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 September 30, 2003

                                       OR

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

                         Commission File Number: 0-32615


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


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


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

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

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

         YES     |X|                    NO     |_|

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

         YES     |X|                    NO     |_|

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

                        Franklin Street Properties Corp.

                                    Form 10-Q

                                Quarterly Report
                               September 30, 2003

                                Table of Contents

                                                                            Page
                                                                            ----
Part I.  Financial Information

         Item 1.  Financial Statements

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

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

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

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

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

         Item 3.  Quantitative and Qualitative Disclosures about
                        Market Risk.......................................    28

         Item 4.  Controls and Procedures.................................    28

Part II. Other Information

         Item 1.  Legal Proceedings.......................................    29

         Item 2.  Changes in Securities and Use of Proceeds...............    29

         Item 3.  Defaults upon Senior Securities.........................    29

         Item 4.  Submission of Matters to a Vote of Security Holders.....    29

         Item 5.  Other Information.......................................    29

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

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

                         PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
                        Franklin Street Properties Corp.
                           Consolidated Balance Sheets
                                   (unaudited)

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

<S>                                                                                 <C>               <C>
Assets:

Real estate investments, at cost:
   Land                                                                             $  71,398         $ 39,560
   Buildings and improvements                                                         404,541          154,785
   Fixtures and equipment                                                                 777              930
-------------------------------------------------------------------------------------------------------------------
                                                                                      476,716          195,275
   Less accumulated depreciation                                                       23,200           21,999
-------------------------------------------------------------------------------------------------------------------

     Real estate investments, net                                                     453,516          173,276

Acquired real estate leases, less accumulated amortization of $429                      8,768               --

Cash and cash equivalents                                                              68,663           22,316
Restricted cash                                                                           951              483
Tenant rent receivables, less allowance for doubtful accounts of
   $202 and $202, respectively                                                            891              327
Straight-line rent receivable, less allowance for doubtful accounts of
   $360 and $360, respectively                                                          3,511            3,057
Prepaid expenses and other                                                              1,385              743
Deposits on real estate assets                                                            500              841
Office computers and furniture, net of accumulated depreciation of
   $449 and $389, respectively                                                            381              234
Deferred leasing commissions, net of accumulated amortization of
   $496 and $289, respectively                                                          1,053              659
-------------------------------------------------------------------------------------------------------------------

     Total Assets                                                                   $ 539,619         $201,936
===================================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
   Accounts payable and accrued expenses                                            $   8,969         $  3,001
   Dividends payable                                                                   21,341               --
   Accrued compensation                                                                 2,017            1,287
   Tenant security deposits                                                               951              483
-------------------------------------------------------------------------------------------------------------------

     Total Liabilities                                                                 33,278            4,771
-------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies

Stockholders' Equity:
   Preferred Stock, $.0001 par value, 20,000,000 shares
     authorized, none issued or outstanding                                                --               --
   Common Stock, $.0001 par value, 180,000,000 shares
     authorized, 49,630,338 and 24,586,249 shares issued and outstanding                    5                2
   Additional paid-in capital                                                         513,912          192,743
   Earnings in excess of distributions (distributions in excess of earnings)           (7,955)           4,420
   Accumulated undistributed net realized gain on sale of properties                      379               --
-------------------------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                                       506,341          197,165
-------------------------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                                     $ 539,619         $201,936
===================================================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                           Three Months Ended             Nine Months Ended
                                                              September 30,                 September 30,
                                                         ----------------------        ----------------------
(in thousands, except per share amounts)                   2003           2002           2003           2002
=============================================================================================================

<S>                                                      <C>            <C>            <C>            <C>
Revenue:
   Rental                                                $17,767        $ 6,014        $32,606        $18,083
   Syndication fees                                        6,019          4,153         11,426          9,890
   Transaction fees                                        6,128          3,865         11,565          9,203
   Sponsored REIT income                                   1,541            421          2,442            453
   Other                                                     248            280            853            589
-------------------------------------------------------------------------------------------------------------

     Total revenue                                        31,703         14,733         58,892         38,218
-------------------------------------------------------------------------------------------------------------

Expenses:
   Rental operating expenses                               3,540          1,393          7,125          4,105
   Real estate taxes and insurance                         2,325            676          4,229          1,954
   Depreciation and amortization                           3,219          1,068          5,464          3,136
   Sponsored REIT expenses                                 1,365            296          2,006            313
   Selling, general and administrative                     1,376          1,194          4,124          4,096
   Commissions                                             3,006          2,075          5,712          4,910
   Shares issued as compensation                              --            604             --            604
   Interest                                                  257            297            795            647
-------------------------------------------------------------------------------------------------------------

     Total expenses                                       15,088          7,603         29,455         19,765
-------------------------------------------------------------------------------------------------------------

Income before interest income and taxes on income         16,615          7,130         29,437         18,453

Interest income                                              130             66            238            185
-------------------------------------------------------------------------------------------------------------

Income before taxes on income                             16,745          7,196         29,675         18,638

Taxes on income                                            1,035            216          1,460            417
-------------------------------------------------------------------------------------------------------------

Income from continuing operations                         15,710          6,980         28,215         18,221

Income from discontinued operations                           56            147            201            472
-------------------------------------------------------------------------------------------------------------

Income before gain on sale of properties                  15,766          7,127         28,416         18,693

Gain on sale of properties                                 4,914             --          6,335             --
-------------------------------------------------------------------------------------------------------------

Net income                                               $20,680        $ 7,127        $34,751        $18,693
=============================================================================================================

Weighted average number of shares outstanding,
   basic and diluted                                      49,630         24,586         35,741         24,598
=============================================================================================================
Net income per share basic and diluted
     Continuing operations                               $  0.32        $  0.28        $  0.79        $  0.74
     Discontinued operations                                  --           0.01             --           0.02
     Gain on sale of property                               0.10             --           0.18             --
-------------------------------------------------------------------------------------------------------------

Net income per share, basic and diluted                  $  0.42        $  0.29        $  0.97        $  0.76
=============================================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                           Nine Months
                                                                                                              Ended
                                                                                                          September 30,
                                                                                                   --------------------------
(in thousands)                                                                                        2003             2002
=============================================================================================================================

<S>                                                                                                <C>               <C>
Cash flows from operating activities:
   Net income                                                                                      $  34,751         $ 18,693
   Adjustments to reconcile net income to net cash provided by operating activities:
       Depreciation and amortization                                                                   5,808            3,515
       Gain on sale of real estate assets                                                             (6,335)
       Stock issued as compensation                                                                       --              604
   Changes in operating assets and liabilities:
       Restricted cash                                                                                    30                9
       Tenant rent receivables                                                                          (312)              54
       Straight-line rents, net                                                                         (454)          (1,036)
       Prepaid expenses and other assets, net                                                           (274)            (472)
       Accounts payable and accrued expenses                                                          (5,114)             962
       Accrued compensation                                                                              730             (315)
       Tenant security deposits                                                                          (30)              (9)
   Payment of deferred leasing costs                                                                    (481)            (608)
-----------------------------------------------------------------------------------------------------------------------------

         Net cash provided by operating activities                                                    28,319           21,397
-----------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
   Cash acquired through issuance of common stock in the merger transaction                           23,524               --
   Purchase of real estate assets, office computers and furniture; capitalized merger costs           (2,246)          (1,078)
   Change in deposits on real estate assets                                                              341
   Proceeds from real estate assets held for syndication                                                  --          (49,956)
   Proceeds received on sale of real estate assets                                                    21,815               --
-----------------------------------------------------------------------------------------------------------------------------

         Net cash provided by (used for) investing activities                                         43,434          (51,034)
-----------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Distributions to stockholders                                                                     (25,406)         (22,879)
   Proceeds from bank note payable                                                                        --           50,000
-----------------------------------------------------------------------------------------------------------------------------

         Net cash provided by (used for) financing activities                                        (25,406)          27,121
-----------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                                                  46,347           (2,516)

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

Cash and cash equivalents, end of period                                                           $  68,663         $ 21,841
=============================================================================================================================

Supplemental disclosure of cash flow information: Cash paid for:
     Interest                                                                                      $     795         $    647
     Income taxes                                                                                      1,963              390
   Non-cash investing and financing activities
     Assets acquired through issuance of common stock in the merger transaction, net                 297,648               --
     Capital expenditures included in accounts payable and accrued expenses                               --            1,544
     Dividends declared but not paid                                                                  21,341               --
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

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

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

Organization

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

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

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

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

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

Properties

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

                                                                 As of
                                                             September 30,
                                                           2003          2002
                                                        ---------     ---------
      Residential real estate
             Number of properties                               4             4
             Number of apartments                             837           642

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

Basis of Presentation

The unaudited consolidated financial statements of the Company include all the
accounts of the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated. These financial
statements should be read in conjunction with the Company's financial statements
and notes thereto contained in the Company's annual report on Form 10-K for its
fiscal year ended December 31, 2002.

The accompanying interim financial statements are unaudited; however, the
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States 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 for complete
financial statements. In the opinion of management, all adjustments (consisting
solely of normal recurring matters) necessary for a fair presentation of the
financial statements for these interim periods have been included. The results
of operations for the interim periods presented in this quarterly report are not
necessarily indicative of the results for other interim periods or for the full
fiscal year.

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


                                       6
<PAGE>

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

Recent Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities. The objective of this
interpretation is to provide guidance on how to identify a variable interest
entity ("VIE") and determine when the assets, liabilities, noncontrolling
interests, and results of operations of a VIE need to be included in a company's
consolidated financial statements. A company that holds variable interests in an
entity will need to consolidate the entity if the company's interest in the VIE
is such that the company will absorb a majority of the VIE's expected losses
and/or receive a majority of the entity's expected residual returns, if they
occur. FIN 46 also requires additional disclosures by primary beneficiaries and
other significant variable interest holders. The provisions of this
interpretation became effective for fiscal periods ending after December 15,
2003. The Company believes the impact will not be material to its financial
position, results of operations or cash flows.

2. Investment Services Activity

During the three months ended September 30, 2003, two Sponsored REITs, FSP
Innsbrook Corp. and FSP 380 Interlocken Corp., acquired office buildings in Glen
Allen, Virginia and Broomfield, Colorado, respectively. The Company sold on a
best efforts basis, through private placements approximately $95.5 million in
preferred stock in these Sponsored REITs in the three months ending September
30, 2003.

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


                                       7
<PAGE>

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

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

The Company typically retains a non-controlling common stock ownership interest
in Sponsored REITs that it has organized. These ownership interests have
virtually no economic benefit or risk. At September 30, 2003, December 31, 2002,
and September 30, 2002 the Company had ownership interests in seven, sixteen and
fourteen Sponsored REITs, respectively.

Summarized financial information for the Sponsored REITs is as follows:

                                                    September 30,   December 31,
(unaudited)                                             2003            2002
                                                    -------------   ------------
                                                           in thousands)
Balance Sheet Data:
Real estate, net                                     $ 228,322       $ 385,907
Other assets                                            33,345          39,465
Total liabilities                                       (5,203)         (6,554)
                                                     ---------       ---------
Shareholders' equity                                 $ 256,464       $ 418,818
                                                     =========       =========

<TABLE>
<CAPTION>
                                                        For the                       For the
                                                   Three Months Ended             Nine Months Ended
                                                      September 30,                 September 30,
                                                   2003           2002           2003           2002
                                                -----------------------------------------------------
                                                                   (in thousands)
<S>                                              <C>            <C>           <C>             <C>
Operating Data:
Rental revenue                                   $ 9,077        $12,838       $ 19,934        $31,542
Other revenue                                         47            334            122            551
Operating and maintenance expenses                (2,873)        (2,540)        (6,535)        (9,326)
Depreciation and amortization                     (1,441)        (2,200)        (3,708)        (4,802)
Interest expense and commitment fees              (6,155)        (4,893)       (11,751)        (8,937)
                                                -----------------------------------------------------
Net income (loss)                                $(1,345)       $ 3,539       $ (1,938)       $ 9,028
                                                =====================================================
</TABLE>

