Franklin Street Properties (FSP)

Scott Carter Executive Vice President, General Counsel and Secretary
John Demeritt Executive Vice President, Chief Financial Officer and Treasurer
George Carter Chief Executive Officer and Chairman of the Board
John Donahue President of FSP Property Management and Executive Vice President
Jeffrey Carter President and Chief Investment Officer
Rob Stevenson Janney
Dave Rodgers Baird
Call transcript
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Good morning, and welcome to the Franklin Street Properties Corporation Second Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Scott Carter, General Counsel. Please go ahead.

Scott Carter

Good morning and welcome to the Franklin Street Properties Second Quarter 2021 Earnings Call.

Joining me this morning are George Carter, our Chief Executive Officer; John Demeritt, our Chief Financial Officer; Jeff Carter, our President and Chief Investment Officer; and John Donahue, President of FSP Property Management. morning President Daley of this both Will me Vice Executive FSP joining are and Toby Brad, Also Property Management. various and company Securities Litigation that future Safe Harbor for note remarks Act the may the we Please Private under make purposes expectations, of plans constitute of prospects may the Reform Provisions for forward-looking statements that about XXXX. in section various those statements as Actual our forward-looking important including on results for these factors, may Form Factors which the indicated the December differ by on the those annual report year SEC. discussed materially file with of XX, result of Risk is from XX-K a XXXX, ended

during to forward-looking August not statements, may company's as it to update as statements these to estimates company's release, the specifically of disclaims GAAP addition, to available any are views Reconciliations other Investor X, expectations is so. should the measures today. financial any operations of the funds in website section yesterday's today, non-GAAP while representing our statements contained obligation Any forward-looking of Relations only FFO as call, on the FFO. refer or elect this these In XXXX, At net www.fspreit.com. date or from which do be to and forward-looking represent may subsequent times at press we upon income relied of company

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

John Demeritt

a going results. give comments. to I'm Thank for Afterward, call everyone. the very overview you, pass George of Scott, good and second I'll to brief our quarter morning, his

'XX. be million per or which funds release, will as our FFO website. We operations of XX-Q, reported supplemental share second and our of found reminder, today our comments earnings a to quarter the $X.XX $XX.X on As Scott for or mentioned, can from package refer

to was in completed incurred debt our our $X amount a sale maturity million drawn the payment QX repayment, break interest to and paid what and to repaid. During the used maturities on about XXXX. on debt on The revolver. is complete properties of XXXX rate We their costs proceeds paid four equal the swaps have the XX, primarily we repay balance November to swaps we through the would which roughly on the debt we

were So lowered about $X.XX share expenses accelerated into these FFO per and share. our QX a by

XX, liquidity Turning to million. at and debt our and outstanding line, of our had between $XXX.X total hand on amounts our on balance end, million of drawn sheet; of about we June $XXX availability a XXXX, At on had total no quarter cash we revolver. unsecured

have is reminder, a all this no our As and unsecured, maturities year. debt we remaining debt

year. early Although our for extend that a maturity revolver matures in can we 'XX,

rate at George? Our over revolver, the I'll to rates which amounts George. debt drawn. a that, at on fixed than is call is the other turn floating With

George Carter

Quarter welcome during again, employees by Earnings FSP would and John effort support work continued tenant Call. Properties extraordinary FSP Street our their you, personnel, investors, Thank comments I today to like and turbulent Second XXXX customers, thanking Franklin professionals, to these for property begin times. associated directors and our my

vaccination to entire this recovery properties. the of markets and our continue battle FSP the within and through critical see public in U.S. our to and remain As of world lines individuals measures, healthcare signs the overcome continues the We at hopeful COVID-XX front on grateful efforts to health all work.

dispositions. believe significant strengthen. be indebtedness of reduce potential our to XXXX new the select life FSP that remarks return To to through as materially seeing John pipeline will to corporate of his the reason legitimate Donahue to a the are be about continues to and persist, a such end, Delta optimistic While there this office potential as measured result, work a as discuss normalizing uncertainties further leases in what for property We occupancy. year we we has ahead. is Variant

