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FSP 303 East Wacker Drive Corp. – ‘PREM14A’ for 7/6/18

On:  Friday, 7/6/18, at 4:08pm ET   ·   For:  7/6/18   ·   Accession #:  1171520-18-312   ·   File #:  0-53165

2 References:   By:  SEC – ‘UPLOAD’ on 7/24/18 By:  SEC – ‘UPLOAD’ on 7/12/18 

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/06/18  FSP 303 East Wacker Drive Corp.   PREM14A     7/06/18    1:1.1M                                   Elec Publishing Svcs Inc

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Preliminary Proxy Solicitation Material - Merger    HTML    721K 
                          or Acquisition                                         

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

FSP 303 EAST WACKER DRIVE CORP.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

FSP 303 East Wacker Drive Corp.
401 Edgewater Place, Suite 200
Wakefield, MA 01880
Telephone: (781) 557-1300

[●], 2018

Dear Stockholder:

On behalf of the Board of Directors (the “Board”) of FSP 303 East Wacker Drive Corp. (the “Company”), we are writing to request your written consent to the following proposals.

The Sale will constitute the sale of substantially all of the assets of the Company within the meaning of Section 271 of the General Corporation Law of the State of Delaware (the “DGCL”). The Dissolution will constitute the dissolution of the Company within the meaning of Section 275 of the DGCL. Consequently, pursuant to the DGCL and the Company’s certificate of incorporation, the Sale requires the Company to obtain the consent of the stockholders owning a majority of the outstanding preferred stock and a majority of the outstanding common stock of the Company, each voting as a separate class, and the Dissolution requires the Company to obtain the consent of the stockholders owning a majority of the outstanding common stock of the Company.

If the Sale is consummated, the Company will discharge certain of its liabilities upon closing, including but not limited to the approximately $33,550,412 principal balance outstanding under its loan with John Hancock Life Insurance Company (U.S.A.) (the “John Hancock Loan”), together with any accrued but unpaid interest and a prepayment premium estimated to be approximately $2,027,607, any sales commissions due in connection with the Sale, any adjustments to the purchase price for the Property pursuant to a purchase and sale agreement and other outstanding amounts. As a result, if the stockholders approve the Proposals, we estimate that the aggregate amount of the total cash distributions to stockholders will be approximately $71,500 per share of preferred stock (assuming the Sale is consummated for a gross sales price in the aggregate of at least $182,000,000. Based on the $182,000,000 gross

sales price for the Property pursuant to the Purchase and Sale Agreement (as defined in the information statement that accompanies this letter), we do not expect any cash distributions to be made on the single share of common stock owned by Franklin Street Properties Corp. (“FSP Corp.”). These amounts may be paid in one or more distributions, and we cannot predict the timing or amount of any such distributions, as uncertainties as to the precise net value of our remaining assets after the Sale, the ultimate amount of our liabilities, the operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete such transactions make it impossible to predict with certainty the actual net cash amount that will ultimately be available for distribution to stockholders or the timing of any such distributions. Dividends of $27,379 per share of preferred stock have been paid to date, so a stockholder who purchased a share of preferred stock in the Company’s offering in 2007 for $100,000 will have received a total return of approximately $98,879 per share, assuming a payment of $71,500 per share of preferred stock as a result of adoption of the Proposals. Since completion of the Company’s offering of preferred stock, no dividends have been paid on the single share of common stock owned by FSP Corp.

FSP Corp. is the sole stockholder of the one share of the Company’s common stock that is outstanding, and pursuant to a voting agreement, has agreed to vote that single share in the manner voted by the majority of the holders of the outstanding shares of preferred stock (other than FSP Corp. and its affiliates) with respect to the Sale. FSP Corp. owns 965.75 shares of the Company’s preferred stock, or approximately 43.7% of the outstanding shares of the Company’s preferred stock, and pursuant to a voting agreement, has agreed that it would vote its shares of preferred stock with respect to the Sale by means of consenting to and withholding consent from approval of the Sale in a manner that approximates as closely as possible the proportions of shares which consent to and withhold consent from the approval of such matter by the holders of preferred stock other than FSP Corp. and its affiliates, and for purposes of determining this vote, abstentions and non-votes by stockholders other than FSP Corp. shall not be considered. If the requisite stockholder consent approving the Sale is obtained, FSP Corp. currently intends to vote its share of common stock by consenting to approval of the Dissolution. For avoidance of doubt, FSP Corp. will not provide a consent with respect to its share of common stock to approve the Dissolution if the Company does not receive the requisite stockholder consent approving the Sale.

The Board has unanimously approved EACH OF the proposals and unanimously recommends that you consent to EACH OF the proposals set forth in the attached information statement.

The Board has fixed June 30, 2018 as the record date for purposes of this consent solicitation. Therefore, only holders who owned shares of our preferred stock or common stock as of the close of business on June 30, 2018 are eligible to provide their written consent.

Enclosed for your consideration is an information statement, dated [●], 2018 and a form of consent in lieu of a stockholders’ meeting (the “Consent Form”). Please review this letter and the information in the attached information statement and return the enclosed Consent Form per the instructions provided in the information statement.

Your participation is very important. Please sign, date and return your Consent Form as soon as possible.

BY ORDER OF THE BOARD OF DIRECTORS.

FSP 303 East Wacker Drive Corp.

401 Edgewater Place, Suite 200
Wakefield, MA 01880
Telephone: (781) 557-1300

NOTICE OF SOLICITATION OF ACTION OF STOCKHOLDERS
BY WRITTEN CONSENT IN LIEU OF MEETING OF STOCKHOLDERS

[●], 2018

This information statement and the accompanying documents are being furnished to the stockholders of record as of the close of business on June 30, 2018 (the “Record Date”) of FSP 303 East Wacker Drive Corp., a Delaware corporation (the “Company”), in connection with the solicitation of written consents to the following proposals.

AFTER CONSULTATION WITH ITS LEGAL ADVISORS AND CONSIDERATION OF VARIOUS FACTORS DISCUSSED IN THE ACCOMPANYING INFORMATION STATEMENT, THE FSP 303 EAST WACKER DRIVE CORP. BOARD OF DIRECTORS HAS APPROVED THE PROPOSALS AND UNANIMOUSLY RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS. The Proposals are described in more detail in the accompanying information statement, which you should read in its entirety before voting.

Your vote is very important, regardless of the number of shares of Company stock you own. Only stockholders of record at the close of business on the Record Date are entitled to

consent, to withhold their consent, abstain or to revoke their consent to the Proposals. Any consent to the Sale may be revoked or changed in writing at any time prior to the close of business on the date that consents signed by holders of a majority of the outstanding shares of preferred stock and the holders of a majority of the outstanding shares of common stock, each voting as a separate class, approving the Sale, are received by us. Any consent to the Dissolution may be revoked or changed in writing at any time prior to the time that consents signed by holders of a majority of the outstanding shares of common stock approving the Dissolution are received by us.

The Sale will constitute the sale of substantially all of the assets of the Company within the meaning of Section 271 of the General Corporation Law of the State of Delaware (the “DGCL”). The Dissolution will constitute the dissolution of the Company within the meaning of Section 275 of the DGCL. Consequently, pursuant to the DGCL and the Company’s certificate of incorporation, the Sale requires the Company to obtain the consent of the stockholders owning a majority of the outstanding preferred stock and a majority of the outstanding common stock of the Company, each voting as a separate class, and the Dissolution requires the Company to obtain the consent of the stockholders owning a majority of the outstanding common stock of the Company.

Franklin Street Properties Corp. (“FSP Corp.”) is the sole stockholder of the one share of the Company’s common stock that is outstanding, and pursuant to a voting agreement, has agreed to vote that single share in the manner voted by the majority of the holders of the outstanding shares of preferred stock (other than FSP Corp. and its affiliates) with respect to the Sale. FSP Corp. owns 965.75 shares of the Company’s preferred stock, or approximately 43.7% of the outstanding shares of the Company’s preferred stock, and pursuant to a voting agreement, has agreed that it would vote its shares of preferred stock with respect to the Sale by means of consenting to and withholding consent from approval of the Sale in a manner that approximates as closely as possible the proportions of shares which consent to and withhold consent from the approval of such matter by the holders of preferred stock other than FSP Corp. and its affiliates, and for purposes of determining this vote, abstentions and non-votes by stockholders other than FSP Corp. shall not be considered. If the requisite stockholder consent approving the Sale is obtained, FSP Corp. currently intends to vote its share of common stock by consenting to approval of the Dissolution. For avoidance of doubt, FSP Corp. will not provide a consent with respect to its share of common stock to approve the Dissolution if the Company does not receive the requisite stockholder consent approving the Sale. If the requisite stockholder consent approving the Sale is not received, the Company will not proceed with the Sale or the Dissolution. The Company hereby requests your consent to the Proposals.

In order to eliminate the costs and management time involved in holding a special meeting of stockholders and in order to effect the Sale and Dissolution on the earliest possible date, the Board determined to seek the written consent of our stockholders. As discussed in this information statement, the Board has unanimously recommended that the stockholders consent to each of the Proposals.

The Sale will be approved if and when we hold unrevoked written consents of stockholders approving the Sale representing a majority of the outstanding shares of our

preferred stock and a majority of the outstanding shares of our common stock, each voting as a separate class. The Dissolution will be approved if and when we hold unrevoked written consents of stockholders approving the Dissolution representing a majority of the outstanding shares of our common stock. The withholding of consent, abstention or the failure to deliver a form of consent in lieu of a stockholders’ meeting (the “Consent Form”) with respect to a Proposal will all have the effect of a vote withholding consent to such Proposal.

We are distributing this information statement and the accompanying Consent Form to the Company stockholders on or about [●], 2018.

BY ORDER OF THE BOARD OF DIRECTORS.

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TABLE OF CONTENTS

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FSP 303 East Wacker Drive Corp.

401 Edgewater Place, Suite 200
Wakefield, MA 01880
Telephone: (781) 557-1300

INFORMATION STATEMENT
FOR STOCKHOLDER ACTION BY WRITTEN CONSENT

This information statement and the accompanying documents are being furnished by FSP 303 East Wacker Drive Corp. (the “Company”) in connection with the proposals described herein. The enclosed form of consent in lieu of a stockholders’ meeting (the “Consent Form”) is being solicited by our Board of Directors (the “Board”) for the purpose of approving the proposals described herein. The terms “we,” “our,” and the “Company” as used in this information statement refer to FSP 303 East Wacker Drive Corp. The term “you” refers to the stockholders of FSP 303 East Wacker Drive Corp. The term “Buyer” refers to BCSP 8 Acquisition LLC (or any assignee thereof), an unaffiliated third-party buyer. The term “Franklin Street” or “FSP Corp.” refers to Franklin Street Properties Corp.

SUMMARY TERM SHEET

The following summary briefly describes the material terms of (1) the proposed sale by the Company of the 28-story, Class “A” multi-tenant office tower containing approximately 860,000 rentable square feet of space located at 303 East Wacker Drive, Chicago, Illinois (the “Property”), which constitutes the sale of substantially all of the Company’s assets, to Buyer, whom we expect to be able to perform under a purchase and sale agreement dated June 28, 2018 between FSP 303 East Wacker Drive LLC (the “Ownership LLC”), a wholly-owned subsidiary of the Company, and Buyer (the “Purchase and Sale Agreement”) attached hereto as Annex C and (2) the proposed dissolution of the Company and adoption of a plan of dissolution and liquidation following the closing of such sale. This summary does not contain all the information that may be important for you to consider when evaluating the proposed transaction. We encourage you to read this information statement and the annexes attached to the information statement before consenting to the proposals described herein. We have included cross references to direct you to a more complete description of the topics described in this summary.

The Property is located at 303 East Wacker Drive, Chicago, Illinois, and consists of a 28-story, Class “A” multi-tenant office tower containing approximately 860,000 rentable square feet of space. As of March 31, 2018, the Property was approximately 74.7% leased to a diverse group of tenants with staggered lease expirations. As of March 31, 2018, 45 tenants were leasing space at the Property, with the largest being Tribune Media at approximately 60,952 square feet, or approximately 7.1% of the Property’s rentable space. We purchased the Property from an unaffiliated third-party on January 5, 2007 for $167,000,000, which purchase was financed entirely by a loan from FSP Corp. collateralized by a first mortgage. The acquisition loan from FSP Corp. was repaid from the proceeds of the sale of equity interests in the Company. The

John Hancock Loan with a principal balance outstanding of approximately $33,550,412 is the only remaining indebtedness of the Company secured by the Property.

We are seeking stockholder consent to sell the Property for a gross sales price in the aggregate of at least $182,000,000. “Gross sales price” includes any and all consideration received or receivable, in whatever form, including but not limited to assumption or release of existing liabilities.

We are seeking stockholder approval of the sale of the Property to Buyer, or, if that sale is not consummated, to another unaffiliated third-party buyer for a gross sales price of at least $182,000,000 (the “Sale”), and stockholder approval of our dissolution following the closing of the Sale. We are required to obtain the affirmative vote of a majority of our outstanding preferred stock and our outstanding common stock, each voting as a separate class, to approve the Sale. We are required to obtain the affirmative vote of a majority of our outstanding common stock to approve the dissolution of the Company and adopt the plan of dissolution and liquidation.

After considering a number of factors, our Board believes that the Sale for a gross sales price of at least $182,000,000, and our subsequent dissolution following the closing of the Sale are in the Company’s and our stockholders’ best interest. The Board has approved the Sale and our dissolution following the Sale and recommends that the stockholders of the Company approve the same.

On June 28, 2018, the Ownership LLC entered into the Purchase and Sale Agreement with Buyer. Pursuant to the Purchase and Sale Agreement, the gross sales price of the Property is $182,000,000, and the purchase of the Property is subject to customary conditions and termination rights for transactions of this type.  Assuming that the conditions to closing are satisfied, the closing of the purchase of the Property will take place on or about September 4, 2018.

In addition, pursuant to the Purchase and Sale Agreement, if we fail to obtain the required stockholder vote approving the Sale prior to the scheduled closing, we have the right to extend the date of closing for up to an additional 45 days in order to obtain the required stockholder vote approving the Sale. In the event following such extension we are still unable to obtain the required stockholder vote approving the Sale, any earnest money deposited by Buyer under the Purchase and Sale Agreement will be returned to Buyer and we will be required to reimburse Buyer up to an aggregate maximum of $75,000 as reimbursement for its out of pocket costs and expenses.

The plan of dissolution and liquidation provides that, following its approval by the holders of a majority of our outstanding common stock and the filing of a certificate of dissolution with the Secretary of State of the State of Delaware, our activities will be limited to winding up our business and affairs including the distribution of our assets to the stockholders of the Company in one or more liquidating distributions. The plan of dissolution and liquidation also provides that the Company may, following the dissolution of the Company, transfer the Company’s remaining assets to a liquidating trust.

On August 3, 2011, the Ownership LLC entered into a mortgage note in favor of John Hancock Life Insurance Company (U.S.A.) (“John Hancock”) to evidence a loan in the original principal amount of $35,000,000 that matures on September 1, 2021 (the “John Hancock Loan”). The John Hancock Loan bears interest at the fixed rate of 4.83% per annum. Pursuant to the mortgage note, the Ownership LLC is obligated to make monthly payments of principal and interest in the amount of $201,155. The Ownership LLC may prepay the John Hancock Loan upon payment of a prepayment premium, which we estimate will be approximately $2,027,607 assuming that the Sale is consummated on September 4, 2018 and such loan is prepaid at closing. The amount of the prepayment premium declines over time and becomes zero during the last ninety (90) days of the term of the John Hancock Loan. The John Hancock Loan is secured, in part, by a mortgage, assignment of leases and rents and security agreement (the “Mortgage”) from the Ownership LLC in favor of John Hancock. The Mortgage constitutes a lien against the Property and has been recorded in the land records of Cook County, Illinois. We estimate that the principal balance outstanding under the John Hancock Loan will be approximately $33,550,412 as of September 4, 2018.

In evaluating the proposals described herein, you should carefully read this information statement and consider the factors discussed in the section entitled “Risk Factors.”

QUESTIONS AND ANSWERS REGARDING THE PROPOSALS

Q.       WHAT AM I BEING ASKED TO CONSENT TO?

A.       You are being asked to give your written consent to each of the following proposals.

Q.       WHAT WILL HAPPEN IF THE PROPOSED SALE OF THE PROPERTY AND THE PROPOSED DISSOLUTION ARE APPROVED?

A.       If the Sale, which constitutes the sale of substantially all of the assets of the Company, and the Dissolution are approved by the stockholders, we will seek to sell the Property, including the transfer of the existing leases with unrelated third-party tenants, for a gross sales price in the aggregate of at least $182,000,000, in accordance with terms of a purchase and sale agreement dated June 28, 2018 between FSP 303 East Wacker Drive LLC (the “Ownership LLC”), a wholly-owned subsidiary of the Company, and Buyer (the “Purchase and Sale Agreement”). Following the closing of the Sale, the Company intends to dissolve and distribute the net proceeds from the Sale, along with any other assets of the Company, as applicable, to the stockholders in accordance with the certificate of incorporation and by-laws of the Company, and applicable law.

Even if the requisite stockholder approvals for the Proposals are obtained, there is no guarantee that we will successfully consummate the Sale on terms acceptable to our Board of Directors (the “Board”). Therefore, there is no guarantee that the Sale will be consummated or that the Company will be dissolved if the Proposals are approved.

Q.       WHAT WILL HAPPEN IF THE SALE OF THE PROPERTY IS NOT APPROVED?

A.       Pursuant to the Purchase and Sale Agreement, if we fail to obtain the required stockholder vote approving the Sale prior to the scheduled closing, we have the right to extend

the date of closing for up to 45 days in order to obtain the required stockholder vote approving the Sale. In the event following such extension we are still unable to obtain the required stockholder vote approving the Sale, any earnest money deposited by Buyer under the Purchase and Sale Agreement will be returned to Buyer, we will be required to reimburse Buyer up to an aggregate maximum of $75,000 as reimbursement for its out of pocket costs and expenses, and we will not consummate the Sale. Also, the Dissolution of the Company will not occur, whether or not we have obtained the required stockholder vote approving the Dissolution of the Company.

If the Sale is not approved by the stockholders, the Company intends to continue to own and operate the Property. In addition, the Company will seek to replace the John Hancock Loan (as defined below) on or before its maturity on September 1, 2021, but there can be no assurance that the Company will be able to do so, or if it can, what the principal amount and terms of any such replacement financing will be.

On August 3, 2011, the Ownership LLC entered into a mortgage note in favor of John Hancock Life Insurance Company (U.S.A.) (“John Hancock”) to evidence a loan in the original principal amount of $35,000,000 that matures on September 1, 2021 (the “John Hancock Loan”). The John Hancock Loan bears interest at the fixed rate of 4.83% per annum. Pursuant to the mortgage note, the Ownership LLC is obligated to make monthly payments of principal and interest in the amount of $201,155. The Ownership LLC may prepay the John Hancock Loan upon payment of a prepayment premium, which we estimate will be approximately $2,027,607 assuming that the Sale is consummated on September 4, 2018 and such loan is prepaid at closing. The amount of the prepayment premium declines over time and becomes zero during the last ninety (90) days of the term of the John Hancock Loan. The John Hancock Loan is secured, in part, by a mortgage, assignment of leases and rents and security agreement (the “Mortgage”) from the Ownership LLC in favor of John Hancock. The Mortgage constitutes a lien against the Property and has been recorded in the land records of Cook County, Illinois. We estimate that the principal balance outstanding under the John Hancock Loan will be approximately $33,550,412 as of September 4, 2018.

See also “BACKGROUND AND REASONS FOR THE SALE AND DISSOLUTION – Factors Considered by the Board in Recommending the Sale and Dissolution”.

Q.       WILL THE COMPANY DECLARE AND PAY DIVIDENDS IF THE SALE OF THE PROPERTY IS NOT APPROVED?

A:  On April 24, 2018, the Company declared a dividend for the quarter ended March 31, 2018 in the amount of $340 per share of preferred stock that was paid on May 15, 2018 to stockholders of record on May 8, 2018, representing property operations for such quarter. If the Sale of the Property is not approved, we would expect a similar level of dividend distributions in future periods until occupancy levels at the Property more fully recover. However, there is no guarantee that the Board will declare and pay any dividends for any particular quarter, or as to the amount or timing of any future dividends that may be declared.

Q.       WHAT WILL I RECEIVE IN THE EVENT OF A SALE OF THE PROPERTY AND DISSOLUTION OF THE COMPANY?

A.       Upon closing of the Sale and the Dissolution, you will be entitled to receive a portion of the assets of the Company, including the cash consideration paid for the Property, taking into account the Company’s obligation to discharge certain liabilities upon closing of the Sale, including but not limited to the approximately $33,550,412 principal balance outstanding under John Hancock Loan, together with any accrued but unpaid interest and a prepayment premium estimated to be approximately $2,027,607, any sales commissions due in connection with the Sale, any adjustments to the purchase price for the Property pursuant to the Purchase and Sale Agreement and other outstanding amounts. Your share of the assets of the Company will be determined in accordance with the terms of the Company’s certificate of incorporation and applicable law.

