FSP reported earnings for the year. They tried to break things down to defer attention to AFFO which only increased 4.4% for the year.
Listened to the conference call and it didnt sound like the dividend is going to be raised anytime soon.
EPS...which the CEO suggested is the best indicator was up to $1.65 from 1.32. +25%.
Still, the stock has shown some weakness and traded and closed below $20 today.
It seems the market is looking at AFFO and that figure doesnt and hasnt even covered the dividend.
Still, it has a good yield that I believe is solid and a decent PE given the 25% year over year earnings increase.
Hopefully, the market will wake up to the dividend and value here.
----------
Franklin Street Properties Corp. Announces Record 2006 Earnings
Tuesday February 20, 8:10 am ET
WAKEFIELD, MA--(MARKET WIRE)--Feb 20, 2007 -- Franklin Street Properties Corp. (the "Company" or "FSP") (AMEX:FSP - News) announced today record Net Income and Earnings Per Share (EPS) for the year ended December 31, 2006. The Company also announced increased Adjusted Funds From Operations (AFFO) over 2005, record AFFO plus Gains on Sales (AFFO+GOS) and provided an update on other activities.
The Company evaluates its performance based on Net Income, EPS, AFFO and AFFO+GOS, and believes each is an important measure. A reconciliation of Net Income to AFFO and AFFO+GOS, which are non-GAAP financial measures, is provided on page 3 of this press release.
(in 000's
except per Three Months Ended
share data) December 31, Year Ended December 31,
----------------------------- -----------------------------
2006 2005 Increase 2006 2005 Increase
--------- --------- --------- --------- --------- ---------
Net Income $ 39,482 $ 28,424 $ 11,058 $ 110,929 $ 75,116 $ 35,813
========= ========= ========= ========= ========= =========
AFFO $ 20,320 $ 16,934 $ 3,386 $ 79,987 $ 64,970 $ 15,017
GOS 26,969 17,232 9,737 61,438 30,493 30,945
--------- --------- --------- --------- --------- ---------
AFFO+GOS $ 47,289 $ 34,166 $ 13,123 $ 141,425 $ 95,463 $ 45,962
========= ========= ========= ========= ========= =========
Per Share Data:
EPS $ 0.56 $ 0.47 $ 0.09 $ 1.65 $ 1.32 $ 0.33
AFFO $ 0.29 $ 0.28 $ 0.01 $ 1.19 $ 1.14 $ 0.05
AFFO+GOS $ 0.67 $ 0.57 $ 0.10 $ 2.11 $ 1.68 $ 0.43
Weighted ave
shares
(diluted) 70,766 60,259 10,507 67,159 56,847 10,312
--------- --------- --------- --------- --------- ---------
George J. Carter, President and CEO, commented as follows:
"FSP is a real estate investment company that has three major components to its profitability.
1. Rental income from properties
2. Gains or losses on sales of properties
3. Fee income from real estate investment banking activities
Because property sales and investment banking are transactional sources of business, their contribution from quarter-to-quarter can be quite variable. Consequently, FSP management believes that a much more meaningful view of financial performance and potential future performance can be ascertained from annual financial results. Our 2006 financial performance metrics, which we believe to be most important when evaluating FSP, follow below."
(in 000's except per Share amounts, which are fully diluted)
Year ended
December 31,
----------------------
FSP Closing Share
2006 2005 Prices:
---------- ----------- ----------------------
Increase in Shareholders'
Equity per share $ 1.97 $ 0.92 12/31/06 $ 21.05
Dividend paid per share 1.24 1.24 12/31/05 $ 20.95
========== ===========
Total $ 3.21 $ 2.16 12/31/04 N/A
========== ===========
Total as a percentage of
12/31/05 closing price 15.3% N/A
========== ===========
% Increase Multiple on
Over 21.05
2006 results 31-Dec-06 31-Dec-05 Prior Year Share Price
---------- ----------- ---------- -----------
Per share amounts:
EPS (net income) $ 1.65 $ 1.32 25.0% 12.8
AFFO $ 1.19 $ 1.14 4.4% 17.7
GOS (Gain on sales of
assets) $ 0.91 $ 0.54 68.5% 23.1
AFFO + GOS $ 2.11 $ 1.68 25.6% 10.0
AFFO plus appreciation
realized on assets sold $ 1.87 $ 1.42 31.7% 11.3
Shareholders' Equity per
share $ 13.03 $ 11.06 17.8% 1.6
========== =========== ========== ===========
Cash and certificate of
deposit $ 75,116 $ 69,715 7.7%
========== =========== ==========
Permanent Debt $ 0.00 $ 0.00 0.0%
========== =========== ==========
"As we begin 2007, I continue to be confident that FSP's financial position is strong, competitive and flexible within the broader capital and real estate markets, and anticipate continued growth and performance from our three major business components."
Discussion of results:
The following significant factors affected Net Income, EPS, AFFO and AFFO+GOS for the three months and year ended December 31, 2006 compared to results for the same periods in 2005:
-- Gains on sale of properties including a provision for loss on an asset
held for sale during the three months and year ended December 31, 2006 was
$27.0 million and $61.4 million, respectively. Net gains on the sale of
properties during the three months and year ended December 31, 2005 was
$17.2 million and $30.5 million, respectively.
-- Increased net operating income from the real estate portfolio
included:
o The benefits of four properties acquired by merger in April 2005 and
five properties acquired by merger in April 2006, which were accretive to
our per share calculations.
o The benefits of two suburban office properties acquired directly in
2005 and three suburban office properties acquired directly in 2006.
o Lease termination payments received of $0.8 million and $7.5 million
during the three months and year ended December 31, 2006, respectively,
compared to $0.2 million and $1.0 million for the three months and year
ended December 31, 2005. Except for a lease which expired at December 31,
2006, a substantial amount of the space at the related properties was re-
leased.
-- Greater investment banking results compared to the same periods in
2005. Gross proceeds on the sale of securities, which our revenue and
expenses in investment banking are directly related to, was $170.2 million
for the year ended December 31, 2006 compared to $138.8 million for 2005.
This was an increase of $36.5 million and $31.4 million for the three
months and year ended December 31, 2006, respectively, compared to the same
periods in 2005.
-- Interest income increased $0.4 million and $1.4 million in the three
months and year ended December 31, 2006, respectively, compared to the same
periods in 2005 as a result of higher bank balances during the periods and
rising interest rates.
-- General and administrative costs increased $0.9 million and $1.1
million for the three months and year ended December 31, 2006, compared to
the same periods in 2005. The increase was primarily from compensation and
other costs relating to merger, acquisition and disposition activity and
monitoring and managing a larger portfolio of properties.
-- A net increase of 10.5 million and 10.3 million weighted average
shares for the three months and year ended December 31, 2006, respectively,
compared to 2005 due to the merger completed on April 30, 2006.
A reconciliation of Net Income to AFFO, AFFO+GOS and AFFO plus appreciation realized on assets sold is shown below, and definitions of AFFO, AFFO+GOS and AFFO plus appreciation realized on assets sold are provided on Supplemental Schedule F. We believe AFFO is used broadly throughout the REIT industry as a measurement of performance and is generally calculated in a similar manner to our calculation. We also believe that AFFO+GOS and AFFO plus appreciation realized on assets sold are important measures as they consider investment performance.
Three Months Ended Year Ended
December 31, December 31,
-------------------- --------------------
(In thousands except per share
amounts) 2006 2005 2006 2005
--------- --------- --------- ---------
Net income $ 39,482 $ 28,424 $ 110,929 $ 75,116
Net gains on sales of assets
and provision on one asset
held for sale (26,969) (17,232) (61,438) (30,493)
GAAP income from
non-consolidated REITs (131) (121) (1,043) (1,418)
Distributions from
non-consolidated REITs 59 130 783 1,217
Depreciation of real estate &
intangible amortization 8,684 6,258 32,090 22,240
Straight-line rent (805) (525) (1,334) (1,692)
--------- --------- --------- ---------
Adjusted Funds From Operations
(AFFO) 20,320 16,934 79,987 64,970
Plus gains on sales of assets
and provision on one asset
held for sale 26,969 17,232 61,438 30,493
--------- --------- --------- ---------
AFFO+GOS 47,289 34,166 141,425 95,463
Adjustment for appreciation
realized on assets sold (8,330) (7,277) (15,605) (14,502)
--------- --------- --------- ---------
AFFO plus appreciation realized
on assets sold $ 38,959 $ 26,889 $ 125,820 $ 80,961
========= ========= ========= =========
Per Share Data
EPS $ 0.56 $ 0.47 $ 1.65 $ 1.32
AFFO $ 0.29 $ 0.28 $ 1.19 $ 1.14
AFFO+GOS $ 0.67 $ 0.57 $ 2.11 $ 1.68
AFFO plus appreciation realized
on assets sold $ 0.55 $ 0.45 $ 1.87 $ 1.42
Weighted average shares (basic
and diluted) 70,766 60,259 67,159 56,847
========= ========= ========= =========
ADVERTISEMENT
Dividend announcement
On January 19, 2007, the Board of Directors of the Company declared a cash distribution of $0.31 per share of common stock payable on February 20, 2007 to stockholders of record on January 31, 2007.
Real Estate and Investment Banking Update
During the fourth quarter we acquired a suburban office property in Broomfield, Colorado with a total of approximately 241,000 square feet of rentable space. The purchase was financed with proceeds from property sales. We sold two suburban office properties located in Herndon, Virginia and North Andover, Massachusetts with a total of 251,000 square feet. In December 2006, we reached an agreement to sell a suburban office property in Greenville, South Carolina with a total of 144,000 square feet of rentable space. The property was sold on January 31, 2007 at a loss of approximately $4.9 million, which was provided for in 2006. Supplementary Schedule D presents our continuing real estate portfolio of 29 properties as of December 31, 2006. In January 2007 we commenced a new syndication as part of our real estate investment banking activities with an opportunity to place up to $221 million.
Today's news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.franklinstreetproperties.com.
A conference call is scheduled for February 21, 2007 at 9:30 a.m. (ET) to discuss the fourth quarter and year end 2006 results. The toll free number is 1-800-510-9661, passcode 43336594. Internationally, the call may be accessed by dialing 1-617-614-3452, passcode 43336594. The call will also be available via a live webcast, which can be accessed at least 10 minutes before the start time through the Webcasts & Presentations section of our Investor Relations section at www.franklinstreetproperties.com. A replay of the conference call will be available on the Company's website one hour after the call. |
