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

                                   FORM 10 - Q

  (Mark One)

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

            For the quarterly period ended June 30, 2005

                                       OR

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

            For the transition period  _________ to __________.

                         Commission File Number: 0-32615


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


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


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

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

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

      YES     |X|                                 NO     |_|

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

      YES     |X|                                 NO     |_|

The number of shares of common stock outstanding as of July 29, 2005 was
60,525,608.
<PAGE>

                        Franklin Street Properties Corp.

                                    Form 10-Q

                                Quarterly Report
                                  June 30, 2005

                                Table of Contents


Part I. Financial Information

                                                                            Page
      Item 1. Financial Statements

              Consolidated Balance Sheets as of June 30, 2005 and
              December 31, 2004 .............................................  3

              Consolidated Statements of Income for the three and six months
              ended June 30, 2005 and 2004...................................  4

              Consolidated Statements of Cash Flows for the six months ended
              June 30, 2005 and 2004.........................................  5

              Notes to Consolidated Financial Statements................... 6-16

      Item 2. Management's Discussion and Analysis of Financial Condition
              and Results of Operations................................... 17-30

      Item 3. Quantitative and Qualitative Disclosures about Market Risk ...  31

      Item 4. Controls and Procedures ......................................  32

Part II. Other Information

      Item 1. Legal Proceedings ............................................  33

      Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ..  33

      Item 3. Defaults upon Senior Securities ..............................  33

      Item 4. Submission of Matters to a Vote of Security Holders ..........  34

      Item 5. Other Information ............................................  34

      Item 6. Exhibits .....................................................  35

Signatures    ..............................................................  36
<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 shares and par value amounts)                                        2005             2004
=====================================================================================================================

<S>                                                                                     <C>               <C>
Assets:

Real estate investments, at cost:
     Land                                                                               $  90,997         $  71,267
     Buildings and improvements                                                           518,956           404,830
     Fixtures and equipment                                                                   885               885
---------------------------------------------------------------------------------------------------------------------
                                                                                          610,838           476,982
     Less accumulated depreciation                                                         42,583            37,227
---------------------------------------------------------------------------------------------------------------------

Real estate investments, net                                                              568,255           439,755

Acquired real estate leases, net of accumulated amortization of
   $4,919 and $3,020, respectively                                                         23,549             6,483
Investment in non-consolidated REITs                                                        4,215             4,270
Assets held for syndication                                                                53,646            59,246
Asset held for sale                                                                         4,766                --
Cash and cash equivalents                                                                  51,475            52,752
Restricted cash                                                                             1,326             1,033
Tenant rent receivables, less allowance for doubtful accounts of
    $350 and $350, respectively                                                               679               769
Straight-line rent receivables, less allowance for doubtful accounts of
   $460 and $460, respectively                                                              5,506             4,947
Prepaid expenses                                                                            1,264               901
Other assets                                                                                1,359             1,097
Office computers and furniture, net of accumulated depreciation of
   $668 and $597, respectively                                                                304               374
Deferred leasing commissions, net of accumulated amortization of
   $1,084 and $873, respectively                                                            1,584             1,484
---------------------------------------------------------------------------------------------------------------------

      Total assets                                                                      $ 717,928         $ 573,111
=====================================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Bank note payable                                                                       $  53,213         $  59,439
Accounts payable and accrued expenses                                                      10,640             8,846
Accrued compensation                                                                          940               705
Tenant security deposits                                                                    1,326             1,033
---------------------------------------------------------------------------------------------------------------------

     Total liabilities                                                                     66,119            70,023
---------------------------------------------------------------------------------------------------------------------

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, 60,525,608 and 49,630,338 issued and outstanding                            6                 5
     Additional paid-in capital                                                           677,397           512,813
     Treasury stock, 898 and 575 shares, respectively                                         (16)              (10)
     Distributions in excess of earnings                                                  (25,578)           (9,720)
---------------------------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                                           651,809           503,088
---------------------------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                                         $ 717,928         $ 573,111
=====================================================================================================================
</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 Ended              Six Months Ended
                                                                  June 30,                       June 30,
-----------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)                    2005           2004            2005           2004
=================================================================================================================

<S>                                                       <C>            <C>            <C>            <C>
Revenue:
     Rental                                               $ 21,748       $ 17,564       $ 38,982       $ 36,439
Related party revenue:
     Syndication fees                                        1,603          5,407          4,122          8,448
     Transaction fees                                        1,595          5,193          4,038          8,742
     Management fees and interest income from loans            481            124          1,451            253
Other                                                           --             11             13             16
-----------------------------------------------------------------------------------------------------------------

             Total revenue                                  25,427         28,299         48,606         53,898
-----------------------------------------------------------------------------------------------------------------

Expenses:
     Real estate operating expenses                          4,528          3,576          8,067          6,942
     Real estate taxes and insurance                         2,902          2,279          5,239          4,729
     Depreciation and amortization                           4,621          3,544          8,160          6,843
     Selling, general and administrative                     1,741          1,606          3,567          3,294
     Commissions                                               867          2,767          2,191          4,287
     Interest                                                  788            253          1,743            517
-----------------------------------------------------------------------------------------------------------------

       Total expenses                                       15,447         14,025         28,967         26,612
-----------------------------------------------------------------------------------------------------------------

Income before interest income, equity in earnings of
   non-consolidated REITs and taxes on income                9,980         14,274         19,639         27,286
Interest income                                                367            127            597            363
Equity in earnings of non-consolidated REITs                   302              6            968            385
-----------------------------------------------------------------------------------------------------------------

Income before taxes on income                               10,649         14,407         21,204         28,034
Income tax expense                                              70            648            114            976
-----------------------------------------------------------------------------------------------------------------

Income from continuing operations                           10,579         13,759         21,090         27,058
Loss from discontinued operations                              (70)           (83)          (158)          (163)
Estimated loss on asset held for sale                       (1,055)            --         (1,055)            --
-----------------------------------------------------------------------------------------------------------------

Net income                                                $  9,454       $ 13,676       $ 19,877       $ 26,895
=================================================================================================================

Weighted average number of shares outstanding,
     basic and diluted                                      56,815         49,630         53,242         49,627
=================================================================================================================

Net income from continuing operations                     $   0.19       $   0.28       $   0.39       $   0.54
Loss from discontinued operations                               --             --             --             --
Estimated loss on asset held for sale                        (0.02)            --          (0.02)            --
-----------------------------------------------------------------------------------------------------------------
Net income per share, basic and diluted                   $   0.17       $   0.28       $   0.37       $   0.54
=================================================================================================================
</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)                                                                                           2005              2004
====================================================================================================================================

<S>                                                                                                   <C>               <C>
Cash flows from operating activities:
   Net income                                                                                         $  19,877         $ 26,895
   Adjustments to reconcile net income to net cash provided by  operating activities:
      Estimated loss on asset held for sale                                                               1,055               --
      Depreciation and amortization expense                                                               8,230            6,697
      Amortization of above market lease                                                                    887              118
      Sponsored REIT income during consolidation                                                             --             (441)
      Equity in earnings from non-consolidated REITs                                                       (968)            (385)
      Distributions from non-consolidated REITs                                                             980              773
      Shares issued as compensation                                                                          31              162
  Changes in operating assets and liabilities:
     Restricted cash                                                                                       (293)             (46)
     Tenant rent receivables, net                                                                            90              251
     Straight-line rents, net                                                                              (724)            (854)
     Operations of assets held for syndication, net                                                      (1,295)              --
     Prepaid expenses and other assets, net                                                                (843)            (201)
     Accounts payable and accrued expenses                                                               (1,144)           2,952
     Accrued compensation                                                                                   235              272
     Tenant security deposits                                                                               293               46
     Payment of deferred leasing commissions                                                               (311)            (252)
------------------------------------------------------------------------------------------------------------------------------------

        Net cash provided by operating activities                                                        26,100           35,987
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
      Cash acquired through issuance of common stock in merger transaction                               10,621               --
      Purchase of real estate assets, office computers and furniture                                     (1,928)            (619)
      Merger costs paid                                                                                    (402)              --
      Investment in non-consolidated REITs                                                                   43           (4,248)
      Investment in assets held for syndication, net                                                      6,265            4,117
------------------------------------------------------------------------------------------------------------------------------------

      Net cash provided by (used) for investing activities                                               14,599             (750)
------------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
      Distibutions to stockholders                                                                      (35,734)         (30,767)
      Purchase of treasury shares                                                                           (16)            (146)
      Repayments under bank note payable, net                                                            (6,226)          (4,117)
------------------------------------------------------------------------------------------------------------------------------------

      Net cash used for financing activities                                                            (41,976)         (35,030)
------------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                                                     (1,277)             207

Cash and cash equivalents, beginning of period                                                           52,752           58,793
------------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                                              $  51,475         $ 59,000
====================================================================================================================================

Supplemental disclosure of cash flow information:
    Cash paid for:
      Interest                                                                                        $   1,795         $    517
      Income taxes                                                                                    $     406         $  1,020
    Non-cash investing and financing activities:
      Assets acquired through issuance of common stock in merger transaction, net                     $ 153,943         $     --
</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. ("FSP Corp." or the "Company") holds, directly
and indirectly, 100% of the interest in FSP Investments LLC, FSP Property
Management LLC, and FSP Holdings LLC. The Company also has a non-controlling
common stock interest in twelve corporations organized to operate as real estate
investment trusts ("REITs").

