10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10 - Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015.

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from        to       .

Commission File Number:  001-32470

Franklin Street Properties Corp.

(Exact name of registrant as specified in its charter)

Maryland	04-3578653
(State or other jurisdiction of incorporation	(I.R.S. Employer Identification No.)
or organization)

401 Edgewater Place, Suite 200

Wakefield, MA 01880

(Address of principal executive offices)(Zip Code)

(781) 557-1300

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x  NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES x  NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o  NO x

The number of shares of common stock outstanding as of April 24, 2015 was 100,187,405.

Franklin Street Properties Corp.

Form 10-Q

Quarterly Report

March 31, 2015

Table of Contents

			Page
Part I.	Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014	3
		Condensed Consolidated Statements of Income for the three months ended March 31, 2015 and 2014	4
		Condensed Consolidated Statements of Other Comprehensive Income for the three months ended March 31, 2015 and 2014	5
		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014	6
		Notes to Condensed Consolidated Financial Statements	7-15
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16-27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
	Item 4.	Controls and Procedures	30
Part II.	Other Information
	Item 1.	Legal Proceedings	31
	Item 1A.	Risk Factors	31
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 3.	Defaults Upon Senior Securities	31
	Item 4.	Mine Safety Disclosures	31
	Item 5.	Other Information	31
	Item 6.	Exhibits	31
Signatures			32

PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

Franklin Street Properties Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
(in thousands, except share and par value amounts)	2015			2014
Assets:
Real estate assets:
Land	$	174,707		$	183,930
Buildings and improvements	1,581,524			1,604,984
Fixtures and equipment	1,724			1,677
	1,757,955			1,790,591
Less accumulated depreciation	271,058			266,284
Real estate assets, net	1,486,897			1,524,307
Acquired real estate leases, less accumulated amortization of $105,045 and $101,838, respectively	124,337			138,714
Investment in non-consolidated REITs	78,228			78,611
Cash and cash equivalents	14,945			7,519
Restricted cash	56			742
Tenant rent receivables, less allowance for doubtful accounts of $330 and $325, respectively	4,587			4,733
Straight-line rent receivable, less allowance for doubtful accounts of $162 and $162, respectively	45,498			47,021
Prepaid expenses and other assets	13,526			10,292
Related party mortgage loan receivables	93,641			93,641
Other assets: derivative asset	774			3,020
Office computers and furniture, net of accumulated depreciation of $1,109 and $1,036, respectively	588			609
Deferred leasing commissions, net of accumulated amortization of $17,429 and $16,944, respectively	26,335			27,181
Total assets	$	1,889,412		$	1,936,390
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	240,000		$	268,000
Term loans payable	620,000			620,000
Accounts payable and accrued expenses	36,065			42,561
Accrued compensation	1,241			3,758
Tenant security deposits	4,019			4,248
Other liabilities: derivative liability	9,836			7,268
Acquired unfavorable real estate leases, less accumulated amortization of $9,218 and $8,687, respectively	9,921			10,908
Total liabilities	921,082			956,743
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, 100,187,405 and 100,187,405 shares issued and outstanding, respectively	10			10
Additional paid-in capital	1,273,556			1,273,556
Accumulated other comprehensive loss	(9,062		)	(4,248		)
Accumulated distributions in excess of accumulated earnings	(296,174		)	(289,671		)
Total stockholders’ equity	968,330			979,647
Total liabilities and stockholders’ equity	$	1,889,412		$	1,936,390

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Franklin Street Properties Corp.

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

	For the Three Months Ended March 31,
(in thousands, except per share amounts)	2015			2014
Revenue:
Rental	$	59,013		$	61,597
Related party revenue:
Management fees and interest income from loans	1,473			1,643
Other	21			23
Total revenue	60,507			63,263
Expenses:
Real estate operating expenses	15,356			15,071
Real estate taxes and insurance	10,048			9,251
Depreciation and amortization	22,672			24,300
Selling, general and administrative	3,691			3,272
Interest	6,187			7,176
Total expenses	57,954			59,070
Income before interest income, equity in losses of non-consolidated REITs and taxes	2,553			4,193
Interest income	1			1
Equity in losses of non-consolidated REITs	(322		)	(484		)
Gain on sale of properties, less applicable income tax	10,462			—
Income before taxes on income	12,694			3,710
Taxes on income	161			137
Net income	$	12,533		$	3,573
Weighted average number of shares outstanding, basic and diluted	100,187			100,187
Earnings per share, basic and diluted:
Net income per share, basic and diluted	$	0.13		$	0.04

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Franklin Street Properties Corp.

Condensed Consolidated Statements of Other Comprehensive Income (Loss)

(Unaudited)

	For the Three Months Ended March 31,
(in thousands)	2015			2014
Net income	$	12,533		$	3,573
Other comprehensive income:
Unrealized loss on derivative financial instruments	(4,814		)	(2,301		)
Total other comprehensive income	(4,814		)	(2,301		)
Comprehensive income	$	7,719		$	1,272

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Franklin Street Properties Corp.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Three Months Ended March 31,
(in thousands)	2015			2014
Cash flows from operating activities:
Net income	$	12,533		$	3,573
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	23,189			24,797
Amortization of above market lease	6			(11		)
Equity in losses of non-consolidated REITs	322			484
Gain on sale of properties, less applicable income tax	(10,462		)	—
Changes in operating assets and liabilities:
Restricted cash	686			(45		)
Tenant rent receivables	146			(933		)
Straight-line rents	(69		)	(1,784		)
Lease acquisition costs	(3		)	(347		)
Prepaid expenses and other assets	283			800
Accounts payable, accrued expenses and other items	(7,706		)	(7,257		)
Accrued compensation	(2,517		)	(1,958		)
Tenant security deposits	(230		)	231
Payment of deferred leasing commissions	(1,116		)	(1,113		)
Net cash provided by operating activities	15,062			16,437
Cash flows from investing activities:
Property improvements, fixtures and equipment	(4,298		)	(4,850		)
Distributions in excess of earnings from non-consolidated REITs	27			27
Investment in related party mortgage loan receivable	—			(2,170		)
Proceeds received on sales of real estate assets	47,671			—
Changes in deposits on real estate assets	(4,000		)	—
Net cash provided by (used in) investing activities	39,400			(6,993		)
Cash flows from financing activities:
Distributions to stockholders	(19,036		)	(19,036		)
Borrowings under bank note payable	20,000			10,000
Repayments of bank note payable	(48,000		)	—
Net cash used in financing activities	(47,036		)	(9,036		)
Net increase in cash and cash equivalents	7,426			408
Cash and cash equivalents, beginning of year	7,519			19,623
Cash and cash equivalents, end of period	$	14,945		$	20,031
Non-cash investing and financing activities:
Accrued costs for purchase of real estate assets	$	2,998		$	1,080

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Franklin Street Properties Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.     Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards

Organization

Franklin Street Properties Corp. (“FSP Corp.” or the “Company”), holds, directly and indirectly, 100% of the interest in FSP Investments LLC, FSP Property Management LLC, FSP Holdings LLC and FSP Protective TRS Corp.  FSP Property Management LLC provides asset management and property management services.  The Company also has a non-controlling common stock interest in nine corporations organized to operate as real estate investment trusts (“REIT”) and a non-controlling preferred stock interest in two of those REITs.  Collectively, the nine REITs are referred to as the “Sponsored REITs”.

As of March 31, 2015, the Company owned and operated a portfolio of real estate consisting of 36 properties, managed nine Sponsored REITs and held five promissory notes secured by mortgages on real estate owned by Sponsored REITs, including one mortgage loan, one construction loan and three revolving lines of credit.  From time-to-time, the Company may acquire real estate, make additional secured loans or acquire a Sponsored REIT.  The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons.

Properties

The following table summarizes the Company’s number of properties and rentable square feet of real estate:

	As of March 31,
	2015	2014
Commercial real estate:
Number of properties	36	39
Rentable square feet	9,310,131	9,686,055

Basis of Presentation

The unaudited condensed consolidated financial statements of the Company include all the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission.

The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission.  Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included.  Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ended December 31, 2015 or for any other period.

Financial Instruments

The Company estimates that the carrying values of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued expenses, accrued compensation, tenant security deposits approximate their fair values based on their short-term maturity and the bank note and term loans payable approximate their fair values as they bear interest at variable interest rates.

Recent Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. This update is effective for interim and annual reporting periods beginning after December 15, 2016.  The Company is currently in the process of evaluating the impact the adoption of this ASU will have on the condensed consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  This update requires an entity to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances.  This update is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter with early adoption permitted.  The implementation of this update is not expected to cause any significant changes to the condensed consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This update is effective for interim and annual reporting periods beginning after December 15, 2015 and requires retrospective application. The implementation of this update is not expected to cause any material changes to the condensed consolidated financial statements other than the reclassification of debt issuance costs from assets to contra liabilities on the condensed consolidated balance sheets. As of March 31, 2015 and December 31, 2014, $7.1 million and $7.6 million, respectively, would be reclassified from assets to contra liabilities on the condensed consolidated balance sheets.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. A reporting entity may apply the amendments in ASU 2015-02 using: (a) a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption; or (b) by applying the amendments retrospectively. We are currently assessing the potential impact that the adoption of ASU 2015-02 will have on the condensed consolidated financial statements.

7

Franklin Street Properties Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

2.     Related Party Transactions and Investments in Non-Consolidated Entities

Investment in Sponsored REITs:

At March 31, 2015 and December 31, 2014, the Company held a common stock interest in 9 and 10 Sponsored REITs, respectively.  The Company holds a non-controlling preferred stock investment in two of these Sponsored REITs, FSP 303 East Wacker Drive Corp. (“East Wacker”) and FSP Grand Boulevard Corp. (“Grand Boulevard”), from which it continues to derive economic benefits and risks.

During the year ended December 31, 2014, properties owned by four Sponsored REITs were sold and, thereafter, liquidating distributions for their preferred shareholders were declared and issued.  The Company held a mortgage loan with two of these entities secured by the property owned by FSP Galleria North Corp. (“Galleria”) and the property owned by FSP Highland Place I Corp. (“Highland”).  The loan with Galleria in the principal amount of $13,880,000 was repaid from the proceeds of the sale and the loan with Highland in the principal amount of $3,395,000 was repaid from the proceeds of the sale.

During the three months ended March 31, 2015, a property owned by a Sponsored REIT was sold and, thereafter, liquidating distributions for their preferred shareholders were declared and issued.

Equity in losses of investment in non-consolidated REITs:

The following table includes equity in losses of investments in non-consolidated REITs

	Three Months Ended
	March 31,
(in thousands)	2015		2014
Equity in loss of East Wacker	$	285	$	431
Equity in loss of Grand Boulevard	37		53
	$	322	$	484

Equity in losses of investments in non-consolidated REITs is derived from the Company’s share of income or loss in the operations of those entities.  The Company exercises influence over, but does not control these entities, and investments are accounted for using the equity method.

Equity in losses of East Wacker is derived from the Company’s preferred stock investment in the entity.  In December 2007, the Company purchased 965.75 preferred shares or 43.7% of the outstanding preferred shares of East Wacker for $82,813,000 (which represented $96,575,000 at the offering price net of commissions of $7,726,000, loan fees of $5,553,000 and acquisition fees of $483,000 that were excluded).

Equity in losses of Grand Boulevard is derived from the Company’s preferred stock investment in the entity.  In May 2009, the Company purchased 175.5 preferred shares or 27.0% of the outstanding preferred shares of Grand Boulevard for $15,049,000 (which represented $17,550,000 at the offering price net of commissions of $1,404,000, loan fees of $1,009,000 and acquisition fees of $88,000 that were excluded).

The Company recorded distributions of $27,000 from non-consolidated REITs during the three months ended March 31, 2015 and 2014.

8

Franklin Street Properties Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

2.             Related Party Transactions and Investments in Non-consolidated Entities (continued)

Management fees and interest income from loans:

Asset management fees range from 1% to 5% of collected rents and the applicable contracts are cancelable with 30 days notice.  Asset management fee income from non-consolidated entities amounted to approximately $211,000 and $234,000 for the three months ended March 31, 2015 and 2014, respectively.

From time to time the Company may make secured loans (“Sponsored REIT Loans”) to Sponsored REITs in the form of mortgage loans or revolving lines of credit to fund construction costs, capital expenditures, leasing costs and for other purposes.  The Company anticipates that each Sponsored REIT Loan will be repaid at maturity or earlier from long term financings of the underlying properties, cash flows from the underlying properties or some other capital event.  Each Sponsored REIT Loan is secured by a mortgage on the underlying property and has a term of approximately one to three years, which may be extended from time to time by one year or longer.  Except for the mortgage loan which bears interest at a fixed rate, advances under each Sponsored REIT Loan bear interest at a rate equal to the 30-day LIBOR rate plus an agreed upon amount of basis points and most advances also require a 50 basis point draw fee.

9

Franklin Street Properties Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

2.             Related Party Transactions and Investments in Non-consolidated Entities (continued)

The following is a summary of the Sponsored REIT Loans outstanding as of March 31, 2015:

(dollars in thousands)

			Maximum		Amount						Interest
		Maturity	Amount		Drawn at		Interest		Draw		Rate at
Sponsored REIT	Location	Date	of Loan		31-Mar-15		Rate (1)		Fee (2)		31-Mar-15
Secured revolving lines of credit
FSP Satellite Place Corp.	Duluth, GA	31-Mar-17	$	5,500	$	5,500	L+4.4	%	0.5	%	4.57	%
FSP 1441 Main Street Corp.	Columbia, SC	31-Mar-16	10,800		9,000		L+4.4	%	0.5	%	4.57	%
FSP Energy Tower I Corp.	Houston, TX	3-Jul-15	20,000		8,600		L+5.0	%	0.5	%	5.17	%
Secured construction loan
FSP 385 Interlocken Development Corp.	Broomfield, CO	30-Apr-16	42,000		37,541		L+4.4	%	n/a		4.57	%
Mortgage loan secured by property
FSP Energy Tower I Corp.	Houston, TX	3-Jul-15	33,000		33,000		6.41	%	n/a		6.41	%
			$	111,300	$	93,641

(1) The interest rate is 30-day LIBOR rate plus the additional rate indicated, otherwise a fixed rate.

(2) The draw fee is a percentage of each new advance, and is paid at the time of each new draw.

The Company recognized interest income and fees from the Sponsored REIT Loans of approximately $1,262,000 and $1,409,000 for the three months ended March 31, 2015 and 2014, respectively.

