FSP - Franklin Street Properties: Positive Debt Extensions And Low Multiple (Rating Upgrade)

2024-04-25 13:13:50 ET

Summary

• Franklin Street Properties has extended all of its near-term debt maturities to 2026, and repaid $102 million of debt in February.
• The REIT is trading at a material discount to a disposition value of $837 million.
• FSP's value proposition has improved with a healthier maturity schedule, potential Fed rate cuts, and a low multiple to its annualized fourth-quarter FFO.

Franklin Street Properties ( FSP ) has dipped around 16% since I last covered the ticker with a sell rating. The office REIT is now changing hands for 7.4x multiple to its annualized fiscal 2023 fourth quarter funds from operations ("FFO"). FFO was $0.07 per share in the fourth quarter, dipping $0.03 versus its year-ago comp of $0.10 per share . This multiple is markedly lower than FSP's prior 8.8x multiple from when I last covered the ticker. It comes as the REIT looks to address its wall of near-term debt maturities through asset dispositions and extensions. Critically, FSP's extension talks with its creditors have been positive, with all the REIT's debt extended through April 1, 2026. The REIT also repaid $102 million of debt in February....

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