Mission West Properties Announces Second Quarter 2011 Operating Results

Jul 13, 2011, 16:15 ET from Mission West Properties, Inc.

CUPERTINO, Calif., July 13, 2011 /PRNewswire/ -- Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations ("FFO") for the quarter ended June 30, 2011, was approximately $13,708,000, or $0.13 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 $16,559,000, or $0.16 per diluted common share, for the same period in 2010. Realized gain from investment in marketable securities accounted for approximately $2,215,000, or $0.02 per diluted common share, and litigation proceeds accounted for approximately $903,000, or $0.01 per diluted common share, for the quarter ended June 30, 2010. On a sequential quarter basis, FFO for the quarter ended March 31, 2011, was approximately $0.15 per diluted common share. For the six months ended June 30, 2011, FFO decreased to $29,950,000, or $0.28 per diluted common share, from FFO of $33,066,000, or $0.31 per diluted common share, for the six months ended June 30, 2010. Realized and unrealized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the six months ended June 30, 2010.

Net income for the quarter ended June 30, 2011, was approximately $7,370,000 as compared to approximately $10,041,000 for the quarter ended June 30, 2010. Net income per diluted share available to common stockholders was approximately $0.08 for the quarter ended June 30, 2011, compared to $0.11 for the quarter ended June 30, 2010, a per share decrease of approximately 27%. Net income for the six months ended June 30, 2011, was approximately $17,305,000 as compared to approximately $20,185,000 for the six months ended June 30, 2010. For the six months ended June 30, 2011, net income per diluted share available to common stockholders was $0.19, down from $0.22 a year ago, a per share decrease of approximately 14%. Realized and unrealized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the six months ended June 30, 2010.

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)

STATEMENTS OF OPERATIONS

Three Months

Ended

Jun 30, 2011

Three Months

Ended

Jun 30, 2010

Six Months

Ended

Jun 30, 2011

Six Months

Ended

Jun 30, 2010

OPERATING REVENUES:

 Rental income

$20,295

$20,659

$42,072 (6)

$41,462

 Tenant reimbursements

4,045

4,028

8,690

8,453

 Other income

462

1,204

1,562

1,862

   Total operating revenues

24,802

25,891

52,324

51,777

OPERATING EXPENSES:

 Operating and maintenance

2,595

3,061

5,250

5,972

 Real estate taxes

3,150

3,388

6,354

6,571

 General and administrative

522

563

1,043

1,081

 Depreciation and amortization

5,844 (1)

5,976 (1)

11,671 (1)

11,816 (1)

   Total operating expenses

12,111

12,988

24,318

25,440

   Operating income

12,691

12,903

28,006

26,337

OTHER INCOME (EXPENSES):

 Equity in earnings of unconsolidated joint venture

27

147

18

224

 Interest and dividend income

57

-

126

50

 Realized and unrealized gain from investment

-

2,215

-

4,067

 Interest expense

(5,246)

(4,778)

(10,525)

(9,627)

 Interest expense – related parties

(144)

(327)

(291)

(624)

   Income from continuing operations

7,385

10,160

17,334

20,427

Discontinued operations:

   Loss from discontinued operations

(15)

(119)

(29)

(242)

       Net income

7,370

10,041

17,305

20,185

Net income attributable to noncontrolling interests

(5,491)

(7,581)

(13,027)

(15,267)

Net income available to common stockholders

$1,879

$2,460

$4,278

$4,918

Income per share from continuing operations:

  Basic

$0.08

$0.11

$0.19

$0.23

  Diluted

$0.08

$0.11

$0.19

$0.22

Income per share from discontinued operations:

  Basic

-

-

-

-

  Diluted

-

-

-

-

Net income per share to common stockholders:

  Basic

$0.08

$0.11

$0.19

$0.22

  Diluted

$0.08

$0.11

$0.19

$0.22

Weighted average shares of common stock (basic)

22,495,605

21,957,654

22,392,427

21,919,632

Weighted average shares of common stock (diluted)

22,756,006

22,123,527

22,583,358

22,090,313

Weighted average O.P. units outstanding

82,790,430

83,326,965

82,893,608

83,362,225

FUNDS FROM OPERATIONS

Three Months

Ended

Jun 30, 2011

Three Months

Ended

Jun 30, 2010

Six Months

Ended

Jun 30, 2011

Six Months

Ended

Jun 30, 2010

Funds from operations

$13,708

$16,559

$29,950

$33,066

Funds from operations per share (2)

$0.13

$0.16

$0.28

$0.31

Outstanding common stock

22,584,770

21,959,070

22,584,770

21,959,070

Outstanding O.P. units

82,701,265

83,326,965

82,701,265

83,326,965

Weighted average O.P. units and common stock outstanding (diluted)

105,546,436

105,450,492

105,476,966

105,452,538

FUNDS FROM OPERATIONS CALCULATION

Three Months

Ended

Jun 30, 2011

Three Months

Ended

Jun 30, 2010

Six Months

Ended

Jun 30, 2011

Six Months

Ended

Jun 30, 2010

Net income

$7,370

$10,041

$17,305

$20,185

Add:

  Depreciation and amortization

6,384

6,556

12,736

12,963

  Depreciation and amortization in unconsolidated joint venture

60

60

119

119

Less:

  Noncontrolling interests in joint ventures

(106)

(98)

(210)

(201)

Funds from operations

$13,708

$16,559

$29,950

$33,066

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

Jun 30, 2011

Three Months

Ended

Jun 30, 2010

Six Months

Ended

Jun 30, 2011

Six Months

Ended

Jun 30, 2010

Total properties, end of period

111

112

111

112

Total square feet, end of period

8,011,026

8,088,923

8,011,026

8,088,923

Average monthly rental revenue per square foot (3)

$1.29

$1.31

$1.34 (7)

$1.32

Occupancy for leased properties

66.5%

64.1%

66.5%

64.1%

Straight-line rent

$260

$9

($375)

($228)

Leasing commissions

$128

$445

$323

$445

Non-recurring capital expenditures

$613

-

$1,539

-

LEASE ROLLOVER SCHEDULE:

Year

# of Leases

Rentable Square Feet

2011 Base Rent (5)

2011 (4)

6

284,099

$7,369,853

2012

12

784,393

15,046,671

2013

6

339,123

4,971,350

2014

21

1,677,913

26,653,825

2015

8

587,437

9,178,833

2016

7

275,251

4,280,551

2017

10

606,553

7,831,158

2018

3

265,612

1,120,944

2019

1

165,000

2,931,834

Thereafter

3

208,768

4,327,563

   Total

77

5,194,149

$83,712,582

BALANCE SHEETS

June 30, 2011

December 31, 2010

Assets

Investments in real estate:

    Land

$322,076

$322,076

    Buildings and improvements

791,963

790,424

    Real estate related intangible assets

1,121

3,240

        Total investments in properties

1,115,160

1,115,740

    Accumulated depreciation and amortization

(233,578)

(224,027)

    Assets held for sale, net

3,267

3,267

        Net investments in properties

884,849

894,980

    Investment in unconsolidated joint venture

3,698

3,830

        Net investments in real estate

888,547

898,810

Cash and cash equivalents

-

3,988

Restricted cash

-

6,892

Deferred rent

17,566

17,941

Other assets, net

41,866

40,653

     Total assets

$947,979

$968,284

Liabilities and Equity

Liabilities:

    Mortgage notes payable

$338,566

$345,770

    Mortgage note payable – related parties

7,436

7,721

    Interest payable

1,614

1,659

    Security deposits

4,385

4,605

    Prepaid rent

4,402

6,526

    Dividends and distributions payable

13,687

15,793

    Accounts payable and accrued expenses

18,492

16,239

        Total liabilities

388,582

398,313

Commitments and contingencies.

Equity:

Stockholders' equity:

    Common stock, $.001 par value

22

22

    Additional paid-in capital

175,863

172,568

    Distributions in excess of accumulated earnings

(32,086)

(30,520)

        Total stockholders' equity

143,799

142,070

Noncontrolling interests in operating partnerships

415,598

427,901

        Total equity

559,397

569,971

        Total liabilities and equity

$947,979

$968,284

(1) Includes approximately $56 and $301 in amortization expense for the three months ended June 30, 2011 and 2010, respectively, and $180 and $461 in amortization expense for the six months ended June 30, 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 all 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 78,000 rentable square feet and approximately $106 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.



RELATED LINKS

http://www.missionwest.com