FSP 10-K & 10-Q changes, risk factors and insider trading
Franklin Street Properties Corp. · NYSE · Real Estate Investment Trusts · CIK 1031316 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We are dependent on key personnel and if our Chief Executive Officer and Chairman of the Board of Directors ceases to serve in such position, we may be obligated to pay all outstanding obligations under the Credit Agreement.”
New heading “Failure to comply with covenants in the Credit Agreement could adversely affect our financial condition.”
New heading “We are subject to risks from changes in trade policies and tariffs”
New heading “We have suspended quarterly dividends and may not resume paying dividends on our common stock, and may not elect to resume paying dividends in the foreseeable future or at all.”
New heading “If we fail to comply with the continued listing requirements of the NYSE American stock exchange, our common stock may be delisted and the price of our common stock and our ability to access capital markets could be negatively impacted.”
Removed heading “If our one remaining Sponsored REIT defaults on its Sponsored REIT Loan, we may be required to keep balances outstanding on our existing debt, seek new debt or use our cash balance to repay our existing debt, which may reduce cash available for distribution to our stockholders or for other corporate purposes.”
Removed heading “Our operating results and financial condition could be adversely affected if we are unable to refinance the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes.”
Removed heading “Failure to comply with covenants in the documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes could adversely affect our financial condition.”
Removed heading “An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets.”
Removed heading “Downgrades in our credit ratings could reduce our access to funding sources in the credit and capital markets.”
Removed heading “If we do not repay a portion of our indebtedness by March 31, 2025, our interest costs will increase.”
Removed heading “We are dependent on key personnel.”
Removed heading “Our level of dividends may fluctuate.”
Largest changes
“If we breach covenants in the documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes, the lenders can declare a default. A default under documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes, or the Series B Notes could result in difficulty financing growth in our business and could also result in a reduction in the cash available for distribution to our stockholders or for other corporate purposes. …”see in full comparison
“If our one remaining Sponsored REIT defaults on its Sponsored REIT Loan, we may be required to keep balances outstanding on our existing debt, seek new debt or use our cash balance to repay our existing debt, which may reduce cash available for distribution to our stockholders or for other corporate purposes.”see in full comparison
“Downgrades in our credit ratings could reduce our access to funding sources in the credit and capital markets.”see in full comparison
“If we fail to comply with the continued listing requirements of the NYSE American stock exchange, our common stock may be delisted and the price of our common stock and our ability to access capital markets could be negatively impacted.”see in full comparison
“The documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes and the Series B Notes contain customary affirmative and negative covenants, including some or all of the following: …”see in full comparison
“We must satisfy the NYSE American stock exchange’s continued listing requirements, including, among other things, a requirement that the price of our common stock may not sell for a substantial period of time at a low price per share. If our common stock sells for a substantial period of time at a low price per share, the NYSE American may require us to effect a reverse split of such shares within a reasonable time after being notified that the NYSE American deems such action to be appropriate under all the circumstances. …”see in full comparison
Full comparison: every changed paragraph (41)
If our one remaining Sponsored REIT defaults on its Sponsored REIT Loan, we may be required to keep balances outstanding on our existing debt, seek new debt or use our cash balance to repay our existing debt, which may reduce cash available for distribution to our stockholders or for other corporate purposes.
We have one remaining secured loan to a Sponsored REIT in the form of a mortgage loan, which we refer to as the Sponsored REIT Loan. We anticipate that the Sponsored REIT Loan will be repaid through cash flow from property operations or sale of the underlying property, although the actual amount and timing of any repayment is uncertain and will likely depend on prevailing market conditions at the time of any such sale. If the Sponsored REIT defaults on the Sponsored REIT Loan, the Sponsored REIT could be unable to fully repay the Sponsored REIT Loan and we may have to satisfy our obligations under our existing debt through other means, including without limitation, keeping balances outstanding, seeking new debt, and/or using our cash balance. If that happens, we may have less cash available for distribution to our stockholders or for other corporate purposes.
Our operating results and financial condition could be adversely affected if we are unable to refinance the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes.
Each of the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes (each as defined in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations) matures on April 1, 2026. There can be no assurance that we will be able to refinance this indebtedness at maturity, or if we were able to do so, that any such refinancings would be on terms as favorable as the terms currently applicable to the BofA Term Loan, the BMO Term Loan, the Series A Notes, or the Series B Notes, and we may not be able to otherwise obtain funds by selling assets or raising equity to make required payments on the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes. If we are unable to refinance or repay the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes at maturity or otherwise meet our payment obligations, we would be in default under the terms of the applicable indebtedness and our operations and financial condition would be materially and adversely affected.
Failure to comply with covenants in the documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes could adversely affect our financial condition.
The documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes and the Series B Notes contain customary affirmative and negative covenants, including some or all of the following: limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, use of net cash proceeds from the disposition of properties, assets and equity issuances, mandatory prepayments, the requirement to have certain subsidiaries provide guarantees, the requirement to pledge our equity interests in certain subsidiaries as collateral, changes in business, certain restricted payments, repurchases and redemptions of our common stock, going concern qualifications to our financial statements, and transactions with affiliates. In addition, subject to certain tax-related exceptions, the documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes and the Series B Notes restrict our ability to make quarterly dividend distributions that exceed $0.01 per share of our common stock; provided, however, that notwithstanding such restriction, we are permitted to make dividend distributions based on our good faith estimate of projected or estimated taxable income or otherwise as necessary to retain our status as a real estate investment trust, to meet the distribution requirements of Section 857 of the Internal Revenue Code or to eliminate any income or excise taxes to which we would otherwise be subject. The documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes and the Series B Notes contain the following financial covenants: minimum tangible net worth; maximum leverage ratio; maximum secured leverage ratio; maximum secured recourse leverage ratio; minimum fixed charge coverage ratio; maximum unencumbered leverage ratio; and minimum unsecured interest coverage.
Our continued general compliance with the BofA Term Loan, the BMO Term Loan, the Series A Notes and the Series B Notes is subject to ongoing compliance with our financial and other covenants. Failure to comply with such covenants could cause a default under the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes, and we may then be required to repay them with capital from other sources. Under those circumstances, other sources of capital may not be available to us, or be available only on unattractive terms.
If we breach covenants in the documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes, the lenders can declare a default. A default under documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes, or the Series B Notes could result in difficulty financing growth in our business and could also result in a reduction in the cash available for distribution to our stockholders or for other corporate purposes. A default under documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes could materially and adversely affect our financial condition and results of operations.
An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets.
As of each of December 31, 2024 and February 6, 2025, we had $55.6 million outstanding under the BofA Term Loan. Interest on the BofA Term Loan bears interest at variable rates based on a spread over SOFR and includes a 5.00% floor on SOFR.
As of each of December 31, 2024 and February 6, 2025, we had $71.1 million outstanding under the BMO Term Loan. Interest on the BMO Term Loan bears interest at variable rates based on a spread over SOFR and includes a 5.00% floor on SOFR.
During 2024, the Federal Reserve lowered the federal funds rate target three times, most recently decreasing it by 25 basis points on December 18, 2024, to a range of 4.25% to 4.50%. If interest rates increase, then the interest costs on our unhedged variable rate debt will also increase, which could adversely affect our cash flow, our ability to pay principal and interest on our debt and our ability to make distributions to stockholders. In addition, rising interest rates could limit our ability to incur new debt or to refinance existing debt when it matures. From time to time, we may enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risks that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges. In addition, increases in interest rates could decrease the amount third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions, to incur new debt or refinance existing debt when it matures.
Downgrades in our credit ratings could reduce our access to funding sources in the credit and capital markets.
