Good morning and welcome to the Franklin Street Properties Corporation’s Second Quarter 2015 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Scott Carter. Please go ahead sir.

Good morning, and welcome to the Franklin Street Properties second quarter 2015 earnings Call. With me this morning are George Carter, our Chief Executive Officer; John Demeritt, our Chief Financial Officer; Jeff Carter, our Chief Investment Officer; and Janet Notopoulos, President of FSP Property Management. Also with me this morning are Toby Daley, Vice President and Regional Director of Houston; and Will Friend, Vice President and Regional Director of Denver. Before I turn the call over to John Demeritt, I must read the following statement. Please note that various remarks that we may make about future expectations, plans and prospects for the company may constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factor section of our Annual Report on Form 10-K for the year ended December 31, 2014, which is on file with the SEC. In addition, these forward-looking statements represent the company’s expectations only as of today, July 29, 2015. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statements should not be relied upon as representing the company’s estimates or views as of any date subsequent to today. At times during this call, we may refer to Funds from Operations or FFO. A reconciliation of FFO to GAAP net income is contained in yesterday’s press release, which is available in the Investor Relations section of our website at www.franklinstreetproperties.com. Now I’ll turn the call over to John Demeritt. John?

Thank you, Scott, and good morning, everyone. Welcome to our second quarter 2015 earnings call. On today’s call, I’ll begin with a brief overview of our second quarter results and then afterwards our CEO George Carter will discuss our performance in more detail and provide an update on our operations and overall strategies if you look ahead for the second half of 2015. Janet Notopoulos will then discuss some of our recent leasing activities and Jeff Carter will then discuss some of our investment bad disposition activities. And after that we’ll be happy to take the questions as usual. As a reminder our comments today will refer to the earnings release and our supplemental package and also the 10-Q all of which were filed yesterday. And as Scott mentioned it can be found in our website. We reported a decrease in funds from operations or FFO of about $1.1 million, $27.7 million for the second quarter of 2015, compared to the second quarter of 2014. The decrease was primarily from lower property income, as a result of the property dispositions we have been talking about and also some single asset loan repayments we completed in the last 12 months. And also from lower occupancy which you can see the drop from that in some of our same-store comparisons in the supplemental. These decreases were partially offset by property income from the acquisition of Two Ravinia, that we completed in April. We are benefited from lower interest expense. As a result our FFO per share was $0.27 compared to $0.28 per share to the second quarter of 2014. These results were in line with our expectations. Turning to our balance sheet, the current financial position at June 30, 2015, we had approximately $920 million of unsecured debt outstanding and our total…

Thanks John and good morning everyone. Thanks for taking the time to listen the Franklin Street Properties second quarter 2015 earnings call. My prepared remarks today will generally follow my written commentary in the yesterday’s earnings press release. After my comments and others from FSP executives, we will open the call for questions. As John said, for the second quarter of 2015, FSP’s profits as represented by FFO totaled approximately $27.2 million, or $0.27 per share. Our directly owned real estate portfolio of 36 properties totaling approximately 9.6 million square feet was 90.6% leased as of June 30, 2015. And again, as John said, we did update on our 2015 FFO guidance range to $1.04 to $1.08 per share and that just brings up the bottom side $0.01. I thought, I’ll just try to quickly take a step back and reiterate on this call, what we’re doing and why. A lot of analysts and institutional investors here they said we [indiscernible]. I think we’re keeping once in a while briefly make sense for new investors, people who are trying to get to know us. So Franklin Street Properties is very positive on U.S. economic growth and we are very positive about the office sector property to participate in U.S. economic growth. We are bullish. But we believe that this cycle of growth that the U.S. is in now, will be a much longer and slower growth cycle than many other traditional cycles that occurred sort of over the last generation and allowing our many things that go into our view of this that you could talk about for hours. Delevering and some of the new rules and regs on capital and other things are certainly a part of our view of this longer, slower growth cycle, again with muted spikes…

