Franklin Street Properties Corp. (FSP) | Investment Case

1. Company Snapshot

1.a. Company Description

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets.FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income.FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes.

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1.b. Last Insights on FSP

Franklin Street Properties Corp.'s recent performance was negatively impacted by uncertainty surrounding its review of strategic alternatives, initiated in May 2025. The ongoing review, which includes potential alternatives such as a sale of the company, has not yet yielded a resolution. Despite this, some analysts view a potential acquisition as an attractive opportunity, given the company's history and current valuation. Additionally, the company's underperformance has raised questions about its future prospects. A strategic review update was provided on November 21, 2025.

1.c. Company Highlights

Last Price	0.93
Change Percentage	-3.98%
Open	0.97
Previous Close	0.97
Market Cap ( Millions)	97
Volume	463300
Year High	2.21
Year Low	0.87
M A 50	1.28
M A 200	1.59

FCF Yield	-4.11%
Dividend Yield	4.29%
ROE	-7.30%
Debt / Equity	40.31%
Net Debt / EBIDTA	1288.96%
Price To Book	0.16
Price Earnings Ratio	-2.09
Price To FCF	-24.35
Price To sales	0.88
EV / EBITDA	18.64

2. Franklin Street Properties Corp. Reports Mixed Q1 2025 Earnings Amid Challenging Market Conditions

Franklin Street Properties Corp. reported a mixed bag of results for Q1 2025, with Funds From Operations (FFO) coming in at $2.7 million, or $0.03 per share, beating consensus estimates of $0.02 per share. However, the company also reported a GAAP net loss of $21.4 million, or $0.21 per share, reflecting ongoing challenges in the office real estate market. The company's financial performance underscores the impact of macroeconomic uncertainties, including recent tariff concerns, which have introduced volatility in corporate leasing decisions and office property investments.

Publication Date: Apr -30

                                    📋 Highlights
                                    Q1 2025 FFO and Net Loss::
                                                FFO of $2.7 million ($0.03 per share) and a GAAP net loss of $21.4 million ($0.21 per share) reflect ongoing financial pressures.
Portfolio Leasing Decline::
                                                Portfolio leased rate dropped to 69.2% from 70.3% in Q4 2024, with economic occupancy at 67.7% and only 60,000 square feet of renewals/expansions completed.
Debt Reduction Progress::
                                                $1.1 billion in property sales since 2020 reduced debt by nearly 75%, with average sale price of $211 per square foot, though market conditions remain challenging.
Macroeconomic Volatility Impact::
                                                Recent tariff headlines and macroeconomic uncertainties are causing volatility, potentially affecting corporate leasing decisions and office property investments.
Geographic Performance Variance::
                                                Houston's energy corridor shows strong demand, while Dallas improves but lags Houston; Denver and Minneapolis CBD markets remain weaker compared to Texas suburbs.

                                

Portfolio Occupancy and Leasing Activity

The directly owned portfolio ended the quarter with a lease rate of 69.2%, down slightly from 70.3% in Q4 2024, while economic occupancy stood at 67.7%. Leasing activity during the quarter was disappointing, with only 60,000 square feet of renewals and expansions completed. However, the company is tracking 800,000 square feet of prospective new tenants and 400,000 square feet of potential renewals, providing a glimmer of hope for future leasing momentum. Scheduled expirations for the remainder of 2025 total 246,000 square feet, representing 5.1% of the portfolio. Management expects choppy quarterly leasing activity but remains optimistic about achieving full-year progress.

Disposition Strategy and Debt Reduction

Since 2020, Franklin Street Properties has completed $1.1 billion in property sales, reducing debt by nearly 75%. The average sale price was $211 per square foot. The company is currently marketing properties totaling approximately 1 million square feet for disposition, focusing on debt reduction and maximizing shareholder value. While market conditions remain challenging, with constrained investment and lending liquidity, elevated cap rates, and lower asset values compared to 2021, FSP is seeing signs of stabilization, with national office transaction volumes rising 31% year-over-year in Q1 2025.

Geographic Performance

Geographically, Houston is showing strong demand, particularly in the energy corridor, while Dallas is improving but lagging Houston. Denver and Minneapolis CBD markets are recovering but remain weaker than Texas suburbs. FSP continues to engage with tenants and capital partners, exploring operational and strategic options to unlock portfolio value.

Valuation and Analyst Estimates

Looking at valuation metrics, Franklin Street Properties trades at a Price-to-Book (P/B) Ratio of 0.26 and an Enterprise Value-to-EBITDA (EV/EBITDA) of 2.65. The company also offers a Dividend Yield of 2.53%, which may attract income-focused investors. However, the negative Price-to-Earnings (P/E) Ratio of -2.46 and the negative Net Debt/EBITDA of -0.63 raise concerns about profitability and debt levels. Analysts have set modest revenue growth estimates of 0.8% for next year, reflecting the challenging environment and the company's ongoing restructuring efforts. While the stock may not be a near-term outperformer, patient investors could find value in FSP's strategic disposition strategy and potential for long-term portfolio stabilization.

