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, 2007.

                                       OR

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

            For the transition period from _________ to __________.

                        Commission File Number: 001-32470


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

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

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

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

                                       N/A
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

      YES |X|       NO |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large Accelerated Filer |X|   Accelerated Filer |_|   Non-Accelerated Filer |_|


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

      YES |_|       NO |X|

The number of shares of common stock outstanding as of April 30, 2007 was
70,766,305.
<PAGE>

                        Franklin Street Properties Corp.

                                    Form 10-Q

                                Quarterly Report
                                 March 31, 2007

                                Table of Contents

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

                  Consolidated Balance Sheets as of March 31, 2007 and
                  December 31, 2006.......................................     3

                  Consolidated Statements of Income for the three months
                  ended March 31, 2007 and 2006...........................     4

                  Consolidated Statements of Cash Flows for the
                  three months ended March 31, 2007 and 2006..............     5

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

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations..................... 15-22

         Item 3.  Quantitative and Qualitative Disclosures About
                  Market Risk.............................................    23

         Item 4.  Controls and Procedures.................................    24

Part II. Other Information

         Item 1.  Legal Proceedings.......................................    25

         Item 1A. Risk Factors............................................    25

         Item 2.  Unregistered Sales of Equity Securities and
                  Use of Proceeds.........................................    29

         Item 3.  Defaults Upon Senior Securities.........................    30

         Item 4.  Submission of Matters to a Vote of Security Holders.....    30

         Item 5.  Other Information.......................................    30

         Item 6.  Exhibits................................................    31

Signatures        ........................................................    32
<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)                                          2007          2006
===================================================================================================================

<S>                                                                                      <C>            <C>
Assets:
Real estate assets:
   Land                                                                                  $   103,922    $ 103,922
   Buildings and improvements                                                                740,217      737,379
   Fixtures and equipment                                                                         56           40
-------------------------------------------------------------------------------------------------------------------
                                                                                             844,195      841,341
   Less accumulated depreciation                                                              43,000       37,851
-------------------------------------------------------------------------------------------------------------------
Real estate assets, net                                                                      801,195      803,490
Acquired real estate leases, less accumulated amortization
   of $24,394 and $21,548, respectively                                                       39,994       43,167
Investment in non-consolidated REITs                                                           5,004        5,064
Assets held for syndication, net                                                             125,195           --
Assets held for sale                                                                              --        5,830
Cash and cash equivalents                                                                     68,726       69,973
Certificate of deposit                                                                         5,180        5,143
Restricted cash                                                                                  682          761
Tenant rent receivables, less allowance for doubtful accounts
   of $433 and $433, respectively                                                              1,937        2,440
Straight-line rent receivable, less allowance for doubtful accounts
   of $163 and $163, respectively                                                              5,875        4,720
Prepaid expenses                                                                                 769          972
Deposits on real estate assets                                                                    --        5,010
Other assets                                                                                     556        1,118
Office computers and furniture, net of accumulated depreciation
   of $881 and $851, respectively                                                                344          375
Deferred leasing commissions, net of accumulated amortization
   of $1,623, and $1,323, respectively                                                         7,615        7,254
-------------------------------------------------------------------------------------------------------------------
   Total assets                                                                          $ 1,063,072    $ 955,317
===================================================================================================================

Liabilities and Stockholders' Equity:
Liabilities:
  Bank note payable                                                                      $   130,000    $      --
  Accounts payable and accrued expenses                                                       16,945       25,275
  Accrued compensation                                                                         1,255        2,643
  Tenant security deposits                                                                     1,654        1,744
  Acquired unfavorable real estate leases, less accumulated amortization
      of $681, and $534, respectively                                                          3,462        3,693
-------------------------------------------------------------------------------------------------------------------
   Total liabilities                                                                         153,316       33,355
-------------------------------------------------------------------------------------------------------------------

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,
    70,766,305 and 70,766,305 shares issued and outstanding, respectively                          7            7
  Additional paid-in capital                                                                 907,794      907,794
  Treasury stock, 731,898 and 731,898 shares at cost, respectively                           (14,008)     (14,008)
  Earnings (distributions) in excess of accumulated earnings/distributions                    15,963       28,169
-------------------------------------------------------------------------------------------------------------------
     Total stockholders' equity                                                              909,756      921,962
-------------------------------------------------------------------------------------------------------------------
     Total liabilities and stockholders' equity                                          $ 1,063,072    $ 955,317
===================================================================================================================
                             The accompanying notes are an integral part of these consoldated financial statements.
</TABLE>


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                For the
                                                                                          Three Months Ended
                                                                                               March 31,
-------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)                                                    2007       2006
=============================================================================================================

<S>                                                                                      <C>         <C>
Revenue:
     Rental                                                                              $ 26,868    $21,317
Related party revenue:
     Syndication fees                                                                       2,956      1,921
     Transaction fees                                                                       3,081      1,939
     Management fees and interest income from loans                                         1,817        167
Other                                                                                          38         26
-------------------------------------------------------------------------------------------------------------
        Total revenue                                                                      34,760     25,370
-------------------------------------------------------------------------------------------------------------

Expenses:
     Real estate operating expenses                                                         6,655      4,099
     Real estate taxes and insurance                                                        4,483      2,405
     Depreciation and amortization                                                          7,657      4,775
     Selling, general and administrative                                                    1,888      1,805
     Commissions                                                                            1,559      1,022
     Interest                                                                               2,676        594
-------------------------------------------------------------------------------------------------------------

       Total expenses                                                                      24,918     14,700
-------------------------------------------------------------------------------------------------------------

Income before interest income, equity in earnings of
   non-consolidated REITs and taxes on income                                               9,842     10,670
Interest income                                                                               653        588
Equity in earnings of non-consolidated REITs                                                 (616)        80
-------------------------------------------------------------------------------------------------------------

Income before taxes on income                                                               9,879     11,338
Income tax expense                                                                            240         57
-------------------------------------------------------------------------------------------------------------

  Income from continuing operations                                                         9,639     11,281
  Income from discontinued operations                                                          93      1,858
-------------------------------------------------------------------------------------------------------------

Net income                                                                               $  9,732    $13,139
=============================================================================================================

Weighted average number of shares outstanding,
     basic and diluted                                                                     70,766     59,795
=============================================================================================================

Earnings per share, basic and diluted, attributable to:
  Continuing operations                                                                  $   0.14    $  0.19
  Discontinued operations                                                                      --       0.03
-------------------------------------------------------------------------------------------------------------
Net income per share, basic and diluted                                                  $   0.14    $  0.22
=============================================================================================================
                       The accompanying notes are an integral part of these consoldated financial statements.
</TABLE>


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                For the
                                                                                          Three Months Ended
                                                                                               March 31,
                                                                                         -----------------------
(in thousands)                                                                               2007        2006
================================================================================================================

<S>                                                                                      <C>          <C>
Cash flows from operating activities:
   Net income                                                                            $   9,732    $ 13,139
   Adjustments to reconcile net income to net cash
        provided by  operating activities:
      Depreciation and amortization expense                                                  7,666       5,659
      Amortization of above market lease                                                     1,334       1,474
      Equity in earnings from non-consolidated REITs                                           583        (275)
      Distributions from non-consolidated REITs                                                281         118
  Changes in operating assets and liabilities:
     Restricted cash                                                                            79          (4)
     Tenant rent receivables, net                                                              503         207
     Straight-line rents, net                                                               (1,273)        200
     Prepaid expenses and other assets, net                                                    755         210
     Accounts payable and accrued expenses                                                  (1,856)     (1,254)
     Accrued compensation                                                                   (1,388)       (555)
     Tenant security deposits                                                                  (90)         76
  Payment of deferred leasing commissions                                                     (661)       (156)
----------------------------------------------------------------------------------------------------------------

