Attached files
| file | filename |
|---|---|
| 8-K - 8-K - FRANKLIN STREET PROPERTIES CORP /MA/ | fsp-20210527x8k.htm |
Exhibit 99.1
SELECTED COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL DATA
On May 27, 2021, FSP One Ravinia Drive LLC, FSP Two Ravinia Drive LLC, and FSP One Overton Park LLC (together, the “Seller”), each a wholly-owned subsidiary of Franklin Street Properties Corp. (“FSP Corp.” or the “Registrant”), sold three properties (collectively, the “Properties”) to One Ravinia Owner LLC, Two Ravinia Owner LLC, and One Overton Owner LLC (together, the “Buyer”), each an affiliate of Crocker Partners LLC (the “Buyer”), pursuant to a Purchase and Sale Agreement dated March 5, 2021 (as amended, the “Agreement”). The aggregate purchase price for the Properties was $219,500,000. There were no material relationships, other than in respect of the Agreement, among the Seller and the Buyer, or any of their respective affiliates. The Properties are located at One Ravinia Drive NE, Dunwoody, Georgia, Two Ravinia Drive NE, Dunwoody, Georgia, and 3625 Cumberland Boulevard SE, Atlanta, Georgia.
The following unaudited pro forma condensed consolidated financial statements of FSP Corp. have been prepared to show the pro forma effect of the disposal of the Properties and have been prepared in accordance with Article 11 of Regulation S-X by applying pro forma adjustments to our historical combined financial information. The pro forma transaction accounting adjustments for the sale of the Properties consist of those necessary to account for the disposal. The unaudited pro forma condensed consolidated financial statements are based upon the historical consolidated financial statements of FSP Corp. included in its Annual Report on Form 10-K for the year ended December 31, 2020, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. The pro forma consolidated balance sheet has been presented as if the dispositions had occurred as of March 31, 2021. The pro forma condensed consolidated statements of operations for the three months ended March 31, 2021 and for the year ended December 31, 2020 are presented as if the dispositions were completed on January 1, 2020.
The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the actual results of operations of the Properties for the periods indicated, nor do they purport to represent the financial condition or results of operations of FSP Corp. for any future period. These unaudited pro forma financial statements are provided for informational purposes only. FSP Corp.’s financial position and results of operations after the disposition of the Properties may be significantly different than what is presented in these unaudited pro forma financial statements. In the opinion of FSP Corp. management, all material adjustments necessary to reflect the effect of the above transactions have been made.
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Franklin Street Properties Corp.
Unaudited Condensed Consolidated Pro Forma Balance Sheets
March 31, 2021
(dollars in thousands, except per share amounts)
| |
| Transaction |
| | ||||
| Historical | | Accounting | | | ||||
| FSP Corp. (a) | | | Adjustments | | Pro Forma | |||
| | | | | | ||||
Assets: | | | | | | | |||
Real estate assets, net | | $ | 1,601,613 | | $ | (170,473) | (b) | $ | 1,431,140 |
Acquired real estate leases, net | | | 25,836 | | | (1,810) | (b) | | 24,026 |
Cash, cash equivalents and restricted cash | | | 4,113 | | | 210,471 | (c) | | 214,584 |