During this million. $XXX $XXX by declined million past XX% from debt quarter, its to outstanding approximately total saw FSP

quarter, been of drawn million $XX.X our loan $XXX approximately we under revolving During of had the repaid credit. of second approximately term indebtedness line that all million and the

$XXX for XX, risk, June use, had available balance flexibility revolving line cash to of of $XX opportunities for XXXX, increase enhance the million is As our well-suited of was at same intended reset on balance consider to our full in-progress our approximately we to shareholders. credit our This sheet. time, value million and reduce sheet while

FSP a Since our believe at four debts own four shareholders that not or price completed of These is our same. impact We one $XXX in of properties, sold for that XXXX may XX, we of the million. on dispositions indebtedness sales potential that of be believe shareholder Currently, positive $X repaid of equity directly the share to-date debt approximately approximately time. reflecting was our believe have what accurately future had has total billion reflected September planned gross reducing investments in should value do during upcoming we embedded approximately best dispositions have XXXX, for our During our we XXXX, completed value $XXX proceeds unlock million stock. and the risk. XX.X% approximately

million And our sales shares as plan. announced previously warrant so conditions of pursuant we may asset proceeds to our use portion for outstanding the of a $XX market repurchase of repurchase up stock from to common

FFO our the property further with continuing net are dispositions. primarily guidance amount current proceeds uncertainties and of we timing and from income suspension to progresses, due of XXXX surrounding As

year. $XXX of disposition we'll reaffirming to guidance the keep are we of market to and million range continue We between $XXX XXXX the remainder as our through informed million, the move

Sunbelt and remains and employment FSP and its population markets long-term committed compelling growth Mountain potential. properties emphasizes which with focus, Lastly, West office to

with to and optimism. XXXX We look continue anticipation to forward

to to Now I portfolio John call Donahue, Management John? the over of and FSP turn will Company the President leasing prospects. Property discuss

John Donahue

the redevelopment XXXX. first to of due lease dispositions Good greater quarter. known end half secondarily were as everyone. of and at than compared morning, of The XX.X% primarily leased departures. at multiple George. and second for approximately decrease the FSP you, Rent end including expirations collections is The Thank due XX% the XX.X% leased portfolio, the was the quarter first to to

a including will urban tenants, witness their employees offices, locations. leased in in return are employees all form office, More and for office the prevalent new arrives the respective approach. additional Sunbelt space those positive Many the some the as the fall. to full announced school part hybrid time this to signs, These in office ahead. utilization infill new list across expect grow to expectation The increasing tenants back announcements, of optimism regards back tenant the trend of to anticipation in potential and continue. portfolio, in in of to months companies similar inviting offices with might to we higher assets. the of the improving suburban prospects and/or continue post-pandemic in made a have We with include being year the in our normal markets The plans particularly that have occupancies normal and continues and FSP be and time

be encouraged growth tenants. meaningful of by continue in prospective pipeline FSP's We to

have absorption that and square surprises, for demand, XXX,XXX Although prospective is the summer approximately activity the the including typical tenants net summer, assets. approximately next currently new potential brought over tracking has of feet. listed months Barring short portfolio the square feet FSP nine submitted slower tours, any pandemic is this XXX,XXX property season with proposals. FSP counter RFPs FSP prior more witnessed to its

over has leasing, XXXX, of and feet half including During deals the calendar first FSP new square of renewals. finalized XXX,XXX total

turn with exposure second XXX,XXX over to positioned to coupled portfolio. absorption make you. net the portfolio now half the Jeff XXXX, and Carter. by space believe of approximately the FSP's tenants meaningful will well the rollover year. Due of of that has or Thank end progress lease our limited to For occupancy FSP and higher assets, is regarding for improving the expiring feet square I X.X% we it of demand