Non-consolidated REITs:

The balance sheet data below for 2015 and 2014 includes the 9 and 10 Sponsored REITs the Company held an interest in as of March 31, 2015 and December 31, 2014, respectively.  The operating data below for 2015 and 2014 include the operations of the 10 and 14 Sponsored REITs in which the Company held an interest in during the three months ended March 31, 2015 and 2014, respectively.

Summarized financial information for these Sponsored REITs is as follows:

	March 31,			December 31,
(in thousands)	2015			2014
Balance Sheet Data (unaudited):
Real estate, net	$	421,849		$	451,822
Other assets	105,791			127,259
Total liabilities	(200,754		)	(203,239		)
Shareholders’ equity	$	326,886		$	375,842

	For the Three Months Ended
	March 31,
(in thousands)	2015			2014
Operating Data (unaudited):
Rental revenues	$	13,900		$	23,305
Other revenues	2			14
Operating and maintenance expenses	(8,235		)	(11,746		)
Depreciation and amortization	(4,975		)	(7,677		)
Interest expense	(2,457		)	(3,431		)
Net income	$	(1,765	)	$	465

3.     Bank Note Payable and Term Note Payable

BMO Term Loan

On October 29, 2014, the Company entered into an Amended and Restated Credit Agreement (the “BMO Credit Agreement”) with the lending institutions referenced in the BMO Credit Agreement and Bank of Montreal, as administrative agent, that continued a single, unsecured term loan borrowing in the amount of $220,000,000 (the “BMO Term Loan”).  On August 26, 2013, the Company drew down the entire $220,000,000 under the BMO Term Loan, which remains fully advanced and outstanding under the BMO Credit Agreement. The BMO Term Loan matures on August 26, 2020. The BMO Credit Agreement also includes an accordion feature that allows up to $50,000,000 of additional loans, subject to receipt of lender commitments and satisfaction of certain customary conditions.

The BMO Term Loan bears interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating (165 basis points over LIBOR at March 31, 2015) or (ii) a number of basis points over the base rate depending on the Company’s credit rating (65 basis points over the base rate at March 31, 2015).

Although the interest rate on the BMO Term Loan is variable, the Company is permitted to hedge the base LIBOR interest rate by entering into an interest rate swap agreement. On August 26, 2013, the Company entered into an ISDA Master Agreement with Bank of Montreal that fixed the base LIBOR interest rate on the BMO Term Loan at 2.32% per annum for seven years, until the August 26, 2020 maturity date.  Accordingly, based upon the Company’s credit rating, as of March 31, 2015, the effective interest rate on the BMO Term Loan was 3.97% per annum.

10

Franklin Street Properties Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

3.     Bank Note Payable and Term Note Payable (continued)

The BMO Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type.  The BMO Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, minimum unsecured interest coverage and a maximum ratio of certain investments to total assets. The Company was in compliance with the BMO Term Loan financial covenants as of March 31, 2015.

The Company may use the proceeds of the loans under the BMO Credit Agreement to finance the acquisition of real properties and for other permitted investments; to finance investments associated with Sponsored REITs, to refinance or retire indebtedness and for working capital and other general business purposes, in each case to the extent permitted under the BMO Credit Agreement.

BAML Credit Facility

On October 29, 2014, the Company entered into a Second Amended and Restated Credit Agreement (the “BAML Credit Agreement”) with the lending institutions referenced in the BAML Credit Agreement and those lenders from time to time party thereto and Bank of America, N.A., as administrative agent, L/C Issuer and Swing Line Lender (the “BAML Credit Facility”) that continued an existing unsecured credit facility comprised of both a revolving line of credit (the “BAML Revolver) and a term loan (the “BAML Term Loan”).

BAML Revolver Highlights

·The BAML Revolver is for borrowings, at the Company’s election, of up to $500,000,000.  Borrowings made pursuant to the BAML Revolver may be revolving loans, swing line loans or letters of credit, the combined sum of which may not exceed $500,000,000 outstanding at any time.

·Borrowings made pursuant to the BAML Revolver may be borrowed, repaid and reborrowed from time to time until the initial maturity date of October 29, 2018. The Company has the right to extend the initial maturity date of the BAML Revolver by an additional 12 months, or until October 29, 2019, upon payment of a fee and satisfaction of certain customary conditions.

·The BAML Revolver includes an accordion feature that allows for up to $250,000,000 of additional borrowing capacity subject to receipt of lender commitments and satisfaction of certain customary conditions.

As of March 31, 2015, there were borrowings of $240,000,000 outstanding under the BAML Revolver.  The BAML Revolver bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.25% over LIBOR at March 31, 2015) or (ii) a margin over the base rate depending on the Company’s credit rating (0.25% over the base rate at March 31, 2015). The BAML Credit Facility also obligates the Company to pay an annual facility fee in an amount that is also based on the Company’s credit rating. The facility fee is assessed against the total amount of the BAML Revolver, or $500,000,000 (0.25% at March 31, 2015).

Based upon the Company’s credit rating, as of March 31, 2015, the weighted average interest rate on the BAML Revolver was 1.42% per annum and there were borrowings of $240,000,000 outstanding.  As of December 31, 2014, the weighted average interest rate on the BAML Revolver was 1.41% per annum and there were borrowings of $268,000,000 outstanding. The weighted average interest rate on all amounts outstanding on the BAML Revolver during the three months ended March 31, 2015 was approximately 1.42% per annum.  The weighted average interest rate on all amounts outstanding on the BAML Revolver during the year ended December 31, 2014 was approximately 1.60% per annum.

BAML Term Loan Highlights

·The BAML Term Loan is for $400,000,000.

·The BAML Term Loan matures on September 27, 2017.

·On September 27, 2012, the Company drew down the entire $400,000,000 and such amount remains fully advanced and outstanding under the BAML Credit Agreement.

The BAML Term Loan bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.45% over LIBOR at March 31, 2015) or (ii) a margin over the base rate depending on the Company’s credit rating (0.45% over the base rate at March 31, 2015). The actual margin over LIBOR rate or base rate is determined based on the Company’s credit rating.

11

Franklin Street Properties Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

3.     Bank Note Payable and Term Note Payable (continued)

Although the interest rate on the BAML Credit Facility is variable, the Company fixed the base LIBOR interest rate on the BAML Term Loan by entering into an interest rate swap agreement.  On September 27, 2012, the Company entered into an ISDA Master Agreement with Bank of America, N.A. that fixed the base LIBOR interest rate on the BAML Term Loan at 0.75% per annum for five years, until the September 27, 2017 maturity date.  Accordingly, based upon the Company’s credit rating, as of March 31, 2015, the effective interest rate on the BAML Term Loan was 2.20% per annum.

BAML Credit Facility General Information

The BAML Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type.  The BAML Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, minimum unsecured interest coverage and a maximum ratio of certain investments to total assets. The Company was in compliance with the BAML Credit Facility financial covenants as of March 31, 2015.

The Company may use the proceeds of the loans under the BAML Credit Agreement to finance the acquisition of real properties and for other permitted investments; to finance investments associated with Sponsored REITs, to refinance or retire indebtedness and for working capital and other general business purposes, in each case to the extent permitted under the BAML Credit Agreement.

4.     Financial Instruments: Derivatives and Hedging

On August 26, 2013, the Company fixed the interest rate for seven years on the BMO Credit Agreement with an interest rate swap agreement (the “BMO Interest Rate Swap”) and on September 27, 2012, the Company fixed the interest rate for five years on the BAML Term Loan with an interest rate swap agreement (the “BAML Interest Rate Swap”). The variable rates that were fixed under the BMO Interest Rate Swap and the BAML Interest Rate Swap are described in Note 3.

The BMO Interest Rate Swap and the BAML Interest Rate Swap qualify as cash flow hedges and have been recognized on the consolidated balance sheet at fair value.  If a derivative qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings.  The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings, which may increase or decrease reported net income and stockholders’ equity prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows.

The following table summarizes the notional and fair value of our derivative financial instruments at March 31, 2015.  The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks.

	Notional		Strike		Effective	Expiration	Fair
(in thousands)	Value		Rate		Date	Date	Value
BMO Interest Rate Swap	$	220,000	2.32	%	Aug-13	Aug-20	$	(9,836	)
BAML Interest Rate Swap	$	400,000	0.75	%	Sep-12	Sep-17	$	774

On March 31, 2015, the BMO Interest Rate Swap was reported as a liability at its fair value of approximately $9.8 million and the BAML Interest Rate Swap was reported as an asset at its fair value of approximately $0.8 million.  These are included in other liabilities: derivative liability and other assets: derivative asset on the condensed consolidated balance sheet at March 31, 2015 and December 31, 2014, respectively.  Offsetting adjustments are reported as unrealized gains or losses on derivative financial instruments in accumulated other comprehensive income of $4.8 million.  During the three months ended March 31, 2015, $1.8 million was reclassified out of other comprehensive income and into interest expense.

12

Franklin Street Properties Corp.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

4.     Financial Instruments: Derivatives and Hedging (continued)

Over time, the unrealized gains and losses held in accumulated other comprehensive income will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest payments affect earnings.  We estimate that approximately $1.5 million of the current balance held in accumulated other comprehensive income will be reclassified into earnings within the next 12 months.

We are hedging the exposure to variability in anticipated future interest payments on existing debt.

The fair value of the Company’s derivative instruments are determined using the net discounted cash flows of the expected cash flows of the derivative based on the market based interest rate curve and are adjusted to reflect credit or nonperformance risk.  The risk is estimated by the Company using credit spreads and risk premiums that are observable in the market. These financial instruments were classified within Level 2 of the fair value hierarchy and were classified as an asset or liability on the condensed consolidated balance sheets.

5.     Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of Company shares outstanding during the period.  Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares.  There were no potential dilutive shares outstanding at March 31, 2015 and 2014, respectively.

6.     Stockholders’ Equity

As of March 31, 2015, the Company had 100,187,405 shares of common stock outstanding.

Equity Offerings

On May 6, 2010, the Company entered into an on demand offering sales agreement whereby the Company may offer and sell up to an aggregate gross sales price of $75 million of its common stock from time to time (the “ATM Sales Program”).  The on demand offering sales agreement for the ATM Sales Program was amended on April 27, 2012 in connection with the Company’s filing of a new Registration Statement on Form S-3.  Sales of shares of the Company’s common stock depend upon market conditions and other factors determined by the Company and may be deemed to be “at the market offerings” as defined in Rule 415 of the Securities Act of 1933, as amended, including sales made directly on the NYSE MKT or sales made to or through a market maker other than on an exchange, as well as in negotiated transactions, if and to the extent agreed by the Company in writing.  The Company has no obligation to sell any shares of its common stock, and may at any time suspend solicitation and offers. During the three months ended March 31, 2015, the Company did not sell any shares under the ATM Sales Program.  As of March 31, 2015, the Company was authorized to offer and sell a remainder of approximately $34.3 million of its shares of common stock under the ATM Sales Program.

The Company declared and paid dividends as follows (in thousands, except per share amounts):

Quarter Paid	Dividends Per Share		Total Dividends
First quarter of 2015	$	0.19	$	19,036
First quarter of 2014	$	0.19	$	19,036

13

Franklin Street Properties Corp.

Notes to the Consolidated Financial Statements

(Unaudited)

7.Income Taxes

General

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).  As a REIT, the Company generally is entitled to a tax deduction for distributions paid to its shareholders, thereby effectively subjecting the distributed net income of the Company to taxation at the shareholder level only.  The Company must comply with a variety of restrictions to maintain its status as a REIT.  These restrictions include the type of income it can earn, the type of assets it can hold, the number of shareholders it can have and the concentration of their ownership, and the amount of the Company’s taxable income that must be distributed annually.

One such restriction is that the Company generally cannot own more than 10% of the voting power or value of the securities of any one issuer unless the issuer is itself a REIT or a taxable REIT subsidiary (“TRS”).  In the case of TRSs, the Company’s ownership of securities in all TRSs generally cannot exceed 25% of the value of all of the Company’s assets and, when considered together with other non-real estate assets, cannot exceed 25% of the value of all of the Company’s assets.  FSP Investments and FSP Protective TRS Corp. are the Company’s taxable REIT subsidiaries operating as taxable corporations under the Code.

Income taxes are recorded based on the future tax effects of the difference between the tax and financial reporting bases of the Company’s assets and liabilities.  In estimating future tax consequences, potential future events are considered except for potential changes in income tax law or in rates.

The Company adopted an accounting pronouncement related to uncertainty in income taxes effective January 1, 2007, which did not result in recording a liability, nor was any accrued interest and penalties recognized with the adoption.  Accrued interest and penalties will be recorded as income tax expense, if the Company records a liability in the future.  The Company’s effective tax rate was not affected by the adoption.  The Company and one or more of its subsidiaries files income tax returns in the U.S federal jurisdiction and various state jurisdictions.  The statute of limitations for the Company’s income tax returns is generally three years and as such, the Company’s returns that remain subject to examination would be primarily from 2011 and thereafter.

The Company is subject to business tax (the “Revised Texas Franchise Tax”).  The Revised Texas Franchise Tax is a tax at a rate of approximately 0.7% of revenues at Texas properties commencing with 2007 revenues.  Some of the Company’s leases allow reimbursement by tenants for these amounts because the Revised Texas Franchise Tax replaces a portion of the property tax for school districts.  Because the tax base on the Revised Texas Franchise Tax is derived from an income based measure it is considered an income tax.  The Company recorded a provision for income taxes on its income statement of $159,000 and $127,000 for the three months ended March 31, 2015 and 2014, respectively.

Net operating losses

Section 382 of the Code restricts a corporation’s ability to use net operating losses (“NOLs”) to offset future taxable income following certain “ownership changes.” Such ownership changes occurred with past mergers and accordingly a portion of the NOLs incurred by the Sponsored REITs available for use by the Company in any particular future taxable year will be limited. To the extent that the Company does not utilize the full amount of the annual NOLs limit, the unused amount may be carried forward to offset taxable income in future years. NOLs expire 20 years after the year in which they arise, and the last of the Company’s NOLs will expire in 2027. A valuation allowance is provided for the full amount of the NOLs as the realization of any tax benefits from such NOLs is not assured.  The gross amount of NOLs available to the Company was $13,041,000, as of March 31, 2015 and December 31, 2014.

Income Tax Expense

The income tax expense reflected in the consolidated statements of income relates primarily to a franchise tax on our Texas properties.  FSP Protective TRS Corp. provides taxable services to tenants at some of the Company’s properties and the tax expenses associated with these activities are reported as Other Taxes in the table below:

14

Franklin Street Properties Corp.