We are currently assigned a corporate credit rating from Moody’s Investors Service, Inc. (“Moody’s”) based on its evaluation of our creditworthiness. Although our corporate credit rating from Moody’s is currently below investment grade, there can be no assurance that we will not be further downgraded. Credit rating reductions or other negative actions by one or more rating agencies could adversely affect our access to funding sources, the cost and other terms of obtaining funding as well as our overall financial condition, operating results and cash flow.
If we do not repay a portion of our indebtedness by March 31, 2025, our interest costs will increase.
The terms of the BofA Term Loan and the BMO Term Loan provide that if, as of March 31, 2025, the aggregate principal amount outstanding under the BMO Term Loan, the BofA Term Loan and the Senior Notes exceeds $200 million, then the spread over SOFR or the base rate, as applicable, will permanently increase by 100 basis points, from 300 basis points to 400 basis points in the case of SOFR, and from 200 basis points to 300 basis points in the case of the base rate. The terms of the Senior Notes provide that if, as of March 31, 2025, the aggregate principal amount outstanding under the BMO Term Loan, the BofA Term Loan and the Senior Notes exceeds $200 million, then the per annum interest rates applicable to the Series A Notes and the Series B Notes will permanently increase by 1.00% from 8.00% per annum to 9.00% per annum.
We currently have approximately $250.3 million of indebtedness outstanding under the BMO Term Loan, the BofA Term Loan and the Senior Notes. Therefore, if we do not repay approximately $50.3 million of our indebtedness by March 31, 2025, the interest rate on each of our BMO Term Loan, the BofA Term Loan and the Senior Rates will permanently increase by 1%. An increase in our interest costs would adversely affect our cash flow and could adversely affect our capacity to pay principal and interest on our debt and our ability to make distributions to stockholders. In addition, increased interest rates on our outstanding indebtedness could adversely affect our ability to incur new debt or to refinance our existing debt when it matures.
The COVID-19 pandemic has adversely impacted our properties and operating results and continues to present material uncertainty and risk with respect to the performance of our properties and our financial results. Considerable uncertaintyUncertainty still surrounds the long-term impact of the COVID-19 pandemic and its potential effects on the population, including the spread of more contagious variants of the virus, andpandemic, on the commercial real estate market and our business. Many of our tenants still do not fully occupy the space that they lease. Any ongoing negative impacts from the COVID-19 pandemic could adversely affect us and/or our tenants due to, among other factors: the potential negative impact to the businesses of our tenants, the impact of work-from-home and return-to-work policies, the potential negative impact to leasing efforts and occupancy at our properties, uncertainty regarding future rent collection levels or requests for rent concessions from our tenants, the occurrence of a default under any of our debt agreements, the potential for increased borrowing costs, negative impacts on our ability to refinance existing indebtedness or to secure new sources of capital on favorable terms, fluctuations in our level of dividends, increased costs of operations, making more difficult our ability to complete required capital expenditures in a timely manner and on budget, decreases in values of our real estate assets, changes in law and/or regulation, and uncertainty regarding government and regulatory policy.
Some of our existing tenants and potential tenants operate in businesses and industries that continue to be adversely affected by the continuing disruption to business as a resulteffects of the COVID-19 pandemic. Some of our existing tenants and potential tenants have elected to, or been required to, and may in the future elect to, or be required to, reduce or suspend operations for extended periods of time, including as a result of work-from-home policies. Some of our tenants have requested rent concessions and more tenants may request rent concessions or may not pay rent in the future. These situationseffects could lead to increased rent delinquencies and/or defaults under leases, a lower demand for rentable space leading to increased concessions or lower occupancy, increased tenant improvement capital expenditures, or reduced rental rates to maintain occupancies. For example, on December 21, 2020, the parent company of a tenant that leasesleased approximately 130,000 square feet filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, resulting in a writeoff charge of $3.1 million. Our operations could be materially negatively affected ifas thea economic downturn is prolonged,result, which could adversely affect our operating results, our ability to pay dividends, our ability to repay or refinance our existing indebtedness, and the price of our common stock.
Although recent indicators suggest that economic activity has expanded at a modest pace, theThe global economy continues to experience significant disruptions and uncertainty as a result of various factors, including changes in U.S. trade or other policies or those policies of other nations, geopolitical events such as the wars and conflicts in UkraineIran and other countries in the Middle East,East and Ukraine, increasing tensions with China and Iran,Venezuela, tensions between the long-termU.S. impactand Europe related to the sovereignty of theGreenland, COVID-19major pandemicpolitical shifts domestically or internationally and continuing supply chain difficulties. Because economic conditions directly affect the demand for office space, our primary income producing asset, broad economic market conditions in the United States, including uncertainty over interest rates, inflation, tariffs, slower growth, stock market volatility or recession fears, could have a material adverse effect on our earnings and financial condition. Economic conditions may be affected by numerous other factors, including but not limited to, inflation and employment levels, energy prices, uncertainty about government fiscal, monetary, trade and tax policies, changes in currency exchange rates, the regulatory environment and the availability of credit. Future economic factors also may negatively affect the demand for office space, real estate values, occupancy levels and property income.
If we are not able to collect sufficient rents from each of our owned real properties or collect interest on the Sponsored REIT Loan,properties, we may suffer significant operating losses or a reduction in cash available for future dividends.losses.
A substantial portion of our revenue is generated by the rental income of our real properties. If our properties do not provide us with a steady rental income, our revenues will decrease, which may cause us to incur operating losses in the future. In addition, if our properties do not provide us with rental income or we do not collect interest income from the Sponsored REIT Loan, it will reduce the cash available for distribution to our stockholders.
We have adopted a strategy seeking to increase shareholder value by pursuing the sale of select properties where we believe that short to intermediate term valuation potential has been reached and striving to lease vacant space. As we execute this strategy, our revenue, Funds From Operations, and capital expenditures may decrease in the short term. ProceedsUnder the Credit Agreement, certain proceeds from dispositions are intendedrequired to be used primarily for the repayment of debt. We may not be able to dispose of properties at acceptable prices or otherwise on anticipated terms and conditions within the time periods contemplated by our disposition strategy, which would adversely affect our ability to use the proceeds as intended and impair our financial flexibility.
We are dependent on key personnel and if our Chief Executive Officer and Chairman of the Board of Directors ceases to serve in such position, we may be obligated to pay all outstanding obligations under the Credit Agreement.
We are dependent on key personnel.
The Credit Agreement provides that if George J. Carter ceases to serve in the position of our Chief Executive Officer and Chairman of the Board of Directors or devote substantially all of his business time and attention to FSP Corp., whether as a result of resignation, death, disability or otherwise, and we do not use commercially reasonable efforts to find a permanent replacement to replace Mr. Carter that is reasonably satisfactory to the Required Lenders (as defined in the Credit Agreement) following such cessation, such event will constitute an event of default under the Credit Agreement and would entitle the lenders to terminate their lending commitments, and to accelerate all outstanding obligations under the Credit Agreement. Whether Mr. Carter remains our Chief Executive Officer and Chairman of the Board of Directors is not entirely under our control. Although we intend to find an appropriate replacement satisfactory to the Required Lenders if Mr. Carter leaves his current position, there is no assurance that we will be able to find a replacement acceptable to the Required Lenders. If there is an event of default under the Credit Agreement, there can be no assurance that we will be able to repay all outstanding obligations or be able to find alternative financing, which could materially adversely affect our business, financial condition and results of operations.
If any of our tenants defaults on its lease, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. In addition, at any time, a tenant of one of our properties may seek the protection of bankruptcy laws, which could result in the rejection and termination of such tenant’s lease and thereby cause a reduction in cash available for distribution to our stockholders. For example, onin December 21, 2020, the parent company of a tenant that leasesleased approximately 130,000 square feet filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, resulting in a write-off charge of $3.1 million.
