Funds From Operations (FFO)*

$

21,292

$

20,194

$

20,446

$

17,466

$

79,398

$

22,110

$

23,769

$

24,908

$

26,755

$

97,542

Amortization of deferred financing costs

748

726

727

824

3,025

717

720

720

721

2,878

Shares issued as compensation

337

337

337

337

Straight-line rent

(966)

(377)

(1,293)

951

(1,685)

(1,140)

(3,689)

(2,120)

(1,927)

(8,876)

Tenant improvements

(10,716)

(13,531)

(8,022)

(837)

(33,106)

(8,318)

(10,169)

(7,890)

(15,874)

(42,251)

Leasing commissions

(2,730)

(603)

(2,033)

(7,432)

(12,798)

(4,239)

(3,666)

(1,286)

(3,164)

(12,355)

Non-investment capex

(4,527)

(6,581)

(6,373)

(6,105)

(23,586)

(2,413)

(4,049)

(3,968)

(6,304)

(16,734)

Adjusted Funds From Operations (AFFO)*

$

3,101

$

165

$

3,452

$

4,867

$

11,585

$

6,717

$

2,916

$

10,364

$

544

$

20,541

Per Share Data:

EPS

$

(0.01)

$

(0.02)

$

(0.02)

$

0.35

$

0.30

$

(0.01)

$

0.02

$

0.02

$

0.03

$

0.06

FFO*

0.20

0.19

0.19

0.16

0.74

0.21

0.22

0.23

0.25

0.91

AFFO*

0.03

0.00

0.03

0.05

0.11

0.06

0.03

0.10

0.01

0.19

Weighted Average Shares (basic and diluted)

107,269

107,287

107,328

107,328

107,303

107,231

107,231

107,231

107,240

107,233


*

See Appendix for Non-GAAP Financial Measures Definitions beginning on page 29.

December 31, 2020| Page 9


Graphic

EBITDA* & Adjusted EBITDA* Reconciliation

(in thousands, except ratio amounts)

Year

Year

Three Months Ended

Ended

Three Months Ended

Ended

    

31-Mar-20

    

30-Jun-20

    

30-Sep-20

    

31-Dec-20

    

31-Dec-20

31-Mar-19

    

30-Jun-19

    

30-Sep-19

    

31-Dec-19

    

31-Dec-19

 

 

Net income (loss)

$

(1,071)

$

(2,075)

$

(1,679)

$

37,440

$

32,615

$

(1,205)

$

1,633

$

2,399

$

3,648

$

6,475

Interest expense

9,063

8,980

8,953

9,030

36,026

9,368

9,371

9,036

8,982

36,757

Depreciation and amortization

22,265

22,170

21,989

21,820

88,244

23,133

22,028

22,448

22,898

90,507

Income taxes

68

64

71

47

250

(29)

81

113

104

269

EBITDA (1)*

$

30,325

29,139

29,334

68,337

157,135

$

31,267

$

33,113

$

33,996

$

35,632

$

134,008

(Gain) loss on sale of properties and provisions for loss
on properties held for sale or equity investments

(41,928)

(41,928)

Adjusted EBITDA (1)*

$

30,325

$

29,139

$

29,334

$

26,409

$

115,207

$

31,267

$

33,113

$

33,996

$

35,632

$

134,008

Interest expense

$

9,063

$

8,980

$

8,953

$

9,030

$

36,026

$

9,368

$

9,371

$

9,036

$

8,982

$

36,757

Scheduled principal payments

Interest and scheduled principal payments

$

9,063

$

8,980

$

8,953

$

9,030

$

36,026

$

9,368

$

9,371

$

9,036

$

8,982

$

36,757

Interest coverage ratio (1)

3.35

3.24

3.28

2.92

3.20

3.34

3.53

3.76

3.97

3.65

Debt service coverage ratio (1)

3.35

3.24

3.28

2.92

3.20

3.34

3.53

3.76

3.97

3.65

Debt excluding unamortized financing costs

$

1,000,000

$

1,000,000

$

1,000,000

$

923,500

$

1,010,000

$

970,000

$

970,000

$

970,000

Cash, cash equivalents and restricted cash

17,283

2,890

4,840

4,150

8,832

13,100

20,159

9,790

Net Debt (Debt less Cash, cash equivalents and restricted cash)

