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, 2002

                                    OR

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

                         Commission File Number: 0-32615

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

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

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

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

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

      YES |X|                                 NO |_|

The number of shares of common stock outstanding as of August 1, 2002 was
24,630,247.

<PAGE>

                        Franklin Street Properties Corp.

                                    Form 10-Q

                                Quarterly Report
                                  June 30, 2002

                                Table of Contents

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

                 Consolidated Balance Sheets as of June 30, 2002 and
                 December 31, 2001 .......................................     3

                 Consolidated Statements of Income for the six months
                 ended June 30, 2002 and 2001 ............................     4

                 Consolidated Statements of Cash Flows for the six months
                 ended June 30, 2002 and 2001 ............................     5

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

         Item 2. Management's Discussion and Analysis of Financial
                 Condition and Results of Operations ..................... 15-20

         Item 3. Quantitative and Qualitative Disclosures about
                 Market Risk .............................................    21

Part II. Other Information

         Item 1. Legal Proceedings .......................................    22

         Item 2. Changes in Securities and Use of Proceeds ...............    22

         Item 3. Defaults upon Senior Securities .........................    22

         Item 4. Submission of Matters to a Vote of Security Holders .....    22

         Item 5. Other Information .......................................    22

         Item 6. Exhibits and Reports on Form 8-K ........................    22

Signatures       .........................................................    23

Certification    .........................................................    24
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                        Franklin Street Properties Corp.
                           Consolidated Balance Sheets
                                   (unaudited)

<TABLE>
<CAPTION>
                                                            June 30,      December 31,
(in thousands, except share, unit and par value amounts)      2002            2001
===========================================================================================
                                                             (REIT)   (Limited Partnership)
<S>                                                         <C>            <C>
Assets:

Real estate investments, at cost:
  Land                                                      $ 39,560       $  39,560
  Buildings and improvements                                 154,358         153,632
  Fixtures and equipment                                         928             920
-------------------------------------------------------------------------------------------
                                                             194,846         194,112

  Less accumulated depreciation                               19,542          17,419
-------------------------------------------------------------------------------------------

    Real estate investments, net                             175,304         176,693

Real estate assets held for syndication                       22,300              --
Cash and cash equivalents                                     20,712          24,357
Restricted cash                                                  498             495
Tenant rent receivables, net of allowance for
  doubtful accounts of $357 and $210, respectively             2,365           1,434
Prepaid expenses and other assets, net                         1,276             741
Office computers and furniture, net of accumulated
  depreciation of $326 and $215, respectively                    296             397
-------------------------------------------------------------------------------------------

    Total assets                                            $222,751       $ 204,117
===========================================================================================

Liabilities and Stockholders' Equity/Partners' Capital:

Liabilities:
  Bank note payable                                         $ 22,300       $      --
  Accounts payable and accrued expenses                        2,967           2,112
  Accrued compensation                                           900           1,747
  Tenant security deposits                                       499             495
-------------------------------------------------------------------------------------------

    Total liabilities                                         26,666           4,354
-------------------------------------------------------------------------------------------

Commitments and Contingencies:

Stockholders' Equity/Partners' Capital:
  Preferred Stock, $.0001 par value, 20,000,000 shares
   authorized, none issued or outstanding                         --              --
  Common Stock, $.0001 par value, 180,000,000 shares
   authorized, 24,586,249 shares issued and outstanding            2              --
  Additional paid-in capital                                 192,139              --
  Limited partnership units, 23,637,750 units issued
   and outstanding                                                --         203,348
  General partnership units, 948,499 units issued and
   outstanding                                                    --          (3,585)
  Retained earnings                                            3,944              --
-------------------------------------------------------------------------------------------

    Total Stockholders' Equity/Partners' Capital             196,085         199,763
-------------------------------------------------------------------------------------------

    Total Liabilities and Stockholders'
      Equity/Partners' Capital                              $222,751       $ 204,117
===========================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                     For the                            For the
                                                                  Three Months                        Six Months
                                                                      Ended                              Ended
                                                                    June 30,                           June 30,
                                                          ------------------------------    --------------------------------
(in thousands, except per share/unit amounts)               2002           2001               2002             2001
============================================================================================================================
                                                           (REIT)  (Limited Partnership)     (REIT)    (Limited Partnership)
<S>                                                       <C>            <C>                <C>              <C>
Revenue:
  Rental                                                  $ 6,777        $ 6,831            $13,359          $13,319
  Syndication fees                                          3,979          3,280              5,737            6,231
  Transaction fees                                          3,884          3,069              5,338            5,871
  Interest and other                                          249            316                442              862
----------------------------------------------------------------------------------------------------------------------------

    Total revenue                                          14,889         13,496             24,876           26,283
----------------------------------------------------------------------------------------------------------------------------

Expenses:
  Selling, general and administrative                       1,379          1,841              2,903            3,513
  Commissions                                               1,989          1,640              2,835            3,116
  Partnership units issued as compensation                     --             --                 --               29
  Rental operating expenses                                 1,607          2,022              3,197            3,433
  Depreciation and amortization                             1,167          1,151              2,313            2,424
  Real estate taxes and insurance                             786            698              1,511            1,416
  Interest                                                    291            209                350              394
----------------------------------------------------------------------------------------------------------------------------

    Total expenses                                          7,219          7,561             13,109           14,325
----------------------------------------------------------------------------------------------------------------------------

Income before minority interests                            7,670          5,935             11,767           11,958

Income applicable to minority interests                        --             19                 --               40

Income before taxes                                         7,670          5,916             11,767           11,918

Taxes on income                                               201             --                201               --

Net income                                                $ 7,469        $ 5,916            $11,566          $11,918
============================================================================================================================

