FRANKLIN STREET PROPERTIES CORP /MA/ 10-Q

Item 1. Financial Statements ​ Franklin Street Properties Corp. Consolidated Balance Sheets (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, (in thousands, except share and par value amounts) ​ ​ ​ 2026 ​ ​ ​ 2025 Assets: ​ ​ ​ ​ ​ ​ ​ Real estate assets: ​ ​ ​ ​ ​ ​ ​ Land $ 98,882 $ 98,883 ​ Buildings and improvements ​ 1,094,771 ​ 1,091,728 ​ Fixtures and equipment ​ 11,562 ​ 11,572 ​ ​ ​ 1,205,215 ​ 1,202,183 ​ Less accumulated depreciation ​ 416,644 ​ 408,461 ​ Real estate assets, net ​ 788,571 ​ 793,722 ​ Acquired real estate leases, less accumulated amortization of $ 15,058 and $ 14,648 , respectively ​ 2,080 ​ 2,490 ​ Cash, cash equivalents and restricted cash ​ 23,753 ​ 30,571 ​ Tenant rent receivables ​ 1,345 ​ 471 ​ Straight-line rent receivable ​ 38,670 ​ 38,744 ​ Prepaid expenses and other assets ​ 4,322 ​ 4,080 ​ Office computers and furniture, net of accumulated depreciation of $ 1,059 and $ 1,047 , respectively ​ 124 ​ 136 ​ Deferred leasing commissions, net of accumulated amortization of $ 14,694 and $ 14,571 , respectively ​ 22,921 ​ 22,670 ​ Total assets $ 881,786 $ 892,884 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity: ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ Initial Term Loans, less unamortized financing costs and OID of $ 23,473 $ 251,527 $ — ​ Term loans payable, less unamortized financing costs of $ 441 ​ ​ — ​ ​ 125,555 ​ Series A & Series B Senior Notes, less unamortized financing costs of $ 236 ​ ​ — ​ ​ 122,686 ​ Accounts payable and accrued expenses ​ 26,391 ​ 28,724 ​ Accrued compensation ​ 234 ​ 2,394 ​ Tenant security deposits ​ 6,186 ​ 6,198 ​ Lease liability ​ ​ 1,002 ​ ​ 316 ​ Acquired unfavorable real estate leases, less accumulated amortization of $ 58 and $ 56 , respectively ​ 33 ​ 34 ​ Total liabilities ​ 285,373 ​ 285,907 ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity: ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ .0001 par value, 20,000,000 shares authorized, none issued or outstanding ​ — ​ — ​ Common stock, $ .0001 par value, 180,000,000 shares authorized, 103,690,340 and 103,690,340 shares issued and outstanding , respectively ​ 10 ​ 10 ​ Additional paid-in capital ​ 1,335,586 ​ 1,335,586 ​ Accumulated distributions in excess of accumulated earnings ​ ( 739,183 ) ​ ( 728,619 ) ​ Total stockholders’ equity ​ 596,413 ​ 606,977 ​ Total liabilities and stockholders’ equity $ 881,786 $ 892,884 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 3 Table of Contents Franklin Street Properties Corp. Consolidated Statements of Operations (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended March 31, ​ (in thousands, except per share amounts) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues: ​ ​ ​ ​ ​ ​ ​ Rental ​ $ 26,225 ​ $ 27,107 ​ Total revenues ​ 26,225 ​ 27,107 ​ Expenses: ​ ​ ​ ​ ​ ​ ​ Real estate operating expenses ​ 10,290 ​ 10,095 ​ Real estate taxes and insurance ​ 4,243 ​ 5,369 ​ Depreciation and amortization ​ 10,580 ​ 10,824 ​ General and administrative ​ 2,669 ​ 3,484 ​ Interest ​ 6,812 ​ 5,691 ​ Total expenses ​ 34,594 ​ 35,463 ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss on extinguishment of debt ​ ​ ( 1,267 ) ​ ​ ( 2 ) ​ Loss on sale of properties and impairment of assets held for sale, net ​ ​ — ​ ​ ( 13,284 ) ​ Interest income ​ 163 ​ 259 ​ Loss before taxes ​ ( 9,473 ) ​ ( 21,383 ) ​ Tax expense ​ 54 ​ 52 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 9,527 ) ​ $ ( 21,435 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of shares outstanding, basic and diluted ​ 103,690 ​ 103,567 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ $ ( 0.09 ) ​ $ ( 0.21 ) ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 4 Table of Contents Franklin Street Properties Corp. Consolidated Statements of Stockholders’ Equity (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ Distributions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ other ​ in excess of ​ Total ​ ​ Common Stock ​ Paid-In ​ comprehensive ​ accumulated ​ Stockholders’ (in thousands, except per share amounts) ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Capital ​ ​ ​ income (loss) ​ ​ ​ earnings ​ ​ ​ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2024 103,567 ​ $ 10 ​ $ 1,335,361 ​ $ — ​ $ ( 679,514 ) ​ $ 655,857 ​ Comprehensive loss — ​ — ​ — ​ — ​ ( 21,435 ) ​ ( 21,435 ) ​ Distributions $ 0.01 per share of common stock — ​ — ​ — ​ — ​ ( 1,036 ) ​ ( 1,036 ) ​ Balance, March 31, 2025 103,567 ​ $ 10 ​ $ 1,335,361 ​ $ — ​ $ ( 701,985 ) ​ $ 633,386 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, December 