UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10 - Q

(Mark One)

      |X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

            For the quarterly period ended March 31, 2004

                                       OR

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

            For the transition period _________ to __________.

                         Commission File Number: 0-32615

                        Franklin Street Properties Corp.
             (Exact name of registrant as specified in its charter)


            Maryland                                   04-3578653
 (State or other jurisdiction of           (IRS Employer Identification Number)
  incorporation or organization)


                         401 Edgewater Place, Suite 200
                            Wakefield, MA 01880-6210
                    (Address of principal executive offices)

                  Registrant's telephone number: (781) 557-1300

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 ninety days.

         YES  |X|                                               NO  |_|

Indicate by check mark whether the registrant is an accelerated filer as defined
in Rule 12b-2 of the Exchange Act.

         YES  |X|                                               NO  |_|

The number of shares of common stock outstanding as of April 28, 2004 was
49,630,338.

<PAGE>

                        Franklin Street Properties Corp.

                                    Form 10-Q

                                Quarterly Report
                                 March 31, 2004

                                Table of Contents


Part I.  Financial Information
                                                                            Page
         Item 1.  Financial Statements                                      ----

                  Consolidated Balance Sheets as of March 31, 2004 and
                  December 31, 2003.......................................     3

                  Consolidated Statements of Income for the three months
                  ended March 31, 2004 and 2003...........................     4

                  Consolidated Statements of Cash Flows for the three
                  months ended March 31, 2004 and 2003....................     5

                  Notes to Consolidated Financial Statements..............  6-14

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations..................... 15-27

         Item 3.  Quantitative and Qualitative Disclosures about
                  Market Risk.............................................    27

         Item 4.  Controls and Procedures.................................    27

Part II. Other Information

         Item 1.  Legal Proceedings.......................................    28

         Item 2.  Changes in Securities, Use of Proceeds and Issuer
                  Purchases of Equity Securities..........................    28

         Item 3.  Defaults upon Senior Securities.........................    28

         Item 4.  Submission of Matters to a Vote of Security Holders.....    28

         Item 5.  Other Information.......................................    28

         Item 6.  Exhibits and Reports on Form 8-K........................    29

Signatures        ........................................................    30
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                        Franklin Street Properties Corp.
                           Consolidated Balance Sheets
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                           March 31,  December 31,
(in thousands, except share and par value amounts)                           2004        2003
==================================================================================================

<S>                                                                        <C>          <C>
Assets:

Real estate assets:
   Land                                                                    $ 71,236     $ 71,236
   Buildings and improvements                                               403,343      403,243
   Fixtures and equipment                                                       889          889
------------------------------------------------------------------------------------------------
                                                                            475,468      475,368
   Less accumulated depreciation                                             28,555       25,836
------------------------------------------------------------------------------------------------
     Real estate assets, net                                                446,913      449,532

Acquired real estate leases, less accumulated amortization of $1,999 and
   $1,539, respectively                                                       7,504        7,964
Assets held for syndication                                                      --        4,117
Cash and cash equivalents                                                    53,950       58,793
Restricted cash                                                                 968          982
Tenant rent receivables, less allowance for doubtful accounts of
  $155 and $155, respectively                                                 1,110          881
Straight-line rent receivable, less allowance for doubtful accounts
   of $360 and $360, respectively                                             4,427        4,087
Prepaid expenses                                                                970          806
Investment in non-consolidated REITs                                          4,292           --
Office computers and furniture, net of accumulated
   depreciation of $484 and $473, respectively                                  404          398
Deferred leasing commissions, net of accumulated amortization
   of $655 and $586, respectively                                             1,051          969
------------------------------------------------------------------------------------------------
     Total Assets                                                          $521,589     $528,529
================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
   Bank note payable                                                       $     --     $  4,117
   Accounts payable and accrued expenses                                      5,502        5,030
   Accrued compensation                                                         411        1,545
   Tenant security deposits                                                     968          982
------------------------------------------------------------------------------------------------

     Total Liabilities                                                        6,881       11,674
------------------------------------------------------------------------------------------------

Commitments and Contingencies:

Stockholders' Equity:
   Preferred Stock, $.0001 par value, 20,000,000 shares
     authorized, none issued or outstanding                                      --           --
   Common Stock, $.0001 par value, 180,000,000 shares
     authorized, 49,630,338 shares issued and outstanding                         5            5
   Additional paid-in capital                                               512,813      512,797
   Retained earnings                                                          1,484        3,647
   Accumulated undistributed net realized gain on sale of properties            406          406
------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                             514,708      516,855
------------------------------------------------------------------------------------------------
     Total Liabilities and Stockholders' Equity                            $521,589     $528,529
================================================================================================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       3
<PAGE>

                        Franklin Street Properties Corp.
                        Consolidated Statements of Income
                                   (Unaudited)

                                                                    For the
                                                                 Three Months
                                                                     Ended
                                                                    March 31,
                                                               -----------------
(in thousands, except per share amounts)                         2004      2003
================================================================================

Revenue:
   Rental                                                      $18,045   $ 5,399
   Syndication fees                                              3,041     3,233
   Transaction fees                                              3,549     3,215
   Sponsored REIT income                                         1,669       384
   Other                                                           350       317
--------------------------------------------------------------------------------

     Total revenue                                              26,654    12,548
--------------------------------------------------------------------------------

Expenses:
   Real estate operating expenses                                3,299     1,433
   Real estate taxes and insurance                               2,320       697
   Depreciation and amortization                                 3,200       830
   Sponsored REIT expenses                                       1,043       291
   Selling, general and administrative                           1,526     1,398
   Commissions                                                   1,520     1,616
   Shares issued as compensation                                   162        --
   Interest                                                        264       331
--------------------------------------------------------------------------------

     Total expenses                                             13,334     6,596
--------------------------------------------------------------------------------

Income before interest income and taxes on income               13,320     5,952

Interest income                                                    227        49
--------------------------------------------------------------------------------

Income before taxes on income                                   13,547     6,001

Taxes on income                                                    328       229
--------------------------------------------------------------------------------

Income from continuing operations                               13,219     5,772

Income from discontinued operations                                 --        95
Gain on sale of properties, less applicable income tax              --     1,421
--------------------------------------------------------------------------------

Net income                                                     $13,219   $ 7,288
================================================================================

Weighted average number of shares outstanding, basic
     and diluted                                                49,624    24,630
================================================================================

Amounts per share, basic and diluted, attributable to
   Continuing operations                                       $  0.27   $  0.23
   Discontinued operations                                          --        --
   Gain on sale of properties, less applicable income tax           --      0.06
--------------------------------------------------------------------------------
Net income per share, basic and diluted                        $  0.27   $  0.29
================================================================================

The accompanying notes are an integral part of these consolidated financial
statements.


                                       4
<PAGE>

                        Franklin Street Properties Corp.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              For the
                                                                           Three Months
                                                                               Ended
                                                                              March 31,
                                                                       --------------------
(in thousands, except per share amounts)                                  2004        2003
===========================================================================================

<S>                                                                    <C>         <C>
Cash flows from operating activities:
   Net income                                                          $ 13,219    $  7,288
   Adjustments to reconcile net income to net cash
     provided by (used for) operating activities:
      Depreciation and amortization                                       3,259         931
      Gain on sale of real estate assets                                     --      (1,421)
      Shares issued as compensation                                         162          --
      Income from non-consolidated REITs                                    (44)         --
   Changes in operating assets and liabilities:
       Restricted cash                                                       14          41
       Tenant rent receivable, net                                         (229)         44
       Straight-line rent receivables, net                                 (340)        450
       Prepaid expenses                                                    (164)         33
       Accounts payable and accrued expenses                                472        (243)
       Accrued compensation                                              (1,134)       (451)
       Tenant security deposits                                             (14)        (41)
   Payment of deferred leasing commissions                                 (151)        (56)
-------------------------------------------------------------------------------------------

         Net cash provided by (used for) operating activities            15,050       6,575
-------------------------------------------------------------------------------------------

Cash flows from investing activities:
   Purchase of real estate assets, office computers and furniture          (117)       (183)
   Investment in non-consolidated REITs                                  (4,248)         --
   Changes in deposits on real estate assets                                 --         290
   Purchase of (sale of) assets held for syndication                      4,117     (25,309)
   Proceeds received on sale of real estate assets                           --       6,228
-------------------------------------------------------------------------------------------

         Net cash provided by (used for) investing activities              (248)    (18,974)
-------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Distributions to stockholders                                        (15,382)     (7,635)
   Proceeds from (payments to) bank note payable, net                    (4,117)     23,979
   Purchase of treasury stock                                              (146)         --
-------------------------------------------------------------------------------------------

         Net cash provided by (used for) financing activities           (19,645)     16,344
-------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                     (4,843)      3,945

Cash and cash equivalents, beginning of period                           58,793      22,316
-------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                               $ 53,950    $ 26,261
===========================================================================================

Supplemental disclosure of cash flow information:

   Cash paid for:
     Interest                                                          $    264    $    331
     Taxes on income                                                   $    100    $    585
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       5
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.    Organization, Properties, Basis of Presentation and Recent Accounting
      Pronouncements

Organization

Franklin Street Properties Corp. (together with its subsidiaries, "FSP Corp." or
the "Company", known as Franklin Street Partners Limited Partnership, or the
"Partnership", prior to January 1, 2002) was formed as a Massachusetts limited
partnership on February 4, 1997. Prior to July 1, 2001 the Partnership owned a
99% interest in FSP Investments LLC ("FSP Investments"), a 99% interest in FSP
Property Management LLC ("FSP Property Management") and 100% of FSP Holdings LLC
("FSP Holdings"). Effective July 1, 2001, FSP Holdings purchased the remaining
1% interest of FSP Investments and FSP Property Management for approximately
$32,000. As of March 31, 2004, the Company also has a non-controlling interest
in nine corporations organized to operate as real estate investment trusts
("REITs").

In December 2001, the limited partners of the Partnership approved the
conversion of the Partnership from a partnership into a corporation (the
"Conversion"). The Conversion was effective January 1, 2002, and was
accomplished as tax-free reorganization by merging the Partnership with and into
a wholly owned subsidiary, Franklin Street Properties Corp., with the subsidiary
as the surviving entity. In 2002, the Company elected to be taxed as a real
estate investment trust ("REIT"). As part of the Conversion, all of the
Partnership's outstanding units were converted on a one-for-one basis into
24,586,249 shares of common stock of the Company. The Conversion was accounted
for as a reorganization of affiliated entities, with assets and liabilities
recorded at their historical costs.

On May 30, 2003, the shareholders of the Company approved the Company's
acquisition by merger of 13 REITs (the "Target REITs"). The mergers were
effective June 1, 2003 and, as a result, the Company issued approximately
25,000,091 shares in a tax-free exchange for all the outstanding preferred
shares of the Target REITs. The mergers were accounted for as a purchase and the
acquired assets and liabilities were recorded at their fair value.

The Company operates in two business segments: real estate operations and
investment banking/investment services. As part of the Company's real estate
operations segment, FSP Property Management provides asset management and
property management services for the Sponsored REITs. As part of the Company's
investment banking/investment services segment, FSP Investments provides real
estate investment and broker/dealer services. FSP Investments' services include:
(i) the organization of REIT entities (the "Sponsored REITs"), which are
syndicated through private placements; (ii) the acquisition of real estate on
behalf of the Sponsored REITs; and (iii) the sale of preferred stock in
Sponsored REITs.

Properties

The following table summarizes the Company's investment in real estate assets,
excluding assets held for syndication:

                                                              As of
                                                            March 31,
                                                       2004          2003
                                                    ---------     ---------
      Residential real estate
             Number of properties                           4             3
             Number of apartments                         837           558

      Commercial real estate
             Number of properties                          24            13
             Square feet                            3,049,357     1,433,300


                                       6
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1.    Organization, Properties, Basis of Presentation and Recent Accounting
      Pronouncements (continued)

Basis of Presentation

The unaudited consolidated financial statements of the Company include all the
accounts of the Company and its wholly and majority owned subsidiaries. All
significant intercompany balances and transactions have been eliminated. These
financial statements should be read in conjunction with the Company's financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for its fiscal year ended December 31, 2003.

The accompanying interim financial statements are unaudited; however, the
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and in conjunction with the rules and regulations of the Securities
and Exchange Commission. Accordingly, they do not include all of the disclosures
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments (consisting solely of normal recurring matters) necessary for a fair
presentation of the financial statements for these interim periods have been
included.

Certain prior-year balances have been reclassified in order to conform to the
current-year presentation.

Recent Accounting Standards

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities. In December 2003, the FASB revised
FIN 46 with certain modifications and clarifications. The objective of this
interpretation is to provide guidance on how to identify a variable interest
entity ("VIE") and determine when the assets, liabilities, non-controlling
interests, and results of operations of a VIE need to be included in a company's
consolidated financial statements. A VIE exists when either the total equity
investment at risk is not sufficient to permit the entity to finance its
activities by itself, or the equity investors lack one of three characteristics
associated with owning a controlling financial interest. Application of this
guidance was effective for interests in certain VIEs commonly referred to as
special-purpose entities (SPEs) as of December 31, 2003. The provisions of this
interpretation became effective upon issuance. The adoption of this standard did
not have a material impact on the Company's financial position, operations or
cash flow.


                                       7
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

2.    Investment Banking/Investment services Activity

During the three months ended March 31, 2004, the Company completed the
syndication of a Sponsored REIT, FSP Blue Lagoon Drive Corp., which had been
started in the fourth quarter of 2003. The Company also completed the
syndication of another Sponsored REIT, FSP Eldridge Green Corp., which had
acquired an office building in Houston, Texas. The Company sold on a best
efforts basis, through private placements, approximately $49,175,000 in
preferred stock in these Sponsored REITs in the three months ending March 31,
2004.

The Company has in the past acquired by merger entities similar to the Sponsored
REITs. The Company's business model includes the potential acquisition by merger
in the future of Sponsored REITs. However, the Company has no legal or any other
enforceable obligation to acquire or to offer to acquire any Sponsored REIT. In
addition, any offer (and the related terms and conditions) that might be made in
the future to acquire any Sponsored REIT would require the approval of the
boards of directors of the Company and the Sponsored REIT, the approval of the
shareholders of the Sponsored REIT, and any such acquisition may also require
the approval of the shareholders of the Company.

3.    Related Party Transactions and Investments in Non-consolidated Entities

The Company typically purchases and retains a non-controlling common stock
ownership interest in Sponsored REITs that it has organized. These ownership
interests have virtually no economic benefit or risk. In January 2004 the
Company also purchased 49.25 preferred shares or 8.22% of FSP Blue Lagoon Drive
Corp. for $4,248,000 ($4,925,000 less non-recorded commissions of $394,000 and
loan fees of $283,000). At March 31, 2004, December 31, 2003 and March 31, 2003,
the Company had ownership interests in nine, eight and eighteen Sponsored REITs,
respectively.

Summarized financial information for the Sponsored REITs is as follows:

                                                     March, 31      December 31,
                                                        2004            2003
                                                      --------        --------
      (in thousands)

      Balance Sheet Data:
      -------------------
      Real estate, net                                $293,722        $257,700
      Other assets                                      57,207          53,646
      Total liabilities                                 (4,833)        (18,129)
                                                      --------        --------
      Shareholders' equity                            $346,096        $293,217
                                                      ========        ========

                                                    For the three months ended
                                                             March 31,
                                                       2004              2003
                                                     -------           -------
      (in thousands)

      Operating Data:
      -------------------
      Rental revenue                                 $13,006           $15,667
      Other revenue                                      120               108
      Operating and maintenance expenses              (3,853)           (5,020)
      Depreciation and amortization                   (3,050)           (2,619)
      Interest expense and commitment fees            (3,332)             (767)
                                                     -------           -------
      Net income                                     $ 2,891           $ 7,369
                                                     =======           =======


                                       8
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

3.    Related Party Transactions and Investments in Non-consolidated Entities
      (continued)

The Company's proportionate share of the Sponsored REITs' income and expenses
prior to the completion of the syndication of these Sponsored REITs is
summarized in the following table:

                                             For the three months ended
                                                     March 31,
      (in thousands)                            2004             2003
                                              -------          ------

      Sponsored REIT income                   $ 1,669          $  384
      Sponsored REIT expense                   (1,043)           (291)
                                              -------          ------
             Net income                       $   626          $   93
                                              =======          ======


Sponsored REIT income also includes $44,000 for the three months ended March 31,
2004, which was the Company's share of income resulting from its interest in
preferred stock of FSP Blue Lagoon Drive Corp.

The Company provides syndication and real estate acquisition advisory services
for the Sponsored REITs at the times of their respective syndications. For the
three months ended March 31, 2004 and 2003, respectively, syndication fees were
approximately $3.0 million and $3.2 million, and transaction fees were
approximately $3.5 million and $3.2 million.

Asset management fee income charged by the Company to the Sponsored REITs
amounted to approximately $115,000 and $149,000 for the three months ended March
31, 2004 and 2003, respectively, and is included in "Other" in the consolidated
statements of income. Management fees range from 1% to 5% of collected rents and
the applicable contracts are cancelable with 30 days notice.

4.    Bank Note Payable

The Company has a revolving line of credit agreement (the "Loan Agreement") with
a group of banks providing for borrowings at the Company's election of up to
$125,000,000. Borrowings under the Loan Agreement bear interest at either the
bank's base rate or a variable LIBOR rate, as defined. The balance outstanding
was $0 and $4,117,000 as of March 31, 2004 and December 31, 2003, respectively.

The Loan Agreement includes restrictions on property liens and requires
compliance with various financial covenants. Financial covenants include the
maintenance of at least $1,500,000 in operating cash accounts, a minimum
tangible net worth and compliance with various debt and operating income ratios,
as defined in the Loan Agreement. The Company was in compliance with the Loan
Agreement's financial covenants as of March 31, 2004. The Loan Agreement matures
on August 18, 2005.

5.    Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted
average number of Company shares outstanding during the period. Diluted net
income per share 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 March 31, 2004 and 2003.


                                       9
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

6.    Business Segments

The Company operates in two business segments: real estate operations (including
real estate leasing, interim acquisition financing and asset/property
management) and investment banking/investment services (including real estate
acquisition and broker/dealer services). The Company has identified these
segments because this discrete information is the basis upon which management
makes decisions regarding resource allocation and performance assessment. The
accounting policies of the reportable segments are the same as those described
in the "Significant Accounting Policies" set forth in Note 2 to the Company's
audited financial statements included in the Company's Annual Report on Form
10-K for the year ended December 31, 2003. The Company's segments are located in
the United States of America.

The Company evaluates the performance of its reportable segments based on Cash
Available for Distribution ("CAD") as management believes that CAD represents
the most accurate measure of the reportable segment's activity and is the basis
for distributions paid to equity holders. The Company defines CAD as: net income
as computed in accordance with accounting principles generally accepted in the
United States of America ("GAAP"); plus certain non-cash items included in the
computation of net income (depreciation and amortization, gain or loss on the
sale of real estate, unrealized income from non-consolidated REITs, certain
non-cash compensation expenses and straight-line rent adjustments); plus the net
proceeds from the sale of land; less purchases of property and equipment
("Capital Expenditures") and payments for deferred leasing commissions, plus
proceeds from (payments to) cash reserves established at the acquisition date of
the property. Depreciation and amortization, gain or loss on the sale of real
estate, unrealized income from non-consolidated REITs, non-cash compensation and
straight-line rents are an adjustment to CAD, as these are non-cash items
included in net income. Capital expenditures, payments of deferred leasing
commissions and the proceeds from (payments to) the funded reserve are an
adjustment to CAD, as they represent cash items not reflected in net income.

The funded reserve represents funds that the Company has set aside in
anticipation of future capital needs. These reserves are typically used for the
payment of capital expenditures, deferred leasing commissions and certain tenant
allowances; however, there are no legal restrictions on their use and they may
be used for any Company purpose.

CAD should not be considered as an alternative to net income (determined in
accordance with GAAP), as an indicator of the Company's financial performance,
nor as an alternative to cash flows from operating activities (determined in
accordance with GAAP), nor as a measure of the Company's liquidity, nor is it
necessarily indicative of sufficient cash flow to fund all of the Company's
needs. Other real estate companies may define CAD in a different manner. It is
at the Company's discretion to retain a portion of CAD for operational needs. We
believe that in order to facilitate a clear understanding of the results of the
Company, CAD should be examined in connection with net income and cash flows
from operating, investing and financing activities in the consolidated financial
statements.


                                       10
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

6.    Business Segments (continued)

The calculation of CAD by business segment is shown in the following table:

                                                            Investment
                                                             Banking/
                                               Real Estate  Investment
(in thousands)                                  Operations   Services    Total
                                               -----------  ---------  --------
Three Months Ended March 31, 2004

Net Income                                      $ 12,739     $ 480     $ 13,219
Depreciation and amortization                      3,235        24        3,259
Straight line rent                                  (340)       --         (340)
Non-cash compensation expense                         --       162          162
Capital expenditures                                (100)      (17)        (117)
Payment of deferred leasing costs                   (151)       --         (151)
Unrealized income from non-consolidated REITs        (44)       --          (44)
Proceeds from funded reserves                        251        --          251
                                                --------     -----     --------

Cash Available for Distribution                 $ 15,590     $ 649     $ 16,239
                                                ========     =====     ========

Three Months Ended March 31, 2003

Net Income                                      $  6,986     $ 302     $  7,288
Depreciation and amortization                        901        30          931
Straight line rent                                   432        --          432
Non-cash compensation expense                         --        --           --
Loss (gain) on sale of property                   (1,421)       --       (1,421)
Capital expenditures                                (183)       --         (183)
Payment of deferred leasing costs                    (53)       --          (53)
Proceeds from funded reserves                        191        --          191
                                                --------     -----     --------

Cash Available for Distribution                 $  6,853     $ 332     $  7,185
                                                ========     =====     ========


                                       11
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

6.    Business Segments (continued)

The following table is a summary of other financial information by business
segment:

                                                            Investment
                                                             Banking/
                                               Real Estate  Investment
(in thousands)                                  Operations   Services    Total
                                               -----------  ---------  --------

Three Months Ended March 31, 2004:
     Revenue                                    $ 22,892      $3,762   $ 26,654
     Interest Income                                 211          16        227
     Interest Expense                                264          --        264
     Capital Expenditures                            100          17        117
     Total assets at March 31, 2004              518,255       3,334    521,589

Three Months Ended March 31, 2003:
     Revenue                                    $  9,141      $3,407   $ 12,548
     Interest Income                                  28          21         49
     Interest Expense                                331          --        331
     Income from discontinued operations, net         95          --         95
     Gain on Sale of Properties                    1,421          --      1,421
     Capital Expenditures                            183          --        183
     Total assets at March 31, 2003              217,463       6,040    223,503

7.    Cash Dividends

The Company declared and paid dividends as follows (in thousands, except per
share amounts):

                                                Dividends       Total
            Quarter Paid                        Per Share     Dividends
      -------------------------------           ---------     ---------

      First quarter of 2004                      $ .31         $15,382

      First quarter of 2003                      $ .31         $ 7,635

8.    Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"). As a REIT, the Company generally is entitled to a
tax deduction for dividends paid to its shareholders, thereby effectively
subjecting the distributed net income of the Company to taxation at the
shareholder 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 shareholders it can
have and the concentration of their ownership, and the amount of the Company's
income that must be distributed annually.

One such restriction is that the Company generally cannot own more than 10% of
the voting power or value of the securities of any one issuer unless the issuer
is itself a REIT or a "taxable REIT subsidiary" ("TRS"). In the case of TRSs,
the Company's ownership of securities in all TRSs generally cannot exceed 20% of
the value of all of the Company's assets and, when considered together with
other non-real estate assets, cannot exceed 25% of the value of all of the
Company's assets. Effective January 1, 2001, a subsidiary of the Company has
elected to be treated as a TRS. As a result, FSP Investments operates as a
taxable corporation under the Code and has accounted for income taxes in
accordance with the provisions of Statement of Financial Accounting Standard
("SFAS") No. 109, Accounting for Income Taxes. Taxes are provided when FSP
investments has net profits for both financial statement and income tax
purposes.


                                       12
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

8.    Income Taxes (continued)

Income taxes are recorded based on the future tax effects of the difference
between the tax and financial reporting bases of the Company's assets and
liabilities. In estimating future tax consequences, potential future events are
considered except for potential changes in income tax law or in rates.

The income tax expense reflected in the consolidated statements of income
relates only to the TRS. The expense differs from the amounts computed by
applying the Federal statutory rate of 35% to income before income taxes as
follows:

                                                                    For the
                                                              Three Months Ended
                                                              ------------------
      (in thousands)                                            2004      2003
                                                              ------------------

      Federal income tax expense at statutory rate             $  283    $  195
      Increase (decrease) in taxes resulting from:
          State income taxes, net of federal impact                45        34
                                                               ----------------
                                                               $  328    $  229
                                                               ================

No deferred income taxes were provided as there were no temporary differences
between the financial reporting basis and the tax basis of the taxable REIT
subsidiary.


                                       13
<PAGE>

                        Franklin Street Properties Corp.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

9.    Merger Transactions

On June 1, 2003, the Company issued approximately 25 million shares of common
stock, $0.0001 par value per share in exchange for all of the outstanding
preferred stock of 13 Sponsored REITs it acquired by merger. The results of
operations for each of the Sponsored REITs have been included in the Company's
consolidated financial statements since that date. The merger transactions were
structured as exchanges of shares and no cash was involved.

