Franklin Street Properties (FSP) 1 May 242024 Q1 Earnings call transcript

Good day, and welcome to the Franklin Street Properties Corp.

First Quarter 2024 Results Conference Call. [Operator Instructions]. After the speakers remarks, there will be a question-and-answer session. [Operator Instructions]. like recorded. all would call that I being is finally, to participants advise this And you. Thank now I'd welcome conference. to like begin Counsel the to Scott Carter, General over Scott, you. to

Earnings Street morning. First Good the Franklin to Quarter Welcome XXXX Call. Properties

for Property Joining me our Officer; Chief Carter, the differ Demeritt, those John indicated Private FSP Investment for the Securities Jeff of George company Officer; Chief Litigation by Reform these Officer; materially the Donahue, from XXXX. statements President Chief Property President may Financial of Executive purposes our safe our Vice Act harbor Management. Please morning results are under this constitute are may Toby Carter, provisions and that of forward-looking Daley; as a Will annual and of President me section John Management. of those year we joining ended Executive XXXX. FSP prospects various that Risk important future December XX-K this the morning of our remarks the in result Also for about expectations, note factors, XX, discussed forward-looking including and Factors Actual Friend, various and make report Form both may on statements plans

file reports amended which on As XX-Q, with all the quarterly Form are SEC. of by on our

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

contained which our Relations on to GAAP of views FFO website these Investor While funds relied be in this upon any update are company of call, measures so. the times may specifically date statements other elect company's or during and any section today. at may should not non-GAAP from The FFO. as operations or income forward-looking release, disclaims the financial www.fspreit.com. Any is press estimates yesterday's it statements, as to subsequent of to obligation refer the available forward-looking we net Reconciliations to to do representing

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

to give to the everyone. first today. on and of overview XX, a Scott, his going our good morning, I'll for our thoughts. call very at quarter I call February pass ] and George Linx spoken during brief I'm you, had results Thank [ Afterward,

will from release, and our As funds found mentioned, website. We the 'XX. today about per our $X.X first or reported Scott for of or of XX-Q, a on FFO, can $X.XX comments to supplemental reminder, operations, the be our which, package million refer as share quarter earnings

million We a in per $X.X George. also quarter loss for the 'XX. to over about share turn the or reported of that, With George? net GAAP of I'll first call $X.XX

trying times progress made, for sheet Earnings will potential stand on we meaningful to the press you, said couple disposition sources search maturing as macro during in past one, again, my generate And to already back sell, continued puts and for of thin competitive embedded value. The XXXX I of with paths keys that then the and will Properties years. prices. available. in the in is earnings cases, of than last sellers property today, are the pressure last That to efforts we currently to have limited the the I comments the due, be increased capital who along so many part XXXX to our or property i.e., quarter's will number properties and Quarter appears more we amount portfolio, believe trying there that of on focus And and early FSP far lot sale at of attract Thank John. a office shareholder over property investment balance potential readers let least difficult XXXX, distressed that lenders deleveraging debt There and/or a to years, value increasing best But leasing some to welcome and XXXX X XXXX. the in handed growth as is year-end that in are my that owner our is existing have the fire our property us disposition First opportunities on update, Call. at comments market page release. coming call. I more our of written with continue been is earnings Franklin verbal Street so dispositions strong first new

to traditional generally acquire the But liquidity, still industry planning post-COVID back-to-office occupancy investors property bit property at capital XXXX, assets. difficult decision office continues space make are debt, from leasing consistent some Number access attendance vary long limited start looking progress. its least and of way and to market employee from ongoing situation have property. The requirements numbers the the at office a to long-term and expensive equity to markets, and both two, corporate So a for makers. the industry, market for need to is quite for market pre-COVID to

office asset longer-term and interest class to bigger recently, of cyclicality We rate and much inflation change. And just consideration. center future from a of the moves the are both timing on finding uncertainty fundamental part Reserve's future that range the Federal tenant thought investor direction most new of heightened and traditional stage taken about viewpoints secular and has

advantage of believe available part the we to of shareholder quarter the paths this All the search increased and opportunities in challenges good I the value. shareholder in early factor very a reality seeing create of seeing the do what of and mix value. Having fact, that opportunities on of year, to in the second a FSP to for increasing is is, are as are sources some that and conveyed generate timing take of this position we into is ground new we XXXX of best our certainly are in additional part go potential

its real risk/reward our and shareholders value and FSP of work we intrinsic exploring We that and and embedded is strongly continue dispositions, give sources leasing forward. A properties. new make best on return further to progress paths going possible value to the in believe to property potential

and specific situations and progress on will update markets our We shareholders soon unfold. the as as events