31, 2025 103,690 ​ $ 10 ​ $ 1,335,586 ​ $ — ​ $ ( 728,619 ) ​ $ 606,977 ​ Comprehensive loss — ​ — ​ — ​ — ​ ( 9,527 ) ​ ( 9,527 ) ​ Distributions $ 0.01 per share of common stock — ​ — ​ — ​ — ​ ( 1,037 ) ​ ( 1,037 ) ​ Balance, March 31, 2026 103,690 ​ $ 10 ​ $ 1,335,586 ​ $ — ​ $ ( 739,183 ) ​ $ 596,413 ​ ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 5 Table of Contents Franklin Street Properties Corp. Consolidated Statements of Cash Flows (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended March 31, (in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 9,527 ) ​ $ ( 21,435 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization expense ​ 11,600 ​ 11,509 Loss on extinguishment of debt ​ ​ 1,267 ​ ​ 2 Loss on sale of properties and impairment of assets held for sale, net ​ — ​ 13,284 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Tenant rent receivables ​ ( 874 ) ​ ( 179 ) Straight-line rents ​ 221 ​ 70 Lease acquisition costs ​ ( 147 ) ​ ( 74 ) Prepaid expenses and other assets ​ 448 ​ ( 225 ) Accounts payable and accrued expenses ​ ( 4,582 ) ​ ( 5,914 ) Accrued compensation ​ ( 2,160 ) ​ ( 1,892 ) Tenant security deposits ​ ( 12 ) ​ ( 81 ) Payment of deferred leasing commissions ​ ( 1,386 ) ​ ( 546 ) Net cash used in operating activities ​ ( 5,152 ) ​ ( 5,481 ) Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Property improvements, fixtures and equipment ​ ​ ( 2,696 ) ​ ​ ( 4,454 ) Net cash used in investing activities ​ ( 2,696 ) ​ ( 4,454 ) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Distributions to stockholders ​ ( 1,037 ) ​ ( 1,036 ) Proceeds received from Initial Term Loans ​ 258,500 ​ — Cost of extinguished debt ​ ​ ( 1,018 ) ​ ​ — Repayments of Term Loans payable ​ ( 125,995 ) ​ ( 77 ) Repayments of Series A&B Senior Notes ​ ​ ( 122,922 ) ​ ( 76 ) Deferred financing costs ​ ( 6,498 ) ​ — Net cash provided by (used in) financing activities ​ 1,030 ​ ( 1,189 ) Net decrease in cash, cash equivalents and restricted cash ​ ( 6,818 ) ​ ( 11,124 ) Cash, cash equivalents and restricted cash , beginning of year ​ 30,571 ​ 42,683 Cash, cash equivalents and restricted cash , end of period ​ $ 23,753 ​ $ 31,559 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ Cash paid for: ​ ​ ​ ​ ​ ​ Interest ​ $ 6,120 ​ $ 2,510 Non-cash investing activities: ​ ​ ​ ​ ​ ​ Accrued costs for purchases of real estate assets ​ $ 1,941 ​ $ 2,060 Non-cash financing activities: ​ ​ ​ ​ ​ ​ Initial Term Loan original issue discount ​ $ 16,500 ​ $ — Accrued deferred financing costs ​ $ 1,068 ​ $ — ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 6 Table of Contents Franklin Street Properties Corp. Notes to Consolidated Financial Statements (Unaudited) ​ 1.  Organization, Properties, Basis of Presentation, Financial Instruments and Recent Accounting Standards ​ Organization ​ Franklin Street Properties Corp. (“FSP Corp.” or the “Company”) holds, directly and indirectly, 100 % of the interest in FSP Investments LLC, FSP Property Management LLC , FSP Holdings LLC and FSP Protective TRS Corp . FSP Property Management LLC provides asset management and property management services. ​ As of March 31, 2026, the Company owned and operated a portfolio of real estate consisting of 14 operating properties. The Company may pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, for geographic, property specific reasons or for other general corporate purposes. ​ Properties ​ The following table summarizes the Company’s number of owned properties and rentable square feet of real estate. ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Owned and Consolidated Properties: ​ ​ ​ ​ ​ Number of properties 14 14 ​ Rentable square feet 4,809,487 4,806,456 ​ ​ Basis of Presentation ​ The unaudited consolidated financial statements of the Company include all of the accounts of the Company and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2025, as filed with the Securities and Exchange Commission. ​ The accompanying interim financial statements are unaudited; however, the financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any other period. ​ The Company does not have any comprehensive loss other than what is included in net loss. If the Company has any comprehensive loss in the future such that a statement of comprehensive loss would be necessary, the Company will include such statement in a separate consolidated statement of comprehensive loss. ​ Financial Instruments ​ The Company estimates that the carrying values of cash and cash equivalents, restricted cash, receivables, prepaid expenses, accounts payable and