Thank you, George. At George noted the biggest lease for the quarter was Centene management at the Timberlake property in St. Louis for 117,618 square feet. Centene will occupy the entire second building of the project that was formally occupied by RGA Reinsurance Group. The lease is for 91 months and is expected to commence around December 1. The rent is approximately $24.00 a square foot, which is higher than the expiring GAAP rent for RGA and higher than the Energizer deal that was announced last quarter at the Timberlake East building. In the six months since RGA moved out of approximately 197,000 square feet, we have reached approximately 162,000 square feet of that vacant space or close to 82% of the RGA vacancy. And there are several strong prospects for the remaining vacant space, which is now primarily in the Timberlake East building. The portfolio was the whole ended quarter at 90.6% leased and only 2.3% of the portfolio’s proceed expired during the rest of 2015. The next large scheduled lease expiration will be in January of 2016, when the TCF lease in Minneapolis expires. As a reminder, the TCF lease includes two buildings. The first is a 17-storey tower, which we have just completed repositioning. TCF lease is approximately 90,000 square feet out of approximately 305,000 square feet in that tower. We expect 90,000 square feet to get backspace in that tower, we’ll start leasing as soon TCF moves out similar to the leasing pattern that we saw at Timberlake and St. Louis. TCF also leases approximately 165,000 square feet in the adjacent low-rise building that we refer to at 801 Marquette, at only $4.75 per square foot net. Since low-rise building 801 Marquette is the one that’s being considered for redevelopment and if a redevelopment scenario is pursued during 2016, there will be no ramp from that building during the construction period and the ramp loss will be approximately 805,000 net per year. However, the potential future ranking from a new structure will obviously be much greater, because of the low [indiscernible]. I’ll answer any other questions that you have about leasing or property performance later, but I’ll now turn the call over to Jeff Carter, who will discuss the redevelopment prospects for 801 Marquette further, as well as other investments and dispositions.

Thank you, Janet. Good morning everyone. I will review our investment activities for the second quarter and year-to-date including dispositions and acquisitions. And I will as Janet mentioned conclude with the discussion about the status of our potential development project in downtown Minneapolis at 801 Marquette Avenue. On the asset recycling front and in an effort to continue the evolution of our property portfolios George discussed into a primarily urban and infill orientation within our top five core markets and also to capitalize on strong national real estate pricing trends, FSP continues our asset focus on asset recycling from non-core mostly legacy commodity suburban assets, when and as appropriate pricing is in fact achieved. We had indicated the potential for dispositions of non-core assets of up to $150 million to $200 million during the calendar year, and so far FSP has sold three properties for approximately $57 million. We continue to think that our range is a reasonable estimate of our potential asset recycling during this calendar year 2015. As mentioned in our last call, asset recycling efforts will consist of sales of directly-owned properties, as well as the potential repayment certain outstanding single asset REIT loans. We will continue to update the market as greater clarity on potential progress is achieved. As a reminder, in the first quarter of 2015, we sold 100% leased Willow Bend Office Center in Plano, Dallas, Texas on February 24 for $20,750,000 and about $1.462 million gain. Also in the first quarter of 2015 we sold the 100% leased Eden Bluff Corporate Center at Eden Prairie on March 31 for $28 million and an approximate $9 million gain. Most recently as George mentioned, during this past second quarter of 2015, we sold our Park Seneca office building in Charlotte, North Carolina about 110,000 square…

Yes that’s all and now I call for questions.

We will now begin the question-and-answer session. [Operator Instructions] At this time we’ll pass momentarily to assemble our roster. We have a question from John Guinee from Stiffel. Please go ahead, sir.

Okay, great thank you. Couple of just sort of small questions, I noticed that you had one acquisition of $78 million, one asset sale of $8 million, so net use of proceeds of $70 million, but your debt only went up by $60 million, what’s the difference? And then the second question is it looks to me like you extended $53 million worth of loans for a couple of years. Can you walk through that rationale?

Yes, John this is John Demiritt. The debt went up $60 million, because we used some of the Park Seneca proceeds to acquire that property, but also used some operating cash generated to cover that. So that’s why the debt is not as much the asset acquisition position. On the loan expenses for the single asset we launched, we have a property at Houston that we have a loan on called Energy Tower and we extended that loan for a couple of years. We’re working on some lease-up and then in fact we have the asset manager here who works with that if have more questions about that.

I guess from a strategy point of view, if I was picking totally as a shareholder fiduciary, I’d rather have that $53 million back, as opposed to having it lent to a third party at less than 6% interest. Wouldn’t that be a better use of the capital?

John, its George. These loans are first mortgage loans secured by the property. So they are a real estate investment [indiscernible] to a third-party per se, they’re really a real estate investment secured by the property. And from a pure cash flow point of view, when you consider cash, not necessarily NOI, you can get – if you can get 5% or 6% cash flows, so when you think about AFFO versus FFO and all of those sorts of things, these are actually wonderful, wonderful investments. And we think they are absolutely great investments for the FSP shareholders and right where we should be. Again, we know these proprieties. We’ve been managing these properties. We originally acquired these properties. We’re not lenders in fact to the broad marketplace of other people’s opportunities. These are properties that we found, bought, managed and now call. And as you know they’re slowly being disclosed of at the right times and my guess is that eventually all of these properties will be disclosed of and we will be effectively out of the lending business.