$

982,717

$

997,110

$

995,160

$

919,350

$

1,001,168

$

956,900

$

949,841

$

960,210

Adjusted EBITDA (1)*

$

30,325

$

29,139

$

29,334

$

26,409

$

31,267

$

33,113

$

33,996

$

35,632

Annualized

$

121,300

$

116,556

$

117,336

$

105,636

$

125,068

$

132,452

$

135,984

$

142,528

Net Debt-to-Adjusted EBITDA ratio (1)*

8.1

8.6

8.5

8.7

8.0

7.2

7.0

6.7


*

See Appendix for Non-GAAP Financial Measures Definitions beginning on page 29. Amounts in the EBITDA and Adjusted EBITDA reconciliation do not reflect our proportionate share of interest expense, depreciation, amortization, income taxes, gains or losses on sales and debt from our investments in non-consolidated REITs, which are accounted for under the equity method.

(1) Includes a $3,084 (or $12,336 annualized) charge during the three months ended December 31, 2020 from a lease write-off of a tenant in the travel industry that filed for bankruptcy on December 21, 2020, and includes accrued rent (all of which was included within rental revenue). Management believes excluding the impact of this write-off may be more useful in making period to period comparisons of our leverage, Interest coverage and Debt service coverage ratios, and if such write-off were excluded, our Interest coverage ratio and our Debt service coverage ratio for the three months ended December 31, 2020 would have each been 3.26, and our Net Debt-to-Adjusted EBIDTA* ratio would have been 7.8 at December 31, 2020.

December 31, 2020| Page 10


Graphic

Reconciliation of Net Income (Loss) to Property NOI*

(in thousands)

Year

Year

Three Months Ended

Ended

Three Months Ended

Ended

    

31-Mar-20

    

30-Jun-20

    

30-Sep-20

    

31-Dec-20

    

31-Dec-20

    

31-Mar-19

    

30-Jun-19

    

30-Sep-19

    

31-Dec-19

    

31-Dec-19

 

Net income (loss)

$

(1,071)

$

(2,075)

$

(1,679)

$

37,440

$

32,615

$

(1,205)

$

1,633

$

2,399

$

3,648

$

6,475

Add (deduct):

Gain on sale of property

(41,928)

(41,928)

Management fee income

(478)

(446)

(484)

(464)

(1,872)

(677)

(645)

(634)

(570)

(2,526)

Depreciation and amortization

22,338

22,245

22,076

21,899

88,558

23,245

22,109

22,559

22,996

90,909

Amortization of above/below market leases

(73)

(75)

(86)

(79)

(313)

(112)

(81)

(112)

(97)

(402)

General and administrative

3,525

3,817

3,817

3,838

14,997

3,509

3,703

3,886

3,375

14,473

Interest expense

9,063

8,980

8,953

9,030

36,026

9,368

9,371

9,036

8,982

36,757

Interest income

(382)

(381)

(386)

(391)

(1,540)

(1,294)

(1,259)

(395)

(390)

(3,338)

Non-property specific items, net

(48)

131

(14)

35

104

140

(135)

128

(11)

122

Property NOI*

$

32,874

$

32,196

$

32,197

$

29,380

$

126,647

$

32,974

$

34,696

$

36,867

$

37,933

$

142,470


*

See Appendix for Non-GAAP Financial Measures Definitions beginning on page 29.

December 31, 2020| Page 11


Graphic

Debt Summary

(in thousands)

Maximum

Amount

Interest

Interest

Maturity

Amount

Drawn at

Rate (a)

Rate at

Facility

    

Date

    

of Loan

    

31-Dec-20

    

Components

    

31-Dec-20

    

Fee

 

