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

                                  FORM 10 - Q/A
                                (Amendment No. 1)

(Mark One)
      |X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
            For the quarterly period ended June 30, 2003

                                       OR

      |_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
            For the transition period _________ to __________.

                         Commission File Number: 0-32615

                        Franklin Street Properties Corp.
        (formerly known as Franklin Street Partners Limited Partnership)
             (Exact name of registrant as specified in its charter)

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

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

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

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

        YES     |X|                                          NO     |_|

Indicate by check mark whether the registrant is an accelerated filer as defined
in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.

        YES     |X|                                          NO     |_|

The number of shares of common stock outstanding as of August 10, 2003 was
49,630,338.
<PAGE>

                                EXPLANATORY NOTE

The purpose of this Amendment No. 1 to the Form 10-Q for the quarterly period
ended June 30, 2003 is to amend Items 1 and 2 of Part 1, to correct transaction
fee income for the reasons set forth under the caption "Restatement" in Note 1
to the Notes to the Consolidated Financial Statements contained in Item 1 of
Part 1. The Company filed a 10-Q/A on May 6, 2004 for the quarterly period ended
March 31, 2003 to make a corresponding correction.
<PAGE>

                        Franklin Street Properties Corp.

                                    Form 10-Q

                                Quarterly Report
                                  June 30, 2003

                                Table of Contents

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

                Consolidated Balance Sheets as of June 30, 2003 and
                December 31, 2002.........................................     3

                Consolidated Statements of Income for the three and six
                months ended June 30, 2003 and 2002 ......................     4

                Consolidated Statements of Cash Flows for the six months
                ended June 30, 2003 and 2002 .............................     5

                Notes to the Consolidated Financial Statements............  6-15

        Item 2. Management's Discussion and Analysis of Financial
                Condition and Results of Operations....................... 16-28

        Item 3. Quantitative and Qualitative Disclosures about Market
                Risk......................................................    29

        Item 4. Controls and Procedures...................................    29

Part II. Other Information

        Item 1. Legal Proceedings.........................................    30

        Item 2. Changes in Securities and Use of Proceeds.................    30

        Item 3. Defaults upon Senior Securities...........................    30

        Item 4. Submission of Matters to a Vote of Security Holders.......    31

        Item 5. Other Information.........................................    31

        Item 6. Exhibits and Reports on Form 8-K..........................    32

Signatures      ..........................................................    33


                                        2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                        Franklin Street Properties Corp.
                           Consolidated Balance Sheets
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                          June 30,  December 31,
(in thousands, except share and par value amounts)                          2003        2002
================================================================================================

<S>                                                                       <C>          <C>
Assets:

Real estate investments, at cost:
  Land                                                                    $  74,798    $ 39,560
  Buildings and improvements                                                414,524     154,785
  Fixtures and equipment                                                        774         930
------------------------------------------------------------------------------------------------
                                                                            490,096     195,275
  Less accumulated depreciation                                              23,303      21,999
------------------------------------------------------------------------------------------------

    Real estate investments, net                                            466,793     173,276

Acquired real estate leases, less accumulated amortization of $102            9,095          --

Cash and cash equivalents                                                    89,285      22,316
Restricted cash                                                                 964         483
Tenant rent receivables, less allowance for doubtful accounts of
  $202 and $202, respectively                                                   614         327
Straight-line rent receivable, less allowance for doubtful accounts of
  $360 and $360, respectively                                                 2,817       3,057
Prepaid expenses                                                                773         743
Deposits on real estate assets                                                   --         841
Office computers and furniture, net of accumulated depreciation of
  $398 and $389, respectively                                                   225         234
Deferred leasing commissions, net of accumulated amortization of
  $439 and $289, respectively                                                   778         659
------------------------------------------------------------------------------------------------

    Total Assets                                                          $ 571,344    $201,936
================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
  Bank note payable                                                       $  38,122    $     --
  Accounts payable and accrued expenses                                      14,387       3,001
  Dividends payable                                                           5,172          --
  Accrued compensation                                                          734       1,287
  Tenant security deposits                                                      964         483
------------------------------------------------------------------------------------------------

    Total Liabilities                                                        59,379       4,771
------------------------------------------------------------------------------------------------

Commitments and Contingencies

Stockholders' Equity:
  Preferred Stock, $.0001 par value, 20,000,000 shares
    authorized, none issued or outstanding                                       --          --
  Common Stock, $.0001 par value, 180,000,000 shares
    authorized, 49,630,338 and 24,586,249 shares issued and outstanding           5           2
  Additional paid-in capital                                                513,912     192,743
  Retained earnings and distributions                                        (1,952)      4,420
------------------------------------------------------------------------------------------------

    Total Stockholders' Equity                                              511,965     197,165
------------------------------------------------------------------------------------------------

    Total Liabilities and Stockholders' Equity                            $ 571,344    $201,936
================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                        3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    For the                 For the
                                                                  Three Months            Six Months
                                                                     Ended                  Ended
                                                                    June 30,               June 30,
                                                               -------------------     ----------------
(in thousands, except per share amounts)                          2003       2002      2003      2002
=======================================================================================================
                                                               (Restated)
<S>                                                            <C>         <C>       <C>       <C>
Revenue:
  Rental                                                       $  9,849    $ 6,546   $15,664   $12,924
Syndication fees                                                  2,174      3,979     5,407     5,737
  Transaction fees                                                2,222      3,884     5,437     5,338
  Sponsored REIT income                                             517         --       901        32
  Other                                                             289        236       606       309
------------------------------------------------------------------------------------------------------

    Total revenue                                                15,051     14,645    28,015    24,340
------------------------------------------------------------------------------------------------------

Expenses:
  Rental operating expenses                                       2,324      1,538     3,915     3,037
  Real estate taxes and insurance                                 1,300        754     2,089     1,448
  Depreciation and amortization                                   1,508      1,125     2,438     2,227
  Sponsored REIT expenses                                           350         --       641        17
  Selling, general and administrative                             1,350      1,378     2,732     2,903
  Commissions                                                     1,090      1,989     2,706     2,835
  Interest                                                          207        291       538       350
------------------------------------------------------------------------------------------------------

    Total expenses                                                8,129      7,075    15,059    12,817
------------------------------------------------------------------------------------------------------

Income before interest income and taxes on income                 6,922      7,570    12,956    11,523

Interest income                                                      59         44       108       118
------------------------------------------------------------------------------------------------------

Income before taxes on income                                     6,981      7,614    13,064    11,641

Taxes on income                                                     196        201       425       201
------------------------------------------------------------------------------------------------------

Income from continuing operations                                 6,785      7,413    12,639    11,440

    Income (loss) from discontinued operations                       (2)        56        11       126
    Gain on sale of real estate from discontinued operations         --         --     1,421        --
------------------------------------------------------------------------------------------------------

Net Income                                                     $  6,783    $ 7,469   $14,071   $11,566
=======================================================================================================

Weighted average number of shares outstanding,
  basic and diluted                                              32,964     24,586    28,797    24,586
=======================================================================================================

Net income per share, basic and diluted, attributable to:
  Continuing operations                                        $   0.21    $  0.30   $  0.44   $  0.47
  Discontinued operations                                            --         --        --        --
  Gain on sale of properties, less applicable income tax             --         --      0.05        --
------------------------------------------------------------------------------------------------------

Net income per share, basic and diluted                        $   0.21    $  0.30   $  0.49   $  0.47
=======================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                        4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                      For the
                                                                                    Six months
                                                                                       Ended
                                                                                     June 30,
                                                                                -------------------
(in thousands)                                                                  2003          2002
===================================================================================================

<S>                                                                          <C>          <C>
Cash flows from operating activities:
  Net income                                                                 $  14,071    $ 11,566
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                                              2,438       2,313
      Gain on sale of real estate assets                                        (1,421)         --
  Changes in operating assets and liabilities:
      Restricted cash                                                               17          (3)
      Tenant rent receivables                                                      (35)       (931)
      Straight-line rents, net                                                     240          --
      Prepaid expenses and other assets, net                                       338        (614)
      Accounts payable and accrued expenses                                        304         854
      Accrued compensation                                                         (17)       (847)
      Tenant security deposits                                                    (553)          4
  Payment of deferred leasing commissions                                         (149)         --
---------------------------------------------------------------------------------------------------

        Net cash provided by operating activities                               15,233      12,342
---------------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Cash acquired through issuance of common stock in the merger transaction      23,524          --
  Purchase of real estate assets, office computers and furniture;
    capitalized merger costs                                                    (1,708)       (743)
  Deposits on real estate assets                                                   841          --
  Addition of assets held for syndication                                           --     (22,300)
  Proceeds received on sale of real estate assets                                6,228          --
---------------------------------------------------------------------------------------------------

        Net cash provided by (used for) investing activities                    28,885     (23,043)
---------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Distributions to stockholders                                                (15,271)    (15,244)
  Proceeds from bank note payable, net                                          38,122      22,300
---------------------------------------------------------------------------------------------------

        Net cash provided by financing activities                               22,851       7,056
---------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                            66,969      (3,645)

Cash and cash equivalents, beginning of period                                  22,316      24,357
---------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                     $  89,285    $ 20,712
===================================================================================================

Supplemental disclosure of cash flow information: Cash paid for:
    Interest                                                                 $     538    $    350
    Income taxes                                                                   585          --
    Dividends declared but not paid                                              5,172          --
Non-cash investing and financing activities
  Assets acquired through issuance of common stock in the
    merger transaction, net                                                    297,648          --
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                        5
<PAGE>

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

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

Organization

Franklin Street Properties Corp. (the "Company" or "FSP Corp.") was formed as a
Massachusetts limited partnership (the "Partnership") on February 4, 1997.
Through June 30, 2001 the Partnership owned a 99% interest in FSP Investments
LLC ("FSP Investments") and a 99% interest in FSP Property Management LLC ("FSP
Property Management"). Effective July 1, 2001, a wholly-owned subsidiary of the
Partnership purchased the remaining 1% ownership interest in FSP Investments and
1% ownership interest in FSP Property Management for an aggregate purchase price
of approximately $32,000.

