Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 02, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2023 | |
Entity File Number | 001-32470 | |
Entity Registrant Name | Franklin Street Properties Corp. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 04-3578653 | |
Entity Address, Address Line One | 401 Edgewater Place, Suite 200 | |
Entity Address, City or Town | Wakefield | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 01880 | |
City Area Code | 781 | |
Local Phone Number | 557-1300 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | FSP | |
Security Exchange Name | NYSEAMER | |
Entity Common Stock, Shares Outstanding | 103,430,353 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001031316 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Real estate assets: | ||
Land (amounts related to variable interest entities ("VIEs") of $6,416 and $0 at September 30, 2023 and December 31, 2022, respectively) | $ 114,298 | $ 126,645 |
Buildings and improvements (amounts related to VIEs of $13,279 and $0 at September 30, 2023 and December 31, 2022, respectively) | 1,183,744 | 1,388,869 |
Fixtures and equipment | 10,377 | 11,151 |
Total real estate assets, gross | 1,308,419 | 1,526,665 |
Less accumulated depreciation (amounts related to VIEs of $256 and $0 at September 30, 2023 and December 31, 2022, respectively) | 386,838 | 423,417 |
Real estate assets, net (amounts related to VIEs of $19,439 and $0 at September 30, 2023 and December 31, 2022, respectively) | 921,581 | 1,103,248 |
Acquired real estate leases, less accumulated amortization of $19,660 and $20,243, respectively (amounts related to variable interest entities ("VIEs") of $305, less accumulated amortization of $166 and $0 at September 30, 2023 and December 31, 2022, respectively) | 7,447 | 10,186 |
Asset held for sale | 132,659 | |
Cash, cash equivalents and restricted cash (amounts related to VIEs of $2,445 and $0 at September 30, 2023 and December 31, 2022, respectively) | 13,043 | 6,632 |
Tenant rent receivables | 2,854 | 2,201 |
Straight-line rent receivable | 43,253 | 52,739 |
Prepaid expenses and other assets | 5,601 | 6,676 |
Related party mortgage loan receivable, less allowance for credit loss of $0 and $4,237, respectively | 19,763 | |
Other assets: derivative asset | 4,358 | |
Office computers and furniture, net of accumulated depreciation of $1,166 and $1,115, respectively | 109 | 154 |
Deferred leasing commissions, net of accumulated amortization of $17,143 and $19,043, respectively | 25,226 | 35,709 |
Total assets | 1,151,773 | 1,241,666 |
Liabilities: | ||
Bank note payable | 80,000 | 48,000 |
Term loans payable, less unamortized financing costs of $390 and $250, respectively | 114,610 | 164,750 |
Series A & Series B Senior Notes, less unamortized financing costs of $371 and $494, respectively | 199,629 | 199,506 |
Accounts payable and accrued expenses (amounts related to VIEs of $628 and $0 at September 30, 2023 and December 31, 2022, respectively) | 36,857 | 50,366 |
Accrued compensation | 3,179 | 3,644 |
Tenant security deposits | 5,631 | 5,710 |
Lease liability | 444 | 759 |
Acquired unfavorable real estate leases, less accumulated amortization of $384 and $574, respectively | 97 | 195 |
Total liabilities | 440,447 | 472,930 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $.0001 par value, 20,000,000 shares authorized, none issued or outstanding | ||
Common stock, $.0001 par value, 180,000,000 shares authorized, 103,430,353 and 103,235,914 shares issued and outstanding, respectively | 10 | 10 |
Additional paid-in capital | 1,335,091 | 1,334,776 |
Accumulated other comprehensive income (loss) | 1,417 | 4,358 |
Accumulated distributions in excess of accumulated earnings | (625,192) | (570,408) |
Total stockholders' equity | 711,326 | 768,736 |
Total liabilities and stockholders' equity | $ 1,151,773 | $ 1,241,666 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Land amounts related to variable interest entities ("VIEs") | $ 114,298 | $ 126,645 |
Buildings and improvements amounts related to variable interest entities ("VIEs") | 1,183,744 | 1,388,869 |
Less accumulated depreciation amounts related to variable interest entities ("VIEs") | (386,838) | (423,417) |
Real estate assets | 921,581 | 1,103,248 |
Acquired real estate leases | 7,447 | 10,186 |
Acquired real estate leases, accumulated amortization | 19,660 | 20,243 |
Cash, cash equivalents and restricted cash (amounts related to variable interest entities ("VIEs") | 13,043 | 6,632 |
Allowance on related parties loans and leases receivable | 0 | 4,237 |
Office computers and furniture, accumulated depreciation | 1,166 | 1,115 |
Deferred leasing commissions, accumulated amortization | 17,143 | 19,043 |
Term loan payable, unamortized financing costs | 390 | 250 |
Series A & Series B Senior notes, unamortized financing costs | 371 | 494 |
Accounts payable and accrued expenses amounts related to variable interest entities ("VIEs") | 36,857 | 50,366 |
Acquired unfavorable real estate leases, accumulated amortization | $ 384 | $ 574 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 180,000,000 | 180,000,000 |
Common stock, shares issued (in shares) | 103,430,353 | 103,235,914 |
Common stock, shares outstanding (in shares) | 103,430,353 | 103,235,914 |
Variable interest entities ("VIEs") | ||
Land amounts related to variable interest entities ("VIEs") | $ 6,416 | $ 0 |
Buildings and improvements amounts related to variable interest entities ("VIEs") | 13,279 | 0 |
Less accumulated depreciation amounts related to variable interest entities ("VIEs") | (256) | 0 |
Real estate assets | 19,439 | 0 |
Acquired real estate leases | 305 | 305 |
Acquired real estate leases, accumulated amortization | 166 | 0 |
Cash, cash equivalents and restricted cash (amounts related to variable interest entities ("VIEs") | 2,445 | 0 |
Accounts payable and accrued expenses amounts related to variable interest entities ("VIEs") | $ 628 | $ 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues: | ||||
Total revenues | $ 36,903 | $ 40,836 | $ 110,936 | $ 124,404 |
Expenses: | ||||
Real estate operating expenses | 12,797 | 13,369 | 37,627 | 38,547 |
Real estate taxes and insurance | 7,115 | 8,951 | 21,257 | 26,713 |
Depreciation and amortization | 13,408 | 15,148 | 42,780 | 49,004 |
General and administrative | 3,265 | 3,232 | 10,849 | 10,997 |
Interest | 6,209 | 6,110 | 18,099 | 17,140 |
Total expenses | 42,794 | 46,810 | 130,612 | 142,401 |
Loss on extinguishment of debt | (39) | (78) | (106) | (78) |
Gain on consolidation of Sponsored REIT | 394 | |||
Impairment and loan loss reserve | 717 | 1,857 | ||
(Gain) loss on sale of properties and impairment of assets held for sale, net | (39,671) | 24,077 | (32,085) | 24,077 |
Income (loss) before taxes | (45,601) | 17,308 | (51,473) | 4,145 |
Tax expense | 70 | 62 | 212 | 167 |
Net loss (loss) | $ (45,671) | $ 17,246 | $ (51,685) | $ 3,978 |
Weighted average number of shares outstanding, basic | 103,430 | 103,236 | 103,333 | 103,372 |
Weighted average number of shares outstanding, diluted | 103,430 | 103,236 | 103,333 | 103,372 |
Net income (loss) per share, basic | $ (0.44) | $ 0.17 | $ (0.50) | $ 0.04 |
Net income (loss) per share, diluted | $ (0.44) | $ 0.17 | $ (0.50) | $ 0.04 |
Rental | ||||
Revenues: | ||||
Rental | $ 36,903 | $ 40,366 | $ 110,927 | $ 122,994 |
Related party revenue: Management fees and interest income from loans | ||||
Revenues: | ||||
Revenue | 466 | 1,393 | ||
Related party revenue: Other | ||||
Revenues: | ||||
Revenue | $ 4 | $ 9 | $ 17 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Consolidated Statements of Comprehensive Income (Loss) | ||||
Net income (loss) | $ (45,671) | $ 17,246 | $ (51,685) | $ 3,978 |
Other comprehensive income (loss): | ||||
Unrealized gain on derivative financial instruments | 2,315 | 177 | 9,504 | |
Reclassification from accumulated other comprehensive income into interest expense | (1,063) | (3,118) | ||
Total other comprehensive income (loss) | (1,063) | 2,315 | (2,941) | 9,504 |
Comprehensive income (loss) | $ (46,734) | $ 19,561 | $ (54,626) | $ 13,482 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated other comprehensive income (loss) | Distributions in excess of accumulated earnings | Total |
Balance at Dec. 31, 2021 | $ 10 | $ 1,339,226 | $ (5,239) | $ (550,794) | $ 783,203 |
Balance (in shares) at Dec. 31, 2021 | 103,999,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income (loss) | 5,044 | (4,158) | 886 | ||
Repurchased shares | (4,843) | $ (4,843) | |||
Repurchased shares (in shares) | (847,000) | (846,739) | |||
Distributions | (9,360) | $ (9,360) | |||
Balance at Mar. 31, 2022 | $ 10 | 1,334,383 | (195) | (564,312) | 769,886 |
Balance (in shares) at Mar. 31, 2022 | 103,152,000 | ||||
Balance at Dec. 31, 2021 | $ 10 | 1,339,226 | (5,239) | (550,794) | 783,203 |
Balance (in shares) at Dec. 31, 2021 | 103,999,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income (loss) | 13,482 | ||||
Balance at Sep. 30, 2022 | $ 10 | 1,334,776 | 4,266 | (566,491) | 772,561 |
Balance (in shares) at Sep. 30, 2022 | 103,236,000 | ||||
Balance at Dec. 31, 2021 | $ 10 | 1,339,226 | (5,239) | (550,794) | 783,203 |
Balance (in shares) at Dec. 31, 2021 | 103,999,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Repurchased shares | $ (4,843) | ||||
Repurchased shares (in shares) | (846,739) | ||||
Balance at Dec. 31, 2022 | $ 10 | 1,334,776 | 4,358 | (570,408) | $ 768,736 |
Balance (in shares) at Dec. 31, 2022 | 103,236,000 | ||||
Balance at Mar. 31, 2022 | $ 10 | 1,334,383 | (195) | (564,312) | 769,886 |
Balance (in shares) at Mar. 31, 2022 | 103,152,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income (loss) | 2,146 | (9,110) | (6,964) | ||
Equity-based compensation | 393 | 393 | |||
Equity-based compensation (in shares) | 84,000 | ||||
Distributions | (9,283) | (9,283) | |||
Balance at Jun. 30, 2022 | $ 10 | 1,334,776 | 1,951 | (582,705) | 754,032 |
Balance (in shares) at Jun. 30, 2022 | 103,236,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income (loss) | 2,315 | 17,246 | 19,561 | ||
Distributions | (1,032) | (1,032) | |||
Balance at Sep. 30, 2022 | $ 10 | 1,334,776 | 4,266 | (566,491) | 772,561 |
Balance (in shares) at Sep. 30, 2022 | 103,236,000 | ||||
Balance at Dec. 31, 2022 | $ 10 | 1,334,776 | 4,358 | (570,408) | 768,736 |
Balance (in shares) at Dec. 31, 2022 | 103,236,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income (loss) | (814) | 2,406 | 1,592 | ||
Distributions | (1,033) | (1,033) | |||
Balance at Mar. 31, 2023 | $ 10 | 1,334,776 | 3,544 | (569,035) | 769,295 |
Balance (in shares) at Mar. 31, 2023 | 103,236,000 | ||||
Balance at Dec. 31, 2022 | $ 10 | 1,334,776 | 4,358 | (570,408) | 768,736 |
Balance (in shares) at Dec. 31, 2022 | 103,236,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income (loss) | (54,626) | ||||
Repurchased shares | (4,800) | ||||
Balance at Sep. 30, 2023 | $ 10 | 1,335,091 | 1,417 | (625,192) | 711,326 |
Balance (in shares) at Sep. 30, 2023 | 103,430,000 | ||||
Balance at Mar. 31, 2023 | $ 10 | 1,334,776 | 3,544 | (569,035) | 769,295 |
Balance (in shares) at Mar. 31, 2023 | 103,236,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income (loss) | (1,064) | (8,420) | (9,484) | ||
Equity-based compensation | 315 | 315 | |||
Equity-based compensation (in shares) | 194,000 | ||||
Distributions | (1,032) | (1,032) | |||
Balance at Jun. 30, 2023 | $ 10 | 1,335,091 | 2,480 | (578,487) | 759,094 |
Balance (in shares) at Jun. 30, 2023 | 103,430,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Comprehensive income (loss) | (1,063) | (45,671) | (46,734) | ||
Distributions | (1,034) | (1,034) | |||
Balance at Sep. 30, 2023 | $ 10 | $ 1,335,091 | $ 1,417 | $ (625,192) | $ 711,326 |
Balance (in shares) at Sep. 30, 2023 | 103,430,000 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Consolidated Statements of Stockholders' Equity | ||||||
Distributions common stock (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.09 | $ 0.09 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (51,685) | $ 3,978 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization expense | 44,705 | 50,472 |
Amortization of above and below market leases | (39) | (88) |
Shares issued as compensation | 315 | 394 |
Amortization of other comprehensive income into interest expense | (2,789) | |
Loss on extinguishment of debt | 106 | 78 |
Gain on consolidation of Sponsored REIT | (394) | |
Impairment and loan loss reserve | 1,857 | |
(Gain) loss on sale of properties and impairment of assets held for sale, net | (32,085) | 24,077 |
Changes in operating assets and liabilities: | ||
Tenant rent receivables | (653) | 645 |
Straight-line rents | 427 | (4,064) |
Lease acquisition costs | (903) | (2,659) |
Prepaid expenses and other assets | (644) | (1,670) |
Accounts payable and accrued expenses | (2,516) | (6,388) |
Accrued compensation | (465) | (1,545) |
Tenant security deposits | (79) | (493) |
Payment of deferred leasing commissions | (5,926) | (7,086) |
Net cash provided by operating activities | 11,545 | 9,354 |
Cash flows from investing activities: | ||
Property improvements, fixtures and equipment | (26,024) | (38,035) |