BAML Revolver

12-Jan-22

$

600,000

$

3,500

L

 + 

1.20%

1.35%

0.25%

JPM Term Loan

30-Nov-21

150,000

100,000

2.44%

 + 

1.25%

3.69%

BAML Term Loan

12-Jan-23

400,000

400,000

1.12%

 + 

1.35%

2.47%

BMO Term Loan Tranche A

30-Nov-21

55,000

55,000

2.39%

 + 

1.25%

3.64%

BMO Term Loan Tranche B

31-Jan-24

165,000

165,000

2.39%

 + 

1.25%

3.64%

Series A Senior Notes

20-Dec-24

116,000

116,000

3.99%

Series B Senior Notes

20-Dec-27

84,000

84,000

4.26%

$

1,570,000

$

923,500

3.23%

On August 2, 2018, we entered into an Amended and Restated Credit Agreement with respect to the JPM Term Loan, which extended the maturity of the JPM Term Loan to November 30, 2021 and reduced the number of basis points over the LIBOR-based rate used to determine the interest rate.  The maturity date may be extended by two additional six-month periods or until November 30, 2022.  On March 7, 2019, we entered into interest rate swap transactions for a $100 million portion of the $150 million JPM Term Loan that fixed the LIBOR-based rate at 2.44% from March 29, 2019 and until the loan matures on November 30, 2021.  Accordingly, the interest rate on the $100 million portion was 3.69% at December 31, 2020.  On December 24, 2020, we repaid the $50 million portion of the loan that was not subject to an interest rate swap agreement.      
On September 27, 2018, we entered into a Second Amended and Restated Credit Agreement with respect to the BMO Term Loan, which consists of a $55 million tranche A term loan and a $165 million tranche B term loan.  The tranche A term loan matures on November 30, 2021 and the tranche B term loan matures on January 31, 2024.        
The BAML Revolver is subject to a 25 basis point facility fee based on our credit rating and, when applied to our availability of $600 million at December 31, 2020, would be $1.5 million annually.      
On October 24, 2017, we entered into a note purchase agreement relating to a private placement of $200 million in aggregate principal amount of unsecured senior notes, consisting of $116 million in aggregate principal amount of 3.99% Series A Senior Notes with a 7-year maturity and $84 million in aggregate principal amount of 4.26% Series B Senior Notes with a 10-year maturity.  On December 20, 2017, we drew the proceeds from the private placement and reduced the outstanding balance on our revolving line of credit.  
We incurred financing costs, some of which are deferred and amortized into interest expense during the terms of the loans we execute.  We estimate the annualized rate for this amortization to interest expense will be approximately $2.9 million.
Additional information on these transactions can be found in Current Reports on Form 8-K that the Company filed with the U.S. Securities and Exchange Commission on October 24, 2017, August 2, 2018 and September 27, 2018.    

(a)Interest rate excludes amortization of deferred financing costs and facility fees, which is discussed in the notes above.

December 31, 2020| Page 12


Graphic

Capital Analysis

(in thousands, except per share amounts)

31-Mar-20

30-Jun-20

30-Sep-20

31-Dec-20

31-Mar-19

30-Jun-19

30-Sep-19

31-Dec-19

Market Data:

    

    

    

    

  

  

    

    

    

  

Shares Outstanding

107,269

107,328

107,328

107,328

107,231

107,231

107,231

107,269

Closing market price per share

$

5.73

$

5.09

$

3.66

$

4.37

$

7.19

$

7.38

$

8.46

$

8.56

Market capitalization

$

614,653

$

546,301

$

392,821

$

469,024

$

770,992

$

791,366

$

907,176

$

918,224

Total debt outstanding excluding unamortized financing costs

1,000,000

1,000,000

1,000,000

923,500

1,010,000

970,000

970,000

970,000

Total Market Capitalization

$

1,614,653

$

1,546,301

$

1,392,821

$

1,392,524

$

1,780,992

$

1,761,366

$

1,877,176

$

1,888,224

Dividend Data:

Total dividends declared for the quarter

$

9,654

$

9,654

$

9,660

$

9,660

$

9,651

$

9,651

$

9,651

$

9,650

Common dividend declared per share

$

0.09

$

0.09

$

0.09

$

0.09

$

0.09

$

0.09

$

0.09

$

0.09

Declared dividend as a % of Net income (loss) per share

(901)%

(465)%

(575)%

26%

(801)%

591%

402%

265%

Declared dividend as a % of AFFO* per share

311%

5852%

280%

198%

144%

331%

93%

1774%

Liquidity:

Cash, cash equivalents and restricted cash

$

17,283

$

2,890

$

4,840

$

4,150

$

8,832

$

13,100

$

20,159

$

9,790

Revolver:

Gross potential available under the BAML Revolver

600,000

600,000

600,000

600,000

600,000

600,000

600,000

600,000

Less:

Outstanding balance

(30,000)

(30,000)

(30,000)

(3,500)

(40,000)

Total Liquidity

$

587,283

$

572,890

$

574,840

$

600,650

$

568,832

$

613,100

$

620,159

$

609,790


*

See page 9 for a reconciliation of Net Income (Loss) to AFFO and the Appendix for Non-GAAP Financial Measures Definitions beginning on page 29.

