[G & J Letterhead]
______ __, 1998
Mission West Properties
10050 Bandley Drive
Cupertino, California 95014
Mission West Properties, Inc.
10050 Bandley Drive
Cupertino, California 95014
Re: Certain Federal Income Tax Matters
Ladies and Gentlemen:
This opinion is delivered to you in our capacity as counsel to
Mission West Properties, a California corporation, ("Mission West") and Mission
West Properties, Inc., a Maryland corporation ("Mission West-Maryland"), in
connection with the amended registration statement on Form S-4 containing the
Proxy Statement/Prospectus of Mission West addressed to holders of common stock
of Mission West (the "Proxy Statement/Prospectus"), which Mission West
originally filed with the Securities and Exchange Commission on May 15, 1998.
The Proxy Statement/Prospectus relates to the following proposals (i) the offer
and sale at $4.50 per share of 6,495,058 shares of common stock of Mission West
to accredited investors in a private placement (the "Private Placement"); (ii)
the ratification of Mission West's acquisition of approximately 12.11% of the
total partnership interests in, and becoming the sole general partner of, each
of four limited partnerships for $35,200,000 (collectively, the "Operating
Partnership"); (iii) the offer and sale of up to 93,398,705 shares of common
stock of Mission West issuable upon the future exchange of units of limited
partnership interest in the Operating Partnership; and (iv) the merger of
Mission West with and into Mission West-Maryland pursuant to the Merger
Agreement and Plan of Merger (the "Merger Agreement") (the "Reincorporation
Merger").
This opinion relates to Mission West-Maryland's qualification for
federal income tax purposes as a real estate investment trust ("REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"), the status of the
Operating Partnership as a partnership for federal income tax purposes, and the
accuracy of the discussion of federal income tax considerations in the Proxy
Statement/Prospectus. Certain capitalized terms not defined herein shall have
the meanings attributed to them in the Proxy Statement/Prospectus.
In rendering the following opinions, we have examined the Proxy
Statement/Prospectus, the Articles of Incorporation and Bylaws of Mission
West-Maryland, the Merger Agreement, the Acquisition Agreement among Mission
West Properties, Certain Partnerships and the Berg Group (as defined therein)
dated as of May 14, 1998 (the "Acquisition Agreement"), the agreements of
limited partnership of the Operating Partnership, the pro forma financial
statements of Mission West prepared as of September 30, 1998 and for the
three-month period then ended (the "Pro Formas"), and such other records,
certificates and documents as we have deemed necessary or appropriate for
purposes of rendering the open set forth herein. The foregoing documents,
including the Pro Formas, are referred to herein as the "Documents". We also
have relied upon the representations of Mission West, Mission West-Maryland, and
the Operating Partnership regarding the manner in which such entities have been
and will be owned and operated (the "Management Representations"). We have
neither independently investigated nor verified such representations, and we
assume that such representations are true, correct and complete and that all
representations made "to the best of the knowledge and belief" of any person(s)
or party(ies) or with similar qualification are and will be true, correct and
complete as if made without such qualification and that no action will occur
from the date hereof until the Reincorporation Merger that is inconsistent with
such representations. We further assume that the Reincorporation Merger and
related transactions contemplated by the Documents will be consummated in
accordance with the Documents and as described in the Proxy Statement/Prospectus
(including satisfaction of all covenants and conditions to the obligations of
the parties without amendment or waiver thereof) insofar as is relevant to the
opinions contained herein and that, prior to the Reincorporation Merger, all
entities have operated and will operate in accordance with applicable laws and
the terms and conditions of applicable documents. In addition, we assume that
each of the limited partnerships included in the Operating Partnership will be,
or will make a timely election to be, classified as a partnership as provided by
ss.301.7701-3 of the Procedure and Administration Regulations promulgated under
the Code.
In rendering the opinions set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as original, (iii) the conformity
to the original documents of all documents submitted to s as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person, (vi) the accuracy and completeness of
all records made available to us and (vii) the factual accuracy of all
representations, warranties and other statements made by all parties. We also
have assumed, without investigation, that all documents, certificates,
warranties and covenants on which we have relied in rendering the opinions set
forth below and that were given or dated earlier than the date of this letter
continue to remain accurate, insofar as relevant to the opinions set forth
herein, from such earlier date through and including the date of this letter.
The opinions set forth below are based upon the current provisions of
the Code, the Income Tax Regulations and Procedure and Administration
Regulations promulgated thereunder, all as of the date hereof, and existing
administrative and judicial interpretations thereof, all as of the date hereof
of which are subject to change. Future changes in applicable law may cause the
federal income tax treatment of Mission West and the Mission West-Maryland to be
materially and adversely different from that described below:
Based upon and subject to the foregoing, we are of the opinion that:
1. Mission West-Maryland is organized, as of the date hereof, in conformity with
the requirements for qualification and taxation as a real estate investment
trust ("REIT") under the Code, and Mission West-Maryland's proposed method of
operation (as described in the Management Representations), including for
periods following the Reincorporation Merger, should enable Mission
West-Maryland to continue to meet the requirements for qualification and
taxation as a REIT for periods following the date hereof, including periods
following the effective time of the Reincorporation Merger.
2. The Operating Partnership will be treated as a partnership for federal income
tax purposes and will not be subject to federal income tax as a corporation or
an association taxable as a corporation.
3. The discussion in the Proxy Statement/Prospectus under the captions "FEDERAL
INCOME TAX CONSIDERATIONS," and "FEDERAL INCOME TAX CONSEQUENCES OF THE
REINCORPORATION MERGER", to the extent that such sections discuss matters of law
or legal conclusions, is accurate in all material respects.
We express no opinion herein other than those expressly set forth
herein. You should recognize that our opinion is not binding on the Internal
Revenue Service (the "IRS"), and that the IRS may disagree with the opinion
contained herein. Although we believe that our opinion will be sustained if
challenged, there can be no assurance that this will be the case.
We consent to being named as counsel to the Company and Mission West
in the Proxy Statement/Prospectus, to the references in the Proxy
Statement/Prospectus to our firm and to the inclusion of a copy of this opinion
letter as an exhibit to the Proxy Statement/Prospectus. In giving such consent,
however, we do not thereby admit that we are an "expert" within the meaning of
the Securities Act of 1933, as amended. This opinion is being furnished to you
solely for the purpose of being included as an exhibit to the Proxy
Statement/Prospectus. This opinion may not be used or relied upon for any other
purpose without our prior written consent.
Very truly yours,
GRAHAM & JAMES LLP