Franklin Street Properties Corp. Annual Report 2020

FY2020 Annual Report · Franklin Street Properties Corp.

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2020
ANNUAL
R E P O R T

FRANKLIN STREET PROPERTIES

FSPF R A N K L I N S T R E E T
P RO PERTIES CORP.

Franklin Street Properties Corp. (FSP) (NYSE American: FSP) is a real estate investment trust (REIT) focused on infill and

central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic

markets. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation. FSP’s real

estate operations include property acquisitions and dispositions, leasing, development, redevelopment and asset

management. As of December 31, 2020, FSP’s directly owned real estate portfolio of 34 owned properties (including

our 2 redevelopment properties) was approximately 83.8% leased.

This Annual Report contains “forward-looking statements” within the meaning of federal securities laws. For more information, please refer to the

discussion in the first paragraph of Part II, Item 7 in the attached Annual Report on Form 10-K for the year ended December 31, 2020.

F E L LO W S TO C K H O L D E R S

Reflecting on 2020, I would like to start by thanking everyone who contributed to

the successful operation of our business during these challenging times that were

headlined by the COVID-19 pandemic, including frontline workers, first responders, our tenants and their employees, FSP

employees, our vendors and service providers, our Board of Directors, and of course, our shareholders. Notwithstanding

the specific challenges caused by the pandemic, for full-year 2020, our monthly rental collections averaged approximately

99% and we achieved approximately 1,130,000 square feet of total leasing with new tenants, renewals and expansions.

For 2021, we are focused on two primary objectives: leasing progress and debt reduction. From a leasing perspective, we

anticipate the potential for growing office space demand in our markets as a result of an improved economic situation due

to increasing access to both therapeutics and vaccines. We believe that users of office space are now reconsidering the

office densification trends of the past approximately 20 years. We also believe that, even with the continuation of some

planned for level of remote/work-from-home flexibility, the potential reversal or slowing of office densification could bode

well for future office space absorption. Our 2021 leasing focus includes both increased economic occupancy and longer-

term renewals of existing tenants. We believe that successful leasing efforts will translate into higher property valuations.

In terms of debt reduction, we believe that the sale of our Emperor Boulevard property in Durham, North Carolina on

December 23, 2020 for $89.7 million demonstrated our ability to identify and dispose of a property that we viewed as

having reached its valuation objective, and then to apply substantially all of the proceeds to the repayment of debt. FSP

intends to build upon our sale of Emperor Boulevard by pursuing additional dispositions, particularly where we believe

that embedded values of properties may not be appropriately reflected in the price of our common stock, and then to

apply the proceeds from any such dispositions primarily for the repayment of debt. We believe that further debt reduction

will provide greater financial flexibility and position the Company for stronger shareholder returns. Accordingly, we have

introduced full year 2021 disposition guidance in the range of approximately $350 million to $450 million in aggregate

gross proceeds.

FSP remains committed to its Sunbelt and Mountain-West office focus that emphasizes markets/properties with compelling

long-term population and employment growth potential. We look forward to 2021 with anticipation and optimism.

Thank you for your continued support.

George J. Carter

Chairman and Chief Executive Officer

Following is the Annual Report on Form 10-K

for the fiscal year ended December 31, 2020

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-32470
FRANKLIN STREET PROPERTIES CORP.
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of
incorporation or organization)

401 Edgewater Place, Suite 200, Wakefield, Massachusetts
(Address of principal executive offices)

04-3578653
(I.R.S. Employer
Identification No.)

01880
(Zip Code)

Registrant’s telephone number, including area code: (781) 557-1300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:
Common Stock, $.0001 par value per share

Trading Symbol(s)
FSP

Name of each exchange on which registered:
NYSE American

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No .
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  No .

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act

of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Non-accelerated filer ☐

Accelerated filer ☒

Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its

internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒.

The aggregate market value of the voting and non-voting common equity held by non-affiliates based on the closing sale price as reported on

NYSE American, as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2020, was approximately
$523,709,269.

There were 107,328,199 shares of common stock of the registrant outstanding as of February 5, 2021.

Documents incorporated by reference: The registrant intends to file a definitive proxy statement pursuant to Regulation 14A, promulgated under the
Securities Exchange Act of 1934, as amended, to be used in connection with the registrant’s Annual Meeting of Stockholders to be held on May 13, 2021
(the “Proxy Statement”). The information required in response to Items 10 — 14 of Part III of this Form 10-K, other than that contained in Part I under
the caption, “Information about our Executive Officers,” is hereby incorporated by reference to the Proxy Statement.

PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

PART II
Item 5.

TABLE OF CONTENTS

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases

of Equity Securities

Stock Performance Graph
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information

PART III
Item 10.
Item 11.
Item 12.

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Item 13.
Item 14.

Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

PART IV
Item 15.
Item 16

Exhibits, Financial Statement Schedules
Form 10-K Summary

SIGNATURES

1
1
7
18
19
25
25

26
26
27
28
50
51
51
51
52

53
53
53

54
54
57

PART I

Item 1. Business

History

Our company, Franklin Street Properties Corp., which we refer to as FSP Corp., the Company, we or our, is a

Maryland corporation that operates in a manner intended to qualify as a real estate investment trust, or REIT, for federal
income tax purposes. Our common stock is traded on the NYSE American under the symbol “FSP”. FSP Corp. is the
successor to Franklin Street Partners Limited Partnership, or the FSP Partnership, which was originally formed as a
Massachusetts general partnership in January 1997 as the successor to a Massachusetts general partnership that was
formed in 1981. On January 1, 2002, the FSP Partnership converted into FSP Corp., which we refer to as the conversion.
As a result of this conversion, the FSP Partnership ceased to exist and we succeeded to the business of the FSP
Partnership. In the conversion, each unit of both general and limited partnership interests in the FSP Partnership was
converted into one share of our common stock. As a result of the conversion, we hold, directly and indirectly, 100% of
the interest in three former subsidiaries of the FSP Partnership: FSP Investments LLC, FSP Property Management LLC,
and FSP Holdings LLC. We operate some of our business through these subsidiaries.

Our Business

We are a REIT focused on commercial real estate investments primarily in office markets and currently operate

in only one segment: real estate operations. The principal revenue sources for our real estate operations include rental
income from real estate leasing, interest income from secured loans made on office properties, property dispositions and
fee income from asset/property management and development.

Our current strategy is to invest in infill and central business district office properties in the United States
sunbelt and mountain west regions as well as select opportunistic markets. We believe that the United States sunbelt and
mountain west regions have macro-economic drivers that have the potential to increase occupancies and rents. We seek
value-oriented investments with an eye towards long-term growth and appreciation, as well as current income.

Previously we also operated in an investment banking segment, which was discontinued in December 2011.
Our investment banking segment generated brokerage commissions, loan origination fees, development services and
other fees related to the organization of single-purpose entities that own real estate and the private placement of equity in
those entities. 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.

Real Estate

We own and operate a portfolio of real estate consisting of 34 office properties as of December 31, 2020,

consisting of 32 operating properties and 2 redevelopment properties. We derive rental revenue from income paid to us
by tenants of these properties. See Item 2 of this Annual Report on Form 10-K for more information about our
properties. From time-to-time we dispose of properties generating gains or losses in an ongoing effort to improve and
upgrade our portfolio.

We provide asset management, property management, property accounting, investor and/or development

services to our portfolio and certain of our Sponsored REITs through our subsidiaries FSP Investments LLC and FSP
Property Management LLC. FSP Corp. recognizes revenue from its receipt of fee income from Sponsored REITs that

have not been consolidated or acquired by us. 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, 2020, from which we derive interest
income.

Sustainability

As an owner of commercial real estate, a sector with significant environmental, social and governance “ESG”
impact, we strive to maximize shareholder value through the prudent application of sound ESG strategies. Our efforts
have been awarded recognition from various third party review entities, such as GRESB, ENERGY STAR and LEED.

Impact of COVID-19

The COVID-19 pandemic has caused severe disruptions in the U.S. and global economies and has had and is

expected to continue to have an adverse impact on our financial condition and results of operations. This impact could be
materially adverse to the extent that the current COVID-19 pandemic, or future pandemics, cause tenants to be unable to
pay their rent or reduce the demand for commercial real estate. See “Item 1A. Risk Factors” and “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

Investment Objectives

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 may also
acquire additional real properties.

We may acquire, and have acquired, real properties in any geographic area of the United States and of any

property type. We own 34 office properties that are located in 10 different states as of December 31, 2020, which consist
of 32 operating properties and 2 redevelopment properties. See Item 2 of this Annual Report on Form 10-K for more
information about our properties.

From time to time, as market conditions warrant, we may sell properties owned by us. For example, we sold an

office property located in Durham, North Carolina on December 23, 2020 with a sales price of approximately $89.7
million, at a gain of approximately $41.9 million. We did not sell any properties during 2019 or 2018.

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

increase shareholder value. Accordingly, we have adopted a strategy to dispose of certain properties in 2021 where we
believe our valuation objective has been met. Pursuant to this strategy we anticipate dispositions in 2021 will result in
estimated aggregate gross proceeds in the range of $350 million to $450 million. Proceeds from these potential
dispositions would be used primarily for the repayment of debt.

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

after acquisition:

 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;

 we seek to buy or develop properties in excellent locations with substantial infrastructure in place around them

and avoid investing in locations where the future construction of such infrastructure is speculative;

 we seek to buy or develop properties that are well-constructed and designed to appeal to a broad base of users

and avoid properties where quality has been sacrificed for cost savings in construction or which appeal only to a
narrow group of users;

 we aggressively manage, maintain and upgrade our properties and refuse to neglect or undercapitalize

management, maintenance and capital improvement programs; and

 we believe that we have the ability to hold properties through down cycles because we generally do not have

mortgage debt on the Company, which could place the properties at risk of foreclosure. As of February 5, 2021,
none of our owned properties were subject to mortgage debt.

Competition

With respect to our real estate investments, we face competition in each of the markets where our properties are
located. In order to establish, maintain or increase the rental revenues for a property, it must be competitive on location,
cost and amenities with other buildings of similar use. Some of our competitors may have significantly more resources
than we do and may be able to offer more attractive rental rates or services. On the other hand, some of our competitors
may be smaller or have less fixed overhead costs, less cash or other resources that make them willing or able to accept
lower rents in order to maintain a certain occupancy level. In markets where there is not currently significant existing
property competition, our competitors may decide to enter the market and build new buildings to compete with our
existing projects or those in a development stage. Our competition is not only with other developers, but also with
property users who choose to own their building or a portion of the building in the form of an office condominium.
Competitive conditions are affected by larger market forces beyond our control, such as general economic conditions,
which may increase competition among landlords for quality tenants, and individual decisions by tenants that are beyond
our control.

Governmental Regulations

Under various federal, state and local laws, ordinances and regulations, we, as an owner or operator of real

property may become liable for the costs of removal or remediation of certain hazardous substances released on or in our
property. Such laws may impose liability without regard to whether the owner or operator knew of, or caused, the
release of such hazardous substances. The presence of hazardous substances on a property may adversely affect the
owner’s ability to sell such property or to borrow using such property as collateral, and it may cause the owner of the
property to incur substantial remediation costs. In addition to claims for cleanup costs, the presence of hazardous
substances on a property could result in the owner incurring substantial liabilities as a result of a claim by a private party
for personal injury or a claim by an adjacent property owner for property damage.

All of our properties are required to comply with the Americans With Disabilities Act, or ADA, and the
regulations, rules and orders that may be issued thereunder. The ADA has separate compliance requirements for “public
accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to persons with
disabilities. Compliance with ADA requirements might require, among other things, removal of access barriers.
Noncompliance with such requirements could result in the imposition of fines by the U.S. government or an award of
damages to private litigants.

In addition, we are required to operate our properties in compliance with fire and safety regulations, building

codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become
applicable to our properties. Compliance with such requirements may require us to make substantial capital
expenditures, which expenditures would reduce cash otherwise available for distribution to our stockholders.

The provisions of the tax code governing the taxation of REITs are very technical and complex, and although

we expect that we will be organized and will operate in a manner that will enable us to meet such requirements, no
assurance can be given that we will always succeed in doing so. 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. 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.

See “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and

Results of Operations” for additional information.

Human Capital

We had 37 employees as of each of February 5, 2021 and December 31, 2020. Women represent 48.6% of our
employees, of which 50.0% hold management level/leadership roles. We endeavor to maintain a workplace that is free
from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability,
sexual orientation, gender identification or expression or any other status protected by applicable law. We regularly
conduct training to prevent harassment and discrimination. The Company’s basis for recruitment, hiring, development,
training, compensation and advancement of employees is qualifications, performance, skills and experience. Many of our
employees have a long tenure with the Company. 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

We make available, free of charge through our website http://www.fspreit.com our annual report on Form 10-K,

quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended as soon as reasonably practicable
after we electronically file such material with the Securities and Exchange Commission, or SEC.

We will voluntarily provide paper copies of our filings and code of ethics upon written request received at the

address on the cover of this Annual Report on Form 10-K, free of charge.

Information about our Directors

The following table sets forth the names, ages and positions of all our directors as of February 5, 2021.

Name
George J. Carter (5)
John N. Burke (1) (2) (3) (5) (6)
Brian N. Hansen (1) (2) (3) (4) (7)
Kenneth Hoxsie (1) (3) (5) (8)
Dennis J. McGillicuddy (1) (4)
Georgia Murray (1) (2) (5) (9)
Kathryn P. O'Neil (1) (2) (3) (5)

Position

Age
72 Chief Executive Officer and Chairman of the Board
59 Director
49 Director
70 Director
79 Director
70 Director
57 Director

(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating and Corporate Governance Committee
(4) Term expiring at our 2022 Annual Meeting of Stockholders
(5) Term expiring at our 2021 Annual Meeting of Stockholders
(6) Chair of the Audit Committee
(7) Chair of the Compensation Committee
(8) Chair of the Nominating and Corporate Governance Committee
(9) Lead Independent Director

George J. Carter, age 72, is Chief Executive Officer and has been Chairman of the Board of Directors of

FSP Corp. since 2002. Mr. Carter also was the President of FSP Corp. from 2002 to May 2016. Mr. 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. 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. From
1992 through 1996 he was President of Boston Financial Securities, Inc. (“Boston Financial”). Prior to joining Boston
Financial, Mr. Carter was owner and developer of Gloucester Dry Dock, a commercial shipyard in Gloucester,
Massachusetts. From 1979 to 1988, Mr. Carter served as Managing Director in charge of marketing at First Winthrop
Corporation, a national real estate and investment banking firm headquartered in Boston, Massachusetts. Prior to that, he
held a number of positions in the brokerage industry including those with Merrill Lynch & Co. and Loeb Rhodes & Co.
Mr. Carter is a graduate of the University of Miami (B.S.).