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

                                        For the                 For the
                                  Three Months Ended       Nine Months Ended
                                      September 30,           September 30,
                                     2003      2002         2003       2002
                                  ------------------------------------------
                                                  (in thousands)
Revenue                            $ 1,541    $ 421       $ 2,442     $ 453
Expenses                            (1,365)    (296)       (2,006)     (313)
                                  ------------------------------------------
    Net income                     $   176    $ 125       $   436     $ 140
                                  ==========================================


                                       8
<PAGE>

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

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

The Company provided syndication and real estate acquisition advisory services
for the Sponsored REITs in 2003 and 2002. For the three months ended September
30, 2003 and 2002, respectively, syndication fees were approximately $6.0
million and $4.2 million, and transaction fees were approximately $6.1 million
and $3.9 million. For the nine months ended September 30, 2003 and 2002,
respectively, syndication fees were approximately $11.4 million and $9.9
million, and transaction fees were approximately $11.6 million and $9.2 million.

Asset management fee income charged by the Company to the Sponsored REITs
amounted to approximately $85,000 and $172,000 for the three months ended
September 30, 2003 and 2002, respectively, and $383,000 and $389,000 for the
nine months ended September 30, 2003 and 2002, respectively, and is included in
"Other revenue" in the Consolidated Statements of Income. Asset management fees
range from 1% to 5% of collected rents and the applicable contracts are
cancelable with 30 days' notice.

4. Bank note payable

In August 2003 the Company amended its revolving credit facility (the "Credit
Facility"). The amended Credit Facility increases the Company's unsecured line
of credit from $50 million to $125 million and expires in August 2005. The
minimum annual transaction fees payable to the bank increase from $125,000 to
$350,000. Other terms and conditions are consistent with the prior Credit
Facility. Borrowings under the Credit Facility bear interest at a rate of either
the bank's base rate or a variable LIBOR rate, as defined, which was 2.37% per
annum at September 30, 2003. There were no borrowings outstanding under the
Credit Facility as of September 30, 2003 or December 31, 2002.

5. Net Income Per Share

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

6. Business Segments

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

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


                                       9
<PAGE>

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

6. Business Segments (continued)

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

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

<TABLE>
<CAPTION>
                                                                        Investment
                                                    Rental Operations    Services            Total
                                                    -----------------    --------            -----
<S>                                                    <C>                <C>               <C>
Three Months Ended March  31, 2003
   Net income                                          $  5,656           $   302           $  5,958
   Depreciation and amortization                            901                30                931
   Straight line rent                                       432                --                432
   Loss (gain) on sale of property                       (1,421)               --             (1,421)
   Capital expenditures                                    (183)               --               (183)
   Payment of deferred leasing costs                        (53)               --                (53)
   Proceeds from funded reserve                             191                --                191
                                                       --------           -------           --------

   Cash Available for Distribution                     $  5,523           $   332           $  5,855
                                                       ========           =======           ========

Three Months Ended June 30, 2003
   Net income                                          $  7,804           $   309           $  8,113
   Depreciation and amortization                          1,530               (23)             1,507
   Straight line rent                                       208                --                208
   Capital expenditures                                  (1,525)               --             (1,525)
   Payment of deferred leasing costs                        (94)               --                (94)
   Proceeds from funded reserve                             615                --                615
                                                       --------           -------           --------

   Cash Available for Distribution                     $  8,538           $   286           $  8,824
                                                       ========           =======           ========

Three Months Ended September 30, 2003
   Net income                                          $ 19,190           $ 1,490           $ 20,680
   Depreciation and amortization                          3,267                25              3,292
   Straight line rent                                    (1,015)               --             (1,015)
   Gain on sale of property                              (4,914)               --             (4,914)
   Capital expenditures; capitalized merger costs          (331)             (207)              (538)
   Payment of deferred leasing costs                       (334)               --               (334)
   Proceeds from funded reserve                             824                --                824
                                                       --------           -------           --------

   Cash Available for Distribution                     $ 16,687           $ 1,308           $ 17,995
                                                       ========           =======           ========

Nine Months Ended September 30, 2003
   Net income                                          $ 32,650           $ 2,101           $ 34,751
   Depreciation and amortization                          5,698                32              5,730
   Straight line rent                                      (375)               --               (375)
   Loss (gain) on sale of property                       (6,335)               --             (6,335)
   Capital expenditures; capitalized merger costs        (2,039)             (207)            (2,246)
   Payment of deferred leasing costs                       (481)               --               (481)
   Proceeds from funded reserves                          1,630                --              1,630
                                                       --------           -------           --------

   Cash Available for Distribution                     $ 30,748           $ 1,926           $ 32,674
                                                       ========           =======           ========
</TABLE>


                                       10
<PAGE>

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

6.  Business Segments (continued)

<TABLE>
<CAPTION>
                                                                        Investment
                                                    Rental Operations    Services            Total
                                                    -----------------    --------            -----
<S>                                                    <C>                <C>               <C>
Three Months Ended March 31, 2002
   Net income                                          $  4,475           $  (378)          $  4,097
   Depreciation and amortization                          1,075                71              1,146
   Straight line rent                                       (54)               --                (54)
   Capital Expenditures                                    (546)               (2)              (548)
   Proceeds from funded reserves                            538                --                538
                                                       --------           -------           --------

   Cash Available for Distribution                     $  5,488           $  (309)          $  5,179
                                                       ========           =======           ========

Three Months Ended June 30, 2002
   Net income                                          $  6,487           $   982           $  7,469
   Depreciation and amortization                          1,130                37              1,167
   Straight line rent                                      (961)               --               (961)
   Capital Expenditures                                    (187)               (8)              (195)
   Payment of deferred leasing costs                       (531)               --               (531)
   Proceeds from funded reserves                          1,460                --              1,460
                                                       --------           -------           --------

   Cash Available for Distribution                     $  7,398           $ 1,011           $  8,409
                                                       ========           =======           ========

Three Months Ended September 30, 2002
   Net income                                          $  6,541           $   586           $  7,127
   Depreciation and amortization                          1,171                31              1,202
   Straight line rent                                       (20)               --                (20)
   Non-cash compensation                                     --               604                604
   Capital expenditures                                    (335)               --               (335)
   Payment of deferred leasing costs                        (77)               --                (77)
   Proceeds from funded reserves                            810                --                810
                                                       --------           -------           --------

   Cash Available for Distribution                     $  8,090           $ 1,221           $  9,311
                                                       ========           =======           ========

Nine Months Ended September 30, 2002
   Net income                                          $ 17,503           $ 1,190           $ 18,693
   Depreciation and amortization                          3,376               139              3,515
   Straight line rent                                    (1,035)               --             (1,035)
   Non-cash compensation                                     --               604                604
   Capital expenditures                                  (1,068)              (10)            (1,078)
   Payment of deferred leasing costs                       (608)               --               (608)
   Proceeds from funded reserves                          2,808                --              2,808
                                                       --------           -------           --------

   Cash Available for Distribution                     $ 20,976           $ 1,923           $ 22,899
                                                       ========           =======           ========
</TABLE>


                                       11
<PAGE>

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

6.  Business Segments (continued)

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

<TABLE>
<CAPTION>
                                                                        Investment
                                                    Rental Operations    Services            Total
                                                    -----------------    --------            -----
<S>                                                    <C>                <C>               <C>
Three Months Ended September 30, 2003:
   Revenue                                             $ 25,048           $ 6,655           $ 31,703
   Interest income                                          112                18                130
   Interest expense                                         257                --                257
   Income from discontinued operations                       56                --                 56
   Gain on sale of property                               4,914                --              4,914
   Capital expenditures                                     331               207                538

Total assets at September 30, 2003                     $529,800           $ 9,819           $539,619

Three Months Ended September 30, 2002:
   Revenue                                             $ 33,700           $ 4,518           $ 38,218
   Interest income                                           50                16                 66
   Interest expense                                         297                --                297
   Income from discontinued operations                      147                --                147
   Capital expenditures                                     335                --                335

Total assets at September 30, 2003                     $247,153           $ 5,564           $252,717

Nine Months Ended September 30, 2003:
   Revenue                                               46,295            12,597             58,892
   Interest income                                          180                58                238
   Interest expense                                         795                --                795
   Income from discontinued operations                      201                --                201
   Gain on sale of property                               6,335                --              6,335
   Capital expenditures                                   2,039               207              2,246

Total assets at September 30, 2003                      529,800             9,819            539,619

Nine Months Ended September 30, 2002
   Revenue                                             $ 27,546           $10,672           $ 38,218
   Interest income                                          135                50                185
   Interest expense                                         647                --                647
   Income from discontinued operations                      472                --                472
   Capital expenditures                                   1,068                10              1,078

Total assets at September 30, 2002                     $247,153           $ 5,564           $252,717
</TABLE>


                                       12
<PAGE>

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

    7.   Cash Dividends

Cash dividends per share are declared and paid based on the total outstanding
shares as of the record date and are typically paid in the quarter following the
quarter that CAD is generated.

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

                                                 Dividends           Total
            Date Paid                            Per Share         Dividends
      ----------------------                     ---------        ------------

      February 14, 2003                            $0.31            $ 7,635
      May 15, 2003                                 $0.31              7,636
      July 29, 2003                                $0.31             10,135
                                                                   --------
                                                                   $ 25,406
                                                                   ========

The Company declared a dividend of $0.31 per share on September 25, 2003 to
shareholders of record as of September 30, 2003.

The Company declared a special dividend of $0.12 per share on September 25, 2003
to shareholders of record as of September 30, 2003.

8. Income Taxes

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

One such restriction is that the Company generally cannot own more than 10% of
the voting power or value of the securities of any one issuer unless the issuer
is itself a REIT or a "taxable REIT subsidiary" ("TRS"). In the case of TRSs,
the Company's ownership of securities in all TRSs generally cannot exceed 20% of
the value of all of the Company's assets and, when considered together with
other non-real estate assets, cannot exceed 25% of the value of all of the
Company's assets. Effective January 1, 2001, FSP Investments 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 statements of income
relates only to the taxable REIT subsidiary. The expense differs from the
amounts computed by applying the Federal statutory rate of 35% to income before
income taxes as follows:

<TABLE>
<CAPTION>
                                                            For the                For the
                                                          Nine Months            Nine Months
                                                             Ended                  Ended
      (in thousands)                                   September 30, 2003    September 30, 2002
                                                       -------------------   --------------------
<S>                                                         <C>                      <C>
      Federal income tax expense at statutory rate          $ 1,246                  $ 569
      Increase in taxes resulting from:
        State income taxes, net of federal impact               214                     89
        Other                                                    --                   (234)
                                                          ----------               --------
                                                            $ 1,460                  $ 424
                                                          ==========               ========
</TABLE>


                                       13
<PAGE>

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

8. Income Taxes (continued)

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

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

9. Acquisitions

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

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

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

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

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

Pro forma operating results for the Company and the 13 Target REITs the Company
acquired during 2003 are shown in the following table. The results assume that
the mergers occurred and the shares of the Company's stock were issued on
January 1, 2002 and are not necessarily indicative of what the Company's actual
financial position or results of operations would have been for the period
indicated, nor do they purport to represent the results of operations for any
future period.

<TABLE>
<CAPTION>
                                                                 For the
                                                             Nine Months Ended
                                                               September 30,
                                                             2003         2002
                                                          ---------------------
<S>                                                       <C>          <C>
      Revenue                                             $ 77,295     $ 67,179
      Expenses                                             (39,792)     (40,187)
      Interest income                                          354          435
      Taxes on income                                       (1,460)        (417)
                                                          ---------------------
      Net income from continuing operations                 36,397       27,010
      Income from discontinued operations                      201          472
      Gain on sale of property                               6,335           --
                                                          ---------------------
      Net income                                          $ 42,933     $ 27,482
                                                          =====================

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

      Net income per share                                $   0.87     $   0.55
                                                          =====================
</TABLE>


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

Critical Accounting Policies

Real Estate Investments

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

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

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

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

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


                                       15
<PAGE>

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

Revenue Recognition

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

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

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

Depreciation and amortization expense

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

Repairs and maintenance expenses

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

Trends and Uncertainties

Rental Operations

The Company's average leased rate remained at 92% for the three months ended
September 30, 2003. The Company does not anticipate a meaningful increase in
rents or leasing activity in the Company's markets in the fourth quarter of
2003. Because the Company's properties are diversified by property type and by
geography, the impact of national and global trends is different for each of the
properties and is difficult to predict.

There were no major lease expirations, terminations or new leases during the
three months ended September 30, 2003 except at the Bollman property in Savage,
Maryland, which was leased in July and is now 100% leased to Maines Paper & Food
Service, Inc.

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

Investment Services

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

The Company's acquisition executives continued to report significant competition
for properties. Increased equity allocations to real estate as a more favored
asset class, 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.


                                       16
<PAGE>

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

Trends and Uncertainties (continued)

Investment Services (continued)

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

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

                                                                  As of
                                                              September 30,
                                                           2003          2002
                                                        ---------     ---------
      Residential real estate
             Number of properties                               4             4
             Number of apartments                             837           642

      Commercial real estate
             Number of properties                              24            13
             Square feet                                3,049,357     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 nine months
ended September 30, 2003 and 2002:

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

                                                                For the three      For the nine
                                                                 months ended      months ended
                                                                September 30,      September 30
                                                                -------------      ------------

                                                                2003 and 2002      2003 and 2002
                                                                -------------      -------------
<S>                                                               <C>                <C>
Rental operations
   Rental income                                                  $ 11,753           $ 14,523
   Transaction income                                                1,992              1,971
   Sponsored REIT income                                             1,120              1,989
   Other                                                               (32)               266
                                                                  --------           --------
     Total rental operations revenue                                14,833             18,749
                                                                  --------           --------

Investment services
   Syndication income                                                1,866              1,536
   Transaction income                                                  271                391
   Other                                                                --                 (2)
                                                                  --------           --------
     Total investment services revenue                               2,137              1,925
                                                                  --------           --------
Total revenue                                                       16,970             20,674
                                                                  --------           --------

Rental operations
   Rental operating expenses                                         2,147              3,020
   Depreciation and amortization                                     2,157              2,435
   Real estate taxes and insurance                                   1,649              2,275
   Sponsored REIT expense                                            1,069              1,693
   Selling, general and administrative                                  87                140
   Interest Expense                                                    (40)               148
                                                                  --------           --------
     Total rental operations expenses                                7,069              9,711
                                                                  --------           --------

Investment Services Expenses
   Selling, general and administrative                                  95               (112)
   Commission expense                                                  931                802
   Stock/units issued as compensation                                 (604)              (604)
   Depreciation and amortization                                        (6)              (107)
                                                                  --------           --------
     Total investment services expenses                                416                (21)
                                                                  --------           --------
Total expenses                                                       7,485              9,690
                                                                  --------           --------

Income before interest income and taxes on income                    9,485             10,984
Interest income                                                         64                 53
Taxes on income                                                        819              1,043
                                                                  --------           --------
Income from continuing operations                                    8,730              9,994

Income from discontinued operations                                    (91)              (271)
Gain on sale of real estate from discontinued operations             4,914              6,335
                                                                  --------           --------

Net income                                                        $ 13,553           $ 16,058
                                                                  ========           ========
</TABLE>


                                       18
<PAGE>

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

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

The Company completed the syndication of two Sponsored REITs with total gross
proceeds of $95.5 million in the three months ended September 30, 2003, an
increase of $34.6 million compared to total gross proceeds of $60.9 million in
the comparable period in 2002 from the syndication of two Sponsored REITs.

On June 1, 2003 the Company completed the acquisition by merger of 13 Sponsored
REITs. The results of operations for these 13 properties are included in the
results of the Company since the acquisition date. The Company operated 28
properties for the three months ended September 30, 2003 compared to 17
properties for the three-month period ended September 30, 2002. The results of
operations for two properties that were sold in 2003 have been classified as
discontinued operations for both periods.

Net Income

The Company's net income for the three months ended September 30, 2003 was $20.7
million, compared to $7.1 million during the comparable period in 2002, an
increase of approximately $13.6 million, of which an increase of $8.7 million
relates to continuing operations and $4.8 million to discontinued operations,
including the gain on the sale of Reata.

Revenue

Total revenues increased $17.0 million, or 115%, to $31.7 million for the three
months ended September 30, 2003, as compared to $14.7 million for the comparable
period in 2002.

Income from rental operations was $25.0 million for the three months ended
September 30, 2003, an increase of $14.8 million, or 145%, compared to the three
months ended September 30, 2002. The increase is attributable to:

      o     An increase in rental revenue of $11.8 million, which is comprised
            of an increase of $11.7 million of rental revenue from the 13
            properties acquired by the Company in June 2003, and a net increase
            in rental revenue of $0.1 million on the remaining properties. The
            net increase on the remaining properties is comprised of an increase
            in straight-line rent revenue of $0.4 million, offset by a decrease
            in rental revenue of $0.3 million primarily as a result of vacancies
            in Blue Ravine and Bollman;
      o     An increase in transaction fees of $2.0 million attributable to the
            syndication of two Sponsored REITs (with aggregate proceeds of $95.5
            million) in 2003 as compared to the syndication of two Sponsored
            REITs (with aggregate proceeds of $60.9 million) for the comparable
            period in 2002; and
      o     An increase in Sponsored REIT income of $1.1 million as a result of
            the Company's ownership percentage of Sponsored REITs for a greater
            period of time in 2003 than in the comparable period of 2002.

Investment banking services revenue was $6.7 million for the three months ended
September 30, 2003, an increase of $2.1 million, or 47%, compared to the three
months ended September 30, 2002. This increase is attributable to the increase
in syndication proceeds.

Expenses

Total expenses were $15.1 million for the three months ended September 30, 2003,
an increase of $7.5 million, or 98%, compared to the three months ended
September 30, 2002.

Expenses for rental operations were $10.9 million for the three months ended
September 30, 2003, a net increase of $7.1 million, or 183%, compared to the
three months ended September 30, 2002. The increase is attributable to:

      o     An increase in rental operating expenses of $2.1 million, which is
            comprised of an increase of $2.2 million from the 13 properties
            acquired by the Company in June 2003, offset by a decrease of $0.1
            million from the remaining properties;
      o     An increase in depreciation and amortization of $2.2 million, which
            is primarily attributable to the 13 properties acquired by the
            Company in June 2003;
      o     An increase in real estate taxes and insurance of $1.6 million,
            which is primarily attributable to the 13 properties acquired by the
            Company in June 2003;
      o     An increase of $1.1 million of Sponsored REIT expenses as a result
            of the Company's ownership percentage of Sponsored REITs in 2003 for
            a greater period of time in 2003 than in the comparable period in
            2002; and
      o     An increase in selling, general and administrative expense of $0.1
            million, primarily attributable to an increase in personnel and
            miscellaneous office expenses.


                                       19
<PAGE>

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

Expenses (continued)

Expenses for investment banking services were $4.1 million for the three months
ended September 30, 2003, an increase of $0.4 million, or 11.1%, compared to the
three months ended September 30, 2002. The increase is primarily attributable to
an increase in commissions of $0.9 million, relating to the increase in
syndication fees discussed above; and an increase in selling, general and
administrative expense of $0.1 million, primarily attributable to an increase in
personnel and miscellaneous office expenses. This increase was offset by a
decrease in shares issued as compensation of $0.6 million; there were no shares
issued as compensation in 2003.

Interest Income

Interest income increased less than $0.1 million for the three months ended
September 30, 2003, as compared to the comparable period in 2002. This increase
is attributable to higher cash balances as a result of the 13 properties
acquired in June 2003.

Taxes

Taxes on income were $1.0 million for the three months ended September 30, 2003,
an increase of $0.8 million compared to the three months ended September 30,
2002. The taxes for 2002 on the taxable REIT subsidiary included certain
benefits that will not occur in the future.

Comparison of the nine months ended September 30, 2003 to the nine months ended
September 30, 2002:

The Company completed the syndication of four Sponsored REITs with total gross
proceeds of $180.7 million in the nine months ended September 30, 2003, an
increase of $34.2 million, compared to total gross proceeds of $146.5 million in
the comparable period in 2002 from the syndication of five Sponsored REITs.

On June 1, 2003 the Company completed the acquisition by merger of 13 Sponsored
REITs. The results of operations for these 13 properties are included in the
results for the period for four months. In addition, the Company operated
another 15 properties for the complete nine-month period. The Company operated
15 properties for the nine months ended September 30, 2002. The results of
operations for two properties that were sold in 2003 have been classified as
discontinued operations for both periods and not included in continuing
operations.

Net Income

The Company's net income for the nine months ended September 30, 2003 was $34.7
million, compared to $18.7 million during the comparable period in 2002, an
increase of approximately $16.0 million, of which an increase of $10.0 million
relates to continuing operations and $6.0 million to discontinued operations,
including the gain on the sale of Reata and Weslayan Oaks.

Revenue

Total revenue increased $20.7 million, or 54%, to $58.9 million for the nine
months ended September 30, 2003, as compared to $38.2 million for the comparable
period in 2002.

Income from rental operations was $46.3 million for the nine months ended
September 30, 2003, an increase of $18.7 million, or 68%, compared to the nine
months ended September 30, 2002. The increase is attributable to:

      o     An increase in rental revenue of $14.5 million which is comprised of
            $15.5 million of rental revenue from the 13 properties acquired by
            the Company in June 2003, offset by a net decrease in rental revenue
            of $1.0 million on the remaining properties. The net decrease of
            $1.0 million on the remaining properties is comprised of an increase
            in rental revenue of $0.3 million, offset by a decrease in
            straight-line rent revenue of $1.3 million;
      o     An increase in transaction fees of $2.0 million attributable to the
            syndication of four Sponsored REITs (with aggregate proceeds of
            $180.7 million) in 2003 as compared to five Sponsored REITs (with
            aggregate proceeds of $146.5 million) for the comparable period in
            2002;
      o     An increase in Sponsored REIT income of $2.0 million as a result of
            the Company's ownership percentage of Sponsored REITs for a greater
            period of time in 2003 than the comparable period in 2002; and
      o     An increase in other income of $0.3 million primarily due to
            interest related to loans to the Sponsored REITs that were
            outstanding for a longer period of time in 2003 than the comparable
            period of 2002.

Investment banking services revenue was $12.6 million for the nine months ended
September 30, 2003; an increase of $1.9 million, or 18%, compared to the nine
months ended September 30, 2002. This increase is attributable to the increase
in gross syndication proceeds as discussed above.


                                       20
<PAGE>

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

Expenses

Total expenses were $29.5 million for the nine months ended September 30, 2003,
an increase of $9.7 million, or 49%, compared to the nine months ended September
30, 2002.