Consolidation of Sponsored REIT | 3,048 | |
Proceeds received from sales of properties | 37,062 | 102,007 |
Net cash provided by investing activities | 14,086 | 63,972 |
Cash flows from financing activities: | ||
Distributions to stockholders | (3,099) | (52,956) |
Proceeds received from termination of interest rate swap | 4,206 | |
Stock repurchases | (4,843) | |
Borrowings under bank note payable | 67,000 | 80,000 |
Repayments of bank note payable | (35,000) | (15,000) |
Repayment of term loan payable | (50,000) | (110,000) |
Deferred financing costs | (2,327) | (2,561) |
Net cash used in financing activities | (19,220) | (105,360) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 6,411 | (32,034) |
Cash, cash equivalents and restricted cash, beginning of year | 6,632 | 40,751 |
Cash, cash equivalents and restricted cash, end of period | 13,043 | 8,717 |
Cash paid for: | ||
Interest | 16,704 | 13,692 |
Taxes | 337 | 664 |
Non-cash investing activities: | ||
Accrued costs for purchase of real estate assets | 2,562 | $ 7,466 |
Investment in related party mortgage loan receivable converted to real estate assets and acquired real estate in conjunction with variable interest entity consolidation | $ 20,000 |
Organization, Properties, Basis
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards | |
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards | 1. Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards Organization Franklin Street Properties Corp. (“FSP Corp.” or the “Company”) holds, directly and indirectly, 100% of the interest in FSP Investments LLC, FSP Property Management LLC FSP Holdings LLC FSP Protective TRS Corp . FSP Property Management LLC provides asset management and property management services. The Company also has a non-controlling common stock interest in the corporation that is the sole member of FSP Monument Circle LLC, which corporation was organized to operate as a real estate investment trust (“Monument Circle” or the “Sponsored REIT”). As of September 30, 2023, the Company owned and operated a portfolio of real estate consisting of 19 operating properties, and the Sponsored REIT, which was consolidated effective January 1, 2023. The Company may pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, for geographic, property specific reasons or for other general corporate purposes. Properties The following table summarizes the Company’s number of owned and consolidated properties and rentable square feet of real estate. As of September 30, 2023 2022 Owned and Consolidated Properties: Number of properties (1) 20 22 Rentable square feet 6,206,460 6,433,954 (1) Includes three properties that were classified as assets held for sale as of September 30, 2023. Basis of Presentation The unaudited consolidated financial statements of the Company include all of the accounts of the Company and its majority-owned and controlled subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission. The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other period. Management is in discussions with lenders to extend or refinance the Company’s debt, a portion of which matures within one year after the date that these financial statements are issued as more fully described in Note 3 below. Management has considered whether there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these interim financial statements due to the fact of the uncertainty regarding the maturities of this debt as set forth in Accounting Standards Codification (ASC) 205-40, “Presentation of Financial Statements - Going Concern.” As described in Note 1 below, the Company has concluded that management’s plans to dispose of assets and extend and/or refinance the Company’s debt are probable of being achieved and alleviate substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from an adverse outcome of this uncertainty. Financial Instruments As disclosed in Note 4, the Company’s derivatives were recorded at fair value using Level 2 inputs prior to their termination on February 8, 2023. The Company estimates that the carrying values of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued expenses, accrued compensation, and tenant security deposits approximate their fair values based on their short-term maturity and the bank note and term loans payable approximate their fair values as they bear interest at variable interest rates or at rates that are at market for similar investments. Cash, Cash Equ ivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows. September 30, September 30, (in thousands) 2023 2022 Cash and cash equivalents (1) $ 13,043 $ 6,367 Restricted cash — 2,350 Total cash, cash equivalents and restricted cash $ 13,043 $ 8,717 (1) Includes $2,445 at September 30, 2023, pertaining to Monument Circle, which the Company is unable to utilize for its own operational purposes. Restricted cash Variable Interest Entities (VIEs) The Company determines whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. The determination of whether an entity in which the Company holds a, direct or indirect, variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. The Company makes judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary. The Company analyzes any investments in VIEs to determine if the Company is the primary beneficiary. In evaluating whether the Company is the primary beneficiary, the Company evaluates its direct and indirect economic interests in the entity. Determining which reporting entity, if any, is the primary beneficiary of a VIE is primarily a qualitative approach focused on identifying which reporting entity has both (1) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment. The Company considers a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct a proposed sale of the property or merger of the company. In addition, the Company considers the rights of other investors to participate in those decisions, to replace the manager and to amend the corporate charter. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and considers that conclusion upon a reconsideration event. As of January 1, 2023, the Company’s relationship with the Sponsored REIT was considered a VIE and the Company became the primary beneficiary. Upon this reconsideration event, the entity is included within the Company’s consolidated financial statements and all intercompany accounts and transactions have been eliminated in consolidation. A gain on consolidation of approximately million held by Monument Circle was included in the Company’s cash and cash equivalents upon consolidation and is reflected as “Consolidation of Sponsored REIT” in the consolidated statement of cash flows. The cash and cash equivalents held by Monument Circle are unable to be utilized for the Company’s operational purposes. The creditors of Monument Circle’s trade payables do not have any recourse against the Company. The consolidation value of Monument Circle was allocated to real estate investments and leases, including lease origination costs. Lease origination costs represent the value associated with acquiring an in-place lease (i.e. the market cost to execute a similar lease, including leasing commission, legal, vacancy, and other related costs). The value assigned to building approximates the replacement cost; the value assigned to land approximates its appraised value; and the value assigned to leases approximate their fair value. Other assets and liabilities are recorded at their historical costs, which approximates fair value. The Company assessed the fair value of the acquired real estate leases based on estimated cash flow projections that utilize appropriate discount rates and available market information. Such inputs are Level 3 in the fair value hierarchy. The following table summarizes the estimated fair value of the assets acquired at the date of consolidation, January 1, 2023: (in thousands) Real estate assets $ 19,695 Value of acquired real estate leases 305 Total $ 20,000 The following is quantitative information about significant unobservable inputs in the Company’s Level 3 measurement of the assets acquired in the consolidation of Monument Circle and were measured at fair value on a nonrecurring basis at January 1, 2023: Fair Value (1) at Significant Range Weighted Description January 1, 2023 Valuation Technique Unobservable Input Min Max Average (2) (in thousands) Monument Circle Consolidation $ 20,000 Discounted Cash Flows Exit Cap Rate 7.50 % 7.50 % 7.50 % Discount Rate 9.50 % 9.50 % 9.50 % (1) Classified within Level 3 of the fair value hierarchy. (2) Unobservable inputs were weighted based on the fair value of the related instrument. Prior to January 1, 2023, the Company’s relationship with the Sponsored REIT was considered a VIE in which the Company was not the primary beneficiary. The Company’s maximum exposure to losses associated with this VIE was limited to the principal amount outstanding under the loan from the Company to the Sponsored REIT secured by a mortgage on real estate owned by the Sponsored REIT (the “Sponsored REIT Loan”) net of the allowance for credit loss, the related accrued interest receivable and an exit fee receivable, which were in aggregate approximately million at December 31, 2022. The accrued interest and exit fee receivables are million at December 31, 2022. Liquidity and Management’s Plan When preparing financial statements for each annual and interim reporting period, management evaluates whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued as set forth in Accounting Standards Codification (ASC) 205-40, “Presentation of Financial Statements - Going Concern.” In making its assessment, management considered the Company’s financial condition and liquidity sources. As of September 30, 2023 and November 7, 2023, the Company had aggregate outstanding indebtedness under two unsecured loans, the BofA Revolver and the BMO Term Loan (as defined in Note 3), totaling approximately $195 million and $205 million, respectively, maturing within 12 months of the date of issuance of the financial statements, and expects to have sufficient financial resources available to satisfy the obligations when due. Subsequent to September 30, 2023, on October 26, 2023, the Company closed on the disposition of million. As of the date of these interim financial statements, the Company is holding such net proceeds in cash and cash equivalents. As of September 30, 2023, the Company had entered into agreements to effect the sale of million of indebtedness maturing on October 1, 2024. The Company is also actively working on the potential disposition of additional properties that are not classified as assets held for sale as of September 30, 2023. As of September 30, 2023, the Company had entered into an agreement to effect the sale of a property that is scheduled to close during the fourth quarter of 2023, which would result in net proceeds of approximately million. The Company intends to use net proceeds from dispositions primarily for the repayment of debt. Management is also actively engaged in discussions with the Company’s lenders to extend and/or refinance the BofA Revolver and the BMO Term Loan prior to maturity. The Company believes that it will be able to extend and/or refinance the BofA Revolver and the BMO Term Loan prior to their scheduled October 1, 2024 maturity dates. However, there can be no assurance that the Company will be able to obtain extensions and/or refinancings in a timely manner, or on acceptable terms, if at all, or generate the cash necessary to pay off the BofA Revolver and the BMO Term Loan through asset sales prior to their October 1, 2024 maturity dates. The failure to obtain extensions and/or refinancings, or otherwise to repay the BofA Revolver and the BMO Term Loan, when due, could lead to events of default, which would have a material adverse effect on the Company’s financial condition. The Company has concluded that management’s plans to dispose of assets and extend and/or refinance the BofA Revolver and the BMO Term Loan are probable of being achieved and alleviate substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from an adverse outcome of this uncertainty. As of September 30, 2023, the Company also has the Series A Notes (as defined in Note 3) in the aggregate principal amount of $116 million outstanding that are scheduled to mature on December 20, 2024, which is beyond 12 months of the date of issuance of the financial statements in this Quarterly Report on Form 10-Q and therefore have been excluded from management’s associated going concern assessment and analysis. Recent Accounting Standards In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 adds interim and annual disclosure requirements to GAAP at the request of the Securities and Exchange Commission. The guidance in ASU 2023-06 is required to be applied prospectively and the GAAP requirements will be effective when the removal of the related SEC disclosure requirements is effective. If the SEC does not act to remove its related requirement by June 30, 2027, any related FASB amendments will be removed from the Accounting Standards Codification and will not be effective. The Company does not anticipate that the adoption of ASU 2023-06 will have a material impact on the consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company does not anticipate that the adoption of ASU 2020-04 will have a material impact on the consolidated financial statements. |
