What changed in this filing

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Item 1. Financial Statements

2021-05-04 compared with 2020-11-03 · 79 added, 132 removed, 322 unchanged (40% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

(in thousands, except share and par value amounts)

10 unchanged sentences

Related party mortgage loan receivables

Other assets:

derivative asset

Office computers and furniture, net of accumulated depreciation of $ 1,459 and $ 1,443 , respectively

24 unchanged sentences

Consolidated Statements of Operations

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in thousands, except per share amounts)

7 unchanged sentences

Total expenses

Income (loss) before taxes

Tax expense on income

Net income (loss)

Loss before taxes

Weighted average number of shares outstanding, basic and diluted

Net income (loss) per share, basic and diluted

Net loss per share, basic and diluted

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Net income (loss)

Other comprehensive income (loss):

1 unchanged sentence

Total other comprehensive income (loss)

Comprehensive income (loss)

Comprehensive loss

The accompanying notes are an integral part of these consolidated financial statements.

11 unchanged sentences

Balance, March 31, 2020

Comprehensive income (loss)

Distributions $ 0.09 per

share of common stock

Balance, June 30, 2019

Comprehensive income (loss)

Distributions $ 0.09 per

share of common stock

Balance, September 30, 2019

Balance, December 31, 2020

Comprehensive loss

Distributions $ 0.09 per

share of common stock

Balance, March 31, 2020

Comprehensive income (loss)

Equity-based compensation

Distributions $ 0.09 per

share of common stock

Balance, June 30, 2020

Comprehensive income (loss)

Distributions $ 0.09 per

share of common stock

Balance, September 30, 2020

Balance, March 31, 2021

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in thousands)

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income or loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization expense

Amortization of above and below market leases

Shares issued as compensation

Decrease in allowance for doubtful accounts

12 unchanged sentences

Property improvements, fixtures and equipment

Investment in related party mortgage loan receivable

Repayment of related party mortgage loan receivable

Proceeds received from liquidating trust

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

2 unchanged sentences

Repayments of bank note payable

Deferred financing costs

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

14 unchanged sentences

Collectively, the two REITs are referred to as the “Sponsored REITs”.

As of September 30, 2020, the Company owned and operated a portfolio of real estate consisting of 32 operating properties, three redevelopment properties and two managed Sponsored REITs and held one promissory note secured by a mortgage on real estate owned by a Sponsored REIT.

As of March 31, 2021, the Company owned and operated a portfolio of real estate consisting of 33 operating properties, one redevelopment property and two managed Sponsored REITs and held one promissory note secured by a mortgage on real estate owned by a Sponsored REIT.

From time-to-time, the Company may acquire real estate or make additional secured loans.

1 unchanged sentence

The following table summarizes the Company’s number of operating properties and rentable square feet of real estate.

As of September 30, 2020 and September 30, 2019, the Company had three redevelopment properties, respectively, which are excluded from the table.

As of September 30,

As of March 31, 2021 and March 31, 2020, the Company had one and three redevelopment properties, respectively, which are excluded from the table.

As of March 31,

Operating Properties:

9 unchanged sentences

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 and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or for any other period.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any other period.

Financial Instruments

4 unchanged sentences

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.

September 30,

(in thousands)

3 unchanged sentences

Recent Accounting Standards

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses.

The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company’s Sponsored REIT Loan (as defined in Note 2 below) receivables are within the scope of this standard and our analysis was completed using a Probability of Default / Loss Given Default Model.

The Company’s receivables associated with its real estate operating leases are not within the scope of this standard.

The Company adopted this standard on January 1, 2020.

The adoption of this standard did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”).

The ASU is intended to improve the effectiveness of fair value measurement disclosures.

ASU 2018-13 is effective for all entities for annual periods beginning after December 15, 2019, and interim periods within those fiscal years.

This ASU amends existing fair value measurement disclosure requirements by adding, changing, or removing certain disclosures.

The Company adopted this standard on January 1, 2020.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Topics 326, Financial Instruments - Credit Losses, Topic 815 Derivatives and Hedging and Topic 825, Financial Instruments (“ASU 2019-04”).