John N. Burke, age 59, has been a Director of FSP Corp. since 2004 and Chair of the Audit Committee since

June 2004. Mr. Burke is a certified public accountant with over 30 years of experience in the practice of public
accounting working with both private and publicly traded companies with extensive experience serving clients in the real
estate and REIT industry. His experience includes analysis and evaluation of financial reporting, accounting systems,
internal controls and audit matters. Mr. Burke has been involved as an advisor on several public offerings, private equity
and debt financings and merger and acquisition transactions. Mr. Burke’s consulting experience includes a wide range of
accounting, tax and business planning matters. Prior to starting his own firm in 2003, Mr. Burke was an Audit Partner in
the Boston office of BDO USA, LLP. Mr. Burke is a member of the American Institute of Certified Public Accountants
and the Massachusetts Society of CPAs. Mr. Burke earned an M.S. in Taxation and studied undergraduate accounting at
Bentley University.

Brian N. Hansen, age 49, has been a Director of FSP Corp. since 2012 and became Chair of the Compensation

Committee in February 2021. Since 2007, Mr. Hansen has served as President and Chief Operating Officer of
Confluence Investment Management LLC, a St. Louis based Registered Investment Advisor. Prior to founding
Confluence in 2007, Mr. Hansen served as a Managing Director in A.G. Edwards’ Financial Institutions & Real Estate
Investment Banking practice. While at A.G. Edwards, Mr. Hansen advised a wide variety of Real Estate Investment
Trusts on numerous capital markets transactions, including public and private offerings of debt and equity securities as
well as the analysis of various merger & acquisition opportunities. Prior to joining A.G. Edwards, Mr. Hansen served as
a Manager in Arthur Andersen LLP’s Audit & Business Advisory practice. Mr. Hansen has served on the boards of a
number of non-profit entities and currently serves on the Finance Council and as the Investment Committee Chair of the
Archdiocese of St. Louis and as a member of the St. Louis County Retirement Board. Mr. Hansen earned his M.B.A.
from the Kellogg School of Management at Northwestern University and his Bachelor of Science in Commerce from
DePaul University. Mr. Hansen is a Certified Public Accountant.

Kenneth A. Hoxsie, age 70, has been a Director of FSP Corp. since January 2016 and became Chair of the

Nominating and Corporate Governance Committee in February 2021. Mr. Hoxsie was a Partner at the international law
firm of Wilmer Cutler Pickering Hale and Dorr LLP (“WilmerHale”) until his retirement on December 31, 2015. He
joined Hale and Dorr (the predecessor of WilmerHale) in 1981, subsequently worked at Copley Real Estate Advisors, an
institutional real estate investment advisory firm, and rejoined Hale and Dorr in 1994. Mr. Hoxsie has over 30 years’
experience in real estate capital markets transactions, fund formation, public company counseling and mergers and
acquisitions and has advised the Company since its formation in 1997. Mr. Hoxsie earned his J.D. (Cum Laude) from
Harvard Law School, his M.A. from Harvard University and his B.A. (Summa Cum Laude) from Amherst College,
where he was elected to Phi Beta Kappa.

Dennis J. McGillicuddy, age 79, has been a Director of FSP Corp. since May 2002. Mr. McGillicuddy

graduated from the University of Florida with a B.A. degree and from the University of Florida Law School with a J.D.
degree. In 1968, Mr. McGillicuddy joined Barry Silverstein in founding Coaxial Communications, a cable television
company. In 1998 and 1999, Coaxial sold its cable systems. Mr. 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 he serves as a Co-Chair, together with his wife, of Embracing Our Differences, an annual
two-month long art exhibit that promotes the values of diversity and inclusion. Mr. McGillicuddy also is a director and
Chief Executive Officer of All-Star Children’s Foundation, an organization engaged in creating a new paradigm for
foster care.

Georgia Murray, age 70, has been a Director of FSP Corp. since April 2005 and Lead Independent Director

since February 2014. Ms. Murray is retired from Lend Lease Real Estate Investments, Inc., where she served as a
Principal from November 1999 until May 2000. 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. Boston Financial was
an affiliate of the Boston Financial Group, Inc. She is a past Trustee of the Urban Land Institute and a past President of
the Multifamily Housing Institute. Ms. Murray previously served on the Board of Directors of Capital Crossing Bank.
She also serves on the boards of numerous non-profit entities. Ms. Murray is a graduate of Newton College.

Kathryn P. O’Neil, age 57, has been a Director of FSP Corp. since January 2016. Ms. O’Neil was a Director
at Bain Capital in the Investor Relations area where she focused on Private Equity and had oversight of the Investment
Advisory sector from 2011 until her retirement in 2014. From 1999 to 2007, Ms. O’Neil was a Partner at FLAG Capital
Management LLC, a manager of fund-of-funds investment vehicles in private equity, venture capital, real estate and
natural resources. Previously, Ms. O’Neil was an Investment Consultant at Cambridge Associates where she specialized
in Alternative Assets. Ms. 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, Audit, 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. Ms. O’Neil is a Trustee Emeritus of Colby College and a former member of the Board of Overseers of the Boston
Museum of Science. Ms. O’Neil holds a B.A. (Summa Cum Laude) and M.A. (Honorary) from Colby College where she
was elected to Phi Beta Kappa. Ms. O’Neil received her M.B.A. from The Harvard Graduate School of Business
Administration.

Information about our Executive Officers

The following table sets forth the names, ages and positions of all our executive officers as of February 5, 2021.

Name
George J. Carter (1)
Jeffrey B. Carter
Scott H. Carter
John G. Demeritt
John F. Donahue
Eriel Anchondo

Position

Age
72 Chief Executive Officer and Chairman of the Board
49 President and Chief Investment Officer
49 Executive Vice President, General Counsel and Secretary
60 Executive Vice President, Chief Financial Officer and Treasurer
54 Executive Vice President
43 Executive Vice President and Chief Operating Officer

(1) Information about George J. Carter is set forth above. See “Directors of FSP Corp.”

Jeffrey B. Carter, age 49, is President and Chief Investment Officer of FSP Corp. Mr. Carter served as

Executive Vice President and Chief Investment Officer from February 2012 until May 2016, when he was appointed as
President in addition to his position as Chief Investment Officer. Previously, Mr. Carter served as Senior Vice President
and Director of Acquisitions of FSP Corp. from 2005 to 2012 and as Vice President - Acquisitions from 2003 to 2005.
Mr. Carter oversees the day-to-day execution of the Company’s strategic objectives and business plan. In addition, Mr.
Carter is primarily responsible for developing and implementing the Company’s investment strategy, including
coordination of acquisitions and dispositions. Prior to joining FSP Corp., Mr. Carter worked in Trust Administration for
Northern Trust Bank in Miami, Florida. Mr. Carter is a graduate of Arizona State University (B.A.), The George
Washington University (M.A.) and Cornell University (M.B.A.). Mr. Carter’s father, George J. Carter, serves as Chief
Executive Officer and Chairman of the Board of Directors of FSP Corp. and Mr. Carter’s brother, Scott H. Carter, serves
as Executive Vice President, General Counsel and Secretary of FSP Corp.

Scott H. Carter, age 49, is Executive Vice President, General Counsel and Secretary of FSP Corp. Mr. Carter

has served as General Counsel since February 2008. Mr. Carter joined FSP Corp. in October 2005 as Senior Vice
President and In-house Counsel. Mr. Carter is primarily responsible for the management of all of the legal affairs of FSP
Corp. and its affiliates. Prior to joining FSP Corp. in October 2005, Mr. Carter was associated with the law firm of
Nixon Peabody LLP, which he originally joined in 1999. At Nixon Peabody LLP, Mr. Carter concentrated his practice
on the areas of real estate syndication, acquisitions and finance. Mr. Carter received a Bachelor of Business

Administration (B.B.A.) degree in Finance and Marketing and a Juris Doctor (J.D.) degree from the University of
Miami. Mr. Carter is admitted to practice law in the Commonwealth of Massachusetts. Mr. Carter’s father, George J.
Carter, serves as Chief Executive Officer and Chairman of the Board of Directors of FSP Corp. and Mr. Carter’s brother,
Jeffrey B. Carter, serves as President and Chief Investment Officer of FSP Corp.

John G. Demeritt, age 60, is Executive Vice President, Chief Financial Officer and Treasurer of FSP Corp.

and has been Chief Financial Officer since March 2005. Mr. Demeritt previously served as Senior Vice President,
Finance and Principal Accounting Officer from September 2004 to March 2005. Prior to September 2004, Mr. Demeritt
was a Manager with Caturano & Company, an independent accounting firm (which later merged with McGladrey) where
he focused on Sarbanes Oxley compliance. Previously, from March 2002 to March 2004 he provided consulting services
to public and private companies where he focused on SEC filings, evaluation of business processes and acquisition
integration. During 2001 and 2002 he was Vice President of Financial Planning & Analysis at Cabot Industrial Trust, a
publicly traded real estate investment trust, which was acquired by CalWest in December 2001. From October 1995 to
December 2000 he was Controller and Officer of The Meditrust Companies, a publicly traded real estate investment trust
(formerly known as The La Quinta Companies, which was then acquired by the Blackstone Group), where he was
involved with a number of merger and financing transactions. Prior to that, from 1986 to 1995 he had financial and
accounting responsibilities at three other public companies, and was previously associated with Laventhol & Horwath,
an independent accounting firm from 1983 to 1986. Mr. Demeritt is a Certified Public Accountant and holds a Bachelor
of Science degree from Babson College.

John F. Donahue, age 54, is Executive Vice President of FSP Corp. and President of FSP Property
Management LLC and has held those positions since May 2016. Mr. Donahue is primarily responsible for the oversight
of the management of all of the real estate assets of FSP Corp. and its affiliates. Mr. Donahue joined FSP Corp. in
August 2001 as Vice President of FSP Property Management LLC. From 2001 to May 2016, Mr. Donahue was
responsible for the management of real estate assets of FSP Corp. and its affiliates. From 1992 to 2001, Mr. Donahue
worked in the pension fund advisory business for GE Capital and AEW Capital Management with oversight of office,
research and development, industrial and land investments. From 1989 to 1992, Mr. Donahue worked for Krupp Realty
in various accounting and finance roles. Mr. Donahue holds a Bachelor of Science in Business Administration degree
from Bryant College.

Eriel Anchondo, age 43, is Executive Vice President and Chief Operating Officer of FSP Corp. and has held
those positions since May 2016. Mr. Anchondo joined FSP Corp. in 2015 as Senior Vice President of Operations. Mr.
Anchondo is responsible for ensuring that the Company has the proper operational controls, administrative and reporting
procedures, and people systems and infrastructure in place to effectively grow the organization and maintain financial
strength and operating efficiency. Prior to joining FSP Corp., from July 2014 to December 2014, Mr. Anchondo
provided consulting services to the retail banking division of ISBAN, which is part of the Technology and Operations
division of the Santander Group of financial institutions. From May 2007 to July 2013, Mr. Anchondo was employed by
Mercer, a global consulting leader in talent, health, retirement, and investments, as an Employee Education Manager
across all lines of Mercer’s business. From May 2005 to May 2007, Mr. Anchondo was a Communications Consultant at
New York Life Investment Management. From December 2002 to May 2005, Mr. Anchondo worked in the Preferred
Client Services Group at Putnam Investments. Mr. Anchondo is a graduate of Boston University (B.A.) and Cornell
University (M.B.A.).

Each of the above executive officers has been a full-time employee of FSP Corp. for the past five fiscal years.

Item 1A. Risk Factors

The following material factors, among others, could cause actual results to differ materially from those
indicated by forward-looking statements made in this Annual Report on Form 10-K and presented elsewhere by
management from time-to-time.

Risks Related to the COVID-19 Pandemic

The COVID-19 pandemic has caused severe disruptions in the U.S. and global economies and has had and is
expected to continue to have an adverse impact on our financial condition and results of operations. This impact
could be materially adverse to the extent that the current COVID-19 pandemic, or future pandemics, cause
tenants to be unable to pay their rent or reduce the demand for commercial real estate, or cause other impacts
described below.

The COVID-19 pandemic in many countries, including the United States, continues to adversely impact global economic
activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the
pandemic has been evolving and many countries, including the United States, have reacted by instituting quarantines and
restrictions on travel.

Many U.S. cities and states, including cities and states where our properties are located, have also reacted by instituting
quarantines, restrictions on travel, restrictions on types of business that may continue to operate, and/or restrictions on
types of construction projects that may continue. There can be no assurances as to the length of time these restrictions
will remain in place.

The effects of the COVID-19 pandemic or another future pandemic could further adversely affect us and/or our tenants
due to, among other factors:



the unavailability of personnel, including our executive officers and other leaders that are part of our
management team, and the inability to recruit, attract and retain skilled personnel;

difficulty accessing debt and equity capital on attractive terms, or at all—a severe disruption and
instability in the global financial markets or deteriorations in credit and financing conditions may
affect our and our tenants’ ability to access capital necessary to fund business operations or replace or
renew maturing liabilities on a timely basis on attractive terms, and may adversely affect the valuation
of financial assets and liabilities, any of which could affect our ability to meet liquidity and capital
expenditure requirements or have a material adverse effect on our business, financial condition, results
of operations and cash flows;

an inability to operate in affected areas, or delays in the supply of products or services from the
vendors that are needed to operate effectively, including without limitation, the ability to complete
construction on time and on budget;

a reduction in demand for oil as a result of decreased economic activity and travel restrictions which, if
sustained, could have an adverse impact on occupancy and rental rates in the markets where we own
properties, including energy-influenced markets such as Dallas, Denver and Houston, where we have a
significant concentration of properties;

tenants’ inability to pay rent on their leases or our inability to re-lease space that is or becomes vacant,
which inability, if extreme, could cause us to: (i) no longer be able to maintain our current level of
dividends in order to preserve liquidity and (ii) be unable to meet our debt obligations to lenders,
and/or be unable to meet debt covenants, either of which could trigger a default or defaults and cause
us to have to sell properties or refinance debt on unattractive terms; and

our inability to maintain an investment grade corporate credit rating could lead to increased borrowing
costs and adversely affect our access to funding sources and the terms of any available funding
sources.

