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):  February 12, 2019

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 February 12, 2019, Franklin Street Properties Corp. (the “Registrant”) announced its financial results for the three and twelve months ended December 31, 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.

2

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued by Franklin Street Properties Corp. on February 12, 2019.
99.2	Supplemental Operating and Financial Data for the Fourth Quarter of 2018.

3

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:  February 12,  2019	By:	/s/ George J. Carter
		George J. Carter
		Chief Executive Officer

4

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

Fourth Quarter / Annual 2018 Results 

And 2019 Guidance

Wakefield, MA—February 12,  2019—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE American:  FSP), a real estate investment trust (REIT), announced its results for the fourth quarter and year ended December  31, 2018.         

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

“Leasing activity within our property portfolio of 32 operating and 3 redevelopment properties continued to be solid during the fourth quarter of 2018, with approximately 398,000 square feet leased during the quarter.  This leasing activity contributed to making 2018 a record year of leasing at FSP, with approximately 1,681,000 square feet leased during the year.   We also continued to see increased leasing activity in our energy-influenced markets of Houston and Denver.  The price of oil was particularly volatile over the past quarter and we believe that longer-term supply/demand pricing characteristics of that commodity will be an important factor affecting future levels of office space absorption in those markets during 2019 and 2020.

As anticipated, we did experience known and planned for tenant move outs during the fourth quarter of 2018, including Burger King at Blue Lagoon in Miami, Florida, SunTrust at Innsbrook in Glen Allen, Virginia, and Red Cross at Forest Park in Charlotte, North Carolina, which reduced overall leased occupancy in our property portfolio.

As 2019 begins, we are continuing our lease-up efforts at our approximately 130,000 square foot redevelopment property known as 801 Marquette in Minneapolis, Minnesota, which was approximately 37% leased as of December 31, 2018.  In addition, we are now redeveloping an approximately 213,000 square foot property known as Blue Lagoon in Miami, Florida and an approximately 62,000 square foot property known as Forest Park in Charlotte, North Carolina, for a total of approximately 400,000 square feet of redevelopment space in the aggregate.  Similar to 801 Marquette, prior to beginning our redevelopment efforts, both Blue Lagoon and Forest Park had been long-term leased to single-tenants.  In addition, both assets have been owned by us (or our affiliates) for in excess of 15 years, are anchored in excellent locations within their respective markets, and have generated consistently strong cash flows.  We believe that current market rents for these assets are meaningfully higher than the expiring single-tenant rents.  We also believe that our redevelopment efforts will provide us the opportunity to capture significant increased value for our shareholders through higher ongoing rental cash flows, as we seek to achieve a strong, long-term rate of return on our costs of redevelopment.  Currently, these 3 redevelopment properties contribute no material rental income to the Company.

As 2019 begins, we are optimistic about our ability to lease significant portions of our vacancy in our 32 operating properties and in our 3 redevelopment properties, and believe that successful results will mark the beginning of a longer-term, more sustainable, rise in operating performance and value creation within our property portfolio in 2020. The reduction to our dividend in 2018 allows the Company to retain more operating cash flow to fund anticipated increased leasing costs and capital expenditures during 2019 and 2020.”    

Highlights

· Net Income was $1.4 million and $13.1 million or $0.01 and $0.12 per basic and diluted share for the fourth quarter and year ended December 31, 2018, respectively.  FFO was $24.5 million and $102.5 million or $0.23 and $0.96 per basic and diluted share for the fourth quarter and year ended December  31, 2018, respectively.        

· Adjusted Funds From Operations (AFFO) was $0.10 and $0.47 per basic and diluted share for the fourth quarter and year ended December 31, 2018, respectively.                            

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Leasing Update

· Our directly owned real estate portfolio of 32 operating properties (excluding 3 redevelopment properties) totaling approximately 9.5 million square feet was approximately 89.0% leased as of December  31, 2018.            

· During the year ended December 31, 2018, we leased approximately 1,681,000 square feet, of which approximately 397,000 was with new tenants, representing a 14% increase in leasing accomplished compared to 2017,  and a new high for the company. 

· During the three months ended December 31, 2018, we leased approximately 398,000 square feet, of which approximately 54,000 square feet was with new tenants. 

· The portfolio assets in our core markets of Houston and Denver improved in 2018:     

o Our core market of Houston’s leased percentage increased to 86.0% as of December 31, 2018, up from 76.4% leased as of December 31, 2017. 

o Our core market of Denver’s leased percentage increased to 90.7% as of December 31, 2018, up from 89.7% leased as of December 31, 2017.

Dividend Update

On January 11, 2019, the Company announced that its Board of Directors declared a regular quarterly cash dividend for the three months ended December 31, 2018 of $0.09 per share of common stock that will be paid on February 14, 2019 to stockholders of record on January 25, 2019.          

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 December 31, 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 initiating our full year net income guidance for 2019, which is estimated to be in the range of a net loss of approximately $0.03 to net income of $0.03 per basic and diluted share, and are for the first quarter of 2019, which is estimated to be in the range of a net loss of approximately $0.02 to $0.00 per basic and diluted share.  We are initiating our full year FFO guidance for 2019, which is estimated to be in the range of approximately $0.81 to $0.87  per basic and diluted share, and for the first quarter of 2019, which is estimated to be in the range of approximately $0.19 to $0.21 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:  

		Q1 2019 Range				Full Year 2019 Range
	Low		High		Low		High
Net income (loss) per share	$	(0.02)	$	-	$	(0.03)	$	0.03
GAAP income from non-consolidated REITs		-		-		-		-
FFO from non-consolidated REITs		-		-		-		-
Depreciation & Amortization		0.21		0.21		0.84		0.84
Funds From Operations per share	$	0.19	$	0.21	$	0.81	$	0.87

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 February 13, 2019 at 10:00 a.m. (ET) to discuss the fourth quarter and year end 2018 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 operating performance, rates of return and value creation/enhancement in future periods, expectations for operating cash flow in future periods, expectations for growth, leasing and acquisition and disposition activities in future periods, including in the Denver and Houston markets, expectations regarding the timing, leasing and economic results of our redevelopment properties, 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, including the level of interest rates, 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, 2018, 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				Year Ended
	December 31,				December 31,
(in thousands, except per share amounts)	2018		2017		2018		2017
Revenue:
Rental	$	65,304	$	65,555	$	263,777	$	267,265
Related party revenue:
Management fees and interest income from loans		1,268		1,271		5,061		5,285
Other		6		9		32		38
Total revenue		66,578		66,835		268,870		272,588
Expenses:
Real estate operating expenses		18,652		18,720		70,703		71,212
Real estate taxes and insurance		10,737		9,961		45,857		45,841
Depreciation and amortization		23,327		25,659		94,230		101,258
General and administrative		3,162		3,665		13,070		13,471
Interest		9,200		8,657		38,374		32,387
Total expenses		65,078		66,662		262,234		264,169
Income before equity in income (loss) of non-consolidated REITs, other, gain (loss) on sale of properties and properties held for sale and taxes		1,500		173		6,636		8,419
Equity in income (loss) of non-consolidated REITs		—		(2,885)		6,793		(3,604)
Other		—		(2,096)		—		(1,878)
Gain (loss) on sale of properties and properties held for sale		—		(21)		—		(18,481)
Income (loss) before taxes on income		1,500		(4,829)		13,429		(15,544)
Taxes on income		129		103		360		400
Net income (loss)	$	1,371	$	(4,932)	$	13,069	$	(15,944)
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	$	0.01	$	(0.05)	$	0.12	$	(0.15)

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Franklin Street Properties Corp. Financial Results

Supplementary Schedule B

Condensed Consolidated Balance Sheets

(Unaudited)

