FRANKLIN STREET PROPERTIES CORP /MA/ (FSP)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 was operationally stable but subdued: revenue drifted lower on portfolio shrinkage and soft occupancy, while GAAP EPS matched the lone Street estimate at -$0.08; FFO remained modest at $2.5M . EPS (actual -$0.08) was in line with S&P Global consensus (-$0.08)*. Revenue consensus was not available .
• Management reiterated a strategic alternatives review (sale of company/assets or refinancing) and maintained suspension of Net Income/FFO/disposition guidance; the quarterly dividend remained $0.01 per share .
• Occupancy ticked down to 69.1% (owned) from 69.2% in Q1 and 72.3% a year ago; leasing activity year‑to‑date was 187k sf (mostly renewals), with positive rent spreads and a 6.3‑year average lease term .
• Balance sheet: total debt ~$249.8M at ~9% rates; Q2 10‑Q flagged substantial doubt under ASC 205‑40 tied to April 1, 2026 maturities absent executed refinancing/asset sales, though management believes extension/refinancing is “more likely than not” .
• No earnings call was held; near‑term stock catalysts center on outcomes from the strategic review, leasing wins in Minneapolis/Houston/Denver, and visibility on refinancing or asset sales .

What Went Well and What Went Wrong

What Went Well

• Pricing/mix: YTD leasing achieved weighted average GAAP base rent of $31.89/sf (+4.2% vs prior rents), with a 6.3‑year average term, signaling healthy economics on executed deals .
• Stabilized NOI cadence: Same‑store NOI edged up sequentially to $11.667M (+1.1% q/q), supported by Midwest/South stability, partially offset by West softness .
• Strategic optionality: Board engaged BofA Securities to evaluate a full range of alternatives (company/asset sale, refinancing), acknowledging disconnect between share price and asset value . “We continue to work with our financial advisor, BofA Securities, in connection with a review of strategic alternatives…” — George J. Carter, CEO .

What Went Wrong

• Occupancy pressure: Owned portfolio leased slipped to 69.1% (vs 69.2% Q1 and 72.3% LY), with expirations outpacing new leasing; YTD activity (187k sf) was renewal‑heavy (171k sf) .
• Portfolio contraction impact: Revenue declined to $26.715M from $30.830M YOY on 2024 dispositions and lease roll‑downs; Adjusted EBITDA trended down YOY to $8.790M (from $10.783M) .
• Refinancing overhang: 10‑Q disclosed “substantial doubt” language under ASC 205‑40 due to April 1, 2026 maturities across term loans and senior notes (all ~9% post‑Apr 1), pending refinancing/asset sale execution .

Financial Results

Headline P&L and Operating Metrics

Versus S&P Global Consensus (Q2 2025)

* Values retrieved from S&P Global. EPS coverage reflects 1 estimate.

Regional NOI (Owned properties, $USD Millions)

KPIs and Balance Sheet

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We remain focused on trying to improve leasing and occupancy across the portfolio… We believe that current ‘back‑to‑office’ initiatives by employers have the potential to positively impact our leasing and occupancy efforts.” — George J. Carter, CEO .
• “We continue to work with our financial advisor, BofA Securities, in connection with a review of strategic alternatives… including a sale of the Company, a sale of assets, and refinancing of existing indebtedness…” .
• “As of June 30, 2025, our total indebtedness was approximately $249.8 million…” — underscores deleveraging focus .
• 10‑Q: Management believes extending/refinancing debt or asset sales is “more likely than not,” but absent executed actions, ASC 205‑40 requires “substantial doubt” disclosure about going concern through at least one year post‑issuance .

Q&A Highlights

• No quarterly earnings call was held for Q2 2025; the company explicitly stated it would not host a call .
• Clarifications came via the 10‑Q: refinancing plan, going‑concern disclosure, and operating trends by region .

Estimates Context

• GAAP EPS: Actual -$0.08 vs S&P Global consensus -$0.08 (1 estimate) — inline . Revenue consensus not available; EBITDA/FFO estimates not available.
• With limited coverage and suspended guidance, Street models may remain sparse; updates will likely hinge on disposition timing, leasing conversion, and refinancing path.
• Note: Values marked with an asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

• Strategic review is the near‑term narrative: Any announced transaction (asset/company sale or refinancing package) is a potential stock catalyst .
• Refinancing clock is ticking: All ~$249.8M debt stacks to April 1, 2026 at ~9% rates; Q2 10‑Q “substantial doubt” language raises urgency for asset sales/refi execution .
• Leasing execution is the operating lever: Despite a modest 187k sf YTD (mostly renewals), rent economics are favorable (+4.2% GAAP rent spreads; 6.3‑year term), with potential Minneapolis tailwind from corporate RTO .
• Earnings quality: FFO of $2.5M and Adjusted EBITDA of $8.8M reflect portfolio downsizing and lower occupancy; monitoring NOI by region shows stability in South/Midwest offset by West softness .
• Dividend steady but small: $0.01 per quarter likely constrained by debt covenants and cash preservation; payout remains a signaling mechanism rather than income driver .
• Risk/reward skew: Upside from strategic outcomes and leasing wins; downside tied to slower leasing, asset sale pricing/liquidity, and refinancing risk flagged in the 10‑Q .

---

Additional detail and primary sources:

• Q2 2025 8‑K/Press Release & Supplemental (financials, leasing, capital, dividend, strategy):
• Q2 2025 10‑Q (MD&A, going concern, debt, NOI):
• Q1 2025 press release (trend context):
• Q4/FY 2024 press release (baseline, dispositions):
• Dividend declaration (Q2):

Estimates: S&P Global consensus; EPS values marked with * indicate S&P Global data.