Notes to the Consolidated Financial Statements

(Unaudited)

7.Income Taxes (continued)

	For the
	Three Months Ended
	March 31,
(in thousands)	2015		2014
Revised Texas franchise tax	$	159	$	127
Other Taxes	2		10
Income tax expense	$	161	$	137

Taxes on income are a current tax expense.  No deferred income taxes were provided as there were no material temporary differences between the financial reporting basis and the tax basis of the TRSs.

8.Dispositions of properties

The Company sold an office property located in Plano, Texas on February 23, 2015 at a $1.5 million gain and an office property located in Eden Prairie, Minnesota on March 31, 2015 at a $9.0 million gain.  The disposal of the properties does not represent a strategic shift that has a major effect on the Company’s operations and financial results.  Accordingly, the properties remain classified within continuing operations for all periods presented.

9.Subsequent Events

On April 8, 2015, the Company acquired an office property with approximately 442,130 rentable square feet of space for $78.0 million located in the Central Perimeter Submarket of Atlanta, Georgia.

On April 10 2015, the Board of Directors of the Company declared a cash distribution of $0.19 per share of common stock payable on May 14, 2015 to stockholders of record on April 24, 2015.

15

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2014.  Historical results and percentage relationships set forth in the condensed consolidated financial statements, including trends which might appear, should not be taken as necessarily indicative of future operations.  The following discussion and other parts of this Quarterly Report on Form 10-Q 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, economic conditions in the United States, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, uncertainties relating to fiscal policy, changes in government regulations and regulatory uncertainty, geopolitical events, 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 Part II, Item 1A. “Risk Factors” below.  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 may not update any of the forward-looking statements after the date this Quarterly Report on Form 10-Q is filed to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

Overview

FSP Corp., or we, or the Company, operates in the real estate operations segment. The real estate operations segment involves real estate rental operations, leasing, secured financing of real estate and services provided for asset management, property management, property acquisitions, dispositions and development.  Our current strategy is to invest in select urban infill and central business district properties, with primary emphasis on our top five markets of Atlanta, Dallas, Denver, Houston and Minneapolis.  We believe that our top five markets have macro-economic drivers that have the potential to increase occupancies and rents.  We will also monitor San Diego, Silicon Valley, Greater Boston, Raleigh-Durham, and Greater Washington, DC, as well as other markets, for opportunistic investments.  FSP Corp. seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income.

The main factor that affects our real estate operations is the broad economic market conditions in the United States.  These market conditions affect the occupancy levels and the rent levels on both a national and local level.  We have no influence on broader economic/market conditions.  We look to acquire and/or develop quality properties in good locations in order to lessen the impact of downturns in the market and to take advantage of upturns when they occur.

Critical Accounting Policies

We have certain critical accounting policies that are subject to judgments and estimates by our management and uncertainties of outcome that affect the application of these policies.  We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances.  On an on-going basis, we evaluate our estimates.  In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information.  The accounting policies that we believe are most critical to the understanding of our financial position and results of operations, and that require significant management estimates and judgments, are discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2014.

Critical accounting policies are those that have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates.  We believe that our judgments and assessments are consistently applied and produce financial information that fairly presents our results of operations.  No changes to our critical accounting policies have occurred since the filing of our Annual Report on Form 10-K for the year ended December 31, 2014.

Recent Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. This update is effective for interim and annual reporting periods beginning after December 15, 2016.  The Company is currently in the process of evaluating the impact the adoption of this ASU will have on the condensed consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  This update requires an entity to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances.  This update is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter with early adoption permitted.  The implementation of this update is not expected to cause any significant changes to the condensed consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This update is effective for interim and annual reporting periods beginning after December 15, 2015 and requires retrospective application. The implementation of this update is not expected to cause any material changes to the condensed consolidated financial statements other than the reclassification of debt issuance costs from assets to contra liabilities on the condensed consolidated balance sheets. As of March 31, 2015 and December 31, 2014, $7.1 million and $7.6 million, respectively, would be reclassified from assets to contra liabilities on the condensed consolidated balance sheets.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. A reporting entity may apply the amendments in ASU 2015-02 using: (a) a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption; or (b) by applying the amendments retrospectively. We are currently assessing the potential impact that the adoption of ASU 2015-02 will have on the condensed consolidated financial statements.

16

Trends and Uncertainties

Economic Conditions

The economy in the United States is continuing to experience a period of slow economic growth, with slowly declining unemployment from recent high levels, which directly affects the demand for office space, our primary income producing asset.  The broad economic market conditions in the United States are affected by numerous factors, including but not limited to, inflation and employment levels, energy prices, slow economic growth and/or recessionary concerns, uncertainty about government fiscal and tax policy, changes in currency exchange rates, geopolitical events, the regulatory environment, the availability of credit and interest rates.  In addition, the Federal Reserve Bank’s current reduction in its quantitative easing program (or QE), has been generally received as a harbinger of real improvement, which could bode well for our real estate operations.  We could benefit from any further improved economic fundamentals and increasing levels of employment.  We believe that the economy is in the early stages of a cyclically-slower but prolonged broad-based upswing.  However, future economic factors may negatively affect real estate values, occupancy levels and property income.

Real Estate Operations

Leasing

Our real estate portfolio was approximately 90.4% leased as of March 31, 2015, a decrease from 92.8% as of December 31, 2014.  The 2.4% decrease in leased space was a result of lease expirations and terminations during 2015 that were not leased at March 31, 2015.  As of March 31, 2015 we had 897,000 square feet of vacancy in our portfolio compared to 689,000 square feet of vacancy at December 31, 2014.  During the three months ended March 31, 2015, we leased approximately 208,000 square feet of office space, of which approximately 135,000 square feet were with existing tenants, at a weighted average term of 4.0 years.  On average, tenant improvements for such leases were $10.71 per square foot, lease commissions were $4.31 per square foot and rent concessions were approximately two months of free rent.  Average GAAP base rents under such leases were $24.59 per square foot, or 10.5% higher than average rents in the respective properties as applicable compared to the year ended December 31, 2014.

As of March 31, 2015, leases for approximately 3.8% and 10.8% of the square footage in our portfolio are scheduled to expire during 2015 and 2016, respectively.  As the second quarter of 2015 begins, we believe that our property portfolio is well stabilized, with a balanced lease expiration schedule.

While we cannot generally predict when existing vacancy in our real estate portfolio will be leased or if existing tenants with expiring leases will renew their leases or what the terms and conditions of the lease renewals will be, we expect to renew or sign new leases at then-current market rates for locations in which the buildings are located, which could be above or below the expiring rates.  Also, even as the economy recovers, we believe the potential for any of our tenants to default on its lease or to seek the protection of bankruptcy still exists.  If any of our tenants defaults on its lease, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment.  In addition, at any time, a tenant of one of our properties may seek the protection of bankruptcy laws, which could result in the rejection and termination of such tenant’s lease and thereby cause a reduction in cash available for distribution to our stockholders.

Real Estate Acquisition and Investment Activity

During 2015:

·on April 8, we acquired an office property with approximately 442,130 rentable square feet of space for $78.0 million located in the Central Perimeter Submarket of Atlanta, Georgia.

Additional potential real estate investment opportunities are actively being explored and we would anticipate further real estate investments in the future.

During 2014:

·we funded advances on Sponsored REIT Loans for revolving lines of credit in the aggregate amount of approximately $11.2 million;

·on June 19, we received approximately $13.9 million from FSP Galleria North Corp. as repayment in full of a Sponsored REIT Loan; and

·on December 23, we received approximately $3.4 million from FSP Highland Place I Corp. as repayment in full of a Sponsored REIT Loan.

17

Dispositions of Properties

During 2015, we sold an office property located in Plano, Texas on February 23, 2015 at a $1.5 million gain and sold an office property located in Eden Prairie, Minnesota on March 31, 2015 at a $9.0 million gain.  During 2014, we sold an office property located in Colorado Springs, Colorado on December 3, 2014 at a $0.9 million gain. The disposal of these properties does not represent a strategic shift that has a major effect on the Company’s operations and financial results.  Accordingly, the properties sold remain classified within continuing operations for all periods presented.

We will continue to evaluate our portfolio, and in the future may decide to dispose of additional properties from time-to-time in the ordinary course of business.  We believe that the current property sales environment is improving in many markets relative to both liquidity and pricing.  We believe that both improving office property fundamentals as well as attractive financing availability will likely be required to continue improvement in the marketplace for potential property dispositions.  As an important part of our total return strategy, we intend to be active in property dispositions when we believe that market conditions warrant such activity and, as a consequence, we continuously review and evaluate our portfolio of properties for potentially advantageous dispositions.

Results of Operations

The following table shows results for the three months ended March 31, 2015 and 2014:

	Three months ended March 31,
(in thousands)	2015			2014			Change
Revenue:
Rental	$	59,013		$	61,597		$	(2,584	)
Related party revenue:
Management fees and interest income from loans	1,473			1,643			(170		)
Other	21			23			(2		)
Total revenue	60,507			63,263			(2,756		)
Expenses:
Real estate operating expenses	15,356			15,071			285
Real estate taxes and insurance	10,048			9,251			797
Depreciation and amortization	22,672			24,300			(1,628		)
Selling, general and administrative	3,691			3,272			419
Interest	6,187			7,176			(989		)
Total expenses	57,954			59,070			(1,116		)
Income before interest income, equity in losses of non-consolidated REITs and taxes	2,553			4,193			(1,640		)
Interest income	1			1			—
Equity in losses of non-consolidated REITs	(322		)	(484		)	162
Gain on sale of properties, less applicable income tax	10,462			—			10,462
Income before taxes on income	12,694			3,710			8,984
Taxes on income	161			137			24
Net income	$	12,533		$	3,573		$	8,960

18

Comparison of the three months ended March 31, 2015 to the three months ended March 31, 2014:

Revenues

Total revenues decreased by $2.8 million to $60.5 million for the quarter ended March 31, 2015, as compared to the quarter ended March 31, 2014.  The decrease was primarily a result of:

·A decrease in rental revenue of approximately $2.6 million arising primarily from loss of revenue from the disposition of a property on December 3, 2014 and the disposition of another property on February 23, 2015.  In addition, our leased space decreased approximately 4.1% to 90.4% in the real estate portfolio at March 31, 2015 compared to March 31, 2014.

·A decrease in interest income from loans to Sponsored REITs of approximately $0.2 million as a result of repayments of Sponsored REIT Loans in the last twelve months.

Expenses

Total expenses decreased by $1.1 million to $58.0 million for the quarter ended March 31, 2015, as compared to the quarter ended March 31, 2014.  The decrease was primarily a result of:

·A decrease in depreciation and amortization of $1.6 million as a result of the disposition of a property on December 3, 2014 and the disposition of another property on February 23, 2015.

·A decrease to interest expense of approximately $1.0 million to $6.2 million for the three months ended March 31, 2015 compared to the same period in 2014.  The decrease was attributable to a lower amount of debt outstanding and lower interest rates during the three months ended March 31, 2015 compared to the same period in 2014.

These decreases were partially offset by:

·An increase in real estate operating expenses and real estate taxes and insurance of approximately $1.1 million, which was primarily from increases to real estate taxes.

·An increase in selling, general and administrative expenses of approximately $0.4 million, which was primarily the result of increased personnel related expenses and professional fees.  We had 38 and 38 employees as of March 31, 2015 and 2014, respectively, at our headquarters in Wakefield, Massachusetts.

Equity in losses of non-consolidated REITs

Equity in losses from non-consolidated REITs decreased approximately $0.2 million to a loss of $0.3 million during the three months ended March 31, 2015 compared to the same period in 2014.  The decrease was primarily because equity in loss from our preferred stock investment in a Sponsored REIT, FSP 303 East Wacker Drive Corp., which we refer to as East Wacker, decreased during the three months ended March 31, 2015 compared to the same period in 2014.

Gain on sale of properties, less applicable income tax

During the three months ended March 31, 2015, we recorded gains on sale of two properties.  We sold an office property located in Plano, Texas on February 23, 2015 at a $1.5 million gain and an office property located in Eden Prairie, Minnesota on March 31, 2015 at a $9.0 million gain.  During the three months ended March 31, 2014, we did not sell any properties.

Taxes on income

Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties that increased $32,000 and federal income taxes that decreased $8,000 for the three months ended March 31, 2015, compared to the three months ended March 31, 2014.

Net Income

Net Income for the three months ended March 31, 2015 was $12.5 million compared to $3.6 million for the three months ended March 31, 2014, for the reasons described above.

19

Non-GAAP Financial Measures

Funds From Operations

The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders.  The Company defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.

FFO should not be considered as an alternative to net income (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.

Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT may define this term in a different manner.  We have included the NAREIT FFO definition in our table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.

We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

The calculations of FFO are shown in the following table:

	For the
	Three Months Ended
	March 31,
(in thousands):	2015			2014
Net income (loss)	$	12,533		$	3,573
Gain on sale or properties, less applicable income tax	(10,462		)	—
Equity in losses of non-consolidated REITs	322			484
FFO from non-consolidated REITs	601			419
Depreciation and amortization	22,678			24,289
NAREIT FFO	25,672			28,765
Acquisition costs of new properties	—			14
Funds From Operations	$	25,672		$	28,779

Net Operating Income (NOI)

The Company provides property performance based on Net Operating Income, which we refer to as NOI.  Management believes that investors are interested in this information.  NOI is a non-GAAP financial measure that the Company defines as net income (the most directly comparable GAAP financial measure) plus selling, general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equity in earnings of nonconsolidated REITs, interest income, management fee income, gains or losses on the sale of assets and excludes non-property specific income and expenses. The information presented includes footnotes and the data is shown by region with properties owned in both periods, which we call Same Store.  The Comparative Same Store results include properties held for the periods presented and exclude significant nonrecurring income such as bankruptcy settlements and lease termination fees.  NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income as an indication of our performance or to cash flows as a measure of the Company’s liquidity or its ability to make distributions.  The calculations of NOI are shown in the following table:

20

Net Operating Income (NOI)*

	Rentable
	Square Feet	Three Months Ended				Inc			%
(in thousands)	or RSF	31-Mar-15		31-Mar-14		(Dec)			Change
Region
East	1,442	$	4,832	$	4,726	$	106		2.2	%
MidWest	1,529	3,469		4,586		(1,117		)	-24.4	%
South	4,030	15,781		16,796		(1,015		)	-6.0	%
West	2,309	8,216		9,388		(1,172		)	-12.5	%
Same Store	9,310	32,298		35,496		(3,198		)	-9.0	%
Acquisitions	—	—		—		—			0.0	%
Property NOI from the continuing portfolio	9,310	32,298		35,496		(3,198		)	-9.0	%
Dispositions and asset held for sale		726		1,077		(351		)	-0.7	%
Property NOI		$	33,024	$	36,573	$	(3,549	)	-9.7	%
Same Store		$	32,298	$	35,496	$	(3,198	)	-9.0	%
Nonrecurring
Items in NOI (a)		75		707		(632		)	1.6	%
Comparative
Same Store		$	32,223	$	34,789	$	(2,566	)	-7.4	%

	Three Months
	Ended
Reconciliation to Net income	31-Mar-15			31-Mar-14
Net Income	$	12,533		$	3,573
Add (deduct):
Gain on sale of properties, less applicable income tax	(10,462		)	—
Management fee income	(643		)	(646		)
Depreciation and amortization	22,672			24,300
Amortization of above/below market leases	6			(11		)
Selling, general and administrative	3,691			3,272
Interest expense	6,187			7,176
Interest income	(1,262		)	(1,410		)
Equity in earnings of nonconsolidated REITs	322			484
Non-property specific items, net	(20		)	(165		)
Property NOI from the continuing portfolio	$	33,024		$	36,573
Dispositions and asset held for sale	—			—
Property NOI	$	33,024		$	36,573

(a)Nonrecurring Items in NOI include proceeds from bankruptcies, lease termination fees or other significant nonrecurring income or expenses, which may affect comparability.

*Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.

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The information presented below provides the weighted average GAAP rent per square foot for the three months ending March 31, 2015 for our properties and weighted occupancy square feet and percentages.  GAAP rent includes the impact of tenant concessions and reimbursements.  This table does not include information about properties held by our investments in nonconsolidated REITs or those to which we have provided Sponsored REIT Loans.

						Weighted
						Occupied		Weighted
			Year Built		Weighted	Percentage as of		Average
			or	Net Rentable	Occupied	March 31,		Rent per Occupied
Property Name	City	State	Renovated	Square Feet	Sq. Ft.	2015 (a)		Square Feet (b)
Park Seneca	Charlotte	NC	1969	109,699	97,292	88.7	%	$	14.57
Forest Park	Charlotte	NC	1999	62,212	62,212	100.0	%	14.08
Meadow Point	Chantilly	VA	1999	138,537	128,299	92.6	%	28.43
Innsbrook	Glen Allen	VA	1999	298,456	298,187	99.9	%	18.77
East Baltimore	Baltimore	MD	1989	325,445	264,554	81.3	%	23.06
Loudoun Tech Center	Dulles	VA	1999	136,658	125,739	92.0	%	19.54
Stonecroft	Chantilly	VA	2008	111,469	111,469	100.0	%	38.33
Emperor Boulevard	Durham	NC	2009	259,531	259,531	100.0	%	35.86
East total				1,442,007	1,347,284	93.4	%	24.99
Northwest Point	Elk Grove Village	IL	1999	176,848	176,848	100.0	%	24.23
909 Davis Street	Evanston	IL	2002	195,245	191,164	97.9	%	36.17
River Crossing	Indianapolis	IN	1998	205,059	204,403	99.7	%	21.10
Timberlake	Chesterfield	MO	1999	232,766	101,882	43.8	%	23.24
Timberlake East	Chesterfield	MO	2000	116,197	12,573	10.8	%	24.88
Lakeside Crossing	Maryland Heights	MO	2008	127,778	127,778	100.0	%	25.47
121 South 8th Street	Minneapolis	MN	1974	475,012	429,031	90.3	%	15.03
Midwest total				1,528,905	1,243,678	81.3	%	22.43
Blue Lagoon Drive	Miami	FL	2002	212,619	212,619	100.0	%	23.44
One Overton Place	Atlanta	GA	2002	387,267	299,706	77.4	%	24.89
Park Ten	Houston	TX	1999	157,460	99,357	63.1	%	30.89
Addison Circle	Addison	TX	1999	294,053	249,827	85.0	%	24.04
Collins Crossing	Richardson	TX	1999	300,472	298,970	99.5	%	24.20
Eldridge Green	Houston	TX	1999	248,399	248,399	100.0	%	31.08
Park Ten Phase II	Houston	TX	2006	156,746	156,746	100.0	%	31.52

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The information presented below provides the weighted average GAAP rent per square foot for the three months ending March 31, 2015 for our properties and weighted occupancy square feet and percentages.  GAAP rent includes the impact of tenant concessions and reimbursements.  This table does not include information about properties held by our investments in nonconsolidated REITs or those to which we have provided Sponsored REIT Loans.

						Weighted
						Occupied		Weighted
			Year Built		Weighted	Percentage as of		Average
			or	Net Rentable	Occupied	March 31,		Rent per Occupied
Property Name	City	State	Renovated	Square Feet	Sq. Ft.	2015 (a)		Square Feet (b)
Liberty Plaza	Addison	TX	1985	218,934	197,041	90.0	%	20.88
Legacy Tennyson Center	Plano	TX	1999/2008	202,600	202,600	100.0	%	17.59
One Legacy Circle	Plano	TX	2008	214,110	214,110	100.0	%	33.46
One Ravinia Drive	Atlanta	GA	1985	386,603	368,046	95.2	%	22.88
Westchase I & II	Houston	TX	1983/2008	629,025	607,953	96.7	%	33.44
999 Peachtree	Atlanta	GA	1987	621,946	597,877	96.1	%	28.89
South Total				4,030,234	3,753,250	93.1	%	27.25
380 Interlocken	Broomfield	CO	2000	240,185	230,121	95.8	%	29.79
1999 Broadway	Denver	CO	1986	676,379	589,397	87.1	%	32.57
1001 17th Street	Denver	CO	1977/2006	655,420	531,480	81.1	%	35.84
Greenwood Plaza	Englewood	CO	2000	196,236	196,236	100.0	%	24.27
390 Interlocken	Broomfield	CO	2002	241,516	171,984	71.2	%	29.50
Hillview Center	Milpitas	CA	1984	36,288	36,288	100.0	%	16.08
Federal Way	Federal Way	WA	1982	117,010	66,801	57.1	%	18.76
Montague Business Center	San Jose	CA	1982	145,951	118,381	81.1	%	16.39
West Total				2,308,985	1,940,687	84.0	%	30.25
Grand Total				9,310,131	8,284,900	89.0	%	26.86

(a) Based on weighted occupied square feet for the three months ended March 31, 2015, including month-to-month tenants, divided by the Property’s net rentable square footage.

(b) Represents annualized GAAP rental revenue for the three months ended March 31, 2015 per weighted occupied square foot.

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Liquidity and Capital Resources

Cash and cash equivalents were $14.9 million and $7.5 million at March 31, 2015 and December 31, 2014, respectively. The increase of $7.4 million is attributable to $15.0 million provided by operating activities plus $39.4 million provided by investing activities, less $47.0 million used in financing activities.  Management believes that existing cash, cash anticipated to be generated internally by operations and our existing debt financing will be sufficient to meet working capital requirements and anticipated capital expenditures for at least the next 12 months.  Although there is no guarantee that we will be able to obtain the funds necessary for our future growth, we anticipate generating funds from continuing real estate operations.  We believe that we have adequate funds to cover unusual expenses and capital improvements, in addition to normal operating expenses.  Our ability to maintain or increase our level of dividends to stockholders, however, depends in significant part upon the level of rental income from our real properties.

Operating Activities

The cash provided by our operating activities of $15.0 million is primarily attributable to net income of $12.5 excluding the gain on sale of properties of $10.5 million, plus the add-back of $23.5 million of non-cash activities, a $0.3 million decrease in prepaid and other assets and a $0.7 million decrease in restricted cash.  These increases were partially offset by a $10.2 million decrease in accounts payable and accrued expenses, $1.1 million in payments of deferred leasing commissions and a $0.2 million decrease in tenant security deposits.

Investing Activities

Our cash provided by investing activities for the three months ended March 31, 2015 of $39.4 million is primarily attributable to additions to $47.5 million in proceeds from the sale of two properties and was partially offset by purchases of real estate assets and office equipment investments and office equipment of approximately $4.3 million and a deposit we paid on a real estate acquisition in process of $4.0 million.

Financing Activities

Our cash used by financing activities for the three months ended March 31, 2015 of $47.0 million is primarily attributable to distributions paid to stockholders of $19.0 million and net borrowings under the BAML Revolver (as defined below) of $28.0 million.

BMO Term Loan

On October 29, 2014, the Company entered into an Amended and Restated Credit Agreement (the “BMO Credit Agreement”) with the lending institutions referenced in the BMO Credit Agreement and Bank of Montreal, as administrative agent, that continued a single, unsecured term loan borrowing in the amount of $220,000,000 (the “BMO Term Loan”).  On August 26, 2013, the Company drew down the entire $220,000,000 under the BMO Term Loan, which remains fully advanced and outstanding under the BMO Credit Agreement. The BMO Term Loan matures on August 26, 2020. The BMO Credit Agreement also includes an accordion feature that allows up to $50,000,000 of additional loans, subject to receipt of lender commitments and satisfaction of certain customary conditions.

The BMO Term Loan bears interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating (165 basis points over LIBOR at March 31, 2015) or (ii) a number of basis points over the base rate depending on the Company’s credit rating (65 basis points over the base rate at March 31, 2015).

Although the interest rate on the BMO Term Loan is variable, the Company is permitted to hedge the base LIBOR interest rate by entering into an interest rate swap agreement. On August 26, 2013, the Company entered into an ISDA Master Agreement with Bank of Montreal that fixed the base LIBOR interest rate on the BMO Term Loan at 2.32% per annum for seven years, until the August 26, 2020 maturity date.  Accordingly, based upon the Company’s credit rating, as of March 31, 2015, the effective interest rate on the BMO Term Loan was 3.97% per annum.

The BMO Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type.  The BMO Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, minimum unsecured interest coverage and a maximum ratio of certain investments to total assets. The Company was in compliance with the BMO Term Loan financial covenants as of March 31, 2015.

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The Company may use the proceeds of the loans under the BMO Credit Agreement to finance the acquisition of real properties and for other permitted investments; to finance investments associated with Sponsored REITs, to refinance or retire indebtedness and for working capital and other general business purposes, in each case to the extent permitted under the BMO Credit Agreement.

BAML Credit Facility

On October 29, 2014, the Company entered into a Second Amended and Restated Credit Agreement (the “BAML Credit Agreement”) with the lending institutions referenced in the BAML Credit Agreement and those lenders from time to time party thereto and Bank of America, N.A., as administrative agent, L/C Issuer and Swing Line Lender (the “BAML Credit Facility”) that continued an existing unsecured credit facility comprised of both a revolving line of credit (the “BAML Revolver) and a term loan (the “BAML Term Loan”).

BAML Revolver Highlights

·The BAML Revolver is for borrowings, at the Company’s election, of up to $500,000,000.  Borrowings made pursuant to the BAML Revolver may be revolving loans, swing line loans or letters of credit, the combined sum of which may not exceed $500,000,000 outstanding at any time.

·Borrowings made pursuant to the BAML Revolver may be borrowed, repaid and reborrowed from time to time until the initial maturity date of October 29, 2018. The Company has the right to extend the initial maturity date of the BAML Revolver by an additional 12 months, or until October 29, 2019, upon payment of a fee and satisfaction of certain customary conditions.

·The BAML Revolver includes an accordion feature that allows for up to $250,000,000 of additional borrowing capacity subject to receipt of lender commitments and satisfaction of certain customary conditions.

As of March 31, 2015, there were borrowings of $240,000,000 outstanding under the BAML Revolver.  The BAML Revolver bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.25% over LIBOR at March 31, 2015) or (ii) a margin over the base rate depending on the Company’s credit rating (0.25% over the base rate at March 31, 2015). The BAML Credit Facility also obligates the Company to pay an annual facility fee in an amount that is also based on the Company’s credit rating. The facility fee is assessed against the total amount of the BAML Revolver, or $500,000,000 (0.25% at March 31, 2015).

Based upon the Company’s credit rating, as of March 31, 2015, the weighted average interest rate on the BAML Revolver was 1.42% per annum and there were borrowings of $240,000,000 outstanding.  As of December 31, 2014, the weighted average interest rate on the BAML Revolver was 1.41% per annum and there were borrowings of $268,000,000 outstanding.  The weighted average interest rate on all amounts outstanding on the BAML Revolver during the three months ended March 31, 2015 was approximately 1.42% per annum.  The weighted average interest rate on all amounts outstanding on the BAML Revolver during the year ended December 31, 2014 was approximately 1.60% per annum.

BAML Term Loan Highlights

·The BAML Term Loan is for $400,000,000.

·The BAML Term Loan matures on September 27, 2017.

·On September 27, 2012, the Company drew down the entire $400,000,000 and such amount remains fully advanced and outstanding under the BAML Credit Agreement.

The BAML Term Loan bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.45% over LIBOR at March 31, 2015) or (ii) a margin over the base rate depending on the Company’s credit rating (0.45% over the base rate at March 31, 2015). The actual margin over LIBOR rate or base rate is determined based on the Company’s credit rating.

Although the interest rate on the BAML Credit Facility is variable, the Company fixed the base LIBOR interest rate on the BAML Term Loan by entering into an interest rate swap agreement.  On September 27, 2012, the Company entered into an ISDA Master Agreement with Bank of America, N.A. that fixed the base LIBOR interest rate on the BAML Term Loan at 0.75% per annum for five years, until the September 27, 2017 maturity date.  Accordingly, based upon the Company’s credit rating, as of March 31, 2015, the effective interest rate on the BAML Term Loan was 2.20% per annum.

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BAML Credit Facility General Information

The BAML Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type.  The BAML Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, minimum unsecured interest coverage and a maximum ratio of certain investments to total assets. The Company was in compliance with the BAML Credit Facility financial covenants as of March 31, 2015.

The Company may use the proceeds of the loans under the BAML Credit Agreement to finance the acquisition of real properties and for other permitted investments; to finance investments associated with Sponsored REITs, to refinance or retire indebtedness and for working capital and other general business purposes, in each case to the extent permitted under the BAML Credit Agreement.

Equity Securities

On May 6, 2010, we entered into an on demand offering sales agreement that allows us to offer and sell up to an aggregate gross sales price of $75 million of our common stock from time to time, which we refer to as our ATM Sales Program.  The on demand offering sales agreement for the ATM Sales Program was amended on April 27, 2012 in connection with our filing of a new Registration Statement on Form S-3.  Sales of shares of our common stock depend upon market conditions and other factors determined by us and are deemed to be “at the market offerings” as defined in Rule 415 of the Securities Act of 1933, as amended, including sales made directly on the NYSE MKT or sales made to or through a market maker other than on an exchange, as well as in negotiated transactions, if and to the extent agreed by us in writing.  We have no obligation to sell any shares of our common stock, and may at any time suspend solicitation and offers.  During the three months ended March 31, 2015, we did not sell any shares of our common stock under our ATM Sales Program.  As of March 31, 2015, we were authorized to offer and sell a remainder of approximately $34.3 million of our shares of common stock under the ATM Sales Program.

On January 12, 2015, we filed a new automatic shelf registration statement on Form S-3 on file with the Securities and Exchange Commission relating to the offer and sale, from time to time, of an indeterminate amount of our debt securities, common stock, preferred stock or depository shares.  From time-to-time, we expect to issue debt securities, common stock, preferred stock or depository shares under our existing automatic shelf registration statements or a different registration statement to fund the acquisition of additional properties, to pay down any existing debt financing and for other corporate purposes.

Contingencies

From time to time, we may provide financing to Sponsored REITs in the form of a construction loan and/or a revolving line of credit secured by a mortgage.  As of March 31, 2015, we were committed to fund up to $111.3 million to four Sponsored REITs under such arrangements for the purpose of funding construction costs, capital expenditures, leasing costs or for other purposes, of which $93.6 million has been drawn and is outstanding.  We anticipate that advances made under these facilities will be repaid at their maturity date or earlier from long term financings of the underlying properties, cash flows from the underlying properties or another other capital event.

We may be subject to various legal proceedings and claims that arise in the ordinary course of our business.  Although occasional adverse decisions (or settlements) may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position or results of operations.

Related Party Transactions

We intend to draw on the BAML Credit Facility in the future for a variety of corporate purposes, including the acquisition of properties that we acquire directly for our portfolio and for Sponsored REIT Loans as described below.

26

Loans to Sponsored REITs

Sponsored REIT Loans

From time to time we may make secured loans (“Sponsored REIT Loans”) to Sponsored REITs in the form of mortgage loans or revolving lines of credit to fund construction costs, capital expenditures, leasing costs and for other purposes.  We anticipate that each Sponsored REIT Loan will be repaid at maturity or earlier from long term financings of the underlying properties, cash flows from the underlying properties or some other capital event.  Each Sponsored REIT Loan is secured by a mortgage on the underlying property and has a term of approximately one to three years, which may be extended from time to time by one year or longer.  Except a mortgage loan which bears interest at a fixed rate, advances under each Sponsored REIT Loan bear interest at a rate equal to the 30-day LIBOR rate plus an agreed upon amount of basis points and most advances also require a 50 basis point draw fee.

Our Sponsored REIT Loans subject us to credit risk.  However, we believe that our position as asset manager of each of the Sponsored REITs helps mitigate that risk by providing us with unique insight and the ability to rely on qualitative analysis of the Sponsored REITs.  Before making a Sponsored REIT Loan, we consider a variety of subjective factors, including the quality of the underlying real estate, leasing, the financial condition of the applicable Sponsored REIT and local and national market conditions.  These factors are subject to change and we do not apply a formula or assign relative weights to the factors.  Instead, we make a subjective determination after considering such factors collectively.

Additional information about our Sponsored REIT Loans outstanding as of March 31, 2015, including a summary table of our Sponsored REIT Loans, is incorporated herein by reference to Part I, Item 1, Note 2, “Related Party Transactions and Investments in Non-consolidated Entities, Management fees and interest income from loans”, in the Notes to Condensed Consolidated Financial Statements included in this report.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

Market Rate Risk

We are exposed to changes in interest rates primarily from our floating rate borrowing arrangements.  We use interest rate derivative instruments to manage exposure to interest rate changes.  As of March 31, 2015 and December 31, 2014, if market rates on our outstanding borrowings under our BAML Revolver increased by 10% at maturity, or approximately 14 and 14 basis points, respectively, over the current variable rate, the increase in interest expense would decrease future earnings and cash flows by $0.4 million and $0.4 million annually, respectively.  Based upon our credit rating, the interest rate on our borrowings on the BAML Revolver as of March 31, 2015 was LIBOR plus 125 basis points, or 1.42% per annum.  We do not believe that the interest rate risk represented by borrowings under our BAML Revolver is material as of March 31, 2015.

Although the interest rates on the BMO Term Loan and the BAML Credit Facility are variable, the Company fixed the base LIBOR interest rates on the BMO Term Loan and the BAML Term Loan by entering into interest rate swap agreements.  On August 26, 2013, the Company entered into an ISDA Master Agreement with Bank of Montreal that fixed the base LIBOR interest rate on the BMO Term Loan at 2.32% per annum for seven years (the “BMO Interest Rate Swap”).  On September 27, 2012, the Company entered into an ISDA Master Agreement with Bank of America, N.A. that fixed the base LIBOR interest rate on the BAML Term Loan at 0.75% per annum for five years (the “BAML Interest Rate Swap”).  Accordingly, based upon our credit rating, as of March 31, 2015, the interest rate on the BMO Term Loan was 3.97% per annum and the interest rate on the BAML Term Loan was 2.20% per annum.  The fair value of the BMO Interest Rate Swap and the BAML Interest Rate Swap is affected by changes in market interest rates.  We believe that we have mitigated interest rate risk with respect to the BMO Term Loan through the BMO Interest Rate Swap for the seven year term of the BMO Term Loan.  We believe that we have mitigated interest rate risk with respect to the BAML Term Loan through the BAML Interest Rate Swap for the five year term of the BAML Term Loan. The BMO Interest Rate Swap and the BAML Interest Rate Swap were our only derivative instruments as of March 31, 2015.

The table below lists our derivative instruments, which are hedging variable cash flows related to interest on our BMO Term Loan and our BAML Term Loan as of March 31, 2015 (in thousands):

	Notional		Strike		Effective	Expiration	Fair
(in thousands)	Value		Rate		Date	Date	Value
BMO Interest Rate Swap	$	220,000	2.32	%	Aug-13	Aug-20	$	(9,836	)
BAML Interest Rate Swap	$	400,000	0.75	%	Sep-12	Sep-17	$	774

Our BMO Term Loan and our BAML Term Loan hedging transactions used derivative instruments that involve certain additional risks such as counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant changes in interest rates will cause a significant loss of basis in either or both of the contracts. We require our derivatives contracts to be with counterparties that have investment grade ratings.  The counterparty to the BMO Interest Rate Swap is Bank of Montreal and the counterparty to the BAML Interest Rate Swap is Bank of America, N.A., both of which have investment grade ratings.  As a result, we do not anticipate that either counterparty will fail to meet its obligations.  However, there can be no assurance that we will be able to adequately protect against the foregoing risks or that we will ultimately realize an economic benefit that exceeds the related amounts incurred in connection with engaging in such hedging strategies.

The BAML Revolver has a term of four years and matures on October 29, 2018.  We have the right to extend the initial maturity date of the BAML Revolver by an additional 12 months, or until October 29, 2019, upon payment of a fee and satisfaction of certain customary conditions. The BAML Revolver includes an accordion feature that allows for up to $250,000,000 of additional borrowing capacity subject to receipt of lender commitments and satisfaction of certain customary conditions.  Upon maturity, our future income, cash flows and fair values relevant to financial instruments will be dependent upon the balance then outstanding and prevalent market interest rates.

We borrow from time-to-time under the BAML Revolver.  These borrowings bear interest at either (i) a rate equal to LIBOR plus 87.5 to 165 basis points depending on our credit rating at the time of the borrowing (LIBOR plus 125 basis points, or 1.42% at March 31, 2015) or (ii) a rate equal to the bank’s base rate plus up to 65 basis points depending on our credit rating at the time of the borrowing (the bank’s base rate plus 25 basis points, or 3.50% at March 31, 2015).  There were borrowings totaling $240.0 million and $268.0 million on the BAML Revolver, at a weighted average rate of 1.42% and 1.41% outstanding at March 31, 2015 and December 31, 2014, respectively.  We have drawn on the BAML Revolver, and intend to draw on the BAML Revolver in the future for a variety of corporate purposes, including the funding of Sponsored REIT Loans and the acquisition of properties that we acquire directly for our portfolio.  Information about our Sponsored REIT Loans as of March 31, 2015 is incorporated herein by

28

reference to Part I, Item 1, Note 2, “Related Party Transactions and Investments in Non-consolidated Entities, Management fees and interest income from loans”, in the Notes to Condensed Consolidated Financial Statements included in this report.

The following table presents as of March 31, 2015, our contractual variable rate borrowings under our BAML Revolver, which matures on October 29, 2018, under our BAML Term Loan, which matures on September 27, 2017 and under our BMO Term Loan, which matures on August 26, 2020.  Under the BAML Revolver, we have the right to extend the initial maturity date by an additional 12 months, or until October 29, 2019, upon payment of a fee and satisfaction of certain customary conditions.

	Payment due by period
	(in thousands)
	Total		2015		2016		2017		2018		2019		Thereafter
BAML Revolver	$	240,000	$	—	$	—	$	—	$	240,000	$	—	$	—
BAML Term Loan	400,000						400,000		—		—
BMO Term Loan	220,000										—		220,000
Total	$	860,000	$	—	$	—	$	400,000	$	240,000	$	—	$	220,000

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Item 4.Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2015.  The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Based on the evaluation of our disclosure controls and procedures as of March 31, 2015, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting occurred during the quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.Legal Proceedings

From time to time, we may be subject to legal proceedings and claims that arise in the ordinary course of our business.  Although occasional adverse decisions (or settlements) may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position, cash flows or results of operations.

Item 1A.  Risk Factors

There were no material changes to the risk factors disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2014, except to the extent previously updated or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors.  In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2014, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K for the year ended December 31, 2014 are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

None.

Item 5.Other Information

None.

Item 6.Exhibits

The Exhibits listed in the Exhibit Index are filed as part of this Quarterly Report on Form 10-Q and are incorporated herein by reference.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		FRANKLIN STREET PROPERTIES CORP.
Date	Signature		Title
Date: April 28, 2015	/s/ George J. Carter		Chief Executive Officer and Director
	George J. Carter		(Principal Executive Officer)
Date: April 28, 2015	/s/ John G. Demeritt		Chief Financial Officer
	John G. Demeritt		(Principal Financial Officer)

32

EXHIBIT INDEX

Exhibit No.	Description
3.1 (1)	Articles of Incorporation.
3.2 (2)	Amended and Restated By-laws.
31.1*	Certification of FSP Corp.’s President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of FSP Corp.’s Chief Financial Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
32.1*	Certification of FSP Corp.’s President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of FSP Corp.’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following materials from FSP Corp.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Income; (iii) the Condensed Consolidated Statements of Cash Flows; (iv) the Condensed Consolidated Statements of Other Comprehensive Income; and (v) the Notes to Condensed Consolidated Financial Statements.

Footnotes	Description
(1)	Incorporated by reference to FSP Corp.’s Form 8-A, filed on April 5, 2005 (File No. 001-32470).
(2)	Incorporated by reference to FSP Corp.’s Current Report on Form 8-K, filed on February 15, 2013 (File No. 001-32470).
*	Filed herewith.

33

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, George J. Carter, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Franklin Street Properties Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 28, 2015	/s/ George J. Carter
	George J. Carter
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, John G. Demeritt, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Franklin Street Properties Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))  and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 28, 2015	/s/ John G. Demeritt
	John G. Demeritt
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Franklin Street Properties Corp. (the “Company”) for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, George J. Carter, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 28, 2015	/s/ George J. Carter
	George J. Carter
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Franklin Street Properties Corp. (the “Company”) for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, John G. Demeritt, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 28, 2015	/s/ John G. Demeritt
	John G. Demeritt
	Chief Financial Officer

XML

Dispositions of properties (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	0 Months Ended
	Mar. 31, 2015	Feb. 23, 2015	Mar. 31, 2015
Gain (loss) on sale of property
Gain (loss) on sale of property	$ 10,462
Office Property in Plano, Texas
Gain (loss) on sale of property
Gain (loss) on sale of property		1,500
Office Property in Eden Prairie, Minnesota
Gain (loss) on sale of property
Gain (loss) on sale of property			$ 9,000

XML

Related Party Transactions and Investments in Non-Consolidated Entities (Details 3) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Related Party Transactions and Investments in Non-Consolidated Entities
Asset management fees, low end of range (as a percent)	1.00%
Asset management fees, high end of range (as a percent)	5.00%
Notice period for cancellation of applicable contracts	30 days
Asset management fee income from non-consolidated entities	$ 211,000	$ 234,000

XML

Bank Note Payable and Term Note Payable

3 Months Ended

Mar. 31, 2015

Bank Note Payable and Term Note Payable

Bank Note Payable and Term Note Payable

3.Bank Note Payable and Term Note Payable

BMO Term Loan

On October 29, 2014, the Company entered into an Amended and Restated Credit Agreement (the “BMO Credit Agreement”) with the lending institutions referenced in the BMO Credit Agreement and Bank of Montreal, as administrative agent, that continued a single, unsecured term loan borrowing in the amount of $220,000,000 (the “BMO Term Loan”).  On August 26, 2013, the Company drew down the entire $220,000,000 under the BMO Term Loan, which remains fully advanced and outstanding under the BMO Credit Agreement. The BMO Term Loan matures on August 26, 2020. The BMO Credit Agreement also includes an accordion feature that allows up to $50,000,000 of additional loans, subject to receipt of lender commitments and satisfaction of certain customary conditions.

The BMO Term Loan bears interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating (165 basis points over LIBOR at March 31, 2015) or (ii) a number of basis points over the base rate depending on the Company’s credit rating (65 basis points over the base rate at March 31, 2015).

Although the interest rate on the BMO Term Loan is variable, the Company is permitted to hedge the base LIBOR interest rate by entering into an interest rate swap agreement. On August 26, 2013, the Company entered into an ISDA Master Agreement with Bank of Montreal that fixed the base LIBOR interest rate on the BMO Term Loan at 2.32% per annum for seven years, until the August 26, 2020 maturity date.  Accordingly, based upon the Company’s credit rating, as of March 31, 2015, the effective interest rate on the BMO Term Loan was 3.97% per annum.

The BMO Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type.  The BMO Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, minimum unsecured interest coverage and a maximum ratio of certain investments to total assets. The Company was in compliance with the BMO Term Loan financial covenants as of March 31, 2015.

The Company may use the proceeds of the loans under the BMO Credit Agreement to finance the acquisition of real properties and for other permitted investments; to finance investments associated with Sponsored REITs, to refinance or retire indebtedness and for working capital and other general business purposes, in each case to the extent permitted under the BMO Credit Agreement.