	December 31,		December 31,
(in thousands, except share and par value amounts)	2018		2017
Assets:
Real estate assets:
Land	$	191,578	$	191,578
Buildings and improvements		1,857,935		1,811,631
Fixtures and equipment		8,839		5,614
		2,058,352		2,008,823
Less accumulated depreciation		432,579		376,131
Real estate assets, net		1,625,773		1,632,692
Acquired real estate leases, less accumulated amortization of $101,897 and $109,771, respectively		59,595		86,520
Investment in non-consolidated REITs		—		70,164
Cash, cash equivalents and restricted cash		11,177		9,819
Tenant rent receivables, less allowance for doubtful accounts of $200 and $250, respectively		3,938		3,123
Straight-line rent receivable, less allowance for doubtful accounts of $50 and $50, respectively		54,006		53,194
Prepaid expenses and other assets		10,400		8,387
Related party mortgage loan receivables		70,660		71,720
Other assets: derivative asset		14,765		13,925
Office computers and furniture, net of accumulated depreciation of $1,512 and $1,420, respectively		197		289
Deferred leasing commissions, net of accumulated amortization of $24,318 and $22,276, respectively		47,591		40,679
Total assets	$	1,898,102	$	1,990,512
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	25,000	$	78,000
Term loans payable, less unamortized financing costs of $5,722 and $5,099, respectively		764,278		764,901
Series A & Series B Senior Notes, less unamortized financing costs of $1,150 and $1,308, respectively		198,850		198,692
Accounts payable and accrued expenses		59,183		61,039
Accrued compensation		3,043		3,641
Tenant security deposits		6,319		5,383
Other liabilities: derivative liabilities		—		1,759
Acquired unfavorable real estate leases, less accumulated amortization of $6,605 and $7,638, respectively		3,795		5,805
Total liabilities		1,060,468		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		14,765		12,166
Accumulated distributions in excess of accumulated earnings		(533,599)		(497,342)
Total stockholders’ equity		837,634		871,292
Total liabilities and stockholders’ equity	$	1,898,102	$	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
	Year Ended
	December 31,
(in thousands)	2018		2017
Cash flows from operating activities:
Net income (loss)	$	13,069	$	(15,944)
Adjustments to reconcile net income or loss to net cash provided by operating activities:
Depreciation and amortization expense		97,171		103,743
Amortization of above and below market leases		(556)		(1,031)
Equity in (income) loss of non-consolidated REITs		(6,793)		3,604
Hedge ineffectiveness		—		1,878
Loss on sale of properties and properties held for sale		—		18,481
Increase (decrease) in allowance for doubtful accounts		(50)		150
Changes in operating assets and liabilities:
Tenant rent receivables		(765)		(160)
Straight-line rents		381		(1,767)
Lease acquisition costs		(1,193)		(2,052)
Prepaid expenses and other assets		(1,940)		(403)
Accounts payable and accrued expenses		(4,077)		3,870
Accrued compensation		(598)		(143)
Tenant security deposits		936		28
Payment of deferred leasing commissions		(15,383)		(14,309)
Net cash provided by operating activities		80,202		95,945
Cash flows from investing activities:
Property improvements, fixtures and equipment		(51,057)		(54,187)
Office computers and furniture		—		(119)
Investment in non-consolidated REITs		74,931		—
Distributions in excess of earnings from non-consolidated REITs		710		1,396
Repayment of related party mortgage loan receivable		1,060		10,060
Proceeds received on sales of real estate assets		—		37,756
Net cash provided by (used in) investing activities		25,644		(5,094)
Cash flows from financing activities:
Distributions to stockholders		(49,326)		(81,496)
Borrowings under bank note payable		38,000		75,000
Repayments of bank note payable		(91,000)		(277,000)
Borrowing of Series A & Series B Senior Notes		—		200,000
Deferred financing costs		(2,162)		(6,902)
Net cash used in financing activities		(104,488)		(90,398)
Net increase in cash, cash equivalents and restricted cash		1,358		453
Cash, cash equivalents and restricted cash, beginning of year		9,819		9,366
Cash, cash equivalents and restricted cash, end of period	$	11,177	$	9,819

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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
2019	854,888	8.6%
2020	1,072,050	10.8%
2021	691,623	7.0%
2022	1,206,763	12.2%
2023	776,188	7.9%
Thereafter (2)	5,289,790	53.5%
	9,891,302	100.0%

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

(2) Includes 1,046,853 square feet of current vacancies at our operating properties and 294,421 square feet of current vacancies at our redevelopment properties. We define redevelopment properties as properties being developed, redeveloped or where development/redevelopment is complete but that are not yet stabilized. 

(dollars & square feet in 000's)	As of December 31, 2018 (a)
	# of			% of	Square	% of
State	Properties	Investment		Portfolio	Feet	Portfolio
Colorado	6	$	537,998	33.1%	2,609	26.4%
Texas	9		348,404	21.4%	2,417	24.4%
Georgia	5		322,698	19.9%	1,967	19.9%
Minnesota	3		118,871	7.3%	750	7.6%
Virginia	4		82,920	5.1%	685	6.9%
North Carolina	2		50,592	3.1%	322	3.2%
Missouri	2		47,292	2.9%	351	3.6%
Illinois	2		48,731	3.0%	372	3.8%
Florida	1		38,432	2.4%	213	2.2%
Indiana	1		29,835	1.8%	205	2.0%
Total	35	$	1,625,773	100.0%	9,891	100.0%

(a) Includes investment in our redevelopment properties.  We define redevelopment properties as properties being developed, redeveloped or where complete, but that are not yet stabilized. 

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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								Year Ended
	31-Mar-18		30-Jun-18		30-Sep-18		31-Dec-18		31-Dec-18
Tenant improvements	$	6,777	$	8,212	$	7,084	$	6,895	$	28,968
Deferred leasing costs		1,021		5,314		4,394		3,746		14,475
Non-investment capex		1,858		2,558		2,328		3,342		10,086
	$	9,656	$	16,084	$	13,806	$	13,983	$	53,529

	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	December 31,	December 31,
	2018	2017
Operating Properties (a):
Number of properties	32	34
Square feet	9,486,650	9,761,984
Leased percentage	89.0%	89.7%
Redevelopment Properties:
Number of properties	3	1
Square feet	404,652	129,821
Leased percentage	27.2%	1.9%
Managed Properties - Single Asset REITs (SARs):
Number of properties	3	4
Square feet	674,342	810,278
Total Operating, Redevelopment and Managed Properties:
Number of properties	38	39
Square feet	10,565,644	10,702,083

(a) Excludes investment in our redevelopment properties.  We define redevelopment properties as properties being developed, redeveloped or where development/redevelopment is complete but that are not yet stabilized. 