As of December 31, 2024,2025, approximately 25% and 10% of our tenants as a percentage of the total rentable square feet operated in the energy services industry.industry and the professional services industry, respectively. An economic downturn in these or any industry in which a high concentration of our tenants operate or in which a significant number of our tenants currently or may in the future operate, could negatively impact the financial condition of such tenants and cause them to fail to make timely rental payments or default on lease obligations, fail to renew their leases or renew their leases on terms less favorable to us, become bankrupt or insolvent, or otherwise become unable to satisfy their obligations to us, which could adversely affect our financial condition and results of operations.
In the ordinary course of our business, we collect and store sensitive data concerning investors in the Sponsored REIT, tenants and vendors. Although we have taken steps to protect the security of our information technology systems and the data maintained in those systems, such systems and infrastructure may be vulnerable to attacks by hackers, computer viruses or ransomware, or breaches due to employee error, malfeasance, impersonation of authorized users or other disruptions. Any such breach or attack could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and continuously become more sophisticated, often are not recognized until launched against a target and may be difficult to detect for a long time, we may be unable to anticipate these techniques or to implement adequate preventive or detective measures. Any unauthorized access, disclosure or other loss of information could result in significant financial exposure, including significant costs to remediate possible injury to the affected parties. We may also be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under laws protecting confidential information. Any failure to maintain proper functionality and security of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business, financial condition, cash flows and results of operations.
Failure to comply with covenants in the Credit Agreement could adversely affect our financial condition.
On February 26, 2026, we entered into a Credit Agreement with Alter Domus (US) LLC, as administrative agent, and the lenders from time to time party thereto, which provides for a secured credit facility for aggregate principal commitments of up to $320 million, consisting of (i) initial term loans in an aggregate principal amount of $275 million, and (ii) delayed draw term loans available upon the approval of the lenders party thereto in an aggregate principal amount of up to $45 million. The Credit Agreement contains customary affirmative and negative covenants, including without limitation and subject to certain exceptions, restrictions on indebtedness, liens, investments, mergers, consolidations and other fundamental changes, dispositions of assets (including real property), capital expenditures, changes in business, certain restricted payments, transactions with affiliates, burdensome agreements, sale leaseback transactions, prepayments of other debt, corporate operating expenses and severance and retention payments. The Credit Agreement also contains minimum tangible net worth and minimum liquidity financial covenants.
Failure to comply with the covenants in the Credit Agreement would entitle the lenders to terminate their lending commitments, and to accelerate all outstanding obligations under the Credit Agreement. Under those circumstances, other sources of capital may not be available to us, or be available only on unattractive terms. A default under the Credit Agreement could result in difficulty financing growth in our business. A default under the Credit Agreement could materially and adversely affect our financial condition and results of operations.
We are subject to risks from changes in trade policies and tariffs
Changes in the financial condition of our tenants or prospective tenants directly or indirectly resulting from geopolitical developments that could negatively affect important supply chains and international trade, the termination or threatened termination of existing international trade agreements, or the implementation of tariffs or retaliatory tariffs on imported or exported goods could adversely affect the financial condition and results of operations of our tenants or prospective tenants. The uncertainty regarding the ultimate impact of any changes in trade policies or tariffs could also impact tenants or prospective tenants as they continue to determine changes needed to their businesses. Such changes in trade policy or the imposition of tariffs could accordingly adversely affect our ability to lease our properties which in turn could have a material adverse effect on our business, results of operations, and financial condition.
We have suspended quarterly dividends and may not resume paying dividends on our common stock, and may not elect to resume paying dividends in the foreseeable future or at all.
In March 2026, our Board of Directors determined to suspend quarterly cash dividends to reduce operating expenses and to redeploy that capital into leasing efforts intended to enhance the value of our portfolio. In addition, the Credit Agreement provides that we may not declare dividends in excess of the greater of $0.01 per share or such amount as is required to maintain our status as a REIT. Any future declaration and payment of dividends will be determined from time to time by our Board of Directors and will depend on, among other things, our results of operations, cash flows, liquidity, financial condition, capital requirements and other factors the Board of Directors deems relevant. There can be no assurance that we will resume paying dividends in the foreseeable future or at all, which could adversely affect the market price of our common stock.
Our level of dividends may fluctuate.
Because our real estate occupancy levels, rental rates and property disposition levels can fluctuate, there is no predictable recurring level of revenue from such activities and changes in interest rates or in the mix of our fixed and variable rate debt can cause our interest costs to fluctuate. As a result of these fluctuations, the amount of cash available for distribution to our stockholders may fluctuate, which may result in our not being able to maintain or grow dividend levels, including special dividends, in the future. In 2022, we adopted a variable quarterly dividend policy, which replaced our previous regular quarterly dividend policy. Under this dividend policy, our Board of Directors determines quarterly dividends based upon a variety of factors, including our estimates of our annual taxable income and the amount that we are required to distribute annually in the aggregate to enable us to continue to qualify as a REIT for federal income tax purposes. In addition, the BofA Term Loan, the BMO Term Loan, the Series A Notes and the Series B Notes include restrictions on our ability to make quarterly dividend distributions that exceed $0.01 per share of our common stock; provided, however, that notwithstanding such restrictions, we are permitted to make dividend distributions based on our good faith estimate of projected or estimated taxable income or otherwise as necessary to retain our status as a REIT, to meet the distribution requirements of Section 857 of the Internal Revenue Code or to eliminate any income or excise taxes to which we would otherwise be subject.
As of December 31, 2024,2025, we owned 14 properties. Some or all of these properties may decline in value. To the extent our real properties decline in value, our stockholders could lose some or all of the value of their investments. The value of our common stock may be adversely affected if the real properties held by us decline in value since these real properties represent the majority of the tangible assets held by us. Moreover, if we are forced to sell or lease the real property held by us below its initial purchase price or its carrying costs, respectively, or if we are forced to lease real property at below market rates because of the condition of the property or general economic or local market conditions, our results of operations would be adversely affected and such negative results of operations may result in lower dividends being paid to holders of our common stock.affected.
If we fail to comply with the continued listing requirements of the NYSE American stock exchange, our common stock may be delisted and the price of our common stock and our ability to access capital markets could be negatively impacted.