Jeffrey Carter

everyone between our John. endeavor year Properties order you, dispositions as marketplace. the in FSP with that plan at and will ground work I down efforts to everyone. our healthy. of continuing to disposition and gain remain Good Street our provide discovery and I will goals safe that pay guidance here to stronger million we is the This disposition the reduce million seeing greater Thank financial some on in position With morning, FSP's calendar objective company what is to are to to of $XXX then disposition price to in returns Franklin debt The for existing $XXX primarily select for risk to XXXX. is mind, XXXX, for achieve discuss in We reaffirming our morning, color shareholders. and flexibility, hope our

reflected well Importantly, value completed for currently within we share may capturing our not dispositions the on be shareholders that our that as that price. to-date accurately embedded is are believe as working our we sales

second proceeds bottom FSP best of XX% our will target Specific FSP for be process, reflects enhance success top sold to $XXX sheet the opportunities suited positioned conclusion reset of of $XXX toward pivot of disposition shareholders. the quarter, million, our of our $XXX properties our the which Assuming fundamentally and and value the end balance about approximately XX% target of million million returns the about range gross completed to and just our end at to range. to have

price were to and Drive gross purchaser One as million. $XXX.X of sold for Due which Two quarter specific June Ravinia confidentiality, on comprised well a as combined Tech to XX of million on announced are as we One sold Overton the for unable dispositions approximately previously Loudoun a Park, for metrics. Our transaction purchase Virginia, $XX.XX in of which Northern discuss XX proceeds and May single Center to

that achieved has the sales conviction value However, regard shareholders. to thus with pricing our far, believe captured the we with embedded completed for

are the Corporate in In St. buyers in in in will in Timberlake Corporate the both our as specific properties, price Meadow Louis, and Center move terms and are Richmond, Point forward. Stonecroft of Virginia, following currently, River market we on we discovery Greater we apprised is Center in Crossing Virginia Innsbrook and with keep pipeline Northern or what Indianapolis, working

aggregate the to we seeing an Lastly, wanted investment within we sense least once are at marketplace. in again share what

properties, be our accurately that we are price from that closed, of generally may narrative this both discovery and and interest The seeing Pricing in for both see private over interest in that market largely reflected expectations, in to share has properties multi-tenant within on as sum, We to continue time, who thank shareholders market investors will with and operators long-term well the made value-add have price be such been price. and internal a questions. our a And that In we that, witnessing coming with the call bullish our not Danielle? for that to we like the single keep line today. indeed positive values demand continue posted at for there Interest and open we'd are discovery is to we earnings U.S. tenant listening continue within are value realize months, call we our would on. come any we for has we for the as to the assets. seen to reopening own now conference been have the stabilized experience sought if majority up has you


from [Operator first The Janney. Instructions] comes Rob Stevenson of question


Can portfolio about Good today you end and that and utilization where morning, XXXX? of the talk in tenant is the year-end guys. where first versus quarter is


It's morning, Good Donahue. Rob. John

So portfolio metropolitan XX submarkets. We're and or strategic broader across the approximately utilization in the markets varies. XX areas

widely. Houston Dallas pretty witnessing and above that it XX%. We're varies Texas, hearing So and are

that the XX% hearing little get somewhere a that So particular, that in hearing that is in urban behind, between starting markets people slightly. XX% public that that XX% is Sunbelt are approaching in the we're and then are slightly. Atlanta The bit versus to somewhere that Denver, but XX% higher even that hearing markets trailing We're XX% depending first that is to on trending Dallas range we're probably We're with Minneapolis, and to is hearing are transportation probably Chicago, behind range. Virginia Miami trailing the quarter in range. just back submarket. is

hopefully, So of sense that gives it. you a


new a space start in XXXX? leasing stuff factor you, earnings? it we the new and words, actually the just impact for sort thinking going to you of is of today, you a in is sort other how should getting, be Okay, and free and rents enough on know, FFO about XXXX build-out impact effective I while to XXXX lease rent, if the all do really or In when you the vacant be after free sign there time have