We estimate that the aggregate amount of the total cash distributions to stockholders will be approximately $71,500 per share of preferred stock (assuming the asset sale is consummated for a gross sales price in the aggregate of at least $182,000,000). We do not expect any cash distributions to be made on the single share of common stock owned by Franklin Street Properties Corp. (“FSP Corp.”). These amounts may be paid in one or more distributions, and we cannot predict the timing or amount of any such distributions, as uncertainties as to the precise net value of our remaining assets after the Sale, the ultimate amount of our liabilities, the operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete such transactions make it impossible to predict with certainty the actual net cash amount that will ultimately be available for distribution to stockholders or the timing of any such distributions. Dividends of $27,379 per share of preferred stock have been paid to date, so a stockholder who purchased a share of preferred stock in the Company’s offering in 2007 for $100,000 will have received a total return of approximately $98,879 per share, assuming a payment of $71,500 per share of preferred stock as a result of adoption of the Proposals. Since completion of the Company’s offering of preferred stock, no dividends have been paid on the single share of common stock owned by FSP Corp.

Q: How do I know if the price established by THE Board for the sale of the Property IS fair?

A: In order to obtain the best price reasonably available for the Property, we engaged Jones Lang LaSalle Americas (Illinois) L.P. (the “Broker”) to solicit third-party purchaser bids through an auction process. The Board considered various objective and subjective factors in selecting the winning bid from Buyer, including but not limited to the proposed final purchase price, any proposed financing contingencies, prior dealings with bidders and additional factors indicative of a bidder’s ability to perform and other conditions to closing under the Purchase and Sale Agreement. We believe that this process has resulted in the best terms and conditions reasonably available for the Property. You should carefully read the information presented in this information statement and the factors considered by our Board and make your own determination.

Q: What should I do if I think the MINIMUM price for the Property is too low?

A: In order to obtain the best terms and conditions reasonably available for the Property, we engaged the Broker to solicit third-party purchaser bids through an auction process. The final purchase price was determined by market interest in the Property. We believe this process has resulted in the best terms and conditions reasonably available for the Property. See “How do I know if the price established by the Board for the sale of the Property is fair?” However, if you do not agree, or for any other reason do not want to approve the Sale, you should not consent to the proposed Sale.

According to the certificate of incorporation of the Company and applicable law, the Company may sell the Property if holders of a majority of our outstanding preferred stock and the holders of a majority of our outstanding common stock, each voting as a separate class, vote to approve the Sale, and the Company may dissolve if holders of a majority of our outstanding common stock vote to approve the Dissolution. Therefore, if the requisite stockholder consent is obtained, we may sell the Property in accordance with this information statement, dissolve the Company and distribute to you your portion of the assets of the Company, without the consent of all of the preferred stockholders. Under the General Corporation Law of the State of Delaware (the “DGCL”) and our certificate of incorporation, you do not have the right to seek appraisal of the value of the cash proceeds upon a sale of the Property or for your percentage of the assets of the Company upon its dissolution as you would if the proposed transaction were the acquisition of the Company through a merger.

Q: WHEN WILL I receive THE PROCEEDS PAYABLE TO ME IN CONNECTION WITH THE SALE AND THE DISSOLUTION?

A: Of the aggregate amount of the estimated cash distributions to stockholders of approximately $71,500 per share of preferred stock, the Company currently expects to distribute approximately $70,500 per share of preferred stock in the form of an initial liquidating distribution within thirty (30) days following consummation of the Sale and effectiveness of a certificate of dissolution filed with the Secretary of State of the State of Delaware. Prior to issuing such liquidating distribution, the Company intends to set aside a reasonable amount of cash or other assets as a contingency reserve to satisfy claims against, and obligations of, the Company in accordance with the DGCL, including but not limited to any claims against and obligations of the Company in connection with the Purchase and Sale Agreement. The Company will continue to exist for three years after the dissolution becomes effective or for such longer period as the Delaware courts shall direct, for the sole purpose of winding up our business and affairs. Following completion of the winding up of our business and affairs under the DGCL, but prior to the expiration of the referenced three year period, we will distribute, in one or more distributions, any remaining amounts of such contingency reserve, less any applicable expenses, to the stockholders pro rata in accordance with the respective number of shares held on June 30, 2018 (the “Record Date”) pursuant to the Company’s certificate of incorporation and applicable law. Prior to the expiration of the Company’s three year wind-up period, the Company currently intends to transfer a portion of the Company’s remaining assets to a liquidating trust for the benefit of the Company’s stockholders. Any assets placed in a liquidating trust would be

distributed to the stockholders of the Company in accordance with the terms of the plan of dissolution and liquidation, the agreement establishing and governing the liquidating trust, and the Company’s certificate of incorporation. We cannot predict the timing or amount of any such distributions, as uncertainties as to the precise net value of our remaining assets after the Sale, the ultimate amount of our liabilities, the operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete such transactions make it impossible to predict with certainty the actual net cash amount that will ultimately be available for distribution to stockholders or the timing of any such distributions.

Q: Will the directors and officers of FSP 303 EAST WACKER DRIVE CORP. or their affiliates receive any fees, commissions or other compensation in connection with THE sale?

A: No director or officer of FSP 303 East Wacker Drive Corp. owns shares of preferred stock, so none of our directors or officers will be entitled to any proceeds of the Sale or from the Dissolution, or otherwise be entitled to receive any fees, commissions or other compensation in connection with the Sale.

Q: Will FSP CORP. or its affiliates receive any fees, commissions or other compensation in connection with THE sale?

A: None of FSP Corp. or its affiliates will receive any fees or commissions from the Sale. Proceeds of the Sale would be payable to the Company and distributed to its stockholders as part of the Dissolution. A relative of Dennis J. McGillicuddy, a director of FSP Corp., owns 0.25 shares of preferred stock of the Company. Mr. McGillicuddy expressly disclaims beneficial ownership of such fractional share. No director or officer of FSP Corp. owns shares of preferred stock; therefore, none of its directors or officers will be entitled to any proceeds of the Sale or from the Dissolution.

FSP Corp. owns 965.75 shares of the Company’s preferred stock, or approximately 43.7% of the outstanding shares of the Company’s preferred stock, and upon the Dissolution, FSP Corp. will be entitled to its pro rata portion of distributions to the holders of preferred stock in the Dissolution. Because FSP Corp. holds the sole outstanding share of common stock of the Company, according to the terms of the certificate of incorporation of the Company, in the event the Company is dissolved, FSP Corp., as the sole common stockholder, would be entitled to receive a portion of the assets of the Company only after the payment of preferential amounts to the preferred stockholders of at least $100,000 per share, in which case it would be allocated the equivalent of one-tenth of a preferred share as part of a distribution to all stockholders, pro rata. We do not expect any cash distributions to be made on the single share of common stock owned by FSP Corp.

After the consummation of the Sale, FSP Corp. will no longer be entitled to receive any asset management fees from the Company.

Q: WHAT WILL HAPPEN TO THE COMPANY AFTER A CERTIFICATE OF DISSOLUTION IS FILED?

A: Upon effectiveness of a certificate of dissolution filed with the Secretary of State of the State of Delaware, the Company will continue to exist for a period of three years, or for such longer period as the Delaware Court of Chancery may in its discretion direct, for the purpose of prosecuting and defending suits and to enable the Company to wind up its business and affairs, discharge its liabilities and distribute any remaining assets to stockholders. Therefore, even assuming that the Company completes the distribution of all its assets to its claimants and stockholders promptly following the Dissolution, the Company will continue to exist during the three-year period for the purpose of any additional winding-up activities and in order to prosecute or defend suits. The Company also intends to establish a liquidating trust in connection with the Dissolution into which the Company may transfer, prior to the completion of the three year wind-up period, certain assets of the Company.

Q: What will happen to the shares of stock of the Company that I own in the event the proposed sale ANd the dissolution are approved?

A: If the Proposals are approved, the Company will promptly seek to consummate the Sale. If the proposed Sale is successfully consummated, the Company will be dissolved and the sale proceeds and the Company’s other assets will be distributed to the holders of the preferred stock in one or more liquidating distributions as described in this information statement, consistent with the terms of the Company’s certificate of incorporation and applicable law.

Transfers of preferred stock and common stock will cease to be recognized on the books of the Company as of the date of the effectiveness of the certificate of dissolution. Thereafter, during the subsequent three-year period (or such longer period as the Delaware Court of Chancery may in its discretion direct) during which we wind up our business and affairs, shares of our preferred stock and common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law, and we will not issue any new shares of stock.

Following expiration of such period during which we wind up our business and affairs, and payment by the Company of distributions to its stockholders, if any, your shares will no longer be outstanding and will be cancelled and cease to exist.

Q: What will happen to the SINGLE share of COMMON stock and the 965.75 shares of preferred stock owned by FSP Corp. in the event the proposed sale and dissolution are approved?

A: Prior to the effectiveness of the certificate of dissolution, FSP Corp. may, for tax planning reasons, transfer its single share of common stock and/or its 965.75 shares of preferred stock to an affiliate.

Any right to transfer the single share of common stock and the 965.75 shares of preferred stock owned by FSP Corp. or its affiliate will be discontinued as of the date of the effectiveness of the certificate of dissolution. Thereafter, during the subsequent three-year period (or such longer period as the Delaware Court of Chancery may in its discretion direct) during which we wind up our business and affairs, the single share of common stock and the 965.75 shares of preferred stock owned by FSP Corp. or its affiliate will not be assignable or transferable on our books except by will, intestate succession or operation of law.

Following expiration of such period during which we wind up our business and affairs and payment by the Company of distributions to its stockholders, if any, the single share of common stock and the 965.75 shares of preferred stock owned by FSP Corp. or its affiliate will no longer be outstanding and will be cancelled and cease to exist.

Q.       WILL THE COMPANY CONTINUE TO DECLARE AND PAY DIVIDENDS FOLLOWING CONSUMMATION OF THE SALE?

A: Following consummation of the Sale and effectiveness of the certificate of dissolution, the Company does not intend to declare and pay any dividends. For avoidance of doubt, any liquidating distributions received by the stockholders in connection with the Dissolution do not constitute dividends declared and paid by the Company.

Q.       WHAT DO I NEED TO DO NOW?

A.       After carefully reading and considering the information contained in this information statement, you should complete and sign the enclosed Consent Form and return it in the enclosed return envelope as soon as possible so that your shares may be represented in the consent solicitation.

Q.       WHAT DOES THE COMPANY’S BOARD OF DIRECTORS RECOMMEND?

A.       Our Board unanimously recommends consenting to each of the Proposals.

Q.       CAN COMPANY STOCKHOLDERS REVOKE THEIR CONSENT AFTER THEY HAVE MAILED THEIR SIGNED CONSENTS?

A.       Any consent to the Sale may be revoked before we hold unrevoked written consents of stockholders approving the Sale representing a majority of the outstanding shares of our preferred stock and a majority of the outstanding shares of our common stock, each voting as a separate class. Any consent to the Dissolution may be revoked before we hold unrevoked written consents of stockholders approving the Dissolution representing a majority of the outstanding shares of our common stock. If you wish to revoke your written consent, you must provide a written or facsimile notice of revocation to us addressed as set forth on page 14. The Sale will be approved if and when we hold unrevoked written consents of stockholders approving the Sale representing a majority of the outstanding shares of our preferred stock and a majority of the outstanding shares of our common stock, each voting as a separate class. The Dissolution will be approved if and when we hold unrevoked written consents of stockholders

approving the Dissolution representing a majority of the outstanding shares of our common stock.

Any notice of revocation must be signed exactly as you hold your stock. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.

Q.       WHO CAN HELP ANSWER QUESTIONS?

A.       Please feel free to contact our Investor Services group at (800) 950-6288 and speak directly with Georgia Touma, Assistant Vice President and Director of Investor Services, Lara Ryan, Investor Services Manager, or Michelle Sullivan, Investor Services Specialist, with any questions you may have.

FSP 303 East Wacker Drive Corp.

401 Edgewater Place, Suite 200
Wakefield, MA 01880
Telephone: (781) 557-1300

SOLICITATION OF WRITTEN CONSENTS

General

The enclosed Consent Form is solicited by the Board for the purpose of approving the Proposals.

The solicitation is being made by mail and we may also use FSP Investments LLC to solicit consents from stockholders either in person or by mail, telephone, facsimile or e-mail without additional compensation. Costs of solicitation will be borne by the Company. No person will receive any compensation contingent upon solicitation of a favorable vote.

Record Date

Pursuant to a vote of the Board, each stockholder of record at the close of business on June 30, 2018 (the “Record Date”) is entitled to consent to the Proposals. As of the close of business on the Record Date, the Company had one share of common stock outstanding and 2,210 shares of preferred stock outstanding. In connection with the Sale, each share of common stock outstanding on the Record Date entitles the holder thereof to one vote and each share of preferred stock outstanding on the Record Date entitles the holder thereof to one vote except as otherwise provided by law or by our certificate of incorporation. In connection with the Dissolution, each share of common stock outstanding on the Record Date entitles the holder thereof to one vote except as otherwise provided by law or by our certificate of incorporation. The preferred stock is not entitled to vote on the Dissolution.

Vote Required to Approve the Proposals

The affirmative vote of the holders of a majority of our outstanding shares of preferred stock and a majority of our outstanding shares of common stock, each voting as a separate class, is required to approve the Sale. The affirmative vote of the holders of a majority of our outstanding shares of common stock is required to approve the Dissolution. The Company is soliciting the consent of the holders of our outstanding shares of preferred stock and our outstanding shares of common stock to the Sale, and the Company is soliciting the consent of the holder of our outstanding shares of common stock to the Dissolution.

FSP Corp. is the sole stockholder of the one share of our common stock that is outstanding and, pursuant to a voting agreement, has agreed to vote that share in favor of the Sale if the majority of the holders of the outstanding shares of preferred stock of the Company (other than FSP Corp. and its affiliates) vote in favor of the Sale. FSP Corp. owns 965.75 shares of the Company’s preferred stock, or approximately 43.7% of the outstanding shares of the

Company’s preferred stock, and pursuant to a voting agreement, has also agreed that it would vote the shares of any preferred stock held by it by means of consenting to and withholding consent from approval of the Sale in a manner that approximates as closely as possible the proportions of shares which consent to and withhold consent from the approval of the Sale by the holders of preferred stock other than FSP Corp. and its affiliates, and for purposes of determining this vote, abstentions and non-votes by stockholders other than FSP Corp. shall not be considered. Once consent to the approval of the Sale has been received from the holders of preferred stock (other than FSP Corp. and its affiliates) of a majority of the outstanding shares of preferred stock held by such holders, FSP Corp. will vote its shares of preferred stock by consenting to and withholding consent from approval of the Sale in a manner that approximates as closely as possible the proportions of shares that have consented to and withheld consent from the approval of the Sale by such holders, which will result in the Sale being approved by the holders of a majority of our outstanding shares of preferred stock. If the requisite stockholder consent approving the Sale is obtained, FSP Corp. currently intends to vote its share of common stock by consenting to approval of the Dissolution.

Revocation of Consent

Any consent to the Sale may be revoked before we hold unrevoked written consents of stockholders approving the Sale representing a majority of the outstanding shares of our preferred stock and a majority of the outstanding shares of our common stock, each voting as a separate class. Any consent to the Dissolution may be revoked before we hold unrevoked written consents of stockholders approving the Dissolution representing a majority of the outstanding shares of our common stock. If you wish to revoke your written consent, you must provide a written or facsimile notice of revocation to us addressed as set forth below. To be effective, revocations of approvals of the Sale must be received by us prior to the time we have received unrevoked written consents of stockholders approving the Sale representing a majority of the outstanding shares of our preferred stock and a majority of the outstanding shares of our common stock, each voting as a separate class, and revocations of approvals of the Dissolution must be received by us prior to the time we have received unrevoked written consents of stockholders approving the Dissolution representing a majority of the outstanding shares of our common stock.

Any notice of revocation must be signed exactly as you hold your stock. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.

Consents

Registered stockholders can vote their shares by mailing their completed and signed Consent Form in the enclosed self-addressed stamped envelope or by mail or other delivery

service to:

FSP 303 East Wacker Drive Corp.
401 Edgewater Place, Suite 200
Wakefield, MA 01880
Facsimile No. (781) 557-1349
Attn: Investor Services

Consents returned to us and properly executed will be voted in accordance with stockholders’ instructions. You should specify your choice by appropriately marking the enclosed Consent Form.

The failure to return a Consent Form with respect to a Proposal will have the effect of a vote withholding consent to such Proposal. If a stockholder signs and returns a Consent Form without indicating a vote, such Consent Form will constitute the stockholder’s consent to and approval of the Proposals referred to therein. The approximate mailing date of this information statement and notice of solicitation and Consent Form is [●], 2018.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This information statement and the accompanying documents to this information statement contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by our use of the words “believes”, “anticipates”, “plans”, “expects”, “may”, “will”, “intends”, “estimates” and similar expressions, whether in the negative or affirmative. Although we believe that these forward-looking statements reasonably reflect our plans, intentions and expectations, we cannot guarantee that we actually will achieve these plans, intentions or expectations. Our actual results could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation economic conditions in the United States, disruptions in the debt market, economic conditions in the Property’s markets, risks of a lessening of demand for the type of real estate owned by us, 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, the cash distributions payable to stockholders following consummation of the Sale and Dissolution, and the ability of any Buyer to perform under the Purchase and Sale Agreement. We cannot guarantee that we actually will achieve the plans, intentions or expectations disclosed in our forward-looking statements and, accordingly, you should not place undue reliance on our forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from the forward-looking statements that we make, including the factors included in the documents we incorporate by reference in this information statement. You should read these factors and the other cautionary statements made in the documents we incorporate by reference as being applicable to all related forward-looking statements wherever they appear in this information statement and any accompanying documents. We caution you that we do not undertake any obligation to update forward-looking statements we make.

RISK FACTORS IN CONNECTION WITH SALE OF THE PROPERTY (CONSTITUTING THE SALE OF SUBSTANTIALLY ALL ASSETS)

The Sale may not be completed, which could materially and adversely impact our business, financial condition and results of operations.

To complete the Sale, Company stockholders must approve the Sale because it will be considered a sale of substantially all of the Company’s assets. In addition, the Purchase and Sale Agreement contains closing conditions that must be satisfied for the Sale to be consummated. These conditions may not be satisfied, and there can be no guarantee that Buyer will agree to waive any conditions which are not satisfied. If we are unable to consummate the Sale with Buyer or with another unaffiliated third-party buyer, the Company would be subject to a number of risks, including the following:

The occurrence of any of these events individually or in combination could have a material adverse effect on our business, financial condition and results of operations.

Even if the Company’s stockholders approve the Sale, the Sale may not be completed.

The completion of the Sale is subject to numerous closing conditions set forth in the Purchase and Sale Agreement, some of which are out of the Company’s control, and there can be

no guarantee that the Company will be able to satisfy all of the closing conditions set forth in the Purchase and Sale Agreement.

Similarly, although we expect Buyer will be able to perform under the terms of the Purchase and Sale Agreement, there can be no guarantee that Buyer will actually perform under the terms of the Purchase and Sale Agreement and consummate the Sale. As a result, even if the Sale is approved by the required vote of our stockholders, the Company cannot guarantee that the Sale will be completed.

The Purchase and Sale Agreement limits our ability to pursue alternatives to the transaction for a period of time.

The Purchase and Sale Agreement contains provisions that prevent us from entering into any contract or other written agreement for selling our Property to a party other than Buyer so long as the Purchase and Sale Agreement remains in effect, even if that party were prepared to pay consideration with a higher value than the consideration to be paid by Buyer.

Stockholders who purchased preferred stock in the Company’s offering in 2007 will realize a loss on their investment in the Company.

If the Sale is completed for a gross sale price of $182,000,000 as contemplated by the Purchase and Sale Agreement, we estimate that the aggregate amount of total cash distributions on account of the sale will be approximately $71,500 per share of preferred stock. Dividends of $27,379 have been paid to date, so a stockholder who purchased a share of preferred stock in the Company’s offering in 2007 for $100,000 will have received a total return of approximately $98,879 per share. As a result, stockholders who purchased preferred stock in the 2007 offering will realize a loss on their investment in the Company. Although the Board of Directors believes that the Sale is in the best interest of the Company and its stockholders and that the value that can be obtained in the Sale would be greater than the value that would be received in the future from the continuation of the Company or other strategic alternatives, the Company may be able to realize a higher sale price in connection with a sale of the Property in the future.