The aggregate purchase price was approximately $321 million. On the acquisition
date, for each Sponsored REIT, the increase between the appraised value of the
property and the historical cost of the property was allocated to real estate
investments and leases, including Lease origination costs. Lease origination
costs represent the value associated with acquiring an in-place lease (i.e. the
market cost to execute a similar lease, including leasing commission, legal,
vacancy, and other related costs). The value assigned to buildings approximates
their replacement cost; the value assigned to land approximates its appraised
value; and the value assigned to leases approximates their fair value. Other
assets and liabilities are recorded at their historical costs, which
approximates fair value. The following table summarizes the estimated fair value
of the assets acquired at the date of acquisition:

Pro forma operating results for the Company and the 13 Sponsored REITs the
Company acquired during 2003 are shown in the following table. The results
assume that the mergers occurred and the shares of the Company's stock were
issued on January 1, 2003 and are not necessarily indicative of what the
Company's actual results of operations would have been for the period indicated,
nor do they purport to represent the results of operations of any future period.

                                                          For Three Months Ended
                                                                 March 31,
(in thousands except per share amount)                             2003
                                                                 --------

Revenue                                                          $ 24,064
Expenses                                                          (12,346)
Interest income                                                       121
Taxes on income                                                      (229)
                                                                 --------
Net income from continuing operations                              11,610
Income from discontinued operations                                    95
Gain on sale of property                                            1,421
                                                                 ========
Net income                                                       $ 13,126
                                                                 ========

Weighted average shares outstanding                                49,630
                                                                 ========
Net income per share                                             $   0.26
                                                                 ========


                                       14
<PAGE>

Item 2. 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 and in our
Annual Report on Form 10-K for the year ended December 31, 2003. Historical
results and percentage relationships set forth in the Consolidated Statements of
Income contained in the financial statements, including trends which might
appear, should not be taken as necessarily indicative of future operations. This
discussion may also contain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. For purposes of these Acts, any
statement that is not a statement of historical fact may be deemed a
forward-looking statement. The forward-looking statements found in this
Quarterly Report on Form 10-Q are 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, changes in economic conditions in the markets in
which we own properties, expectations with respect to individual properties
owned by us, changes in the demand by investors for investment in Sponsored
REITs, risks of a lessening of demand for the types 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. See
the factors set forth below under the caption, "Certain Factors That May Affect
Future Results". 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 will not update any of the
forward-looking statements after the date this quarterly report 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

FSP Corp. operates in two business segments: real estate operations and
investment banking/investment services. The real estate operations segment
involves real estate rental operations, leasing, interim acquisition financing
and asset/property management services. The investment banking/investment
services segment involves the provision of real estate investment and
broker/dealer services that include the organization of Sponsored REITs, the
acquisition of real estate on behalf of Sponsored REITs and the syndication of
Sponsored REITs through sale of preferred stock in private placements.

The main factor that affects our real estate operations is the broad economic
market conditions in the United States. These market conditions affect the
occupancy levels and the rent levels on both a national and local level. We have
no influence on the national market conditions. We look to acquire quality
properties in good locations in order to lessen the impact of downturns in the
market and to take advantage of upturns when they occur.

Our investment banking/investment services customers are primarily institutions
and high net-worth individuals. To the extent that the broad capital markets
affect these investors our business is also affected. These investors have many
investment choices. We must continually search for real estate at a price and at
a competitive risk/reward rate of return that meets our customer's risk/reward
profile for providing a stream of income and as a long-term hedge against
inflation.

Critical Accounting Policies

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 on-going 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.

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
assessments are consistently applied and produce financial information that
fairly presents our results of operations. Our most critical accounting policies
involve our investments in real property and Sponsored REITs. These policies
affect our:

      o     allocation of purchase prices between various asset categories and
            the related impact on our recognition of rental income and
            depreciation and amortization expense;

      o     assessment of the carrying values and impairments of long lived
            assets;

      o     classification of leases; and

      o     revenue recognition in the syndication of Sponsored REITs and the
            investment in non-consolidated REITs.


                                       15
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Critical Accounting Policies (continued)

      Allocation of Purchase Price

We have historically allocated the purchase prices of properties to land,
buildings and improvements. Each component of purchase price generally has a
different useful life. For properties acquired subsequent to June 1, 2001, the
effective date of Statement of Financial Accounting Standards ("SFAS") No. 141
"Business Combinations," we allocate the value of real estate acquired among
land, buildings, improvements and identified intangible assets and liabilities,
which may consist of the value of above market and below market leases, the
value of in-place leases, and the value of tenant relationships. Purchase price
allocations and the determination of the useful lives are based on management's
estimates. Under some circumstances we may rely upon studies commissioned from
independent real estate appraisal firms.

Purchase price allocated to land and building and improvements is based on
management's determination of the relative fair values of these assets assuming
the property was vacant. Management determines the fair value of a property
using methods similar to those used by independent appraisers. Purchase price
allocated to above market leases is based on the present value (using an
interest rate which reflects the risks associated with the leases acquired) of
the difference between (i) the contractual amounts to be paid pursuant to the
in-place leases and (ii) our estimate of fair market lease rates for the
corresponding leases, measured over a period equal to the remaining
non-cancelable terms of the respective leases. Purchase price allocated to
in-place leases and tenant relationships is determined as the excess of (i) the
purchase price paid for a property after adjusting existing in-place leases to
market rental rates over (ii) the estimated fair value of the property as if
vacant. This aggregate value is allocated between in-place lease values and
tenant relationships and is based on management's evaluation of the specific
characteristics of each tenant's lease; however, the value of tenant
relationships has not been separated from in-place lease value because such
value and its consequence to amortization expense is immaterial for acquisitions
reflected in our financial statements. Factors considered by us in performing
these analyses include (i) an estimate of carrying costs during the expected
lease-up periods, including real estate taxes, insurance and other operating
income and expenses and (ii) costs to execute similar leases in current market
conditions, such as leasing commissions, legal and other related costs. If
future acquisitions result in our allocating material amounts to the value of
tenant relationships, those amounts would be separately allocated and amortized
over the estimated life of the relationships.

      Depreciation Expense

We compute depreciation expense using the straight-line method over estimated
useful lives of up to 40 years for buildings and improvements, and up to 15
years for personal property. The allocated cost of land is not depreciated. The
capitalized above-market lease values (included in acquired real estate leases
in our consolidated balance sheets) are amortized as a reduction to rental
income over the remaining non-cancelable terms of the respective leases. We do
not have any capitalized below market leases. The value of in-place leases,
exclusive of the value of above-market and below-market in-place leases, is
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 are 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 our real estate properties 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 investments. 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.


                                       16
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Critical Accounting Policies (continued)

      Lease Classification

Some of our real estate properties are leased on a triple net basis, pursuant to
non-cancelable, fixed term, operating leases. 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.

      Revenue Recognition

We earn syndication and transaction fees in connection with the syndication of
Sponsored REITs. This revenue is recognized pursuant to the provisions of SFAS
No. 66 "Accounting for Sales of Real Estate," and Statement of Position 92-1
"Accounting for Real Estate Syndication Income." Revenue is recognized provided
the criteria for sale accounting in SFAS No. 66 are met. Accordingly, we
recognize syndication fees related to commissions when shares of the Sponsored
REIT are sold and the investor's funds have been transferred from escrow into
our account. We recognize transaction fees related to loan commitment fees upon
an investor closing and the subsequent payment of the Sponsored REIT's loan to
the Company. Other transaction fees are recognized upon the final syndication of
the Sponsored REIT.

      Ownership of Stock in a Sponsored REIT

We typically purchase and retain a common stock ownership in a Sponsored REIT
following syndication, and earn an ongoing asset and/or property management fee.
Accordingly, transaction fee revenue and our share of the operations of these
Sponsored REITs are not classified as discontinued operations due to our
continuing involvement.

Our investment in non-consolidated REITs represents our investment in the common
and preferred stock in Sponsored REITs. We account for these investments using
the equity method of accounting as we exercise significant influence over, but
do not control, these entities. Under the equity method of accounting we record
our percentage share of net earnings from these investments and our investment
balance of these entities is subsequently adjusted. Equity in the losses of
these entities is not recognized to the extent that the investment balance would
become negative. Dividends are recognized as income after the investment balance
is reduced to zero.

Under the equity method, accounting policy judgments made by the Sponsored REITs
could have a material affect on our net income. Also, if we determine that there
is an other than temporary decline in the fair value of any of these
investments, its investment balance would be written down to fair value and the
amount of the write down would be included in our earnings. In evaluating the
fair value of these investments, we have considered, among other things, the
financial condition and near term prospects of the investment, earnings trends,
asset quality, asset valuation models, and the financial condition and prospects
for its industry.