In December 2001, the limited partners of the Partnership approved the
conversion of the Partnership from a partnership into a corporation. The
conversion was effective January 1, 2002, and was accomplished as a tax-free
reorganization by merging the Partnership with and into a wholly owned
subsidiary, Franklin Street Properties Corp., with the subsidiary as the
surviving entity. In 2002, the Company elected to be taxed as a real estate
investment trust ("REIT").

As a part of the conversion, all of the Partnership's outstanding units were
converted on a one-for-one basis into 24,586,249 shares of common stock of the
Company. The conversion was accounted for as a reorganization of affiliated
entities, with assets and liabilities recorded at their historical costs.

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

The Company operates in two business segments: rental operations and investment
services. FSP Investments provides real estate investment and broker/dealer
services. FSP Investments' services include: (i) the organization of REITs (the
"Sponsored REITs") which are syndicated through private placements; (ii) the
acquisition of real estate on behalf of the Sponsored REITs; and (iii) the sale
in private placements of preferred stock in Sponsored REITs.

Restatement

In the first quarter of 2004, the Company determined that it had incorrectly
applied an accounting principle regarding the recognition of transaction fee
revenue related to loan fees charged to Sponsored REITs in cases in which a
syndication had not been completed as of the end of a fiscal period. This error
only affected results in the three months ended March 31, 2003 and the three
months ended June 30, 2003. The Company is therefore restating its previously
reported, unaudited consolidated financial statements for the three months ended
June 30, 2003. As a result of the restatement, transaction fee income increased
$1,330,000 for the three months ended March 31, 2003 and decreased $1,330,000
for the three months ended June 30, 2003. There was no effect on the six months
ended June 30, 2003. The following table summarizes the impact to amounts
previously reported for the three months ended June 30, 2003:

<TABLE>
<CAPTION>
                                                   Three months ended June 30, 2003
                                                ---------------------------------------
                                                As Reported    Adjustments   As Amended
                                                -----------    ----------   -----------
                                                 (in thousands, except per share data)

<S>                                             <C>               <C>       <C>
Revenue                                         $    16,381       ($1,330)  $    15,051
                                                ===========    ==========   ===========

Income from continuing operations                     8,115        (1,330)        6,785
Income from discontinued operations                      (2)           --            (2)
Gain on sale of properties                               --            --            --
                                                -----------    ----------   -----------
Net income                                      $     8,113       ($1,330)  $     6,783
                                                ===========    ==========   ===========

Basic and diluted net income per share          $      0.25       ($ 0.04)  $      0.21
                                                ===========    ==========   ===========

Weighted average number of shares outstanding        32,964            --        32,964
                                                ===========    ==========   ===========
</TABLE>


                                        6
<PAGE>

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

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

Properties

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

                                                            As of
                                                          June 30,
                                                     2003           2002
                                                  ---------      ---------
          Residential real estate
                Number of properties                      5              4
                Number of apartments                    996            642

          Commercial real estate
                Number of properties                     24             13
                Square feet                       3,049,357      1,433,200

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, 2002.

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

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

Recent Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities. The objective of this
interpretation is to provide guidance on how to identify a variable interest
entity ("VIE") and determine when the assets, liabilities, noncontrolling
interests, and results of operations of a VIE need to be included in a company's
consolidated financial statements. A company that holds variable interests in an
entity will need to consolidate the entity if the company's interest in the VIE
is such that the company will absorb a majority of the VIE's expected losses
and/or receive a majority of the entity's expected residual returns, if they
occur. FIN 46 also requires additional disclosures by primary beneficiaries and
other significant variable interest holders. The provisions of this
interpretation became effective upon issuance. The Company believes the impact
will not be material to its financial position, results of operations or cash
flows.

2. Investment Services Activity

In March 2003, a Sponsored REIT, FSP Collins Crossing Corp. acquired one office
building in Richardson, Texas. The Company sold on a best efforts basis, through
private placements, approximately $55.5 million in preferred stock in this
Sponsored REIT, of which $23.1 million and $32.4 million in preferred stock was
sold in the three months ending March 31, 2003 and June 30, 2003, respectively.


                                        7
<PAGE>

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

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

The Company typically retains a non-controlling common stock ownership interest
in Sponsored REITs that it has organized. These ownership interests have
virtually no economic benefit or risk. At June 30, 2003, December 31, 2002, and
June 30, 2002 the Company had ownership interests in five, sixteen and fourteen
Sponsored REITs, respectively. Neither the Company nor any other related entity
has an obligation to acquire the non-owned interests in any Sponsored REIT.

Summarized financial information for the Sponsored REITs is as follows:

                                               June 30,       December 31,
       (unaudited)                               2003            2002
                                              -----------     ------------
                                                    (in thousands)

       Balance Sheet Data:
       -------------------
       Real estate, net                       $   152,805     $   385,907
       Other assets                                25,429          39,465
       Total liabilities                           (2,874)         (6,554)
                                              -----------     -----------
       Shareholders' equity                   $   175,360     $   418,818
                                              ===========     ===========

<TABLE>
<CAPTION>
                                                   For the                 For the
                                              Three Months Ended       Six Months Ended
                                                  June 30,                 June 30,
                                              2003        2002         2003        2002
                                              -------------------------------------------
                                                          (in thousands)
<S>                                           <C>        <C>         <C>         <C>
       Operating Data:
       ---------------
       Rental revenue                         $ 6,052    $ 10,027    $ 10,857    $ 18,704
       Other revenue                               38          (3)         76         217
       Operating and maintenance expenses      (2,141)     (2,274)     (3,662)     (6,786)
       Depreciation and amortization           (1,504)     (1,306)     (2,267)     (2,602)
       Interest expense and commitment fees    (3,591)     (4,039)     (5,597)     (4,044)
                                              -------------------------------------------
       Net income (loss)                      $(1,146)   $  2,405    $   (593)   $  5,489
                                              ===========================================
</TABLE>

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

                                             For the               For the
                                       Three Months Ended     Six Months Ended
                                            June 30,              June 30,
                                       2003         2002      2003        2002
                                       ---------------------------------------
                                                    (in thousands)
       Revenue                         $ 517        $--       $ 901      $ 32
       Expenses                         (350)        --        (641)      (17)
                                       ---------------------------------------
           Net income                  $ 167        $--       $ 260      $ 15
                                       =======================================

The Company provided syndication and real estate acquisition advisory services
for the Sponsored REITs in 2003 and 2002. For the three months ended June 30,
2003 and 2002, respectively, syndication fees were approximately $2.2 million
and $4.0 million, and transaction fees were approximately $2.2 million and $3.9
million. For the six months ended June 30, 2003 and 2002, respectively,
syndication fees were approximately $5.4 million and $5.7 million, and
transaction fees were approximately $5.4 million and $5.3 million.


                                        8
<PAGE>

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

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

Asset management fee income charged by the Company to the Sponsored REITs
amounted to approximately $146,000 and $158,000 for the three months ended June
30, 2003 and 2002, respectively, and $298,000 and $217,000 for the six months
ended June 30, 2003 and 2002, respectively, and is included in "Other revenue"
in the Consolidated Statements of Income. Asset management fees range from 1% to
5% of collected rents and the applicable contracts are cancelable with 30 days'
notice.

4. Bank note payable

On June 30, 2003, $38.1 million was outstanding under the Company's $50 million
unsecured line of credit (the "Loan Agreement"). As a result of a delay until
July 15, 2003 in closing on the purchase of a property for a Sponsored REIT, the
proceeds of the loan are included in cash on the Company's balance sheet at June
30, 2003. Borrowings under the Loan Agreement bear interest at a rate of either
the bank's base rate or a variable LIBOR rate, as defined, which was 4.25% per
annum at June 30, 2003. There were no borrowings outstanding under the Loan
Agreement at December 31, 2002. The Loan Agreement which originally matured on
February 23, 2003, has been extended to August 23, 2003 with no other changes in
terms and conditions.

5. Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted
average number of Company shares outstanding during the period. Diluted net
income per share reflects the potential dilution that could occur if securities
or other contracts to issue shares were exercised or converted into shares.
There were no potential dilutive shares outstanding at or during the periods
ended June 30, 2003 and 2002.

6. Business Segments

The Company operates in two business segments: rental operations and investment
services (including real estate acquisition, financing and broker/dealer
services). The Company has identified these segments because this discrete
information is the basis upon which management makes decisions regarding
resource allocation and performance assessment. The accounting policies of the
reportable segments are the same as those described in the "Significant
Accounting Policies" set forth in Note 2 to the Company's audited financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002. The Company's segments are located in the United States
of America.

The Company evaluates the performance of its reportable segments based on Cash
Available for Distribution ("CAD") as management believes that CAD represents
the most accurate measure of the reportable segment's activity and is the basis
for distributions paid to equity holders. The Company defines CAD as: net income
as computed in accordance with accounting principles generally accepted in the
United States of America ("GAAP"); plus certain non-cash items included in the
computation of net income (depreciation and amortization, certain non-cash
compensation expenses, straight-line rent adjustments and gain or loss
adjustments on the sale of real estate); plus investment services proceeds
received from controlled partnerships; plus the net proceeds from the sale of
surplus land; less purchases of property and equipment ("Capital Expenditures")
and payments for deferred leasing commissions, plus proceeds from (payments to)
cash reserves established at the acquisition date of the property. Depreciation
and amortization, non-cash compensation, straight-line rents adjustments and the
gain or loss adjustment on the sale of real estate are an adjustment to CAD as
these are non-cash items included in net income. Proceeds from the sale of
surplus land, Capital Expenditures, payments of deferred leasing commissions and
the proceeds from (payments to) the funded reserve are an adjustment to CAD as
they represent cash items not reflected in income. CAD should not be considered
as an alternative to net income (determined in accordance with GAAP), as an
indicator of the Company's financial performance, nor as an alternative to cash
flows from operating activities (determined in accordance with GAAP), nor as a
measure of the Company's liquidity, nor is it necessarily indicative of
sufficient cash flow to fund all of the Company's needs. Other real estate
companies may define CAD in a different manner. It is at the Company's
discretion to retain a portion of CAD for operational needs.

The Company believes that in order to facilitate a clear understanding of the
results of the Company, CAD should be examined in connection with net income and
cash flows from operating, investing and financing activities in the
consolidated financial statements.


                                        9
<PAGE>

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

6. Business Segments (continued)

Cash available for distribution by business segment is as follows (in
thousands):

<TABLE>
<CAPTION>
                                        Rental          Investment
                                      Operations         Services           Total
                                    --------------    --------------    --------------
<S>                                 <C>               <C>               <C>
Three Months Ended March 31, 2002

Net Income                          $        4,475    $         (378)   $        4,097
Depreciation and amortization                1,075                71             1,146
Straight line rent                             (54)               --               (54)
Capital expenditures                          (546)               (2)             (548)
Proceeds from funded reserve                   538                --               538
                                    --------------    --------------    --------------
Cash Available for Distribution     $        5,488    $         (309)   $        5,179
                                    ==============    ==============    ==============

Three Months Ended June 30, 2002

Net Income                          $        6,487    $          982    $        7,469
Depreciation and amortization                1,130                37             1,167
Straight line rent                            (961)               --              (961)
Capital expenditures                          (187)               (8)             (195)
Payment of deferred leasing costs             (531)               --              (531)
Proceeds from funded reserve                 1,460                --             1,460
                                    --------------    --------------    --------------
Cash Available for Distribution     $        7,398    $        1,011    $        8,409
                                    ==============    ==============    ==============
</TABLE>


                                       10
<PAGE>

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

6. Business Segments (continued)

Cash Available for Distribution by business segment is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                     Rental          Investment
                                                   Operations         Services           Total
                                                 --------------    --------------    --------------
<S>                                              <C>               <C>               <C>
Six Months Ended June 30, 2002

Net Income                                       $       10,962    $          604    $       11,566
Depreciation and amortization                             2,205               108             2,313
Straight line rent                                       (1,015)               --            (1,015)
Capital expenditures                                       (733)              (10)             (743)
Payment of deferred leasing costs                          (531)               --              (531)
Proceeds from funded reserve                              1,998                --             1,998
                                                 --------------    --------------    --------------
Cash Available for Distribution                  $       12,886    $          702    $       13,588
                                                 ==============    ==============    ==============

Three Months Ended March  31, 2003 (Restated)

Net Income                                       $        6,986    $          302    $        7,288
Depreciation and amortization                               901                30               931
Straight line rent                                          432                --               432
Loss (gain) on sale of property                          (1,421)               --            (1,421)
Capital expenditures                                       (183)               --              (183)
Payment of deferred leasing costs                           (53)               --               (53)
Proceeds from funded reserve                                191                --               191
                                                 --------------    --------------    --------------
Cash Available for Distribution                  $        6,853    $          332    $        7,185
                                                 ==============    ==============    ==============

Three Months Ended June 30, 2003 (Restated)

Net Income                                       $        6,474    $          309    $        6,783
Depreciation and amortization                             1,530               (23)            1,507
Straight line rent                                          208                --               208
Capital expenditures; capitalized merger costs           (1,525)               --            (1,525)
Payment of deferred leasing costs                           (94)               --               (94)
Proceeds from funded reserve                                615                --               615
                                                 --------------    --------------    --------------
Cash Available for Distribution                  $        7,208    $          286    $        7,494
                                                 ==============    ==============    ==============
</TABLE>


                                       11
<PAGE>

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

6. Business Segments (continued)

Cash Available for Distribution by business segment is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                           Rental          Investment
                                                         Operations         Services           Total
                                                       --------------    --------------    --------------
<S>                                                    <C>               <C>               <C>
Six Months Ended June 30, 2003

Net Income                                             $       13,460    $          611    $       14,071
Depreciation and amortization                                   2,431                 7             2,438
Straight line rent                                                640                --               640
Loss (gain) on sale of property                                (1,421)               --            (1,421)
Capital expenditures; capitalized merger costs                 (1,708)               --            (1,708)
Payment of deferred leasing costs                                (147)               --              (147)
Proceeds from funded reserve                                      806                --               806
                                                       --------------    --------------    --------------
Cash Available for Distribution                        $       14,061    $          618    $       14,679
                                                       ==============    ==============    ==============
</TABLE>

The following table is a summary of other financial information by business
segment (in thousands):

<TABLE>
<CAPTION>
                                                           Rental          Investment
                                                         Operations         Services           Total
                                                       --------------    --------------    --------------
<S>                                                    <C>               <C>               <C>
Three Months Ended June 30, 2003 (Restated):
  Revenue                                              $       12,516    $        2,535    $       15,051
  Interest Income                                                  40                19                59
  Interest Expense                                                207                --               207
  Loss from discontinued operations                                (2)               --                (2)
  Capital Expenditures                                          1,525                --             1,525

Total assets at June 30, 2003                          $      565,261    $        6,083    $      571,344

Three Months Ended June 30, 2002:
  Revenue                                              $       10,685    $        3,960    $       14,645
  Interest Income                                                  25                19                44
  Interest Expense                                                291                --               291
  Income from discontinued operations                              56                --                56
  Capital Expenditures                                            187                 8               195

Total assets at June 30, 2002                          $      218,232    $        4,519    $      222,751

Six Months Ended June 30, 2003:
  Revenue                                              $       22,073    $        5,942    $       28,015
  Interest Income                                                  68                40               108
  Interest Expense                                                538                --               538
  Income from discontinued operations                           1,432                --             1,432
  Capital Expenditures                                          1,708                --             1,708

Total assets at June 30, 2003                          $      565,261    $        6,083    $      571,344
</TABLE>


                                       12
<PAGE>

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

6.  Business Segments (continued)

The following table is a summary of other financial information by business
segment (in thousands):

<TABLE>
<CAPTION>
                                          Rental         Investment
                                        Operations        Services          Total
                                      --------------   --------------   --------------
<S>                                   <C>              <C>              <C>
Six Months Ended June 30, 2002:
Revenue                               $       18,603   $        5,737   $       24,340
Interest Income                                   83               35              118
Interest Expense                                 350               --              350
Income from discontinued operations              126               --              126
Capital Expenditures                             733               10              743

Total assets at June 30, 2002         $      218,232   $        4,519   $      222,751
</TABLE>

7. Cash Dividends

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

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

       First Quarter of 2003                     $0.31          $        7,635
       Second Quarter of 2003                    $0.31                   7,636
                                                                --------------
                                                                $       15,271
                                                                ==============

8. Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"). As a REIT, the Company generally is entitled to a
tax deduction for dividends paid to its shareholders, thereby effectively
subjecting the distributed net income of the Company to taxation at the
shareholder level only. The Company must comply with a variety of restrictions
to maintain its status as a REIT. These restrictions include the type of income
it can earn, the type of assets it can hold, the number of shareholders it can
have and the concentration of their ownership, and the amount of the Company's
income that must be distributed annually.

