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

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

(Mark One)

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

            For the quarterly period ended March 31, 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 Exchange Act.

         YES   |X|                                         NO   |_|

The number of shares of common stock outstanding as of May 9, 2003 was
24,630,247.

<PAGE>

                                EXPLANATORY NOTE

The purpose of this Amendment No. 1 to the Form 10-Q for the quarterly period
ended March 31, 2003 is to amend Items 1 and 2 of Part 1, to correct transaction
fee income for the reasons set forth under the caption "Restatement" in Note 1
to the Notes to the Consolidated Financial Statements contained in Item 1 of
Part 1. As described in Note 1, the Company also expects to file an Amendment
No. 1 to its form 10-Q for the three months ended June 30, 2003 to make a
corresponding correction.

<PAGE>

                        Franklin Street Properties Corp.

                                    Form 10-Q

                                Quarterly Report
                                 March 31, 2003

                                Table of Contents


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

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

                  Consolidated Statements of Income for the three months
                  ended March 31, 2003 and 2002...........................     4

                  Consolidated Statements of Cash Flows for the three
                  months ended March 31, 2003 and 2002....................     5

                  Notes to the Consolidated Financial Statements..........  6-13

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations..................... 14-20

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

         Item 4.  Controls and Procedures.................................    21

Part II. Other Information

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

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

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

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

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

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

Signatures        ........................................................    23
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                        Franklin Street Properties Corp.
                           Consolidated Balance Sheets
                                   (unaudited)

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

<S>                                                                        <C>          <C>
Assets:

Real estate investments, at cost:
   Land                                                                    $ 37,902     $ 39,560
   Buildings and improvements                                               151,069      154,785
   Fixtures and equipment                                                       769          930
------------------------------------------------------------------------------------------------
                                                                            189,740      195,275

   Less accumulated depreciation                                             21,932       21,999
------------------------------------------------------------------------------------------------

     Real estate assets, net                                                167,808      173,276

Assets held for syndication                                                  25,309           --
Cash and cash equivalents                                                    26,261       22,316
Restricted cash                                                                 442          483
Tenant rent receivables, less allowance for doubtful accounts of
   $202 and $202, respectively                                                  283          327
Straight-line rent receivable, less allowance for doubtful accounts
   of $360 and $360, respectively                                             2,607        3,057
Prepaid expenses                                                                710          743
Deposits on real estate assets                                                  551          841
Office computers and furniture, net of accumulated
   depreciation of $420 and $389, respectively                                  203          234
Deferred leasing commissions, net of accumulated amortization
   of $345 and $289, respectively                                               659          659
------------------------------------------------------------------------------------------------

     Total Assets                                                          $224,833     $201,936
================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
   Bank note payable                                                       $ 23,979     $     --
   Accounts payable and accrued expenses                                      2,758        3,001
   Accrued compensation                                                         836        1,287
   Tenant security deposits                                                     442          483
------------------------------------------------------------------------------------------------

     Total Liabilities                                                       28,015        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, 24,630,247 shares issued and outstanding                         2            2
   Additional paid-in capital                                               192,743      192,743
   Retained earnings                                                          4,073        4,420
------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                             196,818      197,165
------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                            $224,833     $201,936
================================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements


                                       3
<PAGE>

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

                                                                    For the
                                                                 Three Months
                                                                     Ended
                                                                   March 31,
                                                              ------------------
(in thousands, except per share amounts)                        2003       2002
================================================================================

Revenues:
   Rental                                                     $ 5,815    $ 6,378
   Syndication fees                                             3,233      1,758
   Transaction fees                                             3,215      1,454
   Sponsored REIT income                                          384         32
   Interest and other                                             317         73
--------------------------------------------------------------------------------

     Total revenue                                             12,964      9,695
--------------------------------------------------------------------------------

Expenses:
   Selling, general and administrative                          1,398      1,525
   Commissions                                                  1,616        846
   Rental operating expenses                                    1,591      1,499
   Real estate taxes and insurance                                789        694
   Depreciation and amortization                                  914      1,102
   Sponsored REIT expenses                                        291         17
   Interest                                                       331         59
--------------------------------------------------------------------------------

     Total expenses                                             6,930      5,742
--------------------------------------------------------------------------------

Income before interest income and taxes on income               6,034      3,953

Interest income                                                    49         74
--------------------------------------------------------------------------------

Income before taxes on income                                   6,083      4,027

Taxes on income                                                   229         --
--------------------------------------------------------------------------------

Income from continuing operations                               5,854      4,027

Income from discontinued operations                                13         70
   Income before gain on sale of property
Gain on sale of real estate from discontinued operations        1,421         --
--------------------------------------------------------------------------------