The ASU clarifies areas of guidance related to the recently issued standards on credit losses (Topic 326), derivatives and hedging (Topic 815), and recognition and measurement of financial instruments (Topic 825).

The Company adopted this standard on January 1, 2020.

The adoption of this standard did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No.

6 unchanged sentences

Investment in Sponsored REITs:

At each of September 30, 2020 and December 31, 2019, the Company held a non-controlling common stock interest in two Sponsored REITs in which the Company no longer shares in economic benefit or risk.

At each of March 31, 2021 and December 31, 2020, the Company held a non-controlling common stock interest in two Sponsored REITs in which the Company no longer shares in economic benefit or risk.

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.

Asset management fee income from non-consolidated entities amounted to approximately $ 59,000 and $ 152,000 for the nine months ended September 30, 2020 and 2019, respectively.

Asset management fee income from non-consolidated entities amounted to approximately $ 16,000 and $ 21,000 for the three months ended March 31, 2021 and 2020, respectively.

From time to time the Company may make secured loans (“Sponsored REIT Loans”) to Sponsored REITs in the form of mortgage loans or revolving lines of credit to fund construction costs, capital expenditures, leasing costs and for other purposes.

4 unchanged sentences

The Company applies normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment.

The Company has evaluated the credit loss using a loss probability, loss given default model and determined that the expected credit loss on the Sponsored REIT Loan is immaterial.

The Company anticipates that each Sponsored REIT Loan will be repaid at maturity or earlier from refinancing, long term financings of the underlying properties, cash flows from the underlying properties or some other capital event.

Each Sponsored REIT Loan is secured by a mortgage on the underlying property and has a term of approximately one to three years .

The mortgage loan bears interest at a fixed rate.

The following is a summary of the Sponsored REIT Loans outstanding as of September 30, 2020:

None of the Sponsored REIT loans have been impaired.

The Company anticipates the Sponsored REIT Loan will be repaid at maturity or earlier from refinancing, long term financings of the underlying property, cash flows from the underlying property or some other capital event.

The Sponsored REIT Loan is secured by a mortgage on the underlying property and has a term of approximately two years .

The following is a summary of the Sponsored REIT Loan outstanding as of March 31, 2021:

(dollars in thousands, except footnotes)

4 unchanged sentences

(1) The interest rate is a fixed rate and this mortgage loan includes an origination fee of $ 164,000 and an exit fee of $ 38,000 when repaid by the borrower.

The Company recognized interest income and fees from the Sponsored REIT Loans of approximately $ 1,149,000 and $ 2,948,000 for the nine months ended September 30, 2020 and 2019, respectively.

The Company recognized interest income and fees from the Sponsored REIT Loans of approximately $ 394,000 and $ 382,000 for the three months ended March 31, 2021 and 2020, respectively.

The financial instrument was classified within Level 3 of the fair value hierarchy and had a fair value of approximately $ 20.3 million as of March 31, 2021.

On December 6, 2020, the Company entered into a second amendment to the Sponsored REIT Loan which qualified as a troubled debt restructuring.

The amendment extended the maturity date of the loan for two years and increased the interest rate from 7.19 % to 7.51 %.

There were no commitments to lend additional funds to the Sponsored REIT and the loan is fully collateralized by the mortgage held on the Sponsored REIT's property.

Repayment of the Sponsored REIT Loan outstanding with FSP Monument Circle LLC is expected to be provided substantially through the operation or sale of the collateral.

Bank Note Payable, Term Loans Payable and Senior Notes

JPM Term Loan

On August 2, 2018, the Company entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and lender (“JPMorgan”), and the other lending institutions party thereto (the “JPM Credit Agreement”), which provides a single unsecured bridge loan in the aggregate principal amount of $ 150 million (the “JPM Term Loan”) that remains fully advanced and outstanding.

On December 24, 2020, the Company repaid a $ 50 million portion of the JPM Term Loan with a portion of the proceeds from the December 23, 2020 sale of its Durham, North Carolina property, and $ 100 million remains fully advanced and outstanding under the JPM Term Loan.

The JPM Term Loan matures on November 30, 2021.