RISK FACTORS IN CONNECTION WITH THE DISSOLUTION OF THE COMPANY

We cannot determine at this time the amount or timing of any distributions to our stockholders because there are many factors, some of which are outside of our control, which could affect our ability to make such distributions.

We cannot determine at this time with certainty when, or potentially whether, we will be able to make any distributions to our stockholders or the amount of any such distributions. Those determinations depend on a variety of factors, including whether the Sale closes, the timing of the closing of the Sale, the amount required to pay our known liabilities and obligations, the amount of our liabilities and obligations in the future, the amount of unknown or contingent liabilities of which we become aware after closing, general business and economic conditions, and other matters. We will continue to incur claims, liabilities and expenses from operations (such as operating costs, legal and accounting fees and compliance costs) before and after the Sale. Any unforecasted or unexpected claims, liabilities or expenses that arise before and after the closing of the Sale would likely reduce the amount of cash available for ultimate distribution to our stockholders. Further, the Company will be obligated to discharge certain of its liabilities upon the closing of the Sale, including but not limited to the approximately $33,550,412 principal balance outstanding under John Hancock Loan, together with any accrued but unpaid interest and a prepayment premium estimated to be approximately $2,027,607, any sales commissions due in connection with the Sale, any adjustments to the purchase price for the Property pursuant to the Purchase and Sale Agreement and other outstanding amounts.

The Board may abandon or delay implementation of the Sale or Dissolution even if they are approved by our stockholders.

The Board has approved the Sale and has adopted and approved a plan of dissolution and liquidation for the dissolution and winding-up of the Company following the closing of the Sale. However, even if the Sale and the Dissolution are approved by our stockholders, our Board may, in its sole discretion, abandon the Sale or the Dissolution if our Board concludes that its fiduciary obligations require it to abandon the Sale or the Dissolution. If the Board elects to pursue any alternative to the Sale or Dissolution, the value of our preferred stock may decline, and our stockholders may not receive any of the funds currently estimated to be available for distribution pursuant to the Dissolution.

We will continue to incur the expenses of complying with public company reporting requirements until either the SEC provides relief from such reporting requirements or the deregistration of our shares.

We, or a liquidating trust that we may establish as our successor, will continue to have an obligation to comply with the applicable reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), until the Securities and Exchange Commission (the “SEC”), provides relief from such reporting requirements or the Company is permitted to deregister its shares under the Exchange Act. In order to curtail the economically burdensome expenses that the Company would incur to comply with Exchange Act reporting requirements, we intend to seek relief from the SEC to suspend our reporting obligations under the Exchange

Act as soon as possible. We anticipate that, if granted such relief, we would continue to file current reports on Form 8-K to disclose material events relating to our dissolution and liquidation along with any other reports that the SEC might require. If we are unable to suspend our obligation to file periodic reports with the SEC, we will be obligated to continue complying with the applicable reporting requirements of the Exchange Act and will be required to continue to incur the expenses associated with these reporting requirements, including legal and accounting expenses, which will reduce the cash available for distribution to stockholders.

Distributions to our stockholders could be delayed.

All or a portion of any distributions to our stockholders could be delayed, depending on many factors, including if:

Any of the foregoing could delay or substantially diminish the amount available for distribution to our stockholders.

If we fail to create an adequate contingency reserve for payment of our expenses and liabilities, a stockholder could be held liable for payment to the Company’s creditors up to the amount actually distributed to such stockholder.

If the Sale is completed and the Dissolution is approved by the Company’s stockholders, following the Sale, the Company intends to file a certificate of dissolution with the Secretary of State of the State of Delaware. Once a certificate of dissolution is filed with the Secretary of State of the State of Delaware dissolving the Company, pursuant to Delaware law, the Company will continue to exist for three years after the dissolution becomes effective or for such longer period as the Delaware courts shall direct, for the sole purpose of winding up our business and affairs. Following the effective date of the Dissolution, we will pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured contractual claims, known to us. We currently intend to establish a liquidating trust in connection with the Dissolution and to transfer certain assets of the Company to such trust during the Company’s wind-up period. We also may obtain and maintain insurance coverage or establish and set aside a reasonable amount of cash or other assets as a contingency reserve to satisfy claims against, and obligations of, the Company. If the amount of the contingency reserve, insurance and other resources calculated to provide for the satisfaction of liabilities and claims is insufficient to satisfy the aggregate amount ultimately found payable in respect of our liabilities and claims against us, each stockholder could be held liable for amounts due to creditors up to the amounts distributed to such stockholder under the plan of dissolution and liquidation. In such event, a

stockholder could be required to return all amounts received as distributions pursuant to the plan of dissolution and liquidation and ultimately could receive nothing under the plan of dissolution and liquidation.

Stockholders may not be able to recognize a loss for federal income tax purposes until they receive a final distribution from us.

As a result of our dissolution and liquidation, for federal income tax purposes, our stockholders generally will recognize gain or loss equal to the difference between (1) the sum of the amount of cash and the fair market value (at the time of distribution) of property, if any, distributed to them, and (2) their tax basis for their shares of our preferred stock. Liquidating distributions pursuant to the plan of dissolution and liquidation may occur at various times and in more than one tax year. Any gain realized by a stockholder will be recognized at the time (and to the extent) that the liquidating distributions received by the stockholder exceed the stockholder’s tax basis in the share with respect to which the distribution occurred. Any loss generally will be recognized by a stockholder only when the stockholder receives our final liquidating distribution to the stockholders, and then only if the aggregate value of all liquidating distributions with respect to a share is less than the stockholder’s tax basis for that share. Stockholders are urged to consult their own tax advisors as to the specific tax consequences to them of our dissolution and liquidation pursuant to the plan of dissolution and liquidation.

The directors and officers of the Company will continue to receive indemnification benefits following the transaction and the dissolution and liquidation of the Company.

Following the filing of a certificate of dissolution with the Secretary of State of the State of Delaware, we will continue to indemnify each of our current and former directors and officers to the fullest extent permitted under Delaware law and our certificate of incorporation and by-laws as in effect immediately prior to the filing of the certificate of dissolution.

BACKGROUND AND REASONS FOR THE SALE AND DISSOLUTION

Background

The Company’s objectives were to (i) obtain cash available to pay dividends through rental receipts from operations of the Property, (ii) have such cash increase over time as a result of rental rate step increases in existing leases and new leasing activity in vacant space, (iii) have that cash potentially increase over time if rental rates increase for new leases at comparable properties in downtown Chicago, Illinois, (iv) provide a return of capital if permanent mortgage financing closes or another capital event occurs at such time; (v) provide increased equity in the Property as a result of potential appreciation in market value, and (vi) preserve and protect the capital invested by investors.

In July 2016, the Board made the decision to try to sell the Property. After soliciting interest and input from commercial real estate brokers familiar with the Property and the local market, the Company retained a commercial real estate broker to facilitate a potential sale of the Property. Despite an aggressive marketing campaign that included several offers, the Company did not achieve buyer interest at pricing levels that the Board was prepared to recommend to the holders of the Preferred Stock. Accordingly, the Company directed the broker to cease marketing the Property at that time.

On February 21, 2018, the Board held a special meeting, together with management, at which management presented the results of its evaluation of independent and nationally recognized commercial real estate brokers and recommended that the Company engage Jones Lang LaSalle Americas (Illinois) L.P. (the “Broker”) to conduct a full marketing effort for the potential disposition of the Property. At this special meeting, the Board authorized management to engage the Broker, an independent commercial real estate broker, to conduct a full marketing effort, including soliciting third party cash bids for the Property.

On February 28, 2018, the Company entered into an exclusive sales listing agreement (the “Listing Agreement”), with the Broker in connection with the proposed sale of the Property. The Listing Agreement provides that the Broker act as exclusive broker for the Property and perform various services in connection with a sale of the Property, including but not limited to reviewing the Property to determine its relative market appeal, quality of location, market and area trends and potential for value enhancement prior to entering the market, developing a marketing plan for the sale of the Property, preparing marketing materials in connection with the sale and soliciting prospective purchasers of the Property. The Broker’s sole and exclusive compensation for its services under the Listing Agreement is contingent upon sale of the Property. Such compensation due to the Broker will be calculated based on a percentage of the gross sales price for the Property.

Since February 28, 2018, the Broker has managed an ongoing marketing process for potential purchasers of the Property. 

On April 17, 2018, the Broker distributed information regarding the Property to targeted potential purchasers in an e-mail blast to approximately 6,520 potential purchasers.

On April 24, 2018, the Broker redistributed information regarding the Property in an e-mail blast to approximately 6,313 potential purchasers, of which approximately 112 signed confidentiality agreements permitting them to receive additional information regarding the Property. 

Following a call for offers on May 9, 2018, the Company received ten initial offers. 

On May 25, 2018, the Broker asked four potential purchasers to submit best and final offers.  In response, on June 5, 2018, three of those four potential purchasers submitted best and final offers.  

Buyer submitted the highest offer of $182,000,000 at the deadline for the submission of bids. Buyer also required the shortest due diligence period and had already conducted a high level of due diligence on the Property. In addition, Buyer has a strong track record in negotiating purchase and sale agreements and closing on the purchase of real estate assets similar to the Property. For all of the foregoing reasons, Buyer was selected to proceed to negotiate a definitive purchase and sale agreement with the Company.

After the deadline for submission of bids had passed and after receiving notice from the Broker that Buyer had been selected to enter into negotiations for a purchase and sale agreement with the Company, one of the final bidders submitted a revised, improved offer of $183,000,000. The Company determined to continue negotiating with Buyer rather than this other bidder because Buyer had submitted the highest price when potential purchasers were asked to send their best and final offers, Buyer’s shorter due diligence period and perceived lower likelihood of due diligence risk made the overall terms and conditions of Buyer’s offer more attractive than the revised offer from the other bidder and the Broker had recommended that the Company continue with the course of negotiating with Buyer in light of the foregoing.

On June 8, 2018, the Ownership LLC entered into an access and indemnity agreement with Buyer.

Between June 11, 2018 and June 28, 2018, Buyer conducted certain due diligence investigations of the Property.

On June 20, 2018, the Board held a special meeting, together with management, at which the Board reviewed and approved the offer from Buyer to purchase the Property for a gross sales price of at least $182,000,000, authorized management to enter into a definitive purchase and sale agreement with Buyer, and fixed June 30, 2018 as the record date for purposes of a consent solicitation to provide approval by the stockholders for the Sale and the Dissolution.

On June 28, 2018, Buyer satisfactorily completed its due diligence investigation of the Property and the Ownership LLC entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with Buyer.

Directors’ Recommendations

The Board believes that the Sale, constituting the sale of substantially all the assets of the Company under Section 271 of the DGCL, and the Dissolution under Section 275 of the DGCL, are in the best interest of the Company and our stockholders. Accordingly, the Board has approved each of the Sale and Dissolution and recommended that the stockholders of the Company approve each of the Sale and Dissolution.

Factors Considered by the Board in Recommending the Sale and Dissolution

In reaching its decision to sell the Property and to dissolve the Company following closing of the Sale, the Board considered a number of factors, including:

Some of the material negative factors considered were:

premium declines over time and becomes zero during the last ninety (90) days of the term of the John Hancock Loan.

The above information and factors considered by the Board are not intended to be exhaustive, but includes all of the material factors, both negative and positive, considered by the Board. The Board did not attempt to quantify or otherwise assign relative weights to the specific factors it considered or determine that any factor was of particular importance. A determination of various weightings would, in the view of the Board, be impractical. Rather, the Board viewed its position and recommendations as being based on all of the information presented to, and considered by, it. In addition, individual members of the Board may have given different weight to different factors.

ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS CONSENT TO THE APPROVAL OF THE SALE OF THE PROPERTY, CONSTITUTING THE SALE OF SUBSTANTIALLY ALL ASSETS, AND CONSENT TO APPROVAL OF THE DISSOLUTION OF THE COMPANY FOLLOWING CLOSING OF THE SALE.

PROPOSAL ONE - THE SALE OF THE PROPERTY (FOR APPROVAL BY HOLDERS OF PREFERRED STOCK AND COMMON STOCK)

General

Our Board proposes to sell the 28-story, Class “A” multi-tenant office tower containing approximately 860,000 rentable square feet of space located at 303 East Wacker Drive, Chicago, Illinois (the “Property”) to BCSP 8 Acquisition LLC (or an assignee thereof), an unaffiliated third-party buyer (“Buyer”), for a gross sales price of $182,000,000, as further described herein or, if that sale should not be consummated, to another unaffiliated third-party buyer for a gross sales price of at least $182,000,000 (the “Sale” of the Property). “Gross sales price” includes any and all consideration received or receivable, in whatever form, including but not limited to assumption or release of existing liabilities. The approval of the Sale by the holders of a majority of our outstanding shares of preferred stock and the holders of a majority of our outstanding shares of common stock, each voting as a separate class, constitutes consent to the Sale for purposes of the Company’s certificate of incorporation and applicable law.

Section 271 of the General Corporation Law of the State of Delaware (“DGCL”) requires the approval of a sale of all or substantially all assets of the Company by the holders of a majority of the outstanding stock of the Company entitled to vote thereon.

History

Our company, FSP 303 East Wacker Drive Corp., which we refer to as the “Company”, “we” or “our”, is a Delaware corporation formed to purchase, own and operate the Property. The Company operates in a manner intended to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.

The Company was organized in December 2006 by FSP Investments LLC, a wholly-owned subsidiary of Franklin Street Properties Corp., which we refer to as Franklin Street or FSP Corp. (NYSE American: FSP). FSP Investments LLC acted as a real estate investment firm and broker/dealer with respect to (a) the organization of the Company, (b) the acquisition of the Property by the Company and (c) the sale of equity interests in the Company.

FSP 303 East Wacker Drive LLC (the “Ownership LLC”), a wholly-owned subsidiary of the Company, purchased the Property from an unaffiliated third-party on January 5, 2007 for $167,000,000, which purchase was financed entirely by a loan from FSP Corp. collateralized by a first mortgage, which we refer to as the Acquisition Mortgage Loan. The Acquisition Mortgage Loan was repaid in its entirety on December 27, 2007 from the proceeds of the sale of equity interests in the Company. Total interest and loan fees incurred on the Acquisition Mortgage Loan were approximately $13,810,000. The John Hancock Loan (as described below under the caption “Principal Provisions of the John Hancock Loan”) is the only remaining indebtedness of the Company secured by the Property.

Franklin Street holds the sole share of the Company’s common stock, $.01 par value per share, which we refer to as the common stock, that is outstanding. Between February 7, 2007 and

December 27, 2007, FSP Investments LLC completed the sale on a best efforts basis of 2,210 shares of the Company’s preferred stock, $.01 par value per share, which we refer to as the preferred stock. We sold the preferred stock for an aggregate consideration of approximately $207,238,000 in a private placement offering to 815 “accredited investors” within the meaning of Regulation D under the Securities Act of 1933. Between February 7, 2007 and December 27, 2007, the Company held 17 investor closings, at which shares of preferred stock were sold and funds were received. On December 27, 2007, Franklin Street purchased 965.75 shares of preferred stock (approximately 43.7% of the 2,210 shares sold) for $82,813,000, representing $96,575,000 at the offering price net of commissions of $7,726,000 and fees of $6,036,000. Prior to purchasing any shares of preferred stock, Franklin Street agreed to vote any shares held by it on any matter presented to the holders of preferred stock in a manner that approximates as closely as possible the votes cast in favor of and opposed to such matter by the holders of the preferred stock other than Franklin Street and its affiliates. For purposes of determining how Franklin Street votes its shares of preferred stock, abstentions and non-votes by stockholders other than Franklin Street are not considered. Funds from each individual closing were used to repay the Acquisition Mortgage Loan and associated fees as well as other expenses payable to Franklin Street’s wholly-owned subsidiary, FSP Investments LLC. The use of proceeds from the offerings of preferred stock, including for payments to Franklin Street and its affiliates, is set forth in the table on the following page:

Transactions between the Company and Franklin Street and/or its affiliates were entered into without the benefit of arm’s-length bargaining and involved conflicts of interest. Although Franklin Street has sponsored the syndication of other REITs similar to the Company and has in the past acquired some of those REITs, Franklin Street is under no obligation to acquire or to offer to acquire the Company or the outstanding shares of preferred stock, and any acquisition transaction would need to be approved by the Company’s stockholders and the boards of directors of Franklin Street and the Company.

Our Business

Our sole business is to own and operate the Property and we do not intend to invest in or purchase any additional properties. We derive rental revenue from income paid to us by the tenants of the Property. Asset, investor and property management services are provided by third parties, including affiliates of Franklin Street.

The Property was completed in 1979 and is a twenty-eight story multi-tenant office tower located in downtown Chicago, Illinois containing approximately 860,000 rentable square feet of office and retail space and a 294-stall underground parking garage.

The Property, formerly known as Three Illinois Center, is part of the multi-building, mixed-use development known as Illinois Center, which includes office buildings, hotels, residential buildings, and a large athletic club. The Property was preceded in construction by One and Two Illinois Center, which were developed in 1970 and 1972, respectively. The three towers share an aluminum and glass design that is characteristic of contemporary international style, distinguished by a curtain wall of bronze-finished aluminum and reflective glass. The Property is located in Chicago’s East Loop submarket on the eastern portion of the development along the southern edge of the Chicago River.

The office component of the Property is separated into low-rise, mid-rise and high-rise sections. The first floor, or Plaza, has three elevator banks, each containing five passenger elevators and a freight elevator which services the 27 floors of office space. An additional elevator is also provided at the Plaza level for direct access to the parking garage and Concourse. Access to the Concourse level from the Plaza level is provided by an escalator system. Access to the Plaza level from street-level is provided by entrances on the West and East sides of the Property and emergency exits on the south end.

The Property was approximately 74.7% leased as of March 31, 2018 to a diverse group of tenants with staggered lease expirations, compared to approximately 73.5% leased as of December 31, 2017. We believe that any tenant that leases 10% or more of the Property’s rentable space is material. As of March 31, 2018, 45 tenants were leasing space at the Property, with the largest being Tribune Media at approximately 60,952 square feet, or approximately 7.1% of the Property’s rentable space.

In general, office leases at the Property are structured on a triple-net (NNN) basis with respect to expenses, so that the tenant is responsible for its respective pro-rata percentage of expenses. In general, concourse level (lower level) retail tenants have full service gross rent

leases under which gross rent includes expenses.

FSP Property Management LLC, a wholly-owned subsidiary of Franklin Street, provides the Company with asset management and financial reporting services. The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one-half of one percent (0.5%) of that month’s gross revenues of the Property. The asset management agreement between the Company and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days written notice.

FSP Investments LLC, a wholly-owned subsidiary of Franklin Street, provides investor services to the holders of the Company’s preferred stock. The investor services agreement between the Company and FSP Investments LLC requires the Company to pay a monthly service fee of $500 and to reimburse FSP Investments LLC for its reasonable out-of-pocket expenses. The investor services agreement may be terminated by either party with thirty days written notice or immediately upon the occurrence of certain events of default specified in the investor services agreement.

Hines Interests Limited Partnership provides the Company with day-to-day property management, construction management and leasing services relating to the operation of the Property. Hines Interests Limited Partnership is a third-party service provider that is not related to or affiliated with Franklin Street. The management agreement between the Company and Hines Interests Limited Partnership requires the Company to pay Hines Interests Limited Partnership a monthly fee equal to one and three-quarters percent (1.75%) of the net operating receipts collected in the preceding month. The monthly fee is adjusted to one and nine-tenths percent (1.90%) of the net operating receipts collected in the preceding month if the Property is above eighty percent (80%) leased. The management agreement between the Company and Hines Interests Limited Partnership operates on a month-to-month basis and may be terminated for cause.

Investment Objectives

The Company’s objectives were to (i) obtain cash available to pay dividends through rental receipts from operations of the Property, (ii) have such cash increase over time as a result of rental rate step increases in existing leases and new leasing activity in vacant space, (iii) have that cash potentially increase over time if rental rates increase for new leases at comparable properties in downtown Chicago, Illinois, (iv) provide a return of capital if permanent mortgage financing closes or another capital event occurs at such time; (v) provide increased equity in the Property as a result of potential appreciation in market value, and (vi) preserve and protect the capital invested by investors. We cannot be sure of meeting all of our objectives.

Our policy is not to make loans to other persons, not to invest in the securities of other issuers for the purpose of exercising control, not to underwrite the securities of other issuers, not to offer securities in exchange for property and not to purchase or otherwise reacquire our securities. These policies may be changed by our directors without a vote of the holders of shares of our preferred stock.

We issued 2,210 shares of preferred stock in the offering described above. No additional shares of preferred stock are authorized by our charter, and authorization of any increase in the number of authorized shares or the creation of any new series or class of stock would require the affirmative vote of the holders of 66.67% of the outstanding shares of preferred stock.