        Net cash provided by operating activities                                           15,665      18,839
----------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
      Purchase of real estate assets, office computers and
          furniture, capitalized merger costs                                               (9,327)    (25,744)
      Purchase of acquired favorable and unfavorable leases                                     --        (951)
      Investment in non-consolidated REITs                                                      (9)        (11)
      Investment in certificate of deposit                                                     (37)         --
      Investment in assets held for syndication, net                                      (121,431)    (51,500)
      Proceeds received on sales of real estate assets                                       5,830          --
----------------------------------------------------------------------------------------------------------------

      Net cash used for investing activities                                              (124,974)    (78,206)
----------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
      Distributions to stockholders                                                        (21,938)    (18,536)
      Borrowings under bank note payable, net                                              130,000      41,500
----------------------------------------------------------------------------------------------------------------

      Net cash provided by financing activities                                            108,062      22,964
----------------------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents                                                   (1,247)    (36,403)

Cash and cash equivalents, beginning of period                                              69,973      69,715
----------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                                 $  68,726    $ 33,312
================================================================================================================

Supplemental disclosure of cash flow information:
  Cash paid for:
      Interest                                                                           $   1,697    $    513
      Income taxes                                                                             170          50
Non-cash investing and financing activities:
  Accrued costs for purchase of real estate assets                                       $   2,042    $     --
  Deposits on real estate assets converted to investments in assets
     held for syndication                                                                $   5,010    $     --
  Accrued merger costs at period end                                                                  $    779

                        The accompanying notes are an integral part of these consoldated financial statements.
</TABLE>


                                       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. ("FSP Corp." or the "Company") holds, directly
and indirectly, 100% of the interest in FSP Investments LLC ("FSP Investments"),
FSP Property Management LLC ("FSP Property Management"), and FSP Holdings LLC.
The Company also has a non-controlling common stock interest in eleven
corporations organized to operate as real estate investment trusts ("REITs") and
a non-controlling preferred stock interest in two of those REITs.

On April 30, 2006, the Company acquired five real estate investment trusts (the
"2006 Target REITs"), by the merger of the five 2006 Target REITs with and into
five of the Company's wholly-owned subsidiaries. The merger was effective April
30, 2006 and, as a result, the Company issued 10,971,697 shares in a tax-free
exchange for all outstanding preferred shares of the 2006 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 (including
real estate leasing, interim acquisition financing, development and
asset/property management) and investment banking/investment services (including
real estate acquisitions and broker/dealer services). 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) sourcing of the acquisition of
real estate on behalf of the Sponsored REITs; and (iii) the sale of preferred
stock in the Sponsored REITs. FSP Property Management provides asset management
and property management services for the Sponsored REITs.

The Company owns and operates a portfolio of real estate, which consisted of 29
properties as of March 31, 2007. The Company also pursues, on a selective basis,
the sale of its properties in order to take advantage of the value creation and
demand for its properties, or for geographic or property specific reasons.

Properties

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

                                                         As of
                                                       March 31,
                                                   2007          2006
                                                ---------     ---------

      Commercial real estate:
        Number of properties                           29            22
        Square feet                             5,148,490     3,404,073

Basis of Presentation

The unaudited consolidated financial statements of the Company include all the
accounts of the Company and its wholly 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, 2006, as filed with the Securities and Exchange
Commission.

The accompanying interim financial statements are unaudited; however, the
financial statements have been prepared in accordance with generally accepted
accounting principles 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. Operating results for the three months ended March 31, 2007 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2007 or for any other period.


                                       6
<PAGE>

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

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

Reclassifications

Certain balances from the 2006 balance sheet and interim financial statements
have been reclassified to conform to the 2007 presentation. The
reclassifications primarily were related to the disposition of six properties
sold in 2006 and one property sold in 2007, which are reported as discontinued
operations for all periods presented. These reclassifications changed rental
revenues, operating and maintenance expenses, depreciation and amortization,
other income and the related assets, which are segregated on the financial
statements. There was no change to net income for any period presented as a
result of these reclassifications.

Recent Accounting Standards

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, which defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. SFAS No. 157 applies under other
accounting pronouncements that require or permit fair value measurements, the
FASB having previously concluded in those accounting pronouncements that fair
value is the relevant measurement attribute. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The adoption of this standard is
not expected to have a material impact on the Company's financial position,
operations or cash flow.

In June 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), which
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
"Accounting for Income Taxes". This interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return.
This interpretation also provides guidance on derecognition, classification,
interest and penalties, accounting for interim periods, disclosure and
transition. The guidance is effective for periods beginning after December 15,
2006. The adoption of this standard did not have a material impact on the
Company's financial position, operations or cash flow.

2.   Investment Banking/Investment Services Activity

During the three months ended March 31, 2007, the Company sold on a best efforts
basis, through private placements, preferred stock in the following Sponsored
REIT:

Sponsored REIT                           Property Location     Gross Proceeds
-------------------------------------------------------------------------------
                                                               (in thousands)(1)
FSP 303 East Wacker Drive Corp.          Chicago, IL                $49,150
                                                               ------------
                                         Total                      $49,150
                                                               ============

      1.    The syndication of FSP 303 East Wacker Drive Corp. ("East Wacker"),
            which commenced in January 2007 was not complete at March 31, 2007.
            This amount represents the gross proceeds syndicated during the
            three months ended March 31, 2007.

3.   Certificates of Deposit

Investment in certificates of deposit consists of investments the Company has
the ability and intent to hold until their maturity. As of March 31, 2007 and
December 31, 2006 the Company held a certificate of deposit with an original
maturity of six months at a carrying value of $5.2 million and $5.1 million,
respectively, with an annual interest rate of 5% that matured on April 11, 2007.
The Company believes the aggregate fair value is approximately the same as its
carrying value.


                                       7
<PAGE>

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

4.   Related Party Transactions and Investments in Non-Consolidated Entities

Investment in Sponsored REITs:

At March 31, 2007, the Company held an interest in eleven Sponsored REITs. Ten
were fully syndicated and the Company no longer derives economic benefits or
risks from the common stock interest that is retained in them. The Company holds
a preferred stock investment in two of these Sponsored REITs, FSP Park Ten
Development Corp. ("Park Ten Development") and FSP Phoenix Tower Corp. ("Phoenix
Tower"), from which it continues to derive economic benefit and risk. The
remaining entity that was not fully syndicated at March 31, 2007, FSP 303 East
Wacker Drive Corp., has a value of approximately $125 million on the
accompanying consolidated balance sheets and is classified as assets held for
syndication.

The table below shows the Company's share of income and expenses from Sponsored
REITs prior to consolidation. Management fees of $18,000 and $11,000 for the
three months ended March 31, 2007 and 2006, respectively, and interest expenses
are eliminated in consolidation.

