UNITED STATES
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): February 6, 2006
MISSION WEST PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland Commission File Number: 95-2635431
-------- 1-8383 ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification)
10050 Bandley Drive, Cupertino, CA 95014
(Address of principal executive offices)
(408) 725-0700
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
(a) The following information is being furnished by the Company as required for
Item 2.02(a) of this report and shall not be deemed to be "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934:
On February 6, 2006, the Company issued a press release announcing its earnings
results for the fourth quarter and full year ended December 31, 2005. The press
release is attached to this Current Report as Exhibit 99.1 and is incorporated
by reference in response to Item 2.02(a) of this report.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be filed on its behalf by the
undersigned hereunto duly authorized.
MISSION WEST PROPERTIES, INC.
Date: February 6, 2006 By: /s/ Wayne N. Pham
------------------------------
Wayne N. Pham
Vice President of Finance and Controller
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Exhibit 99.1
PRESS RELEASE
For Immediate News Release
February 6, 2006
MISSION WEST PROPERTIES ANNOUNCES FOURTH QUARTER AND FULL YEAR 2005
OPERATING RESULTS
"We build the buildings for the high tech companies that build the internet"
Cupertino, CA - Mission West Properties, Inc. (AMEX/PCX: MSW) reported today
that Funds From Operations ("FFO") for the quarter ended December 31, 2005 was
$19,173,000 or $0.18 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 $22,982,000 or $0.22 per diluted common share for the same period in
2004. On a sequential quarter basis, FFO per diluted common share remained
evenly compared to the previous quarter ended September 30, 2005. For the twelve
months ended December 31, 2005, FFO decreased to $79,152,000 or $0.76 per
diluted share from FFO of $103,320,000 or $0.99 per diluted share for the same
period in 2004.
Net income to common stockholders per diluted share was $0.13 for the quarter
ended December 31, 2005 compared to $0.16 for the quarter ended December 31,
2004, a per share decrease of approximately 18.8%. For the twelve months ended
December 31, 2005, net income to common stockholders per diluted share was
$0.55, down from $0.74 one year ago, a per share decrease of approximately
25.7%.
Company Profile
Mission West Properties, Inc. operates as a self-managed, self-administered 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 107
properties totaling approximately 7.8 million 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.
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MISSION WEST PROPERTIES, INC.
SELECTED FINANCIAL DATA
(In thousands, except share, per share and property data amounts)
Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended
Dec 31, 2005 Dec 31, 2004 Dec 31, 2005 Dec 31, 2004
----------------- --------------- --------------- ---------------
REVENUES:
Rental revenue from real estate $24,722 (1) $28,814 (1) $100,765 (1) $119,339 (1)
Tenant reimbursements 3,508 3,295 14,762 14,919
Other income, including lease terminations,
settlements and interest 1,588 1,512 4,606 6,913
----------------- --------------- --------------- ---------------
Total revenues 29,818 33,621 120,133 141,171
----------------- --------------- --------------- ---------------
EXPENSES:
Operating expenses 2,585 2,139 9,219 9,016
Real estate taxes 2,792 2,666 10,259 11,030
Interest 5,249 4,530 21,295 17,581
Interest (related parties) 193 317 972 1,077
General and administrative 368 382 1,910 2,011
Depreciation and amortization of real estate 5,278 (2) 5,180 (2) 21,283 (2) 21,347 (2)
----------------- --------------- --------------- ---------------
Total expenses 16,465 15,214 64,938 62,062
----------------- --------------- --------------- ---------------
Income before equity in earnings of
unconsolidated
joint venture and minority interests 13,353 18,407 55,195 79,109
Equity in earnings of unconsolidated joint 46 1,383 724 2,947
venture
Minority interests (11,062) (16,442) (46,234) (68,199)
----------------- --------------- --------------- ---------------
Income from continuing operations 2,337 3,348 9,685 13,857
----------------- --------------- --------------- ---------------
Discontinued operations, net of minority interests:
Gain from disposal of discontinued operations 140 - 445 -
(Loss)/income from discontinued operations (4) (527) (103) (545)
----------------- --------------- --------------- ---------------
Income from discontinued operations 136 (527) 342 (545)
----------------- --------------- --------------- ---------------
Net income to common stockholders $2,473 $2,821 $10,027 $13,312
================= =============== =============== ===============
Net income to minority interests $11,701 $14,504 $47,524 $66,100
================= =============== =============== ===============
Income per share from continuing operations:
Basic $0.13 $0.19 $0.53 $0.77
Diluted $0.13 $0.19 $0.53 $0.77
Income per share from discontinued operations:
Basic - ($0.03) $0.02 ($0.03)
Diluted - ($0.03) $0.02 ($0.03)
----------------- --------------- --------------- ---------------
Net income per share to common stockholders:
Basic $0.13 $0.16 $0.55 $0.74
================= =============== =============== ===============
Diluted $0.13 $0.16 $0.55 $0.74
================= =============== =============== ===============
Weighted average shares of common stock (basic) 18,418,855 18,081,321 18,286,947 18,034,873
================= =============== =============== ===============
Weighted average shares of common stock (diluted) 18,432,819 18,104,454 18,325,659 18,076,498
