UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K


(Mark One)


x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2009





o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from              to


Commission File No. 000-52551





FSP 50 South Tenth Street Corp.


(Exact name of registrant as specified in its charter)





Delaware
20-5530367(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)401 Edgewater Place, Wakefield, Massachusetts
01880(Address of principal executive offices)
(Zip Code)


Registrant’s telephone number, including area code:(781) 557-1300





Securities registered pursuant to Section 12(b) of the Act:None





Securities registered pursuant to Section 12(g) of the Act:





Preferred Stock, $.01 par value per share





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes   No X.





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.   Yes  __   No X.





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes X  No __.





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   No __.








Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer o
Accelerated filer oNon-accelerated filer    o (Do not check if a smaller reporting company)
Smaller reporting company x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes__ No X.





As of June 30, 2009, the aggregate fair market value of Common Stock held by non-affiliates of the registrant was $0.





The number of shares of Common Stock outstanding was 1 and the number of shares of Preferred Stock outstanding was 700, each as of February 28, 2010.





Documents incorporated by reference: None.





TABLE OF CONTENTS





PART I

1Item 1.
Business.
1Item 1A.
Risk Factors.
5Item 1B.
Unresolved Staff Comments.
5Item 2.
Properties.
6Item 3.
Legal Proceedings.
7Item 4.
Removed and Reserved.
7PART II

8Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
8Item 6.
Selected Financial Data.
8Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
9Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
15Item 8.
Financial Statements and Supplementary Data.
15Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
15Item 9A.
Controls and Procedures.
15Item 9A(T).
Controls and Procedures.
15Item 9B.
Other information.
16PART III

17Item 10.
Directors, Executive Officers and Corporate Governance
17Item 11.
Executive Compensation.
18Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
18Item 13.
Certain Relationships and Related Transactions, and Director Independence.
20Item 14.
Principal Accounting Fees and Services.
20PART IV

22Item 15.
Exhibits, Financial Statement Schedules.
22SIGNATURES
23

















Item 1.
Business





History





Our company, FSP 50 South Tenth Street Corp., which individually or together with its subsidiary, we refer to as the Company, we or our, is a Delaware corporation formed to purchase, own and operate a twelve-story multi-tenant office and retail building containing approximately 498,768 square feet of rentable space located in downtown Minneapolis, Minnesota, which we refer to as the Property.  The Company operates in a manner intended to qualify as a real estate investment trust, or REIT, for federal income tax purposes.





The Company was organized initially in September 2006 by FSP Investments LLC (member, FINRA and SIPC), a wholly-owned subsidiary of Franklin Street Properties Corp., which we refer to as Franklin Street (NYSE Amex: FSP).  FSP Investments LLC acted as a real estate investment firm and broker/dealer with respect to (a) the organization of the Company, (b) the acquisition of the Property by the Company and (c) the sale of equity interests in the Company.





The Company purchased the Property from an unaffiliated third party for $127,000,000 on November 8, 2006.  The purchase price, which was determined by arm’s-length negotiations, was financed entirely by a loan from Franklin Street collateralized by a first mortgage, which we refer to as the Acquisition Mortgage Loan.





Franklin Street holds the sole share of the Company’s common stock, $.01 par value per share, which we refer to as the Common Stock.  Between November 2006 and January 2007, FSP Investments LLC completed the sale on a best efforts basis of 700 shares of preferred stock, $.01 par value per share, which we refer to as the Preferred Stock.  We sold the Preferred Stock for an aggregate consideration of $70,000,000 in a private placement offering to 627 “accredited investors” within the meaning of Regulation D under the Securities Act of 1933.  Between November 13, 2006 and January 9, 2007, the Company held six investor closings, at each of which shares of Preferred Stock were sold and funds were received.  Funds from each individual closing were used to repay a portion of the Acquisition Mortgage Loan from Franklin Street and associated fees as well as other expenses payable to Franklin Street’s wholly-owned subsidiary, FSP Investments LLC.  On December 21, 2006, the Company obtained a permanent first mortgage loan in the original principal amount of $76,200,000 from Bank of America, N.A., which we refer to as the Permanent Mortgage Loan.  The Acquisition Mortgage Loan was repaid in its entirety on December 26, 2006 from the proceeds of the sale of equity interests in the Company and from the proceeds of the Permanent Mortgage Loan.  Total interest and loan fees incurred on the Acquisition Mortgage Loan payable to Franklin Street were approximately $4,961,000 in 2006.  The use of proceeds received from the offering of Preferred Stock and the Permanent Mortgage Loan and affiliates receiving payments therefrom are set forth in the table below:





Type
Affiliate paid

AmountOperating/Capital Reserve (1)


$
8,209,000Organizational, Offering andOther Expenditures for the Company(2)(6)
FSP Investments LLC


725,000Selling Commissions(3)
FSP Investments LLC


5,600,000Equity Portion of the Purchase Priceof the Property(4)
Franklin Street Properties Corp.


50,800,000Loan Fee Paid to Franklin Street (5)
Franklin Street Properties Corp.


4,025,000Acquisition Fee(6)
FSP Investments LLC


350,000Permanent Mortgage Loan fee & expenses



291,000Total Uses of Proceeds



70,000,000Permanent Mortgage Loan



76,200,000$
146,200,000




















(1)
The Operating/Capital Reserve proceeds were retained by the Company for operating and capital uses.
 (2)
Organizational, Offering and Other Expenditures were paid for various expenses, including legal, accounting, appraisal, engineering and organizational expenses allocable to the offering, incurred in connection with the organization and syndication of the Company.
 (3)
Selling Commissions were paid to FSP Investments LLC, as Selling Agent.
 (4)
The Purchase Price of the Property was $127,000,000 and was financed by the Acquisition Mortgage Loan, which was repaid from proceeds of the offering and the Permanent Mortgage Loan.
 (5)
The Loan Fee Paid to Franklin Street was a fee (or points) of $4,025,000 paid to Franklin Street to obtain the Acquisition Mortgage Loan to purchase the Property.  The Acquisition Mortgage Loan was in the original principal amount equal to the purchase price of the Property, had a term of two years, and was prepayable at any time without premium or penalty and carried an interest rate equal to the rate payable by Franklin Street on borrowings under its line of credit with its bank.
 (6)
The Acquisition Fee was paid for services in connection with identifying and acquiring the Property.








1


Transactions between the Company and Franklin Street and/or its affiliates were entered into without the benefit of arm’s-length bargaining and involved conflicts of interest.  Although Franklin Street sponsors the syndication of other REITs similar to the Company and has in the past acquired some of those REITs, Franklin Street is under no obligation to acquire or to offer to acquire the Company or the outstanding shares of Preferred Stock, and any acquisition transaction would need to be approved by the Company’s stockholders and the boards of directors of Franklin Street and the Company.  Please see “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence”.





Our Business





Our sole business is to own and operate the Property and we do not intend to invest in or purchase any additional properties.  We derive rental revenue from income paid to us by the tenants of the Property.  Property management services are provided by a third party.





FSP 50 South Tenth Street LLC, a wholly-owned subsidiary of the Company, leases a portion of the Property from the Company and is the lessor for tenants occupying the portion of the Property controlled by this master lease.  This arrangement has no economic effect on the Company's operations and exists only because the Company acquired the Property with a master lease in place.





The Property was completed in 2001 and is leased to a diverse group of office and retail tenants with staggered lease expirations.  The Property is located directly across the street from the designated world headquarters of Target Corporation (NYSE: TGT), which we refer to as Target, and is connected to a corporately-owned two-level Target retail store and sits above an approximately 850-stall, three-level parking garage that is owned and managed by the City of Minneapolis.





The Property also has lower level retail space and is part of a larger area that we refer to as the Project that covers a full city block in Minneapolis, Minnesota.  The Project is comprised of our Property, the Target retail store and the parking garage.  The three owners of the Project, the Company, Target and the City of Minneapolis, share expenses and responsibilities for maintenance of the Project under the terms of a Reciprocal Easement and Operation Agreement (REOA), which is administered by Ryan Companies US, Inc., which we refer to as Ryan.  The three owners of the Project also share certain common areas and access to four skyway bridges that connect the Project to other buildings, including Target’s world headquarters across the street, and the greater Minneapolis skyway system.  Ryan also serves as our property manager and is a tenant of ours at the Property.  For the year ended December 31, 2009, total expenses allocable to the three owners pursuant to the REOA were $0.7 million, of which $321,000 or 47.1% was allocated to us as common area expenses.  These common area expenses are typically recovered through tenant leases.





The Property has office and retail space, which collectively was approximately 97% occupied as of December 31, 2009.  There is approximately 449,233 square feet of rentable office space, which was approximately 98% occupied as of December 31, 2009, and approximately 36,415 square feet of rentable retail space, which was approximately 82% occupied as of December 31, 2009 and approximately 13,120 square feet of storage space.  Target and Ryan currently occupy 10% or more of the Property’s space.  Oracle America, Inc., which we refer to as Oracle America, leases approximately 242,107 square feet of space (approximately 50% of the Property’s rentable space) through March 2014.  Oracle America subleases its space to Target (approximately 215,838 square feet) and the balance (approximately 26,269 square feet) to another tenant.  Oracle America was previously known as Oracle USA, Inc., which we refer to as Oracle USA.  Effective February 15, 2010, Oracle USA merged with and into Oracle America, with Oracle America surviving the merger.  In connection with this merger, Oracle USA assigned its lease at the Property to Oracle America.  Oracle America is and Oracle USA was a wholly-owned subsidiary of Oracle Corporation (NASDAQ: ORCL), which we refer to as Oracle.  Ryan leases approximately 86,381 square feet through July 2015, subject to Ryan’s right to terminate the lease, commencing on December 31, 2011, prior to its scheduled expiration in 2015.  In addition to its sublease, Target directly leases approximately 43,506 square feet through June 2015 and approximately 1,024 square feet through October 2011.  Including subleased space, Target occupies approximately 54% of the Property's rentable space.  Ryan occupies approximately 18% of the Property’s rentable space.





2


For leases with 10% or more of the rentable square feet of the property, the table below shows the estimated annual rental and average effective annual rental per square foot, including estimated expense reimbursement for each lessee, and the percentage of gross annual rental income for the Property.  Renewal options for each of these leases are further discussed in “Part I, Item 2. Properties” below.  Except for Oracle America and Ryan, none of the Property’s additional office and retail tenants with direct leases currently occupies 10% or more of the Property’s space.





Annual

% ofRental

GrossAnnual

per Square

AnnualTenant
Rental

Foot

RentalOracle USA
$  8,016,654

$       33.11

51%Ryan
$  2,800,786

$       32.42

18%





Tenant leases at the Property are generally structured so that each tenant pays a base rent amount for its premises and also pays a portion of the Property’s operating costs as additional rent.  The tenant’s portion of the Property’s operating costs is calculated by taking the square footage of the tenant’s premises and dividing it by the total square footage of the Property.  Operating costs include, but are not limited to, costs associated with maintenance, repairs, real estate taxes, insurance, utilities and management fees.  In our capacity as the landlord, we are generally obligated, at our expense, to maintain and replace, if necessary, major building systems and structural components of the Property, including exterior walls, roof and slab.





