8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 30, 2018

Franklin Street Properties Corp.

(Exact name of registrant as specified in its charter)

Maryland	001-32470	04-3578653
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

401 Edgewater Place, Suite 200, Wakefield, Massachusetts	01880
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (781) 557-1300

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Item 2.02.  Results of Operations and Financial Condition.

On October 30, 2018, Franklin Street Properties Corp. (the “Registrant”) announced its financial results for the three months ended September 30, 2018.  The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.  The press release references certain supplemental operating and financial data that is now available on the Registrant’s website.  A copy of the supplemental operating and financial data is attached hereto as Exhibit 99.2 and is incorporated by reference herein. 

The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits

See Exhibit Index attached hereto.

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued by Franklin Street Properties Corp. on October 30, 2018.
99.2	Supplemental Operating and Financial Data for the Third Quarter of 2018.

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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 hereunto duly authorized.

	FRANKLIN STREET PROPERTIES CORP.
Date:  October 30, 2018	By:	/s/ George J. Carter
		George J. Carter
		Chief Executive Officer

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EX-99.1

Exhibit 99.1

PRESS RELEASE Franklin Street Properties Corp.

401 Edgewater Place  Suite 200  Wakefield, Massachusetts  01880  (781) 557-1300 www.fspreit.com

Contact: Georgia Touma   (877) 686-9496 For Immediate Release

Franklin Street Properties Corp. Announces

Third Quarter 2018 Results

Wakefield, MA—October 30,  2018—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE American:  FSP), a real estate investment trust (REIT), announced its results for the third quarter ended September 30, 2018.         

George J. Carter, Chairman and Chief Executive Officer, commented as follows:

“For the third quarter of 2018, FSP’s Funds from Operations or FFO totaled approximately $26.2 million or $0.24 per share.  Leasing activity continued to be strong within our property portfolio during the quarter and we are currently seeing that activity extend into the fourth quarter of 2018.  We also saw increased leasing in our energy influenced markets of Houston and Denver and anticipate further occupancy gains in those markets during the balance of the year as well as 2019.  Dispositions during the quarter of the properties owned by two of our single-asset REITs in which FSP had a financial interest provided initial cash proceeds totaling approximately $74.9 million, which was used for debt reduction.  These dispositions are projected to have the net effect of reducing FFO for the fourth quarter and full year 2018, and are reflected in our updated FFO guidance.  A recast of two of our existing unsecured term loans totaling $370 million during the quarter moved out our near term debt maturities, achieved future interest cost savings and maintained corporate liquidity for anticipated future leasing costs. We remain optimistic about achieving meaningful value creation within our property portfolio during 2018 and 2019, while maintaining our financial capabilities to help achieve those results.” 

Highlights

· FFO was $26.2 million or $0.24 per basic and diluted share for the third  quarter ended September 30, 2018.  We had Net Income of $9.6 million or $0.09 per basic and diluted share for the third quarter ended September 30, 2018.        

· Adjusted Funds From Operations (AFFO) was $0.12 per basic and diluted share for the third quarter of 2018. 

· During the third quarter we recast $370 million of our unsecured term loans with our bank group and extended maturities of these loans, with $205 million now maturing in November 2021, and $165 million now maturing in January 2024.  As a result, we have no scheduled debt maturities for the next three years.  The lending spreads on these loans decreased, which we anticipate will decrease interest costs approximately $1 million on an annualized basis while outstanding based on our current credit rating. 

· We reduced debt $81 million during the third quarter, primarily from application of approximately $74.9 million in cash proceeds from dispositions of the properties owned by two of our single-asset REITs in which we had a financial interest.                   

Leasing Update

· Our directly owned real estate portfolio of 34 properties totaling approximately 9.8 million square feet was approximately 90.5% leased as of September 30, 2018, which was a 1.5% increase compared to June 30, 2018.            

· During the three months ended September 30, 2018, we leased approximately 515,000 square feet, of which approximately 177,000 square feet was with new tenants.  During the nine months ended September 30, 2018, we leased approximately 1,283,000 square feet, of which approximately 343,000 square feet was with new tenants.  

· The portfolio assets in our five core markets reached a three-year high point of 88.0% leased

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occupancy as of September 30, 2018, primarily from leasing improvements in our Denver and Houston assets.   

o Our core market of Denver’s leased percentage increased to 89.6% as of September 30, 2018, up from 87.5% leased as of June 30, 2018.

o Our core market of Houston’s leased percentage increased to 85.1% as of September 30, 2018, up from 79.3% leased as of June 30, 2018.

· FSP expects the overall trend of improving leased occupancy in our core five markets to continue into 2019. 

Acquisition and Disposition Update

· On July 19, 2018, one of our single-asset REITs, FSP Grand Boulevard Corp., sold the property owned by it to a third party.  On August 17, 2018, we received an initial cash distribution of $5.9 million in consideration of the  financial interest we previously held.         

· On September 24, 2018, one of our single-asset REITs, FSP 303 East Wacker Drive Corp., sold the property owned by it to a third party.  On September 27, 2018, we received an initial cash distribution of $69 million in consideration of the financial interest we previously held.     

· We anticipate potential additional disposition activity within our managed portfolio during the remainder of 2018 and/or 2019.       

Dividend Update

On October 5, 2018, the Company announced that its Board of Directors declared a regular quarterly cash dividend for the three months ended September 30, 2018 of $0.09 per share of common stock that will be paid on November 8, 2018 to stockholders of record on October 19, 2018.      

Non-GAAP Financial Information

A reconciliation of Net income (loss) to FFO, AFFO and Sequential Same Store NOI and our definitions of FFO, AFFO and Sequential Same Store NOI can be found on Supplementary Schedules H and I.    

Real Estate Update

Supplementary schedules provide property information for the Company’s owned and managed real estate portfolio as of September 30, 2018.  The Company will also be filing an updated supplemental information package that will provide stockholders and the financial community with additional operating and financial data.  The Company will file this supplemental information package with the SEC and make it available on its website at www.fspreit.com.  

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FFO Guidance

We are updating our full year FFO guidance for 2018, which is estimated to be in the range of approximately $0.96 to $0.97 per basic and diluted share, and are initiating guidance for the fourth quarter of 2018, which is estimated to be in the range of approximately $0.23 to $0.24 per basic and diluted share.  We are updating full year 2018 net income guidance, which is estimated to be in the range of approximately $0.11 to $0.12 per basic and diluted share, and are initiating net income guidance for the fourth quarter of 2018, which is estimated to be in the range of approximately $0.00 to $0.01 per basic and diluted share.  This guidance (a) excludes the impact of future acquisitions, developments, dispositions, debt financings or repayments or other capital market transactions; (b) reflects estimates from our ongoing portfolio of properties, other real estate investments and general and administrative expenses; and (c) reflects our current expectations of economic conditions.  We will update guidance quarterly in our earnings releases.  There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above. 

A reconciliation of the guidance for net income (loss) per share to the guidance for FFO per share is provided as follows:  

		Q4 2018 Range				Full Year 2018 Range
	Low		High		Low		High
Net income (loss) per share	$	-	$	0.01	$	0.11	$	0.12
GAAP income from non-consolidated REITs		-		-		(0.06)		(0.06)
FFO from non-consolidated REITs		-		-		0.02		0.02
Depreciation & Amortization		0.23		0.23		0.89		0.89
Funds From Operations per share	$	0.23	$	0.24	$	0.96	$	0.97

Today’s news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.fspreit.com.  We routinely post information that may be important to investors in the Investor Relations section of our website.  We encourage investors to consult that section of our website regularly for important information about us and, if they are interested in automatically receiving news and information as soon as it is posted, to sign up for E-mail Alerts. 

Earnings Call

A conference call is scheduled for October 31, 2018 at 10:00 a.m. (ET) to discuss the third quarter results. To access the call, please dial 1-800-464-8240. Internationally, the call may be accessed by dialing 1-412-902-6521. To access the call from Canada, please dial 1-866-605-3852. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.fspreit.com) at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.     

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on investing in institutional-quality office properties in the U.S.  FSP’s strategy is to invest in select urban infill and central business district (CBD) properties, with primary emphasis on our five core markets of Atlanta, Dallas, Denver, Houston, and Minneapolis.  FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income.  FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes.  To learn more about FSP please visit our website at www.fspreit.com.

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Forward-Looking Statements

Statements made in this press release that state FSP’s or management’s intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  This press release may also contain forward-looking statements, such as our ability to lease space in the future,  expectations for FFO and net income (loss) in future periods, expectations for growth,  leasing and acquisition and disposition activities in future periods, including in the Denver and Houston markets, and prospects for long-term sustainable growth, that are based on current judgments and current knowledge of management and 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, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated such as utility rate and usage increases, delays in construction schedules, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments.  See the “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, as the same may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission.  Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, acquisitions, dispositions, performance or achievements.  We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law. 

Franklin Street Properties Corp.

