Q4 2026 Franklin Street Properties Corp Earnings Call

March 10, 2026

Operator 1: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Franklin Street Properties Corp. Q4 and Full Year 2025 Results. I will now turn the call over to Scott Carter, General Counsel. Scott, please go ahead.

Speaker #3: I will now turn the call over to Scott Carter, General Counsel. Scott, please go ahead.

Scott Carter: Good morning, and welcome to the Franklin Street Properties Q4 2025 Earnings Call. Joining me this morning is George Carter, our Chief Executive Officer. Please note that various remarks that we may make about future expectations, plans, and prospects for the company may constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2025, as amended by our quarterly reports on Form 10-Q, which are on file with the SEC. In addition, these forward-looking statements represent the company's expectations only as of today, March 10, 2026.

Speaker #2: Good morning and welcome to the Franklin Street Properties 4th Quarter 2025 earnings call. Joining me this morning is George Carter, our Chief Executive Officer.

Speaker #2: Please note that various remarks that we may make about future expectations, plans, and prospects for the company may constitute forward-looking statements for purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995, actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factor section of our annual report on Form 10-K for the year-ended

Speaker #1: December 31st , 2025 , as amended by our Quarterly Reports on Form 10-q , which are on file with the SEC . In addition , these forward looking statements represent the company's expectations only as of today , March 10th , 2026 .

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

Speaker #1: While the company may elect to update these forward looking statements , it specifically disclaims any obligation to do so Any forward looking statement should not be relied upon as representing the company's estimates or views as of any date subsequent to today .

Speaker #1: At times during this call , we may refer to . Funds from operations or FFO . Reconciliations of FFO and other non-GAAP financial measures to GAAP net income are contained in yesterday's press release , which is available in the Investor Relations section of our website at Now , I will turn the call over to George Carter George

George Carter: Thank you, Scott. Good morning, and thank you all for joining us today. As many of you know, Franklin Street Properties has not been conducting traditional quarterly earnings calls over the past several quarters. Given that the company continues to be engaged in an ongoing review of potential strategic alternatives under the advisory of BofA Securities. We have generally limited our public commentary to our written earnings releases and required SEC disclosures. However, we felt it would be helpful to provide investors with a little more color and a brief update, not on our quarterly full year financial and operating results, the written earnings press release, and 10-K details that information well enough, but rather on our ongoing review of the company's potential strategic alternative process, the recent refinancing of our debt, and the current transactional capital markets environment for office real estate investment.

Speaker #2: Thank you . Scott Good morning , and thank you all for joining us today . As many of you know , Franklin Street Properties has not been conducting traditional quarterly earnings calls over the past several quarters .

Speaker #2: Given that the company continues to be engaged in an ongoing review of potential strategic alternatives under the advisory of Bank of America Securities , we have generally limited our public commentary to our written earnings releases and required SEC disclosures However , we felt it would be helpful to provide investors with a little more color and a brief update not on our quarterly full year financial and operating results .

Speaker #2: The written earnings press release and 10-K detail that information well enough, but rather focus on our ongoing review of the company's potential strategic alternative process.

Speaker #2: The recent refinancing of our debt and the current transactional markets environment for office real estate investment at Is , as is customary during a strategic review process .

George Carter: As is customary during a strategic review process, today's remarks will be relatively brief, and we will not be taking questions. In addition, Janney, which provided research coverage of FSP in prior years, has exited its capital markets business, including its equity research platform. I will start with a brief update of the company's review of potential strategic alternatives, which we began in May 2025. Our board of directors continues to work closely with our financial advisor, BofA Securities, in evaluating potential strategic alternatives intended to try to maximize shareholder value. The alternatives the board has examined in depth have included portfolio level transactions, individual asset sales, joint venture structures, corporate level transactions, potential liquidation scenarios, and refinancing alternatives. As we have disclosed previously, the refinancing of our credit facility that we completed recently was one such alternative evaluated as part of this process.

Speaker #2: Today's remarks will be relatively brief , and we will not be taking questions . In addition , Janney , which provided research coverage of FSP in prior years as exited its capital markets business , including its equity research platform So I will start with a brief update of the company's review of potential strategic alternatives , which we began in May 2025 .

Speaker #2: Our board of directors continues to work closely with our financial advisor , Bank of America Securities and evaluating potential strategic alternatives intended to try to maximize shareholder value The alternatives the board has examined in depth have included portfolio level transactions , individual asset sales , joint venture structures , corporate level transactions , potential liquidation scenarios , and refinancing alternatives As we have disclosed previously , the refinancing of our credit facility that we completed recently was one such alternative , evaluated as part of this process The board remains actively engaged in evaluating opportunities and alternatives , and continues to assess them carefully .