FSP Property Management LLC, a wholly-owned subsidiary of Franklin Street, provides the Company with asset management and financial reporting services, which include but are not limited to, selecting and supervising a local property management company and local leasing brokers, approving lease transactions, managing debt compliance, evaluating performance of the asset, and recommending appropriate stockholder distributions to the Board of Directors of the Company.  The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one percent (1%) of the gross revenues of the Property.  The asset management agreement between the Company and FSP Property Management LLC may be terminated by the Company without cause at any time, upon at least thirty (30) days written notice.





Ryan provides the Company with local, on-site property management and building maintenance services and periodic financial, operating and budget reports relating to the operation of the Property for review by FSP Property Management LLC.  Ryan is a third-party service provider that is not related to or affiliated with Franklin Street.  The management agreement between the Company and Ryan requires the Company to pay Ryan a monthly fee equal to three percent (3%) of the net operating receipts collected in the preceding month.  The management agreement between the Company and Ryan has an initial term that expires on December 31, 2012 and, unless terminated at that time, automatically renews month-to-month thereafter.  The management agreement may be terminated for cause at any time.





Investment Objectives





The Company’s objectives are to (i) obtain cash available to pay dividends through rental receipts from operations of the Property, (ii) have that cash increase over time as a result of rental rate step increases in existing leases, (iii) have our rental revenue potentially increase over time if rental rates increase for new leases, subject to the qualification that approximately 50% and 27% of the currently leased rentable space at the Property expires in 2014 and 2015, respectively, which limits the amount of space for which new leases could be executed until that time, (iv) provide increased equity in the Property as a result of appreciation in market value, and (v) preserve and protect the capital invested by the holders of our Preferred Stock.  We cannot be sure of meeting our objectives.





Our policy is not to make loans to other persons, not to invest in the securities of other issuers for the purpose of exercising control, not to underwrite the securities of other issuers, not to offer securities in exchange for property and not to purchase or otherwise reacquire our securities.  These policies may be changed by our directors without a vote of the holders of our Preferred Stock.





We have issued 700 shares of Preferred Stock in the offering described above.  The Company’s Amended and Restated Certificate of Incorporation, or charter, authorizes the Company to issue up to 1,540 shares of Preferred Stock.  In the event that the Company elects, in its sole and absolute discretion, to reduce the principal amount of the Permanent Mortgage Loan, the Company will have the right, without the consent of any holder of shares of our Preferred Stock, to issue up to 840 additional shares of Preferred Stock.  We expect that any such issuance would be in an offering exempt from registration under the Securities Act.  No additional shares of Preferred Stock are authorized by our charter, and authorization of any increase in the number of authorized shares or the creation of any new series or class of stock would require the affirmative vote of the holders of 66.67% of the outstanding shares of Preferred Stock.


3


We intend to dispose of the Property at such time that our directors determine that we have achieved our investment objectives.  We do not intend to reinvest the proceeds and would distribute cash proceeds to shareholders following such disposition.  We also do not intend to list our shares of Preferred Stock on an exchange and therefore do not expect any trading market to develop in such shares.





Except for the Permanent Mortgage Loan, which matures on January 1, 2012, we do not intend to borrow any money but have the right to obtain a line of credit as described below.  There can be no assurance that the Company will be able to sell or refinance the Property upon the maturity of the Permanent Mortgage Loan or that the proceeds received from such sale or refinancing, or cash raised from the issuance of up to an additional 840 shares of Preferred Stock or the use of our line of credit will be sufficient to repay the Permanent Mortgage Loan at that time.  The Board of Directors of the Company has not yet determined whether it will issue additional shares of Preferred Stock or refinance or sell the Property in connection with the maturity of the Permanent Mortgage Loan, and, because we cannot predict the state of the capital markets in 2011, we cannot predict how we will retire the Permanent Mortgage Loan.





Permanent Mortgage Loan





The Property is subject to the Permanent Mortgage Loan with Bank of America, N.A.  The Permanent Mortgage Loan closed on December 21, 2006 and is secured by, among other items, a first mortgage lien on the Property.  The principal amount of the Permanent Mortgage Loan is $76,200,000 and interest is fixed at 5.287% per annum.  The Permanent Mortgage Loan matures on January 1, 2012.  The Company is obligated to make monthly payments of interest only until the maturity date, at which time the principal amount of the Permanent Mortgage Loan, together with any accrued but unpaid interest, is due and payable in full.  The Company may prepay (in full but not in part) the Permanent Mortgage Loan upon payment of an amount equal to the greater of 1% of the principal balance outstanding or the product of a yield maintenance calculation.  The yield maintenance formula represents the difference between the interest rate on the Permanent Mortgage Loan and that of a comparable U.S. Treasury Security of similar maturity.  Additionally, the Company may prepay (in full but not in part) the Permanent Mortgage Loan without penalty at any time during the final six months of the Permanent Mortgage Loan.  The Permanent Mortgage Loan is nonrecourse to the Company.





The documentation evidencing and securing the Permanent Mortgage Loan, which we refer to as the Loan Agreement, includes restrictions on property liens and requires compliance with various financial covenants.  Financial covenants include the requirement that the Company deposit all rents or other revenue from the Property to a lockbox account with the lender, which so long as there is no default, is immediately available to us, and to provide the lender with periodic reporting.  The Loan Agreement also includes restrictions on the Company’s ability to incur additional debt without consent of the lender.  The Company was in compliance with the Permanent Mortgage Loan covenants as of December 31, 2009.





Revolving Line of Credit





While a line of credit is not expected to be needed, the Company may, without the consent of any holder of shares of our Preferred Stock, obtain a revolving line of credit of up to $76,200,000 on commercially reasonable terms to be used for capital improvements, operating expenses, working capital requirements or to refinance the Company’s debt and fund other Company purposes, if needed.  However, pursuant to the Permanent Mortgage Loan, we need the consent of Bank of America, N.A. to use the line of credit.  As of February 28, 2010, the Company had neither sought nor obtained a revolving line of credit.





Competition





The economy in the United States is continuing to experience significant disruptions, including high levels of unemployment, the failure and near failure of a number of large financial institutions, reduced liquidity and increased credit risk premiums for a number of market participants.  Economic conditions may be affected by numerous factors, including but not limited to, inflation and employment levels, energy prices, recessionary concerns, changes in currency exchange rates, the availability of debt and interest rate fluctuations.  Management does not believe that the current disruptions have negatively impacted our business at this time.  However, management does believe that the current disruptions have negatively impacted real estate values, occupancy levels and property income levels in the United States and, as a consequence, is closely monitoring the situation.  These trends may continue or worsen in the future.  At this time, we cannot predict the extent or duration of any negative impact that the current disruptions will have on our business.





4


The Property is located in the downtown area of Minneapolis, Minnesota.  The Property may encounter substantial competition from the other office buildings which are or may become available in the general area in which the Property is located and which may be priced at rental levels lower than those for space in the Property or which may otherwise be more attractive to tenants.  In order to maintain or increase rental revenues following the expiration of our leases, the Property must be competitive, in regard to cost and amenities, with other buildings of similar use near our location.  Some of our competitors may have significantly more resources than we do and may be able to offer more attractive rental rates or services.  On the other hand, some of our competitors may be smaller or have lower fixed overhead costs, less cash or other resources that make them willing or able to accept lower rents in order to maintain a certain occupancy level.  If there is not currently significant existing property competition, our competitors may decide to enter the market and build new buildings to compete with our Property.  Our competition is not only with other developers, but also with property users who choose to own their building or a portion of the building in the form of an office condominium, larger market forces (including the current disruptions in the U.S. economy described above, changes in interest rates and tax treatment) that increase competition among landlords for quality tenants and individual decisions beyond our control.  Subject to possible extension options, approximately 50% of the rentable space at the Property expires in 2014 and approximately 27% of the rentable space at the Property expires in 2015.  Ryan has the right to terminate its lease, commencing on December 31, 2011, prior to its scheduled expiration in 2015.  We cannot predict which competitive factors will be relevant to prospective tenants or our Property’s competitive position in the marketplace when those leases expire.





Management believes that the position of the Property within Minneapolis’ office and retail markets is strong.  In order to further improve the Property’s position in Minneapolis’ office and retail markets, throughout 2009, management evaluated the Property’s operations for both greater efficiency and for more active and proactive sustainability practices.  In addition to the Property’s existing Energy Star® certification, management believes that the Property is in a strong position to achieve LEED® certification by the U.S. Green Building Council in the Leadership in Energy and Environmental Design for Existing Buildings: Operations and Maintenance, which we refer to as LEED-EB: O&M.  During 2010, management intends to pursue LEED-EB: O&M certification for the Property at a level commensurate with the Property’s position in the market and other factors.  Management expects to complete the LEED-EB: O&M certification process during 2010.  There can be no assurance that we will obtain LEED-EB: O&M certification.





Employees





We had no employees as of December 31, 2009.





Available Information





We are subject to the informational requirements of the Securities Exchange Act of 1934, and, in accordance therewith, we file reports and other information with the Securities and Exchange Commission (SEC).  This Annual Report on Form 10-K and other reports and other information we file can be inspected and copied at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 on official business days during the hours of 10:00 am to 3:00 pm.  Such reports, proxy and information statements, if any, and other information about issuers that file electronically with the SEC may also be obtained from the web site that the SEC maintains at http://www.sec.gov.  Further information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.





We will make available and voluntarily provide, free of charge upon written request at the address on the cover of this Annual Report on Form 10-K, a copy of our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. We do not maintain a website.





Item 1A.
Risk Factors





Not applicable.





Item 1B.
Unresolved Staff Comments





Not applicable.


5


Item 2.
Properties





Set forth below is information regarding the Property as of December 31, 2009:





PercentDate of
Approx.
Leased as
NumberProperty Location
Purchase
Square Feet
of 12/31/09
of Tenants
Name of Major Tenants (1)50 South Tenth Street
11/08/06
498,768
97%
30
Oracle America (2)Minneapolis, MN 55403




Ryan Companies US, Inc.





1.
Excludes subtenants.


2.
Oracle America leases approximately 242,107 square feet of space (approximately 50% of the Property’s rentable space) through March 2014.  Oracle America subleases most of its space to Target (approximately 215,838 square feet) and the balance (approximately 26,269 square feet) to another tenant.