Net income                                                    $ 7,288    $ 4,097
================================================================================

Weighted average number of shares outstanding, basic
     and diluted                                               24,630     24,623
================================================================================

Amounts per share, basic and diluted, attributable to
   Continuing operations                                      $  0.23    $  0.17
   Discontinued operations                                    $    --    $    --
   Gain on sale of properties, less applicable income tax     $  0.06    $    --
Net income per share, basic and diluted                       $  0.29    $  0.17
================================================================================

           See accompanying notes to consolidated financial statements


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                             For the
                                                                          Three months
                                                                              Ended
                                                                            March 31,
                                                                      --------------------
(in thousands)                                                        2003          2002
==========================================================================================

<S>                                                                   <C>         <C>
Cash flows from operating activities:
   Net income                                                         $  7,288    $  4,097
   Adjustments to reconcile net income to net cash
     provided by operating activities:
      Depreciation and amortization                                        931       1,146
      Gain on sale of real estate assets                                (1,421)         --
   Changes in operating assets and liabilities:
       Restricted cash                                                      41          29
       Tenant rent receivables, net                                         44           6
       Straight-line rents, net                                            450         (54)
       Prepaid expenses and other assets, net                               33        (347)
       Accounts payable and accrued expenses                              (243)         31
       Accrued compensation                                               (451)     (1,297)
       Tenant security deposits                                            (41)        (29)
   Payment of deferred leasing commissions                                 (56)         --
------------------------------------------------------------------------------------------

         Net cash provided by (used for) operating activities            6,575       3,582
------------------------------------------------------------------------------------------

Cash flows from investing activities:
   Purchase of real estate assets, office computers and furniture         (183)       (548)
   Deposits on real estate assets                                          290          --
   Addition of assets held for syndication                             (25,309)         --
   Proceeds received on sale of real estate assets                       6,228          --
------------------------------------------------------------------------------------------

         Net cash provided by (used for) investing activities          (18,974)       (548)
------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Distributions to stockholders                                        (7,635)     (7,622)
   Proceeds from bank note payable, net                                 23,979          --
------------------------------------------------------------------------------------------

         Net cash provided by (used for) financing activities           16,344      (7,622)
------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                     3,945      (4,588)

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

Cash and cash equivalents, end of period                              $ 26,261    $ 19,769
==========================================================================================

Supplemental disclosure of cash flow information:

   Cash paid for:
     Interest                                                         $    331    $     59
     Income taxes                                                     $    585    $     --
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

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

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

Organization

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

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

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

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

Restatement

In the first quarter of 2004, the Company determined that it had incorrectly
applied an accounting principle regarding the recognition of transaction fee
revenue related to loan fees charged to sponsored REITs in cases in which a
syndication had not been completed as of the end of a fiscal period. This error
only affected results in the three months ended March 31, 2003 and the three
months ended June 30, 2003. The Company is therefore restating its previously
reported, unaudited consolidated financial statements for the three months ended
March 31, 2003. As a result of the restatement, transaction fee income is
increased $1,330,000 for the three months ended March 31, 2003. Assets held for
syndication, total assets and stockholders' equity also increased by $1,330,000
as of March 31, 2003. The following tables summarize the impact to amounts
previously reported:

<TABLE>
<CAPTION>
                                                 First Quarter ended March 31, 2003
                                                -------------------------------------
                                                As Reported  Adjustments   As Amended
                                                -----------  -----------   ----------
                                                (in thousands, except per share data)

<S>                                               <C>           <C>          <C>
Revenue                                           $11,634       $1,330       $12,964
                                                  =======       ======       =======

Income from continuing operations                   4,524        1,330         5,854
Income from discontinued operations                    13           --            13
Gain on sale of properties                          1,421           --         1,421
                                                  -------       ------       -------
Net income                                        $ 5,958       $1,330       $ 7,288
                                                  =======       ======       =======

Basic and diluted net income per share            $  0.24       $ 0.06       $  0.30
                                                  =======       ======       =======

Weighted average number of shares outstanding      24,630           --        24,630
                                                  =======       ======       =======
</TABLE>


                                       6
<PAGE>

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

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

Properties

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

                                                                 As of
                                                               March 31,
                                                           2003        2002
                                                        ---------   ---------
      Residential real estate
             Number of properties                               3           4
             Number of apartments                             558         642

      Commercial real estate
             Number of properties                              13          13
             Square feet                                1,433,300   1,433,300

In February 2003 the Company completed the sale of its Weslayan Oaks apartment
complex in Houston, Texas. The net selling price was approximately $6.2 million
and the Company realized a gain of approximately $1.4 million on the sale.

A purchase and sale agreement was signed in April 2003 to sell the Reata
Apartments in Houston, Texas at a price in excess of book value. The
transaction, which is subject to the due diligence of the buyer, is not expected
to take place until the third quarter of 2003. If this sale is not completed,
the Company does not intend to actively market the property for sale.

Basis of Presentation

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

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

The results of operations for the interim periods are not necessarily indicative
of the results to be obtained for other interim periods or for the full fiscal
year.

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

Recent Accounting Standards

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


                                       7
<PAGE>

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

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

Recent Accounting Standards (continued)

In October 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". This Statement supersedes SFAS No. 121 and
requires that long-lived assets that are to be disposed of by sale be measured
at the lower of book value or fair value less costs to sell. SFAS No. 144
retains the fundamental provisions of SFAS 121 for (a) recognition and
measurement of the impairment of long-lived assets to be held and used, and (b)
measurement of long-lived assets to be disposed of by sale, but broadens the
definition of what constitutes a discontinued operation and how the results of a
discontinued operation are to be measured and presented. This Statement was
effective at the beginning of 2002. The impact of adoption did not have a
material impact on the Company's financial position, results of operations and
cash flows. The Company does not have any real estate assets that it considers
"held for sale" at December 31, 2002 or March 31, 2003.

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

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit or Disposal Activities". This statement was effective January 1, 2003. SFAS
No. 146 replaces current accounting literature and requires the recognition of
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. FAS No. 146
supersedes Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity,"
which in some cases required certain costs to be recognized before a liability
was actually incurred. The adoption of this standard is not expected to have a
material impact on the Company's financial position, results of operations or
cash flow.

On November 25, 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45")
"Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB
Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34". FIN
45 clarifies the requirements of SFAS No. 5 "Accounting for Contingencies",
relating to a guarantors accounting for, and disclosure of, the issuance of
certain types of guarantees. The disclosure requirements of FIN 45 were
effective for the Corporation as of December 31, 2002, and require disclosure of
the nature of the guarantee, the maximum potential amount of future payments
that the guarantor could be required to make under the guarantee, and the
current amount of the liability, if any, for the guarantor's obligations under
the guarantee. The recognition requirements of FIN 45 are to be applied
prospectively to guarantees issued or modified after December 31, 2002. The
Company has reviewed the provisions of FIN 45 and believes that the impact of
adoption will not be material to its financial position, results of operations
and cash flow.

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


                                       8
<PAGE>

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

2.    Investment Services Activity

During the three months ended March 31, 2003, two Sponsored REITs, FSP Royal
Ridge Corp. and FSP Collins Crossing Corp., acquired office buildings in
Alpharetta, Georgia and Richardson, Texas, respectively. The Company sold on a
best efforts basis, through private placements, approximately $52.9 million in
preferred stock in these Sponsored REITs. The Company recorded approximately
$3.2 million and $1.9 million of syndication fee and transaction fee revenues,
respectively, as a result of these transactions.

The Company has in the past acquired by merger entities similar to the Sponsored
REITs. On January 14, 2003, the Company entered into a merger agreement to
acquire 13 Sponsored REITs (the "Merger Agreement"). The Company's business
model for growth includes the potential acquisition by merger in the future of
Sponsored REITs. However, except pursuant to the Merger Agreement, the Company
has no legal or 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
likely would require the approval of the shareholders of the Company.

3.    Real Estate Assets Held For Syndication

Real estate assets held for syndication represents the net assets of a Sponsored
REIT which was owned 99% by the Company and 1% by an officer of the Company at
March 31, 2003. The Company intends to syndicate, on a best efforts basis,
through a private placement, approximately $55.5 million in preferred stock in
the Sponsored REIT. Approximately $23.1 million had been sold through March 31,
2003.

Following the anticipated syndication of the preferred stock in the second
quarter of 2003, the Company will own 99% of the common stock in the Sponsored
REIT, which represents less than a 1% ownership interest in the Sponsored REIT.
Additionally, the Company anticipates earning a fee of approximately 1% of gross
rental revenue, as defined, for services rendered in connection with the ongoing
asset management of the property. Accordingly, as the Company anticipates having
significant continuing involvement following the syndication, as defined in FAS
144, syndication and transaction fees and related expenses from the syndication
will be recorded in continuing operations.

The assets owned by the Sponsored REIT, FSP Collins Crossing Corp., were
purchased on March 3, 2003, are located in Richardson, Texas and are comprised
principally of land and an office building totaling $45.2 million. The purchase
was funded by a mortgage loan of $45.2 million from the Company to the Sponsored
REIT. The Company obtained the funds to make this loan by drawing on its line of
credit.


                                       9
<PAGE>

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

4.    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 March 31, 2003, December 31, 2002 and
March 31, 2002, the Company had ownership interests in eighteen, sixteen and
twelve Sponsored REITs, respectively.

Summarized financial information for the Sponsored REITs is as follows:

                                                     March, 31     December 31,
                                                        2003           2002
                                                     ---------      ---------
      (in thousands)

      Balance Sheet Data:
      ----------------------
      Real estate, net                               $ 404,695      $ 385,907
      Other assets                                      43,582         39,465
      Total liabilities                                 (6,692)        (6,554)
                                                     ---------      ---------
      Shareholders' equity                           $ 441,585      $ 418,818
                                                     =========      =========

                                                      For the three months ended
                                                             March 31,
                                                         2003             2002
                                                       --------         -------
      (in thousands)

      Operating Data:
      ----------------------
      Rental revenue                                   $ 15,667         $ 8,677
      Other revenue                                         108             220
      Operating and maintenance expenses                 (5,020)         (4,512)
      Depreciation and amortization                      (2,619)         (1,296)
      Interest expense and commitment fees                 (767)             (5)
                                                       --------         -------
      Net income                                       $  7,369         $ 3,084
                                                       ========         =======

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

                                                      For the three months ended
                                                              March 31,
      (in thousands)                                    2003            2002
                                                       ------          ------

      Sponsored REIT income                            $  384          $   32
      Sponsored REIT expense                             (291)            (17)
                                                       ------          ------
             Net income                                $   93          $   15
                                                       ======          ======

The Company provided syndication and real estate acquisition advisory services
for the Sponsored REITs in 2003 and 2002. For the three months ended March 31,
2003 and 2002, respectively, syndication fees were approximately $3.2 million
and $1.7 million, and transaction fees were approximately $1.9 million and $1.4
million.

Asset management fee income charged by the Company to the Sponsored REITs
amounted to approximately $149,000 and $59,000 for the three months ended March
31, 2003 and 2002, respectively, and is included in "Interest and other" in the
Consolidated Statements of Income. Management fees range from 1% to 5% of
collected rents and the applicable contracts are cancelable with 30 days notice.


                                       10
<PAGE>

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

5.    Bank Note Payable

On March 31, 2003, approximately $24.0 million was outstanding under the
Company's $50.0 million unsecured line of credit (the "Loan Agreement").
Borrowings under the Loan Agreement bear interest at a rate of either the bank's
base rate or a variable LIBOR rate, as defined, which was 4.25% per annum at
March 31, 2003. There were no borrowings outstanding under the Loan Agreement at
December 31, 2002. The Loan Agreement terminates on June 23, 2003.

6.    Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted
average number of Company shares outstanding during the period. Diluted net
income per share reflects the potential dilution that could occur if securities
or other contracts to issue shares were exercised or converted into shares.
There were no potential dilutive shares outstanding at March 31, 2003 and 2002.

The denominator used for calculating basic and diluted net income per share was
24,630,000 shares and 24,623,000 shares at March 31, 2003 and 2002,
respectively.

7.    Business Segments

The Company operates in two business segments: rental operations and investment
services (including real estate acquisition, financing and broker/dealer
services). The Company has identified these segments because this discrete
information is the basis upon which management makes decisions regarding
resource allocation and performance assessment. The accounting policies of the
reportable segments are the same as those described in the "Significant
Accounting Policies" set forth in Note 2 to the Company's audited financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 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
real estate; less purchases of property and equipment ("Capital Expenditures")
and payments for deferred leasing commissions, plus proceeds from (payments to)
cash reserves established at the acquisition date of the property. Depreciation
and amortization, non-cash compensation, straight-line rents adjustments and the
gain or loss adjustment on the sale of real estate are an adjustment to CAD as
these are non-cash items included in net income. Capital Expenditures, payments
of deferred leasing commissions and the proceeds from (payments to) the funded
reserve are an adjustment to CAD as they represent cash items not reflected in
income. CAD should not be considered as an alternative to net income (determined
in accordance with GAAP), as an indicator of the Company's financial
performance, nor as an alternative to cash flows from operating activities
(determined in accordance with GAAP), nor as a measure of the Company's
liquidity, nor is it necessarily indicative of sufficient cash flow to fund all
of the Company's needs. Other real estate companies may define CAD in a
different manner. It is at the Company's discretion to retain a portion of CAD
for operational needs. The Company believes that in order to facilitate a clear
understanding of the results of the Company, CAD should be examined in
connection with net income and cash flows from operating, investing and
financing activities in the consolidated financial statements.


                                       11
<PAGE>

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

7.    Business Segments (continued)

CAD by business segment is as follows (in thousands):

                                                 Rental    Investment
                                               Operations   Services     Total
                                               ----------   --------     -----
Three Months Ended March  31, 2003

Net Income                                      $ 6,986      $ 302      $ 7,288
Depreciation and amortization                       901         30          931
Straight line rent                                  432         --          432
Non-cash compensation expense                        --         --           --
Loss (gain) on sale of property                  (1,421)        --       (1,421)
Capital expenditures                               (183)        --         (183)
Payment of deferred leasing costs                   (53)        --          (53)
Proceeds from sale of property (net)              6,228         --        6,228
Proceeds from (payments to) funded reserves      (6,037)        --       (6,037)
                                                -------      -----      -------

Cash Available for Distribution                 $ 6,853      $ 332      $ 7,185
                                                =======      =====      =======

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)
Non-cash compensation expense                        --         --           --
Loss (gain) on sale of property                      --         --           --
Capital expenditures                               (546)        (2)        (548)
Payment of deferred leasing costs                  (211)        --         (211)
Proceeds from sale of property (net)                 --         --           --
Proceeds from (payments to) funded reserves         749         --          749
                                                -------      -----      -------

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


                                       12
<PAGE>

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

7.  Business Segments (continued)

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

                                                Rental     Investment
                                              Operations    Services     Total
                                              ----------    --------     -----
Three Months Ended March 31, 2003:
     Revenue                                   $  9,240      $3,407    $ 12,647
     Interest Income                                296          21         317
     Interest Expense                               331          --         331
     Discontinued Operations                      1,434          --       1,434
     Capital Expenditures                           183          --         183
     Total assets at March 31, 2003             218,793       6,040     224,833

Three Months Ended March 31, 2002:
     Revenue                                   $  7,847      $1,775    $  9,622
     Interest Income                                 55          18          73
     Interest Expense                                59          --          59
     Discontinued Operations                         70          --          70
     Capital Expenditures                           546           2         548
     Total assets at March 31, 2002             196,365       2,932     199,297

8.    Cash Dividends

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

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

      First quarter of 2003                      $   .31            $ 7,635

      First quarter of 2002                      $   .31            $ 7,622

9.    Income Taxes

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

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


                                       13
<PAGE>


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

9.    Income Taxes (continued)

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

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

                                                              For the
                                                         Three Months Ended
                                                        -------------------
      (in thousands)                                     2003          2002
                                                        -----         -----

      Federal income tax expense at statutory rate      $ 195         $  --
      Increase (decrease) in taxes resulting from:
          State income taxes, net of federal impact        34            --
                                                        -----         -----
                                                        $ 229         $  --
                                                        =====         =====

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.

10.   Subsequent Events

The Company declared a dividend of $0.31 per share on May 12, 2003 to
shareholders of record as of May 12, 2003.


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
financial statements, including trends which might appear, should not be taken
as necessarily indicative of future operations. This discussion may also contain
forward-looking statements based on current judgments and current knowledge of
management, which are subject to certain risks, trends and uncertainties that
could cause actual results to differ materially from those indicated in such
forward-looking statements. Accordingly, readers are cautioned not to place
undue reliance on forward-looking statements. Investors are cautioned that the
Company's forward-looking statements involve risks and uncertainty, including
without limitation, changes in economic conditions in the markets in which the
Company owns properties, changes in the demand by investors for investment in
Sponsored REITS, the impact of the events of September 11, 2001, risks of a
lessening of demand for the types of real estate owned by the Company, changes
in government regulations, and expenditures that cannot be anticipated such as
utility rate and usage increases, unanticipated repairs, insurance increases and
real estate tax valuation reassessments. See "Risk Factors" in Item 1A of the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.
Although we believe the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of activity,
performance or achievements. We will not update any of the forward-looking
statements after the date this quarterly report is filed to conform them to
actual results or to changes in our expectations that occur after such date,
other than as required by law.

Critical Accounting Policies

Basis of Presentation

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


                                       14
<PAGE>

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

Real Estate Assets

Real estate assets are stated at the lower of depreciated cost or fair value.
The cost of buildings and improvements 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 Company periodically reviews its properties to determine if its carrying
amounts will be recovered from future operating cash flows. The evaluation of
anticipated cash flows is highly subjective and is based in part on assumptions
regarding future occupancy, rental rates and capital requirements that could
differ materially from actual results in future periods. Since cash flows on
properties considered to be "long-lived assets to be held and used" as defined
by FAS 144 are considered on an undiscounted basis to determine whether an asset
has been impaired, the Company's established strategy of holding properties over
the long term directly 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.

Revenue Recognition

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

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

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

Depreciation 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 portion of the acquisition cost
allocated between land and building for each property may vary based on
estimated land value and other factors. 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 allocation
of a property's acquisition costs to buildings and the determination of the
asset's useful life are based on management's estimates.


                                       15
<PAGE>

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

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

Overall occupancy dropped slightly from the fourth quarter of 2002 through the
first quarter of 2003. Many national and global factors affect the demand for
rental space in the Company's markets. The Company does not anticipate a
meaningful increase in rents or leasing activity until there is new job growth.
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 March 31, 2003. The lease at the Bollman property in Savage,
Maryland expired on November 30, 2002, and the building remains vacant. The
monthly operating costs are projected at approximately $25,000 per month. The
lease at Blue Ravine in Folsom, California will terminate on June 30, 2003.
Monthly operating costs for Blue Ravine are less than $10,000 per month.

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 and Home Gold has vacated the premises.

An offer to sell a parcel of vacant land in Southfield, Michigan was accepted in
December 2002, but the parties still cannot agree on the terms of a purchase and
sale agreement. The Company believes that this transaction is unlikely to be
completed in the foreseeable future.

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

                                                             March 31,
                                                   ------------------------
                                                      2003           2002

      Residential:
        Number of properties                               3              4
        Number of apartment units                        558            642

      Commercial:
        Number of properties                              13             13
        Square footage                             1,433,000      1,433,000


                                       16
<PAGE>

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

Investment Services

Unlike the Company's real estate business, which provides a rental revenue
stream which is ongoing and recurring in nature, the Company's investment
banking business is transactional in nature. Trends in 2002 and in the first
quarter of 2003 were below expectations in terms of the amount of equity raised.
Future business in this area is unpredictable.

The Company's acquisition executives are reporting some of the largest spreads
between bid and ask prices for properties that they have seen in the Company's
history. The larger-than-normal spreads may be caused by differing views of the
strength and timing of a national economic recovery as well as low interest rate
carrying costs on debt-financed properties. Without the ability to acquire
properties at attractive prices on behalf of Sponsored REITs, the Company's
investment banking activities may suffer.

Further, the Company continues to rely solely on its in-house investment
executives to access interested investors who have capital they can afford to
place in an illiquid position for an indefinite period of time (i.e., investment
in Sponsored REITs). While the Company continues to expand its in-house sales
force, uncertainties always exist as to whether it is capable, either through
the Company's existing client base or through new clients, of raising the amount
of capital invested in Sponsored REITs to achieve future performance objectives.
Further setbacks in the stock market or the general economy could have negative
effects, and while the tragic events of September 11, 2001 did not disrupt the
Company's transactional business unit significantly, further terrorist attacks,
if they occur, may have an adverse effect on the willingness of investors to
purchase interests in future Sponsored REITs.


                                       17
<PAGE>

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

Results of Operations

The following table shows the variance in dollars for the Company's operations
for the three months ended March 31, 2003 and 2002.

                                                     Variance in dollars for the
                                                         three months ended
(in thousands)                                        March 31, 2003 and 2002
                                                      -----------------------

Revenue:
   Rental Operations
   Rental Income                                             $  (563)
   Transaction Income                                          1,604
   Sponsored REIT income                                         352
   Interest Income                                               317
                                                             -------
      Total rental operations revenue                          1,710

Investment services
   Syndication Income                                          1,475
   Transaction Income                                            157
   Interest Income                                               (73)
                                                             -------
      Total investment services revenue                        1,559

Total Revenue                                                  3,269

Expenses:
   Rental operations
   Selling, general and administrative                          (193)
   Rental operating expenses                                      92
   Depreciation and amortization                                (147)
   Real estate taxes and insurance                                95
   Sponsored REIT expense                                        274
      Interest Expense                                           272
                                                             -------
Total rental operations expenses                                 393

Investment Services Expenses
   Selling, general and administrative                            66
   Commission expense                                            770
   Partnership units issued as comp                               --
   Depreciation and amortization                                 (41)
                                                             -------
      Total investment services expenses                         795

Total Expenses                                                 1,188

Income Before Interest                                         2,081

Interest income                                                  (25)
                                                             -------
Income before taxes on income                                  2,056

Taxes on income                                                  229
                                                             -------
Income before discontinued operations                          1,827

Income from discontinued operations                              (57)
Gain on sale of real estate from discontinued ops              1,421
                                                             -------

Net Income                                                   $ 3,191
                                                             =======


                                       18
<PAGE>

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

Comparison of the three months ended March 31, 2003 to the three months ended
March 31, 2002.