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

expansions feet which was the commencements XXXX. of portfolio prospective The shortlists. FSP's at new owned total XX.X% owned leased that in fourth XXX,XXX feet assets along first identified new represents during XX.X% offset to end the quarter Downtown and square XXXX tenants, square an quarter to new leased approximately property the X assets overall square total the feet the decrease first due XXX,XXX FSP's X.X% respective have The leasing everyone. portfolio end new of in approximately directly square portfolio. Houston to property is with one XXX,XXX The increase feet. Thank in of feet have tenant attributable owned approximately XX,XXX approximately of the The first of was Scheduled of XX.X% leases. FSP disposition compared of for feet square past approximately directly quarter. Economic and currently the of during occupancy Denver tracking square FSP George. the at XX.X% suburban renewals including at The impact of XXXX. XXX,XXX and first quarter approximately you, to of tenant FSP at primarily finalized in XXX,XXX was the square over end feet to the included of compared the activity of the Good lease directly leased the increase lease by months. approximately quarter. remainder morning, occupancy end witnessed of the their of expirations partially XXX,XXX sold prospects quarter. FSP the was on during X

Jeff tenants feet square XXX,XXX approximately executed total pipeline, the renewals leased with few or to is FSP quarters, dispositions. potential an the combined feet. barring any regarding will ideal FSP Carter. now of new Thank approximately XXXX. potential turn over calendar you. FSP purposes, renewal square with next comparison activity, existing expansions engaged occupancy XXX,XXX provides impact over of The For that during with it renewals I and potential opportunity tenant increase surprises currently to

in properties our Thank morning, quarter of the If will and current market good as ahead discussing during office first will I provide proceeds look activity further talk our year. our the of about net any as reduce selectively to you, FSP for some it do conditions objective majority further sell when to completed indebtedness. a work sense XXXX to insights of so. John, the also using also disposition received dispositions we I and be continues everyone. makes

As previously million. in $XX reported Collins Crossing sold January XX, on for Texas FSP Greater approximately Dallas,

approximate property with XX% for the are sales We sales which the selected sale far likely purchase successful, months. With working currently Efforts agreement potential activity summer data are during property. which, transaction have finalize in this dispositions such resulted showing currently one available volume an be for FSP a year-over-year. would office respect on market completed if so challenged currently prospective to in or buyer remains office property underway a and to for several having current decline conditions, completed further

As referenced to influenced equity that present his and disposition X scarce efforts to in accessing and very property are debt facing capital to comments, buyers markets closely. We monitoring any a and difficult become factors capital more are necessary which environment date. changes purchases, costly, our the has primary have George fund see we the

stabilized First, about sources at buyers a leased and that properties prospective or currently from favor better. their perspective capital XX% lease

appealing a amount approaching lease weighted doubts that average percentage itself WAULT their significant a renewal in-place that buyers and not rapidly of with expirations or potential about lease their also necessarily capital by probabilities. are if sources buyers potential to and capital there and relatedly, sources is Second, focused term, on lease high are are

and environment. sources success properties who higher tenants in-place probability capital-constricted buyers certainty. of a creditworthiness larger within deals than a smaller for perceived the fourth, capital significant of are their have this potential consideration Third, seeking is dollar-sized And

a of who have are value assets to or continue to pricing, over and number and groups we such fewer work growth the years. diligently see just buyers there office remain there find do deeply who proposition While discounted also distressed will buyers several FSP including are as buyers, the past of seeking longer-term

objective as is in And believe we harming the up open even to now the cautious climate our we that we the our our thank possibility to have our efforts market with sales appropriate. when shareholders, is questions. that that call listening continues of keeping maximize informed To conference shareholders strongly beyond that Given to we to for achieved filings is buyers to dispositions best interest and details until being sales continue that values and be competitive clear, we present our more We from current beneficial forward albeit served prospective on most look appropriate. competitive potential environment, in select remain prospective that the this by progress to remain to will for disposition make believe investment highlighting information reduction. of we'd current at call and earnings investment what see optimistic continue with Gavin? like to for time, interest you qualified the And today. that, and debt this objective. FSP interest, corresponding any not

the [Operator the from And of first question comes from line Janney. Steve Instructions] Dumanski

I you forward? noticed leasing renewal has in leasing there been a pickup expect velocity this this quarter. go Do to that

so. number we with near-term Well, XX months Donahue. expirations over as to that XX John tenants a it's certainly next Steve, have of hope We're the large engaged and well.

engaged at that to perhaps we So We're extension an to some early smaller cases, looking be downsize potentially looking relocating. of they're also a looking of in an might and the and larger it's the tenants some term. exchange the tenants at that bit growing, great maybe are, little news

that more finding encouraging. are is it's it we're So or tenants engaged numbers at so in quite this engaged total time, more

to That's your like a predominantly I just down properties that general there in another interest? the space? in to question that, to range or were add very receives would picture maintaining tenants feet is square if size of greater just certain certain -- just helpful. for or terms maybe And a looking demand

in would looking we the shortest years, rearview last the over have X mirror the been depends. predominantly needs it the is certainly I smaller demand answer Well, it been say with. that has finding that

to X been really to square the has to that more table larger demand. But come most months, the noticing and significant serious. the X,XXX XX,XXX been portion be would or be tenants feet so XX that over the of some appear of to the we've last So

