FSP - Franklin Street Properties: No Dividends And Wall Of Debt

2024-02-04 03:22:24 ET

Summary

• FSP trading at an 8.8x multiple to its annualized third-quarter FFO is comparatively expensive against its 1.7% dividend yield and 74.8% lease rate.
• The office REIT is currently trading significantly below its $6.88 book value per share.
• 2024 is set to see $311 million of debt mature which will mean more asset sales if FSP is unable to refinance.

Office REITs are in a battle for their lives, and their investors are faced with a conundrum in picking the winners in an increasingly Darwinistic space. The headwinds are clear; a Fed funds rate at a more than two-decade high and rising office vacancies as work-from-home becomes a perpetual feature of the post-pandemic world of work. Rolling layoffs have also afflicted US corporates as they come to terms with more expensive debt and the specter of a recession. These three factors have aggregated to form the perfect storm of headwinds for office REITs like Franklin Street Properties ( FSP ). The $260 million REIT is the owner of Class B office properties across six states but with a concentration on Texas and Denver, Colorado....

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