We must satisfy the NYSE American stock exchange’s continued listing requirements, including, among other things, a requirement that the price of our common stock may not sell for a substantial period of time at a low price per share. If our common stock sells for a substantial period of time at a low price per share, the NYSE American may require us to effect a reverse split of such shares within a reasonable time after being notified that the NYSE American deems such action to be appropriate under all the circumstances. A reverse split of our common stock could have an adverse effect on the value of a stockholder’s investment in our common stock if our stock price continued to fall after the reverse split is effected. In addition, if we fail to maintain compliance with any of the NYSE American's continued listing requirements, it could affect our ability to raise capital on acceptable terms, or at all. In the event our common stock is delisted from the NYSE American, the only established trading market for our common stock would be eliminated, and we would be forced to list our shares on the OTC Markets or another quotation medium, depending on our ability to meet the specific listing requirements of those quotation systems. As a result, an investor would likely find it more difficult to trade or obtain accurate price quotations for our shares. Delisting would likely also reduce the visibility, liquidity, and value of our common stock, reduce institutional investor interest in us, and may increase the volatility of our common stock. Delisting could also cause a loss of confidence of potential lessees, lenders, and employees, which could further harm our business and our future prospects.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the year ended December 31, 2025 to the year ended December 31, 2024”
Removed heading “Comparison of the year ended December 31, 2023 to the year ended December 31, 2022”
Largest changes
“As of February 21, 2024, the interest rate applicable to borrowings under the Senior Notes (as defined in Liquidity and Capital Resources below) was no longer based on the credit rating of our debt. The credit rating for our senior unsecured debt was downgraded by Moody’s Investor Service from Ba1 to Ba3 on April 12, 2023, and from Ba3 to B3 on June 14, 2023. As of December 31, 2024, our credit rating remains at B3.”see in full comparison
“The BMO Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, certain cross defaults and a change in control (as defined in the BMO Credit Agreement). …”see in full comparison
“The BofA Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with the provisions of the BofA Credit Agreement, certain cross defaults and a change in control (as defined in the BofA Credit Agreement). …”see in full comparison
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the consolidated financial statements, including trends which might appear, should not be taken as necessarily indicative of future operations. The following discussion and other parts of this Annual Report on Form 10-K may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, adverse changes in general economic or local market conditions, includingsee in full comparisontheasimpacta result ofrecessionarytheconcerns,long-terminflation,effectsenergy prices and interest rates, as well as those resulting fromof the COVID-19 pandemic,and the impact of work-from-home and return-to-work policies, and other potential infectious disease outbreaks andwars, terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate,ourimpactsinabilityoftochangesextendin tariffs that the United States and/other countries have announced orrefinanceimplemented,ouras well as any additional new tariffs, trade restrictions or export regulations that may be implemented or reversed in the future, inflation rates, interest rates, disruptions in the debtormarkets,effecteconomicassetconditionssales sufficient to repay such debt prior toin thematuritymarketsdatesinthereof,which we own properties, risks of a lessening of demand for the types of real estate owned by us, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, expectations for future potential property dispositions, expectations for future potential leasing activity,expectations for the potential payment of special dividends, changes in interest rates as a result of economic market conditions, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, uncertainties relating to fiscal policy,changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopoliticalevents,events and expenditures that cannot beanticipatedanticipated, such as utility rate and usage increases, delays in construction schedules, unanticipated increases in construction costs, unanticipated repairs, increases in the level of general and administrative costs as a percentage of revenues as revenues decrease as a result of property dispositions, additional staffing, insurance increases and real estate tax valuation reassessments. See “Risk Factors” in Part I, Item 1A, of this Annual Report on Form 10-K. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, acquisitions, dispositions, performance or achievements. We may not update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.
“The BofA Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type. The BofA Credit Agreement also contained financial covenants that required us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. We were in compliance with the BofA Term Loan financial covenants as of December 31, 2025. …”see in full comparison
“The BMO Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type. The BMO Credit Agreement also contained financial covenants that required us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. We were in compliance with the BMO Term Loan financial covenants as of December 31, 2025. …”see in full comparison
Full comparison: every changed paragraph (105)
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the consolidated financial statements, including trends which might appear, should not be taken as necessarily indicative of future operations. The following discussion and other parts of this Annual Report on Form 10-K may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, adverse changes in general economic or local market conditions, including theas impacta result of recessionarythe concerns,long-term inflation,effects energy prices and interest rates, as well as those resulting fromof the COVID-19 pandemic, and the impact of work-from-home and return-to-work policies, and other potential infectious disease outbreaks andwars, terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, ourimpacts inabilityof tochanges extendin tariffs that the United States and/ other countries have announced or refinanceimplemented, ouras well as any additional new tariffs, trade restrictions or export regulations that may be implemented or reversed in the future, inflation rates, interest rates, disruptions in the debt ormarkets, effecteconomic assetconditions sales sufficient to repay such debt prior toin the maturitymarkets datesin thereof,which we own properties, risks of a lessening of demand for the types of real estate owned by us, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, expectations for future potential property dispositions, expectations for future potential leasing activity, expectations for the potential payment of special dividends, changes in interest rates as a result of economic market conditions, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, uncertainties relating to fiscal policy, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events,events and expenditures that cannot be anticipatedanticipated, such as utility rate and usage increases, delays in construction schedules, unanticipated increases in construction costs, unanticipated repairs, increases in the level of general and administrative costs as a percentage of revenues as revenues decrease as a result of property dispositions, additional staffing, insurance increases and real estate tax valuation reassessments. See “Risk Factors” in Part I, Item 1A, of this Annual Report on Form 10-K. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, acquisitions, dispositions, performance or achievements. We may not update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.
FSP Corp., or we or the Company, operates in a single reportable segment: real estate operations. The real estate operations market involves real estate rental operations, leasing, secured financing of real estate and services provided for asset management, property management, property acquisitions, dispositions and development. Our current strategy is to focus on infill and central business district office properties in the United States sunbelt and mountain west regions as well as select opportunistic markets. We believe that the United States sunbelt and mountain west regions have macro-economic drivers that have the potential to increase occupancies and rents. We are focused on long-term growth and appreciation, as well as current income.appreciation.
As of December 31, 2024,2025, all of our total owned portfolio, consisting of approximately 4.8 million square feet, or approximately 95.7% of our total owned and consolidated portfolio, was located in Dallas, Denver, Houston and Minneapolis.
In May 2025, we announced that our Board of Directors had initiated a review of strategic alternatives in order to explore ways to maximize shareholder value.
Throughout the strategic review process, the Board of Directors and management directed its financial advisors to evaluate a broad range of strategic alternatives, including:
During the period from the commencement of the strategic review process to the date of this Annual Report:
On February 26, 2026, we closed a $320 million secured credit facility with an affiliate of TPG Credit. We repaid in full all of our then outstanding approximately $249 million aggregate principal amount of indebtedness with borrowings under the facility. The facility has an original stated maturity of February 26, 2029, subject to potential extension of up to one year at our option, subject to certain conditions. The facility consists of (i) initial term loans in an aggregate principal amount of $275 million, and (ii) delayed draw term loans available upon the approval of the lenders party thereto in an aggregate principal amount of up to $45 million. The delayed draw term loans may be used, subject to certain conditions, to fund tenant improvements, leasing commissions, building improvements and other uses approved by the lender. See Note 12, Subsequent Events, of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K for further information on the Credit Agreement.
We continue to believe that the intrinsic value of our real estate portfolio exceeds our current public market valuation. However, our ability to realize that value is dependent upon transaction and financing liquidity in the relevant capital markets and property submarkets, including for assets of similar quality, occupancy levels, and weighted average lease terms. Based on market evidence, transaction comparables, and discussions with potential counterparties, we, in consultation with our professional advisors, have determined that, to date, market conditions have not been supportive of transactions at pricing levels that would reasonably reflect the intrinsic value of our assets. Accordingly, we believe that pursuing asset sales or liquidation under such market conditions would likely not maximize value for our shareholders. We believe that current transaction activity in many office markets continues to reflect limited capital availability and highly selective buyer demand rather than the underlying long-term value of institutional quality assets.
Our review of potential strategic alternatives remains ongoing and continues to include evaluation of a range of alternatives, including asset sales.
We continue to believe that the current price of our common stock does not accurately reflect the intrinsic value of our underlying real estate assets and we will seek to increase shareholder value by (1) pursuing the sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) striving to lease vacant space. As we continue to execute this strategy, our revenue, Funds From Operations, and capital expenditures may decrease in the short term. Proceeds from dispositions are intended to be used primarily for the repayment of debt.
ForDuring the year ended December 31, 2024, our disposition strategy resulted in aggregate gross sale proceeds of $100.0 million.million, On February 21, 2024,and we repaid an aggregate amount of $102$154.7 million of debt in connection with the extensions of our BofA Term Loan, BMO Term Loan, our Series A Notes and our Series B Notes (each as defined in Liquidity and Capital Resources below). On July 10, 2024 and October 25, 2024, we repaid an aggregate amount of $25.3 million and $27.4 million, respectively, of our debt previously outstanding under the BofA Term Loan, BMO Term Loan, Series A Notes and Series B Notes (each as defined in Liquidity and Capital Resources below). During the year ended December 31, 2025, we used disposition proceeds of $1.4 million received from escrow proceeds relating to dispositions in 2024, to repay outstanding debt.