Allocation of net income to:
  Common Shareholders                                     $ 7,469        $    --            $11,566          $    --
  Limited Partners                                             --          5,686                 --           11,455
  General Partner                                              --            230                 --              463
----------------------------------------------------------------------------------------------------------------------------
                                                          $ 7,469        $ 5,916            $11,566          $11,918
============================================================================================================================

  Weighted average number of shares/units outstanding,
    respectively, basic and diluted                        24,586         24,437             24,586           24,437
============================================================================================================================

  Net income per share and per limited and general
    partnership unit, respectively, basic and diluted     $  0.30        $  0.24            $  0.47          $  0.49
============================================================================================================================
</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)                                                         2002           2001
====================================================================================================
                                                                      (REIT)   (Limited Partnership)

<S>                                                                 <C>            <C>
Cash flows from operating activities:
  Net income                                                        $ 11,566       $ 11,918
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                                    2,313          2,424
      Partnership units issued as compensation                            --             29
      Gain on sale of land                                                --            (11)
      Minority interests                                                  --             40
  Changes in operating assets and liabilities:
    Increase in restricted cash                                           (3)           (16)
    (Increase) decrease in tenant rent receivables                      (931)           432
    Increase in prepaid expenses and other assets, net                  (614)           (83)
    Increase in accounts payable and accrued expenses                    854          2,516
    (Decrease) increase in accrued compensation                         (847)           202
    Increase in tenant security deposits                                   4             16
----------------------------------------------------------------------------------------------------

       Net cash provided by operating activities                      12,342         17,467
----------------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Purchase of real estate assets, office computers and furniture        (743)          (161)
  Change in real estate assets held for syndication                  (22,300)        16,500
  Proceeds received on sale of land                                       --            449
  Proceeds from marketable securities                                     --          4,321
----------------------------------------------------------------------------------------------------

       Net cash (used for) provided by investing activities          (23,043)        21,109
----------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Distributions to stockholders/partners                             (15,244)       (13,440)
  Distributions to minority interest holders                              --            (51)
  Proceeds from bank note payable                                     22,300             --
  Repayments of bank note payable                                         --        (16,500)
----------------------------------------------------------------------------------------------------

       Net cash provided by (used for) financing activities            7,056        (29,991)
----------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents                  (3,645)         8,585

Cash and cash equivalents, beginning of period                        24,357         13,718
----------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                            $ 20,712       $ 22,303
====================================================================================================

Supplemental disclosure of cash flow information:

  Cash paid for:
   Interest                                                         $    350       $    394
   Income taxes                                                           --             --
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

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

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

Organization

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

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

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

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

Properties

As of June 30, 2002, December 31, 2001 and June 30, 2001, excluding assets held
for syndication, the Company owned a portfolio of four residential real estate
properties (consisting of approximately 642 apartment units) and 13 commercial
properties (consisting of approximately 1,433,200 square feet of rentable
space).

Basis of Presentation

The consolidated financial statements of the Company include all the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated. These financial statements
should be read in conjunction with the Company's financial statements and notes
thereto contained in the Company's annual report on Form 10-K for its fiscal
year ended December 31, 2001.

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

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

Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations," which addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This Statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of the fair value
can be made. The associated asset retirement costs are capitalized as part of
the carrying amount of the long-lived asset. This Statement will be effective at
the beginning of 2003. The Company has reviewed the provisions of SFAS 143 and
believes that the impact of adoption will not be material to its financial
position, results of operations and cash flows.


                                       6
<PAGE>

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

Recent Accounting Pronouncements (continued)

In October 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". This Statement supersedes SFAS No. 121 and
requires that long-lived assets that are to be disposed of by sale be measured
at the lower of book value or fair value less costs to sell. SFAS No. 144
retains the fundamental provisions of SFAS 121 for (a) recognition and
measurement of the impairment of long-lived assets to be held and used, and (b)
measurement of long-lived assets to be disposed of by sale, but broadens the
definition of what constitutes a discontinued operation and how the results of a
discontinued operation are to be measured and presented. This Statement was
effective at the beginning of 2002. With the exception of reclassifying the
operations of certain real estate assets considered "held for sale" (and for
which no significant continuing involvement exists) to "Discontinued operations,
net of tax" in the consolidated statement of income, the impact of adoption is
not expected to have a material impact on the Company's financial position and
cash flows. The Company has one real estate asset that it considers "held for
syndication" at June 30, 2002.

In April 2002, the FASB issued SFAS No. 145 "Rescission of FAS Nos. 4, 44, and
64, Amendment of FAS 13, and Technical Corrections". This Statement rescinds
FASB No. 4, "Reporting Gains and Losses from Extinguishment of Debt", and an
amendment of that Statement, FASB No. 64, "Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements". This Statement amends FASB No. 13,
"Accounting for Leases". This Statement also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings or
describe their applicability under changed conditions. This statement will be
effective for the Company's fiscal year ending December 31, 2003. The Company
has reviewed the provisions of FASB 145 and believes that the impact of adoption
will not be material to its financial position, results of operations and cash
flows.

2. Investment Services Activity

During the three months ended June 30, 2002, two Sponsored REITs, FSP Merrywood
Corp. and FSP Plaza Ridge Corp., acquired one apartment building in Katy, Texas
and one office building in Herndon, Virginia, respectively. The Company sold on
a best efforts basis, through private placements, approximately $60.6 million in
preferred stock in the Sponsored REITs. The Company recorded approximately
$4.0 million and $3.9 million of Syndication fee and Transaction fee revenues,
respectively, as a result of these transactions.