One such restriction is that the Company generally cannot own more than 10% of
the voting power or value of the securities of any one issuer unless the issuer
is itself a REIT or a "taxable REIT subsidiary" ("TRS"). In the case of TRSs,
the Company's ownership of securities in all TRSs generally cannot exceed 20% of
the value of all of the Company's assets and, when considered together with
other non-real estate assets, cannot exceed 25% of the value of all of the
Company's assets. Effective January 1, 2001, a subsidiary of the Company has
elected to be treated as a TRS. As a result, it will be required to pay taxes on
its net income like any other taxable corporation.

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.


                                       13
<PAGE>

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

8. Income Taxes (continued)

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

<TABLE>
<CAPTION>
                                                            For the          For the
                                                          Six Months       Six Months
                                                             Ended           Ended
       (in thousands)                                    June 30, 2003   June 30, 2002
                                                         -------------   -------------
<S>                                                      <C>             <C>
       Federal income tax expense at statutory rate      $         362   $         282
       Increase in taxes resulting from:
          State income taxes, net of federal impact                 63              48
          Other                                                     --            (129)
                                                         -------------   -------------
                                                         $         425   $         201
                                                         =============   =============
</TABLE>

Other consists primarily of the tax benefit on cash bonuses accrued in 2001 but
paid in 2002. Due to the conversion from a partnership into a corporation the
bonus is treated as a permanent tax difference.

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

9. Acquisitions

On June 1, 2003, the Company issued approximately 25 million shares of common
stock, $0.0001 par value per share in exchange for a 100% interest in the
preferred stock of 13 Target REITs it acquired by merger. The results of
operations for each of the Target REITs have been included in the Company's
consolidated financial statements since that date.

The aggregate purchase price was approximately $321.2 million. The value was
determined based upon the fair value of the assets acquired. The following table
summarizes the estimated fair value of the assets acquired at the date of
acquisition:

                                                Value of Assets Acquired
                                                ------------------------
                                                     (in thousands)

       Real estate assets                       $                298,831
       Value of acquired real estate leases                        9,277
       Cash                                                       23,524
       Other assets                                                1,120
       Liabilities assumed                                       (11,580)
       ------------------------------------------------------------------

            Total                               $                321,172
       ==================================================================


                                       14
<PAGE>

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

9. Acquisitions (continued)

Pro forma operating results for the Company and the 13 Target REITs the Company
acquired during 2003 are shown in the following table. The results assume that
the Merger occurred and the shares of the Company's stock were issued on
December 31, 2001 and are not necessarily indicative of what the Company's
actual financial position or results of operations would have been for the
period indicated, nor do they purport to represent the results of operations for
any future period.

<TABLE>
<CAPTION>
                                               For the                 For the
                                          Three Months Ended      Six Months Ended
                                               June 30,                June 30,
                                           2003        2002       2003         2002
                                        --------------------------------------------
                                        (Restated)
<S>                                     <C>         <C>         <C>         <C>
Revenues                                $ 21,939    $ 23,923    $ 46,418    $ 41,692
Expenses                                 (12,468)    (15,893)    (25,271)    (27,272)
Interest income                              104         129         224         262
Taxes on income                             (196)       (201)       (425)       (201)
                                        --------------------------------------------
Net income from continuing operations      9,379       7,958      20,946      14,481
Income from discontinued operations           (2)         --       1,432         126
                                        --------------------------------------------
Net income                              $  9,377    $  7,958    $ 22,378    $ 14,607
                                        ============================================

Weighted average shares outstanding       49,630      49,630      49,630      49,630
                                        ============================================

                                        ============================================
Net income per share                    $   0.19    $   0.16    $   0.45    $   0.29
                                        ============================================
</TABLE>

10. Subsequent Events

The Company declared a dividend of $0.10 per share on July 25, 2003 to
shareholders of record as of July 25, 2003.

The Company had previously, on May 30, 2003, declared a dividend of $0.21 per
share to shareholders of record as of May 30, 2003.

Both of the above dividends were paid on July 29, 2003.


                                       15
<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 the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.
Historical results and percentage relationships set forth in the Consolidated
Statements of Operations contained in the financial statements, including trends
which might appear, should not be taken as necessarily indicative of future
operations. This discussion may also contain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
and Section 27A of the Securities Act of 1933, as amended. For purposes of these
Acts, any statement that is not a statement of historical fact may be deemed a
forward-looking statement. The forward-looking statements found in this
Quarterly Report on Form 10-Q are based on current judgments and current
knowledge of management, which are subject to certain risks, trends and
uncertainties that could cause actual results to differ materially from those
indicated in such forward-looking statements. Accordingly, readers are cautioned
not to place undue reliance on forward-looking statements. Investors are
cautioned that the Company's forward-looking statements involve risks and
uncertainty, including without limitation, changes in economic conditions in the
markets in which the Company owns 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 the Company, changes in government regulations, and
expenditures that cannot be anticipated such as utility rate and usage
increases, unanticipated repairs, additional staffing, insurance increases and
real estate tax valuation reassessments. See the factors set forth below under
the caption, "Certain factors that may affect future results". Although we
believe the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. We will not update any of the forward-looking statements after
the date this quarterly report is filed to conform them to actual results or to
changes in our expectations that occur after such date, other than as required
by law.

Critical Accounting Policies

Basis of Presentation

The consolidated financial statements of the Company include the accounts of the
Company and wholly and majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.

Real Estate Investments

Real estate assets are stated at the lower of depreciated cost or fair value.
The cost of each investment in real estate includes the purchase price of
property, legal fees and other direct acquisition costs. Typical capital
improvements include new roofs, site improvements, various exterior building
improvements and major renovations. Funding for capital improvements typically
is provided by cash reserves.

The acquisition cost of each investment in real estate is allocated between the
value of leases acquired with the property and the real property components,
such as land, buildings and improvements. Acquisition cost allocations are based
upon management's estimates and are typically guided by information received by
independent real estate appraisal firms. Inappropriate allocation of acquisition
costs could result in depreciation and amortization expenses that do not
appropriately reflect the allocation of capital expenditures over future
periods.

The Company periodically reviews its properties to determine if the carrying
amounts will be recovered from future operating cash flows. The evaluation of
anticipated cash flows is highly subjective and is based in part on assumptions
regarding future occupancy, rental rates and capital requirements that could
differ materially from actual results in future periods. Since cash flows on
properties considered to be "long-lived assets to be held and used" as defined
by FAS 144 are considered on an undiscounted basis to determine whether an asset
has been impaired, the Company's established strategy of holding properties over
the long term decreases the likelihood of recording an impairment loss. If the
Company's strategy changes or market conditions otherwise dictate an earlier
sale or disposal date, an impairment loss may be recognized. If the Company
determines that impairment has occurred, the affected assets must be reduced to
their fair value. No such impairment losses have been recognized to date.

The Company classifies a property as "held for sale" upon the execution of a
purchase and sale agreement provided that there are no significant contingencies
to the sale and management believes that the sale or disposition is probable
within one year. The Company reports the results of operations of its properties
classified as discontinued operations in its statements of income if no
significant continuing involvement exists after the sale or disposition.

The Company typically retains a common stock ownership in a Sponsored REIT
following a syndication, and earns an ongoing asset and/or property management
fee; accordingly, transaction fee revenue and the results of operations are not
classified as discontinued operations due to the Company's continuing
involvement.


                                       16
<PAGE>

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

Revenue Recognition

Rental revenue is reported on a straight-line basis over the terms of the
respective leases. Straight-line rent represents rental income earned in excess
of rent payments received pursuant to the terms of the individual lease
agreements.

The Company maintains an allowance against straight-line rent for future
potential tenant credit losses. The credit assessment is based on the estimated
straight-line rental income that is recoverable over the term of the lease. The
computation of this allowance is based on the tenants' payment history and
current credit status. If the Company's estimates of collectibility differ from
the cash received, the timing and amount of its reported revenue would likely be
impacted.

Investment banking services revenue (Syndication and Transaction fees) from the
syndication of Sponsored REITs is recognized pursuant to the provisions of
Statement of Financial Standards No. 66 "Accounting for Sales of Real Estate",
and Statement of Position 92-1 "Accounting for Real Estate Syndication Income".
Revenue is recognized provided the criteria for sale accounting in SFAS 66 are
met.

Depreciation and amortization expense

The Company computes depreciation on its properties using the straight-line
method based on an estimated useful life of 27.5 years for residential property
and 39 years for non-residential property. The Company computes depreciation on
building improvements on an estimated useful life of 15 to 39 years, and on
furniture and fixtures on an estimated useful life of 5-7 years. The Company
computes amortization expense on the value of leases acquired and deferred
leasing costs based upon the remaining life of the related lease. The
determination of the asset's useful life are based on management's estimates.

