SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
-------------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------------------------------------
Commission file number 1-12708
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FRANKLIN SELECT REALTY TRUST
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-3095938
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(State or other jurisdiction (I.R.S.Employer Identification No.)
P. O. BOX 7777, SAN MATEO, CALIFORNIA 94403-7777
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 312-2000
-----------------------
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report
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 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 X No
Common Stock Shares Outstanding as of September 30, 1998, Series A: 12,250,372
Common Stock Shares Outstanding as of September 30, 1998, Series B: 745,584
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
Unaudited
(In thousands, except per share amounts) 1998 1997
- ----------------------------------------------------------------------------
ASSETS
Real Estate
Rental property:
Land $38,787 $38,787
Buildings and improvements 111,968 110,733
-------------------
150,755 149,520
Less: accumulated depreciation 23,477 20,817
-------------------
127,278 128,703
Rental property held for sale, net of accumulated - 12,395
depreciation -------------------
Real estate, net 127,278 141,098
Cash and cash equivalents 2,893 3,821
Mortgage-backed securities, available for sale 412 501
Deferred rent receivable 1,790 1,863
Deferred costs and other assets 2,504 2,814
===================
Total assets $134,877 $150,097
===================
- ----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes and bonds payable $27,694 $42,487
Tenant deposits, accounts payable and accrued expenses 2,003 1,391
Distributions payable 1,642 1,645
--------------------
Total liabilities 31,339 45,523
--------------------
Minority interest 9,200 9,258
--------------------
Commitments and contingencies - -
Stockholders' equity:
Common stock, Series A, without par value; stated
value $10 per share; 50,000 shares authorized; 12,250 103,161 103,161
issued and outstanding
Common stock, Series B, without par value; stated
value $10 per share; 1,000 shares authorized; 746 6,294 6,294
issued and outstanding
Accumulated other comprehensive income (30) (28)
Accumulated distributions in excess of net income (15,087) (14,111)
--------------------
Total stockholders' equity 94,338 95,316
====================
Total liabilities and stockholders' equity $134,877 $150,097
====================
The accompanying notes are an integral part of these consolidated financial
statements.
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
30, 1998 30,1997 30, 1998 30, 1997
REVENUE:
Rent $4,298 $4,436 $13,619 $12,982
Interest, dividends and other 41 55 145 143
------------------------------------------
Total revenue 4,339 4,491 13,764 13,125
------------------------------------------
EXPENSES:
Property operating 1,149 1,092 3,074 2,940
Interest 631 674 2,308 1,999
Related party 361 365 1,125 1,074
General and administrative 319 111 844 413
Depreciation and amortization 1,002 1,014 3,016 2,968
------------------------------------------
Total expenses 3,462 3,256 10,367 9,394
------------------------------------------
Operating income before gain on
sale of property and minority interest 877 1,235 3,397 3,731
Gain on sale of property 382 - 552 -
------------------------------------------
Operating income before minority
interest 1,259 1,235 3,949 3,731
minority interest
Minority interest 177 161 515 483
==========================================
NET INCOME $1,082 $1,074 $3,434 $3,248
==========================================
Unrealized gain (loss) on mortgage-backed
securities - 3 (2) 11
mortgage-backed
==========================================
Total comprehensive income $1,082 $1,077 $3,432 $3,259
==========================================
Net income per share, based on
the weighted
average shares outstanding of
Series A $ .09 $ .09 $ .28 $ .27
common stock of 12,250 for the ==========================================
three- and
nine-month periods ended
September 30,
1998, and 1997, respectively
Distributions per share, based on
the weighted
average shares outstanding of
Series A $.12 $ .11 $ .36 $ .33
common stock of 12,250 for the ==========================================
three- and
nine-month periods ended
September 30,
1998 and 1997, respectively
The accompanying notes are an integral part of these consolidated financial
statements.
