UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): October 14, 2009
MISSION WEST PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland Commission File Number: 95-2635431
-------- 1-8383 ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification)
10050 Bandley Drive, Cupertino, CA 95014
(Address of principal executive offices)
(408) 725-0700
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
(a) The following information is being furnished by the Company as required for
Item 2.02(a) of this report and shall not be deemed to be "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934:
On October 14, 2009, the Company issued a press release announcing its earnings
results for the third quarter ended September 30, 2009. The press release is
attached to this Current Report as Exhibit 99.1 and is incorporated by reference
in response to Item 2.02(a) of this report.
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 hereunto duly authorized.
MISSION WEST PROPERTIES, INC.
Date: October 15, 2009 By: /s/ Wayne N. Pham
----------------------------------------
Wayne N. Pham
Vice President of Finance and Controller
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Exhibit 99.1
PRESS RELEASE
For Immediate News Release
October 14, 2009
MISSION WEST PROPERTIES ANNOUNCES THIRD QUARTER 2009 OPERATING RESULTS
Cupertino, CA - Mission West Properties, Inc. (NASDAQ: MSW) reported today that
Funds From Operations ("FFO") for the quarter ended September 30, 2009 was
approximately $17,604,000, or $0.17 per diluted common share, (considering the
potential effect of all O.P. units being exchanged for shares of the Company's
common stock) as compared to approximately $14,199,000, or $0.13 per diluted
common share, for the same period in 2008. Unrealized gain from investment in
marketable securities accounted for approximately $4,464,000, or $0.04 per
diluted common share, for the quarter ended September 30, 2009. On a sequential
quarter basis, FFO for the quarter ended June 30, 2009 was approximately $0.13
per diluted common share. For the nine months ended September 30, 2009, FFO
increased to $43,863,000, or $0.42 per diluted common share, from FFO of
$42,471,000, or $0.40 per diluted common share, for the same period in 2008. Net
termination fees accounted for approximately $1,921,000, or $0.02 per diluted
common share, for the nine months ended September 30, 2008.
Net income for the quarter ended September 30, 2009 was approximately
$11,242,000 as compared to approximately $7,939,000 for the quarter ended
September 30, 2008. Net income per diluted share to common stockholders was
approximately $0.13 for the quarter ended September 30, 2009 compared to $0.08
for the quarter ended September 30, 2008, a per share increase of approximately
63%. Net income for the nine months ended September 30, 2009 was approximately
$24,065,000 as compared to approximately $23,897,000 for the nine months ended
September 30, 2008. For the nine months ended September 30, 2009, net income per
diluted share to common stockholders was approximately $0.27, up from $0.25 a
year ago, a per share increase of approximately 8%.
COMPANY PROFILE
Mission West Properties, Inc. operates as a self-managed, self-administered and
fully integrated REIT engaged in the management, leasing, marketing, development
and acquisition of commercial R&D properties, primarily located in the Silicon
Valley portion of the San Francisco Bay Area. Currently, the Company manages 111
properties totaling approximately 8.0 million rentable square feet, which
includes approximately 854,000 rentable square feet (or 16 buildings) that are
in the process of being rezoned for residential development. For additional
information, please contact Investor Relations at 408-725-0700.
The matters described herein contain forward-looking statements. Such statements
can be identified by the use of forward-looking terminology such as "will,"
"anticipate," "estimate," "expect," "intends," or similar words. Forward-looking
statements involve a number of risks, uncertainties or other factors beyond the
Company's control, which may cause material differences in actual results,
performance or other expectations. These factors include, but are not limited
to, the ability to complete acquisitions under the Berg Land Holdings Option
Agreement with the Berg Group and other factors detailed in the Company's
registration statements, and periodic filings with the Securities & Exchange
Commission.
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MISSION WEST PROPERTIES, INC.
SELECTED FINANCIAL DATA
(In thousands, except share, per share and property data amounts)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept 30, 2009 Sept 30, 2008 Sept 30, 2009 Sept 30, 2008
---------------- ---------------- ---------------- ----------------
OPERATING REVENUES:
Rental revenue from real estate $20,442 $20,256 $61,521 $58,612
Tenant reimbursements 4,566 4,607 13,681 11,900
Lease termination and settlement income - - - 1,921
Other income 284 292 906 769
---------------- ---------------- ---------------- ----------------
Total operating revenues 25,292 25,155 76,108 73,202
---------------- ---------------- ---------------- ----------------
OPERATING EXPENSES:
Operating and maintenance 3,539 2,951 10,014 7,993
Real estate taxes 3,248 2,888 9,996 8,245
General and administrative 589 605 1,743 1,951
Depreciation and amortization of real estate 5,921 (1) 5,759 (1) 18,200 (1) 17,064 (1)
---------------- ---------------- ---------------- ----------------
Total operating expenses 13,297 12,203 39,953 35,253
---------------- ---------------- ---------------- ----------------
Operating income 11,995 12,952 36,155 37,949
OTHER INCOME (EXPENSES):
Equity in earnings of unconsolidated joint venture 72 126 237 915
Interest and dividend income 93 193 1,158 965
Unrealized gain from investment 4,464 - 4,140 -
Interest expense (5,180) (5,023) (17,071) (14,907)
Interest expense - related parties (202) (309) (554) (1,025)
---------------- ---------------- ---------------- ----------------
Net income 11,242 7,939 24,065 23,897
Net income attributable to noncontrolling interests (8,476) (6,304) (18,083) (19,021)
---------------- ---------------- ---------------- ----------------
Net income attributable to common stockholders $2,766 $1,635 $5,982 $4,876
================ ================ ================ ================
Net income per share to common stockholders:
Basic $0.13 $0.08 $0.28 $0.25
================ ================ ================ ================
Diluted $0.13 $0.08 $0.27 $0.25
================ ================ ================ ================
Weighted average shares of common stock (basic) 21,770,211 19,745,141 21,717,713 19,703,066
================ ================ ================ ================
Weighted average shares of common stock (diluted) 21,902,387 19,783,507 21,858,067 19,769,148
================ ================ ================ ================
Weighted average O.P. units outstanding 83,504,965 85,527,739 83,557,463 85,528,787
================ ================ ================ ================
FUNDS FROM OPERATIONS
Funds from operations $17,604 $14,199 $43,863 $42,471
================ ================ ================ ================
Funds from operations per share ((2)) $0.17 $0.13 $0.42 $0.40
================ ================ ================ ================
Outstanding common stock 21,770,211 19,748,211 21,770,211 19,748,211
================ ================ ================ ================
Outstanding O.P. units 83,504,965 85,526,965 83,504,965 85,526,965
================ ================ ================ ================
Weighted average O.P. units and common stock
outstanding (diluted) 105,407,352 105,311,246 105,415,530 105,297,934
================ ================ ================ ================
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Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
FUNDS FROM OPERATIONS CALCULATION Sept 30, 2009 Sept 30, 2008 Sept 30, 2009 Sept 30, 2008
---------------- ---------------- ---------------- ----------------
Net income $11,242 $ 7,939 $24,065 $23,897
Add:
Depreciation and amortization of real estate 6,385 6,204 19,796 18,313
Depreciation and amortization of real estate
held in unconsolidated joint venture 60 189 179 568
Less:
Noncontrolling interests in joint ventures (83) (133) (177) (307)
---------------- ---------------- ---------------- ----------------
Funds from operations $17,604 $14,199 $43,863 $42,471
================ ================ ================ ================
Funds From Operations ("FFO") is a non-GAAP financial measurement used by real
estate investment trusts ("REITs") to measure and compare operating performance.
As defined by NAREIT, FFO represents net income (loss) (computed in accordance
with GAAP, accounting principles generally accepted in the United States of
America), excluding gains (or losses) from debt restructuring and sales of
property, plus real estate related depreciation and amortization (excluding
amortization of deferred financing costs and depreciation of non-real estate
assets) and after adjustments for unconsolidated partnerships and joint
ventures. Management considers FFO to be an appropriate supplemental measure of
the Company's operating and financial performance because when compared year
over year, it reflects the impact to operations from trends in occupancy rates,
rental rates, operating costs, general and administrative expenses and interest
costs, providing a perspective not immediately apparent from net income. In
addition, management believes that FFO provides useful information about the
Company's financial performance when compared to other REITs since FFO is
generally recognized as the industry standard for reporting the operations of
REITs. FFO should neither be considered as an alternative for net income as a
measure of profitability nor is it comparable to cash flows provided by
operating activities determined in accordance with GAAP. FFO is not comparable
to similarly entitled items reported by other REITs that do not define them
exactly as we define FFO.
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
PROPERTY AND OTHER DATA: Sept 30, 2009 Sept 30, 2008 Sept 30, 2009 Sept 30, 2008
---------------- ---------------- ---------------- ----------------
Total properties, end of period 111 111 111 111
Total square feet, end of period 8,047,569 8,047,569 8,047,569 8,047,569
Average monthly rental revenue per square foot (3) $1.30 $1.25 $1.29 $1.24
Occupancy for leased properties 65.7% 66.7% 65.7% 66.7%
Straight-line rent $115 $ 857 $ 675 $2,444
Leasing commissions $973 $ 606 $1,294 $1,241
Capital expenditures $156 $3,827 $ 156 $6,164
LEASE ROLLOVER SCHEDULE:
Year # of Leases Rentable Square Feet 2009 Base Rent (5)
---------------- ------------- --------------------- ----------------------
2009 8 90,082 (4) $ 1,811,171
2010 8 342,099 5,838,534
2011 16 838,692 12,333,272
2012 14 1,010,825 13,538,262
2013 6 397,215 5,081,754
2014 17 1,492,430 24,794,530
2015 6 485,036 8,784,081
2016 3 165,976 3,105,544
2017 5 349,949 3,510,351
Thereafter 1 119,756 2,608,286
------------- --------------------- ----------------------
Total 84 5,292,060 $81,405,785
============= ===================== ======================
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BALANCE SHEETS
September 30, 2009 December 31, 2008
-------------------- --------------------
Assets
Investments in real estate:
Land $320,911 $ 320,911
Buildings and improvements 799,627 799,471
Real estate related intangible assets 3,240 3,240
-------------------- --------------------
Total investments in properties 1,123,778 1,123,622
Accumulated depreciation and amortization (198,243) (180,043)
-------------------- --------------------
Net investments in properties 925,535 943,579
Investment in unconsolidated joint venture 3,830 3,768
-------------------- --------------------
Net investments in real estate 929,365 947,347
Cash and cash equivalents 576 -
Restricted cash 7,597 39,478
Restricted investment in marketable securities 11,124 -
Investment in marketable securities - 3,368
Deferred rent receivables 18,516 17,841
Other assets, net 31,408 26,251
-------------------- --------------------
Total assets $998,586 $1,034,285
==================== ====================
Liabilities and Equity
Liabilities:
Mortgage notes payable $321,907 $ 330,908
Mortgage note payable - related parties 8,389 8,761
Note payable - related parties 5,057 -
Revolving line of credit 3,573 13,079
Interest payable 1,530 1,596
Security deposits 5,026 5,272
Deferred rental income 5,525 3,964
Dividends and distributions payable 15,791 21,055
Accounts payable and accrued expenses 29,283 17,747
-------------------- --------------------
Total liabilities 396,081 402,382
-------------------- --------------------
Commitments and contingencies.
Equity: (6)
Stockholders' equity:
Common stock, $.001 par value 22 20
Additional paid-in capital 169,790 154,412
Distributions in excess of accumulated earnings (24,912) (20,014)
-------------------- --------------------
Total stockholders' equity 144,900 134,418
Noncontrolling interests 457,605 497,485
-------------------- --------------------
Total equity 602,505 631,903
-------------------- --------------------
Total liabilities and equity $998,586 $1,034,285
==================== ====================
(1) Includes approximately $159 in amortization expense for the three months
ended September 30, 2009 and 2008, and $478 and $441 in amortization
expense for the nine months ended September 30, 2009 and 2008,
respectively, for the amortization of in-place lease value intangible asset
pursuant to the Business Combinations Topic of the Financial Accounting
Standards Board Accounting Standards Codification ("FASB ASC").
(2) Calculated on a fully diluted basis. Assumes conversion of O.P. units
outstanding into the Company's common stock.
(3) Average monthly rental revenue per square foot has been determined by
taking the cash base rent for the period divided by the number of months in
the period, and then divided by the average occupied square feet in the
period.
(4) Seven leases for approximately 90,000 rentable square feet are month to
month leases.
(5) Base rent reflects cash rent.
(6) Reflects adoption of the Consolidation Topic of the FASB ASC.
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