Repairs and maintenance expenses

Routine replacements and ordinary maintenance and repairs are expensed as
incurred. Typical expense items include residential interior painting,
landscaping, minor carpet replacements and residential appliances. The
determination to expense an item rather than to capitalize and subsequently
depreciate the item is based upon management's judgment of whether the repair
extends the useful life of the asset. Funding for routine replacements, repairs
and maintenance items are typically provided by cash flows from operating
activities.

Trends and Uncertainties

Rental Operations

Primarily due to the Company's acquisition of 13 REITs, average leased rate
increased from 88% for the three months ended March 31, 2003 to 92% for the
three months ended June 30, 2003. The Company does not anticipate a meaningful
increase in rents or leasing activity in the Company's markets until there is
new job growth in the economy. Because the Company's properties are diversified
by property type and by geography, the impact of national and global trends is
different for each of the properties and is difficult to predict.

There were no major lease expirations, terminations or new leases during the
three months ended June 30, 2003 except at Blue Ravine in Folsom, California,
where the sole lease terminated on June 30, 2003 and the building remains
vacant. The Bollman property in Savage, Maryland, which was vacant throughout
the second quarter, was leased in July and is now 100% leased to Maines Paper &
Food Service, Inc.

Home Gold, a tenant occupying approximately 12% of the space in Piedmont Center
in Greenville, South Carolina, filed for bankruptcy protection under Chapter 11
on April 7, 2003. Rent through and including April 2003 has been paid. No rent
has been received for May 2003 through July 2003 and Home Gold has vacated the
premises.

Investment Services

Unlike the Company's real estate business, which provides a rental revenue
stream which is ongoing and recurring in nature, the Company's investment
banking business is transactional in nature.

During the first half of 2003, the Company's acquisition executives continued to
report large spreads between bid and ask prices for properties. Differing views
of the strength and timing of a national economic recovery as well as low
interest rate carrying costs on debt-financed properties are contributing to
this situation. Without the ability to acquire properties at attractive prices
on behalf of the Sponsored REITs, the Company's investment banking activities
may suffer.


                                       17
<PAGE>

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

Trends and Uncertainties (continued)

Investment Services (continued)

The Company relies solely on its in-house investment executives to access
interested investors who have capital they can afford to place in an illiquid
investment in real estate for an indefinite period of time. Setbacks in the
stock market or the general economy could have negative effects. Although
terrorist activity has not significantly affected the Company's transactional
business, further terrorist attacks, if they occur, may have a chilling effect
on the willingness of investors to purchase interests in future Sponsored REITs.

The following table summarizes property wholly owned by the Company, excluding
discontinued operations and real estate assets held for syndication as of the
dates indicated:

                                                         As of
                                                       June 30,
                                                  2003           2002
                                               ---------      ---------
       Residential real estate
             Number of properties                      5              4
             Number of apartments                    996            642

       Commercial real estate
             Number of properties                     24             13
             Square feet                       3,049,357      1,433,200


                                       18
<PAGE>

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

Results of Operations

The following table shows variance in dollars for the three and six months ended
June 30, 2003 and 2002:

<TABLE>
<CAPTION>
                                                                  Variance           Variance
(in thousands)                                                  For the three      For the six
                                                                months ended       months ended
                                                                  June 30,           June 30,
                                                                2003 and 2002     2003 and 2002
                                                               --------------    --------------
                                                                (Restated)
<S>                                                            <C>               <C>
Rental operations
  Rental income                                                $        3,303    $        2,740
  Transaction income                                                   (1,608)              (21)
  Sponsored REIT income                                                   517               869
  Other                                                                    53               297
                                                               --------------    --------------
      Total rental operations                                           2,265             3,885
                                                               --------------    --------------
Investment services
  Syndication income                                                   (1,805)             (330)
  Transaction income                                                      (54)              120
                                                               --------------    --------------
      Total investment services                                        (1,859)             (210)
                                                               --------------    --------------
Total revenue                                                             406             3,675
                                                               --------------    --------------

Rental operations
  Selling, general and administrative                                     161                36
  Rental operating expenses                                               786               878
  Depreciation and amortization                                           459               312
  Real estate taxes and insurance                                         546               641
  Sponsored REIT expense                                                  350               624
  Interest Expense                                                        (84)              188
                                                               --------------    --------------
      Total rental operations                                           2,218             2,679
                                                               --------------    --------------
Investment Services Expenses
  Selling, general and administrative                                    (205)             (207)
  Commission expense                                                     (899)             (129)
  Depreciation and amortization                                           (60)             (101)
                                                               --------------    --------------
      Total investment services                                        (1,164)             (437)
                                                               --------------    --------------
Total expenses                                                          1,054             2,242
                                                               --------------    --------------

Interest income                                                            15               (10)
Taxes on income                                                             5              (224)
                                                               --------------    --------------
Income from continuing operations                                        (628)            1,199

Income from discontinued operations                                       (58)             (115)
Gain on sale of real estate from discontinued operations                   --             1,421
                                                               --------------    --------------

Net income                                                     $         (686)   $        2,505
                                                               ==============    ==============
</TABLE>


                                       19
<PAGE>

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

Comparison of the three months ended June 30, 2003 to the three months ended
June 30, 2002:

The Company completed the syndication of one Sponsored REIT with total gross
proceeds of $55.5 million in the three months ended June 30, 2003, a decrease of
$5.1 million compared to total gross proceeds of $60.6 million in the comparable
period in 2002 from the syndication of two Sponsored REITs. Of the $55.5
million, $32.4 million was syndicated in the three months ended June 30, 2003
and $23.1million was syndicated in the three months ended March 31, 2003.

On June 1, 2003 the Company completed the acquisition by merger of 13 Sponsored
REITs. The results of operations for these 13 properties are included in the
results for the period for one month. The Company operated 17 properties for the
three months ended June 30, 2002 and for two months of the three month period
ended June 30, 2003. The results of operations for one property that was sold in
2003 have been classified as discontinued operations for both periods.

Revenue

Total revenues increased $0.4 million, or 2.8%, to $15.0 million for the three
months ended June 30, 2003, as compared to $14.6 million for the comparable
period in 2002.

Income from rental operations was $12.5 million for the three months ended June
30, 2003, an increase of $2.3 million, or 22%, compared to the three months
ended June 30, 2002. The increase is attributable to:

      o     Rental revenue of $3.9 million for the 13 properties acquired by the
            Company in June, 2003;
      o     Routine rent increases of $0.8 million in the aggregate; and
      o     Sponsored REIT income of $0.5 million as a result of the Company is
            owning a percentage of a Sponsored REIT for a greater period of time
            in 2003 than the comparable period of 2002.

These increases were offset by:

      o     A decrease in rents of $0.2 million due to a vacancy in 2003;
      o     An adjustment for straight-line rent revenue of $1.2 million,
            relating to new or renewed leases since June 30, 2002; and
      o     A decrease in transaction fees of $1.6 million relating to the
            decrease in the gross proceeds from the syndication of sponsored
            REITs as discussed above.

Investment banking services revenue was $2.5 million for the three months ended
June 30, 2003, a decrease of $1.8 million, or 72%, compared to the three months
ended June 30, 2002. This decrease is attributable to the decrease in gross
proceeds from the syndication of Sponsored REITs as discussed above.

Expenses

Total expenses were $8.1 million for the three months ended June 30, 2003, an
increase of $1.0 million, or 15%, compared to the three months ended June 30,
2002.

Expenses for rental operations were $6.1 million for the three months ended June
30, 2003, a net increase of $2.2 million, or 57%, compared to the three months
ended June 30, 2002. The increase is attributable to:

      o     Rental expenses of $1.5 million for the 13 properties acquired by
            the Company in June, 2003;
      o     An increase in real estate taxes and insurance of $0.4 million, as a
            result of tax rate increases on the existing properties and
            increases in the price of obtaining insurance; and
      o     An increase of $0.3 million of Sponsored REIT expenses and as a
            result of the Company owning a percentage of a Sponsored REIT in
            2003 for a greater period of time in 2003 than the comparable period
            in 2002.

Expenses for investment banking services were $2.0 million for the three months
ended June 30, 2003, a net decrease of $1.2 million, or 36%, compared to the
three months ended June 30, 2002. The decrease is primarily attributable to a
decrease in commission expenses relating to the decrease in syndication fees
discussed above.

Interest income and taxes on income for the three month period ended June 30,
2003 were consistent with the comparable period of 2002.


                                       20
<PAGE>

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

Comparison of the six months ended June 30, 2003 to the six months ended June
30, 2002:

The Company completed the syndication of two Sponsored REITs with total gross
proceeds of $85.3 million in the six months ended June 30, 2003 a decrease of
$0.3 million compared to total gross proceeds of $85.6 million in the comparable
period in 2002 from the syndication of two Sponsored REITs.