3. Real Estate Assets Held For Syndication

Real estate assets held for syndication represents the assets of a Sponsored
REIT which was owned 99% by the Company and 1% by an officer of the Company at
June 30, 2002. The Company intends to syndicate, on a best efforts basis,
through a private placement, approximately $27.5 million in preferred stock in
the Sponsored REIT. Following the anticipated syndication of the preferred stock
in the third quarter of 2002, the Company will own 100% of the common stock in
the sponsored REIT, which represents less than a 1% ownership interest.
Additionally, the Company anticipates earning a fee of approximately 1% of gross
rental revenue, as defined, for services rendered in connection with the ongoing
asset management of the property. Accordingly, as the Company anticipates having
significant continuing involvement following the syndication, as defined in FAS
144, revenues and expenses from the syndication will be recorded in continuing
operations.

The assets owned by the Sponsored REIT, FSP Park Ten Corp., were purchased June
27, 2002, for a price of $22,300,000, and are located in Houston, Texas and are
comprised principally of land and an office building.

The results of operations for the FSP Park Ten Corp. for the three and six
months ended June 30, 2002 were not material.


                                       7
<PAGE>

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

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

The Company has arranged for Citizens Bank to provide a line of credit for the
Company's senior officers in the maximum aggregate amount of $3 million. The
borrowings under this line of credit are for the purpose of paying income taxes
on equity interests in the Company issued to such senior officers as
compensation. Loans under this line of credit have a term of one year and bear
interest at the bank's prime rate plus 50 basis points. Each borrower has
secured the loan by pledging shares of the Company's Common Stock having an
aggregate fair market value at the time of the loan of no less than twice the
principal amount of the loan. Borrowings of $1,625,000 were outstanding to
senior officers of the Company at June 30, 2002, March 31, 2002 and December 31,
2001. The Company has agreed to purchase from Citizens Bank any such loan on
which the borrower defaults. Following the purchase of the loan, the Company
would have the same rights as Citizens Bank, including the right to foreclose on
the pledged stock or to recover the outstanding amount of the loan from the
officer/borrower.

The Company typically retains a non-controlling common stock ownership interest
in Sponsored REITs that it has organized. These ownership interests have
virtually no economic benefit or risk. At June 30, 2002, December 31, 2001, and
June 30, 2001 the Company had ownership interests in fourteen, ten and five
Sponsored REITs, respectively. During 1999 and 2000, the Company acquired 100%
of the non-owned interests of 17 limited partnerships (through a series of
mergers) that it had previously organized. Neither the Company nor any other
related entity has an obligation to acquire the non-owned interests in any
previously syndicated Sponsored REIT.

Summarized financial information for the Sponsored REITs is as follows:

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

Balance Sheet Data:
Real estate, net                               $ 290,718       $ 222,232
Other assets                                      29,460          19,048
Total liabilities                                  7,541           6,755
Shareholders' equity                           $ 312,637       $ 234,525

<TABLE>
<CAPTION>
                                     For the three months ended     For the six months ended
                                               June 30,                    June 30,
                                          2002        2001             2002        2001
                                        --------     --------        --------    --------
                                                         (in thousands)
<S>                                     <C>          <C>             <C>         <C>
Operating Data:
Rental revenues                         $ 10,027     $  4,080        $ 18,704    $  6,509
Other revenues                                (3)          98             217         172
Operating and maintenance expenses         2,274        1,479           6,786       2,079
Depreciation and amortization              1,306          322           2,602         680
Interest expense and commitment fees       4,039          133           4,044       1,239
                                        --------     --------        --------    --------
Net income                              $  2,405     $  2,244        $  5,489    $  2,683
                                        ========     ========        ========    ========
</TABLE>

The Company provided syndication and real estate acquisition advisory services
for the Sponsored REITs in 2002 and 2001. For the three months ended June 30,
2002 and 2001, respectively, syndication fees were approximately $4.0 million
and $3.3 million, and transaction fees were approximately $3.9 million and $3.1
million. For the six months ended June 30, 2002 and 2001, respectively,
syndication fees were approximately $5.7 million and $6.2 million, and
transaction fees were approximately $5.3 million and $5.9 million.


                                       8
<PAGE>

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

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

Asset management fee income charged to the Sponsored REITs amounted to
approximately $80,000 and $30,000 for the three months ended June 30, 2002 and
2001, respectively, and $10,000 and $50,000 for six months ended June 30, 2002
and 2001, respectively, and is included in "Interest and other income" in the
Consolidated Statements of Income. Management fees range from 1% to 5% of
collected rents and the applicable contracts are cancelable with 30 days'
notice.

For the six months ended June 30, 2002, the Company received $15,489 of dividend
income from one of the Sponsored REITs. There were no dividends for the
corresponding period in 2001.

5. Bank note payable

On June 30, 2002, $22.3 million was outstanding under the Company's $50 million
unsecured line of credit (the "Loan Agreement"). Borrowings under the Loan
Agreement bear interest at a rate of either the bank's base rate or a variable
LIBOR rate, as defined, which was 4.75% per annum at June 30, 2002. There were
no borrowings outstanding under the Loan Agreement at March 31, 2002, December
31, 2001 or at June 30, 2001. The Loan Agreement matures on February 23, 2003.

6. Net Income Per Share/Partnership Unit

The Company follows SFAS No. 128, "Earnings per Share," which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share/unit. Basic net income per share/unit is computed by dividing
net income by the weighted average number of Company shares/units outstanding
during the period. Diluted net income per share/unit reflects the potential
dilution that could occur if securities or other contracts to issue shares/units
were exercised or converted into shares/units. There were no potential dilutive
shares/units outstanding at June 30, 2002 and 2001.

The denominator used for calculating basic and diluted net income per share/unit
is as follows:

<TABLE>
<CAPTION>
                                          For the Three Months Ended     For the Six Months Ended
                                                   June 30,                       June 30,
                                           ------------------------      ------------------------
                                              2002          2001            2002          2001
                                           ----------    ----------      ----------    ----------
<S>                                        <C>           <C>             <C>           <C>
Weighted average number of shares/units
outstanding:
Common shares                              24,586,249            --      24,586,249            --
Limited partnership units                          --    23,488,618              --    23,488,409
General partnership units                          --       948,499              --       948,499
                                           ----------    ----------      ----------    ----------
                                           24,586,249    24,437,117      24,586,249    24,436,908
                                           ==========    ==========      ==========    ==========
</TABLE>


                                       9
<PAGE>

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

7. Business Segments

The Company operates in two business segments: rental operations and investment
services (including real estate acquisition, financing and broker/dealer
services). The Company has identified these segments because this discrete
information is the basis upon which management makes decisions regarding
resource allocation and performance assessment. The accounting policies of the
reportable segments are the same as those described in the "Significant
Accounting Policies" set forth in Note 2 to the Company's audited financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001. The Company's segments are located in the United States
of America.

The Company evaluates the performance of its reportable segments based on Cash
Available for Distribution ("CAD") as management believes that CAD represents
the most accurate measure of the reportable segment's activity and is the basis
for distributions paid to equity holders. The Company defines CAD as: net income
as computed in accordance with accounting principles generally accepted in the
United States of America ("GAAP"); plus certain non-cash items included in the
computation of net income (depreciation and amortization, certain non-cash
compensation expenses and straight line rent adjustments); plus Investment
services proceeds received from controlled partnerships; plus the net proceeds
from the sale of land; less purchases of property and equipment from operating
cash. Purchases of real estate, deferred leasing commissions or other items paid
from cash reserves at the acquisition date of the property are not reflected in
the computation of CAD. CAD should not be considered an alternative to net
income (determined in accordance with GAAP), as an indicator of the Company's
financial performance, 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.

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

<TABLE>
<CAPTION>
                                                                                                   Per
                                                                                               Consolidated
                                          Rental     Investment               Intercompany     Statement of
                                        Operations    Services     Total      Eliminations        Income
                                        ----------   ----------   -------     ------------     ------------
<S>                                     <C>           <C>         <C>           <C>             <C>
Three Months Ended March  31, 2001

Net Income                              $ 4,059       $ 1,900     $ 5,959       $    43         $ 6,002
Depreciation and amortization             1,306            10       1,316           (43)          1,273
Non-cash compensation expense                --            29          29            --              29
Straight line rent                          (66)           --         (66)           --             (66)
Purchase of fixed assets                    (21)          (55)        (76)           --             (76)
                                        -------       -------     -------       -------         -------
Cash Available for Distribution         $ 5,278       $ 1,884     $ 7,162       $    --         $ 7,162
                                        =======       =======     =======       =======         =======

Three Months Ended June 30, 2001

Net Income                              $ 3,915       $ 1,958     $ 5,873       $    43         $ 5,916
Depreciation and amortization             1,184            10       1,194           (43)          1,151
Non-cash compensation expense                --            --          --            --              --
Straight line rent                         (161)           --        (161)           --            (161)
Purchase of fixed assets                    (60)          (25)        (85)           --             (85)
                                        -------       -------     -------       -------         -------
Cash Available for Distribution         $ 4,878       $ 1,943     $ 6,821       $    --         $ 6,821
                                        =======       =======     =======       =======         =======
</TABLE>


                                       10
<PAGE>

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

7.  Business Segments (continued)

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

<TABLE>
<CAPTION>
                                                                                                   Per
                                                                                              Consolidated
                                        Rental      Investment                Intercompany    Statement of
                                      Operations     Services       Total     Eliminations       Income
                                      ----------    ----------     -------    ------------    ------------
<S>                                   <C>            <C>          <C>           <C>             <C>
Six Months Ended June 30, 2001

Net Income                            $  7,974       $  3,858     $ 11,832      $     86        $ 11,918
Depreciation and amortization            2,490             20        2,510           (86)          2,424
Non-cash compensation expense               --             29           29            --              29
Straight line rent                        (227)            --         (227)           --            (227)
Purchase of fixed assets                   (81)           (80)        (161)           --            (161)
                                      --------       --------     --------      --------        --------
Cash Available for Distribution       $ 10,156       $  3,827     $ 13,983      $     --        $ 13,983
                                      ========       ========     ========      ========        ========

Three Months Ended March  31, 2002

Net Income                            $  4,432       $   (378)    $  4,054      $     43        $  4,097
Depreciation and amortization            1,118             71        1,189           (43)          1,146
Straight line rent                         (54)            --          (54)           --             (54)
Purchase of fixed assets                  (547)            (1)        (548)           --            (548)
Proceeds from funded reserves              538             --          538            --             538
                                      --------       --------     --------      --------        --------
Cash Available for Distribution       $  5,487       $   (308)    $  5,179      $     --        $  5,179
                                      ========       ========     ========      ========        ========

Three Months Ended June 30, 2002

Net Income                            $  7,067       $    982     $  8,049      $   (580)       $  7,469
Depreciation and amortization            1,174             37        1,211           (44)          1,167
Straight line rent                        (961)            --         (961)           --            (961)
Purchase of fixed assets                  (186)            (9)        (195)           --            (195)
Increase in leasing commissions           (531)            --         (531)           --            (531)
Proceeds from funded reserves            1,460             --        1,460            --           1,460
                                      --------       --------     --------      --------        --------
Cash Available for Distribution       $  8,023       $  1,010     $  9,033      $   (624)       $  8,409
                                      ========       ========     ========      ========        ========

