msw8k41410.htm
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): April 14, 2010

MISSION WEST PROPERTIES, INC.
(Exact name of registrant as specified in its charter)

Maryland
  
Commission File Number:
  
95-2635431
(State or other jurisdiction of incorporation)
  
1-8383
  
(I.R.S. Employer 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):


o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

 
 
 



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 April 14, 2010, the Company issued a press release announcing its earnings results for the first quarter ended March 31, 2010. 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: April 14, 2010                                                                                     By: /s/ Wayne N. Pham                                           
              Wayne N. Pham
                                              Vice President of Finance

 
 
 
 
 

 
Exhibit 99.1


 
 
Press Release

For Immediate News Release
April 14, 2010


Mission West Properties Announces First Quarter 2010 Operating Results


Cupertino, CA – Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations (“FFO”) for the quarter ended March 31, 2010 was approximately $16,506,000, or $0.16 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 $12,070,000, or $0.11 per diluted common share, for the same period in 2009. Unrealized holding gain from investment in marketable securities accounted for approximately $1,853,000, or $0.02 per diluted common share, for the quarter ended March 31, 2010. On a sequential quarter basis, FFO for the quarter ended December 31, 2009 was approximately $0.16 per diluted common share.

Net income for the quarter ended March 31, 2010 was approximately $10,143,000 as compared to approximately $5,634,000 for the quarter ended March 31, 2009. Net income per diluted share to common stockholders was approximately $0.11 for the quarter ended March 31, 2010 compared to $0.07 for the quarter ended March 31, 2009, a per share increase of approximately 57%. Unrealized holding gain (loss) from investment in marketable securities accounted for approximately $0.02 and ($0.03) per diluted common share for the quarters ended March 31, 2010 and 2009, respectively.

On January 8, 2010, the Company acquired a leased R&D property with approximately 41,300 rentable square feet located at 1040-1050 La Avenida Street in Mountain View, California from an unrelated party. The total acquisition price for this property was approximately $3,853,000.

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 112 properties totaling approximately 8.1 million rentable square feet. 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.
 
 
 
 
 


MISSION WEST PROPERTIES, INC.
SELECTED FINANCIAL DATA
(In thousands, except share, per share and property data amounts)

   
 
Three Months Ended
Mar 31, 2010
    
 
Three Months Ended
Mar 31, 2009
  
OPERATING REVENUES:
            
  Rental income
   $ 20,814     $ 20,655  
  Tenant reimbursements
     4,440       4,800  
  Other income
     658       320  
    Total operating revenues
     25,912       25,775  
                 
OPERATING EXPENSES:
                
  Operating and maintenance
     2,943       2,555  
  Real estate taxes
     3,220       3,397  
  General and administrative
     518       531  
  Depreciation and amortization
     5,921 (1)     5,944  (1)
    Total operating expenses
     12,602       12,427  
                 
    Operating income
     13,310       13,348  
                 
OTHER INCOME (EXPENSES):
                
  Equity in earnings of unconsolidated joint venture
     76       89  
  Interest and dividend income
     50       (59 )
  Unrealized holding gain (loss) from investment
     1,853       (2,757 )
  Interest expense
     (4,849 )     (4,806 )
  Interest expense – related parties
     (297 )     (181 )
    Net income
     10,143       5,634  
                 
Net income attributable to noncontrolling interests
     (7,685 )     (4,202 )
Net income available to common stockholders
   $ 2,458     $ 1,432  
                 
Net income per share to common stockholders:
                
   Basic
   $ 0.11     $ 0.07  
   Diluted
   $ 0.11     $ 0.07  
Weighted average shares of common stock (basic)
     21,881,189       21,614,878  
Weighted average shares of common stock (diluted)
     22,056,805       21,770,489  
Weighted average O.P. units outstanding
     83,397,876       83,660,298  
                 


FUNDS FROM OPERATIONS
            
Funds from operations
   $ 16,506     $ 12,070  
Funds from operations per share (2)
   $ 0.16     $ 0.11  
Outstanding common stock
     21,953,211       21,748,211  
Outstanding O.P. units
     83,326,965       83,526,965  
Weighted average O.P. units and common stock
   outstanding (diluted)
      105,454,681        105,430,787  

 
 
 



 
 
 
FUNDS FROM OPERATIONS CALCULATION
  
Three Months Ended
Mar 31, 2010
    
Three Months Ended
Mar 31, 2009
  
Net income
   $ 10,143     $ 5,634  
Add:
                
   Depreciation and amortization of real estate
     6,406       6,416  
   Depreciation and amortization of real estate held in
     unconsolidated joint venture
      60        59  
Less:
                
   Noncontrolling interests in joint ventures
     (103 )     (39 )
Funds from operations
   $ 16,506     $ 12,070  
                 
 
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.
 
 
 
 
PROPERTY AND OTHER DATA:
  
Three Months Ended
Mar 31, 2010
    
Three Months Ended
Mar 31, 2009
  
Total properties, end of period
     112       111  
Total square feet, end of period
     8,088,923       8,047,569  
Average monthly rental revenue per square foot (3)
   $ 1.33     $ 1.29  
Occupancy for leased properties
     65.1 %     65.3 %
Straight-line rent
   $ (237 )   $ 322  
Leasing commissions
   $ -     $ 117  
Capital expenditures
   $ -     $ -  


LEASE ROLLOVER SCHEDULE:
                   
Year
  
# of Leases
    
Rentable Square Feet
    
2010 Base Rent(5)
  
2010
     9       251,112  (4)   $ 2,164,307  
2011
     16       781,347       12,227,420  
2012
     14       1,009,205       15,356,955  
2013
     7       460,320       6,150,363  
2014
     16       1,466,930       26,334,237  
2015
     8       620,801       9,873,164  
2016
     3       159,600       3,421,708  
2017
     5       349,949       4,955,733  
Thereafter
     1       119,756       2,695,260  
    Total
     79       5,219,020     $ 83,179,147  
                         

 
 
 



 
BALANCE SHEETS
            
   
March 31, 2010
    
December 31, 2009
  
             
Assets
            
Investments in real estate:
            
  Land
   $ 324,563     $ 320,911  
  Buildings and improvements
     799,849       799,649  
  Real estate related intangible assets
     3,240       3,240  
     Total investments in properties
     1,127,652       1,123,800  
  Accumulated depreciation and amortization
     (210,074 )     (204,153 )
      Net investments in properties
     917,578       919,647  
  Investment in unconsolidated joint venture
     3,829       3,828  
      Net investments in real estate
     921,407       923,475  
  Cash and cash equivalents
     5,894       986  
  Restricted cash
     98       197  
  Restricted investment in marketable securities
     13,996       12,069  
  Deferred rent receivables
     18,474       18,711  
  Other assets, net
     31,233       30,951  
      Total assets
   $ 991,102     $ 986,389  
 
                 
Liabilities and Equity
                
Liabilities:
                
  Mortgage notes payable
   $ 315,673     $ 318,818  
  Mortgage note payable – related parties
     8,130       8,261  
  Note payable – related parties
     34,082       9,325  
  Revolving line of credit
     -       14,466  
  Interest payable
     1,504       1,573  
  Security deposits
     4,872       4,849  
  Deferred rental income
     6,364       6,539  
  Dividends and distributions payable
     15,792       15,791  
  Accounts payable and accrued expenses
     13,097       9,638  
      Total liabilities
     399,514       389,260  
                 
Commitments and contingencies.
                
 
                 
Equity: (6)
                
Stockholders’ equity:
                
  Common stock, $.001 par value
     22       22  
  Additional paid-in capital
     171,188       170,606  
  Distributions in excess of accumulated earnings
     (26,619 )     (25,784 )
      Total stockholders’ equity
     144,591       144,844  
Noncontrolling interests in operating partnerships
     446,997       452,285  
      Total equity
     591,588       597,129  
      Total liabilities and equity
   $ 991,102     $ 986,389  

 
(1)
Includes approximately $159 in amortization expense for the three months ended March 31, 2010 and 2009 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)
Excludes five month-to-month leases for approximately 53,000 rentable square feet.

(5)
Base rent reflects cash rent.

(6)
Reflects adoption of the Consolidation Topic of the FASB ASC.