Franklin Street Properties (FSP) 15 Feb 232022 Q4 Earnings call transcript

Good morning. Thank you for attending today's Franklin Street Properties Corporation Fourth Quarter and Full Year 2022 Results Conference Call. My name is Megan, and I'll be your moderator for today's call. [Operator Instructions]

I would now like to pass the conference over to Scott Carter, General Counsel. ahead. go please Scott,

welcome call. Franklin and quarter Properties XXXX earnings to morning Street the fourth Good

this are Jeff both Will me Donahue, me Demeritt, FSP and Joining this morning of Investment Executive President our Officer; Chief Chief Management. Toby Management. Property Chief Vice John of Executive morning FSP Presidents Financial Also and are Friend, Officer; Officer Carter, Property President George our John Carter, joining our and Daley

important of future remarks for of that Private with and we safe those Factors December factors, the Please expectations, Risk from note materially year annual for is about may our statements plans Reform XXXX. for in on including make file forward-looking harbor that the differ may as purposes indicated company the those Act various these results various forward-looking Securities discussed Litigation section by the prospects on XXXX, which may ended statements the the Actual SEC. provisions constitute Form under report XX, XX-K of a result of

of forward-looking In as expectations only February XX, the XXXX. company's these statements represent addition, today,

so. the be forward-looking as elect company these do update statements, statements specifically date subsequent estimates any While of disclaims representing to obligation should to it not the as relied any views upon forward-looking company's may Any or today. to

www.fspreit.com. GAAP financial release, the to our funds or press at FFO. operations, available measures in from income Reconciliations in this to and section At Investor refer during FFO other may of is times non-GAAP we call, are website which of Relations yesterday's net contained

Demeritt. John? to turn I'll John Now call over the

call I'll going company. the overview yearend quarter you, results for of the and comments. fourth I'm Afterward, to a give brief morning, to his of Thank Scott, good and our pass George everyone.

will mentioned, today our on and which package XX-K, be our release, to can website. as a reminder, Scott earnings supplemental comments found refer As our

of for share million for about from per per or $XX.X million or net 'XX. and reported or $X.XX loss dollars I'm $X.XX FFO $X.XX income the net full GAAP funds operation full fourth fourth -- of We $X.X reported share of share year $XX.X about quarter or We 'XX. year million, for quarter $X.XX a about for of sorry, the GAAP million the and $X.X GAAP per net income share of the or

On balance. December XX, price an sale property sale that portion Illinois of resulted the a this from office a XXXX, in used $XX.X million we of gain in located to sold a million. repay our revolver for We proceeds of $X.X Evanston,

ratio X.XX filing. supplemental December are our 'XX a coverage These had of debt-to-EBITDA At service ratio We debt we X.X times. XX, of finished times. net in disclosed calculations and at 'XX, million was $XXX debt outstanding, the

of program remain dispositions from repayment late million about disposition focused in total $XXX on bank-related value in of our shareholders and We debt. our our we which select XXXX, XX% began of Since debt. is to about showing our assets the bank repaid debt, have

we strategy bank mind, to have pleased to our revolver rightsized dispositions loan With and debt. has and October be make that been extended this XX, XXXX. to of in of report and Our maturities we're and through the continues term repayment

potentially expense bank the efforts capacity suited to our the that to plans extensions We continued from or these bear of and well debt. and our got are facilities. much for participation footprint believe and extensions group current for very long-standing bank well term. the We our both shareholders or support We XXX% not with unneeded think to reduce appreciate eliminate our align

that, turn With the I'll over call George. George? to

XXXX Earnings Fourth Properties to Call. Quarter John. you, Full And again, welcome Thank Franklin Year Street

of to XXXX of not our estate reflect price common stock the began, of believe value assets. first the accurately that does underlying current As we quarter continue the real our

shareholder increase reached. the properties to seek valuation sale . we of been intermediate-term that to value continue potential where short- has will select by to believe pursuing We

vacant striving space. to will reduction. to proceeds use continue debt we We And primarily from intend lease for property continued dispositions

for reality, that providing office competitive We uncertain. at primarily reasons disposition this are activity choppy and time, the at XXXX, guidance least property very for is not currently and sales

currently However, anticipate do and have several meaningful in XXXX we dispositions potential some disposition stage of properties in activity.

