Franklin Street Properties Corp. (FSP) closed a $320 million secured credit facility with an affiliate of TPG Credit on February 26, 2026. The facility provides a $258.5 million drawdown, net of a $16.5 million original issue discount, which the company used to repay in full its $248.9 million aggregate principal amount of unsecured loans that were due on April 1, 2026.
The new facility carries a 9.0% initial coupon rate and a 4.0% exit fee. It has a stated maturity of February 26, 2029, with an option to extend for up to one year. In addition, the facility includes up to $45 million in delayed‑draw term loans earmarked for tenant improvements, leasing commissions, and building enhancements.
This refinancing is a key component of FSP’s debt‑reduction strategy, which has already sold approximately $1.1 billion of property assets since late 2020, cutting corporate debt by nearly 75%. By replacing unsecured debt with a secured facility that carries a lower interest rate, the company improves its balance‑sheet leverage, removes a near‑term maturity risk, and gains financial flexibility for future portfolio optimization.
"After considering a number of different potential strategic alternatives in consultation with our professional advisors, we concluded that refinancing our outstanding indebtedness was the best alternative available to us at this time," said George J. Carter, Chairman and CEO. "Our Board of Directors and management team remain deeply committed to continuing to explore ways to maximize shareholder value. We believe that having successfully addressed our near‑term debt maturities has reduced a significant source of near‑term uncertainty and avoided having to make forced or suboptimal decisions, enabling us to focus on executing property‑level initiatives in what continues to be an uneven office market environment." David Busker of TPG Credit added, "We are pleased to provide a capital solution that offers financial flexibility in current market conditions."
Prior to the refinancing, FSP reported a GAAP net loss of $8.3 million and Funds From Operations of $2.3 million for Q3 2025, with revenue of $27.3 million. The company’s InvestingPro Financial Health score is currently rated as "WEAK," and it has reported negative Adjusted Funds From Operations. The new credit facility provides the liquidity needed to support ongoing tenant improvements and to maintain operations while the company continues its strategic review, which began in May 2025.
The transaction removes the April 2026 debt maturity, de‑risks the balance sheet, and positions FSP to focus on property‑level initiatives and potential future asset sales. With the secured facility in place, the company can pursue opportunities in a challenging office market while maintaining financial flexibility for tenant improvements and other capital needs.
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