                                                        Three Months Ended
                                                            March 31,
      (in thousands)                                      2007       2006
                                                        -------    -------

      Operating Data:
      Rental revenues                                   $ 2,079    $ 1,215
      Operating and maintenance
          expenses                                        1,102        554
      Depreciation and amortization                         442        288
      Interest expense                                      992        479
      Interest income                                        39          9
                                                        -------    -------
                                                        $  (418)   $   (97)
                                                        =======    =======

Equity (deficit) in earnings of investment in non-consolidated REITs:

The following table includes equity in earnings of investments in
non-consolidated REITs:

                                                            Three Months Ended
                                                                 March 31,
      (in thousands)                                         2007        2006
                                                           --------    --------

      Equity in earnings of Sponsored REITs                $   (666)   $     27
      Equity in earnings of FSP Blue Lagoon Drive Corp.          --          53
      Equity in earnings of Park Ten Development                 (7)         --
      Equity in earnings of Phoenix Tower                        57          --
                                                           --------    --------
                                                           $   (616)   $     80
                                                           ========    ========

Equity (deficit) in earnings of investments in Sponsored REITs is derived from
the Company's share of income following the commencement of syndication of
Sponsored REITs. Following the commencement of syndication the Company exercises
influence over, but does not control these entities, and investments are
accounted for using the equity method.

Equity (deficit) in earnings of Park Ten Development is derived from the
Company's preferred stock investment in the entity. In September 2005 the
Company acquired 8.5 preferred shares or 3.05% of the authorized preferred
shares of Park Ten Development via a non-monetary exchange of land valued at
$850,000.

Equity in earnings of Phoenix Tower is derived from the Company's preferred
stock investment in the entity. In September 2006 the Company purchased 48
preferred shares or 4.6% of the outstanding preferred shares of Phoenix Tower
for $4,116,000 (which represented $4,800,000 at the offering price net of
commissions of $384,000 and fees of $300,000 that were excluded).


                                       8
<PAGE>

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

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

Equity in earnings of FSP Blue Lagoon Drive Corp. ("Blue Lagoon") is derived
from the Company's preferred stock investment in the entity. In January 2004,
the Company purchased 49.25 preferred shares, or 8.22%, of the authorized
preferred shares of Blue Lagoon for $4,248,000 (which represented $4,925,000 at
the offering price net of commissions of $394,000 and loan fees of $283,000 that
were excluded). Blue Lagoon was one of the 2006 Target REITs that the Company
acquired by merger on April 30, 2006 at which time the preferred stock
investment was canceled and the merger was accounted for as a purchase, and the
acquired assets and liabilities were recorded at their fair value.

The Company recorded distributions declared or received of $281,000 and $118,000
from Sponsored REITs during the three months ended March 31, 2007 and 2006,
respectively.

Non-consolidated REITs:

The Company has in the past acquired by merger entities similar to the Sponsored
REITs, including on April 30, 2006, the five 2006 Target REITs. The Company's
business model for growth 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 and the approval of
the shareholders of the Sponsored REIT.

The operating data below for 2007 includes operations of the eleven Sponsored
REITs the Company held an interest in as of March 31, 2007. The operating data
for 2006 includes operations of the fourteen Sponsored REITs the Company held an
interest in as of March 31, 2006, including operations from the five 2006 Target
REITs from January through March 31, 2006. The five 2006 Target REITs were
merged into the Company on April 30, 2006.

At March 31, 2007, December 31, 2006 and March 31, 2006, the Company had
ownership interests in eleven, ten and fourteen Sponsored REITs, respectively.
Summarized financial information for these Sponsored REITs is as follows:

                                                  March 31,       December 31,
                                                     2007             2006
                                                  ---------        ---------
                                                        (in thousands)
      Balance Sheet Data (unaudited):
      Real estate, net                            $ 621,598        $ 612,835
      Other assets                                   66,193           87,383
      Total liabilities                            (258,576)        (132,565)
                                                  ---------        ---------
      Shareholders equity                         $ 429,215        $ 567,653
                                                  =========        =========

                                                   For the Three Months Ended
                                                           March 31,
                                                      2007            2006
                                                    --------        --------
                                                          (in thousands)
      Operating Data (unaudited):
      Rental revenue                                $ 22,099        $ 16,522
      Other revenue                                      781             731
      Operating and maintenance expenses             (10,735)         (7,477)
      Depreciation and amortization                   (4,339)         (3,604)
      Interest expense and commitment fees            (7,017)         (2,736)
                                                    --------        --------
      Net income (loss)                             $    789        $  3,436
                                                    ========        ========


                                       9
<PAGE>

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

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

Syndication fees and Transaction fees:

The Company provides syndication and real estate acquisition advisory services
for Sponsored REITs. Syndication and transaction fees from non-consolidated
entities amounted to approximately $6,037,000 and $3,860,000 for the three
months ended March 31, 2007 and 2006, respectively.

Management fees and interest income from loans:

Asset management fees range from 1% to 5% of collected rents and the applicable
contracts are cancelable with 30 days notice. Asset management fee income from
non-consolidated entities amounted to approximately $228,000 and $167,000 for
the three months ended March 31, 2007 and 2006, respectively. The Company
typically makes interim mortgage loans to Sponsored REITs that enable Sponsored
REITs to acquire their respective properties prior to the consummation of the
offerings of their equity interests. The interim mortgage loans are subsequently
repaid out of offering proceeds. The Company recognized interest income from
interim mortgage loans of approximately $1,589,000 and $4,000 for the three
months ended March 31, 2007 and 2006, respectively, relating to these loans.

5.    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
$150,000,000. Borrowings under the Loan Agreement bear interest at either the
bank's prime rate (8.25% at March 31, 2007) or a rate equal to LIBOR plus 125
basis points (6.57% at March 31, 2007). The balance outstanding was $130,000,000
at March 31, 2007, and there was no balance outstanding at December 31, 2006.
The weighted average interest rate on amounts outstanding during the three
months ended March 31, 2007 and 2006 was 6.57% and 6.34%, respectively; and for
the year ended December 31, 2006 was approximately 6.39%.

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
unencumbered cash and liquid investments balance and 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, 2007 and December 31, 2006. Borrowings under the Loan
Agreement mature on August 18, 2008.

6.    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, 2007 and 2006.

7.    Discontinued Operations

During 2006 the Company sold six properties, each of which was sold at a gain.
The Company also reached an agreement to sell another commercial property,
located in Greenville, South Carolina, which sold on January 31, 2007 at a loss.
For the year ended December 31, 2006, the Company reported the gains from the
sale of these properties and a provision for loss on the Greenville property
held for sale.

Accordingly, each of the seven properties sold are classified as discontinued
operations on our financial statements. Income from discontinued operations was
approximately $93,000 and $1,858,000 for the three months ended March 31, 2007
and 2006, respectively.


                                       10
<PAGE>

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

8.    Business Segments

The operating results for these real estate assets have been reflected as
discontinued operations in the consolidated statements of income for all periods
presented, and are summarized below:

                                                               For the
                                                          Three Months Ended
      (in thousands)                                           March 31,
                                                         ---------------------
                                                           2007         2006
                                                         --------     --------
      Rental revenue                                     $    116     $  4,584
      Rental operating expenses                               (23)      (1,362)
      Real estate taxes and insurance                          --         (495)
      Depreciation and amortization                            --         (869)
      Interest income                                          --           --
                                                         --------     --------
      Net income from discontinued operations            $     93     $  1,858
                                                         ========     ========

The Company operates in two business segments: real estate operations (including
real estate leasing, interim acquisition financing, development 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 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" in Note 2 to the Company's consolidated
financial statements included in its Annual Report on Form 10-K for the year
ended December 31, 2006. The Company's operations are located in the United
States of America.

The Company evaluates the performance of its reportable segments based on
Adjusted Funds From Operations ("AFFO") as management believes that AFFO
represents the most accurate measure of the reportable segment's activity and is
the basis for distributions paid to equity holders. The Company defines AFFO as:
net income as computed in accordance with GAAP; excluding gains or losses on the
sale of real estate and non-cash income from Sponsored REITs; plus certain
non-cash items included in the computation of net income (depreciation and
amortization and straight-line rent adjustments); plus distributions received
from Sponsored REITs; plus the net proceeds from the sale of land. Depreciation
and amortization, gain or loss on the sale of real estate, and straight-line
rents are an adjustment to AFFO, as these are non-cash items included in net
income.