gating general capital itself shown talk in more activity be properties sales about our office our much disposition factor us, few Jeff Liquidity in office the for in than for consummation price. least minutes. a has to markets or at properties bigger to will this a to in

of and higher remaining subsequent revolver last to term unpredictability referenced any of October remarks, of receipt timing Demeritt to his opening the As relative proceeds, of degree and our the loan of in XXXX. we our because dispositions John property extended

most space currently of but that the date the in have has vacancy to to our are metric. markets a portfolio Leasing more current vacant markets meaningful of Those finally future many upside than struggling Property on because and some amount a now are FSP vacant impact lot Both potential FFO we because have properties traction. real to and with space others. starting lease our larger gain of

a our properties in X exposure to dynamic. our Many had the buildings Houston long starting tenancy. office the again locations office CBD of after Houston, space the than Our West have Both and back to examples. Denver tenants and momentum hiatus. CBD and as employees just slower Chase COVID now in some Denver are well energy-related post have CBD high-rise until X Also, Denver to are assets requirements consider expanded those as larger recently

slow and steady the will help in the that more in working future. days leasing for And the to across trend the in office decision are office space corporate determine and employees our office. broader decisions make our return makers entire Ultimately, this continue see, tenants [indiscernible] portfolio, increase of needs the firm their percentage a we to general,

Corp. activity, Management color more to leasing President turn I will call John? For over our on of now Donahue, John FSP the

quarter leased at the FSP everyone. approximately of the of end the primarily at The attributable morning, Economic compared Good third to compared George. of asset the XX.X% at XX.X% of the portfolio fourth leased lease third was quarter. . XX.X% end you, to was the approximately The decrease occupied end Thank at fourth the was and XX.X% quarter an quarter. the disposition maturities. to occupancy end

tenant calendar increased leases availabilities the lease quarter finalized and new feet was The trended inched quarter. during square leasing square approximately to increase Demand approximately for space FSP higher space XXX,XXX office during and feet XXXX XXXX. square of commencements. feet XX,XXX each XXX,XXX tenant calendar as XXXX fourth downward sublease approximately FSP due successive of executed during total with the new during year. overall of

tenant areas in been feet has small-to-midsize professional by suburban requirements urban both services. below XX,XXX The and business dominated pipeline square and in prospective and particularly

defensive to shifted As we the previous mentioned occupancy decisions. many mode companies to regards in quarter, in have a

Houston the energy-related begin for year, suburban prospects requests in has Downtown proposals, and well we As Denver. been FSP encouraged new tours including the as in by pickup as recent

of portfolio. leases, approximately with X.X% We prospects and Lease total XXX,XXX that FSP have renewals of FSP's are feet over XXX,XXX tenants is assets At that existing identified currently XXX,XXX time, their of for square on in XXXX respective FSP tracking including this expansions feet XXX,XXX for expirations approximately tenants lists. prospective square square new for of short excess representing total working feet, approximately feet. square calendar

Thank you. to I will now Carter. turn it Jeff over

our of safe in not John believe healthy. and We on comments continues to John being morning, Building accurately Good our for is some from John. remain that Demeritt unlock is shareholders FSP reflected efforts you, everyone hope the that on focused current everyone. to Donahue, share further price. Thank George, and value public we

Our work key two on centers action areas.

tenant $XXX Since that properties their we commenced space met proceeds and the XX% to existing short-to-intermediate to reduced second, by will of has principally corporate to approximately through judge FSP debt program renew in reduce First, More our sale sales vacant XXXX, efforts to potential; specifically, select million. continue our our and term continued have FSP late lease disposition and indebtedness. customers. or has direct

And in while on sale of GAAP Evanston, cap XX rate XXX On a million. XXXX Davis both X.X% property weighted gain $XX.X basis. that the average FSP a front, in in on disclose $X.X disposition proceeds, 'XX, and resulted which quarter total Illinois a fourth the the of reflect in pending completed approximately in sales million December our dispositions gross and for specific during we're of approximately metrics in-place completed unable cash to began aggregate, late of

influence facing challenges in investors both their to as uncertainties currently on increased well constricted and that part have and due potential macroeconomic acquisitions. property on is as environment conditions conviction ability that disposition investors the decision-makers prospective space needs corporate to equity debt capital liquidity obtain new for The of reduced office necessary

to shaping sectors, the accelerate closings including in a notable decline XXXX office data second and to how This market of the in trend keep segment. began but yet others points real resulted circumstances being too updated. across half year the volume the within is significantly few early estate These It in is have we meaningfully too of up, available in will XXXX. understand with this

from With acquisition well-located regard the marketplace and the see of buyers specific efforts, interest interested continues high-quality prospective to FSP remain to own in in our office who disposition select, properties.