The Property was completed in 2001 and is leased to a diverse group of office and retail tenants with staggered lease expirations.  The Property is located directly across the street from the world headquarters of Target, is connected to a corporately-owned two-level Target retail store and sits above an approximately 850-stall, three-level underground parking garage that is owned and managed by the City of Minneapolis.The Property also has lower level retail space and is part of a larger development that we refer to as the Project that covers a full city block in Minneapolis, Minnesota.  The Project is comprised of our Property, the Target retail store and the parking garage.  The three owners of the Project, our Company, Target and the City of Minneapolis, share expenses and responsibilities for maintenance of the Project under the terms of a Reciprocal Easement and Operation Agreement (REOA), which is administered by Ryan.  The three owners of the Project also share certain common areas and access to four skyway bridges that connect the Project to other buildings, including Target’s world headquarters across the street, and the greater Minneapolis skyway system.





We acquired the Property on November 8, 2006.  In the opinion of our management, the Property is adequately covered by insurance.  The Property is currently encumbered by the Permanent Mortgage Loan described above in “Item 1. Business–Permanent Mortgage Loan.”  Other than normal tenant improvements or replacements of equipment in the ordinary course of ongoing operations, there are no present plans for the improvement or development of any portion of the Property.  Below is certain information with respect to the Property’s significant tenants and leases.





Tenants





The Property has office and retail space, which collectively was approximately 97% occupied as of December 31, 2009.  There is approximately 449,233 square feet of rentable office space, which was approximately 98% occupied as of December 31, 2009, and approximately 36,415 square feet of rentable retail space, which was approximately 82% occupied as of December 31, 2009 and approximately 13,120 square feet of storage space, which was approximately 98% occupied as of December 31, 2009.  Target and Ryan currently occupy 10% or more of the Property’s space.  Oracle USA, Inc., which we refer to as Oracle USA, leases approximately 250,115 square feet of space (approximately 50% of the Property’s rentable space) through March 2014.  Oracle USA subleases most of its space to Target (approximately 223,846 square feet) and the balance (approximately 26,269 square feet) to another tenant.  Oracle USA is a subsidiary of Oracle Corporation (NASDAQ: ORCL), which we refer to as Oracle.  Ryan leases approximately 86,381 square feet through July 2015, subject to Ryan’s right to terminate the lease, beginning on December 31, 2011, prior to its scheduled expiration.  Target directly leases approximately 43,506 square feet through June 2015 and approximately 1,024 square feet through October 2011.  Including subleased space, Target occupies approximately 54% of the Property's rentable space.  Ryan occupies approximately 18% of the Property’s rentable space.  Except for Oracle USA and Ryan, none of the Property’s additional office and retail tenants with direct leases currently occupies 10% or more of the Property’s space.





6


Leases





Tenant leases at the Property are generally structured so that each tenant pays a base rent amount for its premises and also pays a portion of the Property’s operating costs as additional rent.  The tenant’s portion of the Property’s operating costs is calculated by taking the square footage of the tenant’s premises and dividing it by the total square footage of the Property.  Operating costs include, but are not limited to, costs associated with maintenance, repairs, real estate taxes, insurance, utilities and management fees.  In our capacity as the landlord, we are generally obligated, at our expense, to maintain and replace, if necessary, major building systems and structural components of the Property, including exterior walls, roof and slab.  Abstract of material leases are noted below:





Oracle America




Oracle America leases approximately 242,107 square feet of rentable space (approximately 50% of the Property’s space).  The lease expires on March 31, 2014 and contains two five-year extension options with base rent equal to the greater of (i) $18.85 per rentable square foot or (ii) the market rent for such extension term.  In order to exercise either extension option, Oracle America must provide the Company with not less than nine months prior written notice.  The lease with Oracle America also contains a continuing right of first refusal in favor of Oracle America on all other office rental space at the Property.  Oracle America’s lease does not contain any other rights of first offer, purchase, expansion or termination at the Property.  Oracle America subleases most of its space to Target (approximately 215,838 square feet) and the balance (approximately 26,269 square feet) to another tenant.





Ryan




Ryan leases a total of approximately 86,381 rentable square feet (approximately 18% of the Property's space) pursuant to a lease that expires on July 31, 2015.  The lease contains a termination right in favor of Ryan that permits Ryan to terminate the lease effective either (i) as of December 31, 2011 or (ii) on the last day of any month after December 31, 2011.  In order to exercise the termination right, Ryan must provide the Company with written notice of its intention to terminate not less than three months prior to the intended termination date.  Ryan's lease does not contain any other rights of first offer, purchase, expansion or termination at the Property.





Additional Operating Data





Additional information regarding the amount of the Property’s annual realty taxes and insurance can be found in the Statements of Operations that are included with this Form 10-K.  Additional information regarding the Property’s Federal tax basis, rate, method and life claimed for purposes of depreciation can be found in the Notes to Consolidated Financial Statements that are included with this Annual Report on Form 10-K.





Item 3.
Legal Proceedings





There are no material legal proceedings to which the Company is a party.  The Company from time to time may be involved in lawsuits including, but not limited to, lawsuits relating to the real property it owns for liability for slips and falls, damage to automobiles in the parking garage, minor theft or similar matters.   The Company expects that most of these suits will be covered by insurance, subject to customary deductions.  In addition, in the ordinary course of business, the Company may become involved in litigation to collect rents or other income due to it from tenants.





Item 4.
Removed and Reserved








7


PART II





Item 5.
Market For Registrant’s Common Equity,  Related Stockholder Matters and Issuer Purchases of Equity Securities





There is no established public trading market for the Company’s Common Stock or Preferred Stock.





As of February 28, 2010, Franklin Street was the sole holder of record of the Common Stock and there were631 holders of record of the Preferred Stock.  This computation is based upon the number of record holders reflected in our corporate records.  The final sale of Preferred Stock occurred on January 9, 2007 and following that date no further distributions have been or will be declared on the Common Stock.  The last Common Stock dividend was declared on December 27, 2006 and was paid in December 2006.





Set forth below are the distributions made to Preferred Stockholders in respect of each quarter from the last two fiscal years.  Distributions are determined based on the Company’s Board of Directors’ review of cash available for distribution and distribution requirements necessary for the Company to continue to qualify as a real estate investment trust.  We cannot guarantee the future payment of dividends or the amount of any such dividends.  See the Notes to Consolidated Financial Statements that are included with this Annual Report on Form 10-K for additional information.





Distributionspaid toQuarter

PreferredEnded

StockholdersMarch 31, 2008

$               1,234,800June 30, 2008

1,299,900September 30, 2008

1,225,000December 31, 2008

1,225,000March 31, 2009

1,225,000June 30, 2009

1,225,000September 30, 2009

1,225,000December 31, 2009

1,225,000





The following schedule summarizes tax components of the distributions paid for the year ended December 31:





(dollars in thousands)

2009

2008Preferred

%

Preferred

%Ordinary income

$    1,323

27%

$     1,354

27%Return of Capital

3,577

73%

3,630

73%Total

$    4,900

100%

$     4,984

100%





The Company does not have an equity compensation plan or any outstanding stock options or other securities convertible into the Company’s Common Stock.





Item 6.
Selected Financial Data





Not applicable.


8


Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations





The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.  Historical results and percentage relationships set forth in the financial statements, including trends which might appear, should not be taken as necessarily indicative of future operations.  The following discussion and other parts of this Annual Report on Form 10-K may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward looking statements.  Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.  Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in United States and in the market where we own the Property, continued disruptions in the debt markets, risks of a lessening of demand for the type of real estate owned by us, changes in government regulations, and expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments.  Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  We may not update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.





Overview





We own and operate a twelve-story multi-tenant office and retail building containing approximately 498,768 square feet of rentable space located in downtown Minneapolis, Minnesota, which we refer to as the Property.  We operate in one business segment, which is real estate operations, and own a single property.  Our real estate operations involve real estate rental operations, leasing services and property management services.  The main factor that affects our real estate operations is the broad economic market conditions in the United States and, more specifically, the economic conditions in Minneapolis, Minnesota.  These market conditions affect the occupancy levels and the rent levels on both a national and local level.  We have no influence on national or local market conditions.





Trends and Uncertainties





Economic Conditions





The economy in the United States is continuing to experience significant disruptions, including high levels of unemployment, the failure and near failure of a number of large financial institutions, reduced liquidity and increased credit risk premiums for a number of market participants.  Economic conditions may be affected by numerous factors, including but not limited to, inflation and employment levels, energy prices, recessionary concerns, changes in currency exchange rates, the availability of debt and interest rate fluctuations.  Management does not believe that the current disruptions have negatively impacted our business at this time.  However, management does believe that the current disruptions have negatively impacted real estate values, occupancy levels and property income levels in the United States and, as a consequence, is closely monitoring the situation.  For the three months ended December 31, 2009, we believe that vacancy rates increased and that rental rates decreased for office and retail buildings in downtown Minneapolis.  These local and national trends may continue or worsen in the future.  At this time, we cannot predict the extent or duration of any negative impact that the current disruptions will have on our business.





Real Estate Operations





We own and operate a twelve-story multi-tenant office and retail building containing approximately 498,768 of rentable square feet located in downtown Minneapolis, Minnesota.  The Property was completed in 2001 and is leased to a diverse group of office and retail tenants with staggered lease expirations.  The Property is located directly across the street from the designated world headquarters of Target Corporation (NYSE:TGT), which we refer to as Target, and is connected to a corporately-owned two-level Target retail store and sits above an approximately 850-stall, three-level parking garage that is owned and managed by the City of Minneapolis.  The Property also has lower level retail space and is part of a larger development that we refer to as the Project that covers a full city block in Minneapolis, Minnesota.  The Project is comprised of our Property, the Target retail store and the parking garage.  The three owners of the Project, our Company, Target and the City of Minneapolis, share expenses and responsibilities for maintenance of the Project under the terms of a Reciprocal Easement and Operation Agreement (REOA), which is administered by Ryan.  The three owners of the Project also share certain common areas and access to four skyway bridges that connect the Project to other buildings, including Target’s world headquarters across the street, and the greater Minneapolis skyway system.





9


The Property has office and retail space, which collectively was approximately 97% occupied as of December 31, 2009.  There is approximately 449,233 square feet of rentable office space, which was approximately 98% occupied as of December 31, 2009 and approximately 36,415 square feet of rentable retail space, which was approximately 82% occupied as of December 31, 2009 and approximately 13,120 square feet of storage space, which was approximately 98% occupied as of December 31, 2009. Target and Ryan currently occupy 10% or more of the Property’s space.  Oracle America, Inc., which we refer to as Oracle America, leases approximately 242,107 square feet of space (approximately 50% of the Property’s rentable space) through March 2014.  Oracle America subleases its space to Target (approximately 215,838 square feet) and the balance (approximately 26,269 square feet) to another tenant.  Oracle America was previously known as Oracle USA, Inc., which we refer to as Oracle USA.  Effective February 15, 2010, Oracle USA merged with and into Oracle America, with Oracle America surviving the merger.  In connection with this merger, Oracle USA assigned its lease at the Property to Oracle America.  Oracle America is and Oracle USA was a wholly-owned subsidiary of Oracle Corporation (NASDAQ: ORCL), which we refer to as Oracle.  Ryan leases approximately 86,381 square feet through July 2015, subject to Ryan’s right to terminate the lease, beginning on December 31, 2011, prior to its scheduled expiration.  Target directly leases approximately 43,506 square feet through June 2015 and approximately 1,024 square feet through October 2011.  Including subleased space, Target occupies approximately 54% of the Property's rentable space.  Ryan occupies approximately 18% of the Property’s rentable space.  Except for Oracle America and Ryan, none of the Property’s additional office and retail tenants with direct leases currently occupies 10% or more of the Property’s space.