The Company has the right to extend the maturity date of the JPM Term Loan by two additional six month periods, or until November 30, 2022, upon payment of a fee and satisfaction of certain customary conditions.

The JPM Term Loan was

previously evidenced by a Credit Agreement, dated November 30, 2016, among the Company, JPMorgan, as administrative agent and lender, and the other lending institutions party thereto, as amended by a First Amendment, dated October 18, 2017.

The JPM Term Loan bears interest at either (i) a number of basis points over a LIBOR-based rate depending on the Company’s credit rating ( 125.0 basis points over the LIBOR-based rate at September 30, 2020) or (ii) a number of basis points over the base rate depending on the Company’s credit rating ( 25.0 basis points over the base rate at September 30, 2020).

The Company has the right to extend the maturity date of the JPM Term Loan by two additional six month periods, or until November 30, 2022, (subject to specified exceptions).

The JPM Term Loan was previously evidenced by a Credit Agreement, dated November 30, 2016, among the Company, JPMorgan, as administrative agent and lender, and the other lending institutions party thereto, as amended by a First Amendment, dated October 18, 2017.

The JPM Term Loan bears interest at either (i) a number of basis points over a LIBOR-based rate depending on the Company’s credit rating ( 125.0 basis points over the LIBOR-based rate at March 31, 2021) or (ii) a number of basis points over the base rate depending on the Company’s credit rating ( 25.0 basis points over the base rate at March 31, 2021).

Although the interest rate on the JPM Term Loan is variable under the JPM Credit Agreement, the Company fixed the LIBOR-based rate on a portion of the JPM Term Loan by entering into interest rate swap transactions.

1 unchanged sentence

Effective March 29, 2019, the Company fixed the LIBOR-based rate at 2.44 % per annum on a $ 100 million portion of the JPM Term Loan until November 30, 2021.

Accordingly, based upon the Company’s credit rating, as of September 30, 2020, the effective interest rate on a $ 100 million portion of the JPM Term Loan was 3.69 % per annum.

Based upon the Company’s credit rating, as of September 30, 2020, the effective interest rate on the unhedged $ 50 million portion of the JPM Term Loan was 1.44 % per annum.

The weighted average interest rate on the unhedged $ 50 million portion of the JPM Term Loan during the nine months ended September 30, 2020 was approximately 2.05 % per annum.

The weighted average interest rate on the JPM Term Loan during the year ended December 31, 2019 was approximately 3.54 % per annum.

The JPM Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in business, certain restricted payments, the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates.

Accordingly, based upon the Company’s credit rating, as of March 31, 2021, the effective interest rate on the remaining $ 100 million portion of the JPM Term Loan was 3.69 % per annum.

business, certain restricted payments, the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates.

The JPM Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a minimum fixed charge coverage ratio, a maximum secured leverage ratio, a maximum leverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage.

2 unchanged sentences

For certain events of default related to bankruptcy, insolvency, and receivership, all outstanding obligations of the Company will become immediately due and payable.

The Company was in compliance with the JPM Term Loan financial covenants as of September 30, 2020.

The Company was in compliance with the JPM Term Loan financial covenants as of March 31, 2021.

BMO Term Loan

5 unchanged sentences

The BMO Term Loan was previously evidenced by an Amended and Restated Credit Agreement, dated October 29, 2014, among the Company, BMO, as administrative agent and lender, and the other lending institutions party thereto, as amended by a First Amendment, dated July 21, 2016, and a Second Amendment, dated October 18, 2017.

The BMO Term Loan bears interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating ( 125 basis points over LIBOR at September 30, 2020) or (ii) a number of basis points over the base rate depending on the Company’s credit rating ( 25 basis points over the base rate at September 30, 2020).

The BMO Term Loan bears interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating ( 125 basis points over LIBOR at March 31, 2021) or (ii) a number of basis points over the base rate depending on the Company’s credit rating ( 25 basis points over the base rate at March 31, 2021).

Although the interest rate on the BMO Term Loan is variable under the BMO Credit Agreement, the Company fixed the base LIBOR interest rate by entering into interest rate swap transactions.