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Franklin Street Properties Corp. Earnings Release

Supplementary Schedule F

Percentage of Leased Space

(Unaudited & Estimated)

					Third		Fourth
				% Leased (1)	Quarter	% Leased (1)	Quarter
				as of	Average %	as of	Average %
	Property Name	Location	Square Feet	30-Sep-18	Leased (2)	31-Dec-18	Leased (2)
	FOREST PARK (3)	Charlotte, NC	—	100.0%	100.0%	Note (3)	Note (3)
1	MEADOW POINT	Chantilly, VA	138,537	100.0%	100.0%	100.0%	100.0%
2	TIMBERLAKE	Chesterfield, MO	234,496	100.0%	100.0%	100.0%	100.0%
3	TIMBERLAKE EAST	Chesterfield, MO	117,036	100.0%	100.0%	100.0%	100.0%
4	NORTHWEST POINT	Elk Grove Village, IL	177,095	100.0%	100.0%	100.0%	100.0%
5	PARK TEN	Houston, TX	157,460	89.5%	89.5%	89.5%	89.5%
6	PARK TEN PHASE II	Houston, TX	156,746	59.7%	34.6%	65.5%	65.5%
7	GREENWOOD PLAZA	Englewood, CO	196,236	100.0%	100.0%	100.0%	100.0%
8	ADDISON	Addison, TX	289,302	100.0%	100.0%	89.3%	80.4%
9	COLLINS CROSSING	Richardson, TX	300,887	100.0%	100.0%	99.4%	99.4%
10	INNSBROOK	Glen Allen, VA	298,456	100.0%	100.0%	57.3%	57.3%
11	RIVER CROSSING	Indianapolis, IN	205,059	94.9%	94.9%	94.2%	94.7%
12	LIBERTY PLAZA	Addison, TX	218,934	80.8%	80.3%	80.4%	80.7%
13	380 INTERLOCKEN	Broomfield, CO	240,358	86.2%	86.2%	93.4%	93.4%
14	390 INTERLOCKEN	Broomfield, CO	241,512	98.2%	98.4%	98.2%	98.2%
	BLUE LAGOON (3)	Miami, FL	—	100.0%	100.0%	Note (3)	Note (3)
15	ELDRIDGE GREEN	Houston, TX	248,399	100.0%	100.0%	100.0%	100.0%
16	ONE OVERTON PARK	Atlanta, GA	387,267	79.7%	79.5%	79.7%	79.7%
17	LOUDOUN TECH	Dulles, VA	136,658	95.7%	95.7%	95.7%	95.7%
18	4807 STONECROFT	Chantilly, VA	111,469	100.0%	100.0%	100.0%	100.0%
19	121 SOUTH EIGHTH ST	Minneapolis, MN	293,460	80.4%	79.1%	80.1%	80.2%
20	EMPEROR BOULEVARD	Durham, NC	259,531	100.0%	100.0%	100.0%	100.0%
21	LEGACY TENNYSON CTR	Plano, TX	202,600	90.4%	87.7%	90.4%	90.4%
22	ONE LEGACY	Plano, TX	214,110	100.0%	100.0%	100.0%	100.0%
23	909 DAVIS	Evanston, IL	195,098	97.8%	97.8%	97.8%	97.8%
24	ONE RAVINIA DRIVE	Atlanta, GA	386,602	91.3%	91.3%	92.3%	91.6%
25	TWO RAVINIA	Atlanta, GA	411,047	78.2%	77.7%	78.5%	78.4%
26	WESTCHASE I & II	Houston, TX	629,025	84.5%	85.8%	84.7%	84.8%
27	1999 BROADWAY	Denver, CO	676,379	81.3%	78.2%	81.8%	82.0%
28	999 PEACHTREE	Atlanta, GA	621,946	84.6%	84.7%	84.6%	84.6%
29	1001 17th STREET	Denver, CO	655,413	97.7%	96.1%	97.7%	97.7%
30	PLAZA SEVEN	Minneapolis, MN	326,757	87.3%	87.3%	88.2%	87.9%
31	PERSHING PLAZA	Atlanta, GA	160,145	97.4%	97.4%	97.4%	97.4%
32	600 17th STREET	Denver, CO	598,630	84.5%	85.1%	86.0%	85.5%
	OPERATING TOTAL		9,486,650	90.5%	89.7%	89.0%	88.9%
33	FOREST PARK	Charlotte, NC	62,212	—	—	100.0%	100.0%
34	BLUE LAGOON	Miami, FL	212,619	—	—	0.0%	66.7%
35	801 MARQUETTE AVE	Minneapolis, MN	129,821	15.8%	15.8%	37.0%	29.9%
	REDEVELOPMENT TOTAL		404,652	15.8%	15.8%	27.2%	60.0%
	OWNED PORTFOLIO TOTAL		9,891,302

(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.

(3) Classified as a redevelopment property. 

-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 December  31, 2018

			% of
	Tenant	Sq Ft	Portfolio
1	IQVIA Holdings Inc.	259,531	2.6%
2	CITGO Petroleum Corporation	248,399	2.5%
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	Eversheds Sutherland (US) LLP	179,868	1.8%
7	The Vail Corporation	164,636	1.7%
8	EOG Resources, Inc.	160,937	1.6%
9	T-Mobile South, LLC dba T-Mobile	151,792	1.5%
10	Citicorp Credit Services, Inc.	146,260	1.5%
11	Petrobras America, Inc.	144,813	1.4%
12	Jones Day	140,342	1.4%
13	Argo Data Resource Corporation	140,246	1.4%
14	Kaiser Foundation Health Plan	120,979	1.2%
15	VMWare, Inc.	119,558	1.2%
16	Giesecke & Devrient America	112,110	1.2%
17	Northrop Grumman Systems Corp.	111,469	1.1%
18	Randstad General Partner (US)	109,638	1.1%
19	ADS Alliance Data Systems, Inc.	107,698	1.1%
20	Densbury Onshore LLC	100,000	1.0%
	Total	3,193,291	32.2%

-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				Year Ended
	December 31,				December 31,
(In thousands, except per share amounts)	2018		2017		2018		2017
Net income (loss)	$	1,371	$	(4,932)	$	13,069	$	(15,944)
Gain (loss) on sale of properties and properties held for sale		—		21		—		18,481
GAAP (income) loss from non-consolidated REITs		—		2,885		(6,793)		3,604
FFO from non-consolidated REITs		—		708		2,511		3,173
Depreciation & amortization		23,175		25,569		93,674		100,227
NAREIT FFO		24,546		24,251		102,461		109,541
Hedge ineffectiveness		—		2,096		—		1,878
Acquisition costs		—		—		—		18
Funds From Operations (FFO)	$	24,546	$	26,347	$	102,461	$	111,437
Funds From Operations (FFO)	$	24,546	$	26,347	$	102,461	$	111,437
Reverse FFO from non-consolidated REITs		—		(708)		(2,511)		(3,173)
Distributions from non-consolidated REITs		—		355		710		1,396
Amortization of deferred financing costs		717		667		2,940		2,485
Straight-line rent		(440)		254		381		(1,767)
Tenant improvements		(6,895)		(4,166)		(28,968)		(20,477)
Leasing commissions		(3,746)		(5,869)		(14,475)		(13,893)
Non-investment capex		(3,342)		(3,836)		(10,086)		(9,051)
Adjusted Funds From Operations (AFFO)	$	10,840	$	13,044	$	50,452	$	66,957
Per Share Data
EPS	$	0.01	$	(0.05)	$	0.12	$	(0.15)
FFO	$	0.23	$	0.25	$	0.96	$	1.04
AFFO	$	0.10	$	0.12	$	0.47	$	0.62
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,  acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs 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 redevelopment properties, which include properties being developed, redeveloped or where redevelopment is complete but are in lease-up and are not stabilized, 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	31-Dec-18		30-Sep-18		(Dec)		Change
Region
East	945	$	3,044	$	3,868	$	(824)	(21.3)	%
MidWest	1,549		5,028		5,104		(76)	(1.5)	%
South	4,384		13,916		14,903		(987)	(6.6)	%
West	2,609		10,849		11,324		(475)	(4.2)	%
Property NOI* from Operating Properties	9,487		32,837		35,199		(2,362)	(6.7)	%
Dispositions and Redevelopment Properties	405		2,298		1,914		384	1.4	%
NOI*	9,892	$	35,135	$	37,113	$	(1,978)	(5.3)	%
Sequential Same Store		$	32,837	$	35,199	$	(2,362)	(6.7)	%
Less Nonrecurring
Items in NOI* (a)			1,695		2,504		(809)	2.0	%
Comparative
Sequential Same Store		$	31,142	$	32,695	$	(1,553)	(4.7)	%