      Summary

These policies involve significant judgments made based upon our experience,
including judgments about current valuations, ultimate realizable value,
estimated useful lives, salvage or residual value, the ability of our tenants to
perform their obligations to us, current and future economic conditions and
competitive factors in the markets in which our properties are located. Recent
declines in our occupancy percentages at some of our properties reflect current
economic conditions and competition. Competition, economic conditions and other
factors may cause additional occupancy declines in the future. In the future we
may need to revise our carrying value assessments to incorporate information
which is not now known and such revisions could increase or decrease our
depreciation expense related to properties we own, result in the classification
of our leases as other than operating leases or decrease the carrying values of
our assets.


                                       17
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Trends and Uncertainties

Real Estate Operations

The portfolio remained 90% leased at March 31, 2004. No major leases expired
during the first quarter of 2004, and no new large leases were signed. During
the quarter, we continued to see an increase in leasing activity and downward
pressure on rental rates in most of our office markets. We cannot predict if
these trends will continue, or if the increase in leasing activity will lead to
an increase in our portfolio's occupancy or its rents.

Our three Houston-area apartment properties continue to face weakened demand for
apartment units in the face of historic high levels of new construction. The
imbalance between demand and supply is expected to continue throughout 2004,
although an increase in mortgage interest rates could help to increase the
supply of renters versus homebuyers.

A partial lease termination was signed in February for the release of
approximately 31,000 square feet, which was not scheduled to expire in 2004, in
exchange for a cash payment by the tenant of $1,223,000.

In August 2003 we increased our line of credit which allows us to increase the
number and size of assets held for syndication. In the first quarter of 2004 we
were able to utilize this increased line and we acquired a property, Eldridge
Green, prior to the completion of the syndication of Blue Lagoon Drive.

The following table summarizes property wholly owned by us as of the dates
indicated:

                                                            March 31,
                                                    -----------------------
                                                       2004          2003

      Residential:
        Number of properties                                4             3
        Number of apartment units                         837           558

      Commercial:
        Number of properties                               24            13
        Square footage                              3,049,357     1,433,000

Investment Banking/Investment Services

Unlike our real estate operations business, which provides a rental revenue
stream which is ongoing and recurring in nature, our investment
banking/investment services business is transactional in nature. Both the number
of Sponsored REIT syndications completed and the amount of equity raised in 2003
were below our expectations. Syndication business in the first quarter of 2004
was also slightly below already reduced expectations. Future business in this
area is unpredictable.

Our property acquisition executives continue to be concerned about high
valuation levels for prime commercial investment real estate in 2004. It appears
that a combination of factors, including relatively low interest rates, a
recovering general economy and increased capital allocation to real estate
assets are increasing prices on many properties we would have an interest in
acquiring. This general price increase is causing capitalization rates to fall
and prices per square foot to rise. Specifically, our acquisition executives
fear that we will not be able to purchase enough property during 2004 at a price
acceptable under our investment criteria to grow our overall investment
banking/investment services business. In the first quarter of 2004 investment
demand by our client base exceeded our ability to acquire acceptable properties.
If this situation continues into future quarters, lower revenues from this
business could reduce the cash available for distribution to stockholders as
dividends. However, the same capital market forces that are causing higher real
estate prices and difficulties in achieving property acquisition goals are also
presenting some appealing opportunities for the dispositions of certain of our
assets. Although our general intention is to hold our properties for long-term
appreciation, if opportunities present themselves that are sufficiently
attractive, we may take advantage of the current market environment in 2004 and
sell certain selected real estate assets. The sale of these assets could
generate cash gains available for distribution to shareholders as dividends.

We continue to rely solely on our in-house investment executives to access
interested investors who have capital they can afford to place in an illiquid
position for an indefinite period of time (i.e., invest in a Sponsored REIT).
While we continue to expand our in-house sales force, uncertainties always exist
as to whether we are capable, either through our existing client base or through
new clients, of raising the amount of capital invested in Sponsored REITs to
achieve future performance objectives.


                                       18
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Results of Operations

The following table shows the variance in dollars for our operations for the
three months ended March 31, 2004 and 2003.

                                                             Variance in dollars
(in thousands)                                                     for the
                                                             three months ended
                                                                  March 31,
                                                                2004 and 2003
                                                             -------------------
Revenue:
Rental Operations
   Rental Income                                                  $ 12,646
   Transaction Income                                                 (213)
   Sponsored REIT income                                             1,285
   Other Income                                                         33
                                                                  --------
      Total rental operations revenue                               13,751

Investment banking/investment services
   Syndication Income                                                 (192)
   Transaction Income                                                  547
                                                                  --------
   Total investment banking/investment services revenue                355

Total Revenue                                                       14,106

Expenses:
Rental operations
   Selling, general and administrative                                 115
   Rental operating expenses                                         1,866
   Depreciation and amortization                                     2,376
   Real estate taxes and insurance                                   1,623
   Sponsored REIT expense                                              752
   Interest Expense                                                    (67)
                                                                  --------
      Total rental operations expenses                               6,665

Investment banking/investment Services Expenses
   Selling, general and administrative                                  13
   Commission expense                                                  (96)
   Shares issued as compensation                                       162
   Depreciation and amortization                                        (6)
                                                                  --------
      Total investment banking/investment services expenses             73

Total Expenses                                                       6,738

Income before interest income and taxes on income                    7,368

Interest income                                                        178
                                                                  --------
Income before taxes on income                                        7,546

Taxes on income                                                        (99)
                                                                  --------
Income before discontinued operations                                7,447

Income from discontinued operations                                    (95)
Gain on sale of real estate from discontinued ops                   (1,421)
                                                                  --------

Net Income                                                        $  5,931
                                                                  ========


                                       19
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Comparison of the three months ended March 31, 2004 to the three months ended
March 31, 2003.

On June 1, 2003, we completed the acquisition by merger of 13 Sponsored REITs,
which more than doubled the size of our real estate operations. Increases in
rental revenues and expenses in the three months ended March 31, 2004 as
compared to the three months ended March 31, 2003 are primarily a result of this
merger. We also sold two properties in 2003. The results of operations for these
two properties are shown as discontinued operations. The result of operations
for the three months ended March 31, 2003 has been adjusted to reflect the sale
of the two properties in 2003.

Our investment banking/investment services segment completed the syndication of
two Sponsored REITs with total gross proceeds of $49.2 million in the three
months ended March 31, 2004; a decrease of $3.7 million compared to two
Sponsored REITs syndicated in the three months ended March 31, 2003 with gross
proceeds of $52.9 million. Revenues and expenses for investment banking and/or
investment services are directly related to the gross proceeds of these
syndications.

Net Income

Our net income for the three months ended March 31, 2004 was $13.2 million,
compared to $7.3 million for the comparable period in 2003, an increase of
approximately $5.9 million.

Revenue

Total revenues increased $14.1 million, or 112%, to $26.6 million for the three
months ended March 31, 2004, as compared to $12.5 million for the comparable
period in 2003.

Revenue from real estate operations was $22.9 million for the three months ended
March 31, 2004; an increase of $13.7 million, or 150%, compared to the three
months ended March 31, 2003. The increase is attributable to:

      o     An increase in rental revenue of $12.5 million, relating to the
            thirteen REITs acquired in 2003. This includes a lease termination
            fee of approximately $1.2 million paid by a tenant.

      o     An increase in Sponsored REIT income of $1.3 million. This increase
            relates to our increased line of credit which allows us to acquire
            more than one property held for syndication at a time. During the
            three months ended March 31, 2004 we completed the syndication of
            two properties, FSP Blue Lagoon Drive Corp. and FSP Eldridge Green
            Corp.

      o     These increases were offset by a decrease in transaction (loan
            commitment) fees of $0.2 million attributable to the reduction in
            gross proceeds from syndications as described above.

Investment banking/investment services revenue was $3.7 million for the three
months ended March 31, 2004; an increase of $0.4 million, or 10%, compared to
the three months ended March 31, 2003. This increase is primarily attributable
to transaction fee income relating to property organization and acquisition fees
being recognized when the syndication process is complete. We completed the
syndication of two properties in the three months ended March 31, 2004 compared
to the syndication of one property for the comparable period in 2003.

Expenses

Total expenses during the three months ended March 31, 2004 increased $6.7
million to $13.3 million compared to $6.6 million for the three months ended
March 31, 2003.