December 31, 2020| Page 13


Graphic

Owned Portfolio Overview

As of the Quarter Ended

    

31-Dec-20

30-Sep-20

30-Jun-20

31-Mar-20

31-Dec-19

 

Operating Properties:

Number of properties

32

32

32

32

32

Square feet

9,331,489

9,526,822

9,508,226

9,506,513

9,504,634

Leased percentage

85.0%

85.6%

84.5%

85.4%

87.6%

Redevelopment Properties (a):

Number of properties

2

3

3

3

3

Square feet

324,651

388,849

405,215

405,215

405,215

Leased percentage

48.0%

53.0%

55.8%

55.8%

50.3%

Total Owned Properties:

Number of properties

34

35

35

35

35

Square feet

9,656,140

9,915,671

9,913,441

9,911,728

9,909,849

Leased percentage

83.8%

84.3%

83.3%

84.2%

86.1%

Managed Properties - Single Asset REITs (SARs):

Number of properties

2

2

2

2

2

Square feet

348,545

348,545

348,545

348,545

348,545

Total Operating, Redevelopment and Managed Properties:

Number of properties

36

37

37

37

37

Square feet

10,004,685

10,264,216

10,261,986

10,260,273

10,258,394

(a)We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

December 31, 2020| Page 14


Graphic

Owned Portfolio Overview

Percent

Wtd Occupied

GAAP

Percent

Wtd Occupied

GAAP

MSA / Property Name

    

City

    

State

    

Square Feet

    

Leased

    

Percentage (a)

    

Rent (b)

    

    

MSA / Property Name

    

City

    

State

    

Square Feet

    

Leased

    

Percentage (a)

    

Rent (b)

 

Owned Properties:

East Region

Midwest Region

Washington, D.C.

Chicago

Meadow Point

Chantilly

VA

138,537

91.1%

74.1%

$

25.03

Northwest Point

Elk Grove Village

IL

177,095

100.0%

100.0%

$

28.08

Loudoun Tech Center

Dulles

VA

136,658

98.9%

98.9%

$

18.64

909 Davis Street

Evanston

IL

195,098

93.3%

93.3%

$

41.05

Stonecroft (c)

Chantilly

VA

111,469

0.0%

0.0%

$

Indianapolis

Richmond, VA

River Crossing

Indianapolis

IN

205,729

100.0%

98.3%

$

24.55

Innsbrook

Glen Allen

VA

298,183

57.2%

57.2%

$

18.70

St. Louis

Charlotte, NC

Timberlake

Chesterfield

MO

234,496

100.0%

95.7%

$

27.65

Forest Park

Charlotte

NC

64,198

78.4%

19.0%

$

21.54

Timberlake East

Chesterfield

MO

117,036

100.0%

97.0%

$

26.59

Minneapolis

121 South 8th Street

Minneapolis

MN

297,209

92.6%

85.8%

$

22.31

801 Marquette Ave

Minneapolis

MN

129,821

91.8%

37.0%

$

29.87

Plaza Seven

Minneapolis

MN

330,096

88.5%

88.3%

$

33.02

East Region Total

749,045

64.4%

56.2%

$

20.31

Midwest Region Total

1,686,580

95.0%

88.6%

$

29.04


(a)Weighted Occupied Percentage for the year ended December 31, 2020.
(b)Weighted Average GAAP Rent per Occupied Square Foot.
(c)We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

December 31, 2020| Page 15


Graphic

Owned Portfolio Overview

Percent

Wtd Occupied

GAAP

Percent

Wtd Occupied

GAAP

MSA / Property Name

    

City

    

State

    

Square Feet

    

Leased

    

Percentage (a)

    

Rent (b)

    

    

MSA / Property Name

    

City

    

State

    

Square Feet

    

Leased

    

Percentage (a)

    

Rent (b)

 