AFFO 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 AFFO in a different manner. We
believe that in order to facilitate a clear understanding of the results of the
Company, AFFO should be examined in connection with net income and cash flows
from operating, investing and financing activities in the consolidated financial
statements. The calculation of AFFO by business segment is shown in the
following table.


                                       11
<PAGE>

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

8.    Business Segments (continued)

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

                                                          Investment
                                                           Banking/
                                             Real Estate  Investment
(in thousands)                               Operations    Services      Total
                                             ----------    --------      -----
Three Months Ended March 31, 2007
Net Income                                    $  9,376     $    356    $  9,732
Equity in income of non-consolidated REITs         583           --         583
Distributions from non-consolidated REITs          281           --         281
Depreciation and amortization                    8,970           30       9,000
Straight line rent                              (1,273)          --      (1,273)
                                              --------     --------    --------

Adjusted Funds From Operations                $ 17,937     $    386    $ 18,323
                                              ========     ========    ========

Three Months Ended March 31, 2006
Net Income                                    $ 13,054     $     85    $ 13,139
Equity in income of non-consolidated REITs        (275)          --        (275)
Distributions from non-consolidated REITs          118           --         118
Depreciation and amortization                    7,100           33       7,133
Straight line rent                                 200           --         200
                                              --------     --------    --------

Adjusted Funds From Operations                $ 20,197     $    118    $ 20,315
                                              ========     ========    ========

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

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

March 31, 2007:
  Revenue                              $    31,551     $   3,209   $    34,760
  Interest income                              645             8           653
  Interest expense                           2,676            --         2,676
  Capital expenditures                      (2,854)           --        (2,854)
  Identifiable assets                  $ 1,056,974     $   6,098   $ 1,063,072

March 31, 2006:
  Revenue                              $    23,203     $   2,167   $    25,370
  Interest income                              579             9           588
  Interest expense                             594            --           594
  Capital expenditures                         232            36           268
  Identifiable assets                  $   707,481     $   4,907   $   712,388


                                       12
<PAGE>

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

9.    Cash Dividends

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

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

      First quarter of 2007                       $.31             $21,938

      First quarter of 2006                       $.31             $18,536

10.   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.

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 Company's adoption of the provisions of FIN 48 effective January 1, 2007 did
not result in recording a liability, nor was any accrued interest and penalties
recognized with the adoption of FIN 48. Accrued interest and penalties will be
recorded as income tax expense, if the Company records a liability in the
future. The Company's effective tax rate was not affected by the adoption of FIN
48. The Company and one or more of its subsidiaries files income tax returns in
the U.S federal jurisdiction and various state jurisdictions. The statute of
limitations for the Company's income tax returns is generally three years and as
such, the Company's returns that remain subject to examination would be
primarily from 2003 and thereafter

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 34% to income before income taxes as
follows:

                                                                  For the
                                                            Three Months Ended
                                                                 March 31,
      (in thousands)                                            2007       2006
                                                            --------   --------

      Federal income tax expense at statutory rate          $    203   $     48
      Increase in taxes resulting from:
      State income taxes, net of federal impact                   37          9
                                                            --------   --------
                                                            $    240   $     57
                                                            ========   ========

No deferred income taxes were provided as there were no material 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)

11.   Subsequent Events

The Company repaid $30 million of its bank note payable on April 4, 2007, and
declared a cash distribution of $0.31 per share on April 20, 2007 to
stockholders of record on April 30, 2007 payable on May 21, 2007.


                                       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, 2006. Historical
results and percentage relationships set forth in the consolidated financial
statements, including trends which might appear, should not be taken as
necessarily indicative of future operations. The following discussion and other
parts of this Quarterly Report on Form 10-Q may also contain forward-looking
statements based on current judgments and current knowledge of management, which
are subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those indicated in such forward-looking
statements. Accordingly, readers are cautioned not to place undue reliance on
forward-looking statements. Investors are cautioned that our forward-looking
statements involve risks and uncertainty, including without limitation changes
in economic conditions in the markets in which we own properties, 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, Item 1A. "Risk Factors". Although we believe the
expectations reflected in the forward looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. We may not update any of the forward-looking statements after the
date this Quarterly Report on Form 10-Q is filed to conform them to actual
results or to changes in our expectations that occur after such date, other than
as required by law.

Overview

We operate 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, development
services, asset/property management services, property acquisitions and
dispositions. The investment banking/investment services segment involves the
structuring of real estate investments and broker/dealer services that include
the organization of Sponsored REITs, the acquisition and development of real
estate on behalf of Sponsored REITs and the raising of capital to equitize the
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 and/or
develop 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.

Due to the transactional nature of significant portions of our business, our
quarterly financial metrics have historically been quite variable. We do not
manage our business to quarterly targets but rather manage our business to
longer-term targets. Consequently, we consider annual financial results to be
much more meaningful for performance and trend measurements. We continue to be
very optimistic about our full-year 2007 financial performance potential and
growth prospects.

Net income decreased $3.4 million comparing the first quarter of 2007 to 2006.
The decrease was principally a result of a decrease in termination fee income,
which is included in rental revenue. During the first quarter of 2007 such
income was $61,000 compared to $4,722,000 in the first quarter of 2006. The
impact of this $4.7 million decrease was partially offset by increases to income
from real estate operations, including the impact of mergers, acquisitions and
properties sold in the last twelve months, of approximately $1.1 million; and
the benefit of increased investment banking results of approximately $0.3
million. Selling, general and administrative expenses also increased $83,000.
Each of these components of our results are more fully discussed below.

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 in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the year ended December 31, 2006.

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.

No changes to our critical accounting policies have occurred since our Annual
Report on Form 10-K for the year ended December 31, 2006.


                                       15
<PAGE>

Trends and Uncertainties
------------------------

Real Estate Operations

Our property operations during the first quarter of 2007 produced profit results
that were generally in line with management's expectations. Significantly, two
properties totaling approximately 263,000 square feet, one in the greater
Seattle/Tacoma area, and the other in Silicon Valley, did not contribute
meaningful rental income as each was substantially vacant. Both properties are
in the process of being physically repositioned in their respective markets from
single- to multi-tenant configurations. Construction and lease-up of these two
assets is likely to take up a good portion of 2007 and possibly beyond. However,
once repositioned and released, we believe these two properties can add
meaningful rental income and value. To date, approximately 42% of our 526,269
square feet of expected 2007 lease expirations has been re-leased/renewed.

Our major lease expirations scheduled for 2007 occurred during the first
quarter, which added some additional square footage to our vacant space,
although there were several renewals and extensions. The portfolio was
approximately 86% leased at March 31, 2007, and approximately 3% of the
portfolio is anticipated to have lease expirations over the remainder of the
year, based on rentable square feet.

While we cannot predict when existing vacancy will be leased or if existing
tenants with expiring leases will renew their leases or what the terms and
conditions of the lease renewals will be, we expect to renew or sign new leases
at current market rates for the locations in which the buildings are located,
which in some cases may be below the expiring rental rates. In most of our
markets, leasing conditions are still improving gradually, but market rents have
still not returned to the levels that were reached in the late 1990s and before
2001.

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. Equity raised
for Sponsored REIT syndications in the first quarter of 2007 totaled $49.2
million. Future business in this area, while always uncertain, continues to be
more encouraging than in the past three years. In January of 2007, one of our
Sponsored REITs purchased a property for investment syndication. Permanent
equity capitalization of the property was structured as a private placement
preferred stock offering totaling $221 million. This offering is the largest
single-investment syndication in our history.