3. NewsRoom

Franklin Street Properties Corp. Provides Update on Review of Strategic Alternatives

Nov -21

Source: businesswire.com

Strawberry Fields REIT (NASDAQ:STRW) vs. Franklin Street Properties (NYSE:FSP) Head to Head Review

Oct -20

Source: defenseworld.net

Franklin Street Properties: On The Brink Of Getting Acquired

Oct -15

Source: seekingalpha.com

Adtran advances open networking at OIF's ECOC 2025 demo with FSP 3000 OLS and coherent pluggables

Sep -25

Source: businesswire.com

Franklin Street Properties: Strategic Review May Unlock Shareholder Value

Aug -11

Source: seekingalpha.com

Franklin (FSP) Q2 Revenue Down 13%

Jul -31

Source: fool.com

Franklin Street Properties Corp. Announces Second Quarter 2025 Results

Jul -29

Source: businesswire.com

U.S. REIT Same-Store Net Operating Income Growth Slips In Q1

May -29

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.65%)

6. Segments

Real Estate Operations

Expected Growth: 4.65%

Franklin Street Properties Corp.'s 4.65% growth in Real Estate Operations is driven by increasing demand for office spaces, strategic property acquisitions, and effective asset management. Additionally, the company's focus on high-growth markets, such as Boston and Dallas, contributes to its growth. Furthermore, the company's ability to maintain a strong balance sheet and access to capital also supports its growth initiatives.

7. Detailed Products

Office Properties

Franklin Street Properties Corp. owns and operates a diverse portfolio of office properties, providing high-quality, amenity-rich spaces for businesses and organizations.

Industrial Properties

The company's industrial portfolio comprises warehouses, distribution centers, and manufacturing facilities, catering to the logistics and supply chain needs of various industries.

Retail Properties

Franklin Street Properties Corp. owns and operates a range of retail properties, including shopping centers, strip centers, and single-tenant retail buildings.

Apartment Communities

The company's multifamily portfolio offers a range of apartment communities, providing residents with comfortable, amenity-rich living spaces.

Hotel Properties

Franklin Street Properties Corp. owns and operates a selection of hotel properties, offering comfortable accommodations and amenities for travelers.

Land Development

The company's land development services focus on acquiring, entitling, and developing raw land into commercial and residential properties.

8. Franklin Street Properties Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Franklin Street Properties Corp. operates in the real estate industry, which has a moderate threat of substitutes. While there are alternative investment options available, the company's focus on commercial properties and its diversified portfolio mitigate the threat of substitutes.

Bargaining Power Of Customers

Franklin Street Properties Corp. has a diverse tenant base, which reduces the bargaining power of individual customers. Additionally, the company's properties are located in prime areas, making it difficult for customers to negotiate rents.

Bargaining Power Of Suppliers

Franklin Street Properties Corp. has a strong financial position, which gives it bargaining power over its suppliers. The company can negotiate favorable terms with its suppliers, reducing its costs.

Threat Of New Entrants

The real estate industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to compete with established players like Franklin Street Properties Corp.

Intensity Of Rivalry

The real estate industry is highly competitive, with many established players competing for a limited number of tenants. Franklin Street Properties Corp. must continually innovate and improve its properties to remain competitive.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	36.20%
Debt Cost	7.00%
Equity Weight	63.80%
Equity Cost	8.06%
WACC	7.67%
Leverage	56.73%

11. Quality Control: Franklin Street Properties Corp. passed 2 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Easterly Government Properties

A-Score: 5.8/10

Value: 5.5

Growth: 4.8

Quality: 5.4

Yield: 10.0

Momentum: 1.0

Volatility: 8.3

1-Year Total Return ->

Paramount Group

A-Score: 5.5/10

Value: 8.0

Growth: 3.2

Quality: 5.8

Yield: 3.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

JBG SMITH

A-Score: 5.4/10

Value: 5.3

Growth: 2.9

Quality: 2.3

Yield: 8.0

Momentum: 7.5

Volatility: 6.3

1-Year Total Return ->

Orion Office REIT

A-Score: 5.0/10

Value: 7.8

Growth: 4.2

Quality: 3.6

Yield: 10.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

Franklin Street Properties

A-Score: 4.8/10

Value: 8.2

Growth: 0.6

Quality: 3.1

Yield: 7.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

Hudson Pacific Properties

A-Score: 3.2/10

Value: 6.6

Growth: 2.0

Quality: 2.2

Yield: 4.0

Momentum: 1.5

Volatility: 2.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

27.83%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.67%

Franklin Street Properties Corp. - US35471R1068

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on FSP

1.c. Company Highlights

Strong Momentum

Lower Growth

Cheaper

Earnings Miss

Revenues Beats

Lower Quality

More Volatile

Earnings Beats

Weak Momentum

Revenues Miss

Medium Volatility

2. Franklin Street Properties Corp. Reports Mixed Q1 2025 Earnings Amid Challenging Market Conditions

Portfolio Occupancy and Leasing Activity

Disposition Strategy and Debt Reduction

Geographic Performance

Valuation and Analyst Estimates

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.65%)

6. Segments

Real Estate Operations

Expected Growth: 4.65%

7. Detailed Products

Office Properties

Industrial Properties

Retail Properties

Apartment Communities

Hotel Properties

Land Development

8. Franklin Street Properties Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Franklin Street Properties Corp. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.93$

Current Price

0.93$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA