• Funds From Operations (FFO): $2.7 million or $0.03 per share for Q4 2024; $13.3 million or $0.13 per share for the full year 2024.
• GAAP Net Loss: $8.5 million or $0.08 per share for Q4 2024; $52.7 million or $0.51 per share for the full year 2024.
• Leased Office Space: Approximately 252,000 square feet leased during Q4 2024.
• Property Sale: Pershing Park Plaza in Atlanta sold for $34 million in Q4 2024.
• Total Indebtedness: Approximately $250.3 million as of December 31, 2024.
• Leased Occupancy Rate: 70.3% at the end of Q4 2024, down from 74.0% at the end of 2023.
• Economic Occupancy Rate: 68.6% at the end of Q4 2024, down from 70.1% at the end of 2023.
• Total Leasing Activity in 2024: Approximately 616,000 square feet, including 252,000 square feet in Q4 2024.
• Property Dispositions in 2024: Three properties sold for total gross proceeds of approximately $100 million.

• Warning! GuruFocus has detected 3 Warning Signs with FSP.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Franklin Street Properties Corp (FSP) reported a significant uptick in leasing activity during the fourth quarter of 2024, finalizing approximately 252,000 square feet of office space leases.
• The company successfully completed the sale of its Pershing Park Plaza property in Atlanta for $34 million, contributing to a reduction in corporate indebtedness.
• FSP has reduced its corporate indebtedness by approximately 75% since the inception of its disposition program in late 2020, enhancing financial flexibility.
• The company is witnessing a general increase in office property activity, with more employees returning to the office and clearer long-term leasing requirements from larger tenants.
• FSP is tracking over 600,000 square feet of prospective new tenants, indicating a strong pipeline for future leasing opportunities.

Negative Points

• Franklin Street Properties Corp (FSP) reported a GAAP net loss of $8.5 million for the fourth quarter of 2024 and a net loss of $52.7 million for the full year.
• The company's directly owned portfolio was only 70.3% leased at the end of the fourth quarter, down from 74.0% at the end of 2023.
• Economic occupancy of the directly owned portfolio decreased to 68.6% by the end of the fourth quarter, primarily due to multiple property dispositions.
• The office sales environment remains challenging, with liquidity in the marketplace being constricted and tenant demand soft.
• FSP's current share price does not reflect the intrinsic value of its real estate assets, indicating potential undervaluation in the market.

Q & A Highlights

Q: There was a significant uptick in leasing for the 4th quarter. Can you expand on the robust leasing velocity for the quarter, including information on geographies and tenants? A: Good morning, Steven. This is John Donahue. We saw steady new tenant activity in Houston throughout 2024, finalizing some new deals. Minneapolis also had several deals that closed by year-end. The strongest markets for the 4th quarter were Houston and Minneapolis. We engaged tenants in Dallas for renewals and hope to do more in the coming year. The industries were diverse, including government, healthcare, business services, energy, chemical, construction, and agriculture. The tech industry has been lacking, but we hope it will return. Downtown markets have improved over the last 6 to 12 months, and we expect suburban markets to follow.

Q: You mentioned government as a tenant contributing to growth. Are there any impacts on your properties regarding lease terminations or move-outs? A: We don't expect any impact from existing tenants, whether national, federal, or local government. There are no early termination options, so we don't foresee any issues. Our tenant roster shows one US government lease rolling in 13 months, and we are engaged with them for a potential renewal, which is a positive sign.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.