-15-

	Three Months Ended		Three Months Ended
Reconciliation to Net income	31-Dec-18		30-Sep-18
Net income	$	1,371	$	9,608
Add (deduct):
(Gain) loss on sale of properties and properties held for sale		—		—
Hedge ineffectiveness		—		—
Management fee income		(640)		(712)
Depreciation and amortization		23,327		23,277
Amortization of above/below market leases		(152)		(196)
General and administrative		3,162		3,394
Interest expense		9,200		9,935
Interest income		(1,192)		(1,157)
Equity in (income) loss of non-consolidated REITs		—		(7,180)
Non-property specific items, net		59		144
NOI*	$	35,135	$	37,113

(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

Fourth 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	Redevelopment Activity	23
Property Net Operating Income (NOI)	8	Capital Expenditures	24
Reconciliation		Transaction Activity	25
FFO & AFFO	9
EBITDA	10	Loan Portfolio of Secured Real Estate	26
Property NOI	11
		Net Asset Value Components	27
Debt Summary	12
		Appendix: Definitions of Non-GAAP Measures
Capital Analysis	13	FFO	28
		EBITDA and NOI	29
Owned and Managed Portfolio Overview	14-17	AFFO	30

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

December 31, 2018| Page 2

Company Information

Overview		Snapshot (as of December  31, 2018)
Franklin Street Properties Corp. (“FSP”, “we”, “our” or the “Company”) (NYSE American: FSP) invests in institutional-quality office properties in the United States.  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	35 (1)
		Total Square Feet	9.8 Million (1)
		Trading Symbol	FSP
		Exchange	NYSE American
		Common Shares Outstanding	107,231,155
		Quarterly Dividend	$0.09
Our Business		Dividend Yield	5.8%
As of December 31, 2018, the Company owned and operated a portfolio of real estate consisting of 32 operating properties, three redevelopment properties and 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	$1.7 Billion (2)
		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 (1) Includes both operating and redevelopment properties. (2) Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt      outstanding.

December 31, 2018| Page 3

Summary of Financial Highlights

(in thousands except per share amounts, SF & number of properties)
	31-Dec-18		30-Sep-18		30-Jun-18		31-Mar-18		31-Dec-17
Income Items:
Rental revenue	$	65,304	$	67,436	$	65,409	$	65,628	$	65,555
Total revenue		66,578		68,705		66,694		66,893		66,835
Net income (loss)		1,371		9,608		665		1,425		(4,932)
Adjusted EBITDA*		33,875		35,636		34,270		34,943		34,033
FFO*		24,546		26,158		25,393		26,364		26,347
AFFO*		10,840		13,024		9,658		16,930		13,044
Per Share Data:
EPS	$	0.01	$	0.09	$	0.01	$	0.01	$	(0.05)
FFO*	$	0.23	$	0.24	$	0.24	$	0.25	$	0.25
AFFO*	$	0.10	$	0.12	$	0.09	$	0.16	$	0.12
Weighted Average Shares (diluted)		107,231		107,231		107,231		107,231		107,231
Closing share price	$	6.23	$	7.99	$	8.56	$	8.41	$	10.74
Dividend declared	$	0.09	$	0.09	$	0.09	$	0.09	$	0.19
Balance Sheet Items:
Real estate, net	$	1,625,773	$	1,628,036	$	1,627,498	$	1,627,941	$	1,632,692
Other assets, net		272,329		280,523		352,029		358,254		357,820
Total assets, net		1,898,102		1,908,559		1,979,527		1,986,195		1,990,512
Total liabilities, net		1,060,468		1,055,146		1,127,140		1,127,277		1,119,220
Shareholders' equity		837,634		853,413		852,387		858,918		871,292
Market Capitalization and Debt:
Total Market Capitalization (a)	$	1,663,050	$	1,843,777	$	1,985,899	$	1,969,814	$	2,199,663
Total debt outstanding (excluding unamortized financing costs)		995,000		987,000		1,068,000		1,068,000		1,048,000
Debt to Total Market Capitalization		59.8%		53.5%		53.8%		54.2%		47.6%
Net Debt to Adjusted EBITDA*		7.3		6.9		7.7		7.5		7.6
Operating Properties Leasing Statistics (b):
Operating properties assets		32		34		34		34		34
Operating properties total SF		9,486,650		9,760,699		9,760,699		9,760,657		9,761,984
Operating properties % leased		89.0%		90.5%		89.0%		88.5%		89.7%

(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 redevelopment properties.

*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 28.

December 31, 2018| Page 4

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

									For the										For the
	For the Three Months Ended								Year Ended		For the Three Months Ended								Year Ended
	31-Mar-18		30-Jun-18		30-Sep-18		31-Dec-18		31-Dec-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Revenue:
Rental	$	65,628	$	65,409	$	67,436	$	65,304	$	263,777	$	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		1,268		5,061		1,370		1,366		1,278		1,271		5,285
Other		9		9		8		6		32		10		10		9		9		38
Total revenue		66,893		66,694		68,705		66,578		268,870		68,756		68,371		68,626		66,835		272,588
Expenses:
Real estate operating expenses		17,151		16,954		17,946		18,652		70,703		17,308		17,286		17,898		18,720		71,212
Real estate taxes and insurance		11,177		12,292		11,651		10,737		45,857		12,403		11,595		11,882		9,961		45,841
Depreciation and amortization		24,035		23,591		23,277		23,327		94,230		25,332		25,279		24,988		25,659		101,258
General and administrative		3,432		3,082		3,394		3,162		13,070		3,443		3,077		3,286		3,665		13,471
Interest		9,486		9,753		9,935		9,200		38,374		7,579		7,893		8,258		8,657		32,387
Total expenses		65,281		65,672		66,203		65,078		262,234		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 and taxes		1,612		1,022		2,502		1,500		6,636		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		—		—		—		—		—		2,289		(20,492)		(257)		(21)		(18,481)
Income (loss) before taxes on income		1,507		740		9,682		1,500		13,429		4,605		(17,323)		2,003		(4,829)		(15,544)
Income tax expense		82		75		74		129		360		125		72		100		103		400
Net income (loss)	$	1,425	$	665	$	9,608	$	1,371	$	13,069	$	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		107,231
Net income (loss) per share, basic and diluted	$	0.01	$	0.01	$	0.09	$	0.01	$	0.12	$	0.04	$	(0.16)	$	0.02	$	(0.05)	$	(0.15)

