Mission West Properties Announces Fourth Quarter and Full Year 2009 Operating Results
CUPERTINO, Calif., Feb. 3 /PRNewswire-FirstCall/ -- Mission West Properties, Inc. (Nasdaq: MSW) reported today that Funds From Operations ("FFO") for the quarter ended December 31, 2009 was approximately $16,604,000, 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 $12,863,000, or $0.12 per diluted common share, for the same period in 2008. A forfeited deposit of $2,000,000 under a contract for the sale of the McCandless property accounted for approximately $0.02 per diluted common share and unrealized gain from investment in marketable securities accounted for approximately $871,000, or less than $0.01 per diluted common share, for the quarter ended December 31, 2009. Net termination fee income relating to lease terminations for the fourth quarter ended December 31, 2008 accounted for less than $0.01 per diluted common share. On a sequential quarter basis, FFO for the quarter ended September 30, 2009 was approximately $0.17 per diluted common share. For the year ended December 31, 2009, FFO increased to $60,467,000, or $0.57 per diluted common share, from FFO of $55,334,000, or $0.52 per diluted common share, for the year ended December 31, 2008. Net termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $0.03 per diluted common share for the year ended December 31, 2008.
Net income for the quarter ended December 31, 2009 was approximately $10,384,000 as compared to approximately $26,443,000 for the quarter ended December 31, 2008. Net income per diluted share to common stockholders was approximately $0.11 for the quarter ended December 31, 2009 compared to $0.26 for the quarter ended December 31, 2008, a per share decrease of approximately 58%. A forfeited deposit under a contract for the sale of the McCandless property accounted for approximately $0.02 per diluted common share for the quarter ended December 31, 2009. Gains from the sale of two R&D properties in the Company's unconsolidated joint venture, TBI-MWP, accounted for approximately $0.20 per diluted common share for the quarter ended December 31, 2008. Net income for the year ended December 31, 2009 was approximately $34,449,000 as compared to approximately $50,340,000 for the year ended December 31, 2008. For the year ended December 31, 2009, net income per diluted share to common stockholders was approximately $0.38, down from $0.51 a year ago, a per share decrease of approximately 25%. Gains from the sale of two R&D properties in the Company's unconsolidated joint venture, TBI-MWP, accounted for approximately $0.20 per diluted common share for the year ended December 31, 2008 and net termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $0.03 per diluted common share for the year ended December 31, 2008.
In October 2009, the Company entered into a change in terms agreement with Heritage Bank of Commerce to amend the maturity date of the $17,500,000 revolving line of credit to September 15, 2011. The interest rate on the revolving line of credit is the greater of LIBOR plus 1.75% or 4.00% per annum. The Heritage Bank of Commerce loan is secured by three properties consisting of approximately 219,000 rentable square feet. The revolving line of credit contains certain customary covenants as defined in the loan agreement. The Company paid approximately $25,000 in loan and legal fees in obtaining the revolving line of credit.
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 third 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 Three Twelve Twelve Months Months Months Months Ended Ended Ended Ended Dec 31, Dec 31, Dec 31, Dec 31, 2009 2008 2009 2008 -------- -------- -------- -------- OPERATING REVENUES: Rental revenue $20,999 $20,464 $82,520 $79,075 Tenant reimbursements 5,051 4,505 18,732 16,406 Lease termination income - 1,087 - 3,007 Other income 2,850 446 3,756 1,216 ----- --- ----- ----- Total operating revenues 28,900 26,502 105,008 99,704 ------ ------ ------- ------ OPERATING EXPENSES: Operating and maintenance 4,365 3,410 14,379 11,404 Real estate taxes 3,485 3,812 13,481 12,056 General and administrative 593 684 2,336 2,635 Depreciation and amortization of real estate 5,910(1) 6,160(1) 24,110(1) 23,224(1) -------- -------- --------- --------- Total operating expenses 14,353 14,066 54,306 49,319 ------ ------ ------ ------ Operating income 14,547 12,436 50,702 50,385 OTHER INCOME (EXPENSES): Equity in earnings of unconsolidated joint venture 72 18,701 309 19,617 Interest and dividend income 150 771 1,309 1,735 Unrealized gain (loss) from investment 871 (278) 5,011 (278) Interest expense (5,045) (4,880) (22,117) (19,787) Interest expense – related parties (211) (307) (765) (1,332) ---- ---- ---- ------ Net income 10,384 26,443 34,449 50,340 Net income attributable to noncontrolling interests (7,975) (21,186) (26,058) (40,206) ------ ------- ------- ------- Net income attributable to common stockholders $2,409 $5,257 $8,391 $10,134 ====== ====== ====== ======= Net income per share to common stockholders: Basic $0.11 $0.27 $0.39 $0.51 ===== ===== ===== ===== Diluted $0.11 $0.26 $0.38 $0.51 ===== ===== ===== ===== Weighted average shares of common stock (basic) 21,793,037 19,748,211 21,736,699 19,714,414 ========== ========== ========== ========== Weighted average shares of common stock (diluted) 21,979,442 19,889,016 21,923,104 19,996,348 ========== ========== ========== ========== Weighted average O.P. units outstanding 83,482,139 85,526,965 83,538,477 85,528,329 ========== ========== ========== ========== FUNDS FROM OPERATIONS Funds from operations $16,604 $12,863 $60,467 $55,334 ======= ======= ======= ======= Funds from operations per share (2) $0.16 $0.12 $0.57 $0.52 ===== ===== ===== ===== Outstanding common stock 21,870,211 19,748,211 21,870,211 19,748,211 ========== ========== ========== ========== Outstanding O.P. units 83,404,965 85,526,965 83,404,965 85,526,965 ========== ========== ========== ========== Weighted average O.P. units and common stock outstanding (diluted) 105,461,581 105,415,981 105,461,581 105,524,677 =========== =========== =========== =========== FUNDS FROM Three Three Twelve Twelve OPERATIONS Months Months Months Months CALCULATION Ended Ended Ended Ended Dec 31, Dec 31, Dec 31, Dec 31, 2009 2008 2009 2008 -------- -------- -------- -------- Net income $10,384 $26,443 $34,449 $50,340 Add: Depreciation and amortization of real estate 6,391 6,620 26,187 24,933 Depreciation and amortization of real estate held in unconsolidated joint venture 60 332 238 900 Less: Gain on sale of real estate - (20,471) - (20,471) Noncontrolling interests in joint ventures (231) (61) (407) (368) ---- ---- ---- ---- Funds from operations $16,604 $12,863 $60,467 $55,334 ======= ======= ======= ======= 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 Three Twelve Twelve Months Months Months Months Ended Ended Ended Ended PROPERTY AND Dec 31, Dec 31, Dec 31, Dec 31, OTHER DATA: 2009 2008 2009 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) $1.33 $1.26 $1.30 $1.25 Occupancy for leased properties 65.5% 66.4% 65.5% 66.4% Straight-line rent $195 $563 $870 $3,008 Leasing commissions $328 $458 $1,621 $1,699 Capital expenditures $22 $305 $178 $6,468
LEASE ROLLOVER SCHEDULE: # of Rentable Square 2009 Year Leases Feet Base Rent(5) ---- ------ --------------- --------------- 2009 - - $1,595,158 2010 14 270,448 (4) 4,045,285 2011 17 844,452 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 7 613,556 10,722,042 2016 3 159,600 3,299,764 2017 5 349,949 3,632,723 Thereafter 1 119,756 2,608,286 ---- ------- --------- Total 84 5,258,231 $81,651,076 ==== ========= ===========
BALANCE SHEETS December 31, December 31, 2009 2008 ------------ ------------ Assets Investments in real estate: Land $320,911 $320,911 Buildings and improvements 799,649 799,471 Real estate related intangible assets 3,240 3,240 ----- ----- Total investments in properties 1,123,800 1,123,622 Accumulated depreciation and amortization (204,153) (180,043) -------- -------- Net investments in properties 916,647 943,579 Investment in unconsolidated joint venture 3,828 3,768 ----- ----- Net investments in real estate 923,475 947,347 Cash and cash equivalents 986 - Restricted cash 197 39,478 Restricted investment in marketable securities 12,069 - Investment in marketable securities - 3,368 Deferred rent receivables 18,711 17,841 Other assets, net 30,951 26,251 ------ ------ Total assets $986,389 $1,034,285 ======== ========== Liabilities and Equity Liabilities: Mortgage notes payable $318,818 $330,908 Mortgage note payable – related parties 9,325 8,761 Note payable – related parties 8,261 - Revolving line of credit 14,466 13,079 Interest payable 1,573 1,596 Security deposits 4,849 5,272 Deferred rental income 6,539 3,964 Dividends and distributions payable 15,791 21,055 Accounts payable and accrued expenses 9,638 17,747 ----- ------ Total liabilities 389,260 402,382 ------- ------- Commitments and contingencies. Equity: (6) Stockholders' equity: Common stock, $.001 par value 22 20 Additional paid-in capital 170,606 154,412 Distributions in excess of accumulated earnings (25,784) (20,014) ------- ------- Total stockholders' equity 144,844 134,418 Noncontrolling interests in operating partnerships 452,285 497,485 ------- ------- Total equity 597,129 631,903 ------- ------- Total liabilities and equity $986,389 $1,034,285 ======== ========== (1) Includes approximately $159 in amortization expense for the three months ended December 31, 2009 and 2008, and $637 and $600 in amortization expense for the twelve months ended December 31, 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) Five leases for approximately 53,000 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.
SOURCE Mission West Properties, Inc.
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