Franklin Street Properties (FSP)

George Carter Chairman and CEO
John Demeritt EVP, CFO and Treasurer
Jeff Carter President and Chief Investment Officer
John Donahue President of FSP Property Management and EVP
Toby Daley SVP and Regional Director of Atlanta & Houston
Scott Carter EVP, General Counsel and Secretary
Dave Rodgers Robert W. Baird
Call transcript
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Good morning, and welcome to the Franklin Street Properties' First Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please now Scott Carter. would like to to over conference the turn I Sir, ahead. please go

Scott Carter

Good morning this and Demeritt, President first Carter, quarter forward-looking and welcome by Chief the our the to the earnings which those Risk plans constitute of our Vice Officer; file Act Jeff call. Franklin Securities Chief of SEC. and conference Chief Actual may about purposes Financial in President With Carter, remarks Officer; the Litigation statements Investment me results result Friend Toby Executive Daley, are morning me Safe for Officer; XXXX. factors, on George XXXX we are this from John with Street our materially is may John for Donahue, important under morning the Management. Will Property President FSP that and of Vice of FSP FSP President Please the and Property XX-K forward-looking also various Management; a Executive of Management. Also Report with future including those Private that these XX, of statements the XXXX, company Property indicated may discussed Properties ended expectations, Annual Executive December Reform of Form section make as Factors differ provisions on various our year for prospects Harbor note

XXXX. May forward-looking these X, today, addition, statements In of expectations represent company’s as the only

the estimates forward-looking to operations, in Relations funds as section any upon should in any our refer may may relied or to company not update is site of While A we release, the Web company’s of is today. contained subsequent yesterday’s Any call, representing this income net www.fsp.com. to of reconciliation to available or which at specifically from forward-looking Investor GAAP elect to statements FFO. press during times FFO views the At date as obligation it these do so. statements, disclaims be

over call the Now to I'll John turn John? Demeritt.

John Demeritt

recent first Scott, Afterward, a you, CEO, everyone. detail John performance Carter morning, some Donahue, remarks. Management call, George begin quarter more then his of be questions. CIO, our activities. results. investment would our and and And then your today’s Carter, I’ll Jeff will discuss our President with On of After and activities. our our that, President discuss team, in take discuss provide leasing and good will Thank happy Asset of overview our the disposition to brief will we

and, to release, XX.X with As of package a night reminder, refer Web our mentioned, operations, from filed can first site. be on and of found last quarter will the the today as SEC supplemental our per $X.XX FFO, earnings share XXXX. reported for which or Scott were comments XX-Q, or funds We million our

$X our our we unsecured and billion outstanding service about to At about debt XXXX, coverage XX, had debt balance March ratio was Turning sheet. of X.Xx.

time the We believe was LIBOR March. with to LIBOR extended quarter, XXX about trading of XX interest interest fixing our off at forward where two loan, end executed placed away of maturity transactions. go sheet of loans. basis were one During last balance the our the a taken for rate swaps; the points the these X these XXX We first we swap term below rate year. term loans XX-day between million risk swaps right of rate some and the was Each to these on of floating million that swaps other we’ve started fixing some

we and our our standpoint, add and our more fixed, value XX we cash at debt revolver From end liquidity about November We sheet. our the in in have our balance we mostly our X.X quarter more million available a capital of on is aligned at XXXX we on debt maturities XX% until now believe debt stack of our and have out fixed a rates. no have With markets. the termed structure of million that properties long-term had with $XXX rates

at XXX.X total quarter With end. to have of over George. million George? the that, we call So turn I’ll liquidity about

George Carter

And again, welcome Franklin John. quarter earnings first Properties XXXX you, Thank to Street call.