South Region

West Region

Dallas-Fort Worth

Denver

Legacy Tennyson Center

Plano

TX

207,049

100.0%

95.6%

$

14.67

380 Interlocken

Broomfield

CO

240,359

76.0%

72.7%

$

33.10

One Legacy Circle

Plano

TX

214,110

56.4%

47.1%

$

37.78

1999 Broadway

Denver

CO

677,539

81.8%

79.3%

$

33.20

Addison Circle

Addison

TX

289,325

83.7%

77.0%

$

33.37

Greenwood Plaza

Englewood

CO

196,236

100.0%

100.0%

$

25.31

Collins Crossing

Richardson

TX

300,887

83.5%

81.0%

$

26.81

390 Interlocken

Broomfield

CO

241,512

99.4%

98.7%

$

33.20

Liberty Plaza

Addison

TX

216,906

74.1%

72.8%

$

23.07

1001 17th Street

Denver

CO

655,420

96.0%

97.2%

$

37.15

600 17th Street

Denver

CO

609,353

88.0%

86.3%

$

32.26

Houston

West Region Total

2,620,419

89.2%

88.1%

$

33.40

Park Ten

Houston

TX

157,460

71.7%

71.7%

$

27.87

Eldridge Green

Houston

TX

248,399

100.0%

100.0%

$

30.06

Total Owned Properties

9,656,140

83.8%

79.2%

$

29.60

Park Ten Phase II

Houston

TX

156,746

95.0%

90.5%

$

28.45

Westchase I & II

Houston

TX

629,025

53.5%

55.6%

$

28.35

Miami-Ft. Lauderdale-West Palm Beach

Blue Lagoon Drive (c)

Miami

FL

213,182

73.1%

0.0%

$

Atlanta

One Overton Park

Atlanta

GA

387,267

95.6%

86.8%

$

24.02

One Ravinia

Atlanta

GA

386,602

89.0%

86.6%

$

27.47

Two Ravinia

Atlanta

GA

411,047

69.2%

67.6%

$

27.31

Pershing Plaza

Atlanta

GA

160,145

98.9%

98.9%

$

34.22

999 Peachtree

Atlanta

GA

621,946

84.5%

86.1%

$

33.62

South Region Total

4,600,096

79.7%

74.3%

$

28.42


(a)Weighted Occupied Percentage for the year ended December 31, 2020.
(b)Weighted Average GAAP Rent per Occupied Square Foot.
(c)We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

December 31, 2020| Page 16


Graphic

Managed Portfolio Overview

MSA / Property Name

    

City

    

State

    

Square Feet

  

  

  

MSA / Property Name

    

City

    

State

    

Square Feet

 

Southeast Region

Midwest Region

Atlanta

Indianapolis

Satellite Place

Duluth

GA

134,785

Monument Circle

Indianapolis

IN

213,760

Southeast Region Total

134,785

Midwest Region Total

213,760

Total Managed

348,545

Total Owned & Managed

10,004,685

December 31, 2020| Page 17


Graphic

Tenants by Industry

(By Square Feet)

Graphic

December 31, 2020| Page 18


Graphic

20 Largest Tenants with Annualized Rent and Remaining Term

Remaining

Aggregate

% of Aggregate

Tenant

Number of

Lease Term

Leased

% of Total

Annualized

Leased

    

Name

    

Leases

    

in Months

    

Square Feet

    

Square Feet

    

Rent (a)

    

Annualized Rent

 

1

Centene Management Company, LLC (b)

3

114, 114, 114

317,101

3.3%

$

6,526,443

2.8%

2

CITGO Petroleum Corporation

1

14

248,399

2.6%

8,269,203

3.5%

3

Ovintiv USA Inc.

1

14

234,495

2.4%

9,937,161

4.2%

4

US Government (c)

2

1, 1, 121

226,140

2.3%

5,846,360

2.5%

5

Eversheds Sutherland (US) LLP

1

64

179,868

1.9%

6,048,032

2.6%

6

EOG Resources, Inc.

1

72

169,167

1.8%

6,052,795

2.6%

7

The Vail Corporation

1

111

164,636

1.7%

5,641,693

2.4%

8

Lennar Homes, LLC (d)

1

192

155,808

1.6%

0.0%

9

T-Mobile South, LLC dba T-Mobile

1

56

151,792

1.6%

4,027,042

1.7%

10

Citicorp Credit Services, Inc

1

80

146,260

1.5%

4,809,029

2.1%

11

Jones Day

1

5

140,342

1.4%

5,029,307

2.1%

12

Worldventures Holdings, LLC (e)

2

109, 115

129,998

1.3%

3,952,336

1.7%

13

Kaiser Foundation Health Plan

1

41

120,979

1.3%

3,714,547

1.6%

14

Argo Data Resource Corporation (f)

1

33, 116

114,200

1.2%

3,280,966

1.4%

15

Giesecke & Devrient America

1

48

112,110

1.2%

2,153,633

0.9%

16

Randstad General Partner (US) (g)

1

6, 132

111,952

1.2%

2,884,093

1.2%

17

VMWare, Inc.

1

65

100,853

1.0%

3,363,447

1.4%

18

Deluxe Corporation (h)

1

193

94,302

1.0%

0.0%

19

Ping Identity Corp.