Despite this current syndication, our property acquisition executives continue
to grapple with historically high valuation levels for prime commercial
investment real estate. It appears that a combination of factors, including low
interest rates, a growing general economy and substantially increased capital
allocation to real estate assets is increasing prices on many properties we
would have an interest in acquiring. This upward pressure on prices is causing
capitalization rates to remain low and prices per square foot to rise.
Specifically, our acquisition executives have a challenge identifying enough
property at a price acceptable under our investment criteria to grow our overall
investment banking/investment services business. As the first quarter of 2007
ends, valuation levels for many top quality investment properties remain at
historically high levels, with significant competition from a variety of capital
sources to acquire them. 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). We also continue to evaluate whether our in-house sales force
is capable, either through our existing client base or through new clients, of
raising sufficient investment capital in Sponsored REITs to achieve future
performance objectives.

Results of Operations

We operate in two business segments: Real Estate Operations and Investment
Banking/Investment Services. We consider contribution from each segment in
evaluating performance. Contribution includes revenue from each segment, less
related expenses such as rental property operating expenses, depreciation and
amortization, commissions and interest income and expense. Selling, general and
administrative expenses arise primarily from corporate related expenses and
costs associated with our headquarters in Wakefield, Massachusetts where both
business segments are managed and can shift between the segments depending on
the level of activity in each segment and other factors.

Some of the more significant factors include:

      o     Increases and decreases in the number of owned properties in our
            real estate portfolio, and the related impact of transactions such
            as direct acquisition and disposition of real estate assets;
      o     Increases and decreases in the number of Sponsored REITs, which are
            managed by FSP, and the related impact of creating the Sponsored
            REITs;
      o     Trends in the level of syndication proceeds in our investment
            banking segment; and
      o     Increases and decreases in the level of management time related to
            each of our segments.

As a result of these factors, we compare the total selling, general and
administrative expenses from period-to-period as we believe it more meaningful
than comparison of allocated expenses to each segment

Discontinued Operations and Property Dispositions

During the year ended December 31, 2006, the Company disposed of one apartment
property and five commercial properties. The apartment property is located in
Katy, Texas. The five commercial properties are located in Santa Clara,
California, Fairfax and Herndon, Virginia and North Andover and Peabody,
Massachusetts. An agreement was also reached to sell an office property in


                                       16
<PAGE>

Greenville, South Carolina, which was sold on January 31, 2007. Accordingly, as
of December 31, 2006 the South Carolina property was held for sale and is
classified as such on our financial statements. The operating results for these
real estate assets have been reflected as discontinued operations in the
financial statements for the three months ended March 31, 2007 and 2006,
respectively.

We continue to evaluate our portfolio, and in the future may decide to dispose
of additional properties from time-to-time in the ordinary course of business.

The following table shows each segment for the three months ended March 31, 2007
and 2006.

<TABLE>
<CAPTION>
(in thousands)
                                                          Three months ended March 31,
                                                       --------------------------------
Real Estate Operations                                   2007        2006       Change
                                                       --------    --------    --------
<S>                                                    <C>         <C>         <C>
Revenues:
  Rental income                                        $ 26,868    $ 21,317    $  5,551
  Transaction fees                                        2,828       1,693       1,135
  Management fees and interest income from loans          1,855         193       1,662
                                                       --------    --------    --------
                                                         31,551      23,203       8,348
                                                       --------    --------    --------
Expenses:
  Real estate operating expenses                          6,655       4,099       2,556
  Real estate taxes and insurance                         4,483       2,405       2,078
  Depreciation and amortization                           7,627       4,742       2,885
  Interest                                                2,676         594       2,082
                                                       --------    --------    --------
                                                         21,441      11,840       9,601
                                                       --------    --------    --------
Other items:
  Interest income                                           645         579          66
  Equity in earnings in non-consolidated REIT's            (616)         80        (696)
                                                       --------    --------    --------
                                                             29         659        (630)
                                                       --------    --------    --------

Contribution from real estate                            10,139      12,022      (1,883)
                                                       --------    --------    --------

Investment Banking/Investment Services:
  Syndication fees                                        2,956       1,921       1,035
  Transaction fees                                          253         246           7
                                                       --------    --------    --------
                                                          3,209       2,167       1,042
                                                       --------    --------    --------
Expenses:
  Commissions                                             1,559       1,022         537
  Depreciation and amortization                              30          33          (3)
                                                       --------    --------    --------
                                                          1,589       1,055         534
                                                       --------    --------    --------
Other items:
  Interest income                                             8           9          (1)
  Taxes on income                                          (240)        (57)       (183)
                                                       --------    --------    --------
                                                           (232)        (48)       (184)
                                                       --------    --------    --------

Contribution from investment banking                      1,388       1,064         324
                                                       --------    --------    --------

Selling, general and administrative expenses              1,888       1,805          83
                                                       --------    --------    --------

Income from continuing operations (Combined)              9,639      11,281      (1,642)
Discontinued operations, less applicable income tax:
Income from discontinued operations                          93       1,858      (1,765)
                                                       --------    --------    --------
  Net income                                           $  9,732    $ 13,139    $ (3,407)
                                                       ========    ========    ========
</TABLE>


                                       17
<PAGE>

The real estate operations segment includes operating results of properties held
in our real estate portfolio, commitment fee income earned on real estate loans
and development fees earned for services provided. During 2006 we acquired the
five 2006 Target REITs by merger, acquired three additional properties with
cash, sold six properties and reached an agreement to sell another property,
which closed on January 31, 2007. As a result, as of December 31, 2006 we
operated 29 properties and had one property held for sale. During the first
three months of 2007 we completed the sale of the property held for sale, and as
of March 31, 2007 we operated 29 properties.

Acquisitions, Mergers and Dispositions:

On February 24, 2006 we acquired one commercial property in Texas, on April 30,
2006 we completed the acquisition by merger of the five 2006 Target REITs, on
June 27, 2006 we acquired a commercial property in Georgia and on December 21,
2006 we acquired a commercial property in Broomfield, Colorado. The results of
operations for each of the acquired or merged properties are included in our
operating results as of their respective purchase or merger dates. Increases in
rental revenues and expenses for the three months ended March 31, 2007 as
compared to the same period in 2006 are primarily a result of the timing of
these acquisitions and subsequent contribution of these acquired properties. The
operating results of the seven properties sold were classified as discontinued
operations in our financial statements for all periods presented.

Sales of Real Estate:

The sales of real estate in 2006 included the following. On May 24, 2006 we sold
an apartment building in Katy, Texas, and on May 31, 2006 we sold two commercial
properties, one in Santa Clara, California and another in Fairfax, Virginia. On
August 9, 2006 we sold a commercial property in Peabody, Massachusetts, on
November 16, 2006 we sold a commercial property in Herndon, Virginia and on
December 21, 2006 we sold a commercial property in North Andover, Massachusetts.
As of December 31, 2006, we classified a property in Greenville, South Carolina
as held-for-sale, which was sold on January 31, 2007.

Investment Banking:

The investment banking/investment services segment is primarily based on the
gross proceeds from the sale of securities of the Sponsored REITs. During the
three months ended March 31, 2007 our investment banking/investment services
segment had total gross proceeds of $49.2 million; which was derived from the
syndication of FSP 303 East Wacker Drive Corp. During the three months ended
March 31, 2006 our investment banking/investment services segment had total
gross proceeds of $29.2 million; which was derived from the syndication of FSP
Phoenix Tower Corp. As a result, total gross proceeds increased $20.0 million
for the three months ended March 31, 2007 compared to three months ended March
31, 2006. The syndication currently in process commenced in January 2007, and
the syndication in process during the three months ended March 31, 2006
commenced in February 2006.