BAML Credit Facility

On October 29, 2014, the Company entered into a Second Amended and Restated Credit Agreement (the “BAML Credit Agreement”) with the lending institutions referenced in the BAML Credit Agreement and those lenders from time to time party thereto and Bank of America, N.A., as administrative agent, L/C Issuer and Swing Line Lender (the “BAML Credit Facility”) that continued an existing unsecured credit facility comprised of both a revolving line of credit (the “BAML Revolver) and a term loan (the “BAML Term Loan”).

BAML Revolver Highlights

· The BAML Revolver is for borrowings, at the Company’s election, of up to $500,000,000.  Borrowings made pursuant to the BAML Revolver may be revolving loans, swing line loans or letters of credit, the combined sum of which may not exceed $500,000,000 outstanding at any time.

· Borrowings made pursuant to the BAML Revolver may be borrowed, repaid and reborrowed from time to time until the initial maturity date of October 29, 2018. The Company has the right to extend the initial maturity date of the BAML Revolver by an additional 12 months, or until October 29, 2019, upon payment of a fee and satisfaction of certain customary conditions.

· The BAML Revolver includes an accordion feature that allows for up to $250,000,000 of additional borrowing capacity subject to receipt of lender commitments and satisfaction of certain customary conditions.

As of March 31, 2015, there were borrowings of $240,000,000 outstanding under the BAML Revolver.  The BAML Revolver bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.25% over LIBOR at March 31, 2015) or (ii) a margin over the base rate depending on the Company’s credit rating (0.25% over the base rate at March 31, 2015). The BAML Credit Facility also obligates the Company to pay an annual facility fee in an amount that is also based on the Company’s credit rating. The facility fee is assessed against the total amount of the BAML Revolver, or $500,000,000 (0.25% at March 31, 2015).

Based upon the Company’s credit rating, as of March 31, 2015, the weighted average interest rate on the BAML Revolver was 1.42% per annum and there were borrowings of $240,000,000 outstanding.  As of December 31, 2014, the weighted average interest rate on the BAML Revolver was 1.41% per annum and there were borrowings of $268,000,000 outstanding. The weighted average interest rate on all amounts outstanding on the BAML Revolver during the three months ended March 31, 2015 was approximately 1.42% per annum.  The weighted average interest rate on all amounts outstanding on the BAML Revolver during the year ended December 31, 2014 was approximately 1.60% per annum.

BAML Term Loan Highlights

· The BAML Term Loan is for $400,000,000.

· The BAML Term Loan matures on September 27, 2017.

· On September 27, 2012, the Company drew down the entire $400,000,000 and such amount remains fully advanced and outstanding under the BAML Credit Agreement.

The BAML Term Loan bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating (1.45% over LIBOR at March 31, 2015) or (ii) a margin over the base rate depending on the Company’s credit rating (0.45% over the base rate at March 31, 2015). The actual margin over LIBOR rate or base rate is determined based on the Company’s credit rating.

Although the interest rate on the BAML Credit Facility is variable, the Company fixed the base LIBOR interest rate on the BAML Term Loan by entering into an interest rate swap agreement.  On September 27, 2012, the Company entered into an ISDA Master Agreement with Bank of America, N.A. that fixed the base LIBOR interest rate on the BAML Term Loan at 0.75% per annum for five years, until the September 27, 2017 maturity date.  Accordingly, based upon the Company’s credit rating, as of March 31, 2015, the effective interest rate on the BAML Term Loan was 2.20% per annum.

BAML Credit Facility General Information

The BAML Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type.  The BAML Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, minimum unsecured interest coverage and a maximum ratio of certain investments to total assets. The Company was in compliance with the BAML Credit Facility financial covenants as of March 31, 2015.

The Company may use the proceeds of the loans under the BAML Credit Agreement to finance the acquisition of real properties and for other permitted investments; to finance investments associated with Sponsored REITs, to refinance or retire indebtedness and for working capital and other general business purposes, in each case to the extent permitted under the BAML Credit Agreement.

XML

Financial Instruments: Derivatives and Hedging (Details) (Cash flow hedges, USD $)	3 Months Ended	0 Months Ended
	Mar. 31, 2015	Aug. 26, 2013	Sep. 27, 2012
BMO and BAML Interest Rate Swaps
Financial Instruments: Derivatives and Hedging
Unrealized gains or losses on derivative financial instruments in accumulated other comprehensive income	$ 4,800,000
Interest reclassified from accumulated other comprehensive income into interest expense	1,800,000
Amount estimated to be reclassified into earnings within next 12 months	1,500,000
BMO Interest Rate Swap
Financial Instruments: Derivatives and Hedging
Term pursuant to interest rate swap agreement		7 years
Notional Value	220,000,000
Strike Rate (as a percent)	2.32%
Fair Value	(9,836,000)
BAML Interest Rate Swap
Financial Instruments: Derivatives and Hedging
Term pursuant to interest rate swap agreement			5 years
Notional Value	400,000,000
Strike Rate (as a percent)	0.75%
Fair Value	$ 774,000

XML

Bank Note Payable and Term Note Payable (Details) (USD $)	3 Months Ended	12 Months Ended	0 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Sep. 27, 2012	Aug. 26, 2013	Oct. 29, 2014
Bank note payable and term note payable
Borrowings outstanding	$ 240,000,000	$ 268,000,000
BAML Revolver
Bank note payable and term note payable
Total available	500,000,000
Additional borrowing capacity allowed by exercising an accordion feature	250,000,000
Borrowings outstanding	240,000,000	268,000,000
Extension available on debt	12 months
Facility fee (as a percent)	0.25%
Interest rate during period (as a percent)	1.42%	1.41%
Weighted average interest rate (as a percent)	1.42%	1.60%
BAML Term Loan
Bank note payable and term note payable
Principal amount of loan	400,000,000
Amount drawn down			400,000,000
Effective interest rate (as a percent)	2.20%
LIBOR | BAML Revolver
Bank note payable and term note payable
Basis spread on variable rate (as a percent)	1.25%
LIBOR | BAML Term Loan
Bank note payable and term note payable
Basis spread on variable rate (as a percent)	1.45%
Fixed rate (as a percent)			0.75%
Term pursuant to interest rate swap agreement			5 years
Base Rate | BAML Revolver
Bank note payable and term note payable
Basis spread on variable rate (as a percent)	0.25%
Base Rate | BAML Term Loan
Bank note payable and term note payable
Basis spread on variable rate (as a percent)	0.45%
BMO Term Loan
Bank note payable and term note payable
Principal amount of loan				220,000,000
Amount drawn down				220,000,000
Additional loans allowed by exercising an accordion feature					$ 50,000,000
Effective interest rate (as a percent)	3.97%
BMO Term Loan | LIBOR
Bank note payable and term note payable
Basis spread on variable rate (as a percent)	1.65%
Fixed rate (as a percent)				2.32%
Term pursuant to interest rate swap agreement				7 years
BMO Term Loan | Base Rate
Bank note payable and term note payable
Basis spread on variable rate (as a percent)	0.65%

XML

Net Income Per Share (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Net Income Per Share
Potential dilutive shares outstanding	0	0

XML

Stockholders' Equity (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	May 06, 2010
Equity offerings
Common stock, shares outstanding (in shares)	100,187,405		100,187,405
Dividends declared and paid
Dividends Per Share (in dollars per share)	$ 0.19	$ 0.19
Total Dividends	$ 19,036,000	$ 19,036,000
ATM Sales Program
Equity offerings
Maximum aggregate gross sales price of common stock	$ 34,300,000			$ 75,000,000

XML

Related Party Transactions and Investments in Non-Consolidated Entities

3 Months Ended

Mar. 31, 2015

Related Party Transactions and Investments in Non-Consolidated Entities

Related Party Transactions and Investments in Non-Consolidated Entities

2.Related Party Transactions and Investments in Non-Consolidated Entities

Investment in Sponsored REITs:

At March 31, 2015 and December 31, 2014, the Company held a common stock interest in 9 and 10 Sponsored REITs, respectively.  The Company holds a non-controlling preferred stock investment in two of these Sponsored REITs, FSP 303 East Wacker Drive Corp. (“East Wacker”) and FSP Grand Boulevard Corp. (“Grand Boulevard”), from which it continues to derive economic benefits and risks.

During the year ended December 31, 2014, properties owned by four Sponsored REITs were sold and, thereafter, liquidating distributions for their preferred shareholders were declared and issued.  The Company held a mortgage loan with two of these entities secured by the property owned by FSP Galleria North Corp. (“Galleria”) and the property owned by FSP Highland Place I Corp. (“Highland”).  The loan with Galleria in the principal amount of $13,880,000 was repaid from the proceeds of the sale and the loan with Highland in the principal amount of $3,395,000 was repaid from the proceeds of the sale.

During the three months ended March 31, 2015, a property owned by a Sponsored REIT was sold and, thereafter, liquidating distributions for their preferred shareholders were declared and issued.

Equity in losses of investment in non-consolidated REITs:

The following table includes equity in losses of investments in non-consolidated REITs

	Three Months Ended
	March 31,
(in thousands)	2015		2014
Equity in loss of East Wacker	$	285	$	431
Equity in loss of Grand Boulevard	37		53
	$	322	$	484

Equity in losses of investments in non-consolidated REITs is derived from the Company’s share of income or loss in the operations of those entities.  The Company exercises influence over, but does not control these entities, and investments are accounted for using the equity method.

Equity in losses of East Wacker is derived from the Company’s preferred stock investment in the entity.  In December 2007, the Company purchased 965.75 preferred shares or 43.7% of the outstanding preferred shares of East Wacker for $82,813,000 (which represented $96,575,000 at the offering price net of commissions of $7,726,000, loan fees of $5,553,000 and acquisition fees of $483,000 that were excluded).

Equity in losses of Grand Boulevard is derived from the Company’s preferred stock investment in the entity.  In May 2009, the Company purchased 175.5 preferred shares or 27.0% of the outstanding preferred shares of Grand Boulevard for $15,049,000 (which represented $17,550,000 at the offering price net of commissions of $1,404,000, loan fees of $1,009,000 and acquisition fees of $88,000 that were excluded).

The Company recorded distributions of $27,000 from non-consolidated REITs during the three months ended March 31, 2015 and 2014.

Management fees and interest income from loans:

Asset management fees range from 1% to 5% of collected rents and the applicable contracts are cancelable with 30 days notice.  Asset management fee income from non-consolidated entities amounted to approximately $211,000 and $234,000 for the three months ended March 31, 2015 and 2014, respectively.

From time to time the Company may make secured loans (“Sponsored REIT Loans”) to Sponsored REITs in the form of mortgage loans or revolving lines of credit to fund construction costs, capital expenditures, leasing costs and for other purposes.  The Company anticipates that each Sponsored REIT Loan will be repaid at maturity or earlier from long term financings of the underlying properties, cash flows from the underlying properties or some other capital event.  Each Sponsored REIT Loan is secured by a mortgage on the underlying property and has a term of approximately one to three years, which may be extended from time to time by one year or longer.  Except for the mortgage loan which bears interest at a fixed rate, advances under each Sponsored REIT Loan bear interest at a rate equal to the 30-day LIBOR rate plus an agreed upon amount of basis points and most advances also require a 50 basis point draw fee.

The following is a summary of the Sponsored REIT Loans outstanding as of March 31, 2015:

(dollars in thousands)

			Maximum		Amount						Interest
		Maturity	Amount		Drawn at		Interest		Draw		Rate at
Sponsored REIT	Location	Date	of Loan		31-Mar-15		Rate (1)		Fee (2)		31-Mar-15
Secured revolving lines of credit
FSP Satellite Place Corp.	Duluth, GA	31-Mar-17	$	5,500	$	5,500	L+4.4	%	0.5	%	4.57	%
FSP 1441 Main Street Corp.	Columbia, SC	31-Mar-16	10,800		9,000		L+4.4	%	0.5	%	4.57	%
FSP Energy Tower I Corp.	Houston, TX	3-Jul-15	20,000		8,600		L+5.0	%	0.5	%	5.17	%
Secured construction loan
FSP 385 Interlocken Development Corp.	Broomfield, CO	30-Apr-16	42,000		37,541		L+4.4	%	n/a		4.57	%
Mortgage loan secured by property
FSP Energy Tower I Corp.	Houston, TX	3-Jul-15	33,000		33,000		6.41	%	n/a		6.41	%
			$	111,300	$	93,641

(1) The interest rate is 30-day LIBOR rate plus the additional rate indicated, otherwise a fixed rate.

(2) The draw fee is a percentage of each new advance, and is paid at the time of each new draw.

The Company recognized interest income and fees from the Sponsored REIT Loans of approximately $1,262,000 and $1,409,000 for the three months ended March 31, 2015 and 2014, respectively.

Non-consolidated REITs:

The balance sheet data below for 2015 and 2014 includes the 9 and 10 Sponsored REITs the Company held an interest in as of March 31, 2015 and December 31, 2014, respectively.  The operating data below for 2015 and 2014 include the operations of the 10 and 14 Sponsored REITs in which the Company held an interest in during the three months ended March 31, 2015 and 2014, respectively.