1

66

89,856

0.9%

3,535,834

1.5%

20

Common Grounds, LLC

2

112, 141

76,984

0.8%

2,877,374

1.2%

Total

3,085,242

32.0%

$

87,949,295

37.4%


Footnotes on next page

December 31, 2020| Page 19


Graphic

20 Largest Tenants with Annualized Rent and Remaining Term

Footnotes:

(a) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at December 31, 2020 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(b)

Includes 70,881 square feet, which commences in 2022 and is currently occupied by another tenant with a lease expiring December 31, 2021.

(c) Includes 101,140 square feet expiring in 2021. The remaining 125,000 square feet expire in 2031.

(d) Lease and rent commence February 1, 2021.

(e) On December 21, 2020, tenant’s parent filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.

(f) Includes 28,550 square feet, which expire in 2023. The remaining 85,650 square feet expire in 2030.

(g) Includes 5,991 square feet, which expire in 2021 and 105,961 square feet expiring December 31, 2031.

(h) Lease and rent commence on July 1, 2021.

December 31, 2020| Page 20


Graphic

Leasing Activity

(Owned Portfolio)

Year

Year

Year

    

Ended

    

Ended

    

Ended

    

 

Leasing Activity (a)

31-Dec-20

31-Dec-19

31-Dec-18

(in Square Feet - SF)

New leasing

368,000

534,000

397,000

Renewals and expansions

762,000

883,000

1,284,000

1,130,000

1,417,000

1,681,000

Other information per SF

(Activity on a year-to-date basis)

GAAP Rents on leasing

$

28.47

$

31.78

$

31.02

Weighted average lease term

8.3 Years

8.3 Years

7.2 Years

Increase or decrease over average GAAP rents in prior year (b)

7.7%

10.9%

7.3%

Average free rent

5 Months

3 Months

4 Months

Tenant Improvements

$

34.07

$

34.44

$

29.13

Leasing Costs

$

11.36

$

13.51

$

8.99

(a)  Leasing activity includes leasing at redevelopment properties. We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

(b)  The increase or decrease percentage is calculated by comparing average GAAP rents at properties that had leasing activity in the current year to average GAAP rents at the same properties in the prior year.

December 31, 2020| Page 21


Graphic

Lease Expirations by Square Feet (a)

(Owned Portfolio)

Graphic

(a)Lease expirations include leases in redevelopment properties. We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

December 31, 2020| Page 22


Graphic

Lease Expirations with Annualized Rent per Square Foot

(Owned Portfolio)

Rentable

Annualized

Percentage

Number of

Square

Rent

of Total

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

Cumulative

December 31,

    

Year (a)

    

Leases

    

Leases (b)

    

Leases

    

Leases

Total

 

2021

69

(c)

738,723

$

22,498,632

$

30.46

9.5%

9.5%

2022

74

1,067,527

38,021,879

35.62

16.2%

25.7%

2023

65

450,184

14,563,689

32.35

6.2%

31.9%

2024

61

839,607

26,036,049

31.01

11.1%

43.0%

2025

57

867,351

25,079,346

28.91

10.7%

53.7%

2026

38

752,257

23,732,491

31.55

10.1%

63.8%

2027

19

698,962

22,169,871

31.72

9.4%

73.2%

2028

19

450,799

10,156,201

22.53

4.3%

77.5%

2029

12

405,689

12,911,391

31.83

5.5%

83.0%

2030

10

893,357

24,753,582

27.71

10.5%

93.5%

2031 and thereafter

71

925,978

(d)

15,325,361

16.55

6.5%

100.0%

Leased total

495

8,090,434

$

235,248,492

$

29.08

100.0%

Vacancies as of 12/31/20

1,396,863

���

Redevelopment properties (e)

168,843

Total Portfolio Square Footage

9,656,140


(a)The number of leases approximates the number of tenants. Tenants with lease maturities in different years are included in annual totals for each lease. Tenants may have multiple leases in the same year. Includes annualized rent from redevelopment properties. We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.
(b)Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at December 31, 2020 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.
(c)Includes 2 leases that are month-to-month.
(d)Includes 117,089 square feet that are non-revenue producing building amenities.
(e)Redevelopment properties include properties being developed, redeveloped, or where redevelopment is complete, but are in lease-up and that are not stabilized.