talked large, bulge large XXXX; is So approximately XXXX, roll three-year dealing we concentrations is lease both that have roll of in XXXX with, which that and about the bulk this a FSP occurs lease about of a markets strong long-term current challenge dynamics. growth in and are targeted and properties, like office an opportunity. our of with infrastructure square optimistic and and We portfolio footage the

lease well all We of of within as as by available or unsecured. properties XXXX operating successfully rollover our and place. increasing which can as existing in terming absorption our of much take have space. renewing the fixing before our XXXX it prepared in the handling at three effort on a our and tenant rollover Leasing net continues record remains portfolio is be XX current out space liquidity rates It absorption much as pace, new must financially redeveloped this for on is properties. But new debt, backfilling our net activity way important. achieved well believe We

the generally and of we space. our properties in at seeing leases rents work rising through believe our continue XXXX this percentage likely to and as is We longer that trough to lease be period, are

$X.XX our maintaining per full this time, we share. said, our the are for guidance. XXXX year was John And FFO As quarter at

from for metrics important most leasing FSP in the XXXX and XXXX However, our results. will flow

so the President some Donahue, I in call portfolio activity Management to over For about will the Company. John John? XXXX, our commentary Property turn of far property

John Donahue

Including of by surprises, was far quarter portfolio was occupancy end of total several trend at first including quarters quarter the redevelopment prospective any leased the the the end in at assets, best Thank we you, a interest end largest FSP. of XX.X% leasing leased next the the calendar for quarter. The the entire to first the assets. FSP the morning, believe will leased XX.X% Barring upward due George. that everyone. quarter, for leased strong was XXXX. redevelopment Good during first at compared vacancies, achieved to The first the portfolio operating record the XX.X% the

upward be well to anchor FSP been Minneapolis activity hopeful and that the and both of we balance continues be few portfolio. be believe leased trend been enjoying for FSP portfolio to during there for track tenant largest overall. appears in XXXX. show across trend both has West be of and leased are have encouraging, The year. XXXX. Mountain highest of those two the the this Leasing two quarters redevelopment at regions progress market, balance and the in upward resilient finished this trend occupancy, Atlanta last prospective has progress will But reaching Denver most year. leased. activity strong been three signs quarters. poised Following The has markets the Denver, quarter its continue believe markets to been and first record will and prospective continue market further strong to the FSP’s to calendar occupancy this tenant years of FSP’s making of for the of gain Many appeared over continued slow in level consistent of and Dallas on Leasing Houston in the We Sunbelt calendar we the succession, progress relatively will next assets very incentive leasing XX.X% Atlanta quarters. interest the

in Similar single-tenant known the continues three assets bulk to departures the calendar the known be of planned. majority buildings to to are decreases remaining work of is there downsizings and/or all expected multi-tenant in fourth properties as transition portfolio expected the from the to in late of are XXXX, our tenant to Houston. quarter do, Dallas occur during Although year XXXX. The of and

both active to in work exposure. and and assets Our positioned have Houston we Dallas been as be rollover the through appear well

both those quarters. make With Jeff markets during excellent leasing I progress We opportunity the turn that, several of it have Carter. over in an to will to next

Jeff Carter

to markets, is and FSP, which on leasing Such of demand to locations in available time. relatively may infill forefront U.S. work that of Good across growth supply within with low to high-quality portfolio. working rents well positively of efforts At morning, well in sales amenities this housing. work. properties, West well and continues see will FSP the high-quality embedded the and as is focus to population dense to existing employment thinking office access Enhancing for potential markets. and and on through you, believes with on relationships. primarily sale opportunistic own portfolio tenant value and within markets, primarily office long-term are indicate at in as drive At We properties. possible a our within our Sunbelt both tracking efforts current demand is efficient these potential Thank our located value to within over the focus everyone. as as renewals newly locations office both display John. regions strategy strength our continues Mountain several available our FSP high-quality properties respect of economic and a comparables and strong U.S. and indicators the vacancies economy number of aggregate our time, our

working within as we front, specifically, potential anticipate XXXX, and to last a Tower of X. property we managed and during as are disposition On disposition for asset potential call, Energy continue asset recycling on our the the our dispositions quarterly discussed portfolio, the known during

form pay the has in of over possesses so. of transaction which For by FSP specifically to XXX XXXX, may on both In an debt additional is received four potential million. to years not since at highest do time five a unless past and prospective and completing, Any down. confidentiality our and/or commentary to and will include loans, secured reshape repayments million. for interest order case, it totaling return until mortgage dispositions the in XX disposition as its evaluated we economic be Also to portfolio this would shareholders, reminder, competitive FSP the over proceeds such the reasons, provide worked determine appropriate best approximately this

for that and we suitable credibly that, value for term. track the markets, front, continue listening acquisition call to open for over possess the to you questions. continue And screen our opportunities and conference any infill now we’d the With and properties call today. to our at ability like time, to On to earnings within add short, we all urban the intermediate screen up thank this


Thank you.