accrued expenses, accrued compensation, and tenant security deposits approximate their fair values based on their short-term maturity and the term loans payable approximate their fair values as they bear interest at variable interest rates or at rates that are at market for similar investments. ​ 7 Table of Contents Cash, Cash Equ ivalents and Restricted Cash ​ The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ ​ March 31, (in thousands) ​ 2026 ​ 2025 Cash and cash equivalents ​ $ 23,753 ​ $ 30,167 Restricted cash ​ — ​ 1,392 Total cash, cash equivalents and restricted cash ​ $ 23,753 ​ $ 31,559 ​ ​ ​ ​ ​ ​ ​ ​ Restricted cash consists of escrows arising from property sales. Cash held in escrow is paid based on the terms of the closing agreements for the sale. ​ Variable Interest Entities (VIEs) ​ The Company determines whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. The determination of whether an entity in which the Company holds a, direct or indirect, variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. The Company makes judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary. ​ The Company analyzes any investments in VIEs to determine if the Company is the primary beneficiary. In evaluating whether the Company is the primary beneficiary, the Company evaluates its direct and indirect economic interests in the entity. Determining which reporting entity, if any, is the primary beneficiary of a VIE is primarily a qualitative approach focused on identifying which reporting entity has both (1) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment. ​ The Company considers a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct a proposed sale of the property or merger of the company. In addition, the Company considers the rights of other investors to participate in those decisions, to replace the manager and to amend the corporate charter. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and considers that conclusion upon a reconsideration event. ​ As of January 1, 2023, the Company’s relationship with FSP Monument Circle LLC, which corporation was organized as a real estate investment trust (“Monument Circle” or the “Sponsored REIT”), was considered a VIE and the Company became the primary beneficiary. Upon this reconsideration event, the entity was included within the Company’s consolidated financial statements and all intercompany accounts and transactions were eliminated in consolidation. A gain on consolidation of approximately $ 0.4 million was recognized in the three months ended March 31, 2023. Cash and cash equivalents of $ 3 million held by Monument Circle was included in the Company’s cash and cash equivalents upon consolidation and was reflected as “Consolidation of Sponsored REIT” in the consolidated statement of cash flows. The cash and cash equivalents held by Monument Circle were unable to be utilized for the Company’s operational purposes. The creditors of Monument Circle’s trade payables did not have any recourse against the Company. ​ The property held by Monument Circle was sold on June 6, 2025, and Monument Circle and the corporation that had been its sole member were dissolved on December 9, 2025. The Company’s previous loan to Monument Circle that was secured by a mortgage on the real estate owned by Monument Circle (the “Sponsored REIT Loan”) was extinguished on June 6, 2025, when the property securing the loan was sold. More information on the sale is included in Note 7, “Disposition of Properties and Assets Held for Sale”. ​ 8 Table of Contents Management fees and interest income from loans: ​ Asset management fees range from 1 % to 5 % of collected rents and the applicable contracts are cancellable with 30 days ’ notice. The Company did not recognize asset management fee income from non-consolidated entities for the three months ended March 31, 2026 and 2025. ​ The Company did not recognize interest income and fees from the Sponsored REIT Loan for the three months ended March 31, 2025 . ​ Recent Accounting Standards ​ In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 adds interim and annual disclosure requirements to GAAP at the request of the Securities and Exchange Commission. The guidance in ASU 2023-06 is required to be applied prospectively and the GAAP requirements will be effective when the removal of the related SEC disclosure requirements is effective. If the SEC does not act to remove its related requirements by June 30, 2027, any related FASB amendments will be removed from the Accounting Standards Codification and will not be effective. The Company does not anticipate that the adoption of ASU 2023-06 will have a material impact on the consolidated financial statements. ​ In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. The guidance in ASU 2024-03 is required to be applied prospectively and entities may apply it retrospectively. ASU 2024-03 is effective for public entities for fiscal years beginning after December 15, 2026. The Company does not anticipate that the adoption of ASU 2024-03 will have a material impact on the consolidated financial statements . ​ ​ ​ ​ 2.  