December 31, 2020| Page 23


Graphic

Redevelopment Activity

(in 000's except square feet)

Estimated

Estimated

Incurred

Percent

Estimated

Leased

Occupied

Rentable

Anticipated

Through

Leased

Completion

Stabilization

Stabilization

Property Name

    

City

    

State

    

Square Feet

    

Investment (1)

    

31-Dec-20

    

31-Dec-20

    

Date

    

Date

    

Date

Redevelopment in Process

Blue Lagoon Drive (2)

Miami

FL

213,182

$

39,900

$

20,443

73.1%

28-Feb-21

1-Jul-21

1-Jan-22

Stonecroft

Chantilly

VA

111,469

18,462

1,814

0.0%

31-Jul-21

1-Dec-21

1-Dec-22

Total Office in Process

324,651

$

58,362

$

22,257

(1)Anticipated Investment includes capitalized redevelopment costs, capitalized interest and lease-up costs.
(2)Leased square feet was 155,808 as of December 31, 2020.

December 31, 2020| Page 24


Graphic

Capital Expenditures

(in thousands)

Year

For the Three Months Ended

Ended

    

31-Mar-20

    

30-Jun-20

    

30-Sep-20

31-Dec-20

    

31-Dec-20

Tenant improvements

$

10,716

$

13,531

$

8,022

$

837

$

33,106

Deferred leasing costs

2,730

603

2,033

7,432

12,798

Non-investment capex

4,527

6,581

6,373

6,105

23,586

Total Capital Expenditures

$

17,973

$

20,715

$

16,428

$

14,374

$

69,490

For the Three Months Ended

Year Ended

    

31-Mar-19

    

30-Jun-19

    

30-Sep-19

    

31-Dec-19

    

31-Dec-19

Tenant improvements

$

8,318

$

10,169

$

7,890

$

15,874

$

42,251

Deferred leasing costs

4,239

3,666

1,286

3,164

12,355

Non-investment capex

2,413

4,049

3,968

6,304

16,734

Total Capital Expenditures

$

14,970

$

17,884

$

13,144

$

25,342

$

71,340


First generation leasing and investment capital was $19.7 million for year ended December 31, 2020 and $18.1 million for the year ended December 31, 2019.

December 31, 2020| Page 25


Graphic

Transaction Activity

(in thousands except for Square Feet)

Recent Acquisitions:

    

City

    

State

    

Square Feet

    

Date Acquired

    

Purchase Price

 

2016

Plaza Seven

Minneapolis

MN

325,796

6/6/16

$

82,000

Pershing Plaza

Atlanta

GA

160,145

8/10/16

45,450

600 17th Street

Denver

CO

613,527

12/1/16

154,260

2015

Two Ravinia

Atlanta

GA

442,130

4/8/15

$

78,000

Recent Dispositions:

Gross Sale

Gain (loss)

    

City

    

State

    

Square Feet

    

Date Sold

    

Proceeds

    

on Sale

 

2020

Emperor Boulevard

Durham

NC

259,531

12/23/20

$

89,700

$

41,928

2017

Hillview

Milpitas

CA

36,288

1/6/17

$

6,342

$

2,289

East Baltimore

Baltimore

MD

325,445

10/20/17

32,547

(20,770)

2016

Lakeside I

Maryland Heights

MO

127,778

4/5/16

$

20,189

$

4,154

Federal Way

Federal Way

WA

117,010

12/16/16

7,500

(7,092)

2015

Willow Bend

Plano

TX

117,050

2/23/15

$

20,750

$

1,462

Eden Bluff

Eden Prairie

MN

153,028

3/31/15

28,000

9,000

Park Seneca

Charlotte

NC

109,699

5/13/15

8,150

949

Montague

San Jose

CA

145,561

12/9/15

30,250

12,251

December 31, 2020| Page 26


Graphic

Loan Portfolio of Secured Real Estate

(in thousands)

(dollars in thousands, except footnotes)

Maximum

Amount

Interest

Maturity

Amount

Outstanding

Rate at

Sponsored REIT

    

Location

    

Date

    

of Loan

    

31-Dec-20

    

31-Dec-20

 

Mortgage loan secured by property

FSP Monument Circle LLC (1)

Indianapolis, IN

6-Dec-22

$

21,000

$

21,000

7.51%

$

21,000

$

21,000


(1)Includes an origination fee of $164,000 and an exit fee of $38,000 when repaid by the borrower.