Related Party Transactions and
Related Party Transactions and Investments in Non-Consolidated Entities | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions and Investments in Non-Consolidated Entities | |
Related Party Transactions and Investments in Non-Consolidated Entities | 2. Related Party Transactions and Investments in Non-Consolidated Entities Investment in Sponsored REITs: At December 31, 2022, the Company held a non-controlling common stock interest in the Sponsored REIT. Management fees and interest income from loans: Asset management fees range from 1% to 5% of collected rents and the applicable contracts are cancellable with 30 days notice. Prior to the consolidation of Monument Circle on January 1, 2023, the Company held the Sponsored REIT Loan, which was reported in the balance sheet as a related party mortgage loan receivable. The Company reviewed the need for an allowance under the current expected credit loss model for the Sponsored REIT Loan at each reporting period. The measurement of expected credit losses was based upon historical experiences, current conditions, and reasonable and supportable forecasts that affected the collectability of the reported amount. The Company elected to apply the practical expedient for financial assets secured by collateral in instances where the borrower was experiencing financial difficulty and repayment of the Sponsored REIT Loan was expected to be provided substantially through operation or sale of the collateral. The Company used the fair value of the collateral at the reporting date, and an adjustment to the allowance for expected credit losses was recorded when the amortized cost basis of the financial asset exceeded the fair value of the collateral, less costs to sell. The Company regularly evaluated the extent and impact of any credit deterioration that could affect performance and the value of the secured property, as well as the financial and operating capability of the borrower. A property’s fair value, operating results and existing cash balances were considered and used to assess whether cash flows from operations were sufficient to cover the current and future operating and debt service requirements. The Company also evaluated the borrower’s competency in managing and operating the secured property and considered the overall economic environment, real estate sector and geographic sub-market in which the secured property is located. The Company applied normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment. The outstanding Sponsored REIT Loan is secured by a mortgage on the underlying property and the balances within the borrower’s cash accounts. The Company recognized interest income and fees from the Sponsored REIT Loan of approximately $0 and $1,367,000 for the nine months ended September 30, 2023 and 2022, respectively. On October 29, 2021, the Company agreed to amend and restate the then existing Sponsored REIT Loan to extend the maturity date from December 6, 2022 to June 30, 2023 and to advance an additional $3.0 million tranche of indebtedness to FSP Monument Circle LLC with the same June 30, 2023 maturity date, effectively increasing the aggregate principal amount of the Sponsored REIT Loan from $21 million to $24 million. In addition, the Company agreed to defer all principal and interest payments due under the Sponsored REIT Loan until the maturity date. As part of its consideration for agreeing to amend and restate the Sponsored REIT Loan, the Company obtained from the stockholders of the parent of Monument Circle the right to vote their shares in favor of any sale of the property owned by Monument Circle any time on or after January 1, 2023. There were no commitments to lend additional funds to the Sponsored REIT. On June 26, 2023, the Sponsored REIT Loan maturity The Company recorded a $4.2 million increase in its provision for credit losses during the year ended December 31, 2022 which was primarily due to the deterioration within the real estate market, changes to key assumptions applied within our financial model to reflect these changes, such as the exit capitalization and discount rates, and an increase in the accrued interest receivable balance. The Company recorded a million decrease in its provision for credit losses during the three months ended March 31, 2023. The change in the allowance for credit losses during the three months ended March 31, 2023 was due to the consolidation of Monument Circle. There were adjustments during the subsequent months through September 30, 2023. The following table presents a roll-forward of the Company’s allowance for credit losses. For the Nine Months Ended September 30, (In thousands) 2023 2022 Beginning allowance for credit losses $ (4,237) $ — Additional increases to the allowance for credit losses — (1,857) Reductions to the allowance for credit losses 4,237 — Ending allowance for credit losses $ — $ (1,857) The following is quantitative information about significant unobservable inputs in the Company’s Level 3 measurement of the collateral of the Sponsored REIT Loan measured at fair value on a nonrecurring basis at December 31, 2022: Fair Value (1) at Significant Range Weighted Description December 31, 2022 Valuation Technique Unobservable Input Min Max Average (2) (in thousands) Sponsored REIT Loan $ 19,763 Discounted Cash Flows Exit Cap Rate 7.50 % 7.50 % 7.50 % Discount Rate 9.50 % 9.50 % 9.50 % (1) Classified within Level 3 of the fair value hierarchy. (2) Unobservable inputs were weighted based on the fair value of the related instrument. |
Bank Note Payable, Term Loans P
Bank Note Payable, Term Loans Payable and Senior Notes | 9 Months Ended |
Sep. 30, 2023 | |
Bank Note Payable, Term Note Payable and Private Placements | |
Bank Note Payable, Term Note Payable and Private Placements | 3. Bank Note Payable, Term Loans Payable and Senior Notes BMO Term Loan On February 10, 2023, the Company entered into a First Amendment to the Second Amended and Restated Credit Agreement with the lending institutions party thereto and Bank of Montreal, as administrative agent (the “BMO First Amendment”). The BMO First Amendment amended the Second Amended and Restated Credit Agreement, dated September 27, 2018, among the Company and the lending institutions party thereto (as amended by the BMO First Amendment, the “BMO Credit Agreement”) to, among other things, extend the maturity date from January 31, 2024 to October 1, 2024 and change the interest rate from a number of basis points over LIBOR depending on the Company’s credit rating to million (the “BMO Term Loan”). million principal amount remained outstanding. On August 10, 2023, the Company repaid an additional . On or before April 1, 2024, the Company is required to repay an additional million of the BMO Term Loan. The remaining balance of the BMO Term Loan matures on October 1, 2024. Effective February 10, 2023 upon entering into the BMO First Amendment, the BMO Term Loan bears interest at either (i) 300 basis points over one three basis points over the base rate. Prior to February 10, 2023, the BMO Term Loan bore interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating ( As of September 30, 2023, the interest rate on the BMO Term Loan was 8.43% per annum. The weighted average variable interest rate on all amounts outstanding under the BMO Term Loan from February 8, 2023, which is when the Company terminated its outstanding interest rate swaps applicable to the BMO Term Loan as described below, through September 30, 2023 was approximately Although the interest rate on the BMO Term Loan is variable under the BMO Credit Agreement, the Company fixed the base LIBOR interest rate that previously applied to the BMO Term Loan by entering into interest rate swap transactions. On February 20, 2019, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BMO Term Loan at 2.39% per annum for the period beginning on August 26, 2020 and ending January 31, 2024. Accordingly, based upon the Company’s credit rating, as of both December 31, 2022 and February 8, 2023, the effective interest rate on the BMO Term Loan was per annum. On February 8, 2023, the Company terminated all outstanding interest rate swaps applicable to the BMO Term Loan and, on February 10, 2023, the Company received an aggregate of approximately million related to interest receivable. The BMO Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in business, certain restricted payments and repurchases and redemptions of the Company’s common stock; going concern qualifications to the Company’s financial statements; and the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates. In addition, the BMO Credit Agreement also restricts the Company’s ability to make quarterly dividend distributions that exceed per share of the Company’s common stock; provided, however, that notwithstanding such restriction, the Company is permitted to make dividend distributions based on the Company’s good faith estimate of projected or estimated taxable income or otherwise as necessary to retain the Company’s status as a real estate investment trust, to meet the distribution requirements of Section 857 of the Internal Revenue Code or to eliminate any income or excise taxes to which the Company would otherwise be subject. The BMO Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. The BMO Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, certain cross defaults and a change in control of the Company (as defined in the BMO Credit Agreement). In the event of a default by the Company, the administrative agent may, and at the request of the requisite number of lenders shall, declare all obligations under the BMO Credit Agreement immediately due and payable, terminate the lenders’ commitments to make loans under the BMO Credit Agreement, and enforce any and all rights of the lenders or administrative agent under the BMO Credit Agreement and related documents. For certain events of default related to bankruptcy, insolvency, and receivership, the commitments of lenders will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable. The Company was in compliance with the BMO Term Loan financial covenants as of September 30, 2023. BofA Revolver On February 10, 2023, the Company entered into a First Amendment to Credit Agreement with Bank of America, N.A., as administrative agent, a letter of credit issuer and a lender (“BofA”), and the other lending institutions party thereto (the “BofA First Amendment”), for a revolving line of credit for borrowings, at the Company’s election, of up to $150 million (the “BofA Revolver”). The BofA First Amendment amended the Credit Agreement, dated January 10, 2022, among the Company and the lending institutions party thereto (as amended by the BofA First Amendment, the “BofA Credit Agreement”) to, among other things, extend the maturity date from January 12, 2024 to October 1, 2024, reduce availability for borrowings, at the Company’s election, from up to basis points over SOFR. Borrowings made under the BofA Revolver may be revolving loans or letters of credit, the combined sum of which may not exceed million. As of September 30, 2023 and November 7, 2023, there were borrowings of million that the Company borrowed on February 10, 2023 to repay a portion of the BMO Term Loan. Borrowings made pursuant to the BofA Revolver may be borrowed, repaid and reborrowed from time to time until the maturity date on October 1, 2024. Effective February 10, 2023 upon entering into the BofA First Amendment, the BofA Revolver bears interest at 300 basis points over either (i) the daily simple SOFR, plus an adjustment of 0.11448%, or (ii) one three a corresponding adjustment of 0.11448%, 0.26161% or 0.42826% , respectively. In addition, under certain circumstances, such as if SOFR was not able to be determined, the BofA Revolver will instead bear interest at basis points over the base rate. Prior to February 10, 2023, borrowings under the BofA Revolver bore interest at a margin over either (i) the daily simple SOFR, plus an adjustment of one three per annum and, if applicable, letter of credit fees. Prior to February 10, 2023, the Company was also obligated to pay an annual facility fee and, if applicable, letter of credit fees in amounts that were also based on the Company’s leverage ratio. The previous facility fee was assessed against the aggregate amount of lender commitments regardless of usage ( As of September 30, 2023, the interest rate on the BofA Revolver was 8.43% per annum. The weighted average variable interest rate on all amounts outstanding under the BofA Revolver through September 30, 2023 was approximately per annum. The BofA Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in business, certain restricted payments, use of proceeds, the amount of cash and cash equivalents that the Company can have on its balance sheet