are needed for we of and currently overall are facilitate of sales. capital in last buyers, the debt as equity time and the procure the there both prospective needed to discussed ability fewer challenges quarter, to and However, there amount the buyers completion

information, are although to not our providing and property and sales firm potential reasons key strive of point value for remain competitive or pay debt shareholders. specific asset focal For in down for the guidance we as we a unlock the disposition interest shareholders,

all that, conference call for at you like any And each thank disposition with will the occurs. now We we this as our Megan? open with keep the questions. updated we'd to up listening it quarter call And today. to for market progress time, earnings

the Our Instructions] Stevenson Janney. [Operator comes question first of with from Rob line

is line open. Your now

guys. morning, Good

and in of In be any there 'XX should expirations, thinking move-outs we size terms model? about the that the of 'XX of known lease terms

a John at Yes, look that your largest near-term expires currently end 'XX. XX of expirations, the Hey it's supplemental, on at that which for we there as Page Donahue. Citicorp, the calendar the which have tenants at of disposition. see for supplemental, tenants, the XX most is looking Thank we question. And you'll are the of you few potential significant Rob, asset

them. that the lease expires the Kaiser down, year of were and middle we tenant next year, and with in next the in dialogue is

space then well. their a downsize and might have that We explore to needs. some large capacity. them they property to It have continuing been as dialogue but prospect they like in remain looks for there definitely in we want with And

sublet will So Argo, looking #X And downsizing in small find you had forward tenant Greenwood And have for then making of a Schwegman. They that footnoted. finally, later this year a then that progress small coming Corp. their portion there. space. another further They small significant downsizing to down that's we then space. at can there's that's the some And in vacate suburban EMC with there, list, footnoted Again, Denver. Dallas.

XX And we're And in for top dialogue so it subtenants. with tenants, Rob. that's the the

So shape we to some the like pretty updates and good there look we're giving year feel you in progresses. as forward

about Okay. both call wind the guess undervalued. yourself And is then release and near would said year? the off limit would asset you doing question table? the George, take stock do on term? I buybacks sales have being the question, this stock not in Why up why the significant if in you other Board the the Why I

know, primary debt reduction years, reduction dispositions. you achieving through really, property our has almost that so been for and as three the Rob, debt last, objective

when program amount but repurchase shares got was that the share of also we share objective so we again debt together repurchase, Secondary disposing that and of was assets were anticipated the to to split repurchase. repurchasing share proceeds disposition and primarily of we reduction, put disposing

started the property of on into we we in disposition property down issue for dramatically. expectations dispositions dispositions property of in As liquidity as XXXX's range you dispositions. XXXX, XXXX, probably this we be and slowed the amount to And had terms definitely know, in ran marketplace

quarter office. liquidity, you know, for quarter As sort last broader of again, kept capital to guidance lack disposition we year the our of reducing particularly markets after reflect

the to tail started amount. terms as in So off of dispositions

debt objective And maturity of off had. on revolver did at those that paid with we the had anticipated on properties that been amount the proceeds true we the our remaining effectively the two again, understand beginning have and had both realize have we want more the same less of loan disposed repurchase to time, would -- continued. share as term reduction amount we primary the the bank focus of and So them XXXX, and to dates would of maturities,

we've #X But suspended really again, share really the repaid for their share and objective. that getting on is maturities prior halt repurchase now now extended focus that's debt repurchase. And why to off

Our Riley next B. of question comes from Craig Kucera the with line Securities.

Your open. line now is

bit staffing and quarter And G&A million of there the the past in curious Your be couple should any range to G&A hear, quarters. over future? $X been the a have expect to I'm has more foreseeable quite dropped we per for reductions

I'll this the changes. Craig, been The We take over last staff was, some so. compared that reductions. we that But compensation bonus Demeritt. primarily that people 'XX that's was is it had to that's reduced. 'XX personnel or drop of We any some one. cost primarily had didn't year John leave have what in was from

quote decrease the be that's what the in really So G&A is to reason like... I going for G&A. can't

G&A what? that. is missed be to I'm going I sorry,

'XX. it G&A I should can't is future, mean, quote a lower it 'XX really was little than I to but I what be said the going in be in

quarter, -- as as that in somewhere lease this the Okay, a $XXX,XXX guys fees housekeeping far great. And termination range. you Did . was item. just

was. it Yes,

year was it or was good-sized some four it we million million $X.X fee year. 'XX. the and termination for from We For this 'XX, tenants full had that had five $X.X income

There are questions this time. additional at currently waiting no

the to I'll pass for closing conference remarks. back George So Carter over

changes. call. in disposition into terms to activity of we out 'XX predict them. early for market to there dispositions, We're and COVID then it's interesting and said, too the Again, everyone, tuning facing the you, XXXX. the coming forward But of properties Certainly, queue Jeff in XXXX Thank as particularly. do have is on was looking capital

this energy as of now and as to which steady you know. have And anything markets, work steady we our maybe as in concentration, just activity some exciting is back

to So next it. talking you forward forward we're looking about all Look excited to XXXX to quarter.

That Quarter Thank Franklin hope Properties Conference Corporation and XXXX you your Call. participation. concludes have day. Street the Fourth Full I Year a for you Results wonderful