Earnings Release

Supplementary Information

Table of Contents

Franklin Street Properties Corp. Financial Results	A-C
Real Estate Portfolio Summary Information	D
Portfolio and Other Supplementary Information	E
Percentage of Leased Space	F
Largest 20 Tenants – FSP Owned Portfolio	G
Reconciliation and Definitions of Funds From Operations (FFO) and Adjusted
Funds From Operations (AFFO)	H
Reconciliation and Definition of Sequential Same Store results to Property Net
Operating Income (NOI) and Net Income (Loss)	I

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Franklin Street Properties Corp. Financial Results

Supplementary Schedule A

Condensed Consolidated Income (Loss) Statements

(Unaudited)

	For the				For the
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share amounts)	2018		2017		2018		2017
Revenue:
Rental	$	67,436	$	67,339	$	198,473	$	201,710
Related party revenue:
Management fees and interest income from loans		1,261		1,278		3,793		4,014
Other		8		9		26		29
Total revenue		68,705		68,626		202,292		205,753
Expenses:
Real estate operating expenses		17,946		17,898		52,051		52,492
Real estate taxes and insurance		11,651		11,882		35,120		35,880
Depreciation and amortization		23,277		24,988		70,903		75,599
General and administrative		3,394		3,286		9,908		9,806
Interest		9,935		8,258		29,174		23,730
Total expenses		66,203		66,312		197,156		197,507
Income before equity in income (loss) of non-consolidated REITs, other, gain (loss) on sale of properties and properties held for sale, less applicable income tax and taxes		2,502		2,314		5,136		8,246
Equity in income (loss) of non-consolidated REITs		7,180		(121)		6,793		(719)
Other		—		67		—		218
Gain (loss) on sale of properties and properties held for sale, less applicable income tax		—		(257)		—		(18,460)
Income (loss) before taxes on income		9,682		2,003		11,929		(10,715)
Taxes on income		74		100		231		297
Net income (loss)	$	9,608	$	1,903	$	11,698	$	(11,012)
Weighted average number of shares outstanding,  basic and diluted		107,231		107,231		107,231		107,231
Net income (loss) per share, basic and diluted	$	0.09	$	0.02	$	0.11	$	(0.10)

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Franklin Street Properties Corp. Financial Results

Supplementary Schedule B

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30,		December 31,
(in thousands, except share and par value amounts)	2018		2017
Assets:
Real estate assets:
Land	$	191,578	$	191,578
Buildings and improvements		1,848,362		1,811,631
Fixtures and equipment		7,842		5,614
		2,047,782		2,008,823
Less accumulated depreciation		419,746		376,131
Real estate assets, net		1,628,036		1,632,692
Acquired real estate leases, less accumulated amortization of $98,890 and $109,771, respectively		65,687		86,520
Investment in non-consolidated REITs		—		70,164
Cash, cash equivalents and restricted cash		10,434		9,819
Tenant rent receivables, less allowance for doubtful accounts of $225 and $250, respectively		3,206		3,123
Straight-line rent receivable, less allowance for doubtful accounts of $50 and $50, respectively		53,056		53,194
Prepaid expenses and other assets		9,259		8,387
Related party mortgage loan receivables		70,925		71,720
Other assets: derivative asset		22,265		13,925
Office computers and furniture, net of accumulated depreciation of $1,493 and $1,420, respectively		216		289
Deferred leasing commissions, net of accumulated amortization of $24,059 and $22,276, respectively		45,475		40,679
Total assets	$	1,908,559	$	1,990,512
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	17,000	$	78,000
Term loans payable, less unamortized financing costs of $6,086 and $5,099, respectively		763,914		764,901
Series A&B Senior Notes, less unamortized financing costs of $1,191 and $1,308, respectively		198,809		198,692
Accounts payable and accrued expenses		62,699		61,039
Accrued compensation		2,844		3,641
Tenant security deposits		5,619		5,383
Other liabilities: derivative liabilities		—		1,759
Acquired unfavorable real estate leases, less accumulated amortization of $7,985 and $7,638, respectively		4,261		5,805
Total liabilities		1,055,146		1,119,220
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, 107,231,155 and 107,231,155 shares issued and outstanding, respectively		11		11
Additional paid-in capital		1,356,457		1,356,457
Accumulated other comprehensive loss		22,265		12,166
Accumulated distributions in excess of accumulated earnings		(525,320)		(497,342)
Total stockholders’ equity		853,413		871,292
Total liabilities and stockholders’ equity	$	1,908,559	$	1,990,512

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Franklin Street Properties Corp. Financial Results

Supplementary Schedule C

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the
	Nine Months Ended
	September 30,
(in thousands)	2018		2017
Cash flows from operating activities:
Net income (loss)	$	11,698	$	(11,012)
Adjustments to reconcile net income or loss to net cash provided by operating activities:
Depreciation and amortization expense		73,127		77,418
Amortization of above and below market leases		(405)		(941)
Equity in (income) loss of non-consolidated REITs		(6,793)		719
Hedge ineffectiveness		—		(218)
Loss on sale of properties and properties held for sale, less applicable income tax		—		18,460
Increase (decrease) in allowance for doubtful accounts		(25)		25
Changes in operating assets and liabilities:
Tenant rent receivables		(58)		(902)
Straight-line rents		821		(2,021)
Lease acquisition costs		(683)		(876)
Prepaid expenses and other assets		(487)		(1,945)
Accounts payable and accrued expenses		(2,665)		(489)
Accrued compensation		(797)		(784)
Tenant security deposits		236		76
Payment of deferred leasing commissions		(11,051)		(8,178)
Net cash provided by operating activities		62,918		69,332
Cash flows from investing activities:
Property improvements, fixtures and equipment		(35,901)		(41,862)
Investment in non-consolidated REITs		74,931		—
Distributions in excess of earnings from non-consolidated REITs		710		1,041
Repayment of related party mortgage loan receivable		795		9,795
Proceeds received on sales of real estate assets		—		6,160
Net cash used in investing activities		40,535		(24,866)
Cash flows from financing activities:
Distributions to stockholders		(39,676)		(61,122)
Borrowings under bank note payable		30,000		60,000
Repayments of bank note payable		(91,000)		(40,000)
Deferred financing costs		(2,162)		—
Net cash used in financing activities		(102,838)		(41,122)
Net increase in cash, cash equivalents and restricted cash		615		3,344
Cash, cash equivalents and restricted cash, beginning of year		9,819		9,366
Cash, cash equivalents and restricted cash, end of period	$	10,434	$	12,710

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Franklin Street Properties Corp. Earnings Release

Supplementary Schedule D

Real Estate Portfolio Summary Information

(Unaudited & Approximated)

Commercial portfolio lease expirations (1)
	Total	% of
Year	Square Feet	Portfolio
2018	562,230	5.8%
2019	953,783	9.8%
2020	991,024	10.2%
2021	696,686	7.1%
2022	1,228,487	12.6%
Thereafter (2)	5,328,489	54.5%
	9,760,699	100.0%

(1) Percentages are determined based upon total square footage.   

(2) Includes 931,200 square feet of current vacancies.

(dollars & square feet in 000's)	As of September 30, 2018
	# of			% of	Square	% of
State	Properties	Investment		Portfolio	Feet	Portfolio
Colorado	6	$	538,772	33.5%	2,609	26.7%
Texas	9		348,576	21.7%	2,417	24.8%
Georgia	5		322,282	20.0%	1,967	20.2%
Minnesota (a)	2		96,624	6.0%	620	6.3%
Virginia	4		83,544	5.2%	685	7.0%
North Carolina	2		50,975	3.2%	322	3.3%
Missouri	2		48,150	3.0%	351	3.6%
Illinois	2		49,350	3.1%	372	3.8%
Florida	1		37,805	2.4%	213	2.2%
Indiana	1		30,135	1.9%	205	2.1%
Total	34	$	1,606,213	100.0%	9,761	100.0%

(a) Excludes approximately $21,823, which is our investment in a property that was redeveloped and is classified as non-operating.       

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Franklin Street Properties Corp. Earnings Release

Supplementary Schedule E

Portfolio and Other Supplementary Information

(Unaudited & Approximated)

Recurring Capital Expenditures

(in thousands)	For the Three Months Ended						Nine Months
	31-Mar-18		30-Jun-18		30-Sep-18		30-Sep-18
Tenant improvements	$	6,777	$	8,212	$	7,084	$	22,073
Deferred leasing costs		1,021		5,314		4,394		10,729
Non-investment capex		1,858		2,558		2,328		6,744
	$	9,656	$	16,084	$	13,806	$	39,546

	For the Three Months Ended								Year Ended
	31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Tenant improvements	$	6,474	$	5,363	$	4,474	$	4,166	$	20,477
Deferred leasing costs		1,579		1,963		4,482		5,869		13,893
Non-investment capex		1,670		1,685		1,860		3,836		9,051
	$	9,723	$	9,011	$	10,816	$	13,871	$	43,421

Square foot & leased percentages	September 30,	December 31,
	2018	2017
Owned portfolio of commercial real estate
Number of properties (a)	34	34
Square feet	9,760,699	9,761,984
Leased percentage	90.5%	89.7%
Investments in non-consolidated REITs (b)
Number of properties	—	2
Square feet	—	1,396,071
Leased percentage	—	75.3%
Single Asset REITs (SARs) managed
Number of properties	3	4
Square feet	674,342	810,278
Leased percentage	93.9%	93.0%
Total owned, investments & managed properties
Number of properties	37	40
Square feet	10,435,041	11,968,333
Leased percentage	90.7%	88.2%

(a) Excludes one property that was redeveloped and is classified as non-operating. 

(b) Properties were sold during the three months ended September 30, 2018. 

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Franklin Street Properties Corp. Earnings Release

Supplementary Schedule F

Percentage of Leased Space

(Unaudited & Estimated)