December 31, 2018| Page 5

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

	March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,
	2018		2018		2018		2018		2017		2017		2017		2017
Assets:
Real estate assets:
Land	$	191,578	$	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		1,857,935		1,836,073		1,792,784		1,800,831		1,811,631
Fixtures and equipment		5,909		7,565		7,842		8,839		4,600		4,841		5,017		5,614
		2,018,522		2,032,613		2,047,782		2,058,352		2,036,851		1,989,203		1,997,426		2,008,823
Less accumulated depreciation		390,581		405,115		419,746		432,579		350,697		348,652		361,720		376,131
Real estate assets, net		1,627,941		1,627,498		1,628,036		1,625,773		1,686,154		1,640,551		1,635,706		1,632,692
Acquired real estate leases, net		78,729		71,861		65,687		59,595		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		11,177		11,174		11,623		12,710		9,819
Tenant rent receivables, net		3,411		4,039		3,206		3,938		3,785		4,706		3,990		3,123
Straight-line rent receivable, net		53,430		53,294		53,056		54,006		52,304		51,590		52,272		53,194
Prepaid expenses and other assets		8,355		7,444		9,259		10,400		4,946		5,124		6,282		8,387
Related party mortgage loan receivable		71,455		71,190		70,925		70,660		81,515		72,250		71,985		71,720
Other assets: derivative asset		18,740		21,196		22,265		14,765		13,603		11,333		10,771		13,925
Office computers and furniture, net of accumulated depreciation		261		236		216		197		275		287		319		289
Deferred leasing commissions, net		39,815		43,254		45,475		47,591		34,636		33,548		36,348		40,679
Total assets	$	1,986,195	$	1,979,527	$	1,908,559	$	1,898,102	$	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	$	25,000	$	295,000	$	295,000	$	300,000	$	78,000
Term loan payable, net of unamortized financing costs		765,259		765,618		763,914		764,278		765,539		765,861		766,183		764,901
Series A & Series B Senior Notes		198,727		198,768		198,809		198,850		—		—		—		198,692
Accounts payable and accrued expenses		53,327		52,651		62,699		59,183		50,529		55,241		57,593		61,039
Accrued compensation		1,112		1,778		2,844		3,043		1,259		1,929		3,000		3,641
Tenant security deposits		5,588		5,576		5,619		6,319		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		3,795		8,144		6,961		6,371		5,805
Total liabilities		1,127,277		1,127,140		1,055,146		1,060,468		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		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		1,356,457
Accumulated other comprehensive income (loss)		18,740		21,196		22,265		14,765		7,351		4,940		4,954		12,166
Accumulated distributions in excess of accumulated earnings		(516,290)		(525,277)		(525,320)		(533,599)		(415,796)		(453,564)		(472,036)		(497,342)
Total stockholders’ equity		858,918		852,387		853,413		837,634		948,023		907,844		889,386		871,292
Total liabilities and stockholders’ equity	$	1,986,195	$	1,979,527	$	1,908,559	$	1,898,102	$	2,078,286	$	2,042,567	$	2,031,685	$	1,990,512

December 31, 2018| Page 6

Condensed Consolidated Statements of Cash Flows (in thousands)

	Twelve Months Ended December 31,
	2018		2017		2016
Cash flows from operating activities:
Net income (loss)	$	13,069	$	(15,944)	$	8,378
Adjustments to reconcile net income or loss to net cash provided by operating activities:
Depreciation and amortization expense		97,171		103,743		95,243
Amortization of above and below market leases		(556)		(1,031)		(496)
Hedge ineffectiveness		—		1,878		(1,878)
Loss on sale of properties and properties held for sale		—		18,481		2,938
Equity in (income) loss from non-consolidated REITs		(6,793)		3,604		831
Increase (decrease) in allowance for doubtful accounts		(50)		150		(30)
Changes in operating assets and liabilities:
Tenant rent receivables		(765)		(160)		(185)
Straight-line rents		381		(1,767)		(1,977)
Lease acquisition costs		(1,193)		(2,052)		(1,095)
Prepaid expenses and other assets		(1,940)		(403)		(721)
Accounts payable and accrued expenses		(4,077)		3,870		5,751
Accrued compensation		(598)		(143)		58
Tenant security deposits		936		28		526
Payment of deferred leasing commissions		(15,383)		(14,309)		(12,965)
Net cash provided by operating activities		80,202		95,945		94,378
Cash flows from investing activities:
Property acquisitions		—		—		(221,119)
Acquired real estate leases		—		—		(51,509)
Property improvements, fixtures and equipment		(51,057)		(54,306)		(37,490)
Investment in non-consolidated REITs		74,931		—		—
Distributions in excess of earnings from non-consolidated REITs		710		1,396		1,023
Investment in related party mortgage loan receivable		—		—		(3,000)
Repayment of related party mortgage loan receivable		1,060		10,060		39,861
Proceeds received on sales of real estate assets		—		37,756		27,262
Net cash provided by (used in) investing activities		25,644		(5,094)		(244,972)
Cash flows from financing activities:
Distributions to stockholders		(49,326)		(81,496)		(77,481)
Proceeds from equity offering, net		—		—		82,902
Borrowings under bank note payable		38,000		75,000		175,000
Repayments of bank note payable		(91,000)		(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		(104,488)		(90,398)		141,774
Net increase (decrease) in cash, cash equivalents and restricted cash		1,358		453		(8,820)
Cash, cash equivalents and restricted cash, beginning of period		9,819		9,366		18,186
Cash, cash equivalents and restricted cash, end of period	$	11,177	$	9,819	$	9,366

December 31, 2018| Page 7

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

	Rentable									Year										Year
	Square Feet	Three Months Ended								Ended		Three Months Ended								Ended		Inc		%
(in thousands)	or RSF	31-Mar-18		30-Jun-18		30-Sep-18		31-Dec-18		31-Dec-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17		(Dec)		Change
Region
East	945	$	3,802	$	3,990	$	3,868	$	3,044	$	14,704	$	3,753	$	3,777	$	3,762	$	3,772	$	15,064	$	(360)	(2.4)	%
MidWest	1,549		6,257		4,955		5,104		5,028		21,344		4,365		3,908		4,476		4,940		17,689		3,655	20.7	%
South	4,384		14,449		14,246		14,903		13,916		57,514		16,031		15,487		15,548		15,186		62,252		(4,738)	(7.6)	%
West	2,609		10,958		11,061		11,324		10,849		44,192		10,958		12,045		11,337		11,352		45,692		(1,500)	(3.3)	%
Property NOI* from Operating Properties	9,487		35,466		34,252		35,199		32,837		137,754		35,107		35,217		35,123		35,250		140,697		(2,943)	(2.1)	%
Dispositions and Redevelopment Properties	405		1,250		1,072		1,914		2,298		6,534		1,766		1,607		1,715		1,050		6,138		396	0.4	%
Property NOI*	9,892	$	36,716	$	35,324	$	37,113	$	35,135	$	144,288	$	36,873	$	36,824	$	36,838	$	36,300	$	146,835	$	(2,547)	(1.7)	%
Same Store		$	35,466	$	34,252	$	35,199	$	32,837	$	137,754	$	35,107	$	35,217	$	35,123	$	35,250	$	140,697	$	(2,943)	(2.1)	%
Less Nonrecurring
Items in NOI* (a)			761		1,141		2,504		1,695		6,101		65		1,178		1,103		914		3,260		2,841	(2.1)	%
Comparative
Same Store		$	34,705	$	33,111	$	32,695	$	31,142	$	131,653	$	35,042	$	34,039	$	34,020	$	34,336	$	137,437	$	(5,784)	(4.2)	%

(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 28.

December 31, 2018| Page 8

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

									Year										Year
	Three Months Ended								Ended		Three Months Ended								Ended
	31-Mar-18		30-Jun-18		30-Sep-18		31-Dec-18		31-Dec-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Net income (loss)	$	1,425	$	665	$	9,608	$	1,371	$	13,069	$	4,480	$	(17,395)	$	1,903	$	(4,932)	$	(15,944)
(Gain) loss on sale of properties and properties held for sale		—		—		—		—		—		(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		23,175		93,674		25,163		24,592		24,903		25,569		100,227
NAREIT FFO*		26,364		25,393		26,158		24,546		102,461		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	$	24,546	$	102,461	$	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	$	24,546	$	102,461	$	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		717		2,940		606		606		606		667		2,485
Straight-line rent		40		259		522		(440)		381		(1,082)		(792)		(147)		254		(1,767)
Tenant improvements		(6,777)		(8,212)		(7,084)		(6,895)		(28,968)		(6,474)		(5,363)		(4,474)		(4,166)		(20,477)
Leasing commissions		(1,021)		(5,314)		(4,394)		(3,746)		(14,475)		(1,579)		(1,963)		(4,482)		(5,869)		(13,893)
Non-investment capex		(1,858)		(2,558)		(2,328)		(3,342)		(10,086)		(1,670)		(1,685)		(1,860)		(3,836)		(9,051)
Adjusted Funds From Operations (AFFO)*	$	16,930	$	9,658	$	13,024	$	10,840	$	50,452	$	17,884	$	18,919	$	17,110	$	13,044	$	66,957
Per Share Data:
EPS	$	0.01	$	0.01	$	0.09	$	0.01	$	0.12	$	0.04	$	(0.16)	$	0.02	$	(0.05)	$	(0.15)
FFO*		0.25		0.24		0.24		0.23		0.96		0.27		0.27		0.26		0.25		1.04
AFFO*		0.16		0.09		0.12		0.10		0.47		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		107,231

*See the Appendix for Definitions of these Non-GAAP Measures beginning on page 28. 