It is difficult for management to predict what will happen to occupancy or rents after the expiration or earlier termination of existing leases at our Property because the need for space and the price tenants are willing to pay are tied to both the local economy and to the larger trends in the national economy, such as job growth, interest rates, the availability of credit and corporate earnings, which in turn are tied to even larger macroeconomic and political factors, such as recessionary concerns, volatility in energy pricing and the risk of terrorism.  In addition to the difficulty of predicting macroeconomic factors, it is difficult to predict how our local market or tenants will suffer or benefit from changes in the larger economy.  In addition, because the Property is in a single geographical market, these macroeconomic trends may have a different effect on the Property and on its tenants, many of which operate on a national level.  Although we cannot predict how long it would take to lease vacant space at the Property or what the terms and conditions of any new leases would be, we would expect to sign new leases at current market rates which may be below the expiring rates.





Management believes that the position of the Property within Minneapolis’ office and retail markets is strong.  In order to further improve the Property’s position in Minneapolis’ office and retail markets, throughout 2009, management evaluated the Property’s operations for both greater efficiency and for more active and proactive sustainability practices.  In addition to the Property’s existing Energy Star® certification, management believes that the Property is in a strong position to achieve LEED® certification by the U.S. Green Building Council in the Leadership in Energy and Environmental Design for Existing Buildings: Operations and Maintenance, which we refer to as LEED-EB: O&M.  During 2010, management intends to pursue LEED-EB: O&M certification for the Property at a level commensurate with the Property’s position in the market and other factors.  Management expects to complete the LEED-EB: O&M certification process during 2010.  There can be no assurance that we will obtain LEED-EB: O&M certification.





Given the current economic downturn, the potential for any of our tenants to default on its lease or to seek the protection of bankruptcy laws has increased.  If any of our tenants defaults on its lease, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment.  In addition, at any time, a tenant may seek the protection of bankruptcy laws, which could result in the rejection and termination of such tenant’s lease and thereby cause a reduction in cash available for distribution to our stockholders.  Bankruptcy or a material adverse change in the financial condition of a material tenant would likely have a material adverse effect on our results of operations.





Critical Accounting Policies and Estimates





We have certain critical accounting policies that are subject to judgments and estimates by our management and uncertainties of outcome that affect the application of these policies.  We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances.  On an ongoing basis, we evaluate our estimates.  In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information.  The accounting policies that we believe are most critical to the understanding of our financial position and results of operations, and that require significant management estimates and judgments, are discussed below.





10


Critical accounting policies are those that have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates.  We believe that our judgments and estimates are consistently applied and produce financial information that fairly presents our results of operations.  These policies affect our:





·
recognition of rental income and depreciation and amortization expense; and


·
assessment of the carrying values and impairments of long-lived assets.





Depreciation and Amortization





We compute depreciation expense using the straight-line method over estimated useful lives of up to 39 years for the building and improvements, and up to 15 years for personal property.  The allocated cost of land is not depreciated.  The value of above or below-market leases are amortized over the remaining non-cancelable periods of the lease as an adjustment to rental income.  The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is also amortized over the remaining non-cancelable periods of the respective leases.  If a lease is terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off.  Inappropriate allocation of acquisition costs, or incorrect estimates of useful lives, could result in depreciation and amortization expenses which do not appropriately reflect the allocation of our capital expenditures over future periods, as is required by generally accepted accounting principles.





Impairment





We periodically evaluate the Property for impairment indicators.  These indicators may include declining tenant occupancy, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life or legislative, economic or market changes that permanently reduce the value of our investment.  If indicators of impairment are present, we evaluate the carrying value of the Property by comparing it to its expected future undiscounted cash flows.  If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the Property to the present value of these expected future cash flows. This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash flows.  If we misjudge or estimate incorrectly or if future tenant profitability, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate or fail to record a charge when we should have done so, or the amount of such charges may be inaccurate.





Lease Classification





Each time we enter a new lease or materially modify an existing lease we evaluate whether it is appropriately classified as a capital lease or as an operating lease.  The classification of a lease as capital or operating affects the carrying value of a property, as well as our recognition of rental payments as revenue.  These evaluations require us to make estimates of, among other things, the remaining useful life and market value of a property, discount rates and future cash flows.  Incorrect assumptions or estimates may result in misclassification of our leases.





Recent Accounting Standards





In June 2009, the Financial Accounting Standards Board (“FASB”) issued a pronouncement establishing the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with GAAP.  The standard explicitly recognizes rules and interpretive releases of the SEC under federal securities laws as authoritative GAAP for SEC registrants.  This standard is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009.  The Company has adopted this standard in accordance with GAAP.





In May 2009, the FASB issued a pronouncement which sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This pronouncement requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date.  This disclosure should alert all users of financials statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented.  The Company is adhering to the requirements of this pronouncement, which was effective for financial periods ending after June 15, 2009.


11


Results of Operations





Comparison of the year ended December 31, 2009 to the year ended December 31, 2008





Revenue





Total revenue increased $0.2 million to $16.2 million for the year ended December 31, 2009, as compared to $16.0 million for the year ended December 31, 2008.This increase was primarily due to an increase in recovery of expenses of approximately $0.2 million.  The majority of the operating expenses, real estate taxes and insurance expenses represent amounts recoverable by the Company.





Expenses





Total expenses increased approximately $0.2 million to $15.1 million for the year ended December 31, 2009, as compared to $14.9 million for the year ended December 31, 2008.  The increase was primarily attributable to a $0.2 million increase in real estate taxes.





Liquidity and Capital Resources





Cash and cash equivalents remained relatively unchanged at $9.9 million at December 31, 2009 and 2008.  Cash provided by operating activities was $5.0 million and was offset by $0.1 million used for investing activities and $4.9 million used for financing activities.





Management believes that existing cash and cash equivalents as of December 31, 2009 of $9.9 million and cash anticipated to be generated internally by operations will be sufficient to meet working capital requirements, distributions and anticipated capital expenditures for at least the next 12 months.





Operating Activities





The cash provided by operating activities of $5.0 million for the year ended December 31, 2009 was primarily attributable to net income of approximately $1.2 million plus non-cash items of $3.9 million, consisting primarily of depreciation and amortization, and an increase in accounts payable and accrued liabilities of approximately $0.3 million and was partially offset by uses arising from other current accounts of approximately $0.2 million and payments in deferred leasing costs of $0.2 million.





Investing Activities





The cash used for investing activities for the year ended December 31, 2009 of approximately $0.1 million was attributable to the purchase of real estate assets.




Financing Activities





The cash used for financing activities of approximately $4.9 million for the year ended December 31, 2009 was primarily attributable to distributions to stockholders.





Sources and Uses of Funds





Our principal demands on liquidity are cash for operations, interest on debt payments and distributions to equity holders.  As of December 31, 2009, we had approximately $1.7 million in accrued liabilities and $76.2 million in long-term debt.  In the near term, liquidity is generated by cash from operations.


12


Cash held in escrow





We also have cash held in escrow of $1.1 million as of December 31, 2009.  We are required under our loan documents to make monthly deposits into a pledge account for real estate taxes, which is used to make periodic payments of those taxes.  Increases and decreases to the cash held in escrow are a result of the timing of monthly deposits and payment of periodic real estate tax assessments.




Secured Debt





We have a loan agreement, which we refer to as the Loan, outstanding with Bank of America, N.A. in the amount of $76,200,000.  Loan payments are interest-only until the Loan matures and bear interest at the fixed rate of 5.287% per annum.  The Loan is secured by the Property.  The Loan was entered into on December 21, 2006 and matures on January 1, 2012, with the entire principal balance due on that date.  Interest expense for the years ended December 31, 2009 and 2008 was $4,086,000 and $4,096,000, respectively.





The Loan agreement includes restrictions on property liens and requires compliance with various financial covenants.  Financial covenants include the requirement that we deposit all rents or other revenue from the Property to a lockbox account with the lender and provide periodic reporting.  The Loan agreement contains certain restrictions on our ability to incur debt.  We were in compliance with the loan covenants as of December 31, 2009 and 2008.





Contingencies





We may be subject to various legal proceedings and claims that arise in the ordinary course of our business.  Although occasional adverse decisions or settlements may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position or results of operations.




Related Party Transactions





We have in the past engaged in and currently engage in transactions with a related party, Franklin Street and its subsidiaries FSP Investments LLC and FSP Property Management LLC, which we collectively refer to as FSP.  We expect to continue to have related party transactions with FSP in the form of management fees paid to FSP to manage the Company on behalf of our stockholders.  FSP Property Management LLC currently provides the Company with asset management and financial reporting services.  The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one percent (1%) of the gross revenues of the Property.  The asset management agreement between the Company and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days written notice, effective at the end of the notice period.  For the years ended December 31, 2009 and 2008, management fees paid were $162,000 and $161,000, respectively.





Franklin Street is the sole holder of the Company’s one share of Common Stock that is issued and outstanding.  Subsequent to the completion of the private placement of the Preferred Stock in January 2007, Franklin Street has not been entitled to share in any earnings or any dividend as a result of its ownership of the Common Stock of the Company.





13


Rental Income Commitments





Our commercial real estate operations consist of the leasing of the Property.  Approximate future minimum rental income under non-cancelable operating leases as of December 31, 2009 is as follows:





Year Ending

AmountDecember 31,

(in thousands)2010

$
8,8352011


8,4272012


8,1362013


8,0492014


4,184Thereafter


1,683$
39,314








14


Off-Balance Sheet Arrangements





The Company is not party to any off-balance sheet arrangements other than property management commitments.  The Company is a party to a management agreement with Ryan, an unaffiliated third party management company that is a tenant of the Property, to provide property management services, and is party to an asset management agreement with an affiliate, FSP Property Management LLC, to provide asset management and financial reporting services.  The management agreement between the Company and Ryan requires the Company to pay Ryan a monthly fee equal to three percent (3%) of the net operating receipts collected in the preceding month.  The management agreement between the Company and Ryan has an initial term that expires on December 31, 2012 and, unless terminated at that time, automatically renews month-to-month thereafter.  The management agreement with Ryan may be terminated by the Company for cause at any time.  The agreement with FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days written notice.  The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one percent (1%) of the gross revenues of the Property.





