Franklin Street Properties Reports $21.4 Million Net Loss in Q1 2025

Franklin Street Properties Corp. reported a net loss of $21.4 million for the first quarter of 2025, a significant increase from the $7.6 million loss recorded in the same period of 2024. Total revenues decreased by 13.2% to $27.1 million, down from $31.2 million a year earlier, primarily due to a decline in rental income attributed to the sale of three properties in 2024 and losses from lease expirations. The company's rental revenue fell by approximately $4.1 million, reflecting a decrease in leased space, which was 66.4% as of March 31, 2025, compared to 70.6% a year prior.

Despite the drop in revenue, total expenses also decreased by 10.4% to $35.5 million, down from $39.6 million in the previous year. This reduction was driven by lower real estate operating expenses, taxes, and interest costs, which collectively contributed to a decrease of approximately $4.1 million in total expenses. The company reported a loss on the sale of properties and impairment of assets held for sale amounting to $13.3 million, which further impacted the net loss for the quarter.

Operationally, Franklin Street Properties owned and operated 14 properties as of March 31, 2025, down from 17 properties a year earlier. The total rentable square footage decreased to approximately 5.02 million square feet from 5.48 million square feet. The company actively marketed existing vacancies, with approximately 1.48 million square feet of vacancy reported, an increase from 1.43 million square feet at the end of 2024. The company leased about 60,000 square feet of office space during the quarter, with average GAAP base rents increasing by 3.4% compared to the previous year.

Looking ahead, Franklin Street Properties faces challenges related to its debt obligations, with approximately $250.2 million in outstanding loans maturing on April 1, 2026. Management is in discussions with lenders to extend or refinance this debt, although there is substantial doubt regarding the company's ability to continue as a going concern if these efforts are unsuccessful. The company plans to use proceeds from property sales primarily for debt repayment, and it continues to focus on leasing vacant spaces to improve occupancy rates. The outlook remains cautious, with potential impacts from broader economic conditions, including inflation and interest rate fluctuations, which could affect rental income and overall financial performance.