that first saying that I certainly would deal, answer of the the that by 'XX. Rob, we majority question, those the quarter second be will quarter in larger and of believe the

or on this so we a X,XXX in between a and impact do of smaller having quarter fourth square more XX,XXX deals those We are we and have been close that working earnings in of number XXXX. on to square of chance large the have feet feet year very

that needs have prior So time make done, the the don't have making decision. many against left. it's as are explained get They've and renew now they much we've now on tenants to can they down They're decisions road the these calls, time and it. move, of a and to up have it urgent kicked and

of the the see fourth expecting that So see would average some square and in in feet next net we'll absorption then say QX of square a of quarter we're and feet weighted occur larger amount I on QX will year.


do is that more guys close to on fourth the are over deals sitting here be in quarter next drifting timing into halfway then third more execute the likely quarter this to in or here, sometime the is Jeff, sitting or the weeks if additional through likely acquisitions And Okay. the you XXXX? seven quarter, these any third likely


meant You I think said acquisitions, you dispositions?


Yes, please.



the side, see that September the disposition Xth our be the things Timberlake Northern property, for would disclosures to be expected expected the to the you in move that on are if they the way take around Virginia XX-Q closing can would in around agreement at page that move and September and that purchase On the place sale XXth. XX on


contract. last Okay. sold what you dispositions are describe fundamentally when is that different I for margin Very just guys anything different side portfolio plus look the for the and minus skew about to using the those announced year-to-date or anything pricing doing operating the versus dramatically existing you've talking take at aren't about you would on helpful, expenses on to things. whatever then know other marketing, the what a that's and assets that you're the In the you've whole? would or of the under deals that one there as me. that a it's the whatever or NOI portfolio words, But -- either I


just straight I John bound side, But although I we and maybe just sort from will with start a look. that add. on to the are confidentiality, as disposition wants mentioned, by of

on completed in-place if sales transactions not we've expense so side. about If average you four had you all at is in property on rate on look and those roughly X% that sure far cap aggregate, NOI I'm the anything the John,


remaining slightly a look lower as would or NOI I time. at Rob, this dispositions Sure. at portfolio the net rents whole as the versus having

basis leasing So gross weighted we've I supplemental, slightly inched assets would rents if up seeing majority have the the as foot portfolio, rent, net GAAP I in net for that would portfolio the as would square per -- that say have and in remain you NOI I and or so on you'll those a well -- look, higher consider gross the find done and rents will. should the a the be higher you'll on what find of the the in-place for also activity rents the


comes next Baird. Rodgers Dave The of from question


could if necessarily good multi-tenant you you about more that a talked was little buildings sales that the the completed, discussed, Yes. asset morning, you've wondering well everybody. to for been both not Jeff, talk as ones the have and but you demand more vacancy Good what's single-tenant, both process market I about as selling? perspective, thought buildings shopped as I from around opposed value add. a some how to guess and you occupied core more those your taking value-add assets actively you've of bit


Dave. Good morning,

a values-add and continue we be of the are in the so asset on going that for us, the looking stabilized and to captured achieve valuations We really and the there. value sense think is depends market, those interest term good near makes course assets. we assets has basis It short-term at returns value that for to the that and where full seeing to and both we gets assets benchmark can and us need pricing for on

because have marketing an in marketing Virginia, have we in that our Stonecroft Chantilly, that intended So We example, from we the contract for give you I'll marketing property and intent and example, not we have were we're Point a not directly property. property submarket. same we as Meadow -- that in play and only were to were property interest group interested with the from at interest We stabilized the under in stabilize well. looking received It's value-add well other groups as asset, that that property. great as were release Northern but

for value we And we us so is capture us the term. we're the they judging benchmark value really, to sure value in as these come the near in. that the as see and best the for full short But making things