On June 1, 2003 the Company completed the acquisition by merger of 13 Sponsored
REITs. The results of operations for these 13 properties are included in the
results for the period for one month. The Company operated 17 properties for the
six months ended June 30, 2002 and for three months of the six month period
ended June 30, 2003. The results of operations for one property that was sold in
2003 have been classified as discontinued operations for both periods.

Revenue

Total revenue increased $3.7 million, or 15%, to $28.0 million for the six
months ended June 30, 2003, as compared to $24.3 million for the comparable
period in 2002.

Income from rental operations was $22.1 million for the six months ended June
30, 2003, an increase of $3.9 million, or 21%, compared to the six months ended
June 30, 2002. The increase is attributable to:

      o     Rental revenue of $3.9 million for the 13 properties acquired by the
            Company in June, 2003.
      o     An increase in Sponsored REIT income of $0.9 million as a result of
            the Company is owning a percentage of a Sponsored REIT for a greater
            period of time in 2003 than the comparable period in 2002; and
      o     An increase in other income of $0.3 million primarily representing
            interest related to loans to the Sponsored REITs that were
            outstanding for a longer period of time in 2003 than the comparable
            period of 2002.

These increases were offset by:

      o     A decrease in rents of $0.3 million due to a vacancy in 2003; and
      o     A net decrease in rental revenue of $0.8 million comprised of an
            increase in rental revenue of $0.8 million offset by a decrease in
            straight-line rent revenue of $1.6 million, relating to new or
            renewed leases since June 30, 2002.

Investment banking services revenue was $5.9 million for the six months ended
June 30, 2003; a decrease of $0.2 million, or 72%, compared to the six months
ended June 30, 2002. This decrease is attributable to the decrease in gross
syndication proceeds as discussed above.

Expenses

Total expenses were $15.1 million for the six months ended June 30, 2003, an
increase of $2.2 million, or 17%, compared to the six months ended June 30,
2002.

Expenses for rental operations were $10.1 million for the six months ended June
30, 2003, a net increase of $2.7 million, or 36%, compared to the six months
ended June 30, 2002. The increase is attributable to:

      o     Rental expenses of $1.5 million for the 13 properties acquired by
            the Company in June, 2003;
      o     An increase in rental operating expenses of $0.2 million is
            primarily attributable to a miscellaneous increase in maintenance
            costs over the comparable period in 2002;
      o     An increase in real estate taxes and insurance of $0.1 million, as a
            result of tax rate increases on the existing properties and
            increases in the price of obtaining insurance;
      o     An increase of $0.6 million of Sponsored REIT expenses as a result
            of the Company is owning a percentage of a Sponsored REIT in 2003
            for a greater period of time in 2003 than the comparable period in
            2002; and
      o     An increase in interest expense of $0.2 million for loans related to
            the to the Sponsored REITs that were outstanding for a longer period
            of time in 2003 than the comparable period in 2002.


                                       21
<PAGE>

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

Expenses (continued)

Expenses for investment banking services were $5.0 million for the six months
ended June 30, 2003, a decrease of $0.4 million, or 31%, compared to the six
months ended June 30, 2002. The decrease is primarily attributable to a decrease
in commission expenses relating to the decrease in syndication fees discussed
above and overall cost management.

Interest income for the six-month period ended June 30, 2003 was consistent with
the comparable period of 2002.

Taxes on income were $0.4 million for the six moths ended June 30, 2003, an
increase of $0.2 million compared to the six months ended June 30, 2002. The
taxes for 2002 on the taxable REIT subsidiary included certain benefits that
will not occur in the future. The Company expects a tax rate of approximately
41% for the taxable REIT subsidiary for 2003.

Liquidity and Capital Resources

Cash and cash equivalents were $89.3 million and $22.3 million at June 30, 2003
and December 31, 2002, respectively. This increase of $67.0 million is
attributable to $15.2 million provided by operating activities; $28.9 million
provided by investing activities; and $22.9 million provided by financing
activities.

Operating Activities

The cash provided by the Company's operating activities of $15.2 million is
primarily attributable to net income of $14.1 million plus the add-back of $1.0
million from non-cash activity plus a $0.3 million net change in operating
assets and liabilities, less payments for deferred leasing costs of $0.1
million.

Investing Activities

The Company's cash provided by investing activities of $28.9 million is
attributable to $23.5 million in cash acquired as a result of the issuance of
stock in the merger transaction, $6.2 million proceeds from the sale of assets
and $0.8 million for a return of a deposit on real estate investments offset by
$1.7 million used for the purchase of real estate assets (including $1.0 million
of capitalized merger costs), office computers and furniture.

Financing Activities

The Company's cash provided by financing activities of $22.9 million is
attributable to $38.1 million proceeds from a loan, offset by $15.3 million
distributions to the Company's shareholders as dividends.

Sources and Uses of Funds

Our principal demands for liquidity are cash for operations, dividends to equity
holders, debt repayments and expenses associated with indebtedness. As of June
30, 2003 we had approximately $59 million in liabilities. The Company has no
permanent, long-term debt. In the near term, liquidity is generated from funds
from ongoing real estate operations and transaction fees and commissions
received in connection with the sale of shares in new Sponsored REITs.

The Company maintains an unsecured line of credit through Citizens Bank. The
Company has entered into a Master Promissory Note and Loan Agreement ("loan
agreement"), which provides for a revolving line of credit of up to $50 million.
The loan agreement originally expired February 23, 2003, but has been extended
to August 23, 2003 with no changes in terms and conditions. The Company intends
to renew the loan agreement prior to expiration. Borrowings under the loan bear
interest at either the bank's base rate or a variable LIBOR rate. The Company
typically uses the unsecured line of credit to provide each newly formed
Sponsored REIT with the funds to purchase a property. The Company's loan
agreement with the bank includes customary restrictions on property liens and
requires compliance with various financial covenants. Financial covenants
include maintaining minimum cash balances in operating accounts, tangible net
worth of at least $140 million and compliance with other various debt and income
ratios. The Company was in compliance with all covenants as of June 30, 2003.
The Company had $38.1 million of borrowings under its revolving credit facility
as of June 30, 2003.

Contingencies

The Company is subject to various legal proceedings and claims which arise in
the ordinary course of its business. Although occasional adverse decisions (or
settlements) may occur, the Company believes that the final disposition of such
matters will not have a material adverse effect on the financial position or
results of operations of the Company.


                                       22
<PAGE>

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

Related Party Transactions

During the second quarter of 2003, the Company organized one Sponsored REIT and
retained a non-controlling common stock interest in this Sponsored REIT with
virtually no economic benefit. The Company did not enter into any other
significant transactions with related parties during the quarter ended June 30,
2003. For a discussion of transactions between the Company and related parties
during 2002, see "Related Party Transactions" under Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations - of
the Company's Annual Report on Form 10-K for the year ended December 31, 2002.

Economic Conditions

The Company generally pays the ordinary annual operating expenses of its
properties from the rental revenue generated by the properties. For the six
months ended June 30, 2003, with the exception of the Bollman property in
Savage, Maryland, which was vacant for the six months ended June 30, 2003, the
rental income exceeded the expenses for each of the Company's real properties.
The Company expects that Bollman will produce sufficient revenue to cover its
expenses during the third and fourth quarters of 2003. In addition to rental
income, the Company maintains cash reserves that may be used to fund unusual
expenses or major capital improvements. The cash reserves included in cash and
cash equivalents, which as of June 30, 2003 were approximately $15 million, are
in excess of the known needs for extraordinary expenses or capital improvements
for the real properties within the next few years. There are no external
restrictions on these reserves, and they may be used for any Company purpose.

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

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

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

As a result of its acquisition of 13 REITs, FSP Corp. may no longer qualify as a
REIT.

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

FSP Corp. would incur adverse tax consequences if it failed to qualify as a
REIT.

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


                                       23
<PAGE>

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

The anticipated benefits of FSP Corp.'s acquisition of the 13 REITs may not be
realized and FSP Corp's operating results may be adversely affected.

FSP Corp. acquired the 13 REITs in June 2003 with the expectation that the
mergers would result in benefits, including:

      o     FSP Corp.'s real estate portfolio would be substantially larger and
            more diverse both geographically and by tenant business than prior
            to the consummation of the mergers, reducing the dependence of an
            investment in FSP Corp. on the performance of a smaller group of
            assets.

      o     FSP Corp.'s business would generate a greater percentage of its
            revenues from rentals from real properties and a lesser percentage
            from real estate investment banking/brokerage activities,
            constituting a more stable income stream than that received by FSP
            Corp. prior to the consummation of the mergers.

      o     FSP Corp.'s larger portfolio of real estate would produce economies
            of scale, increase its purchasing power relating to goods and
            services and reduce the percentage that expenses constitute of gross
            revenue.

      o     FSP Corp.'s increased asset base would give it the flexibility to
            increase its $50,000,000 line of credit, enabling FSP Corp. to
            finance the acquisition of real property for itself or to provide
            larger loans to Sponsored REITs to finance their acquisition of real
            property.

      o     FSP Corp.'s larger portfolio of real properties and larger equity
            capitalization might increase the likelihood that FSP Corp. may
            eventually be able to provide liquidity for its equity investors
            through the public markets.