Six Months Ended June 30, 2002

Net Income                            $ 11,499       $    604     $ 12,103      $   (537)       $ 11,566
Depreciation and amortization            2,292            108        2,400           (87)          2,313
Straight line rent                      (1,015)            --       (1,015)           --          (1,015)
Purchase of fixed assets                  (733)           (10)        (743)           --            (743)
Increase in leasing commissions           (531)            --         (531)           --            (531)
Proceeds from funded reserves            1,998             --        1,998            --           1,998
                                      --------       --------     --------      --------        --------
Cash Available for Distribution       $ 13,510       $    702     $ 14,212      $   (624)       $ 13,588
                                      ========       ========     ========      ========        ========
</TABLE>


                                       11
<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 (in thousands):

                                               Rental     Investment
                                             Operations    Services       Total
                                             ----------    --------       -----

Three Months Ended June 30, 2002:
  Revenue                                     $ 10,570     $  3,960     $ 14,530
  Interest Income                                  340           19          359
  Interest Expense                                 291           --          291
  Capital expenditures                             187            8          195
Total assets at June 30, 2002                 $218,232     $  4,519     $222,751

Three Months Ended June 30, 2001:
  Revenue                                     $ 11,057     $  3,280     $ 13,180
  Interest Income                                  297           --          316
  Interest Expense                                 209           --          209
  Capital expenditures                              58           27           85
Total assets at June 30, 2001                 $197,920     $  6,733     $204,653

Six Months Ended June 30, 2002:
  Revenue                                     $ 18,697     $  5,737     $ 24,434
  Interest Income                                  407           35          442
  Interest Expense                                 350           --          350
  Capital expenditures                             733           10          743
 Total assets at June 30, 2002                $218,232     $  4,519     $222,751

Six Months Ended June 30, 2001:
  Revenue                                     $ 19,189     $  6,231     $ 25,420
  Interest Income                                  799           62          863
  Interest Expense                                 394           --          394
  Capital expenditures                              79           82          161
Total assets at June 30, 2001                 $197,920     $  6,733     $204,653

8. Cash Dividends

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

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

       First Quarter of 2002               $  .31            $  7,622
       Second Quarter of 2002              $  .31               7,622
                                                             --------
                                                             $ 15,244
                                                             ========


                                       12
<PAGE>

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

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, it will be required to pay taxes on
its net income like any other taxable corporation.

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

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

                                                            For the
                                                          Six Months
                                                            Ended
                                                         June 30, 2002
                                                         -------------
                                                        (in thousands)

       Federal income tax expense at statutory rate        $  282
       Increase (decrease) in taxes resulting from:
         State income taxes, net of federal impact             48
         Other                                               (129)
                                                           ------
                                                           $  201
                                                           ======

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

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

Prior to the REIT conversion on January 1, 2002, no provision or benefit was
made for federal or state income taxes in the consolidated financial statements
of the Partnership. Partners were required to report on their individual tax
returns their allocable share of income, gains, losses, deductions and credits
of the Partnership.

10. Employee Benefit Plan

On May 20, 2002, the stockholders of the Company approved the 2002 Stock
Incentive Plan (the "Plan"). The Plan is an equity-based incentive compensation
plan, and provides for the grants of up to a maximum of 2,000,000 shares of the
Company's common stock ("Awards"). All of the Company's employees, officers,
directors, consultants and advisors are eligible to be granted awards. Awards
under the Plan are made at the discretion of the Company's Board of Directors,
and have no vesting requirements. The Company has not granted any Awards under
the Plan as of June 30, 2002. Upon granting an Award, the Company will recognize
compensation cost equal to the fair market value of the Company's common stock,
as determined by the Company's Board of Directors, on the date of the grant.


                                       13
<PAGE>

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

11. Subsequent Events

The Company declared a dividend of $0.31 per share on July 19, 2002 to
shareholders of record as of July 19, 2002.

On July 19, 2002, the Company granted 43,999 shares of stock in accordance with
the Plan to Mr. R. Scott MacPhee, an officer of the Company. On July 30, 2002,
Mr. MacPhee borrowed $453,000 under the line of credit (as described in Note 4)
from Citizen's Bank, for payment of income taxes, bringing the total amount
outstanding under the line of credit by all officers to $2,078,000.


                                       14
<PAGE>

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

The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report and in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001.
Historical results and percentage relationships set forth in the Consolidated
Statements of Operations contained in the financial statements, including trends
which might appear, should not be taken as necessarily indicative of future
operations. This discussion may also contain forward-looking statements based on
current judgments and current knowledge of management, which are subject to
certain risks, trends and uncertainties that could cause actual results to
differ materially from those indicated in such forward-looking statements.
Accordingly, readers are cautioned not to place undue reliance on
forward-looking statements. Investors are cautioned that the Company's
forward-looking statements involve risks and uncertainty, including without
limitation, changes in economic conditions in the markets in which the Company
owns properties, changes in the demand by investors for investment in Sponsored
REITS, the impact of the events of September 11, 2001, risks of a lessening of
demand for the types of real estate owned by the Company, changes in government
regulations, and expenditures that cannot be anticipated such as utility rate
and usage increases, unanticipated repairs, additional staffing, insurance
increases and real estate tax valuation reassessments. See "Risk Factors" in
Item 1A of the Company's Annual Report on Form 10-K for the year ended December
31, 2001. Although we believe the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. We will not update any of the
forward-looking statements after the date this quarterly report is filed to
conform them to actual results or to changes in our expectations that occur
after such date, other than as required by law.