Item 7A.
Quantitative and Qualitative Disclosure About Market Risk





Not applicable.





Item 8.
Financial Statements and Supplementary Data





The information required by this item is included elsewhere herein and incorporated herein by reference.  Reference is made to the Index to Consolidated Financial Statements in Item 15 of Part IV.





Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure





Not applicable.





Item 9A.
Controls and Procedures





Not applicable.





Item 9A(T).
Controls and Procedures





Disclosure Controls and Procedures





Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2009.  The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Based on the evaluation of our disclosure controls and procedures as of December 31, 2009, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.





15


Management’s Annual Report on Internal Control Over Financial Reporting





The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officer and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:





•Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;





•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and





•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009.  In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.





Based on our assessment, management concluded that, as of December 31, 2009, the Company’s internal control over financial reporting is effective based on those criteria.





This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.  This report shall not be deemed to be filed for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.





Changes in Internal Control Over Financial Reporting





No change in our internal control over financial reporting occurred during the quarter ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





Item 9B.
Other Information





Not applicable.





16


PART III




Item 10.
Directors, Executive Officers and Corporate Governance





Directors and Executive Officers




Information regarding the executive officers and directors of the Company as of February 28, 2010 is set forth below.  The biographies of each of the directors below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused our Board of Directors to determine that the person should serve as a director of the Company.  In addition, all of our directors bring to our Board executive leadership experience derived from their service as executives of a public company and specifically as an executive of Franklin Street and employee of FSP Investments, a wholly-owned subsidiary of Franklin Street, as well as other key attributes that are important to an effective board: integrity, candor, analytical skills, the willingness to engage management and each other in a constructive and collaborative fashion. In addition, we have included information about each nominee’s specific experience, qualifications, attributes, or skills that led the board to conclude that he or she should serve as a director of the Company, in light of our business and structure.





George J. Carter, age 61, is President and a director of the Company.  Since 1996 he has also been President and Chief Executive Officer and a director of Franklin Street and is responsible for all aspects of the business of Franklin Street and its affiliates, with special emphasis on the evaluation, acquisition and structuring of real estate investments.  From 1992 through 1996 he was President of Boston Financial Securities, Inc. (“Boston Financial”).  Prior to joining Boston Financial, Mr. Carter was owner and developer of Gloucester Dry Dock, a commercial shipyard in Gloucester, Massachusetts.  From 1979 to 1988, Mr. Carter served as Managing Director in charge of marketing at First Winthrop Corporation, a national real estate and investment banking firm headquartered in Boston, Massachusetts.  Prior to that, he held a number of positions in the brokerage industry including those with Merrill Lynch & Co. and Loeb Rhodes & Co.  Mr. Carter is a graduate of the University of Miami (B.S.).  Mr. Carter is a FINRA General Securities Principal (Series 24) and holds a FINRA Series 7 general securities license.





Barbara J. Fournier, age 54, is the Vice President, Chief Operating Officer, Treasurer and Secretary and a director of the Company.  Since 1996, she has also been Chief Operating Officer, Treasurer and Secretary and a director of Franklin Street.  In 2008, Ms. Fournier became an Executive Vice President of Franklin Street.  Ms. Fournier has as her primary responsibility, together with Mr. Carter, the management of all operating business affairs of Franklin Street and its affiliates.  From 1993 through 1996, she was Director of Operations for the private placement division of Boston Financial.  Prior to joining Boston Financial, Ms. Fournier served as Director of Operations for Schuparra Securities Corp. and as the Sales Administrator for Weston Financial Group.  From 1979 through 1986, Ms. Fournier worked at First Winthrop Corporation in administrative and management capacities, including Office Manager, Securities Operations and Partnership Administration.  Ms. Fournier attended Northeastern University and the New York Institute of Finance.  Ms. Fournier is a member of the NYSE Amex Listed Company Council.  Ms. Fournier is a FINRA General Securities Principal (Series 24).  She also holds other FINRA supervisory licenses including Series 4 and Series 53, and a FINRA Series 7 general securities license.





William W. Gribbell, age 50, is an Executive Vice President and a director of the Company.  Since 1996, he has been an Executive Vice President of Franklin Street and has as his primary responsibility the direct equity placement of Franklin Street-sponsored investment programs.  From 1993 through 1996 he was an executive officer of Boston Financial.  From 1989 to 1993, Mr. Gribbell worked at Winthrop Financial Associates.  Mr. Gribbell is a graduate of Boston University (B.A.).  Mr. Gribbell holds a FINRA Series 7 general securities license.





R. Scott MacPhee, age 52, is an Executive Vice President and a director of the Company.  Since 1996, he has been an Executive Vice President of Franklin Street and has as his primary responsibility the direct equity placement of Franklin Street-sponsored investment programs.  From 1993 through 1996 he was an executive officer of Boston Financial.  From 1985 to 1993, Mr. MacPhee worked at Winthrop Financial Associates.  Mr. MacPhee attended American International College.  Mr. MacPhee holds a FINRA Series 7 general securities license.





Janet Prier Notopoulos, age 62, is a Vice President and a director of the Company.  In addition, she is President of FSP Property Management LLC and an Executive Vice President and a director of Franklin Street and has as her primary responsibility the oversight of the management of the real estate assets of Franklin Street and its affiliates.  Prior to joining Franklin Street in 1997, Ms. Notopoulos was a real estate and marketing consultant for various clients.  From 1975 to 1983, she was Vice President of North Coast Properties, Inc., a Boston real estate investment company.  Between 1969 and 1973, she was a real estate paralegal at Goodwin, Procter & Hoar.  Ms. Notopoulos is a graduate of Wellesley College (B.A.) and the Harvard School of Business Administration (M.B.A).





17


Jeffrey B. Carter, age 38, is a Vice President and a director of the Company, and is George J. Carter's son. In addition, he is a Senior Vice President and the Director of Acquisitions for Franklin Street.  Prior to joining Franklin Street in 1998, Mr. Carter worked in Trust Administration for Northern Trust Bank in Miami, Florida. Mr. Carter is a graduate of Arizona State University (B.A.) and The George Washington University (M.A.).  Mr. Carter holds a FINRA Series 7 general securities license.





Each of our directors holds office from the time of his or her election until the next annual meeting and until a successor is elected and qualified, or until such director’s earlier death, resignation or removal.  Each of the above persons has been associated with us in the positions described above since our inception in 2006.  Each of them is an employee of FSP Investments LLC, a wholly-owned subsidiary of Franklin Street, which is the sole owner of the Common Stock.  Each of our officers serves in that capacity at the request of Franklin Street.





Mr. Carter, Ms. Fournier, Mr. MacPhee, Mr. Gribbell and Ms. Notopoulos also serve as directors of FSP Galleria North Corp., FSP Phoenix Tower Corp. and FSP 303 East Wacker Drive Corp., which are public reporting companies sponsored by Franklin Street.  Jeffrey B. Carter also serves as a director of FSP 303 East Wacker Drive Corp.  In their capacities as directors of FSP Galleria North Corp., FSP Phoenix Tower Corp. and FSP 303 East Wacker Drive Corp., Mr. Carter, Ms. Fournier, Mr. MacPhee, Mr. Gribbell, Ms. Notopoulos and Mr. Carter, as applicable, each holds office from the time of his or her election until the next annual meeting and until a successor is elected and qualified, or until such director's earlier death, resignation or removal.





Sections 16(a) Beneficial Ownership Reporting Compliance




Based solely on its review of copies of reports filed by the directors and executive officers of the Company pursuant to Section 16(a) of the Exchange Act, the Company believes that during 2009 all filings required to be made by its reporting persons were timely made in accordance with the requirements of the Exchange Act.





Corporate Governance




Our board of directors does not have standing compensation, nominating and corporate governance or audit committees.  Our officers are compensated by Franklin Street in connection with their employment by Franklin Street and serve as our executive officers at Franklin Street’s request.  Our directors are officers of Franklin Street and we do not consider it necessary to establish a nominating committee or a policy for reviewing nominees recommended by stockholders.  We do not have a director who qualifies as an “audit committee financial expert” under the regulations of the SEC.  We have not adopted a code of business conduct or code of ethics for our executive officers because all of our officers are officers of Franklin Street and are governed by Franklin Street’s code of business conduct and ethics.





Item 11.
Executive Compensation





Each of the executive officers of the Company is compensated by Franklin Street in connection with his or her employment by Franklin Street and serves as an executive officer of the Company at Franklin Street’s request without compensation.  Franklin Street is subject to the informational requirements of the Exchange Act, and, in accordance therewith, files reports and other information with the Securities and Exchange Commission (SEC).  Franklin Street’s common stock is traded on the NYSE Amex under the symbol “FSP”.





Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters





The following tables set forth the beneficial ownership of the Company’s Common Stock and Preferred Stock as of February 28, 2010 by each holder who beneficially owns more than five percent of the Company’s Common Stock or Preferred Stock, by each director, by each of the Company’s executive officers and by all current directors and executive officers as a group.  To the Company’s knowledge, no person or group, other than as set forth below, beneficially owns more than five percent of the Company’s Common Stock or Preferred Stock.





18





Common Stock
Number of Shares

Percentage ofBeneficially

OutstandingName of Holder
Owned

Common StockFranklin Street Properties Corp. (1)
1

100%George J. Carter(2)
-

0%Barbara J. Fournier(2)
-

0%R. Scott MacPhee(2)
-

0%William W. Gribbell(2)
-

0%Janet P. Notopoulos(2)
-

0%Jeffrey B. Carter(2)
-

0%All Directors and Executive Officers as a Group

(consisting of 6 persons)(2)
-

0%





Preferred Stock
Number of Shares

Percentage ofBeneficially

OutstandingName of Holder
Owned

Preferred  StockGeorge J. Carter(2)
-

0%Barbara J. Fournier(2)
-

0%R. Scott MacPhee(2)
-

0%William W. Gribbell(2)
-

0%Janet P. Notopoulos(2)
-

0%Jeffery B. Carter(2)
-

0%All Directors and Executive Officers as a Group 
(consisting of 6 persons) (2)
-

0%




(1)
The address of Franklin Street Properties Corp. is401 Edgewater Place, Wakefield, Massachusetts 01880.




(2)
Each of the Executive Officers is employed by FSP Investments LLC, a subsidiary of Franklin Street Properties Corp.  Franklin Street Properties Corp. owns 100% of the issued and outstanding Common Stock of the Company.





Equity Compensation Plan Information




The Company does not have any equity compensation plans.





19


Item 13.
Certain Relationships and Related Transactions, and Director Independence





Certain Relationships and Related Transactions





Messrs. George J. Carter, R. Scott MacPhee and William W. Gribbell and Mses. Barbara J. Fournier and Janet P. Notopoulos, each of whom is an executive officer and a director of the Company, are executive officers of Franklin Street and, except for Messrs. R. Scott MacPhee and William W. Gribbell, are directors of Franklin Street.  In addition, Jeffrey B. Carter, a vice president and a director of the Company, is a senior vice president and Director of Acquisitions of Franklin Street but not a director of Franklin Street.  Jeffrey B. Carter is George J. Carter’s son.  None of such persons received any remuneration from the Company for their services.