to occupied forward? situations. continue most as on the higher most I of kinds likely value you've way think of where anticipate look these that to it you'd we a about achieved some the that is mean, sell So fair of assets except one-off


think that, fair. generally I that's

you again, done it's if XX% that about we've leased in for what continuing. I a that, so of think think see I you'll spread far. so aggregate look And sold at we've what far, Dave,

they're every there's a leased mix. fully So not assets instance, in

And so it's lease if we Meadow blend Stonecroft -- different Point, if type with of we sell a occupancy obviously, range.

we've range that that XX%, we've far, play in things are So in sold in about type got aggregate. of to and roughly


appreciate I the on a things. expiration showed schedule. Jeff. Donahue, of DIRECTV helpful. that, up maybe couple John That's

negotiations having you in space, remaining you're a which about lease that on still think, about think, the a can maybe whether that's due if as the expires portion the signed direct I they'll was leave sub Ovintiv, well? year asset at and on little that a bit sales. and there the end you still of me remind to and think I maybe of stay of that some Can just tenancy then portion talk I sub? of the or you talk But


this the just have expirations, Sure, Dave. remaining In regards portfolio to year. of X.X% we

few expecting get as well. renewals to a and depart tenants we're so a maybe And few

that that with aware this six mixed known So are be moment above no XX,XXX months. tenants of significant could a the feet a over there square at next and bag, we're departure

So we expiring to square executed still have for supplemental, with we're subtenant success regards feeling pretty the have a approximately that as our Ovintiv, good year on direct feet. deal one XXX,XXX we probability In that there. of there next and you'll XX,XXX see feet listed about square

a could we mitigated subtenants discussed been that's and couple do XXX,XXX So square we growing another are those and feet then be then -- quarter, dialogue And well to progressing. with that we floors prospects. of of in down as a as last have approximately other are pipeline couple for new a

So looking Denver very now, the are is things right the in right headed good and direction. in momentum


maybe and John. with Thanks had be go that forward. But take sell, the near-term to we're Clearly, how of you there's strategic part that. you're a and picture second cut. dividend finish about to you, going kind discussions any will. and the and look that's to of how guess, forward, stocks down question lease I you alternative a I have going George, strategy. as bigger you appreciate But it Board XX%, strategy facing

the of abandoned kind strategy. You've

buyback, to run working stock or what rubber of a rate the hey, talking is better We of little getting something hitting $X. point bit to direction? here. look down to road that below in about point Are either EBITDA to this move you is different or say, road You're we have kind stock guess needed at that, we so. guys all XX% need the you a do as at isn't do or I the


the marketplace in and sheet the the year are considered which lease That's all plan outside So of markets fiberboard about are of all discussed the and disposition them. rental find which last to income to all a the analyze and think thought disposition and fact, tremendous a reset, discount looked say we take are office the dramatically I and is the to change sheet lay that doubt we that, at really big of direction was The the on believe and with and that on Amber way on and NAV while our that for strategic is top and sites of properties you change many time the I significant vacancy have front sort our started explored strategic year, quarter and us in in always they depending ballpark if opportunities our and executing with again, and trying and have whatever change that all and we REIT those professionals. fourth is significant of always our all is look this am think this look would at advantage to price avenues pretty portfolio opportunity of in the into from We we this and opportunities those balance who time do. vacant in reflected with we being remaining improved in trading alternatives, other balance that are is plan NAV, don't properties where so think are space believe takes year. options a being in always values for us. and discount are the we they the to are. best We and some articulate in no that funds I reset -- of lower to that the share and most get want currently


our question-and-answer closing This Carter to conference the session. I back to concludes over George for would like remarks. turn

George Carter

for with talking listening all earnings forward call. look I to you you And Thank next all Thank our to you. quarter.


presentation. our conference you today's Thank This call. for attending concludes

disconnect. now may You