Term Loans Payable and Senior Notes ​ TPG Term Loans ​ On February 26, 2026 (the “Closing Date”), the Company entered into a Credit Agreement (the “Credit Agreement”) with Alter Domus (US) LLC, as administrative agent (the “Agent”), and Silver Oak Capital LLC, an affiliate of TPG Credit (collectively, the lenders from time to time party thereto, the “Lenders”). The Credit Agreement provides for a secured credit facility (the “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 (the “Initial Term Loans”), and (ii) delayed draw term loans available upon the approval of the Lenders after the Closing Date in an aggregate principal amount of up to $ 45 million (the “Delayed Draw Term Loans” and together with the Initial Term Loans, the “Term Loans”). 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 Lenders. ​ The Term Loans are not subject to amortization and have an initial stated maturity date of February 26, 2029. The maturity date is subject to potential extension of up to one year at the option of the Company, subject to the satisfaction of certain conditions (the “Extension Option”). ​ Borrowings under the Credit Facility bear interest at an initial interest rate of 9.0 % per annum. The Initial Term Loans were issued with original issue discount of 6.0 % of the principal amount thereof. The Delayed Draw Term Loans, if any, will be issued with original issue discount of 6.0 % of the principal amount thereof. ​ As of March 31, 2026, the remaining balance of the unamortized original issue discount and the unamortized deferred financing costs amounted to approximately $ 16.1 million and $ 7.4 million, respectively. 9 Table of Contents ​ If the Company exercises the Extension Option, the interest rate will increase to a rate of 13.0 % per annum. Additionally, if the Company exercises the Extension Option, the Company must pay the following extension fees multiplied by the then-outstanding principal amount of Term Loans on each applicable date: ​ (i) 36th month anniversary of Closing Date: 2.00 % (ii) 39th month anniversary of Closing Date: 0.50 % (iii) 42nd month anniversary of Closing Date: 0.50 % (iv) 45th month anniversary of Closing Date: 0.50 % (v) 48th month anniversary of Closing Date: 0.50 % ​ The Credit Agreement requires the Company to prepay outstanding Term Loans with certain proceeds of dispositions of real property. Additionally, the Company may voluntarily prepay the outstanding Term Loans at any time; provided, that if the Company prepays any Term Loans prior to the first anniversary of the Closing Date, the Company is required to pay a make-whole payment equal to the amount of interest that would have accrued on such Term Loans to and excluding the first anniversary of the Closing Date. The Company is required to pay an exit fee of 4.0 % of the aggregate principal amount of such Term Loans upon any permitted repayment of the Term Loans prior to the applicable maturity date. ​ The Company must also pay customary agency fees. ​ The obligations under the Credit Facility are guaranteed by substantially all subsidiaries of the Company and secured by a first priority lien on substantially all of the assets of the Company and its subsidiaries, including a first priority security interest in all of the Company’s and its subsidiaries’ personal property and first priority mortgage liens on the Company’s and its subsidiaries’ real property, in each case subject to certain exceptions. ​ The Credit Agreement contains customary representations and affirmative and negative covenants for credit facilities of this type, 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 financial covenants that require the Company to maintain (i) a minimum tangible net worth $ 424,884,000 plus 70 % of the aggregate net proceeds received by the Company in connection with any offering of stock or other equity in the Company after December 31, 2025 (with a step-down based on 70 % of the impairment charge and/or loss resulting from dispositions of the mortgaged properties of the Company and its subsidiaries, or such other amount as agreed to by the Company and