Expenses for rental operations were $20.4 million for the nine months ended
September 30, 2003, a net increase of $9.7 million, or 91.2%, compared to the
nine months ended September 30, 2002. The increase is attributable to:

      o     An increase in rental operating expenses of $3.0 million, which is
            compromised of an increase of $2.9 million from the 13 properties
            acquired by the Company in June 2003 and an increase of $0.1 million
            from the remaining properties, primarily attributable to a
            miscellaneous increase in maintenance costs over the comparable
            period in 2002;
      o     An increase in depreciation and amortization of $2.4 million, which
            is primarily attributable to the 13 properties acquired by the
            Company in June 2003;
      o     An increase in real estate taxes and insurance of $2.3 million,
            which is comprised of an increase of $2.1 million from the 13
            properties acquired by the Company in June 2003, and an increase of
            $0.2 million from the remaining properties as a result of tax rate
            increases and increases in the price of obtaining insurance;
      o     An increase of $1.7 million of Sponsored REIT expenses as a result
            of the Company's ownership percentage of Sponsored REITs for a
            greater period of time in 2003 than in the comparable period in
            2002;
      o     An increase in selling, general and administrative expense of $0.2
            million, primarily attributable to an increase in personnel and
            miscellaneous office expense; and
      o     An increase in interest expense of $0.1 million for loans related to
            the to the Sponsored REITs that were outstanding for a longer period
            of time in 2003 than in the comparable period in 2002.

Expenses for investment banking services were $9.1 million for the nine months
ended September 30, 2003 and were consistent with the comparable period of 2002.
Commission expense increased by $0.8 million as a result of increased
syndication proceeds. This increase is offset by a decrease of $0.6 million in
the expense related to shares issued as compensation (there were no shares
issued as compensation in 2003) as well as minor decreases in general and
administration expense and depreciation expense.

Interest Income

Interest income increased less than $0.1 million for the nine months ended
September 30, 2003. This increase is attributable to higher cash balances as a
result of the 13 properties acquired in June 2003.

Taxes

Taxes on income were $1.5 million for the nine moths ended September 30, 2003,
an increase of $1.0 million compared to the nine months ended September 30,
2002. The taxes for 2002 on the Company's taxable REIT subsidiary included
certain benefits that will not occur in the future. The Company expects a tax
rate of approximately 41% for its taxable REIT subsidiary for 2003.

Liquidity and Capital Resources

Cash and cash equivalents were $68.7 million and $22.3 million at September 30,
2003 and December 31, 2002, respectively. This increase of $46.4 million is
attributable to $28.3 million provided by operating activities and $43.4 million
provided by investing activities, offset by $25.4 million provided by financing
activities.

Operating Activities

The cash provided by the Company's operating activities of $28.3 million is
primarily attributable to net income of $34.7 million, plus the add-back of $5.8
million from non-cash expenses related to depreciation and amortization, less
$6.3 million relating to the gain on the sale of properties, less a $5.4 million
net change in operating assets and liabilities, less payments for deferred
leasing costs of $0.5 million.

Investing Activities

The Company's cash provided by investing activities of $43.4 million is
attributable to $23.5 million in cash acquired as a result of the issuance of
stock in the merger transaction, $21.8 million are proceeds from the sale of
assets and $0.3 million for a decrease of deposits on real estate investments,
offset by $2.2 million used for the purchase of real estate assets (including
$1.0 million of capitalized merger costs), office computers and furniture.

Financing Activities

The Company's cash used by financing activities of $25.4 million is attributable
to distributions to the Company's shareholders as dividends.


                                       21
<PAGE>

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

Sources and Uses of Funds

Our principal demands for liquidity are cash for operations, dividends to equity
holders, debt repayments and expenses associated with indebtedness. As of
September 30, 2003 we had approximately $33 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 newly formed Sponsored REITs.

The Company maintains an unsecured line of credit through Citizens Bank. In
August 2003, the Company amended its Master Promissory Note and Loan Agreement
(the "loan agreement"), which now provides for a revolving line of credit of up
to $125 million. The loan agreement expires August 18, 2005. Borrowings under
the loan bear interest at either the bank's base rate or a variable rate based
on LIBOR. 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, maintaining a minimum tangible net worth and compliance with other
various debt and income ratios. The Company was in compliance with all covenants
as of September 30, 2003. The Company had no borrowings under its revolving
credit facility as of September 30, 2003.

Contingencies

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

Related Party Transactions

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

Economic Conditions

The Company generally pays the ordinary annual operating expenses of its
properties from the rental revenue generated by the properties. For the three
months ended September 30, 2003, the rental income exceeded the expenses for
each individual property, with the exception of the Bollman and Blue Ravine
properties. The Bollman property in Savage, Maryland had been vacant, however,
it was leased in July 2003. The Company expects that Bollman will produce
sufficient revenue in the fourth quarter to cover its expense. The single tenant
lease at the Blue Ravine property located in Folsom, California expired June 30,
2003, there is no new lease, and the Company expects that the property will not
produce revenue to cover its expenses in the fourth quarter. 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 September
30, 2003 were approximately $14 million, are in excess of the known needs for
extraordinary expenses or capital improvements for the real properties currently
owned by the Company 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 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 the Company's real properties.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

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


                                       22
<PAGE>

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

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

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

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

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

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

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

      o     FSP Corp.'s real estate portfolio would be substantially larger and
            more diverse both geographically and by tenant business than prior
            to the consummation of the mergers, reducing the dependence of an
            investment in FSP Corp. on the performance of a smaller group of
            assets.
      o     FSP Corp.'s business would generate a greater percentage of its
            revenues from rentals from real properties and a lesser percentage
            from real estate investment banking/brokerage activities,
            constituting a more stable income stream than that received by FSP
            Corp. prior to the consummation of the mergers.
      o     FSP Corp.'s larger portfolio of real estate would produce economies
            of scale, increase its purchasing power relating to goods and
            services and reduce the percentage that expenses constitute of gross
            revenue.
      o     FSP Corp.'s larger portfolio of real properties and larger equity
            capitalization might increase the likelihood that FSP Corp. may
            eventually be able to provide liquidity for its equity investors
            through the public markets.

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

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

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


                                       23
<PAGE>

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

FSP Corp.'s level of dividends may fluctuate.

