2014

Mission West Properties Announces Third Quarter 2010 Operating Results

CUPERTINO, Calif., Oct. 13 /PRNewswire-FirstCall/ -- Mission West Properties, Inc. (Nasdaq: MSW) reported today that Funds From Operations ("FFO") for the quarter ended September 30, 2010 was approximately $11,770,000, or $0.11 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 $17,604,000, or $0.17 per diluted common share, for the same period in 2009. Unrealized gain from investment in marketable securities accounted for approximately $4,464,000, or $0.04 per diluted common share, for the quarter ended September 30, 2009. On a sequential quarter basis, FFO for the quarter ended June 30, 2010 was approximately $0.16 per diluted common share. For the nine months ended September 30, 2010, FFO increased to $44,836,000, or $0.43 per diluted common share, from FFO of $43,863,000, or $0.42 per diluted common share, for the nine months ended September 30, 2009. Realized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the nine months ended September 30, 2010. Unrealized gain from investment in marketable securities accounted for approximately $0.04 per diluted common share for the nine months ended September 30, 2009.

Net income for the quarter ended September 30, 2010 was approximately $5,471,000 as compared to approximately $11,242,000 for the quarter ended September 30, 2009. Net income per diluted share available to common stockholders was approximately $0.06 for the quarter ended September 30, 2010 compared to $0.13 for the quarter ended September 30, 2009, a per share decrease of approximately 54%. Net income for the nine months ended September 30, 2010 was approximately $25,655,000 as compared to approximately $24,065,000 for the nine months ended September 30, 2009. For the nine months ended September 30, 2010, net income per diluted share available to common stockholders was $0.28, up from $0.27 a year ago, a per share increase of approximately 4%.

Financing Activity

On August 4, 2010, the Company entered into a fixed rate term agreement and related contracts and instruments for a secured mortgage loan totaling $40,000,000 from Hartford Life Insurance Company and Hartford Life and Accident Insurance Company (the "Hartford Loan II"). The Hartford Loan II bears a fixed interest rate of 6.05%, with a 20 year amortization, and matures September 1, 2030. The Hartford Loan II is secured by five properties consisting of approximately 500,000 rentable square feet.

The Company paid approximately $457,000 in loan fees and costs, which will be amortized over the 20 year loan period. The proceeds were used primarily to repay the remaining balance of an existing loan with the Berg Group.

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 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
Sept 30, 2010


Three Months
Ended
Sept 30, 2009


Nine Months
Ended
Sept 30, 2010


Nine Months
Ended
Sept 30, 2009

OPERATING REVENUES:








 Rental income

$20,607


$20,442


$62,091


$61,521

 Tenant reimbursements

3,128


4,566


11,611


13,681

 Other income

276


284


2,138


906

   Total operating revenues

24,011


25,292


75,840


76,108









OPERATING EXPENSES:








 Operating and maintenance

3,630


3,539


9,662


10,014

 Real estate taxes

3,163


3,248


9,806


9,996

 General and administrative

580


589


1,661


1,743

 Depreciation and amortization

5,862 (1)


5,921 (1)


17,840


18,200

   Total operating expenses

13,235


13,297


38,969


39,953









   Operating income

10,776


11,995


36,871


36,155









OTHER INCOME (EXPENSES):








 Equity in earnings of unconsolidated joint venture

46


72


270


237

 Interest and dividend income

1


93


51


1,158

 Realized gain from investment

-


-


8,800


-

 Unrealized gain (loss) from investment

-


4,464


(4,733)


4,140

 Interest expense

(5,138)


(5,180)


(14,765)


(17,071)

 Interest expense – related parties

(214)


(202)


(839)


(554)

   Net income

5,471


11,242


25,655


24,065









Net income attributable to noncontrolling interests

(4,101)


(8,476)


(19,367)


(18,083)

Net income available to common stockholders

$1,370


$2,766


$6,288


$5,982









Net income per share to common stockholders:








  Basic

$0.06


$0.13


$0.29


$0.28

  Diluted

$0.06


$0.13


$0.28


$0.27

Weighted average shares of common stock (basic)

21,976,679


21,770,211


21,938,857


21,717,713

Weighted average shares of common stock (diluted)

22,109,391


21,902,387


22,095,602


21,858,067

Weighted average O.P. units outstanding

83,309,356


83,504,965


83,344,408


83,557,463











FUNDS FROM OPERATIONS








Funds from operations

$11,770


$17,604


$44,836


$43,863

Funds from operations per share (2)