the Lenders) and (ii) a minimum liquidity of not less than $ 5,000,000 in cash or cash equivalents. The Company was in compliance with the Credit Agreement financial covenants as of March 31, 2026. ​ The Credit Agreement provides for customary events of default with corresponding grace periods, including, among other things, failure to pay principal or interest when due, breaches of certain covenants, inaccuracies in representations and warranties, certain cross defaults, certain defaults under material contracts, insolvency or bankruptcy events, the entry of certain judgments, the occurrence of a change in control of the Company (as defined in the Credit Agreement) and the departure of the chairman and chief executive officer of the Company. In the event of a default by the Company, the Agent may, and at the request of the requisite number of Lenders, shall, declare any commitment of the Lenders to make Term Loans terminated, declare all obligations under the Credit Agreement immediately due and payable and enforce any and all rights of the Lenders under the Credit Agreement and related documents. Certain events of default related to bankruptcy, insolvency, and receivership result in the automatic acceleration of all outstanding obligations. ​ The Company used the proceeds of the Initial Term Loans on the Closing Date to refinance and retire all outstanding indebtedness under the documents evidencing the BMO Term Loan, the BofA Term and the Senior Notes (each as defined below) and to pay fees and expenses related to the Credit Agreement. The Company incurred approximately $ 1.0 million of costs in connection with the retirement of the debt, consisting of a make-whole premium related to the Senior Notes and legal and professional fees payable to the lenders under the BMO Term Loan, the BofA Term Loan, and the Senior Notes. These costs were recognized as part of the loss on debt extinguishment. 10 Table of Contents The Company may use the proceeds of any Delayed Draw Term Loans funded to finance tenant improvements, leasing commissions, building improvements and other uses approved by the Lenders, subject to certain conditions, in each case as permitted under the Credit Agreement. ​ ​ BMO Term Loan ​ On February 26, 2026, the Company repaid in its entirety the Company’s 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 the Company refers 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 the Company refers 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 the Company refers to as the BMO First Amendment, and the Second Amendment to Second Amended and Restated Credit Agreement dated February 21, 2024, which the Company refers to as the BMO Second Amendment. The Company refers to the Original BMO Credit Agreement, as amended by the BMO First Amendment and the BMO Second Amendment, as the BMO Credit Agreement. ​ Effective April 1, 2025, the interest rate on the BMO Term Loan increased from 8.00 % per annum to 9.00 % per annum. As of February 26, 2026 and December 31, 2025, the interest rate on the BMO Term Loan was 9.00 % per annum. The weighted average variable interest rate on all amounts outstanding under the BMO Term Loan was 9 % for the period of January 1, 2026 until February 26, 2026 and was 8.75 % for the year ended December 31, 2025. ​ 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 the Company 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). ​ BofA Term Loan ​ On February 26, 2026, the Company repaid in its entirety the Company’s 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 the Company refers 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 the Company refers to as the Original BofA Credit Agreement, as amended by the First Amendment to Credit Agreement dated February 10, 2023, which the Company refers to as the BofA First Amendment, and the Second Amendment to Credit Agreement dated February 21, 2024, which the Company refers to as the BofA Second Amendment. The Company refers to the Original BofA Credit Agreement, as amended by the BofA First Amendment and the BofA Second Amendment, as the BofA Credit Agreement. ​ Effective April 1, 2025, the interest rate on the BofA Term Loan increased from 8.00 % per annum to 9.00 % per annum. As of February 26, 2026 and December 31, 2025, the interest rate on the BofA Term Loan was 9.00 % per annum. The weighted average variable interest rate on all amounts outstanding under the BofA Term Loan was 9 % for the period of January 1, 2026 until February 26, 2026 and was 8.75 % for the year ended December 31, 2025. ​ 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 the Company 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). 