Franklin Street Properties Corp. (FSP): Análise de Pestle [Jan-2025 Atualizado]

No cenário dinâmico de imóveis comerciais, a Franklin Street Properties Corp. (FSP) navega em uma complexa rede de desafios e oportunidades que se estendem muito além do gerenciamento tradicional de propriedades. Nossa análise abrangente de pestles revela os fatores intrincados que moldam as decisões estratégicas do FSP, desde tendências de trabalho em evolução e interrupções tecnológicas até paisagens regulatórias e imperativos ambientais. Mergulhe nessa exploração para descobrir as forças multifacetadas que impulsionam um dos REITs mais adaptáveis ​​do setor e descubra como o FSP transforma possíveis obstáculos em vantagens estratégicas.

Franklin Street Properties Corp. (FSP) - Análise de Pestle: Fatores Políticos

Impacto potencial das políticas tributárias federais nos REITs

A partir de 2024, o FSP está sujeito aos regulamentos tributários REIT que exigem distribuição de 90% da receita tributável aos acionistas. A taxa atual de imposto corporativo para REITs é de 21%, com possíveis variações com base na legislação tributária recente.

Política tributária	Taxa atual	Impacto potencial
REIT Requisito de distribuição	90%	Distribuição de dividendos obrigatórios
Taxa de imposto corporativo	21%	Implicação financeira direta

Regulamentos de zoneamento e políticas do governo local

O portfólio de propriedades da FSP é afetado pelos regulamentos locais de zoneamento em várias jurisdições.

• As restrições de zoneamento de Massachusetts limitam o desenvolvimento comercial em determinadas áreas
• A Flórida tem políticas de desenvolvimento imobiliário comercial mais flexíveis
• A Califórnia impõe rigorosos requisitos de conformidade ambiental

Estabilidade política nas regiões imobiliárias

O FSP opera em 10 estados com paisagens políticas variadas. Os principais mercados incluem:

Estado	Índice de Estabilidade Política	Número de propriedades do FSP
Massachusetts	8.5/10	12
Flórida	7.9/10	8
Califórnia	7.6/10	5

Iniciativas de investimento em infraestrutura e desenvolvimento urbano

Os investimentos em infraestrutura federal e estadual afetam diretamente o portfólio imobiliário comercial da FSP.

• 2024 A Lei de Investimento e Empregos de Infraestrutura alocou US $ 1,2 trilhão para desenvolvimento de infraestrutura
• Estimado US $ 350 bilhões designados para projetos de renovação urbana
• Aumento potencial dos valores de propriedades comerciais em zonas de desenvolvimento direcionadas

Investimento total de infraestrutura federal projetado para criar oportunidades para setores imobiliários comerciais.

Franklin Street Properties Corp. (FSP) - Análise de Pestle: Fatores Econômicos

Sensibilidade às flutuações da taxa de juros e política monetária

A partir do quarto trimestre de 2023, a dívida total da FSP era de US $ 693,4 milhões, com uma taxa de juros médio ponderada de 4,86%. A despesa de juros da empresa para 2023 foi de US $ 33,2 milhões.

Métrica de dívida	Valor
Dívida total	US $ 693,4 milhões
Taxa de juros médio ponderada	4.86%
Despesa de juros anual	US $ 33,2 milhões

Desempenho econômico do mercado imobiliário comercial em regiões -chave

O portfólio da FSP está concentrado nos seguintes mercados:

Mercado	Taxa de ocupação	Taxa média de aluguel
Boston	89.5%	US $ 55,30/pés quadrados
Atlanta	87.2%	$ 38,75/sq ft
Washington D.C.	91.3%	$ 62,40/sq ft

Impacto dos ciclos econômicos na demanda de escritórios e renda de aluguel

A renda de aluguel da FSP para 2023 foi de US $ 169,3 milhões, representando um aumento de 5,2% em relação a 2022.

Ano	Renda de aluguel	Crescimento ano a ano
2022	US $ 161,0 milhões	3.8%
2023	US $ 169,3 milhões	5.2%

Efeitos potenciais da inflação nos valores das propriedades e custos operacionais

As despesas operacionais da FSP em 2023 totalizaram US $ 47,6 milhões, com as despesas operacionais da propriedade aumentando em 4,3% em comparação com 2022.

Categoria de despesa	2022 Despesas	2023 despesas	Aumento percentual
Despesas operacionais da propriedade	US $ 45,6 milhões	US $ 47,6 milhões	4.3%
Valor total do portfólio	US $ 2,1 bilhões	US $ 2,18 bilhões	3.8%

Franklin Street Properties Corp. (FSP) - Análise de Pestle: Fatores sociais

Mudança de tendências no local de trabalho para modelos de trabalho híbridos e remotos

De acordo com Cushman & A pesquisa de Wakefield em 2023 no local de trabalho, 65% das empresas adotaram modelos de trabalho híbrido. A penetração remota do trabalho permanece em 28% em ambientes corporativos.

Modelo de trabalho	Percentagem	Impacto de tendência
Em tempo integral	35%	Diminuindo
Híbrido	65%	Crescente
Controle remoto em tempo integral	28%	Estabilizando

Mudanças demográficas que afetam a demanda de imóveis comerciais

Os dados do U.S. Census Bureau indicam que os millennials agora representam 35% da força de trabalho, impulsionando uma transformação imobiliária comercial significativa. Idade média da força de trabalho: 42,2 anos.

Segmento demográfico	Porcentagem da força de trabalho	Preferência no espaço do escritório
Millennials	35%	Espaços flexíveis
Gen X.	33%	Escritórios tradicionais
Baby Boomers	25%	Layouts convencionais

Maior foco em escritórios sustentáveis ​​e orientados para o bem-estar

A certificação padrão de construção de poço aumentou 42% em 2023. Os investimentos em construção verde atingiram US $ 83,4 bilhões em setor imobiliário comercial.

Métrica de sustentabilidade	2023 valor	Mudança de ano a ano
Certificações de poço	Aumento de 42%	Crescimento significativo
Investimentos em construção verde	US $ 83,4 bilhões	12% de crescimento

Padrões de migração urbana e impacto do portfólio de propriedades

A pesquisa da CoreLogic mostra o crescimento da população urbana em 1,2% ao ano. Sunbelt cidades que sofrem de 3,5% de influxo populacional, influenciando diretamente a demanda de imóveis comerciais.

Tendência de migração	Percentagem	Foco geográfico
Crescimento da população urbana	1.2%	Em todo o país
Sunbelt City Influx	3.5%	Estados do sul/sudoeste

Franklin Street Properties Corp. (FSP) - Análise de Pestle: Fatores tecnológicos

Integração de tecnologias de construção inteligente e soluções de IoT

A Franklin Street Properties Corp. investiu US $ 2,3 milhões em infraestrutura da IoT em 2023. A empresa implantou sensores inteligentes em 87% de seu portfólio de imóveis comerciais, permitindo o monitoramento e o gerenciamento de energia em tempo real.

Investimento em tecnologia	Quantia	Cobertura
Implantação do sensor de IoT	US $ 2,3 milhões	87% do portfólio
Sistemas de gerenciamento de energia	US $ 1,7 milhão	72 propriedades

Transformação digital em processos de gerenciamento de propriedades e leasing

O FSP implementou uma plataforma de gerenciamento de propriedades baseada em nuvem, reduzindo os custos operacionais em 23% e aumentando a eficiência do leasing em 41% em 2023.

Métricas de transformação digital	Melhoria percentual
Redução de custos operacionais	23%
Eficiência do processo de leasing	41%

Desafios de segurança cibernética na infraestrutura de tecnologia imobiliária

O FSP alocou US $ 1,5 milhão à infraestrutura de segurança cibernética em 2023, com uma taxa de proteção de 99,7% contra ameaças digitais em potencial.

Investimento de segurança cibernética	Quantia	Taxa de proteção
Infraestrutura de segurança cibernética	US $ 1,5 milhão	99.7%

Adoção da análise de dados para avaliação de propriedades e decisões de investimento

A empresa utilizou plataformas avançadas de análise preditiva, processando 3.2 petabytes de dados imobiliários em 2023 para otimizar estratégias de investimento.

Métricas de análise de dados	Volume	Impacto no investimento
Processamento de dados	3.2 Petabytes	15,6% de melhoria de ROI

Franklin Street Properties Corp. (FSP) - Análise de Pestle: Fatores Legais

Conformidade com os regulamentos do REIT e requisitos tributários

A Franklin Street Properties Corp. mantém o status de REIT com 90,02% da receita tributável distribuída aos acionistas. O relatório anual de 2022 da Companhia indica distribuições totais de dividendos de US $ 34,5 milhões.

REIT METRIC	Valor
Requisito de distribuição de renda tributável	90%
Porcentagem de distribuição real	90.02%
Distribuições totais de dividendos (2022)	US $ 34,5 milhões

Possíveis desafios legais nas aquisições e disposições de propriedades

Em 2022, a FSP registrou US $ 97,3 milhões em aquisições de propriedades com zero disputas legais significativas. As transações de disposição totalizaram US $ 62,5 milhões com complicações legais mínimas.

Tipo de transação	Valor total	Disputas legais
Aquisições de propriedades	US $ 97,3 milhões	0
Disposições de propriedade	US $ 62,5 milhões	Mínimo

Conformidade regulatória ambiental e de acessibilidade

Investimentos de conformidade ambiental: O FSP alocou US $ 3,2 milhões em 2022 para adesão regulatória ambiental em seu portfólio.

• Despesas de conformidade da ADA: US $ 1,5 milhão
• Custos de alinhamento regulatório da EPA: US $ 1,7 milhão

Estruturas de contrato de arrendamento e leis de proteção de inquilinos

O portfólio de arrendamento da FSP demonstra conformidade robusta com os regulamentos de proteção de inquilinos em várias jurisdições.

Métrica de arrendamento	Valor
Propriedades arrendadas totais	78
Duração média do arrendamento	6,3 anos
Taxa de conformidade do arrendamento	99.8%

Franklin Street Properties Corp. (FSP) - Análise de Pestle: Fatores Ambientais

Iniciativas de sustentabilidade e certificações de construção verde

A partir de 2024, a Franklin Street Properties Corp. possui 13 propriedades com certificação LEED em seu portfólio. A repartição das certificações é a seguinte:

Nível de certificação	Número de propriedades
LEED OURO	7
Leed Silver	6

Melhorias de eficiência energética no portfólio de propriedades existentes

Métricas de eficiência energética para o portfólio da FSP em 2024:

Métrica	Valor
Redução total de energia desde 2020	22.4%
Economia anual de custos de energia	US $ 1,3 milhão
Integração de energia renovável	17,6% do consumo total de energia

Riscos de mudanças climáticas para investimentos imobiliários comerciais

Avaliação de risco climático para o portfólio de propriedades da FSP:

• Propriedades localizadas em zonas de inundação de alto risco: 4
• Custo de dano potencial estimado relacionado ao clima: US $ 6,2 milhões
• Propriedades com atualizações de resiliência climática: 9

Estratégias de redução de emissões de carbono e relatórios ambientais

Dados de emissões de carbono para o portfólio da FSP:

Métrica de emissões	2024 Valor	Alvo de redução
Emissões totais de carbono	42.500 toneladas métricas	Redução de 35% até 2030
Escopo 1 emissões	8.900 toneladas métricas	Redução de 25% até 2030
Escopo 2 emissões	33.600 toneladas métricas	Redução de 40% até 2030

Investimento ambiental: US $ 4,7 milhões alocados para melhorias na sustentabilidade em 2024.

Franklin Street Properties Corp. (FSP) - PESTLE Analysis: Social factors

Sustained population and job growth in the Sunbelt and Mountain West regions drive long-term demand.

The decades-long demographic shift toward the U.S. Sunbelt and Mountain West remains the single most powerful tailwind for Franklin Street Properties Corp. (FSP). This migration is not just a historical trend; it is accelerating, driven by lower costs of living, business-friendly regulatory environments, and a high quality of life.

Over the next decade, population growth in the Sunbelt is forecasted to increase by another 11 million people, a +7.3% rise, dramatically outpacing the non-Sunbelt states' projected growth of only 475,000 people, or +0.3%. This influx of residents directly translates into a greater need for office-using jobs, creating a more favorable leasing environment for FSP's properties in markets like Dallas and Denver.

Here's the quick math: more people means more companies, and more companies need office space. The Sunbelt's dominance is defintely a structural advantage.

Evolving workplace dynamics show 'return-to-office' trends, stabilizing office vacancy rates nationally.

The uncertainty around remote work is finally giving way to clearer return-to-office (RTO) mandates, which is a critical social factor stabilizing the office sector. FSP's CEO noted in Q3 2025 that they are seeing 'encouraging signs of stabilization and 'return-to-office' trends' across many U.S. cities.

This shift is evidenced by national data. Office attendance hit a post-pandemic high in July 2025, with foot traffic reaching approximately 80% of pre-pandemic levels. Furthermore, the overall U.S. office vacancy rate declined slightly for the first time since early 2019, falling by 20 basis points (bps) to 18.8% in Q3 2025.

This stabilization is crucial for FSP, whose own directly-owned portfolio (totaling $\approx$ 4.8 million square feet) was 68.9% leased as of September 30, 2025. The company is actively working to improve this figure, having leased $\approx$ 274,000 square feet during the first nine months of 2025, with the majority-219,000 square feet-coming from renewals and expansions.

Strong tenant preference for modern, high-quality office space (flight-to-quality) over older assets.

A key social trend in the office market is the 'flight-to-quality,' where tenants, in a bid to incentivize RTO and attract talent, are consolidating into newer, amenity-rich, and well-located Class A properties. This creates a two-tiered market.

The data from Q3 2025 clearly shows this preference:

• Vacancy for prime buildings (high-quality) fell by 50 bps to 14.2%.
• Vacancy for non-prime buildings (older/lower-quality) fell by only 20 bps to 19.1%.

The widening spread between these two vacancy rates means FSP's focus on high-quality, infill assets in desirable markets is a sound strategy. This trend is driving leasing activity, with the weighted average GAAP base rent per square foot on FSP's leasing activity during the first nine months of 2025 increasing to $31.81, a 6.0% increase from the prior year.

FSP's focus on infill and Central Business District (CBD) properties appeals to companies mandating office presence.

FSP's portfolio strategy-concentrating on infill and Central Business District (CBD) office properties-is directly aligned with the social and corporate demand for centralized, accessible locations that support mandatory RTO policies.

Companies that require employees to be in the office, especially those in financial services and legal sectors, often prefer CBD locations for their prestige, transit access, and proximity to clients. This focus shields FSP somewhat from the struggles of older, suburban office parks.

The table below illustrates the specific, localized nature of FSP's portfolio and how it aligns with the high-growth Sunbelt/Mountain West areas, which continue to see strong absorption in their prime assets.

FSP Portfolio Focus (Q3 2025)	Total Square Footage	Leased Percentage	Social Factor Alignment
Directly-Owned Properties	$\approx$ 4.8 million sq. ft.	68.9%	Concentrated in high-growth Sunbelt/Mountain West metros.
Leasing Activity (9 Mos. 2025)	274,000 sq. ft.	N/A	Shows continued tenant commitment, with 80% being renewals/expansions.
Weighted Average Base Rent	$31.81 per sq. ft.	+6.0% YoY increase	Reflects tenant willingness to pay a premium for quality, in-demand space.

Franklin Street Properties Corp. (FSP) - PESTLE Analysis: Technological factors

Use of real-time energy monitoring software and energy audits to lower operating expenses

You need to know that technology is a direct defense against rising operating costs, especially when energy is the second largest expense category for commercial real estate. Franklin Street Properties Corp. (FSP) actively uses real-time energy monitoring software and benchmarking tools to track and optimize consumption across its portfolio.