We have in the past engaged in and currently engage in transactions with a related party, Franklin Street and its subsidiaries FSP Investments LLC and FSP Property Management LLC, which we refer to collectively as FSP.  We expect to continue to have related party transactions with FSP in the form of management fees paid to FSP to manage the Company on behalf of our stockholders.  FSP Property Management LLC currently provides the Company with asset management and financial reporting services.  The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one percent (1%) of the gross revenues of the Property.  The asset management agreement between the Company and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days written notice, effective at the end of the notice period.  For the years ended December 31, 2009 and 2008, management fees paid were $162,000 and $161,000, respectively.





Franklin Street is the sole holder of the Company’s one share of Common Stock that is issued and outstanding.  Subsequent to the completion of the private placement of the Preferred Stock in January 2007, Franklin Street has not been entitled to share in any earnings or any dividend as a result of its ownership of the Common Stock of the Company.





Director Independence





Our securities are not listed on a national securities exchange or in an inter-dealer quotation system.  None of our directors qualifies as “independent” under the standards of the NYSE Amex, where Franklin Street is listed.





Item 14.
Principal Accounting Fees and Services





Independent Auditor Fees and Other Matters




The following tables summarize the aggregate fees billed by the Company’s independent registered public accounting firm, Braver PC, for audit services for each of the last two fiscal years and for other services rendered to the Company in each of the last two fiscal years.





Fee Category

2009


2008Audit Fees (1)

$
64,050


$
61,000Audit-Related Fees (2)Tax fees (3)

$
5,250


$
5,000All Other Fees (4)Total Fees

$
69,300


$
66,000




(1)
Audit fees consist of fees for the audit of our financial statements, the review of the interim financial statements included in our quarterly reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings or engagements.




(2)
Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit and the review of our financial statements and which are not reported under “Audit Fees”.




20




(3)
Tax fees consist of fees for tax compliance, tax advice and tax planning services.  Tax compliance services, which relate to the preparation of tax returns, claims for refunds and tax payment-planning services, accounted for $5,250 of the total tax fees incurred in 2009, and accounted for $5,000 of the total tax fees incurred in 2008.
  (4)
The Company was not billed by its independent registered public accounting firm in 2009 or 2008 for any other fees.





Pre-Approval Policy and Procedures





The Company has not adopted policies and procedures relating to the pre-approval of audit and non-audit services that are to be performed by the Company’s independent registered public accounting firm.











21


PART IV





Item 15.
Exhibits, Financial Statement Schedules





(a)
The following documents are filed as part of this report.





1.
Financial Statements: The Financial Statements listed in the accompanying Index to Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K.





2.
Financial Statement Schedule: The Financial Statement Schedule listed on the accompanying Index to Consolidated Financial Statements is filed as part of this Annual Report on Form 10-K.





3.
Exhibits: The Exhibits listed in the Exhibit Index are filed as part of this Annual Report on Form 10-K.





22




SIGNATURES
  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf as of March 12, 2010 by the undersigned, thereunto duly authorized.
  FSP 50 South Tenth Street Corp.
  By:  /s/ George J. Carter
 George J. Carter
 President
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature

Title
Date/s/ George J. Carter

President and Director

(Principal Executive Officer)
March 12, 2010George J. Carter/s/ Barbara J. Fournier

Vice President, Chief Operating Officer, 
Treasurer, Secretary and Director

(Principal Financial Officer and 
Principal Accounting Officer)
March 12, 2010Barbara J. Fournier/s/ R. Scott MacPhee

Director, Executive Vice President
March 12, 2010R. Scott MacPhee/s/ William W. Gribbell

Director, Executive Vice President
March 12, 2010William W. Gribbell/s/ Janet P. Notopoulos

Director, Vice President
March 12, 2010Janet P. Notopoulos/s/ Jeffrey B. Carter

Director, Vice PresidentJeffrey B. Carter


March 12, 2010





23


EXHIBIT INDEX




Exhibit No.
Description3.1
Amended and Restated Certificate of Incorporation, incorporated herein by reference to Exhibit 3.1 to FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as amended (File No. 000-52551)3.2
By-Laws, incorporated herein by reference to Exhibit 3.2 to FSP 50 South Tenth Street Corp.’s  Registration Statement on Form 10, as amended (File No. 000-52551)4.1
Loan Agreement, incorporated herein by reference to Exhibit 4.1 to FSP 50 South Tenth Street Corp.’s  Registration Statement on Form 10, as amended (File No. 000-52551)4.2
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, incorporated herein by reference to Exhibit 4.2 to FSP 50 South Tenth Street Corp.’s  Registration Statement on Form 10, as amended (File No. 000-52551)4.3
Promissory Note, incorporated herein by reference to Exhibit 4.3 to FSP 50 South Tenth Street Corp.’s  Registration Statement on Form 10, as amended (File No. 000-52551)10.1
Ryan Lease, as amended, incorporated herein by reference to Exhibit 10.1 to FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as amended (File No. 000-52551)10.2
Oracle America Lease, as amended, incorporated herein by reference to Exhibit 10.2 to FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as amended (File No. 000-52551)10.3
Asset Management Agreement, incorporated herein by reference to Exhibit 10.3 to FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as amended (File No. 000-52551)10.4
Management Agreement, incorporated herein by reference to Exhibit 10.4 to FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as amended (File No. 000-52551)10.5
Voting Agreement, incorporated herein by reference to Exhibit 10.5 to FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as amended (File No. 000-52551)21.1
Subsidiaries of the Registrant, incorporated herein by reference to Exhibit 21.1 to FSP 50 South Tenth Street Corp.’s Registration Statement on Form 10, as amended (File No. 000-52551)31.1
Certification of FSP 50 South Tenth Street Corp.'s principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
Certification of FSP 50 South Tenth Street Corp.'s principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
Certification of FSP 50 South Tenth Street Corp.'s principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
Certification of FSP 50 South Tenth Street Corp.'s principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





24


FSP 50 South Tenth Street Corp.


Index to Consolidated Financial Statements





Table of Contents





PageConsolidatedFinancial StatementsReport of Independent Registered Public Accounting Firm
F-2ConsolidatedBalance Sheets as of December 31, 2009 and 2008
F-3ConsolidatedStatements of Operations for the years ended December 31, 2009 and 2008
F-4ConsolidatedStatements of Changes in Stockholders’ Equity for the years ended December 31, 2008 and 2009
F-5ConsolidatedStatements of Cash Flows for the years ended December 31, 2009 and 2008
F-6Notes to ConsolidatedFinancial Statements
F-7Financial Statement Schedule – Schedule III
F-16





F-1


[LETTERHEAD OF BRAVER PC]








REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the Stockholders


FSP 50 South Tenth Street Corp.


Wakefield, Massachusetts








We have audited the accompanying consolidated balance sheets of FSP 50 South Tenth Street Corp. as of December 31, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2).  These consolidated financial statements and schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.





We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of FSP 50 South Tenth Street Corp. as of December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.  Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.








/s/ Braver PC


Newton, Massachusetts


March 12, 2010


F-2


FSP 50 South Tenth Street Corp.


Consolidated Balance Sheets





December 31,(in thousands, except share and par value amounts)

2009


2008Assets:Real estate investments, at cost:Land

$
21,974


$
21,974Buildings and improvements


97,495



97,400119,469



119,374Less accumulated depreciation


7,941



5,422Real estate investments, net


111,528



113,952Acquired real estate leases, net of accumulated

amortization of $2,744 and $2,110, respectively


3,179



4,155Acquired favorable real estate leases, net of accumulated

amortization of $1,447 and $1,002, respectively


1,650



2,111Cash and cash equivalents


9,888



9,874Cash - held in escrow


1,072



977Tenant rent receivable, less allowance

for doubtful accounts of $30 and $0, respectively


86



109Step rent receivable


602



506Deferred leasing costs, net of accumulated

amortization of $20 and $5, respectively


196



37Deferred financing costs, net of accumulated

amortization of $177 and $118, respectively


119



178Prepaid expenses and other assets


28



19Total assets

$
128,348


$
131,918Liabilities and Stockholders’ Equity:Liabilities:Accounts payable and accrued expenses

$
1,666


$
1,382Tenant security deposits


86



36Loan payable


76,200



76,200Acquired unfavorable real estate leases, net of accumulated

amortization of $593 and $429, respectively


853



1,050Total liabilities


78,805



78,668Commitments and Contingencies:


-



-Stockholders’ Equity:Preferred Stock, $.01 par value, 1,540 sharesauthorized, 700 issued and outstandingat December 31, 2009 and 2008, aggregateliquidation preference $70,000


-



-Common Stock, $.01 par value, 1 shareauthorized, issued and outstanding


-



-Additional paid-in capital


64,224



64,224Retained deficit and distributions in excess of earnings


(14,681
)


(10,974
)Total Stockholders’ Equity


49,543



53,250Total Liabilities and Stockholders’ Equity

$
128,348


$
131,918See accompanying notes to consolidated financial statements.





F-3





FSP 50 South Tenth Street Corp.


Consolidated Statements of Operations





For the Year Ended December 31,(in thousands, except share and per share amounts)

2009


2008Revenues:Rental

$
16,237


$
15,978Total revenue


16,237



15,978Expenses:Rental operating expenses


4,218



4,267Real estate taxes and insurance


3,210



2,904Depreciation and amortization


3,510



3,542Interest expense


4,145



4,155Total expenses


15,083



14,868Income before interest income


1,154



1,110Interest income


39



224Net income attributable to preferred stockholders

$
1,193


$
1,334Weighted average number of preferred shares outstanding,basic and diluted


700



700Net income per preferred share, basic and diluted

$
1,704


$
1,906See accompanying notes to consolidated financial statements.







F-4





FSP 50 South Tenth Street Corp.


Consolidated Statements of Changes in Stockholders' Equity


For the Years Ended December 31, 2008 and 2009





(in thousands, except per share and share amounts)

Preferred

Stock


Common

Stock


Additional

Paid-in

Capital


Retained Deficit and Distributions

in Excess of Earnings


Total

Stockholders'

EquityBalance, January 1, 2008

$
-


$
-


$
64,224


$
(7,324
)

$
56,900Distributions - preferred stockholdersor $7,120 per preferred share


-



-



-



(4,984
)


(4,984
)Net income


-



-



-



1,334



1,334Balance, December 31, 2008


-



-



64,224



(10,974
)


53,250Distributions - preferred stockholdersor $7,000 per preferred share


-



-



-



(4,900
)


(4,900
)Net income


-



-



-



1,193



1,193Balance, December 31, 2009

$
-


$
-


$
64,224


$
(14,681
)

$
49,543See accompanying notes to consolidated financial statements.