The COVID-19 pandemic has adversely impacted our properties and operating results and will continue to do so to the
extent it reduces occupancy, increases the cost of operation, results in limited hours, results in decreased rental receipts,
results in increased borrowings or necessitates the closure of such properties. In addition, quarantines, states of

emergencies and other measures taken to curb the spread of COVID-19 may negatively impact the ability of our
properties to continue to obtain necessary goods and services or provide adequate staffing, which may also adversely
affect our properties and operating results.

Some of our existing tenants and potential tenants operate in industries that are being adversely affected by the disruption
to business caused by this pandemic. Tenants have been, and may in the future be, required to suspend operations at our
properties for extended periods of time. For example, some of our retail tenants have been, and may continue to be,
closed for an extended period of time or only open certain hours of the day. Some of our tenants have requested rent
concessions and more tenants may request rent concessions or may not pay rent in the future. This could lead to
increased rent delinquencies and/or defaults under leases, a lower demand for rentable space leading to increased
concessions or lower occupancy, increased tenant improvement capital expenditures, or reduced rental rates to maintain
occupancies. For example, on December 21, 2020, the parent company of a tenant that leases approximately 130,000
square feet filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code resulting in a
writeoff charge of $3.1 million. Our operations could be materially negatively affected if the economic downturn is
prolonged, which could adversely affect our operating results, ability to pay dividends, our ability to repay or refinance
our existing indebtedness, and the price of our common stock.

The continuing evolution of this situation precludes any prediction as to the ultimate impact of the COVID-19 pandemic.
The full extent of the impact and effects of the COVID-19 pandemic on our future financial performance, as a whole,
and, specifically, on our real estate property holdings are uncertain at this time. The impact will depend on the
effectiveness of vaccines and therapeutics and future developments, including, among other factors, the duration and
spread of the pandemic, along with related travel advisories and restrictions, and the uncertainty with respect to the
duration of the global economic slowdown. COVID-19 and the current financial, economic and capital markets
environment, and future developments in these and other areas present uncertainty and risk with respect to our
performance, financial condition, results of operations, cash flows, and the price of our common stock.

Risks Related to our Indebtedness

If a Sponsored REIT defaults on a Sponsored REIT Loan, we may be required to request additional draws, keep
balances outstanding on our existing debt, exercise any maturity date extension rights, seek new debt or use our
cash balance to repay our existing debt, which may reduce cash available for distribution to our stockholders or
for other corporate purposes.

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 refer to these
loans as Sponsored REIT Loans. We anticipate that each Sponsored REIT Loan will be repaid at maturity or earlier
from long term financing of the property securing the loan, cash flows from that underlying property or some other
capital event. If a Sponsored REIT defaults on a Sponsored REIT Loan, the Sponsored REIT could be unable to fully
repay the Sponsored REIT Loan and we may have to satisfy our obligations under our existing debt through other means,
including without limitation, requesting additional draws, keeping balances outstanding, exercising any maturity date
extension rights, seeking new debt, and/or using our cash balance. If that happens, we may have less cash available for
distribution to our stockholders or for other corporate purposes.

Our operating results and financial condition could be adversely affected if we are unable to refinance the BAML
Credit Facility, the BMO Term Loan, the JPM Term Loan, the Series A Notes or the Series B Notes.

There can be no assurance that we will be able to refinance the revolving line of credit portion of the BAML
Credit Facility (as defined in Note 4 to the Consolidated Financial Statements) upon its maturity on January 12, 2022
(subject to two six month extension options that may extend the maturity date to up to January 12, 2023), the term loan
portion of the BAML Credit Facility upon its maturity on January 12, 2023, the BMO Term Loan (as defined in Note 4
to the Consolidated Financial Statements) upon its maturities on November 30, 2021 and January 31, 2024, the JPM
Term Loan (as defined in Note 4 to the Consolidated Financial Statements) upon its maturity on November 30, 2021
(subject to two six month options that may extend the maturity date to up to November 30, 2022), the Series A Notes (as
defined in Note 4 to the Consolidated Financial Statements) upon their maturity on December 20, 2024 or the Series B

Notes (as defined in Note 4 to the Consolidated Financial Statements) upon their maturity on December 20, 2027, that
any such refinancings would be on terms as favorable as the terms of the BAML Credit Facility, the BMO Term Loan,
the JPM Term Loan, the Series A Notes, or the Series B Notes, or that we will be able to otherwise obtain funds by
selling assets or raising equity to make required payments on the BAML Credit Facility, the BMO Term Loan, the JPM
Term Loan, the Series A Notes or the Series B Notes. If we are unable to refinance the BAML Credit Facility, the BMO
Term Loan, the JPM Term Loan, the Series A Notes or the Series B Notes at maturity or meet our payment obligations,
the amount of our distributable cash flow and our financial condition would be adversely affected.

Failure to comply with covenants in the documents evidencing the BAML Credit Facility, the BMO Term Loan,
the JPM Term Loan, the Series A Notes or the Series B Notes could adversely affect our financial condition.

The documents evidencing the BAML Credit Facility, the BMO Term Loan, the JPM Term Loan, the Series A

Notes and the Series B Notes contain customary affirmative and negative covenants, 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. The documents evidencing the BAML Credit Facility, the BMO Term Loan, the JPM Term
Loan, the Series A Notes and the Series B Notes contain some or all of the following financial covenants: minimum
tangible net worth; maximum leverage ratio; maximum secured leverage ratio; minimum fixed charge coverage ratio;
maximum unencumbered leverage ratio; and minimum unsecured interest coverage. Our continued ability to borrow
under the BAML Credit Facility, the BMO Term Loan, and the JPM Term Loan is subject to compliance with our
financial and other covenants. Failure to comply with such covenants could cause a default under the BAML Credit
Facility, the BMO Term Loan, the JPM Term Loan, the Series A Notes or the Series B Notes, and we may then be
required to repay them with capital from other sources. Under those circumstances, other sources of capital may not be
available to us, or be available only on unattractive terms.

We may use the BAML Credit Facility, the BMO Term Loan, and the JPM Term Loan to finance the

acquisition of real properties and for other permitted investments, to finance investments associated with Sponsored
REITs, to refinance or retire indebtedness and for working capital and other general business purposes, in each case to
the extent permitted under the respective documents. If we breach covenants in the documents evidencing the BAML
Credit Facility, the BMO Term Loan, the JPM Term Loan, the Series A Notes or the Series B Notes, the lenders can
declare a default. A default under documents evidencing the BAML Credit Facility, the BMO Term Loan, the JPM
Term Loan, the Series A Notes, or the Series B Notes could result in difficulty financing growth in our business and
could also result in a reduction in the cash available for distribution to our stockholders or for other corporate purposes.
A default under documents evidencing the BAML Credit Facility, the BMO Term Loan, the JPM Term Loan, the Series
A Notes or the Series B Notes could materially and adversely affect our financial condition and results of operations.

An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact
our ability to refinance existing debt or sell assets.

As of December 31, 2020, we had $3.5 million of borrowings under the revolving line of credit portion of

our BAML Credit Facility that bears interest at variable rates based on our credit rating, from which we may incur
indebtedness in the future. Borrowings under the revolving line of credit portion of our BAML Credit Facility may not
exceed $600 million outstanding at any time. As of December 31, 2020, $400 million was drawn and outstanding under
the term loan portion of our BAML Credit Facility. The BAML Credit Facility includes an accordion feature that allows
for an aggregate amount of up to $500 million of additional borrowing capacity. On July 22, 2016, we fixed the base
LIBOR rate on the term loan portion of the BAML Credit Facility at 1.12% until September 27, 2021 by entering into an
interest rate swap agreement.

As of December 31, 2020, $220 million was drawn and outstanding under the BMO Term Loan, although

such amount may be increased by up to an additional $100 million through the exercise of an accordion feature. The
BMO Term Loan consists of a $55 million tranche A term loan and a $165 million tranche B term loan. On August 26,
2013, we fixed the base LIBOR rate on the BMO Term Loan at 2.32% per annum until August 26, 2020 by entering into
an interest rate swap agreement. On February 20, 2019, we fixed the base LIBOR rate on the BMO Term Loan at 2.39%

per annum for the period beginning August 26, 2020 and ending on January 31, 2024, by entering into interest rate swap
agreements.

On December 24, 2020, we repaid $50 million of our JPM Term Loan. As of December 31, 2020, $100

million was drawn and outstanding under the JPM Term Loan. The JPM Term Loan bears interest at variable rates
based on our credit rating. Effective March 29, 2019, we fixed the LIBOR-based rate at 2.44% per annum on the $100
million portion of the JPM Term Loan until November 30, 2021, by entering into interest rate swap agreements.

In the future, if interest rates increase, then the interest costs on our unhedged variable rate debt will also

increase, which could adversely affect our cash flow, our ability to pay principal and interest on our debt and our ability
to make distributions to stockholders. In addition, rising interest rates could limit our ability to incur new debt or to
refinance existing debt when it matures. From time to time, we may enter into additional interest rate swap agreements
and other interest rate hedging contracts, including swaps, caps and floors. While these agreements are intended to
lessen the impact of rising interest rates on us, they also expose us to the risks that the other parties to the agreements
will not perform, we could incur significant costs associated with the settlement of the agreements, the agreements will
be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges. In addition, an
increase in interest rates could decrease the amount third parties are willing to pay for our assets, thereby limiting our
ability to change our portfolio promptly in response to changes in economic or other conditions.

Changes to and replacement of the LIBOR benchmark interest rate could adversely affect our business, financial
results and operation.

We may be adversely affected by the expected discontinuance of LIBOR. In July 2017, the United Kingdom

Financial Conduct Authority (the regulatory authority over LIBOR) announced that it will plan for a phase out of
regulatory oversight of LIBOR interest rate indices after 2021 to allow for an orderly transition to an alternate reference
rate. However, the ICE Benchmark Administration, in its capacity as administrator of USD LIBOR, has announced that
it intends to extend publication of USD LIBOR (other than one-week and two-week tenors) to June 2023. At this time,
no consensus exists as to what rate or rates may become acceptable alternatives to LIBOR and it is impossible to predict
the effect of any such alternatives on the value of LIBOR-based securities and variable rate loans, or other securities or
financial arrangements, given LIBOR’s role in determining market interest rates globally. The Alternative Reference
Rates Committee (ARRC), a group of private-market participants assembled by the Federal Reserve Board and the
Federal Reserve Bank of New York, has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that
represents best practice as the alternative to LIBOR for derivatives and other financial contracts that are currently
indexed to LIBOR. The ARRC has proposed a market transition plan to SOFR from LIBOR and organizations are
currently working on transition plans as it relates to derivatives and cash markets exposed to LIBOR. We are evaluating
the potential impact of the eventual replacement of the LIBOR benchmark interest rate, including the possibility of
SOFR as the dominant replacement in the United States. In addition, other benchmarks may emerge or other rates may
be adopted outside of the United States. Although the full impact of the transition away from LIBOR, including the
discontinuance of LIBOR publication and the adoption of a replacement rate for LIBOR, remains unclear, these changes
may have an adverse impact on our financing costs with respect to any floating rate indebtedness.

Downgrades in our credit ratings could increase our borrowing costs or reduce our access to funding sources in
the credit and capital markets.

We are currently assigned a corporate credit rating from Moody’s Investors Service, Inc. (“Moody’s”)

based on its evaluation of our creditworthiness. Although our corporate credit rating from Moody’s is currently
investment grade, there can be no assurance that we will not be downgraded or that our rating will remain investment
grade. If our credit rating is downgraded or other negative action is taken, we could be required, among other things, to
pay additional interest and fees under the BAML Credit Facility, the BMO Term Loan, the JPM Term Loan, the Series A
Notes and the Series B Notes.

Credit rating reductions by one or more rating agencies could also adversely affect our access to funding sources, the
cost and other terms of obtaining funding as well as our overall financial condition, operating results and cash flow.

Risks Related to our Operations and Properties

Economic conditions in the United States could have a material adverse impact on our earnings and financial
condition.

The economy in the United States is currently in an economic downturn with recessionary concerns as a result
of the COVID-19 pandemic. Because economic conditions in the United States may affect the demand for office space,
real estate values, occupancy levels and property income, current and future economic conditions in the United States
could have a material adverse impact on our earnings and financial condition. Economic conditions may be affected by
numerous factors, including but not limited to, the pace of economic growth and/or recessionary concerns, inflation,
increases in the levels of unemployment, energy prices, changes in currency exchange rates, uncertainty about
government fiscal and tax policy, geopolitical events, the regulatory environment, the availability of credit and interest
rates. As of the date of this report, the impact of the COVID-19 pandemic and related fallout from containment and
mitigation measures, such as work from home arrangements and the closing of various businesses, is adversely affecting
current economic conditions in the United States and the demand for office space. Future economic factors also may
negatively affect the demand for office space, real estate values, occupancy levels and property income.

If we are not able to collect sufficient rents from each of our owned real properties, or investments in Sponsored
REITs, or collect interest on Sponsored REIT Loans we fund, we may suffer significant operating losses or a
reduction in cash available for future dividends.

A substantial portion of our revenue is generated by the rental income of our real properties and investments in

Sponsored REITs. If our properties do not provide us with a steady rental income or we do not collect interest income
from Sponsored REIT Loans we fund, our revenues will decrease, which may cause us to incur operating losses in the
future and reduce the cash available for distribution to our stockholders.