Critical Accounting Policies

      Basis of Presentation

      The consolidated financial statements of the Company include the accounts
      of the Company, 17 Sponsored REITs and wholly and majority-owned
      subsidiaries. All significant intercompany accounts and transactions have
      been eliminated in consolidation. Prior to the mergers, FSP Holdings was
      the general partner and owned a 5% interest in each of the Sponsored
      REITs. As the general partner, FSP Holdings had the exclusive rights and
      powers to manage and control the business of each Sponsored Company
      without the consent or approval of the limited partners. The limited
      partners in the Sponsored REITs could not elect to replace the general
      partner, except for cause. Accordingly, prior to the mergers, the accounts
      of the Sponsored REITs have been consolidated into the Company's financial
      statements under the principles of accounting applicable to investments in
      subsidiaries in accordance with SOP 78-9.

      Real Estate and Depreciation

      Real estate assets are stated at the lower of cost or fair value, as
      appropriate, less accumulated depreciation. Costs related to property
      acquisition and improvements are capitalized. Typical capital items
      include new roofs, site improvements, various exterior building
      improvements and major interior renovations. Funding for capital
      improvements typically is provided by cash set aside at the time the
      property was purchased.

      Routine replacements and ordinary maintenance and repairs that do not
      extend the life of the asset are expensed as incurred. Typical expense
      items include interior painting, landscaping, minor carpet replacements
      and residential appliances. Funding for repairs and maintenance items
      typically is provided by cash flows from operating activities.
      Depreciation is computed using the straight line method over the assets'
      estimated useful lives as follows:

            Category                       Years
            --------                       -----

            Buildings:
               Residential                  27
               Commercial                   39
            Building Improvements         15-39
            Furniture and equipment        5-7

      The Company evaluates its assets used in operations by identifying
      indicators of impairment and by comparing the sum of the estimated
      undiscounted future cash flows for each asset to the asset's carrying
      value. When indicators of impairment are present and the sum of the
      undiscounted future cash flows is less than the carrying value of such
      asset, an impairment loss is recorded equal to the difference between the
      asset's current carrying value and its fair value based on discounting its
      estimated future cash flows. At June 30, 2002, no such indicators of
      impairment were identified.


                                       15
<PAGE>


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

      Revenue Recognition

      Rental income for Commercial Properties -- The Company has retained
      substantially all of the risks and benefits of ownership of the Company's
      commercial properties and accounts for its leases as operating leases.
      Rental income from leases, which include scheduled increases in rental
      rates during the lease term, is recognized on a straight-line basis. The
      Company does not have any percentage rent arrangements with its commercial
      property tenants. Reimbursable common area maintenance charges are
      included in rental income in the period earned.

      Rental income for Residential Apartments -- The Company's residential
      property leases are generally for terms of one year or less. Rental income
      from tenants of residential apartment properties is recognized in the
      period earned. Rent concessions, including free rent and leasing
      commissions are charged as a reduction of rental revenue.

      Investment Banking Services -- Syndication fees ranging from 6% to 8% of
      the gross offering proceeds from the sale of securities in Sponsored
      Entities are generally recognized upon an investor closing; at that time
      the Company has provided all required services, the fee is fixed and
      collected, and no further contingencies exist. Commission expense ranging
      from 3% to 4% of the gross offering proceeds is recorded in the period the
      related syndication fee is earned.

      Investment Banking Services -- Transaction fees are generally recognized
      upon the final investor closing of a Sponsored Entity. The final investor
      closing is the last admittance of investors into a Sponsored Entity; at
      that time, required funds have been received from the investors, charges
      relating to the syndication have been paid or accrued, continuing
      investment and continuing involvement criteria have been met, and legal
      and economic rights have been transferred. Third party transaction-related
      costs are deferred and later expensed to match revenue recognition.
      Internal expenses are expensed as incurred. The Company follows the
      requirements for profit recognition as set forth by Statement of Financial
      Accounting Standards No. 66 "Accounting for Sales of Real Estate" and
      Statement of Position 92-1 "Accounting for Real Estate Syndication
      Income."

Trends and Uncertainties

      Rental Operations

      Historically, real estate has been subject to a wide range of cyclical
      economic conditions, which affect various real estate sectors and
      geographic regions with differing intensities at different times. In 2001
      and early 2002, many regions of the United States experienced varying
      degrees of economic recession; and the tragic events of September 11, 2001
      may have accelerated certain trends, such as the cost of obtaining
      sufficient property and liability insurance coverage.

      The bankruptcies of Enron, WorldCom, and others, the concerns about
      accounting practices and corporate governance at other major companies,
      and the decline in the stock market are likely to have a negative impact
      on vacancy and absorption rates, but the extent of the effect will vary by
      industry segment and geography. The Company believes that it will be
      affected by the combination of these events, but that they should not have
      a material effect on the Company's portfolio or financial performance,
      given the Company's property types and the geographic regions in which the
      Company's properties are located.

      As discussed in the Company's Annual Report on Form 10-K for the year
      ended December 31, 2001, a subsidiary of XO Communications, LTD. ("XO") is
      a tenant at the Company's property in San Diego, CA. During the three
      months ended June 30, 2002, XO filed for bankruptcy protection under
      Chapter 11. The Company has not been notified by the bankruptcy court as
      to whether the lease will be accepted or rejected. However, at the time of
      the bankruptcy filing and as of June 30, 2002, the tenant was current on
      its rent.

      Except for the Company's property in Southfield, Michigan, where a lease
      with the major tenant in the building was renewed early for an additional
      five years, there were no major lease expirations, terminations, renewals
      or new leases during the three months ended June 30, 2002. As part of the
      lease extension at the Company's property in Southfield, Michigan, an
      allowance of $897,000 was given to the tenant. The allowance was treated
      as a rent reduction and will be amortized on a straight line basis into
      earnings over the life of the lease. The allowance was paid out of the
      funded reserves along with brokerage commissions of $306,000 and tenant
      improvements of $116,000 for another tenant in the building.