Okay, thank you.

You’re welcome.

And our next question is from Dave Rogers from Baird. Please go ahead.

Yes, good morning. Maybe, Janet, I’ll start with you and I wanted to ask a little bit about lease economics in the second quarter. It looks like lease economics definitely dipped on the leasing that you did. I was curious that if that was a function of maybe some TI [indiscernible] or if that was just a broader trend that you noted during the quarter?

Could you just refer me to what numbers you’re actually looking at to be asking the question about the lease economics? Are you looking at those leasing activity, spreadsheet that gives the six months?

I think what we’re just trying to look at it is probably the combination of all-in economics on leases for the spreads, the TIs that any free rent component. If you looked at that it’s kind of dropped in the second quarter, but I guess I’d be interested in your commentary on that.

In general – and we aren’t – in several markets beyond just our core markets. The rents in the markets are rising. The leases that we’re doing are – in those good markets are above, expiring rents, they certainly app market. If you look at the leasing activity, one of the things that make the difference is what the mix is renewals versus new. So to the extent, if you look at the six month period and try to subtract and find out what the tenant improvement leasing cost with this quarter we’re in and versus the other a lot of what drives the per square foot is what the ratio is the renewal, which obviously a low cost some new win. So we did simply with the big driver of the activity in Q2, and it’s a new lease with space that needed to be renovated, so that would obviously have a higher TIs and the renewals that we were doing in the path that San Diego where we have 100,000 square feet of lots and lots of tenants renew at one year at a time. Is that…

Okay, and that’s fair. Thank you. And then maybe on when I look at your lease expiration schedule next year Danbury and Fannie Mae both expired I think about 100,000 square feet each plus or minus, any thoughts on kind of where those discussions are today.

Unfortunately, don’t have, John Dunigan [ph] who is our Regional Manager for Dallas on the call this morning. He tied up on another matter. But on Danbury, that property had two properties, two buildings, they emphasize an early termination options on one of the building and that building will completely sublet so we are in the process of talking to the sub-lessee to see if they are willing to pay what we think it’s a market rent. But we think will either renew those tenants or we will get higher rent depending upon how those negotiations go. So that one has offer the size, Fannie Mae is still in our building for a long time, they wanted more space where we believe that and they are very densely believe that they may move out we’re not willing to make the accommodation for what we have that goes strange things have happened.

Okay, great, thanks. And maybe for Jeff or George, let’s talk a little bit more about the acquisition environment, what your underwriting today, how big that pipeline is and how good you feel about being able to close the more deals.

Hi, Dave this is Jeff. The acquisition environment is toughest has been there is a lot of competition out there for assets and pricing is strong in a lot of the markets that we’re working in, we have and continue to have a lot of opportunities that we’re looking at a number of which continue to be off market. As George talked about this environment is an interesting one to operate and in terms of matching cost of capital and return on capital. We have opportunities in front of us we still feel good about our acquisition guidance. My guess is that will be likely towards the end of the year if it materializes to try to match one against some perspective dispositions that we’re working on as well. But I feel good about the guidance that we’ve given at this point on both dispositions and acquisitions. And I think you’re going to see us continue the favor more often properties that have leasing opportunity associated with them, they can see associated with them. Again, Dallas and Atlanta are the two that I’m seeing – continue to see the most opportunity in. And again, some of that are just off market opportunities. But we do feel good about our pipeline and prospects and the guidance that we’ve given on disclosing acquisitions.

Okay, great. Last one for John, any thoughts John about trimming out debt this year just given the high-line balance or are you feeling pretty comfortable with the balance sort of?

[Indiscernible] balance outstanding as we go through this asset recycling program, so we’re probably not in the short-term here, but we certainly keeping our eyes open on rates and very, very much...

Okay, great. Thanks, guys.

And our next question comes from Tom Lesnick from Capital One Securities. Please go ahead.

All right, good morning everyone. George, Janet, just a couple of leasing questions. You know I only had a chance last night to do some cursory research about sensing, but it appears to be a health insurance company that caters mostly to uninsured and underinsured people. You know in the context of the changing industry dynamic, the Affordable Care Act and the consolidation we have seen among the major health insurance companies recently. How did you underwrite that credit and how did you approach change at all to underwriting that credit?