FRANKLIN SELECT REALTY TRUST
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Unaudited
(In thousands) 1998 1997
- -----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $3,434 $3,248
-----------------
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 3,153 3,091
Gain on sale of property (552) -
Minority interest 515 483
(Increase) decrease in deferred rent receivable (37) 50
Decrease (increase) in other assets 49 (211)
Increase in accounts payable, accrued expenses
and other liabilities 555 220
-----------------
3,683 3,633
-----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,117 6,881
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 13,081 -
Acquisition of rental property (12,613)
-
Improvements to real estate (1,262) (529)
Construction period interest paid - (85)
Leasing commissions paid (230) (349)
Disposition of mortgage-backed securities 87 58
-----------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 11,676 (13,518)
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under notes and bonds payable - 20,338
Repayment of notes and bonds payable (14,793) (7,666)
Payment of loan costs - (3)
Distributions paid to limited partners (515) (477)
Distributions paid to stockholders (4,413) (3,927)
-----------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (19,721) 8,265
-----------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (928) 1,628
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,821 2,558
-----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,893 $4,186
=================
The accompanying notes are an integral part of these consolidated financial
statements.
FRANKLIN SELECT REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
Unaudited
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of
Franklin Select Realty Trust (the "Company") included herein have been
prepared in accordance with the instructions to Form 10-Q pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all appropriate adjustments
necessary to a fair presentation of the results of operations have been made
for the periods shown. All adjustments are of a normal recurring nature.
Certain prior year amounts have been reclassified to conform to current year
presentations. These financial statements should be read in conjunction with
the Company's audited financial statements as of, and for the year ended,
December 31, 1997.
NOTE 2 - NET INCOME PER SHARE
In October 1997, 1,625,000 limited partnership units (the "FSRT Units")
became eligible for exchange into a like number of Series A common shares in
the Company in accordance with the partnership agreement of FSRT. None of the
partnership units have been exchanged for common stock. The convertible
partnership units are deemed anti-dilutive and consequently there is no
difference between basic and diluted net income per share.
NOTE 3 - SALE OF REAL ESTATE
On January 21, 1998, the Company sold a 12.5-acre parcel of undeveloped land
that was acquired in June 1997. Net proceeds of $4,471,000 were received and
of that amount approximately $4,100,000 was used to repay debt and the
Company retained the remainder.
On July 1, 1998, the Company sold Carmel Mountain Gateway Plaza. Proceeds of
$8,900,000 were received and of that amount approximately $8,600,000 was used
to repay debt and the remainder was retained by the Company. Gain from sale
of the property amounted to approximately $382,000.
NOTE 4 - LITIGATION
The Company is currently defending the former directors of Franklin Advantage
Real Estate Income Fund ("Advantage") against a purported class action
complaint filed in the California Superior Court for San Mateo County on
December 2, 1996 by two stockholders for themselves and purportedly on behalf
of certain other minority stockholders of Advantage. Other defendants to the
complaint currently include Franklin Resources, Inc. and the Company's
advisor, Franklin Properties, Inc. The complaint alleges that defendants
breached fiduciary duties to plaintiffs and other minority stockholders in
connection with the purchase by Franklin Resources, Inc. in August 1994 of a
46.6% interest in Advantage and in connection with the Merger of Advantage
into the Company in May 1996, which was approved by a majority of the
outstanding shares of each of the three companies. Plaintiffs also allege
that defendants misstated certain material facts or omitted to state material
facts in connection with these transactions.
The complaint includes a variety of additional claims, including claims
relating to the investment of Advantage assets, the suspension of the
dividend reinvestment program, the allocation of merger-related expenses,
revisions to the investment policies of Advantage, and the restructuring of
the contractual relationship with the Advisor. Plaintiffs seek damages in an
unspecified amount and certain equitable relief. The defendants deny any
wrongdoing in these matters and intend to vigorously defend the action.
Discovery is continuing.
FRANKLIN SELECT REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
Unaudited
NOTE 4 - LITIGATION (CONTINUED)
On June 3, 1997, Herbert S. Hodge, Jr., on behalf of himself and certain
other shareholders of Franklin Real Estate Income Fund ("FREIF"), filed an
alleged class action complaint in the California Superior Court for San Mateo
County against the Company, certain of its directors, the Company's advisor,
Franklin Properties, Inc., Franklin Resources, Inc., and Bear Stearns Co.,
Inc. The complaint alleges that defendants breached fiduciary duties to
plaintiff and certain other shareholders in connection with the merger of
FREIF into Franklin Select Realty Trust in May 1996. Plaintiff also alleges
that defendants misstated certain material facts or omitted to state material
facts in connection with this transaction. Plaintiff seeks damages in an
unspecified amount. The defendants deny any wrongdoing in these matters and
intend to vigorously defend the action. Discovery is continuing.
Management does not believe that the outcome of these matters will have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
NOTE 5 - STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
During fiscal 1998, the Company has adopted Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income" ("FAS 130"). FAS 130
establishes the disclosure requirements for reporting comprehensive income in
an entity's annual and interim financial statements and became effective for
the Company in the current fiscal year. Comprehensive income includes
unrealized gains and losses on securities previously reported by the Company
as a component of stockholders' equity. The Company is now required to show
comprehensive income in a financial statement and display the accumulated
balance of other comprehensive income separately in the equity section of the
consolidated balance sheet.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
When used in the following discussion, the words "believes," "anticipates"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected, including,
but not limited to, those set forth in the section entitled "Potential
Factors Affecting Future Operating Results," below. Readers are cautioned
not to place undue reliance on these forward-looking statements that speak
only as of the date hereof. The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND
1997
Total revenue for the three- and nine-month periods ended September 30, 1998
decreased $152,000, or 3%, and increased $639,000, or 5%, respectively, when
compared to the same periods in 1997. The decrease for the three-month period
was due to the sale of Carmel Mountain Gateway Plaza on July 1 1998 and an
increase in vacant space at the Shores office complex. The increase for the
nine-month period was primarily due to rental revenue provided by the
Hathaway and Tanon Buildings acquired in 1997.
Total expenses for the three- and nine-month period ended September 30, 1998
increased $206,000, or 6%, and $972,000, or 10%, respectively, when compared
to the same periods in 1997. The increase for both periods was primarily a
result of the acquisition of the Hathaway and Tanon Buildings and increased
general and administrative expenses.
General and administrative expenses for the three-month and nine-month
periods ended September 30, 1998, increased $208,000, or 187%, and $431,000,
or 104%, respectively, when compared to the same periods in 1997. The
increases were primarily the result of legal fees incurred with respect to
the pending legal actions that are described in Note 3 to the accompanying
financial statements and with respect to the Company's evaluation of its
strategic alternatives.
The increase in net income for the three- and nine-month periods under review
was primarily due to changes in revenues and expenses described above and
also the gains recorded on the sale of real estate.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, cash and cash equivalents aggregated $2,893,000. The
Company believes this amount is adequate to meet its short-term operating
cash requirements. The Company also holds $412,000 in mortgage-backed
securities and has access to a revolving line of credit in the amount of $25
million, of which $24.2 million remains available as of September 30, 1998.
At September 30, 1998, the outstanding balance under the Company's line of
credit was $800,000. Borrowings under the line of credit bear interest at
the London Interbank Offered Rate plus 1.90%, or at Bank of America's
Reference Rate at the Company's option. At September 30, 1998, the weighted
average interest rate of borrowings under the line of credit was 7.5%. In
July 1998, the Company paid down $6,300,000 of the outstanding balance on its
line of credit and $2,300,000 on other debt secured by the property from the
proceeds received from the sale of Carmel Mountain Gateway Plaza as described
in Note 3 to the accompanying financial statements.
Net cash provided by operating activities for the nine-month period ended
September 30, 1998 was $7,117,000. The increase in this cash flow when
compared to the same period in the prior year was primarily attributable to
the changes in revenues and expenses discussed above.
The changes in net cash provided by investing and financing activities during
the nine-month period ended September 30, 1998 primarily resulted from the
sale of real estate in January and July 1998 and repayment of Company notes
and bonds payable.
Management continues to evaluate properties for acquisition by the Company.
The Company expects to fund the cost of acquisitions, capital expenditures,
costs associated with lease renewals and reletting of space, repayment of
indebtedness, and development of properties from (i) cash flow from
operations, (ii) borrowings under its line of credit and, if available, other
indebtedness (which may include indebtedness assumed in acquisitions), and
(iii) the issuance of partnership interests in connection with acquisitions.
The Company's operating cash flow has been its principal source of capital
for minor property improvements, leasing costs and the payment of quarterly
distributions.
The Special Committee of the Board of Directors is continuing its review of
the strategic alternatives available to the Company.
Management does not believe that the outcome of the litigation described in
Note 4 to the accompanying financial statements will have a materially
adverse effect on the Company's financial condition, results of operations,
or cash flows.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
Management believes that the Company's sources of capital as described under
Liquidity and Capital Resources are adequate to meet its liquidity needs in
the foreseeable future.
IMPACT OF INFLATION
The Company's policy of negotiating leases which incorporate operating
expense "pass-through" provisions is intended to protect the Company against
increased operating costs resulting from inflation.
CASH DISTRIBUTION POLICY
Distributions are declared quarterly at the discretion of the Board of
Directors. The Company's present distribution policy is to at least annually
evaluate the current distribution rate in light of anticipated tenant
turnover over the next two or three years, the estimated level of associated
improvements and leasing commissions, planned capital expenditures, any debt
service requirements and the Company's other working capital requirements.
After balancing these considerations, and considering the Company's earnings
and cash flow, the level of its liquid reserves and other relevant factors,
the Company seeks to establish a distribution rate which:
i) provides a stable distribution which is sustainable
despite short-term fluctuations in property cash
flows;
ii) maximizes the amount of cash flow paid out as
distributions consistent with the above listed
objective; and
iii) complies with the Internal Revenue Code requirement
that a REIT annually pay out as distributions not less
than 95% of its taxable income.
During the nine month period ended September 30, 1998, the Company declared
distributions related to the Series A common stock totaling $4,410,000.
FUNDS FROM OPERATIONS
The Company considers funds from operations to be a useful measure of the
operating performance of an equity REIT because, together with net income and
cash flows, funds from operations provides investors with an additional basis
to evaluate the ability of a REIT to support general operating expense and
interest expense before the impact of certain activities, such as gains and
losses from property sales and changes in the accounts receivable and
accounts payable. However, it does not measure whether income is sufficient
to fund all of the Company's cash needs including principal amortization,
capital improvements and distributions to stockholders. Funds from
operations should not be considered an alternative to net income or any other
GAAP measurement of performance, as an indicator of the Company's operating
performance or as an alternative to cash flows from operating, investing or
financing activities as a measure of liquidity. As defined by the National
Association of Real Estate Investment Trusts, funds from operations is net
income (computed in accordance with GAAP), excluding gains or losses from
debt restructuring and sales of property, plus depreciation and amortization,
and after adjustment for unconsolidated joint ventures. The Company reports
funds from operations in accordance with the revised NAREIT definition. The
measure of funds from operations as reported by the Company may not be
comparable to similarly titled measures of other companies that follow
different definitions.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
FUNDS FROM OPERATIONS (Continued)
For the Nine Months
Ended
September 30,
(In thousands) 1998 1997
- ----------------------------------------------------------------
Net income $3,434 $3,248
Add: Depreciation and amortization 3,016 2,968
Less: Gain on sale of property (552) -
- ----------------------------------------------------------------
Funds from Operations $5,898 $6,216
================================================================
The primary difference between the periods reflects the changes in net income
as discussed under "Results of Operations".
POTENTIAL FACTORS AFFECTING FUTURE OPERATING RESULTS
LEASING TURNOVER
In connection with any lease renewal or new lease, the Company typically
incurs costs for tenant improvements and leasing commissions which will be
funded first from operating cash flow and, if necessary, from cash reserves
or the line of credit. In addition, while the Company has historically been
successful in renewing and releasing space, the Company will be subject to
the risk that leases expiring in the future may be renewed or released at
terms that are less favorable than current lease terms.
LEASING TURNOVER - DATA GENERAL BUILDING
Over the next twelve months, the Company's greatest leasing exposure consists
of one lease at the Data General Building covering approximately 34,000
square feet, which expires in January 1999. The tenant has announced its
intention to vacate the property at that time. The lease carries a triple
net rental rate that is equivalent to approximately $34.50 per square foot on
a full service basis. Compared to the estimated current market rate of
approximately $22.80 per square foot, this lease provides over-market rent of
approximately $397,000 annually, or 2% of the Company's current annual rental
revenue based on annualizing the total rental revenue for the nine months
ended September 30, 1998. It is not possible to predict the rental rate at
which new leases will be signed; however, the Company expects that the rental
income related to this space will be less than the existing rate of $34.50
per square foot. In addition, there will likely be a period of time that the
space is vacant between tenants. The Company will also incur costs for
tenant improvements and leasing commissions related to re-leasing the space,
however, the amounts are unknown at this time.
YEAR 2000
The Company has evaluated whether its computer systems, including on-site and
embedded systems, and those of third parties with whom the Company interacts
will function properly by, at or during the year 2000. The Company has
determined certain of its own systems are not currently year 2000 compliant.
Management has a plan to replace or upgrade these systems within the next
twelve months. The Company does not expect that the costs associated with
these replacements or upgrades will have a materially adverse impact on its
financial position, results of operations or cash flows in future periods.
However, failure to successfully replace or upgrade these systems could
result in material disruptions to its business.
FRANKLIN SELECT REALTY TRUST
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
POTENTIAL FACTORS AFFECTING FUTURE OPERATING RESULTS (Continued)
YEAR 2000 (Continued)
The Company is managed and advised by certain affiliates of Franklin
Resources, Inc. It is reliant on these entities for its basic computer
network and certain other applications. The Company is also reliant on a
third-party transfer agent for maintaining its basic shareholder records.
Management is monitoring the progress of these entities in achieving year
2000 compliance and does not currently anticipate a materially adverse impact
on the Company's business as a result of their non-compliance.
FRANKLIN SELECT REALTY TRUST
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
NO. LIST OF EXHIBITS FOOTNOTE
3.1 Articles of Incorporation (1)
3.2 First Amendment to Articles of Incorporation (2)
3.2a Second Amended and Restated Bylaws of Franklin Select Realty Trust (2)
10.1 Amended and Restated Advisory Agreement
10.2 Property Management Agreement (3)
10.3 Agreement of Limited Partnership of FSRT, L.P. between the Company
and (4)
Northport Associates No. 18, a California limited liability company,
dated as October 30, 1996.
10.4 Contribution Agreement, dated as of October 30, 1996, between FSRT,
L.P., the Company, Northport Associates No. 18, a California limited (4)
liability company, and the members of Northport Associates No. 18.
10.5 Exchange Rights Agreement, dated as of October 30, 1996, among the
Company, (4)
FSRT L.P., and Northport Associates No. 18, a California limited
liability company.
10.6 Registration Rights Agreement, dated as of October 30, 1996, among
the Company and Northport Associates No. 18, a California limited (4)
liability company.
10.7 Secured line of credit loan agreement, dated December 10, 1996, by
and between the Company and Bank of America.
FOOTNOTES
(1) Documents were filed in the Company's Form S-11 Registration
Statement, dated March 30, 1989 (Registration No. 033-26562) and are
incorporated herein by reference.
(2) Documents were filed in the Company's Form S-4 Registration
Statement, dated November 13, 1995, (Registration No. 033-64131),
and are incorporated herein by reference.
(3) Documents were filed in the Company's Form 10-K for the year ended
December 31, 1994, and are incorporated herein by reference.
(4) Documents were filed in the Company's Form 8-K, dated October 31,
1996, and are incorporated herein by reference.
(b) Reports on Form 8-K - There were no reports on form 8-K filed during
the quarter ended September 30, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRANKLIN SELECT REALTY TRUST
By: /S/ DAVID P. GOSS
-----------------------
David P. Goss
Chief Executive Officer
Date: NOVEMBER 13, 1998
------------------------
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<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S
FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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