after giving effect to an advance under the BofA Revolver, repurchases and redemptions of the Company’s common stock, going concern qualifications to the Company’s financial statements, and the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates. The BofA Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio and a minimum unsecured interest coverage ratio. The BofA Credit Agreement also restricts the Company’s ability to make quarterly dividend distributions that exceed per share of the Company’s common stock; provided, however, that notwithstanding such restriction, the Company is permitted to make dividend distributions based on the Company’s good faith estimate of projected or estimated taxable income or otherwise as necessary to retain the Company’s status as a real estate investment trust, to meet the distribution requirements of Section 857 of the Internal Revenue Code or to eliminate any income or excise taxes to which the Company would otherwise be subject. The Company was in compliance with the BofA Revolver financial covenants as of September 30, 2023. The BofA Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with the provisions of the BofA Credit Agreement, certain cross defaults and a change in control of the Company (as defined in the BofA Credit Agreement). In the event of a default by the Company, BofA, in its capacity as administrative agent, may, and at the request of the requisite number of lenders shall, declare all obligations under the BofA Credit Agreement immediately due and payable and enforce any and all rights of the lenders or BofA under the BofA Credit Agreement and related documents. For certain events of default related to bankruptcy, insolvency, and receivership, all outstanding obligations of the Company will become immediately due and payable. The Company may use the net proceeds of the BofA Revolver for permitted investments, working capital and other general business purposes, including for building improvements, tenant improvements and leasing commissions, in each case to the extent permitted under the BofA Credit Agreement. Former BofA Credit Facility On July 21, 2016, the Company entered into a First Amendment (the “BofA First Amendment”), and on October 18, 2017, the Company entered into a Second Amendment (the “BofA Second Amendment”), to the Second Amended and Restated Credit Agreement dated October 29, 2014 among the Company, the lending institutions party thereto and BofA, as administrative agent, L/C Issuer and Swing Line Lender (as amended by the BofA First Amendment and the BofA Second Amendment, the “Amended Former BofA Credit Facility”) that continued an existing unsecured revolving line of credit (the “Former BofA Revolver”) and an existing term loan (the “Former BofA Term Loan”). Effective simultaneously with the closing of the Amended Former BofA Credit Facility on January 10, 2022, the Company delivered a notice to BofA terminating the aggregate lender commitments under the Former BofA Revolver in their entirety. There were amounts drawn on the Former BofA Revolver as of December 31, 2021 and January 10, 2022. Former BofA Revolver Highlights ● The Former BofA Revolver was terminated at the Company’s election effective January 10, 2022. ● As of December 31, 2021 and January 10, 2022, there were no borrowings under the Former BofA Revolver. The Former BofA Revolver bore interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.550% over LIBOR at December 31, 2021) or (ii) a margin over the base rate depending on the Company’s credit rating (0.550% over the base rate at December 31, 2021). The Former BofA Credit Facility also obligated the Company to pay an annual facility fee in an amount that is based on the Company’s credit rating. The facility fee was assessed against the total amount of the Former BofA Revolver, or $600 million (0.30% at December 31, 2021). The amount of any applicable facility fee, and the margin over LIBOR rate or base rate was determined based on the Company’s credit rating pursuant to a pricing grid. For purposes of the Former BofA Credit Facility, base rate meant, for any day, a fluctuating rate per annum equal to the highest of: (i) the bank’s prime rate for such day, (ii) the Federal Funds Rate for such day, plus 0.50%, and (iii) the one month LIBOR based rate for such day plus 1.00%. As of December 31, 2021, the Company’s credit rating from Moody’s Investors Service was Ba1. During 2022 and as of December 31, 2022, there were no borrowings under the Former BofA Revolver. Former BofA Term Loan Highlights ● The Former BofA Term Loan was repaid in its entirety on September 6, 2022. ● The original principal amount of the Former BofA Term Loan was $400 million. On September 30, 2021, the Company repaid a $90 million portion and on October 25, 2021, the Company repaid a $200 million portion of the Former BofA Term Loan and incurred a loss on extinguishment of debt of $0.7 million related to unamortized deferred financing costs. On September 6, 2022, the Company prepaid the remaining $110 million balance of the Former BofA Term Loan in full and incurred a loss of extinguishment of debt of $0.1 million related to unamortized deferred financing costs. The Former BofA Term Loan bore interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.75% over LIBOR at the date of repayment on September 6, 2022) or (ii) a margin over the base rate depending on the Company’s credit rating (0.750% over the base rate at the date of repayment on September 6, 2022). The margin over LIBOR rate or base rate was determined based on the Company’s credit rating pursuant to a pricing grid. The interest rate on the Former BofA Term Loan was variable through the date of repayment on September 6, 2022. Previously the Company had fixed the base LIBOR interest rate on the Former BofA Term Loan by entering into interest rate swap transactions. On July 22, 2016, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the Former BofA Term Loan at per annum for the period beginning on September 27, 2017 and ended on September 27, 2021. The weighted average variable interest rate on all amounts outstanding under the Former BofA Term Loan through the date of repayment on September 6, 2022 was approximately per annum. Senior Notes On October 24, 2017, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with the various purchasers named therein (the “Purchasers”) in connection with a private placement of senior unsecured notes. Under the Note Purchase Agreement, the Company agreed to sell to the Purchasers an aggregate principal amount of $200 million of senior unsecured notes consisting of (i) Series A Senior Notes due December 20, 2024 in an aggregate principal amount of $116 million (the “Series A Notes”) and (ii) Series B Senior Notes due December 20, 2027 in an aggregate principal amount of $84 million (the “Series B Notes” and, together with the Series A Notes, the “Senior Notes”). On December 20, 2017, the Senior Notes were funded and the proceeds were used to reduce the outstanding balance of the Former BofA Revolver. The Senior Notes bear interest depending on the Company’s credit rating. As of September 30, 2023, the Series A Notes bear interest at per annum. The Note Purchase Agreement contains customary financial covenants, including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, and a maximum unencumbered leverage ratio. The Note Purchase Agreement also contains restrictive covenants that, among other things, restrict the ability of the Company and its subsidiaries to enter into transactions with affiliates, merge, consolidate, create liens, make certain restricted payments, enter into certain agreements or prepay certain indebtedness. Such financial and restrictive covenants are substantially similar to the corresponding covenants contained in the BofA Credit Agreement and the BMO Credit Agreement. The Senior Notes financial covenants require, among other things, the maintenance of a fixed charge coverage ratio of at least 1.50; a maximum leverage ratio and an unsecured leverage ratio of no more than 60% (65% if there were a significant acquisition for a short period of time). In addition, the Note Purchase Agreement provides that the Note Purchase Agreement will automatically incorporate additional financial and other specified covenants (such as limitations on investments and distributions) that are effective from time to time under the existing credit agreements, other material indebtedness or certain other private placements of debt of the Company and its subsidiaries. The Note Purchase Agreement contains customary events of default, including payment defaults, cross defaults with certain other indebtedness, breaches of covenants and bankruptcy events. In the case of an event of default, the Purchasers may, among other remedies, accelerate the payment of all obligations. The Company was in compliance with the Senior Notes financial covenants as of September 30, 2023. |
Financial Instruments_ Derivati
Financial Instruments: Derivatives and Hedging | 9 Months Ended |
Sep. 30, 2023 | |
Financial Instruments: Derivatives and Hedging | |
Financial Instruments: Derivatives and Hedging | 4. Financial Instruments: Derivatives and Hedging On February 20, 2019, the Company entered into interest rate swap transactions that fixed the interest rate for the period beginning August 26, 2020 and ending January 31, 2024 on the BMO Term Loan (the “2019 BMO Interest Rate Swap”). The variable rates that were fixed under the 2019 BMO Interest Rate Swap is described in Note 3. On February 8, 2023, the Company terminated the 2019 BMO Interest Rate Swap applicable to the BMO Term Loan and, on February 10, 2023, the Company received an aggregate of approximately million related to interest receivable. As of September 30, 2023, there were derivative instruments. The 2019 BMO Interest Rate Swap qualified as a cash flow hedge and has been recognized on the consolidated balance sheets at fair value. If a derivative qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value will be recognized in earnings in the same period in which the hedged interest payments affect earnings, which may increase or decrease reported net income and stockholders’ equity prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows. The following table summarizes the notional and fair value of the Company’s derivative financial instrument at December 31, 2022. The notional value is an indication of the extent of the Company’s involvement in this instrument at that time, but does not represent exposure to credit, interest rate or market risks. Notional Strike Effective Expiration Fair Value (1) at (in thousands) Value Rate Date Date September 30, 2023 December 31, 2022 2019 BMO Interest Rate Swap $ 165,000 2.39 % Aug-20 Jan-24 $ — $ 4,358 (1) Classified within Level 2 of the fair value hierarchy. The 2019 BMO Interest Rate Swap was reported as an asset with a fair value of approximately $4.4 million at December 31, 2022. The balance is included in other assets: derivative asset in the consolidated balance sheet at December 31, 2022. The gain (loss) on the Company’s 2019 BMO Interest Rate Swap was recorded in other comprehensive income (loss) (OCI), and the accompanying consolidated statements of operations as a component of interest expense for the nine months ended September 30, 2023 and 2022, was as follows: (in thousands) Nine Months Ended September 30, Interest Rate Swaps in Cash Flow Hedging Relationships: 2023 2022 Amounts of gain recognized in OCI $ 177 $ 7,835 Amounts of previously recorded gain (loss) reclassified from OCI into Interest Expense $ 3,118 $ (1,669) Total amount of Interest Expense presented in the consolidated statements of operations $ 18,099 $ 17,140 Over time, the realized gains in accumulated other comprehensive income will be reclassified into earnings as a decrease to interest expense in the same periods in which the hedged interest payments would affect earnings. The Company estimates that approximately The Company hedged the exposure to variability in anticipated future interest payments on existing debt. The BMO Term Loan hedging transaction used derivative instruments that involved certain additional risks such as counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant changes in interest rates would cause a significant loss of basis in the contract. The Company required its derivatives contracts to be with counterparties that have investment grade ratings. As a result, the Company did not anticipate that any counterparty would fail to meet its obligations. However, there was no assurance that the Company would be able to adequately protect against the foregoing risks or that it would ultimately realize an economic benefit that exceeded the related amounts incurred in connection with engaging in such hedging strategies. The fair value of the Company’s derivative instruments are determined using the net discounted cash flows of the expected cash flows of the derivative based on the market based interest rate curve and are adjusted to reflect credit or nonperformance risk. The risk is estimated by the Company using credit spreads and risk premiums that are observable in the market. These financial instruments were classified within Level 2 of the fair value hierarchy and were classified as an asset or liability on the consolidated balance sheet. The Company’s derivatives are recorded at fair value in other assets: derivative asset and other liabilities: derivative liability in the consolidated balance sheets, and the effective portion of the derivatives’ fair value is recorded to other comprehensive income (loss) in the consolidated statements of comprehensive income (loss). |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Net Income Per Share | |