Expenses from real estate operations increased $6.6 million primarily
attributable to aggregate expenses of $5.7 million for the 13 properties
acquired by us in June 2003. In addition Sponsored REIT expenses increased $0.8
million as a result of us holding two properties for syndication during the
three months ended March 31, 2004 compared to the syndication of one property
for the comparable period in 2003.

Investment banking/investment services expenses increased $0.1 million primarily
as a result of us issuing shares as compensation during the three months ended
March 31, 2004. We did not issue any shares as compensation in 2003.

Taxes on income

Taxes on income were $0.3 million for the three months ended March 31, 2004
compared to $0.2 million for the three months ended March 31, 2003.

Discontinued operations

We sold the Weslayan Oaks apartment complex in February 2003 and recognized a
gain of $1.4 million. There were no sales of real estate in the comparable
period of 2004.


                                       20
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Liquidity and Capital Resources

Cash and cash equivalents were $53.9 million and $58.7 million at March 31, 2004
and December 31, 2003, respectively. This decrease of $4.8 million is
attributable to $15.0 million provided by operating activities offset by $0.2
million used for investing activities and $19.6 million used for financing
activities.

Operating Activities

Our cash provided by operating activities of $15.0 million is primarily
attributable to net income of approximately $13.2 million plus a net adjustment
of $3.4 million for non-cash activity (principally relating to depreciation of
$3.3 million). This increase was offset by a $1.4 million net change in
operating assets and liabilities and a payment of $0.2 million of leasing
commissions.

Investing Activities

Our cash used for investing activities of $0.2 million is primarily attributable
to the $4.1 million decrease in assets held for syndication offset by a $4.3
million investment in preferred stock of FSP Blue Lagoon Drive Corp.

Financing Activities

Our cash used for financing activities of $19.6 million is attributable to a
$4.1 million payment for a bank note payable, $15.3 million of distributions to
shareholders and $0.1 million purchase of treasury stock.

Sources and Uses of Funds

Our principal demands for liquidity are cash for operations, dividends to equity
holders, debt repayments and expenses associated with indebtedness. As of March
31, 2004 we had approximately $6.8 million in liabilities. We have no permanent,
long-term debt. In the near term, liquidity is generated from funds from ongoing
real estate operations and transaction fees and commissions received in
connection with the sale of shares in newly formed Sponsored REITs.

Line of Credit

We maintain an unsecured line of credit through Citizens Bank. In August 2003,
we amended our Master Promissory Note and Loan Agreement which now provides for
a revolving line of credit of up to $125 million. The loan agreement expires
August 18, 2005. Borrowings under the loan bear interest at either the bank's
base rate or a variable rate based on LIBOR. We typically use the unsecured line
of credit to provide each newly formed Sponsored REIT with the funds to purchase
a property. Our loan agreement with the bank includes customary restrictions on
property liens and requires compliance with various financial covenants.
Financial covenants include maintaining minimum cash balances in operating
accounts, maintaining a minimum tangible net worth and compliance with other
various debt and income ratios. We were in compliance with all covenants as of
March 31, 2004. We have no borrowings under its revolving credit facility as of
March 31, 2004.

Contingencies

We are subject to various legal proceedings and claims that arise in the
ordinary course of its 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.

Assets Held for Syndication

As of March 31, 2004 there are no assets held for syndication. As of December
31, 2003 we had one asset held for syndication. The syndication of this asset
was completed in the first quarter of 2004.

Related Party Transactions

In the three months ended March 31, 2004, we completed the syndication of two
Sponsored REITs. We retained a non-controlling common stock interest in those
Sponsored REITs with virtually no economic benefit. As discussed in Note 3 to
our Consolidated Financial Statements, during the first quarter of 2004, we
purchased 49.25 preferred shares, or 8.22% of the preferred stock, of FSP Blue
Lagoon Drive Corp. We did not enter into any other significant transactions with
related parties during the quarter ended March 31, 2004. For a discussion of
transactions between us and related parties during 2003, see Footnote No. 5
"Related Party Transactions" to the Consolidated Financial Statements of the
Company's Annual Report on Form 10-K for the year ended December 31, 2003.


                                       21
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

Economic Conditions

We generally pay the ordinary annual operating expenses of our properties from
the rental revenue generated by the properties. For the three months ended March
31, 2004, the rental income exceeded the expenses for each individual property,
with the exception of Blue Ravine. The single tenant lease at the Blue Ravine
property located in Folsom, California, expired June 30, 2003; there is no new
lease, and we expect that the property will not produce revenue to cover its
expenses in the second quarter. In addition to rental income we maintain cash
reserves that may be used to fund unusual expenses or major capital
improvements.

The cash reserves included in cash and cash equivalents, which as of March 31,
2004 were approximately $15 million, are in excess of the known needs for
extraordinary expenses or capital improvements for the real properties currently
owned by us within the next year. There are no external restrictions on these
reserves, and they may be used for any business purpose.

Although there is no guarantee that we will be able to obtain the funds
necessary for our future growth, we anticipate generating funds from continuing
real estate operations and from fees and commissions from the sale of shares in
newly formed Sponsored REITs. We believe that we have adequate funds to cover
unusual expenses and capital improvements, in addition to normal operating
expenses. Our ability to maintain or increase our level of dividends to
stockholders, however, depends in part upon the level of interest on the part of
investors in purchasing shares of Sponsored REITs and the level of rental income
from our real properties.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

The following important factors, among others, could cause actual results to
differ materially from those indicated by forward-looking statements made in
this Annual Report on Form 10-K and presented elsewhere by management from time
to time.

If we are not able to collect sufficient rents from each of our owned real
properties, we may suffer significant operating losses.

A substantial portion of our revenues are generated by the rental income of our
real properties. If our properties do not provide us with a steady rental
income, our revenues will decrease and may cause us to incur operating losses in
the future.

We face risks in continuing to attract investors for Sponsored REITs.

Our investment banking/investment services business continues to depend upon its
ability to attract purchasers of equity interests in Sponsored REITs. Our
success in this area will depend on the propensity and ability of investors who
have previously invested in Sponsored REITs to continue to invest in future
Sponsored REITs and on our ability to expand the investor pool for the Sponsored
REITs by identifying new potential investors. Moreover, our investment
banking/investment services business may be affected to the extent existing
Sponsored REITs incur losses or have operating results that fail to meet
investors' expectations.

If we are unable to fully syndicate a Sponsored REIT, we may be required to keep
a balance outstanding on our line of credit or use our cash balance to repay our
line of credit, which may reduce cash available for distribution to our
stockholders.

We typically draw on our line of credit to make an interim mortgage loan to a
Sponsored REIT, so that it can acquire real property prior to the consummation
of the offering of its equity interests; this interim loan is secured by a first
mortgage of the real property acquired by the Sponsored REIT. Once the offering
has been completed, the Sponsored REIT repays the loan out of the offering
proceeds. If we are unable to fully syndicate a Sponsored REIT, the Sponsored
REIT could be unable to fully repay the loan, and we would have to satisfy our
obligation under our line of credit through other means. If we are required to
use cash for this purpose, we would have less cash available for distribution to
our stockholders.

We may not be able to find properties that meet our criteria for purchase.

Growth in our investment banking/investment services business is dependent on
the ability of our acquisition executives to find properties for sale which meet
our investment critieria. To the extent they fail to find such properties, we
will be unable to syndicate offerings of Sponsored REITs to investors, and this
segment of our business could have lower revenue, which would reduce the cash
available for distribution to our stockholders.


                                       22
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

We are dependent on key personnel.

We depend on the efforts of George Carter, our Chief Executive Officer, and our
other executive officers. If they were to resign, our operations could be
adversely affected. We do not have employment agreements with Mr. Carter or any
other of our executive officers.

Our level of dividends may fluctuate.

Because our investment banking/investment services business is transactional in
nature and real estate occupancy levels and rental rates can fluctuate, there is
no predictable recurring level of revenue from such activities. As a result of
this, the amount of cash available for distribution may fluctuate, which may
result in us not being able to maintain or grow dividend levels in the future.

The real properties held by us may significantly decrease in value.

As of March 31, 2004, we owned 28 properties. Some or all of these properties
may decline in value. To the extent our real properties decline in value, our
stockholders could lose some or all the value of their investments.

New acquisitions may fail to perform as expected.

We may acquire new properties, whether by cash purchase, by acquisition of
Sponsored REITs or by investment in a Sponsored REIT. Newly acquired properties
may fail to perform as expected, in which case, our results of operations could
be adversely affected.

We face risks in owning and operating real property.