Summarized financial information for these Sponsored REITs is as follows:

	March 31,			December 31,
(in thousands)	2015			2014
Balance Sheet Data (unaudited):
Real estate, net	$	421,849		$	451,822
Other assets	105,791			127,259
Total liabilities	(200,754		)	(203,239		)
Shareholders’ equity	$	326,886		$	375,842

	For the Three Months Ended
	March 31,
(in thousands)	2015			2014
Operating Data (unaudited):
Rental revenues	$	13,900		$	23,305
Other revenues	2			14
Operating and maintenance expenses	(8,235		)	(11,746		)
Depreciation and amortization	(4,975		)	(7,677		)
Interest expense	(2,457		)	(3,431		)
Net income	$	(1,765	)	$	465

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Income Taxes (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Income Taxes
Maximum ownership as a percentage of the voting power or value of the securities of each issuer other than REIT or "TRS"	10.00%
Maximum ownership of securities in all TRS (as a percent)	25.00%
Maximum ownership of securities in all TRS when considered together with other non-real estate assets (as a percent)	25.00%
Period of statute of limitations applicable to the entity's income tax returns	3 years
Net operating losses
NOLs expiration period	20 years
Gross amount of NOLs available to company	$ 13,041,000		$ 13,041,000
Income Tax Expense
Revised Texas Franchise tax rate (as a percent)	0.70%
Revised Texas franchise tax	159,000	127,000
Other Taxes	2,000	10,000
Income tax expense	161,000	137,000
Deferred income taxes	$ 0

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Real estate assets:
Land	$ 174,707	$ 183,930
Buildings and improvements	1,581,524	1,604,984
Fixtures and equipment	1,724	1,677
Total real estate assets, gross	1,757,955	1,790,591
Less accumulated depreciation	271,058	266,284
Real estate assets, net	1,486,897	1,524,307
Acquired real estate leases, less accumulated amortization of $105,045 and $101,838, respectively	124,337	138,714
Investment in non-consolidated REITs	78,228	78,611
Cash and cash equivalents	14,945	7,519
Restricted cash	56	742
Tenant rent receivables, less allowance for doubtful accounts of $330 and $325, respectively	4,587	4,733
Straight-line rent receivable, less allowance for doubtful accounts of $162 and $162, respectively	45,498	47,021
Prepaid expenses and other assets	13,526	10,292
Related party mortgage loan receivables	93,641	93,641
Other assets: derivative asset	774	3,020
Office computers and furniture, net of accumulated depreciation of $1,109 and $1,036, respectively	588	609
Deferred leasing commissions, net of accumulated amortization of $17,429 and $16,944, respectively	26,335	27,181
Total assets	1,889,412	1,936,390
Liabilities:
Bank note payable	240,000	268,000
Term loans payable	620,000	620,000
Accounts payable and accrued expenses	36,065	42,561
Accrued compensation	1,241	3,758
Tenant security deposits	4,019	4,248
Other liabilities: derivative liability	9,836	7,268
Acquired unfavorable real estate leases, less accumulated amortization of $9,218 and $8,687, respectively	9,921	10,908
Total liabilities	921,082	956,743
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, 100,187,405 and 100,187,405 shares issued and outstanding, respectively	10	10
Additional paid-in capital	1,273,556	1,273,556
Accumulated other comprehensive loss	(9,062)	(4,248)
Accumulated distributions in excess of accumulated earnings	(296,174)	(289,671)
Total stockholders' equity	968,330	979,647
Total liabilities and stockholders' equity	$ 1,889,412	$ 1,936,390

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net income	$ 12,533	$ 3,573
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	23,189	24,797
Amortization of above market lease	6	(11)
Equity in losses of non-consolidated REITs	322	484
Gain on sale of properties, less applicable income tax	(10,462)
Changes in operating assets and liabilities:
Restricted cash	686	(45)
Tenant rent receivables	146	(933)
Straight-line rents	(69)	(1,784)
Lease acquisition costs	(3)	(347)
Prepaid expenses and other assets	283	800
Accounts payable, accrued expenses and other items	(7,706)	(7,257)
Accrued compensation	(2,517)	(1,958)
Tenant security deposits	(230)	231
Payment of deferred leasing commissions	(1,116)	(1,113)
Net cash provided by operating activities	15,062	16,437
Cash flows from investing activities:
Property improvements, fixtures and equipment	(4,298)	(4,850)
Distributions in excess of earnings from non-consolidated REITs	27	27
Investment in related party mortgage loan receivable		(2,170)
Proceeds received on sales of real estate assets	47,671
Changes in deposits on real estate assets	(4,000)
Net cash provided by (used in) investing activities	39,400	(6,993)
Cash flows from financing activities:
Distributions to stockholders	(19,036)	(19,036)
Borrowings under bank note payable	20,000	10,000
Repayments of bank note payable	(48,000)
Net cash used in financing activities	(47,036)	(9,036)
Net increase in cash and cash equivalents	7,426	408
Cash and cash equivalents, beginning of year	7,519	19,623
Cash and cash equivalents, end of period	14,945	20,031
Non-cash investing and financing activities:
Accrued costs for purchase of real estate assets	$ 2,998	$ 1,080

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Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015 property item entity sqft	Dec. 31, 2014 entity	Mar. 31, 2014 property sqft entity
Organization
Number of promissory notes secured by mortgages on real estate owned by Sponsored REITs	5
Number of REITs in which the entity holds non-controlling common stock interest	9
Number of REITs in which the entity holds non-controlling preferred stock interest	2
Number of Sponsored REITs	9	10	14
Properties
Number of properties	36		39
Rentable square feet	9,310,131		9,686,055
Recent Accounting Standards
Reclassification of debt issuance costs from assets to contra liabilities	$ 7.1	$ 7.6
Mortgage loan secured by property
Organization
Number of promissory notes secured by mortgages on real estate owned by Sponsored REITs	1
Secured construction loan
Organization
Number of promissory notes secured by mortgages on real estate owned by Sponsored REITs	1
Secured revolving lines of credit
Organization
Number of promissory notes secured by mortgages on real estate owned by Sponsored REITs	3
FSP Investments LLC
Organization
Ownership interest (as a percent)	100.00%
FSP Property Management LLC
Organization
Ownership interest (as a percent)	100.00%
FSP Holdings LLC
Organization
Ownership interest (as a percent)	100.00%
FSP Protective TRS Corp.
Organization
Ownership interest (as a percent)	100.00%

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Related Party Transactions and Investments in Non-Consolidated Entities (Details 2) (USD $)	3 Months Ended		1 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2007	May 31, 2009
Sponsored REITs
Equity in loss	$ 322,000	$ 484,000
Distributions received from non-consolidated REITs
Distributions from non-consolidated REITs	27,000	27,000
East Wacker
Sponsored REITs
Equity in loss	285,000	431,000
Preferred shares purchased			965.75
Percentage of outstanding preferred shares purchased			43.70%
Net cost of preferred shares purchased			82,813,000
Offering price of preferred shares purchased			96,575,000
Commissions excluded			7,726,000
Loan fees excluded			5,553,000
Acquisition fees excluded			483,000
Grand Boulevard
Sponsored REITs
Equity in loss	37,000	53,000
Preferred shares purchased				175.5
Percentage of outstanding preferred shares purchased				27.00%
Net cost of preferred shares purchased				15,049,000
Offering price of preferred shares purchased				17,550,000
Commissions excluded				1,404,000
Loan fees excluded				1,009,000
Acquisition fees excluded				$ 88,000

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Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards

3 Months Ended

Mar. 31, 2015

Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards

Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards

1.Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards

Organization

Franklin Street Properties Corp. (“FSP Corp.” or the “Company”), holds, directly and indirectly, 100% of the interest in FSP Investments LLC, FSP Property Management LLC, FSP Holdings LLC and FSP Protective TRS Corp.  FSP Property Management LLC provides asset management and property management services.  The Company also has a non-controlling common stock interest in nine corporations organized to operate as real estate investment trusts (“REIT”) and a non-controlling preferred stock interest in two of those REITs.  Collectively, the nine REITs are referred to as the “Sponsored REITs”.

As of March 31, 2015, the Company owned and operated a portfolio of real estate consisting of 36 properties, managed nine Sponsored REITs and held five promissory notes secured by mortgages on real estate owned by Sponsored REITs, including one mortgage loan, one construction loan and three revolving lines of credit.  From time-to-time, the Company may acquire real estate, make additional secured loans or acquire a Sponsored REIT.  The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons.

Properties

The following table summarizes the Company’s number of properties and rentable square feet of real estate:

	As of March 31,
	2015	2014
Commercial real estate:
Number of properties	36	39
Rentable square feet	9,310,131	9,686,055

Basis of Presentation

The unaudited condensed consolidated financial statements of the Company include all the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission.

The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission.  Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included.  Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ended December 31, 2015 or for any other period.

Financial Instruments

The Company estimates that the carrying values of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued expenses, accrued compensation, tenant security deposits approximate their fair values based on their short-term maturity and the bank note and term loans payable approximate their fair values as they bear interest at variable interest rates.

Recent Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. This update is effective for interim and annual reporting periods beginning after December 15, 2016.  The Company is currently in the process of evaluating the impact the adoption of this ASU will have on the condensed consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  This update requires an entity to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances.  This update is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter with early adoption permitted.  The implementation of this update is not expected to cause any significant changes to the condensed consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This update is effective for interim and annual reporting periods beginning after December 15, 2015 and requires retrospective application. The implementation of this update is not expected to cause any material changes to the condensed consolidated financial statements other than the reclassification of debt issuance costs from assets to contra liabilities on the condensed consolidated balance sheets. As of March 31, 2015 and December 31, 2014, $7.1 million and $7.6 million, respectively, would be reclassified from assets to contra liabilities on the condensed consolidated balance sheets.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. A reporting entity may apply the amendments in ASU 2015-02 using: (a) a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption; or (b) by applying the amendments retrospectively. We are currently assessing the potential impact that the adoption of ASU 2015-02 will have on the condensed consolidated financial statements.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Condensed Consolidated Balance Sheets
Acquired real estate leases, accumulated amortization	$ 105,045	$ 101,838
Tenant rent receivables, allowance for doubtful accounts	330	325
Straight-line rent receivable, allowance for doubtful accounts	162	162
Office computers and furniture, accumulated depreciation	1,109	1,036
Deferred leasing commissions, accumulated amortization	17,429	16,944
Acquired unfavorable real estate leases, accumulated amortization	$ 9,218	$ 8,687
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	180,000,000	180,000,000
Common stock, shares issued (in shares)	100,187,405	100,187,405
Common stock, shares outstanding (in shares)	100,187,405	100,187,405

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Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards (Tables)

3 Months Ended

Mar. 31, 2015

Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards

Summary of the entity's investment in real estate assets, including number of properties and rentable square feet of real estate

	As of March 31,
	2015	2014
Commercial real estate:
Number of properties	36	39
Rentable square feet	9,310,131	9,686,055

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 24, 2015
Document and Entity Information
Entity Registrant Name	FRANKLIN STREET PROPERTIES CORP /MA/
Entity Central Index Key	0001031316
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		100,187,405
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

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Related Party Transactions and Investments in Non-Consolidated Entities (Tables)

3 Months Ended

Mar. 31, 2015

Related Party Transactions and Investments in Non-Consolidated Entities

Schedule of equity in losses of investments in non-consolidated REITs

	Three Months Ended
	March 31,
(in thousands)	2015		2014
Equity in loss of East Wacker	$	285	$	431
Equity in loss of Grand Boulevard	37		53
	$	322	$	484

Summary of the Sponsored REIT Loans outstanding

(dollars in thousands)

			Maximum		Amount						Interest
		Maturity	Amount		Drawn at		Interest		Draw		Rate at
Sponsored REIT	Location	Date	of Loan		31-Mar-15		Rate (1)		Fee (2)		31-Mar-15
Secured revolving lines of credit
FSP Satellite Place Corp.	Duluth, GA	31-Mar-17	$	5,500	$	5,500	L+4.4	%	0.5	%	4.57	%
FSP 1441 Main Street Corp.	Columbia, SC	31-Mar-16	10,800		9,000		L+4.4	%	0.5	%	4.57	%
FSP Energy Tower I Corp.	Houston, TX	3-Jul-15	20,000		8,600		L+5.0	%	0.5	%	5.17	%
Secured construction loan
FSP 385 Interlocken Development Corp.	Broomfield, CO	30-Apr-16	42,000		37,541		L+4.4	%	n/a		4.57	%
Mortgage loan secured by property
FSP Energy Tower I Corp.	Houston, TX	3-Jul-15	33,000		33,000		6.41	%	n/a		6.41	%
			$	111,300	$	93,641

(1) The interest rate is 30-day LIBOR rate plus the additional rate indicated, otherwise a fixed rate.

(2) The draw fee is a percentage of each new advance, and is paid at the time of each new draw.

Summary of financial information of sponsored REITs

	March 31,			December 31,
(in thousands)	2015			2014
Balance Sheet Data (unaudited):
Real estate, net	$	421,849		$	451,822
Other assets	105,791			127,259
Total liabilities	(200,754		)	(203,239		)
Shareholders’ equity	$	326,886		$	375,842

	For the Three Months Ended
	March 31,
(in thousands)	2015			2014
Operating Data (unaudited):
Rental revenues	$	13,900		$	23,305
Other revenues	2			14
Operating and maintenance expenses	(8,235		)	(11,746		)
Depreciation and amortization	(4,975		)	(7,677		)
Interest expense	(2,457		)	(3,431		)
Net income	$	(1,765	)	$	465

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Condensed Consolidated Statements of Income (Loss) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenue:
Rental	$ 59,013	$ 61,597
Related party revenue:
Management fees and interest income from loans	1,473	1,643
Other	21	23
Total revenues	60,507	63,263
Expenses:
Real estate operating expenses	15,356	15,071
Real estate taxes and insurance	10,048	9,251
Depreciation and amortization	22,672	24,300
Selling, general and administrative	3,691	3,272
Interest	6,187	7,176
Total expenses	57,954	59,070
Income before interest income, equity in losses of non-consolidated REITs and taxes	2,553	4,193
Interest income	1	1
Equity in losses of non-consolidated REITs	(322)	(484)
Gain on sale of properties, less applicable income tax	10,462
Income before taxes on income	12,694	3,710
Taxes on income	161	137
Net income	$ 12,533	$ 3,573
Weighted average number of shares outstanding, basic and diluted (in shares)	100,187	100,187
Earnings per share, basic and diluted:
Net income per share, basic and diluted (in dollars per share)	$ 0.13	$ 0.04

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Stockholders' Equity

3 Months Ended

Mar. 31, 2015

Stockholders' Equity

Stockholders' Equity

6.Stockholders’ Equity

As of March 31, 2015, the Company had 100,187,405 shares of common stock outstanding.

Equity Offerings

On May 6, 2010, the Company entered into an on demand offering sales agreement whereby the Company may offer and sell up to an aggregate gross sales price of $75 million of its common stock from time to time (the “ATM Sales Program”).  The on demand offering sales agreement for the ATM Sales Program was amended on April 27, 2012 in connection with the Company’s filing of a new Registration Statement on Form S-3.  Sales of shares of the Company’s common stock depend upon market conditions and other factors determined by the Company and may be deemed to be “at the market offerings” as defined in Rule 415 of the Securities Act of 1933, as amended, including sales made directly on the NYSE MKT or sales made to or through a market maker other than on an exchange, as well as in negotiated transactions, if and to the extent agreed by the Company in writing.  The Company has no obligation to sell any shares of its common stock, and may at any time suspend solicitation and offers. During the three months ended March 31, 2015, the Company did not sell any shares under the ATM Sales Program.  As of March 31, 2015, the Company was authorized to offer and sell a remainder of approximately $34.3 million of its shares of common stock under the ATM Sales Program.

The Company declared and paid dividends as follows (in thousands, except per share amounts):

Quarter Paid	Dividends Per Share		Total Dividends
First quarter of 2015	$	0.19	$	19,036
First quarter of 2014	$	0.19	$	19,036

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Net Income Per Share

3 Months Ended

Mar. 31, 2015

Net Income Per Share

Net Income Per Share

5.Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of Company shares outstanding during the period.  Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares.  There were no potential dilutive shares outstanding at March 31, 2015 and 2014, respectively.