Net Income Per Share | 5. Net Income Per Share Basic net income per share is computed by dividing net income by the weighted average number of Company shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares. There were potential dilutive shares outstanding at each of September 30, 2023 and 2022. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | 6. Stockholders’ Equity As of September 30, 2023, the Company had 103,430,353 shares of common stock outstanding. The Company declared and paid dividends as follows (in thousands, except per share amounts): Dividends Per Total Quarter Paid Share Dividends First quarter of 2023 $ 0.01 $ 1,033 Second quarter of 2023 $ 0.01 $ 1,032 Third quarter of 2023 $ 0.01 $ 1,034 2022: Special dividend declared in December 2021 and paid January 2022 $ 0.32 $ 33,280 First quarter of 2022 $ 0.09 $ 9,360 Second quarter of 2022 $ 0.09 $ 9,284 Third quarter of 2022 $ 0.01 $ 1,032 Equity-Based Compensation On May 20, 2002, the stockholders of the Company approved the 2002 Stock Incentive Plan (the “Plan”). The Plan is an equity-based incentive compensation plan and provides for the grants of up to a maximum of 2,000,000 shares of the Company’s common stock (“Awards”). All of the Company’s employees, officers, directors, consultants and advisors are eligible to be granted Awards. Awards under the Plan are made at the discretion of the Company’s Board of Directors, and have no vesting requirements. Upon granting an Award, the Company will recognize compensation cost equal to the fair value of the Company’s common stock, as determined by the Company’s Board of Directors, on the date of the grant. On each of May 17, 2022 and May 18, 2023, the Company granted shares under the Plan to non-employee directors with the compensation cost related to such grants indicated in the table below, which was recognized during the year ended December 31, 2022 and the nine months ended September 30, 2023, respectively, included in general and administrative expenses for the respective period. Such shares were fully vested on the date of issuance. Shares Available Compensation for Grant Cost Balance December 31, 2021 1,780,820 1,012,500 Shares granted 2022 (84,133) 393,750 Balance December 31, 2022 1,696,687 $ 1,406,250 Shares granted 2023 (194,439) 314,991 Balance September 30, 2023 1,502,248 $ 1,721,241 Repurchase of Common Stock On June 23, 2021, the Board of Directors of the Company authorized the repurchase of up to $50 million of the Company’s common stock from time to time in the open market, privately negotiated transactions or other manners as permitted by federal securities laws. The repurchase authorization may be suspended or discontinued at any time. The Company repurchased 846,739 shares of common stock during the first quarter of 2022 at an aggregate cost of approximately $4.8 million at an average cost of approximately $5.72 per share, inclusive of brokerage commissions. The Company did not repurchase any shares of common stock during the remainder of 2022 or the first quarter of 2023. The excess of the purchase price over the par value of the shares repurchased is applied to reduce additional paid-in capital. On February 10, 2023, the Company announced it had discontinued the previous repurchase authorization made on June 23, 2021. A summary of the repurchase of common stock by the Company is shown in the following table: (Cost in thousands) Shares Repurchased Cost Balance, December 31, 2021 4,413,741 $ 37,019 Repurchase of shares 846,739 4,843 Balance, December 31, 2022 5,260,480 $ 41,862 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | 7. Income Taxes General The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, the Company generally is entitled to a tax deduction for distributions paid to its shareholders, thereby effectively subjecting the distributed net income of the Company to taxation at the shareholder level only. The Company must comply with a variety of restrictions to maintain its status as a REIT. These restrictions include the type of income it can earn, the type of assets it can hold, the number of shareholders it can have and the concentration of their ownership, and the amount of the Company’s taxable income that must be distributed annually. One such restriction is that the Company generally cannot own more than 10% of the voting power or value of the securities of any one issuer unless the issuer is itself a REIT or a taxable REIT subsidiary (“TRS”). In the case of TRSs, the Company’s ownership of securities in all TRSs generally cannot exceed of the value of all of the Company’s assets. FSP Investments LLC and FSP Protective TRS Corp. are the Company’s taxable REIT subsidiaries operating as taxable corporations under the Code. The TRSs have gross amounts of net operating losses (“NOLs”) available to those taxable corporations of million as of December 31, 2022 and December 31, 2021, respectively. The NOLs created prior to 2018 will expire between 2030 and 2047 and the NOLs generated after 2017 will not expire. A valuation allowance is provided for the full amount of the NOLs as the realization of any tax benefits from such NOLs is not assured. Income taxes are recorded based on the future tax effects of the difference between the tax and financial reporting bases of the Company’s assets and liabilities. In estimating future tax consequences, potential future events are considered except for potential changes in income tax law or in rates. The Company adopted an accounting pronouncement related to uncertainty in income taxes effective January 1, 2007, which did not result in recording a liability, nor was any accrued interest and penalties recognized with the adoption. Accrued interest and penalties will be recorded as income tax expense, if the Company records a liability in the future. The Company’s effective tax rate was not affected by the adoption. The Company and one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The statute of limitations for the Company’s income tax returns is generally and as such, the Company’s returns that remain subject to examination would be primarily from 2019 and thereafter. Net operating losses Section 382 of the Code restricts a corporation’s ability to use NOLs to offset future taxable income following certain “ownership changes.” Such ownership changes occurred with past mergers and accordingly a portion of the NOLs incurred by the Company’s prior sponsored REITs available for use by the Company in any particular future taxable year will be limited. To the extent that the Company does not utilize the full amount of the annual NOLs limit, the unused amount may be carried forward to offset taxable income in future years. NOLs generated prior to December 31, 2018 will expire 20 years after the year in which they arise, and the last of the Company’s NOLs will expire in 2027. A valuation allowance is provided for the full amount of the NOLs as the realization of any tax benefits from such NOLs is not assured. The gross amount of NOLs available to the Company was million as of September 30, 2023 and December 31, 2022, respectively. Income Tax Expense The Company is subject to a business tax known as the Revised Texas Franchise Tax. Some of the Company’s leases allow reimbursement by tenants for these amounts because the Revised Texas Franchise Tax replaces a portion of the property tax for school districts. Because the tax base on the Revised Texas Franchise Tax is derived from an income based measure, it is considered an income tax. The Company recorded a provision for the Revised Texas Franchise Tax of The income tax expense reflected in the consolidated statements of operations relates primarily to a franchise tax on the Company’s Texas properties. For the Nine Months Ended September 30, (Dollars in thousands) 2023 2022 Revised Texas Franchise Tax $ 212 $ 167 Other Taxes — — Tax expense $ 212 $ 167 Taxes on income are a current tax expense. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | 8. Leases Leases as a Lessor: The Company is a lessor of commercial real estate with operations that include the leasing of office and industrial properties. Many of the leases with customers contain options to extend leases at a fair market rate and may also include options to terminate leases. The Company considers several inputs when evaluating the amount it expects to derive from its leased assets at the end of the lease terms, such as the remaining useful life, expected market conditions, fair value of lease payments, expected fair values of underlying assets, and expected deployment of the underlying assets. The Company’s strategy to address its risk for the residual value in its commercial real estate is to re-lease the commercial space. The Company has elected to apply the practical expedient to not separate non-lease components from the related lease component of real estate leases. This combined component is primarily comprised of fixed lease payments, early termination fees, common area maintenance cost reimbursements, and parking lease payments. The Company applies ASC 842-Leases to the combined lease and non-lease components. For the nine months ended September 30, 2023 and 2022, the Company recognized the following amounts of income relating to lease payments: Income relating to lease payments: Nine Months Ended (in thousands) September 30, 2023 September 30, 2022 Income from leases (1) $ 111,316 $ 118,843 $ 111,316 $ 118,843 (1) Includes amounts recognized from variable lease payments of $32,275 and $37,050 for the nine months ended September 30, 2023 and 2022, respectively. |
Disposition of Properties
Disposition of Properties | 9 Months Ended |
Sep. 30, 2023 | |
Dispositions of properties | |
Dispositions of properties | 9. Disposition of Properties and Asset Held for Sale In 2021, the Company determined that further debt reduction would provide greater financial flexibility and potentially increase shareholder value. Accordingly, the Company adopted a strategy to dispose of certain properties where it believes valuation potential has been reached. In 2022, the Company sold two office properties located in Broomfield, Colorado on August 31, 2022 for an aggregate sales price of $102.5 million, at a gain of approximately $24.1 million. The Company sold an office property located in Evanston, Illinois on December 28, 2022 for a sales price of million. The Company used the proceeds of the dispositions principally to repay outstanding indebtedness. In 2023, the Company sold one office property located in Elk Grove, Illinois on March 10, 2023, for a sales price of $29.1 million, at a gain of approximately $8.4 million. The Company used the proceeds of the disposition principally to repay a portion of outstanding indebtedness. The Company sold square feet of land at our Addison, Texas property to the Town of Addison as part of a road revitalization project. During the three months ended September 30, 2023, the Company entered into an agreement to sell a property in Miami, Florida for a gross sales price of approximately $68.0 million at an expected loss of $19.2 million and an agreement to sell a property in Atlanta, Georgia for a gross sales price of approximately $40.0 million at an expected loss of $20.5 million. The Company reclassified $96.4 million of its office properties in Miami, Florida and Atlanta, Georgia as assets held for sale as of September 30, 2023, which is comprised of $122.2 million of real estate assets, net of accumulated depreciation, $5.5 million of straight-line rents receivable, and $8.4 million of deferred leasing commissions, net of accumulated amortization. The Company recorded these properties at the fair value less cost to sell, which was less than the carrying value and resulted in an impairment of million in the three months ended September 30, 2023. The reclassification is a non-cash investing activity on the statement of cash flows. The Company estimated the fair value of these properties, less estimated costs to sell, using the offers to purchase the properties made by third parties (Level 3 inputs, as there is no active market). During the three months ended September 30, 2023, the Company entered into an agreement to sell a property in Plano, Texas for a gross sales price of approximately $48.0 million at an expected gain of $10.6 million. The Company reclassified million of acquired real estate leases, net of accumulated amortization. The reclassification is a non-cash investing activity on the statement of cash flows. The Company reports the results of operations of its properties in its consolidated statements of operations, which includes rental income, rental operating expenses, real estate taxes and insurance and depreciation and amortization. The operating results for the properties that the Company disposed of or classified as assets held for sale are summarized below: Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Rental revenue $ 5,354 $ 8,592 $ 16,062 $ 27,646 Rental operating expenses (1,862) (2,809) (5,277) (8,669) Real estate taxes and insurance (720) (2,416) (2,264) (7,287) Depreciation and amortization (1,034) (3,157) (5,372) (10,246) Income from dispositions and assets held for sale $ 1,738 $ 210 $ 3,149 $ 1,444 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events | |