An investment in us is subject to the risks incident to the ownership and
operation of real estate-related assets. These risks include the fact that real
estate investments are generally illiquid, which may impact our ability to vary
our portfolio in response to changes in economic and other conditions, as well
as the risks normally associated with:

      o     changes in general and local economic conditions;
      o     the supply or demand for particular types of properties in
            particular markets;
      o     changes in market rental rates; o the impact of environmental
            protection laws; and
      o     changes in tax, real estate and zoning laws.

Certain significant costs, such as real estate taxes, utilities, insurance and
maintenance costs, generally are not reduced even when a property's rental
income is reduced. In addition, environmental and tax laws, interest rate
levels, the availability of financing and other factors may affect real estate
values and property income. Furthermore, the supply of commercial and
multi-family residential space fluctuates with market conditions.

We face risks from tenant defaults or bankruptcies.

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 of one of our properties 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.

We may encounter significant delays in reletting vacant space, resulting in
losses of income.

When leases expire, we will incur expenses and may not be able to re-lease the
space on the same terms. Certain leases provide tenants the right to terminate
early if they pay a fee. If we are unable to re-lease space promptly, if the
terms are significantly less favorable than anticipated or if the costs are
higher, we may have to reduce distributions to our stockholders.


                                       23
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

We face risks from geographic concentration.

The properties in our portfolio, by aggregate square footage, are distributed
geographically as follows: Southwest - 26%, Northeast - 31%, Midwest - 19%, West
- 16% and Southeast 8%. However, within certain of those segments, we hold a
larger concentration of our properties in Houston, Texas - 18% and Washington,
DC - 13%. We are likely to face risks to the extent that any of these areas in
which we hold a larger concentration of our properties suffer deteriorating
economic conditions.

We compete with national, regional and local real estate operators and
developers, which could adversely affect our cash flow.

Competition exists in every market in which our properties are located and in
every market in which our properties will be located. We compete with, among
others, national, regional and numerous local real estate operators and
developers. Such competition may adversely affect the percentage of leased space
and the rental revenues of our properties, which could adversely affect our cash
flow from operations and our ability to make expected distributions to our
stockholders. Some of our competitors may have more resources than we do or
other competitive advantages. Competition may be accelerated by any increase in
availability of funds for investment in real estate. For example, decreases in
interest rates tend to increase the availability of funds and therefore can
increase competition. To the extent that our properties continue to operate
profitably, this will likely stimulate new development of competing properties.
The extent to which we are affected by competition will depend in significant
part on local market conditions.

There is limited potential for an increase in leased space gains in our
properties.

We anticipate that future increases in revenue from our properties will be
primarily the result of scheduled rental rate increases or rental rate increases
as leases expire. Properties with higher rates of vacancy are generally located
in soft economic markets so that it may be difficult to realize increases in
revenue when vacant space is re-leased.

We are subject to possible liability relating to environmental matters, and we
cannot assure you that we have identified all possible liabilities.

Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real property may become liable for the costs of removal or
remediation of certain hazardous substances released on or in its property. Such
laws may impose liability without regard to whether the owner or operator knew
of, or caused, the release of such hazardous substances. The presence of
hazardous substances on a property may adversely affect the owner's ability to
sell such property or to borrow using such property as collateral, and it may
cause the owner of the property to incur substantial remediation costs. In
addition to claims for cleanup costs, the presence of hazardous substances on a
property could result in the owner incurring substantial liabilities as a result
of a claim by a private party for personal injury or a claim by an adjacent
property owner for property damage.

In addition, we cannot assure you that:

      o     future laws, ordinances or regulations will not impose any material
            environmental liability;

      o     the current environmental conditions of our properties will not be
            affected by the condition of properties in the vicinity of such
            properties (such as the presence of leaking underground storage
            tanks) or by third parties unrelated to us;

      o     tenants will not violate their leases by introducing hazardous or
            toxic substances into our properties that could expose us to
            liability under federal or state environmental laws; or

      o     environmental conditions, such as the growth of bacteria and toxic
            mold in heating and ventilation systems or on walls, will not occur
            at our properties and pose a threat to human health.

We are subject to compliance with the Americans With Disabilities Act and fire
and safety regulations which could require us to make significant capital
expenditures.

All of our properties are required to comply with the Americans With
Disabilities Act (ADA), and the regulations, rules and orders that may be issued
thereunder. The ADA has separate compliance requirements for "public
accommodations" and "commercial facilities," but generally requires that
buildings be made accessible to persons with disabilities. Compliance with ADA
requirements might require, among other things, removal of access barriers and
noncompliance could result in the imposition of fines by the U.S. government, or
an award of damages to private litigants.


                                       24
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

In addition, we are required to operate our properties in compliance with fire
and safety regulations, building codes and other land use regulations, as they
may be adopted by governmental agencies and bodies and become applicable to our
properties. Compliance with such requirements may require us to make substantial
capital expenditures, which expenditures would reduce cash otherwise available
for distribution to its stockholders.

There are significant conditions to our obligation to redeem shares of our
common stock, and any such redemption will result in the stockholders tendering
shares receiving less than their fair market value.

Under our redemption plan, we are only obligated to use our best efforts to
redeem shares of our common stock from stockholders wishing to have them
redeemed. There are significant conditions to our obligation to redeem shares of
our common stock including:

      o     we cannot be insolvent or be rendered insolvent by the redemption;
      o     the redemption cannot impair our capital or operations;
      o     the redemption cannot contravene any provision of federal or state
            securities laws;
      o     the redemption cannot result in our failing to qualify as a REIT;
            and
      o     our management must determine that the redemption is in our best
            interests.

Any redemption effected by us under this plan would result in those stockholders
tendering shares of our common stock receiving 90% of the fair market value of
such shares, as determined by our board of directors in its sole and absolute
discretion, and not their full fair market value.

We may lose capital investment or anticipated profits if an uninsured event
occurs.

We carry or our tenants carry comprehensive liability, fire and extended
coverage with respect to each of our properties, with policy specification and
insured limits customarily carried for similar properties. There are, however,
certain types of losses, such as from wars, pollution or earthquakes, that may
be either uninsurable or not economically insurable (although the properties
located in California all have earthquake insurance). Should an uninsured
material loss occur, we could lose both capital invested in the property and
anticipated profits.

Contingent or unknown liabilities acquired in mergers or similar transactions
could require us to make substantial payments.

The properties which we acquired in mergers were acquired subject to liabilities
and without any recourse with respect to liabilities, whether known or unknown.
As a result, if liabilities were asserted against us based upon any of these
properties, we might have to pay substantial sums to settle them, which could
adversely affect our results of operations and financial condition and our cash
flow and ability to make distributions to our stockholders. Unknown liabilities
with respect to properties acquired might include:

      o     liabilities for clean-up or remediation of environmental conditions;
      o     claims of tenants, vendors or other persons dealing with the former
            owners of the properties; and
      o     liabilities incurred in the ordinary course of business.

We would incur adverse tax consequences if we failed to qualify as a REIT.

If in any taxable year we do not qualify as a real estate investment trust, we
would be taxed as a corporation and distributions to our stockholders would not
be deductible by us in computing our taxable income. In addition, if we were to
fail to qualify as a real estate investment trust, we could be disqualified from
treatment as a real estate investment trust in the year in which such failure
occurred and for the next four taxable years and, consequently, we would be
taxed as a corporation during such years. Failure to qualify for even one
taxable year could result in a significant reduction of our cash available for
distribution to stockholders or could require us to incur indebtedness or
liquidate investments in order to generate sufficient funds to pay the resulting
federal income tax liabilities. In addition, timing differences between the
receipt of income and payment of expenses and the inclusion and deduction of
such amounts in arriving at taxable income could make it necessary for us to
borrow in order to make certain distributions to our stockholders in
satisfaction of the 90% distribution requirement applicable to real estate
investment trusts. The provisions of the Internal Revenue Code governing the
taxation of real estate investment trusts are very technical and complex, and
although we expect that we will be organized and will operate in a manner that
will enable us to meet such requirements, no assurance can be given that we will
always succeed in doing so. In addition, you should note that if one or more of
the REITs we acquired in June 2003 did not qualify as a real estate


                                       25
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

investment trust immediately prior to the consummation of the mergers, we would
be disqualified as a REIT as a result of the mergers.

As a result of our acquisition of 13 REITs, we may no longer qualify as a REIT.

As a result of our acquisition of 13 REITs by merger in June 2003, we might no
longer qualify as a real estate investment trust under Section 856 of the
Internal Revenue Code of 1986, as amended. We could lose our ability to so
qualify for a variety of reasons relating to the nature of the assets acquired
from the acquired REITs, the identity of the shareholders of the acquired REITs
who became our shareholders, or the failure of one or more of the acquired REITs
to have previously qualified as a real estate investment trust.

Provisions in our organizational documents may prevent changes in control.