					Second		Third
				% Leased (1)	Quarter	% Leased (1)	Quarter
				as of	Average %	as of	Average %
	Property Name	Location	Square Feet	30-Jun-18	Leased (2)	30-Sep-18	Leased (2)
1	FOREST PARK	Charlotte, NC	62,212	100.0%	100.0%	100.0%	100.0%
2	MEADOW POINT	Chantilly, VA	138,537	100.0%	100.0%	100.0%	100.0%
3	TIMBERLAKE	Chesterfield, MO	234,496	100.0%	100.0%	100.0%	100.0%
4	TIMBERLAKE EAST	Chesterfield, MO	117,036	100.0%	100.0%	100.0%	100.0%
5	NORTHWEST POINT	Elk Grove Village, IL	177,095	100.0%	100.0%	100.0%	100.0%
6	PARK TEN	Houston, TX	157,460	89.5%	84.9%	89.5%	89.5%
7	PARK TEN PHASE II	Houston, TX	156,746	1.4%	1.4%	59.7%	34.6%
8	GREENWOOD PLAZA	Englewood, CO	196,236	100.0%	100.0%	100.0%	100.0%
9	ADDISON	Addison, TX	288,794	100.0%	100.0%	100.0%	100.0%
10	COLLINS CROSSING	Richardson, TX	300,887	100.0%	100.0%	100.0%	100.0%
11	INNSBROOK	Glen Allen, VA	298,456	100.0%	100.0%	100.0%	100.0%
12	RIVER CROSSING	Indianapolis, IN	205,059	94.9%	95.3%	94.9%	94.9%
13	LIBERTY PLAZA	Addison, TX	218,934	85.8%	85.0%	80.8%	80.3%
14	380 INTERLOCKEN	Broomfield, CO	240,358	86.2%	86.2%	86.2%	86.2%
15	390 INTERLOCKEN	Broomfield, CO	241,512	98.8%	98.5%	98.2%	98.4%
16	BLUE LAGOON	Miami, FL	212,619	100.0%	100.0%	100.0%	100.0%
17	ELDRIDGE GREEN	Houston, TX	248,399	100.0%	100.0%	100.0%	100.0%
18	ONE OVERTON PARK	Atlanta, GA	387,267	79.3%	67.4%	79.7%	79.5%
19	LOUDOUN TECH	Dulles, VA	136,658	95.7%	95.7%	95.7%	95.7%
20	4807 STONECROFT	Chantilly, VA	111,469	100.0%	100.0%	100.0%	100.0%
21	121 SOUTH EIGHTH ST	Minneapolis, MN	293,460	78.9%	78.1%	80.4%	79.1%
22	EMPEROR BOULEVARD	Durham, NC	259,531	100.0%	100.0%	100.0%	100.0%
23	LEGACY TENNYSON CTR	Plano, TX	202,600	86.4%	86.4%	90.4%	87.7%
24	ONE LEGACY	Plano, TX	214,110	100.0%	100.0%	100.0%	100.0%
25	909 DAVIS	Evanston, IL	195,098	92.2%	92.2%	97.8%	97.8%
26	ONE RAVINIA DRIVE	Atlanta, GA	386,602	91.3%	91.7%	91.3%	91.3%
27	TWO RAVINIA	Atlanta, GA	411,047	77.4%	76.7%	78.2%	77.7%
28	WESTCHASE I & II	Houston, TX	629,025	88.1%	87.3%	84.5%	85.8%
29	1999 BROADWAY	Denver, CO	676,379	76.6%	79.3%	81.3%	78.2%
30	999 PEACHTREE	Atlanta, GA	621,946	84.8%	85.4%	84.6%	84.7%
31	1001 17th STREET	Denver, CO	655,413	93.2%	93.9%	97.7%	96.1%
32	PLAZA SEVEN	Minneapolis, MN	326,483	87.3%	86.4%	87.3%	87.3%
33	PERSHING PLAZA	Atlanta, GA	160,145	97.4%	97.4%	97.4%	97.4%
34	600 17th STREET	Denver, CO	598,630	85.4%	85.1%	84.5%	85.1%
	TOTAL WEIGHTED AVERAGE		9,760,699	89.0%	88.6%	90.5%	89.7%

(1) % Leased as of month's end includes all leases that expire on the last day of the quarter.

(2) Average quarterly percentage is the average of the end of the month leased percentage for each of the 3 months during the quarter.   

-11-

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule G

Largest 20 Tenants – FSP Owned Portfolio

(Unaudited & Estimated)

The following table includes the largest 20 tenants in FSP’s owned portfolio based on total square feet:

As of September 30, 2018

			% of
	Tenant	Sq Ft	Portfolio
1	Quintiles IMS Healthcare Incorporated	259,531	2.7%
2	CITGO Petroleum Corporation	248,399	2.6%
3	Newfield Exploration Company	234,495	2.4%
4	US Government	223,641	2.3%
5	Centene Management Company, LLC	216,879	2.2%
6	Burger King Corporation	212,619	2.2%
7	Eversheds Sutherland (US) LLP	179,868	1.8%
8	The Vail Corporation	164,636	1.7%
9	EOG Resources, Inc.	160,937	1.7%
10	T-Mobile South, LLC dba T-Mobile	151,792	1.6%
11	Citicorp Credit Services, Inc.	146,260	1.5%
12	Petrobras America, Inc.	144,813	1.5%
13	Jones Day	140,342	1.4%
14	Argo Data Resource Corporation	140,246	1.4%
15	SunTrust Bank	127,500	1.3%
16	Federal National Mortgage Association	123,144	1.3%
17	Kaiser Foundation Health Plan	120,979	1.2%
18	Giesecke & Devrient America	112,110	1.1%
19	Northrop Grumman Systems Corp.	111,469	1.1%
20	Randstad General Partner (US)	109,638	1.1%
	Total	3,329,298	34.1%

-12-

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule H

Reconciliation and Definitions of Funds From Operations (“FFO”) and

Adjusted Funds From Operations (“AFFO”)

A reconciliation of Net income (loss) to FFO and AFFO is shown below and a definition of FFO and AFFO is provided on Supplementary Schedule I.  Management believes FFO and AFFO are used broadly throughout the real estate investment trust (REIT) industry as measurements of performance.   The Company has included the National Association of Real Estate Investment Trusts (NAREIT) FFO definition as of May 17, 2016 in the table and notes that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently.  The Company’s computation of FFO and AFFO may not be comparable to FFO or AFFO reported by other REITs or real estate companies that define FFO or AFFO differently. 

Reconciliation of Net Income (Loss) to FFO and AFFO:	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands, except per share amounts)	2018		2017		2018		2017
Net income (loss)	$	9,608	$	1,903	$	11,698	$	(11,012)
Gain (loss) on sale of properties and properties held for sale, less applicable income tax		—		257		—		18,460
GAAP (income) loss from non-consolidated REITs		(7,180)		121		(6,793)		719
FFO from non-consolidated REITs		649		874		2,511		2,465
Depreciation & amortization		23,081		24,903		70,499		74,658
NAREIT FFO		26,158		28,058		77,915		85,290
Hedge ineffectiveness		—		(67)		—		(218)
Acquisition costs of new properties		—		—		—		18
Funds From Operations (FFO)	$	26,158	$	27,991	$	77,915	$	85,090
Funds From Operations (FFO)	$	26,158	$	27,991	$	77,915	$	85,090
Reverse FFO from non-consolidated REITs		(649)		(874)		(2,511)		(2,465)
Distributions from non-consolidated REITs		—		350		710		1,041
Amortization of deferred financing costs		799		606		2,223		1,818
Straight-line rent		522		(147)		821		(2,021)
Tenant improvements		(7,084)		(4,474)		(22,073)		(16,311)
Leasing commissions		(4,394)		(4,482)		(10,729)		(8,024)
Non-investment capex		(2,328)		(1,860)		(6,744)		(5,215)
Adjusted Funds From Operations (AFFO)	$	13,024	$	17,110	$	39,612	$	53,913
Per Share Data
EPS	$	0.09	$	0.02	$	0.11	$	(0.10)
FFO	$	0.24	$	0.26	$	0.73	$	0.79
AFFO	$	0.12	$	0.16	$	0.37	$	0.50
Weighted average shares (basic and diluted)		107,231		107,231		107,231		107,231

-13-

Funds From Operations (“FFO”)

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 or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness 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 or loss (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 NAREIT may define this term in a different manner.  We have included the NAREIT FFO as of May 17, 2016 in the 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 or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

Adjusted Funds From Operations (“AFFO”)

The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO.  The Company defines AFFO as (1) FFO, (2) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (3) excluding the effect of straight-line rent, (4) plus deferred financing costs and (5) less recurring capital expenditures that are generally for maintenance of properties, which we call non-investment capex or are second generation capital expenditures.  Second generation costs include re-tenanting space after a tenant vacates, which include tenant improvements and leasing commissions. 

We exclude development/redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property. We also exclude first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned for at acquisition. 

AFFO should not be considered as an alternative to net income or loss (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 may define this term in a different manner.  We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements. 

-14-

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule I

Reconciliation and Definition of Sequential Same Store results to property Net Operating Income (NOI) and Net Income (Loss) 

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 or loss (the most directly comparable GAAP financial measure) plus 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, hedge ineffectiveness, 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 the periods presented, which we call Sequential Same Store.  The comparative Sequential Same Store results include properties held for the periods presented and exclude properties that are non-operating, being developed or redeveloped, dispositions and 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 or loss 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 and Sequential Same Store are shown in the following table:

	Rentable
	Square Feet	Three Months Ended		Three Months Ended		Inc		%
(in thousands)	or RSF	30-Sep-18		30-Jun-18		(Dec)		Change
Region
East	1,007	$	4,032	$	4,123	$	(91)	(2.2)	%
MidWest	1,549		5,104		4,955		149	3.0	%
South	4,597		16,722		15,223		1,499	9.8	%
West	2,608		11,324		11,061		263	2.4	%
Same Store	9,761		37,182		35,362		1,820	5.1	%
Acquisitions	—		—		—		—	—	%
NOI* from the continuing portfolio	9,761		37,182		35,362		1,820	5.1	%
Dispositions, Non-Operating, Development or Redevelopment	-		(69)		(38)		(31)	—	%
NOI*	9,761	$	37,113	$	35,324	$	1,789	5.1	%
Sequential Same Store		$	37,182	$	35,362	$	1,820	5.1	%
Less Nonrecurring
Items in NOI* (a)			2,504		1,141		1,363	(3.8)	%
Comparative
Sequential Same Store		$	34,678	$	34,221	$	457	1.3	%

-15-

	Three Months Ended		Three Months Ended
Reconciliation to Net income	30-Sep-18		30-Jun-18
Net income	$	9,608	$	665
Add (deduct):
(Gain) loss on sale of properties and properties held for sale, less applicable income tax		—		—
Hedge ineffectiveness		—		—
Management fee income		(712)		(746)
Depreciation and amortization		23,277		23,591
Amortization of above/below market leases		(196)		(123)
General and administrative		3,394		3,082
Interest expense		9,935		9,753
Interest income		(1,157)		(1,141)
Equity in (income) loss of non-consolidated REITs		(7,180)		282
Non-property specific items, net		144		(39)
NOI*	$	37,113	$	35,324

(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.