We the will session. [Operator begin now question-and-answer Instructions].

with question Baird. Please Our Dave ahead. from comes Rodgers go first

Dave Rodgers

to with a bit do a start of I terms some Good lot and kind lot assets of to see to you John kind seeing vacancies. relative expire, of of of multi-tenant tenants little more where perspective go to just want the comfort then because you you give wood to certainly as well? kind have to just what but bit with larger where John, terms of And and of a market a opportunity, the which kind downtime, you’re us ask deeper dive rents some chop of morning, the little of Donahue in of wanted you guys. in just

John Donahue

Sure, through morning. start largest Dave. and the I’ll my work vacancies with Good way that.

at in We’re seeing largest in which Lagoon, the Miami activity very portfolio. vacancy our Blue good is

of be up to common the way do discussions with approach Burger and but the King the in to that fourth our we setting handful and it yet, refurbishment areas We’re nothing just with going enhancement. restoration, to best the multi-tenanted. value announce – planned – property building back that very of property that’s prospects there, expect going through in multi-tenanted. has a We and think the been We well. late improvements in control of as quarter be everything’s working That for that received that’s

leased XX% by of Nothing will mostly the yet, think that about have Fannie on in to we’re that the I way having of announce quarter. and our large here great that be stabilized balance through also space. worked Mae We been activity but third space Dallas, has the that vacancy

And then in building of our property large we in was how property well. to in vacancy property We property. We’ll Park Forest quarter. see last also activity in that strong multi-tenanted. vacated We vacancy may year. a in large be is has fourth Charlotte that a be the the SunTrust year. the that back by That have throughout just the multi-tenanted, as the first quarter got have on progresses Innsbrook the ability And that

action We the wide tend few many have to on markets. So quite we because with we’re properties, so pleased industries. industries have range a of the a

banking and also the and referred We seen creative finance brainpower industries, industries. TAMI, as then affectionately a from industry, and energy the have significant interest from co-working then the to STEM and

we and than the our Lastly, lower best to of question and was as actually as economics, XX% – compare ever the the And than years. we of leasing square XXXX, quarter upwards per year cost foot cost the Those as the with had weighted – leasing, one rents, X% we lease gross saw average XXXX calendar actually range. better in average per two spreads addressing rents. are trending your far our certainly on last numbers

the at this So good rental really about time. feeling rates

Dave Rodgers

Northrop And year in mentioned about then expirations, two kind I bulge other both about for your one coming up those – question you you’ve the talk of maybe and activity Can guess in you Petrobras that take And maybe larger then about that next the internally expiration. kind kind as broad multi-tenant up? you back space do from spaces? just that potential to go would comment that fill long it of space, on how anticipate when average on of a

John Donahue

six to space. I of the refer the out property. a building one Northrop many of the and it anywhere for of to it XX stabilization meantime, if a single-tenant the a of are you in get Petrobras and the answers multi-tenancy, in Grumman could is to gaining you does would we’re of usually be the properties. single-tenant property grass From grow. Westchase. at supplemental need from three showing Hopefully, not Well, not just Page to that’s the well and timing up letting is properties the control to any of control that prospects the of outside tenants we’re for redevelopment lay that property the are questions. properties, of market, be months physically. to a your redevelopment that When building, those But there refer multi-tenant we properties, get setting sense

Dave Rodgers

Thank you yes. did, much the for color. It very


closing question-and-answer further This no George over session. concludes any the to showing like I’d turn to our questions. for back I’m conference remarks. Instructions]. Carter [Operator

George Carter

you very quarter. tuning call. next earnings look Thank We our for much to to you. talking into you forward Thank


for today’s you The conference Thank has concluded. attending presentation. now

now disconnect. You may