SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): JANUARY 22, 1997 Commission File Number 1-8383
MISSION WEST PROPERTIES
Incorporated in California IRS Employer Identification Number: 95-2635431
Principal Executive Offices: Telephone: (619) 450-3135
6815 Flanders Drive, Suite 250
San Diego, California 92121-3914
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On December 6, 1996, Mission West Properties (seller and "the Company") entered
into an agreement (the "Agreement") to sell all its real estate assets to
Spieker Properties, L.P. (purchaser and "Spieker"), a California limited
partnership, for $50,500,000 cash. The Company's real estate constituted nearly
all of its assets. A special shareholder meeting was held December 16, 1996, at
which time the Company's shareholders approved the sale of the real estate
assets to Spieker.
A majority of the sale transaction was completed January 22, 1997, at which time
nine (9) of the Company's 11 real estate properties were sold. The remaining
two (2) properties are anticipated to close within 120 days after January 22,
1997. The nine (9) properties sold consisted of occupied office, light
industrial, and R&D buildings in San Diego and Riverside counties, California,
and occupied industrial buildings and vacant land in Chandler, Arizona. The
total building space sold approximated 685,000 square feet. The two (2)
remaining properties consist of leaseholds, together with hangar and office
buildings thereon, comprising approximately 25 percent of the land at
Palomar-McClellan airport in San Diego county, California.
Upon completion of sale of the nine (9) properties, the Company received
$47,500,000 in cash, from which it repaid all debt encumbering the properties
and paid a majority of the related transaction and closing costs. In accordance
with the Agreement, $300,000 was withheld from the proceeds to allow for
satisfaction of any post-closing breaches of representations and warranties made
by the Seller. If no such breaches occur, the $300,000 will be released to the
Company after 90 days. Also in accordance with the Agreement, upon completion
of sale of the two (2) leasehold properties, the Company will receive $3,000,000
in cash, subject to an additional $300,000 representation and warranty holdback
(for 90 days), and will repay related debt and transaction costs from the
proceeds.
There is no relationship between the Company and Spieker.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION:
The following unaudited pro forma consolidated financial statements
are filed with this report:
Pro Forma Consolidated Balance Sheet as of August 31, 1996
Pro Forma Consolidated Statement of Operations for the Year Ended
November 30, 1995
Pro Forma Consolidated Statement of Operations for the Year Ended
November 30, 1994
Pro Forma Consolidated Statement of Operations for the Year Ended
November 30, 1993
Pro Forma Consolidated Statement of Operations for the Nine
Months Ended August 31, 1996
Pro Forma Consolidated Statement of Operations for the Nine
Months Ended August 31, 1995
The Pro Forma Consolidated Balance Sheet reflects the financial
position of the Company after giving effect to the sale of the nine
(9) real estate properties and satisfaction of the related liabilities
as discussed in Item 2 and assumes the sale took place on August 31,
1996. The Pro Forma Consolidated Statements of Operations assume that
the sale occurred on December 1, 1994, December 1, 1993, and December
1, 1992 for the years ended November 30, 1995, November 30, 1994, and
November 30, 1993, respectively, and that the sale occurred on
December 1, 1995 and December 1, 1994 for the nine- (9) month periods
ended August 31, 1996 and August 31, 1995, respectively.
The unaudited pro forma consolidated financial statements have been
prepared by the Company based upon assumptions deemed proper by
management. The unaudited pro forma consolidated financial statements
presented herein are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or future
results of operations of the Company, or of the financial position
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or results of operations of the company that would have actually
occurred had the transaction been in effect as of the date or for the
pro forma periods presented.
The unaudited pro forma consolidated financial statements should be
read in conjunction with the historical financial statements and
related notes thereto.