Achieving the benefits of the mergers will depend in part on the sustainability
of long-term tenants in the real properties owned by FSP Corp. and the ability
of FSP Corp.'s key personnel to effectively manage the additional 13 properties.
If the occupancy levels and creditworthiness of tenants are not maintained, FSP
Corp. will not achieve the intended benefits of the mergers and the operating
results of FSP Corp. may be adversely affected.

If FSP Corp. is not able to collect sufficient rents from each of its owned real
properties, FSP Corp. may suffer significant operating losses.

A substantial portion of FSP Corp.'s revenues will be generated by the rental
income of its real properties. If the additional properties acquired by FSP
Corp. in the mergers or the properties owned by FSP Corp. prior to the
consummation of the mergers do not provide FSP Corp. a steady rental income, FSP
Corp.'s revenues will decrease and may cause FSP Corp. to incur operating losses
in the future.

The mergers may affect the level of dividends received by FSP Corp.'s
stockholders.

The mergers may affect the level of dividends made to FSP Corp.'s stockholders.
The level of dividends after the consummation of the mergers may be lower than
the level of dividends FSP Corp.'s stockholders received with respect to their
common stock prior to the consummation of the mergers due to the dilution of
their percentage ownership incurred upon consummation of the mergers. Regardless
of the initial level of FSP Corp.'s dividends immediately following consummation
of the mergers, they could decline in the future to a level at which FSP Corp.'s
stockholders could receive lower dividends than they received prior to the
consummation of the mergers. Moreover, because FSP Corp.'s investment banking
business is transactional in nature, there is no predictable recurring level of
revenue for such activities. As a result of this, the amount of cash available
for distribution may fluctuate, which may result in FSP Corp.'s not being able
to maintain growth in dividend levels in the future.

The real properties held by FSP Corp. may significantly decrease in value.

FSP Corp. owns 29 properties following the consummation of the mergers. Some or
all of these properties may decline in value. To the extent FSP Corp.'s real
properties decline in value, its stockholders could lose some or all the value
of their investments.


                                       24
<PAGE>

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

If FSP Corp.'s line of credit is substantially increased, FSP Corp. may borrow
more than it is capable of reasonably repaying.

One expected benefit from the mergers is that FSP Corp.'s increased asset base
should give FSP Corp. the flexibility to increase its $50,000,000 line of
credit, enabling FSP Corp. to finance the acquisition of real property for
itself or to provide larger loans to Sponsored REITs to finance their
acquisition of real property. However, if FSP Corp. borrows heavily against any
increased line of credit, FSP Corp. may experience difficulties repaying such
line of credit, particularly if FSP Corp.'s cash flows are substantially reduced
for any reason. An increased line of credit may create a greater likelihood that
FSP Corp. will not be able to sustain its debt obligations under such line of
credit and cause a default thereunder.

FSP Corp. faces risks in continuing to attract investors for  Sponsored REITs.

FSP Corp.'s investment banking business continues to depend upon its ability to
attract purchasers of equity interests in Sponsored REITs. FSP Corp.'s 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 FSP Corp.'s ability to expand the investor pool for the Sponsored
REITs by identifying new potential investors. Moreover, FSP Corp.'s investment
banking business may be impacted to the extent existing Sponsored REITs incur
losses or have operating results that fail to meet investors' expectations. FSP
Corp. expects that its investment banking business will account for a smaller
percentage of its overall revenue on a going forward basis due to the expected
increase in the percentage of revenues derived from rents as a result of its
acquisition of 13 REITs.

FSP Corp. faces risks in owning and operating real property.

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

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

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

FSP Corp. faces risks from tenant defaults or bankruptcies.

If any of FSP Corp.'s tenants defaults on its lease, FSP Corp. may experience
delays in enforcing its rights as a landlord and may incur substantial costs in
protecting its investment. In addition, at any time, a tenant of one of FSP
Corp.'s 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 FSP Corp.'s stockholders.

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

When leases expire, FSP Corp. 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 FSP Corp. is unable to re-lease space
promptly, if the terms are significantly less favorable than anticipated or if
the costs are higher, FSP Corp. may have to reduce its distributions to its
stockholders.

FSP Corp. faces risks from geographic concentration.

The properties in FSP Corp.'s portfolio are distributed among the major
geographic segments by aggregate square footage to be owned by FSP Corp., as
follows: Southwest - 28%; Northeast - 30%; Midwest - 19%; West - 15%; and
Southeast - 8%. However, within certain of those segments, a large concentration
exists within a particular city and its immediately surrounding area;
specifically, Houston, Texas - 21% and Washington, DC - 13%. FSP Corp. is likely
to face risks to the extent that any of these areas suffer deteriorating
economic conditions.


                                       25
<PAGE>

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

FSP Corp. competes with national, regional and local real estate operators and
developers, which could adversely affect FSP Corp.'s cash flow.

Competition exists in every market in which FSP Corp.'s properties are located
and in every market in which FSP Corp.'s properties will be located. FSP Corp.
competes 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 FSP Corp.'s properties, which could
adversely affect FSP Corp.'s cash flow from operations and its ability to make
expected distributions to its stockholders. Some of FSP Corp.'s competitors may
have more resources than FSP Corp. 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. The extent to which FSP Corp. is
affected by competition will depend in significant part on local market
conditions.

There is limited potential for an increase in leased space gains in FSP Corp.'s
properties.

FSP Corp. anticipates that future increases in revenue from its properties will
be primarily the result of scheduled rental rate increases or rental rate
increases as leases expire. Those properties with higher rates of vacancy are
located in soft economic markets so that it may be difficult to realize
increases in revenue when vacant space is re-leased. To the extent that the
properties of FSP Corp. continue to operate profitably, this will likely
stimulate new development of competing properties.

FSP Corp. will be subject to possible liability relating to environmental
matters, and FSP Corp. cannot assure you that it has 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.

Each REIT acquired by FSP Corp. in June 2003 had previously obtained a Phase I
environmental assessment for the property held by it at the time of the acquired
REITs acquisition of such property. FSP Corp. (through its subsidiaries) has
been involved in the operation of each such property since that acquisition, and
is not aware of any material changes to the environmental conditions at any of
the properties held by the acquired REITs since their acquisition. However, FSP
Corp. cannot assure you that any environmental assessments of the acquired
REITs' properties that have been provided to it have revealed all potential
environmental liabilities, that any prior owner or operator of the properties
did not create any material environmental condition not known to FSP Corp. or
the acquired REIT, or that an environmental condition does not otherwise exist
as to any one or more of the properties that could have a material adverse
effect on FSP Corp.'s financial condition or results of operations.

In addition, FSP Corp. cannot assure you that:

      o     future laws, ordinances or regulations will not impose any material
            environmental liability;
      o     the current environmental conditions of FSP Corp.'s and the acquired
            REITs' respective 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 FSP Corp. or the acquired REITs;
      o     the current environmental conditions of the acquired REITs'
            properties will not be affected by mold or other environmental
            pollutants that could affect indoor air quality;
      o     tenants will not violate their leases by introducing hazardous or
            toxic substances into FSP Corp.'s properties that could expose FSP
            Corp. 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 FSP Corp.'s properties and pose a threat to human health.


                                       26
<PAGE>

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

FSP Corp. will be subject to compliance with the Americans With Disabilities Act
and fire and safety regulations which could require FSP Corp. to make
significant capital expenditures.

All of FSP Corps. properties are required to comply with the Americans With
Disabilities Act, and the regulations, rules and orders that may be issued
thereunder (the "ADA"). 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, FSP Corp. will be required to operate its 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 FSP Corp.'s properties. Compliance with such requirements may require FSP
Corp. to make substantial capital expenditures, which expenditures would reduce
cash otherwise available for distribution to its stockholders.

The property held by each acquired REIT was inspected for compliance with the
ADA at the time of acquisition of such property and was found to be in material
compliance. FSP Corp. (through its subsidiaries) has been involved in the
operation of each such property since that acquisition, and is not aware of any
alterations to the properties that were not made in compliance with the ADA.

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

Under FSP Corp.'s redemption plan, it is only obligated to use its best efforts
to redeem shares of its common stock from stockholders wishing to have them
redeemed. There are significant conditions to FSP Corp.'s obligation to redeem
shares of its common stock including:

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

Any redemption effected by FSP Corp. under this plan would result in the
stockholders tendering shares of FSP common stock receiving 90% of the fair
market value, as determined by FSP Corp.'s Board of Directors in its sole and
absolute discretion, of such shares and not their full fair market value.

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

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

FSP Corp.'s stockholders may experience greater risks relating to
diversification of portfolios following the mergers.

The assets and liabilities of the acquired REITs and of FSP Corp. were combined
as a result of the mergers. As a result of the mergers, the geographic diversity
of the properties in which FSP Corp.'s stockholders own an interest changed.
However, because the market for real estate may vary widely from one region of
the country to another, the change in geographic diversity may expose FSP Corp.
stockholders to different and greater risks than those to which they were
previously exposed.