On August 26, 2013, the Company entered into an ISDA Master Agreement with Bank of Montreal that fixed the base LIBOR interest rate on the BMO Term Loan at 2.32 % per annum, which expired on August 26, 2020.

On August 26, 2013, the Company entered into an ISDA Master Agreement with Bank of Montreal that fixed the base LIBOR interest rate on the BMO Term Loan at 2.32 % per annum, which matured on August 26, 2020.

On February 20, 2019, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BMO Term Loan at 2.39 % per annum for the period beginning on August 26, 2020 and ending January 31, 2024.

Accordingly, based upon the Company’s credit rating, as of September 30, 2020, the effective interest rate on the BMO Term Loan was 3.64 % per annum.

Accordingly, based upon the Company’s credit rating, as of March 31, 2021, the effective interest rate on the BMO Term Loan was 3.64 % per annum.

The BMO Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in business, certain restricted payments, the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates.

3 unchanged sentences

For certain events of default related to bankruptcy, insolvency, and receivership, the commitments of lenders will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.

The Company was in compliance with the BMO Term Loan financial covenants as of September 30, 2020.

The Company was in compliance with the BMO Term Loan financial covenants as of March 31, 2021.

BAML Credit Facility

6 unchanged sentences

● The BAML Credit Facility includes an accordion feature that allows for an aggregate amount of up to $ 500 million of additional borrowing capacity applicable to the BAML Revolver and/or the BAML Term Loan, subject to receipt of lender commitments and satisfaction of certain customary conditions.

As of September 30, 2020, there were $ 30 million of borrowings outstanding under the BAML Revolver.

The BAML Revolver bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating ( 1.20 % over LIBOR at September 30, 2020) or (ii) a margin over the base rate depending on the Company’s credit rating ( 0.20 % over the base rate at September 30, 2020).

As of March 31, 2021, there were $ 27.5 million of borrowings outstanding under the BAML Revolver.

The BAML Revolver bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating ( 1.20 % over LIBOR at March 31, 2021) or (ii) a margin over the base rate depending on the Company’s credit rating ( 0.20 % over the base rate at March 31, 2021).

The BAML Credit Facility also obligates the Company to pay an annual facility fee in an amount that is also based on the Company’s credit rating.

The facility fee is assessed against the total amount of the BAML Revolver, or $ 600 million ( 0.25 % at September 30, 2020).

Based upon the Company’s credit rating, as of September 30, 2020, the interest rate on the BAML Revolver was 1.35 % per annum.

The weighted average interest rate on all amounts outstanding on the BAML Revolver during the nine months ended September 30, 2020 was approximately 1.76 % per annum.

As of December 31, 2019, there were no borrowings outstanding under the BAML Revolver.

The facility fee is assessed against the total amount of the BAML Revolver, or $ 600 million ( 0.25 % at March 31, 2021).

Based upon the Company’s credit rating, as of March 31, 2021, the interest rate on the BAML Revolver was 1.31 % per annum.

The weighted average interest rate on all amounts outstanding on the BAML Revolver during the three months ended March 31, 2021 was approximately 1.31 % per annum.

As of December 31, 2020, there were $ 3.5 million of borrowings outstanding under the BAML Revolver.

The weighted average interest rate on all amounts outstanding on the BAML Revolver during the year ended December 31, 2020 was approximately 1.65 % per annum.

4 unchanged sentences

● On September 27, 2012, the Company drew down the entire $ 400 million under the BAML Term Loan and such amount remains fully advanced and outstanding under the BAML Term Loan.

The BAML Term Loan bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating ( 1.35 % over LIBOR at September 30, 2020) or (ii) a margin over the base rate depending on the Company’s credit rating ( 0.35 % over the base rate at September 30, 2020).

The BAML Term Loan bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating ( 1.35 % over LIBOR at March 31, 2021) or (ii) a margin over the base rate depending on the Company’s credit rating ( 0.35 % over the base rate at March 31, 2021).

Although the interest rate on the BAML Credit Facility is variable, the Company fixed the base LIBOR interest rate on the BAML Term Loan by entering into interest rate swap transactions.