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

On April 30, 2005, the Company acquired four real estate investment trusts (the
"Target REITs"), by the merger of the four Target REITs with and into four of
the Company's wholly-owned subsidiaries. Upon the consummation of these mergers,
the Company issued 10,894,994 shares of common stock to holders of preferred
stock in these Target REITs.

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

Properties

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

                                                                  As of
                                                                June 30,
                                                           2005           2004
                                                        ---------      ---------
      Residential real estate
             Number of properties                               4              4
             Number of apartments                             837            837

      Commercial real estate
             Number of properties                              28             24
             Square feet                                3,952,011      3,049,357

Basis of Presentation

The unaudited consolidated financial statements of the Company include all the
accounts of the Company and its wholly and majority owned subsidiaries. All
significant intercompany balances and transactions have been eliminated. These
financial statements should be read in conjunction with the Company's financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for its fiscal year ended December 31, 2004, as filed with the Securities
and Exchange Commission.

The accompanying interim financial statements are unaudited; however, the
financial statements have been prepared in accordance with 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. Operating results for the three and six months ended June 30, 2005 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2005 or for any other period.


                                       6
<PAGE>

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

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

Reclassifications

Certain balances in the interim 2004 financial statements have been reclassified
to conform to presentation contained in the Company's Annual Report on Form 10-K
for its fiscal year ended December 31, 2004. The reclassifications primarily
were related to Sponsored REIT income and expenses. Prior to December 31, 2004
the Company presented its proportionate share of Sponsored REIT's revenues and
expenses and has since reclassified those amounts to consolidate the real estate
operations activity from inception of the Sponsored REIT until the initiation of
syndication upon which the equity method of accounting is applied. These
reclassifications changed rental revenues, operating and maintenance expenses,
depreciation and amortization, other income and equity in earnings of
non-consolidated REITs. There was no change to income from continuing operations
or net income for any period presented as a result of these reclassifications.

2.    Investment Banking/Investment Services Activity

During the six months ended June 30, 2005, the Company sold on a best efforts
basis, through private placements, preferred stock in the following Sponsored
REITs:

<TABLE>
<CAPTION>
                                                                    Date Syndication     Gross Proceeds
      Sponsored REIT                        Property Location       Completed            (in thousands) (1)
      -------------------------------------------------------------------------------------------------------

      <S>                                   <C>                     <C>                    <C>
      FSP 505 Waterford Corp.               Plymouth, MN            January 28, 2005           3,000

      FSP Galleria North Corp.              Dallas, TX                                        58,250(2)
                                                                                          -------------

                                            Total                                          $  61,250
                                                                                          =============
</TABLE>

      1.    The syndication of FSP 505 Waterford Corp. and FSP Galleria North
            Corp. commenced in the fourth quarter of 2004.

      2.    The syndication of FSP Galleria North Corp. was not complete at June
            30, 2005. This amount represents the gross proceeds syndicated
            during the six months ended June 30, 2005.

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

Investment in Sponsored REITs

At June 30, 2005, the Company held a common stock interest in twelve Sponsored
REITs. Ten were fully syndicated and the Company no longer derives economic
benefits or risks from the common stock interest that is retained in them. The
Company also holds a preferred stock investment in one of these Sponsored REITs,
FSP Blue Lagoon Corp., from which it continues to derive economic benefit and
risk. The remaining two Sponsored REITs were not fully syndicated and have a
value of approximately $53.6 million on the accompanying consolidated balance
sheets and are classified as assets held for syndication.

The table below shows the Company's share of income and expenses from Sponsored
REITs prior to consolidation. Management fees of $24,000 and $13,000 for the six
months ended June 30, 2005 and 2004, respectively; and interest expenses are
eliminated in consolidation.


                                       7
<PAGE>

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

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

                                                            Six Months Ended
      (unaudited)                                               June 30,
      (in thousands)                                        2005         2004
                                                            ----         ----

      Operating Data:
      Rental revenues                                     $ 2,469      $ 1,372
      Operating and maintenance expenses                     (720)        (422)
      Depreciation and amortization                          (795)        (220)
      Interest expense                                       (605)        (290)
      Interest income                                           6           14
                                                          --------     --------
                                                          $   355      $   454
                                                          ========     ========

Equity in earnings of investment in non-consolidated REITs:

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

                                                             Six Months Ended
      (unaudited)                                                June 30,
      (in thousands)                                         2005        2004
                                                             ----        ----

      Equity in earnings of Sponsored REITs                  $ 841      $ 292
      Equity in earnings of Blue Lagoon                        127         93
                                                            -------    -------
                                                             $ 968      $ 385
                                                            =======    =======

Equity in earnings of investments in Sponsored REITs is derived from the
Company's share of income following the commencement of syndication of Sponsored
REITs. Following the commencement of syndication the Company exercises influence
over, but does not control these entities and investments are accounted for
using the equity method. Equity in earnings of Blue Lagoon is derived from the
Company's preferred stock investment in the entity, which was acquired in
January 2004.

The Company recorded distributions declared or received of $980,000 and $773,000
from non-consolidated Sponsored REITs during the six months ended June 30, 2005
and 2004, respectively.

The Company has in the past acquired by merger entities similar to the Sponsored
REITs. On April 30, 2005, the Company acquired four Sponsored REITs (the Target
REITs) by merger. The Company's business model for growth may include the
potential acquisition by merger in the future of Sponsored REITs. The Company
has no legal or any other enforceable obligation to acquire or to offer to
acquire any Sponsored REIT. In addition, any offer (and the related terms and
conditions) that might be made in the future to acquire any Sponsored REIT would
require the approval of the boards of directors of the Company and the Sponsored
REIT and the approval of the shareholders of the Sponsored REIT.


                                       8
<PAGE>

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

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

At June 30, 2005, December 31, 2004 and June 30, 2004, the Company had ownership
interests in twelve, fifteen and nine Sponsored REITs, respectively.

Summarized financial information for these non-consolidated Sponsored REITs is
as follows:

                                                    June 30,        December 31,
                                                  ------------------------------
                                                      2005              2004
                                                  ------------------------------
                                                          (in thousands)
      Balance Sheet Data (unaudited):
      Real estate, net                             $  345,009       $  350,030
      Other assets                                     47,754           47,001
      Total liabilities                               (41,577)         (75,372)
                                                   ----------       ----------
      Shareholders equity                          $  351,186       $  321,659
                                                   ==========       ==========

                                                              For the
                                                         Six Months Ended
                                                              June 30,
                                                        2005           2004
                                                    --------------------------
                                                          (in thousands)
      Operating Data (unaudited):
      Rental revenue                                $   27,721     $  13,043
      Other revenue                                        559           170
      Operating and maintenance expenses               (10,657)       (4,558)
      Depreciation and amortization                     (5,240)       (2,585)
      Interest expense and commitment fees              (2,730)       (8,250)
                                                    -----------    ----------
      Net income (loss)                             $    9,653     $  (2,180)
                                                    ==========     ==========

Syndication fees and Transaction fees:

The Company provides syndication and real estate acquisition advisory services
for Sponsored REITs. Syndication and transaction fees from non-consolidated
entities amounted to approximately $8,160,000 and $17,190,000 for the six months
ended June 30, 2005 and 2004, respectively.

Management fees and interest income from loans:

Asset management fees range from 1% to 5% of collected rents and the applicable
contracts are cancelable with 30 days notice. Asset management fee income from
non-consolidated entities amounted to approximately $396,000 and $242,000 for
the six months ended June 30, 2005 and 2004, respectively. The Company is
typically entitled to interest on funds advanced to Sponsored REITs. The Company
recognized interest income of approximately $1,056,000 and $12,000 for the six
months ended June 30, 2005 and 2004, respectively, relating to these loans.


                                       9
<PAGE>

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

4.    Merger Transactions

On April 30, 2005, the Company issued 10,894,994 shares of common stock, $0.0001
par value per share, in exchange for all of the outstanding preferred stock of
the Target REITs. The results of operations for each of Target REIT have been
included in the Company's consolidated financial statements since May 1, 2005.

The aggregate purchase price was approximately $164,564,000. On the acquisition
date, for each Sponsored REIT, the increase between the appraised value of the
property and the historical cost of the property was allocated to real estate
investments and leases, including lease origination costs. Lease origination
costs represent the value associated with acquiring an in-place lease (i.e. the
market cost to execute a similar lease, including leasing commission, legal,
vacancy, and other related costs). The value assigned to buildings approximates
their replacement cost; the value assigned to land approximates its appraised
value; and the value assigned to leases approximates their fair value. Other
assets and liabilities are recorded at their historical costs, which
approximates fair value. The following table summarizes the estimated fair value
of the assets acquired at the date of acquisition:

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

      Real estate assets                               $   137,687
      Value of acquired real estate leases                  18,965
      Cash                                                  10,621
      Other assets                                             229
      Liabilities assumed                                   (2,938)
                                                       -----------
         Total                                         $   164,564
                                                       ===========

Pro forma operating results for the Company and the Target REITs are shown in
the following table. The results assume that the mergers occurred and the shares
of the Company's stock were issued on January 1, 2004 and are not necessarily
indicative of what the Company's actual results of operations would have been
for the period indicated, nor do they purport to represent the results of
operations of any future period.

<TABLE>
<CAPTION>
                                                    For Three Months Ended          For Six Months Ended
(unaudited)                                                June 30,                       June 30,
(in thousands except per share amounts)              2005          2004              2005          2004
                                                  --------------------------    --------------------------

<S>                                                <C>         <C>               <C>            <C>
Revenue                                            $  27,003   $   33,207        $   54,894     $ 64,252
                                                  --------------------------    --------------------------
Net income                                         $   9,995   $   15,276        $   22,523     $ 30,978
                                                  ==========================    ==========================

Weighted average shares outstanding                   60,527       60,525            60,526       60,522
                                                  ==========================    ==========================

Net income per share                               $    0.17   $     0.25        $     0.37     $   0.51
                                                  ==========================    ==========================
</TABLE>


                                       10
<PAGE>

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

5.    Bank Note Payable

The Company has a revolving line of credit agreement (the "Loan Agreement") with
a group of banks providing for borrowings at the Company's election of up to
$125,000,000. Borrowings under the Loan Agreement bear interest at either the
bank's base rate (6.25% at June 30, 2005) or at a LIBOR plus 125 basis points
(4.55% at June 30, 2005), as defined. The balance outstanding was $53,213,000
and $59,439,000 at June 30, 2005 and December 31, 2004, respectively. The
weighted average interest rate on amounts outstanding during the six months
ended June 30, 2005 was 4.91% and for the year ended December 31, 2004 was
approximately 3.62%.

The Loan Agreement includes restrictions on property liens and requires
compliance with various financial covenants. Financial covenants include the
maintenance of at least $1,500,000 in operating cash accounts, a minimum
tangible net worth and compliance with various debt and operating income ratios,
as defined in the Loan Agreement. The Company was in compliance with the Loan
Agreement's financial covenants as of June 30, 2005 and December 31, 2004. The
Loan Agreement matures on August 18, 2005, however, the Company has received a
commitment letter from the bank for a three year agreement maturing in August
2008 with substantially the same terms.

6.    Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted
average number of Company shares outstanding during the period. Diluted net
income per share reflects the potential dilution that could occur if securities
or other contracts to issue shares were exercised or converted into shares.
There were no potential dilutive shares outstanding at June 30, 2005 and 2004.

7.    Business Segments

The Company operates in two business segments: real estate operations (including
real estate leasing, interim acquisition financing and asset/property
management) and investment banking/investment services (including real estate
acquisition and broker/dealer services). The Company has identified these
segments because this information is the basis upon which management makes
decisions regarding resource allocation and performance assessment. The
accounting policies of the reportable segments are the same as those described
in the "Significant Accounting Policies" in Note 2 to the Company's consolidated
financial statements included in its Annual Report on Form 10-K for the year
ended December 31, 2004. The Company's operations are located in the United
States of America.

The Company evaluates the performance of its reportable segments based on
several measures including Cash Available for Distribution ("CAD") as management
believes that CAD represents an important measure of the reportable segment's
activity and is an important consideration in determining 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"); excluding gains or losses on the sale of real estate and non-cash
income from Sponsored REITs; plus certain non-cash items included in the
computation of net income (depreciation and amortization and straight-line rent
adjustments); plus distributions received from Sponsored REITs; plus the net
proceeds from the sale of land; less purchases of property and equipment
("Capital Expenditures") and payments for deferred leasing commissions, plus
proceeds from (payments to) cash reserves established at the acquisition date of
the property. Depreciation and amortization, gain or loss on the sale of real
estate and straight-line rents are an adjustment to CAD, as these are non-cash
items included in net income. Capital expenditures, payments of deferred leasing
commissions and the proceeds from (payments to) the funded reserve are an
adjustment to CAD, as they represent cash items not reflected in net income.

The funded reserve represents funds that the Company has set aside in
anticipation of future capital needs. These reserves are typically used for the
payment of capital expenditures, deferred leasing commissions and certain tenant
allowances; however, there are no legal restrictions on their use and they may
be used for any Company purpose. CAD should not be considered as an alternative
to net income (determined in accordance with GAAP), as an indicator of the
Company's financial performance, nor as an alternative to cash flows from
operating activities (determined in accordance with GAAP), nor as a measure of
the Company's liquidity, nor is it necessarily indicative of sufficient cash
flow to fund all of the Company's needs. Other real estate companies may define
CAD in a different manner. It is at the Company's discretion to retain a portion
of CAD for operational needs. We believe that in order to facilitate a clear
understanding of the results of the Company, CAD should be examined in
connection with net income and cash flows from operating, investing and
financing activities in the consolidated financial statements.


                                       11
<PAGE>

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

7.    Business Segments (continued)

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

<TABLE>
<CAPTION>
                                                                 Investment
                                                                  Banking/
(in thousands)                                  Real Estate      Investment
                                                 Operations       Services         Total
                                                -----------      ----------     -----------

<S>                                               <C>              <C>           <C>
Three Months Ended March 31, 2005
Net Income                                        $ 10,346         $   77        $ 10,423
Equity in income of non-consolidated REITs            (665)            --            (665)
Distributions from non-consolidated REITs              599             --             599
Depreciation and amortization                        3,598             34           3,632
Straight line rent                                    (307)            --            (307)
Capital Expenditures                                  (327)            --            (327)
Payment of deferred leasing costs                      (95)            --             (95)
Proceeds from funded reserves                          422             --             422
                                                  --------         ------        --------

Cash Available for Distribution                   $ 13,571         $  111        $ 13,682
                                                  ========         ======        ========

Three Months Ended June 30, 2005
Net Income                                        $  9,362         $   92        $  9,454
Estimated loss on sale of property                   1,055             --           1,055
Equity in income of non-consolidated REITs            (303)            --            (303)
Distributions from non-consolidated REITs              381             --             381
Depreciation and amortization                        5,448             37           5,485
Straight line rent                                    (417)            --            (417)
Capital Expenditures                                (1,601)            --          (1,601)
Payment of deferred leasing costs                     (216)            --            (216)
Proceeds from funded reserves                        1,817             --           1,817
                                                  --------         ------        --------

Cash Available for Distribution                   $ 15,526         $  129        $ 15,655
                                                  ========         ======        ========

Six Months Ended June 30, 2005
Net Income                                        $ 19,708         $  169        $ 19,877
Estimated loss on sale of property                   1,055             --           1,055
Equity in income of non-consolidated REITs            (968)            --            (968)
Distributions from non-consolidated REITs              980             --             980
Depreciation and amortization                        9,046             71           9,117
Straight line rent                                    (724)            --            (724)
Capital Expenditures                                (1,928)            --          (1,928)
Payment of deferred leasing costs                     (311)            --            (311)
Proceeds from funded reserves                        2,239             --           2,239
                                                  --------         ------        --------

Cash Available for Distribution                   $ 29,097         $  240        $ 29,337
                                                  ========         ======        ========
</TABLE>


                                       12
<PAGE>

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

7.    Business Segments (continued)

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

<TABLE>
<CAPTION>
                                                                 Investment
                                                                  Banking/
(in thousands)                                  Real Estate      Investment
                                                 Operations       Services         Total
                                                -----------      ----------     -----------

<S>                                               <C>              <C>            <C>
Three Months Ended March 31, 2004
Net Income                                        $ 12,739         $   480        $ 13,219
Sponsored REIT income during consolidation            (247)             --            (247)
Equity in income of non-consolidated REITs            (379)             --            (379)
Distributions from non-consolidated REITs              582              --             582
Depreciation and amortization                        3,235              24           3,259
Straight line rent                                    (340)             --            (340)
Capital Expenditures                                  (100)            (17)           (117)
Payment of deferred leasing costs                     (151)             --            (151)
Proceeds from funded reserves                          251              --             251
                                                  --------         -------        --------

Cash Available for Distribution                   $ 15,590         $   487        $ 16,077
                                                  ========         =======        ========

Three Months Ended June 30, 2004
Net Income                                        $ 12,780         $   896        $ 13,676
Sponsored REIT income during consolidation              --              --              --
Equity in income of non-consolidated REITs            (182)             --            (182)
Distributions from non-consolidated REITs              173              --             173
Depreciation and amortization                        3,501              55           3,556
Straight line rent revenue                            (514)             --            (514)
Capital expenditures                                  (430)            (72)           (502)
Payment of deferred leasing costs                     (101)             --            (101)
Payments to (proceeds from) funded reserve             531              --             531
                                                  --------         -------        --------

Cash Available for Distribution                   $ 15,758         $   879        $ 16,637
                                                  ========         =======        ========

Six Months Ended June 30, 2004

Net Income                                        $ 25,519         $ 1,376        $ 26,895
Sponsored REIT income during consolidation            (247)             --            (247)
Equity in income of non-consolidated REITs            (561)             --            (561)
Distributions from non-consolidated REITs              755              --             755
Depreciation and amortization                        6,736              79           6,815
Straight line rent revenue                            (854)             --            (854)
Capital expenditures                                  (530)            (89)           (619)
Payment of deferred leasing costs                     (252)             --            (252)
Payments to (proceeds from) funded reserve             782              --             782
                                                  --------         -------        --------

Cash Available for Distribution                   $ 31,348         $ 1,366        $ 32,714
                                                  ========         =======        ========
</TABLE>


                                       13
<PAGE>

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

7.    Business Segments (continued)

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

<TABLE>
<CAPTION>
                                                                  Investment
                                                      Real         Banking/
                                                     Estate       Investment
                                                   Operations      Services        Total
      ------------------------------------------------------------------------------------
                                                                (in thousands)

<S>                                                 <C>             <C>           <C>
      Three Months Ended June 30, 2005:
           Revenue                                  $ 23,626        $1,801        $ 25,427
           Interest income                               360             7             367
           Interest expense                              788            --             788
           Loss from discontinued operations              70            --              70
           Capital expenditures                        1,601            --           1,601

      Six Months Ended June 30, 2005:
           Revenue                                  $ 43,968        $4,638        $ 48,606
           Interest income                               582            15             597
           Interest expense                            1,743            --           1,743
           Loss from discontinued operations             158            --             158
           Capital expenditures                        1,928            --           1,928

      Identifiable Assets at June 30, 2005:         $714,065        $3,863        $717,928


      Three Months Ended June 30, 2004:
           Revenue                                  $ 22,478        $5,822        $ 28,300
           Interest income                               122             5             127
           Interest expense                              253            --             253
           Loss from discontinued operations              83            --              83
           Capital expenditures                          431            71             502

      Six Months Ended June 30, 2004:
           Revenue                                  $ 44,314        $9,584        $ 53,898
           Interest income                               342            21             363
           Interest expense                              517            --             517
           Loss from discontinued operations             163            --             163
           Capital expenditures                          530            89             619

      Identifiable Assets at June 30, 2004:
           Identifiable assets                      $518,313        $5,513        $523,826
</TABLE>


                                       14
<PAGE>

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

8.    Cash Distributions

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

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

      First quarter of 2005                 $  0.31           $ 15,385
      Second quarter of 2005                $  0.41           $ 20,349

      First quarter of 2004                 $  0.31           $ 15,382
      Second quarter of 2004                $  0.31           $ 15,385

The second quarter distribution was paid on April 29, 2005 to shareholders of
record on April 19, 2005, in anticipation of the consummation of the acquisition
of four REITs by merger on April 30, 2005, and was in respect of the first four
months of operations in 2005.

9.    Income Taxes

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

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

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

The income tax expense reflected in the consolidated statements of income
relates only to the TRS. The expense differs from the amounts computed by
applying the Federal statutory rate of 34% to income before income taxes as
follows:

                                                                  For the
                                                             Six Months Ended
                                                                  June 30,
                                                            ------------------
      (in thousands)                                         2005        2004
                                                            ------------------

      Federal income tax expense at statutory rate          $   96      $  823
      Increase in taxes resulting from:
          State income taxes, net of federal impact             18         153
                                                            ------      ------
                                                            $  114      $  976
                                                            ======      ======

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


                                       15
<PAGE>

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

10.   Discontinued Operations

During June 2005 an agreement was reached to sell a property called Blue Ravine,
which is located in Folsom, California. The sale was completed on July 13, 2005
and resulted in a loss of approximately $1,055,000, which was recorded during
the three months ended June 30, 2005 as an estimated loss on an asset held for
sale. The property had been vacant since mid-2003 and had operating expenses of
approximately $70,000 and $83,000 for the three months ended June 30, 2005 and
2004, respectively and $158,000 and $163,000 for the six months ended June 30,
2005 and 2004, respectively. The offer to purchase the property was compared to
estimated future costs to convert the property from a single tenant to a
multi-tenant facility and lease the building. The Company concluded that
accepting the offer was the more prudent decision because the management time
and oversight of such a conversion outweighed the potential future benefit. The
Company will continue to evaluate its portfolio, and from time-to-time may
decide to dispose of properties.

11.   Subsequent Events

On July 6, 2005 the Company borrowed approximately $42 million under its Loan
Agreement. The Company used the borrowed funds to make an interim mortgage loan
for a property located in Indiana.

On July 13, 2005 the Company completed the sale of Blue Ravine for approximately
$4.7 million. Proceeds were applied to the outstanding balance on the Loan
Agreement.

On July 27, 2005 the Company received a commitment letter from its bank group
committing to increase its line of credit to $150,000,000 and extending its
maturity to August, 2008 at substantially the same terms and covenants as the
current facility. The Company expects the loan agreement to be finalized in
August 2005.

On July 29, 2005, the Board of Directors of the Company declared a cash dividend
of $0.21 per share of common stock payable on August 29, 2005 to stockholders of
record on August 8, 2005. The cash dividend represents two months of operations.
The Company's past practice is to declare quarterly cash dividends representing
three months of operations. However, on April 19, 2005, in anticipation of the
consummation of the acquisition of four REITs by merger on April 30, 2005, the
Company declared a dividend in respect of the first four months of operations in
2005. The dividend declared by the Company on July 29, 2005 is therefore in
respect of the remaining two months in the second quarter of 2005.


                                       16
<PAGE>

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

      The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report and in our
Annual Report on Form 10-K for the year ended December 31, 2004. Historical
results and percentage relationships set forth in the consolidated financial
statements, including trends which might appear, should not be taken as
necessarily indicative of future operations. The following discussion and other
parts of this Quarterly Report on Form 10-Q may also contain forward-looking
statements based on current judgments and current knowledge of management, which
are subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those indicated in such forward looking
statements. Accordingly, readers are cautioned not to place undue reliance on
forward-looking statements. Investors are cautioned that our forward-looking
statements involve risks and uncertainty, including without limitation changes
in economic conditions in the markets in which we own properties, changes in the
demand by investors for investment in Sponsored REITs, risks of a lessening of
demand for the types of real estate owned by us, changes in government
regulations, and expenditures that cannot be anticipated such as utility rate
and usage increases, unanticipated repairs, additional staffing, insurance
increases and real estate tax valuation reassessments. See the factors set forth
below under the caption, "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 of this Quarterly Report on Form 10-Q is filed to
conform them to actual results or to changes in our expectations that occur
after such date, other than as required by law.

Overview

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

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

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

Critical Accounting Policies

      We have certain critical accounting policies that are subject to judgments
and estimates by our management and uncertainties of outcome that affect the
application of these policies. We base our estimates on historical experience
and on various other assumptions we believe to be reasonable under the
circumstances. On an on-going basis, we evaluate our estimates. In the event
estimates or assumptions prove to be different from actual results, adjustments
are made in subsequent periods to reflect more current information. The
accounting policies that we believe are most critical to the understanding of
our financial position and results of operations, and that require significant
management estimates and judgments, are discussed in Item 7, Management's
Discussion and Analysis of Financial Conditions and Results of Operations in our
Annual Report on Form 10-K for the year ended December 31, 2004.

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

      No changes to our critical accounting policies have occurred since our
Annual Report on Form 10-K for the year ended December 31, 2004.


                                       17
<PAGE>

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

Trends and Uncertainties

Real Estate Operations

      The trends in our office markets have remained consistent across the last
few quarters with slow employment growth leading to slow improvement in
occupancy and an almost imperceptible improvement in market rents. While market
rents for new leases may be increasing in some areas, the new market rents are
generally lower than expiring rents in most of our markets, particularly for
those leases that were made at the height of the market four to five years ago.
We expect to continue to see a decrease in rents to market rents for leases at
our properties that expire during the rest of the year unless there is dramatic
improvement in market fundamentals.

      Our apartment properties are beginning to see improving market conditions,
despite recent competition from condominiums in addition to the usual
competition from other apartments and new homes. If the improvement continues,
we expect it will first manifest itself in higher occupancy and lower rent
concessions, before there is any significant increase in rental rates.

      The uncertainty surrounding utility prices in the larger economy creates
uncertainty about our future utility costs. Although many of our leases pass
through the cost of utilities to the tenants, higher utility prices would
increase our overall operating costs.

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

                                                               June 30,
                                                      -----------------------
                                                         2005          2004

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

     Commercial:
       Number of properties                                  28            24
       Square footage                                 3,952,011     3,049,357

Investment Banking/Investment Services

      Unlike our real estate operations business, which provides a rental
revenue stream which is ongoing and recurring in nature, our investment
banking/investment services business is transactional in nature. Both the number
of Sponsored REIT syndications and the amount of equity anticipated to be raised
for the balance of 2005 are likely to be below our 2004 levels. Future business
in this area is very unpredictable.