                                       16
<PAGE>

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

      Investment Services

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

      During the first half of 2002, the Company's acquisition executives
      continued to report large spreads between bid and ask prices for
      properties. Differing views of the strength and timing of a national
      economic recovery as well as low interest rate carrying costs on
      debt-financed properties are contributing to this situation. Without the
      ability to acquire properties at attractive prices on behalf of the
      Sponsored REITs, the Company's investment banking activities may suffer.

      Further, the Company continues to rely solely on its in-house investment
      executives to access interested investors who have capital they can afford
      to place in an illiquid investment in Sponsored REITs for an indefinite
      period of time. Further setbacks in the stock market or the general
      economy could have negative effects, and while the tragic events of
      September 11, 2001 did not disrupt the Company's transactional business
      unit significantly, further terrorist attacks, if they occur, may have a
      chilling effect on the willingness of investors to purchase interests in
      future Sponsored Entities.

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

                                                            June 30,
                                                     ---------------------
                                                        2002        2001
                                                        ----        ----

Residential:
  Number of properties                                       4           4
  Number of apartment units                                642         642

Commercial:
  Number of properties                                      13          13
  Square footage                                     1,433,200   1,433,200


                                       17
<PAGE>

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

Results of Operations

The following table shows variance in dollars for the three and six months ended
June 30, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                   Variance in
                                                              Thousands of Dollars
                                                      ------------------------------------

                                                        For the three        For the six
                                                        months ended        months ended
                                                          June 30,            June 30,
                                                      ------------------  ----------------

                                                        2002 and 2001       2002 and 2001
                                                        -------------       -------------
<S>                                                       <C>                 <C>
Rental operations
  Rental income                                           $   (54)            $    40
  Transaction income                                        3,485               4,922
  Interest income                                             (56)               (392)
Investment services
  Syndication income                                          699                (494)
  Transaction income                                       (2,670)             (5,455)
  Interest income                                             (11)                (28)
                                                          -------             -------
Total revenue                                               1,393              (1,407)

Rental operations
  Selling, general and administrative                        (998)             (1,364)
  Rental operating expenses                                  (415)               (236)
  Depreciation and amortization                               (10)               (199)
  Real estate taxes and insurance                              88                  95
  Interest Expense                                             82                 (44)
Investment Services Expenses
  Selling, general and administrative                         536                 754
  Commission expense                                          349                (281)
  Partnership units issued as compensation                     --                 (29)
  Depreciation and amortization                                26                  88
                                                          -------             -------
Total Expenses                                               (342)             (1,216)
                                                          -------             -------

Income applicable to minority interest                        (19)                (40)

Taxes on income                                               201                 201
                                                          -------             -------
Net Income                                                $ 1,553             $  (352)
                                                          =======             =======
</TABLE>


                                       18
<PAGE>

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

Comparison of the three and six months ended June 30, 2002 to the three and six
months ended June 30, 2001

Revenue

Total revenues during the three months ended June 30, 2002 increased by $1.3
million compared to the three months ended June 30, 2001. This is primarily
attributable to the syndication of two Sponsored REITs (with aggregate proceeds
of $60.6 million) in 2002 as compared to one Sponsored REIT (with aggregate
proceeds of $51.5 million) in 2001. Total revenues decreased $1.4 million to
$24.8 million for the six months ended June 30, 2002, as compared to $26.2
million for the six months ended June 30, 2001. This is primarily attributable
to lower than anticipated investment services revenue.

The $0.4 million decrease in interest and other income is primarily due to lower
cash balances and lower interest rates in 2002 compared to 2001.

Expenses

Total expenses decreased $0.3 million and $1.2 million for the three months and
six months ended June 30, 2002 respectively, compared to the same periods in
2001.

The decrease for the three months is primarily attributable to the $0.4 million
reduction in selling and general & administrative expense, $0.4 million
reduction in rental operating expenses offset by $0.3 million increase in
commissions expense and $0.08 million increase in depreciation and amortization
and $0.08 million increase in real estate taxes and insurance. The decrease for
the six months is primarily attributable to the $0.6 million reduction in
selling, general and administrative expense and $0.2 million decrease in
commissions and rental operating expenses and $0.1 million of depreciation and
amortization.

Liquidity and Capital Resources

Cash and cash equivalents were $20.7 million and $24.3 million at June 30, 2002
and December 31, 2001, respectively. This decrease of $3.6 million is
attributable to $12.3 million provided by operating activities and $7.0 million
provided for financing activities offset by $23.0 million used by investing
activities.

Operating Activities

The Company's cash provided by operating activities of $12.3 million is
primarily attributable to net income of $11.6 million plus the add back of $2.3
million from non cash activity, offset by $0.9 million from the increase in
tenants accounts receivable and a $0.6 million increase in prepaid expenses and
other assets.

Investing Activities

The Company's cash used for investing activities of $23.0 million is due to the
$22.3 million increase in assets held for syndication and $0.7 million for the
purchase of real estate assets, office computers and furniture.

Financing Activities

The Company's cash provided by financing activities of $7.0 million is
attributable to $22.3 million of proceeds from a bank note payable offset by
$15.2 million of distributions to shareholders and partners.

Sources and uses of funds

Our principal demands for liquidity are cash for operations, dividends to equity
holders, debt repayments and expense associated with indebtedness. As of June
30, 2002 we had approximately $27.4 million in liabilities. The Company has no
permanent, long-term debt. In the near term, liquidity is generated from funds
from ongoing real estate operations and transaction fees and commissions
received in connection with the sale of shares in new Sponsored REITs.