The $49.2 million of proceeds raised in the first quarter reflected the offering
of FSP 303 East Wacker Drive Corp. being available for subscription for only a
portion of the quarter. As of April 30, 2007, additional equity in the amount of
approximately $24.8 million was closed into the transaction. Our acquisition
executives continue to work on other property investment opportunities and are
currently more optimistic about potential future investment banking product than
in the past several years. Our investment banking business is off to a solid
start this year, and we are optimistic about this business segment's potential
for increased contribution in 2007.

Comparison of the three months ended March 31, 2007 to the three months ended
March 31, 2006

      Overview
      --------

      Total revenues increased $9.4 million to $34.8 million for the first
quarter ended March 31, 2007, as compared to $25.4 million for the quarter ended
March 31, 2006. Total expenses were $24.9 million for the quarter ended March
31, 2007, which was an increase of $10.2 million compared to the quarter ended
March 31, 2006. The increases were primarily attributable to properties acquired
in the last twelve months and increases in investment banking activity in the
three months ended March 31, 2007 compared to the three months ended March 31,
2006.

      Each segment is discussed below.

      Real Estate Operations
      ----------------------

      Contribution from the real estate segment was $10.1 million for the three
months ended March 31, 2007; a decrease of $1.9 million, compared to the three
months ended March 31, 2006. The decrease is primarily attributable to:

o     An increase to real estate operating income of $0.9 million to $15.7
      million for the three months ended March 31, 2007 compared to $14.8
      million for same period in 2006. We define real estate operating income as
      rental revenues less real estate operating expenses, real estate taxes and
      insurance. The increase was primarily a result of:

      -     A $5.6 million increase in real estate operating income resulting
            from the acquisitions of a property in Texas during February 2006,
            the five 2006 Target REITs by merger on April 30, 2006, a property
            in Georgia in June 2006 and a property in Colorado in December 2006.
            Real estate operating income from acquisitions is included in


                                       18
<PAGE>

            current operating income. Each of these acquisitions resulted in an
            increase in real estate operating income for the first quarter of
            2007 compared to the first quarter of 2006. The positive impact of
            these acquisitions was somewhat mitigated by vacancies at two
            properties during the three months ended March 31, 2007, which were
            leased in the first quarter of 2006; and

      -     A $4.7 million decrease in lease termination payments received.
            During the three months ended March 31, 2007 we received lease
            termination fee income of $61,000 from two tenants in Texas compared
            to $4.7 million from one tenant in Illinois during the three months
            ended March 31, 2006;

o     A $1.7 million increase in transaction (loan commitment) fees, which was
      principally a result of the increase in gross syndication proceeds in the
      quarter compared to the same period in 2006.

o     An increase in management fees and loan interest income of $1.7 million,
      principally a result of interest income from a larger loan balance during
      the first quarter of 2007 as compared to 2006. The mortgage loan for the
      property in syndication during the first quarter of 2007 commenced on
      January 5, 2007 as compared to the mortgage loan for the property in
      syndication during the first quarter of 2006, which commenced on February
      21, 2006. The impact of this increase was slightly greater as a result of
      higher interest rates charged for the first quarter of 2007 compared to
      2006.

o     An increase to interest income of $0.1 million during the three months
      ended March 31, 2007, which was primarily a result of higher interest
      rates earned on cash, cash equivalents and other investments compared to
      the three months ended March 31, 2006.

These increases were offset by:

o     A increase in interest expense of $2.1 million resulting from a higher
      average loan balance outstanding for syndications in process during the
      three months ended March 31, 2007 compared to the three months ended March
      31, 2006, which was slightly greater as a result of higher interest rates
      in the 2007 period than the 2006 period.

o     An increase in depreciation and amortization expense of $2.9 million to
      $7.6 million for the three months ended March 31, 2007 as compared to $4.7
      million for the same period in 2006. The increase was primarily a result
      of property acquisitions over the last twelve months.

o     A decrease in equity in income from non-consolidated REITs of $0.6
      million, which was principally a result of a loss attributed to us from a
      syndication in process during the first quarter of 2007, as compared to
      the first quarter of 2006.

      Investment Banking/Investment Services
      --------------------------------------

      Contribution from the investment banking and services segment was $1.4
million for the three months ended March 31, 2007, which was an increase of $0.3
million, compared to the three months ended March 31, 2006. The increase was
primarily attributable to:

o     A increase in syndication and transaction fee revenues of $1.0 million,
      which was primarily attributable to a greater level of gross syndication
      proceeds during the three months ended March 31, 2007 compared to the
      three months ended March 31, 2006.

o     An increase in commission expense of $0.5 million, which relates to the
      increase in gross syndication proceeds.

o     An increase in income taxes of $0.2 million arising from greater taxable
      income during the three months ended March 31, 2007 as compared to the
      same period in 2006.

o     There were insignificant changes to depreciation and amortization and
      interest income during the three months ended March 31, 2007 compared to
      the three months ended March 31, 2006.

      Selling, general and administrative expenses
      --------------------------------------------

      Selling, general and administrative costs increased $83,000, primarily
from a greater amount of payroll taxes primarily as a result of increases to
commissions, and, to a lesser extent salaries during the three months ended
March 31, 2007 compared to the three months ended March 31, 2006. We had 38
employees as of March 31, 2007 at our headquarters in Wakefield compared to 40
employees as of March 31, 2006.


                                       19
<PAGE>

      Income from continuing operations
      ---------------------------------

      Contribution from both segments, net of selling, general and
administrative expenses for the first quarter of 2007 decreased $1.6 million to
$9.6 million compared the first quarter of 2006 for the reasons discussed above.

      Discontinued Operations
      -----------------------

      During 2006, we sold six properties and classified one property in
Greenville, South Carolina as held for sale, which was sold on January 31, 2007.
Accordingly, each of the six properties sold and the property held for sale are
reported as discontinued operations on our financial statements for the relevant
periods presented. Income from discontinued operations was $93,000 for the three
months ended March 31, 2007 and was $1.8 million for the three months ended
March 31, 2006.

      The Company will continue to evaluate its portfolio, and from time-to-time
may decide to dispose of other properties.

      Net Income
      ----------

      Net income for the three months ended March 31, 2007 decreased $3.4
million to $9.7 million compared to $13.1 million for the three months ended
March 31, 2006, for the reasons discussed above.

Liquidity and Capital Resources

      Cash and cash equivalents were $68.7 million and $70.0 million at March
31, 2007 and December 31, 2006, respectively. This decrease of $1.2 million is
attributable to $15.7 million provided by operating activities, less $125.0
million used for investing activities, plus $108.1 million provided by financing
activities. Management believes that existing cash, cash anticipated to be
generated internally by operations, cash anticipated to be generated by fees and
commissions from the sale of preferred stock in future Sponsored REITs and our
line of credit will be sufficient to meet working capital requirements and
anticipated capital expenditures and improvements for at least the next 12
months. 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 significant 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.

      Operating Activities

      The cash provided by our operating activities of $15.7 million is
primarily attributable to net income of $9.7 million, plus the add-back of $9.6
million of non-cash activity and $0.3 million of distributions from
non-consolidated REITs and was partially offset by decreases in accrued expenses
and compensation of $3.2 million and other current operating accounts of $0.7
million.

