Franklin Street Properties (FSP) risk factors, FY2024 10-K

Risks Related to our Indebtedness

1. 01If our one remaining Sponsored REIT defaults on its Sponsored REIT Loan, we may be required to keep balances outstanding on our existing debt, 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
2. 02Our operating results and financial condition could be adversely affected if we are unable to refinance the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes
3. 03Failure to comply with covenants in the documents evidencing the BofA Term Loan, the BMO Term Loan, the Series A Notes or the Series B Notes could adversely affect our financial condition
4. 04As of each of December 31, 2024 and February 6, 2025, we had $71.1 million outstanding under the BMO Term Loan. Interest on the BMO Term Loan bears interest at variable rates based on a spread over SOFR and includes a 5.00% floor on SOFR
5. 05Downgrades in our credit ratings could reduce our access to funding sources in the credit and capital markets
6. 06If we do not repay a portion of our indebtedness by March 31, 2025, our interest costs will increase

Risks Related to our Operations and Properties

1. 07Economic conditions in the United States could have a material adverse impact on our earnings and financial condition
2. 08If we are not able to collect sufficient rents from each of our owned real properties or collect interest on the Sponsored REIT Loan, we may suffer significant operating losses or a reduction in cash available for future dividends
3. 09We may not be able to dispose of properties on acceptable terms or within the time periods we anticipate pursuant to our disposition strategy
4. 10We are dependent on key personnel
5. 11We face risks from tenant defaults or bankruptcies
6. 12New acquisitions may fail to perform as expected
7. 13We face risks in owning, developing, redeveloping and operating real property
8. 14We may encounter significant delays in reletting vacant space, resulting in losses of income
9. 15We face risks of tenant-type concentration
10. 16We face risks from geographic concentration
11. 17We compete with national, regional and local real estate operators and developers, which could adversely affect our cash flow
12. 18We face possible risks associated with the physical effects of climate change
13. 19Security breaches and other disruptions could compromise our information and expose us to liability, which could cause our business and reputation to suffer
14. 20Actual or threatened terrorist attacks may adversely affect our ability to generate revenues and the value of our properties
15. 21We may lose capital investment or anticipated profits if an uninsured event occurs

Risks Related to Legal and Regulatory Matters

1. 22We are subject to possible liability relating to environmental matters, and we cannot assure you that we have identified all possible liabilities
2. 23We 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
3. 24We face risks associated with our tenants being designated “Prohibited Persons” by the Office of Foreign Assets Control

Risks Related to our Common Stock

1. 25Our level of dividends may fluctuate
2. 26The real properties held by us may significantly decrease in value
3. 27Further issuances of equity securities may be dilutive to current stockholders
4. 28The price of our common stock may vary

Risks Related to our Organization and Structure

1. 29Our employee retention plan may prevent changes in control
2. 30We would incur adverse tax consequences if we failed to qualify as a REIT
3. 31Provisions in our organizational documents may prevent changes in control