Mission West Properties Announces First Quarter 2011 Operating Results

News provided by

Mission West Properties, Inc.

Apr 13, 2011, 04:15 ET

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.