EX-99.2

Exhibit 99.2 

Franklin Street Properties

Supplemental Operating
and Financial Data

Third Quarter 2018

Franklin Street Properties Corp. 401 Edgewater Place ● Wakefield, MA 01880 (781) 557-1300 ● www.fspreit.com

Table of Contents

	Page		Page
Company Information	3	Tenant Analysis and Leasing Activity
		Tenants by Industry	18
Key Financial Data		20 Largest Tenants with Annualized Rent and Remaining Term	19
Financial Highlights	4	Leasing Activity	20
Income Statements	5	Lease Expirations by Square Feet	21
Balance Sheets	6	Lease Expirations with Annualized Rent per Square Foot	22
Cash Flow Statements	7	Capital Expenditures	23
Property Net Operating Income (NOI)	8
		Transaction Activity	24
Reconciliation
FFO & AFFO	9	Loan Portfolio of Secured Real Estate	25
EBITDA	10
Property NOI	11	Net Asset Value Components	26
Debt Summary	12	Appendix: Definitions of Non-GAAP Measures
		FFO	27
Capital Analysis	13	EBITDA and NOI	28
		AFFO	29
Owned and Managed Portfolio Overview	14-17

All financial information contained in this supplemental information package is unaudited.  In addition, certain statements contained in this supplemental information package may be deemed to be forward-looking statements within the meaning of the federal securities laws.  Although FSP believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.  Factors that could cause actual results to differ materially from FSP’s current expectations include general economic conditions, uncertainties relating to fiscal policy, changes in government regulations, regulatory uncertainty, geopolitical events, local real estate conditions, the performance of properties that FSP has acquired or may acquire, the timely lease-up of properties and other risks, which are detailed from time to time in FSP’s reports filed with the Securities and Exchange Commission.  FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

801 Marquette

September 30, 2018| Page 2

Company Information

Overview		Snapshot (as of September 30, 2018)
Franklin Street Properties Corp. (“FSP”, “we”, “our” or the “Company”) (NYSE American: FSP) is investing in institutional-quality office properties in the U.S.  FSP’s strategy is to invest in select urban infill and central business district (CBD) properties, with primary emphasis on our five core markets of Atlanta, Dallas, Denver, Houston, and Minneapolis.  FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income.  FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management.		Corporate Headquarters	Wakefield, MA
		Fiscal Year-End	31-Dec
		Total Properties	34
		Total Square Feet	9.8 Million
		Trading Symbol	FSP
		Exchange	NYSE American
		Common Shares Outstanding	107,231,155
		Quarterly Dividend	$0.09
Our Business		Dividend Yield	4.5%
As of September 30, 2018, the Company owned and operated a portfolio of real estate consisting of 34 properties, one property that has been redeveloped and is classified as non-operating and has three managed Sponsored REITs, From time-to-time, the Company may acquire, develop or redevelop real estate, make additional secured loans or acquire one of its Sponsored REITs. 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.		Total Market Capitalization	$1.8 Billion*
		Insider Holdings	4.0%
Management Team
George J. Carter	Jeffrey B. Carter
Chief Executive Officer and	President and Chief Investment
Chairman of the Board	Officer
John G. Demeritt	Scott H. Carter
Executive Vice President, Chief	Executive Vice President, General
Financial Officer and Treasurer	Counsel and Secretary
John F. Donahue	Eriel Anchondo
Executive Vice President	Executive Vice President and Chief Operating Officer	Greenwood Plaza, Englewood, CO
Inquiries
Inquiries should be directed to:  Georgia Touma
877.686.9496 or InvestorRelations@fspreit.com * Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt      outstanding.

September 30, 2018| Page 3

Summary of Financial Highlights

(in thousands except per share amounts, SF & number of properties)
	30-Sep-18		30-Jun-18		31-Mar-18		31-Dec-17		30-Sep-17
Income Items:
Rental revenue	$	67,436		65,409		65,628	$	65,555	$	67,339
Total revenue		68,705		66,694		66,893		66,835		68,626
Adjusted EBITDA*		35,636		34,270		34,943		34,033		35,354
Equity in income (loss) of non-consolidated REITs		7,180		(282)		(105)		(2,885)		(121)
Net income (loss)		9,608		665		1,425		(4,932)		1,903
FFO*		26,158		25,393		26,364		26,347		27,991
AFFO*		13,024		9,658		16,930		13,044		17,110
Per Share Data:
EPS	$	0.09		0.01		0.01	$	(0.05)	$	0.02
FFO*	$	0.24		0.24		0.25	$	0.25	$	0.26
AFFO*	$	0.12		0.09		0.16	$	0.12	$	0.16
Weighted Average Shares (diluted)		107,231		107,231		107,231		107,231		107,231
Closing share price	$	7.99		8.56		8.41	$	10.74	$	10.62
Dividend declared	$	0.09		0.09		0.09	$	0.19	$	0.19
AFFO Payout Ratio:		74%		100%		57%		156%		119%
Balance Sheet Items:
Real estate, net	$	1,628,036		1,627,498		1,627,941	$	1,632,692	$	1,635,706
Other assets, net		280,523		352,029		358,254		357,820		395,979
Total assets, net		1,908,559		1,979,527		1,986,195		1,990,512		2,031,685
Total liabilities, net		1,055,146		1,127,140		1,127,277		1,119,220		1,142,299
Shareholders' equity		853,413		852,387		858,918		871,292		889,386
Market Capitalization and Debt:
Total Market Capitalization (a)	$	1,843,777		1,985,899		1,969,814	$	2,199,663	$	2,208,795
Total debt outstanding (excluding unamortized financing costs)		987,000		1,068,000		1,068,000		1,048,000		1,070,000
Debt to Total Market Capitalization		53.5%		53.8%		54.2%		47.6%		48.4%
Net Debt to Adjusted EBITDA*		6.9		7.7		7.5		7.6		7.5
Owned Portfolio Leasing Statistics (b):
Owned portfolio assets		34		34		34		34		35
Portfolio total SF		9,760,699		9,760,699		9,760,657		9,761,984		10,085,889
Portfolio % leased		90.5%		89.0%		88.5%		89.7%		88.7%

(a) Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt outstanding on that date.

(b) For periods in 2018 and 2017, excludes one property that was redeveloped and is classified as non-operating, which is located in Minneapolis, Minnesota.

*See pages 9 & 10 for reconciliations of Net income or loss to FFO, AFFO and Adjusted EBITDA, respectively, and the Appendix for Definitions of these Non-GAAP Measures beginning on page 27.

September 30, 2018| Page 4

Condensed Consolidated Income Statements ($ in thousands, except per share amounts)

							Nine Months										For the
	Three Months Ended						Ended		For the Three Months Ended								Year Ended
	31-Mar-18		30-Jun-18		30-Sep-18		30-Sep-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Revenue:
Rental	$	65,628	$	65,409	$	67,436	$	198,473	$	67,376	$	66,995	$	67,339	$	65,555	$	267,265
Related party revenue:
Management fees and interest income from loans		1,256		1,276		1,261		3,793		1,370		1,366		1,278		1,271		5,285
Other		9		9		8		26		10		10		9		9		38
Total revenue		66,893		66,694		68,705		202,292		68,756		68,371		68,626		66,835		272,588
Expenses:
Real estate operating expenses		17,151		16,954		17,946		52,051		17,308		17,286		17,898		18,720		71,212
Real estate taxes and insurance		11,177		12,292		11,651		35,120		12,403		11,595		11,882		9,961		45,841
Depreciation and amortization		24,035		23,591		23,277		70,903		25,332		25,279		24,988		25,659		101,258
General and administrative		3,432		3,082		3,394		9,908		3,443		3,077		3,286		3,665		13,471
Interest		9,486		9,753		9,935		29,174		7,579		7,893		8,258		8,657		32,387
Total expenses		65,281		65,672		66,203		197,156		66,065		65,130		66,312		66,662		264,169
Income before equity in income (loss) of non-consolidated REITs, other, gain (loss) on sale of properties and properties held for sale, less applicable income tax and taxes		1,612		1,022		2,502		5,136		2,691		3,241		2,314		173		8,419
Equity in income (loss) of non-consolidated REITs		(105)		(282)		7,180		6,793		(397)		(201)		(121)		(2,885)		(3,604)
Other		—		—		—		—		22		129		67		(2,096)		(1,878)
Gain (loss) on sale of properties and provision for loss on properties held for sale, less applicable income tax		—		—		—		—		2,289		(20,492)		(257)		(21)		(18,481)
Income (loss) before taxes on income		1,507		740		9,682		11,929		4,605		(17,323)		2,003		(4,829)		(15,544)
Income tax expense		82		75		74		231		125		72		100		103		400
Net income (loss)	$	1,425	$	665	$	9,608	$	11,698	$	4,480	$	(17,395)	$	1,903	$	(4,932)	$	(15,944)
Weighted average number of shares outstanding, basic and diluted		107,231		107,231		107,231		107,231		107,231		107,231		107,231		107,231		107,231
Net income (loss) per share, basic and diluted	$	0.01	$	0.01	$	0.09	$	0.11	$	0.04	$	(0.16)	$	0.02	$	(0.05)	$	(0.15)

September 30, 2018| Page 5

	$ in thousands, except per share amounts)
	Condensed Consolidated Balance Sheets (in thousands)

