What changed in this filing

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Item 1. Business

2023-02-14 compared with 2022-02-15 · 36 added, 28 removed, 264 unchanged (20% of the section changed)

17 unchanged sentences

We refer to these entities, which are organized as corporations and operated in a manner intended to qualify as REITs, as Sponsored REITs.

On December 15, 2011, we announced that our broker/dealer subsidiary, FSP Investments LLC, would no longer sponsor the syndication of shares of preferred stock in newly-formed Sponsored REITs.

On July 15, 2014, FSP Investments LLC withdrew its registration as a broker/dealer with FINRA.

From time-to-time we may acquire real estate or invest in real estate by making secured loans on real estate.

We may also pursue on a selective basis the sale of our properties to take advantage of the value creation and demand for our properties, or for geographic or property specific reasons.

We own and operate a portfolio of real estate consisting of 24 office properties as of December 31, 2021.

As of December 31, 2022, we owned and operated a portfolio of real estate consisting of 21 office properties and managed one Sponsored REIT.

We derive rental revenue from income paid to us by tenants of these properties.

4 unchanged sentences

Neither FSP Investments LLC nor FSP Property Management LLC receives any rental income.

From time-to-time we may make secured 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.

We anticipate that these loans will be repaid at their maturity or earlier from long-term financings of the underlying properties, cash flows from the underlying properties or some other capital event.

We refer to these loans as Sponsored REIT Loans.

We had one Sponsored REIT Loan secured by real estate outstanding as of December 31, 2021, from which we derive interest income.

As of December 31, 2022, we had one remaining secured loan to a Sponsored REIT in the form of a mortgage loan, which we refer to as the Sponsored REIT Loan.

The Sponsored REIT Loan is secured by a mortgage on the underlying property and has a current term of less than one year.

We anticipate that the Sponsored REIT Loan will be repaid through cash flow from property operations or sale of the underlying property, although the actual amount and timing of any repayment is uncertain and will likely depend on prevailing market conditions at the time of any such sale.

Sustainability

10 unchanged sentences

Our investment objectives are to create shareholder value by increasing revenue from rental, dividend, interest and fee income and net gains from sales of properties and increase the cash available for distribution in the form of dividends to our stockholders.

We expect that we will continue to derive real estate revenue from owned properties and Sponsored REIT Loans and fees from asset management, property management and investor services.

We expect that we will continue to derive real estate revenue from owned properties and the Sponsored REIT Loan and fees from asset management, property management and investor services.

We may also acquire additional real properties.

Although our property portfolio is focused on properties in the central business districts of Atlanta, Dallas, Denver, Houston and Minneapolis, we may acquire, and have acquired, real properties in any geographic area of the United States and of any property type.

Although our property portfolio is focused on properties in the central business districts of Dallas, Denver, Houston and Minneapolis, we may acquire, and have acquired, real properties in any geographic area of the United States and of any property type.

We own 21 office properties that are located in eight different states as of December 31, 2022.

See Item 2 of this Annual Report on Form 10-K for more information about our properties.

In 2021, we determined that further debt reduction would provide greater financial flexibility and potentially increase shareholder value.

We continue to believe that the current price of our common stock does not accurately reflect the value of our underlying real estate assets and intend to continue the strategy we initially adopted in 2021 of seeking to increase shareholder value through the sale of select properties where we believe that short to intermediate term valuation potential has been reached.

Pursuant to this strategy, we anticipate that dispositions in 2022 will result in estimated aggregate gross proceeds in the range of approximately $250 million to $350 million.

We continue to believe that the current price of our common stock does not accurately reflect the value of our underlying real estate assets and we will seek to increase shareholder value by (1) pursuing the sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) striving to lease vacant space.

As a result, from time to time, as market conditions warrant, we expect to sell properties owned by us in 2023.

In 2022, we sold two office properties located in Broomfield, Colorado for aggregate gross sales proceeds of $102.5 million at a gain of $24.1 million and one office property located in Evanston, Illinois for gross sale proceeds of $27.8 million at a gain of $3.9 million.

In 2021, we sold 10 office properties located in four different states for aggregate gross sale proceeds of $602.7 million, at a net gain of $113.1 million.

In 2020, we sold an office property located in Durham, North Carolina for gross proceeds of approximately $89.7 million, at a net gain of approximately $41.9 million.

We did not sell any properties during 2019.

As we continue to execute on our property disposition strategy, our revenue, Funds From Operations, and capital expenditures are likely to decrease in the short term.

Proceeds from dispositions are intended to be used for the repayment of debt, repurchases of our common stock, any special dividends required to meet REIT requirements, and other general corporate purposes.

We rely on the following principles in selecting real properties for acquisition by FSP Corp.

and managing them after acquisition:

As we continue to execute on our strategy of select property dispositions and striving to lease vacant space, our revenue, Funds From Operations, and capital expenditures may decrease in the short term.

Proceeds from dispositions are intended to be used primarily for the repayment of debt.

In selecting real properties for acquisition by FSP Corp.

and managing them after acquisition, we rely on the following principles:

● we seek to buy or develop investment properties at a price which produces value for investors and avoid overpaying for real estate merely to outbid competitors;

25 unchanged sentences

If in any taxable year we do not qualify as a REIT, we would be taxed as a corporation and distributions to our stockholders would not be deductible by us in computing our taxable income.