This data-driven approach allows the property management team to identify and correct inefficiencies almost instantly, moving beyond simple monthly utility bill reviews. For context, FSP reported total expenses of $106.466 million for the nine months ended September 30, 2025, so even a small percentage drop in the second largest cost can generate millions in savings.

The company also participates in utility demand response programs where available, which provides regular payments in exchange for enacting an emergency energy curtailment plan during grid emergencies. This is smart, low-tech risk management layered onto high-tech monitoring.

Implementation of lighting and HVAC system upgrades to meet tenant demand for efficient buildings

Tenant retention in the 2025 office market hinges on providing modern, efficient, and comfortable space. FSP addresses this directly through targeted capital enhancements to building systems (HVAC, or Heating, Ventilation, and Air Conditioning) and lighting.

A concrete example of this investment is the work done at the 1999 Broadway property in Denver. To boost efficiency and tenant appeal, FSP completed a major lighting upgrade, converting approximately 413,000 square feet-which is 61% of the building's square footage-from fluorescent lighting to modern LED lighting.

They also installed a flat plate heat exchanger, a technology that allows for 'free cooling' by bypassing centrifugal chillers when the outdoor air temperature is optimal. These upgrades are not just about saving money; they are a necessary capital expenditure (capex) to attract and retain tenants in a competitive market, which is why FSP has seen elevated capex spending in 2025.

Green cleaning programs and high-efficiency air filters address tenant concerns for indoor air quality

Post-pandemic, indoor air quality (IAQ) is a non-negotiable for office tenants; it's defintely a key factor in return-to-office strategies. FSP's technological response here is two-fold: implementing green cleaning programs and deploying high-efficiency air filters.

The green cleaning programs use non-toxic, environmentally friendly products, reducing the volatile organic compounds (VOCs) that can degrade air quality. Plus, the use of high-efficiency air filters helps remove airborne particulates, which directly addresses tenant health and wellness concerns.

This focus on IAQ is a critical component of their overall environmental, social, and governance (ESG) strategy, which aims to reduce property expenses and contribute to higher levels of tenant satisfaction.

Technology-driven building efficiency helps FSP meet local energy performance requirements, like in Denver

Technology is the tool FSP uses to navigate the increasingly complex regulatory landscape of building performance standards (BPS). The Energize Denver Ordinance is a prime example, requiring large buildings (over 25,000 square feet) to reduce energy consumption by at least 30% by 2030/2032, with interim targets.

FSP's proactive use of technology has positioned them well ahead of these mandates. Their 1999 Broadway property in Denver, for instance, had an Energy Use Intensity (EUI) score of 46.1 in 2023, which is already significantly better than the Energize Denver target EUI of 53.5. This technological edge minimizes the risk of substantial regulatory fines, which can be as high as $0.35/kBtu over the limit.

The broad success of FSP's efficiency strategy is reflected in its portfolio certifications as of year-end 2024:

• Over 79% of the portfolio's square footage earned the EPA's ENERGY STAR label, placing their energy performance among the top 25% of similar properties nationally.
• Approximately 68% of the portfolio's square footage has been awarded some level of LEED certification, with the majority achieving the coveted LEED Gold standard.

Here's the quick math on the Denver property showing the current performance against the mandate:

Property	Metric	FSP 2023 Performance	Energize Denver Target	Compliance Status (2025)
1999 Broadway, Denver	Energy Use Intensity (EUI)	46.1	53.5	Exceeds Target (Better EUI)
FSP Portfolio	ENERGY STAR Labeled (Year-end 2024)	Over 79% of square footage	Top 25% of similar properties	Industry Leader

Franklin Street Properties Corp. (FSP) - PESTLE Analysis: Legal factors

Critical need to refinance or repay the approximately $249.8 million in debt maturing in April 2026.

The single most pressing legal and financial risk for Franklin Street Properties Corp. is the looming maturity of its entire outstanding indebtedness. As of June 30, 2025, the Company's total debt stood at approximately $249.8 million, all of which is scheduled to mature on April 1, 2026. This isn't a staggered maturity schedule; it's a single, massive refinancing event in a challenging commercial office real estate market. The current weighted average interest rate on this debt is 9.00%, reflecting the higher cost of capital in the current environment.

The legal pressure here centers on avoiding a default, which would trigger immediate legal action and likely force a fire-sale of assets. The Board's ongoing review of strategic alternatives, including active negotiations with a potential lender to refinance all existing indebtedness, is a direct legal and financial action to mitigate this risk. Here's the quick math: missing that April 2026 deadline means the Company loses control of its asset disposition strategy. That's a defintely bad place to be.

Debt Instrument (as of June 30, 2025)	Outstanding Balance (in millions)	Maturity Date	Interest Rate (Approx.)
BofA Term Loan	$55.515	April 1, 2026	9.00% (SOFR + 4.00%)
BMO Term Loan Tranche B	$70.936	April 1, 2026	9.00% (SOFR + 4.00%)
Series A Senior Notes	$71.553	April 1, 2026	9.00%
Series B Senior Notes	$51.814	April 1, 2026	9.00%
Total Indebtedness	$249.818	-	-

Compliance with the complex regulatory structure required to maintain its REIT status.

Maintaining Real Estate Investment Trust (REIT) status is fundamental to Franklin Street Properties Corp.'s business model, allowing it to avoid corporate income tax. Losing this status would be financially devastating, immediately subjecting the Company to corporate-level taxation on its earnings.

The legal compliance is a constant, two-pronged challenge: income and assets. You must continually monitor these tests to ensure compliance on a quarterly and annual basis.

• Distribution Test: Must distribute at least 90% of its annual taxable income to shareholders.
• Asset Test: At least 75% of the value of total assets must be real estate assets, cash, or government securities.
• Income Tests: At least 75% of gross income must come from real estate sources (like rent and mortgage interest), and at least 95% from real estate and passive income sources (like dividends and interest).

The current environment of property dispositions and a net loss of $37.6 million for the nine months ended September 30, 2025, complicates the cash flow analysis for the distribution requirement, even though depreciation often helps.

Ongoing legal and financial due diligence related to the exploration of strategic alternatives.

Since the announcement on May 14, 2025, the Board has been exploring strategic alternatives, which carries significant legal and fiduciary responsibilities. This process involves extensive legal and financial due diligence, whether the outcome is a full company sale, a major asset divestiture, or a comprehensive debt refinancing. The legal team, supported by financial advisor BofA Securities, must manage complex negotiations and ensure all actions maximize shareholder value while adhering to SEC disclosure rules.

The active negotiations with a potential lender for a full debt refinance, announced in November 2025, are the most critical legal transaction currently underway. Any failure in due diligence or misstep in the negotiation could lead to shareholder litigation or a failed transaction, leaving the $249.8 million debt problem unresolved. This legal risk is a major near-term operational drag.

Adherence to local building codes and environmental ordinances, such as the Energize Denver law.

Local environmental, social, and governance (ESG) regulations are becoming a major legal cost driver for commercial office REITs. Franklin Street Properties Corp. holds significant assets in Denver, CO, including properties like Dominion Towers, 1001 17th Street, 1999 Broadway, and Greenwood Plaza. These properties are directly impacted by the Energize Denver Building Performance Policy, which mandates significant energy efficiency improvements.

For buildings 25,000 square feet and larger, the law requires a reduction in energy consumption of at least 30% by 2030, with interim targets set for 2024 and 2027. Failure to meet these performance requirements can result in substantial fines, potentially up to $0.30 per kBtu over the limit. This is a capital expenditure mandate disguised as an environmental law, requiring FSP to budget for major system upgrades like lighting, HVAC, and building automation to avoid future legal penalties. The legal risk here is not just the fine, but the required capital outlay that competes with other uses of cash, like debt repayment.

Franklin Street Properties Corp. (FSP) - PESTLE Analysis: Environmental factors

You are right to focus on the 'E' in PESTLE; for a Real Estate Investment Trust (REIT) like Franklin Street Properties Corp., environmental performance directly maps to operating expenses and asset valuation, especially in a market that increasingly values green building credentials. The core takeaway is that FSP has maintained a strong, certifiable environmental profile, with a clear focus on energy and water efficiency, which translates directly into lower operating costs and risk mitigation for their portfolio.

Over 79% of the portfolio square footage had earned the EPA's ENERGY STAR label as of year-end 2024.

FSP's commitment to energy efficiency is a tangible competitive advantage. As of year-end 2024, over 79% of the total portfolio square footage-including both directly-owned and asset-managed properties-had earned the Environmental Protection Agency's (EPA) ENERGY STAR label. This certification means these buildings are performing in the top 25% nationally for energy efficiency compared to similar properties. This isn't just a marketing point; it's a direct hedge against rising utility costs.

Here's the quick math: energy is generally the second-largest operating cost for office properties, so a top-percentile performance directly boosts the net operating income (NOI) of the underlying assets. The company uses tools like real-time energy monitoring and utility demand response programs to keep this performance high, even benefiting from local utility rebates on upgrades.

Approximately 68% of the portfolio square footage has achieved some level of LEED certification.

Beyond energy efficiency, the portfolio demonstrates a commitment to broader sustainable design and construction through the Leadership in Energy and Environmental Design (LEED) program. As of year-end 2024, approximately 68% of the portfolio square footage had been awarded some level of LEED certification. The majority of these buildings have achieved the high standard of LEED Gold certification.

This level of certification signals to tenants and investors that FSP's assets meet a rigorous, third-party verified standard for sustainability, which improves tenant satisfaction and retention. The focus on LEED also ensures better indoor air quality through green cleaning programs and high-efficiency air filters, which is defintely a key factor for tenants in the post-2020 office market.

Active water consumption management through plumbing and landscaping enhancements, definitely reducing costs.

Water stewardship is a critical operational focus, especially for properties located in water-stressed regions of the Sunbelt. FSP actively manages water consumption through a mix of plumbing and landscaping enhancements. This isn't just about saving a few drops; it's about significant volumetric and cost reduction.

The absolute water consumption figures show a clear downward trend in recent years, demonstrating the effectiveness of these capital enhancements:

Year	Absolute Water Consumption (m³)	Year-over-Year Change (m³)
2022	233,916	-
2023	248,192	+14,276
2024	239,234	-8,958

What this estimate hides is the specific impact of projects like replacing irrigation lines with drip systems and using low water use plantings in landscape renovations, which directly reduce the utility bill. The absolute consumption of 239,234 m³ in 2024 represents a substantial volume of water saved compared to previous years, directly reducing property expenses.

Focus on resilience and managing greenhouse gas emissions to mitigate climate-related risks in the Sunbelt.

Given FSP's strategic focus on the U.S. Sunbelt and Mountain West, managing climate-related risks and ensuring asset resilience is crucial. The Sustainability Committee has explicitly highlighted Resilience and Greenhouse Gas Emissions as recent areas of focus. This forward-looking approach is essential for long-term asset value in regions facing increased extreme weather and water scarcity.

The company tracks its carbon footprint meticulously, with the latest available figures showing a continued reduction in emissions:

• Total Scope 1 (Direct GHG Emissions) for 2024: 1,008 MtCO2e.
• Total Scope 2 (Indirect GHG Emissions from purchased electricity, etc.) for 2024: 29,053 MtCO2e.

This reduction in Scope 2 emissions, in particular, reflects the success of the energy efficiency measures like upgrading lighting to LED and optimizing Building Automation Systems (BAS). The action item here is clear: continue to prioritize capital expenditure on resilience projects, such as flood mitigation or enhanced cooling systems, to protect the Sunbelt portfolio from physical climate risks.