2014 Annual Report

Fellow Stockholders

I am pleased to report that our Company’s total revenues rose by $36 million or 16.9% to $249.7 million in 2014. Profits as measured by funds from operations, or FFO1, increased by approximately $11.6 million or 11.5% from 2013, and on a per share basis, FFO grew 4.7% from $1.07 per share in 2013 to $1.12 per share in 2014. Our total growth in FFO per fully-diluted share for the four-year period of 2011 to 2014 has totaled approximately 33.3%, reflecting the overall growth in the size and number of properties in our portfolio, as well as the strong operating results we have been able to achieve. Along with our $0.76 per share dividend, we continue to believe this combination of growth and income is meaningful and attractive to investors.

During 2014, the broader U.S. economy continued to make choppy but positive strides toward higher GDP growth and lower unemployment. As a consequence, national office property statistics also continued to show overall improvement in rental rate and occupancy metrics. Our directly-owned portfolio of 38 office properties, totaling approximately 9.6 million square feet, finished 2014 posting 2.2% “same-store” full-year growth and a 92.8% overall leased rate as of December 31, 2014. We believe the most likely outlook for the U.S. economy is one of steady modest growth for the foreseeable future with continued low interest rates prevailing during 2015. The broader U.S. economy in 2015 could be meaningfully affected by economic risks in other large countries, relative global currency values and important geopolitical events. Uncertainty to any U.S. economic forecast is heightened by these interconnected global forces.

During 2014, we focused on integrating the large amount of new property acquisitions we made in 2013; but as we look ahead, we believe that in 2015 and 2016 we will resume our asset growth through additional property acquisitions as well as through new property development. Capital for this growth plan will come from property operations, including rental cash flow and targeted non-core property dispositions. Broader capital market availabilities also present the potential for growth capital. These opportunities for resumed growth in our property portfolio over the next two years are primarily presenting themselves within our five core geographic markets of Atlanta, Dallas, Denver, Houston and Minneapolis. However, limited special situations surrounding the redevelopment potential of other properties we currently own are also presenting themselves and may be pursued as well. Also, the recent drop in oil/energy prices may, if maintained at current levels for an extended period of time, provide better pricing for additional property acquisition opportunities within energy-driven markets. Regardless of some of these near-term risks, FSP has a very positive long-term view of the global energy business as a macro driver of jobs and growth in key U.S. office markets.

In closing, the team at FSP remains focused on creating value and growth for all our stockholders from efforts within our existing portfolio of office properties, as well as through the acquisition and development of new real estate assets. As 2015 begins, I am confident that our Company is well positioned to provide stockholders with future share price growth and meaningful current dividend income.

Thank you for your continued trust, confidence and support.

George J. Carter
Chairman & Chief Executive Officer

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1FFO is a non-GAAP financial measure currently used in the real estate industry that we believe provides useful information to investors. Please refer to page A-1 of this Annual Report for a definition of FFO and a reconciliation of net income to FFO.

Investor Relations
Franklin Street Properties Corp.
401 Edgewater Place
Wakefield, MA 01880
(877) 686-9496