EXHIBIT 99.1
Press Release
For Immediate News Release
May 1, 2006
Mission West Properties Announces First Quarter 2006 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 March 31, 2006 was
$34,526,000 or $0.33 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 $20,308,000 or $0.19 per diluted common share for the same period in
2005. On a sequential quarter basis, FFO per diluted common share increased
$0.15 compared to the prior quarter ended December 31, 2005. Termination fees
and security deposit forfeitures relating to lease terminations accounted for
approximately $16,056,000, or $0.15 per diluted common share. Excluding
termination fees and security deposit forfeitures, FFO for the quarter ended
March 31, 2006 was $0.18 per diluted common share.
Net income to common stockholders per diluted share was $0.28 for the quarter
ended March 31, 2006 compared to $0.13 for the quarter ended March 31, 2005.
Excluding termination fees and security deposit forfeitures relating to lease
terminations, net income to common stockholders per diluted share for the
quarter ended March 31, 2006 was $0.13 per diluted share. The impact of stock
option compensation expense from the adoption of SFAS No. 123R, "Share-based
Payment", had minimal impact on the Company's financial position and results of
operations.
ACQUISITION ACTIVITY
In March 2006, the Company acquired a fully leased office/R&D property with
approximately 95,700 rentable square feet located at 233 South Hillview Drive in
Milpitas, California from Sipex Corporation. The total acquisition price for
this property was approximately $13,450,000 and was funded from the proceeds
received from the 800 Embedded Way property sale in October 2005.
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 109
properties totaling approximately 7.9 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.
- 3 -
MISSION WEST PROPERTIES, INC.
SELECTED FINANCIAL DATA
(In thousands, except share, per share and property data amounts)
Three Months Three Months
Ended Ended
Mar 31, 2006 Mar 31, 2005
----------------- ---------------
REVENUES
Rental revenue from real estate $24,316 (1) $26,247 (1)
Tenant reimbursements 3,309 3,628
Other income, including lease terminations
and interest 16,788 303
----------------- ---------------
Total revenues 44,413 30,178
----------------- ---------------
EXPENSES:
Operating expenses 2,056 2,173
Real estate taxes 2,625 2,716
Interest 5,215 4,647
Interest (related parties) 192 307
General and administrative 635 675
Depreciation and amortization of real estate 5,479 (2) 5,574 (2)
----------------- ---------------
Total expenses 16,202 16,092
----------------- ---------------
Income before equity in earnings of unconsolidated
joint venture and minority interests 28,211 14,086
Equity in earnings of unconsolidated joint venture 331 (6)
Minority interests (23,390) (11,677)
----------------- ---------------
Income from continuing operations 5,152 2,403
----------------- ---------------
Discontinued operations, net of minority interests:
Gain from disposal of discontinued operations - 14
Loss from discontinued operations - (9)
----------------- ---------------
Income from discontinued operations - 5
----------------- ---------------
Net income to common stockholders $5,152 $2,408
================= ===============
Net income to minority interests $23,390 $11,695
================= ===============
Income per share from continuing operations:
Basic $0.28 $0.13
Diluted $0.28 $0.13
Income per share from discontinued operations:
Basic - -
Diluted - -
----------------- ---------------
Net income per share to common stockholders:
Basic $0.28 $0.13
================= ===============
Diluted $0.28 $0.13
================= ===============
Weighted average shares of common stock (basic) 18,455,897 18,110,524
================= ===============
Weighted average shares of common stock (diluted) 18,520,297 18,136,797
================= ===============
Weighted average O.P. units outstanding 86,082,539 86,371,362
================= ===============
FUNDS FROM OPERATIONS
Funds from operations $34,526 $20,308
================= ===============
Funds from operations per share ((3)) $ 0.33 $ 0.19
================= ===============
Outstanding common stock 18,511,291 18,147,191
================= ===============
Outstanding O.P. units 86,038,095 86,334,695
================= ===============
Weighted average O.P. units and common stock
outstanding (diluted) 104,602,836 104,508,159
================= ===============
- 4 -
Three Months Three Months
FUNDS FROM OPERATIONS CALCULATION Ended Ended
Mar 31, 2006 Mar 31, 2005
----------------- ---------------
Net income $5,152 $2,408
Add:
Minority interests ((4)) 23,256 11,574
Depreciation and amortization of real estate
from continuing operations 5,907 6,001
Depreciation and amortization of real estate
from discontinued operations - 33
Depreciation & amortization of real estate
held in unconsolidated joint venture 211 355
Less:
Gain on sale of real estate - (63)
----------------- ---------------
Funds from operations $34,526 $20,308
================= ===============
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
Ended Ended
PROPERTY AND OTHER DATA: Mar 31, 2006 Mar 31, 2005
----------------- ---------------
Total properties, end of period 109 108
Total square feet, end of period 7,894,355 8,019,082
Average monthly rental revenue per square foot (5) $1.63 $1.59
Occupancy for leased properties 67.3% 67.7%
Straight-line rent ($ 677) $ 615
Leasing commissions $ 270 $ 3,584
Capital expenditures $ 79 $ 285
- 5 -
BALANCE SHEET March 31, 2006 December 31, 2005
-------------------- --------------------
Assets:
Land $ 277,269 $ 273,933
Buildings and improvements 775,237 766,457
Real estate related intangible assets 18,784 17,410
-------------------- --------------------
Total investments in properties 1,071,290 1,057,800
Less accumulated depreciation and amortization (136,370) (130,419)
-------------------- --------------------
Net investments in properties 934,920 927,381
Cash and cash equivalents 39,937 31,441
Restricted cash 12,698 16,712
Deferred rent receivable 18,540 19,218
Investment in unconsolidated joint venture 3,340 3,263
Other assets 28,212 25,362
-------------------- --------------------
Total assets $1,037,647 $1,023,377
==================== ====================
Liabilities:
Mortgage notes payable $ 355,009 $ 357,481
Mortgage notes payable - related parties 9,955 10,051
Interest payable 321 321
Security deposits 6,608 8,047
Deferred rental income 10,585 6,103
Dividend/distribution payable 16,729 16,725
Accounts payable and accrued expenses 10,939 8,952
-------------------- --------------------
Total liabilities 410,146 407,680
Minority interests 509,522 500,682
Stockholders' equity:
Common stock, $.001 par value 18 18
Paid in capital 138,811 138,038
Accumulated deficit (20,850) (23,041)
-------------------- --------------------
Total stockholders' equity 117,979 115,015
-------------------- --------------------
Total liabilities and stockholders' equity $1,037,647 $1,023,377
==================== ====================
(1) Includes approximately $472 in amortization expense for the three months
ended March 31, 2006 and 2005 for the amortization of an above-market lease
intangible asset pursuant to Statement of Financial Accounting Standard No.
141, "Business Combinations."
(2) Includes approximately $340 and $440 in amortization expense for the three
months ended March 31, 2006 and 2005, respectively, for the amortization of
in-place lease value intangible asset 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.