We may not be able to dispose of properties on acceptable terms or within the time periods we anticipate
pursuant to our disposition strategy.

We have adopted a strategy to dispose of certain properties in 2021 where we believe our valuation objective
has been met and to use the proceeds from such dispositions to repay indebtedness. We may not be able to dispose of
properties at acceptable prices or otherwise on anticipated terms and conditions with the time periods contemplated by
our disposition strategy, which would adversely affect our ability to repay indebtedness and impair our financial
flexibility.

We may not be able to identify properties that meet our criteria for purchase.

Growth in our portfolio of real estate is dependent on the ability of our acquisition executives to identify

properties for sale and/or development which meet the applicable investment criteria. To the extent they fail to identify
such properties, we would be unable to increase the size of our portfolio of real estate, which could reduce the cash
otherwise available for distribution to our stockholders.

We are dependent on key personnel.

We depend on the efforts of George J. Carter, our Chief Executive Officer and Chairman of the Board of

Directors; Jeffrey B. Carter, our President and Chief Investment Officer; Scott H. Carter, our General Counsel, Secretary
and an Executive Vice President; John G. Demeritt, our Chief Financial Officer, Treasurer and an Executive Vice
President; John F. Donahue, our President of FSP Property Management LLC and an Executive Vice President; and Eriel
Anchondo, our Chief Operating Officer and an Executive Vice President. If any of our executive officers were to resign,
our operations could be adversely affected. We do not have employment agreements with any of our executive officers.

We face risks from tenant defaults or bankruptcies.

If any of our tenants defaults on its lease, we may experience delays in enforcing our rights as a landlord and

may incur substantial costs in protecting our investment. In addition, at any time, a tenant of one of our properties may
seek the protection of bankruptcy laws, which could result in the rejection and termination of such tenant’s lease and
thereby cause a reduction in cash available for distribution to our stockholders. For example, on December 21, 2020, the
parent company of a tenant that leases approximately 130,000 square feet filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code resulting in a writeoff charge of $3.1 million.

New acquisitions may fail to perform as expected.

We may fund the acquisition of new properties with cash, by drawing on the revolving line of credit portion of

our BAML Credit Facility, by assuming existing indebtedness, by entering into new indebtedness, by issuing debt
securities, by issuing shares of our stock or by other means. Our acquisition activities are subject to the following risks:




acquired properties may fail to perform as expected;
the actual costs of repositioning, redeveloping or maintaining acquired properties may be greater than
our estimates; and

 we may be unable to quickly and efficiently integrate new acquisitions into our existing operations,

and this could have an adverse effect on our results of operations and financial condition.

We face risks in owning, developing, redeveloping and operating real property.

An investment in us is subject to the risks incidental to the ownership, development, redevelopment and

operation of real estate-related assets. These risks include the fact that real estate investments are generally illiquid,
which may affect our ability to vary our portfolio in response to changes in economic and other conditions, as well as the
risks normally associated with:








changes in general and local economic conditions;
the supply or demand for particular types of properties in particular markets;
changes in market rental rates;
the impact of environmental protection laws;
changes in tax, real estate and zoning laws; and
the impact of obligations and restrictions contained in title-related documents.

Certain significant costs, such as real estate taxes, utilities, insurance and maintenance costs, generally are not
reduced even when a property’s rental income is reduced. In addition, environmental and tax laws, interest rate levels,
the availability of financing and other factors may affect real estate values and property income. Furthermore, the supply
of commercial space fluctuates with market conditions.

We may encounter significant delays in reletting vacant space, resulting in losses of income.

When leases expire, we may incur expenses and may not be able to re-lease the space on the same terms. While

we cannot predict when existing vacant space in properties will be leased, if existing tenants with expiring leases will
renew their leases or what the terms and conditions of the lease renewals will be, we expect to renew or sign new leases
at current market rates for locations in which the buildings are located, which in some cases may be below the expiring
rates. Certain leases provide tenants the right to terminate early if they pay a fee. If we are unable to re-lease space
promptly, if the terms are significantly less favorable than anticipated or if the costs are higher, we may have to reduce
distributions to our stockholders. Typical lease terms range from five to ten years, so up to approximately 20% of our
rental revenue from commercial properties could be expected to expire each year.

We face risks of tenant-type concentration.

As of December 31, 2020, approximately 14%, 13%, 11% and 10% of our tenants as a percentage of the total

rentable square feet operated in the information technology and computer services industry, the energy services industry,
the non-legal professional services industry and the legal services industry, respectively. An economic downturn in these
or any industry in which a high concentration of our tenants operate or in which a significant number of our tenants
currently or may in the future operate, could negatively impact the financial condition of such tenants and cause them to
fail to make timely rental payments or default on lease obligations, fail to renew their leases or renew their leases on
terms less favorable to us, become bankrupt or insolvent, or otherwise become unable to satisfy their obligations to us,
which could adversely affect our financial condition and results of operations.

We face risks from geographic concentration.

The properties in our portfolio as of December 31, 2020, by aggregate square footage, are distributed
geographically as follows: South — 47.6%, West — 27.1%, Midwest — 17.5% and East — 7.8%. However, within
certain of those regions, we hold a larger concentration of our properties in Greater Denver, Colorado — 27.1%, Atlanta,
Georgia — 20.4%, Houston, Texas — 12.3% and Dallas, Texas — 12.7%. We are likely to face risks to the extent that
any of these areas in which we hold a larger concentration of our properties suffer deteriorating economic conditions.
Given the fact that the Dallas, Denver and Houston metropolitan areas have a significant presence in the energy sector, a
prolonged period of low oil or natural gas prices, or other factors negatively impacting the energy industry, could have
an adverse impact on our ability to maintain the occupancy of our properties in those areas or could cause us to lease
space at rates below current in-place rents, or at rates below the rates we have leased space in those areas in the prior
year. In addition, factors negatively impacting the energy industry could reduce the market values of our properties in
those areas, which could reduce our net asset value and adversely affect our financial condition and results of operations,
or cause a decline in the value of our common stock.

We compete with national, regional and local real estate operators and developers, which could adversely affect
our cash flow.

Competition exists in every market in which our properties are currently located and in every market in which

properties we may acquire in the future will be located. We compete with, among others, national, regional and
numerous local real estate operators and developers. Such competition may adversely affect the percentage of leased
space and the rental revenues of our properties, which could adversely affect our cash flow from operations and our
ability to make expected distributions to our stockholders. Some of our competitors may have more resources than we
do or other competitive advantages. Competition may be accelerated by any increase in availability of funds for
investment in real estate. For example, decreases in interest rates tend to increase the availability of funds and therefore
can increase competition. To the extent that our properties continue to operate profitably, this will likely stimulate new
development of competing properties. The extent to which we are affected by competition will depend in significant part
on both local market conditions and national and global economic conditions.

We face possible risks associated with the physical effects of climate change.

The physical effects of climate change could have a material adverse effect on our properties, operations and
business. For example, climate change could increase utility and other costs of operating our properties, including
increased costs for energy, water, insurance, regulatory compliance and other supply chain materials, which if not offset
by rising rental income and/or paid by tenants, could have a material adverse effect on our properties, operations and
business. We are also subject to climate change induced severe storm hazards, which to the extent not covered by
insurance, could result in significant capital expenditures. Over time, the physical effects of climate change could result
in declining demand for office space in our buildings or our inability to operate the buildings at all.

Security breaches and other disruptions could compromise our information and expose us to liability, which
could cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data concerning investors in the Sponsored

REITS, tenants and vendors. Although we have taken steps to protect the security of our information technology
systems and the data maintained in those systems, such systems and infrastructure may be vulnerable to attacks by
hackers, computer viruses or ransomware, or breaches due to employee error, malfeasance, impersonization of
authorized users or other disruptions. Any such breach or attack could compromise our networks and the information
stored there could be accessed, publicly disclosed, lost or stolen. Because the techniques used to obtain unauthorized
access, disable or degrade service, or sabotage systems change frequently and continuously become more sophisticated,
often are not recognized until launched against a target and may be difficult to detect for a long time, we may be unable
to anticipate these techniques or to implement adequate preventive or detective measures. Any unauthorized access,
disclosure or other loss of information could result in significant financial exposure, including significant costs to
remediate possible injury to the affected parties. We may also be subject to sanctions and civil or criminal penalties if we
are found to be in violation of the privacy or security rules under laws protecting confidential information. Any failure to
maintain proper functionality and security of our information systems could interrupt our operations, damage our
reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business,
financial condition, cash flows and results of operations.

Actual or threatened terrorist attacks may adversely affect our ability to generate revenues and the value of our
properties.

We have significant investments in markets that may be the targets of actual or threatened terrorism attacks in

the future. As a result, some tenants in these markets may choose to relocate their businesses to other markets or to
lower-profile office buildings within these markets that may be perceived to be less likely targets of future terrorist
activity. This could result in an overall decrease in the demand for office space in these markets generally or in our
properties in particular, which could increase vacancies in our properties or necessitate that we lease our properties on
less favorable terms or both. In addition, future terrorist attacks in these markets could directly or indirectly damage our
properties, both physically and financially, or cause losses that materially exceed our insurance coverage. As a result of
the foregoing, our ability to generate revenues and the value of our properties could decline materially. See also “We
may lose capital investment or anticipated profits if an uninsured event occurs.”

We may lose capital investment or anticipated profits if an uninsured event occurs.

We carry, or our tenants carry, comprehensive liability, fire and extended coverage with respect to each of our
properties, with policy specification and insured limits customarily carried for similar properties. There are, however,
certain types of losses that may be either uninsurable or not economically insurable. Should an uninsured material loss
occur, we could lose both capital invested in the property and anticipated profits.

Risks Related to Legal and Regulatory Matters

We are subject to possible liability relating to environmental matters, and we cannot assure you that we have
identified all possible liabilities.

Under various federal, state and local laws, ordinances and regulations, we, as an owner or operator of real

In addition, we cannot assure you that:






future laws, ordinances or regulations will not impose any material environmental liability;
the current environmental conditions of our properties will not be affected by the condition of properties in the
vicinity of such properties (such as the presence of leaking underground storage tanks) or by third parties
unrelated to us;
tenants will not violate their leases by introducing hazardous or toxic substances into our properties that could
expose us to liability under federal or state environmental laws; or
environmental conditions, such as the growth of bacteria and toxic mold in heating and ventilation systems or
on walls, will not occur at our properties and pose a threat to human health.

We are subject to compliance with the Americans With Disabilities Act and fire and safety regulations, any of
which could require us to make significant capital expenditures.

In addition, we are required to operate our properties in compliance with fire and safety regulations, building

We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets
Control.

Pursuant to Executive Order 13224 and other laws, the Office of Foreign Assets Control of the United States

Department of the Treasury, or OFAC, maintains a list of persons designated as terrorists or who are otherwise blocked
or banned, which we refer to as Prohibited Persons. OFAC regulations and other laws prohibit conducting business or
engaging in transactions with Prohibited Persons, or collectively, the “OFAC Requirements”. Our current leases and
certain other agreements require the other party to comply with the OFAC Requirements. If a tenant or other party with
whom we contract is placed on the OFAC list, we may be required by the OFAC Requirements to terminate the lease or
other agreement. Any such termination could result in a loss of revenue or a damage claim by the other party that the
termination was wrongful.

Risks Related to our Common Stock

Our level of dividends may fluctuate.

Because our real estate occupancy levels and rental rates can fluctuate, there is no predictable recurring level of
revenue from such activities and changes in interest rates or in the mix of our fixed and variable rate debt can cause our
interest costs to fluctuate. As a result of these fluctuations, the amount of cash available for distribution to our
stockholders may fluctuate, which may result in our not being able to maintain or grow dividend levels in the future.

The real properties held by us may significantly decrease in value.

As of December 31, 2020, we owned 34 properties, consisting of 32 operating properties and 2 redevelopment
properties. Some or all of these properties may decline in value. To the extent our real properties decline in value, our
stockholders could lose some or all of the value of their investments. The value of our common stock may be adversely
affected if the real properties held by us decline in value since these real properties represent the majority of the tangible
assets held by us. Moreover, if we are forced to sell or lease the real property held by us below its initial purchase price

or its carrying costs, respectively, or if we are forced to lease real property at below market rates because of the condition
of the property, our results of operations would be adversely affected and such negative results of operations may result
in lower dividends being paid to holders of our common stock.

Further issuances of equity securities may be dilutive to current stockholders.

The interests of our existing stockholders could be diluted if we issue additional equity securities to finance

future acquisitions, repay indebtedness or to fund other general corporate purposes. Our ability to execute our business
strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit and other
forms of secured and unsecured debt, and equity financing.

The price of our common stock may vary.

The market prices for our common stock may fluctuate with changes in market and economic conditions,
including the market perception of real estate investment trusts, or REITs, in general, and changes in our financial
condition and results of operations. Such fluctuations may depress the market price of our common stock independent of
the financial performance of FSP Corp. The market conditions for REIT stocks generally could affect the market price
of our common stock.

Risks Related to our Organization and Structure

Our employee retention plan may prevent changes in control.

During February 2006, our Board of Directors approved a change in control plan, which included a form of
retention agreement and discretionary payment plan. Payments under the discretionary plan are capped at 1% of the
market capitalization of FSP Corp. as reduced by the amount paid under the retention plan. The costs associated with
these two components of the plan may have the effect of discouraging a third party from making an acquisition proposal
for us and may thereby inhibit a change in control under circumstances that could otherwise give the holders of our
common stock the opportunity to realize a greater premium over the then-prevailing market prices.

We would incur adverse tax consequences if we failed to qualify as a REIT.

The provisions of the tax code governing the taxation of REITs are very technical and complex, and although

we expect that we will be organized and will operate in a manner that will enable us to meet such requirements, no
assurance can be given that we will always succeed in doing so. In addition, as a result of our past acquisition of certain
Sponsored REITs by merger, which we refer to as target REITs, we might no longer qualify as a REIT. We could lose
our ability to so qualify for a variety of reasons relating to the nature of the assets acquired from the target REITs, the
identity of the stockholders of the target REITs who become our stockholders or the failure of one or more of the target
REITs to have previously qualified as a REIT. Moreover, if one or more of the target REITs that we acquired in
May 2008, April 2006, April 2005 or June 2003 did not qualify as a REIT immediately prior to the consummation of its
acquisition, we could be disqualified as a REIT as a result of such acquisition.