December 31, 2020| Page 27


Graphic

Net Asset Value Components

(in thousands except per share data)

As of

Assets:

Other information:

    

31-Dec-20

 

    

Loans outstanding on secured RE

    

$

21,000

 

    

Leased SF to be FFO producing

    

Total Market Capitalization Values

Investments in SARs (book basis)

during 2021 and 2022 (in 000's)

376

Shares outstanding

107,328.2

Straight-line rent receivable

67,789

Closing price

$

4.37

Asset held for sale

Straight-line rental revenue current quarter

$

(951)

Market capitalization

$

469,024

Cash, cash equivalents and restricted cash

4,150

Debt

923,500

Tenant rent receivables

7,656

Management fee income current quarter

$

11

Total Market Capitalization

$

1,392,524

Prepaid expenses

2,951

Interest income from secured loans

391

Office computers and furniture

163

Management fees and interest income from loans

$

402

Other assets:

3 Months

Deferred financing costs, net

4,848

Ended

Other assets: Derivative Market Value

NOI Components

31-Dec-20

Other assets - Right-to-Use Asset

1,452

$

110,009

Same Store NOI (1)

$

27,826

Acquisitions (1) (2)

Liabilities:

Footnotes to the components

Property NOI (1)

27,826

Debt (excluding contra for unamortized financing costs)

$

923,500

Full quarter adjustment (3)

Accounts payable & accrued expenses

75,976

(1) See pages 11 & 30 for definitions and reconciliations.

Stabilized portfolio

$

27,826

Tenant security deposits

8,677

Other liabilities: lease liability

1,536

(2) Includes NOI from acquisitions not in Same Store.

Other liabilities: derivative liability

17,311

Financial Statement Reconciliation:

$

1,027,000

(3) Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary.

Rental Revenue

$

59,408

Rental operating expenses

(17,442)

(4) HB3 Tax in Texas is classified as an income tax, though we treat it as a real estate tax in Property NOI.

Real estate taxes and insurance

(12,042)

NOI from dispositions & redevelopment properties

(1,554)

(5) Management & other fees are eliminated in consolidation but included in Property NOI.

Taxes (4)

(47)

Management & other fees (5)

(497)

Property NOI (1)

$

27,826

December 31, 2020| Page 28


Graphic

Appendix: Non-GAAP Financial Measure Definitions

Definition of Funds From Operations (“FFO”)

The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders.  The Company defines FFO as net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.

FFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.

Other real estate companies and 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 as of May 17, 2016 in the table on page 9 and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.

We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

December 31, 2020| Page 29


Graphic

Appendix: Non-GAAP Financial Measure Definitions

Definition of Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)
and Adjusted EBITDA

EBITDA is defined as net income or loss plus interest expense, income tax expense and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA excluding hedge ineffectiveness, gains and losses on sales of properties or shares of equity investments or provisions for losses on assets held for sale or equity investments. EBITDA and Adjusted EBITDA are not intended to represent cash flow for the period, are 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 are not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA and Adjusted EBITDA are 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 or Adjusted EBITDA the same way, this presentation may not be comparable to similarly titled measures of other companies. The Company believes that net income or loss is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA and Adjusted EBITDA.

Definition of Property Net Operating Income (Property NOI)

The Company provides property performance based on Net Operating Income, which we refer to as NOI. Management believes that investors are interested in this information. NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus 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, hedge ineffectiveness, gains or losses on the sale of assets and excludes non-property specific income and expenses. The information presented includes footnotes and the data is shown by region with properties owned in the periods presented, which we call Same Store. The comparative Same Store results include properties held for the periods presented and exclude properties that are redevelopment properties.  We also exclude properties that have been placed in service, but that do not have operating activity for all periods presented, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.  NOI, as defined 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 or loss as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

December 31, 2020| Page 30


Graphic

Appendix: Non-GAAP Financial Measure Definitions

Definition of Adjusted Funds From Operations (AFFO)

The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO.  The Company defines AFFO as (1) FFO, (2) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (3) excluding the effect of straight-line rent, (4) plus the amortization of deferred financing costs, (5) plus the value of shares issued for compensation and (6) less recurring capital expenditures that are generally for maintenance of properties, which we call non-investment capex or are second generation capital expenditures.  Second generation costs include re-tenanting space after a tenant vacates, which include tenant improvements and leasing commissions.  

We exclude development/redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property. We also exclude first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned for at acquisition.  

AFFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.  Other real estate companies may define this term in a different manner.  We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.  

December 31, 2020| Page 31


Graphic

December 31, 2020| Page 32