Franklin Street Properties Corp. — Third Quarter 2026 Earnings Summary

Financial Performance:

• GAAP net loss was $9.1 million ($0.09 per share) for the three months ended September 30, 2026, compared to $8.3 million ($0.08 per share) in the same period in 2025; for the nine months ended September 30, 2026, net loss was $35.2 million ($0.34 per share) compared to $37.6 million ($0.36 per share) in 2025.
• Funds From Operations (FFO) was $1.4 million ($0.01 per share) for the three months ended September 30, 2026, down from $2.3 million ($0.02 per share) in 2025; for the nine months ended September 30, 2026, FFO was $4.2 million ($0.04 per share) compared to $7.6 million ($0.07 per share) in 2025.
• Adjusted Funds From Operations (AFFO) was negative $0.88 million ($0.01 per share) for the three months ended September 30, 2026, compared to negative $3.2 million ($0.03 per share) in 2025; for the nine months ended September 30, 2026, AFFO was negative $1.1 million ($0.01 per share) compared to negative $4.4 million ($0.04 per share) in 2025.
• Total revenue was $24.9 million for the three months ended September 30, 2026, down from $27.3 million in 2025; for the nine months ended September 30, 2026, revenue was $77.5 million, down from $81.1 million in 2025.
• General and administrative expenses for the nine months ended September 30, 2026, were $7.2 million, a decrease of $2.6 million compared to $9.8 million in the same period in 2025, primarily due to lower personnel costs.
• Interest expense was $7.8 million for the three months ended September 30, 2026, up from $6.3 million in 2025; for the nine months ended September 30, 2026, interest expense was $22.6 million, up from $18.4 million in 2025.
• Net cash provided by operating activities was $4.7 million for the nine months ended September 30, 2026, compared to net cash used of $0.1 million in 2025.
• Net cash used in financing activities was $8.7 million for the nine months ended September 30, 2026, compared to $4.5 million in 2025.
• Cash, cash equivalents, and restricted cash totaled $34.9 million as of September 30, 2026, compared to $30.6 million as of December 31, 2025.
• Total liabilities were $282.6 million as of September 30, 2026, compared to $285.9 million as of December 31, 2025.
• Total stockholders' equity was $570.9 million as of September 30, 2026, compared to $607.0 million as of December 31, 2025.

Guidance and Future Outlook:

• The Company intends to actively pursue individual asset and subportfolio sale opportunities in the fourth quarter based on recommendations from co-advisors BofA Securities and JLL Securities.
• Completion of potential sales or transactions depends on reaching acceptable final pricing terms and counterparties completing due diligence and financing arrangements.
• The Company will continue working with co-advisors and prospective purchasers regarding potential transactions as market conditions evolve.
• Management remains focused on improving occupancy, extending lease duration, and prudently managing operating expenses to generate long-term shareholder value.

Business Segments and Product Lines:

• The directly-owned real estate portfolio consists of 13 properties totaling approximately 4.6 million square feet, down from 14 properties and 4.8 million square feet as of December 31, 2025.
• The portfolio was 66.2% leased as of September 30, 2026, compared to 68.9% leased as of December 31, 2025; the decrease was due to lease expirations exceeding new executed leases during the nine months ended September 30, 2026.
• During the nine months ended September 30, 2026, the Company leased approximately 226,000 square feet, including 163,000 square feet from renewals and expansions of existing tenants.
• The weighted average GAAP base rent per square foot achieved on leasing activity during the nine months ended September 30, 2026, was $33.57, an 11.5% increase compared to average rents in the respective properties for the year ended December 31, 2025.
• The average lease term on leases signed during the nine months ended September 30, 2026, was 6.8 years, compared to 5.7 years during the year ended December 31, 2025.
• Overall portfolio weighted average rent per occupied square foot was $30.42 as of September 30, 2026, compared to $30.86 as of December 31, 2025.
• The portfolio is geographically concentrated in the Southwest and Mountain West regions, with 52.4% of investment value in Colorado and 33.4% in Texas.
• On July 8, 2026, the Company sold the Greenwood Plaza property in Englewood, Colorado, for a gross selling price of approximately $19.4 million.
• Proceeds from the Greenwood Plaza sale included approximately $8.5 million used to repay debt (including interest and fees) and approximately $8.9 million retained in cash.
• Recurring capital expenditures for the nine months ended September 30, 2026, totaled $14.2 million, compared to $18.4 million for the year ended December 31, 2025.

Market and Competitive Landscape:

• Office investment demand and liquidity remain uneven nationally and are challenged in several of the Company's markets.
• The Company's portfolio consists of high-quality assets located in the Southwest and Mountain West with long-term upside leasing potential.
• The largest tenant, CITGO Petroleum Corporation, occupies 5.4% of the portfolio, while the top 20 tenants collectively occupy 31.8% of the portfolio.
• Lease expirations are scheduled as follows: 1.4% in 2026, 11.9% in 2027, 4.7% in 2028, 8.3% in 2029, 5.9% in 2030, and 67.8% thereafter.

Risks and Challenges:

• The Company faces risks related to adverse changes in general economic or local market conditions, including impacts from the long-term effects of the COVID-19 pandemic, wars, terrorist attacks, or other acts of violence.
• Risks include impacts of changes in tariffs, inflation rates, interest rates, and disruptions in debt markets.
• There is a risk of lessening demand for the types of real estate owned by the Company, which could negatively affect occupancy and rental rates.
• Energy-influenced markets such as Dallas, Denver, and Houston are subject to risks from adverse changes in energy prices.
• Risks include increases in general and administrative costs as a percentage of revenues as revenues decrease due to property dispositions, as well as unanticipated repairs, additional staffing, insurance increases, and real estate tax valuation reassessments.
• Potential transactions may not be effectuated at acceptable terms and conditions, and timing is uncertain.

Management Commentary and Tone:

• Chairman and CEO George J. Carter stated the focus remains on maximizing shareholder value through strategic alternatives, proactive asset management, expense management, and improving leasing and occupancy.
• Management highlighted that recent refinancing of outstanding debt has provided increased flexibility to pursue strategic initiatives in a disciplined and thoughtful manner.
• The Company described the sale of Greenwood Plaza as reflecting disciplined execution, targeted owner-user marketing, and progress on broader strategic objectives.
• Management emphasized the importance of leasing and asset management initiatives, noting that changes in occupancy, lease duration, capital requirements, and tenant quality can materially affect asset value and marketability.

Other Key Points:

• The Board of Directors suspended quarterly dividend payments on March 9, 2026, to redeploy capital into leasing efforts intended to enhance portfolio value.
• The suspension of dividends is estimated to preserve approximately $4.1 million in cash on an annualized basis.
• The Board will reassess quarterly when and if dividend payments can be reinstated.
• The Company consolidated the operations of its Monument Circle sponsored REIT as of January 1, 2023; the property was sold on June 6, 2025, and the entity was dissolved on December 9, 2025.
• The Company filed an updated supplemental information package with the SEC and made it available on its website.
• The Company's Initial Term Loans totaled $247.3 million as of September 30, 2026, replacing previous term loans and senior notes which were fully repaid.