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Franklin Street Properties (FSP)

Participants
Scott Carter Executive Vice President, General Counsel and Secretary
John Demeritt Executive Vice President and Chief Financial Officer
George Carter Chief Executive Officer and Chairman
John Donahue Executive Vice President of FSP Corp. and President of FSP Property Management LLC
Jeffrey Carter President and Chief Investment Officer
Nicholas Thillman Robert W. Baird
Craig Kucera B. Riley FBR
Call transcript
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Operator

Good morning. Thank you for attending today's Franklin Street Properties Corporation Q2 2022 Earnings Call. My name is Megan and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator instructions]. to General conference Counsel. like host, to now Carter, Scott would pass over the our I Scott, go please ahead.

Scott Carter

Good morning XXXX quarter Street Properties and welcome to earnings the call. Franklin second

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

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

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

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

John Demeritt

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

will As XX-Q, a loss $XXX or second release, which, funds $X.XX about the on from and of net had $XX.X comments found of our our reminder, can earnings or We our ratio coverage XX, website. supplemental per refer the million debt FFO, service share quarter about mentioned, June package X.XX operations, to the debt as today was reported quarter for million we per be Scott quarter XXXX share of $X.XX reported and of or a of million XXXX. outstanding, our we $X.X times. second for At GAAP XXXX, and for

between XXXX, million on As liquidity of and had June we availability of XX, $XXX.X on our cash hand. revolver about

With over remains that, our unsecured. reminder, George. As debt to turn of call the a George? all I'll

George Carter

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

third the real stock of that to quarter of price not As value does XXXX estate continue accurately the our we our common the believe underlying reflect of assets. current begins,

stock, compared have proceeds to dividends intend time, million properties be are $XXX variable full approximately have million to and capital we to and $XXX property these our that maintained common the current powerful to uncertainty of quarter very $XXX million future. that primarily commercial that dispositions, maximum shareholder of first previously value of We sales. increase of largest of guidance leasing million to reflects XXXX in transactional other quarterly for range strive corporate property XXXX well two placed number to the that competitiveness. XXXX select occupancy At where policy, Denver, year primarily believe future growing second population believe estimated Number extremely property And through reduction and estimated have dividend around markets potential Colorado, our that properties, to any particular, range our under increase disposition been be there disposition valuation million. of has we realized debt continuing in can intermediate-term nature Our updating office general in to this the $XXX value-add and them range near proceeds XXXX Dallas, estate. to FSP's gross quarter We from from our one, potential two, of to aggregate we'll our primary sale are our employment the repurchases use for for for Texas, upgraded been in objectives $XX potential twofold. potential seek that The the growing We portfolio in purposes. dynamic broader markets reached. reduction, remain believe of short real the position in markets

We are the for asset generally least finding and equity debt that predictable forces. office disrupted available, economic have liquid, and at markets, by broader efficient class, been

any property at of are sellers We price. not

we price that We will meaningful value target specific to believe shareholders disposition each potential FSP for ranges inherent have property. that deliver

releases. continue to will our quarterly guidance disposition We update in our earnings

to Management to Now John? of John Corp. turn the President call I over like Donahue, would FSP Property

John Donahue

for the Good everyone. approximately quarter. The FSP attributable second end is of to primarily including trailed total Denver. in The Thank portfolio the morning, of second leasing approximately nation maturities XX.X% quarter. quarter quarter of off during second cooled the compared XX.X% Overall was the end leases. and to feet feet across the XXXX, of leased the decrease FSP square XX,XXX the George. approximately leased you, office new at space lease at square during first demand XXX,XXX finalized of

requirements. tenants active a calendar year, to during improvement Denver, this of and midsize witnessed steady FSP and particularly regards in for small Texas to market, requirements in slow However, in has space the

FSP's during prospects are In currently remain assets decisions occupancy approximately in on the I square of of second tenants, X.X% that Carter. of total opportunity have to prospective the optimistic it provides with tenants pipeline third respective will number prospective turn half a occupancy new addition, identified calendar for increase feet quarter. of Jeff the of FSP shortlists. XXX,XXX we ideal feet, XXX,XXX portfolio. that Lease lease an approximately representing Thank approximately will their over tracking XXXX. you. combined expirations with of to including square minimal The square expirations, feet prospective XXX,XXX remainder make growing now tenants, FSP of We XXXX