================= =============== =============== ===============
Weighted average O.P. units outstanding 86,118,031 86,400,565 86,220,117 86,444,773
================= =============== =============== ===============
FUNDS FROM OPERATIONS
Funds from operations $19,173 $22,982 $79,152 $103,320
================= =============== =============== ===============
Funds from operations per share (3) $ 0.18 $ 0.22 $ 0.76 $ 0.99
================= =============== =============== ===============
Outstanding common stock 18,437,791 18,097,191 18,437,791 18,097,191
================= =============== =============== ===============
Outstanding O.P. units 86,099,095 86,384,695 86,099,095 86,384,695
================= =============== =============== ===============
Weighted average O.P. units and common stock
outstanding (diluted) 104,550,850 104,505,019 104,545,776 104,521,271
================= =============== =============== ===============
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Three Months Three Months Twelve Months Twelve Months
FUNDS FROM OPERATIONS CALCULATION Ended Ended Ended Ended
Dec 31, 2005 Dec 31, 2004 Dec 31, 2005 Dec 31, 2004
----------------- --------------- --------------- ---------------
Net income $2,473 $2,821 $10,027 $ 13,312
Add:
Minority interests (4) 11,602 14,387 47,045 65,614
Depreciation and amortization of real estate from
continuing operations 5,686 5,503 22,987 22,991
Depreciation and amortization of real estate from
discontinued operations - 53 315 529
Depreciation & amortization of real estate held in 210 218 984 874
unconsolidated joint venture
Less:
Gain on sale of real estate (798) - (2,206) -
----------------- --------------- --------------- ---------------
Funds from operations $19,173 $22,982 $79,152 $103,320
================= =============== =============== ===============
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) before minority interest
of unit holders (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 non-real 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 not be considered as
an alternative for net income as a measure of profitability or 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.
Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended
PROPERTY AND OTHER DATA: Dec 31, 2005 Dec 31, 2004 Dec 31, 2005 Dec 31, 2004
--------------- --------------- ----------------- ---------------
Total properties, end of period 107 109 107 109
Total square feet, end of period 7,780,084 7,917,262 7,780,084 7,917,262
Average monthly rental revenue per square foot $1.62 $1.80 $1.58 $1.80
(5)
Average occupancy 67.0% 70.0% 67.9% 71.7%
Actual occupancy 66.7% 70.7% 66.7% 70.7%
Leased properties 68.9% 71.2% 68.9% 71.2%
Straight-line rent ($ 84) ($ 600) $ 707 ($ 460)
Leasing commissions $1,306 $ 410 $5,296 $1,801
Capital expenditures $ 267 $1,148 $1,138 $1,519
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BALANCE SHEET December 31, 2005 December 31, 2004
-------------------- --------------------
Assets:
Land $ 273,933 $ 273,663
Buildings and improvements 766,457 770,757
Real estate related intangible assets 17,410 18,284
-------------------- --------------------
Total investments in properties 1,057,800 1,062,704
Less accumulated depreciation and (130,419) (110,062)
amortization
Assets held for sale, net of accumulated
depreciation of $1,578 at 12/31/04 - 8,221
-------------------- --------------------
Net investments in properties 927,381 960,863
Cash and cash equivalents 31,441 1,519
Restricted cash 16,712 1,551
Deferred rent receivable 19,218 18,511
Investment in unconsolidated joint venture 3,263 3,559
Other assets 25,362 19,653
-------------------- --------------------
Total assets $1,023,377 $1,005,656
==================== ====================
Liabilities:
Mortgage notes payable $ 357,481 $ 292,822
Mortgage notes payable - related parties 10,051 10,420
Line of credit - related parties - 9,560
Revolving line of credit - 24,208
Interest payable 321 327
Security deposits 8,047 8,544
Deferred rental income 6,103 11,038
Liabilities related to assets held for sale - 14
Dividend/distribution payable 16,725 16,718
Accounts payable and accrued expenses 8,952 6,704
-------------------- --------------------
Total liabilities 407,680 380,355
Minority interests 500,682 512,089
Stockholders' equity:
Common stock, $.001 par value 18 18
Paid in capital 138,038 134,539
Accumulated deficit (23,041) (21,345)
-------------------- --------------------
Total stockholders' equity 115,015 113,212
-------------------- --------------------
Total liabilities and stockholders' equity $1,023,377 $1,005,656
==================== ====================
(1) Includes approximately $472 in amortization expense for the three months
ended December 31, 2005 and 2004 and approximately $1,888 in amortization
expense for the twelve months ended December 31, 2005 and 2004 for the
amortization of the above-market lease intangible asset of the San Tomas
Technology Park acquisition pursuant to Statement of Financial Accounting
Standard No. 141, "Business Combinations."
(2) Includes approximately $321 and $440 in amortization expense for the three
months ended December 31, 2005 and 2004, respectively, and approximately
$1,444 and $2,172 in amortization expense for the twelve months ended
December 31, 2005 and 2004, respectively, for the amortization of in-place
lease value of the San Tomas Technology Park acquisition pursuant to
Statement of Financial Accounting Standard No. 141, "Business
Combinations."
(3) Calculated on a fully diluted basis. Assumes conversion of O.P. units
outstanding into the Company's common stock.
(4) The minority interest for third parties has been deducted from total
minority interest in calculating FFO.
(5) 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.
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