      Investing Activities

      Our cash used for investing activities of $125.0 million is primarily
attributable to our investment in assets held for syndication of $121.4 million
and additions to real estate investments and office equipment of approximately
$9.3 million, which were partially offset by proceeds received on the sale of
the Greenville, South Carolina property of $5.8 million.

      Financing Activities

      Our cash provided by financing activities of $108.1 million is primarily
attributable to net proceeds from our line of credit of $130.0 million used to
purchase assets held for syndication, which were partially offset by
distributions to shareholders of $21.9 million.

      Line of Credit

      We have 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
$150,000,000. Borrowings under the Loan Agreement bear interest at either the
bank's prime rate (8.25% at March 31, 2007) or a rate equal to LIBOR plus 125
basis points (6.57% at March 31, 2007). The balance outstanding was $130,000,000
at March 31, 2007, and there was no balance outstanding at December 31, 2006. We
are in compliance with all bank covenants required by the Loan Agreement.


                                       20
<PAGE>

      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, 2007 there was one asset held for syndication, consisting
of the office property owned by FSP 303 East Wacker Drive Corp. and as of
December 31, 2006 there were no assets held for syndication.

      Assets Held for Sale

      During 2006 an agreement was reached to sell a commercial property in
Greenville, South Carolina at a loss, which was sold on January 31, 2007.
Accordingly, as of December 31, 2006 the property is classified as held for sale
on the balance sheet at its approximate net sales price.

      Related Party Transactions

      During the three months ended March 31, 2007, we completed the syndication
of FSP 50 South Tenth Street Corp. and began the syndication of FSP 303 East
Wacker Drive Corp. We did not enter into any other significant transactions with
related parties during the quarter ended March 31, 2007. For a discussion of
transactions between us and related parties during 2006, 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, 2006.

      Other Considerations

      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, 2007, the rental income exceeded the expenses for each individual
property, with the exception of a property located in Westford, Massachusetts, a
property located in Federal Way, Washington and a property located in San Jose,
California. For the three months ended March 31, 2006 the rental income exceeded
the expenses for each individual property, with the exception of the property
located in Westford, Massachusetts.

      o     The single tenant lease at the property located in Westford,
            Massachusetts, expired October 31, 2004. We have not re-let the
            property and expect that it will not produce revenue to cover its
            expenses in the second quarter of 2007. The property had operating
            expenses of $86,000 and $73,000 for the three months ended March 31,
            2007 and 2006, respectively.

      o     The single tenant lease at the property located in Federal Way,
            Washington, expired September 14, 2006. We have signed a lease for
            approximately 8% of the space, which commences later this year and
            includes a free rent period. We expect that the property will not
            produce revenue to cover its expenses in the second or third quarter
            of 2007. The property had operating expenses of $139,000 for the
            three months ended March 31, 2007.

      o     The single tenant lease at the property located in San Jose,
            California, expired December 31, 2006. There is one tenant in the
            building occupying 19% of the rentable square feet of the property,
            from which we had rental income of $100,000 during the three months
            ended March 31, 2007. The property had operating expenses of
            $124,000 for the three months ended March 31, 2007. We are
            repositioning the property and have not re-let the remaining space
            and do not expect to add tenants until the repositioning work is
            complete. As a result, we do not believe the property will produce
            revenue to cover its expenses in the second quarter of 2007.


                                       21
<PAGE>

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, 2007.

We borrow from time-to-time on our line of credit. These borrowings bear
interest at the bank's base rate (8.25% at March 31, 2007) or at LIBOR plus 125
basis points (6.57% at March 31, 2007), as elected by us when requesting funds.
As of March 31, 2007, $130,000,000 was outstanding under the line of credit
consisting of one borrowing at the LIBOR plus 125 basis point rate. We have used
funds drawn on our line of credit for the purpose of making interim mortgage
loans to Sponsored REITs and for interim financing of acquisitions. Generally
interim mortgage loans bear interest at the same variable rate payable by us
under our line of credit. We therefore believe that we have mitigated our
interest rate risk with respect to our borrowings for interim mortgage loans.
Historically we have satisfied obligations arising from interim financing of
acquisitions through cash or sale of properties in our portfolio, so we believe
that we can mitigate interest rate risk with respect to borrowings for interim
financing of acquisitions as well.


                                       22
<PAGE>

Item 4. Controls and Procedures.

Our management, with the participation of our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure controls and
procedures as of March 31, 2007. The term "disclosure controls and procedures,"
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, means controls and other procedures of a company that are designed to
ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by a company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the company's management,
including its principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure. Management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Based on the evaluation of our
disclosure controls and procedures as of March 31, 2007, our chief executive
officer and chief financial officer concluded that, as of such date, our
disclosure controls and procedures were effective at the reasonable assurance
level.

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting occurred during the
quarter ended March 31, 2007 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.


                                       23
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

The following important factors, among others, could cause actual results to
differ materially from those indicated by forward-looking statements made in
this Quarterly Report on Form 10-Q and presented elsewhere by management from
time-to-time. The following risk factors contain no material changes from the
risk factors previously disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2006.

If we are not able to collect sufficient rents from each of our owned real
properties, we may suffer significant operating losses or a reduction in cash
available for future dividends.

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

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

      Growth in our investment banking/investment services business and our
portfolio of real estate is dependent on the ability of our acquisition
executives to find properties for sale and/or development which meet our
investment criteria. 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, and we would be unable to increase the
size of our portfolio of real estate, which would reduce the cash available for
distribution to our stockholders.

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
typically secured by a first mortgage against the real property acquired by the
Sponsored REIT. Once the offering has been completed, the Sponsored REIT
typically 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.

A default under our line of credit could have a material adverse effect on the
cash available for distribution to our stockholders and would limit our growth.

      We typically draw on our line of credit to make an interim mortgage loan
to a Sponsored REIT, so that the Sponsored REIT can acquire real property prior
to the consummation of the offering of such Sponsored REIT's equity interests.
Once the offering has been completed, the Sponsored REIT typically repays the
loan out of the offering proceeds. We also may use the line of credit to
purchase properties directly for our real estate portfolio. A default under our
line of credit could result in difficulty financing growth in both the
investment banking/investment services and real estate segments of our business.
It could also result in a reduction in the cash available for distribution to
our stockholders because revenue for our investment banking/investment services
segment is directly related to the amount of equity raised by Sponsored REITs
which we syndicate. In addition, a significant part of our growth strategy is to
acquire additional real properties by cash purchase or by acquisition of
Sponsored REITs, and the inability to utilize the line of credit would make it
substantially more difficult to pursue acquisitions by either method. To the
extent we have a balance outstanding on the line of credit on the date of its
default, we would have to satisfy our obligation through other means. If we are
required to use cash for this purpose, we would have less cash available for
distribution to our stockholders.


                                       24
<PAGE>

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.

We are dependent on key personnel.

      We depend on the efforts of George J. Carter, our President and Chief
Executive Officer and a Director; Barbara J. Fournier, our Chief Operating
Officer, Treasurer, Secretary, a Vice President and a Director; John G.
Demeritt, our Chief Financial Officer; Janet Prier Notopoulos, a Vice President
and a Director; R. Scott MacPhee, an Executive Vice President; and William W.
Gribbell, an Executive Vice President. If any of our executive officers were to
resign, our operations could be adversely affected. We do not have employment
agreements with any 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.

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.

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

      As of April 30, 2007, we owned 29 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.
The value of our common stock may be adversely affected if the real properties
held by us decline in value since these real properties represent the majority
of the tangible assets held by us. Moreover, if we are forced to sell or lease
the real property held by us below its initial purchase price or its carrying
costs or if we are forced to lease real property at below market rates because
of the condition of the property, our results of operations would be adversely
affected and such negative results of operations may result in lower dividends
being paid to holders of our common stock.

