To The Board Of Directors And Stockholders Franklin Street Properties Corp. Wakefield, Massachusetts
The following excerpt is from the company's SEC filing
We have audited the accompanying statements
of revenue over certain operating expenses (the "Statements") of the property known as 999 Peachtree (the “Property”)
for the period January 1, 2013 to June 30, 2013, and for the year ended December 31, 2012, and the related notes.
Management is responsible for the preparation
and fair presentation of the Statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of the Statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion
on the Statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether
the Statements are free from material misstatement.
An audit involves performing procedures to
obtain audit evidence about the amounts and disclosures in the Statements. The procedures selected depend on the auditors’
judgment, including the assessment of the risks of material misstatement of the Statements, whether due to fraud or error. In making
those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation
of the Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the Statements.
The accompanying Statements were prepared for
the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the Form 8-K
of Franklin Street Properties Corp.) as described in Note 2 to the Statements and are not intended to be a complete presentation
of the Property’s revenue and expenses.
In our opinion, the Statements of the Property
referred to above present fairly, in all material respects, the revenue over certain operating expenses described in Note 2 to
the Statements of the Property for the period January 1, 2013 to June 30, 2013, and for the year ended December 31, 2012, in accordance
with accounting principles generally accepted in the United States of America.
The accompanying statements of revenue
over certain operating expenses (the “Statements”) of 999 Peachtree include the operations of a commercial building
located in the Midtown business district of Atlanta, Georgia (the “Property”). The Property is a fully constructed,
28-story, multi-tenant office building containing approximately 621,946 rentable square feet of space and a 9-story parking garage.
The Property was owned by Jamestown 999 Peachtree, L.P. and sold to FSP 999 Peachtree LLC (the “Property Owner”), a
subsidiary of Franklin Street Properties Corp., on July 1, 2013.
The accompanying Statements have
been prepared on the accrual basis of accounting. The Statements have been prepared in accordance with Rule 3-14 of Regulation
S-X of the Securities and Exchange Commission for real estate properties acquired or to be acquired. Accordingly, these Statements
exclude certain historical expenses not comparable to the operations of the Property after acquisition such as amortization, depreciation,
interest, corporate expenses and certain other costs not directly related to future operations of the Property. Therefore, the
amounts reported in the Statements may not be comparable to the results of operations reported for the future operations of the
Property. Except for this factor, the Property Owner is not aware of any material factors during the year ended December 31, 2012,
or the period January 1, 2013 to June 30, 2013, that would cause the reported financial information not to be indicative of future
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires
management to make estimates and assumptions that affect the reported amounts of revenues and certain expenses during the reporting
period. Actual results could differ from these estimates.
Rental income includes income from
leases, certain reimbursable expenses, parking, and straight-line rent adjustments associated with renting the Property. A summary
of rental income is shown in the following table:
Rental income from the leases, which
includes rent concessions and scheduled increases in rental rates during the lease terms, are recognized on a straight-line basis.
Reimbursable costs are included in rental income in the period earned.
The following amounts were paid
to affiliates of Jamestown 999 Peachtree, L.P. during the period January 1, 2013 to June 30, 2013 and for the year ended December
For the period January 1, 2013 to
June 30, 2013 and for the year ended December 31, 2012, 51% and 53%, respectively, of all of the rental income was recognized from
one tenant. As such, future recognition is dependent upon the financial strength of the lessee and its ability to perform under
the lease agreement.
The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.
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