December 31, 2018| Page 9

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

									Year										Year
	Three Months Ended								Ended		Three Months Ended								Ended
	31-Mar-18		30-Jun-18		30-Sep-18		31-Dec-18		31-Dec-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Net income (loss)	$	1,425	$	665	$	9,608	$	1,371	$	13,069	$	4,480	$	(17,395)	$	1,903	$	(4,932)	$	(15,944)
Interest expense		9,486		9,753		9,935		9,200		38,374		7,579		7,893		8,258		8,657		32,387
Depreciation and amortization		23,950		23,468		23,081		23,175		93,674		25,163		24,592		24,903		25,569		100,227
Income taxes		82		75		74		129		360		125		72		100		103		400
EBITDA*		34,943		33,961		42,698		33,875		145,477		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		—		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	$	33,875	$	138,724	$	35,036	$	35,525	$	35,354	$	34,033	$	139,948
Interest expense	$	9,486	$	9,753	$	9,935	$	9,200	$	38,374	$	7,579	$	7,893	$	8,258	$	8,657	$	32,387
Scheduled principal payments		—		—		—		—		—		—		—		—		—		—
Interest and scheduled principal payments	$	9,486	$	9,753	$	9,935	$	9,200	$	38,374	$	7,579	$	7,893	$	8,258	$	8,657	$	32,387
Interest coverage ratio		3.68		3.51		3.59		3.68		3.62		4.62		4.50		4.28		3.93		4.32
Debt service coverage ratio		3.68		3.51		3.59		3.68		3.62		4.62		4.50		4.28		3.93		4.32
Debt excluding unamortized financing costs	$	1,068,000	$	1,068,000	$	987,000	$	995,000			$	1,065,000	$	1,065,000	$	1,070,000	$	1,048,000
Cash, cash equivalents and restricted cash		14,355		10,448		10,434		11,177				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	$	983,823			$	1,053,826	$	1,053,377	$	1,057,290	$	1,038,181
Adjusted EBITDA*	$	34,943	$	34,270	$	35,636	$	33,875			$	35,036	$	35,525	$	35,354	$	34,033
Annualized	$	139,772	$	137,080	$	142,544	$	135,500			$	140,144	$	142,100	$	141,416	$	136,132
Net Debt-to-Adjusted EBITDA*		7.5		7.7		6.9		7.3				7.5		7.4		7.5		7.6

*See the Appendix for Definitions of these Non-GAAP Measures beginning on page 28.  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.

December 31, 2018| Page 10

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

Reconciliation of Net income to Property NOI*									Year										Year
	Three Months Ended								Ended		Three Months Ended								Ended
	31-Mar-18		30-Jun-18		30-Sep-18		31-Dec-18		31-Dec-18		31-Mar-17		30-Jun-17		30-Sep-17		31-Dec-17		31-Dec-17
Net income (loss)	$	1,425	$	665	$	9,608	$	1,371	$	13,069	$	4,480	$	(17,395)	$	1,903	$	(4,932)	$	(15,944)
Add (deduct):
(Gain) loss on sale of properties and properties held for sale		—		—		—		—		—		(2,289)		20,492		257		21		18,481
Hedge ineffectiveness		—		—		—		—		—		(22)		(129)		(67)		2,096		1,878
Management fee income		(746)		(746)		(712)		(640)		(2,844)		(794)		(768)		(791)		(756)		(3,109)
Depreciation and amortization		24,035		23,591		23,277		23,327		94,230		25,332		25,279		24,988		25,659		101,258
Amortization of above/below market leases		(85)		(123)		(196)		(152)		(556)		(168)		(687)		(86)		(90)		(1,031)
General and administrative		3,432		3,082		3,394		3,162		13,070		3,443		3,077		3,286		3,665		13,471
Interest expense		9,486		9,753		9,935		9,200		38,374		7,579		7,893		8,258		8,657		32,387
Interest income		(1,120)		(1,141)		(1,157)		(1,192)		(4,610)		(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		59		348		129		67		103		228		527
Property NOI*	$	36,716	$	35,324	$	37,113	$	35,135	$	144,288	$	36,873	$	36,824	$	36,838	$	36,300	$	146,835

*See the Appendix for Definition of Non-GAAP Measures beginning on page 28.

December 31, 2018| Page 11

Debt Summary (in thousands)

		Maximum		Amount		Interest			Interest
	Maturity	Amount		Drawn at		Rate (a)			Rate at	Facility
	Date	of Loan		31-Dec-18		Components			31-Dec-18	Fee
BAML Revolver	12-Jan-22	$	600,000	$	25,000	L	+	1.20%	3.63%	0.25%
JPM Term Loan	30-Nov-21		150,000		150,000	L	+	1.25%	3.63%
BAML Term Loan	12-Jan-23		400,000		400,000	1.12%	+	1.35%	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	$	995,000				3.25%

· On August 2, 2018, we entered into an Amended and Restated Credit Agreement with respect to the JPM Term Loan, 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 December 31, 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 with respect to the 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 December 31, 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 of the loans we execute.  Following the recent amendments on August 2, 2018 and September 27, 2018, we estimate the annualized rate for this amortization to interest expense 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.

December 31, 2018| Page 12

Capital Analysis (in thousands, except per share amounts)

	31-Mar-18		30-Jun-18		30-Sep-18		31-Dec-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		107,231
Closing market price per share	$	8.41	$	8.56	$	7.99	$	6.23	$	12.14	$	11.08	$	10.62	$	10.74
Market capitalization	$	901,814	$	917,899	$	856,777	$	668,050	$	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		995,000		1,065,000		1,065,000		1,070,000		1,048,000
Total Market Capitalization	$	1,969,814	$	1,985,899	$	1,843,777	$	1,663,050	$	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	$	9,650	$	20,374	$	20,374	$	20,374	$	20,374
Common dividend declared per share	$	0.09	$	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%		704%		455%		-117%		1071%		-413%
Declared dividend as a % of AFFO* per share		57%		100%		74%		89%		114%		108%		119%		156%
Liquidity:
Cash, cash equivalents and restricted cash	$	14,355	$	10,448	$	10,434	$	11,177	$	11,174	$	11,623	$	12,710	$	9,819
Revolver:
Gross potential available under the BAML Revolver		600,000		600,000		600,000		600,000		500,000		500,000		500,000		600,000
Less:
Outstanding balance		(98,000)		(98,000)		(17,000)		(25,000)		(295,000)		(295,000)		(300,000)		(78,000)
Total Liquidity	$	516,355	$	512,448	$	593,434	$	586,177	$	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 28.