11 Table of Contents ​ Senior Notes ​ On February 26, 2026, the Company repaid in its entirety the Company’s two series of senior notes in the aggregate principal amount of approximately $ 122.9 million, which the Company refers 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 the Company refers 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 the Company refers to as the Series B Notes. The Senior Notes were subject to the terms of the Note Purchase Agreement dated October 24, 2017, which the Company refers to as the Original Note Purchase Agreement, as amended by the First Amendment to Note Purchase Agreement dated February 21, 2024. The Company refers to the Original Note Purchase Agreement, as amended by the NPA First Amendment, as the Note Purchase Agreement. ​ Effective April 1, 2025, the interest rates on both the Series A Notes and the Series B Notes permanently increased from 8.00 % per annum to 9.00 % per annum. As of February 26, 2026 and December 31, 2025, the interest rate on both the Series A Notes and the Series B Notes was 9.00 % per annum and 9.00 % per annum, respectively. ​ The Note Purchase Agreement contained customary affirmative and negative covenants. The Note Purchase Agreement also contained financial covenants that required the Company 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. ​ ​ 3.  Net Income (Loss) Per Share ​ Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of Company shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares. There were no potential dilutive shares outstanding at each of March 31, 2026 and 2025. ​ 4.  Stockholders’ Equity ​ As of March 31, 2026, the Company had 103,690,340 shares of common stock outstanding. The Company declared and paid dividends as follows (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividends Per ​ Total Quarter Paid ​ ​ ​ Share ​ ​ ​ Dividends ​ ​ ​ ​ ​ ​ ​ ​ 2026: ​ ​ ​ ​ ​ ​ ​ First quarter of 2026 $ 0.01 $ 1,037 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025: ​ ​ ​ ​ ​ ​ ​ First quarter of 2025 $ 0.01 $ 1,036 ​ ​ Equity-Based Compensation ​ On May 20, 2002, the stockholders of the Company approved the 2002 Stock Incentive Plan (the “Plan”). The Plan is an equity-based incentive compensation plan and provides for the grants of up to a maximum of 2,000,000 shares of the Company’s common stock (“Awards”). All of the Company’s employees, officers, directors, consultants and advisors are eligible to be granted Awards. Awards under the Plan are made at the discretion of the Company’s Board of Directors, and have no vesting requirements. Upon granting an Award, the Company will recognize compensation cost equal to the fair value of the Company’s common stock, as determined by the Company’s Board of Directors, on the date of the grant. ​ ​ 12 Table of Contents On May 30, 2025, the Company granted shares under the Plan to non-employee directors with the compensation cost related to such grants indicated in the table below, which was recognized during the three months ended June 30, 2025, and is included in general and administrative expenses for such period. Such shares were fully vested on the date of issuance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares Available ​ Compensation ​ ​ for Grant ​ Cost ​ ​ ​ ​ ​ ​ ​ Balance December 31, 2024 ​ ​ 1,365,886 ​ $ 1,991,238 Shares granted 2025 ​ ​ ( 123,625 ) ​ ​ 224,998 Balance December 31, 2025 ​ ​ 1,242,261 ​ $ 2,216,236 Shares granted 2026 ​ ​ — ​ ​ — Balance March 31, 2026 ​ ​ 1,242,261 ​ $ 2,216,236 ​ ​ 5.  Income Taxes ​ General ​ The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, the Company generally is entitled to a tax deduction for distributions paid to its shareholders, thereby effectively subjecting the distributed net income of the Company to taxation at the shareholder level only. The Company must comply with a variety of restrictions to maintain its status as a REIT. These restrictions include the type of income it can earn, the type of assets it can hold, the number of shareholders it can have and the concentration of their ownership, and the amount of the Company’s taxable income that must be distributed annually. ​ One such restriction is that the Company generally cannot own more than 10 % of the voting power or value of the securities of any one issuer unless the issuer is itself a REIT or a taxable REIT subsidiary (“TRS”). In the case of TRSs, the Company’s ownership of securities in all TRSs generally cannot exceed 20 % ( 25 % of taxable years beginning on or before December 31, 2017) of