$0.11


$0.17


$0.43


$0.42

Outstanding common stock

22,013,070


21,770,211


22,013,070


21,770,211

Outstanding O.P. units

83,272,965


83,504,965


83,272,965


83,504,965

Weighted average O.P. units and common stock

  outstanding (diluted)

105,418,747


105,407,352


105,440,010


105,415,530








FUNDS FROM OPERATIONS CALCULATION

Three Months
Ended
Sept 30, 2010


Three Months
Ended
Sept 30, 2009


Nine Months
Ended
Sept 30, 2010


Nine Months
Ended
Sept 30, 2009

Net income

$5,471


$11,242


$25,655


$24,065

Add:








  Depreciation and amortization

6,350


6,385


19,314


19,796

  Depreciation and amortization in

    unconsolidated joint venture

60


60


179


179

Less:








  Noncontrolling interests in joint ventures

(111)


(83)


(312)


(177)

Funds from operations

$11,770


$17,604


$44,836


$43,863









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
Sept 30, 2010


Three Months
Ended
Sept 30, 2009


Nine Months
Ended
Sept 30, 2010


Nine Months
Ended
Sept 30, 2009

Total properties, end of period

112


111


112


111

Total square feet, end of period

8,088,923


8,047,569


8,088,923


8,047,569

Average monthly rental revenue per square foot (3)

$1.29


$1.30


$1.31


$1.29

Occupancy for leased properties

67.8%


65.7%


67.8%


65.7%

Straight-line rent

($    61)


$115


($   289)


$   675

Leasing commissions

$   495


$973


$   940


$1,294

Non-recurring capital expenditures

$1,699


$156


$1,699


$   156




Lease Rollover Schedule:








Year


# of Leases


Rentable Square Feet


2010 Base Rent (5)

2010 (4)


5


144,411


$2,764,570

2011


15


739,221


11,312,732

2012


15


1,023,342


15,400,474

2013


7


401,645


5,626,016

2014


15


1,301,930


22,685,061

2015


9


631,693


9,969,073

2016


4


196,279


3,434,208

2017


5


349,949


4,955,733

Thereafter


7


639,380


6,605,740

   Total


82


5,427,850


$82,753,607












BALANCE SHEETS







September 30, 2010



December 31, 2009







Assets





Investments in real estate:





 Land

$324,563


$320,911


 Buildings and improvements

801,548


799,649


 Real estate related intangible assets

3,240


3,240


    Total investments in properties

1,129,351


1,123,800


 Accumulated depreciation and amortization

(221,993)


(204,153)


     Net investments in properties

907,358


919,647


 Investment in unconsolidated joint venture

3,872


3,828


     Net investments in real estate

911,230


923,475


 Cash and cash equivalents

15,226


986


 Restricted cash

89


197


 Restricted investment in marketable securities

-


12,069


 Deferred rent receivables

18,422


18,711


 Other assets, net

33,396


30,951


     Total assets

$978,363


$986,389







Liabilities and Equity





Liabilities:





 Mortgage notes payable

$349,297


$318,818


 Mortgage note payable – related parties

7,860


8,261


 Note payable – related parties

-


9,325


 Revolving line of credit

-


14,466


 Interest payable

1,664


1,573


 Security deposits

4,886


4,849


 Deferred rental income

5,706


6,539


 Dividends and distributions payable

15,793


15,791


 Accounts payable and accrued expenses

18,021


9,638


     Total liabilities

403,227


389,260







Commitments and contingencies.










Equity:





Stockholders' equity:





 Common stock, $.001 par value

22


22


 Additional paid-in capital

171,692


170,606


 Distributions in excess of accumulated earnings

(29,384)


(25,784)


     Total stockholders' equity

142,330


144,844


Noncontrolling interests in operating partnerships

432,806


452,285


     Total equity

575,136


597,129


     Total liabilities and equity

$978,363


$986,389




(1) Includes approximately $124 and $159 in amortization expense for the three months ended September 30, 2010 and 2009, respectively, and $584 and $478 in amortization expense for the nine months ended September 30, 2010 and 2009, 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) Excludes five month-to-month leases for approximately 53,000 rentable square feet and $212 cash rent.


(5) Base rent reflects cash rent.  



SOURCE Mission West Properties, Inc.



RELATED LINKS
http://www.missionwest.com

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