Jeffrey Carter

is you, our price. healthy. reflected Thank for hope remains focus at being everyone. on in that and Properties John. continues Good unlocking our we We Franklin public here safe to accurately Street morning, that value everyone believe share not shareholders FSP

As worked of the intermediate their such is are sellers through not that prospective believe George key capture value have have properties importantly, met at to in we potential. which And we Carter market to sale term short referenced, one price. select way we any private

pricing back date, deemed ranges. utilize FSP consider sales has shares, to sales continue principally appropriate. reduce to potentially to will hit will when and if We also targeted buy indebtedness proceeds To we and

of FSP led our dynamic to today FSP the and reminder, private what of increasing shareholders the XXXX estate have exists in recession pricing indebtedness realize whether by rising a results uncertainty. approximately firms XX% working continue embedded through sales. certainly market the uncertain of environment, rates, million commercial the reduced disposition finance disruptions property materially for COVID inflation, turbulence select all Notwithstanding than purchases the year. marketplace experienced also pursuit months, our orderly included infections our was war ongoing ranges. Such $XXX of previous well and challenged manner objectives in potential as the in received to within and As disposition Ukraine, property appropriately investor risks corporate have XXXX possibilities, has ability continues many over for concerns growing which capital. calendar roughly a interest our this in to more select fall In procurement in through and via as sales. of continuing witnessed recent we'll mind, this more debt however, value property have equity our an to during real been during Similarly, in targeted for both assess With

in sales the between year. for gross and Given our disposition and to aggregate the million FSP in this fourth current to to with anticipated proceeds quarters $XXX sales third year the conditions, adjusted market million guidance million $XXX has prior $XXX of million occur $XXX expected from

normalized the use a These number seeing marketplace, economy potential will the sale we and share who on not are on office investors to appropriate. potential we a in any unless today. specifics a And call you work Negatively, interested reasons like are seeking and typically that, are we still at Currently, high-quality marketplace, of stringently are scrutinizing to time, in until in though, properties. competitive ground more selective our at For questions. this setting. underwriting typically are return commitments in the looking for lenders up sources opportunities with Megan? to and the their much with and for thank groups. call And familiar open conference quite listening earnings more to in any we'd many now equity buyers

Operator

instructions]. [Operator

first of Our Rodgers comes Baird. with from the David question line

Nicholas Thillman

any guess on what I line guess of It's time leasing candidates. is through for looking do have And for Nick maybe start shortlisted that that. about $XXX,XXX number? of the at visibility starting $XXX,XXX we with lease-up? the kind pipeline talking on with of Dave. them on the we're expiration I John, of kind We'll like potential decision-making on XXXX, with retention then, their as on

John Donahue

but could give first your quite been very you In frustrating it's with decisions. wish Donahue. specific question to a deferred I regards accurate John answer, Nick, timing, I dealing on

We of in for have of have but the Richmond. largest we square number largest feet prospects taxes, number

Houston, We're that little are In we've large have the months, been or top we and we'll of slight the year We And bit half for of We've these so. both or earlier, many property. to a next looking to departures impacted tenants and to regards and share third expanding. number over getting the will range XX prospects. square believe fourth definitely nearly so. led that X,XXX the decisions, Dallas that to of in cases, plans, do working have and square finalizing space hopefully, but these in been have larger a some show be in of our size said or a to the decisions. tenants I closer quarter But many their on second few for issues number prospects We do closer the results don't quarter. We feet at known have many retention, into the second the downsizes the at nothing do the as of tenants then believe range largest the with are XX,XXX the that question in looking making macroeconomic year optimistic closer of And larger a significant. making XX,XXX they're XX,XXX in even Innsbrook the prospects getting that summer lion's in slowdown. to by remain groups we and we foot any

us. XX known tenants significant So, over have net-net again, XX hopefully, don't positive But – of our a supplemental to departures our the for next with we any page – tenants months. XX largest on