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. 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.

Provisions in our organizational documents may prevent changes in control.

Our Articles of Incorporation and Bylaws contain provisions, described below, which may have the effect of

discouraging a third party from making an acquisition proposal for us and may thereby inhibit a change of control under

circumstances that could otherwise give the holders of our common stock the opportunity to realize a premium over the
then-prevailing market prices.

Ownership Limits. In order for us to maintain our qualification as a REIT, the holders of our common stock
may be limited to owning, either directly or under applicable attribution rules of the Internal Revenue Code, no more
than 9.8% of the lesser of the value or the number of our equity shares, and no holder of common stock may acquire or
transfer shares that would result in our shares of common stock being beneficially owned by fewer than 100 persons.
Such ownership limit may have the effect of preventing an acquisition of control of us without the approval of our board
of directors. Our Articles of Incorporation give our board of directors the right to refuse to give effect to the acquisition
or transfer of shares by a stockholder in violation of these provisions.

Board Terms. Prior to our 2019 annual meeting of stockholders, our board of directors was divided into three

classes, with directors of each class elected to serve a three year term. Following the 2019 annual meeting of
stockholders, we amended our articles of incorporation to provide that each of the successors to the directors whose
terms expired in 2020 would be elected to serve until the next annual meeting of stockholders, each of the successors to
the directors whose terms expired in 2021, along with the successors to the directors elected at the 2020 annual meeting,
would be elected to serve until the following annual meeting of stockholders and beginning with the annual meeting of
stockholders in 2022 all directors would be elected to serve until the next annual meeting of stockholders. As a result,
during the transition period prior to the 2022 annual meeting of stockholders, the staggered terms for directors may affect
our stockholders’ ability to effect a change in control even if a change in control may be in the stockholders best interest.

Preferred Stock. Our Articles of Incorporation authorize our board of directors to issue up to 20,000,000 shares
of preferred stock, par value $.0001 per share, and to establish the preferences and rights of any such shares issued. The
issuance of preferred stock could have the effect of delaying or preventing a change in control even if a change in control
may be in our stockholders’ best interest.

Increase of Authorized Stock. Our board of directors, without any vote or consent of the stockholders, may

increase the number of authorized shares of any class or series of stock or the aggregate number of authorized shares we
have authority to issue. The ability to increase the number of authorized shares and issue such shares could have the
effect of delaying or preventing a change in control even if a change in control may be in our stockholders’ best interest.

Amendment of Bylaws. Our board of directors has the power to amend our Bylaws. This power could have the
effect of delaying or preventing a change in control even if a change in control may be in our stockholders’ best interests.

Stockholder Meetings. Our Bylaws require advance notice for stockholder proposals to be considered at annual

and special meetings of stockholders and for stockholder nominations for election of directors at annual and special
meetings of stockholders. The advance notice provisions require a proponent to provide us with detailed information
about the proponent and/or nominee. Our Bylaws also provide that stockholders entitled to cast more than 50% of all the
votes entitled to be cast at a meeting must join in a request by stockholders to call a special meeting of stockholders and
that a specific process for the meeting request must be followed. These provisions could have the effect of delaying or
preventing a change in control even if a change in control may be in the best interests of our stockholders.

Supermajority Votes Required. Our Articles of Incorporation require the affirmative vote of the holders of no
less than 80% of the shares of capital stock outstanding and entitled to vote in order (i) to amend the provisions of our
Articles of Incorporation relating to the removal of directors, limitation of liability of officers and directors or
indemnification of officers and directors or (ii) to amend our Articles of Incorporation to impose cumulative voting in the
election of directors. These provisions could have the effect of delaying or preventing a change in control even if a
change in control may be in our stockholders’ best interest.

Item 1B. Unresolved Staff Comments.

None.

Item 2.

Properties

Set forth below is information regarding our properties as of December 31, 2020:

Property Location

Office

600 Forest Point Circle
Charlotte, NC 28273

14151 Park Meadow Drive
Chantilly, VA 20151

1370 & 1390 Timberlake
Manor Parkway,
Chesterfield, MO 63017

50 Northwest Point Rd.
Elk Grove Village, IL 60005

Date of
Purchase (1)

Approx.
Square
Feet

Percent
Leased as
of 12/31/20

Approx.
Number
of Tenants

Major Tenants (2)

7/8/99

64,198

78.4 %

Willis Towers Watson
Southeast Inc.
Flexential Corp.

3/15/01

138,537

91.1 %

4 American Systems Corporation
Booz Allen Hamilton, Inc.

5/24/01

234,496

100.0 %

Centene Management
Company, LLC

Amdocs, Inc.

12/5/01

177,095

100.0 %

2 Citicorp Credit Services, Inc.

NCS Pearson, Inc.

Centene Management
Company, LLC
Edgewell Personal Care
Company

1350 Timberlake Manor Parkway

3/4/02

117,036

100.0 %

Chesterfield, MO 63017

16285 Park Ten Place
Houston, TX 77084

6/27/02

157,460

71.7 %

7 Penn Virginia Corporation
Blade Energy Partners, Ltd.

15601 Dallas Parkway

9/30/02

289,325

83.7 %

13 Cyxtera Management Inc.

Addison, TX 75001

1500 & 1600 N. Greenville Ave.
Richardson, TX 75081

6550 & 6560 Greenwood Plaza
Englewood, CO 80111

3815-3925 River Crossing Pkwy
Indianapolis, IN 46240

5055 & 5057 Keller Springs Rd.
Addison, TX 75001

5505 Blue Lagoon Drive (4)
Miami, FL 33126

Compass Production Partners,
LP

WDT Acquisition Corporation
Aerotek, Inc.

3/3/03

300,887

83.5 %

6 ARGO Data Resource Corp.

EMC Corporation
Id Software, LLC

2/24/05

196,236

100.0 %

3 Kaiser Foundation Health Plan

DirecTV, Inc.

7/6/05

205,729

100.0 %

12 Somerset CPAs, P.C.

Crowe, LLP
Blackboard, Inc.

2/24/06

216,906

74.1 %

23 See Footnote 3

11/6/03

213,182

73.1 %

1 Lennar Homes, LLC

Property Location

5600, 5620 & 5640 Cox Road
Glen Allen, VA 23060

1293 Eldridge Parkway
Houston, TX 77077

380 Interlocken Crescent
Broomfield, CO 80021

3625 Cumberland Boulevard
Atlanta, GA 30339

390 Interlocken Crescent
Broomfield, CO 80021

16290 Katy Freeway
Houston, TX 77094

45925 Horseshoe Drive
Dulles, VA 20166

4807 Stonecroft Blvd. (4)
Chantilly, VA 20151

121 South Eighth Street
Minneapolis, MN 55402

Date of
Purchase (1)
7/16/03

Approx.
Square
Feet

Percent
Leased as
of 12/31/20

Approx.
Number
of Tenants

Major Tenants (2)

298,183

57.2 %

5 ChemTreat, Inc.

General Electric Company

1/16/04

248,399

100.0 %

1 CITGO Petroleum Corporation

8/15/03

240,359

76.0 %

7 VMWare, Inc.
Cooley LLP
Sierra Financial Services, Inc.

6/27/06

387,267

93.9 %

24 Randstad General Partner (US)

12/21/06

241,512

99.4 %

Gas South LLC
Carestream Dental, LLC

6 The Vail Corporation
AppExtremes, LLC

9/28/05

156,746

95.0 %

7 Olin Corporation

Hargrove and Associates, Inc.
Bluware, Inc.

12/23/08

136,658

98.9 %

Giesecke & Devrient
America, Inc.

6/26/09

111,469

— %

—

6/29/10

297,209

92.6 %

Schwegman, Lundberg &
Woessner

801 Marquette Ave. South

6/29/10

129,821

91.8 %

Minneapolis, MN 55402

5100 & 5160 Tennyson Pkwy

3/10/11

207,049

100.0 %

Common Grounds Minneapolis
I, LLC
Greater Minneapolis
Convention & Visitor
Association

Deluxe Corporation

5 Worldventures Holdings, LLC
ARK-LA-TEX Financial
Services, LLC

Plano, TX 75024

7500 Dallas Parkway
Plano, TX 75024

909 Davis Street
Evanston, IL 60201

3/24/11

214,110

56.4 %

ADS Alliance Data
Systems, Inc.

9/30/11

195,098

93.3 %

9 Houghton Mifflin Co.

Aptinyx, Inc.

Northshore University
Healthsystem

Property Location

Date of
Purchase (1)

Approx.
Square
Feet

Percent
Leased as
of 12/31/20

Approx.
Number
of Tenants

Major Tenants (2)

Industrious Evn 909 Davis
Street

One Ravinia Drive

7/31/12

386,602

89.0 %

10 T-Mobile South LLC
Cedar Document
Technologies, Inc.

4/8/15

411,047

69.2 %

38 See Footnote 3

Atlanta, GA 30346

Two Ravinia Drive
Atlanta, GA 30346

10370 & 10350 Richmond Ave.
Houston, TX 77042

11/1/12

629,025

53.5 %

37 See Footnote 3

1999 Broadway
Denver, CO 80202

999 Peachtree Street
Atlanta, GA 30309

1001 17th Street
Denver, CO 80202

5/22/13

677,539

81.8 %

38 United States Government

7/1/13

621,946

84.5 %

Eversheds Sutherland (US)
LLP

8/28/13

655,420

96.0 %

18 Ovintiv USA Inc.
WPX Energy. Inc.
Hall and Evans, LLC
Ping Identity Corp.

45 South Seventh Street

6/6/16

330,096

88.5 %

26 PricewaterhouseCoopers LLP

Minneapolis, MN 55402

1420 Peachtree Street, NE
Atlanta, GA 30309

600 17th Street
Denver, CO 80202

Haworth Marketing & Media
Company

8/10/16

160,145

98.9 %

4 Jones Day

12/1/16

609,353

88.0 %

42 EOG Resources, Inc.

Total Owned Portfolio

9,656,140

83.8 %

(1) Date of purchase or merged entity date of purchase.
(2) Major tenants that occupy 10% or more of the space in an individual property.
(3) No tenant occupies more than 10% of the space.
(4) We define redevelopment properties as properties being developed, redeveloped or where redevelopment is

complete, but are in lease-up and that are not stabilized.

As of December 31, 2020, we had approximately 0.3 million rentable square feet in our Redevelopment Properties. The
following table summarizes these properties:

(in 000's except square feet)
Property Name

City

State Square Feet Investment (1) 31-Dec-20 31-Dec-20

Anticipated

Through

Leased

Incurred

Percent

Estimated

Estimated
Estimated
Occupied
Leased
Completion Stabilization Stabilization
Date

Date

Redevelopment in Process
Blue Lagoon Drive (2)
Stonecroft
Total Office in Process

Miami
Chantilly

FL
VA

213,182
111,469
324,651

39,900
18,462
58,362

20,443
1,814
22,257

73.1%
0.0%

28-Feb-21
31-Jul-21

1-Jul-21
1-Dec-21

1-Jan-22
1-Dec-22

(1) Anticipated investment includes capitalized redevelopment costs, capitalized interest and lease-up costs.
(2) Leased square feet was 155,808 as of December 31, 2020.

All of the properties listed above are owned, directly or indirectly, by us. None of our properties are subject to any
mortgage loans. We have no other material undeveloped or unimproved properties, or proposed programs for material
renovation or development of any of our properties in 2021. We believe that our properties are adequately covered by
insurance as of December 31, 2020.

The information presented below provides the weighted average GAAP rent per square foot for the year ended
December 31, 2020 for our properties and weighted occupancy square feet and percentages. GAAP rent includes the
impact of tenant concessions and reimbursements. This table does not include information about properties held by our
investments in nonconsolidated REITs or those which we have provided Sponsored REIT Loans.

Property Name

City

State Renovated

Year Built
or

Weighted
Net Rentable Occupied
Square Feet

Sq. Ft.

Weighted
Occupied
Percentage as of
December 31,

2020 (a)

Weighted
Average
Rent per Occupied
Square Feet (b)

Forest Park
Meadow Point
Innsbrook
Loudoun Tech
Center
Stonecroft (c)
East total
Northwest Point
909 Davis Street
River Crossing
Timberlake
Timberlake East
121 South 8th
Street
801 Marquette
Ave
Plaza Seven

Charlotte
Chantilly
Glen Allen

NC 1999/2020
VA
VA

1999
1999

64,198
138,537
298,183

12,204
102,656
170,680

Dulles
Chantilly

VA
VA

Elk Grove Village IL
IL
Evanston
IN
Indianapolis
MO
Chesterfield
MO
Chesterfield

1999
2008

1999
2002
1998
1999
2000

136,658
111,469
749,045
177,095
195,098
205,729
234,496
117,036

135,210
—
420,750
177,095
182,104
202,273
224,319
113,548

19.0 % $
74.1 %
57.2 %

98.9 %
— %

56.2 %
100.0 %
93.3 %
98.3 %
95.7 %
97.0 %

21.54
25.03
18.70

18.64
—
20.31
28.08
41.05
24.55
27.65
26.59

Minneapolis

1974

297,209

255,124

85.8 %

22.31

Minneapolis
Minneapolis

MN 1923/2017
MN

1987

129,821
330,096
1,686,580

48,021
291,442
1,493,926

37.0 %
88.3 %
88.6 %

— %
86.8 %
71.7 %
77.0 %
81.0 %

29.87
33.02
29.04

—
24.02
27.87
33.37
26.81

Midwest total

Blue Lagoon
Drive (c)
Miami
One Overton Park Atlanta
Houston
Park Ten
Addison
Addison Circle
Richardson
Collins Crossing

FL
GA
TX
TX
TX

2002
2002
1999
1999
1999

213,182
387,267
157,460
289,325
300,887

—
336,264
112,962
222,809
243,839

The following table is continued from the previous page and provides the weighted average GAAP rent per square foot
for the year ended December 31, 2020 for our properties and weighted occupancy square feet and percentages. GAAP
rent includes the impact of tenant concessions and reimbursements. This table does not include information about
properties held by our investments in nonconsolidated REITs or those which we have provided Sponsored REIT Loans.