      Our property acquisition executives are concerned about continued high
valuation levels for prime commercial investment real estate in 2005. It appears
that a combination of factors, including relatively low interest rates, a
growing general economy and a substantial increase to capital allocation for
real estate assests is increasing prices on many properties we would have an
interest in acquiring. This upward pressure on prices is causing capitalization
rates to fall and prices per square foot to rise. Consequently, our acquisition
executives are having a difficult time identifying enough property during 2005
at a price acceptable under our investment criteria to grow our overall
investment banking/investment services business. Lower revenues from this
business continue to reduce the cash available for distribution to stockholders
as dividends. As the third quarter of 2005 begins, valuation levels for many top
quality investment properties remain at historically high levels, with
significant competition from a variety of capital sources to acquire them. Lower
capitalization rates on properties acquired for investment syndication mean
lower initial cash flow yields for potential equity investors in our Sponsored
REITs. Consequently we experienced slower sales of these investments to our
clients and prospective clients. We expect this trend to continue for the
balance of 2005. We continue to rely solely on our in-house investment
executives to access interested investors who have capital they can afford to
place in an illiquid position for an indefinite period of time (i.e., invest in
a Sponsored REIT). We also continue to evaluate our in-house sales force, as to
whether we are capable, either through our existing client base or through new
clients, of raising sufficient investment capital in Sponsored REITs to achieve
future performance objectives.


                                       18
<PAGE>

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

Results of Operations

      The following table shows each segment for the three months ended June 30,
2005 and 2004.

<TABLE>
<CAPTION>
(in thousands)
                                                                  Three months ended June 30,
                                                            --------------------------------------
Real Estate Operations                                         2005           2004         Change
                                                               ----           ----         ------
<S>                                                         <C>            <C>            <C>
Real estate:
   Rental income                                            $ 21,748       $ 17,564       $ 4,184
   Transaction fees                                            1,397          4,778        (3,381)
   Management fees and interest income from loans                481            125           356
        Other                                                     --             11           (11)
                                                            -------------------------------------
                                                              23,626         22,478         1,149
                                                            -------------------------------------
Expenses:
   Real estate operating expenses                              4,528          3,576           952
   Real estate taxes and insurance                             2,902          2,279           623
   Depreciation and amortization                               4,585          3,489         1,096
   Interest                                                      788            253           535
                                                            -------------------------------------
                                                              12,803          9,597         3,206
                                                            -------------------------------------
Other items:
   Interest income                                               360            122           238
   Equity in earnings in non-consolidated REIT's                 302              6           296
                                                            -------------------------------------
                                                                 662            128           534
                                                            -------------------------------------

Contribution from real estate                                 11,485         13,009        (1,523)
                                                            -------------------------------------

Investment Banking/Investment Services:
   Syndication fees                                            1,603          5,407        (3,804)
   Transaction fees                                              198            415          (217)
                                                            -------------------------------------
                                                               1,801          5,822        (4,021)
                                                            -------------------------------------
Expenses:
   Depreciation and amortization                                  36             55           (19)
   Commissions                                                   867          2,767        (1,900)
                                                            -------------------------------------
                                                                 903          2,822        (1,919)
                                                            -------------------------------------
Other items:
   Interest income                                                 7              5             2
   Taxes on income                                               (70)          (648)          578
                                                            -------------------------------------
                                                                 (63)          (643)          580
                                                            -------------------------------------

Contribution from investment banking/investment services         835          2,357        (1,522)
                                                            -------------------------------------

Selling, general and administrative expenses                   1,741          1,607          (134)
                                                            -------------------------------------

Loss from discontinued operations                                 70             83           (13)
Loss on sale of asset                                          1,055             --         1,055
                                                            -------------------------------------

   Net income                                               $  9,454       $ 13,676       $(4,222)
                                                            =====================================
</TABLE>

      On April 30, 2005 we completed the acquisition by merger of four Sponsored
REITs. The results of operations for these four properties are included in our
operating results as of May 1, 2005. We operated 28 properties for the first
four months of 2005 and 32 properties for May and June 2005. During the three
and six months ended June 30, 2004, we operated 28 properties. Increases in
rental revenues and expenses for the three and six months ended June 30, 2005 as
compared to the three and six months ended June 30, 2004 are primarily a result
of these mergers.


                                       19
<PAGE>

Comparison of the three months ended June 30, 2005 to the three months ended
June 30, 2004

      Total revenues decreased $2.9 million, or 10.1%, to $25.4 million for the
three months ended June 30, 2005, as compared to $28.3 million for the three
months ended June 30, 2004. Total expenses were $15.4 million for the three
months ended June 30, 2005; an increase of $1.4 million, or 10.1%, compared to
the three months ended June 30, 2004. The decrease in revenues was primarily
attributable to a decrease in revenue from our investment banking/investment
services business that was partially offset by increases in rental revenue as a
result of the mergers described above. The increase in total expenses was
primarily attributable to an increase in real estate expenses associated with
these mergers.

      During the three months ended June 30, 2005 our investment
banking/investment services segment had total gross proceeds of $24.3 million,
which included proceeds from the continuing syndication of FSP Galleria North
Corp. that began in the fourth quarter of 2004. During the three months ended
June 30, 2004, our investment banking/investment services segment had total
gross proceeds of $83.0 million, which included completion of the syndication of
two Sponsored REITs and substantial completion of the syndication of a third
Sponsored REIT. As a result, total gross proceeds decreased $58.7 million for
the three months ended June 30, 2005 compared to three months ended June 30,
2004. This decrease was attributable to a slower pace of syndication investment
by our client base and a more difficult environment in which to find suitable
properties to syndicate during the three months ended June 30, 2005 compared to
the same period in 2004. Revenues and expenses for investment banking/investment
services are directly related to the gross proceeds of these syndications.

Each segment is discussed in greater detail below.

      Real Estate Operations

      Contribution from the real estate segment was $11.5 million for the three
months ended June 30, 2005, a decrease of $1.5 million or 11.7%, compared to the
three months ended June 30, 2004. The decrease is primarily attributable to:

      o     A decrease in transaction fee revenues of $3.4 million to $1.4
            million for the three months ended June 30, 2005 as compared to $4.8
            million for the three months ended June 30, 2004. The decrease was
            principally caused by the decrease in gross syndication proceeds in
            the quarter compared to the same period in 2004;

      o     An increase in interest expense of $0.5 million resulting from
            larger loan balances outstanding for assets held for syndication
            during the three months ended June 30, 2005 compared to the three
            months ended June 30, 2004; and

      o     An increase to depreciation and amortization of $1.1 million to $4.6
            million for three months ended June 30, 2005 compared to $3.5
            million for the comparable 2004 period, which primarily relates to
            the four properties owned by the Sponsored REITs we acquired on
            April 30, 2005.

      These decreases were partially offset by:

      o     An increase in real estate operating income from real estate of $2.6
            million to $14.3 million for three months ended June 30, 2005
            compared to $11.7 million for the comparable 2004 period, which
            primarily relates to the four properties owned by the Sponsored
            REITs, which we acquired by on April 30, 2005. Real estate operating
            income is rental revenues less real estate operating expenses, real
            estate taxes and insurance;

      o     An increase in management fees and interest income of $0.4 million
            to $0.5 million for the three months ended June 30, 2005 compared to
            $0.1 million for the three months ended June 30, 2004. The increase
            is primarily attributed to interest income from Sponsored REITs,
            which had larger loan balances outstanding for a longer period of
            time during the comparable three month period ending June 30, 2004;

      o     An increase from equity in income from non-consolidated REITs of
            $0.3 million as a result of Sponsored REITs in syndication with
            greater net operating income during the three months ended June 30,
            2005 compared to the three months ended June 30, 2004;

      o     An increase to interest income of $.2 million during the three
            months ended June 30, 2005, which was primarily a result of higher
            interest rates on cash and cash equivalents compared to the three
            months ended June 30, 2004.


                                       20
<PAGE>

      Investment Banking/Investment Services

      Contribution from the investment banking and services segment decreased
$1.5 million to $0.8 million for the three months ended June 30, 2005, compared
to $2.4 million for the three months ended June 30, 2004. The decrease is
primarily attributable to:

      o     A decrease in syndication and transaction fee revenues of $4.0
            million, which was primarily attributable to a lower level of gross
            syndication proceeds during the three months ended June 30, 2005
            compared to the three months ended June 30, 2004.

      This decrease was partially offset by:

      o     A decrease in commission expense of $1.9 million, which relates to
            the decrease in gross syndication proceeds;

      o     A decrease in tax expense of $0.6 million to $0.1 million for the
            three months ended June 30, 2005 as compared to $0.7 million for the
            three months ended June 30, 2004;

      Selling, general and administrative expenses

      Selling, general and administrative expenses arise primarily from
corporate related expenses and costs associated with our headquarters in
Wakefield, Massachusetts where both business segments are managed. Over the last
few years there has been a shift in expense and cost allocation between the
segments from being primarily related to investment banking activity to a
greater focus on real estate operations. This shift has occurred as a result of:

      o     The increase in the number of owned properties in our real estate
            portfolio.

      o     The trend to a lower level of syndication proceeds from the
            investment banking segment.

      o     An increased level of management time related to our real estate
            operations.