(10) ADDITIONAL EXHIBITS:
Amendment No. 1 to Agreement of Purchase and Sale and Joint Escrow
Instructions
(99) ADDITIONAL EXHIBITS:
January 23, 1997 News Release announcing completion of the sale of
nine (9) properties
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MISSION WEST PROPERTIES
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Registrant
By: /s/ Katrina L. Thompson
------------------------------------------------
Katrina L. Thompson
Chief Financial Officer & Secretary
(Principal Financial and Accounting Officer)
February 6, 1997
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PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Balance Sheet
As of August 31, 1996
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ------------ ------------
ASSETS:
Cash and cash equivalents $ 1,880,000 $ 13,654,000 $15,534,000
Short-term investments, held-to-maturity 1,123,000 - 1,123,000
Real estate investments:
Rental Properties, less accumulated depreciation of
$1,164,000 ($2,381,000 pledged) 46,154,000 (42,392,000) 3,762,000
Unimproved land 461,000 (461,000) -
Allowance for estimated losses (4,413,000) 3,759,000 (654,000)
----------- ------------ -----------
Net real estate investments 42,202,000 (39,094,000) 3,108,000
----------- ------------ -----------
Other assets, less allowances of $5,000 and accumulated
depreciation of $314,000 1,168,000 (767,000) 401,000
----------- ------------ -----------
$46,373,000 $(26,207,000) $20,166,000
----------- ------------ -----------
----------- ------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Notes payable $30,982,000 $(29,295,000) $ 1,687,000
Accounts payable and accrued expenses 1,181,000 710,000 1,891,000
----------- ------------ -----------
Total liabilities 32,163,000 (28,585,000) 3,578,000
----------- ------------ -----------
Shareholders' equity:
Common stock, no par value; 10,000,000 shares auth-
orized, 1,371,121 shares issued and outstanding 19,456,000 - 19,456,000
Accumulated deficit (5,246,000) 2,378,000 (2,868,000)
----------- ------------ -----------
Total shareholders' equity 14,210,000 2,378,000 16,588,000
----------- ------------ -----------
$46,373,000 $(26,207,000) $20,166,000
----------- ------------ -----------
----------- ------------ -----------
(a) Adjustments from the sale of real estate assets (includes the related tax
effects, the proceeds, and the paydown of debt).
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PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Year Ended November 30, 1995
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ----------- -----------
REVENUES:
Rental revenues from real estate $ 7,146,000 $(6,284,000) $ 862,000
Sales of real estate 400,000 - 400,000
Other, including interest 380,000 (102,000) 278,000
----------- ----------- -----------
7,926,000 (6,386,000) 1,540,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,783,000 (1,316,000) 467,000
Depreciation of real estate 1,352,000 (1,192,000) 160,000
Costs of real estate sold 324,000 - 324,000
General and administrative 945,000 (92,000) 853,000
Interest 3,435,000 (3,251,000) 184,000
----------- ----------- -----------
7,839,000 (5,851,000) 1,988,000
----------- ----------- -----------
Income (loss) before gain on sale of real estate 87,000 (535,000) (448,000)
Gain on sale of real estate - 3,928,000 3,928,000
----------- ----------- -----------
Income before income taxes 87,000 3,393,000 3,480,000
Provision for income taxes 35,000 1,335,000 1,370,000
----------- ----------- -----------
NET INCOME $ 52,000 $ 2,058,000 $ 2,110,000
----------- ----------- -----------
----------- ----------- -----------
NET INCOME PER SHARE $ 0.04 $ 1.47 $ 1.51
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(a) Adjustments from the sale of real estate assets.
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PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Year Ended November 30, 1994
Pro Forma
Adjustments
Historical (a) Pro Forma
------------ ------------ ------------
REVENUES:
Rental revenues from real estate $ 6,637,000 $(5,846,000) $ 791,000
Sales of real estate 2,096,000 - 2,096,000
Other, including interest 564,000 (126,000) 438,000
----------- ----------- -----------
9,297,000 (5,972,000) 3,325,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,991,000 (1,579,000) 412,000
Depreciation of real estate 1,472,000 (1,306,000) 166,000
Costs of real estate sold 229,000 - 229,000
Provision for estimated losses on real estate 5,200,000 (4,546,000) 654,000
General and administrative 1,200,000 (108,000) 1,092,000
Interest 3,088,000 (2,927,000) 161,000
----------- ----------- -----------
13,180,000 (10,466,000) 2,714,000
----------- ----------- -----------
Income (loss) before loss on sale of real estate (3,883,000) 4,494,000 611,000
Loss on sale of real estate - (618,000) (618,000)
----------- ----------- -----------
Income (loss) before income taxes and cumulative effect of
of change in accounting (3,883,000) 3,876,000 (7,000)
Provision for (benefit from) income taxes (1,500,000) 1,497,000 (3,000)
----------- ----------- -----------
Income (loss) before cumulative effect of change in accounting (2,383,000) 2,379,000 (4,000)
Cumulative effect of change in accounting for income taxes 440,000 - 440,000
----------- ----------- -----------
NET INCOME (LOSS) $(1,943,000) $ 2,379,000 $ 436,000
----------- ----------- -----------
----------- ----------- -----------
PER SHARE:
Income (loss) before cumulative effect of change in accounting $(1.62) $ 1.62 $ -
Cumulative effect of change in accounting for income taxes 0.30 - 0.30
------ ------ -----
Net income (loss) per share $(1.32) $ 1.62 $ 0.30
------ ------ -----
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(a) Adjustments from the sale of real estate assets.
