Good morning and welcome to the Franklin Street Properties Corp. Fourth Quarter 2016 Results Conference Call. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Scott Carter, General Counsel. Please go ahead.

Good morning and welcome to the Franklin Street Properties fourth quarter 2016 earnings call. With me this morning are George Carter, our Chief Executive Officer; John Demeritt, our Chief Financial Officer; Jeff Carter, our President and Chief Investment Officer; and John Donahue, President of FSP Property Management. Also with me this morning are Toby Daley, Senior Vice President and Regional Director of Atlanta and Houston; Will Friend, Senior Vice President and Regional Director of Denver and Minneapolis; and Pattie McMullen, Senior Vice President and Regional Director of Dallas. Before I turn the call over to John Demeritt, I must read the following statement. Please note that various remarks that we may make about future expectations, plans, and prospects for the company may constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our annual report on Form 10-K for the year ended December 31, 2016, which is on file with the SEC. In addition, these forward-looking statements represent the company’s expectations only as of today, February 15, 2017. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statement should not be relied upon as representing the company’s estimates or views as of any date subsequent to today. At times during this call, we may refer to funds from operations or FFO, a reconciliation of FFO to GAAP net income is contained in yesterday’s press release, which is available in the Investor Relations section of our website at www.fspreit.com. Now, I will turn the call over to John. John?

Thank you Scott, good morning everyone. On today’s call, I will begin with a brief overview of our fourth quarter results. Afterward, our CEO, George Carter, will discuss our performance in more detail and provide some of his remarks. John Donahue, our President of the Asset Management team will then discuss recent leasing activities; and then Jeff, our President and CIO will discuss our investment and disposition activities. After that, we will be happy to take your questions. As a reminder, our comments today will refer to our earnings release, supplemental package and 10-K, which have been filed with SEC and as Scott mentioned, can be found on our website. We reported FFO of $26.9 million or $0.25 per share for the fourth quarter of 2016 and $106.3 million or a $1.03 per share for the full year. Compared to 2015 our full year 2016 FFO was about $600,000 lower. The FFO decrease was primarily from the impact of asset sales and loan repayments that we've received during 2016 and it was partially offset by four acquisitions that we've made including one in April of 2015 and three more in 2016, one in June, one in August, and the last one in December. As we look ahead to 2017 there should be meaningful contribution from our 2016 acquisitions. FFO on a per share basis in 2016 decreased $0.04 per share compared to 2015 primarily as a result of higher weighted average shares in 2016 from an equity offering that we completed in August. Our FFO per share of $0.25 for the quarter and $1.03 for the year was in line with our expectation and also followed our guidance. Turning to our balance sheet and current financial position at December 31, 2016 we had about a 1.50 billion of unsecured debt outstanding and our total market cap was about 2.4 billion. The debt total included a $150 million bridge loan that was used to acquire a property in Denver on December 1st. Our debt to total market capitalization ratio was 43% at the year’s end and our debt service coverage ratio was about 4.7 times. And debt to adjusted EBITDA ratio was about 7.6 times at December 31. From a liquidity standpoint we had a cash balance of 9.3 million at year-end and also had 220 million available on our $500 million unsecured line of credit and as a result we had liquidity of about 229.3 million at December 31st. We remained comfortable with our leverage and have managed our unsecured debt as part of our strategy. We can opportunistically sell some noncore assets and repay short-term floating rate debt or depending on the magnitude of sales to reinvest proceeds into properties as we've demonstrated. We continue to focus on acquisition of assets in our core markets as we find the right opportunities. With that I'll turn the call over to George.

Thank you, John. And welcome to Franklin Street Properties fourth quarter and full year 2016 earnings call. As John said for the fourth quarter of 2016 FSP’s funds from operations or FFO totaled approximately 26.9 million or $0.25 per share and for the full year of 2016 FSP’s FFO totaled approximately 106.3 million or $1.03 per share. These results are within our most recent guidance range that was given to the markets on December 14, 2016. Our dividend was $0.19 per share for the fourth quarter and the FSP Board of Directors continues to feel comfortable with this level of dividend as we begin 2017. At this time we are reaffirming our initial full year 2017 FFO guidance of $1.04 to $1.09 per share also given to the markets on December 14th of last year. For the first quarter of 2017 we estimate FFO to be in the range of $0.25 to $0.26 per share. More importantly we continue to believe that 2016 will mark the bottom of the reductive effects that our property portfolio transition has had on our FFO over the past two years. And just to look back quickly before going forward, we've had declines in FFO during 2015 and last year 2016 from a high of a $1.12 per share in 2014 to $1.03 per share for full year 2016. That is about $0.09 per share reduction over the two year period or about an 8% decrease over that two year period. That was fully anticipated by us as we transformed this portfolio and faced the hurdles of both differential cap rates from suburban to urban and of course the timing of sales and acquisitions. Currently prospectively seen activity is meaningful in all of our core markets including Houston. And we are reiterating our forecast and are very positive about resuming our FFO growth in 2017 and beyond propelled primarily from our projected realization of increased rental income from select recent property investments, select new development or redevelopment efforts such as 801 Marquette in Minneapolis, and additional leasing in our broader portfolio of urban office properties many of which contain meaningful value add square footage. We anticipate updating future FFO guidance quarterly in earnings releases. I will now turn the call over to John Donahue, President of our Property Management company. John?

Thank you, George. Good morning everyone. The total amount of leases completed in the fourth quarter was slightly greater than the third quarter. Leases completed in the full calendar year of 2016 totaled approximately 1.19 million square feet which represents 12% of the portfolio. Approximately 75% percent of the total was attributable to renewals. Leased occupancy ended the year at 89.3%. The five year average for leases signed has been 1.04 million square feet. The 1.19 million square feet for 2016 was approximately 14% greater than the five year average. During calendar 2016, the total amount of scheduled lease expirations by square foot exceeded 900,000 square feet. As a comparison in calendar 2017 we have approximately 700,000 square feet of scheduled explorations. If leasing volume in 2017 is similar or greater than 2016 and 2015 levels, we believe there will be meaningful net absorption in our portfolio. During Q1 2017, we expect approximately 60,000 to 90,000 square feet of new leases to be completed which represents net absorption and barring any surprises we anticipate that leased occupancy will improve. Total activity has been ramping up over the first month or so of the year after a brief slow down during the holidays. Minneapolis has been one of our strongest core markets with solid activity and we expect positive net absorption in Q1 and Q2. Dallas and Denver are also expected to perform well over the next two quarters with net absorption in both core markets. Atlanta as we have mentioned continues to be one of our stronger markets with solid activity but will incur approximately 240,000 square feet of lease expirations in calendar 2017. FSP remains optimistic that the increasing level of demand will translate to advocated deals during 2017 and we remain confident that we can improve occupancy during the calendar year. With that I will hand off to Jeff Carter. Jeff?

Thank you John, good morning. I'll be discussing our current investment this year and strategy. The strategic investment focus at FSP continues to be clear with primary emphasis on generating sustainable FFO growth and value creation within our portfolio and in particular within our five core markets. We believe that there are three drivers to achieve our desired results; the first driver is through leasing efforts, the second is through select investments, and the third is through select new development and redevelopment efforts like at 801 Marquette. On the disposition and asset recycling front FSP has made considerable progress in completing our portfolio transition with approximately 75% of our square feet now located within our five core markets. Since 2014, FSP has sold properties or had mortgages repaid to us of approximately 192 million through the repositioning program. This compares to approximately 359 million in acquisitions within our five core markets during the same timeframe. At this time we have stepped further acquisition, sorry, at this time we expect further dispositions this year, if satisfactory pricing and values are achieved and we will continue to keep the market posted as sales activities unfold. Specifically during the fourth quarter we exited from and sold our Federal Way, Washington State property for approximately 7.5 million on December 15th. And as a subsequent events for the fourth quarter on January 6, 2017 FSP exited from and sold our Hillview asset in Milpitas, California for 6.34 million again on January 6th of this year. In total then FSP disposed approximately 65.6 million during 2016 plus another 6.34 million in January at the start of 2017. On the acquisition front during 2016 FSP had an active year of acquisitions with approximately 281.7 million in new properties representing about 1.1 million square feet. As a reminder…

[Operator Instructions]. The first question comes from John Guinee with Stifel. Please go ahead.

Okay, great, thank you. So, basically over the course of the year it looks like you raised about 83 million of common, increased your debt outstanding by about 135, which is about equal to the net acquisitions of 210 million, and then you spent another 10 million or 20 million on 801 Marquette. 801 Marquette looks like it's about $156 a foot of spend, can you break that down to how much would be base building, and how much would be TI's and leasing commissions?

Yes, John this Will Friend. Base building is going to be in the range of $14 to $15 and the balance would be made above TI leasing commissions.

And is the $20 million number that you cited include all TIs and leasing commissions to get to stabilization?

It does though, the variable certainly on these terms and in terms of the leases, the long rental lease with even more TIs and commission. So depending on what those terms are that’s why approximately 20 million but that’s your variable.

Okay and then George, you have a sort of a long history of keeping your G&A low and keeping your interest expense low via short-term debt which allows you to pay out a relatively high dividend. Do you anticipate any changes to that strategy particularly cutting out the debt versus keeping it short?

Yeah, no I think John when we look at our debt ladder we believe that we can deal with our debt ladder as maturities come up and they are just starting to come up. And our anticipation is that we will start to term out more of our debt as those maturities come up. Exactly what percentages will depend obviously on factors at that time. But I think if you wanted to take a five year view of Franklin Street you would see more of our debt termed out and maybe as a total percentage of market -- total market capitalization actually less debt.

And do you have a -- I'm assuming you would have no mortgages, no assets specific debt just, term loans with J.P. Morgan, BAML, and BMO?

That is correct. We have no property secured debt.

Got you, okay, thank you very much, nice job.

Our next question comes from Dave Rodgers with Baird. Please go ahead.

I wanted to start with John, good morning guys, with a quick question. I think you said 60,000 to 90,000 square feet of absorption or activity in your comment. I guess I missed whether that was related specifically to the Minneapolis redevelopment or if that was at the overall portfolio? And then I had some other questions to follow.

Yes, good morning Dave. Yes, the 60,000 to 90,000 square feet comment was in regards to the entire portfolio. However, Minneapolis will be a solid contributor to that expected amount.

So I guess one other question to go back to the 88,000 of new leases that you signed in the fourth quarter did those all commence, will those commence in the coming year, how does that play out?

Yeah, it is spread out through 2017. The trend that we've been seeing has been that the demand is coming from smaller tenants and as you know that the positive of that is that the leases tend to start sooner. The larger leases tend to be -- larger prospects and the larger leases tend to be way out in front of their requirements and so those commencement dates are further out. But we expect the FFO impact to start in Q1 and to ramp up as 2017 progresses.

So I guess if I look at the 88,000 from the fourth quarter and kind of tie it back to the 60,000 to 90,000 I mean it kind of implies that you're kind of done for the year. I know there's some other move outs as well. So maybe kind of walk us through the pieces and parts that kind of get this to a number in 2017 that makes, I guess more sense relative to that you've already completed the goal for the year?

Well, I'm not sure that I look at it exactly the same way. But I understand your question. We are expecting the leasing success in the first few quarters to contribute in some way to FFO in the second half of the year. We do not have any large blocks of vacancy in the portfolio. When I say large blocks I mean above 70,000 square feet. We do have explorations late in the year that with Murphy being one of them that will be larger and then if you include the 801 Marquette building. But other than that, most of our vacancy is in single floor or less than single floor and so we are optimistic that there will be some meaningful contribution to FFO in the second half of the year.

Okay, great on that, thank you. Maybe a couple more for me, in terms of leasing activity at the 801 and the overall back feel of TFS [ph] space, can you just kind of maybe dive into a little more detail on that and the remaining timing and kind of how you're feeling about the activity there?

I'll turn it over to Will Friend in a moment. In general Minneapolis has been one of our strongest performers with activity and we have -- well, we will talk about the activity but we're encouraged by not only the 121 South Eighth Street progress but also seeing a wide variety of size prospects for Minneapolis. Will, do you have any more color there.

Yeah, I think it is important to point out that we signed a 30,000 square feet of new leases in the tower since the end of the year. John you might correct me if some of the -- the year end numbers are not but so and that’s about 12.5% of the 121 Southeast Tower. So we continue to have a really good response and activity at the building in the form of tours and actual proposals we’re working on. And at 801 Marquette the response to buildings we completed demolition and have been able to get a brokerage community and prospective tenants for the building has been nothing towards terrific. We got several proposals we’re working on today for at 801, 250,000 square feet of proposals we’re working on and we have additional tours scheduled and inquiries of property. So both from a tower perspective and then the recent 801 we’ve been great activity and the type of activity you want to see as far as proposals and assets to work.

Great last question for me, I’ll re-queue is I guess what do you see as the near-term upside at Dominion Towers. Obviously Denver has been a little bit tougher slug here going up late with regard to occupancy to Broadway in particular. So I know that turnaround was a little bit more challenging in the face of kind of the energy problem so, can you talk about kind of what you see in Dominion Towers and the opportunity there?

Absolutely, this is Jeff good morning. The acquisition of Dominion Towers really solidifies our belief and commitment into downtown Denver. We really see the fundamentals in Denver is strong from an employment and residential standpoint and yes, Denver certainly has its headwinds from energy related industries. But we think those will turn back into tailwinds in buying Dominion Tower at the basis that we were able to in the current yield that are provided but we do see upside in that building from in place rents that are at or below market. We've got a role in that building that is roughly 25% of the building rolls over the next three years at rents that weighted average probably about 18.43 on a net basis versus achieving rents there that are closer to an average of 20 for that space. So we see upside in marking to market on expiring leases and we see upside coming over time from appreciation in the performance of Denver.

Okay, great. Thank you, guys.

Yes.

Our next question comes from Tom Lesnick with Capital One. Please go ahead.

Good morning guys. I guess first on 801 Marquette and I appreciate the leasing color there. I was just looking at the transcript from last quarter and it seemed like you guys were pretty confident that the project would be completed by the end of 1Q. And now you're saying 2Q so just wondering what the delay was for?

Yes Tom, this is Will. It was really permitting -- we got hung up a little bit in the process. It’s a small building, to small projects but speaking it’s a complex project because its adjoined to the existing tower and it’s a 19, 20 building so there are a lot of things we need to work through for the permitting process. So, that's been kind of where it has been going.

Got it and Will for leasing 801 Marquette what are you guys offering right now in terms of months of free rent and when should we expect to see cash NOI really begin to come online from that project?

You know every deal offers different depending upon tenant requirement in the market. On average like say a month of gross free rent per year of term but it then varies based on the components of the terms TI, etc. So I think it is fair to say that we will start to see something, I am optimistic depending on how leases are in the fourth quarter this year but it ends up being a larger lease for a larger holding of the building after we first had a look further or we end up doing small leases on lower awards first and year of broke amendments [ph].

Got it, appreciate that and then John a quick accounting question on the 801 Marquette CAPEX, where is that being reflected in the financial statements. I just saw that TI in terms of dollar amount had picked up a little bit here in the last couple of quarters, just wondering if any of 801 Marquette was being wrapped into that or if it was just being allocated completely separately?

Well, we haven't got a lot of capital expend around the 801 Marquette. I think we will see more of that hit in 2017 but that would be what we call investment capital so we would treat it accordingly.

Got it, thank you. And then shifting to the leasing, appreciate your comments earlier about the optimism of activity generally across all of your markets. But just looking at sequentially, it looked like there was a down tick in occupancy at 380 Interlocken and One Overton, just wondering if you can comment on what's going on there?

Sure, it's John Donahue. The big picture is that same store NOI did dip across the portfolio in several of the regions. Atlanta as a whole since our NOI in Atlanta was up approximately 1.5 million in 2016 versus 2015. Overton didn't have any significant lease expirations, anything material but we did have one departure and we had one extended downsizing. So there's been a little bit of a downturn in Overton. However, again Atlanta as a whole has been one of our best markets. As far as Interlocken goes, the two Interlocken buildings combined performed exceptionally well in 2016, FFP increased approximately 800,000 or 16% compared to 2015. So we had some significant gains at the one Interlocken building and a slight downturn in the other building, but collectively they performed well.

Okay, I appreciate that. And just following up on Atlanta there, and that should be one of your strongest markets because we're hearing similar commentary from some of your peers in Atlanta and if we reflect back and look at the Two Ravinia acquisition in May of 2015 I believe that was acquired at about 81% leased. Today it's 79% leased, what do you see in terms of leasing activity for that asset specifically in terms of getting that leased up and realizing the value add component of the value proposition?

I will let Toby Daley answer that one.

Yeah, Tom most of our -- many of our lease expirations in Atlanta have been in the Two Ravinia building. It is comprised mostly of small tenants and we knew when we acquired the building that there were quite a few lease expirations coming up. And also I think a number of those tenants that were -- that leased space in that building prior to our acquisition had come from lesser quality buildings and as rents have risen they have retreated back to class B and class C properties. So we've been replacing the tenancy with a stronger credit tenants and the result has been we've been relatively flat during our ownership period. But we expect 2017 to show some steady improvement as the year progresses.

Okay, I appreciate that. And last question on leasing is, where do you guys stand in terms of progress on backfilling Murphy Oil which is coming up here in 2Q?

Yet again I think that Tom. Murphy and Conoco Phillips will vacate phase 2 of part 10 project as you well know. And as oil prices started to rise subsequent to February of last year we noticed that corresponding increase in lease activity which makes sense and right now we're dealing with it in Houston total a little over a million square feet of new lease activity. That includes enquiries, proposals, tours, and a good portion of that is focused on the part 10 phase 2 building. So we're encouraged by the activity and hope to have some good news as the year progresses.

Okay, thanks for that. Shifting to investment sales, just a couple of quick questions, but you said in the release that you feel substantially complete with the noncore asset sales but the assets outside of your five core markets still represent roughly 25% of the portfolio. As you think for 2017 and even further forward, how do you think about your approach to the cadence of noncore asset sales as opposed to what you've achieved over the last call it three or four years, do you see it picking up at all?

Well, Tom this is Jeff, good morning. Our focus -- we definitely right now have a focus on dispositions at FSP for a couple of reasons. One as you point out is to finish the transition of our portfolio through our five core markets were completely. As you mentioned we got about 25% remaining to go. And the other reason as we indicated at the time of our Dominion Tower acquisition relates to our want and need to pay down that bridge financing by the time that bridge financing comes due. So I think you will see dispositions. We are this year, I know you suspect it will and I think you'll see them in the next year as well. The patients [ph] go for those and timing of those will vary we've got multiple paths that we're looking at and we remain committed to not selling, just sell. We find we're looking to find the right prices and right values on the assets. We’ve got a number of things we’re working on. I anticipate that you'll see more sales this year, I anticipate that you’ll see more in the next year as well and we’ll keep you posted as they come up. We’d rather not indicate which properties and what our thoughts are for just competitive market reasons.

Sure, appreciate that. Can you talk at all about what you're seeing generally in the investment sales market for the assets that you’re looking to dispose off or is the buyer pool expanding, fitting, what are you seeing in terms of cap rates or per square foot metrics?

It's definitely been variable depending on the assets in question. By most historical measures as I look back over a number of years we're still seeing really strong pricing and results overall. I have definitely seen over the past six plus months that the pools of buyers have probably thinned slightly. There is probably less institutional names that we're seeing involved on some of the transactions. But there's still capital and there is still strong pricing that we been seeing on the asset that we put our there.

Appreciate that and last question are you able to provide the cap rates on each Federal Way and Hillview?

The cap rate on Federal Way was approximately 7.5 and the cap rate on the Hillview Milpitas, asset was approximately 6.7.

And just to clarify that 7.5 on Federal Way was that on in place NOI on this because it's about 61% leased or is that pro forma stabilization?

No, those were both in place numbers.

Okay, thanks guys. Appreciate it.

Our next question comes from John Kim with BMO Capital Markets. Please go ahead.

Thanks, good morning. I was interested in George's comments on this year really being bottom as far as earnings dilution from asset sales. Looking into 2018 you have a lot of floating rate that 430 million that's expiring towards end of the year. But I know you're not giving 2018 guidance now but I just wanted to make sure that you're implying that you have enough growth in your cooperation to offset that potential dilution?

We are implying that, John. Again I think the big picture here is that we've now got a real spread out diverse portfolio mostly into our core markets. A really diverse spread out suburban portfolio mostly into urban CBD properties within our markets. And that is sort of tipping point between the reductive effects of doing that which is tough to do over the last couple of years. We believe we've hit 2017, we believe will be the first year that we start to see that trend move up in our FFO -- profits from FFO. And actually as we look forward into 2018 and 2019 we see that trend accelerating potentially and accelerating meaningfully. So, in that context with debt maturities coming up during those time frames and as an earlier -- as John asked earlier planning to deal with them at that time at the appropriate time and doing some pay down of debt as we go along through some dispositions here as well as some terming out of debt as we deal with debt maturities. That increase in rental income and occupancies in this urban portfolio in these five core markets that we have transitioned to is the way to offset to that that we believe will move the numbers meaningfully.

As far as terming the debt out, is the plan to extend it for a couple of years or do you plan to utilize some longer-term debt and is it reliant on the leasing activity that you have between now and the fourth quarter next year?

John I think it all intersects and so including the markets at the time obviously and there is still some difference of opinions on what the markets look like going out and so we'll analyze those at the time. But I think overall you will see us laddering so you'll see different maturities from shorter-term effects to some longer-term. So we'll -- if you are asking me today what we would look like again five years from now, I would say you would see a ladder of portfolio of debt.

Okay, and then also you mentioned the FFO growth sort of accelerating but I was wondering if you still feel the same way about AFFO given the amount of lease expiration over the next couple years?

Well, we definitely have TIs and leasing commissions that will be meaningful this year and next. But if we're moving the FFO number we believe that our AFFO will be in line and will definitely be in line with our dividend and it might make some sense in terms of start of the year. Just to talk about the way we think about our dividend and levels of AFFO, we worked hard on our AFFO number to come up with a good number that we think represents really sort of the longer-term ongoing recurring cost of running our kind of office portfolio. And we have a very long term view of the AFFO and dividend relationship. Our AFFO like everybody's can be quite variable quarter-to-quarter and even year-to-year. As an example over the last three years, 2014, 2015, 2016 our three year AFFO per share was $2.39 and over that three year period the dividend stayed constant at $0.76 per share. So dividend totaled $2.28 per share over that same three year period. So we were paying out fairly high percentage about 95% of our AFFO number over those three years as we transitioned this portfolio. So we think we're over, we think we're at the tipping point and we think that the FFO line moves up, which we believe longer-term will give us a better AFFO number and more dividend coverage and obviously hopefully the opportunity to raise dividends in the future. Interesting to when you look at it how variable this can be in the fourth quarter of 2016, one of our big tenants Centene which is at the Timber Lake properties in Chesterfield, Greater St. Louis completed a lot of the tenant improvements on their space. And under the lease that was written in June of 2015 they had a right to call for about $5 million in TI reimbursement and did so actually right at the end of December. So here's a call, extraordinary call for TI late in the fourth quarter of 2016 that actually was baked into the lease that was signed in 2015. So these changes in TIs and leasing commissions particularly, leasing commissions to be paid up front for the TI portion particularly can be quite variable and unpredictable. So we take a very, very long-term view of the AFFO dividend relationship. We certainly are going to have our dividend covered over the long-term, we believe it will be over the long-term but, we do take that long-term point of view towards it and as I mentioned earlier the Board feels comfortable with our dividend level as we start 2017.

Do you have a target as far as payout ratio before you consider raising the dividend?

No, not really. I think it will -- the Board looks at this every quarter and takes it very, very, very seriously. So I think it is our projections of the future as to what level of payout we're talking about. We do believe in dividends at FSP. We believe it is a major component of the rate of return on a REIT like ours. But obviously it has to be -- will be in line long-term with our performance.

Okay, moving on to occupancy, the forecast for this increasing this year, can you just break that out by some of your major markets. It sounds like you very bullish on Minneapolis for instance but Atlanta you have a lot of explorations. I imagine Houston is also very challenging but, if we could get a further breakdown that’ll be great?

Sure John, good morning. This is John Donahue. We believe that leased occupancy will be increasing quarter by quarter by approximately 1% in totality. If everything goes according to plan Minneapolis will be the highest increase in percentage of occupancy we believe that will have occupancy gains in Denver and Dallas. And we believe that Atlanta will keep pace with its high rate of exposure in 2017 and then if we have any occupancy gains in Houston that will be a bonus. As far as our noncore markets we believe that will make slight progress in Chicago. We also hope to make some progress in Baltimore and the East markets in general. So hopefully that answers your question.

Yes, that’s great, thanks. And I'm may have missed this but, what were the cash releasing spreads this quarter for this past year?

Cash releasing spreads. Well we look at those numbers in terms of what the costs are per square foot per year. And I believe that’s on page 20 of the supplemental. We have, let me see here, the leasing for calendar 2016 our costs were approximately $4.36 per year. And our GAAP rents achieved are approaching $30, the net rents are in the 18.50 range. So we think that the net cash range is in 14.50 range, does that answer your question.

Yeah, I mean I see that the cap rents increase is 10% over the last couple of years but I was wondering on a cash basis what that is?

It's about 8% to 9% on the net cash basis as far as percentage increase.

Okay, great, thank you.

You are welcome.

[Operator Instructions]. Our next question comes from Craig Kucera with Wunderlich, please go ahead.

Thanks, good morning. I wanted to circle back on 801 Marquette, can you give us an update on what's left to spend this year and I think we're now at the high end of the range but you bumped up your expectation of net rent from maybe the $15 to $18 dollars to $17 to $19 range. How does that impact what you expect to earn on this capital from an underwriting perspective?

Greg, this is Jeff Carter. The range that we have been giving for total cost on 801 Marquette has been in the $15 million to $20 million range. The size of the project increased by about 8,000 square feet and so we have to narrow that range down to the approximately 20 million because we think we will be at the higher end of that range now. As far as timing of the expensing of those expenses, John would you want to comment on that but I would expect a number of those expenses become due towards the close of the year.

Yeah, I guess I'm asking how much is there left to spend on the project and kind of what you expect -- the rent that you're expecting are higher but what you're spending is a little bit higher, has that impacted your underwriting?

Well we will have to look into how much is the expenses. I don't have that number right in front of me.

We did disclose it in the supplemental, I believe we are across in that now about 8.9 million, so we are -- we have got some more room to run in 2017 for more capital spend. But I think the key point there Craig is that we've increased the square footage in the building and I think we sold it in the $15 million to $20 million range. So I think the rent growth, I think it is a better picture than where it was.

Okay, and I appreciate that you guys made some good headway on selling some non-core office properties but can we talk about your loan portfolio. I think it's yielding about 5.65% and it would seem you can recycle that capital into something that it's maybe more accretive with some growth, is that on target for any time in the near future, are you anticipating holding off on those loans for a while?

Craig, this is Jeff again, we are in terms of the mortgages that FSP holds on some of our single assets we are anticipating a potential for some dispositions that we call for those repayments this year. And we will keep you posted as we proceed through the year. But there are couple on debt that are possibilities for this year.

Got it, and one more for me just an accounting follow up. I think your straight line rent was positive this quarter, is that without a true up or should we expect any sort of trends from that going forward.

This is John Demeritt, it is primarily a function of leasing is when straight line rent goes positive and some of the leasing that we did in the third and fourth quarters we will pick that up. And also from the acquisition that we made in December for Dominion Tower that was part of it as well.

Okay, thanks guys.

Our next question is a follow up from John Guinee with Stifel. Please go ahead.

Actually I hadn't planned on asking this but based on the last question I'm not an accountant but does straight line rent is going positive because of Dominion Tower, I mean that they were below market or above market rents being adjusted via FAS 141 accounting?

It was a combination of both of those John but what we're doing is still looking at the remaining lease term of all of the leases we have when we acquired the building and in setting straight line rent. So, in most cases the leases have increasing rents each year so we’re sort of starting off with a positive straight line rent. So we meet the midpoint of the leases that we acquired. So I think it's more a function of that than above or below market leases. I don't have enough on those, we do evaluate each one of those individually.

Okay, and then what was the 2017 expected cash and GAAP yield on Dominion Tower?

Good morning John, this is Jeff Carter. The GAAP yield for the first full year is expected about 6.9% and the first full year cash yield was expected about 6.2%

Great, thank you.

Welcome.

Our next question a follow up from Dave Rodgers with Baird. Please go ahead.

Hey Jeff, do you guys expect to be a net acquire net seller this year and are the two kind of mutually exclusive. Or are you running two separate processes there just in terms of kind of the assets that you're seeing?

Dave, this is Jeff. Our expectations is to be a net seller in 2017.

I know you don't want to identify the assets and I understand that, what would be the magnitude of the dispositions over the acquisitions?

Well right now we're not expecting acquisitions so I'd rather not give a disposition range because there is a variety of scenarios that we have looked at.

And I guess maybe just going back to the acquisition side of the equation, is that a function of capital or is that more a function of kind of what you're seeing opportunistically in the market after you close down on Dominion Towers?

We will continue to monitor all five of our markets for opportunities but, our expectation is broadly speaking to be a net seller and to work on our objective of replacing the bridge financing for Dominion Towers. What I'm seeing out there, there are opportunities out there and we’ll keep our eyes open but that’s not our expectation.

Okay, great. Thank you.

Yeah, you are welcome.

This concludes our question-and-answer session. I would like to turn the conference back over to George Carter for any closing remarks.

Just to say thank you everyone for turning into the call, we look forward to talking to you next quarter. Thank you.