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

      Selling, general and administrative costs increased $0.1 million to $1.7
million for the three months ended June 30, 2005 compared to $1.6 million for
the three months ended June 30, 2004, which were primarily from costs of
monitoring and managing a larger portfolio of REITs, initial expenses incurred
to prepare for public trading of our stock, which occurred on June 2, 2005, and
increases to franchise taxes. We had approximately 39 employees as of June 30,
2005 at our headquarters in Wakefield compared to 36 employees as of June 30,
2004.

      Discontinued Operations

      During June 2005 an agreement was reached to sell a property called Blue
Ravine, which is located in Folsom, California. The sale was completed on July
13, 2005 and resulted in a loss of approximately $1.1 million, which was
recorded during the three months ended June 30, 2005 as an estimated loss on an
asset held for sale. The property had been vacant since mid-2003 and had
operating expenses of approximately $70 thousand and $83 thousand for the three
months ended June 30, 2005 and 2004. The offer to purchase the property was
compared to estimated future costs to convert the property from a single tenant
to a multi-tenant facility and lease the building. We concluded that accepting
the offer was the more prudent decision because the management time and
oversight of such a conversion outweighed the potential future benefit. We will
continue to evaluate our portfolio, and from time-to-time we may decide to
dispose of properties.

      Net Income

      Net income for the three months ended June 30, 2005 decreased $4.2 million
to $9.5 million compared to $13.7 million for the reasons discussed above.


                                       21
<PAGE>

      The following table shows each segment for the six months ended June 30,
2005 and 2004.

<TABLE>
<CAPTION>
(in thousands)
                                                                   Six months ended June 30,
                                                            --------------------------------------
Real Estate Operations                                         2005           2004         Change
                                                               ----           ----         ------
<S>                                                         <C>            <C>            <C>
Revenues:
   Rental income                                            $ 38,982       $ 36,439       $ 2,543
   Transaction fees                                            3,522          7,606        (4,084)
   Management fees and interest income from loans              1,451            254         1,197
   Other                                                          13             15            (2)
                                                            -------------------------------------
                                                              43,968         44,314          (346)
                                                            -------------------------------------
Expenses:
   Real estate operating expenses                              8,067          6,942         1,125
   Real estate taxes and insurance                             5,239          4,729           510
   Depreciation and amortization                               8,089          6,764         1,325
   Interest                                                    1,743            517         1,226
                                                            -------------------------------------
                                                              23,138         18,952         4,186
                                                            -------------------------------------
Other items:
   Interest income                                               582            342           240
   Equity in earnings in non-consolidated REIT's                 968            385           583
                                                            -------------------------------------
                                                               1,550            727           823
                                                            -------------------------------------

Contribution from real estate                                 22,380         26,089        (3,709)
                                                            -------------------------------------

Investment Banking/Investment Services:
Revenues:
   Syndication fees                                            4,122          8,448        (4,326)
   Transaction fees                                              516          1,136          (620)
                                                            -------------------------------------
                                                               4,638          9,584        (4,946)
                                                            -------------------------------------
Expenses:
   Depreciation and amortization                                  71             79            (9)
   Commissions                                                 2,191          4,287        (2,096)
                                                            -------------------------------------
                                                               2,262          4,366        (2,104)
                                                            -------------------------------------
Other items:
   Interest income                                                15             21            (6)
   Taxes on income                                              (114)          (976)          862
                                                            -------------------------------------
                                                                 (99)          (955)          856
                                                            -------------------------------------

Contribution from investment banking/investment services       2,277          4,263        (1,986)
                                                            -------------------------------------

Selling, general and administrative expenses                   3,567          3,294          (273)
                                                            -------------------------------------

Loss from discontinued operations                                158            163            (5)
Loss from sale of asset                                        1,055             --         1,055
                                                            -------------------------------------

   Net income                                               $ 19,877       $ 26,895       $(7,018)
                                                            =====================================
</TABLE>


                                       22
<PAGE>

Comparison of the six months ended June 30, 2005 to the six months ended
June 30, 2004:

      Total revenues decreased $5.3 million, or 9.8%, to $48.6 million for the
six months ended June 30, 2005, as compared to $53.9 million for the six months
ended June 30, 2004. Total expenses were $29.0 million for the six months ended
June 30, 2005; an increase of $2.4 million, or 8.8%, compared to the three
months ended June 30, 2004. The decrease in revenues was primarily attributable
to a decrease in revenue from our investment banking/investment services
business that was partially offset by increases in rental revenue as a result of
the acquisition by merger of four Sponsored REITs on April 30, 2005.

      During the six months ended June 30, 2005 our investment
banking/investment services segment had total gross proceeds of $61.3 million,
which included completion of the syndication of FSP 505 Waterford Corp. and the
continuing syndication of FSP Galleria North Corp., both of which had been
started in the fourth quarter of 2004. During the six months ended June 30,
2004, our investment banking/investment services segment had total gross
proceeds of $132.2 million, which included completion of the syndication of four
Sponsored REITs and substantial completion of the syndication of a fifth
Sponsored REIT. Total gross proceeds decreased $70.9 million for the six months
ended June 30, 2005 compared to six months ended June 30, 2004. This decrease
was attributable to a slower pace of syndication investments and a more
difficult environment to find suitable properties to syndicate during the six
months ended June 30, 2005 compared to the same period in 2004. Revenues and
expenses for investment banking/investment services are directly related to the
gross proceeds of these syndications.

Each segment is discussed in greater detail below.

      Real Estate Operations

      Contribution from the real estate segment was $22.4 million for the six
months ended June 30, 2005; a decrease of $3.7 million, or 14.2%, compared to
the six months ended June 30, 2004. The decrease is primarily attributable to:

      o     A decrease in transaction fee revenues of $4.1 million to $3.5
            million for the six months ended June 30, 2005 as compared to $7.6
            million for the six months ended June 30, 2004. The decrease was
            principally caused by the decrease in gross syndication proceeds
            compared to the same period in 2004;

      o     An increase in interest expense of $1.2 million resulting from
            higher interest rates and larger loan balances outstanding for
            assets held for syndication during the six months ended June 30,
            2005 compared to the six months ended June 30, 2004; and

      o     An increase to depreciation and amortization of $1.3 million to $8.1
            million for six months ended June 30, 2005 compared to $6.8 million
            for the comparable 2004 period, which relates to the four properties
            owned by the Sponsored REITs we acquired on April 30 2005.

These decreases were partially offset by:

      o     An increase in real estate operating income of $0.9 million to $25.7
            million for the six months ended June 30, 2005 compared to $24.8
            million for the six months ended June 30, 2004. Real estate
            operating income is rental revenues less real estate operating
            expenses, real estate taxes and insurance. The increase was
            attributable to:

            o     An increase of approximately $2.1 million arising from the
                  four properties owned by the Sponsored REITs, which we
                  acquired on April 30, 2005, and

            o     A decrease, which partially offset the increase, to rental
                  revenues of $1.2 million, that resulted from a lease
                  termination payment made by a tenant during the six months
                  ended June 30, 2004, which did not recur during the six months
                  ended June 30, 2005;

      o     An increase in management fees and interest income of $1.2 million
            to $1.5 million for the six months ended June 30, 2005 compared to
            $0.3 million for the six months ended June 30, 2004. The increase is
            primarily attributable to interest income from Sponsored REITs,
            which had higher interest rates charged and larger loan balances
            outstanding for a longer period of time during the comparable six
            month period ending June 30, 2004.

      o     An increase from equity in income from non-consolidated REITs of
            $0.6 million as a result of Sponsored REITs in syndication with
            greater net operating income during the six months ended June 30,
            2005 compared to the six months ended June 30, 2004; and


                                       23
<PAGE>

      o     An increase to interest income of $0.2 million during the six months
            ended June 30, 2005, which was primarily a result of higher interest
            rates on cash and cash equivalents compared to the six months ended
            June 30, 2004.

      Investment Banking/Investment Services

      Contribution from the investment banking and services segment decreased
$2.0 million to $2.3 million for the six months ended June 30, 2005, compared to
$4.3 million for the six months ended June 30, 2004. The decrease is primarily
attributable to:

      o     A decrease in syndication and transaction fee revenues of $4.9
            million, which was primarily attributable to a lower level of gross
            syndication proceeds during the six months ended June 30, 2005
            compared to the six months ended June 30, 2004.

      This decrease was partially offset by:

      o     A decrease in commission expense of $2.1 million, which relates to
            the decrease in gross syndication proceeds; and

      o     A decrease in tax expense of $0.9 million to $0.1 million for the
            six months ended June 30, 2005 as compared to $1.0 million for the
            six months ended June 30, 2004.