The Company maintains an unsecured line of credit through Citizens Bank. The
Company has entered into a Master Promissory Note and Loan Agreement which
provides for a revolving line of credit of up to $50 million. The loan agreement
expires February 23, 2003. The Company intends to renew the loan agreement prior
to expiration. Borrowings under the loan bear interest at either the bank's base
rate or a variable LIBOR rate. The Company typically uses the unsecured line of
credit to provide each newly-formed Sponsored REIT with the funds to purchase a
property. The Company's loan agreement with the bank includes customary
restrictions on property liens and requires compliance with various financial
covenants. Financial covenants include maintaining minimum cash balances in
operating accounts, tangible net worth of at least $140 million and compliance
with other various debt and income ratios. The Company was in compliance with
all covenants as of June 30, 2002. The Company had $22.3 million of borrowings
under its revolving credit facility as of June 30, 2002.


                                       19
<PAGE>

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

Contingencies

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

Related Party Transactions

During the second quarter of 2002, the Company organized two Sponsored REITs and
retained a non-controlling common stock interest in those Sponsored REITs with
virtually no economic benefit. The Company did not enter into any other
significant transactions with related parties during the quarter ended June 30,
2002. For a discussion of transactions between the Company and related parties
during 2001, see "Related Party Transactions" under Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations - of
the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

The Company has arranged for Citizens Bank to provide a line of credit for the
Company's senior officers in the maximum aggregate amount of $3 million. The
borrowings under this line of credit are for the purpose of paying income taxes
on equity interests in the Company issued to such senior officers as
compensation. Loans under this line of credit have a term of one year and bear
interest at the bank's prime rate plus 50 basis points. Each borrower has
secured the loan by pledging shares of the Company's Common Stock having an
aggregate fair market value at the time of the loan of no less than twice the
principal amount of the loan. Borrowings of $1,625,000 were outstanding to
senior officers of the Company at June 30, 2002, March 31, 2002 and December 31,
2001. The Company has agreed to purchase from Citizens Bank any such loan on
which the borrower defaults. Following the purchase of the loan, the Company
would have the same rights as Citizens Bank, including the right to foreclose on
the pledged stock or recover the outstanding amount of the loan from the
officer/borrower.

Economic Conditions

The Company generally pays the ordinary annual operating expenses of the
properties from the rental revenue generated by the properties. For the six
months ended June 30, 2002, with the exception of Southfield, the rental income
exceeded the expenses for each of the Company's real properties. The Company
expects that Southfield will generate sufficient revenue to generate a profit
during the third and fourth quarters of 2002. In addition to rental income, the
Company maintains cash reserves that may be used to fund unusual expenses or
major capital improvements. The cash reserves included in cash and cash
equivalents, which as of June 30, 2002 were approximately $2.9 million, are in
excess of the known needs for extraordinary expenses or capital improvements for
the real properties within the next few years. There are no external
restrictions on these reserves, and they may be used for any Company purpose.

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


                                       20
<PAGE>

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company was not a party to any derivative financial instruments at or during
the year ended December 31, 2001 or during the six months ended June 30, 2002.

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


                                       21
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings:

        Not applicable.

Item 2. Changes in Securities and Use of Proceeds:

        Not applicable.

Item 3. Defaults Upon Senior Securities:

        Not applicable.

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

        On May 20, 2002, the Company held its 2002 annual meeting of
        stockholders. The 2002 annual meeting was called for the following
        purposes: (1) to elect two Class III directors to serve until the 2005
        annual meeting, (2) to approve the Company's 2002 Stock Incentive Plan
        and (3) 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
        2002 annual meeting for new three-year terms and the number of votes
        cast for and withheld for each director:

                                                           Withheld
                                                           Authority
                  Director                    For           To Vote
                  --------                    ---           -------

               George J. Carter         19,814,156.41     74,392.75
               Richard R. Norris        19,814,156.41     74,392.75

        The names of each of the other directors whose terms of office
        continued after the 2002 annual meeting are as follows: Barbara J.
        Corinha, William W. Gribbell, R. Scott MacPhee and Janet P.
        Notopolous. Immediatley following the 2002 annual meeting, Messrs.
        Gribbell and MacPhee resigned as directors, and the Board of
        Directors elected Dennis J. McGillicuddy as a Class I director and
        Barry Silverstein as a Class II director.

        The following table sets forth the number of votes cast for, against and
        abstaining from the approval of the Company's 2002 Stock Incentive Plan:

                     For               Against              Abstain
                     ---               -------              -------

                14,835,983.15        4,622,506.63         430,059.38

Item 5. Other Information:

        Not applicable.

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

        On May 23, 2003, the Company filed a current report on Form 8-K pursuant
        to Item 5, Other Events, reporting on the resignation of two directors
        and the appointment of their replacements.


                                       22
<PAGE>

                                   SIGNATURES

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

                                  Franklin Street Properties Corp.


    Date                       Signature                       Title


July 31, 2002     By: /s/  George J. Carter     Chief Executive Officer
                      ---------------------     and Director
                           George J. Carter     (Principal Executive Officer)


July 31, 2002     By: /s/  Lloyd S. Dow         Controller
                     ----------------------     (Principal Accounting Officer)
                           Lloyd S. Dow


                                       23
<PAGE>

                                  CERTIFICATION

Each of the undersigned hereby certifies in his capacity as an officer of
Franklin Street Properties Corp. (the "Company") that the Quarterly Report of
the Company on Form 10-Q for the period ended June 30, 2002 fully complies with
the requirements of Section 13(a) of the Securities Exchange Act of 1934 and
that the information contained in such report fairly presents, in all material
respects, the financial condition of the Company at the end of such period and
the results of operations of the Company for such period.

Date:  July 31, 2002
                                    /s/ George J. Carter
                                    --------------------
                                    President and Chief Executive Officer


                                    /s/ Barbara J. Corinha
                                    ----------------------
                                    Vice President, Chief Operating
                                    Officer (equivalent of Chief Financial
                                    Officer), Treasurer and Secretary


                                       24