Property Name

City

State Renovated

Year Built
or

Weighted
Net Rentable Occupied
Square Feet

Sq. Ft.

Weighted
Occupied
Percentage as of
December 31,

2020 (a)

Weighted
Average
Rent per Occupied
Square Feet (b)

Houston
Houston
Addison

Eldridge Green
Park Ten Phase II
Liberty Plaza
Legacy Tennyson Center Plano
Plano
One Legacy Circle
Atlanta
One Ravinia Drive
Atlanta
Two Ravinia Drive
Houston
Westchase I & II
Atlanta
Pershing Park Plaza
Atlanta
999 Peachtree

1999
2006
1985

TX
TX
TX
TX 1999/2008
TX
GA
GA
TX 1983/2008
GA
GA

2008
1985
1987

1989
1987

2000
1986

Broomfield CO
CO
Denver
CO 1977/2006
Denver
Denver
CO
Englewood CO
Broomfield CO

1982
2000
2002

South Total
380 Interlocken
1999 Broadway
1001 17th Street
600 17th Street
Greenwood Plaza
390 Interlocken
West Total

Total Owned
Properties

248,399
156,746
216,906
207,049
214,110
386,602
411,047
629,025
160,145
621,946
4,600,096
240,359
677,539
655,420
609,353
196,236
241,512
2,620,419

248,399
141,902
157,929
197,835
100,910
334,604
277,909
349,864
158,447
535,185
3,418,858
174,765
537,288
637,265
525,567
196,236
238,445
2,309,566

100.0 % $
90.5 %
72.8 %
95.6 %
47.1 %
86.6 %
67.6 %
55.6 %
98.9 %
86.1 %
74.3 %
72.7 %
79.3 %
97.2 %
86.3 %
100.0 %
98.7 %
88.1 %

30.06
28.45
23.07
14.67
37.78
27.47
27.31
28.35
34.22
33.62
28.42
33.10
33.20
37.15
32.26
25.31
33.20
33.40

9,656,140

7,643,100

79.2 % $

29.60

(a) Based on weighted occupied square feet for the year ended December 31, 2020, including month-to-month tenants,

divided by the property’s net rentable square footage.

(b) Represents annualized GAAP rental revenue for the year ended December 31, 2020 per weighted occupied square

foot.

complete, but are in lease-up and that are not stabilized.

The information presented below is a lease expiration table for ten years and thereafter, stating (i) the number of tenants
whose leases will expire, (ii) the total area in square feet covered by such leases, (iii) the annual rental represented by
such leases in dollars and by square feet, and (iv) the percentage of gross annual rental represented by such leases.

Year of
Lease
Expiration
December 31,

2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031 and thereafter

Leased total
Vacancies as of 12/31/20
Redevelopment Properties (e)
Total Portfolio Square Footage

Number of
Leases
Expiring
Within the
Year (a)

Rentable
Square
Footage
Subject to
Expiring
Leases

Annualized
Rent Under
Expiring
Leases (b)

Annualized Percentage

Rent

of Total

Per Square Annualized
Foot Under Rent Under
Expiring
Leases

Expiring
Leases

Cumulative
Total

69 (c)
74
65
61
57
38
19
19
12
10
71
495

38,021,879
14,563,689
26,036,049
25,079,346
23,732,491
22,169,871
10,156,201
12,911,391
24,753,582
15,325,361

1,067,527
450,184
839,607
867,351
752,257
698,962
450,799
405,689
893,357
925,978 (d)

738,723 $ 22,498,632 $ 30.46
35.62
32.35
31.01
28.91
31.55
31.72
22.53
31.83
27.71
16.55
8,090,434 $ 235,248,492 $ 29.08
1,396,863
168,843
9,656,140

9.5 %
16.2 %
6.2 %
11.1 %
10.7 %
10.1 %
9.4 %
4.3 %
5.5 %
10.5 %
6.5 %
100.0 %

9.5 %
25.7 %
31.9 %
43.0 %
53.7 %
63.8 %
73.2 %
77.5 %
83.0 %
93.5 %
100.0 %

(a) The number of leases approximates the number of tenants. Tenants with lease maturities in different years are

included in annual totals for each lease. Tenants may have multiple leases in the same year.

(b) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at
December 31, 2020 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes,
operating expenses and common area maintenance and utility charges.

(c) Includes 2 leases that are month-to-month.
(d) Includes 117,089 square feet that are non-revenue producing building amenities.
(e) Redevelopment Properties include properties being developed, redeveloped or where redevelopment is complete,

but are in lease-up and that are not stabilized.

Item 3. Legal Proceedings

From time to time, we may be subject to legal proceedings and claims that arise in the ordinary course of our

business. Although occasional adverse decisions (or settlements) may occur, we believe that the final disposition of such
matters will not have a material adverse effect on our financial position, cash flows or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Our common stock is listed on the NYSE American under the symbol “FSP”.

As of February 1, 2021, there were 10,031 holders of our common stock, including both holders of record and

participants in securities position listings.

While not guaranteed, we expect to continue to pay cash dividends on our common stock in the future. See

Part I, Item 1A Risk Factors, “Our level of dividends may fluctuate.” for additional information.

STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return on the Company’s common stock

between December 31, 2015 and December 31, 2020 with the cumulative total return of (1) the NAREIT Equity Index,
(2) the Standard & Poor’s 500 Composite Stock Price Index (“S&P 500”) and (3) the Russell 2000 Total Return Index
over the same period. This graph assumes the investment of $100.00 on December 31, 2015 and assumes that any
distributions are reinvested.

As of December 31,

FSP
NAREIT Equity
S&P 500
Russell 2000

2015 2016 2017 2018 2019 2020
$ 100 $ 134 $ 119 $ 73 $ 104 $ 57
138
203
186

146
171
155

113
130
124

118
136
139

109
112
121

100
100
100

Notes to Graph:
The above performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the
Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing
under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we
specifically incorporate it by reference into such filing.

Item 6. Selected Financial Data

The following selected financial information is derived from the historical consolidated financial statements

of FSP Corp. This information should be read in conjunction with “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in Item 7 and with FSP Corp.’s consolidated financial statements and related notes
thereto included in Item 8.

(In thousands, except per share amounts)

2020

2019

2018

2017

2016

Year Ended December 31,

Operating Data:
Total revenue

Net income (loss)

$ 245,848 $ 269,065 $ 268,870 $ 272,588 $ 249,888

32,615

6,475

13,069

(15,944)

8,378

Basic and diluted income (loss) per share:

0.30 $

0.06 $

0.12 $

(0.15) $

0.08

Distributions declared per share outstanding:

0.36 $

0.46 $

0.76 $

0.76

As of December 31,

2020

2019

2018

2017

2016

Balance Sheet Data:
Total assets
Total liabilities
Total shareholders’ equity

$ 1,793,184 $ 1,842,654 $ 1,898,102 $ 1,990,512 $ 2,088,133
1,126,089
962,044

1,119,220
871,292

1,025,093
768,091

1,060,468
837,634

1,056,258
786,396

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the financial statements and notes thereto
appearing elsewhere in this report. Historical results and percentage relationships set forth in the consolidated financial
statements, including trends which might appear, should not be taken as necessarily indicative of future operations. The
following discussion and other parts of this Annual Report on Form 10-K may also contain forward-looking statements
based on current judgments and current knowledge of management, which are subject to certain risks, trends and
uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements.
Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned
that our forward-looking statements involve risks and uncertainty, including without limitation, adverse changes in
general economic or local market conditions, including as a result of the COVID-19 pandemic and other potential
infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in
which we and our tenants operate, adverse changes in energy prices, which if sustained, could negatively impact
occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as
Dallas, Denver and Houston, any inability to dispose of properties on acceptable terms and any delays in the timing of
any such anticipated dispositions, changes in interest rates as a result of economic market conditions or a downgrade in
our credit rating, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks
of a lessening of demand for the types of real estate owned by us, uncertainties relating to fiscal policy, changes in
government regulations and regulatory uncertainty, changes in energy prices, geopolitical events, and expenditures that
cannot be anticipated such as utility rate and usage increases, delays in construction schedules, unanticipated increases in
construction costs, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation
reassessments. See “Risk Factors” in Item 1A. Although we believe the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We may
not update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to conform
them to actual results or to changes in our expectations that occur after such date, other than as required by law.

Overview

FSP Corp., or we or the Company, operates in a single reportable segment: real estate operations. The real
estate operations market involves real estate rental operations, leasing, secured financing of real estate and services
provided for asset management, property management, property acquisitions, dispositions and development. Our current
strategy is to invest in infill and central business district office properties in the United States sunbelt and mountain west
regions as well as select opportunistic markets. We believe that the United States sunbelt and mountain west regions
have macro-economic drivers that have the potential to increase occupancies and rents. We seek value-oriented
investments with an eye towards long-term growth and appreciation, as well as current income.

As of December 31, 2020, approximately 7.8 million square feet, or approximately 80% of our total owned

portfolio, was located in Atlanta, Dallas, Denver, Houston and Minneapolis. From time-to-time we may dispose of our
smaller, suburban office assets and replace them with larger urban infill and central business district office assets. As we
execute this strategy, short term operating results could be adversely impacted. However, we believe that the
transformed portfolio has the potential to provide higher profit and asset value growth over a longer period of time.

The main factor that affects our real estate operations is the broad economic market conditions in the United
States. These market conditions affect the occupancy levels and the rent levels on both a national and local level. We
have no influence on broader economic/market conditions. We look to acquire and/or develop quality properties in good
locations in order to lessen the impact of downturns in the market and to take advantage of upturns when they occur.

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

Trends and Uncertainties

COVID-19 Pandemic

Beginning in January 2020, there was a global outbreak of COVID-19, which continues to adversely impact

global commercial activity and has contributed to significant volatility in financial markets. It has already disrupted
global travel supply chains, adversely impacted global commercial activity, and its long-term economic impact remains
uncertain. Considerable uncertainty still surrounds the COVID-19 pandemic and its potential effects on the population,
as well as the availability and effectiveness of vaccines, therapeutics and any responses taken on a national and local
level by government authorities and businesses. The travel restrictions, limits on hours of operations and/or closures of
various businesses and other efforts to curb the spread of COVID-19 have significantly disrupted business activity
globally, including in the markets where we own properties, and we expect them to have an adverse impact on our
business. Many of our tenants are subject to various quarantine restrictions, and the restrictions could be in place for an
extended period of time. The pandemic has had an adverse impact on economic and market conditions and triggered a
global economic slowdown. The reduction in economic activity worldwide has had a significant negative effect on
energy prices, which, if sustained, could have an adverse impact on occupancy and rental rates in energy-influenced
markets such as Dallas, Denver and Houston, where we have a significant concentration of properties. However, the
evolving nature of the pandemic makes it difficult to ascertain the long-term impact it will have on commercial real
estate markets and our business. Nevertheless, the COVID-19 pandemic presents material uncertainty and risk with
respect to the performance of our properties and our financial results, such as the potential negative impact to the
businesses of our tenants, the potential negative impact to leasing efforts and occupancy at our properties, the potential
closure of certain of our assets for an extended period, uncertainty regarding future rent collection levels or requests for
rent concessions from our tenants, the occurrence of a default under any of our debt agreements, the potential for
increased borrowing costs, a potential downgrade in our credit rating that could lead to increased borrowing costs or
reduce our access to funding sources in credit and capital markets, our ability to refinance existing indebtedness or to
secure new sources of capital on favorable terms, fluctuations in our level of dividends, increased costs of operations, our
ability to complete required capital expenditures in a timely manner and on budget, decrease in values of our real estate
assets, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. We are unable to
estimate the impact the COVID-19 pandemic will have on our future financial results at this time. See “Risk Factors” in
Item 1A.

We have been following and directing our vendors to follow the guidelines from the Centers for Disease

Control (CDC) and other applicable authorities to minimize the spread of COVID-19 among our employees, tenants,
vendors and visitors, as well as at our properties. We have implemented working from home policies for our employees.
During the three months ended December 31, 2020 and as of February 5, 2021, all of our properties remained open for
business. Although some of our tenants have requested rent concessions, and more tenants may request rent concessions
or may not pay rent in the future, as of December 31, 2020, we had collected approximately 98% of rental receipts due in
December 2020. Future rent concession requests or nonpayment of rent could lead to increased rent delinquencies and/or
defaults under leases, a lower demand for rentable space leading to increased concessions or lower occupancy, extended
lease terms, increased tenant improvement capital expenditures, or reduced rental rates to maintain occupancies. We
review each rent concession request on a case by case basis and may or may not provide rent concessions, depending on
the specific circumstances involved. Cash, cash equivalents and restricted cash were $4.2 million as of December 31,
2020. Management believes that existing cash, cash anticipated to be generated internally by operations and our existing
availability under the BAML Revolver ($596.5 million as of December 31, 2020) will be sufficient to meet working
capital requirements and anticipated capital expenditures for at least the next 12 months. Although there is no guarantee
that we will be able to obtain the funds necessary for our future growth, we anticipate generating funds from continuing
real estate operations. We believe that we have adequate funds to cover unusual expenses and capital improvements, in
addition to normal operating expenses. Our ability to maintain or increase our level of dividends to stockholders,
however, depends in significant part upon the level of rental income from our real estate properties.

Economic Conditions

The economy in the United States has been adversely impacted as a result of the COVID-19 pandemic.
Economic conditions directly affect the demand for office space, our primary income producing asset. The broad

economic market conditions in the United States are typically affected by numerous factors, including but not limited to,
inflation and employment levels, energy prices, the pace of economic growth and/or recessionary concerns, uncertainty
about government fiscal, monetary, trade and tax policies, changes in currency exchange rates, geopolitical events, the
regulatory environment, the availability of credit, and interest rates. As of the date of this report, the impact of the
COVID-19 pandemic and related fallout from containment and mitigation measures, such as work from home
arrangements and the closing of various businesses, is adversely affecting current economic conditions in the United
States.