In March 2026, our Board of Directors determined to suspend quarterly cash dividends to reduce operating expenses and to redeploy that capital into leasing efforts intended to enhance the value of our portfolio. In addition, the Credit Agreement provides that we may not declare dividends in excess of the greater of $0.01 per share or such amount as is required to maintain our status as a REIT. Any future declaration and payment of dividends will be determined from time to time by our Board of Directors and will depend on, among other things, our results of operations, cash flows, liquidity, financial condition, capital requirements and other factors the Board of Directors deems relevant.
In July 2022, we adopted a variable quarterly dividend policy, which replaced our previous regular quarterly dividend policy. Under the variable quarterly dividend policy, the Board of Directors determines quarterly dividends based upon a variety of factors, including the Company’s estimates of its annual taxable income and the amount that the Company is required to distribute annually in the aggregate to enable the Company to continue to qualify as a real estate investment trust for federal income tax purposes.
As of February 21, 2024, the interest rate applicable to borrowings under the Senior Notes (as defined in Liquidity and Capital Resources below) was no longer based on the credit rating of our debt. The credit rating for our senior unsecured debt was downgraded by Moody’s Investor Service from Ba1 to Ba3 on April 12, 2023, and from Ba3 to B3 on June 14, 2023. As of December 31, 2024, our credit rating remains at B3.
Considerable uncertaintyUncertainty still surrounds the long-term impact of the COVID-19 pandemic and its potential effects on the population, including the spread of more contagious variants of the virus, and on the commercial real estate market and our business. Many of our tenants still do not fully occupy the space that they lease. The impact of the COVID-19 pandemic continues to present material uncertainty and risk with respect to the performance of our properties and our financial results, such as the potential negative impact to the businesses of our tenants, the impact of work-from-home and return-to-work policies, the potential negative impact to leasing efforts and occupancy at our properties, uncertainty regarding future rent collection levels or requests for rent concessions from our tenants, the occurrence of a default under any of our debt agreements, the potential for increased borrowing costs, negative impacts on our ability to refinance existing indebtedness or to secure new sources of capital on favorable terms, fluctuations in our level of dividends, increased costs of operations, making more difficult our ability to complete required capital expenditures in a timely manner and on budget,terms decreases in values of our real estate assets, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. We are unable to estimate the full extent of the long-term impact that the COVID-19 pandemic has had and will have on our future financial results at this time. See “The long-term impact of the COVID-19 pandemic has had and may continue to have an adverse impact on our financial condition and results of operations. This impact could be materially adverse to the extent that the long-term impact of the COVID-19 pandemic, or future pandemics, cause tenants to be unable to pay their rent or reduce the demand for commercial real estate, or cause other impacts described below.” in Item 1A. “Risk Factors ”.
Although recent indicators suggest that economic activity has expanded at a modest pace, theThe global economy continues to experience significant disruptions as a result of various factors, including changes in U.S. trade or other policies or those policies of other nations, geopolitical events such as the wars conflicts in Ukraine and the Middle East, increasing tensions with China and Iran, tensions between the long-termU.S. impactand Europe related to the sovereignty of theGreenland, COVID-19major pandemicpolitical shifts domestically or internationally and continuing supply chain difficulties. In addition, various economic factors, including but not limited to, impacts of changes in tariffs that the United States and other countries have announced or implemented, as well as any additional new tariffs, trade restrictions or export regulations that may be implemented or reversed in the future, inflation and interest rates, aremay contributingadversely to recessionary concerns foraffect the economy of the United States. Economic conditions directly affect the demand for office space, our primary income producing asset. In addition, the broad economic market conditions in the United States are typically affected by numerous other factors, including but not limited to, employment levels, energy prices, uncertainty about government fiscal, monetary, trade and tax policies, changes in currency exchange rates, the regulatory environment and the availability of credit. During 2023 and 2024, the Federal Reserve adjusted the federal funds rate target several times, most recently decreasing it by 25 basis points on December 18, 2024, to a range of 4.25% to 4.50%. If interest rates increase, then the interest costs on our unhedged variable rate debt would be adversely affected, which could in turn adversely affect our cash flow, our ability to pay principal and interest on our debt and our ability to make distributions to stockholders. As of December 31, 2024,2025, approximately 50.6% of our total debt constituted unhedged variable rate debt. Increased interest rates could also decrease the amount third parties are willing to pay for our assets and limit our ability to incur new debt or refinance existing debt when it matures. As of the date of this report, the impact of current economic conditions and geopolitical events and the long-term impact of the COVID-19 pandemic are adversely affecting the demand for office space in the United States.
As of December 31, 2024,2025, our real estate portfolio was comprised of 14 owned properties, which we refer to as our owned properties, and a non-controlling common stock interest in the corporation that is the sole member of FSP Monument Circle LLC, which corporation was organized to operate as a real estate investment trust, which we refer to as the Sponsored REIT. The Sponsored REIT, which we also refer to as Monument Circle, was consolidated effective January 1, 2023. We refer to these 15 properties as our owned and consolidated properties. Our owned properties were approximately 68.9% leased as of December 31, 2025, a decrease from 70.3% leased as of December 31, 2024, a decrease from 74.0% leased as of December 31, 2023.2024. The 3.7%1.4% decrease in leased space was primarily a result of lease maturitiesexpirations thatexceeding occurrednew executed leases during the year ended December 31, 2024, and the impact on leased percentage from the disposition of properties on January 26, 2024, July 8, 2024 and October 23, 2024, respectively. These decreases were partially offset by new leasing during the year ended December 31, 2024.2025. As of December 31, 2024,2025, we had approximately 1,428,0001,497,000 square feet of vacancy in our owned properties compared to approximately 1,445,0001,428,000 square feet of vacancy as ofat December 31, 2023.2024. During the year ended December 31, 2024,2025, we leased approximately 616,000413,000 square feet of office space in our owned properties, of which approximately 445,000320,000 square feet were with existing tenants, at a weighted average term of 6.35.7 years. On average, tenant improvements for such leases were $26.06$23.02 per square foot, lease commissions were $9.72$9.24 per square foot and rent concessions were approximately four months of free rent. Average GAAP base rents under such leases were $30.06$32.42 per square foot, or 8.2%5.7% higher than average rents in the respective properties as applicable compared to the year ended December 31, 2023.2024.
Our owned and consolidated properties were approximately 67.5% leased as of December 31, 2024, compared to 71.5% leased as of December 31, 2023. The difference is primarily a result of property sales and lease expirations during 2024, which were partially offset by leasing achieved during 2024.
During 2024, 2023 and 2022, we had no redevelopment properties.
Our property known as Blue Lagoon in Miami, Florida, was substantially completed during the first quarter of 2021, and had previously been classified as a redevelopment property. As of December 31, 2022 and September 30, 2023, the property had leases signed for 98.5% of the rentable square feet of the property, including one tenant occupying approximately 73.6% of the rentable square feet of the property. On December 6, 2023, we sold this property for gross sales proceeds of approximately $68.0 million.
During 2025:
During 2022:
During 2025, we sold an office property located in Indianapolis, Indiana on June 6, 2025, for a gross sale price of $6 million, at a loss of $12.9 million.