December 31, 2018| Page 13

Portfolio Overview

	As of the Quarter Ended
	31-Dec-18	30-Sep-18	30-Jun-18	31-Mar-18	31-Dec-17
Operating Properties:
Number of properties	32	34	34	34	34
Square feet	9,486,650	9,760,699	9,760,699	9,760,657	9,761,984
Leased percentage	89.0%	90.5%	89.0%	88.5%	89.7%
Redevelopment Properties (a):
Number of properties	3	1	1	1	1
Square feet	404,652	129,821	129,821	129,821	129,821
Leased percentage	27.2%	15.8%	15.8%	1.9%	1.9%
Managed Properties - Single Asset REITs (SARs):
Number of properties	3	3	3	4	4
Square feet	674,342	674,342	674,342	810,278	810,278
Total Operating, Redevelopment and Managed Properties:
Number of properties	38	38	38	39	39
Square feet	10,565,644	10,564,862	10,564,862	10,700,756	10,702,083

(a) We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

December 31, 2018| Page 14

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)
Operating Properties:
East Region								Midwest Region
Washington, D.C.								Chicago
Meadow Point	Chantilly	VA	138,537	100.0%	100.0%	$	26.67	Northwest Point	Elk Grove Village	IL	177,095	100.0%	100.0%	$	33.14
Stonecroft	Chantilly	VA	111,469	100.0%	100.0%	$	32.50	909 Davis Street	Evanston	IL	195,098	97.8%	87.7%	$	33.79
Loudoun Tech Center	Dulles	VA	136,658	95.7%	95.8%	$	18.67
								Indianapolis
Richmond								River Crossing	Indianapolis	IN	205,059	94.2%	94.6%	$	23.43
Innsbrook	Glen Allen	VA	298,456	57.3%	89.3%	$	12.45
								St. Louis
Raleigh-Durham								Timberlake	Chesterfield	MO	234,496	100.0%	100.0%	$	27.90
Emperor Boulevard	Durham	NC	259,531	100.0%	100.0%	$	34.33	Timberlake East	Chesterfield	MO	117,036	100.0%	100.0%	$	26.23
								Minneapolis
								121 South 8th Street	Minneapolis	MN	293,460	80.1%	76.2%	$	22.87
								Plaza Seven	Minneapolis	MN	326,757	88.2%	88.0%	$	35.08
East Region Total			944,651	85.9%	96.0%	$	24.24	Midwest Region Total			1,549,001	92.7%	90.7%	$	29.19

(a) Weighted Occupied Percentage for the year ended December  31, 2018.

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

December 31, 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%	77.6%	$	21.33	380 Interlocken	Broomfield	CO	240,358	93.4%	87.2%	$	29.46
One Legacy Circle	Plano	TX	214,110	100.0%	100.0%	$	37.86	1999 Broadway	Denver	CO	676,379	81.8%	77.1%	$	31.51
Addison Circle	Addison	TX	289,302	89.3%	86.6%	$	32.10	Greenwood Plaza	Englewood	CO	196,236	100.0%	100.0%	$	25.09
Collins Crossing	Richardson	TX	300,887	99.4%	99.9%	$	25.32	390 Interlocken	Broomfield	CO	241,512	98.2%	98.1%	$	30.67
Liberty Plaza	Addison	TX	218,934	80.4%	83.2%	$	21.63	1001 17th Street	Denver	CO	655,413	97.7%	91.9%	$	34.82
								600 17th Street	Denver	CO	598,630	86.0%	84.2%	$	32.84
Houston								West Region Total			2,608,528	90.7%	87.0%	$	31.85
Park Ten	Houston	TX	157,460	89.5%	77.9%	$	28.60
Eldridge Green	Houston	TX	248,399	100.0%	100.0%	$	30.11	Total Operating Properties			9,486,650	89.0%	86.3%	$	29.23
Park Ten Phase II	Houston	TX	156,746	65.5%	5.6%	$	17.86
Westchase I & II	Houston	TX	629,025	84.7%	83.8%	$	29.84
								Redevelopment Properties (c)
Atlanta								Forest Park (d)	Charlotte	NC	62,212	100.0%	100.0%	$	15.55
One Overton Park	Atlanta	GA	387,267	79.7%	61.3%	$	23.81	Blue Lagoon Drive	Miami	FL	212,619	0.0%	91.7%	$	24.82
One Ravinia	Atlanta	GA	386,602	92.3%	91.1%	$	25.63	801 Marquette Ave	Minneapolis	MN	129,821	37.0%	4.2%	$	13.09
Two Ravinia	Atlanta	GA	411,047	78.5%	75.0%	$	27.38	Total Redevelopment Properties			404,652	27.2%	64.9%	$	22.38
Pershing Plaza	Atlanta	GA	160,145	97.4%	97.4%	$	36.15
999 Peachtree	Atlanta	GA	621,946	84.6%	86.2%	$	32.04	Total Owned Portfolio			9,891,302	86.4%	85.4%	$	29.01
South Region Total			4,384,470	87.3%	82.2%	$	28.84

(a) Weighted Occupied Percentage for the year ended December  31, 2018.

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

(c) We define Redevelopment Properties as properties being developed, redeveloped or where redevelopment is complete,but are in lease-up and that are not stabilized. 

(d) Lease expired December 31, 2018. 

December 31, 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 Operating & Managed			10,565,644

December 31, 2018| Page 17

Tenants by Industry (By Square Feet)  

December 31, 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	IQVIA Holdings Inc.	1	89	259,531	2.6%	$	9,168,715	3.8%
2	CITGO Petroleum Corporation	1	38	248,399	2.5%		8,385,950	3.5%
3	Newfield Exploration Company	1	38	234,495	2.4%		9,256,575	3.9%
4	US Government (a)	4	8, 17, 21, 25	223,641	2.3%		7,231,705	3.0%
5	Centene Management Company, LLC	3	54, 54,  54	216,879	2.2%		5,690,749	2.4%
6	Eversheds Sutherland (US) LLP	1	88	179,868	1.8%		5,334,134	2.2%
7	The Vail Corporation	1	135	164,636	1.7%		4,067,961	1.7%
8	EOG Resources, Inc.	1	96	160,937	1.6%		5,455,765	2.3%
9	T-Mobile South, LLC dba T-Mobile	1	80	151,792	1.5%		3,984,540	1.7%
10	Citicorp Credit Services, Inc.	1	104	146,260	1.5%		4,886,547	2.0%
11	Petrobras America, Inc.	1	11	144,813	1.4%		5,372,562	2.2%
12	Jones Day	1	23	140,342	1.4%		4,919,841	2.1%
13	Argo Data Resource Corporation	1	56	140,246	1.4%		3,973,169	1.7%
14	Kaiser Foundation Health Plan	1	65	120,979	1.2%		3,551,645	1.5%
15	VMWare, Inc.	1	89	119,558	1.2%		1,285,249	0.5%
16	Giesecke & Devrient America	1	72	112,110	1.2%		2,077,398	0.9%
17	Northrop Grumman Systems Corp.	1	12	111,469	1.1%		3,368,593	1.4%
18	Randstad General Partner (US) (b)	2	30, 65	109,638	1.1%		2,512,008	1.1%
19	ADS Alliance Data Systems, Inc.	1	90	107,698	1.1%		3,919,182	1.6%
20	Densbury Onshore LLC (c)	1	7	100,000	1.0%		1,890,000	0.8%
			Total	3,193,291	32.2%	$	96,332,288	40.3%

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

(c) Includes 100,000 square feet, which expire on 7/31/19 and have been 100% re-leased by WorldVentures Holdings, LLC commencing on 8/1/19 and expiring in 2030.        