Real Estate Operations

Leasing

As of December 31, 2020, our real estate portfolio was comprised of 32 operating properties, which we refer to
as our operating properties, and 2 redevelopment properties, which we refer to as our redevelopment properties, that are
in the process of being redeveloped, or are completed but not yet stabilized. We collectively refer to our operating and
our redevelopment properties as our owned portfolio. Our 32 operating properties were approximately 85.0% leased as
of December 31, 2020, a decrease from 87.6% leased as of December 31, 2019. The 2.6% decrease in leased space was
a result of the impact of lease expirations and terminations, which exceeded leasing completed during the year ended
December 31, 2020. As of December 31, 2020, we had approximately 1,397,000 square feet of vacancy in our operating
properties compared to approximately 1,175,000 square feet of vacancy at December 31, 2019. During the year ended
December 31, 2020, we leased approximately 1,130,000 square feet of office space, of which approximately 762,000
square feet were with existing tenants, at a weighted average term of 8.3 years. On average, tenant improvements for
such leases were $34.07 per square foot, lease commissions were $11.36 per square foot and rent concessions were
approximately five months of free rent. Average GAAP base rents under such leases were $28.47 per square foot, or
7.7% higher than average rents in the respective properties as applicable compared to the year ended December 31, 2019.

As of December 31, 2020, our two redevelopment properties included an approximately 111,000 square foot

property known as Stonecroft in Chantilly, Virginia and an approximately 213,000 square foot property known as Blue
Lagoon in Miami, Florida. Given the length of the redevelopment and lease-up process, these properties are not
classified as an operating property until, in some cases, years after we commence the project.

Our property known as 801 Marquette in Minneapolis, Minnesota, which was substantially completed at the end

of the second quarter of 2017, had been previously classified as a redevelopment property. As of June 30, 2020, the
property had leases signed and tenants occupying approximately 37% of the rentable square feet of the property. On
September 14, 2020, we entered into a lease agreement with a new tenant with an initial term of 16 years for
approximately 71,000 square feet, or 54.8% of the property’s rentable square feet. As a result, 801 Marquette was
approximately 91.8% leased, which we consider stabilized, and has been reclassified as an operating property.

Our property known as Forest Park in Charlotte, North Carolina, which was substantially completed at the end

of the second quarter of 2020, had previously been classified as a redevelopment property. On July 20, 2020, a tenant
lease commenced and occupies approximately 22,000 square feet, or approximately 34.5% of the total rentable square
feet, with an initial term of 11 years. On September 24, 2020, we entered into a lease agreement with a new tenant for
approximately 28,200 square feet, or 43.9% of the rentable square feet at the property, with an initial term of 7 years. As
a result, as of December 31, 2020, Forest Park was approximately 78.4% leased, which we consider stabilized, and has
been reclassified as an operating property.

The redevelopment of Stonecroft commenced in August 2020. We expect to incur total redevelopment and

lease-up costs of $18.5 million, which includes significant interior work to make the space suitable for multiple tenants,
or to accommodate a tenant with accredited security requirements. As of December 31, 2020, we had incurred
approximately $1.8 million in redevelopment costs. We anticipate completing the redevelopment by July 31, 2021.

The redevelopment of Blue Lagoon commenced in December 2018 following the maturity of a lease with a

major tenant that had occupied 100% of the property. On September 13, 2019, we entered into a lease agreement with a
new tenant with an initial term of 16 years for approximately 156,000 square feet, or 73.1% of the property’s rentable

square feet. We expect to incur total restoration, redevelopment and lease-up costs of $39.9 million, which include work
on the roof of the building, costs to make the space suitable for multiple tenants and to increase parking at the property.
As of December 31, 2020, we had incurred approximately $20.4 million in total redevelopment costs. We anticipate
completing the redevelopment by February 28, 2021.

As of December 31, 2020, leases for approximately 7.6% and 11.1% of the square footage in our owned
portfolio are scheduled to expire during 2021 and 2022, respectively. As the first quarter of 2021 begins, we believe that
our operating properties are well stabilized, with a balanced lease expiration schedule, and that existing vacancy is being
actively marketed to numerous potential tenants. While leasing activity at our properties has continued, we believe that
the COVID-19 pandemic and related containment and mitigation measures may limit or delay new tenant leasing during
at least the first quarter of 2021 and potentially in future periods.

While we cannot generally predict when an existing vacancy in our owned portfolio will be leased or if existing

tenants with expiring leases will renew their leases or what the terms and conditions of the lease renewals will be, we
expect to renew or sign new leases at then-current market rates for locations in which the buildings are located, which
could be above or below the expiring rates. Also, we believe the potential exists for any of our tenants to default on its
lease or to seek the protection of bankruptcy. If any of our tenants defaults on its lease, we may experience delays in
enforcing our rights as a landlord and may incur substantial costs in protecting our investment. In addition, at any time, a
tenant of one of our properties may seek the protection of bankruptcy laws, which could result in the rejection and
termination of such tenant’s lease and thereby cause a reduction in cash available for distribution to our stockholders.

Real Estate Acquisition and Investment Activity

During 2020:

 we have continued to actively explore additional potential real estate investment opportunities.

During 2019:



during the year ended December 31, 2019, we received approximately $1.1 million as full repayment
of a Sponsored REIT Loan with FSP Satellite Place Corp. (“Satellite Place”) and we received
approximately $51 million as full repayment of a Sponsored REIT Loan with FSP Energy Tower I
Corp.;
on February 2, 2019, we received a cash distribution of approximately $0.2 million from the
liquidating trust of Grand Boulevard (defined below) and anticipate receiving additional liquidating
distributions of approximately $0.1 million in the aggregate as the trust is liquidated; and
on April 3, 2019 we received a cash distribution of approximately $1.0 million from the liquidating
trust of East Wacker (defined below);

During 2018:

 we received approximately $1.1 million in cash from Satellite Place, as partial prepayment of a



Sponsored REIT Loan;
on July 19, 2018, an office property owned by a Sponsored REIT, FSP Grand Boulevard Corp. (Grand
Boulevard) was sold to a third party. We held an equity investment in Grand Boulevard and received a
liquidating distribution of its investment of $6.2 million on July 20, 2018. The Company received an
initial cash distribution of $5.9 million from the liquidating trust of Grand Boulevard on August 17,
2018; and
on September 24, 2018, an office property owned by a Sponsored REIT, FSP 303 East Wacker Drive
Corp. (East Wacker) was sold to a third party. We held an equity investment in East Wacker and
received a liquidating distribution of its investment of $70.0 million on September 25, 2018. We
received an initial cash distribution of $69.0 million from the liquidating trust of East Wacker on
September 27, 2018.

Property Dispositions and Assets Held for Sale

The Company sold an office property located in Durham, North Carolina on December 23, 2020 with a sales
price of approximately $89.7 million, at a gain of approximately $41.9 million. The disposal of this property did not
represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the
property remained classified within continuing operations for all periods presented and there were no assets held for sale
at December 31, 2020 or December 31, 2019.

As an important part of our total return strategy, we intend to be active in property dispositions when we believe

that we have maximized value and that market conditions warrant such activity and, as a consequence, we continuously
review and evaluate our portfolio of properties for potentially advantageous dispositions.

Critical Accounting Policies

We have certain critical accounting policies that are subject to judgments and estimates by our management and
uncertainties of outcome that affect the application of these policies. We base our estimates on historical experience and
on various other assumptions we believe to be reasonable under the circumstances. On an on-going basis, we evaluate
our estimates. In the event estimates or assumptions prove to be different from actual results, adjustments are made in
subsequent periods to reflect more current information. The accounting policies that we believe are most critical to the
understanding of our financial position and results of operations, and that require significant management estimates and
judgments, are discussed below. Significant estimates in the consolidated financial statements include the allowance for
doubtful accounts, purchase price allocations, useful lives of fixed assets, impairment considerations and the valuation of
derivatives.

Critical accounting policies are those that have the most impact on the reporting of our financial condition and

results of operations and those requiring significant judgments and estimates. We believe that our judgments and
estimates are consistently applied and produce financial information that fairly presents our results of operations. Our
most critical accounting policies involve our investments in Sponsored REITs and our investments in real property.
These policies affect our:









allocation of purchase price;
allowance for doubtful accounts;
assessment of the carrying values and impairments of long lived assets;
useful lives of fixed assets and intangibles;
valuation of derivatives;
classification of leases; and
ownership of stock in a Sponsored REIT and related interests.

These policies involve significant judgments made based upon our experience, including judgments about

current valuations, ultimate realizable value, estimated useful lives, salvage or residual value, the ability of our tenants to
perform their obligations to us, current and future economic conditions and competitive factors in the markets in which
our properties are located. Competition, economic conditions and other factors may cause occupancy declines in the
future. In the future we may need to revise our carrying value assessments to incorporate information which is not now
known and such revisions could increase or decrease our depreciation expense related to properties we own, result in the
classification of our leases as other than operating leases or decrease the carrying values of our assets.

Allocation of Purchase Price

We allocate the value of real estate acquired among land, buildings, improvements and identified intangible
assets and liabilities, which may consist of the value of above market and below market leases, the value of in-place
leases, and the value of tenant relationships. Purchase price allocations and the determination of the useful lives are
based on management’s estimates. Under some circumstances we may rely upon studies commissioned from
independent real estate appraisal firms in determining the purchase price allocations.

Purchase price allocated to land and building and improvements is based on management’s determination of the
relative fair values of these assets assuming the property was vacant. Management determines the fair value of a property
using methods similar to those used by independent appraisers. Purchase price allocated to above or below market leases
is based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the
difference between (i) the contractual amounts to be paid pursuant to the in-place leases including consideration of
potential lease renewals and (ii) our estimate of fair market lease rates for the corresponding leases, measured over a
period equal to the remaining non-cancelable terms of the respective leases. This aggregate value is allocated between
in-place lease values and tenant relationships based on management’s evaluation of the specific characteristics of each
tenant’s lease; however, the value of tenant relationships has not been separated from in-place lease value because such
value and its consequence to amortization expense is immaterial for acquisitions reflected in our financial statements.
Factors considered by us in performing these analyses include (i) an estimate of carrying costs during the expected lease-
up periods, including real estate taxes, insurance and other operating income and expenses, and (ii) costs to execute
similar leases in current market conditions, such as leasing commissions, legal and other related costs. If future
acquisitions result in our allocating material amounts to the value of tenant relationships, those amounts would be
separately allocated and amortized over the estimated life of the relationships.

Allowance for Doubtful Accounts

We provided an allowance for doubtful accounts based on collectability. Lessors recognize the effect of a

change in their assessment of whether the collectability of operating lease receivables are probable as an adjustment to
lease income rather than bad debt expense.

Impairment

We periodically evaluate our real estate properties for impairment indicators. These indicators may include

declining tenant occupancy, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an
asset before the end of its estimated useful life or legislative, economic or market changes that permanently reduce the
value of our investments. If indicators of impairment are present, we evaluate the carrying value of the property by
comparing it to its expected future undiscounted cash flows. If the sum of these expected future cash flows is less than
the carrying value, we reduce the net carrying value of the property to the present value of these expected future cash
flows. This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash flows.
If we misjudge or estimate incorrectly or if future tenant profitability, market or industry factors differ from our
expectations, we may record an impairment charge which is inappropriate or fail to record a charge when we should have
done so, or the amount of such charges may be inaccurate.

Depreciation and Amortization Expense

We compute depreciation expense using the straight-line method over estimated useful lives of up to 39 years

for buildings and improvements, and up to 15 years for personal property. Costs incurred in connection with leasing
(primarily tenant improvements and leasing commissions) are capitalized and amortized over the lease period. The
allocated cost of land is not depreciated. The value of above or below-market leases is amortized over the remaining
non-cancelable periods of the respective leases as an adjustment to rental income. The value of in-place leases, exclusive
of the value of above-market and below-market in-place leases, is also amortized over the remaining non-cancelable
periods of the respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts relating to
that lease are written off. Inappropriate allocation of acquisition costs, or incorrect estimates of useful lives, could result
in depreciation and amortization expenses which do not appropriately reflect the allocation of our capital expenditures
over future periods, as is required by generally accepted accounting principles.

Derivative Instruments

We recognize derivatives on the balance sheet at fair value. Derivatives that do not qualify, or are not
designated as hedge relationships, must be adjusted to fair value through income. Derivative instruments designated in a
hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted
transactions, are considered cash flow hedges. Cash flow hedges are accounted for by recording the fair value of the

derivative instrument on the balance sheet as either an asset or liability. To the extent hedges are effective, a
corresponding amount, adjusted for swap payments, is recorded in accumulated other comprehensive income within
stockholders’ equity. Amounts are then reclassified from accumulated other comprehensive income to the income
statement in the period or periods the hedged forecasted transaction affects earnings. 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. Derivative instruments designated in a hedge relationship to mitigate exposure to
changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate
risk, are considered fair value hedges. We currently have no fair value hedges outstanding. Fair values of derivatives are
subject to significant variability based on changes in interest rates and counterparty credit risk. To the extent we enter
into fair value hedges in the future, the results of such variability could be a significant increase or decrease in our
derivative assets, derivative liabilities, book equity, and/or earnings.

Lease Classification

Some of our real estate properties are leased on a triple net basis, pursuant to non-cancelable, fixed term,
operating leases. Each time we enter a new lease or materially modify an existing lease we evaluate whether it is
appropriately classified as a financing lease or as an operating lease. The classification of a lease as financing or
operating affects the carrying value of a property, as well as our recognition of rental payments as revenue. These
evaluations require us to make estimates of, among other things, the remaining useful life and market value of a property,
discount rates and future cash flows. Incorrect assumptions or estimates may result in misclassification of our leases.