	March 31,		June 30,		September 30,		March 31,		June 30,		September 30,		December 31,
	2018		2018		2018		2017		2017		2017		2017
Assets:
Real estate assets:
Land	$	191,578	$	191,578	$	191,578	$	196,178	$	191,578	$	191,578	$	191,578
Buildings and improvements		1,821,035		1,833,470		1,848,362		1,836,073		1,792,784		1,800,831		1,811,631
Fixtures and equipment		5,909		7,565		7,842		4,600		4,841		5,017		5,614
		2,018,522		2,032,613		2,047,782		2,036,851		1,989,203		1,997,426		2,008,823
Less accumulated depreciation		390,581		405,115		419,746		350,697		348,652		361,720		376,131
Real estate assets, net		1,627,941		1,627,498		1,628,036		1,686,154		1,640,551		1,635,706		1,632,692
Acquired real estate leases, net		78,729		71,861		65,687		115,471		105,811		96,282		86,520
Investment in non-consolidated REITs		69,703		69,067		—		74,423		73,876		73,405		70,164
Asset held for sale		—		—		—		—		31,868		31,615		—
Cash, cash equivalents and restricted cash		14,355		10,448		10,434		11,174		11,623		12,710		9,819
Tenant rent receivables, net		3,411		4,039		3,206		3,785		4,706		3,990		3,123
Straight-line rent receivable, net		53,430		53,294		53,056		52,304		51,590		52,272		53,194
Prepaid expenses and other assets		8,355		7,444		9,259		4,946		5,124		6,282		8,387
Related party mortgage loan receivable		71,455		71,190		70,925		81,515		72,250		71,985		71,720
Other assets: derivative asset		18,740		21,196		22,265		13,603		11,333		10,771		13,925
Office computers and furniture, net of accumulated depreciation		261		236		216		275		287		319		289
Deferred leasing commissions, net		39,815		43,254		45,475		34,636		33,548		36,348		40,679
Total assets	$	1,986,195	$	1,979,527	$	1,908,559	$	2,078,286	$	2,042,567	$	2,031,685	$	1,990,512
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	98,000	$	98,000	$	17,000	$	295,000	$	295,000	$	300,000	$	78,000
Term loan payable, net of unamortized financing costs		765,259		765,618		763,914		765,539		765,861		766,183		764,901
Series A & Series B Senior Notes		198,727		198,768		198,809		—		—		—		198,692
Accounts payable and accrued expenses		53,327		52,651		62,699		50,529		55,241		57,593		61,039
Accrued compensation		1,112		1,778		2,844		1,259		1,929		3,000		3,641
Tenant security deposits		5,588		5,576		5,619		5,441		5,367		5,431		5,383
Other liabilities: derivative liabilities		—		—		—		4,351		4,364		3,721		1,759
Acquired unfavorable real estate leases, net		5,264		4,749		4,261		8,144		6,961		6,371		5,805
Total liabilities		1,127,277		1,127,140		1,055,146		1,130,263		1,134,723		1,142,299		1,119,220
Commitments and contingencies
Stockholders’ Equity:
Preferred stock		-		—		—		-		-		-		-
Common stock		11		11		11		11		11		11		11
Additional paid-in capital		1,356,457		1,356,457		1,356,457		1,356,457		1,356,457		1,356,457		1,356,457
Accumulated other comprehensive income (loss)		18,740		21,196		22,265		7,351		4,940		4,954		12,166
Accumulated distributions in excess of accumulated earnings		(516,290)		(525,277)		(525,320)		(415,796)		(453,564)		(472,036)		(497,342)
Total stockholders’ equity		858,918		852,387		853,413		948,023		907,844		889,386		871,292
Total liabilities and stockholders’ equity	$	1,986,195	$	1,979,527	$	1,908,559	$	2,078,286	$	2,042,567	$	2,031,685	$	1,990,512

September 30, 2018| Page 6

Condensed Consolidated Statements of Cash Flows (in thousands)

		Nine Months ended September 30,			Twelve Months Ended December 31,
		2018		2017	2017		2016
Cash flows from operating activities:
Net income (loss)	$	11,698	$	(11,012)	$	(15,944)	$	8,378
Adjustments to reconcile net income or loss to net cash provided by operating activities:
Depreciation and amortization expense		73,127		77,418		103,743		95,243
Amortization of above and below market leases		(405)		(941)		(1,031)		(496)
Hedge ineffectiveness		—		(218)		1,878		(1,878)
Loss on sale of properties and properties held for sale, less applicable income tax		—		18,460		18,481		2,938
Equity in (income) loss from non-consolidated REITs		(6,793)		719		3,604		831
Increase (decrease) in allowance for doubtful accounts		(25)		25		150		(30)
Changes in operating assets and liabilities:
Tenant rent receivables		(58)		(902)		(160)		(185)
Straight-line rents		821		(2,021)		(1,767)		(1,977)
Lease acquisition costs		(683)		(876)		(2,052)		(1,095)
Prepaid expenses and other assets		(487)		(1,945)		(403)		(721)
Accounts payable and accrued expenses		(2,665)		(489)		3,870		5,751
Accrued compensation		(797)		(784)		(143)		58
Tenant security deposits		236		76		28		526
Payment of deferred leasing commissions		(11,051)		(8,178)		(14,309)		(12,965)
Net cash provided by operating activities		62,918		69,332		95,945		94,378
Cash flows from investing activities:
Property acquisitions		—		—		—		(221,119)
Acquired real estate leases		—		—		—		(51,509)
Property improvements, fixtures and equipment		(35,901)		(41,862)		(54,306)		(37,490)
Investments in non-consolidated REITs		74,931		—		—		—
Distributions in excess of earnings from non-consolidated REITs		710		1,041		1,396		1,023
Investment in related party mortgage loan receivable		—		—		—		(3,000)
Repayment of related party mortgage loan receivable		795		9,795		10,060		39,861
Proceeds received on sales of real estate assets		—		6,160		37,756		27,262
Net cash provided by (used in) investing activities		40,535		(24,866)		(5,094)		(244,972)
Cash flows from financing activities:
Distributions to stockholders		(39,676)		(61,122)		(81,496)		(77,481)
Proceeds from equity offering, net		—		—		—		82,902
Borrowings under bank note payable		30,000		60,000		75,000		175,000
Repayments of bank note payable		(91,000)		(40,000)		(277,000)		(185,000)
Borrowing from Series A & Series B Senior Notes		—		—		200,000		—
Borrowing of term loan payable		—		—		—		150,000
Deferred Financing Costs		(2,162)		—		(6,902)		(3,647)
Net cash provided by (used in) financing activities		(102,838)		(41,122)		(90,398)		141,774
Net increase (decrease) in cash, cash equivalents and restricted cash		615		3,344		453		(8,820)
Cash, cash equivalents and restricted cash, beginning of period		9,819		9,366		9,366		18,186
Cash, cash equivalents and restricted cash, end of period	$	10,434	$	12,710	$	9,819	$	9,366

September 30, 2018| Page 7

Property Net Operating Income (NOI)* with Same Store Comparison (in thousands)

	Rentable							Nine Months								Nine Months
	Square Feet	Three Months Ended						Ended		Three Months Ended						Ended		Inc		%
(in thousands)	or RSF	31-Mar-18		30-Jun-18		30-Sep-18		30-Sep-18		31-Mar-17		30-Jun-17		30-Sep-17		30-Sep-17		(Dec)		Change
Region
East	1,007	$	3,991	$	4,123	$	4,032	$	12,146	$	3,917	$	3,941	$	3,926	$	11,784	$	362	3.1	%
MidWest	1,549		6,257		4,955		5,104		16,316		4,365		3,908		4,476		12,749		3,567	28.0	%
South	4,597		15,431		15,223		16,722		47,376		17,008		16,463		16,531		50,002		(2,626)	(5.3)	%
West	2,608		10,958		11,061		11,324		33,343		10,958		12,045		11,337		34,340		(997)	(2.9)	%
Same Store	9,761		36,637		35,362		37,182		109,181		36,248		36,357		36,270		108,875		306	0.3	%
Acquisitions	—		—		—		—		—		—		—		—		—		—	—	%
Property NOI* from the continuing portfolio	9,761		36,637		35,362		37,182		109,181		36,248		36,357		36,270		108,875		306	0.3	%
Dispositions, Non-Operating, Development or Redevelopment	-		79		(38)		(69)		(28)		625		467		568		1,660		(1,688)	(1.6)	%
Property NOI*	9,761	$	36,716	$	35,324	$	37,113	$	109,153	$	36,873	$	36,824	$	36,838	$	110,535	$	(1,382)	(1.3)	%
Same Store		$	36,637	$	35,362	$	37,182	$	109,181	$	36,248	$	36,357	$	36,270	$	108,875	$	306	0.3	%
Less Nonrecurring
Items in NOI* (a)			761		1,141		2,504		4,406		65		1,178		1,103		2,346		2,060	(1.9)	%
Comparative
Same Store		$	35,876	$	34,221	$	34,678	$	104,775	$	36,183	$	35,179	$	35,167	$	106,529	$	(1,754)	(1.6)	%

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

*See the Appendix for Definition of Non-GAAP Measures beginning on page 27.

September 30, 2018| Page 8

FFO* & AFFO* Reconciliation (in thousands, except per share amounts)

							Nine Months										Year
	Three Months Ended						Ended		Three Months Ended								Ended
	31-Mar-18		30-Jun-18		30-Sep-18		30-Sep-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Net income (loss)	$	1,425	$	665	$	9,608	$	11,698	$	4,480	$	(17,395)	$	1,903	$	(4,932)	$	(15,944)
(Gain) loss on sale of properties and properties held for sale, less applicable income tax		—		—		—		—		(2,289)		20,492		257		21		18,481
GAAP (income) loss from non-consolidated REITs		105		282		(7,180)		(6,793)		397		201		121		2,885		3,604
FFO from non-consolidated REITs		884		978		649		2,511		791		800		874		708		3,173
Depreciation & amortization		23,950		23,468		23,081		70,499		25,163		24,592		24,903		25,569		100,227
NAREIT FFO*		26,364		25,393		26,158		77,915		28,542		28,690		28,058		24,251		109,541
Hedge ineffectiveness		—		—		—		—		(22)		(129)		(67)		2,096		1,878
Acquisition costs		—		—		—		—		8		10		—		—		18
Funds From Operations (FFO)*	$	26,364	$	25,393	$	26,158	$	77,915	$	28,528	$	28,571	$	27,991	$	26,347	$	111,437
Adjusted Funds From Operations (AFFO)*
Funds From Operations (FFO)*	$	26,364	$	25,393	$	26,158	$	77,915	$	28,528	$	28,571	$	27,991	$	26,347	$	111,437
Reverse FFO from non-consolidated REITs		(884)		(978)		(649)		(2,511)		(791)		(800)		(874)		(708)		(3,173)
Distributions from non-consolidated REITs		355		355		—		710		346		345		350		355		1,396
Amortization of deferred financing costs		711		713		799		2,223		606		606		606		667		2,485
Straight-line rent		40		259		522		821		(1,082)		(792)		(147)		254		(1,767)
Tenant improvements		(6,777)		(8,212)		(7,084)		(22,073)		(6,474)		(5,363)		(4,474)		(4,166)		(20,477)
Leasing commissions		(1,021)		(5,314)		(4,394)		(10,729)		(1,579)		(1,963)		(4,482)		(5,869)		(13,893)
Non-investment capex		(1,858)		(2,558)		(2,328)		(6,744)		(1,670)		(1,685)		(1,860)		(3,836)		(9,051)
Adjusted Funds From Operations (AFFO)*	$	16,930	$	9,658	$	13,024	$	39,612	$	17,884	$	18,919	$	17,110	$	13,044	$	66,957
Per Share Data:
EPS	$	0.01	$	0.01	$	0.09	$	0.11	$	0.04	$	(0.16)	$	0.02	$	(0.05)	$	(0.15)
FFO*		0.25		0.24		0.24		0.73		0.27		0.27		0.26		0.25		1.04
AFFO*		0.16		0.09		0.12		0.37		0.17		0.18		0.16		0.12		0.62
Weighted Average Shares (basic and diluted)		107,231		107,231		107,231		107,231		107,231		107,231		107,231		107,231		107,231

