Business & Finance
Business and Finance
Business and Finance
Wed, February 25, 2009
Tue, February 24, 2009 Franklin Street Properties Corp.: Franklin Street Properties Corp. Announces Fourth Quarter and Full Year 2008 Results
WAKEFIELD, MA--(Marketwire - February 24, 2009) - Franklin Street Properties Corp. (the "Company" or "FSP") (
The Company evaluates its performance based on Net Income, EPS, FFO, Gains on Sales (GOS) and FFO+GOS, and believes each is an important measure. A reconciliation of Net Income to FFO and FFO+GOS, which are non-GAAP financial measures, is provided under the "Real Estate Update" section of this press release.
(in 000's except Three Months Ended per share data) December 31, Year Ended December 31, --------------------------- --------------------------- Increase Increase 2008 2007 (Decrease) 2008 2007 (Decrease) -------- -------- --------- -------- -------- --------- Net Income $ 6,619 $ 9,391 $ (2,772) $ 31,959 $ 61,085 $ (29,126) ======== ======== ========= ======== ======== ========= FFO $ 16,199 $ 18,572 $ (2,373) $ 69,204 $ 75,049 $ (5,845) GOS - 257 (257) - 23,789 (23,789) -------- -------- --------- -------- -------- --------- FFO+GOS $ 16,199 $ 18,829 $ (2,630) $ 69,204 $ 98,838 $ (29,634) ======== ======== ========= ======== ======== ========= Per Share Data: EPS $ 0.09 $ 0.13 $ (0.04) $ 0.45 $ 0.86 $ (0.41) FFO $ 0.23 $ 0.26 $ (0.03) $ 0.98 $ 1.06 $ (0.08) GOS $ - $ - $ - $ - $ 0.34 $ (0.34) FFO+GOS $ 0.23 $ 0.27 $ (0.04) $ 0.98 $ 1.40 $ (0.42) Weighted ave shares (diluted) 70,481 70,481 - 70,481 70,651 (170) -------- -------- --------- -------- -------- ---------
Comparing results for the fourth quarter of 2008 to 2007, Net Income and EPS decreased $2.8 million or $0.04 per share, FFO decreased $2.4 million or $0.03 per share and FFO+GOS decreased $2.6 million or $0.04 per share. Comparing results for the fourth quarter of 2008 to 2007, the FFO decrease was primarily attributable to a decrease in FFO from investment banking of $2.7 million, which was partially offset by increases in real estate FFO of $0.3 million. There was no GOS in the fourth quarter of 2008 compared to $0.3 million in the fourth quarter of 2007.
Comparing results for the year ended December 31, 2008 to the year ended December 31, 2007, Net Income and EPS decreased $29.1 million or $0.41 per share, FFO decreased $5.8 million or $0.08 per share and FFO+GOS decreased $29.6 million or $0.42 per share. Comparing results for the full year of 2008 to 2007, the FFO decrease was primarily attributable to a decrease in FFO from investment banking of $7.4 million. The decrease was caused by lower sales of securities by our investment bank, which decreased $90.1 million to $57.4 million for 2008 compared to $147.5 million for 2007. Revenue from our investment bank is primarily based on the value of these securities sales. This decrease was partially offset by increases in real estate FFO of $1.6 million. There was no GOS for 2008 compared to $23.8 million or $0.34 per share for 2007.
George J. Carter, President and CEO, commented as follows:
"For the fourth quarter of 2008, FSP's profits as represented by FFO+GOS totaled approximately $16.2 million or $0.23 per share. Dividend distributions declared for the fourth quarter of 2008, which are payable on February 20, 2009, totaled approximately $13.4 million or $0.19 per share.
"Significant portions of our real estate investment business, specifically property sales and investment banking, are transactional. Neither of these business segments made a positive contribution to the fourth quarter. Substantially all profits for the quarter were produced by our ongoing/recurring rental operations.
"Although, FSP has certain properties in its portfolio that we would contemplate selling, we have not listed any property for sale because of current adverse market conditions. Rather than sell in this negative environment, FSP continues to postpone consideration of the sale of some properties until a more attractive environment establishes itself, particularly within the mortgage/debt markets. A time frame for improvement in these markets continues to be hard to predict. However, we continue to constantly evaluate property disposition opportunities.
