8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): May 27, 2021

Franklin Street Properties Corp.

(Exact Name of Registrant as Specified in Charter)

Maryland	001-32470	04-3578653
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

401 Edgewater Place, Suite 200, Wakefield, Massachusetts 01880

(Address of Principal Executive Offices, and Zip Code)

(781) 557-1300

Registrant’s Telephone Number, Including Area Code

Not Applicable

(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 communication 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 communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communication 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 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common Stock, $.0001 par value per share	FSP	NYSE American

ITEM 2.01. Completion of Acquisition or Disposition of Assets.

On May 27, 2021, FSP One Ravinia Drive LLC, FSP Two Ravinia Drive LLC, and FSP One Overton Park LLC (together, the “Seller”), each a wholly-owned subsidiary of Franklin Street Properties Corp. (the “Registrant”), closed on the previously announced sale of office buildings located at One Ravinia Drive NE, Dunwoody, Georgia, Two Ravinia Drive NE, Dunwoody, Georgia, and 3625 Cumberland Boulevard SE, Atlanta, Georgia (collectively, the “Properties”) to One Overton Owner LLC, One Ravinia Owner LLC, and Two Ravinia Owner LLC (together, the “Buyer”), each an affiliate of Crocker Partners LLC, pursuant to a Purchase and Sale Agreement dated March 5, 2021 (as amended, the “Agreement”).  There were no material relationships, other than in respect of the Agreement, among the Seller and the Buyer, or any of their respective affiliates. The aggregate gross purchase price for the Properties was $219,500,000.  The Registrant expects to record an aggregate gain of approximately $23 million in the second quarter of 2021 in connection with the sale of the Properties.

ITEM 9.01. Financial Statements and Exhibits.

(b) Pro forma financial information.

The pro forma financial information of the Registrant as adjusted to give effect to the sale of the Properties is presented in the unaudited pro forma condensed consolidated financial statements filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

(d) Exhibits.

The following exhibits are filed herewith:

EXHIBIT NO.	DESCRIPTION OF EXHIBITS
99.1	Unaudited Pro Forma Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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.
By:	/s/ Scott H. Carter
	Scott H. Carter
	Executive Vice President, General Counsel and Secretary

Date: June 2, 2021

EX-99.1

Exhibit 99.1

SELECTED COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL DATA

On May 27, 2021, FSP One Ravinia Drive LLC, FSP Two Ravinia Drive LLC, and FSP One Overton Park LLC (together, the “Seller”), each a wholly-owned subsidiary of Franklin Street Properties Corp. (“FSP Corp.” or the “Registrant”), sold three properties (collectively, the “Properties”) to One Ravinia Owner LLC, Two Ravinia Owner LLC, and One Overton Owner LLC (together, the “Buyer”), each an affiliate of Crocker Partners LLC (the “Buyer”), pursuant to a Purchase and Sale Agreement dated March 5, 2021 (as amended, the “Agreement”).  The aggregate purchase price for the Properties was $219,500,000.  There were no material relationships, other than in respect of the Agreement, among the Seller and the Buyer, or any of their respective affiliates.  The Properties are located at One Ravinia Drive NE, Dunwoody, Georgia, Two Ravinia Drive NE, Dunwoody, Georgia, and 3625 Cumberland Boulevard SE, Atlanta, Georgia.

The following unaudited pro forma condensed consolidated financial statements of FSP Corp. have been prepared to show the pro forma effect of the disposal of the Properties and have been prepared in accordance with Article 11 of Regulation S-X by applying pro forma adjustments to our historical combined financial information. The pro forma transaction accounting adjustments for the sale of the Properties consist of those necessary to account for the disposal. The unaudited pro forma condensed consolidated financial statements are based upon the historical consolidated financial statements of FSP Corp. included in its Annual Report on Form 10-K for the year ended December 31, 2020, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. The pro forma consolidated balance sheet has been presented as if the dispositions had occurred as of March 31, 2021. The pro forma condensed consolidated statements of operations for the three months ended March 31, 2021 and for the year ended December 31, 2020 are presented as if the dispositions were completed on January 1, 2020.