Just like Tom – yes, Toby Daley.

Toby Daley, and I’m Regional Director. I cover that market and our asset manager, who did that deal, actually obtained a corporate guarantee from the parent, which is Centene Corp, they are publicly traded company. And if you look them up, you’ll see that their track record and their financials are very strong. So their credit is excellent. And we were very pleased to have them as a new tenant at Timberlake.

Okay, fair enough. And then turning to the Ravinia campus and the perimeter submarket in Atlanta, obviously you guys are the one and two right now. But I believe State Farm has a pretty sizable chunk of space in another building on that campus not to mention a couple of buildings on that side of the perimeter submarket. Given that their building their own campus in the perimeter submarket kind of on the other side, how are you guys thinking long-term about State Farm potentially leaving a sizable chunk at the Ravinia campus.

Again Tom, Toby Daley I will cover that one. State farm is at Three Ravinia which is right next to two buildings. And there are no longer terms leases I understand it through 2021, I believe. So they are there for a good while. And then the other locations I’m sure they’re going to move out to some of the spaces over the next couple of years, as their campus is delivered. But the market has gotten so tight, in terms of space and we are below 10% vacancy that we feel strongly as that space will be absorbed fairly quickly. And our lease role is pretty minimal over the next couple of years, we are not too worry about it.

Got it, and then lastly, on same story in Hawaii, aside from the mid west region, which obviously is impacted by the RGA move out, none of your other regions look particularly strong. This quarter, I’m just wondering when we can start to see that second derivative turn positive, in terms of trend there? And what’s really driving that is it the revenue side, is it the expense, is that something you could potentially begin to disclose in future quarters?

Yes, this is Janet. I think if you are looking at the numbers in our supplemental. If you look at the six stores, six month same-store, you see decreases which are all due to the vacancy from the fourth quarter of 2014, moving to 94% and then dropped in. RGA certainly was part of that in the mid-west but we have similar time to give that great in the fourth quarter or January 1. So I think if you then look at a three months to the three months you can see that we’re picking up obviously the first lease energizer has kicked in, we expect our Centene lease to start December or they may start earlier. So we would hope, well we expect that the leases that we have done start kicking into NOI throughout this year and we hope that the leasing picks up in these other places where we gotten vacancy back. It is not a result of rent, the rents are still pretty strong in all the prices that we’re talking about. And Houston may be moderating, but we should start seeing a gradually kick in as the leasing commences, as the construction finishes as the leasing goes.

Okay, so it sounds to me it’s mostly the timing of leases coming on or off line regarding the revenue side and the expense side is still relatively turning as normal.

Yes, the thing that’s a little bit different about the second quarter is that there was a lot of movement on real estate tax is particularly in the Midwest and the West. We have a lot of payments and then offset by other one that had new tax assessments that we accrued the full anonymous so we get repayment. So the sort of offsetting, so you don’t see a big screen the number, but a lot of different change of working the way through. I expect that that sort of also with about in the next quarter and then hopefully we get more repayment at the end of the year. So that’s [indiscernible].

Okay, great. Thank you.

And our next question comes from Craig Kucera from Wunderlich. Please go ahead.

Yes, hi, good morning. You guys several assets that have had a relatively low occupancy for sometime I think the Baltimore asset has been 80% or below for a while and one year Denver has been some of the in the Seattle asset has been kind of a 50% range. When you look at those assets that have been relatively low occupancy, how do you balance the decision to trying to lease them up versus selling particularly for those we are maybe we only have one asset in the market.

This is George. Now, I mean that is something we look at all the time. And so we’re – so if you take for example to federal way off that which is had a tough occupancy or quite a while. And it’s a nice way did asset out in that market, and we definitely look at that all the time for potential disposition. But every property is unique and for example on that particular sub-market, the better way sub-market that was so effected by warehouse. And the market starting to come back and we think the property, for example that property is sort of operating profitably break-even or profitably. And the markets coming back headed in the right direction. There is not a reason just to dispose the disposal and we – that philosophy were sort of goes through all of our property is including the once that the few of there had low occupancy. Again, on the whole portfolio, our occupancies are pretty good. And these isolated ones or just analyzed property-by-property, market-by-market, where the markets are growing, where we could do the best generally for best tax.

Okay. You mentioned that the Houston was moderating a bit. Can you give us a little bit more color on what you’re seeing there? And are you seeing any space coming back sub-lease space, it’s maybe currently leased, but it’s dark.