In addition, if we were to fail to qualify as a REIT, we could be disqualified from treatment as a REIT in the year in which such failure occurred and for the next four taxable years and, consequently, we would be taxed as a regular corporation during such years.

In addition, if we were to fail to qualify as a REIT, we could be disqualified from treatment as a REIT in

the year in which such failure occurred and for the next four taxable years and, consequently, we would be taxed as a regular corporation during such years.

Failure to qualify for even one taxable year could result in a significant reduction of our cash available for distribution to our stockholders or could require us to incur indebtedness or liquidate investments in order to generate sufficient funds to pay the resulting federal income tax liabilities.

3 unchanged sentences

Human Capital

We had 32 and 34 employees as February 4, 2022 and December 31, 2021, respectively.

We had 28 employees as of both February 10, 2023 and December 31, 2022.

Women represent 46.4% of our employees, of which 38.5% hold management level/leadership roles.

4 unchanged sentences

Our employees are compensated without regard to gender, race and ethnicity, and our compensation program is designed to attract and retain talent.

During the COVID-19 pandemic, employees have been offered work-from-home flexibility to meet personal and family needs.

Available Information

21 unchanged sentences

Carter is responsible for all aspects of the business of FSP Corp.

and its affiliates, with special emphasis on the evaluation, acquisition and structuring of real estate investments.

and its affiliates, with special emphasis on the evaluation,

acquisition and structuring of real estate investments.

Prior to the conversion, he was President of the general partner of the FSP Partnership and was responsible for all aspects of the business of the FSP Partnership and its affiliates.

14 unchanged sentences

Burke’s consulting experience includes a wide range of accounting, tax and business planning matters.

Prior to starting his own firm in 2003, Mr.

Prior to starting his own firm, BA, Inc., in 2003, where he currently practices, Mr.

Burke was an Audit Partner in the Boston office of BDO USA, LLP.

36 unchanged sentences

McGillicuddy has served on the boards of various charitable organizations.

He is currently President of the Board of Trustees of Florida Studio Theater, a professional non-

profit theater organization, and is President, Vice-Chairman and Director of All-Star Children’s Foundation, an organization engaged in creating a new paradigm for foster care.

He is currently President of the Board of Trustees of Florida Studio Theater, a professional non-profit theater organization, and is a Director of All-Star Children’s Foundation, an organization engaged in creating a new paradigm for foster care.

Georgia Murray, age 72, has been a Director of FSP Corp.

2 unchanged sentences

From 1973 through October 1999, Ms.

Murray worked at The Boston Financial Group, Inc., serving as Senior Vice President and a Director at times during her tenure.

Murray worked at The Boston

Financial Group, Inc., serving as Senior Vice President and a Director at times during her tenure.

Boston Financial was an affiliate of the Boston Financial Group, Inc.

10 unchanged sentences

O’Neil was an Investment Consultant at Cambridge Associates where she specialized in Alternative Assets.

O’Neil currently serves on a variety of non-profit boards, including the Peabody Essex Museum where she is a Director and a member of the Finance and Investment Committees, Horizon’s for Homeless Children where she is a Director and serves on the Executive and Finance Committees, and the Trustees of Reservations where she serves on the President’s Council and was a member of the Investment Committee from 2006 to 2020.

O’Neil currently serves on a variety of non-profit boards, including the Peabody Essex Museum where she is a Trustee and a member of the Finance and Investment Committees, Horizon’s for Homeless Children where she is a Director and serves on the Executive and Finance Committees, and the Trustees of Reservations where she serves on the President’s Council and was a member of the Investment Committee from 2006 to 2020.

O’Neil is a Trustee Emeritus of Colby College and a former member of the Board of Overseers of the Boston Museum of Science.

4 unchanged sentences

from The Harvard Graduate School of Business Administration.

Wilkins, Jr., age 75, has been a Director of FSP Corp.

since February 2022.

Wilkins has served as an investment advisor with RBF Wealth Advisors in St.

Louis, Missouri, since 1997.

Concurrently, from 2003 to 2015, Mr.

Wilkins served with Hammond Associates/Mercer Investment Consulting as an institutional investment consultant.

From 1976 to 1986 and from 1989 to 1997, Mr.

Wilkins served in various positions at Monsanto Corporation, including as Vice President of Corporate Development in the corporate mergers and acquisition group.

Wilkins currently serves as Chairman of the St.

Louis County Employees Retirement Board (pension plan), a member of the Investment Committee of the Archdiocese of St.

Louis, and as a member of the Board of Directors of the Nine PBS public television station in St.

Wilkins holds a M.B.A.

degree from the Harvard Graduate School of Business Administration and a Bachelor of Arts degree from Morehouse College.

Information about our Executive Officers

33 unchanged sentences

in October 2005, Mr.

Carter was associated with the law firm of

Nixon Peabody LLP, which he originally joined in 1999.

Carter was associated with the law firm of Nixon Peabody LLP, which he originally joined in 1999.

At Nixon Peabody LLP, Mr.

47 unchanged sentences

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-K

Item 1. Business