The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the actual results of operations of the Properties for the periods indicated, nor do they purport to represent the financial condition or results of operations of FSP Corp. for any future period. These unaudited pro forma financial statements are provided for informational purposes only. FSP Corp.’s financial position and results of operations after the disposition of the Properties may be significantly different than what is presented in these unaudited pro forma financial statements. In the opinion of FSP Corp. management, all material adjustments necessary to reflect the effect of the above transactions have been made.

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Franklin Street Properties Corp.

Unaudited Condensed Consolidated Pro Forma Balance Sheets

March 31, 2021

(dollars in thousands, except per share amounts)

			Transaction
	Historical		Accounting
	FSP Corp. (a)			Adjustments		Pro Forma
Assets:
Real estate assets, net	$	1,601,613	$	(170,473)	(b)	$	1,431,140
Acquired real estate leases, net		25,836		(1,810)	(b)		24,026
Cash, cash equivalents and restricted cash		4,113		210,471	(c)		214,584
Tenant rents receivable, net		4,337		-			4,337
Straight-line rents receivable, net		69,743		(7,959)	(b)		61,784
Prepaid expenses and other assets		5,873		-			5,873
Related party mortgage loan receivable		21,000		-			21,000
Office computers & furniture, net		147		-			147
Deferred leasing commissions, net		56,771		(6,165)	(b)		50,606
Total assets	$	1,789,433	$	24,064		$	1,813,497
Liabilities and stockholders' equity:
Liabilities:
Bank note payable	$	27,500	$	-		$	27,500
Term loan payable, net of unamortized financing costs		717,668		-			717,668
Series A & Series B Senior Notes		199,219		-			199,219
Accounts payable and accrued expenses		63,456		(938)	(b)		62,518
Accrued compensation		1,390		-			1,390
Tenant security deposits		8,041		(447)	(b)		7,594
Lease liability		1,444		-			1,444
Other liabilities: derivative liabilities		13,698		-			13,698
Acquired unfavorable real estate leases, net		1,433		(483)	(b)		950
Total liabilities		1,033,849		(1,868)			1,031,981
Stockholders' Equity:
Preferred stock		-		-			-
Common stock		11		-			11
Additional paid in capital		1,357,131		-			1,357,131
Accumulated other comprehensive loss		(13,698)		-			(13,698)
Accumulated distributions in excess of
accumulated earnings		(587,860)		25,932	(d)		(561,928)
Total stockholders' equity		755,584		25,932			781,516
Total liabilities and stockholders' equity	$	1,789,433	$	24,064		$	1,813,497

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Franklin Street Properties Corp.

Unaudited Condensed Consolidated Pro Forma Statements of Operations

For the Three Months Ended

March 31, 2021

(dollars in thousands, except per share amounts)

			Transaction
	Historical		Accounting
	FSP Corp. (e)		Adjustments			Pro Forma
Revenues:
Rental	$	58,623	$	(5,882)	(f)	$	52,741
Related party revenue:
Management fees and interest from loans		410		-			410
Other		6		-			6
Total revenues		59,039		(5,882)			53,157
Expenses:
Real estate operating expenses		15,939		(2,015)	(f)		13,924
Real estate taxes and insurance		12,366		(972)	(f)		11,394
Depreciation and amortization		24,381		(2,305)	(f)		22,076
General and administrative		4,146		(7)	(f)		4,139
Interest		8,600		-			8,600
Total expenses		65,432		(5,299)			60,133
Income (loss) before taxes on income		(6,393)		(583)			(6,976)
Tax expense on income		67		-			67
Net loss	$	(6,460)	$	(583)		$	(7,043)
Weighted average number of shares outstanding, basic and diluted		107,328					107,328
Net loss per share, basic and diluted	$	(0.06)				$	(0.07)

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Franklin Street Properties Corp.

Unaudited Condensed Consolidated Pro Forma Statements of Operations

For the Year Ended

December 31, 2020

(dollars in thousands, except per share amounts)