Craig, this is Toby Daley, I’m Regional Director for Houston and…

As well as Atlanta.

You could clearly they have been a lot of new deliveries of space, and there’s also been sublease space introduce to that market. But we started with such low vacancy that the fundamentals remain fairly strong, and rents are actually holding firm. They are relatively unchanged from last quarter and clearly vacancy, it is up but it’s still in the range of healthy, and there overall lease percentages 93% at quarter-end. And a lot of the deals that we are doing this year, the renewals and some of the new leasing, because we did the expiring leases three, five, seven years ago. Even though rents have held flatter maybe a little bit off, we’re still getting an increase in rents of 15% to 30% on a case-by-case basis. So, yes, the sublease space available some of our tenants in pockets are attempting to sublease, but overall we are holding at 93% and we are very little roll coming up in 2016. So we remained very bullish on Houston.

Great. And I appreciate the tightening of the guidance, and maybe I missed this but have you guys disclosed any sort of employee pick up an occupancy or expectation based in that number, and what is it?

We have not right now. We’ve not given guidance that way.

Okay. And then finally on the Two Ravinia property, as they look like it’s – you guys going in occupancy of about 77%. What initial yield was that purchase that and where do you think you can bring that to eventually ones it’s closure to eight, nine per occupancy.

Hi, Craig, this is Jeff Carter. We did not give specific guidance on that except to say that it was in the range, but what I was talking about where investments on the last quarter’s call. We’re typically seeing the deals that we are underwriting be in the 5% to 6% going in range, and this property was consistent with that, bought it about 80% leased with below market rents. We see upsize in there that would be – we think meaningful. And that’s the guidance that we gave on that one.

Okay. Thanks guys.

Okay.

And we have a follow up question from John Guinee from Stifel. Please go ahead, sir.

Great, yes. Just a one quick question, I noticed Richmond is now 100% occupied. Congratulations, because I think that was a deal that was zero a while ago. Is there enough lease term on that portfolio where that asset to sell at or is that on the sell back.

There is term, it is a potential candidate for sale along with, by the way, it’s not for sale now, it’s not listed, these potential candidates for sale. Timberlake, when we finished leasing there could be a potential candidate for sale. All of these non-core once John that we are stabilizing and we’re in the markets are starting to come back, and you staring to get buyers on markets, some of these properties on the stabilized for while, but there is no buyers on the market. When both happen, we definitely touch the market for sale to move into more urban in that platform.

Great, thank you.

[Operator Instructions] Our next question is from Jamie Feldman from Bank of America. Please go ahead sir.

Great, thanks and good morning. I was hoping you could give a little bit more color around the assumptions in your guidance. Like in terms of year-end occupancy or what you think same-store NOI might do in the back half of the year?

We actually don’t have that Jamie, we are really just worked on an annual basis, what we thought the range about I thought it would be, so we haven’t disclose that where we thought we would, we’re going to be.

So, what are some of the key changes, like how you guys get to the number? What do you assume?

Well, we bought the bottom of the range up from $1.03 to $1.04 this quarter and a range of $1.04 to $1.08. It was we look at leasing assumptions that we have during the year and what leasing we think we’re going to accomplish and factor that into it and then we look at some of the things that we think might go wrong and some of the things that might move over our way and we make some assumptions of our interest rates and things like that and come up with the range possibilities of where we think FFO is going to land and try to capture that range when we give our guidance. We don’t generally target a particular occupied a least percentage of it at year-end where we disclose that we’ve got there may be several assumptions on that based on what spaces we have what run rates we might receive so it’s little bit hard to come up with that in other than in a range, which is not something we’re disclosed, I’m hopefully that’s helpful for you.

Yes, so I guess it sounds like you do a bottoms up which make sense. But would you say on average like you think the occupancy would be higher or lower or the same? When you do your bottoms up?

Well, I think we would expect to have the occupancy go out, as we move during the year and I think when you look at for examples of same-store comparisons of Q2 of 2015 versus Q2 of 2014, you could see that, it’s better than the six month numbers and you know what, I think, the Centene lease we did this quarter is fairly some good news about where we are leasing. And I think the [indiscernible] space we had in our Colorado we leased some of that after KPMG. And I think we got some good stories with that tending in right direction.

Okay, alright that is helpful, thank you.

And this will conclude our question-and-answer session. I would like to turn the conference back over to George Carter, for any closing remarks.

Thank you for attending the call. I look forward to talking to you on next quarter. Thank you have great day.