Competition

We believe that the vacancy rate in the downtown Chicago office market, which we refer to as the Central Business District, decreased slightly during the first quarter of 2018 compared to the fourth quarter of 2017. We believe that the decrease in the vacancy rate in the Central Business District during the first quarter of 2018 was primarily attributable to a decrease in available sublease space. The Property is located in the East Loop submarket of the Central Business District. We believe that the vacancy rate in the East Loop also decreased slightly during the first quarter of 2018 compared to the fourth quarter of 2017, but we think that the decrease in the East Loop was primarily attributable to positive net absorption and a decrease in available sublease space. During the three months ended March 31, 2018, we believe that rental rates increased for buildings in Chicago’s East Loop office submarket. We believe that several factors, including a limited supply of larger tenant prospects, have caused us to focus on renewing and expanding existing tenants, while also attempting to attract smaller and mid-sized prospective tenants. The Property is competing against the other office buildings which are or may become available in the general area in which the Property is located and which may be priced at rental levels lower than those for space in the Property or which may otherwise be more attractive to tenants. In order to lease existing vacancy, the Property must be competitive, in regards to cost and amenities, with other buildings of similar use near our location. Some of our competitors may have significantly more resources than we do and may be able to offer more attractive rental rates or services. On the other hand, some of our competitors may be smaller or have lower fixed overhead costs, less cash or other resources that make them willing or able to accept lower rents in order to maintain a certain occupancy level. If, at any time, there is no existing significant competition for the Property, our competitors may decide to enter the market and build new buildings to compete with our Property. Our competition is not only with other developers, but also with property users who choose to own their building. In addition, larger market forces beyond our control, such as general economic conditions, may increase competition among landlords for quality tenants and individual decisions beyond our control. Given that the Property is a multi-tenant office tower that is leased to a diverse group of office and retail tenants with staggered lease expirations, we cannot predict which competitive factors will be relevant to prospective future tenants at this time.

Employees

We had no employees as of March 31, 2018.

Corporate Information

FSP 303 East Wacker Drive Corp., a Delaware corporation, was formed in 2007. Our principal executive offices are located at 401 Edgewater Place Suite 200, Wakefield, Massachusetts, 01880, and our telephone number is (781) 557-1300.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through the Securities and Exchange Commission (SEC) Edgar system at www.sec.gov.

Buyer

Buyer is an unaffiliated third party that we expect to be able to perform its obligations under the Purchase and Sale Agreement.

Description of the Property

Set forth below is information regarding the Property as of March 31, 2018:

(1)       Major tenants represent greater than 10% of rental revenue as of March 31, 2018.

The average effective annual rent per leased square foot for the 12 months ended March 31, 2018 was $17.56.

The following table reflects certain information for the leases that are expiring over the next ten years:

Additional Operating Data

Additional information regarding the amount of the Property’s real estate taxes and insurance can be found in the Consolidated Statements of Operations that are included with the Company’s Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 that are incorporated by reference into this information statement. Additional information regarding the Property’s Federal tax basis, rate, method and life claimed for purposes of depreciation can be found in the Notes to Consolidated Financial Statements that are included in the Company’s Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 that are incorporated by reference.

PRINCIPAL PROVISIONS OF THE PURCHASE AND SALE AGREEMENT

On June 28, 2018, the Ownership LLC entered into the Purchase and Sale Agreement with Buyer. Pursuant to the Purchase and Sale Agreement, the gross sales price of the Property is $182,000,000, and the purchase of the Property is subject to customary conditions and termination rights for transactions of this type, including a due diligence inspection period for Buyer. Between June 11, 2018 and June 28, 2018, Buyer conducted due diligence investigations of the Property. Assuming that the remaining conditions are satisfied, the closing of the purchase of the Property will take place on or about September 4, 2018. Pursuant to the Purchase and Sale Agreement, if we fail to obtain the required stockholder vote approving the Sale prior to the scheduled closing, we have the right to extend the date of closing for up to 45 days in order to obtain the required stockholder vote approving the Sale. In the event following such extension we are still unable to obtain the required stockholder vote approving the Sale, any earnest money deposited by Buyer under the Purchase and Sale Agreement will be returned to Buyer and we will be required to reimburse Buyer up to an aggregate maximum of $75,000 as reimbursement for its out of pocket costs and expenses. The Purchase and Sale Agreement also describes the Property, adjustments and mechanics of and processes for closing and contains various representations and warranties, closing conditions, operating covenants, conditions precedent, assignments of the risk of loss and termination provisions, some of which are described in more detail below. Additionally, in the event the Sale is not consummated pursuant to the above-described Purchase and Sale Agreement, the authorization of the stockholders of the Sale includes an authorization for the Company to direct the Ownership LLC to enter into another purchase and sale agreement with an unaffiliated third party providing for a gross sales price of at least $182,000,000.

Remedies

If Buyer breaches or fails, without legal excuse, to complete the purchase of the Property or to perform its obligations under the Purchase and Sale Agreement, then the Ownership LLC will have as its sole remedy the right to receive all of the earnest money deposit funds deposited into escrow at that time, plus all interest earned and accrued thereon, as liquidated damages.

If the Ownership LLC breaches or fails, without legal excuse, to complete the sale of the Property or to perform its obligations under the Purchase and Sale Agreement, Buyer may, as its sole remedy, either (i) enforce specific performance of the Purchase and Sale Agreement against the Ownership LLC or (ii) terminate the Purchase and Sale Agreement and receive a return of all earnest money deposit funds deposited into escrow plus all verifiable out-of-pocket costs and expenses of Buyer not to exceed $75,000. Buyer will be deemed to have elected to terminate the Purchase and Sale Agreement and receive a return of all earnest money deposit funds and payment of verifiable out-of-pocket costs and expenses if Buyer fails to provide the Ownership LLC with written notice, within 30 days following the date upon which the closing was to have occurred, of Buyer’s intent to file a suit for specific performance or if Buyer fails to file such suit within 40 days after such written notice.

From and after the closing, the Ownership LLC is required to indemnify and hold harmless Buyer and its affiliates and representatives from certain losses relating to breaches of

the Ownership LLC’s covenants, representations or warranties under the Purchase and Sale Agreement, or any other agreement, document, certificate or instrument delivered by the Ownership LLC to Buyer, or under any law applicable to the Property or the Sale. Notwithstanding the foregoing, the Ownership LLC shall have no liability to Buyer for any indemnification obligations unless the valid claims for all such indemnification and breaches collectively aggregate more than $100,000, in which event the full amount of such valid claims shall be actionable; provided, however, that the aggregate amount of such valid claims shall be limited to Buyer’s actual damages up to $2,000,000 in the aggregate and in no event shall include consequential, indirect or punitive damages. The indemnification obligations survive the closing for a period of six months.

Additional Information on the Purchase and Sale Agreement

The Purchase and Sale Agreement (excluding the exhibits thereto) is attached to this information statement as Annex C and is incorporated herein by reference. The foregoing summary of the Purchase and Sale Agreement is qualified in its entirety by the complete text of the Purchase and Sale Agreement.

PRINCIPAL PROVISIONS OF THE JOHN HANCOCK LOAN

On August 3, 2011, the Ownership LLC entered into a mortgage note in favor of John Hancock Life Insurance Company (U.S.A.) (“John Hancock”) to evidence a loan in the original principal amount of $35,000,000 that matures on September 1, 2021 (the “John Hancock Loan”). The John Hancock Loan bears interest at the fixed rate of 4.83% per annum. Pursuant to the mortgage note, the Ownership LLC is obligated to make monthly payments of principal and interest in the amount of $201,155. The Ownership LLC may prepay the John Hancock Loan upon payment of a prepayment premium, which we estimate will be approximately $2,027,607 assuming that the Sale is consummated on September 4, 2018 and such loan is prepaid at closing. The amount of the prepayment premium declines over time and becomes zero during the last ninety (90) days of the term of the John Hancock Loan. The John Hancock Loan is secured, in part, by a mortgage, assignment of leases and rents and security agreement (the “Mortgage”) from the Ownership LLC in favor of John Hancock. The Mortgage constitutes a lien against the Property and has been recorded in the land records of Cook County, Illinois. We estimate that the principal balance outstanding under the John Hancock Loan will be approximately $33,550,412 as of September 4, 2018.

JONES LANG LASALLE AMERICAS (ILLINOIS) L.P.

In connection with its services provided with respect to the proposed Sale, Jones Lang LaSalle Americas (Illinois) L.P., which we refer to as “Broker”, made such reviews and inquiries as it deemed necessary and appropriate under the circumstances. Among other things, Broker marketed the Property, in its capacity as the Company’s exclusive broker, to prospective purchasers, solicited and identified prospective purchasers and informed us of all offers and inquiries with respect to the Property.

Broker is a national commercial real estate broker and advisor and was retained based on its experience as a real estate advisor and real estate broker.

Under the Exclusive Sales Listing Agreement, dated February 28, 2018, between the Ownership LLC and Broker (the “Listing Agreement”), the Ownership LLC agreed to appoint Broker as the exclusive agent with respect to the sale of the Property and to pay Broker a commission based on a percentage of the gross sales price of the Property. Payment of such commission to Broker is dependent upon consummation of the Sale of the Property. Based upon a gross sales price in the aggregate of $182,000,000, we expect to pay to Broker a total commission of $1,188,000. Whether or not we consummate the Sale, we are required to pay certain costs incurred by Broker in connection with the assembly and production of any marketing materials prepared in connection with the Sale, which costs shall not exceed $35,000.

The terms of the fee arrangement with Broker were negotiated at arm’s length between Broker and the Company.

NO APPRAISAL RIGHTS

Under Delaware law and our certificate of incorporation, our stockholders are not entitled to appraisal rights or other similar rights in connection with the proposed Sale of the Property.

FEDERAL INCOME TAX CONSIDERATIONS

General. The following is a summary of the principal United States federal income tax considerations applicable to the Company as a result of the Sale of the Property. This summary does not purport to be a complete analysis of tax considerations. The summary does not consider the effect of any applicable foreign, state, local or other tax laws.

Corporate Tax Considerations. From a federal income tax perspective, the proposed sale of the Property under any purchase and sale agreement will be treated as a sale of corporate assets in exchange for cash and the assumption of certain liabilities. The amount of any taxable gain realized on the sale generally will be offset by the amount of any dividend distributions made by the Company for the taxable year of the sale (to the extent not used to offset taxable income from the Company's normal operations for the portion of the year prior to the sale). For this purpose, amounts distributed to the Company's stockholders in liquidation of the Company generally can be treated as dividend distributions to the extent of the Company's retained earnings and profits. Any net operating or capital loss carryovers of the Company could be used to offset in whole or in part gain realized on the sale of the Property to the extent such gain exceeds the dividend distributions for the year subject to certain limitations.

This is a summary of general federal income tax rules applicable to the Company with respect to the proposed Sale of the Property and does not describe all of the tax consequences that may be relevant. Each stockholder should consider the effects of the transactions discussed herein with their own tax advisors.

REGULATORY APPROVALS

We are not aware of any governmental or regulatory approvals required in connection with the proposed Sale other than compliance with the DGCL and the applicable securities laws in connection with this information statement.

REQUIRED VOTE

The affirmative vote of the holders of a majority of our outstanding preferred stock and our outstanding common stock, each voting as a separate class, is required to approve the proposed Sale. The Company is soliciting the consent of our preferred stockholders in favor of the Sale.

FSP Corp. is the sole stockholder of our one share of common stock and has agreed to vote that share by consenting to approval of the Sale if the majority of the holders of the outstanding shares of preferred stock of the Company (other than FSP Corp. and its affiliates) consent to the Sale. FSP Corp. owns 965.75 shares of the Company’s preferred stock, or

approximately 43.7% of the outstanding shares of the Company’s preferred stock, and pursuant to a voting agreement, has agreed that it would vote its shares of preferred stock with respect to the Sale by means of consenting to and withholding consent from approval of the Sale in a manner that approximates as closely as possible the proportions of shares which consent to and withhold consent from the approval of such matter by the holders of preferred stock other than FSP Corp. and its affiliates, and for these purposes, abstentions and non-votes by stockholders other than FSP Corp. shall not be considered.

PROPOSAL Two - DISSOLUTION OF THE COMPANY (FOR APPROVAL BY THE HOLDER OF COMMON STOCK)

General

After and subject to the successful completion of the Sale, the Board intends to dissolve the Company and distribute the assets to the stockholders of the Company. The approval of the dissolution and adoption of the plan of dissolution and liquidation described in this information statement by the holders of a majority of the outstanding shares of our common stock constitutes the required stockholder approval of the Dissolution for purposes of the Company’s certificate of incorporation and Delaware law. The Board has approved the Dissolution, including adoption of the plan of dissolution and liquidation attached hereto as Annex A.

The applicable provisions of the DGCL require stockholder approval for the dissolution of the Company.

If the Sale is consummated, the Company will be obligated to discharge certain of its liabilities upon closing, including but not limited to the approximately $33,550,412 principal balance outstanding under the John Hancock Loan, together with any accrued but unpaid interest and a prepayment premium estimated to be approximately $2,027,607, any sales commissions due in connection with the Sale, any adjustments to the purchase price for the Property pursuant to the Purchase and Sale Agreement and other outstanding amounts. If the stockholders approve the Dissolution proposal, we estimate that the aggregate amount of total cash distributions to stockholders will be approximately $71,500 per share of preferred stock (assuming the Sale is consummated on the terms set forth in the Purchase and Sale Agreement). We do not expect any cash distributions to be made on the single share of common stock owned by FSP Corp. These amounts may be paid in one or more distributions, and we cannot predict the timing or amount of any such distributions, as uncertainties as to the precise net value of our remaining assets after the Sale, the ultimate amount of our liabilities, the operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete such transactions make it impossible to predict with certainty the actual net cash amount that will ultimately be available for distribution to stockholders or the timing of any such distributions. If the Sale is not approved, we will not dissolve, and we intend to reconsider what options, if any, are available.

Dissolution under Delaware Law

Section 275 of the DGCL provides that a corporation may dissolve upon the approval of the dissolution by the board of directors, followed by the approval of the dissolution by the holders of a majority of the outstanding stock of the corporation entitled to vote thereon. Following such approval, the dissolution is effected by filing a certificate of dissolution with the Secretary of State of the State of Delaware. The corporation is dissolved upon the filing of the certificate of dissolution with the Secretary of State of the State of Delaware (or on the later date specified in the certificate of dissolution).

Section 278 of the DGCL provides that after a corporation is dissolved, its existence continues for a period of three years “or for such longer period as the Delaware Court of Chancery shall in its discretion direct” for the purpose of prosecuting and defending suits and to enable the corporation gradually to settle and close its business, sell its properties, wind up its affairs, discharge its liabilities and distribute any remaining assets to stockholders. Therefore, even assuming that the Company completes the distribution of its assets to its claimants and stockholders promptly following the Dissolution, the Company will continue to exist during the three-year period for the purpose of any additional winding-up activities and in order to prosecute or defend suits, whether they arose before or within the three-year period after dissolution. Moreover, the existence of the Company will continue automatically even beyond the three year-period for the purpose of completing the prosecution or defense of suits begun prior to the expiration of the three-year period, until such time as any judgments, orders or decrees resulting from such suits are fully executed.

In order to ensure that its stockholders and directors are afforded certain protections under the DGCL, a dissolving corporation may opt to follow a court supervised dissolution procedure, pursuant to Section 280 of the DGCL, which requires the corporation to give notice by mail and publication of its dissolution to all persons known to have a claim against the corporation and require those persons to submit their claims in accordance with the notice. The court supervised procedure under Section 280 of the DGCL also contemplates that the corporation will offer security to claimants with contingent or conditional claims. The corporation must petition the Delaware Court of Chancery to determine the amount of security for contingent and conditional claimants who have rejected the offered security, for claims that are the subject of pending litigation and for claims that have not been made known to the corporation but are likely to become known within 5 years of the date of dissolution.

The corporation may also dissolve pursuant to the non-court supervised procedure of Section 281(b) of the DGCL. The non-court supervised procedure also requires the corporation to pay or make reasonable provision for certain categories of claims, including contingent, conditional or unmatured contractual claims known to the corporation, claims that are the subject of pending litigation and claims that have not been made known to the corporation but are likely to become known within 10 years of the date of dissolution.

Our Intended Approach to Dissolution

We currently intend to dissolve pursuant to the non-court supervised procedure of Section 281(b) of the DGCL.

PRINCIPAL PROVISIONS OF THE PLAN OF DISSOLUTION AND LIQUIDATION

The following summarizes the material provisions of the proposed plan of dissolution and liquidation. You should carefully read the full text of the plan of dissolution and liquidation attached to this information statement as Annex A which qualifies this description and is incorporated by reference into this information statement.

Approval of the Plan of Dissolution and Liquidation and Authority of Officers and Directors

The Dissolution proposal must be approved by the affirmative vote of the holders of a majority of our outstanding shares of common stock. The approval of the Dissolution proposal by the requisite vote of the stockholders will constitute adoption of the plan of dissolution and liquidation and will grant full and complete authority to the Company’s Board and officers, without further stockholder action, to do and perform any and all acts and to make, execute and deliver any and all agreements, conveyances, assignments, transfers, certificates and other documents of any kind and character that the Company’s Board or officers deems necessary, appropriate or advisable, to implement the plan of dissolution and liquidation and to proceed with our dissolution and liquidation in accordance with any applicable provision of the DGCL, sell, dispose, convey, transfer and deliver assets of the Company, establish a liquidating trust, satisfy or provide for the satisfaction of the Company’s obligations in accordance with any applicable provisions of the DGCL, and distribute all of the remaining funds of the Company and any unsold assets of the Company to its stockholders.

Dissolution and Liquidation

If the Dissolution proposal is approved by the requisite vote of the stockholders, the steps set forth below may be completed at such times as the Board, in its discretion and in accordance with the DGCL and the plan of dissolution and liquidation, as adopted by the Board and the holder of common stock, deems necessary, appropriate or advisable in our best interests and the best interests of the stockholders:

such provision as will be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the Company or that have not arisen but that, based on facts known to the Company, are likely to arise or to become known to the Company within 10 years after the date of dissolution.

Sale of Remaining Assets

The plan of dissolution and liquidation gives the Board the authority to dispose of all of our remaining non-cash property and assets, including but not limited to all tangible and intangible assets without further stockholder approval. We do not anticipate holding any non-cash property or assets after consummation of the Sale. Any such non-cash assets and properties may be sold in one transaction or in several transactions to one or more buyers. Additionally, the Company shall not be required to obtain appraisals, fairness opinions or other third-party opinions as to the value of its properties and assets in connection with the liquidation.

Liquidating Trust

The Board currently intends to establish a liquidating trust and, after distributing an amount of the net proceeds from the Sale in the form of a liquidating distribution following consummation of the Sale and effectiveness of a certificate of dissolution filed with the Secretary of State of the State of Delaware, currently intends to transfer any remaining assets to such liquidating trust. The liquidating trust may be established by agreement with one or more trustees selected by the Board. If a liquidating trust is established by agreement with one or more trustees, the trust agreement establishing and governing the liquidating trust shall be in form and substance determined by the Board. To the fullest extent permitted by law, approval of the Dissolution by the requisite vote of the stockholders shall constitute the approval of the stockholders of the appointment of the trustees, any trust agreement and any transfer of assets by the Company to the liquidating trust. In the alternative, the Board may petition the Delaware Court of Chancery for the appointment of one more trustees to conduct the liquidation of the Company, subject to the supervision of such court. Whether appointed by an agreement or by the Delaware Court of Chancery, the trustees shall in general be authorized to take charge of the Company’s property, and to collect the debts and property due and belonging to the Company, with power to prosecute and defend, in the name of the Company, or otherwise, all such suits as may be necessary or proper for the foregoing purposes, and to appoint agents under them and to do all other acts which might be done by the Company that may be necessary, appropriate or advisable for the final settlement of the unfinished business of the Company.

Professional Fees and Expenses

It is specifically contemplated that the Board may authorize the payment of a retainer fee to a law firm or law firms for legal fees and expenses of the Company, including, among other things, to cover any costs payable pursuant to the indemnification of our directors and officers provided by the Company pursuant to our certificate of incorporation and by-laws or the DGCL or otherwise. In addition, in connection with and for the purpose of implementing and assuring completion of the plan of dissolution and liquidation, the Company may, in the sole and absolute discretion of the Board, pay any brokerage, agency and other fees and expenses of persons rendering services to the Company in connection with the collection, sale, exchange or other disposition of the Company’s property and assets and the implementation of the plan of dissolution and liquidation. Approval of the Dissolution by the requisite vote of the stockholders shall, to the fullest extent permitted by law, constitute approval of such payments by the stockholders of the Company.

Indemnification

We will continue to indemnify our directors, officers and agents in accordance with our certificate of incorporation and by-laws and any contractual arrangements, for actions taken in connection with the plan of dissolution and liquidation and the winding up of our business and affairs. The Board, in its sole and absolute discretion, is also authorized to obtain and maintain insurance as may be necessary, appropriate or advisable to cover the Company’s above mentioned indemnification obligations, including directors’ and officers’ liability coverage.

Liquidating Distributions

We will, as determined by the Board, (i) pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured contractual claims known to us, (ii) make such provisions as will be reasonably likely to be sufficient to provide payment for any claim against us which is the subject of a pending action, suit or proceeding to which we are a party and (iii) make such provision as will be reasonably likely to be sufficient to provide payment for claims that have not been made known to us or that have not arisen but that, based on facts known to us or our successor entity, are likely to arise or to become known within 10 years after the effective date of the dissolution of the Company. Any of our assets remaining after the payment or the provision for payment of claims against and obligations of the Company shall be distributed by us pro rata to our stockholders. Such distribution may occur all at once or in a series of distributions and shall be in cash or assets, in such amounts, and at such time or times, as the Board or trustee(s), if any, in their absolute discretion, may determine.

If any liquidating distribution to a stockholder cannot be made, whether because the stockholder cannot be located or for any other reason, then the distribution to which such stockholder is entitled will be transferred, at such time as the final liquidating distribution is made, to the official of such state or other jurisdiction authorized or permitted by applicable law to receive the proceeds of such distribution. The proceeds of such distribution will thereafter be held solely for the benefit of and for ultimate distribution to such stockholder as the sole equitable owner thereof and will be treated as abandoned property and escheat to the applicable

state or other jurisdiction in accordance with applicable law. In no event will the proceeds of any such distribution revert to or become the Company’s property.

Liquidation Under Internal Revenue Code Sections 331 and 336

We intend that the plan of dissolution and liquidation constitute a plan of complete liquidation of the Company within the meaning of Sections 331 and 336 of the Internal Revenue Code, which plan of dissolution and liquidation shall only go into effect upon the effective date of the certificate of dissolution and not prior to such date. The plan of dissolution and liquidation will be deemed to authorize the taking of such action as, in the opinion of counsel for the Company, may be necessary to conform with the provisions of Sections 331 and 336 of the Internal Revenue Code and the regulations promulgated thereunder, including the making of any elections thereunder, if applicable.

Filing of Tax Forms

The plan of dissolution and liquidation authorizes and directs the Company’s officers to file an appropriate statement of corporate dissolution with the IRS after the effective date. The Company’s officers are also authorized to file any additional returns, forms and reports with the IRS, or other taxing authorities, including state and local taxing authorities, as may be necessary or appropriate in connection with the plan of dissolution and liquidation and the actions contemplated thereby. The Company will be required to file tax returns so long as it holds any assets.

Estimated Liquidating Distributions

Many of the facts influencing the amount of cash distributed to stockholders as a liquidating distribution cannot currently be quantified with certainty and are subject to change. Accordingly, you will not know the exact amount of any liquidating distributions you may receive as a result of the Dissolution when you vote on the Dissolution proposal. You may receive substantially less or more than the amount currently estimated.

The following projected liquidating distribution analysis assumes that the Sale is consummated in accordance with the Purchase and Sale Agreement and our stockholders approve the Dissolution proposal. If the Sale is consummated, the Company will discharge certain of its liabilities and obligations at closing, including but not limited to the approximately $33,550,412 principal balance outstanding under the John Hancock Loan, together with any accrued but unpaid interest and a prepayment premium estimated to be approximately $2,027,607, legal and accounting fees, sales commissions and adjustments payable in connection with the Sale. We intend to sell our remaining non-cash assets, if any, for the best price available as soon as reasonably practicable after the effective date of the dissolution of the Company. We do not expect that our non-cash assets will result in material, incremental value. The amount available to be distributed to stockholders will be deducted by the amount necessary to satisfy the Company’s obligations to current and potential claimants pursuant to the applicable provisions of the DGCL. Based on the foregoing, if both Proposals are approved, we estimate that the aggregate amount of total cash distributions to our stockholders will be approximately

$71,500 per share of preferred stock (assuming the asset sale is consummated on the terms set forth in the Purchase and Sale Agreement). We do not expect any cash distributions to be made on the single share of common stock owned by FSP Corp. These amounts may be paid in one or more distributions, and we cannot predict the timing or amount of any such distributions, as uncertainties as to the precise net value of our remaining assets after the Sale, the ultimate amount of our liabilities, the operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete such transactions make it impossible to predict with certainty the actual net cash amount that will ultimately be available for distribution to stockholders or the timing of any such distributions. If our stockholders do not approve the Dissolution proposal, no liquidating distributions will be made.

Pursuant to the plan of dissolution and liquidation, we intend to liquidate all of our remaining non-cash assets, if any, and, after paying or making reasonable provision for the payment of claims against and obligations of the Company as required by law, and distribute any remaining cash to stockholders. We may defend suits and incur claims, liabilities and expenses (such as legal, accounting and consulting fees) following approval of the Dissolution and during the three years following the effective date of the dissolution of the Company. Satisfaction of these claims, liabilities and expenses will reduce the amount of cash available for ultimate distribution to stockholders.

Conduct of the Company Following Dissolution

If the Dissolution is approved, we intend to file a certificate of dissolution with the Secretary of State of the State of Delaware when determined by the Board as soon as reasonably practicable after the closing of the Sale. Despite the anticipated timing, the Board may abandon the Dissolution if it determines, prior to the filing of the certificate of dissolution, that such course of action is necessary or advisable, in view of its fiduciary obligations. For avoidance of doubt, we do not anticipate abandoning the Dissolution if the Sale is approved by the requisite vote of the stockholders.

After the effective date of the Dissolution, our corporate existence will continue but we may not carry on any business except that appropriate to wind-up and liquidate our business and affairs, including collecting and disposing of our assets, satisfying or making reasonable provision for the satisfaction of our liabilities and, subject to legal requirements, distributing our remaining property among the stockholders. The Company also intends to establish a liquidating trust in connection with the dissolution and to transfer a portion of the Company’s assets to such trust during the Company’s three year wind-up period.

Under the DGCL, we are required, in connection with our dissolution, to satisfy or make reasonable provision for the satisfaction of all claims and liabilities. Following the effective date of the Dissolution, we will pay all expenses and other known liabilities and make reasonable provision for certain other claims and liabilities. We also may seek to acquire insurance coverage and take other steps the Board determines are reasonably calculated to provide for the satisfaction of the reasonably estimated amount of such liabilities. At this time, we are not able to provide a precise estimate of the amount of the cost of insurance or other steps that may be

undertaken to make provision for the satisfaction of liabilities and claims, but any such amount will be deducted before the determination of amounts available for distribution to stockholders.

The actual amount necessary to satisfy the Company’s obligations to current and potential claimants may vary from time to time and will be based upon estimates and opinions of the Board, derived from consultations with management and outside experts, if the Board determines that it is advisable to retain such experts, and a review of our estimated contingent liabilities and estimated ongoing expenses, including: legal and accounting fees; expenses accrued in connection with the preparation of our financial statements; any amounts reserved for potential claims under the Purchase and Sale Agreement; and costs related to public company reporting matters. We anticipate that expenses for professional fees and other expenses of liquidation may be significant. While we expect that we will have sufficient assets to satisfy all of our obligations, expenses and liabilities, if a distribution to stockholders is made and we are not able to satisfy all of our obligations, expenses and liabilities, a creditor could bring a claim against our stockholders for amounts distributed by us to such stockholders pursuant to the plan of dissolution and liquidation.

Potential Liability of Stockholders

Under the DGCL, if the Board fails to make reasonable provision for the satisfaction of liabilities and claims, each stockholder could be held liable for amounts due to creditors up to the amounts distributed to such stockholder under the plan of dissolution and liquidation. So long as we dispose of our claims in accordance with the DGCL, the potential for stockholder liability regarding a distribution continues for three years after the date of dissolution. Under the DGCL, our Dissolution does not remove or impair any remedy available against the Company, its directors, officers or stockholders for any right or claim existing, or any liability incurred, prior to such dissolution or arising thereafter, unless the action or other proceeding thereon is not commenced within three years (or any court extension thereof) after the date of Dissolution.

If we were held by a court to have failed to make adequate provision for expenses and liabilities or if the amount ultimately required to be paid in respect of such liabilities exceeded the amount available, a creditor could seek an injunction against us to prevent us from making distributions to stockholders in accordance with the plan of dissolution and liquidation. Any such action could delay and substantially diminish liquidating distributions to stockholders.

Reporting Requirements

Whether or not the Dissolution is approved, we will continue to have an obligation to comply with the applicable reporting requirements of the Exchange Act, even though compliance with such reporting requirements may be economically burdensome and of minimal value to stockholders, until the SEC provides relief from such reporting requirements or the Company is permitted to deregister its shares under the Exchange Act. In order to curtail the economically burdensome expenses that the Company would incur to continue to comply with Exchange Act reporting requirements, we intend to seek relief from the SEC to suspend our reporting obligations under the Exchange Act as soon as possible. We anticipate that, if granted such relief, we would continue to file current reports on Form 8-K to disclose material events relating to our

dissolution and liquidation along with any other reports that the SEC might require. If we are unable to suspend our obligation to file periodic reports with the SEC, we will be obligated to continue complying with the applicable reporting requirements of the Exchange Act and will be required to continue to incur the expenses associated with these reporting requirements, including legal and accounting expenses, which will reduce the cash available for distribution to stockholders.

Cessation of Transfers of Stock

Transfers of preferred stock and common stock shall be discontinued as of the date of the effectiveness of the certificate of dissolution with the Secretary of State of the State of Delaware. Thereafter, shares of our preferred stock and common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law, and we will not issue any new shares of stock.

The total liquidating distributions to stockholders pursuant to the Company’s certificate of incorporation shall be in complete redemption and cancellation of all of the outstanding shares of the Company’s preferred and common stock. After receipt of all liquidating distributions, each stockholder will cease to have any rights with respect to his, her or its shares, except the right to receive distributions pursuant to the plan of dissolution and liquidation.

If the surrender of documentation evidencing proof of ownership of Company stock will be required following the Dissolution, we will send you written instructions regarding such surrender. Any distributions otherwise payable by us to stockholders who have not surrendered such information, if requested to do so, may be held in trust for such stockholders, without interest, pending the surrender of such information (subject to escheat pursuant to the laws relating to unclaimed property).

NO APPRAISAL RIGHTS

Under the DGCL, the Company’s stockholders are not entitled to appraisal rights for their shares of preferred stock or common stock in connection with the Dissolution.

FEDERAL INCOME TAX CONSIDERATIONS

The discussion set forth below summarizes the material United States federal income tax consequences to stockholders of the Company in connection with the dissolution of the Company pursuant to the plan of dissolution and liquidation. This discussion is based on the Internal Revenue Code, existing and proposed Treasury regulations thereunder and administrative rulings and court decisions, all as in effect on the date of this information statement and all of which are subject to change or differing interpretations (possibly with retroactive effect). Any such change or differing interpretation could alter the tax consequences to the Company and its stockholders described herein.

This discussion is not a complete description of all the United States federal income tax consequences that may be relevant to the Company’s dissolution. In addition, this discussion

does not address all of the tax consequences that may be relevant to particular Company stockholders in light of their particular circumstances or to Company stockholders that are subject to special tax treatment under United States federal income tax laws, such as stockholders that are, for United States federal income tax purposes:

In addition, the following discussion does not address the tax consequences of the Dissolution under foreign, state or local tax laws, the tax consequences of transactions effectuated prior or subsequent to, or concurrently with, the Dissolution (whether or not any such transactions are undertaken in connection with the Dissolution). The Company has not requested, nor will request, a ruling from the IRS with regard to any of the tax consequences of the dissolution.

Each stockholder is urged to consult its own tax advisors as to the specific tax consequences of the Dissolution, including the applicable, federal, state, local and foreign tax consequences, in light of the particular circumstances of such holder.

Material United States Federal Income Tax Consequences to the Company and Company Stockholders of the Dissolution

The Board has adopted a plan of dissolution and liquidation, which, subject to approval of the Company’s stockholders, provides for liquidation and distribution of the Company’s assets to its stockholders. In the Dissolution, the Company will recognize gain or loss measured by the difference, if any, between the sale price (or the fair market value in the case of distributions of assets in kind) of the Company’s assets and their adjusted tax bases. In the Dissolution, the principal assets of the Company will consist of cash and a limited amount of non-cash assets, if any. The amount of any taxable gain realized by the Company on the sale or distribution of assets in-kind generally will be offset by the amount of any dividend distributions made by the Company for the taxable year of the sale (to the extent not used to offset taxable income from the Company's normal operations for the portion of the year prior to the sale). Solely for this purpose, amounts distributed to the Company's stockholders in liquidation of the Company generally will be deemed to be dividend distributions to the extent of the Company's retained

earnings and profits. To the extent that the Company has net operating losses or capital loss carryovers, it may be able to use such losses (subject to certain limitations) to offset any gain that is recognized in the dissolution in excess of the portion offset by the deemed dividend distribution.

Amounts received by Company stockholders pursuant to the plan of dissolution and liquidation will be treated as full payment in exchange for their preferred and common stock. A stockholder’s gain or loss on such amounts received will be computed on a “per share” basis. If the Company makes more than one liquidating distribution, each liquidating distribution will be allocated proportionately to each share of stock owned by a stockholder. The amount of cash and the fair market value of any other property received by a stockholder in each liquidating distribution will be applied against and reduce the stockholder’s adjusted tax basis in that stockholder’s shares of common stock. A stockholder will not recognize any gain with respect to a share until the stockholder has recovered the stockholder’s adjusted tax basis for that share. After the adjusted tax basis is recovered, all distributions in excess of such recovered basis will be recognized as taxable gain. Any loss will generally be recognized only when the final distribution from the Company has been received, and then only if the aggregate value of all liquidating distributions with respect to a share is less than the stockholder’s adjusted tax basis for that share. This gain or loss will be long-term capital gain or loss if, as of the date of dissolution, the holding period for such stock is more than one year.

Upon any liquidating distribution of property (other than cash), the stockholder’s adjusted tax basis in such property immediately after the distribution will be the fair market value of such property at the time of distribution.

For federal income tax purposes, payments made by a stockholder in satisfaction of our liabilities not covered by the cash or other assets in our contingency reserve or otherwise satisfied through insurance or other reasonable means generally would produce a capital loss for such stockholder in the year the liabilities are paid. The deductibility of any such capital loss generally would be subject to limitations for income tax purposes.

If a liquidating trust is used, the distribution of assets and liabilities of the Company to the trust would be treated for United States federal income tax purposes as if the assets and liabilities had been distributed to the Company stockholders in a liquidating distribution (with the tax consequences described above) and then contributed by them to the trust. The Company stockholders would not be required to recognize any additional gain or loss on the deemed contribution of the assets and liabilities to the liquidating trust. The liquidating trust would be treated as a grantor trust for United States federal income tax purposes, and gains or losses realized by the trust in the course of its administration would be passed through to the stockholders, who would be taxed on their respective shares of such gains and losses on their own tax returns.

Material United States Federal Income Tax Consequences to the Company and Company Stockholders after the Asset Sale if there is no Dissolution

If the Company does not ultimately consummate the Dissolution pursuant to the plan of dissolution and liquidation, it may nevertheless distribute various assets to the Company’s stockholders in kind. If non-liquidating distributions of assets in kind are made, the Company would recognize gain (but not loss) on such distributions. For Company stockholders, non-liquidating distributions would be treated either in whole or in part as dividends taxable at ordinary income rates or capital gain rates to the extent attributable to capital gains of the Company without regard to the recipients’ basis in the Company’s stock, or as partial liquidating distributions eligible for capital gain or loss treatment to Company stockholders, or as part of a series of liquidating distributions also eligible for capital gain or loss treatment for Company stockholders, depending on the particular circumstances of the distribution and each recipient stockholder. If any such distribution were treated as a dividend, the amount taxable as a dividend would not exceed the current and accumulated earnings and profits of the Company in the distribution year. Depending upon the amount and sources of a Company stockholder’s other income, the amount of any dividend otherwise taxable at ordinary income rates could qualify for a 20% deduction pursuant to a recently enacted provision of the Internal Revenue Code applicable to “qualified business income” including certain dividends from REITs. In the event that a Company stockholder receives such a dividend distribution from the Company, the stockholder should consult its own tax advisor regarding the availability of the 20% deduction.

Federal Backup Withholding

A Company stockholder may be subject, under some circumstances, to backup withholding at a rate of 24% with respect to any amounts (including cash and the fair market value of other assets) received with respect to Company stock, unless such stockholder provides proof of an applicable exemption or a correct taxpayer identification number, and otherwise complies with applicable requirements of the backup withholding rules.

Any amount withheld from a payment to a stockholder under the backup withholding rules is not an additional tax and may be refunded or credited against the stockholder’s United States federal income tax liability, provided that the required information is timely furnished to the IRS.

THE PRECEDING DISCUSSION IS A SUMMARY OF THE MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE DISSOLUTION AND DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO.

THIS DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR AVOIDING PENALTIES THAT MAY BE IMPOSED. THIS DISCUSSION WAS WRITTEN TO SUPPORT THE SOLICITATION OF WRITTEN CONSENTS IN LIEU OF A STOCKHOLDERS’ MEETING. COMPANY STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO THEM OF THE DISSOLUTION,

INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICABILITY OF STATE, LOCAL, FOREIGN AND OTHER APPLICABLE TAX LAWS AND ANY PROPOSED TAX LAW CHANGES.

REGULATORY APPROVALS

We are not aware of any governmental or regulatory approvals required in connection with the Dissolution other than compliance with the DGCL and the applicable securities laws in connection with this information statement.

REQUIRED VOTE

The affirmative vote of the holders of a majority of the outstanding common stock is required to approve the Dissolution. The Company is soliciting the consent of our common stockholder in favor of the Dissolution. FSP Corp is the sole stockholder of our one share of common stock and, upon the Company’s receipt of the requisite stockholder consent approving the Sale, currently intends to vote its share of common stock by consenting to approval of the Dissolution. For avoidance of doubt, FSP Corp. will not provide a consent with respect to its share of common stock to approve the Dissolution if the Company does not receive the requisite stockholder consent approving the Sale.

INTERESTS OF CERTAIN PERSONS IN THE PROPOSALS

None of FSP Corp. or its affiliates will receive any fees or commissions from the Sale. Proceeds of the Sale would be payable to the Company and distributed to its stockholders as part of the dissolution of the Company in connection therewith. A relative of Dennis J. McGillicuddy, a director of FSP Corp., owns 0.25 shares of preferred stock of the Company. Mr. McGillicuddy expressly disclaims beneficial ownership of such fractional share. No director or officer of FSP Corp. owns shares of preferred stock; therefore, none of its directors or officers will be entitled to any proceeds of a sale of the Property or from a dissolution of the Company in connection therewith.

Because FSP Corp. holds the sole outstanding share of common stock of the Company, according to the terms of the certificate of incorporation of the Company, in the event the Company is dissolved, FSP Corp., as the sole common stockholder, would be entitled to receive a portion of the assets of the Company only after the payment of preferential amounts to the preferred stockholders of at least $100,000 per share, in which case it would be allocated the equivalent of one-tenth of a preferred share as part of a distribution to all stockholders, pro rata. We do not expect any cash distributions to be made on the single share of common stock owned by FSP Corp.

FSP Corp. owns 965.75 shares of the Company’s preferred stock, or approximately 43.7% of the outstanding shares of the Company’s preferred stock, and upon the Dissolution, FSP Corp. will be entitled to its pro rata portion of distributions to the holders of preferred stock in the Dissolution.

After the consummation of the Sale, FSP Corp. will no longer be entitled to receive any asset management fees from the Company.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

LEGAL PROCEEDINGS

There are no material legal proceedings to which the Company is a party. The Company from time to time may be involved in lawsuits including, but not limited to, lawsuits relating to the real property it owns for liability for slips and falls, damage to automobiles in the parking garage, minor theft or similar matters. The Company expects that most of these suits will be covered by insurance, subject to customary deductions. In addition, in the ordinary course of business, the Company may become involved in litigation to collect rents or other income due to it from tenants.

CHANGES IN AND DISAGREEMENTS WITH ACCOOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ADDITIONAL FINANCIAL INFORMATION ON THE COMPANY

Additional financial information about the Company required by Item 14(c)(2) of Schedule 14A, including the Company’s financial statements for the fiscal year ended December 31, 2017 and the quarter ended March 31, 2018 and Management’s Discussion and Analysis for such periods, are incorporated by reference from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 and from any other documents incorporated by reference into this Information Statement as permitted under Item 14(e) of Schedule 14A. We also note that copies of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 are being sent to stockholders along with this information statement pursuant to Rule 14a-3 under the Securities Exchange Act of 1934, as amended.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth the beneficial ownership of the Company’s common stock and preferred stock as of February 28, 2018 by each holder who beneficially owns more than five percent of the Company’s common stock or preferred stock, by each director, by each of the Company’s executive officers and by all current directors and executive officers as a group. To the Company’s knowledge, no person or group, other than as set forth below, beneficially owns more than five percent of the Company’s common stock or preferred stock.

PREFERRED STOCK

IMPORTANT
PLEASE COMPLETE, SIGN AND DATE
YOUR WRITTEN CONSENT AND PROMPTLY
RETURN IT IN THE ENCLOSED PRE-ADDRESSED ENVELOPE

WRITTEN CONSENT OF THE STOCKHOLDERS OF
FSP 303 EAST WACKER DRIVE CORP. IN LIEU OF A STOCKHOLDERS’ MEETING

This consent is solicited by the Board of FSP 303 East Wacker Drive Corp. (the “Company”). When properly executed and delivered to the Company, this consent will be acted upon as designated by the undersigned. If this consent is signed, dated, and delivered to the Company with no designation by the undersigned, this consent will constitute the stockholder’s consent to and approval of the Proposal referred to herein.

Receipt is hereby acknowledged of the Notice of Solicitation of Action by Stockholders by Written Consent In Lieu of Meeting of Stockholders and the information statement dated [●], 2018, which describe in detail the Proposal referred to herein.

(continued and to be signed and dated on reverse side)

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

PLEASE MARK YOUR ACTION IN BLUE OR BLACK INK AS SHOWN HERE: ☒

The Board of Directors recommends consenting to approval of the following proposal.

Proposal: To approve the sale by the Company of the 28-story, Class “A” multi-tenant office tower and a connected 4-story, Class “A” multi-tenant office building containing approximately 860,000 rentable square feet of space located at 303 East Wacker Drive, Chicago, Illinois to BCSP 8 Acquisition LLC (or an assignee thereof), an unaffiliated third-party buyer, for a gross sales price of $182,000,000, as further described in the information statement that accompanies this consent or, if that sale should not be consummated, to another unaffiliated third-party buyer for a gross sales price of at least $182,000,000. “Gross sales price” includes any and all consideration received or receivable, in whatever form, including but not limited to assumption or release of existing liabilities.

MARK ONLY ONE OF THE FOLLOWING THREE BOXES:

Dated: ______________________

Please sign exactly as you hold your stock. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.

COMMON STOCK

IMPORTANT
PLEASE COMPLETE, SIGN AND DATE
YOUR WRITTEN CONSENT AND PROMPTLY
RETURN IT IN THE ENCLOSED PRE-ADDRESSED ENVELOPE

WRITTEN CONSENT OF THE STOCKHOLDERS OF
FSP 303 EAST WACKER DRIVE CORP. IN LIEU OF A STOCKHOLDERS’ MEETING

This consent is solicited by the Board of FSP 303 East Wacker Drive Corp. (the “Company”). When properly executed and delivered to the Company, this consent will be acted upon as designated by the undersigned. If this consent is signed, dated, and delivered to the Company with no designation by the undersigned, this consent will constitute the stockholder’s consent to and approval of the Proposals referred to herein.

Receipt is hereby acknowledged of the Notice of Solicitation of Action by Stockholders by Written Consent In Lieu of Meeting of Stockholders and the information statement dated [●], 2018, which describe in detail the Proposals referred to herein.

(continued and to be signed and dated on reverse side)

_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

PLEASE MARK YOUR ACTION IN BLUE OR BLACK INK AS SHOWN HERE: ☒

The Board of Directors recommends consenting to approval of the following proposals.

Proposal No. 1: To approve the sale by the Company of the 28-story, Class “A” multi-tenant office tower containing approximately 860,000 rentable square feet of space located at 303 East Wacker Drive, Chicago, Illinois (the “Property”) to BCSP 8 Acquisition LLC (or an assignee thereof), an unaffiliated third-party buyer, for a gross sales price of $182,000,000, as further described in the information statement that accompanies this consent or, if that sale should not be consummated, to another unaffiliated third-party buyer for a gross sales price of at least $182,000,000 (the “Sale” of the Property). “Gross sales price” includes any and all consideration received or receivable, in whatever form, including but not limited to assumption or release of existing liabilities.

MARK ONLY ONE OF THE FOLLOWING THREE BOXES:

Proposal No. 2: To approve the dissolution of the Company following the closing of the Sale in accordance with Proposal No. 1 and adoption of the plan of dissolution and liquidation.

MARK ONLY ONE OF THE FOLLOWING THREE BOXES:

(Please sign and date below)

Dated: ______________________.

Please sign exactly as you hold your stock. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.

Annex A: Plan of Dissolution and Liquidation

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PLAN OF COMPLETE DISSOLUTION AND
LIQUIDATION OF FSP 303 EAST WACKER DRIVE CORP.

This Plan of Complete Dissolution and Liquidation (the “Plan”) is intended to accomplish the complete dissolution and liquidation of FSP 303 East Wacker Drive Corp., a Delaware corporation (the “Company”), in accordance with Section 275 and other applicable provisions of the General Corporation Law of Delaware (“DGCL”) and Sections 331 and 336 of the Internal Revenue Code of 1986, as amended (the “Code”), and constitutes a plan of dissolution and distribution under the DGCL.

1.       Approval and Adoption of Plan.

This Plan shall be effective when all of the following steps have been completed:

Notwithstanding the authorization of the Board pursuant to Section 1(a) above or the approval of stockholders pursuant to Section 1(b) above, the Company may continue to pursue other business opportunities and transactions, and, if for any reason, including the pursuit of such opportunities or transactions, the Board determines that such action would be in the best interests

of the Company, it may, prior to the Effective Date, abandon the proposed dissolution and the proposed Plan pursuant to Section 275(e) of the DGCL. Upon the abandonment of the proposed dissolution and the proposed Plan, the Plan shall be void.

2.       Dissolution and Liquidation Period.

After the Effective Date, the steps set forth below shall be completed at such times as the Board, in its absolute discretion, deems necessary, appropriate or advisable. Without limiting the generality of the foregoing, the Board may instruct the officers of the Company to delay the taking of any of the following steps until the Company has performed such actions as the Board or such officers determine to be necessary, appropriate or advisable for the Company to maximize the value of the Company’s assets upon liquidation:

Notwithstanding the foregoing, the Company shall not be required to follow the procedures described in Section 281(b) of the DGCL, and the adoption of the Plan by the holders of Common Stock shall constitute full and complete authority for the Board and the officers of the Company, without further stockholder action, to proceed with the dissolution and liquidation of the Company in accordance with any applicable provision of the DGCL, including, without limitation, Section 280 thereof.

3.       Authority of Officers and Directors.

The adoption of the Plan by the holders of Common Stock shall constitute full and complete authority for the Board and the officers of the Company, without further stockholder action, to do and perform any and all acts and to make, execute and deliver any and all agreements, conveyances, assignments, transfers, certificates and other documents of any kind and character that the Board or such officers deem necessary, appropriate or advisable: (i) to dissolve the Company in accordance with the laws of the State of Delaware and cause its withdrawal from all jurisdictions in which it is authorized to do business; (ii) to sell, dispose, convey, transfer and deliver the assets of the Company; (iii) to satisfy or provide for the satisfaction of the Company’s obligations in accordance with Sections 280 and 281 of the DGCL; (iv) to satisfy any continuing obligations of the Company pursuant to any definitive purchase and sale agreement of substantially all assets of the Company and (v) to distribute all of the remaining funds of the Company and any unsold assets of the Company to the holders of the Company’s preferred stock, par value $.01 per share (the “Preferred Stock”) and Common Stock.

4.       Sale of All or Substantially All of the Non-Cash Assets.

The Company shall determine whether and when to collect, sell, exchange or otherwise dispose of all or substantially all of its non-cash property and assets, including but not limited to all tangible assets, intellectual property and other intangible assets, in one or more transactions upon such terms and conditions as the Board, in its absolute discretion, deems expedient and in the best interests of the Company and the best interests of the stockholders, without any further vote or action by the Company’s stockholders. The Company’s non-cash assets and properties may be sold in one transaction or in several transactions to one or more buyers. The Company shall not be required to obtain appraisals, fairness opinions or other third-party opinions as to the value of its properties and assets in connection with the liquidation.

5.       Professional Fees and Expenses.

It is specifically contemplated that the Board may authorize the payment of a retainer fee to a law firm or law firms for legal fees and expenses of the Company, including, among other things, to cover any costs payable pursuant to the indemnification of the Company’s officers or members of the Board provided by the Company pursuant to its certificate of incorporation and by-laws or the DGCL or otherwise.

In addition, in connection with and for the purpose of implementing and assuring completion of this Plan, the Company may, in the sole and absolute discretion of the Board, pay any brokerage, agency and other fees and expenses of persons rendering services to the Company in connection with the collection, sale, exchange or other disposition of the Company’s property and assets and the implementation of this Plan. Approval of the adoption of the Plan by stockholders shall, to the fullest extent permitted by law, constitute approval of such payments by the stockholders of the Company.

6.       Indemnification.

The Company shall continue to indemnify its directors, officers and agents in accordance with its certificate of incorporation and by-laws and any contractual arrangements, for actions

taken in connection with this Plan and the winding up of the affairs of the Company. The Board, in its sole and absolute discretion, is authorized to obtain and maintain insurance as may be necessary, appropriate or advisable to cover the Company’s obligations hereunder, including without limitation directors’ and officers’ liability coverage.

7.       Liquidating Trust.

The Board may, but is not required to, establish a liquidating trust (the “Liquidating Trust”) and distribute assets of the Company to the Liquidating Trust. The Liquidating Trust may be established by agreement with one or more trustees (the “Trustees”) selected by the Board. If the Liquidating Trust is established by agreement with one or more Trustees, the trust agreement establishing and governing the Liquidating Trust shall be in form and substance determined by the Board. To the fullest extent permitted by law, adoption of the Plan by stockholders shall constitute the approval of the appointment of the Trustees, any trust agreement and any transfer of assets by the Company to the Trust. In the alternative, the Board may petition the Court for the appointment of one or more Trustees to conduct the liquidation of the Company, subject to the supervision of the Court. Whether appointed by an agreement or by the Court, the Trustees shall in general be authorized to take charge of the Company’s property, and to collect the debts and property due and belonging to the Company, with power to prosecute and defend, in the name of the Company, or otherwise, all such suits as may be necessary or proper for the foregoing purposes, and to appoint agents under them and to do all other acts which might be done by the Company that may be necessary, appropriate or advisable for the final settlement of the unfinished business of the Company.

8.       Liquidating Distributions.

Liquidating distributions, in cash or in kind, may be made from time to time to the holders of record of outstanding shares of Preferred Stock and Common Stock at the close of business on the Effective Date, as provided in Section 2 above, pro rata in accordance with the respective number of shares then held of record, and according to the Company’s certificate of incorporation; provided that, in the opinion of the Board, provision has been made for the payment of the obligations of the Company to the extent required by law. All determinations as to the time for and the amount and kind of liquidating distributions shall be made in the exercise of the absolute discretion of the Board and in accordance with Section 281 of the DGCL. As provided in Section 11 below, distributions made pursuant to this Plan shall be treated as made in complete liquidation of the Company within the meaning of the Code and the regulations promulgated thereunder.

9.       Amendment or Modification of Plan.

If for any reason the Board determines that such action would be in the best interests of the Company, it may amend or modify the Plan and all action contemplated thereunder, notwithstanding stockholder approval of the Plan; provided, however, that the Company will not amend or modify the Plan under circumstances that would require additional stockholder approval under the federal securities laws without complying with the federal securities laws.

10.       Cancellation of Stock and Stock Certificates.

Following the Effective Date and subject to applicable law, the Company shall no longer permit or effect transfers of any of its stock. As a condition to receipt of any liquidating distribution, the Board, in its absolute discretion, may require the stockholders to (i) surrender evidence of ownership of the Preferred Stock and Common Stock to the Company or its agents for recording of such distributions thereon, or (ii) furnish the Company with evidence satisfactory to the Board of the loss, theft or destruction of any such evidence documenting ownership of the Preferred Stock and Common Stock, together with such surety bond or other security or indemnity as may be required by and satisfactory to the Board.

11.       Liquidation under Code Sections 331 and 336.

It is intended that this Plan shall be a plan of complete liquidation of the Company in accordance with the terms of Sections 331 and 336 of the Code, which plan shall only go into effect upon the Effective Date, and not prior to such date. The Plan shall be deemed to authorize the taking of such action as, in the opinion of counsel for the Company, may be necessary to conform with the provisions of Sections 331 and 336 and the regulations promulgated thereunder, including, without limitation, the making of any elections thereunder, if applicable.

12.       Filing of Tax Forms.

The appropriate officers of the Company are authorized and directed, within thirty (30) days after the Effective Date, to execute and file United States Treasury Form 966 for the Company and any appropriate subsidiaries, pursuant to Section 6043 of the Code. The appropriate officers of the Company and its subsidiaries are also authorized to file any additional returns, forms and reports with the Internal Revenue Service, or other taxing authorities, including state and local taxing authorities, as may be necessary or appropriate in connection with this Plan and the carrying out thereof.

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Annex B: Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2017 and Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2018

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2017

For the transition period from to

Commission File No. 000-53165

FSP 303 East Wacker Drive Corp.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (781) 557-1300

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Preferred Stock, $.01 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐   No ☑.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐   No ☑.

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 90 days. Yes ☑   No ☐.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑   No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐   No ☑.

As of June 30, 2017 the aggregate fair market value of Common Stock held by non-affiliates of the registrant was $0.

The number of shares of Common Stock outstanding was 1 and the number of shares of Preferred Stock outstanding was 2,210 as of February 28, 2018.

Documents incorporated by reference: None.

TABLE OF CONTENTS

History

Our company, FSP 303 East Wacker Drive Corp., which individually or together with FSP 303 East Wacker Drive LLC, its subsidiary, we refer to as the “Company”, “we” or “our”, is a Delaware corporation formed to purchase, own and operate a twenty-eight story Class”A” multi-tenant office tower containing approximately 860,000 rentable square feet of office and retail space and a 294-stall underground parking garage located in downtown Chicago, Illinois, which we refer to as the Property. The Company operates in a manner intended to qualify as a real estate investment trust, or REIT, for federal income tax purposes.

The Company was organized in December 2006 by FSP Investments LLC, a wholly-owned subsidiary of Franklin Street Properties Corp., which we refer to as Franklin Street (NYSE American: FSP). FSP Investments LLC acted as a real estate investment firm and broker/dealer with respect to (a) the organization of the Company, (b) the acquisition of the Property by the Company and (c) the sale of equity interests in the Company.

The Company purchased the Property from an unaffiliated third party for $167,000,000 on January 5, 2007. The purchase price, which was determined based on arm’s-length negotiations, was financed entirely by a loan from Franklin Street collateralized by a first mortgage, which we refer to as the Acquisition Mortgage Loan. The Acquisition Mortgage Loan was repaid in its entirety on December 27, 2007 from the proceeds of the sale of equity interests in the Company. Total interest and loan fees incurred on the Acquisition Mortgage Loan were approximately $13,810,000. The Company acquired the Property through FSP 303 East Wacker Drive LLC, a wholly-owned subsidiary of the Company. The sole business of FSP 303 East Wacker Drive LLC is to own and operate the Property.

The Company commenced operations in January 2007.

Franklin Street holds the sole share of the Company’s common stock, $.01 par value per share, which we refer to as the Common Stock. Between February 2007 and December 2007, FSP Investments LLC completed the sale on a best efforts basis of 2,210 shares of the Company’s preferred stock, $.01 par value per share, which we refer to as the Preferred Stock. We sold the Preferred Stock in a private placement offering to “accredited investors” within the meaning of Regulation D under the Securities Act of 1933. Between February 7, 2007 and December 27, 2007, the Company held 17 investor closings, at each of which shares of Preferred Stock were sold and funds were received. On December 27, 2007, Franklin Street purchased 965.75 shares of Preferred Stock (approximately 43.7% of the issued and outstanding shares of Preferred Stock) for consideration totaling $82,813,000, representing $96,575,000 at the offering price net of commissions of $7,726,000 and fees of $6,036,000 that were excluded. Prior to purchasing any shares of Preferred Stock, Franklin Street agreed to vote any shares of Preferred Stock held by it on any matter presented to the holders of Preferred Stock in a manner that approximates as closely as possible the votes cast in favor of and opposed to such matter by the holders of the Preferred Stock other than Franklin Street and its affiliates. For purposes of determining how Franklin Street votes its shares of Preferred Stock, abstentions and non-votes by stockholders other than Franklin Street are not considered. Funds from each individual closing were used to repay the Acquisition Mortgage Loan and associated fees as well as other expenses payable to Franklin Street’s wholly-owned subsidiary, FSP Investments LLC. The use of proceeds from the offerings of Preferred Stock, including for payments to Franklin Street and its affiliates, is set forth in the table below:

Transactions between the Company and Franklin Street and/or its affiliates were entered into without the benefit of arm’s-length bargaining and involved conflicts of interest. Although Franklin Street has sponsored the syndication of other REITs similar to the Company and has in the past acquired some of those REITs, Franklin Street is under no obligation to acquire or to offer to acquire the Company or the outstanding shares of Preferred Stock, and any acquisition transaction would need to be approved by the Company’s stockholders and the boards of directors of Franklin Street and the Company. Please see “Part III, Item 13. Certain Relationships and Related Transactions, and Director Independence”.

Our Business

Our sole business is to own and operate the Property and we do not intend to invest in or purchase any additional properties. We derive rental revenue from income paid to us by the tenants of the Property. Asset, investor and property management services are provided by third parties, including affiliates of Franklin Street.

The Property was completed in 1979 and is a twenty-eight story multi-tenant office tower located in downtown Chicago, Illinois containing approximately 860,000 rentable square feet of office and retail space and a 294-stall underground parking garage.

The Property, formerly known as Three Illinois Center, is part of the multi-building, mixed-use development known as Illinois Center, which includes office buildings, hotels, residential buildings, and a large athletic club. The Property was preceded in construction by One and Two Illinois Center, which were developed in 1970 and 1972, respectively. The three towers share an aluminum and glass design that is characteristic of contemporary international style, distinguished by a curtain wall of bronze-finished aluminum and reflective glass. The Property is located in Chicago’s East Loop submarket on the eastern portion of the development along the southern edge of the Chicago River.

The office component of the Property is separated into low-rise, mid-rise and high-rise sections. The first floor, or Plaza, has three elevator banks, each containing five passenger elevators and a freight elevator which services the 27 floors of office space. An additional elevator is also provided at the Plaza level for direct access to the parking garage and Concourse. Access to the Concourse level from the Plaza level is provided by an escalator system. Access to the Plaza level from street-level is provided by entrances on the West and East sides of the Property and emergency exits on the south end.

The Property was approximately 73.5% leased as of December 31, 2017 to a diverse group of tenants with staggered lease expirations. We believe that any tenant that leases 10% or more of the Property’s rentable space is material. As of December 31, 2017, 45 tenants were leasing space at the Property, with the largest being Tribune Media at approximately 60,952 square feet, or approximately 7.1% of the Property’s rentable space.

In general, office leases at the Property are structured on a triple-net (NNN) basis with respect to expenses, so that the tenant is responsible for its respective pro-rata percentage of expenses. In general, concourse level (lower level) retail tenants have full service gross rent leases under which gross rent includes expenses.

FSP Property Management LLC, a wholly-owned subsidiary of Franklin Street, provides the Company with asset management and financial reporting services. The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one-half of one percent (0.5%) of that month’s gross revenues of the Property. The asset management agreement between the Company and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days written notice.

FSP Investments LLC, a wholly-owned subsidiary of Franklin Street, provides investor services to the holders of the Company’s Preferred Stock. The investor services agreement between the Company and FSP Investments LLC requires the Company to pay a monthly service fee of $500 and to reimburse FSP Investments LLC for its reasonable out-of-pocket expenses. The investor services agreement may be terminated by either party with thirty days written notice or immediately upon the occurrence of certain events of default specified in the investor services agreement.

Hines Interests Limited Partnership provides the Company with day-to-day property management, construction management and leasing services relating to the operation of the Property. Hines Interests Limited Partnership is a third-party service provider that is not related to or affiliated with Franklin Street. The management agreement between the Company and Hines Interests Limited Partnership requires the Company to pay Hines Interests Limited Partnership a monthly fee equal to one and three-quarters percent (1.75%) of the net operating receipts collected in the preceding month. The monthly fee is adjusted to one and nine-tenths percent (1.90%) of the net operating receipts collected in the preceding month if the Property is above eighty percent (80%) leased. The management agreement between the Company and Hines Interests Limited Partnership operates on a month-to-month basis and may be terminated for cause.

Investment Objectives

Our investment objectives are to (i) obtain cash available to pay dividends through rental receipts from operations of the Property, (ii) have that cash increase over time as a result of rental rate step increases in existing leases and new leasing activity in currently vacant space, (iii) have that cash potentially increase over time if rental rates increase for new leases, (iv) provide a return of capital to holders of our Preferred Stock if a capital event occurs, (v) provide increased equity in the Property to our holders of Preferred Stock as a result of potential appreciation in market value, and (vi) preserve and protect the capital invested by the holders of our Preferred Stock. We cannot be sure of meeting our objectives.

Our policy is not to make loans to other persons, not to invest in the securities of other issuers for the purpose of exercising control, not to underwrite the securities of other issuers, not to offer securities in exchange for property and not to purchase or otherwise reacquire our securities. These policies may be changed by our directors without a vote of the holders of shares of our Preferred Stock.

We have issued our shares of Preferred Stock in the offering described above. No additional shares of Preferred Stock are authorized by our charter, and authorization of any increase in the number of authorized shares or the creation of any new series or class of stock requires the affirmative vote of the holders of 66.67% of the outstanding shares of Preferred Stock.

We intend to dispose of the Property at such time that our Board of Directors determines that we have achieved our investment objectives. We do not intend to reinvest the proceeds of any such disposition. We also do not intend to list our shares of Preferred Stock on an exchange and therefore do not expect any trading market to develop in such shares.

Permanent Mortgage Loan

On August 3, 2011, we entered into a mortgage note in favor of John Hancock Life Insurance Company (U.S.A.) (the “Lender”) to evidence a loan in the original principal amount of $35,000,000 that matures on September 1, 2021 (the “Loan”). The proceeds of the Loan are being held by the Lender for the Company’s benefit in a restricted reserve account or accounts to be drawn upon by the Company from time to time for tenant improvement costs and leasing commissions at the Property upon satisfaction of certain conditions. The Loan bears interest at the fixed rate of 4.83% per annum. We were obligated to make monthly payments of interest only for the initial 60 months of the Loan. Thereafter, we are obligated to make monthly payments of principal and interest for the remaining 60 months, based on a 25-year amortization schedule, until the maturity date, when all outstanding amounts become due. Commencing on October 1, 2016, the Loan became payable in monthly payments of principal and interest in the amount of $201,155. We may prepay the Loan with a prepayment premium, as defined in the Loan agreement. The Loan is secured, in part, by a mortgage, assignment of leases and rents and security agreement (the “Mortgage”) from the Company in favor of the Lender. The Mortgage constitutes a lien against the Property and has been recorded in the land records of Cook County, Illinois. Subject to customary exceptions, the Loan is nonrecourse to the Company. As of December 31, 2017, we had drawn an aggregate of $31,070,000 from the restricted reserve account(s). Interest expense paid on the Loan for the years ended December 31, 2017 and 2016 was $1,665,000 and $1,690,000, respectively. The documents evidencing and securing the Loan include restrictions on property liens and require compliance with various non-financial covenants, which include the requirement that we provide annual reports to the Lender. We were in compliance with the Loan covenants as of December 31, 2017 and December 31, 2016.

As of December 31, 2017, scheduled principal payments under the Loan for the next four years are as follows:

Fees paid associated with the Loan were $304,000 and are being amortized on the straight-line basis over the term of the Loan. Amortization expense for each of the years ended December 31, 2017 and 2016 is $30,000 and is included in interest expense in the Company’s Consolidated Statements of Operations.

Competition

We believe that the downtown Chicago office market, which we refer to as the Central Business District, witnessed an increase in total vacancy during 2017 compared to 2016. We believe that the increase in vacancy in the Central Business District during 2017 was primarily attributable to increased supply from new construction and a lack of meaningful net absorption. The Property is located in the East Loop submarket of the Central Business District. We believe that vacancy rates in the East Loop also increased during 2017 compared to 2016, but we think that the increase in the East Loop was primarily caused by an increase in available sublease space. The Property is competing against the other office buildings which are or may become available in the general area in which the Property is located and which may be priced at rental levels lower than those for space in the Property or which may otherwise be more attractive to tenants. In order to lease existing vacancy, the Property must be competitive, in regards to cost and amenities, with other buildings of similar use near our location. Some of our competitors may have significantly more resources than we do and may be able to offer more attractive rental rates or services. On the other hand, some of our competitors may be smaller or have lower fixed overhead costs, less cash or other resources that make them willing or able to accept lower rents in order to maintain a certain occupancy level. If, at any time, there is no existing significant competition for the Property, our competitors may decide to enter the market and build new buildings to compete with our Property. Our competition is not only with other developers, but also with property users who choose to own their building. In addition, larger market forces beyond our control, such as general economic conditions, may increase competition among landlords for quality tenants and individual decisions beyond our control. Given that the Property is a multi-tenant office tower that is leased to a diverse group of office and retail tenants with staggered lease expirations, we cannot predict which competitive factors will be relevant to prospective future tenants at this time. We believe that the existing vacant space at the Property will ultimately be leased to new tenants. 

Employees

We had no employees as of December 31, 2017.

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, we file reports and other information with the Securities and Exchange Commission (SEC). This Annual Report on Form 10-K and other reports and other information we file can be inspected and copied at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 on official business days during the hours of 10:00 am to 3:00 pm. Such reports, proxy and information statements, if any, and other information about issuers that file electronically with the SEC may also be obtained from the web site that the SEC maintains at http://www.sec.gov. Further information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

We will make available and voluntarily provide, free of charge upon written request at the address on the cover of this Annual Report on Form 10-K, a copy of our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. We do not maintain a website.

Not applicable.

Not applicable.

Set forth below is information regarding the Property as of December 31, 2017:

(1)       Major tenants represent greater than 10% of rental revenue as of December 31, 2017.

The average effective annual rent per leased square foot for the years ended December 31, 2017 and 2016 was $17.19 and $18.82, respectively.

We acquired the Property on January 5, 2007 through a limited liability company, all of whose equity interest is owned, directly or indirectly, by the Company. In the opinion of our management, the Property is adequately covered by insurance. The Property is currently encumbered by the Loan.

The Property was completed in 1979 and is a twenty-eight story multi-tenant office tower located in downtown Chicago, Illinois containing approximately 860,000 rentable square feet of office and retail space and a 294-stall underground parking garage.

The following table reflects certain information for the leases that are expiring over the next ten years:

Below is certain information with respect to the Property’s tenants and leases.

Tenants

The Property was approximately 73.5% leased as of December 31, 2017 to a diverse group of tenants with staggered lease expirations. We believe that any tenant that leases 10% or more of the Property’s rentable space is material. As of December 31, 2017, 45 tenants were leasing space at the Property, with the largest being Tribune Media at approximately 60,952 square feet, or approximately 7.1% of the Property’s rentable space. Tribune Media’s rent payments commenced in March 2018.

Leases

In general, office leases at the Property are structured on a triple-net (NNN) basis with respect to expenses, so that the tenant is responsible for its respective pro-rata percentage of expenses. In general, concourse level (lower level) retail tenants have full service gross rent leases under which gross rent includes expenses.

Additional Operating Data

Additional information regarding the amount of the Property’s annual real estate taxes and insurance can be found in the Consolidated Statements of Operations that are included with this Form 10-K. Additional information regarding the Property’s Federal tax basis, rate, method and life claimed for purposes of depreciation can be found in the Notes to Consolidated Financial Statements that are included with this Annual Report on Form 10-K.

There are no material legal proceedings to which the Company is a party. The Company from time to time may be involved in lawsuits including, but not limited to, lawsuits relating to the real property it owns for liability for slips and falls, damage to automobiles in the parking garage, minor theft or similar matters. The Company expects that most of these suits will be covered by insurance, subject to customary deductions. In addition, in the ordinary course of business, the Company may become involved in litigation to collect rents or other income due to it from tenants.

Not applicable.

PART II

There is no established public trading market for the Company’s Common Stock or Preferred Stock.

As of February 28, 2018, Franklin Street was the sole holder of record of the Common Stock and there were 856 holders of record of the Preferred Stock. This computation is based upon the number of record holders reflected in our corporate records. The final sale of Preferred Stock occurred on December 27, 2007 and following that date no further distributions or dividends have been or will be declared on the Common Stock.

Set forth below are the distributions made to the holders of our Preferred Stock in respect of each quarter during the past two fiscal years. Distributions are determined based on the Company’s Board of Directors’ review of cash available for distribution and distribution requirements necessary for the Company to continue to qualify as a real estate investment trust. We cannot guarantee the future payment of dividends or the amount of any such dividends. See the Notes to Consolidated Financial Statements that are included with this Annual Report on Form 10-K for additional information.

The Company’s board of directors declared and paid cash distributions as follows:

The Company does not have an equity compensation plan or any outstanding stock options or other securities convertible into Common Stock.

Not applicable.

The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. Historical results and percentage relationships set forth in the financial statements, including trends which might appear, should not be taken as necessarily indicative of future operations. The following discussion and other parts of this Annual Report on Form 10-K 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 our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States and in the market where we own the Property, disruptions in the debt markets, risks of a lessening of demand for the type of real estate owned by us, changes in government regulations and regulatory uncertainty, geopolitical events, expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, uncertainty about government fiscal policy, uncertainties relating to the impact of the enactment of the Tax Cuts and Jobs Act on December 22, 2017, additional staffing, insurance increases and real estate tax valuation reassessments. 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 may not update any of the forward-looking statements after the date this Annual Report on Form 10-K 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.

Overview

FSP 303 East Wacker Drive Corp., which we refer to as the Company, is a Delaware corporation formed to purchase, own, and operate a twenty-eight story Class “A” multi-tenant office tower containing approximately 860,000 rentable square feet of office and retail space and a 294-stall underground parking garage located in downtown Chicago, Illinois, which we refer to as the Property.

Franklin Street Properties Corp., which we refer to as Franklin Street, is the sole holder of our one share of common stock, $.01 par value per share, which we refer to as the Common Stock, that is issued and outstanding. Between February 2007 and December 2007, FSP Investments LLC, a wholly-owned subsidiary of Franklin Street, completed the sale on a best efforts basis of 2,210 shares of our preferred stock, $.01 par value per share, which we refer to as the Preferred Stock. FSP Investments LLC sold the Preferred Stock in a private placement offering to “accredited investors” within the meaning of Regulation D under the Securities Act of 1933. Since the completion of the placement of the Preferred Stock in December 2007, Franklin Street has not been entitled to share in any earnings or dividend related to the Common Stock.

We operate in one business segment, which is real estate operations, and own a single property. Our real estate operations involve real estate rental operations, leasing services and property management services. The main factor that affects our real estate operations is the broad economic market conditions in the United States and, more specifically, the economic conditions in Chicago, Illinois, the relevant submarket. These market conditions affect the occupancy levels and the rent levels on both a national and local level. We have no influence on national or local market conditions.

Trends and Uncertainties

Economic Conditions

The economy in the United States is continuing to experience a period of moderate economic growth, which directly affects the demand for office space, our primary income producing asset.  The broad economic market conditions in the United States are affected by numerous factors, including but not limited to, inflation and employment levels, energy prices, the pace of economic growth and/or recessionary concerns, uncertainty about government fiscal and tax policy, changes in currency exchange rates, geopolitical events, the regulatory environment, the availability of credit and interest rates.   In addition, the Federal Reserve Bank has indicated that it could raise interest rates further in 2018.  We could benefit from any further improved economic fundamentals and increasing levels of employment.  We believe that the economy is in a cyclically-slower but prolonged broad-based upswing.  However, future economic factors may negatively affect real estate values, occupancy levels and property income.

Real Estate Operations

The Property was approximately 73.5% leased as of December 31, 2017 to a diverse group of tenants with staggered lease expirations, representing no change from the leased rate as of December 31, 2016. We believe that any tenant that leases 10% or more of the Property’s rentable space is material. As of December 31, 2017, 45 tenants were leasing space at the Property, with the largest being Tribune Media at approximately 60,952 square feet, or approximately 7.1% of the Property’s rentable space.

During the three months ended December 31, 2017, we worked with several existing tenants on potential lease extensions and we are targeting leased occupancy of approximately 75% by the end of the first quarter of 2018.

We believe that the downtown Chicago office market, which we refer to as the Central Business District, witnessed an increase in total vacancy during 2017 compared to 2016. We believe that the increase in vacancy in the Central Business District during 2017 was primarily attributable to increased supply from new construction and a lack of meaningful net absorption. The Property is located in the East Loop submarket of the Central Business District. We believe that vacancy rates in the East Loop also increased during 2017 compared to 2016, but we think that the increase in the East Loop was primarily caused by an increase in available sublease space. During the three months ended December 31, 2017, we believe that vacancy rates increased slightly and that rental rates increased slightly for buildings in Chicago’s East Loop office submarket. We believe that several factors, including weaker market conditions during 2017 and early 2018 and a limited supply of larger tenant prospects, have caused us to focus on renewing and expanding existing tenants, while also attempting to attract smaller and mid-sized prospective tenants. Accordingly, we believe that it may take longer than we had previously expected to stabilize the Property at a higher occupancy level.

It is difficult for management to predict what will happen to occupancy and rents in the future because the need for space and the price tenants are willing to pay are tied to both the local economy and to the larger trends in the national economy, such as job growth, interest rates, the availability of credit and corporate earnings, which in turn are tied to even larger macroeconomic and political factors, such as recessionary concerns, volatility in energy pricing and the risk of terrorism. In addition to the difficulty of predicting macroeconomic factors, it is difficult to predict how our local market or tenants (existing and potential) will suffer or benefit from changes in the larger economy. In addition, because the Property is in a single geographical market, these macroeconomic trends may have a different effect on the Property and on its tenants (existing and potential), some of which may operate on a national level. Although we cannot predict how long it will take to lease vacant space at the Property or what the terms and conditions of any new leases will be, we expect to sign new leases at then-current market rates which may be below the expiring rates.

The potential for any of our tenants to default on its lease or to seek the protection of bankruptcy laws exists. If any of our tenants defaults on its lease, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. In addition, at any time, a tenant may seek the protection of bankruptcy laws, which could result in the rejection and termination of such tenant’s lease and thereby cause a reduction in cash available for distribution to our stockholders. Bankruptcy or a material adverse change in the financial condition of a material tenant would likely have a material adverse effect on our results of operations.

Dividends, Future Tenant Improvement Costs and Leasing Commissions

On January 24, 2018, our Board of Directors declared a dividend in the amount of $340 per share of Preferred Stock, in light of results of operations of the Property for the three months ended December 31, 2017. Although we currently expect a similar level of dividend distributions in future periods until occupancy levels at the Property more fully recover, the level of dividend payments in future periods may vary and will depend on the Property’s actual operating results and future capital and leasing needs. We cannot guarantee the future payment of dividends or the amount of any such dividends.

Management believes that the Company will need to be able to quickly access cash in order to fund the potentially significant tenant improvements costs and leasing commissions that may be required to stabilize the occupancy and rent roll at the Property. In light of the amount of vacant space that needs to be leased at the Property and the potential for significant tenant improvement allowance costs and leasing commissions, on August 3, 2011, we entered into a mortgage note in favor of John Hancock Life Insurance Company (U.S.A.), which we refer to as the Lender, to evidence a loan, in the original principal amount of $35,000,000 that matures on September 1, 2021, which we refer to as the Loan. The remaining proceeds of the Loan are being held by the Lender for our benefit in a restricted reserve account or accounts to be drawn upon by us from time to time for tenant improvement costs and leasing commissions at the Property upon satisfaction of certain conditions.

The Loan bears interest at the fixed rate of 4.83% per annum. We were obligated to make monthly payments of interest only for the initial 60 months of the Loan. Thereafter, we are obligated to make monthly payments of principal and interest for the remaining 60 months, based on a 25-year amortization schedule, until the maturity date, when all outstanding amounts become due. Commencing on October 1, 2016, the Loan became payable in monthly payments of principal and interest in the amount of $201,155. We may prepay the Loan with a prepayment premium, as defined in the Loan agreement. The Loan is secured, in part, by a mortgage, assignment of leases and rents and security agreement (the “Mortgage”) from the Company in favor of the Lender. The Mortgage constitutes a lien against the Property and has been recorded in the land records of Cook County, Illinois. Subject to customary exceptions, the Loan is nonrecourse to the Company. As of December 31, 2017, we had drawn an aggregate of $31,070,000 from the restricted reserve account(s). Interest expense paid on the Loan for the years ended December 31, 2017 and 2016 was $1,665,000 and $1,690,000, respectively. The documents evidencing and securing the Loan include restrictions on property liens and require compliance with various non-financial covenants, which include the requirement that we provide annual reports to the Lender. We were in compliance with the Loan covenants as of December 31, 2017 and December 31, 2016.

As of December 31, 2017, scheduled principal payments under the Loan for the next four years are as follows:

Potential Sale of the Property

On February 21, 2018, our Board of Directors again made the decision to try to sell the Property. After soliciting interest and input from commercial real estate brokers familiar with the Property and the local market, we retained Jones Lang LaSalle Americas (Illinois) L.P., a commercial real estate broker, to facilitate a potential sale of the Property. We believe that the opportunity to lease the remaining vacant space at the Property, together with an improving economy, are combining to create a potentially advantageous sales opportunity for the holders of the Preferred Stock.

Any sale of the Property would be subject to a number of conditions, including a successful marketing of the Property and approval of the sale by our Board of Directors and a majority of the holders of the Preferred Stock. At this time, we are not able to predict when or if the satisfaction of any of these conditions will occur and as a result there can be no assurance that we will be able to sell the Property on acceptable terms or within any particular time frame.

Critical Accounting Policies and Estimates

We have certain critical accounting policies that are subject to judgments and estimates by our management and uncertainties of outcome that affect the application of these policies. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. On an on-going basis, we evaluate our estimates. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information. The accounting policies that we believe are most critical to the understanding of our financial position and results of operations and that require significant management estimates and judgments are discussed below.

Critical accounting policies are those that have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates. We believe that our judgments and estimates are consistently applied and produce financial information that fairly presents our results of operations. Our most critical accounting policies involve our investments in real property. These policies affect our:

Allocation of Purchase Price

We have allocated the purchase price of the Property to land, buildings and improvements. Each component of the purchase price generally has a different useful life. We allocate the value of real estate acquired among land, buildings, improvements and identified intangible assets and liabilities, which may consist of the value of above market and below market leases, the value of in-place leases, and the value of tenant relationships. Purchase price allocations and the determination of the useful lives are based on management’s estimates, which were partially based upon an appraisal that we obtained from an independent real estate appraisal firm.

Purchase price allocated to land and building and improvements is based on management’s determination of the relative fair values of these assets assuming the Property was vacant. Management determines the fair value of the Property using methods similar to those used by independent appraisers. Purchase price allocated to above market leases is based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to in-place leases and (ii) our estimate of fair market lease rates for leases, measured over a period equal to the remaining non-cancelable term of the leases. Purchase price allocated to in-place leases and the tenant relationships is determined as the excess of (i) the purchase price paid for the Property after adjusting the existing in-place lease to market rental rates over (ii) the estimated fair value of the Property as if vacant. This aggregate value is allocated between the in-place lease value and tenant relationship based on management’s evaluation of the specific characteristics of the tenant’s lease; however, the value of tenant relationships has not been separated from in-place lease value because such value and its consequence to amortization expense is immaterial for the acquisition reflected in our financial statements. Factors considered by us in performing these analyses include (i) an estimate of carrying costs during the expected lease-up periods, including real estate taxes, insurance and other operating income and expenses, and (ii) costs to execute similar leases in current market conditions, such as leasing commissions, legal and other related costs.

Depreciation and Amortization

We compute depreciation expense using the straight-line method over estimated useful lives of up to 39 years for the building and improvements, and up to 15 years for personal property. The allocated cost of land is not depreciated. The capitalized above-market lease values, if any, are amortized as a reduction to rental income over the remaining non-cancelable terms of the lease. The value of above-market leases is amortized over the remaining non-cancelable periods of the lease. The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is also amortized over the remaining non-cancelable periods of the respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off. Inappropriate allocation of acquisition costs, or incorrect estimates of useful lives, could result in depreciation and amortization expenses which do not appropriately reflect the allocation of our capital expenditures over future periods, as is required by generally accepted accounting principles.

Impairment

We periodically evaluate the Property for impairment indicators. These indicators may include declining tenant occupancy, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life or legislative, economic or market changes that permanently reduce the value of our investment. If indicators of impairment are present, we evaluate the carrying value of the Property by comparing it to its expected future undiscounted cash flows. If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the Property to the present value of these expected future cash flows. This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash flows. If we misjudge or estimate incorrectly or if future tenant profitability, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate or fail to record a charge when we should have done so, or the amount of such charges may be inaccurate.

Lease Classification

Each time we enter into a new lease or materially modify an existing lease we evaluate whether it is appropriately classified as a capital lease or as an operating lease. The classification of a lease as capital or operating affects the carrying value of a property, as well as our recognition of rental payments as revenue. These evaluations require us to make estimates of, among other things, the remaining useful life and market value of a property, discount rates and future cash flows. Incorrect assumptions or estimates may result in misclassification of our leases.

Results of Operations

The Company acquired the Property and commenced operations on January 5, 2007. As of December 31, 2017, the Property was approximately 73.5% leased to a diverse group of tenants with staggered lease expirations.

Comparison of the year ended December 31, 2017 to the year ended December 31, 2016

Revenue

Total revenue increased $1.8 million to $19.7 million for the year ended December 31, 2017, as compared to $17.9 million for the year ended December 31, 2016. This increase was primarily due to an increase in overall rental revenue as a result of increased occupancy.

Expenses

Total expenses increased $1.5 million to $20.7 million for the year ended December 31, 2017, as compared to $19.2 million for the year ended December 31, 2016. The increase was primarily due to a $0.8 million increase in real estate taxes and insurance, an increase of $0.6 million in depreciation and amortization, and a $0.1 million increase in rental operating expenses.

Liquidity and Capital Resources

Cash and cash equivalents were $22.6 million and $25.3 million at December 31, 2017 and 2016, respectively.

Management believes that the existing cash and cash equivalents as of December 31, 2017 of $22.6 million and cash anticipated to be generated internally by operations will be sufficient to meet working capital requirements, distributions and anticipated capital expenditures for at least the next 12 months following the filing date.

Operating Activities

Cash provided by operating activities of $6.1 million for the year ended December 31, 2017 was primarily attributable to non-cash items of $7.3 million, consisting primarily of depreciation and amortization, funds from restricted cash of $2.6 million and uses arising from other current accounts of $0.1 million, partially offset by a net loss of approximately $1.0 million, increases in step rent receivable of $1.5 million and payments of deferred leasing costs of $1.4 million.

Investing Activities

Cash used for investing activities for the year ended December 31, 2017 of approximately $5.2 million was attributable to the purchase of real estate assets.

Financing Activities

Cash used for financing activities for the year ended December 31, 2017 of approximately $3.7 million was attributable to the distributions to stockholders of approximately $3.0 million and principal payments on loan payable of approximately $0.7 million.

Sources and Uses of Funds

Our principal demands on liquidity are cash for operations, interest on debt payments, and distributions to equity holders. As of December 31, 2017, we had approximately $6.7 million in accrued liabilities. In the near term, liquidity is generated by cash from operations.

Secured Debt

On August 3, 2011, we entered into a mortgage note in favor of the Lender to evidence the Loan. The proceeds of the Loan are being held by the Lender for the Company’s benefit in a restricted reserve account or accounts to be drawn upon by the Company from time to time for tenant improvement costs and leasing commissions at the Property upon satisfaction of certain conditions. The Loan bears interest at the fixed rate of 4.83% per annum. We were obligated to make monthly payments of interest only for the initial 60 months of the Loan. Thereafter, we are obligated to make monthly payments of principal and interest for the remaining 60 months, based on a 25-year amortization schedule, until the maturity date, when all outstanding amounts become due. Commencing on October 1, 2016, the Loan became payable in monthly payments of principal and interest in the amount of $201,155. We may prepay the Loan with a prepayment premium, as defined in the Loan agreement. The Loan is secured, in part, by the Mortgage from the Company in favor of the Lender. The Mortgage constitutes a lien against the Property and has been recorded in the land records of Cook County, Illinois. Subject to customary exceptions, the Loan is nonrecourse to the Company. As of December 31, 2017, we had drawn an aggregate of $31,070,000 from the restricted reserve account(s). Interest expense paid on the Loan for the years ended December 31, 2017 and 2016 was $1,665,000 and $1,690,000, respectively.

As of December 31, 2017, scheduled principal payments under the Loan for the next four years are as follows:

The Loan agreement includes restrictions on property liens and requires compliance with various non-financial covenants, which include the requirement that we provide annual reporting. We were in compliance with the Loan covenants as of December 31, 2017 and 2016.

Contingencies

We may be subject to various legal proceedings and claims that arise in the ordinary course of our business. Although occasional adverse decisions or settlements may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position or results of operations.

Related Party Transactions

Asset Management Agreement

We have in the past engaged in and currently engage in transactions with a related party, Franklin Street, and its wholly-owned subsidiaries, FSP Investments LLC and FSP Property Management LLC, which we collectively refer to as FSP. We expect to continue to have related party transactions with FSP in the form of management fees paid to FSP to manage the Company on behalf of its stockholders. FSP Property Management LLC currently provides the Company with asset management and financial reporting services. The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one-half of one percent (.5%) of the gross revenues of the Property. The asset management agreement between the Company and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days’ written notice. For the years ended December 31, 2017 and 2016, management fees paid were approximately $91,000 and $87,000, respectively.

Investor Services Agreement

On August 14, 2012, the Company entered into an Investor Services Agreement (the “FSPI Agreement”) with FSP Investments LLC for the provision of investor services to holders of Preferred Stock. FSP Investments LLC is a wholly-owned subsidiary of Franklin Street, which is the sole holder of the one share of Common Stock that is issued and outstanding. FSP Investments LLC acted as a real estate investment firm and broker/dealer with respect to (a) the Company’s organization, (b) the Company’s acquisition of the Property and (c) the sale of the Company’s equity interests. The FSPI Agreement requires the Company to pay a monthly service fee of $500 for services performed under the FSPI Agreement, and to reimburse FSP Investments LLC for its reasonable out-of-pocket expenses incurred in connection with the FSPI Agreement. The FSPI Agreement may be terminated by either party with thirty days written notice or immediately upon certain events of default set forth in the FSPI Agreement. For the years ended December 31, 2017 and 2016, investor services fees and expenses paid were approximately $17,000 and $16,000, respectively.

Ownership of Preferred Stock and Common Stock

On December 27, 2007, Franklin Street purchased 965.75 shares of Preferred Stock (approximately 43.7% of the issued and outstanding shares of Preferred Stock) for consideration totaling $82,813,000. Prior to purchasing any shares of the Preferred Stock, Franklin Street agreed to vote any shares of Preferred Stock held by it on any matter presented to the holders of the Preferred Stock in a manner that approximates as closely as possible the votes cast in favor of and opposed to such matter by the holders of the Preferred Stock other than Franklin Street and its affiliates. For purposes of determining how Franklin Street votes its shares of the Preferred Stock, abstentions and non-votes by stockholders other than Franklin Street are not considered. Franklin Street is entitled to distributions that are declared on the Preferred Stock.

Franklin Street is the sole holder of the one share of the Company’s Common Stock that is issued and outstanding. Subsequent to the completion of the private placement of the Preferred Stock in December 2007, Franklin Street has not been entitled to share in our earnings or any dividend related to the Common Stock.

Rental Income Commitments

Our commercial real estate operations consist of the leasing of the Property. Approximate future minimum rental income under non-cancelable operating leases as of December 31, 2017 is as follows:

Off-Balance Sheet Arrangements

The Company is a party to management, construction management and leasing agreements with an unaffiliated third party management company, Hines Interests Limited Partnership, to provide property management, construction management and leasing services, and is party to an asset management agreement with an affiliate, FSP Property Management LLC, to provide asset management and financial reporting services, all of which agreements may be terminated by either party without cause at any time, upon at least thirty (30) days’ written notice. The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one-half of one percent (0.5%) of the gross revenues of the Property for the corresponding month.

Not applicable.

The information required by this item is included in the financial pages following the signature page to this Annual Report on Form 10-K herein and incorporated herein by reference. Reference is made to the Index to Consolidated Financial Statements in Item 15 of Part IV.

Not applicable.

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2017. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2017, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officer and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework, 2013 Framework.

Based on our assessment, management concluded that, as of December 31, 2017, the Company’s internal control over financial reporting is effective based on those criteria. This annual report is not required to include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting occurred during the quarter ended December 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Not applicable.

PART III

Directors and Executive Officers

Information regarding the executive officers and directors of the Company as of February 28, 2018 is set forth below. The biographies of each of the directors below contain information regarding the person’s service as a director, business experience, public company director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, all of our directors bring to our Board executive leadership experience derived from their service as executives of a public company and specifically as an executive of Franklin Street, as well as other key attributes that are important to an effective board: integrity, candor, analytical skills, the willingness to engage management and each other in a constructive and collaborative fashion.

George J. Carter, age 69, is Chief Executive Officer and a director of the Company. Since 2002 he has also been Chief Executive Officer and a director of Franklin Street and is responsible for all aspects of the business of Franklin Street and its affiliates, with special emphasis on the evaluation, acquisition and structuring of real estate investments. Mr. Carter also served as President of Franklin Street Properties from 2002 to May 2016. From 1992 through 1996 he was President of Boston Financial Securities, Inc., or Boston Financial. Prior to joining Boston Financial, Mr. Carter was owner and developer of Gloucester Dry Dock, a commercial shipyard in Gloucester, Massachusetts. From 1979 to 1988, Mr. Carter served as Managing Director in charge of marketing at First Winthrop Corporation, a national real estate and investment banking firm headquartered in Boston, Massachusetts. Prior to that, he held a number of positions in the brokerage industry including those with Merrill Lynch & Co. and Loeb Rhodes & Co. Mr. Carter is a graduate of the University of Miami (B.S.). Mr. Carter’s son, Jeffrey B. Carter, serves as President, Chief Investment Officer and a director of the Company, and Mr. Carter’s other son, Scott H. Carter, serves as Executive Vice President, General Counsel and Secretary of the Company.

Jeffrey B. Carter, age 46, is President, Chief Investment Officer and a director of the Company. In addition, he is President and Chief Investment Officer of Franklin Street. Prior to joining Franklin Street in 1998, Mr. Carter worked in Trust Administration for Northern Trust Bank in Miami, Florida. Mr. Carter is a graduate of Arizona State University (B.A.), The George Washington University (M.A.), and Cornell University (M.B.A.). Mr. Carter’s father, George J. Carter, serves as Chief Executive Officer and a director of the Company and Mr. Carter’s brother, Scott H. Carter, serves as Executive Vice President, General Counsel and Secretary of the Company.

John G. Demeritt, age 57, is Executive Vice President, Chief Financial Officer, Treasurer and a director of the Company. In addition, he is Executive Vice President, Chief Financial Officer and Treasurer of Franklin Street, which he joined in September 2004. Prior to September 2004, Mr. Demeritt was a Manager with Caturano & Company, an independent accounting firm (which later merged with McGladrey) where he focused on Sarbanes Oxley compliance.  Previously, from March 2002 to March 2004 he provided consulting services to public and private companies where he focused on SEC filings, evaluation of business processes and acquisition integration.  During 2001 and 2002 he was Vice President of Financial Planning & Analysis at Cabot Industrial Trust, a publicly traded real estate investment trust, which was acquired by CalWest in December 2001.  From October 1995 to December 2000 he was Controller and Officer of The Meditrust Companies, a publicly traded real estate investment trust (formerly known as the The La Quinta Companies, which was then acquired by the Blackstone Group), where he was involved with a number of merger and financing transactions.  Prior to that, from 1986 to 1995 he had financial and accounting responsibilities at three other public companies, and was previously associated with Laventhol & Horwath, an independent accounting firm from 1983 to 1986. Mr. Demeritt is a Certified Public Accountant and holds a Bachelor of Science degree from Babson College.

John F. Donahue, age 51, is Executive Vice President and a director of the Company. In addition, he is Executive Vice President of Franklin Street and President of FSP Property Management LLC. Mr. Donahue joined Franklin Street in August 2001 as Vice President of FSP Property Management LLC.  From 2001 to May 2016, Mr. Donahue was responsible for the management of certain of the real estate assets of Franklin Street and its affiliates.  From 1992 to 2001, Mr. Donahue worked in the pension fund advisory business for GE Capital and AEW Capital Management with oversight of office, research and development, industrial and land investments. From 1989 to 1992, Mr. Donahue worked for Krupp Realty in various accounting and finance roles. Mr. Donahue holds a Bachelor of Science in Business Administration from Bryant College. 

Scott H. Carter, age 46, is Executive Vice President, General Counsel and Secretary of the Company. In addition, Mr. Carter is Executive Vice President, General Counsel and Secretary of Franklin Street. Prior to joining Franklin Street in October 2005, Mr. Carter was associated with the law firm of Nixon Peabody LLP, which he originally joined in 1999.  At Nixon Peabody LLP, Mr. Carter concentrated his practice on the areas of real estate syndication, acquisitions and finance.  Mr. Carter received a Bachelor of Business Administration (B.B.A.) degree in Finance and Marketing and a Juris Doctor (J.D.) degree from the University of Miami.  Mr. Carter is admitted to practice law in the Commonwealth of Massachusetts.  Mr. Carter’s father, George J. Carter, serves as Chief Executive Officer and a director of the Company and Mr. Carter’s brother, Jeffrey B. Carter, serves as President, Chief Investment Officer and a director of the Company.

Eriel Anchondo, age 40, is Executive Vice President and Chief Operating Officer of the Company. In addition he is Executive Vice President and Chief Operating Officer of Franklin Street. Prior to joining Franklin Street in January 2015, from July 2014 to December 2014, Mr. Anchondo provided consulting services to the retail banking division of ISBAN, which is part of the Technology and Operations division of the Santander Group of financial institutions.  From May 2007 to July 2013, Mr. Anchondo was employed by Mercer, a global consulting leader in talent, health, retirement, and investments, as an Employee Education Manager across all lines of Mercer’s business. From May 2005 to May 2007, Mr. Anchondo was a Communications Consultant at New York Life Investment Management. From December 2002 to May 2005, Mr. Anchondo worked in the Preferred Client Services Group at Putnam Investments. Mr. Anchondo is a graduate of Boston University (B.A.) and Cornell University (M.B.A.).   

Each of our directors holds office from the time of his or her election until the next annual meeting and until a successor is elected and qualified, or until such director’s earlier death, resignation or removal. Each of them is an employee of Franklin Street, which is the sole holder of the Common Stock and the holder of 965.75 shares of Preferred Stock. Each of our officers serves in that capacity at the request of Franklin Street.

Sections 16(a) Beneficial Ownership Reporting Compliance

Based solely on its review of copies of reports filed by the directors and executive officers of the Company and holders of more than 10% of Preferred Stock pursuant to Section 16(a) of the Exchange Act, the Company believes that during 2017 all filings required to be made by its reporting persons under Section 16(a) were timely made in accordance with the requirements of the Exchange Act.

Corporate Governance

Our board of directors does not have standing compensation, nominating and corporate governance or audit committees. Our executive officers are compensated by Franklin Street in connection with their employment by Franklin Street and serve as our executive officers at Franklin Street’s request. Our directors are officers of Franklin Street and we do not consider it necessary to establish a nominating committee or a policy for reviewing nominees recommended by stockholders. We do not have a director who qualifies as an “audit committee financial expert” under the regulations of the SEC. We have not adopted a code of business conduct or code of ethics for our executive officers because all of our officers are officers of Franklin Street and are governed by Franklin Street’s code of business conduct and ethics.

Each of the executive officers of the Company is compensated by Franklin Street in connection with his or her employment by Franklin Street and serves as an executive officer of the Company at Franklin Street’s request without compensation. Franklin Street is subject to the informational requirements of the Exchange Act, and, in accordance therewith, files reports and other information with the SEC. Franklin Street’s common stock is traded on the NYSE American under the symbol “FSP”.

The following tables set forth the beneficial ownership of the Company’s Common Stock and Preferred Stock as of February 28, 2018 by each holder who beneficially owns more than five percent of the Company’s Common Stock or Preferred Stock, by each director, by each of the Company’s executive officers and by all current directors and executive officers as a group. To the Company’s knowledge, no person or group, other than as set forth below, beneficially owns more than five percent of the Company’s Common Stock or Preferred Stock.

Equity Compensation Plan Information

The Company does not have any equity compensation plans.

Certain Relationships and Related Transactions

George J. Carter, Jeffrey B. Carter, John G. Demeritt, John F. Donahue, Scott H. Carter and Eriel Anchondo, each of whom is an executive officer of the Company, are executive officers of Franklin Street, and George J. Carter is a director of Franklin Street. Jeffrey B. Carter and Scott H. Carter are brothers and are George J. Carter’s sons. None of such persons received any remuneration from the Company for their services.

Asset Management Agreement

The Company has in the past engaged in and currently engages in transactions with a related party, Franklin Street, and its wholly-owned subsidiaries, FSP Investments LLC and FSP Property Management LLC (collectively “FSP”). The Company expects to continue to have related party transactions with FSP in the form of management fees paid to FSP to manage the Company on behalf of its stockholders. FSP Property Management LLC currently provides the Company with asset management and financial reporting services. The asset management agreement between the Company and FSP Property Management LLC requires the Company to pay FSP Property Management LLC a monthly fee equal to one-half of one percent (.5%) of the gross revenues of the Property. The asset management agreement between the Company and FSP Property Management LLC may be terminated by either party without cause at any time, upon at least thirty (30) days’ written notice. For the years ended December 31, 2017 and 2016, management fees paid were approximately $91,000 and $87,000, respectively.

Investor Services Agreement

On August 14, 2012, the Company entered into an Investor Services Agreement (the “FSPI Agreement”) with FSP Investments LLC for the provision of investor services to holders of Preferred Stock. FSP Investments LLC is a wholly-owned subsidiary of Franklin Street, which is the sole holder of the one share of Common Stock that is issued and outstanding. FSP Investments LLC acted as a real estate investment firm and broker/dealer with respect to (a) the Company’s organization, (b) the Company’s acquisition of the Property and (c) the sale of the Company’s equity interests. The FSPI Agreement requires the Company to pay a monthly service fee of $500 for services performed under the FSPI Agreement, and to reimburse FSP Investments LLC for its reasonable out-of-pocket expenses incurred in connection with the FSPI Agreement. The FSPI Agreement may be terminated by either party with thirty days written notice or immediately upon certain events of default set forth in the FSPI Agreement. For the years ended December 31, 2017 and 2016, investor services fees paid were approximately $17,000 and $16,000, respectively.

Ownership of Preferred Stock and Common Stock

On December 27, 2007, Franklin Street purchased 965.75 shares of Preferred Stock (or approximately 43.7% of the issued and outstanding shares of Preferred Stock), for consideration totaling $82,813,000.  Prior to purchasing any shares of the Preferred Stock, Franklin Street agreed to vote any shares of Preferred Stock held by it on any matter presented to the holders of the Preferred Stock in a manner that approximates as closely as possible the votes cast in favor of and opposed to such matter by the holders of the Preferred Stock other than Franklin Street and its affiliates.  For purposes of determining how Franklin Street votes its shares of the Preferred Stock, abstentions and non-votes by stockholders other than Franklin Street are not considered. Franklin Street is entitled to distributions that are declared on the Preferred Stock.

Franklin Street is the sole holder of the one share of the Company’s Common Stock that is issued and outstanding.  Subsequent to the completion of the private placement of the Preferred Stock in December 2007, Franklin Street has not been entitled to share in any earnings or any dividend as a result of its ownership of Common Stock.

Director Independence

Our securities are not listed on a national securities exchange or in an inter-dealer quotation system. None of our directors qualifies as “independent” under the standards of the NYSE American, where Franklin Street is listed.

Independent Auditor Fees and Other Matters

The following table summarizes the aggregate fees billed by the Company’s independent registered public accounting firm for audit services for each of the last two fiscal years and for other services rendered to the Company in each of the last two fiscal years.

Pre-Approval Policy and Procedures

The Company has not adopted policies and procedures relating to the pre-approval of audit and non-audit services that are to be performed by the Company’s independent registered public accounting firm.

PART IV

Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf as of March 16, 2018 by the undersigned, thereunto duly authorized.

FSP 303 East Wacker Drive Corp.

George J. Carter

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

FSP 303 East Wacker Drive Corp.

Index to Consolidated Financial Statements

Table of Contents

[LETTERHEAD OF MARCUM LLP]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

FSP 303 East Wacker Drive Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of FSP 303 East Wacker Drive Corp. (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2017, and the related notes and financial schedule listed on pages F-16 and F-17 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP

Marcum llp

We have served as the Company’s auditor since 2007.

Boston, Massachusetts
March 16, 2018

FSP 303 East Wacker Drive Corp.
Consolidated Balance Sheets

See accompanying notes to consolidated financial statements.

FSP 303 East Wacker Drive Corp.
Consolidated Statements of Operations

See accompanying notes to consolidated financial statements.

FSP 303 East Wacker Drive Corp.
Consolidated Statements of Changes in Stockholders’ Equity
For the Years Ended December 31, 2016 and 2017

See accompanying notes to consolidated financial statements.

FSP 303 East Wacker Drive Corp.
Consolidated Statements of Cash Flows