F-5


FSP 50 South Tenth Street Corp.


Consolidated Statements of Cash Flows





For the Year Ended December 31,(in thousands)

2009


2008Cash flows from operating activities:Net Income

$
1,193


$
1,334Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization


3,569



3,601Amortization of favorable real estate leases


461



487Amortization of unfavorable real estate leases


(197
)


(198
)Increase in bad debt reserve


30



-Changes in operating assets and liabilities:Cash - held in escrow


(95
)


(117
)Tenant rent receivable


(7
)


(59
)Step rent receivable


(96
)


(138
)Prepaid expenses and other assets


(9
)


14Accounts payable and accrued expenses


284



(51
)Tenant security deposits


50



(1
)Payment of deferred leasing costs


(174
)


(29
)Net cash provided by operating activities


5,009



4,843Cash flows from investing activities:Purchase of real estate assets


(95
)


(47
)Net cash used for investing activities


(95
)


(47
)Cash flows from financing activities:Distributions to stockholders


(4,900
)


(4,984
)Net cash used for financing activities


(4,900
)


(4,984
)Net increase (decrease) in cash and cash equivalents


14



(188
)Cash and cash equivalents, beginning of year


9,874



10,062Cash and cash equivalents, end of year

$
9,888


$
9,874Supplemental disclosure of cash flow information:Cash paid for interest

$
4,086


$
4,096See accompanying notes to consolidated financial statements.











F-6


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





1.
Organization





FSP 50 South Tenth Street Corp. (the “Company”) was organized on September 12, 2006 as a corporation under the laws of the State of Delaware to purchase, own and operate a twelve-story multi-tenant office and retail building containing approximately 498,768 rentable square feet of space located in downtown Minneapolis, Minnesota (the “Property”).  The Company acquired the Property on November 8, 2006.  Franklin Street Properties Corp. (“Franklin Street”) (NYSE Amex: FSP) holds the sole share of the Company’s common stock, $.01 par value per share (the “Common Stock”).  Between November 2006 and January 2007, FSP Investments LLC (member, FINRA and SIPC), a wholly-owned subsidiary of Franklin Street, completed the sale on a best efforts basis of 700 shares of the Company’s preferred stock, $.01 par value per share (the “Preferred Stock”).  FSP Investments LLC sold the Preferred Stock in a private placement offering to “accredited investors” within the meaning of Regulation D under the Securities Act of 1933.





All references to the Company refer to FSP 50 South Tenth Street Corp. and its consolidated subsidiary, collectively, unless the context otherwise requires.





2.
Summary of Significant Accounting Policies





BASIS OF PRESENTATION





The accompanying consolidated financial statements include all of the accounts of the Company and its wholly-ownedsubsidiary.  All significant intercompany accounts and transactions have been eliminated in consolidation.





ESTIMATES AND ASSUMPTIONS





The Company prepares its consolidated financial statements and related notes in conformity with accounting principles generally accepted in the United States of America (“GAAP”).  These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.





REAL ESTATE AND DEPRECIATION





Real estate assets are stated at the lower of cost or fair value, as appropriate, less accumulated depreciation.





Costs related to property acquisition and improvements are capitalized.  Typical capital items include new roofs, site improvements, various exterior building improvements and major interior renovations.  Funding for capital improvements typically is provided by cash set aside at the time the Property was purchased.





Routine replacements and ordinary maintenance and repairs that do not extend the life of the asset are expensed as incurred.  Funding for repairs and maintenance items typically is provided by cash flows from operating activities.





Depreciation is computed using the straight-line method over the assets' estimated useful lives as follows:





Category
YearsBuilding - Commercial
39Building Improvements
15-39Furniture & Equipment
5-7





The Company reviews the Property to determine if the carrying amount will be recovered from future cash flows if certain indicators of impairment are identified at the Property.  The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods.  When indicators of impairment are present and the sum of the undiscounted future cash flows is less than the carrying value of such asset, an impairment loss is recorded equal to the difference between the asset’s current carrying value and its fair value based on discounting its estimated future cash flows.  At December 31, 2009 and 2008, no such indicators of impairment were identified.





Depreciation expense of $2,519,000 and $2,506,000 is included in Depreciation and Amortization in the Company’s Consolidated Statements of Operations for the years ended December 31, 2009 and 2008, respectively.




F-7


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





2.
Summary of Significant Accounting Policies (continued)





ACQUIRED REAL ESTATE LEASES





The acquired real estate leases represent the estimated value of legal and leasing costs related to acquired leases that were included in the purchase price when the Company acquired the Property.  The Company subsequently amortizes these costs on a straight-line basis over the remaining life of the related leases.  Amortization expense of $976,000 and $1,033,000 is included in Depreciation and Amortization in the Company’s Consolidated Statements of Operations for the years ended December 31, 2009 and 2008, respectively.





Acquired real estate lease costs included in the purchase price of the Property were $6,447,000.  Detail of the acquired real estate leases are as follows:





December 31,(in thousands)

2009


2008Cost

$
5,923


$
6,265Accumulated amortization


(2,744
)


(2,110
)Book value

$
3,179


$
4,155





The estimated annual amortization expense for the five years succeeding December 31, 2009 is as follows:





(in thousands)2010
$            7822011
$            7032012
$            6362013
$            6362014
$            311





ACQUIRED FAVORABLE REAL ESTATE LEASES





Acquired favorable real estate leases represent the value related to the leases when the lease payments due under a tenant’s lease exceed the market rate of the lease at the date the Property was acquired.  The Company reports this value separately from its investment in real estate.  The Company subsequently amortizes this amount on a straight-line basis over the remaining life of the tenant’s lease.  Amortization of $461,000 and $487,000 is shown as a reduction of rental income in the Company’s Consolidated Statements of Operations for the years ended December 31, 2009 and 2008, respectively.





The acquired favorable real estate leases included in the purchase price of the property were $3,198,000.  Detail of the acquired favorable real estate leases are as follows:





December 31,(in thousands)

2009


2008Cost

$
3,097


$
3,113Accumulated amortization


(1,447
)


(1,002
)Book value

$
1,650


$
2,111





F-8


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





2.
Summary of Significant Accounting Policies (continued)





ACQUIRED FAVORABLE REAL ESTATE LEASES (continued)





The estimated annual amortization expense for the five years succeeding December 31, 2009 is as follows:





(in thousands)2010
$            4242011
$            4012012
$            3462013
$            3462014
$            116





ACQUIRED UNFAVORABLE REAL ESTATE LEASES





Acquired unfavorable real estate leases represent the value relating to leases with rents below the market rate.  Amortization is computed using the straight-line method over the lives of the leases assumed.  Amortization of $197,000 and $198,000 is included with rental revenue in the Company’s Consolidated Statements of Operations for the years ended December 31, 2009 and 2008, respectively.





The acquired unfavorable real estate leases included in the purchase price of the property were $1,482,000.  Detail of the acquired unfavorable real estate leases are as follows:





December 31,(in thousands)

2009


2008Cost

$
1,446


$
1,479Accumulated amortization


(593
)


(429
)Book value

$
853


$
1,050





The estimated annual amortization expense for the five years succeeding December 31, 2009 is as follows:





(in thousands)2010
$            1872011
$            1752012
$            1402013
$            1402014
$            140





CASH AND CASH EQUIVALENTS





The Company considers all highly liquid debt instruments with an initial maturity of three months or less to be cash equivalents.  The Company has set aside funded reserves of $7,799,000 and $8,068,000 at December 31, 2009 and 2008, respectively, in anticipation of future capital needs of the Property.  These funds typically are used for the payment of real estate assets and deferred leasing commissions; however, there is no legal restriction on their use and they may be used for any Company purpose.





CASH - HELD IN ESCROW





The Company is required under its loan documents to make monthly deposits into a pledge account for real estate taxes.  The amount held in escrow for real estate taxes was $1,072,000 and $977,000 as of December 31, 2009 and 2008, respectively.





F-9


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





2.
Summary of Significant Accounting Policies (continued)





CONCENTRATION OF CREDIT RISKS





Cash, cash equivalents and short-term investments are financial instruments that potentially subject the Company to a concentration of credit risk.  The Company maintains its cash balances and short-term investments principally in banks which the Company believes to be creditworthy.  The Company periodically assesses the financial condition of these banks and believes that the risk of loss is minimal.  Cash balances held with various financial institutions frequently exceed the insurance limit of $250,000 provided by the Federal Deposit Insurance Corporation.





For the years ended December 31, 2009 and 2008, rental income was derived from various tenants.  As such, future receipts are dependent upon the financial strength of the lessees and their ability to perform under the lease agreements.





The following tenants represent greater than 10% of rental revenue as of December 31:





2009
2008Oracle America
51%
51%Ryan Companies
18%
18%





FINANCIAL INSTRUMENTS





The Company estimates that the carrying value of cash and cash equivalents, cash-held in escrow, and loan payable approximate their fair values based on their short-term maturity and prevailing interest rates.





STEP RENT RECEIVABLE





Certain leases provide for fixed rental increases over the life of the lease. Rental revenue is recognized on the straight-line basis over the related lease term; however, billings by the Company are based on required minimum rentals in accordance with the lease agreements.  Step rent receivable, which is the cumulative revenue recognized in excess of amounts billed by the Company, is $602,000 and $506,000 at December 31, 2009 and 2008, respectively.





TENANT RENT RECEIVABLE





Tenant rent receivable is reported at the amount the Company expects to collect on balances outstanding at year-end.  Management monitors outstanding balances and tenant relationships and concluded that any realization losses would be immaterial. The Company has provided an allowance for doubtful accounts based on its estimate of a tenants’ ability to make future rent payments. The computation of this allowance is based in part on the tenants’ payment history and current credit status.





DEFERRED LEASING COSTS





Deferred leasing commissions represent direct and incremental external leasing costs incurred in the leasing of commercial space.  These costs are capitalized and are amortizedon a straight-line basis over the terms of the related lease agreements.  Deferred leasing costs of $174,000 and $29,000 were incurred during the years ended December 31, 2009 and 2008, respectively.  Amortization expense was $15,000 and $3,000 for the years ended December 31, 2009 and 2008, respectively.





SYNDICATION FEES





Syndication fees are selling commissions and other costs associated with the initial offering of shares of the Company’s Preferred Stock.  Such costs, in the amount of $5,786,000 have been reported as a reduction in Stockholders’ Equity in the Company’s consolidated balance sheets.








F-10


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





2.
Summary of Significant Accounting Policies (continued)





REVENUE RECOGNITION





The Company has retained substantially all of the risks and benefits of ownership of the Company's commercial property and accounts for its leases as operating leases.  Rental income from the leases, which may include rent concessions (including free rent) and scheduled increases in rental rates during the lease term, is recognized on a straight-line basis.  Any lease incentives are recorded as deferred rent and amortized as reductions to rental income over the lease term on a straight-line basis.  The Company does not have any percentage rent arrangements with its commercial property tenants.  Reimbursable costs are included in rental income in the year earned.  A schedule showing the components of rental revenue is shown below.