Subsequent Events | 10. Subsequent Events On October 6, 2023, the Board of Directors of the Company declared a cash distribution of $0.01 per share of common stock payable on November 9, 2023 to stockholders of record on October 20, 2023. On October 26, 2023, the Company sold an office building located in Plano, Texas, for a sales price of $48.0 million at a gain of approximately $10.6 million. |
Organization, Properties, Bas_2
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements of the Company include all of the accounts of the Company and its majority-owned and controlled subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission. The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other period. Management is in discussions with lenders to extend or refinance the Company’s debt, a portion of which matures within one year after the date that these financial statements are issued as more fully described in Note 3 below. Management has considered whether there is substantial doubt about the Company's ability to continue as a going concern within one year of the issuance date of these interim financial statements due to the fact of the uncertainty regarding the maturities of this debt as set forth in Accounting Standards Codification (ASC) 205-40, “Presentation of Financial Statements - Going Concern.” As described in Note 1 below, the Company has concluded that management’s plans to dispose of assets and extend and/or refinance the Company’s debt are probable of being achieved and alleviate substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from an adverse outcome of this uncertainty. |
Financial Instruments | Financial Instruments As disclosed in Note 4, the Company’s derivatives were recorded at fair value using Level 2 inputs prior to their termination on February 8, 2023. The Company estimates that the carrying values of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued expenses, accrued compensation, and tenant security deposits approximate their fair values based on their short-term maturity and the bank note and term loans payable approximate their fair values as they bear interest at variable interest rates or at rates that are at market for similar investments. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equ ivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows. September 30, September 30, (in thousands) 2023 2022 Cash and cash equivalents (1) $ 13,043 $ 6,367 Restricted cash — 2,350 Total cash, cash equivalents and restricted cash $ 13,043 $ 8,717 (1) Includes $2,445 at September 30, 2023, pertaining to Monument Circle, which the Company is unable to utilize for its own operational purposes. Restricted cash |
Recent Accounting Standards | Recent Accounting Standards In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 adds interim and annual disclosure requirements to GAAP at the request of the Securities and Exchange Commission. The guidance in ASU 2023-06 is required to be applied prospectively and the GAAP requirements will be effective when the removal of the related SEC disclosure requirements is effective. If the SEC does not act to remove its related requirement by June 30, 2027, any related FASB amendments will be removed from the Accounting Standards Codification and will not be effective. The Company does not anticipate that the adoption of ASU 2023-06 will have a material impact on the consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company does not anticipate that the adoption of ASU 2020-04 will have a material impact on the consolidated financial statements. |
Organization, Properties, Bas_3
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of the entity's investment in real estate assets, including number of properties and rentable square feet of real estate | As of September 30, 2023 2022 Owned and Consolidated Properties: Number of properties (1) 20 22 Rentable square feet 6,206,460 6,433,954 |
Reconciliation of cash, cash equivalents, and restricted cash | September 30, September 30, (in thousands) 2023 2022 Cash and cash equivalents (1) $ 13,043 $ 6,367 Restricted cash — 2,350 Total cash, cash equivalents and restricted cash $ 13,043 $ 8,717 (1) Includes $2,445 at September 30, 2023, pertaining to Monument Circle, which the Company is unable to utilize for its own operational purposes. |
Fair value of assets acquired at consolidation of VIE | (in thousands) Real estate assets $ 19,695 Value of acquired real estate leases 305 Total $ 20,000 |
Quantitative information about significant unobservable inputs of Level 3 measurement | Fair Value (1) at Significant Range Weighted Description December 31, 2022 Valuation Technique Unobservable Input Min Max Average (2) (in thousands) Sponsored REIT Loan $ 19,763 Discounted Cash Flows Exit Cap Rate 7.50 % 7.50 % 7.50 % Discount Rate 9.50 % 9.50 % 9.50 % (1) Classified within Level 3 of the fair value hierarchy. (2) Unobservable inputs were weighted based on the fair value of the related instrument. |
Variable interest entities ("VIEs") | |
Quantitative information about significant unobservable inputs of Level 3 measurement | Fair Value (1) at Significant Range Weighted Description January 1, 2023 Valuation Technique Unobservable Input Min Max Average (2) (in thousands) Monument Circle Consolidation $ 20,000 Discounted Cash Flows Exit Cap Rate 7.50 % 7.50 % 7.50 % Discount Rate 9.50 % 9.50 % 9.50 % (1) Classified within Level 3 of the fair value hierarchy. (2) Unobservable inputs were weighted based on the fair value of the related instrument. |
Related Party Transactions an_2
Related Party Transactions and Investments in Non-Consolidated Entities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions and Investments in Non-Consolidated Entities | |
Allowance for credit losses rollforward | For the Nine Months Ended September 30, (In thousands) 2023 2022 Beginning allowance for credit losses $ (4,237) $ — Additional increases to the allowance for credit losses — (1,857) Reductions to the allowance for credit losses 4,237 — Ending allowance for credit losses $ — $ (1,857) |
Quantitative information about significant unobservable inputs of Level 3 measurement | Fair Value (1) at Significant Range Weighted Description December 31, 2022 Valuation Technique Unobservable Input Min Max Average (2) (in thousands) Sponsored REIT Loan $ 19,763 Discounted Cash Flows Exit Cap Rate 7.50 % 7.50 % 7.50 % Discount Rate 9.50 % 9.50 % 9.50 % (1) Classified within Level 3 of the fair value hierarchy. (2) Unobservable inputs were weighted based on the fair value of the related instrument. |
Financial Instruments_ Deriva_2
Financial Instruments: Derivatives and Hedging (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Financial Instruments: Derivatives and Hedging | |
Schedule of notional and fair value of derivative financial instruments | Notional Strike Effective Expiration Fair Value (1) at (in thousands) Value Rate Date Date September 30, 2023 December 31, 2022 2019 BMO Interest Rate Swap $ 165,000 2.39 % Aug-20 Jan-24 $ — $ 4,358 (1) Classified within Level 2 of the fair value hierarchy. |
Summary of Interest Rate Swaps that was recorded in OCI | (in thousands) Nine Months Ended September 30, Interest Rate Swaps in Cash Flow Hedging Relationships: 2023 2022 Amounts of gain recognized in OCI $ 177 $ 7,835 Amounts of previously recorded gain (loss) reclassified from OCI into Interest Expense $ 3,118 $ (1,669) Total amount of Interest Expense presented in the consolidated statements of operations $ 18,099 $ 17,140 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity | |
Schedule of dividends declared and paid | Dividends Per Total Quarter Paid Share Dividends First quarter of 2023 $ 0.01 $ 1,033 Second quarter of 2023 $ 0.01 $ 1,032 Third quarter of 2023 $ 0.01 $ 1,034 2022: Special dividend declared in December 2021 and paid January 2022 $ 0.32 $ 33,280 First quarter of 2022 $ 0.09 $ 9,360 Second quarter of 2022 $ 0.09 $ 9,284 Third quarter of 2022 $ 0.01 $ 1,032 |
Schedule of Share-based Payment Arrangement, Nonemployee Director Award Plan, Activity | Shares Available Compensation for Grant Cost Balance December 31, 2021 1,780,820 1,012,500 Shares granted 2022 (84,133) 393,750 Balance December 31, 2022 1,696,687 $ 1,406,250 Shares granted 2023 (194,439) 314,991 Balance September 30, 2023 1,502,248 $ 1,721,241 |
Schedule of repurchase of common stock | (Cost in thousands) Shares Repurchased Cost Balance, December 31, 2021 4,413,741 $ 37,019 Repurchase of shares 846,739 4,843 Balance, December 31, 2022 5,260,480 $ 41,862 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Schedule of income tax expense reflected in the condensed consolidated statements of income | For the Nine Months Ended September 30, (Dollars in thousands) 2023 2022 Revised Texas Franchise Tax $ 212 $ 167 Other Taxes — — Tax expense $ 212 $ 167 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Summary of income relating to lease payments and undiscounted cash flows | Income relating to lease payments: Nine Months Ended (in thousands) September 30, 2023 September 30, 2022 Income from leases (1) $ 111,316 $ 118,843 $ 111,316 $ 118,843 (1) Includes amounts recognized from variable lease payments of $32,275 and $37,050 for the nine months ended September 30, 2023 and 2022, respectively. |
Disposition of properties (Tabl
Disposition of properties (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Dispositions of properties | |
Summary of operating results for discontinued operations | Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Rental revenue $ 5,354 $ 8,592 $ 16,062 $ 27,646 Rental operating expenses (1,862) (2,809) (5,277) (8,669) Real estate taxes and insurance (720) (2,416) (2,264) (7,287) Depreciation and amortization (1,034) (3,157) (5,372) (10,246) Income from dispositions and assets held for sale $ 1,738 $ 210 $ 3,149 $ 1,444 |
Organization, Properties, Bas_4
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards (Details) | 9 Months Ended | |
Sep. 30, 2023 ft² property | Sep. 30, 2022 ft² property | |
Properties | ||
Number of properties | 19 | |
Number of owned and consolidated properties | 20 | 22 |
Rentable square feet | ft² | 6,206,460 | 6,433,954 |
Number of properties classified as assets held for sale | 3 | |
FSP Investments LLC | ||
Organization | ||
Ownership interest (as a percent) | 100% | |
FSP Property Management LLC | ||
Organization | ||
Ownership interest (as a percent) | 100% | |
FSP Holdings LLC | ||
Organization | ||
Ownership interest (as a percent) | 100% | |
FSP Protective TRS Corp. | ||
Organization | ||
Ownership interest (as a percent) | 100% |
Organization, Properties, Bas_5
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Cash, Cash Equivalents and Restricted Cash | ||||
Cash and cash equivalents | $ 13,043 | $ 6,367 | ||
Restricted Cash | 2,350 | |||
Total cash, cash equivalents and restricted cash | $ 13,043 | $ 6,632 | $ 8,717 | $ 40,751 |
Restricted Cash, Statement of Financial Position [Extensible Enumeration] | Total cash, cash equivalents and restricted cash | |||
FSP Monument Circle LLC | ||||
Cash, Cash Equivalents and Restricted Cash | ||||
Cash and cash equivalents | $ 2,445 |
Organization, Properties, Bas_6
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards - Variable Interest Entities (Details) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2023 USD ($) | Jan. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Variable interest entity | |||||
Gain on consolidation of Sponsored REIT | $ 394 | ||||
Cash, cash equivalents and restricted cash | 13,043 | $ 6,632 | $ 8,717 | $ 40,751 | |
VIE at Consolidation | |||||
Real estate assets | 921,581 | 1,103,248 | |||
Acquired real estate leases | 7,447 | 10,186 | |||
Related party mortgage loan receivable | $ 19,763 | ||||
Debt Securities, Available-for-Sale, Valuation Technique [Extensible Enumeration] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | ||||
Level 3 | |||||
VIE at Consolidation | |||||
Related party mortgage loan receivable | $ 19,763 | ||||
Level 3 | Exit Cap Rate | Maximum | |||||
VIE at Consolidation | |||||
Measurement input | 7.50 | ||||
Level 3 | Exit Cap Rate | Minimum | |||||
VIE at Consolidation | |||||
Measurement input | 7.50 | ||||
Level 3 | Exit Cap Rate | Weighted Average | |||||
VIE at Consolidation | |||||
Measurement input | 7.50 | ||||
Level 3 | Discount Rate | Maximum | |||||