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Related Party Transactions and Investments in Non-Consolidated Entities (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015 entity	Dec. 31, 2014 entity	Mar. 31, 2014 entity
Related Party Transactions and Investments in Non-Consolidated Entities
Sponsored REITs (in entities)	9	10	14
Number of REITs in which the entity holds non-controlling preferred stock interest	2
Number of sponsored REITs having properties which were sold	1	4
Number of entities holding mortgage loans		2
FSP Galleria North Corp.
Investment in Sponsored REITs
Repayment of principal		13,880,000
FSP Highland Place I Corp.
Investment in Sponsored REITs
Repayment of principal		3,395,000

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Financial Instruments: Derivatives and Hedging (Tables)

3 Months Ended

Mar. 31, 2015

Financial Instruments: Derivatives and Hedging

Schedule of notional and fair value of derivative financial instruments

	Notional		Strike		Effective	Expiration	Fair
(in thousands)	Value		Rate		Date	Date	Value
BMO Interest Rate Swap	$	220,000	2.32	%	Aug-13	Aug-20	$	(9,836	)
BAML Interest Rate Swap	$	400,000	0.75	%	Sep-12	Sep-17	$	774

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Subsequent Events

3 Months Ended

Mar. 31, 2015

Subsequent Events

Subsequent Events

9.Subsequent Events

On April 8, 2015, the Company acquired an office property with approximately 442,130 rentable square feet of space for $78.0 million located in the Central Perimeter Submarket of Atlanta, Georgia.

On April 10 2015, the Board of Directors of the Company declared a cash distribution of $0.19 per share of common stock payable on May 14, 2015 to stockholders of record on April 24, 2015.

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Taxes

Income Taxes

7.Income Taxes

General

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).  As a REIT, the Company generally is entitled to a tax deduction for distributions paid to its shareholders, thereby effectively subjecting the distributed net income of the Company to taxation at the shareholder level only.  The Company must comply with a variety of restrictions to maintain its status as a REIT.  These restrictions include the type of income it can earn, the type of assets it can hold, the number of shareholders it can have and the concentration of their ownership, and the amount of the Company’s taxable income that must be distributed annually.

One such restriction is that the Company generally cannot own more than 10% of the voting power or value of the securities of any one issuer unless the issuer is itself a REIT or a taxable REIT subsidiary (“TRS”).  In the case of TRSs, the Company’s ownership of securities in all TRSs generally cannot exceed 25% of the value of all of the Company’s assets and, when considered together with other non-real estate assets, cannot exceed 25% of the value of all of the Company’s assets.  FSP Investments and FSP Protective TRS Corp. are the Company’s taxable REIT subsidiaries operating as taxable corporations under the Code.

Income taxes are recorded based on the future tax effects of the difference between the tax and financial reporting bases of the Company’s assets and liabilities.  In estimating future tax consequences, potential future events are considered except for potential changes in income tax law or in rates.

The Company adopted an accounting pronouncement related to uncertainty in income taxes effective January 1, 2007, which did not result in recording a liability, nor was any accrued interest and penalties recognized with the adoption.  Accrued interest and penalties will be recorded as income tax expense, if the Company records a liability in the future.  The Company’s effective tax rate was not affected by the adoption.  The Company and one or more of its subsidiaries files income tax returns in the U.S federal jurisdiction and various state jurisdictions.  The statute of limitations for the Company’s income tax returns is generally three years and as such, the Company’s returns that remain subject to examination would be primarily from 2011 and thereafter.

The Company is subject to business tax (the “Revised Texas Franchise Tax”).  The Revised Texas Franchise Tax is a tax at a rate of approximately 0.7% of revenues at Texas properties commencing with 2007 revenues.  Some of the Company’s leases allow reimbursement by tenants for these amounts because the Revised Texas Franchise Tax replaces a portion of the property tax for school districts.  Because the tax base on the Revised Texas Franchise Tax is derived from an income based measure it is considered an income tax.  The Company recorded a provision for income taxes on its income statement of $159,000 and $127,000 for the three months ended March 31, 2015 and 2014, respectively.

Net operating losses

Section 382 of the Code restricts a corporation’s ability to use net operating losses (“NOLs”) to offset future taxable income following certain “ownership changes.” Such ownership changes occurred with past mergers and accordingly a portion of the NOLs incurred by the Sponsored REITs available for use by the Company in any particular future taxable year will be limited. To the extent that the Company does not utilize the full amount of the annual NOLs limit, the unused amount may be carried forward to offset taxable income in future years. NOLs expire 20 years after the year in which they arise, and the last of the Company’s NOLs will expire in 2027. A valuation allowance is provided for the full amount of the NOLs as the realization of any tax benefits from such NOLs is not assured.  The gross amount of NOLs available to the Company was $13,041,000, as of March 31, 2015 and December 31, 2014.

Income Tax Expense

The income tax expense reflected in the consolidated statements of income relates primarily to a franchise tax on our Texas properties.  FSP Protective TRS Corp. provides taxable services to tenants at some of the Company’s properties and the tax expenses associated with these activities are reported as Other Taxes in the table below:

	For the
	Three Months Ended
	March 31,
(in thousands)	2015		2014
Revised Texas franchise tax	$	159	$	127
Other Taxes	2		10
Income tax expense	$	161	$	137

Taxes on income are a current tax expense.  No deferred income taxes were provided as there were no material temporary differences between the financial reporting basis and the tax basis of the TRSs.

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Dispositions of properties

3 Months Ended

Mar. 31, 2015

Dispositions of properties

Dispositions of properties

8.Dispositions of properties

The Company sold an office property located in Plano, Texas on February 23, 2015 at a $1.5 million gain and an office property located in Eden Prairie, Minnesota on March 31, 2015 at a $9.0 million gain.  The disposal of the properties does not represent a strategic shift that has a major effect on the Company’s operations and financial results.  Accordingly, the properties remain classified within continuing operations for all periods presented.

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Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards (Policies)

3 Months Ended

Mar. 31, 2015

Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards

Basis of Presentation

Basis of Presentation

The unaudited condensed consolidated financial statements of the Company include all the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission.

The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission.  Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included.  Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ended December 31, 2015 or for any other period.

Financial Instruments

Financial Instruments

The Company estimates that the carrying values of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued expenses, accrued compensation, tenant security deposits approximate their fair values based on their short-term maturity and the bank note and term loans payable approximate their fair values as they bear interest at variable interest rates.

Recent Accounting Standards

Recent Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. This update is effective for interim and annual reporting periods beginning after December 15, 2016.  The Company is currently in the process of evaluating the impact the adoption of this ASU will have on the condensed consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  This update requires an entity to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances.  This update is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter with early adoption permitted.  The implementation of this update is not expected to cause any significant changes to the condensed consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This update is effective for interim and annual reporting periods beginning after December 15, 2015 and requires retrospective application. The implementation of this update is not expected to cause any material changes to the condensed consolidated financial statements other than the reclassification of debt issuance costs from assets to contra liabilities on the condensed consolidated balance sheets. As of March 31, 2015 and December 31, 2014, $7.1 million and $7.6 million, respectively, would be reclassified from assets to contra liabilities on the condensed consolidated balance sheets.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. A reporting entity may apply the amendments in ASU 2015-02 using: (a) a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption; or (b) by applying the amendments retrospectively. We are currently assessing the potential impact that the adoption of ASU 2015-02 will have on the condensed consolidated financial statements.

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Subsequent Events (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		0 Months Ended
	Mar. 31, 2015 sqft	Mar. 31, 2014 sqft	Apr. 08, 2015	Apr. 10, 2015
Subsequent Events
Area of property (in square feet)	9,310,131	9,686,055
Cash dividend declared per share (in dollars per share)	$ 0.19	$ 0.19
Subsequent Events | Office property in Atlanta, Georgia
Subsequent Events
Area of property (in square feet)			442,130
Payments to acquire office property			$ 78.0
Cash distribution declared | Subsequent Events
Subsequent Events
Cash dividend declared per share (in dollars per share)				$ 0.19

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2015

Income Taxes

Schedule of income tax expense reflected in the condensed consolidated statements of income

	For the
	Three Months Ended
	March 31,
(in thousands)	2015		2014
Revised Texas franchise tax	$	159	$	127
Other Taxes	2		10
Income tax expense	$	161	$	137

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Related Party Transactions and Investments in Non-Consolidated Entities (Details 4) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Sponsored REITs
Maximum amount of loan	$ 111,300,000
Amount Drawn	93,641,000		93,641,000
Interest income and fees from the Sponsored REIT Loans	1,262,000	1,409,000
Sponsored REITs
Sponsored REITs
Term of sponsored REIT loan secured by mortgage, minimum	1 year
Term of sponsored REIT loan secured by mortgage, maximum	3 years
Extended term of sponsored REIT loan secured by mortgage, minimum	1 year
Secured revolving lines of credit | FSP Satellite Place Corp.
Sponsored REITs
Maximum amount of loan	5,500,000
Amount Drawn	5,500,000
Sponsored REIT loans, base rate	30-day LIBOR
Sponsored REIT loans, base rate margin (as a percent)	4.40%
Draw Fee (as a percent)	0.50%
Interest rate (as a percent)	4.57%
Secured revolving lines of credit | FSP 1441 Main Street Corp.
Sponsored REITs
Maximum amount of loan	10,800,000
Amount Drawn	9,000,000
Sponsored REIT loans, base rate	30-day LIBOR
Sponsored REIT loans, base rate margin (as a percent)	4.40%
Draw Fee (as a percent)	0.50%
Interest rate (as a percent)	4.57%
Secured revolving lines of credit | FSP Energy Tower I Corp.
Sponsored REITs
Maximum amount of loan	20,000,000
Amount Drawn	8,600,000
Sponsored REIT loans, base rate	30-day LIBOR
Sponsored REIT loans, base rate margin (as a percent)	5.00%
Draw Fee (as a percent)	0.50%
Interest rate (as a percent)	5.17%
Secured construction loan | FSP 385 Interlocken Development Corp.
Sponsored REITs
Maximum amount of loan	42,000,000
Amount Drawn	37,541,000
Sponsored REIT loans, base rate	30-day LIBOR
Sponsored REIT loans, base rate margin (as a percent)	4.40%
Interest rate (as a percent)	4.57%
Mortgage loan secured by property | FSP Energy Tower I Corp.
Sponsored REITs
Maximum amount of loan	33,000,000
Amount Drawn	$ 33,000,000
Fixed rate of interest (as a percent)	6.41%
Interest rate (as a percent)	6.41%

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Condensed Consolidated Statements of Other Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Condensed Consolidated Statements of Other Comprehensive Income (Loss)
Net income	$ 12,533	$ 3,573
Other comprehensive income:
Unrealized loss on derivative financial instruments	(4,814)	(2,301)
Total other comprehensive income	(4,814)	(2,301)
Comprehensive income	$ 7,719	$ 1,272

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Financial Instruments: Derivatives and Hedging

3 Months Ended

Mar. 31, 2015

Financial Instruments: Derivatives and Hedging

Financial Instruments: Derivatives and Hedging

4.Financial Instruments: Derivatives and Hedging

On August 26, 2013, the Company fixed the interest rate for seven years on the BMO Credit Agreement with an interest rate swap agreement (the “BMO Interest Rate Swap”) and on September 27, 2012, the Company fixed the interest rate for five years on the BAML Term Loan with an interest rate swap agreement (the “BAML Interest Rate Swap”). The variable rates that were fixed under the BMO Interest Rate Swap and the BAML Interest Rate Swap are described in Note 3.

The BMO Interest Rate Swap and the BAML Interest Rate Swap qualify as cash flow hedges and have been recognized on the consolidated balance sheet at fair value.  If a derivative qualifies as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings.  The ineffective portion of a derivative’s change in fair value will be immediately recognized in earnings, which may increase or decrease reported net income and stockholders’ equity prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows.

The following table summarizes the notional and fair value of our derivative financial instruments at March 31, 2015.  The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks.

	Notional		Strike		Effective	Expiration	Fair
(in thousands)	Value		Rate		Date	Date	Value
BMO Interest Rate Swap	$	220,000	2.32	%	Aug-13	Aug-20	$	(9,836	)
BAML Interest Rate Swap	$	400,000	0.75	%	Sep-12	Sep-17	$	774

On March 31, 2015, the BMO Interest Rate Swap was reported as a liability at its fair value of approximately $9.8 million and the BAML Interest Rate Swap was reported as an asset at its fair value of approximately $0.8 million.  These are included in other liabilities: derivative liability and other assets: derivative asset on the condensed consolidated balance sheet at March 31, 2015 and December 31, 2014, respectively.  Offsetting adjustments are reported as unrealized gains or losses on derivative financial instruments in accumulated other comprehensive income of $4.8 million.  During the three months ended March 31, 2015, $1.8 million was reclassified out of other comprehensive income and into interest expense.

Over time, the unrealized gains and losses held in accumulated other comprehensive income will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest payments affect earnings.  We estimate that approximately $1.5 million of the current balance held in accumulated other comprehensive income will be reclassified into earnings within the next 12 months.

We are hedging the exposure to variability in anticipated future interest payments on existing debt.

The fair value of the Company’s derivative instruments are determined using the net discounted cash flows of the expected cash flows of the derivative based on the market based interest rate curve and are adjusted to reflect credit or nonperformance risk.  The risk is estimated by the Company using credit spreads and risk premiums that are observable in the market. These financial instruments were classified within Level 2 of the fair value hierarchy and were classified as an asset or liability on the condensed consolidated balance sheets.

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Related Party Transactions and Investments in Non-Consolidated Entities (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 entity	Mar. 31, 2014 entity	Dec. 31, 2014 entity
Related Party Transactions and Investments in Non-Consolidated Entities
Sponsored REITs (in entities)	9	14	10
Balance Sheet Data (unaudited):
Real estate, net	$ 421,849		$ 451,822
Other assets	105,791		127,259
Total liabilities	(200,754)		(203,239)
Shareholders' equity	326,886		375,842
Operating Data (unaudited):
Rental revenues	13,900	23,305
Other revenues	2	14
Operating and maintenance expenses	(8,235)	(11,746)
Depreciation and amortization	(4,975)	(7,677)
Interest expense	(2,457)	(3,431)
Net income	$ (1,765)	$ 465

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2015

Stockholders' Equity

Schedule of dividends declared and paid

The Company declared and paid dividends as follows (in thousands, except per share amounts):

Quarter Paid	Dividends Per Share		Total Dividends
First quarter of 2015	$	0.19	$	19,036
First quarter of 2014	$	0.19	$	19,036