So, near hopefully, news to in future. share we'll the have some good

Nicholas Thillman

disposition candidates for for that. of potential Maybe guys elaborate a that question two more bit sale, is Or that on And just view properties a seeking Jeff. disposition for adding like function strictly just more with assets? right updated you little guidance, now? stabilized lower a maybe capital The those office just more lack properties are the while guide that

Jeffrey Carter

First, I'd referenced. at if our as we sellers sellers any meet ranges. targeted George pricing price, say not we're We're

have been Sunbelt and very the including for on are and the bullish we Mountain Second, years. Atlanta, many West,

objectives happy Atlanta Midtown specifically, have asset Park they're targets in property an strong property to those our pricing desirable are investment we recognized And this compelling today. if that to a and and can and continue time, own terms repositioning of Pershing and in then such the efforts to tenancy. at be value widely location of opportunity releasing at both resulted are value-add very is and market as to in met As check whether a not, terms

As also Miami Lagoon, for strong very been similarly, a Blue has investment market.

continue assess us targeted such are to quality and undertook property. for here And nearly location it so, tenancy. to be, they're fully our result, to own And leasing today. as property again, to value would fully – yielded whether again, ranges and appropriate a leased we add believe that pleased high-quality repositioning achievable through trophy have we more a if not, a our that work leased indeed our we And is efforts valuation than

Nicholas Thillman

strategic last alternatives? the like board's stock alternatives? been continued any form patience like to performance the with Maybe discuss for one there What's strategic committee to versus George. multiyear Has special

George Carter

have can we Denver. a XXXX And the of that value-add achieve management's in very is in a XXXX, you And The Everything. continuation in if position active on the we're the Dallas objectives that move forward our execute, execute company best on as plan, opportunity, What is what what said board's will on best to that at plan. for beyond. like execute can shareholders a And XXXX. balance we be imagine going in which terms the it shareholders. is More put we any XXXX, wonderful XXXX with a along to before, can board right of of in active to than we that If plan, the is XXXX, believe, is we to and best table opportunity in in be think we avenue would sheet, the executing especially execute of did our front. very great we for every we end opportunity. everything manner have positions can, forth the I've all interest and find And is that is inappropriate. well we with go board that wonderful that to along fronts. detail so and as now is appropriate in The we finding into the

Operator

from B. with of comes Securities. Riley Kucera the Craig question next Our line

Craig Kucera

candidates one this on maybe bring Park currently me, all First few disposition maybe of a are Atlanta for later looking you marketed? are year, updated and Or the to Lagoon? Blue in being Pershing

Jeffrey Carter

we is intend out shortly, disposition put Park all to not Carter. Pershing so there. Jeff the officially candidates. Craig, that it are this They market the potential market. and hit hit We for has

Craig Kucera

And goes Blue the as same Lagoon well? for

Jeffrey Carter

been Blue Lagoon in has the market.

Craig Kucera

I you guys of know estimate one one more George, stated publicly for last at me. Just point year, your NAV.

above it I think was $XX.

But what if is of NAV You've I'd share personal had then. some curious or be asset board's sort your view today, sales, the since of per course, of possible.

George Carter

proceeds today, sure to Again, using that for were in down last debt. range we're we pay we've year. primarily Craig, as been

range. So, when are we still you do that calculation we believe NAV, in of our the equity,

Now having as broader come Jeff which, that's example, said you that that, I affect current said, maybe been obviously up NAV the two downside than, year have last more of on this estimate conditions, for of year. challenged big And with that are whatever the and factors market have number.

near increase that of that we We And term. in number over range tremendous that the of that On value-add the upside is Dallas execute going are will opportunity. to think the and Denver number. the

question And that and will in your ballpark. downs there's broader to that ups is answer we're the as and So I as market affect think that well property specific issues.

Operator

additional There questions are currently registered. no

for will I to pass additional George So Carter remarks. the conference over

George Carter

Just thank tuning you. our next you Thank quarter. call, earnings forward into and we look to everyone talking for to

Operator

QX participation. That call. Franklin your you Street concludes the Corporation XXXX for earnings Thank Properties

disconnect You your may now line.