      Selling, general and administrative expenses

      Selling, general and administrative costs increased $0.3 million to $3.6
million for the six months ended June 30, 2005 compared to $3.3 million for the
six months ended June 30, 2004, which were primarily from costs of monitoring
and managing a larger portfolio of REITs, initial expenses incurred to prepare
for public trading of our stock, which occurred on June 2, 2005, and increases
to franchise taxes. These increases were partially offset by decreases to
professional fees related to an investor related project completed in 2004. We
had approximately 39 employees as of June 30, 2005 at our headquarters in
Wakefield compared to 36 employees as of June 30, 2004.

      Discontinued Operations

      During June 2005 an agreement was reached to sell a property called Blue
Ravine, which is located in Folsom, California. The sale was completed on July
13, 2005 and resulted in a loss of approximately $1.1 million, which was
recorded during the three months ended June 30, 2005 as an estimated loss on an
asset held for sale. The property had been vacant since mid-2003 and had
operating expenses of approximately $159 thousand and $163 thousand for the six
months ended June 30, 2005 and 2004, respectively. The offer to purchase the
property was compared to estimated future costs to convert the property from a
single tenant to a multi-tenant facility and lease the building. We concluded
that accepting the offer was the more prudent decision because the management
time and oversight of such a conversion outweighed the potential future benefit.
We will continue to evaluate our portfolio, and from time-to-time we may decide
to dispose of properties.

      Net Income

      Net income for the six months ended June 30, 2005 decreased $7.0 million
to $19.9 million compared to $26.9 million for the reasons discussed above.

Liquidity and Capital Resources

      Cash and cash equivalents were $51.5 million and $52.8 million at June 30,
2005 and December 31, 2004, respectively. This decrease of $1.3 million is
attributable to $26.1 million provided by operating activities, $14.6 million
provided by investing activities less $42.0 million used for financing
activities. Management believes that existing cash, cash anticipated to be
generated internally by operations, cash anticipated to be generated by the sale
of preferred stock in future Sponsored REITs and our line of credit will be
sufficient to meet working capital requirements and anticipated capital
expenditures and improvements for at least the next 12 months. Although there is
no guarantee that we will be able to obtain the funds necessary for our future
growth, we anticipate generating funds from continuing real estate operations


                                       24
<PAGE>

and from fees and commissions from the sale of shares in newly formed Sponsored
REITs. We believe that we have adequate funds to cover unusual expenses and
capital improvements, in addition to normal operating expenses. Our ability to
maintain or increase our level of dividends to stockholders, however, depends in
part upon the level of interest on the part of investors in purchasing shares of
Sponsored REITs and the level of rental income from our real properties.

      Operating Activities

      The cash provided by our operating activities of $26.1 million is
primarily attributable to net income of $19.9 million, plus the add-back of
$10.2 million of non-cash activity and was partially offset by a net decrease
arising from changes in operating assets and liabilities of $4.0 million.

      Investing Activities

      Our cash provided by investing activities of $14.6 million is primarily
attributable to cash added as a result of our acquisition of the four Sponsored
REITs on April 30, 2005 of $10.6 million and the sale of assets held for
syndication of $6.3 million, which were partially offset by uses of $1.9 million
to acquire or improve real estate assets and $0.4 million in costs related to
the merger of four properties in the second quarter of 2005.

      Financing Activities

      Our cash used by financing activities of $42.0 million is primarily
attributable to $35.8 million of distributions to shareholders; and net
repayments on our line of credit of $6.2 million made during the six months
ended June 30, 2005, which related to assets held for syndication.

      Line of Credit

      We have a revolving line of credit agreement with a group of banks
providing for borrowings of up to $125 million. Borrowings under the line of
credit bear interest at either the bank's base rate (6.25% at June 30, 2005) or
at LIBOR plus 125 basis points (4.55% at June 30, 2005), as defined. Borrowings
outstanding under the line of credit at June 30, 2005 were $53.2 million. We are
in compliance with all bank covenants required by this line of credit. The
maturity date of the line of credit is August 18, 2005. On July 27, 2005 we
received a commitment letter from our bank group increasing our line of credit
to $150 million and extending its maturity to August 2008 at substantially the
same terms and covenants as the current facility. We expect the new loan
agreement to be finalized in August 2005.

      On July 6, 2005 the Company borrowed approximately $42 million under its
Loan Agreement. The Company used the borrowed funds to make an interim mortgage
loan for a property located in Indiana.

      On July 13, 2005 the Company completed the sale of Blue Ravine for
approximately $4.7 million. Proceeds were applied to the outstanding balance on
the Loan Agreement.

      Contingencies

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

      Assets Held for Syndication

      As of June 30, 2005 we had two assets held for syndication. As of December
31, 2004 we also had two assets held for syndication. One syndication was
completed in January 2005, and another was purchased during the six months ended
June 30, 2005, but the syndication has not commenced.

      Assets Held for Sale

      During June 2005 an agreement was reached to sell a property called Blue
Ravine, which is located in Folsom, California. The sale was completed on July
13, 2005 and resulted in a loss of approximately $1.1 million. As of June 30,
2005 the property to be sold was classified as held for sale on the balance
sheet and at a carrying value that reflected the approximate net sale proceeds
received for the property.


                                       25
<PAGE>

      Related Party Transactions

      In the six months ended June 30, 2005, we completed the syndication of FSP
505 Waterford Corp., and continued the syndication of FSP Galleria North Corp.
We did not enter into any other significant transactions with related parties
during the quarter ended June 30, 2005. For a discussion of transactions between
us and related parties during 2004, see Footnote No. 5 "Related Party
Transactions" to the Consolidated Financial Statements of the Company's Annual
Report on Form 10-K for the year ended December 31, 2004.

      Other Considerations

      We generally pay the ordinary annual operating expenses of our properties
from the rental revenue generated by the properties. For the three and six
months ended June 30, 2005 and 2004 the rental income exceeded the expenses for
each individual property, with the exception of Lyberty Way and Blue Ravine. The
single tenant lease at the Lyberty Way property located in Westford,
Massachusetts expired October 31, 2004. We have not re-let this property and
expect that it will not produce revenue to cover its expenses in the third
quarter. The property called Blue Ravine was sold on July 13, 2005, which had
been vacant since June 2003 and had operating expenses of approximately $70
thousand and $158 thousand for the three and six months ended June 30, 2005.


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.

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

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

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

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

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

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

Failure to renew, replace or extend our line of credit could have a material
adverse effect on the cash available for distribution to our stockholders and
would limit our growth.

      Our line of credit matures in August 2005. We typically draw on our line
of credit to make an interim mortgage loan to a Sponsored REIT, so that the
Sponsored REIT can acquire real property prior to the consummation of the
offering of such Sponsored REIT's equity interests. Once the offering has been


                                       26
<PAGE>

completed, the Sponsored REIT repays the loan out of the offering proceeds. An
inability to renew, replace or extend our line of credit could result in
difficulty financing growth in the investment banking/investment services
segment of our business. It could also result in a reduction in the cash
available for distribution to our stockholders because revenue for our
investment banking/investment services segment is directly related to the amount
of equity raised by Sponsored REITs which we syndicate. In addition, a
significant part of our growth strategy is to acquire additional real properties
by cash purchase or by acquisition of Sponsored REITs, and the loss of the line
of credit would make it substantially more difficult to pursue acquisitions by
either method. To the extent we have a balance outstanding on the line of credit
on the date of its maturity, we would have to satisfy our obligation through
other means. If we are required to use cash for this purpose, we would have less
cash available for distribution to its stockholders. On July 27, 2005, we
received a commitment letter from our bank group increasing our Line of Credit
to $150 million and extending its maturity to August 2008 at substantially the
same terms and covenants as the current facility. We expect the new loan
agreement to be finalized in August 2005.

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

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

We are dependent on key personnel.

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

Our level of dividends may fluctuate.

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

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

      As of June 30, 2005, we owned 32 properties. Some or all of these
properties may decline in value. To the extent our real properties decline in
value, our stockholders could lose some or all the value of their investments.
The value of our common stock may still be adversely affected if the real
properties held by us decline in value since these real properties represent the
majority of the tangible assets held by us. Moreover, if either we are forced to
sell or lease the real property held by us below its initial purchase price or
its carrying costs or if we are forced to lease real property at below market
rates because of the condition of the property, our results of operations would
be adversely affected and such negative results of operations may result in
lower dividends being paid to holders of our common stock.

New acquisitions may fail to perform as expected.

      We may acquire new properties, whether by direct FSP Corp. cash purchase,
by acquisition of Sponsored REITs or other properties by cash or through the
issuance of shares of our stock or by investment in a Sponsored REIT. We
acquired four Sponsored REITs and the properties they own on April 30, 2005.
Newly acquired properties may fail to perform as expected, in which case, our
results of operations could be adversely affected.

We face risks in owning and operating real property.

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

      o     changes in general and local economic conditions;

      o     the supply or demand for particular types of properties in
            particular markets;

      o     changes in market rental rates;

      o     the impact of environmental protection laws; and

      o     changes in tax, real estate and zoning laws.

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


                                       27
<PAGE>

We face risks from tenant defaults or bankruptcies.