December 31, 2018| Page 19

Leasing Activity (Owned Portfolio)

	Year		Year		Year
	Ended		Ended		Ended
Leasing Activity (a)		31-Dec-18		31-Dec-17		31-Dec-16
(in Square Feet - SF)
New leasing		397,000		460,000		299,000
Renewals and expansions		1,284,000		1,011,000		895,000
		1,681,000		1,471,000		1,194,000
Other information per SF
(Activity on a year-to-date basis)
GAAP Rents on leasing	$	31.02	$	30.43	$	29.64
Weighted average lease term		7.2 Years		6.8 Years		6.6 Years
Increase or decrease over average GAAP rents in prior year (b)		7.3%		12.3%		10.4%
Average free rent		4 Months		4 Months		3 Months
Tenant Improvements	$	29.13	$	22.22	$	18.71
Leasing Costs	$	8.99	$	9.92	$	10.05

(a) Leasing activity includes leasing at redevelopment properties.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

(b) 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. 

December 31, 2018| Page 20

Lease Expirations by Square Feet (a) (Owned Portfolio)

(a) Lease expirations include leases in redevelopment properties.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized. 

December 31, 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
2019	50	(c)	854,888		$	25,609,759	$	29.96	10.7%	10.7%
2020	75		1,072,050			34,590,128		32.27	14.5%	25.2%
2021	63		691,623			19,661,014		28.43	8.2%	33.4%
2022	71		1,206,763			37,727,133		31.26	15.8%	49.2%
2023	59		776,188			22,579,570		29.09	9.5%	58.7%
2024	61		763,471			17,920,983		23.47	7.5%	66.2%
2025	21		572,982			14,712,946		25.68	6.1%	72.3%
2026	18		841,116			24,267,108		28.85	10.2%	82.5%
2027	9		491,326			14,944,498		30.42	6.3%	88.8%
2028	10		314,679			8,557,185		27.19	3.6%	92.4%
2029 and thereafter	82		964,942	(d)		18,276,088		18.94	7.6%	100.0%
	519		8,550,028		$	238,846,412	$	27.94	100.0%
Vacancies as of 12/31/18			1,046,853
Redevelopment properties (e)			294,421
Total Portfolio Square Footage			9,891,302

(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.  Includes annualized rent from redevelopment properties.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized. 

(b) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at December 31, 2018 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(c) Includes 5 leases that are month-to-month.   

(d) Includes 115,130 square feet that are non-revenue producing building amenities.

(e) Redevelopment properties include properties being developed, redeveloped, or where redevelopment is complete, but are in lease-up and that are not stabilized. 

December 31, 2018| Page 22

Redevelopment Activity

(in 000's except square feet)										Estimated	Estimated
						Incurred		Percent	Estimated	Leased	Occupied
				Anticipated		Through		Leased	Completion	Stabilization	Stabilization
Property Name	City	State	Square Feet	Investment (1)		31-Dec-18		31-Dec-18	Date	Date	Date
Redevelopment Activity
Redevelopment in Process
Forest Park (2)	Charlotte	NC	62,212	$	3,475	$	—	100.0%	30-Sep-19	31-Dec-19	31-Mar-20
Blue Lagoon Drive	Miami	FL	212,619		22,500		923	0.0%	31-Dec-19	30-Jun-20	31-Dec-20
Total Office in Process			274,831		25,975		923
Redevelopment Complete But Not Stabilized
801 Marquette Ave	Minneapolis	MN	129,821	$	28,443	$	18,872	37.0%	30-Jun-17	30-Sep-19	31-Mar-20
Total			404,652	$	54,418	$	19,795

(1) Anticipated Investment includes capitalized redevelopment costs, capitalized interest and lease-up costs.  

(2) Lease expired December 31, 2018.     

December 31, 2018| Page 23

Capital Expenditures

(in thousands)									Year
	For the Three Months Ended								Ended
	31-Mar-18		30-Jun-18		30-Sep-18		31-Dec-18		31-Dec-18
Tenant improvements	$	6,777	$	8,212	$	7,084	$	6,895	$	28,968
Deferred leasing costs		1,021		5,314		4,394		3,746		14,475
Non-investment capex		1,858		2,558		2,328		3,342		10,086
Total Capital Expenditures	$	9,656	$	16,084	$	13,806	$	13,983	$	53,529

	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 $15.1 million for the year ended December 31, 2018 and $25.0 million for the year ended December 31, 2017.

December 31, 2018| Page 24

Transaction Activity (in thousands except for Square Feet)

Recent Acquisitions:	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

Recent Dispositions:					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

December 31, 2018| Page 25

Loan Portfolio of Secured Real Estate (in thousands)

(dollars in thousands, except footnotes)			Maximum		Amount						Interest
		Maturity	Amount		Drawn at		Interest			Draw	Rate at
Sponsored REIT	Location	Date	of Loan		31-Dec-18		Rate (1)			Fee (2)	31-Dec-18
Secured revolving lines of credit
FSP Satellite Place Corp.	Duluth, GA	31-Dec-19	$	5,500	$	1,060	L	+	4.40%	0.5%	6.78%
FSP Energy Tower I Corp.	Houston, TX	30-Jun-19		20,000		15,600	L	+	5.00%	0.5%	7.38%
Mortgage loan secured by property
FSP Monument Circle LLC (3) (4)	Indianapolis, IN	6-Dec-20		21,000		21,000			7.19%	n/a	7.19%
FSP Energy Tower I Corp. (5)	Houston, TX	30-Jun-19		33,000		33,000			6.41%	n/a	6.41%
			$	79,500	$	70,660

(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. 

December 31, 2018| Page 26

Net Asset Value Components

(in thousands except per share data)
	Asof		Assets:			Other information:
	31-Dec-18		Loans outstanding on secured RE	$	70,660	Leased SF to be FFO producing
Total Market Capitalization Values			Investments in SARs (book basis)		—	Over the next twelve months (in 000's)		326
Shares outstanding		107,231.2	Straight-line rent receivable		54,006
Closing price	$	6.23	Asset held for sale		—	Straight-line rental revenue current quarter	$	440
Market capitalization	$	668,050	Cash, cash equivalents and restricted cash		11,177
Debt		995,000	Tenant rent receivables		3,938	Management fee income current quarter	$	76
Total Market Capitalization	$	1,663,050	Prepaid expenses		6,605	Interest income from secured loans		1,192
			Office computers and furniture		197	Management fees and interest income from loans	$	1,268
			Other assets:
	3 Months		Deferred financing costs, net		10,667	FFO from non-consolidated REITs - Q3 2018 (6):
	Ended		Other assets: Derivative Market Value		14,765	East Wacker	$	635
NOI Components	31-Dec-18		Other assets		—	Grand Boulevard		14
				$	172,015	Total	$	649
Same Store NOI (1)	$	32,837
Acquisitions (1) (2)		—	Liabilities:			Footnotes to the components
Property NOI (1)		32,837	Debt (excluding contra for unamortized financing costs)	$	995,000
Full quarter adjustment (3)		—	Accounts payable & accrued expenses		62,226	(1) See pages 11 & 28 for definitions and reconciliations.
Stabilized portfolio	$	32,837	Tenant security deposits		6,319
			Other liabilities: derivative liability		—	(2) Includes NOI from acquisitions not in Same Store.
				$	1,063,545
Financial Statement Reconciliation:						(3) Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary.
Rental Revenue	$	65,304
Rental operating expenses		(18,652)				(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		(10,737)
NOI on assets sold		(2,298)				(5) Management & other fees are eliminated in consolidation but included in Property NOI.
Taxes (4)		(129)
Management fees & other (5)		(651)				(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)	$	32,837

December 31, 2018| Page 27

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,  acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs 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.

December 31, 2018| Page 28

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 redevelopment properties, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.  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.

December 31, 2018| Page 29

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. 

December 31, 2018| Page 30

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

December 31, 2018| Page 31