the value of all of the Company’s assets and, when considered together with other non-real estate assets, cannot exceed 25 % of the value of all of the Company’s assets. FSP Investments LLC and FSP Protective TRS Corp. are the Company’s taxable REIT subsidiaries operating as taxable corporations under the Code. The TRSs have gross amounts of net operating losses (“NOLs”) available to those taxable corporations of $ 5.0 million and $ 4.9 million as of December 31, 2025 and December 31, 2024, respectively. The NOLs created prior to 2018 will expire between 2030 and 2037 and the NOLs generated after 2017 will not expire. A valuation allowance is provided for the full amount of the NOLs as the realization of any tax benefits from such NOLs is not assured. The Company is expecting to use approximately $ 39,000 of the TRS’s NOLs in 2026 to offset federal income tax related to the actives of the TRSs; therefore, approximately $ 39,000 of the valuation allowances were reversed during the three months ending March 31, 2026. ​ Income taxes are recorded based on the future tax effects of the difference between the tax and financial reporting bases of the Company’s assets and liabilities. In estimating future tax consequences, potential future events are considered except for potential changes in income tax law or in rates. ​ The Company adopted an accounting pronouncement related to uncertainty in income taxes effective January 1, 2007, which did not result in recording a liability, nor was any accrued interest and penalties recognized with the adoption. Accrued interest and penalties will be recorded as income tax expense, if the Company records a liability in the future. The Company’s effective tax rate was not affected by the adoption. The Company and one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The statute of limitations for the Company’s income tax returns is generally three years and as such, the Company’s returns that remain subject to examination would be primarily from 2022 and thereafter. ​ Net operating losses ​ Section 382 of the Code restricts a corporation’s ability to use net operating losses (“NOLs”) to offset future taxable income following certain “ownership changes.” Such ownership changes occurred with past mergers and accordingly a portion of the NOLs incurred by the Company’s prior sponsored REITs available for use by the Company in any particular future taxable 13 Table of Contents year will be limited. To the extent that the Company does not utilize the full amount of the annual NOLs limit, the unused amount may be carried forward to offset taxable income in future years. NOLs expire 20 years after the year in which they arise, and the last of the Company’s NOLs will expire in 2027. A valuation allowance is provided for the full amount of the gross NOLs available as the realization of any tax benefits remaining from such NOLs is not assured. The gross amount of NOLs available to the Company was approximately $ 150.8 million as of both March 31, 2026 and December 31, 2025. ​ Income Tax Expense ​ The Company is subject to a business tax known as the Revised Texas Franchise Tax. Some of the Company’s leases allow reimbursement by tenants for these amounts because the Revised Texas Franchise Tax replaces a portion of the property tax for school districts. Because the tax base on the Revised Texas Franchise Tax is derived from an income based measure, it is considered an income tax. The Company recorded a provision for the Revised Texas Franchise Tax of $ 52,000 and $ 52,000 for the three months ended March 31, 2026 and 2025, respectively. The income tax expense reflected in the consolidated statements of operations relates primarily to a franchise tax on the Company’s Texas properties and federal income tax related to the TRSs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended March 31, (Dollars in thousands) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ Federal Income Tax ​ $ 2 ​ $ — ​ Revised Texas Franchise Tax ​ ​ 52 ​ ​ 52 ​ Other Taxes ​ — ​ — ​ Tax expense ​ $ 54 ​ $ 52 ​ ​ Taxes on income are a current tax expense. No deferred income taxes were provided as there were no material temporary differences between the financial reporting basis and the tax basis of the TRSs. ​ 6.  