Mission West Properties Announces First Quarter 2011 Operating Results

CUPERTINO, Calif., April 13, 2011 /PRNewswire/ -- Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations ("FFO") for the quarter ended March 31, 2011 was approximately $16,240,000, or $0.15 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 $16,506,000, or $0.16 per diluted common share, for the same period in 2010. For the quarter ended March 31, 2010, unrealized holding gain from investment in marketable securities accounted for approximately $1,853,000, or $0.02 per diluted common share. On a sequential quarter basis, FFO for the quarter ended December 31, 2010, was approximately $0.11 per diluted common share.

Net income for the quarter ended March 31, 2011, was approximately $9,936,000 as compared to approximately $10,143,000 for the quarter ended March 31, 2010. Net income per diluted share available to common stockholders was approximately $0.11 for both quarters ended March 31, 2011 and 2010. For the quarter ended March 31, 2010, unrealized holding gain from investment in marketable securities of $1,853,000 accounted for approximately $0.02 per diluted common share.

In March 2011, the Company's board of directors approved management's recommendation to decrease the Company's quarterly dividend payment rate to common stockholders and O.P. unit holders from $0.15 to $0.13 per share effective the first quarter of 2011.

Company Profile

Mission West Properties, Inc. operates as a selfmanaged, selfadministered 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. 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," "intend," 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 from 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, 2011


Three Months

Ended

Mar 31, 2010





OPERATING REVENUES:








 Rental income

$21,777 (6)


$20,814





 Tenant reimbursements

4,644


4,440





 Other income

1,101


658





   Total operating revenues

27,522


25,912













OPERATING EXPENSES:








 Operating and maintenance

2,654


2,938





 Real estate taxes

3,205


3,212





 General and administrative

521


518





 Depreciation and amortization

5,827 (1)


5,921 (1)





   Total operating expenses

12,207


12,589













   Operating income

15,315


13,323













OTHER INCOME (EXPENSES):








 Equity in (loss) earnings of unconsolidated joint venture

(8)


76





 Interest and dividend income

69


50





 Unrealized gain from investment

-


1,853





 Interest expense

(5,279)


(4,849)





 Interest expense – related parties

(146)


(297)





   Income from continuing operations

9,951


10,156













Discontinued operations:








   Loss from discontinued operations

(15)


(13)













       Net income

9,936


10,143













Net income attributable to noncontrolling interests

(7,536)


(7,685)





Net income available to common stockholders

$2,400


$2,458













Income per share from continuing operations:








  Basic

$0.11


$0.11





  Diluted

$0.11


$0.11





Income per share from discontinued operations:








  Basic

-


-





  Diluted

-


-





Net income per share to common stockholders:








  Basic

$0.11


$0.11





  Diluted

$0.11


$0.11





Weighted average shares of common stock (basic)

22,288,103


21,881,189





Weighted average shares of common stock (diluted)

22,405,276


22,056,805





Weighted average O.P. units outstanding

82,997,932


83,397,876





















FUNDS FROM OPERATIONS








Funds from operations

$16,240


$16,506





Funds from operations per share (2)

$0.15


$0.16





Outstanding common stock

22,370,770


21,953,211





Outstanding O.P. units

82,915,265


83,326,965





Weighted average O.P. units and common stock

  outstanding (diluted)

105,403,208


105,454,681













FUNDS FROM OPERATIONS CALCULATION

Three Months

Ended

Mar 31, 2011


Three Months

Ended

Mar 31, 2010





Net income

$9,936


$10,143





Add:








  Depreciation and amortization

6,351


6,406





  Depreciation and amortization in

    unconsolidated joint venture

60


60





Less:








  Noncontrolling interests in joint ventures

(107)


(103)





Funds from operations

$16,240


$16,506







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 nonreal 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, 2011


Three Months

Ended

Mar 31, 2010





Total properties, end of period

111


112





Total square feet, end of period

8,011,026


8,088,923





Average monthly rental revenue per square foot (3)

$1.39 (7)


$1.33





Occupancy for leased properties

68.5%


65.1%





Straight-line rent

($635)


($237)





Leasing commissions

$194


-





Non-recurring capital expenditures

$926


-







LEASE ROLLOVER SCHEDULE:








Year


# of Leases


Rentable Square Feet


2011 Base Rent (5)

2011 (4)


10


441,970


$7,608,267

2012


13


791,223


15,267,698

2013


6


339,123


4,971,350

2014


20


1,625,113


26,223,937

2015


8


587,437


9,178,833

2016


4


196,279


3,672,284

2017


10


605,557


7,826,608

2018


3


265,612


1,120,944

2019


1


165,000


2,931,834

Thereafter


3


208,768


4,327,563

   Total


78


5,226,082


$83,129,318





BALANCE SHEETS









March 31, 2011


December 31, 2010













                                   Assets








Investments in real estate:








 Land

$322,076


$322,076





 Buildings and improvements

791,350


790,424





 Real estate related intangible assets

1,120


3,240





    Total investments in properties

1,114,546


1,115,740





 Accumulated depreciation and amortization

(227,734)


(224,027)





 Assets held for sale, net

3,267


3,267





     Net investments in properties

890,079


894,980





 Investment in unconsolidated joint venture

3,747


3,830





     Net investments in real estate

893,826


898,810





Cash and cash equivalents

2,108


3,988





Restricted cash

6,820


6,892





Deferred rent

17,306


17,941





Other assets, net

40,903


40,653





     Total assets

$960,963


$968,284













                               Liabilities and Equity








Liabilities:








 Mortgage notes payable

$342,182


$345,770





 Mortgage note payable – related parties

7,580


7,721





 Interest payable

1,642


1,659





 Security deposits

4,415


4,605





 Prepaid rent

4,768


6,526





 Liability related to assets held for sale

8


-





 Dividends and distributions payable

13,832


15,793





 Accounts payable and accrued expenses

20,566


16,239





     Total liabilities

394,993


398,313













Commitments and contingencies.
















Equity:








Stockholders' equity:








 Common stock, $.001 par value

22


22





 Additional paid-in capital

174,186


172,568





 Distributions in excess of accumulated earnings

(31,028)


(30,520)





     Total stockholders' equity

143,180


142,070





Noncontrolling interests in operating partnerships

422,790


427,901





     Total equity

565,970


569,971





     Total liabilities and equity

$960,963


$968,284








(1)

Includes approximately $124 and $159 in amortization expense for the three months ended March 31, 2011 and 2010, 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.



(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 86,000 rentable square feet and $63 in cash rent.



(5)

Base rent reflects cash rent.



(6)

Includes a one-time rent adjustment of approximately $1,638 from a tenant dispute resolution.



(7)

Includes a one-time rent adjustment of approximately $1,638. Excluding the adjustment, the average monthly rental revenue per square foot would have been $1.29.



SOURCE Mission West Properties, Inc.




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