Year Ended December 31,(in thousands)

2009


2008Income from leases

$
9,179


$
9,148Straight-line rent adjustment


96



138Reimbursable expenses


7,226



6,981Amortization of favorable leases


(461
)


(487
)Amortization of unfavorable leases


197



198Total

$
16,237


$
15,978





INTEREST INCOME





Interest income is recognized when the earnings process is complete.





INCOME TAXES





The Company intends to elect to be taxed as a Real Estate Investment Trust (“REIT”) under the Internal Revenue Code of 1986, as amended.  As a REIT, the Company generally is entitled to a tax deduction for dividends paid to its stockholders, thereby effectively subjecting the distributed net income of the Company to taxation at the stockholder level only.  The Company must comply with a variety of restrictions to maintain its status as a REIT.  These restrictions include the type of income it can earn, the type of assets it can hold, the number of stockholders it can have and the concentration of their ownership, and the amount of the Company’s taxable income that must be distributed annually.





NET INCOME PER SHARE





Basic net income per share of Preferred Stock is computed by dividing net income by the weighted average number of shares of Preferred Stock outstanding during the period. Diluted net income per share of Preferred Stock reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares.  There were no potential dilutive shares outstanding at December 31, 2009 or 2008.  Subsequent to the completion of the offering shares of Preferred Stock, the holders of Common Stock are not entitled to share in any income nor in any related dividend.





SUBSEQUENT EVENTS





In preparing these consolidated financial statements the Company evaluated events that occurred through March 12, 2010, the date of issuance of these financial statements, for potential recognition or disclosure.





RECENT ACCOUNTING PRONOUNCEMENTS





In June 2009, the Financial Accounting Standards Board (“FASB”) issued a pronouncement establishing the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with GAAP.  The standard explicitly recognizes rules and interpretive releases of the SEC under federal securities laws as authoritative GAAP for SEC registrants.  This standard is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009.  The Company has adopted this standard in accordance with GAAP.


F-11


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





2.
Summary of Significant Accounting Policies (continued)





RECENT ACCOUNTING PRONOUNCEMENTS (continued)





In May 2009, the FASB issued a pronouncement which sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This pronouncement requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date.  This disclosure should alert all users of financials statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented.  The Company is adhering to the requirements of this pronouncement, which was effective for financial periods ending after June 15, 2009.





3.
Loan Payable





The Company has a loan agreement (the “Loan”) outstanding with Bank of America, N.A. in the amount of $76,200,000.    Loan payments are interest-only until the Loan matures and bears interest at the fixed rate of 5.287% per annum.  The Loan is secured by the Property.  The Loan was entered into on December 21, 2006 and matures on January 1, 2012, with the entire principal balance due on that date.  Interest expense for the years ended December 31, 2009 and 2008 was $4,086,000 and $4,096,000, respectively.





The Loan agreement includes restrictions on property liens and requires compliance with various financial covenants.  Financial covenants include the requirement that the Company deposit all rents or other revenue from the Property to a lockbox account with the lender and provide periodic reporting.  The Loan agreement has certain restrictions on the Company’s ability to incur debt.  The Company was in compliance with all loan covenants as of December 31, 2009 and 2008.





4.
Income Taxes





The Company has elected to be taxed as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended.  In order to qualify as a REIT, the Company is required to distribute at least 90% of its taxable income to stockholders and to meet certain asset and income tests as well as certain other requirements.  The Company will generally not be liable for federal income taxes, provided it satisfies these requirements.  Even as a qualified REIT, the Company is subject to certain state and local taxes on its income and property.





The Company adopted an accounting pronouncement related to uncertainty in income taxes effective January 1, 2007, which did not result in recording a liability, nor was any accrued interest and penalties recognized with the adoption.  Accrued interest and penalties will be recorded as income tax expense, if the Company records a liability in the future.  The Company’s effective tax rate was not affected by the adoption.  The Company files income tax returns in the U.S. federal jurisdiction and the State of Minnesota jurisdiction.  The statute of limitations for the Company’s income tax returns is generally three years and as such, the Company’s returns that remain subject to examination would be from 2006 and thereafter.





For the period ended December 31, 2006, the Company incurred a net operating loss for income tax purposes of approximately $4,166,000 that can be carried forward until it expires in the year 2026.





At December 31, 2009, the Company’s net tax basis of its real estate assets was $116,162,000.


F-12


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





4.
Income Taxes (continued)





The following schedule reconciles net income to taxable income subject to distribution requirements:





Year Ended December 31,(in thousands)

2009


2008Net income

$
1,193


$
1,334Add:   Book depreciation and amortization


3,569



3,601Amortization of favorable real estate leases


461



487Deferred rent


29



(21
)Bad debt expenses


30



-Less:  Tax depreciation and amortization


(3,733
)


(3,716
)Amortization of unfavorable real estate leases


(197
)


(198
)Straight-line rents


(96
)


(138
)Taxable income

$
1,256


$
1,349





The following schedule summarizes the tax components of the distributions paid for the year ended December 31,:




(dollars in thousands)

2009

2008Preferred

%

Preferred

%Ordinary income

$    1,323

27%

$     1,354

27%Return of Capital

3,577

73%

3,630

73%Total

$    4,900

100%

$     4,984

100%


5.
Capital Stock





PREFERRED STOCK





Generally, each holder of shares of Preferred Stock is entitled to receive ratably all dividends, if any, declared by the Board of Directors out of funds legally available.  The right to receive dividends is non-cumulative, and no right to dividends shall accrue by reason of the fact that no dividend has been declared in any prior year.  Each holder of shares of Preferred Stock will be entitled to receive, to the extent that funds are available therefore, $100,000 per share of Preferred Stock, before any payment to the holder of Common Stock, out of distributions to stockholders upon liquidation, dissolution or the winding up of the Company; the balance of any such funds available for distribution will be distributed among the holders of shares of Preferred Stock and the holder of Common Stock, pro rata based on the number of shares held by each; provided, however, that for these purposes, one share of Common Stock will be deemed to equal one-tenth of a share of Preferred Stock.





In addition to certain rights to remove and replace directors, the holders of a majority of the then outstanding shares of Preferred Stock shall have the further right to approve or disapprove a proposed sale of the Property, the merger of the Company with any other entity and amendments to the corporate charter.  A vote of the holders of not less than 66.67% of then outstanding shares of Preferred Stock is required for the issuance of any additional shares of capital stock other than the remaining 840 shares of authorized but unissued Preferred Stock.  Holders of shares of Preferred Stock have no redemption or conversion rights.





COMMON STOCK





Franklin Street is the sole holder of the Company’s Common Stock.  Franklin Street has the right to vote to elect the directors of the Company and to vote on all matters, subject to the voting rights of the Preferred Stock set forth above.  Subsequent to the completion of the offering of the shares of Preferred Stock in January 2007, Franklin Street, as the holder of Common Stock, was not entitled to share in any earnings nor any related dividend.


F-13


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





6.
Related Party Transactions





The following is a summary of related party transactions that occurred with Franklin Street and its subsidiaries for the years ended December 31, 2009 and 2008:





The Company has in the past engaged in and currently engages in transactions with a related party, Franklin Street and its subsidiaries FSP Investments LLC and FSP Property Management LLC (collectively, “FSP”).  The Company expects to continue to have related party transactions with FSP in the form of management fees paid to FSP to manage the Company on behalf of our stockholders.  FSP Property Management LLC currently provides the Company with asset management and financial reporting services.  The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one percent (1%) of the gross revenues of the Property.  The asset management agreement between the Company and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days written notice, effective at the end of the notice period.  For the years ended December 31, 2009 and 2008, management fees paid were $162,000 and $161,000, respectively.





Franklin Street is the sole holder of the Company’s one share of Common Stock that is issued and outstanding.  Subsequent to the completion of the private placement of the Preferred Stock in January 2007, Franklin Street has not been entitled to share in any earnings or any dividend as a result of its ownership of the Common Stock of the Company.





7.
Commitments and Contingencies





The Company, as lessor, has minimum future rentals due under non-cancelable operating leases as follows:





Year Ending(in thousands)

December 31,

Amount2010

$           8,8352011

8,4272012

8,1362013

8,0492014

4,184Thereafter

1,683$         39,314





In addition, the lessees are liable for real estate taxes and certain operating expenses of the Property.





Upon acquiring the commercial rental property on November 8, 2006, the Company was assigned the lease agreements between the seller of the Property and the existing tenants.





8.
Segment Reporting





The Company operates in one industry segment – real estate ownership of commercial property.  As of December 31, 2009 and 2008, the Company owned and operated a twelve-story multi-tenant office and retail building in that one segment.








F-14


FSP 50 South Tenth Street Corp.


Notes to Consolidated Financial Statements





9.
Accounts Payable and Accrued Expenses





Accounts payable and accrued expenses consist of the components shown below:





December 31,(in thousands)

2009


2008Deferred rental income

$
991


$
923Accrued operating expenses


223



195Due to tenants


290



143Accounts payable and other accrued expenses


162



121Total

$
1,666


$
1,382





10.
Subsequent Event





On January 15, 2010, the Board of Directors of the Company declared a cash distribution of $1,225,000 payable on February 19, 2010 to stockholders of record on January 29, 2010.





F-15


SCHEDULE III





FSP 50 South Tenth Street Corp.


Real Estate and Accumulated Depreciation


December 31, 2009


(in thousands)


Initial Cost


Historical CostsDescription

Encumbrances


Land


Buildings

Improvements

and Equipment


Costs Capitalized (Disposals) Subsequent to Acquisition


Land


Buildings

Improvements

and

Equipment


Total (1)


Accumulated

Depreciation


Total Costs, Net of

Accumulated

Depreciation


Depreciable

Life

(Years)


Date of

Acquisition(in thousands)50 South Tenth Street, Minneapolis, MN

$
76,200


$
21,974


$
97,321


$
79


$
21,974


$
97,495


$
119,469


$
7,941


$
111,528


5-39


2006





(1)
Construction of the building was completed in 2001 and the aggregate cost for Federal Income Tax purposes is $127,631.








F-16


FSP 50 South Tenth Street Corp.





The following table summarizes the changes in the Company’s real estate investments and accumulated depreciation:





December 31,


December 31,(in thousands)

2009


2008Real estate investments, at cost:Balance, beginning of year

$
119,374


$
119,327Improvements


95



47Balance, end of year

$
119,469


$
119,374Accumulated depreciation:Balance, beginning of year

$
5,422


$
2,916Depreciation


2,519



2,506Balance, end of year

$
7,941


$
5,422










F-17