On July 22, 2016, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BAML Term Loan at 1.12 % per annum for the period beginning on September 27, 2017 and ending on September 27, 2021.

Accordingly, based upon the Company’s credit rating, as of September 30, 2020, the effective interest rate on the BAML Term Loan was 2.47 % per annum.

On July 22, 2016, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BAML Term Loan at 1.12 % per

annum for the period beginning on September 27, 2017 and ending on September 27, 2021.

Accordingly, based upon the Company’s credit rating, as of March 31, 2021, the effective interest rate on the BAML Term Loan was 2.47 % per annum.

BAML Credit Facility General Information

4 unchanged sentences

The Company was in compliance with the BAML Credit Facility financial covenants as of September 30, 2020.

The Company was in compliance with the BAML Credit Facility financial covenants as of March 31, 2021.

The Company may use the proceeds of the loans under the BAML Credit Facility to finance the acquisition of real properties and for other permitted investments;

11 unchanged sentences

In the case of an event of default, the Purchasers may, among other remedies, accelerate the payment of all obligations.

The Company was in compliance with the Senior Notes financial covenants as of September 30, 2020.

The Company was in compliance with the Senior Notes financial covenants as of March 31, 2021.

Financial Instruments:

7 unchanged sentences

The ineffective portion of a derivative’s change in fair value will be recognized in earnings in the same period in which the hedged interest payments affect earnings, which may increase or decrease reported net income and stockholders’ equity prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows.

The following table summarizes the notional and fair value of the Company’s derivative financial instruments at September 30, 2020.

The following table summarizes the notional and fair value of the Company’s derivative financial instruments at March 31, 2021.

The notional value is an indication of the extent of the Company’s involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks.

Fair Value (2) at

(in thousands)

March 31, 2021

December 31, 2020

2017 Interest Rate Swap

2 unchanged sentences

(1) The Notional Value will decrease to $ 165 million on November 30, 2021.

On September 30, 2020, the 2017 Interest Rate Swap, 2019 JPM Interest Rate Swap and 2019 BMO Interest Rate Swap were reported as liabilities with an aggregate fair value of approximately $ 20.2 million and are included in other liabilities:

derivative liabilities in the consolidated balance sheet at September 30, 2020.

The gain/(loss) on the Company’s Interest Rate Swaps that was recorded in other comprehensive income (loss) (OCI) and the accompanying consolidated statements of operations as a component of interest expense for the nine months ended September 30, 2020 and 2019, respectively, was as follows:

(2) Classified within Level 2 of the fair value hierarchy.

On March 31, 2021, the 2017 Interest Rate Swap, 2019 JPM Interest Rate Swap and 2019 BMO Interest Rate Swap were reported as liabilities with an aggregate fair value of approximately $ 13.7 million and are included in other liabilities:

derivative liabilities in the consolidated balance sheet at March 31, 2021.

The gain/(loss) on the Company’s Interest Rate Swaps that was recorded in other comprehensive income (loss) (OCI) and the accompanying consolidated statements of operations as a component of interest expense for the three months ended March 31, 2021 and 2020, respectively, was as follows:

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Interest Rate Swaps in Cash Flow Hedging Relationships:

Amounts of loss recognized in OCI

Amounts of gain (loss) recognized in OCI

Amounts of previously recorded gain/(loss) reclassified from OCI into Interest Expense

16 unchanged sentences

Diluted net income 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 September 30, 2020 and 2019.

There were no potential dilutive shares outstanding at each of March 31, 2021 and 2020.

Stockholders’ Equity

As of September 30, 2020, the Company had 107,328,199 shares of common stock outstanding.

As of March 31, 2021, the Company had 107,328,199 shares of common stock outstanding.

The Company declared and paid dividends as follows (in thousands, except per share amounts):

1 unchanged sentence

First quarter of 2021

Second quarter of 2020

Third quarter of 2020

First quarter of 2020

Second quarter of 2019

Third quarter of 2019

Equity-Based Compensation

4 unchanged sentences

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.

The Company granted 55,572 shares under the Plan between 2002 and 2005, made no grants between 2006 and 2018 and granted 38,046 shares under the Plan in 2019.