During 2023, we sold an office property located in Elk Grove, Illinois on March 10, 2023, for a gross sales price of $29.1 million, at a gain of approximately $8.4 million. During the three months ended June 30, 2023, we entered into an agreement to sell a property in Charlotte, North Carolina at an expected loss of $0.8 million, which was recorded as an impairment, and we classified the property as an asset held for sale as of June 30, 2023. The property was sold on August 9, 2023, for a gross sales price of $9.2 million, at a loss of $0.8 million, which had been our expected loss. During the three months ended September 30, 2023, we recorded a gain on sale of $53,000 as a result of conveying approximately 7,826 square feet of land at our Addison, Texas property to the Town of Addison as part of a road revitalization project. In addition, during the three months ended September 30, 2023, we executed purchase and sale agreements with four different unrelated purchasers for the potential sale of four properties. Three of these potential dispositions were classified as assets held for sale as of September 30, 2023. On October 26, 2023, we completed the sale of one of the assets held for sale as of September 30, 2023, an office building located in Plano, Texas for a gross sales price of $48.0 million at a gain of approximately $10.6 million. On December 6, 2023, we sold another of the assets held for sale, an office property located in Miami, Florida for a gross sales price of $68.0 million at a loss of approximately $18.9 million. The one remaining asset held for sale was expected to sell for a gross sales price of $40.0 million at a loss of approximately $20.5 million, which was recorded as an impairment as of September 30, 2023; however, on November 15, 2023, we received notice from the buyer indicating that the buyer was terminating the transaction and directing the deposit and interest be disbursed to us.
however, on November 15, 2023, we received notice from the buyer indicating that the buyer was terminating the transaction and directing the deposit and interest be disbursed to us.
During 2022, we sold two office properties located in Broomfield, Colorado on August 31, 2022 for an aggregate sales price of $102.5 million, at a gain of approximately $24.1 million. We also sold an office property in Evanston, Illinois on December 28, 2022, for a gross sales price of approximately $27.8 million, at a gain of $3.4 million. There were no properties held for sale as of December 31, 2022.
The following table shows financial results for the years ended December 31, 2025 and 2024.
Comparison of the year ended December 31, 2025 to the year ended December 31, 2024
Total revenues decreased by $12.9 million to $107.2 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was primarily a result of:
Total expenses decreased by $12.8 million to $140.0 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was primarily a result of:
During the years ended December 31, 2025 and December 31, 2024, we repaid debt and incurred a loss on extinguishment of debt of approximately $12,000 and $1,042,000, respectively, related to unamortized deferred financing costs on the dates of the repayments.
On April 7, 2025, Monument Circle entered into a purchase and sale agreement to sell its property located in Indianapolis, Indiana for a gross sales price of $6.0 million. We estimated the fair value of this property, less estimated costs to sell, based on the purchase price set forth in the letter of intent to purchase the property that Monument Circle entered into with the third party, which resulted in recording an impairment charge of $13.3 million during the three months ended March 31, 2025 that was decreased by $0.4 million during the three months ended June 30, 2025 for final sale adjustments after the sale was completed on June 6, 2025.
During the three months ended September 30, 2023, we entered into an agreement to sell a property in Atlanta, Georgia for a gross sales price of approximately $40.0 million at an expected loss of $20.5 million. We recorded an impairment on this asset held for sale as of September 30, 2023. During the three months ended September 30, 2024, we increased the expected loss on the property in Atlanta, Georgia by $6.6 million after we entered into a new agreement to sell the property for a gross sales price of $34.0 million.
During the year ended December 31, 2024, we sold an office property located in Richardson, Texas on January 26, 2024, for a sales price of $35.0 million at a loss of approximately $2.1 million. The property was classified as held for sale as of December 31, 2023, and an impairment loss of $2.1 million was recorded during the year ended December 31, 2023. An additional $5,000 of costs related to the sale were recorded during the three months ended March 31, 2024.
During the year ended December 31, 2024, we entered into an agreement to sell a property in Glen Allen, Virginia for a gross sales price of approximately $31.0 million at an expected loss of $13.2 million, which was recorded as an impairment, and we classified the property as an asset held for sale as of June 30, 2024. The property was sold on July 8, 2024, at the expected loss. During the three months ended September 30, 2024, an additional $0.7 million in costs related to the sale of properties previously sold were recorded.
During the years ended December 31, 2025 and December 31, 2024, we invested disposition proceeds in an interest-bearing account and earned $1.0 million and $2.1 million, respectively, in interest income.
Included in income taxes is an estimate of federal income taxes of $31,000 from the sale of Monument Circle and the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties, which was $189,000 during the year ended December 31, 2025, compared to $216,000 during the year ended December 31, 2024.
Net loss for the year ended December 31, 2025 was $45.0 million, compared to a net loss of $52.7 million for the year ended December 31, 2024, for the reasons described above.
Gain and loss on sale of properties and impairment of assets held for salesale, net During the three months ended March 31, 2023, we sold an office property located in Elk Grove, Illinois on March 10, 2023, for a gross sales price of $29.1 million, at a gain of approximately $8.4 million.
Net income and loss
The following table shows financial results for the years ended December 31, 2023 and 2022.
Comparison of the year ended December 31, 2023 to the year ended December 31, 2022
Total revenues decreased by $19.9 million to $145.7 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022. The decrease was primarily a result of:
Total expenses decreased by $16.9 million to $171.0 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022. The decrease was primarily a result of:
These decreases were partially offset by:
During the year ended December 31, 2023 and December 31, 2022, we repaid debt and incurred a loss on extinguishment of debt of approximately $0.1 million and $0.1 million, respectively, related to unamortized deferred financing costs on the dates of the repayments.
During the year ended December 31, 2023, we recorded a gain on consolidation of Sponsored REIT as a result of reducing the Monument Circle loan loss reserve, which resulted in a $0.4 million gain.
Impairment and loan reserve
During the year ended December 31, 2022, we recorded an impairment on a mortgage receivable of $4.2 million.
Gain and loss on sale of properties and impairment
During the three months ended March 31, 2023, we sold an office property located in Elk Grove, Illinois on March 10, 2023, for a gross sales price of $29.1 million, at a gain of approximately $8.4 million.
During the three months ended September 30, 2023, we sold an office property located in Charlotte, North Carolina known as Forest Park, for a sales price of $9.2 million at a loss of approximately $0.8 million. During the three months ended September 30, 2023, we also recorded a gain on sale of $53,000 as a result of conveying approximately 7,826 square feet of land at our Addison, Texas property to the Town of Addison as part of a road revitalization project and increased the loss on sale of Forest Park by $38,000 as a result of final sales adjustments.
During the three months ended September 30, 2023, we entered into an agreement to sell a property in Miami, Florida, known as Blue Lagoon, for a gross sales price of approximately $68.0 million at an expected loss of $19.2 million that was recorded as an impairment loss. We completed the sale of the property on December 6, 2023 at an actual loss of $18.9 million. During the three months ended September 30, 2023, we entered into an agreement to sell a property in Atlanta, Georgia for a gross sales price of approximately $40.0 million, at an expected loss of $20.5 million that was recorded as an impairment loss. On October 26, 2023, we completed the sale of an asset held for sale as of September 30, 2023, which was an office building located in Plano, Texas for a gross sales price of $48.0 million at a gain of approximately $10.6 million. During the three months ended September 30, 2023, we entered into a purchase and sales agreement, which was subsequently amended, to sell a property located in Richardson, Texas for a gross sales price of $35 million, at an expected loss of $2.1 million that was recorded as an impairment loss during the three months ended December 31, 2023.
During the three months ended December 31, 2023, we invested disposition proceeds in an interest bearing account and earned $0.6 million in interest income.
Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties, which was $0.3 million during the year ended December 31, 2023, compared to $0.2 million during the year ended December 31, 2022.
Net income and loss
Net loss for year ended December 31, 2023, was $48.1 million compared to net income of $1.1 million for the year ended December 31, 2022, for the reasons described above.
.
FFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.