New acquisitions may fail to perform as expected.

      We may acquire new properties, whether by direct FSP Corp. purchase with
cash or our line of credit, by acquisition of Sponsored REITs or other entities
by cash or through the issuance of shares of our stock or by investment in a
Sponsored REIT. We acquired a property in Texas in February 2006, the five 2006
Target REITs and the properties they own on April 30, 2006, a property in
Georgia in June 2006 and a property in Colorado in December 2006. 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, developing and operating real property.

      An investment in us is subject to the risks incident to the ownership,
development and operation of real estate-related assets. These risks include the
fact that real estate investments are generally illiquid, which may affect 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;
      o     changes in tax, real estate and zoning laws; and
      o     the impact of obligations and restrictions contained in
            title-related documents.


                                       25
<PAGE>

      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 space
fluctuates with market conditions.

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. Typical
lease terms range from five to ten years, so up to approximately 20% of our
rental revenue from commercial properties could be expected to expire each year.

We face risks from geographic concentration.

      The properties in our portfolio as of March 31, 2007, by aggregate square
footage, are distributed geographically as follows: Southwest - 27%, Northeast -
12%, Midwest - 19%, West - 24% and Southeast - 18%. However, within certain of
those regions, we hold a larger concentration of our properties in Dallas, Texas
- 18%, Greater Denver, Colorado - 13%, Atlanta, Georgia - 11% and Houston, Texas
- 8%. 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 currently
located and in every market in which properties we may acquire in the future
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 revenue to increase from an increase in leased
space 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.


                                       26
<PAGE>

We are subject to compliance with the Americans With Disabilities Act and fire
and safety regulations, any of 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.

      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 our stockholders.

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 that may be either uninsurable or not economically
insurable. 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.

Our employee retention plan may prevent changes in control.

      During February 2006, our Board of Directors approved a change in control
plan, which included a form of retention agreement and discretionary payment
plan. Payments under the discretionary plan are capped at 1% of the market
capitalization of FSP Corp. as reduced by the amount paid under the retention
plan. The costs associated with these two components of the plan may have the
effect of discouraging a third party from making an acquisition proposal for us
and may thereby inhibit a change in control under circumstances that could
otherwise give the holders of our common stock the opportunity to realize a
greater premium over the then-prevailing market prices.

The price of our common stock may vary.

      The market prices for our common stock may fluctuate with changes in
market and economic conditions, including the market perception of REITs in
general, and changes in the financial condition of our securities. Such
fluctuations may depress the market price of our common stock independent of the
financial performance of FSP Corp. The market conditions for REIT stocks
generally could affect the market price of our common stock.

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

      The provisions of the tax 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, as a result of our acquisition of the target REITs pursuant to the
mergers, we might no longer qualify as a real estate investment trust. We could
lose our ability to so qualify for a variety of reasons relating to the nature
of the assets acquired from the target REITs, the identity of the stockholders
of the target REITs who become our stockholders or the failure of one or more of
the target REITs to have previously qualified as a real estate investment trust.
Moreover, you should note that if one or more of the REITs that we acquired in
April 2006, April 2005 or June 2003 did not qualify as a real estate investment
trust immediately prior to the consummation of its acquisition, we could be
disqualified as a REIT as a result of such acquisition.


                                       27
<PAGE>

      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 regular 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 our 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.

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 our
equity shares, 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. 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 2007, 2008 and 2009, 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.


                                       28
<PAGE>

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds:

The following table provides information about purchases by Franklin Street
Properties Corp. during the quarter ended March 31, 2007 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)

                                                                                              Maximum Number
                                                                     Total Number of         (or Approximate
                                                                    Shares (or Units)        Dollar Value) of
                                                                    Purchased as Part       Shares (or Units)
                                                                       of Publicly           that May Yet Be
                           Total Number of        Average Price      Announced Plans       Purchased Under the
                          Shares (or Units)      Paid per Share        or Programs          Plans or Programs
Period                    Purchased (1) (2)         (or Unit)            (1) (2)                 (1) (2)
----------------------------------------------------------------------------------------------------------------

<S>                              <C>                   <C>                 <C>                 <C>
01/01/07-01/31/07                 0                    N/A                  0                  $21,008,101
----------------------------------------------------------------------------------------------------------------

02/01/07-02/28/07                 0                    N/A                  0                  $21,008,101
----------------------------------------------------------------------------------------------------------------

03/01/07-03/30/07                 0                    N/A                  0                  $21,008,101
----------------------------------------------------------------------------------------------------------------

Total:                            0                    N/A                  0                  $21,008,101
----------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Our Articles of Incorporation provide that we will use our best efforts to
      redeem shares of our 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. However, as our common stock is currently listed
      for trading on the American Stock Exchange, we are no longer obligated to,
      and do not intend to, effect any such redemption.

(2)   On October 28, 2005 FSP Corp. announced that the Board of Directors of FSP
      Corp. had authorized the repurchase of up to $35 million of the Company's
      common stock from time to time in the open market or in privately
      negotiated transactions. The stock repurchase authorization expires at the
      earlier of (i) November 1, 2007 or (ii) a determination by the Board of
      Directors of FSP Corp. to discontinue repurchases.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

For purposes of Regulation FD the Company has attached a table regarding the
investors in Sponsored REITs attached as Exhibit 99.1 hereto.


                                       29
<PAGE>

                     PART II - OTHER INFORMATION (Continued)

Item 6. Exhibits

See Exhibit Index attached hereto on page 32, which is incorporated herein by
reference.


                                       30
<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.


       Date                 Signature                    Title


Date:  May 1, 2007  /s/ George J. Carter    Chief Executive Officer and Director
                    --------------------    (Principal Executive Officer)
                    George J. Carter


Date:  May 1, 2007  /s/ John G. Demeritt    Chief Financial Officer
                    ---------------------   (Principal Financial Officer)
                    John G. Demeritt


                                       31
<PAGE>

                                  EXHIBIT INDEX


2.1   Agreement and Plan of Merger by and among the Company, Blue Lagoon
      Acquisition Corp., Innsbrook Acquisition Corp., Willow Bend Acquisition
      Corp., 380 Interlocken Acquisition Corp., Eldridge Green Acquisition
      Corp., FSP Blue Lagoon Drive Corp., FSP Innsbrook Corp., FSP Willow Bend
      Office Center Corp., FSP 380 Interlocken Corp. and FSP Eldridge Green
      Corp., dated as of March 15, 2006 (1)

2.2   Agreement of Sale and Purchase, dated May 19, 2006, by and between One
      Overton Park LLC and FSP One Overton Park LLC (2)

3.1   Articles of Incorporation (3)

3.2   Amended and Restated By-Laws (4)

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 Chief Financial Officer 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 Chief Financial 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.

99.1  Table regarding investors in Sponsored REITs.


----------
(1)   Filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated
      March 15, 2006 (File No. 001-32470) as filed on March 16, 2006 and
      incorporated herein by reference.

(2)   Filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated
      June 27, 2006 (File No. 001-32470) as filed on June 28, 2006 and
      incorporated herein by reference.

(3)   Filed as Exhibit 3.1 to the Company's Registration Statement on Form 8-A
      (File No. 001-32470) as filed on April 5, 2005 and incorporated herein by
      reference.

(4)   Filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated May
      12, 2006 (File No. 001-32470) as filed on May 15, 2006 and incorporated
      herein by reference.


                                       32