Our Articles of Incorporation and Bylaws contain provisions, described below,
which may have the effect of discouraging a third party from making an
acquisition proposal for us and may thereby inhibit a change of control under
circumstances that could otherwise give the holders of our common stock the
opportunity to realize a premium over the then-prevailing market prices.

Ownership Limits. In order for us to maintain our qualification as a real estate
investment trust, the holders of our common stock may be limited to owning,
either directly or under applicable attribution rules of the Internal Revenue
Code, no more than 9.8% of the lesser of the value or the number of equity
shares of us, and no holder of common stock may acquire or transfer shares that
would result in our shares of common stock being beneficially owned by fewer
than 100 persons. Such ownership limit may have the effect of preventing an
acquisition of control of us without the approval of our board of directors.
Moreover, we will have the right to redeem any shares of common stock that are
acquired or transferred in violation of these provisions at the market price,
which is determined by our board of directors. In addition, our Articles of
Incorporation give our board of directors the right to refuse to give effect to
the acquisition or transfer of shares by a stockholder in violation of these
provisions.

Staggered Board. Our board of directors is divided into three classes. The terms
of these classes will expire in 2004, 2005 and 2006, respectively. Directors of
each class are elected for a three-year term upon the expiration of the initial
term of each class. The staggered terms for directors may affect our
stockholders' ability to effect a change in control even if a change in control
were in the stockholders' best interests.

Preferred Stock. Our Articles of Incorporation authorize our board of directors
to issue up to 20,000,000 shares of preferred stock, par value $.0001 per share,
and to establish the preferences and rights of any such shares issued. The
issuance of preferred stock could have the effect of delaying or preventing a
change in control even if a change in control were in our stockholders' best
interest.

Increase of Authorized Stock. Our board of directors, without any vote or
consent of the stockholders, may increase the number of authorized shares of any
class or series of stock or the aggregate number of authorized shares we have
authority to issue. The ability to increase the number of authorized shares and
issue such shares could have the effect of delaying or preventing a change in
control even if a change in control were in our stockholders' best interest.

Amendment of Bylaws. Our board of directors has the sole power to amend our
Bylaws. This power could have the effect of delaying or preventing a change in
control even if a change in control were in our stockholders' best interests.

Stockholder Meetings. Our Bylaws require advance notice for stockholder
proposals to be considered at annual meetings of stockholders and for
stockholder nominations for election of directors at special meetings of
stockholders. Our Bylaws also provide that stockholders entitled to cast more
than 50% of all the votes entitled to be cast at a meeting must join in a
request by stockholders to call a special meeting of stockholders. These
provisions could have the effect of delaying or preventing a change in control
even if a change in control were in the best interests of our stockholders.

Supermajority Votes Required. Our Articles of Incorporation require the
affirmative vote of the holders of no less than 80% of the shares of capital
stock outstanding and entitled to vote in order (i) to amend the provisions of
our Articles of Incorporation relating to the classification of directors,
removal of directors, limitation of liability of officers and directors or
indemnification of officers and directors or (ii) to amend our Articles of
Incorporation to impose cumulative voting in the election of directors. These
provisions could have the effect of delaying or preventing a change in control
even if a change in control were in our stockholders' best interest.


                                       26
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)

There is no public trading market for our securities.

There is no public trading market for our common stock, and we cannot assure you
that any market will develop or that, if such a market develops, there will be
any liquidity in such a market for our common stock.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We were not a party to any derivative financial instruments at or during the
three months ended March 31, 2004.

We borrow from time to time on our line of credit. These borrowings bear
interest at a variable rate. As of March 31, 2004, $0 was outstanding under this
line of credit. We have used the funds from our line of credit for the purpose
of making interim mortgage loans to Sponsored REITs. These mortgage loans bear
interest at the same variable rate payable by us under our line of credit.
Therefore, we believe that we have mitigated our interest rate risk with respect
to our borrowings.

Item 4. Controls and Procedures.

Our management, with the participation of FSP Corp.'s President and Chief
Executive Officer and FSP Corp.'s Vice President and Chief Operating Officer
(equivalent of Chief Financial Officer), evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(d)
under the Exchange Act) as of December 31, 2003. Based on this evaluation, FSP
Corp.'s President and Chief Executive Officer and FSP Corp.'s Vice President and
Chief Operating Officer (equivalent of Chief Financial Officer) concluded that,
as of March 31, 2004, our disclosure controls and procedures were (1) designed
to ensure that material information relating to us, including our consolidated
subsidiaries, is made known to FSP Corp.'s President and Chief Executive Officer
and FSP Corp.'s Vice President and Chief Operating Officer (equivalent of Chief
Financial Officer) by others within these entities, particularly during the
period in which this report was being prepared and (2) effective, in that they
provide reasonable assurance that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms.

No change to our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter
ended March 31, 2004 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.


                                       27
<PAGE>

                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings:

      Not applicable.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities:

(e) The following table provides information about purchases by the company
during the quarter ended March 31, 2004 of equity securities that are registered
by the company pursuant to Section 12 of the Exchange Act:

                      ISSUER PURCHASES OF EQUITY SECURITIES

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                (a)                 (b)                  (c)                    (d)

                                                                   Total Number of        Maximum Number (or
                                                                  Shares (or Units)   Approximate Dollar Value)
                                                                  Purchased as Part   of Shares (or Units) that
                          Total Number of                            of Publicly         May Yet Be Purchased
                         Shares (or Units)   Average Price Paid   Announced Plans or      Under the Plans or
Period                     Purchased (1)    per Share (or Unit)      Programs (1)            Programs (1)
----------------------------------------------------------------------------------------------------------------
<S>                           <C>                  <C>                    <C>                     <C>
01/01/04-01/31/04             9,823.46             $14.80                 0                       0

----------------------------------------------------------------------------------------------------------------

02/01/04-02/29/04                0                  N/A                   0                       0
----------------------------------------------------------------------------------------------------------------

03/01/04-03/31/04                0                  N/A                   0                       0
----------------------------------------------------------------------------------------------------------------
Total:                        9,823.46             $14.80                 0                       0

----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) FSP Corp. does not have any publicly announced repurchase plans or programs.
However, FSP Corp.'s Articles of Incorporation provide that FSP Corp. will use
its best efforts to redeem shares of its common stock from stockholders who
request such redemption. Any FSP Corp. stockholder wishing to have shares
redeemed must make such a request no later than July 1 of any year for a
redemption that would be effective the following January 1.

This obligation is subject to significant conditions, including that (i) FSP
Corp. cannot be insolvent or rendered insolvent by the redemption, (ii) the
redemption cannot impair the capital or operations of FSP Corp., (iii) the
redemption cannot contravene any provision of federal or state securities law,
(iv) the redemption cannot result in FSP Corp.'s failing to qualify as a REIT,
and (v) the management of FSP Corp. must determine that the redemption is in the
best interest of FSP Corp. Redemptions pursuant to these provisions result in
redeeming stockholders receiving cash in an amount of 90% of the fair market
value of the stock redeemed, as determined by FSP Corp.'s Board of Directors.

Item 3. Defaults Upon Senior Securities:

      Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders:

Item 5. Other Information:

      Not applicable.


                                       28
<PAGE>

                     PART II - OTHER INFORMATION (continued)

Item 6. Exhibits:

      31.1 Certification of the President and Chief Executive Officer of the
      Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      31.2 Certification of the Vice President, Chief Operating Officer
      (equivalent of Chief Financial Officer), Treasurer and Secretary of the
      Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      32.1 Certification of the President and Chief Executive Officer of the
      Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.

      32.2 Certification of the Vice President, Chief Operating Officer
      (equivalent of Chief Financial Officer), Treasurer and Secretary of the
      Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.

      Reports on Form 8-K:

      On February 6, 2004, we furnished a Current Report on Form 8-K, reporting
      under Item 9, Regulation FD Disclosure, on the declaration of a cash
      dividend.


                                       29
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                  Franklin Street Properties Corp.


<TABLE>
<CAPTION>
    Date                 Signature                              Title

<S>              <C>                                <C>

May 6, 2004      By:  /s/  George J. Carter         President, Chief Executive Officer and
                      ------------------------      Director (Principal Executive Officer)
                           George J. Carter


May 6, 2004      By:  /s/  Lloyd S. Dow             Senior Vice President and Controller
                      ------------------------      (Principal Accounting Officer)
                           Lloyd S. Dow
</TABLE>


                                       30
<PAGE>

                                  Exhibit Index

                                                                            Page

Exhibit 31.1..................................................................32
Exhibit 31.2..................................................................33
Exhibit 32.1..................................................................34
Exhibit 32.2..................................................................35


                                       31