Net Income

The Company's net income for the three months ended March 31, 2003 was $7.3
million, compared to $4.1 million during the comparable period in 2002, an
increase of approximately $3.2 million, of which an increase of $1.8 million
relates to continuing operations and $1.3 million to discontinued operations,
including the gain on the sale of Weslayan Oaks. The net income from continuing
operations of $1.8 million is comprised of an increase of $1.3 million from
rental operations, plus an increase of $0.7 million, offset by taxes of $0.2
million, on income related to investment services.

Revenue

Total revenues during the three months ended March 31, 2003 increased $3.3
million to $13.0 million compared to $9.7 million for the three months ended
March 31, 2002. This is primarily attributable to the syndication of two
Sponsored REITs (with aggregate proceeds of $52 million) in 2003 as compared to
one Sponsored REIT (with aggregate proceeds of $25 million) in the comparable
period in 2002. The increase of $3.3 million is comprised of an increase of $1.7
million in rental operations revenue and an increase of $1.6 million in
investment services revenue.

For the three months ended March 31, 2003 revenues from rental operations
increased by approximately $1.7 million. This increase is primarily attributable
to increased Sponsored REIT income of $0.4 million. Increases in transaction
income of $1.6 million and interest income of $0.3 million are attributable to
the increase in syndication proceeds discussed above. These increases are offset
by a decrease in rental income of $0.6 million that is primarily attributable to
straight-line rents of approximately $0.4 million plus the vacancy at Bollman
Place of approximately $0.2 million.

Investment services revenue increased $1.6 million of which $1.5 million relate
to an increase in syndication fees and $0.1 million relate to an increase in
transaction fees. These increases are attributable to the increase in
syndication proceeds discussed above.

Expenses

Total expenses during the three months ended March 31, 2003 increased $1.2
million to $6.9 million compared to $5.7 million for the three months ended
March 31, 2002. This increase is primarily attributable to an increase in
investment services expenses of $0.8 million and an increase in rental
operations expenses of $0.4 million.

The increase in rental operations expenses of $0.4 million was primarily
attributable to an increase in Sponsored REIT expenses of $0.3 million plus
interest expense of $0.3 million relating to the syndication of Sponsored REITs.
These increases are offset by decreased expenses of $0.1 million relating to the
vacancy at Bollman Place and $0.1 million of depreciation expense.

The increase in investment services expenses of $0.8 million was primarily
attributable to commission expense relating to the increase in aggregate
syndication proceeds, as discussed in "Revenue" above.

Taxes on income

Taxes on income were $0.2 million for the three months ended March 31, 2003.
There were no taxes on income for the comparable period in 2002.

Discontinued operations

The Company sold the Weslayan Oaks apartment complex in February 2003 and
recognized a gain of $1.4 million. There were no sales of real estate in the
comparable period of 2002. The decrease in net income of less than $0.1 million
for Weslayan Oaks is attributable to the sale of the property during the period.

Liquidity and Capital Resources

Cash and cash equivalents were $26.3 million and $22.3 million at March 31, 2003
and December 31, 2002, respectively. This increase of $3.9 million is
attributable to $6.6 million provided by operating activities plus $16.3 million
provided by financing activities offset by $19.0 million used by investing
activities.


                                       19
<PAGE>

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

Operating Activities

The Company's cash provided by operating activities of $6.6 million is primarily
attributable to net income of approximately $7.3 million less a net adjustment
of $0.5 million for non-cash activity (relating to depreciation of $0.9 million
offset by a gain on the sale of real estate assets of $1.4 million) less a $0.3
million net change in operating assets and liabilities.

Investing Activities

The Company's cash used for investing activities of $19.0 million is primarily
attributable to the $25.3 million increase in assets held for syndication offset
by $6.2 million proceeds received from the sale of Weslayan Oaks.

Financing Activities

The Company's cash provided by financing activities of $16.3 million is
attributable to $24.0 million of net proceeds from a bank note payable offset by
$7.6 million of distributions to shareholders.

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 March
31, 2003 we had approximately $28.0 million in liabilities of which $24.0
million is a bank note payable. 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 Sponsored REITs.

The Company maintains an unsecured line of credit through Citizens Bank. The
Company has entered into a Master Promissory Note and Loan Agreement which
provides for a revolving line of credit of up to $50.0 million. Borrowings under
the line bear interest at either the bank's base rate or a variable LIBOR rate.
The Company typically uses the unsecured line of credit to provide each
newly-formed Sponsored REIT with the funds to purchase a property. The Company's
loan agreement with the bank includes customary restrictions on property liens
and requires compliance with various financial covenants. Financial covenants
include maintaining minimum cash balances in operating accounts, tangible net
worth of at least $140.0 million and compliance with other various debt and
income ratios. The Company was in compliance with all covenants as of March 31,
2003. The Company had $24.0 million of borrowings under its revolving credit
facility as of March 31, 2003. The Company intends to renew the loan agreement
when it expires on June 23, 2003.

Contingencies

The Company is subject to various legal proceedings and claims that 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.

Assets Held for Syndication

If all of the remaining shares of preferred stock of the Sponsored REIT are
sold, the Company anticipates recording approximately $2.0 million and $2.0
million of syndication fee and transaction fee revenue, respectively. The
Company expects to record approximately $1.1 million in expenses.

Related Party Transactions

As discussed in Note 2, during the first quarter of 2003, the Company syndicated
two Sponsored REITs and retained a non-controlling common stock interest in
those Sponsored REITs with virtually no economic benefit. Except for the merger
agreement discussed below, the Company did not enter into any other transactions
with related parties during the three months ended March 31, 2003. For a
discussion of transactions between the Company and related parties during 2002,
see "Certain Relationships and Related Transactions" under Item 13 of the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.

In January 2003 the Company entered into the Merger Agreement with thirteen
Sponsored REITs ("Target REITs") providing for the acquisition by the Company of
the Target REITs. The merger requires the approval of the shareholders of the
Company as well as the shareholders of the Target REITs. If approved, the
Company will issue approximately 25 million shares of its common stock for a
100% ownership interest in the Target REITs.


                                       20
<PAGE>

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

Economic Conditions

The Company generally pays the ordinary annual operating expenses of the
properties from the rental revenue generated by the properties. In addition to
rental income, the Company maintains cash reserves, which are replenished from
property operations as necessary and may be used to fund unusual expenses or
major capital purchases or improvements. The cash reserves included in cash and
cash equivalents, which as of March 31, 2003 were approximately $7.7 million,
are in excess of the known needs for extraordinary expenses or capital
improvements for the real properties for the next year. There are no external
restrictions on these reserves, and they may be used for any Company purpose.

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

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 three months ended March 31,
2003.

The Company borrows from time to time upon its line of credit. These borrowings
bear interest at a variable rate. The Company uses the funds it draws on its
line of credit for the purpose of making interim mortgage loans to newly-formed
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

Evaluation of disclosure controls and procedures. Based on their evaluation of
the Company's disclosure controls and procedures (as defined in Rules 13a-14(c)
and 15d-14(c) under the Securities Exchange Act of 1934) as of a date within 90
days of the filing date of this Quarterly Report on Form 10-Q, the Company's
chief executive officer and chief operating officer (equivalent of chief
financial officer) have concluded that the Company's disclosure controls and
procedures are designed to ensure 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 SECs rules and forms and are operating in an effective manner.

Changes in internal controls. There were no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their most recent evaluation.


                                       21
<PAGE>

                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings:

      Not applicable.

Item 2. Changes in Securities and Use of Proceeds:

      Not applicable.

Item 3. Defaults Upon Senior Securities:

      Not applicable.

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

Item 5. Other Information:

      Not applicable.

Item 6. Exhibits:

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

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

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

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

      Reports on Form 8-K:

      On January 15, 2003, the Company filed a Current Report on Form 8-K,
      reporting under Item 5, Other Events, on the execution of the Merger
      Agreement.


                                       22
<PAGE>


                                   SIGNATURES

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

                                      Franklin Street Properties Corp.


<TABLE>
<CAPTION>
    Date                 Signature                              Title

<S>              <C>                                <C>

May 3, 2004      By:  /s/  George J. Carter         President, Chief Executive Officer and
                      ------------------------      Director (Principal Executive Officer)
                           George J. Carter


May 3, 2004      By:  /s/  Lloyd S. Dow             Vice President and Controller
                      ------------------------      (Principal Accounting Officer)
                           Lloyd S. Dow
</TABLE>


                                       23
<PAGE>

                                  Exhibit Index

                                                                            Page

Exhibit 31.1..................................................................25
Exhibit 31.2..................................................................26
Exhibit 32.1..................................................................27
Exhibit 32.2..................................................................28


                                       24