VIE at Consolidation | |||||
Measurement input | 9.50 | ||||
Level 3 | Discount Rate | Minimum | |||||
VIE at Consolidation | |||||
Measurement input | 9.50 | ||||
Level 3 | Discount Rate | Weighted Average | |||||
VIE at Consolidation | |||||
Measurement input | 9.50 | ||||
Variable interest entities ("VIEs") | |||||
Variable interest entity | |||||
Gain on consolidation of Sponsored REIT | 400 | ||||
Cash, cash equivalents and restricted cash | 2,445 | $ 0 | |||
VIE at Consolidation | |||||
Real estate assets | 19,439 | $ 19,695 | 0 | ||
Acquired real estate leases | 305 | 305 | 305 | ||
Total | 20,000 | ||||
Variable interest entities ("VIEs") | FSP Monument Circle LLC | |||||
Variable interest entity | |||||
Cash, cash equivalents and restricted cash | $ 3,000 | ||||
Variable interest entities ("VIEs") | Level 3 | |||||
VIE at Consolidation | |||||
Related party mortgage loan receivable | $ 20,000 | ||||
Debt Securities, Available-for-Sale, Valuation Technique [Extensible Enumeration] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | ||||
Variable interest entities ("VIEs") | Level 3 | Exit Cap Rate | Maximum | |||||
VIE at Consolidation | |||||
Measurement input | 7.50 | ||||
Variable interest entities ("VIEs") | Level 3 | Exit Cap Rate | Minimum | |||||
VIE at Consolidation | |||||
Measurement input | 7.50 | ||||
Variable interest entities ("VIEs") | Level 3 | Exit Cap Rate | Weighted Average | |||||
VIE at Consolidation | |||||
Measurement input | 7.50 | ||||
Variable interest entities ("VIEs") | Level 3 | Discount Rate | Maximum | |||||
VIE at Consolidation | |||||
Measurement input | 9.50 | ||||
Variable interest entities ("VIEs") | Level 3 | Discount Rate | Minimum | |||||
VIE at Consolidation | |||||
Measurement input | 9.50 | ||||
Variable interest entities ("VIEs") | Level 3 | Discount Rate | Weighted Average | |||||
VIE at Consolidation | |||||
Measurement input | 9.50 | ||||
VIE, Not Primary Beneficiary | |||||
Variable interest entity | |||||
Maximum exposure to losses associated with VIE | 22,100 | ||||
VIE, Not Primary Beneficiary | Prepaid expenses and other assets | |||||
Variable interest entity | |||||
Accrued interest and exit fee receivables | $ 2,300 |
Organization, Properties, Bas_7
Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards - Liquidity and Management's Plan (Details) $ in Thousands | 2 Months Ended | 3 Months Ended | ||||||
Oct. 26, 2023 USD ($) property | Dec. 31, 2023 USD ($) property | Dec. 31, 2023 USD ($) property | Oct. 01, 2024 USD ($) | Nov. 07, 2023 USD ($) loan | Sep. 30, 2023 USD ($) loan | Dec. 31, 2022 USD ($) | Oct. 24, 2017 USD ($) | |
Debt Instrument [Line Items] | ||||||||
Unsecured term loan | $ 114,610 | $ 164,750 | ||||||
Number Of Properties Sold | property | 1 | |||||||
Sale price | $ 46,700 | |||||||
Cash and cash equivalents available for repayment of debt | $ 73,500 | |||||||
Forecast | ||||||||
Debt Instrument [Line Items] | ||||||||
Sale price | $ 43,600 | |||||||
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | ||||||||
Debt Instrument [Line Items] | ||||||||
Number Of Properties Sold | property | 2 | 2 | ||||||
Sale price | $ 96,500 | |||||||
Senior Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount of loan | $ 200,000 | |||||||
Series A Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount of loan | $ 116,000 | |||||||
BofA Revolver and BMO Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Number of loans | loan | 2 | 2 | ||||||
Unsecured term loan | $ 205,000 | $ 205,000 | $ 195,000 | |||||
BofA Revolver and BMO Term Loan | Forecast | ||||||||
Debt Instrument [Line Items] | ||||||||
Repayment of principal | $ 170,000 |
Related Party Transactions an_3
Related Party Transactions and Investments in Non-Consolidated Entities - Management fees and interest income from loans (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Sponsored REITs | ||
Asset management fees, low end of range (as a percent) | 1% | |
Asset management fees, high end of range (as a percent) | 5% | |
Notice period for cancellation of applicable contracts | 30 days | |
Type of revenue | Asset management fees | Asset management fees |
Asset management fees | ||
Sponsored REITs | ||
Revenue | $ 0 | $ 26,000 |
Related Party Transactions an_4
Related Party Transactions and Investments in Non-Consolidated Entities - Sponsored REIT Loans outstanding (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Oct. 29, 2021 | Oct. 28, 2021 | |
Sponsored REITs | ||||
Amount Drawn | $ 24,000,000 | $ 21,000,000 | ||
Related party mortgage loan receivable | 24,000,000 | $ 21,000,000 | ||
Sponsored REITs | ||||
Sponsored REITs | ||||
Interest income and fees from the Sponsored REIT Loans | $ 0 | $ 1,367,000 | ||
FSP Monument Circle LLC | ||||
Sponsored REITs | ||||
Additional loan amount | $ 3,000,000 |
Related Party Transactions an_5
Related Party Transactions and Investments in Non-Consolidated Entities - Allowance for credit losses (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||||
Beginning allowance for credit losses | $ (4,237,000) | $ (4,237,000) | |||
Additional increases to the allowance for credit losses | $ (1,857,000) | $ 4,200,000 | |||
Reductions to the allowance for credit losses | $ 4,200,000 | $ 0 | $ 4,237,000 | ||
Ending allowance for credit losses | $ 1,857,000 | $ 4,237,000 |
Related Party Transactions an_6
Related Party Transactions and Investments in Non-Consolidated Entities - Level 3 Significant unobservable inputs (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Related party mortgage loan receivable | $ 19,763 |
Debt Securities, Available-for-Sale, Valuation Technique [Extensible Enumeration] | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Level 3 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Related party mortgage loan receivable | $ 19,763 |
Level 3 | Maximum | Exit Cap Rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 7.50 |
Level 3 | Maximum | Discount Rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 9.50 |
Level 3 | Minimum | Exit Cap Rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 7.50 |
Level 3 | Minimum | Discount Rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 9.50 |
Level 3 | Weighted Average | Exit Cap Rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 7.50 |
Level 3 | Weighted Average | Discount Rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 9.50 |
Bank Note Payable, Term Loans_2
Bank Note Payable, Term Loans Payable and Senior Notes (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||
Apr. 01, 2024 USD ($) | Aug. 10, 2023 USD ($) | Feb. 10, 2023 USD ($) $ / shares | Feb. 09, 2023 | Sep. 30, 2022 USD ($) | Sep. 06, 2022 USD ($) | Oct. 25, 2021 USD ($) | Oct. 24, 2017 USD ($) | Dec. 31, 2021 USD ($) $ / shares | Sep. 30, 2023 USD ($) $ / shares | Jun. 30, 2023 $ / shares | Mar. 31, 2023 $ / shares | Sep. 30, 2022 USD ($) $ / shares | Jun. 30, 2022 $ / shares | Mar. 31, 2022 $ / shares | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Nov. 07, 2023 USD ($) | Oct. 26, 2023 property | Oct. 01, 2023 USD ($) | Jan. 10, 2022 USD ($) | Sep. 27, 2021 | Sep. 27, 2018 USD ($) | |
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Repayments of unsecured debt | $ 50,000,000 | $ 110,000,000 | |||||||||||||||||||||||
Loss on extinguishment of debt | $ (39,000) | $ (78,000) | (106,000) | $ (78,000) | |||||||||||||||||||||
Unsecured term loan | $ 114,610,000 | 114,610,000 | $ 164,750,000 | ||||||||||||||||||||||
Received an aggregate amount | 4,206,000 | ||||||||||||||||||||||||
Cash dividend declared per share (in dollars per share) | $ / shares | $ 0.32 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.09 | $ 0.09 | ||||||||||||||||||
Distributions common stock (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.09 | $ 0.09 | |||||||||||||||||||
Borrowings outstanding | $ 80,000,000 | 80,000,000 | 48,000,000 | ||||||||||||||||||||||
Number of properties sold | property | 1 | ||||||||||||||||||||||||
Senior Notes | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Principal amount of loan | $ 200,000,000 | ||||||||||||||||||||||||
Fixed charge coverage ratio | 1.50 | ||||||||||||||||||||||||
Series A Notes | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Principal amount of loan | $ 116,000,000 | $ 116,000,000 | |||||||||||||||||||||||
Interest rate (as a percent) | 4.49% | 4.49% | |||||||||||||||||||||||
Series B Notes | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Principal amount of loan | $ 84,000,000 | ||||||||||||||||||||||||
Interest rate (as a percent) | 4.76% | 4.76% | |||||||||||||||||||||||
Maximum | Senior Notes | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Unsecured leverage ratio | 60% | ||||||||||||||||||||||||
Unsecured leverage ratio for significant acquisition | 65% | ||||||||||||||||||||||||
Revolving Credit Facility | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Interest rate during period (as a percent) | 8.43% | ||||||||||||||||||||||||
Weighted average variable interest rate (as a percent) | 7.80% | ||||||||||||||||||||||||
Borrowing capacity | $ 150,000,000 | 237,500,000 | |||||||||||||||||||||||
Borrowings outstanding | $ 40,000,000 | $ 0 | $ 80,000,000 | $ 80,000,000 | $ 0 | $ 0 | $ 90,000,000 | $ 0 | |||||||||||||||||
Facility fee at period end (as a percent) | 0.35% | ||||||||||||||||||||||||
Facility fee (as a percent) | 0.35% | ||||||||||||||||||||||||
Revolving Credit Facility | Maximum | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Distributions common stock (in dollars per share) | $ / shares | $ 0.01 | ||||||||||||||||||||||||
Revolving Credit Facility | ScenarioForecastMember | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Borrowing capacity | $ 100,000,000 | $ 125,000,000 | |||||||||||||||||||||||
Revolving Credit Facility | SOFR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 3% | ||||||||||||||||||||||||
Unsecured leverage ratio | 1.75% | ||||||||||||||||||||||||
Revolving Credit Facility | One Month SOFR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 0.11448% | 0.11448% | |||||||||||||||||||||||
Term of SOFR | 1 month | 1 month | |||||||||||||||||||||||
Revolving Credit Facility | Three month SOFR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 0.26161% | 0.26161% | |||||||||||||||||||||||
Term of SOFR | 3 months | 3 months | |||||||||||||||||||||||
Revolving Credit Facility | Six month SOFR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 0.42826% | 0.42826% | |||||||||||||||||||||||
Term of SOFR | 6 months | 6 months | |||||||||||||||||||||||
Revolving Credit Facility | LIBOR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 1.55% | ||||||||||||||||||||||||
Revolving Credit Facility | Bank's base rate | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 2% | 0.55% | |||||||||||||||||||||||
Line of credit on which facility fee | $ 600,000,000 | $ 600,000,000 | |||||||||||||||||||||||
Facility fee (as a percent) | 0.30% | ||||||||||||||||||||||||
Unsecured leverage ratio | 0.75% | ||||||||||||||||||||||||
BofA Line Of Credit | Federal Funds Rate | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 0.50% | ||||||||||||||||||||||||
BofA Line Of Credit | LIBOR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 1% | ||||||||||||||||||||||||
Unsecured Debt [Member] | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Principal amount of loan | $ 400,000,000 | ||||||||||||||||||||||||
Repayments of unsecured debt | $ 90,000,000 | 110,000,000 | $ 200,000,000 | ||||||||||||||||||||||
Loss on extinguishment of debt | $ 100,000 | $ 700,000 | |||||||||||||||||||||||
Effective interest rate (as a percent) | 2.65% | ||||||||||||||||||||||||
Unsecured Debt [Member] | LIBOR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate at period end (as a percent) | 1.75% | ||||||||||||||||||||||||
Fixed rate (as a percent) | 1.12% | ||||||||||||||||||||||||
Unsecured Debt [Member] | Bank's base rate | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate at period end (as a percent) | 0.75% | ||||||||||||||||||||||||
BMO Term Loan | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Principal amount of loan | $ 220,000,000 | ||||||||||||||||||||||||
Repayments of unsecured debt | $ 10,000,000 | ||||||||||||||||||||||||
Unsecured term loan | $ 125,000,000 | $ 115,000,000 | $ 115,000,000 | ||||||||||||||||||||||
Interest rate during period (as a percent) | 8.43% | ||||||||||||||||||||||||
Weighted average interest rate (as a percent) | 7.98% | 7.98% | |||||||||||||||||||||||
Effective interest rate (as a percent) | 4.04% | 4.04% | |||||||||||||||||||||||
BMO Term Loan | Maximum | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Cash dividend declared per share (in dollars per share) | $ / shares | $ 0.01 | ||||||||||||||||||||||||
BMO Term Loan | ScenarioForecastMember | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Repayment of principal | $ 15,000,000 | ||||||||||||||||||||||||
BMO Term Loan | BMO Interest Rate Swap | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Received an aggregate amount | $ 4,300,000 | ||||||||||||||||||||||||
Interest receivable portion of proceeds from termination of interest rate swap | $ 100,000 | ||||||||||||||||||||||||