Provisions in FSP Corp.'s organizational documents may prevent changes in
control.

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


                                       27
<PAGE>

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

Provisions in FSP Corp.'s organizational documents may prevent changes in
control. (continued)

Ownership Limits. In order for FSP Corp. to maintain its qualification as a real
estate investment trust, the holders of common stock will be limited to owning,
either directly or under applicable attribution rules of the Internal Revenue
Code, no more than 9.8% of the lesser of the value or the number of equity
shares of FSP Corp., and no holder of common stock will be able to acquire or
transfer shares that would result in FSP Corp. being beneficially owned by fewer
than 100 persons. Such ownership limit may have the effect of preventing an
acquisition of control of FSP Corp. without the approval of FSP Corp.'s Board of
Directors. Moreover, FSP Corp. will have the right to redeem any shares of its
common stock that are acquired or transferred in violation of these provisions
at the market price. In addition, the Articles give FSP Corp.'s 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. FSP Corp.'s Board of Directors is divided into three classes.
The terms of these classes will expire in 2004, 2005 and 2006, respectively.
Directors of each class are elected for a three-year term upon the expiration of
the initial term of each class. The staggered terms for directors may affect the
stockholders' ability to effect a change in control of FSP Corp. even if a
change in control were in the stockholders' best interests.

Preferred Stock. The Articles authorize FSP Corp.'s Board of Directors to issue
up to 20,000,000 shares of preferred stock, par value $.0001 per share (the
"Preferred Stock"), 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 of FSP Corp. even if a change in control were
in the stockholders' best interest.

Increase of Authorized Stock. FSP Corp.'s 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 FSP
Corp. has 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 of FSP Corp. even if a change in control were in the
stockholders' best interest.

Amendment of Bylaws. FSP Corp.'s Board of Directors has the sole power to amend
the Bylaws. This power could have the effect of delaying or preventing a change
in control of FSP Corp. even if a change in control were in the stockholders'
best interests.

Stockholder Meetings. The 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. The 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
of FSP Corp. even if a change in control were in the best interests of the
stockholders.

Supermajority Votes Required. The Articles 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 the Articles 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 the Articles to impose cumulative voting in the election of
directors. These provisions could have the effect of delaying or preventing a
change in control of FSP Corp. even if a change in control were in the
stockholders' best interest.

There is no public trading market for FSP Corp.'s securities.

There is no public trading market for FSP Corp.'s common stock. FSP Corp. cannot
assure you that any market will develop or that there will be any liquidity in a
market for its common stock.


                                       28
<PAGE>

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company was not a party to any derivative financial instruments at or during
the year ended December 31, 2002 or during the six months ended June 30, 2003.

The Company draws from time to time on its line of credit. These borrowings bear
interest at a variable rate. The Company uses the funds it draws on its line of
credit for the purpose of making interim mortgage loans to Sponsored REITs.
These mortgage loans bear interest at the same variable rate payable by the
Company under its line of credit. Therefore, the Company believes that it has
mitigated its interest rate risk with respect to its borrowings.

Item 4. Controls and Procedures.

The Company's management, with the participation of the Company's President and
Chief Executive Officer and the Company's Vice President and Chief Operating
Officer (equivalent of Chief Financial Officer), evaluated the effectiveness of
the Company's disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) as of June 30, 2003. Based on this
evaluation, the Company's President and Chief Executive Officer and the
Company's Vice President and Chief Operating Officer (equivalent of Chief
Financial Officer) concluded that, as of June 30, 2003, the Company's disclosure
controls and procedures were (1) designed to ensure that material information
relating to the Company, including the Company's consolidated subsidiaries, is
made known to the Company's President and Chief Executive Officer and the
Company's Vice President and Chief Operating Officer (equivalent of Chief
Financial Officer) by others within these entities, particularly during the
period in which this report was being prepared and (2) effective, in that they
provide reasonable assurance that information required to be disclosed by the
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.

No change to the Company's internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the
fiscal quarter ended June 30, 2003 that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.


                                       29
<PAGE>

                           PART II - OTHER INFORMATION

Item 1.     Legal Proceedings:

            Not applicable.

Item 2.     Changes in Securities and Use of Proceeds:

            On June 1, 2003, the Registrant issued approximately 25,000,091
            shares of common stock, $0.0001 par value per share (the "Common
            Stock"), to the holders of preferred stock (the "Target Stock") of
            13 real estate investment trusts (the "Target REITs") it acquired by
            merger (the "Mergers").

            Upon consummation of the Mergers, each share of Target Stock in the
            Target REITs was converted into that number of shares of the
            Registrant's Common Stock as set forth below opposite the name of
            the applicable Target REIT. The Registrant issued the shares of its
            Common Stock to the holders of Target Stock in private placements,
            exempt from registration under Section 4(2) of the Securities Act of
            1933, as amended and Rule 506 of Regulation D promulgated
            thereunder. Fractional shares of Common Stock were issued by the
            Registrant.

                                                                Total Shares of
                                   Shares of Registrant       Registrant Common
                                  Common Stock Issuable       Stock Issuable to
                                   in Exchange for Each          Holders of
                 Target REIT      Share of Target Stock         Target Stock
                 -----------      ---------------------         ------------
            Forest Park                  7,299.59                 569,368.02
            The Gael                     6,975.59               1,482,312.88
            Goldentop                    7,302.58               1,690,547.27
            Centennial                   6,905.56               1,091,078.48
            Meadow Point                 6,983.25               1,798,186.88
            Timberlake                   6,787.12               3,495,366.80
            Federal Way                  6,779.66               1,355,932.00
            Fair Lakes                   6,805.36               3,266,572.80
            Northwest Point              6,779.66               2,525,423.35
            Timberlake East              6,830.85               1,707,712.50
            Merrywood                    6,854.51               1,412,029.06
            Plaza Ridge I                6,822.03               2,728,812.00
            Park Ten                     6,824.54               1,876,748.50
                                                                ------------
                            Total                              25,000,090.54

Item 3.     Defaults Upon Senior Securities:

            Not applicable.


                                       30
<PAGE>

                           PART II - OTHER INFORMATION
                                   (continued)

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

            On May 30, 2003, the Registrant held a Special Meeting of
            Stockholders for the purpose of approving an Agreement and Plan of
            Merger, dated January 14, 2003, by and among the Registrant and 13
            real estate investment trusts. The following table sets forth the
            number of votes cast for, withheld and abstained for the proposal.

                    For                 Withheld                     Abstain
                    ---                 --------                     -------
                20,687,933               79,648                      24,431

            On June 30, 2003, the Registrant held its 2003 Annual Meeting of
            Stockholders (the "2003 Annual Meeting"). The 2003 Annual Meeting
            was called for the following purposes: (1) to elect two Class II
            directors to serve until the 2006 annual meeting and (2) to transact
            such other business as may properly come before the meeting or any
            adjournment thereof.

            The following table sets forth the names of the directors elected at
            the 2003 Annual Meeting for new three-year terms and the number of
            votes cast for and withheld for each director:

               Directors                   For        Withheld Authority to Vote
               ---------                   ---        --------------------------

            Barbara J. Corinha          34,824,655            308,108
            Barry Silverstein           34,824,655            308,108

            The names of each of the other directors whose terms of office
            continued after the 2003 Annual Meeting are as follows: George J.
            Carter, Dennis J. McGillicuddy, Richard R. Norris and Janet P.
            Notopolous.

Item 5.     Other Information:

            Not applicable.


                                       31
<PAGE>

                           PART II - OTHER INFORMATION
                                   (continued)

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

      (a)   Exhibit 31.1 - Certification by the Registrant's President and Chief
            Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
            of 2002.

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

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

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

      (b)   Reports on Form 8-K.

            1.    On April 14, 2003, the Registrant filed a Current Report on
                  Form 8-K to report that PricewaterhouseCoopers, LLP, the
                  Company's independent accountants, had declined to stand for
                  re-election.

            2.    On May 8, 2003, the Registrant filed a Current Report on Form
                  8-K to report that it had engaged Ernst & Young, LLP as its
                  independent accountants.

            3.    On June 1, 2003, the Registrant filed a Current Report on Form
                  8-K to report the completion of its acquisition of 13 real
                  estate investment trusts.

            4.    On June 6, the Registrant filed a Current Report on Form 8-K
                  to report that the Company's President and Chief Executive
                  Officer had delivered a letter to stockholders relating to
                  management's authorization to research the feasibility of
                  listing the Company's common stock on a major U.S. exchange or
                  the NASDAQ electronic market.


                                       32
<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


May 26, 2004       By: /s/ George J. Carter      Chief Executive Officer and
                       --------------------      Director (Principal Executive
                       George J. Carter          Officer)


May 26, 2004       By: /s/ Lloyd S. Dow          Controller
                       --------------------      (Principal Accounting Officer)
                       Lloyd S. Dow


                                       33