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PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Year Ended November 30, 1993
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ----------- -----------
REVENUES:
Rental revenues from real estate $ 6,678,000 $(5,883,000) $ 795,000
Sales of real estate 102,000 - 102,000
Other, including interest 362,000 (91,000) 271,000
----------- ----------- -----------
7,142,000 (5,974,000) 1,168,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 2,421,000 (2,001,000) 420,000
Depreciation of real estate 1,688,000 (1,483,000) 205,000
Costs of real estate sold 43,000 - 43,000
Provision for estimated losses on real estate 94,000 - 94,000
General and administrative 1,386,000 (108,000) 1,278,000
Interest 3,205,000 (3,021,000) 184,000
----------- ----------- -----------
8,837,000 (6,613,000) 2,224,000
----------- ----------- -----------
Income (loss) before loss on sale of real estate (1,695,000) 639,000 (1,056,000)
Loss on sale of real estate - (618,000) (618,000)
----------- ----------- -----------
Income (loss) before income taxes (1,695,000) 21,000 (1,674,000)
Provision for (benefit from) income taxes (630,000) 8,000 (622,000)
----------- ----------- -----------
NET INCOME (LOSS) $(1,065,000) $ 13,000 $(1,052,000)
----------- ----------- -----------
----------- ----------- -----------
NET INCOME (LOSS) PER SHARE $(0.73) $ 0.01 $(0.72)
------ ------ ------
------ ------ ------
(a) Adjustments from the sale of real estate assets.
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PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Nine Months Ended August 31, 1996
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ----------- -----------
REVENUES:
Rental revenues from real estate $ 5,342,000 $(4,740,000) $ 602,000
Sales of real estate 86,000 - 86,000
Other, including interest 237,000 (78,000) 159,000
----------- ----------- -----------
5,665,000 (4,818,000) 847,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,224,000 (913,000) 311,000
Depreciation of real estate 1,026,000 (905,000) 121,000
General and administrative 987,000 (297,000) 690,000
Interest 2,319,000 (2,194,000) 125,000
----------- ----------- -----------
5,556,000 (4,309,000) 1,247,000
----------- ----------- -----------
Income (loss) before gain on sale of real estate 109,000 (509,000) (400,000)
Gain on sale of real estate - 3,928,000 3,928,000
----------- ----------- -----------
Income before income taxes 109,000 3,419,000 3,528,000
Provision for income taxes 46,000 1,335,000 1,381,000
----------- ----------- -----------
NET INCOME $ 63,000 $ 2,084,000 $ 2,147,000
----------- ----------- -----------
----------- ----------- -----------
NET INCOME PER SHARE $ 0.05 $ 1.52 $ 1.57
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(a) Adjustments from the sale of real estate assets.
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PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Nine Months Ended August 31, 1995
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ----------- -----------
REVENUES:
Rental revenues from real estate $ 5,320,000 $(4,675,000) $ 645,000
Sales of real estate 125,000 - 125,000
Other, including interest 282,000 (58,000) 224,000
----------- ----------- -----------
5,727,000 (4,733,000) 994,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,448,000 (1,112,000) 336,000
Depreciation of real estate 1,011,000 (891,000) 120,000
General and administrative 701,000 (60,000) 641,000
Interest 2,663,000 (2,528,000) 135,000
----------- ----------- -----------
5,823,000 (4,591,000) 1,232,000
----------- ----------- -----------
Income (loss) before gain on sale of real estate (96,000) (142,000) (238,000)
Gain on sale of real estate - 3,928,000 3,928,000
----------- ----------- -----------
Income (loss) before income taxes (96,000) 3,786,000 3,690,000
Provision for (benefit from) income taxes (40,000) 1,491,000 1,451,000
----------- ----------- -----------
NET INCOME (LOSS) $ (56,000) $ 2,295,000 $ 2,239,000
----------- ----------- -----------
----------- ----------- -----------
NET INCOME (LOSS) PER SHARE $(0.04) $ 1.64 $ 1.60
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(a) Adjustments from the sale of real estate assets.
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