*See the Appendix for Definitions of these Non-GAAP Measures beginning on page 27

September 30, 2018| Page 9

EBITDA* & Adjusted EBITDA* Reconciliation (in thousands, except ratio amounts)

							Nine Months										Year
	Three Months Ended						Ended		Three Months Ended								Ended
	31-Mar-18		30-Jun-18		30-Sep-18		30-Sep-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Net income (loss)	$	1,425	$	665	$	9,608	$	11,698	$	4,480	$	(17,395)	$	1,903	$	(4,932)	$	(15,944)
Interest expense		9,486		9,753		9,935		29,174		7,579		7,893		8,258		8,657		32,387
Depreciation and amortization		23,950		23,468		23,081		70,499		25,163		24,592		24,903		25,569		100,227
Income taxes		82		75		74		231		125		72		100		103		400
EBITDA*		34,943		33,961		42,698		111,602		37,347		15,162		35,164		29,397		117,070
(Gain) loss on sale of properties and provisions for loss on properties held for sale or equity investments, less applicable income tax		—		309		(7,062)		(6,753)		(2,289)		20,492		257		2,540		21,000
Hedge ineffectiveness		—		—		—		—		(22)		(129)		(67)		2,096		1,878
Adjusted EBITDA*	$	34,943	$	34,270	$	35,636	$	104,849	$	35,036	$	35,525	$	35,354	$	34,033	$	139,948
Interest expense	$	9,486	$	9,753	$	9,935	$	29,174	$	7,579	$	7,893	$	8,258	$	8,657	$	32,387
Scheduled principal payments		—		—		—		—		—		—		—		—		—
Interest and scheduled principal payments	$	9,486	$	9,753	$	9,935	$	29,174	$	7,579	$	7,893	$	8,258	$	8,657	$	32,387
Interest coverage ratio		3.68		3.51		3.59		3.59		4.62		4.50		4.28		3.93		4.32
Debt service coverage ratio		3.68		3.51		3.59		3.59		4.62		4.50		4.28		3.93		4.32
Debt excluding unamortized financing costs	$	1,068,000	$	1,068,000	$	987,000			$	1,065,000	$	1,065,000	$	1,070,000	$	1,048,000
Cash, cash equivalents and restricted cash		14,355		10,448		10,434				11,174		11,623		12,710		9,819
Net Debt (Debt less Cash, cash equivalents and restricted cash)	$	1,053,645	$	1,057,552	$	976,566			$	1,053,826	$	1,053,377	$	1,057,290	$	1,038,181
Adjusted EBITDA*	$	34,943	$	34,270	$	35,636			$	35,036	$	35,525	$	35,354	$	34,033
Annualized	$	139,772	$	137,080	$	142,544			$	140,144	$	142,100	$	141,416	$	136,132
Net Debt-to-Adjusted EBITDA*		7.5		7.7		6.9				7.5		7.4		7.5		7.6

*See the Appendix for Definitions of these Non-GAAP Measures beginning on page 27.  Amounts in the EBITDA and Adjusted EBITDA reconciliation do not reflect our proportionate share of interest expense, depreciation, amortization, income taxes, gains or losses on sales and debt from our investments in non-consolidated REITs, which are accounted for under the equity method.

September 30, 2018| Page 10

Reconciliation of Net Income (Loss) to Property NOI* (in thousands)

Reconciliation of Net income to Property NOI*							Nine Months										Year
	Three Months Ended						Ended		Three Months Ended								Ended
	31-Mar-18		30-Jun-18		30-Sep-18		30-Sep-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Net income (loss)	$	1,425	$	665	$	9,608	$	11,698	$	4,480	$	(17,395)	$	1,903	$	(4,932)	$	(15,944)
Add (deduct):
(Gain) loss on sale of properties and properties held for sale, less applicable income taxes		—		—		—		—		(2,289)		20,492		257		21		18,481
Hedge ineffectiveness		—		—		—		—		(22)		(129)		(67)		2,096		1,878
Management fee income		(746)		(746)		(712)		(2,204)		(794)		(768)		(791)		(756)		(3,109)
Depreciation and amortization		24,035		23,591		23,277		70,903		25,332		25,279		24,988		25,659		101,258
Amortization of above/below market leases		(85)		(123)		(196)		(404)		(168)		(687)		(86)		(90)		(1,031)
General and administrative		3,432		3,082		3,394		9,908		3,443		3,077		3,286		3,665		13,471
Interest expense		9,486		9,753		9,935		29,174		7,579		7,893		8,258		8,657		32,387
Interest income		(1,120)		(1,141)		(1,157)		(3,418)		(1,214)		(1,206)		(1,134)		(1,133)		(4,687)
Equity in (income) loss of non-consolidated REITs		105		282		(7,180)		(6,793)		397		201		121		2,885		3,604
Non-property specific items, net		184		(39)		144		289		129		67		103		228		527
Property NOI*	$	36,716	$	35,324	$	37,113	$	109,153	$	36,873	$	36,824	$	36,838	$	36,300	$	146,835

*See the Appendix for Definition of Non-GAAP Measures beginning on page 27.

September 30, 2018| Page 11

Debt Summary (in thousands)

		Maximum		Amount		Interest			Interest
	Maturity	Amount		Drawn at		Rate (a)			Rate at	Facility
	Date	of Loan		30-Sep-18		Components			30-Sep-18	Fee
BAML Revolver	12-Jan-22	$	600,000	$	17,000	L	+	1.20%	3.33%	0.25%
JPM Term Loan	30-Nov-21		150,000		150,000	L	+	1.25%	3.38%
BAML Term Loan	12-Jan-23		400,000		400,000	1.12%	+	1.25%	2.47%
BMO Term Loan Tranche A	30-Nov-21		55,000		55,000	2.32%	+	1.25%	3.57%
BMO Term Loan Tranche B	31-Jan-24		165,000		165,000	2.32%	+	1.25%	3.57%
Series A Senior Notes	20-Dec-24		116,000		116,000				3.99%
Series B Senior Notes	20-Dec-27		84,000		84,000				4.26%
		$	1,570,000	$	987,000				3.20%

· On August 2, 2018, we entered into an Amended and Restated Credit Agreement, which extended the maturity of the JPM Term Loan to November 30, 2021 and reduced the number of basis points over the Eurodollar Rate used to determine the interest rate.  As of September 30, 2018, the rate was 125 basis points over the Eurodollar Rate based on our credit rating. 

· On September 27, 2018, we entered into a Second Amended and Restated Credit Agreement on our BMO Term Loan, which consists of a $55 million tranche A term loan and a $165 million tranche B term loan.  The tranche A term loan matures on November 30, 2021 and the tranche B term loan matures on January 31, 2024.  The number of basis points over LIBOR used to determine the interest rate was reduced.  As of September 30, 2018, the rate was 125 basis points over LIBOR based on our credit rating.   

· The BAML Revolver is subject to a 25 basis point facility fee based on our credit rating and, when applied to our availability of $600 million, would be $1.5 million annually.     

· On October 24, 2017, we entered into a note purchase agreement relating to a private placement of $200 million in aggregate principal amount of unsecured senior notes, consisting of $116 million in aggregate principal amount of 3.99% Series A Senior Notes with a 7-year maturity and $84 million in aggregate principal amount of 4.26% Series B Senior Notes with a 10-year maturity.  On December 20, 2017, we drew the proceeds from the private placement and reduced the outstanding balance on our revolving line of credit. 

· We incurred financing costs, some of which are deferred and amortized into interest expense during the terms loans we execute.  Following the recent amendments on August 2, 2018 and September 27, 2018, we estimate the annualized rate for amortization to interest expense from these deferred financing costs will be approximately $2.9 million.

· Additional information on these transactions can be found in Current Reports on Form 8-K that the Company filed with the U.S. Securities and Exchange Commission on October 24, 2017, August 2, 2018 and September 27, 2018.        

(a) Interest rate excludes amortization of deferred financing costs and facility fees, which is discussed in the notes above.

September 30, 2018| Page 12

Capital Analysis (in thousands, except per share amounts)

	31-Mar-18		30-Jun-18		30-Sep-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17
Market Data:
Shares Outstanding		107,231		107,231		107,231		107,231		107,231		107,231		107,231
Closing market price per share	$	8.41	$	8.56	$	7.99	$	12.14	$	11.08	$	10.62	$	10.74
Market capitalization	$	901,814	$	917,899	$	856,777	$	1,301,786	$	1,188,121	$	1,138,795	$	1,151,663
Total debt outstanding excluding unamortized financing costs		1,068,000		1,068,000		987,000		1,065,000		1,065,000		1,070,000		1,048,000
Total Market Capitalization	$	1,969,814	$	1,985,899	$	1,843,777	$	2,366,786	$	2,253,121	$	2,208,795	$	2,199,663
Dividend Data:
Total dividends declared for the quarter	$	9,651	$	9,651	$	9,651	$	20,374	$	20,374	$	20,374	$	20,374
Common dividend declared per share	$	0.09	$	0.09	$	0.09	$	0.19	$	0.19	$	0.19	$	0.19
Declared dividend as a % of Net income (loss) per share		677%		1449%		100%		455%		-117%		1071%		-413%
Declared dividend as a % of AFFO* per share		57%		100%		74%		114%		108%		119%		156%
Liquidity:
Cash, cash equivalents and restricted cash	$	14,355	$	10,448	$	10,434	$	11,174	$	11,623	$	12,710	$	9,819
Revolver:
Gross potential available under the BAML Revolver		600,000		600,000		600,000		500,000		500,000		500,000		600,000
Less:
Outstanding balance		(98,000)		(98,000)		(17,000)		(295,000)		(295,000)		(300,000)		(78,000)
Total Liquidity	$	516,355	$	512,448	$	593,434	$	216,174	$	216,623	$	212,710	$	531,819

*See page 9 for a reconciliation of Net Income (Loss) to AFFO and the Appendix for Definitions of Non-GAAP Measures beginning on page 27.