size existing right that we're And Are so tenants that or I would of or rising square full feet above feet but they square over floor, tenant recent a about let's downsize? so, say cases, Richmond, doubled or just say, many their the a they now. example where are to seeing prospects were in so. had looking XX,XXX existing number a In they we almost and XX,XXX

depends. just it So

are, tenants been these grow. smaller Our experience looking that in to the many suburbs in of fact, has

tenants urban that the looking markets, more a or the might tenants often floor say larger floor. the shed to portion be looking would in the Some to of then a are and downsize it's slightly I of

foot has And shift of demand congratulations a and can in you higher on a And basis in improvements on variance? tenant there of leasing commissions and potential where square And speak current been more to Richmond. terms now leasing space? tenants both amount improvements, that when per we tenant opportunity Also, a is there see on currently do tenants? trending new paradigm a where

So I terms last very we've similar in years. of tenant allowances, The on would say what improvement X a XX turnkey. trends really to tenants that of the majority experienced want to over they're

that's on you're the it for. going costs, whatever what of so depending looking And have they're to solve quality at, to space the

risen. of from inflation, has and the Now to labor with chain issues the materials cost supply everything

going the -- did removing ago. inflation, have than quite turnkey. right tenants you look see years them But and we'll when if you at to really, look course, a dollars, full cost higher what expect comparable. at of to expect X the it's now, today So continue But you're to hand overall upper you really with

are average the especially term lengths our renewals recent those average looking experience, term X we're tenants. us, between years. smaller X years, X For that X at for and years in to length Many

leasing, and really commissions And so of TIs been much. cost fairly risen the static. that the They've haven't

as find where transaction, XXXX, years, square on lot. far And that our you see that XX. back we're foot cost all at going Page You as if $X in per changed on can looking information previous to $X supplemental hasn't calendar going really look between at back 'XX year per -- to you'll a whole and

it. Got

on hear spaces whether like co-working for be beneficial portfolio? or would to Just they thoughts your and your not would

place the We, in certainly believe and/or feet XX,XXX property square of the in office the portfolio. has that full past, The cases, really used with. have typically you're location a flexible co-working flexible so operators a of XX,XXX dictates we what XX,XXX for the XX,XXX or rare property square feet. In size to a for a and portfolio, have co-working in Well, a different and/or space dealing co-working office addition corporations. to floor large easy of well really amenity significant, very my opinion, We but floors. to personal that fantastic multiple is XXX,XXX of for co-working public well maybe with provide satellite think a square still small a access feet is our as transportation, nothing with nothing I locks to in above office use flexible

it to think many So I yes, portfolios years be definitely part for owners' of will come.

That's geographical cities Any of strong whether opportunities potential terms it's disposition perhaps or as here. Are not there in are that or very markets, beneficially metros? others? certain as leasing

we've X quarters you stronger the I'll Sunbelt. seen We're let last we've years, us Jeff again, demand the Carter in the that. seeing side address in And the think heard of I in been -- probably say prior disposition suburbs. -- have stronger over that demand

We're think encouraging dispositions. the West little right direction, on energy But well. encouraged what signs. Minneapolis we're Houston behind still areas been rest recently headed in most better country up. the of lagging. Denver still but our seeing really activity in catching seeing bit been is very the urban that. Jeff, they're of that CBD markets in by I has in the we're markets has the as a

is -- On Carter. Steve, the this Jeff

in on In that level and Sunbelt On with particular seen side, we've dispositions then location -- I say, of that and markets that start splinters interest asset. the Midwest. asset statement, would we into activity the than the a have story balance, John the indicated more can in it say they disposition general, would as at I similar And market. the

in has was now, disposition. appeal just that a story -- Right is story Now But by its it what times driven And in more it's market is the and seeing the were on from of that varies in asset in been a the when asset. to liquidity for there we more the of lot asset question Sunbelt. Midwest. the really

very thorough Thank for know opportunities. team John. and lastly, has and disposition on And that sourcing being I you, diligent you been just these patient thank Jeff your

to are So are office buyers, to potentially you multifamily? speak convert there looking when potential redevelop that parties to or any

about Jeff again. question. districts have business is we've us disposition the looking appreciate I that specifically the of -- it the of in Steve, part although some a about country, buyers That read not I suburban talking Carter central redeveloping that downtown I from I've around a seen, This they is more has sold. properties than been conversion. were We acquiring it had specifically not for that -- mostly seems in property it, a prominent program at sort

All your I from experience right. It really is beneficial appreciate to it. that. hear

There are no time. this further questions at

George to like hand I'd closing for remarks. Carter back to So

you Thank We to into our of couple quarterly in next forward up you, and call. tuning everyone Gavin, a earnings annual we thank for that's you for call. and Thank to our earnings look shareholder the look weeks, again. coming meeting forward

our That does today. for you for conference participating. conclude Thank

all now may You disconnect.