			Transaction
	Historical		Accounting
	FSP Corp. (e)		Adjustments			Pro Forma
Revenues:
Rental	$	244,207	$	(25,283)	(f)	$	218,924
Related party revenue:
Management fees and interest from loans		1,610		-			1,610
Other		31		-			31
Total revenues		245,848		(25,283)			220,565
Expenses:
Real estate operating expenses		66,940		(8,776)	(f)		58,164
Real estate taxes and insurance		48,390		(3,797)	(f)		44,593
Depreciation and amortization		88,558		(9,803)	(f)		78,755
General and administrative		14,997		(60)	(f)		14,937
Interest		36,026		-			36,026
Total expenses		254,911		(22,436)			232,475
Gain on sale of property		41,928		25,931	(g)		67,859
Income (loss) before taxes on income		32,865		23,084			55,949
Tax expense on income		250		-			250
Net income	$	32,615	$	23,084		$	55,699
Weighted average number of shares outstanding, basic and diluted		107,303					107,303
Net income per share, basic and diluted	$	0.30				$	0.52

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FRANKLIN STREET PROPERTIES CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

PRO FORMA FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

The above unaudited condensed consolidated pro forma financial statement presentation has been prepared based upon certain pro forma adjustments to the historical consolidated financial statements of FSP Corp. Certain assumptions regarding the operations of FSP Corp. have been made in connection with the preparation of the condensed consolidated financial pro forma information. These assumptions are as follows:

1. Adjustments to Pro Forma Condensed Consolidated Balance Sheet

(a) Represents FSP Corp.’s historical condensed consolidated balance sheet as of March 31, 2021, which was derived from FSP Corp.’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2021. FSP Corp. elected to be, and is qualified as, a real estate investment trust for federal income tax purposes. FSP Corp. has met the various required tests; therefore, no provision for federal or state income taxes has been reflected on real estate operations.

FSP Corp. has subsidiaries which are not in the business of real estate operations. Those subsidiaries are taxable as real estate investment trust subsidiaries, or TRS, and are subject to income taxes at statutory tax rates. The taxes on income shown in the pro forma condensed consolidated statements of operations are the taxes on the income of the TRS. There are no material items that would cause a deferred tax asset or a deferred tax liability.

(b) Represents FSP Corp.’s disposition of the Properties and the necessary adjustments to eliminate the real estate assets, rights and obligations associated with tenant leasing arrangements, accrued property taxes and related intangible assets based on their carrying values as of March 31, 2021 associated with the disposition of the Properties.

(c) Represents the net disposition proceeds received. The gross sales price of the Properties was $219,500 before purchase credits of $6,186, estimated disposition related costs of $1,458, payment of $938 of property taxes and payment of security deposits to the Buyer of $447.

(d) Represents FSP Corp.’s disposition of the Properties and the related nonrecurring estimated gain on sale. The gain has been calculated based upon the net disposition proceeds of $210,471, as described above in (c), less the carrying amounts as of March 31, 2021 of assets and liabilities disposed of on May 27, 2021.

2. Adjustments to Pro Forma Condensed Consolidated Statements of Operations

(e) Represents FSP Corp.’s historical condensed consolidated statements of operations for the three months ended March 31, 2021 and the year ended December 31, 2020, which were derived from FSP Corp.’s quarterly report on Form 10-Q for the three months ended March 31, 2021 and the annual report on Form 10-K for the year ended December 31, 2020, respectively. The condensed consolidated statement of operations for the year ended December 31, 2020 includes a nonrecurring gain of $41,928 for the sale of a property unrelated to the Properties sold on May 27, 2021.

(f) Represents FSP Corp.’s disposition of the Properties and the necessary adjustment to eliminate the impact of historical rental income, real estate operating expenses, real estate taxes and

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insurance, depreciation and amortization and general and administrative expenses associated with the Properties.

(g) Represents the disposition of the Properties and the related nonrecurring estimated gain on sale. The gain has been calculated based upon the net disposition proceeds of $210,471, as described above in (c), less the carrying amounts as of March 31, 2021 of assets and liabilities disposed of on May 27, 2021.

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XML

Document and Entity Information	May 27, 2021
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	May 27, 2021
Entity File Number	001-32470
Entity Registrant Name	Franklin Street Properties Corp.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	04-3578653
Entity Address, Address Line One	401 Edgewater Place
Entity Address, Adress Line Two	Suite 200
Entity Address, State or Province	MA
Entity Address, City or Town	Wakefield
Entity Address, Postal Zip Code	01880
City Area Code	781
Local Phone Number	557-1300
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $.0001 par value per share
Trading Symbol	FSP
Security Exchange Name	NYSEAMER
Entity Emerging Growth Company	false
Entity Central Index Key	0001031316
Amendment Flag	false