We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”), which could materially affect our business, financial condition or future results. The risks described in the 2025 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
New heading “Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025:”
Largest changes
“The BofA Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type. The BofA Credit Agreement also contained financial covenants that required us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. …”see in full comparison
“The BMO Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type. The BMO Credit Agreement also contained financial covenants that required us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. …”see in full comparison
“During the three months ended June 30, 2026, the Company entered into an agreement to sell its Greenwood Plaza property located in Englewood, Colorado for a gross sales price of approximately $19.4 million and an expected loss of $7.7 million, which was recorded as an impairment as of June 30, 2026. The property was sold on July 8, 2026 and we used approximately $8.5 million of the net proceeds from the disposition for the repayment of the Initial Term Loans (defined below in Liquidity and Capital Resources—TPG Term Loans), including interest and fees.”see in full comparison
On July 8, 2026, we sold our Greenwood Plaza property located in Englewood, Colorado for a gross sales price of $19.4 million at a loss of approximately $7.7 million, which had been recorded as an impairment as of June 30, 2026. On July 8, 2026, we used approximately $8.5 million of the net proceeds from the disposition for the repayment of the Initial Term Loans (defined below in Liquidity and Capital Resources—TPG Term Loans), including interest and fees Our review of potential strategic alternatives remains ongoing. While the capital markets environment for office assets remains uneven and transaction volume for office assets continues to be below historical levels, with constrained liquidity and limited participation from traditional institutional investors, and buyer activity remains more heavily weighted toward private, opportunistic, and non-traditional capital, we believe we are beginning to observe early signs of stabilization, which may represent the initial stages of a broader recovery over time.see in full comparison
“Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025:”see in full comparison
“On April 7, 2025, Monument Circle entered into a purchase and sale agreement to sell its property located in Indianapolis, Indiana for a gross sales price of $6.0 million. …”see in full comparison
Full comparison: every changed paragraph (43)
As of MarchJune 31,30, 2026, all of our total owned portfolio, consisting of approximately 4.8 million square feet, was located in Dallas, Denver, Houston and Minneapolis.
On July 8, 2026, we sold our Greenwood Plaza property located in Englewood, Colorado for a gross sales price of $19.4 million at a loss of approximately $7.7 million, which had been recorded as an impairment as of June 30, 2026. On July 8, 2026, we used approximately $8.5 million of the net proceeds from the disposition for the repayment of the Initial Term Loans (defined below in Liquidity and Capital Resources—TPG Term Loans), including interest and fees Our review of potential strategic alternatives remains ongoing. While the capital markets environment for office assets remains uneven and transaction volume for office assets continues to be below historical levels, with constrained liquidity and limited participation from traditional institutional investors, and buyer activity remains more heavily weighted toward private, opportunistic, and non-traditional capital, we believe we are beginning to observe early signs of stabilization, which may represent the initial stages of a broader recovery over time.
We have entered into an Inspection and Confidentiality Agreement with a potential owner user for our Greenwood Plaza property and are simultaneously negotiating a Purchase and Sale Agreement with that potential buyer. Closing of the transaction would be subject to completion of due diligence by the potential buyer, the negotiation and execution of a Purchase and Sale Agreement with the potential buyer and the satisfaction of other customary closing conditions.
As of MarchJune 31,30, 2026, our real estate portfolio was comprised of 14 owned properties, which we refer to as our owned properties. Our owned properties were approximately 68.4%67.4% leased as of MarchJune 31,30, 2026, a decrease from 68.9% leased as of December 31, 2025. The 0.5%1.5% decrease in leased space was primarily a result of lease expirations exceeding new executed leases during the threesix months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, we had approximately 1,520,0001,569,000 square feet of vacancy in our owned properties compared to approximately 1,497,000 square feet of vacancy at December 31, 2025. During the threesix months ended MarchJune 31,30, 2026, we leased approximately 145,000170,000 square feet of office space in our owned properties, of which approximately 112,000120,000 square feet were with existing tenants, at a weighted average term of 6.26.3 years. On average, tenant improvements for such leases were $33.55$33.32 per square foot, lease commissions were $11.53$11.31 per square foot and rent concessions were approximately five months of free rent. Average GAAP base rents under such leases were $35.16$34.34 per square foot, or 6.4%7.4% higher than average rents in the respective properties as applicable compared to the year ended December 31, 2025.
As of MarchJune 31,30, 2026, leases for approximately 4.5%3.0% and 10.1%11.5% of the square footage in our owned portfolio are scheduled to expire during 2026 and 2027, respectively. As the secondthird quarter of 2026 begins, we believe that:
Existing vacancy is being actively marketed to numerous potential tenants. While leasing activity at our properties has continued, we believe that the impact of geopolitical events, current economic conditions and the long-term impact of the COVID-19 pandemic may limit or delay new tenant leasing during at least the secondthird quarter of 2026 and potentially in future periods.
During the three months ended June 30, 2026, the Company entered into an agreement to sell its Greenwood Plaza property located in Englewood, Colorado for a gross sales price of approximately $19.4 million and an expected loss of $7.7 million, which was recorded as an impairment as of June 30, 2026. The property was sold on July 8, 2026 and we used approximately $8.5 million of the net proceeds from the disposition for the repayment of the Initial Term Loans (defined below in Liquidity and Capital Resources—TPG Term Loans), including interest and fees.
The disposition of thisthese propertyproperties diddo not represent a strategic shift that has a major effect on our operations and financial results. Our current strategy is to focus on the sunbelt and mountain west regions of the United States. Accordingly, the propertyproperties sold remained classified within continuing operations for all periods presented.
The following table shows financial results for the three months ended MarchJune 31,30, 2026 and 2025:
Comparison of the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025:
Total revenues decreased by $0.9$0.4 million to $26.2$26.4 million for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily a result of:
Total expenses decreasedincreased by $0.9$0.2 million to $34.6$35.4 million for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarily a result of:
This increase was partially offset by:
Loss on sale of properties and impairment on an asset held for sale During the three months ended June 30, 2026, we entered into an agreement to sell our Greenwood Plaza property located in Englewood, Colorado for a gross sales price of approximately $19.4 million and an expected loss of $7.7 million, which was recorded as an impairment. We classified the property as an asset held for sale as of June 30, 2026. The property was sold on July 8, 2026.
On April 7, 2025, Monument Circle entered into a purchase and sale agreement to sell its property located in Indianapolis, Indiana for a gross sales price of $6.0 million. We estimated the fair value of this property, less estimated costs to sell, based on the purchase price set forth in the letter of intent to purchase the property that Monument Circle entered into with the third party, which resulted in recording an impairment loss of $13.3 million that was decreased by $0.4 million during the three months ended June 30, 2025, for final sale adjustments after the sale was completed on June 6, 2025.
During the three months ended June 30, 2026 and June 30, 2025, we invested disposition proceeds in an interest-bearing account and earned $0.2 million and $0.2 million, respectively, in interest income.
Tax expense on income
Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties, which was $49,000 during the three months ended June 30, 2026, compared to $51,000 during the three months ended June 30, 2025.
Net loss for the three months ended June 30, 2026 was $16.6 million, compared to a net loss of $7.9 million for the three months ended June 30, 2025, for the reasons described above.
The following table shows financial results for the six months ended June 30, 2026 and 2025:
Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025:
Revenues
Total revenues decreased by $1.2 million to $52.6 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease was primarily a result of:
Expenses
Total expenses decreased by $0.6 million to $70.0 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease was primarily a result of:
During the threesix months ended MarchJune 31,30, 2026 and 2025, we repaid debt and incurred losses on extinguishment of debt of approximately $1.3 million and $2,000,$5,000, respectively,respectively. The amounts during the six months ended June 30, 2026 are related to debt deal costs incurred from debt refinanced debt in February 2026 and the write-off of unamortized deferred financing and OID costs on the dates of debt repayments in both periods.2026.
