2014

Mission West Properties Announces Second Quarter 2011 Operating Results

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.



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http://www.missionwest.com

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