"During the fourth quarter of 2008, our investment banking group raised no equity capital, compared with $4.8 million in the third quarter of 2008, $49.9 million in the second quarter of 2008 and $2.7 million in the first quarter of 2008. Concern and uncertainty continues to surround the potential impact on commercial real estate emanating from the U.S. recession and financial credit crisis, and our established investor clients continue to sit on the sidelines until a clearer sense of stability returns to the broader capital markets before considering significant investment purchases. The lack of equity raising activity resulted in our investment banking business segment operating at a loss for the fourth quarter totaling approximately $0.6 million or $0.01 per share. We anticipate business in this area to remain very volatile quarter-to-quarter as long as broader investment market activity and financial events continue to meaningfully sway investor confidence and sentiment.
"While profits continued to suffer in the fourth quarter of 2008 from our transactional businesses, our real estate portfolio of 29 properties maintained its overall 93% occupancy and provided steady rental income. FFO for the fourth quarter of 2008 was $0.23 per share, all of which came from real estate operations net of the cost of maintaining our investment banking capability.
"In late December 2008, FSP invested approximately $40 million to purchase two additional properties for its portfolio. Full quarter operations from these two additional investments will be reflected in the first quarter results of 2009. Additional property investments are currently under consideration.
"As the capital markets and U.S. economy work through the current recession, and financial/credit crisis, we will continue to pursue additional commercial property investment opportunities. It will be FSP's objective to continue to grow our property portfolio and rental income business during this period of liquidity-constrained capital markets by using our balance sheet strength to help finance and fund new acquisitions. We continue to be very optimistic about FSP's position in the current commercial real estate investment market and the opportunities that are presenting themselves to acquire commercial properties at better pricing and value metrics than we have seen in the last several years."
Dividend Announcement
On January 16, 2009, the Company announced that its Board of Directors declared a regularly quarterly dividend for the three months ended December 31, 2008 of $0.19 per share of common stock payable on February 20, 2009 to stockholders of record on January 30, 2009.
Real Estate Update
On December 11, 2008, the Company acquired an office property in Missouri for approximately $20.0 million and on December 23, 2008 the Company acquired an office property in Virginia for approximately $18.6 million. Supplementary Schedules D & E provide property information for our continuing real estate portfolio of 29 properties and for two non-consolidated REITs that we have interests in as of December 31, 2008. The Company will also be filing a supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company will file this supplemental information package with the SEC and make it available on its website at [ www.franklinstreetproperties.com ] in the next week.
A reconciliation of Net Income to FFO and FFO+GOS is shown below and definitions of FFO and FFO+GOS are provided on Supplementary Schedule H. We believe FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance and is generally calculated in a similar manner to our calculation. We also believe that FFO+GOS is an important measure as it considers investment performance.
Three Months Ended Year Ended December 31, December 31, ------------------ ------------------ (In thousands, except per share amounts) 2008 2007 2008 2007 -------- -------- -------- -------- Net income $ 6,619 $ 9,391 $ 31,959 $ 61,085 (Gain) Loss on sale of properties - (257) - (23,789) GAAP (income) loss from non-consolidated REITs (580) (147) (2,747) 472 Distributions from non-consolidated REITs 1,510 607 5,348 1,806 Depreciation of real estate & intangible amortization 8,650 8,978 34,644 35,475 -------- -------- -------- -------- Funds From Operations (FFO) 16,199 18,572 69,204 75,049 Plus gains on sales of properties (GOS) - 257 - 23,789 -------- -------- -------- -------- FFO+GOS $ 16,199 $ 18,829 $ 69,204 $ 98,838 ======== ======== ======== ======== Per Share Data EPS $ 0.09 $ 0.13 $ 0.45 $ 0.86 FFO $ 0.23 $ 0.26 $ 0.98 $ 1.06 GOS $ - $ - $ - $ 0.34 FFO+GOS $ 0.23 $ 0.27 $ 0.98 $ 1.40 Weighted average shares (basic and diluted) 70,481 70,481 70,481 70,651 -------- -------- -------- --------
Today's news release, along with other news about Franklin Street Properties Corp., is available on the Internet at [ www.franklinstreetproperties.com ].
A conference call is scheduled for February 25, 2009 at 9:30 a.m. (ET) to discuss 2008 results. The toll free number is 1-800-597-1967, passcode 61563278. Internationally, the call may be accessed by dialing 1-617-597-5526, passcode 61563278. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website, [ www.franklinstreetproperties.com ] at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.
About Franklin Street Properties Corp.
Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on achieving current income and long-term growth through investments in commercial properties. FSP operates in two business segments: real estate operations and investment banking/investment services. The majority of FSP's property portfolio is suburban office buildings, with select investments in certain central business district properties. FSP's subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and a registered broker/dealer. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. To learn more about FSP please visit our website at [ www.franklinstreetproperties.com ].
Forward-Looking Statements
Statements made in this press release that state FSP's or management's intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, changes in economic conditions in the United States, disruptions in the debt markets, changes in economic conditions in the markets in which we own properties, changes in the demand by investors for investment in Sponsored REITs (as defined in our Annual Report on Form 10-K for the year ended December 31, 2008), risks of a lessening of demand for the types of real estate owned by us, changes in government regulations, and expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments. See the "Risk Factors" set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008, as the same may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.
Franklin Street Properties Corp. Earnings Release Supplementary information Table of Contents Franklin Street Properties Corp. Financial Results A-C Real Estate Portfolio Summary Information D Portfolio and Other Supplementary Information E Prior 4 Quarters Information F Largest 20 Tenants - FSP Owned Portfolio G Definition of Funds From Operations (FFO) and FFO+GOS H Franklin Street Properties Corp. Financial Results Supplementary Schedule A Condensed Consolidated Income Statements (Unaudited) For the Three Months Ended For the Year Ended December 31, December 31, -------------------- -------------------- (in thousands, except per share amounts) 2008 2007 2008 2007 --------- --------- --------- --------- Revenue: Rental $ 28,915 $ 25,851 $ 111,198 $ 100,961 Related party revenue: Syndication fees - 1,896 3,766 8,986 Transaction fees 35 2,452 3,641 9,898 Management fees and interest income from loans 375 1,854 1,739 7,030 Other 20 34 72 118 --------- --------- --------- --------- Total revenue 29,345 32,087 120,416 126,993 --------- --------- --------- --------- Expenses: Real estate operating expenses 8,026 7,145 28,999 26,171 Real estate taxes and insurance 4,365 4,045 17,740 16,535 Depreciation and amortization 7,744 7,624 30,360 29,334 Selling, general and administrative 1,711 1,791 8,268 7,466 Commissions 131 1,017 2,151 4,737 Interest 1,570 1,563 4,921 7,684 --------- --------- --------- --------- Total expenses 23,547 23,185 92,439 91,927 --------- --------- --------- --------- Income before interest income, equity in earnings (losses) of non-consolidated REITs and taxes 5,798 8,902 27,977 35,066 Interest income 88 514 745 2,377 Equity in earnings (losses) of non-consolidated REITs 580 147 2,747 (464) --------- --------- --------- --------- Income before taxes 6,466 9,563 31,469 36,979 Income tax expense (benefit) (153) 359 (490) 873 --------- --------- --------- --------- Income from continuing operations 6,619 9,204 31,959 36,106 --------- --------- --------- --------- Discontinued operations: Income (loss) from discontinued operations - (70) - 1,190 Gain on sale of assets, less applicable income tax - 257 - 23,789 --------- --------- --------- --------- Total discontinued operations - 187 - 24,979 --------- --------- --------- --------- Net income $ 6,619 $ 9,391 $ 31,959 $ 61,085 ========= ========= ========= ========= Weighted average number of shares outstanding, basic and diluted 70,481 70,481 70,481 70,651 ========= ========= ========= ========= Earnings per share, basic and diluted, attributable to: Continuing operations $ 0.09 $ 0.13 $ 0.45 $ 0.51 Discontinued operations - - - 0.35 --------- --------- --------- --------- Net income per share, basic and diluted $ 0.09 $ 0.13 $ 0.45 $ 0.86 ========= ========= ========= ========= Franklin Street Properties Corp. Financial Results Supplementary Schedule B Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share and par value amounts) December 31, ------------------------- 2008 2007 ----------- ------------ Assets: Real estate assets, net $ 844,058 $ 790,319 Acquired real estate leases, less accumulated amortization of $29,200 and $23,401, respectively 28,518 33,695 Investment in non-consolidated REITs 83,046 85,663 Assets held for syndication, net 13,254 26,310 Cash and cash equivalents 29,244 46,988 Restricted cash 336 336 Tenant rent receivables, less allowance for doubtful accounts of $509 and $430, respectively 1,329 1,472 Straight-line rent receivable, less allowance for doubtful accounts of $261 and $261, respectively 8,816 7,387 Prepaid expenses 2,206 1,395 Other assets 3,531 406 Office computers and furniture, net of accumulated depreciation of $1,108 and $968, respectively 281 309 Deferred leasing commissions, net of accumulated amortization of $3,416 and $1,975, respectively 10,814 9,186 ----------- ------------ Total assets $ 1,025,433 $ 1,003,466 =========== ============ Liabilities and Stockholders' Equity: Liabilities: Bank note payable $ 67,468 $ 84,750 Term loan payable 75,000 - Accounts payable and accrued expenses 22,297 20,255 Accrued compensation 1,654 1,564 Tenant security deposits 1,874 1,874 Other liabilities: derivative termination value 3,099 - Acquired unfavorable real estate leases, less accumulated amortization of $1,779 and $1,226, respectively 5,044 4,405 ----------- ------------ Total liabilities 176,436 112,848 ----------- ------------ 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, 70,480,705 and 70,480,705 shares issued and outstanding, respectively 7 7 Additional paid-in capital 889,019 889,019 Accumulated other comprehensive loss (3,099) - Earnings (distributions) in excess of accumulated earnings/distributions (36,930) 1,592 ----------- ------------ Total stockholders' equity 848,997 890,618 ----------- ------------ Total liabilities and stockholders' equity $ 1,025,433 $ 1,003,466 =========== ============ Franklin Street Properties Corp. Financial Results Supplementary Schedule C Condensed Consolidated Statements of Cash Flows (Unaudited) For the Year Ended December 31, ------------------ (in thousands) 2008 2007 -------- -------- Cash flows from operating activities: Net income $ 31,959 $ 61,085 Adjustments to reconcile net income to net cash provided by operating activities: Gains on assets sold - (23,789) Depreciation and amortization expense 30,444 30,563 Amortization of above market lease 4,283 4,948 Equity in earnings (losses) from non-consolidated REITs (2,747) 472 Distributions from non-consolidated REITs 5,348 1,806 Increase (decrease) in bad debt reserve 79 (3) Changes in operating assets and liabilities: Restricted cash - 425 Tenant rent receivables, net 64 971 Straight-line rents, net (1,406) (3,359) Prepaid expenses and other assets, net (901) 374 Accounts payable and accrued expenses 448 1,884 Accrued compensation 90 (1,079) Tenant security deposits - 130 Payment of deferred leasing commissions (3,353) (4,314) -------- -------- Net cash provided by operating activities 64,308 70,114 -------- -------- Cash flows from investing activities: Purchase of real estate assets, office computers and furniture, capitalized merger costs (73,888) (77,894) Purchase of acquired favorable and unfavorable leases (4,508) (3,726) Investment in non-consolidated REITs (10) (82,831) Investment in mortgage loan receivable (1,125) - Redemption of certificate of deposit - 5,143 Changes in deposits on real estate assets (1,300) - Investment in assets held for syndication, net 12,236 (22,093) Proceeds received on sales of real estate assets - 96,102 -------- -------- Net cash used in investing activities (68,595) (85,299) -------- -------- Cash flows from financing activities: Distributions to stockholders (70,481) (87,662) Purchase of treasury shares - (4,767) Borrowings (repayments) under bank note payable, net (17,282) 84,750 Borrowings under term loan payable 75,000 - Deferred financing costs (694) (121) -------- -------- Net cash (used in) provided by financing activities (13,457) (7,800) -------- -------- Net increase (decrease) in cash and cash equivalents (17,744) (22,985) Cash and cash equivalents, beginning of period 46,988 69,973 -------- -------- Cash and cash equivalents, end of period $ 29,244 $ 46,988 ======== ======== The accompanying notes are an integral part of these condensed consolidated financial statements. Franklin Street Properties Corp. Earnings Release Supplementary Schedule D Real Estate