Because FSP Corp.'s investment banking 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 FSP Corp.'s not being able to maintain or grow dividend levels in the
future.

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

As of September 30, 2003, FSP Corp. owns 28 properties. Some or all of these
properties may decline in value. To the extent FSP Corp.'s real properties
decline in value, its stockholders could lose some or all the value of their
investments.

FSP Corp. may borrow more than it is capable of reasonably repaying under its
recently increased line of credit.

In August 2003, FSP Corp. amended its revolving credit facility with Citizens
Bank to increase its line of credit from $50 million to $125 million. If FSP
Corp. borrows heavily against this line of credit, FSP Corp. may experience
difficulties repaying it, particularly if FSP Corp.'s cash flows are
substantially reduced for any reason. The increased line of credit may create a
greater likelihood that FSP Corp. will not be able to sustain its debt
obligations under such line of credit and cause a default thereunder.

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

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

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

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

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

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

FSP Corp. faces risks from tenant defaults or bankruptcies.

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


                                       24
<PAGE>

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

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

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

FSP Corp. faces risks from geographic concentration.

The properties in FSP Corp.'s portfolio are distributed among the major
geographic segments by aggregate square footage to be owned by FSP Corp., as
follows: Southwest - 26%; Northeast - 31%; Midwest - 19%; West - 16%; and
Southeast - 8%. However, within certain of those segments, a large concentration
exists within a particular city and its immediately surrounding area;
specifically, Houston, Texas - 18% and Washington, DC - 14%. FSP Corp. is likely
to face risks to the extent that any of these areas suffer deteriorating
economic conditions.

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

Competition exists in every market in which FSP Corp.'s properties are located
and in every market in which FSP Corp.'s properties will be located. FSP Corp.
competes with, among others, national, regional and numerous local real estate
operators and developers. Such competition may adversely affect the percentage
of leased space and the rental revenues of FSP Corp.'s properties, which could
adversely affect FSP Corp.'s cash flow from operations and its ability to make
expected distributions to its stockholders. Some of FSP Corp.'s competitors may
have more resources than FSP Corp. or other competitive advantages. Competition
may be accelerated by any increase in availability of funds for investment in
real estate. To the extent that the properties of FSP Corp. continue to operate
profitably, this will likely stimulate new development of competing properties.

For example, decreases in interest rates tend to increase the availability of
funds and therefore can increase competition. The extent to which FSP Corp. is
affected by competition will depend in significant part on local market
conditions.

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

FSP Corp. anticipates that future increases in revenue from its properties will
be primarily the result of scheduled rental rate increases or rental rate
increases as leases expire. 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.

FSP Corp. is subject to possible liability relating to environmental matters,
and FSP Corp. cannot assure you that it has identified all possible liabilities.

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

In addition, FSP Corp. cannot assure you that:

      o     future laws, ordinances or regulations will not impose any material
            environmental liability;
      o     the current environmental conditions of FSP Corp.'s properties will
            not be affected by the condition of properties in the vicinity of
            such properties (such as the presence of leaking underground storage
            tanks) or by third parties unrelated to FSP Corp.;
      o     the current environmental conditions of FSP Corp.'s properties will
            not be affected by mold or other environmental pollutants that could
            affect indoor air quality;
      o     tenants will not violate their leases by introducing hazardous or
            toxic substances into FSP Corp.'s properties that could expose FSP
            Corp. to liability under federal or state environmental laws; or
      o     environmental conditions, such as the growth of bacteria and toxic
            mold in heating and ventilation systems or on walls, will not occur
            at FSP Corp.'s properties and pose a threat to human health.


                                       25
<PAGE>

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

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

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

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

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

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

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

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

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

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

FSP Corp.'s stockholders may experience greater risks relating to
diversification of portfolios following its acquisition of 13 REITs.

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

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

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


                                       26
<PAGE>

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

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

Ownership Limits. In order for FSP Corp. to maintain its qualification as a real
estate investment trust, the holders of common stock 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 FSP Corp., and no holder of common stock may acquire or transfer
shares that would result in FSP Corp. being beneficially owned by fewer than 100
persons. Such ownership limit may have the effect of preventing an acquisition
of control of FSP Corp. without the approval of FSP Corp.'s Board of Directors.
Moreover, FSP Corp. will have the right to redeem any shares of its common stock
that are acquired or transferred in violation of these provisions at the market
price. In addition, the Articles give FSP Corp.'s Board of Directors the right
to refuse to give effect to the acquisition or transfer of shares by a
stockholder in violation of these provisions.

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

Preferred Stock. The Articles authorize FSP Corp.'s Board of Directors to issue
up to 20,000,000 shares of preferred stock, par value $.0001 per share (the
"Preferred Stock"), and to establish the preferences and rights of any such
shares issued. The issuance of Preferred Stock could have the effect of delaying
or preventing a change in control of FSP Corp. even if a change in control were
in the stockholders' best interest.

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

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

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

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

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

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


                                       27
<PAGE>

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

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

Item 4. Controls and Procedures.

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

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


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<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:
         Not applicable

Item 5.  Other Information:
         Not applicable.

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

            (a)   Exhibit 10.1 - Amended and restated Loan Agreement among
                  Franklin Street Properties Corp. (and subsidiaries) and
                  Citizens Bank of Massachusetts (agent) and Fleet National Bank
                  (co-agent) dated as of August 18, 2003.

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

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

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

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

            (b)   Reports on Form 8-K.


                  1.    On August 15, 2003, the Registrant filed a current
                        report on Form 8-K/A to amend and restate Item 7 of its
                        current report on Form 8-K dated June 4, 2003, to file
                        certain financial statements and pro forma financial
                        information


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<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


November 12, 2003    By: /s/ George J. Carter     Chief Executive Officer and
                        ----------------------    Director (Principal Executive
                          George J. Carter        Officer)


November 12, 2003    By: /s/ Lloyd S. Dow         Controller
                         ---------------------    (Principal Accounting Officer)
                          Lloyd S. Dow


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