On June 4, 2020, the Company granted 58,998 shares under the Plan to non-employee directors at a compensation cost of approximately $ 337,000 , which was recognized during the nine months ended September 30, 2020 and is included in general and administrative expenses.

On June 4, 2020, the Company granted 58,998 shares under the Plan to non-employee directors at a compensation cost of approximately $ 337,000 , which was recognized during the year ended December 31, 2020 and is included in general and administrative expenses for such period.

Such shares were fully vested on the date of issuance.

2 unchanged sentences

(in thousands)

Balance, December 31, 2016, 2017 and 2018

Balance December 31, 2019

Shares granted 2020

1 unchanged sentence

Shares granted 2021

Balance September 30, 2020

Balance March 31, 2021

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).

6 unchanged sentences

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 $ 4.4 million, $ 4.2 million and $ 4.0 million as of each of December 31, 2019, 2018 and 2017, respectively.

The TRSs have gross amounts of net operating losses (“NOLs”) available to those taxable corporations of $ 4.6 million and $ 4.4 million as of each of December 31, 2020, and 2019 respectively.

The NOLs created prior to 2018 will expire between 2030 and 2047 and the NOLs generated after 2017 will not expire.

13 unchanged sentences

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 gross amount of NOLs available to the Company was $ 13.0 million as of each of September 30, 2020 and December 31, 2019.

The gross amount of NOLs available to the Company was $ 13.0 million as of each of March 31, 2021 and December 31, 2020.

Income Tax Expense

2 unchanged sentences

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 $ 203,000 and $ 277,000 for the nine months ended September 30, 2020 and 2019, respectively.

The Company recorded a provision for the Revised Texas Franchise Tax of $ 67,000 and $ 68,000 for the three months ended March 31, 2021 and 2020, respectively.

The income tax expense reflected in the consolidated statements of operations relates primarily to a franchise tax on the Company’s Texas properties.

FSP Protective TRS Corp.

provides taxable services to tenants at some of the Company’s properties, and the tax expenses associated with these activities and a refund receivable of $ 0.1 million recorded during the nine months ended September 30, 2019 are reported as Other Taxes in the table below:

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(Dollars in thousands)

12 unchanged sentences

Although increases in the CPI are not estimated as part of the Company’s measurement of straight-line rent revenue, to the extent that the actual CPI is greater or less than the CPI at lease commencement, there could be changes to realized income or loss.

For the nine months ended September 30, 2020 and 2019, the Company recognized the following amounts of income relating to lease payments:

For the three months ended March 31, 2021 and 2020, the Company recognized the following amounts of income relating to lease payments:

Income relating to lease payments:

Nine Months Ended

Three Months Ended

(in thousands)

September 30, 2020

September 30, 2019

March 31, 2021

March 31, 2020

Income from leases (1)

(1) Amounts recognized from variable lease payments were variable lease payments $ 45,281 and $ 48,259 for the nine months ended September 30, 2020 and 2019, respectively.

(1) Amounts recognized from variable lease payments were $ 14,688 and $ 15,629 for the three months ended March 31, 2021 and 2020, respectively.

Subsequent Events

On October 9, 2020, the Board of Directors of the Company declared a cash distribution of $ 0.09 per share of common stock payable on November 12, 2020 to stockholders of record on October 23, 2020.

On April 2, 2021, the Board of Directors of the Company declared a cash distribution of $ 0.09 per share of common stock payable on May 7, 2021 to stockholders of record on April 16, 2021.

On March 5, 2021, the Company entered into a Purchase and Sale Agreement with a third-party buyer for the disposition of three office properties located in Atlanta, Georgia for a purchase price of approximately $ 219.5 million.

The buyer’s due diligence inspection period expired on April 15, 2021 and the Company had no assurance the sale was probable as of March 31, 2021.

Assuming satisfaction of certain customary conditions to close, the closing of the sale of the properties is expected to take place on or about May 17, 2021;

provided, however, that seller and buyer each have a one -time right to extend the closing date by up to thirty (30) days by providing notice to the other party at least three (3) business days prior to the then scheduled closing date.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements