Franklin Street will not manage new single property firms' preferreds

By Marisa Wong

Madison, Wis., Dec. 15 - Franklin Street Properties Corp. said that its broker-dealer subsidiary, FSP Investments LLC, will no longer sponsor the syndication of shares of preferred stock in newly formed single property companies.

FSP Investments will, however, continue to provide investor relations services to and sponsor the syndication of any additional preferred shares in existing single property companies, according to a news release.

The parent company said it plans to take charges of between $375,000 and $425,000 to earnings in the fourth quarter to reflect costs resulting from this change.

The release noted that FSP Investments has exclusively managed preferreds in single property companies to accredited investors for over 15 years. Those syndications raised more than $1.8 billion of equity for more than 50 single property companies.

Franklin Street said it will continue to manage all the business of the 16 existing single property companies that sit outside of the firm.

George J. Carter, president and chief executive officer of Franklin Street, said in the release, "The decision to no longer sponsor the syndication of shares of preferred stock in newly formed single property companies was made after judging the potential for meaningful future profit contribution to the earnings of [the company] from such syndications to be limited.

"Our investment banking segment has been marginal in its profit contribution over the last four years and we believe time and resources may be more productively deployed elsewhere going forward. Unfortunately, our investment executives and their sales assistants will be leaving [the company], as there will be no new investment product for them to sell.

"However, we are exploring a possible future arrangement that, if successful, could enable our former investment executives and their sales assistants to act as informed communications conduits with the holders of preferred stock in the 16 existing single property companies. We will keep all shareholders informed of any progress in that area."

Franklin Street is a Wakefield, Mass.-based investment firm specializing in real estate.

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