Leases ​ Leases as a Lessor: The Company is a lessor of commercial real estate with operations that include the leasing of office properties. Many of the leases with customers contain options to extend leases at a fair market rate and may also include options to terminate leases. The Company considers several inputs when evaluating the amount it expects to derive from its leased assets at the end of the lease terms, such as the remaining useful life, expected market conditions, fair value of lease payments, expected fair values of underlying assets, and expected deployment of the underlying assets. The Company’s strategy to address its risk for the residual value in its commercial real estate is to re-lease the commercial space. ​ The Company has elected to apply the practical expedient to not separate non-lease components from the related lease component of real estate leases. This combined component is primarily comprised of fixed lease payments, early termination fees, common area maintenance cost reimbursements, and parking lease payments. The Company applies ASC 842-Leases to the combined lease and non-lease components. ​ For the three months ended March 31, 2026 and 2025, the Company recognized the following amounts of income relating to lease payments: ​ ​ ​ ​ ​ ​ ​ ​ ​ Income relating to lease payments: ​ ​ ​ ​ For the Three Months Ended March 31, (in thousands) ​ ​ ​ 2026 ​ 2025 Income from leases (1) ​ $ 26,445 ​ $ 27,178 ​ ​ $ 26,445 ​ $ 27,178 ​ ​ ​ ​ ​ ​ ​ (1) Includes amounts recognized from variable lease payments of $ 7,770 and $ 8,107 for the three months ended March 31, 2026 and 2025, respectively. ​ ​ ​ ​ ​ ​ 14 Table of Contents ​ ​ 7. Disposition of Properties and Assets Held for Sale ​ On April 7, 2025, Monument Circle entered into a purchase and sale agreement to sell its property located in Indianapolis, Indiana to a third party for a gross sales price of $ 6.0 million. The property was sold on June 6, 2025 at a total loss of $ 12.9 million, including an impairment loss of $ 13.3 million that was recorded during the three months ended March 31, 2025 and was decreased by $ 0.4 million for final sale adjustments during the three months ended June 30, 2025 after the sale was completed. ​ ​ 8.  Segment Information ​ The Company is a REIT focused on real estate investments primarily in the office market and currently operates in one segment: real estate operations. Each of the Company’s properties qualify as an operating segment but are aggregated together because they exhibit similar economic characteristics and operating similarities. ​ The chief operating decision maker (“CODM”) of the Company is the Company’s Chief Executive Officer. The CODM measures the performance and profit or loss for the Company’s reportable segment using a measure referred to as Segment Net Operating Income (“Segment NOI”). The CODM utilizes Segment NOI when considering the deployment of the Company’s capital resources on a property-by-property basis. The significant expense categories which the Company’s CODM examines when measuring the segment’s performance include real estate operating expenses and real estate taxes and insurance. Asset information by segment is not reported because the Company does not use this measure to assess performance. The total assets of the Company’s reportable segment can be found on the Company’s consolidated balance sheets. ​ Segment NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus selling, general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equity in earnings of nonconsolidated REITs, interest income, hedge ineffectiveness, gains or losses on the sale of assets and excludes income taxes. Segment NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently. Segment NOI should not be considered an alternative to net income or loss as an indication of our performance or to cash flows as a measure of the Company’s liquidity or its ability to make distributions. ​ The calculations of Segment NOI are shown in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Three Months Ended (in thousands) March 31, 2026 ​ March 31, 2025 Total consolidated revenues ​ $ 26,225 ​ $ 27,107 ​ ​ ​ ​ ​ ​ ​ Less: ​ ​ ​ ​ ​ ​ Real estate operating expenses ​ ​ 10,290 ​ ​ 10,095 Real estate taxes and insurance ​ ​ 4,243 ​ ​ 5,369 Segment NOI ​ $ 11,692 ​ $ 11,643 ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Three Months Ended ​ Reconciliation to Net loss ​ ​ March 31, 2026 ​ ​ March 31, 2025 Net loss ​ $ ( 9,527 ) ​ $ ( 21,435 ) Add (deduct): ​ ​ ​ ​ ​ ​ Loss on extinguishment of debt ​ ​ 1,267 ​ ​ 2 (Gain) loss on sale of properties and impairment of assets held for sale, net ​ ​ — ​ ​ 13,284 Depreciation and amortization ​ ​ 10,580 ​ ​ 10,824 General and administrative ​ ​ 2,669 ​ ​ 3,484 Interest expense ​ ​ 6,812 ​ ​ 5,691 Interest income ​ ​ ( 163 ) ​ ​ ( 259 ) Tax expense ​ ​ 54 ​ ​ 52 Segment NOI ​ $ 11,692 ​ $ 11,643 ​ ​ ​ ​ ​ ​ 15 Table of Contents