BMO Term Loan | SOFR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 3% | ||||||||||||||||||||||||
BMO Term Loan | One Month SOFR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 0.11448% | ||||||||||||||||||||||||
Term of SOFR | 1 month | ||||||||||||||||||||||||
BMO Term Loan | Three month SOFR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 0.26161% | ||||||||||||||||||||||||
Term of SOFR | 3 months | ||||||||||||||||||||||||
BMO Term Loan | Six month SOFR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 0.42826% | ||||||||||||||||||||||||
Term of SOFR | 6 months | ||||||||||||||||||||||||
BMO Term Loan | LIBOR | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate at period end (as a percent) | 1.65% | ||||||||||||||||||||||||
BMO Term Loan | LIBOR | Hedged portion | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Fixed rate (as a percent) | 2.39% | 2.39% | |||||||||||||||||||||||
BMO Term Loan | Bank's base rate | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Basis spread on variable rate (as a percent) | 2% | ||||||||||||||||||||||||
Basis spread on variable rate at period end (as a percent) | 0.65% | ||||||||||||||||||||||||
Tranche A Term Loan | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||
Repayment of principal | $ 40,000,000 |
Financial Instruments_ Deriva_3
Financial Instruments: Derivatives and Hedging (Details) $ in Thousands | 9 Months Ended | ||
Feb. 10, 2023 USD ($) | Sep. 30, 2023 USD ($) DerivativeInstrument | Dec. 31, 2022 USD ($) | |
Financial Instruments: Derivatives and Hedging | |||
Received an aggregate amount | $ 4,206 | ||
Derivative, Number of Instruments Held | DerivativeInstrument | 0 | ||
Amount estimated to be reclassified into earnings within next 12 months | $ 1,400 | ||
2019 BMO Interest Rate Swap | |||
Financial Instruments: Derivatives and Hedging | |||
Fair value of hedged asset | $ 4,400 | ||
Notional Value | $ 165,000 | ||
Strike Rate (as a percent) | 2.39% | ||
2019 BMO Interest Rate Swap | Level 2 | |||
Financial Instruments: Derivatives and Hedging | |||
Fair Value | $ 4,358 | ||
BMO Interest Rate Swap | BMO Term Loan | |||
Financial Instruments: Derivatives and Hedging | |||
Received an aggregate amount | $ 4,300 | ||
Interest receivable portion of proceeds from termination of interest rate swap | $ 100 |
Financial Instruments_ Deriva_4
Financial Instruments: Derivatives and Hedging - Interest Rate Swaps (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total amount of Interest Expense presented in the consolidated statements of operations | $ 6,209 | $ 6,110 | $ 18,099 | $ 17,140 |
Interest Rate Swap | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total amount of Interest Expense presented in the consolidated statements of operations | 18,099 | 17,140 | ||
Interest Rate Swap | Amounts of previously recorded loss reclassified from OCI into Interest Expense | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total amount of Interest Expense presented in the consolidated statements of operations | 3,118 | (1,669) | ||
Interest Rate Swap | Amounts of gain recognized in OCI | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total amount of Interest Expense presented in the consolidated statements of operations | $ 177 | $ 7,835 |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Net Income Per Share | ||
Potential dilutive shares outstanding | 0 | 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Dec. 31, 2021 USD ($) $ / shares shares | Sep. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2023 USD ($) $ / shares | Mar. 31, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares | Jun. 30, 2022 USD ($) $ / shares | Mar. 31, 2022 USD ($) $ / shares shares | Sep. 30, 2023 USD ($) item shares | Dec. 31, 2022 USD ($) shares | |
Stockholders' Equity | |||||||||
Common Stock, Shares, Outstanding | 103,430,353 | 103,430,353 | 103,235,914 | ||||||
Dividends declared and paid | |||||||||
Cash dividend declared per share (in dollars per share) | $ / shares | $ 0.32 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.09 | $ 0.09 | ||
Total Dividends | $ | $ 33,280,000 | $ 1,034,000 | $ 1,032,000 | $ 1,033,000 | $ 1,032,000 | $ 9,284,000 | $ 9,360,000 | ||
2002 Stock Incentive Plan | |||||||||
Equity-Based Compensation | |||||||||
Maximum number of shares provided for grant under equity-based incentive compensation plan | 2,000,000 | 2,000,000 | |||||||
Number of vesting requirements | item | 0 | ||||||||
Number of shares available for grant under the plan, Beginning | 1,696,687 | 1,780,820 | 1,696,687 | 1,780,820 | |||||
Shares Granted | (194,439) | (84,133) | |||||||
Number of shares available for grant under the plan, Ending | 1,780,820 | 1,502,248 | 1,502,248 | 1,696,687 | |||||
Compensation Cost, Beginning | $ | $ 1,406,250 | $ 1,012,500 | $ 1,406,250 | $ 1,012,500 | |||||
Compensation cost | $ | 314,991 | 393,750 | |||||||
Compensation Cost, Ending | $ | $ 1,012,500 | $ 1,721,241 | $ 1,721,241 | $ 1,406,250 |
Stockholders' Equity - Repurcha
Stockholders' Equity - Repurchase of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Jun. 23, 2021 | |
Stockholders' Equity | ||||
Shares authorized to be repurchased | $ 50,000 | |||
Average cost per share of repurchased shares (in dollars per share) | $ 5.72 | |||
Total number of shares repurchased, beginning (in shares) | 4,413,741 | 5,260,480 | 4,413,741 | |
Shares repurchased (in shares) | 846,739 | 846,739 | ||
Total number of shares repurchased, ending (in shares) | 5,260,480 | |||
Amount of stock repurchased, beginning | $ 37,019 | $ 41,862 | $ 37,019 | |
Aggregate cost of shares repurchased | $ 4,843 | $ 4,800 | 4,843 | |
Amount of stock repurchased, ending | $ 41,862 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2017 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | |||||||
Maximum ownership as a percentage of the voting power or value of the securities of each issuer other than REIT or "TRS" | 10% | ||||||
Maximum ownership of securities in all TRS (as a percent) | 20% | 25% | |||||
Maximum ownership of securities in all TRS when considered together with other non-real estate assets (as a percent) | 25% | ||||||
Gross amount of NOL of TRS | $ 4,900,000 | $ 4,800,000 | |||||
Period of statute of limitations applicable to the entity's income tax returns | 3 years | ||||||
Net operating losses | |||||||
NOLs expiration period | 20 years | ||||||
Gross amount of NOLs available to company | $ 1,700,000 | $ 1,700,000 | $ 1,700,000 | ||||
Income Tax Expense | |||||||
Revised Texas Franchise Tax | 212,000 | $ 167,000 | |||||
Tax expense | $ 70,000 | $ 62,000 | 212,000 | $ 167,000 | |||
Deferred income taxes | $ 0 |
Leases - Income Relating to Lea
Leases - Income Relating to Lease Payments (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income relating to lease payments: | ||
Income from leases | $ 111,316 | $ 118,843 |
Undiscounted Cash Flows | ||
Variable lease payments | $ 32,275 | $ 37,050 |
Disposition of Properties (Deta
Disposition of Properties (Details) | 2 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Oct. 26, 2023 USD ($) property | Aug. 09, 2023 USD ($) property | Mar. 10, 2023 USD ($) property | Dec. 28, 2022 USD ($) | Aug. 31, 2022 USD ($) property | Dec. 31, 2023 USD ($) property | Sep. 30, 2023 USD ($) ft² | Sep. 30, 2022 USD ($) ft² | Sep. 30, 2023 USD ($) ft² | Sep. 30, 2022 USD ($) ft² | Dec. 31, 2022 USD ($) | |
Dispositions of properties | |||||||||||
Number of properties sold | property | 1 | ||||||||||
Assets Held-for-sale, Not Part of Disposal Group | $ 132,659,000 | $ 132,659,000 | |||||||||
Sale price | $ 46,700,000 | ||||||||||
Area of property (in square feet) | ft² | 6,206,460 | 6,433,954 | 6,206,460 | 6,433,954 | |||||||
Real estate assets | $ 921,581,000 | $ 921,581,000 | $ 1,103,248,000 | ||||||||
Straight-line rent receivable | 43,253,000 | 43,253,000 | 52,739,000 | ||||||||
Deferred leasing commissions | 25,226,000 | 25,226,000 | 35,709,000 | ||||||||
Acquired real estate leases | 7,447,000 | 7,447,000 | $ 10,186,000 | ||||||||
Operating results for discontinued operations: | |||||||||||
Rental revenue | 5,354,000 | $ 8,592,000 | 16,062,000 | $ 27,646,000 | |||||||
Rental operating expenses | (1,862,000) | (2,809,000) | (5,277,000) | (8,669,000) | |||||||
Real estate taxes and insurance | (720,000) | (2,416,000) | (2,264,000) | (7,287,000) | |||||||
Depreciation and amortization | (1,034,000) | (3,157,000) | (5,372,000) | (10,246,000) | |||||||
Income from dispositions and assets held for sale | 1,738,000 | $ 210,000 | 3,149,000 | $ 1,444,000 | |||||||
Office properties in Broomfield, Colorado | |||||||||||
Dispositions of properties | |||||||||||
Number of properties sold | property | 2 | ||||||||||
Gain (loss) on sale of property | $ 24,100,000 | ||||||||||
Sale price | $ 102,500,000 | ||||||||||
Property in Atlanta, Georgia | |||||||||||
Dispositions of properties | |||||||||||
Gain (loss) on sale of property | (20,500,000) | ||||||||||
Sale price | 40,000,000 | ||||||||||
Office Property in Evanston, Illinois | |||||||||||
Dispositions of properties | |||||||||||
Gain (loss) on sale of property | $ 3,900,000 | ||||||||||
Sale price | $ 27,800,000 | ||||||||||
Property in Plano, Texas | |||||||||||
Dispositions of properties | |||||||||||
Assets Held-for-sale, Not Part of Disposal Group | 36,200,000 | 36,200,000 | |||||||||
Gain (loss) on sale of property | 10,600,000 | ||||||||||
Sale price | 48,000,000 | ||||||||||
Real estate assets | 32,600,000 | 32,600,000 | |||||||||
Straight-line rent receivable | 1,400,000 | 1,400,000 | |||||||||
Deferred leasing commissions | 1,700,000 | 1,700,000 | |||||||||
Acquired real estate leases | 500,000 | $ 500,000 | |||||||||
Property in Plano, Texas | Subsequent event | |||||||||||
Dispositions of properties | |||||||||||
Gain (loss) on sale of property | 10,600,000 | ||||||||||
Sale price | $ 48,000,000 | ||||||||||
Office Property in Charlotte, North Carolina | |||||||||||
Dispositions of properties | |||||||||||
Number of properties sold | property | 1 | ||||||||||
Gain (loss) on sale of property | $ (800,000) | ||||||||||
Sale price | $ 9,200,000 | ||||||||||
Office Property in Elk Grove Village, Illinois | |||||||||||
Dispositions of properties | |||||||||||
Number of properties sold | property | 1 | ||||||||||
Gain (loss) on sale of property | $ 8,400,000 | ||||||||||
Sale price | $ 29,100,000 | ||||||||||
Property in Addison, Texas | |||||||||||
Dispositions of properties | |||||||||||
Gain (loss) on sale of property | $ 53,000 | ||||||||||
Area of property (in square feet) | ft² | 7,826 | 7,826 | |||||||||
Property in Miami, Florida | |||||||||||
Dispositions of properties | |||||||||||
Gain (loss) on sale of property | $ (19,200,000) | ||||||||||
Sale price | 68,000,000 | ||||||||||
Properties in Miami, Florida and Atlanta, Georgia | |||||||||||
Dispositions of properties | |||||||||||
Assets Held-for-sale, Not Part of Disposal Group | 96,400,000 | $ 96,400,000 | |||||||||
Real estate assets | 122,200,000 | 122,200,000 | |||||||||
Straight-line rent receivable | 5,500,000 | 5,500,000 | |||||||||
Deferred leasing commissions | $ 8,400,000 | 8,400,000 | |||||||||
Impairment charge | $ 39,700,000 | ||||||||||
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | |||||||||||
Dispositions of properties | |||||||||||
Number of properties sold | property | 2 | ||||||||||
Sale price | $ 96,500,000 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | |||||||||
Oct. 26, 2023 USD ($) property | Oct. 06, 2023 $ / shares | Aug. 09, 2023 USD ($) property | Dec. 31, 2021 $ / shares | Dec. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) $ / shares | Jun. 30, 2023 $ / shares | Mar. 31, 2023 $ / shares | Sep. 30, 2022 $ / shares | Jun. 30, 2022 $ / shares | Mar. 31, 2022 $ / shares | |
Subsequent Events | |||||||||||
Cash dividend declared per share (in dollars per share) | $ / shares | $ 0.32 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.09 | $ 0.09 | ||||
Number of properties sold | property | 1 | ||||||||||
Sale price | $ 46.7 | ||||||||||
ScenarioForecastMember | |||||||||||
Subsequent Events | |||||||||||
Sale price | $ 43.6 | ||||||||||
Subsequent event | |||||||||||
Subsequent Events | |||||||||||
Cash dividend declared per share (in dollars per share) | $ / shares | $ 0.01 | ||||||||||
Property in Plano, Texas | |||||||||||
Subsequent Events | |||||||||||
Sale price | $ 48 | ||||||||||
Gain (loss) on sale of property | 10.6 | ||||||||||
Property in Plano, Texas | Subsequent event | |||||||||||
Subsequent Events | |||||||||||
Sale price | 48 | ||||||||||
Gain (loss) on sale of property | $ 10.6 | ||||||||||
Office Property in Charlotte, North Carolina | |||||||||||
Subsequent Events | |||||||||||
Number of properties sold | property | 1 | ||||||||||
Sale price | $ 9.2 | ||||||||||
Gain (loss) on sale of property | $ (0.8) | ||||||||||
Property in Miami, Florida | |||||||||||
Subsequent Events | |||||||||||
Sale price | 68 | ||||||||||
Gain (loss) on sale of property | $ (19.2) |
Insider Trading Arrangements
Insider Trading Arrangements | 9 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |