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Franklin Street Properties (FSP)
:FSP

Franklin Street Properties (FSP) AI Stock Analysis

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Franklin Street Properties

(NYSE MKT:FSP)

Rating:56Neutral
Price Target:
$2.00
▲(11.11%Upside)
Franklin Street Properties faces substantial challenges with profitability and leasing activity, impacting its financial performance score negatively. The technical indicators show some upward momentum but caution is warranted due to potential overbought conditions. The valuation is affected by negative earnings, although the dividend yield offers some support. The reduction in debt and prospective tenant pipeline are positives from the earnings call, yet the overall outlook remains cautious due to ongoing operational issues.

Franklin Street Properties (FSP) vs. SPDR S&P 500 ETF (SPY)

Franklin Street Properties Business Overview & Revenue Model

Company DescriptionFranklin 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.
How the Company Makes MoneyFranklin Street Properties Corp. generates revenue primarily through leasing office space to tenants, which provides a steady stream of rental income. As a REIT, FSP is required to distribute at least 90% of its taxable income to shareholders in the form of dividends, allowing it to maintain its tax-advantaged status. The company's revenue streams are bolstered by its strategic investments in urban markets with strong economic fundamentals and demand for office space. FSP may also increase revenue through property acquisitions, redevelopment projects, and strategic partnerships that enhance the value and appeal of its existing portfolio.

Franklin Street Properties Earnings Call Summary

Earnings Call Date:Apr 29, 2025
(Q1-2025)
|
% Change Since: 16.13%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant reduction in corporate debt and a growing pipeline of prospective tenants. However, challenges persist with a decline in leasing activity, lower occupancy rates, and a reported net loss.
Q1-2025 Updates
Positive Updates
Significant Reduction in Corporate Indebtedness
Since late 2020, Franklin Street Properties has completed approximately $1.1 billion in property sales, contributing to a nearly 75% reduction in corporate indebtedness, enhancing financial flexibility.
Growth in National Office Transaction Volumes
National office transaction volumes rose by 22% in 2024 from the cyclical lows of 2023 and accelerated in the first quarter of 2025, finishing 31% higher year-over-year, indicating signs of stabilization.
Prospective Tenant Pipeline
FSP is tracking approximately 800,000 square feet of prospective new tenants, including 300,000 square feet of prospects on their shortlists, indicating potential for future leasing growth.
Negative Updates
Leasing Challenges and Lower Occupancy
The directly owned portfolio was approximately 69.2% leased at the end of the first quarter, down from 70.3% at the end of the fourth quarter. Economic occupancy also decreased due to lease expirations and departures.
Disappointing First Quarter Leasing Activity
FSP finalized only 60,000 square feet of leasing in the first quarter, comprised entirely of renewals and expansions, with no new leases executed.
GAAP Net Loss
Reported a GAAP net loss of approximately $21.4 million or $0.21 per share for the first quarter of 2025.
Company Guidance
In the first quarter of 2025, Franklin Street Properties Corp. reported funds from operations (FFO) of approximately $2.7 million, equating to $0.03 per share, and a GAAP net loss of about $21.4 million, or $0.21 per share. The company's directly owned portfolio was 69.2% leased, down from 70.3% at the end of the previous quarter, with economic occupancy at 67.7%. The quarter saw 60,000 square feet of leasing activity, all from renewals and expansions, with a forecast of continued instability in leasing activities throughout the year. The company is tracking approximately 800,000 square feet of prospective new tenants and 400,000 square feet in potential renewals. Scheduled lease expirations for 2025 total approximately 246,000 square feet, representing 5.1% of the directly owned portfolio. Franklin Street continues its disposition strategy, having sold $1.1 billion in properties since late 2020, reducing corporate debt by nearly 75%. The office market shows signs of stabilization, with national transaction volumes rising by 31% year-over-year in Q1 2025, although investment liquidity remains constrained.

Franklin Street Properties Financial Statement Overview

Summary
Franklin Street Properties is experiencing significant challenges with profitability and revenue growth, as seen in the income statement. The balance sheet shows a focus on reducing debt, while cash flow stability offers some hope. Overall, the company faces hurdles in achieving financial stability and growth.
Income Statement
48
Neutral
The income statement shows a declining trend in revenue with a significant decrease from previous years. Gross profit margins have deteriorated, and net profit margins are negative, indicating struggles with profitability. The EBIT and EBITDA margins are also negative for the most recent period, reflecting operational inefficiencies and challenges in maintaining profitability.
Balance Sheet
55
Neutral
The balance sheet reveals a relatively stable stockholders' equity, although total debt levels have decreased, suggesting a focus on deleveraging. However, the equity ratio indicates a moderate reliance on equity financing, and the return on equity is negative due to net losses, highlighting profitability issues.
Cash Flow
62
Positive
Cash flow analysis shows a positive trend in operating cash flow, although free cash flow remains volatile and has improved slightly in the latest period. The company has managed to maintain operating cash flow even in times of net income losses, indicating some level of operational resilience.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
115.99M120.11M145.71M165.62M209.36M245.85M
Gross Profit
38.24M52.35M67.78M78.17M107.42M130.52M
EBIT
-7.46M-6.30M-984.00K482.00K12.97M26.96M
EBITDA
30.19M21.64M57.93M66.06M93.98M118.23M
Net Income Common Stockholders
-66.61M-52.72M-48.11M1.09M92.72M32.62M
Balance SheetCash, Cash Equivalents and Short-Term Investments
37.78M41.12M125.53M6.63M40.75M2.65M
Total Assets
1.04B946.93M1.17B1.24B1.36B1.79B
Total Debt
297.54M247.63M404.71M413.01M474.79M921.54M
Net Debt
259.76M206.51M279.18M406.38M434.04M918.89M
Total Liabilities
335.10M291.07M456.52M472.93M580.97M1.03B
Stockholders Equity
703.86M655.86M712.80M768.74M783.20M768.09M
Cash FlowFree Cash Flow
-10.31M-16.23M-13.77M-39.68M-28.47M-9.47M
Operating Cash Flow
10.59M8.99M17.87M15.23M36.36M68.45M
Investing Cash Flow
40.26M70.28M113.64M74.04M505.47M11.04M
Financing Cash Flow
-57.07M-164.47M-10.25M-123.39M-505.24M-85.13M

Franklin Street Properties Technical Analysis

Technical Analysis Sentiment
Positive
Last Price1.80
Price Trends
50DMA
1.66
Positive
100DMA
1.75
Positive
200DMA
1.76
Positive
Market Momentum
MACD
0.04
Positive
RSI
56.03
Neutral
STOCH
17.88
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FSP, the sentiment is Positive. The current price of 1.8 is above the 20-day moving average (MA) of 1.76, above the 50-day MA of 1.66, and above the 200-day MA of 1.76, indicating a bullish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 56.03 is Neutral, neither overbought nor oversold. The STOCH value of 17.88 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FSP.

Franklin Street Properties Risk Analysis

Franklin Street Properties disclosed 32 risk factors in its most recent earnings report. Franklin Street Properties reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
If we do not repay a portion of our indebtedness by March 31, 2025, our interest costs will increase. Q4, 2024

Franklin Street Properties Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
61
Neutral
$2.83B10.910.42%8438.90%5.74%-20.95%
CICIO
57
Neutral
$208.65M-2.51%7.74%-4.92%-128.59%
FSFSP
56
Neutral
$180.21M-9.96%2.22%-18.97%-14.57%
BDBDN
55
Neutral
$773.66M-18.11%13.45%-2.22%1.51%
PDPDM
52
Neutral
$947.99M-3.79%6.56%-6.23%18.07%
ONONL
49
Neutral
$114.07M-10.71%15.76%-18.92%-15.81%
OPOPI
44
Neutral
$14.26M-15.03%19.89%-11.91%-80.43%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FSP
Franklin Street Properties
1.80
0.14
8.43%
PDM
Piedmont Office
7.62
0.85
12.56%
BDN
Brandywine Realty
4.46
0.46
11.50%
OPI
Office Properties Income
0.20
-1.92
-90.57%
CIO
City Office REIT
5.17
0.67
14.89%
ONL
Orion Office REIT
2.10
-1.08
-33.96%

Franklin Street Properties Corporate Events

Shareholder Meetings
Franklin Street Properties Holds 2025 Annual Meeting
Positive
May 15, 2025

On May 15, 2025, Franklin Street Properties Corp. held its 2025 Annual Meeting of Stockholders to elect six directors, ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025, and approve the company’s executive compensation by a non-binding vote. All proposals were approved, with the directors elected for a one-year term expiring at the 2026 Annual Meeting, and the ratification and executive compensation receiving significant support, indicating continued confidence in the company’s leadership and financial oversight.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.