Loss on sale of properties and impairment on asset held for sale During the six months ended June 30, 2026, we entered into an agreement to sell our Greenwood Plaza property located in Englewood, Colorado for a gross sales price of approximately $19.4 million and an expected loss of $7.7 million, which was recorded as an impairment. We classified the property as an asset held for sale as of June 30, 2026. The property was sold on July 8, 2026.
Loss on sale of properties and impairment on asset held for sale On April 7, 2025, Monument Circle entered into a purchase and sale agreement to sell its property located in Indianapolis, Indiana for a gross sales price of $6.0 million. We estimated the fair value of this property, less estimated costs to sell, based on the purchase price set forth in the letter of intent to purchase the property that Monument Circle entered into with the third party, which resulted in recording an impairment loss of $13.3 million.million that was decreased by $0.4 million during the three months ended June 30, 2025, for final sale adjustments after the sale was completed on June 6, 2025.
During the threesix months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, we invested disposition proceeds in an interest-bearing account and earned $0.2$0.3 million and $0.3$0.5 million, respectively, in interest income.
Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties and which was $54,000$100,000 during the threesix months ended MarchJune 31,30, 2026, compared to $52,000$103,000 during the threesix months ended MarchJune 31,30, 2025.
Net loss for the threesix months ended MarchJune 31,30, 2026 was $9.5$26.1 million, compared to a net loss of $21.4$29.3 million for the threesix months ended MarchJune 31,30, 2025, for the reasons described above.
The information presented below provides the weighted average GAAP rent per square foot for the threesix months ended MarchJune 31,30, 2026 for our owned properties and weighted occupancy square feet and percentages. GAAP rent includes the impact of tenant concessions and reimbursements.
Cash and cash equivalents were $23.8$22.5 million and $30.6 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The decrease of $6.8$8.1 million is attributable to $5.1$2.1 million used in operating activities, less $2.7$5.8 million used in investing activities plusless $1.0$0.2 million providedused byin financing activities. Although there is no guarantee that we will be able to obtain the funds necessary for our future growth, we anticipate generating funds from continuing real estate operations, use of our Delayed Draw Term Loans (as defined below) and proceeds from property dispositions. We believe that we have adequate funds to cover unusual expenses and capital improvements, in addition to normal operating expenses. Our ability to pay any dividends to stockholders in the future will depend in significant part upon the level of rental income from our real properties, property dispositions and our interest costs.
Cash used in operating activities for the threesix months ended MarchJune 31,30, 2026, of $5.1$2.1 million is primarily attributable to a net loss of $9.5$26.1 million, excluding an impairment on an asset held for sale of $7.7 million plus the add-back of $13.1$26.2 million of non-cash expenses, less a decrease in accounts payable and accrued compensation of $6.7$7.2 million, less an increase in payment of deferred leasing commissions of $1.4$1.6 million, less an increase in tenant receivables of $1.0 million, less an increase in lease acquisition costs of $0.1 million, less an increase in tenant receivables of $0.9$0.3 million plus an increase in prepaid expenses of $0.4$0.2 million.
Cash used in investing activities for the threesix months ended MarchJune 31,30, 2026, of $2.7$5.8 million is primarily attributable to purchases of other real estate assets and office equipment investments.
Cash providedused byin financing activities for the threesix months ended MarchJune 31,30, 2026 of $1.0$0.2 million is primarily attributable to funding from our Term Loan of $258.5 million less payment of distributions to stockholders of $1.0 million, costs of extinguishment of debt of $1.0 million, the repayment of $249.0 million of our debt that was refinanced with the Term Loan and deferred financing costs of $6.5$7.7 million.
On February 26, 2026, we repaid in its entirety our term loan borrowing in the aggregate principal amount of approximately $70.7 million, with Bank of Montreal, as administrative agent, and the other lending institutions party thereto, which we refer to as the BMO Term Loan. The BMO Term Loan would have matured on April 1, 2026. The BMO Term Loan was subject to the terms of the Second Amended and Restated Credit Agreement dated September 27, 2018, which we refer to as the Original BMO Credit Agreement, as amended by the First Amendment to Second Amended and Restated Credit Agreement dated February 10, 2023, which we refer to as the BMO First Amendment, and the Second Amendment to Second Amended and Restated Credit Agreement dated February 21, 2024, which we refer to as the BMO Second Amendment. We refer to the Original BMO Credit Agreement, as amended by the BMO First Amendment and the BMO Second Amendment, as the BMO Credit Agreement.
The BMO Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type. The BMO Credit Agreement also contained financial covenants that required us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. The BMO Credit Agreement also provided for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, certain cross defaults and a change in control (as defined in the BMO Credit Agreement).
On February 26, 2026, we repaid in its entirety our term loan borrowing in the amount of approximately $55.3 million, with Bank of America, N.A. as administrative agent, and other lending institutions party thereto, which we refer to as the BofA Term Loan. The BofA Term Loan would have matured on April 1, 2026. The BofA Term Loan was subject to the terms of the Credit Agreement dated January 10, 2022, which we refer to as the Original BofA Credit Agreement, as amended by the First Amendment to Credit Agreement dated February 10, 2023, which we refer to as the BofA First Amendment, and the Second Amendment to Credit Agreement dated February 21, 2024, which we refer to as the BofA Second Amendment. We refer to the Original BofA Credit Agreement, as amended by the BofA First Amendment and the BofA Second Amendment, as the BofA Credit Agreement.
The BofA Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type. The BofA Credit Agreement also contained financial covenants that required us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage. The BofA Credit Agreement also provided for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, failure to comply with the provisions of the BofA Credit Agreement, certain cross defaults and a change in control (as defined in the BofA Credit Agreement).
On February 26, 2026, we repaid in its entirety our two series of senior notes in the aggregate principal amount of approximately $122.9 million, which we refer to as the Senior Notes. The Senior Notes would have matured on April 1, 2026. The Senior Notes consisted of (i) Series A Senior Notes due April 1, 2026 in an aggregate principal amount of approximately $71.3 million, which we refer to as the Series A Notes, and (ii) Series B Senior Notes due April 1, 2026 in the aggregate principal amount of approximately $51.6 million, which we refer to as the Series B Notes. The Notes were subject to the terms of the Note Purchase Agreement dated October 24, 2017, which we refer to as the Original Note Purchase Agreement, as amended by the First Amendment to Note Purchase Agreement dated February 21, 2024. We refer to the Original Note Purchase Agreement, as amended by the NPA First Amendment, as the Note Purchase Agreement.
The Note Purchase Agreement contained customary affirmative and negative covenants. The Note Purchase Agreement also contained financial covenants that required us to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a maximum secured recourse leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage.
We generally pay the ordinary annual operating expenses of our owned and consolidated properties from the rental revenue generated by the properties. For the three and six months ended MarchJune 31,30, 2026 and 2025, respectively, the rental income exceeded the expenses for each individual property, with the exception of Monument Circle’s property for the three and six months ended MarchJune 31,30, 2025. Monument Circle sold its property on June 6, 2025. Monument Circle had approximately $76,000$56,000 and $132,000 of rental income and $293,000$157,000 and $450,000 of operating expenses for the three and six months ended MarchJune 31,30, 2025.2025, respectively.
FSP insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-05-28 | Bitterman Jennifer |
Grant/award | 80,342 | — | — |
| 2026-05-28 | Murray Georgia |
Grant/award | 80,342 | — | — |
| 2026-05-28 | Mcgillicuddy Dennis J |
Grant/award | 80,342 | — | — |
| 2026-05-28 | Burke John N |
Grant/award | 80,342 | — | — |
Well-known investors holding FSP (13F)
None of the 59 investors we track reported a position in their latest 13F.