FRANKLIN STREET PROPERTIES CORP /MA/ (FSP)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 results: Revenue $27.3M, GAAP EPS $(0.08), Net loss $(8.3)M; FFO $2.3M, AFFO $(3.2)M. Occupancy softened to 68.9% leased across 4.81M SF; weighted GAAP rent per occupied SF was $31.13 .
• EPS was in line with Wall Street consensus (Primary EPS Consensus Mean $(0.08); 1 estimate), while revenue consensus was unavailable; dividend maintained at $0.01/share for Q3 .
• Management highlighted modest leasing activity year-to-date (274K SF YTD, 219K renewals/expansions) and “encouraging signs of stabilization” and return-to-office trends; strategic alternatives review with BofA Securities remains ongoing; no earnings call this quarter .
• Sequentially, revenue ticked up vs Q2 ($27.3M vs $26.7M), but property NOI and AFFO declined on higher second-generation capex and leasing costs; guidance for Net Income/FFO/dispositions remains suspended given macro uncertainty .

What Went Well and What Went Wrong

• What Went Well

  • Management sees “encouraging signs of stabilization and return-to-office trends” with more and larger potential lease transactions and rising demand amid reduced new supply; quote: “we have recently seen some encouraging signs of stabilization and ‘return-to-office’ trends… More prospective tenants are… seeking to expand” .
  • Weighted average GAAP base rent on 2025 YTD leasing was $31.81/SF, 6.0% above prior-year average rents for those properties; Eldridge Green remains 100% leased, and portfolio weighted occupied rent was $31.13/SF as of 9/30/25 .
  • Revenue improved sequentially ($27.3M in Q3 vs $26.7M in Q2), helped by steady rent collections and stabilized assets, while GAAP net loss narrowed year over year (Q3 2025 $(8.3)M vs Q3 2024 $(15.6)M) .

• What Went Wrong

  • Occupancy drifted lower: owned portfolio leased percentage decreased to 68.9% (vs 69.1% in Q2 and 70.3% at 12/31/24); the decline was driven by lease expirations in 2025 .
  • Sequential property NOI fell across regions (Comparative Same Store down 5.0% vs Q2); total owned property NOI declined to $11.083M from $11.667M in Q2 .
  • AFFO turned more negative ($(3.181)M vs $(0.514)M in Q2), reflecting elevated second-generation capital expenditures (Q3 tenant improvements $4.469M; leasing commissions $0.929M) and continued negative spread between cash flows and recurring capex .

Financial Results

Year-over-year context:

• Revenue: Q3 2025 $27.3M vs Q3 2024 $29.7M .
• EPS: Q3 2025 $(0.08) vs Q3 2024 $(0.15) .

Guidance Changes

Earnings Call Themes & Trends

Note: No earnings call for Q2 or Q3 2025; Q1 had a call. Themes drawn from management’s quarterly communications.

Management Commentary

• “We have recently seen some encouraging signs of stabilization and ‘return-to-office’ trends… More prospective tenants are in the market seeking to expand their office space footprints… demand… pushing up against a reduced supply of office space” — George J. Carter, CEO .
• “Our Board of Directors continues to work with our financial advisor, BofA Securities… review includes a range of potential strategic alternatives, including a sale of the Company, a sale of assets, and refinancing… No assurances… We do not intend to make any further public comment… until it has been completed” — George J. Carter, CEO .
• Dividend declared: $0.01/share for Q3, payable November 6 to holders on October 17 .

Q&A Highlights

• No Q&A this quarter; the company did not hold an earnings call for Q3 2025 .

Estimates Context

Values marked with * retrieved from S&P Global.

Implication: With only one EPS estimate and no revenue consensus, results were broadly “in line” on EPS; limited coverage suggests estimate revisions will hinge more on occupancy trajectory and leasing execution than on headline beats/misses *.

Key Takeaways for Investors

• Occupancy edged down to 68.9% (owned), reflecting 2025 lease expirations; maintaining rent levels (~$31.13/SF occupied) mitigates revenue pressure but keeps NOI under strain .
• Sequential property NOI declined (owned NOI $11.083M vs $11.667M in Q2); Comparative Same Store down 5%, underscoring ongoing demand normalization and timing of lease-ups .
• AFFO deterioration in Q3 tied to elevated second-generation capex (TI $4.47M; LC $0.93M); near-term cash generation remains challenged while reinvestment supports leasing recovery .
• Debt stack totals ~$248.9M, with 9% fixed/contract rates and maturities 4/1/2026; interest coverage ~1.35x in Q3, net debt/Adj. EBITDA ~6.3x — refinancing outcomes are a pivotal strategic variable .
• Dividend held at $0.01/share; sustainability depends on balancing capex, leasing momentum, and disposition proceeds amid suspended earnings/FFO guidance .
• Strategic review remains a headline catalyst; potential outcomes (asset sales, company sale, debt refi) could be value-inflecting but timing remains uncertain per management .
• Watch leasing in Denver/Houston/DFW and major tenant renewals; portfolio concentration: TX and CO comprise ~84% of investment and ~84% of SF, with top-20 tenants ~33% of SF and ~52% of annualized rent .

Appendix: Additional Data Points

• Regional occupancy snapshots: Eldridge Green (Houston) 100%; 1999 Broadway (Denver) ~50% leased; Westchase I & II (Houston) ~66% leased; Minneapolis assets mixed (121 South 8th ~78.5%; Plaza Seven ~51%) .
• Top tenants include CITGO (248,399 SF), US Government (168,573), EOG Resources (169,167); aggregate top-20 tenants 1.594M SF (33.1% of owned portfolio) and $53.7M annualized rent (52.0% of total) .

Other Relevant Q3 2025 Communications

• Earnings release scheduling: company confirmed it would not host a call for Q3 2025 .
• Dividend announcement: $0.01/share declared for Q3 2025 .