George Carter: The board remains actively engaged in evaluating opportunities and alternatives, and continues to assess them carefully in light of evolving market conditions. The board's objective throughout this process is straightforward, to evaluate alternatives that may maximize shareholder value while carefully considering current market conditions. The board remains committed to conducting this process in a disciplined manner and evaluating opportunities as market conditions evolve. As is customary with strategic reviews of this nature, no assurances can be provided regarding the outcome or timing of the process. As previously announced on 27 February 2026, the company closed a $320 million secured credit facility with an affiliate of TPG Credit. Borrowings under this facility were used to repay in full the approximately $249 million of outstanding indebtedness under our prior credit facility.

Speaker #2: In light of evolving market conditions . The board's objective throughout this process is straightforward to evaluate alternatives that may maximize shareholder value while carefully considering current market conditions .

Speaker #2: The board remains committed to conducting this process in a disciplined manner and evaluating opportunities as market conditions evolve. As is customary with strategic reviews of this nature, no assurances can be provided regarding the outcome or timing of the process. As previously announced on February 27, 2026, the company closed a $320 million secured credit facility with an affiliate of TPG Credit.

Speaker #2: Borrowings under this facility were used to repay in full the approximately $249 million of outstanding indebtedness under our prior credit facility . The new facility has an initial maturity of February 26th , 2029 , with the potential for an additional one year extension at the option of the company , subject to certain conditions Importantly , the facility also includes up to 45 million of delayed draw term loans , which may be used to fund tenant improvements , leasing commissions , building improvements and other uses approved by the lender .

George Carter: The new facility has an initial maturity of 26 February 2029, with the potential for an additional one-year extension at the option of the company, subject to certain conditions. Importantly, the facility also includes up to $45 million of delayed draw term loans, which may be used to fund tenant improvements, leasing commissions, building improvements, and other uses approved by the lender. This refinancing accomplished several important objectives. First, it addressed our near term debt maturity, which had been scheduled for April of this year. Second, it simplified our capital structure, replacing a large syndicated lending group that included multiple lenders with a single institutional lender that has significant experience in real estate and real estate credit markets. Third, the additional leasing capital provides us with resources to continue executing our leasing strategy across the portfolio.

Speaker #2: This refinancing accomplished several important objectives First , it addressed our near-term debt maturity , which had been scheduled for April of this year Second , it simplified our capital structure , replacing a large syndicated lending group that included multiple lenders with a single institutional lender that has significant experience in real estate and real estate .

Speaker #2: Credit markets . And third . The additional leasing capital provides us with resources to continue executing our leasing strategy across the portfolio Importantly , resolving this near-term debt maturity removes a source of uncertainty that could have complicated strategic discussions with potential counterparties The company can now continue evaluating strategic alternatives without the pressure of an immediate capital structure constraint The company is also announcing today that the board of directors has determined to suspend the payment of quarterly dividends This was a thoughtful decision by the board , intended to preserve capital and enhance financial flexibility Suspending the dividend is expected to preserve approximately 4.1 million in cash annually , which can be redeployed into leasing efforts and other initiatives designed to enhance the value of our real estate .

George Carter: Importantly, resolving this near term debt maturity removes a source of uncertainty that could have complicated strategic discussions with potential counterparties. The company can now continue evaluating strategic alternatives without the pressure of an immediate capital structure constraint. The company is also announcing today that the board of directors has determined to suspend the payment of quarterly dividends. This was a thoughtful decision by the board intended to preserve capital and enhance financial flexibility. Suspending the dividend is expected to preserve approximately $4.1 million in cash annually, which can be redeployed into leasing efforts, and other initiatives designed to enhance the value of our real estate portfolio. The board will reassess the dividend policy on a quarterly basis. Additionally, disciplined cost management remains a priority for 2026 as we continue to evaluate strategic alternatives.

Speaker #2: The board will reassess the dividend policy on a quarterly basis Additionally , disciplined cost management remains a priority for 2026 as we continue to evaluate strategic alternatives in 2025 .

George Carter: In 2025, we reduced G&A by approximately $1.5 million, or about 10%, declining from $13.9 million in 2024 to $12.4 million in 2025. Beyond our company's specific developments, we believe it is important to provide some perspective on the current transactional capital markets environment for office real estate. Over the past several years, the office sector has experienced a significant shift in capital market conditions driven by two primary factors. First, the rapid increase in interest rates beginning in 2022. Second, a meaningful reduction in institutional capital allocation to the office sector as many investors reassessed allocations to office. These forces have had a substantial impact on the transaction liquidity across the office market.

Speaker #2: We reduced G&A by approximately $1.5 million , or about 10% , declining from 13.9 million in 20 24 to 12 point 4,000,000 in 2025 .

Speaker #2: Beyond our company specific developments , we believe it is important to provide some perspective on the current transactional capital markets environment for office real estate Over the past several years , the office sector has experienced a significant shift in capital market conditions , driven by two primary factors .

Speaker #2: First , the rapid increase in interest rates beginning in 2022 and second , a meaningful reduction in institutional capital allocation to the office sector .

Speaker #2: As many investors reassessed allocations to office These forces have had a substantial impact on the transaction . Liquidity across the office market Importantly , reduced transaction liquidity does not necessarily eliminate asset value , but it can materially affect the ability of markets to reflect that value in observable transactions at a particular point in time Prior to the pandemic , annual Office transaction volume in the United States averaged approximately 140 to 150 billion per year .

George Carter: Importantly, reduced transaction liquidity does not necessarily eliminate asset value, but it can materially affect the ability of markets to reflect that value in observable transactions at a particular point in time. Prior to the pandemic, annual office transaction volume in the United States averaged approximately $140 to 150 billion per year. In recent years, that figure has declined meaningfully. Today, national office transaction volume is running closer to $80 to 90 billion annually, representing a substantial reduction in overall market liquidity. When transaction volumes decline to that degree, several dynamics emerge. The buyer pool becomes smaller and more selective. In addition, many traditional institutional investors that historically participated in the office sector have remained on the sidelines while reassessing long-term allocation strategies.

Speaker #2: In recent years , that figure has declined meaningfully . Today , National Office transaction volume is running closer to 80 to 90 billion annually , representing a substantial reduction in overall market liquidity when transaction volumes declined to that degree , several dynamics emerge .

Speaker #2: The buyer pool becomes smaller and more selective in addition , many traditional institutional investors that historically participated in the office sector have remained on the sidelines while reassessing long term allocation strategies for the smaller pool of buyers that does exist .

George Carter: For the smaller pool of buyers that does exist, return expectations on office investments increase, and a higher proportion of transactions occur in distressed or capital-impaired situations. Another important dynamic affecting transaction activity today is debt availability for office assets. Financing for office transactions remains significantly more constrained than it was prior to 2022, particularly for assets that are not fully stabilized. In many cases, lenders are requiring materially lower leverage levels or additional structural protections compared with prior cycles. As a result, many transactions today are being completed either with significant higher equity requirements or with opportunistic capital, which naturally leads to higher return thresholds and lower property pricing levels. In contrast, the traditional institutional buyer base that historically supported a large portion of office transaction volume often relied on financing markets that have not yet fully normalized.

Speaker #2: Return expectations on office investments . Increase and a higher proportion of transactions occur in distressed or capital impaired situations Another important dynamic affecting transaction activity today is debt availability for office assets .

Speaker #2: Financing for office transactions remains significantly more constrained than it was prior to 2022, particularly for assets that are not fully stabilized. In many cases, lenders are requiring materially lower leverage levels for additional structural protections compared with prior cycles.

Speaker #2: As a result , many transactions today are being completed either with significant higher equity requirements or with opportunistic capital , which naturally leads to higher return thresholds and lower property pricing levels .

Speaker #2: In contrast , the traditional institutional buyer base that historically supported a large portion of office transaction volume often relied on financing markets that have not yet fully normalized Today's buyer universe tends to consist primarily of opportunistic capital , private equity funds targeting higher IRR thresholds , and investors able to transact with limited leverage , which represents a materially different capital base than what historically supported the office market Also , distressed transactions can exert a disproportionate influence on pricing benchmarks , particularly when overall transaction activity is limited As a result , pricing in thin markets can sometimes reflect capital scarcity .

George Carter: Today's buyer universe tends to consist primarily of opportunistic capital, private equity funds targeting higher IRR thresholds, and investors able to transact with limited leverage, which represents a materially different capital base than what historically supported the office market. Also, distressed transactions can exert a disproportionate influence on pricing benchmarks, particularly when overall transaction activity is limited. As a result, pricing in thin markets can sometimes reflect capital scarcity at that moment in time rather than the long-term operating economics of the underlying real estate. We have seen these dynamics play out very clearly in certain FSP markets where distressed transactions have occurred. For example, in Denver's CBD submarket, several highly visible office transactions over the past two years have involved assets that were capital impaired or transferred through lender-related processes.

Speaker #2: At that moment in time . Rather than the long term operating economics of the underlying real estate . We have seen these dynamics play out very clearly in certain FSP markets , where distressed transactions have occurred .

Speaker #2: For example , in Denver's CBD submarket , several highly visible office transactions over the past two years have involved assets that were capital impaired or transferred through lender related processes .

George Carter: Those transactions have occurred at pricing levels significantly below historical replacement costs and prior market valuations, influencing broader market sentiment across the submarket. Importantly, those situations often reflect capital structure challenges rather than underlying asset performance. In a lower liquidity environment, they can disproportionately influence pricing benchmarks across the market. In Minneapolis, the downtown office market has also faced several external challenges in recent years, including broader urban recovery issues following the pandemic, and social and civic disruptions. Factors that have contributed to slower leasing velocity and reduced investor demand. While the broader market continues to show signs of stabilization, these kind of factors have contributed to slower leasing velocity and reduced investor demand, which in turn has affected transaction liquidity in the market. The markets in which Franklin Street Properties operates reflect many of these broader national dynamics.

Speaker #2: Those transactions have occurred at pricing levels significantly below historical replacement costs prior market valuations , influencing broader market sentiment across the submarket Importantly , those situations often reflect capital structure , challenges rather than underlying asset performance But in a lower liquidity environment , they can disproportionately influence pricing benchmarks across the market In Minneapolis , the downtown office market has also faced several external challenges in recent years , including broader urban recovery issues following the pandemic and social and civic disruptions Factors that have contributed to slower leasing velocity , velocity , and reduced investor demand While the broader market continues to show signs of stabilization , these kind of factors have contributed to slower leasing velocity and reduced investor demand , which in turn has affected transaction liquidity in the market The markets in which Franklin Street Properties operates reflect many of these broader national dynamics across markets , such as Denver , Dallas , Houston and Minneapolis Transaction activity has remained well below historical levels .

George Carter: Across markets such as Denver, Dallas, Houston, and Minneapolis, transaction activity has remained well below historical levels. At the same time, leasing markets in many of these regions have begun to show gradual signs of stabilization, particularly as companies continue to refine their return to office policies and long-term space requirements. Although leasing activity still remains below historical averages. These capital market conditions are an important part of the broader environment in which companies across the office sector are operating today. They influence the pace of transactions, the composition of the buyer universe, and the pricing dynamics that occur in the market. The FSP board and management remain committed to evaluating opportunities that may enhance and realize value for shareholders, while also understanding that any actions taken have to reflect the realities of the current capital markets environment.

Speaker #2: At the same time , leasing markets in many of these regions have begun to show gradual signs of stabilization , particularly as companies continue to refine their return to office policies and long term space requirements Although leasing activity still remains below historical averages These capital market conditions are an important part of the broader environment in which companies across the office sector are operating today .

Speaker #2: They influence the pace of transactions, the composition of the buyer universe, and the pricing dynamics that occur in the market. The FSP board and management remain committed to evaluating opportunities that may enhance and realize value for shareholders.

Speaker #2: While also understanding that any actions taken have to reflect the realities of the current capital markets environment . The company remains open to pursuing transactions where market conditions allow Values that we believe appropriately reflect the quality , location and long term economics of our assets In closing , Franklin Street Properties remains focused on three priorities First , continuing to improve leasing performance and occupancy across our portfolio Second , maintaining financial flexibility and operational discipline , particularly following the successful refinancing of our credit facility And third , continuing our review of strategic alternatives .

George Carter: The company remains open to pursuing transactions where market conditions allow values that we believe appropriately reflect the quality, location, and long-term economics of our assets. In closing, Franklin Street Properties remains focused on three priorities. First, continuing to improve leasing performance and occupancy across our portfolio. Second, maintaining financial flexibility and operational discipline, particularly following the successful refinancing of our credit facility. Third, continuing our review of strategic alternatives in order to explore opportunities that may increase shareholder value. We recognize that shareholders want progress and outcomes from this process, and we remain committed to evaluating all opportunities thoughtfully and responsibly as market conditions evolve. We remain focused on pursuing outcomes that reflect both the intrinsic value of our assets and the realities of the current capital markets environment. Thank you for joining us today and for your continued interest in Franklin Street Properties.

Speaker #2: In order to explore opportunities that may increase shareholder value We recognize that shareholders want progress and outcomes from this process , and we remain committed to evaluating all opportunities thoughtfully and responsibly .

Speaker #2: As market conditions evolve . We remain focused on pursuing outcomes that reflect both the intrinsic value of our assets and the realities of the current capital markets environment Thank you for joining us today and for your continued interest in Franklin Street Properties

Operator 3: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Q4 2026 Franklin Street Properties Corp Earnings Call

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