Fellow Stockholders
Our Company experienced its first year in the last five, of lower profits as measured by funds from operations or FFO1. For the full year 2015, our FFO totaled approximately $106.9 million or $1.07 per share. The results reflect a 5% decrease in FFO from the 2014 level of approximately $112.5 million or $1.12 per share. Over the previous four years, FSP averaged better than 8% FFO growth per year. Additionally, during 2015 we recorded $23.7 million in gains on the sale of four of our non-core suburban office properties. Dividend distributions paid/declared for full year 2015 totaled $0.76 per share, unchanged from 2014. These results were anticipated primarily as a result of our initiative to transition FSP’s property portfolio from smaller, suburban office assets located in many diverse markets across the U.S. to larger urban-infill/CBD office assets located primarily in our five core markets of Atlanta, Dallas, Denver, Houston and Minneapolis. Our actual 2015 FFO of $1.07 per share was within our initial full year 2015 FFO guidance range of $1.03 to $1.08 per share.
During 2015, the broader U.S. economy continued to generate slow but positive GDP growth and higher overall employment levels. National office property statistics also continued to show modest improvement in both rental rate and occupancy metrics. Our directly-owned portfolio of 36 office properties totaling approximately 9.5 million square feet, finished 2015 at a 91.6% overall leased rate. We believe the most likely outlook for the U.S. economy in 2016 is one of continued slow growth, and even though the Federal Reserve has begun the process of normalizing interest rates, we think that process will take significant time and still provide a historically low interest rate environment over the next few years. The broader U.S. economy in 2016 could be meaningfully impacted by economic activity in other large countries, relative global currency values, important geopolitical events as well as the capital markets' perception of our own presidential election activity and the resulting potential future economic consequences.
As we begin 2016, our property portfolio is operating smoothly, with existing and known upcoming vacancy activity being marketed to numerous potential tenants. We expect ongoing property disposition/acquisition activity during 2016 as we continue to execute our repositioning plan of FSP’s office portfolio. Once complete, we believe our newly acquired urban/CBD office assets, primarily located in our five core markets, will have the potential to provide strong FFO growth over extended periods of time. We believe that taking a modest step back in our near term profit growth metrics as a natural market consequence of executing this property portfolio transformation, could provide higher profit and asset value growth over a much longer future than remaining with our former/current suburban office portfolio. We look forward with anticipation to renewing our FFO profit growth from our newly transformed office property portfolio.
Thank you for your continued trust, confidence and support.
George J. Carter
Chairman & Chief Executive Officer
1FFO is a non-GAAP financial measure currently used in the real estate industry that we believe provides useful information to investors. Please refer to page A-1 of this Annual Report for a definition of FFO and a reconciliation of net income to FFO.