      If any of our tenants defaults on its lease, we may experience delays in
enforcing our rights as a landlord and may incur substantial costs in protecting
our investment. In addition, at any time, a tenant of one of our properties may
seek the protection of bankruptcy laws, which could result in the rejection and
termination of such tenant's lease and thereby cause a reduction in cash
available for distribution to our stockholders.

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

      When leases expire, we will incur expenses and may not be able to re-lease
the space on the same terms. Certain leases provide tenants the right to
terminate early if they pay a fee. If we are unable to re-lease space promptly,
if the terms are significantly less favorable than anticipated or if the costs
are higher, we may have to reduce distributions to our stockholders. For
example, approximately $10,393,000, or 17.6%, of our annualized rental revenue
from commercial and residential apartment properties derives from leases which
expire during 2005. Some of these leases have been renewed during the first six
months and some have not.

We face risks from geographic concentration.

      The properties in our portfolio as of June 30, 2005, by aggregate square
footage, are distributed geographically as follows: Southwest - 34%, Northeast -
25%, Midwest - 16%, West - 16% and Southeast 10%. However, within certain of
those regions, we hold a larger concentration of our properties in Houston,
Texas - 15% and Dallas, Texas - 13%. We are likely to face risks to the extent
that any of these areas in which we hold a larger concentration of our
properties suffer deteriorating economic conditions.

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

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

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

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

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

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

      In addition, we cannot assure you that:

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

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

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

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


                                       28
<PAGE>

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

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

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

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

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

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

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

      o     liabilities for clean-up or remediation of environmental conditions;

      o     claims of tenants, vendors or other persons dealing with the former
            owners of the properties; and

      o     liabilities incurred in the ordinary course of business.

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

      The provisions of the tax code governing the taxation of real estate
investment trusts are very technical and complex, and although we expect that we
will be organized and will operate in a manner that will enable us to meet such
requirements, no assurance can be given that we will always succeed in doing so.
In addition, as a result of our acquisition of the target REITs pursuant to the
mergers consummated on April 30, 2005, we might no longer qualify as a real
estate investment trust. We could lose our ability to so qualify for a variety
of reasons relating to the nature of the assets acquired from the target REITs,
the identity of the shareholders of the target REITs who become our shareholders
or the failure of one or more of the target REITs to have previously qualified
as a real estate investment trust. Moreover, you should note that if one or more
of the REITs that we acquired in June 2003 or April 2005 did not qualify as a
real estate investment trust immediately prior to the consummation of its
acquisition, we could be disqualified as a REIT as a result of such acquisition.

      If in any taxable year we do not qualify as a real estate investment
trust, we would be taxed as a corporation and distributions to our stockholders
would not be deductible by us in computing our taxable income. In addition, if
we were to fail to qualify as a real estate investment trust, we could be
disqualified from treatment as a real estate investment trust in the year in
which such failure occurred and for the next four taxable years and,
consequently, we would be taxed as a regular corporation during such years.
Failure to qualify for even one taxable year could result in a significant
reduction of our cash available for distribution to our stockholders or could
require us to incur indebtedness or liquidate investments in order to generate
sufficient funds to pay the resulting federal income tax liabilities.

Provisions in our organizational documents may prevent changes in control.

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


                                       29
<PAGE>

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

      Staggered Board. Our board of directors is divided into three classes. The
terms of these classes will expire in 2006, 2007 and 2008, respectively.
Directors of each class are elected for a three-year term upon the expiration of
the initial term of each class. The staggered terms for directors may affect our
stockholders' ability to effect a change in control even if a change in control
were in the stockholders' best interests.

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

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

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

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

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

The price of our common stock may vary.

      Our common stock has recently been listed for trading on the AMEX. We can
provide no assurances as to the development of an ongoing meaningful trading
market in our common stock. If a meaningful trading market does develop, the
market prices for our common stock may fluctuate with changes in market and
economic conditions, including the market perception of REITs in general, and
changes in the financial condition of our securities. Such fluctuations may
depress the market price of our common stock independent of the financial
performance of FSP Corp. The market conditions for REIT stocks generally could
affect the market price of our common stock.


                                       30
<PAGE>

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We were not a party to any derivative financial instruments at or during the six
months ended June 30, 2005.

We borrow from time-to-time on our line of credit. These borrowings bear
interest at the bank's base rate (6.25% at June 30, 2005) or at LIBOR plus 125
basis points (4.55% at June 30, 2005), as elected by us when requesting funds as
defined. As of June 30, 2005, $53,213,000 was outstanding under the line of
credit consisting of one borrowing of $9,213,000 at the bank's base rate and a
borrowing of $44,000,000 at the LIBOR plus 125 basis point rate. We have used
the funds drawn on our line of credit only for the purpose of making interim
mortgage loans to Sponsored REITs. These mortgage loans bear interest at the
same variable rate payable by us under our line of credit. We therefore believe
that we have mitigated our interest rate risk with respect to our borrowings.


                                       31
<PAGE>

Item 4. Controls and Procedures

Our management, with the participation of FSP Corp.'s President and Chief
Executive Officer and FSP Corp.'s Chief Financial Officer, evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(d) under the Exchange Act) as of June 30, 2005. Based on
this evaluation, FSP Corp.'s President and Chief Executive Officer and FSP
Corp.'s Chief Financial Officer concluded that, as of June 30, 2005, our
disclosure controls and procedures were (1) designed to ensure that material
information relating to us, including our consolidated subsidiaries, is made
known to FSP Corp.'s President and Chief Executive Officer and FSP Corp.'s Chief
Financial Officer by others within these entities as appropriate to allow timely
decisions regarding required disclosure, particularly during the period in which
this report was being prepared and (2) effective, in that they provide
reasonable assurance that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.

No change to our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter
ended June 30, 2005 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.


                                       32
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings:

      Not applicable.

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

      (c) The following table provides information about purchases by Franklin
Street Properties Corp. during the quarter ended June 30, 2005 of equity
securities that are registered by the Company pursuant to Section 12 of the
Exchange Act:

                      ISSUER PURCHASES OF EQUITY SECURITIES

<TABLE>
<CAPTION>
------------------------- --------------------- --------------------- --------------------- ---------------------------
                                  (a)                   (b)                   (c)                       (d)
                                                                        Total Number of         Maximum Number (or
                                                                       Shares (or Units)    Approximate Dollar Value)
                                                                       Purchased as Part    of Shares (or Units) that
                            Total Number of                               of Publicly          May Yet Be Purchased
                           Shares (or Units)     Average Price Paid    Announced Plans or       Under the Plans or
Period                       Purchased (1)      per Share (or Unit)       Programs (1)             Programs (1)
------------------------- --------------------- --------------------- --------------------- ---------------------------

<S>                                <C>                  <C>                    <C>                      <C>
04/01/05-04/30/05                  0                    N/A                    0                        0
------------------------- --------------------- --------------------- --------------------- ---------------------------

05/01/05-05/31/05                  0                    N/A                    0                        0
------------------------- --------------------- --------------------- --------------------- ---------------------------

06/01/05-06/30/05                  0                    N/A                    0                        0
------------------------- --------------------- --------------------- --------------------- ---------------------------

Total:                             0                    N/A                    0                        0
------------------------- --------------------- --------------------- --------------------- ---------------------------
</TABLE>

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

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

      As our common stock is currently listed for trading on AMEX, we are no
longer obligated to, and do not intend to, effect any redemption.

Item 3. Defaults Upon Senior Securities:

      Not applicable.


                                       33
<PAGE>

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

      On April 29, 2005, the Registrant held its 2005 Annual Meeting of
      Stockholders (the "2005 Annual Meeting"). The 2005 Annual Meeting was
      called for the following purposes: (1) to elect two Class III directors to
      serve until the 2008 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
      2005 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
         ---------                   ---             --------------------------

      George J. Carter            33,094,788                  132,999
      Georgia Murray              33,060,244                  167,543

      Prior to the election Richard R. Norris announced his retirement as
      director. The names of each of the other directors whose terms of office
      continued after the 2005 Annual Meeting are as follows: Barry Silverstein,
      Dennis J. McGillicuddy, John N. Burke, Barbara J. Fournier and Janet P.
      Notopoulos.

Item 5. Other Information:

      None.


                                       34
<PAGE>

                     PART II - OTHER INFORMATION (Continued)

Item 6. Exhibits:

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

      31.2  Certification of the Chief Financial Officer of the Registrant
            pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

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


                                       35
<PAGE>

                                   SIGNATURES

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

                                         Franklin Street Properties Corp.


<TABLE>
<CAPTION>
       Date                          Signature                           Title
       ----                          ---------                           -----

<C>                           <C>                             <C>
Date:  August 4, 2005         /s/ George J. Carter            Chief Executive Officer and Director
                              --------------------------      (Principal Executive Officer)
                              George J. Carter


Date:  August 4, 2005         /s/ John G. Demeritt            Senior Vice President and Chief Financial
                              --------------------------      Officer (Principal Financial Officer)
                              John G. Demeritt
</TABLE>


                                       36