Tenant rents receivable, net | | | 4,337 | | | - | | | 4,337 |
Straight-line rents receivable, net | | | 69,743 | | | (7,959) | (b) | | 61,784 |
Prepaid expenses and other assets | | | 5,873 | | | - | | | 5,873 |
Related party mortgage loan receivable | | | 21,000 | | | - | | | 21,000 |
Office computers & furniture, net | | | 147 | | | - | | | 147 |
Deferred leasing commissions, net | | | 56,771 | | | (6,165) | (b) | | 50,606 |
| | | | | | ||||
Total assets | | $ | 1,789,433 | | $ | 24,064 | | $ | 1,813,497 |
| | | | | | ||||
Liabilities and stockholders' equity: | | | | | | | |||
Liabilities: | | | | | | | |||
Bank note payable | | $ | 27,500 | | $ | - | | $ | 27,500 |
Term loan payable, net of unamortized financing costs | | | 717,668 | | | - | | | 717,668 |
Series A & Series B Senior Notes | | | 199,219 | | | - | | | 199,219 |
Accounts payable and accrued expenses | | | 63,456 | | | (938) | (b) | | 62,518 |
Accrued compensation | | | 1,390 | | | - | | | 1,390 |
Tenant security deposits | | | 8,041 | | | (447) | (b) | | 7,594 |
Lease liability | | | 1,444 | | | - | | | 1,444 |
Other liabilities: derivative liabilities | | | 13,698 | | | - | | | 13,698 |
Acquired unfavorable real estate leases, net | | | 1,433 | | | (483) | (b) | | 950 |
Total liabilities | | | 1,033,849 | | | (1,868) | | | 1,031,981 |
| | | | | | ||||
Stockholders' Equity: | | | | | | | |||
Preferred stock | | | - | | | - | | | - |
Common stock | | | 11 | | | - | | | 11 |
Additional paid in capital | | | 1,357,131 | | | - | | | 1,357,131 |
Accumulated other comprehensive loss | | | (13,698) | | | - | | | (13,698) |
Accumulated distributions in excess of | | | | | | | |||
accumulated earnings | | | (587,860) | | | 25,932 | (d) | | (561,928) |
Total stockholders' equity | | | 755,584 | | | 25,932 | | | 781,516 |
| | | | | | ||||
Total liabilities and stockholders' equity | | $ | 1,789,433 | | $ | 24,064 | | $ | 1,813,497 |
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Franklin Street Properties Corp.
Unaudited Condensed Consolidated Pro Forma Statements of Operations
For the Three Months Ended
March 31, 2021
(dollars in thousands, except per share amounts)
| |
| Transaction |
| | ||||
| Historical | | Accounting | | |||||
| FSP Corp. (e) | | Adjustments | Pro Forma | |||||
Revenues: | | | | | | ||||
Rental | | $ | 58,623 | | $ | (5,882) | (f) | $ | 52,741 |
Related party revenue: | | | | | | ||||
Management fees and interest from loans | | | 410 | | | - | | 410 | |
Other | | | 6 | | | - | | 6 | |
Total revenues | | | 59,039 | | | (5,882) | | 53,157 | |
Expenses: | | | | | | ||||
Real estate operating expenses | | | 15,939 | | | (2,015) | (f) | | 13,924 |
Real estate taxes and insurance | | | 12,366 | | | (972) | (f) | | 11,394 |
Depreciation and amortization | | | 24,381 | | | (2,305) | (f) | | 22,076 |
General and administrative | | | 4,146 | | | (7) | (f) | | 4,139 |
Interest | | | 8,600 | | | - | | 8,600 | |
Total expenses | | | 65,432 | | | (5,299) | | 60,133 | |
| | | | | |||||
Income (loss) before taxes on income | | | (6,393) | | | (583) | | (6,976) | |
Tax expense on income | | | 67 | | | - | | 67 | |
| | | | | |||||
Net loss | | $ | (6,460) | | $ | (583) | $ | (7,043) | |
| | | | | |||||
Weighted average number of shares outstanding, basic and diluted | | | 107,328 | | | | 107,328 | ||
| | | | | |||||
| | | | | |||||
Net loss per share, basic and diluted | | $ | (0.06) | | | $ | (0.07) | ||
P-3
Franklin Street Properties Corp.
Unaudited Condensed Consolidated Pro Forma Statements of Operations
For the Year Ended
December 31, 2020
(dollars in thousands, except per share amounts)
| |
| Transaction |
| | ||||
| Historical | | Accounting | | |||||
| FSP Corp. (e) | | Adjustments | Pro Forma | |||||
Revenues: | | | | | | ||||
Rental | | $ | 244,207 | | $ | (25,283) | (f) | $ | 218,924 |
Related party revenue: | | | | | | ||||
Management fees and interest from loans | | | 1,610 | | | - | | 1,610 | |
Other | | | 31 | | | - | | 31 | |
Total revenues | | | 245,848 | | | (25,283) | | 220,565 | |
Expenses: | | | | | | ||||
Real estate operating expenses | | | 66,940 | | | (8,776) | (f) | | 58,164 |
Real estate taxes and insurance | | | 48,390 | | | (3,797) | (f) | | 44,593 |
Depreciation and amortization | | | 88,558 | | | (9,803) | (f) | | 78,755 |
General and administrative | | | 14,997 | | | (60) | (f) | | 14,937 |
Interest | | | 36,026 | | | - | | 36,026 | |
Total expenses | | | 254,911 | | | (22,436) | | 232,475 | |
| | | | | |||||
Gain on sale of property | | | 41,928 | | | 25,931 | (g) | | 67,859 |
Income (loss) before taxes on income | | | 32,865 | | | 23,084 | | 55,949 | |
Tax expense on income | | | 250 | | | - | | 250 | |
| | | | | |||||
Net income | | $ | 32,615 | | $ | 23,084 | $ | 55,699 | |
| | | | | |||||
Weighted average number of shares outstanding, basic and diluted | | | 107,303 | | | | 107,303 | ||
| | | | | |||||
| | | | | |||||
Net income per share, basic and diluted | | $ | 0.30 | | | $ | 0.52 | ||
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FRANKLIN STREET PROPERTIES CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
The above unaudited condensed consolidated pro forma financial statement presentation has been prepared based upon certain pro forma adjustments to the historical consolidated financial statements of FSP Corp. Certain assumptions regarding the operations of FSP Corp. have been made in connection with the preparation of the condensed consolidated financial pro forma information. These assumptions are as follows:
1. Adjustments to Pro Forma Condensed Consolidated Balance Sheet
(a) | Represents FSP Corp.’s historical condensed consolidated balance sheet as of March 31, 2021, which was derived from FSP Corp.’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2021. FSP Corp. elected to be, and is qualified as, a real estate investment trust for federal income tax purposes. FSP Corp. has met the various required tests; therefore, no provision for federal or state income taxes has been reflected on real estate operations. |
FSP Corp. has subsidiaries which are not in the business of real estate operations. Those subsidiaries are taxable as real estate investment trust subsidiaries, or TRS, and are subject to income taxes at statutory tax rates. The taxes on income shown in the pro forma condensed consolidated statements of operations are the taxes on the income of the TRS. There are no material items that would cause a deferred tax asset or a deferred tax liability.
(b) | Represents FSP Corp.’s disposition of the Properties and the necessary adjustments to eliminate the real estate assets, rights and obligations associated with tenant leasing arrangements, accrued property taxes and related intangible assets based on their carrying values as of March 31, 2021 associated with the disposition of the Properties. |
(c) | Represents the net disposition proceeds received. The gross sales price of the Properties was $219,500 before purchase credits of $6,186, estimated disposition related costs of $1,458, payment of $938 of property taxes and payment of security deposits to the Buyer of $447. |
(d) | Represents FSP Corp.’s disposition of the Properties and the related nonrecurring estimated gain on sale. The gain has been calculated based upon the net disposition proceeds of $210,471, as described above in (c), less the carrying amounts as of March 31, 2021 of assets and liabilities disposed of on May 27, 2021. |
2. Adjustments to Pro Forma Condensed Consolidated Statements of Operations
(e) | Represents FSP Corp.’s historical condensed consolidated statements of operations for the three months ended March 31, 2021 and the year ended December 31, 2020, which were derived from FSP Corp.’s quarterly report on Form 10-Q for the three months ended March 31, 2021 and the annual report on Form 10-K for the year ended December 31, 2020, respectively. The condensed consolidated statement of operations for the year ended December 31, 2020 includes a nonrecurring gain of $41,928 for the sale of a property unrelated to the Properties sold on May 27, 2021. |
(f) | Represents FSP Corp.’s disposition of the Properties and the necessary adjustment to eliminate the impact of historical rental income, real estate operating expenses, real estate taxes and |
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insurance, depreciation and amortization and general and administrative expenses associated with the Properties.
(g) | Represents the disposition of the Properties and the related nonrecurring estimated gain on sale. The gain has been calculated based upon the net disposition proceeds of $210,471, as described above in (c), less the carrying amounts as of March 31, 2021 of assets and liabilities disposed of on May 27, 2021. |
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