September 30, 2018| Page 13

Owned Portfolio Overview

	As of the Quarter Ended
	30-Sep-18	30-Jun-18	31-Mar-18	31-Dec-17	30-Sep-17
Owned portfolio of commercial real estate:
Number of properties (a)	34	34	34	34	35
Square feet	9,760,699	9,760,699	9,760,657	9,761,984	10,085,889
Leased percentage	90.5%	89.0%	88.5%	89.7%	88.7%
Investments in non-consolidated commercial real estate:
Number of properties (b)	—	2	2	2	2
Square feet	—	1,396,493	1,396,493	1,396,071	1,396,071
Leased percentage	—	74.0%	74.4%	75.3%	79.2%
Single Asset REITs (SARs) managed:
Number of properties	3	3	4	4	4
Square feet	674,342	674,342	810,278	810,278	810,278
Leased percentage	93.9%	96.1%	96.1%	93.0%	89.9%
Total owned, investments and managed properties:
Number of properties	37	39	40	40	41
Square feet	10,435,041	11,831,534	11,967,428	11,968,333	12,292,238
Leased percentage	90.7%	87.7%	87.4%	88.2%	87.7%
(a) Excludes one property that was redeveloped and is classified as non-operating.
(b) Properties were sold during the three months ended September 30, 2018.

September 30, 2018| Page 14

Owned Portfolio Overview

				Percent	Wtd Occupied	GAAP						Percent	Wtd Occupied	GAAP
MSA / Property Name	City	State	Square Feet	Leased	Percentage (a)	Rent (b)		MSA / Property Name	City	State	Square Feet	Leased	Percentage (a)	Rent (b)
East Region								Midwest Region
Washington, D.C.								Chicago
Meadow Point	Chantilly	VA	138,537	100.0%	100.0%	$	26.33	Northwest Point	Elk Grove Village	IL	177,095	100.0%	100.0%	$	32.38
Stonecroft	Chantilly	VA	111,469	100.0%	100.0%	$	32.80	909 Davis Street	Evanston	IL	195,098	97.8%	86.3%	$	35.32
Loudoun Tech Center	Dulles	VA	136,658	95.7%	95.8%	$	18.33
								Indianapolis
Richmond								River Crossing	Indianapolis	IN	205,059	94.9%	94.6%	$	23.57
Innsbrook	Glen Allen	VA	298,456	100.0%	100.0%	$	11.38
								St. Louis
Charlotte								Timberlake	Chesterfield	MO	234,496	100.0%	100.0%	$	28.64
Forest Park	Charlotte	NC	62,212	100.0%	100.0%	$	15.60	Timberlake East	Chesterfield	MO	117,036	100.0%	100.0%	$	26.97
Raleigh-Durham								Minneapolis
Emperor Boulevard	Durham	NC	259,531	100.0%	100.0%	$	33.99	121 South 8th Street	Minneapolis	MN	293,460	80.4%	75.7%	$	22.30
								Plaza Seven	Minneapolis	MN	326,483	87.3%	88.4%	$	35.02
East Region Total			1,006,863	99.4%	99.4%	$	22.87	Midwest Region Total			1,548,727	92.7%	90.5%	$	29.38

(a) Weighted Occupied Percentage for the nine months ended September 30, 2018.

(b) Weighted Average GAAP Rent per Occupied Square Foot.

September 30, 2018| Page 15

Owned Portfolio Overview

				Percent	Wtd Occupied	GAAP						Percent	Wtd Occupied	GAAP
MSA / Property Name	City	State	Square Feet	Leased	Percentage (a)	Rent (b)		MSA / Property Name	City	State	Square Feet	Leased	Percentage (a)	Rent (b)
South Region								West Region
Dallas-Fort Worth								Denver
Legacy Tennyson Center	Plano	TX	202,600	90.4%	74.7%	$	20.74	380 Interlocken	Broomfield	CO	240,358	86.2%	86.2%	$	29.82
One Legacy Circle	Plano	TX	214,110	100.0%	100.0%	$	37.42	1999 Broadway	Denver	CO	676,379	81.3%	77.4%	$	31.25
Addison Circle	Addison	TX	288,794	100.0%	94.7%	$	33.10	Greenwood Plaza	Englewood	CO	196,236	100.0%	100.0%	$	25.45
Collins Crossing	Richardson	TX	300,887	100.0%	100.0%	$	25.15	390 Interlocken	Broomfield	CO	241,512	98.2%	98.1%	$	30.65
Liberty Plaza	Addison	TX	218,934	80.8%	84.2%	$	21.29	1001 17th Street	Denver	CO	655,413	97.7%	92.0%	$	34.87
								600 17th Street	Denver	CO	598,630	84.5%	84.1%	$	33.00
Houston								West Region Total			2,608,528	89.6%	87.0%	$	31.90
Park Ten	Houston	TX	157,460	89.5%	74.0%	$	28.56
Eldridge Green	Houston	TX	248,399	100.0%	100.0%	$	30.34	Total Owned			9,760,699	90.5%	87.0%	$	28.95
Park Ten Phase II	Houston	TX	156,746	59.7%	1.4%	$	8.68
Westchase I & II	Houston	TX	629,025	84.5%	83.9%	$	29.62
Miami-Ft. Lauderdale-West Palm Beach
Blue Lagoon Drive	Miami	FL	212,619	100.0%	100.0%	$	23.57
Atlanta
One Overton Park	Atlanta	GA	387,267	79.7%	60.3%	$	24.19
One Ravinia	Atlanta	GA	386,602	91.3%	91.2%	$	25.62
Two Ravinia	Atlanta	GA	411,047	78.2%	74.8%	$	27.52
Pershing Plaza	Atlanta	GA	160,145	97.4%	97.4%	$	36.05
999 Peachtree	Atlanta	GA	621,946	84.6%	86.8%	$	32.24
South Region Total			4,596,581	88.2%	83.1%	$	28.63

(a) Weighted Occupied Percentage for the nine months ended September 30, 2018.

(b) Weighted Average GAAP Rent per Occupied Square Foot.

September 30, 2018| Page 16

Managed Portfolio Overview

MSA / Property Name	City	State	Square Feet	MSA / Property Name	City	State	Square Feet
Southeast Region				Midwest Region
Atlanta
Satellite Place	Duluth	GA	134,785
				Indianapolis
				Monument Circle	Indianapolis	IN	213,760
Southeast Region Total			134,785
Southwest Region
Houston
Energy Tower I	Houston	TX	325,797
Southwest Region Total			325,797	Midwest Region Total			213,760
				Total Managed			674,342
				Total Owned & Managed			10,435,041

September 30, 2018| Page 17

Tenants by Industry (By Square Feet)  

September 30, 2018| Page 18

20 Largest Tenants with Annualized Rent and Remaining Term

			Remaining	Aggregate				% of Aggregate
	Tenant	Number of	Lease Term	Leased	% of Total	Annualized		Leased
	Name	Leases	in Months	Square Feet	Square Feet	Rent		Annualized Rent
1	Quintiles IMS Healthcare Incorporated	1	92	259,531	2.7%	$	9,168,715	3.6%
2	CITGO Petroleum Corporation	1	41	248,399	2.6%		8,385,950	3.3%
3	Newfield Exploration Company	1	41	234,495	2.4%		9,247,772	3.7%
4	US Government (a)	4	11, 20, 24, 28	223,641	2.3%		7,230,610	2.9%
5	Centene Management Company, LLC	3	57, 57,  57	216,879	2.2%		5,857,830	2.3%
6	Burger King Corporation	1	2	212,619	2.2%		5,351,560	2.1%
7	Eversheds Sutherland (US) LLP	1	91	179,868	1.8%		5,334,134	2.1%
8	The Vail Corporation (b)	1	138	164,636	1.7%		4,347,842	1.7%
9	EOG Resources, Inc.	1	99	160,937	1.7%		5,455,765	2.2%
10	T-Mobile South, LLC dba T-Mobile	1	83	151,792	1.6%		4,020,482	1.6%
11	Citicorp Credit Services, Inc.	1	107	146,260	1.5%		4,886,547	1.9%
12	Petrobras America, Inc.	1	14	144,813	1.5%		5,372,562	2.1%
13	Jones Day	1	26	140,342	1.4%		4,919,841	1.9%
14	Argo Data Resource Corporation	1	59	140,246	1.4%		3,973,169	1.6%
15	SunTrust Bank	1	0	127,500	1.3%		4,667,775	1.8%
16	Federal National Mortgage Association	1	0	123,144	1.3%		4,483,673	1.8%
17	Kaiser Foundation Health Plan	1	68	120,979	1.2%		3,320,575	1.3%
18	Giesecke & Devrient America	1	75	112,110	1.1%		2,077,398	0.8%
19	Northrop Grumman Systems Corp.	1	15	111,469	1.1%		3,368,593	1.3%
20	Randstad General Partner (US) (c)	2	33, 68	109,638	1.1%		2,477,564	1.0%
			Total	3,329,298	34.1%	$	103,948,357	41.0%

(a) Includes 27,398 square feet, which expire in 2019 and 159,330 square feet, which expire in 2020.  The remaining 36,913 square feet expire in 2021.

(b) Includes 22,584 square feet commencing 10/1/18.    

(c) Includes 98,695 square feet, which expire in 2021,  and 10,943 square feet commencing on 3/1/19, which expire in 2024.    

September 30, 2018| Page 19

Leasing Activity (Owned Portfolio)

					Year		Year
	Nine Months Ended				Ended		Ended
Leasing Activity (a)		30-Sep-18		30-Sep-17		31-Dec-17		31-Dec-16
(in Square Feet - SF)
New leasing		343,000		207,000		460,000		299,000
Renewals and expansions		940,000		729,000		1,011,000		895,000
		1,283,000		936,000		1,471,000		1,194,000
Other information per SF
(Activity on a year-to-date basis)
GAAP Rents on leasing	$	30.94	$	29.61	$	30.43	$	29.64
Weighted average lease term		7.3 Years		6.6 Years		6.8 Years		6.6 Years
Increase or decrease over average GAAP rents in prior year (1)		6.0%		8.3%		12.3%		10.4%
Average free rent		4.5 Months		3 Months		4 Months		3 Months
Tenant Improvements	$	29.16	$	22.43	$	22.22	$	18.71
Leasing Costs	$	9.06	$	8.83	$	9.92	$	10.05
(a) Leasing activity includes leasing at 801 Marquette, which was redeveloped and is being
leased for future occupancy.
(1) The increase or decrease percentage is calculated by comparing average GAAP rents at
properties that had leasing activity in the current year to average GAAP rents at the same
properties in the prior year.