Ownership of Stock in a Sponsored REIT and Related Interests

We held preferred stock interests in two Sponsored REITs, both of which were liquidated during 2018. As a

result of our common and preferred stock interests in these two Sponsored REITs, we exercised influence over, but did
not control these entities. These preferred stock interests were accounted for using the equity method. Under the equity
method of accounting our cost basis was adjusted by our share of the Sponsored REITs’ operations and distributions
received. We also agreed to vote our preferred shares (i) with respect to any merger in the same manner that a majority
of the other stockholders of the Sponsored REIT vote for or against the merger and (ii) with respect to any other matter
presented to a vote by the stockholders of these Sponsored REITs in the same proportion as shares voted by other
stockholders of that Sponsored REIT.

The equity investments in Sponsored REITS were reviewed for impairment each reporting period. The

Company recorded impairment charges when events or circumstances indicate a decline in the fair value below the
carrying value of the investment has occurred and such decline is other than temporary.

Results of Operations

The following table shows financial results for the years ended December 31, 2020 and 2019.

(in thousands)
Revenues:
Rental
Related party revenue:

Management fees and interest income from loans

Other

Total revenues

Expenses:

Real estate operating expenses
Real estate taxes and insurance
Depreciation and amortization
General and administrative
Interest

Total expenses

Gain on sale of property
Income before taxes on income
Tax expense on income

Net income

Year ended December 31,

2020

2019

Change

$ 244,207 $ 265,527 $ (21,320)

1,610
31
245,848

3,517
21
269,065

(1,907)
10
(23,217)

66,940
48,390
88,558
14,997
36,026
254,911

72,311
47,871
90,909
14,473
36,757
262,321

(5,371)
519
(2,351)
524
(731)
(7,410)

41,928
32,865
250

—
6,744
269

41,928
26,121
(19)

$ 32,615 $ 6,475 $ 26,140

Comparison of the year ended December 31, 2020 to the year ended December 31, 2019

Revenues

Total revenues decreased by $23.2 million to $245.8 million for the year ended December 31, 2020, as

compared to the year ended December 31, 2019. The decrease was primarily a result of:

 A decrease in rental revenue of approximately $21.3 million arising primarily from the loss of
rental income from leases that expired after December 31, 2019 and during the year ended
December 31, 2020, compared to the year ended December 31, 2019. In December 2020, a tenant
filed for bankruptcy and was put on a cash basis resulting in a $3.1 million charge against revenue
to write-off receivables from the lease. These decreases were partially offset by rental income
earned from leases commencing after December 31, 2019. Our leased space in our operating
properties was 85.0% at December 31, 2020 and 87.6% at December 31, 2019.

 A decrease of approximately $1.8 million in interest income from Sponsored REIT Loans

primarily as a result of repayment of approximately $51 million of these loans in June 2019.

Expenses

Total expenses decreased by $7.4 million to $255.0 million for the year ended December 31, 2020, as compared

to the year ended December 31, 2019. The decrease was primarily a result of:

 A decrease in real estate operating expenses and real estate taxes and insurance of approximately

$4.8 million.

 A decrease to depreciation and amortization of approximately $2.4 million.
 A decrease in interest expense of approximately $0.7 million. The decrease was primarily from
lower interest rates during the year ended December 31, 2020 compared to the year ended
December 31, 2019.

These decreases were partially offset by:

 An increase in general and administrative expenses of $0.5 million, which was primarily

attributable to an increase in public company related expenses.

Gain on sale of property

The Company sold an office property located in Durham, North Carolina on December 23, 2020 with a sales

price of approximately $89.7 million, at a gain of approximately $41.9 million. The Company did not sell any properties
during the year ended December 31, 2019.

Tax expense on income

Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties,

which decreased $144,000 and federal and other income taxes, which increased by $125,000, during the year ended
December 31, 2020, as compared to the year ended December 31, 2019, primarily as a result of a refund arising due to
the provisions of the Tax Cuts and Jobs Act of 2017 during the year ended December 31, 2019.

Net income

Net income for the year ended December 31, 2020 was $32.6 million compared to a net income of $6.5 million

for the year ended December 31, 2019, for the reasons described above.

The following table shows financial results for the years ended December 31, 2019 and 2018.

(in thousands)
Revenues:
Rental
Related party revenue:

Management fees and interest income from loans

Other

Total revenues

Expenses:

Real estate operating expenses
Real estate taxes and insurance
Depreciation and amortization
General and administrative
Interest

Total expenses

Income before taxes on income and equity in
income of non-consolidated REITs
Taxes on income
Equity in income of non-consolidated REITs

Year ended December 31,
2018

Change

2019

$ 265,527 $ 263,777 $ 1,750

3,517
21
269,065

5,061
32
268,870

(1,544)
(11)
195

72,311
47,871
90,909
14,473
36,757
262,321

70,703
45,857
94,230
13,070
38,374
262,234

1,608
2,014
(3,321)
1,403
(1,617)
87

6,744
269
—

6,636
360
6,793

108
(91)
(6,793)

Net income

6,475 $ 13,069 $ (6,594)

Comparison of the year ended December 31, 2019 to the year ended December 31, 2018

Revenue

Total revenues increased by $0.2 million to $269.1 million for the year ended December 31, 2019, as compared

to the year ended December 31, 2018. The increase was primarily a result of:

 An increase in rental revenue of approximately $1.7 million arising primarily from increased

termination fees for the year ended December 31, 2019, as compared to the year ended December
31, 2018, and rental income earned from leases commencing in 2019 and 2018, which was offset
by the loss of rental income from leases that expired in 2019 and 2018. Our leased space in our
operating properties was 87.6% at December 31, 2019 and 89.0% at December 31, 2018.

The increase was partially offset by:

 A decrease in interest income from Sponsored REIT loans of approximately $1.5 million primarily

as a result of repayment of an outstanding loan by a Sponsored REIT of approximately $51
million in June 2019.

Expenses

Total expenses increased by $0.1 million to $262.3 million for the year ended December 31, 2019, as compared

to the year ended December 31, 2018. The increase was primarily a result of:

 An increase in real estate operating expenses and real estate taxes and insurance of approximately

$3.6 million.

 An increase in general and administrative expenses of $1.4 million, which was primarily

attributable to personnel related expenses and lease acquisition costs.

These increases were partially offset by:

 A decrease in depreciation and amortization of approximately $3.3 million.
 A decrease in interest expense of approximately $1.6 million. The decrease was primarily

attributable to lower debt outstanding, which was partially offset by higher interest rates during the
year ended December 31, 2019 compared to the year ended December 31, 2018.

Tax expense on income

Included in income taxes is the Revised Texas Franchise Tax, which is a tax on revenues from Texas properties,

which increased $75,000, and federal and other income taxes, which decreased by $166,000, during the year ended
December 31, 2019, as compared to the year ended December 31, 2018, primarily as a result of a refund arising due to
the provisions of the Tax Cuts and Jobs Act of 2017.

Equity in income of non-consolidated REITs

Equity in income from non-consolidated REITs was $6.8 million for the year ended December 31, 2018. All of

our investments in non-consolidated REITs were liquidated during 2018. The equity in income during the year ended
December 31, 2018 consisted of equity in income from our preferred stock investment in East Wacker of $7.2 million,
which sold its property on September 24, 2018, and was partially offset by equity in loss from our preferred stock
investment in Grand Boulevard of $0.1 million, which sold its property on July 19, 2018. In addition, for the three
months ended June 30, 2018, we recognized an impairment charge of $0.3 million, which represented the other-than-
temporary decline in the fair value below the carrying value of the Company’s investments in non-consolidated REITs.

Net income

Net income for the year ended December 31, 2019 was $6.5 million compared to net income of $13.1 million

for the year ended December 31, 2018, for the reasons described above.

Non-GAAP Financial Measures

Funds From Operations

The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as
management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to
equity holders. The Company defines FFO as net income or loss (computed in accordance with GAAP), excluding gains
(or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not
capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization
of acquired above and below market lease intangibles and impairment charges on properties or investments in non-
consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate
share of FFO from, non-consolidated REITs.

FFO should not be considered as an alternative to net income (determined in accordance with GAAP), nor as an

indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities
(determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of
sufficient cash flow to fund all of the Company’s needs.

Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT may
define this term in a different manner. We have included the NAREIT FFO definition as of May 17, 2016 in the table
and note that other REITs may not define FFO in accordance with the NAREIT definition or may interpret the current
NAREIT definition differently than we do.

We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be
examined in connection with net income and cash flows from operating, investing and financing activities in the
consolidated financial statements.

The calculations of FFO are shown in the following table:

(in thousands):

Net income
Gain on sale of property
Equity in income of non-consolidated REITs
FFO from non-consolidated REITs
Depreciation and amortization

NAREIT FFO

Lease Acquisition costs

Funds From Operations

Net Operating Income (NOI)

2018

2020

For the Year December 31,
2019
$ 32,615 $ 6,475 $ 13,069
—
(41,928)
(6,793)
2,511
93,674
102,461
—

—
—
—
90,507
96,982
560

—
—
88,244
78,931
467

$ 79,398 $ 97,542 $ 102,461

The Company provides property performance based on Net Operating Income, which we refer to as NOI.

Management believes that investors are interested in this information. 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, management fee income, hedge ineffectiveness, gains or losses on the sale of assets and excludes non-property
specific income and expenses. The information presented includes footnotes and the data is shown by region with
properties owned in the periods presented, which we call Same Store. The comparative Same Store results include
properties held for the periods presented and exclude properties that are redevelopment properties. We also exclude
properties that have been placed in service, but that do not have operating activity for all periods presented, dispositions
and significant nonrecurring income such as bankruptcy settlements and lease termination fees. NOI, as defined by the

Company, may not be comparable to NOI reported by other REITs that define NOI differently. 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 NOI are shown in the following table:

(in thousands)
Region
East
MidWest
South
West
Property NOI from the continuing
portfolio
Dispositions, Non-Operating,
Development or Redevelopment
Property NOI

Same Store

Less Nonrecurring
Items in NOI (a)

Comparative
Same Store

Reconciliation to Net income
Net Income
Add (deduct):
Gain on sale of property
Management fee income
Depreciation and amortization
Amortization of above/below market leases
General and administrative
Interest expense
Interest income
Equity in losses of non-consolidated REITs
Non-property specific items, net
Property NOI

Net Operating Income (NOI)*
Year
Ended

Year
Ended

Rentable
Square Feet 31-Dec-20
573 $

31-Dec-19

4,846 $

4,840 $

1,557
4,387
2,620

20,935
50,415
44,656

20,877
64,513
44,907

Inc
(Dec)

%
Change
0.1 %
0.3 %
(14,098) (21.9)%
(0.6)%

6
58

(251)

9,137

120,852

135,137

(14,285) (10.6)%

5,795

(0.5)%
$ 126,647 $ 142,470 $ (15,823) (11.1)%

(1,538)

7,333

$ 120,852 $ 135,137 $ (14,285) (10.6)%

1,532

8,577

(7,045)

4.9 %

$ 119,320 $ 126,560 $ (7,240)

(5.7)%

Year
Ended
31-Dec-20

Year
Ended
31-Dec-19

32,615 $

6,475

(41,928)
(1,872)
88,558
(313)
14,997
36,026
(1,540)
—
104
126,647 $

—
(2,526)
90,909
(402)
14,473
36,757
(3,338)
—
122
142,470

(a) Nonrecurring Items in NOI include proceeds from bankruptcies, lease termination fees or other significant

nonrecurring income or expenses, which may affect comparability.

* Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.

Liquidity and Capital Resources

Cash and cash equivalents were $4.2 million and $9.8 million at December 31, 2020 and December 31, 2019,

respectively. The decrease of $5.6 million is attributable to $68.5 million provided by operating activities, plus $11.0
million provided by investing activities and less $85.1 million used in financing activities. Management believes that
existing cash, cash anticipated to be generated internally by operations and our existing debt financing will be sufficient
to meet working capital requirements, anticipated capital expenditures and anticipated payments of maturing debt for at
least the next 12 months. We have extension options on our JPM Term Loan and BAML Revolver (discussed below),
which management expects to exercise, or we may seek to replace this indebtedness with new loans or extend the current
loans. Although there is no guarantee that we will be able to obtain the funds necessary for our future growth, we
anticipate generating funds from continuing real estate operations. We believe that we have adequate funds to cover
unusual expenses and capital improvements, in addition to normal operating expenses. Our ability to maintain or
increase our level of dividends to stockholders, however, depends in significant part upon the level of rental income from
our real properties and our interest costs.

Operating Activities

Cash provided by our operating activities of $68.5 million is primarily attributable to net income of $32.6
million excluding the gain on sale of a property of $41.9 million plus the add-back of $89.9 million of non-cash expenses
and a $8.3 million increase in accounts payable and accrued expenses. These increases were partially offset by a $13.7
million increase in payments of deferred leasing commissions, a $3.8 million increase in tenant rent receivables, a $2.1
million increase in lease acquisition costs, a $0.7 million decrease in tenant security deposits and a $0.1 million increase
in prepaid and other assets.

Investing Activities

Cash provided by investing activities for the year ended December 31, 2020 of $11.0 million is primarily

attributable to cash proceeds from the sale of an office property located in Durham, North Carolina of approximately
$88.9 million and partially offset by capital expenditures and office equipment investments of approximately $77.9
million.

Financing Activities

Cash used in financing activities for the year ended December 31, 2020 of $85.1 million is primarily

attributable to net repayments on the JPM Term Loan (as defined below) of $50.0 million and distributions paid to
stockholders of $38.6 million and was partially offset by net borrowings on the BAML Revolver (as defined below) of
$3.5 million.

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”). 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, so that $100 million
remains fully advanced and outstanding under the JPM Term Loan. The JPM Term Loan matures on November 30,
2021, which maturity date may be extended 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 a LIBOR-based rate at December 31, 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 December 31,
2020).

The margin over the LIBOR-based rate or base rate is determined based on the Company’s credit rating pursuant to the
following grid:

LEVEL
I
II
III
IV
V

CREDIT
RATING

LIBOR-BASED
RATE

MARGIN

BASE RATE
MARGIN

/A3 (or higher)

A-
BBB+ /Baa1
/Baa2
BBB
BBB- /Baa3