Portfolio Summary Information (Unaudited & Approximated) Commercial portfolio lease expirations (1) Total % of Year Square Feet Portfolio ------------- ------------ 2009 612,905 11.3% 2010 752,508 13.9% 2011 376,047 6.9% 2012 755,752 14.0% 2013 342,809 6.3% 2014 477,836 8.8% Thereafter (2) 2,099,658 38.8% ------------- ------------ 5,417,515 100.0% ============= ============ (1) Percentages are determined based upon square footage of expiring commercial leases. (2) Includes 365,000 square feet of current vacancies. (dollars & square feet in 000's) As of December 31, 2008 ---------------------------------------------------------- # of % of Square % of State Properties Investment Portfolio Feet Portfolio ----------- ----------- ---------- ----------- ---------- Texas 7 $ 234,098 27.7% 1,489 27.4% Colorado 4 130,461 15.5% 791 14.6% Georgia 1 77,849 9.2% 387 7.1% Maryland 2 62,930 7.5% 424 7.8% Virginia 3 80,320 9.5% 569 10.5% Missouri 3 74,375 8.8% 477 8.8% Florida 1 49,276 5.9% 213 3.9% Indiana 1 37,444 4.4% 205 3.8% Illinois 1 31,402 3.7% 177 3.3% California 2 21,340 2.5% 182 3.4% Michigan 1 15,176 1.8% 215 4.0% Washington 1 15,051 1.8% 117 2.2% North Carolina 2 14,336 1.7% 172 3.2% ----------- ----------- ---------- ----------- ---------- 29 $ 844,058 100.0% 5,418 100.0% =========== =========== ========== =========== ========== Property by type: (dollars & square feet in 000's) As of December 31, 2008 ----------------------------------------------------------- # of % of % of Type Properties Investment Portfolio Square Feet Portfolio ----------- ----------- ---------- ----------- ---------- Office 28 $ 838,915 99.4% 5,319 98.2% Industrial 1 5,143 0.6% 99 1.8% ----------- ----------- ---------- ----------- ---------- 29 $ 844,058 100.0% 5,418 100.0% =========== =========== ========== =========== ========== Franklin Street Properties Corp. Earnings Release Supplementary Schedule E Portfolio and Other Supplementary Information (Unaudited & Approximated) Capital Expenditures Owned Portfolio Three Months Ended Twelve Months Ended --------------------- --------------------- (in thousands) 31-Dec-08 31-Dec-07 31-Dec-08 31-Dec-07 ---------- ---------- ---------- ---------- Tenant improvements $ 823 $ 998 $ 5,387 $ 6,596 Deferred leasing costs 919 1,409 3,354 4,314 Building improvements 419 908 1,728 4,504 ---------- ---------- ---------- ---------- $ 2,161 $ 3,315 $ 10,469 $ 15,414 ========== ========== ========== ========== Square foot & leased percentages December 31, -------------------- 2008 2007 --------- --------- Owned portfolio of commercial real estate Number of properties 29 26 Square feet 5,417,515 4,998,280 Leased percentage 93% 93% Investments in non-consolidated commercial real estate Number of properties 2 3 Square feet 1,461,224 1,614,380 Leased percentage 80% 92% Single Asset REITs (SARs) managed Number of properties 10 9 Square feet* 2,684,561 2,682,770 Leased percentage* 92% 92% Total owned, investments & managed properties Number of properties 41 38 Square feet* 9,563,300 9,295,430 Leased percentage* 91% 93% *Excludes a property to be constructed with approximately 285,000 square feet. The following table shows property information for our investments in non- consolidated REITs: % Square % Leased Interest Single Asset REIT Name City State Feet 31-Dec-08 Held --------- --------- --------- --------- --------- FSP 303 East Wacker Drive Corp. Chicago IL 842,717 87.9% 43.7% FSP Phoenix Tower Corp. Houston TX 618,507 68.9% 4.6% --------- --------- 1,461,224 79.9% --------- --------- Franklin Street Properties Corp. Earnings Release Supplementary Schedule F: Prior 4 Quarters Information (Unaudited) (in thousands) Q4 Q1 Q2 Q3 Revenue: 2007 2008 2008 2008 -------- -------- -------- -------- Rental $ 25,851 26,656 27,700 27,927 Related party revenue: Syndication fees 1,896 205 3,257 304 Transaction fees 2,452 168 3,138 300 Management fees and interest income from loans 1,854 561 423 380 Other 34 20 19 13 -------- -------- -------- -------- Total revenue 32,087 27,610 34,537 28,924 -------- -------- -------- -------- Expenses: Real estate operating expenses 7,145 6,698 7,116 7,159 Real estate taxes and insurance 4,045 4,279 4,505 4,590 Depreciation and amortization 7,624 7,359 7,591 7,666 Selling, general and administrative 1,791 2,009 2,621 1,927 Commissions 1,017 158 1,654 208 Interest 1,563 1,192 1,051 1,108 -------- -------- -------- -------- Total expenses 23,185 21,695 24,538 22,658 -------- -------- -------- -------- Income before interest income, equity in earnings in non-consolidated REITs 8,902 5,915 9,999 6,266 Interest income 514 303 176 177 Equity in earnings in non-consolidated REITs 147 793 694 679 -------- -------- -------- -------- Income before taxes on income 9,563 7,011 10,869 7,122 Taxes on income 359 (375) 335 (297) -------- -------- -------- -------- Income from continuing operations 9,204 7,386 10,534 7,419 Loss from discontinued operations (70) - - - Gain on sale of assets 257 - - - -------- -------- -------- -------- Net income $ 9,391 $ 7,386 $ 10,534 $ 7,419 ======== ======== ======== ======== FFO and FFO+GOS calculations: Net income $ 9,391 $ 7,386 $ 10,534 $ 7,419 -------- -------- -------- -------- (Gain) loss on sale of assets (257) - - - GAAP (income) from non-consolidated REITs (106) (147) (694) (680) Distributions from non-consolidated REITs 476 607 546 1,561 Depreciation & amortization 9,008 8,978 8,498 8,784 -------- -------- -------- -------- Funds From Operations (FFO) 18,512 16,824 18,884 17,084 Plus gains on sales of assets (GOS) 257 - - - -------- -------- -------- -------- FFO+GOS $ 18,769 $ 16,824 $ 18,884 $ 17,084 ======== ======== ======== ======== Franklin Street Properties Corp. Earnings Release Supplementary Schedule G Largest 20 Tenants - FSP Owned Portfolio (Unaudited & Estimated) The following table includes the largest 20 tenants in FSP's owned portfolio based on square feet leased. % of Tenant Sq Ft SIC Code Portfolio --------- --------- ---------- 1 Capital One Services, Inc.* (1) 297,789 61 5.5% 2 Citgo Petroleum Corporation 248,399 29 4.6% 3 Tektronix Texas, LLC 241,372 38 4.4% 4 Burger King Corporation 212,619 58 3.9% 5 New Era of Networks, Inc. (Sybase) 199,077 42 3.7% 6 Citigroup Credit Services, Inc. 176,848 61 3.3% 7 RGA Reinsurance Company 171,120 63 3.2% 8 International Business Machines Corp. 138,033 73 2.5% 9 Giesecke & Devrient America 135,888 13 2.5% 10 Murphy Exploration & Production Company 133,786 73 2.5% 11 CACI Technologies, Inc. 132,896 42 2.4% 12 Monsanto 127,778 87 2.4% 13 Maines Paper and Food Service, Inc. 98,745 73 1.8% 14 Jones Lang Lasalle 92,827 81 1.7% 15 AMDOCS, Inc. 91,928 91 1.7% 16 Ober Kaler Grimes 90,811 79 1.7% 17 County of Santa Clara 90,467 67 1.7% 18 Technip-Coflexip USA Holdings, Inc 86,059 73 1.6% 19 Vail Corp, dba Vail Resorts 83,620 67 1.5% 20 Corporate Holdings, LLC 81,818 81 1.5% --------- ---------- Total 2,931,880 54.1% --------- ---------- (1) Capital One sublets all of the space to LandAmerica Financial Group, Inc. LandAmerica Financial Group, Inc. entered into a direct lease with us which commences at the expiration of the Capital One lease on October 31, 2009. On November 26, 2008, LandAmerica Financial Group, Inc. filed a voluntary motion for relief under chapter 11 of the Bankruptcy Code. As of February 20, 2009, no motion to assume or reject the direct lease had been filed by LandAmerica Financial Group, Inc.
Franklin Street Properties Corp. Earnings Release Supplementary Schedule H Definition of Funds From Operations ("FFO"), and FFO plus Gains on Sales ("FFO+GOS") The Company evaluates the performance of its reportable segments based on several measures including, Funds From Operations ("FFO") and FFO plus Gains on Sales ("FFO+GOS") as management believes they represent important measures of activity and are an important consideration in determining distributions paid to equity holders. The Company defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, and after adjustments to exclude non-cash income (or losses) from non-consolidated or Sponsored REITs, plus distributions received from non-consolidated or Sponsored REITs. The Company defines FFO+GOS as FFO as defined above, plus gains (or losses) from sales of properties and provisions for assets held for sale, if applicable.
FFO and FFO+GOS should not be considered as alternatives to net income (determined in accordance with GAAP), as indicators of the Company's financial performance, nor as alternatives to cash flows from operating activities (determined in accordance with GAAP), nor as measures of the Company's liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company's needs. Other real estate companies may define these terms in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, FFO and FFO+GOS should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.