September 30, 2018| Page 20

Lease Expirations by Square Feet (Owned Portfolio)

September 30, 2018| Page 21

Lease Expirations with Annualized Rent per Square Foot (Owned Portfolio)

			Rentable				Annualized		Percentage
	Number of		Square				Rent		of Total
Year of	Leases		Footage		Annualized		Per Square		Annualized
Lease	Expiring		Subject to		Rent Under		Foot Under		Rent Under
Expiration	Within the		Expiring		Expiring		Expiring		Expiring	Cumulative
December 31,	Year (a)		Leases		Leases (b)		Leases		Leases	Total
2018	19	(c)	562,230		$	18,544,953	$	32.98	7.3%	7.3%
2019	58		953,783			28,617,066		30.00	11.3%	18.6%
2020	70		991,024			32,151,066		32.44	12.7%	31.3%
2021	63		696,686			19,559,803		28.08	7.7%	39.0%
2022	71		1,228,487			38,884,589		31.65	15.3%	54.3%
2023	60		829,800			23,189,653		27.95	9.1%	63.4%
2024	41		644,560			14,818,740		22.99	5.9%	69.3%
2025	20		572,982			14,931,880		26.06	5.9%	75.2%
2026	15		742,598			23,190,677		31.23	9.1%	84.3%
2027	8		487,257			15,066,896		30.92	5.9%	90.2%
2028 and thereafter	97		1,120,092	(d)		24,768,751		22.11	9.8%	100.0%
	522		8,829,499		$	253,724,074	$	28.74	100.0%
Vacancies as of 9/30/18			931,200
Total Portfolio Square Footage			9,760,699

(a) The number of leases approximates the number of tenants. Tenants with lease maturities in different years are included in annual totals for each lease. Tenants may have multiple leases in the same year.

(b) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at September 30, 2018 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(c) Includes 4 leases that are month-to-month.

(d) Includes 115,150 square feet that are non-revenue producing building amenities.

September 30, 2018| Page 22

Capital Expenditures

(in thousands)							Nine Months
	For the Three Months Ended						Ended
	31-Mar-18		30-Jun-18		30-Sep-18		30-Sep-18
Tenant improvements	$	6,777	$	8,212	$	7,084	$	22,073
Deferred leasing costs		1,021		5,314		4,394		10,729
Non-investment capex		1,858		2,558		2,328		6,744
Total Capital Expenditures	$	9,656	$	16,084	$	13,806	$	39,546

	For the Three Months Ended								Year ended
	31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Tenant improvements	$	6,474	$	5,363	$	4,474	$	4,166	$	20,477
Deferred leasing costs		1,579		1,963		4,482		5,869		13,893
Non-investment capex		1,670		1,685		1,860		3,836		9,051
Total Capital Expenditures	$	9,723	$	9,011	$	10,816	$	13,871	$	43,421

First generation leasing and investment capital was $11.7 million for the nine months ended September 30, 2018 and $25.0 million for the year ended December 31, 2017.

September 30, 2018| Page 23

Transaction Activity (in thousands except for Square Feet)

	City	State	Square Feet	Date Acquired	Purchase Price
2016
Plaza Seven	Minneapolis	MN	325,796	6/6/16	$	82,000
Pershing Plaza	Atlanta	GA	160,145	8/10/16		45,450
600 17th Street	Denver	CO	613,527	12/1/16		154,260
2015
Two Ravinia	Atlanta	GA	442,130	4/8/15	$	78,000

					Gross Sale		Gain (loss)
	City	State	Square Feet	Date Sold	Proceeds		on Sale
2017
Hillview	Milpitas	CA	36,288	1/6/17	$	6,342	$	2,289
East Baltimore	Baltimore	MD	325,445	10/20/17		32,547		(20,770)
2016
Lakeside I	Maryland Heights	MO	127,778	4/5/16	$	20,189	$	4,154
Federal Way	Federal Way	WA	117,010	12/16/16		7,500		(7,092)
2015
Willow Bend	Plano	TX	117,050	2/23/15	$	20,750	$	1,462
Eden Bluff	Eden Prairie	MN	153,028	3/31/15		28,000		9,000
Park Seneca	Charlotte	NC	109,699	5/13/15		8,150		949
Montague	San Jose	CA	145,561	12/9/15		30,250		12,251

September 30, 2018| Page 24

Loan Portfolio of Secured Real Estate (in thousands)

(dollars in thousands)			Maximum		Amount						Interest
		Maturity	Amount		Drawn at		Interest			Draw	Rate at
Sponsored REIT	Location	Date	of Loan		30-Sep-18		Rate (1)			Fee (2)	30-Sep-18
Secured revolving lines of credit
FSP Satellite Place Corp.	Duluth, GA	31-Dec-19	$	5,500	$	1,325	L	+	4.40%	0.5%	6.51%
FSP Energy Tower I Corp.	Houston, TX	30-Jun-19		20,000		15,600	L	+	5.00%	0.5%	7.11%
Mortgage loan secured by property
FSP Monument Circle LLC (3)	Indianapolis, IN	7-Dec-18		21,000		21,000			4.90%	n/a	4.90%
FSP Energy Tower I Corp. (4)	Houston, TX	30-Jun-19		33,000		33,000			6.41%	n/a	6.41%
			$	79,500	$	70,925

(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.

(3) Includes an origination fee of $164,000 and an exit fee of $38,000 when repaid by the borrower.

(4) This mortgage includes an annual extension fee of $108,900 paid by the borrower. 

September 30, 2018| Page 25

Net Asset Value Components

(in thousands except per share data)
	Asof		Assets:			Other information:
	30-Sep-18		Loans outstanding on secured RE	$	70,925	Leased SF to be FFO producing
Total Market Capitalization Values			Investments in SARs (book basis)		—	Over the next twelve months (in 000's)		307
Shares outstanding		107,231.2	Straight-line rent receivable		53,056
Closing price	$	7.99	Asset held for sale		—	Straight-line rental revenue current quarter	$	(522)
Market capitalization	$	856,777	Cash, cash equivalents and restricted cash		10,434
Debt		987,000	Tenant rent receivables		3,206	Management fee income current quarter	$	104
Total Market Capitalization	$	1,843,777	Prepaid expenses		5,152	Interest income from secured loans		1,157
			Office computers and furniture		216	Management fees and interest income from loans	$	1,261
			Other assets:
	3 Months		Deferred financing costs, net		11,384	FFO from non-consolidated REITs - Q2 2018 (6):
	Ended		Other assets: Derivative Market Value		22,265	East Wacker	$	853
NOI Components	30-Sep-18		Other assets		—	Grand Boulevard		125
				$	176,638	Total	$	978
Same Store NOI (1)	$	37,182
Acquisitions (1) (2)		—	Liabilities:			Footnotes to the components
Property NOI (1)		37,182	Debt (excluding contra for unamortized financing costs)	$	987,000
Full quarter adjustment (3)		—	Accounts payable & accrued expenses		65,543	(1) See pages 11 & 28 for definitions and reconciliations.
Stabilized portfolio	$	37,182	Tenant security deposits		5,619
			Other liabilities: derivative liability		—	(2) Includes NOI from acquisitions not in Same Store.
				$	1,058,162
Financial Statement Reconciliation:						(3) Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary.
Rental Revenue	$	67,436
Rental operating expenses		(17,946)				(4) HB3 Tax in Texas is classified as an income tax, though we treat it as a real estate tax in Property NOI.
Real estate taxes and insurance		(11,651)
NOI on assets sold		69				(5) Management & other fees are eliminated in consolidation but included in Property NOI.
Taxes (4)		(74)
Management fees & other (5)		(652)				(6) We report FFO from non-consolidated REITs for the previous quarter as their financial statements are not yet complete for the current quarter.
Property NOI (1)	$	37,182

September 30, 2018| Page 26

Appendix: Non-GAAP Financial Measure Definitions

Definition of Funds From Operations (“FFO”)

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 or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness 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 or loss (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 as of May 17, 2016 in the table on page 9 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 or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

September 30, 2018| Page 27

Appendix: Non-GAAP Financial Measure Definitions

Definition of Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)
and Adjusted EBITDA

EBITDA is defined as net income or loss plus interest expense, income tax expense and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA excluding hedge ineffectiveness, gains and losses on sales of properties or shares of equity investments or provisions for losses on assets held for sale or equity investments. EBITDA and Adjusted EBITDA are not intended to represent cash flow for the period, are not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and are not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA and Adjusted EBITDA are presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA or Adjusted EBITDA the same way, this presentation may not be comparable to similarly titled measures of other companies. The Company believes that net income or loss is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA and Adjusted EBITDA.

Definition of Property Net Operating Income (Property 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 or loss (the most directly comparable GAAP financial measure) plus 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, hedge ineffectiveness, 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 the periods presented, which we call Same Store. The comparative Same Store results include properties held for the periods presented and exclude properties that are non-operating, being developed or redeveloped, dispositions and 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 or loss as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

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Appendix: Non-GAAP Financial Measure Definitions

Definition of Adjusted Funds From Operations (AFFO)

The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO.  The Company defines AFFO as (1) FFO, (2) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (3) excluding the effect of straight-line rent, (4) plus deferred financing costs and (5) less recurring capital expenditures that are generally for maintenance of properties, which we call non-investment capex or are second generation capital expenditures.  Second generation costs include re-tenanting space after a tenant vacates, which include tenant improvements and leasing commissions. 

We exclude development/redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property. We also exclude first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned for at acquisition. 

AFFO should not be considered as an alternative to net income or loss (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 may define this term in a different manner.  We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements. 

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Investor Relations Contact

Georgia Touma | 877.686.9496

InvestorRelations@fspreit.com

Franklin Street Properties Corp. 401 Edgewater Place ● Wakefield, MA 01880 (781) 557-1300 ● www.fspreit.com

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