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, 2008
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, 2008, the Company issued a press release announcing its earnings
results for the fourth quarter and full year ended December 31, 2007. 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 signed on its behalf by the
undersigned hereunto duly authorized.
MISSION WEST PROPERTIES, INC.
Date: February 7, 2008 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, 2008
MISSION WEST PROPERTIES ANNOUNCES FOURTH QUARTER AND FULL YEAR 2007 OPERATING
RESULTS AND 25.0% INCREASE IN COMMON DIVIDEND
"We build the buildings for the high tech companies that build the internet"
Cupertino, CA - Mission West Properties, Inc. (AMEX: MSW) reported today that
Funds From Operations ("FFO") for the quarter ended December 31, 2007 was
approximately $13,992,000 or $0.13 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 $18,538,000 or $0.18 per diluted
common share for the same period in 2006. On a sequential quarter basis, FFO for
the quarter ended September 30, 2007 was approximately $0.58 per diluted common
share, which included approximately $0.44 from termination fee income. For the
twelve months ended December 31, 2007, FFO increased to approximately
$114,867,000 or $1.09 per diluted common share from FFO of $86,585,000 or $0.83
per diluted common share for the same period in 2006. Net termination fee income
relating to lease terminations accounted for approximately $51,721,000 or $0.49
per diluted common share and $14,784,000 or $0.14 per diluted common share for
the twelve months ended December 31, 2007 and 2006, respectively.
Net income per diluted share to common stockholders was $0.08 for the quarter
ended December 31, 2007 compared to $0.27 for the quarter ended December 31,
2006, a per share decrease of approximately 70.4%. Gain on sale of real estate
accounted for approximately $0.15 per diluted common share for the three months
ended December 31, 2006. For the twelve months ended December 31, 2007, net
income per diluted share to common stockholders was $0.95, up from $0.76 a year
ago, a per share increase of approximately 25%. Net termination fee income
relating to lease terminations accounted for approximately $0.52 and $0.15 per
diluted common share for the twelve months ended December 31, 2007 and 2006,
respectively.
The Company announced today that its Board of Directors declared its regular
quarterly dividend on the Company's Common Stock for the first quarter of 2008.
The declared dividend represents a 25.0%, or $0.04 per share, increase over the
Company's prior quarterly dividend of $0.16 per share. The Common Stock dividend
is $0.20 per share and is payable on April 3, 2008 to all Common Stockholders of
Record as of March 31, 2008. The dividend is equivalent to an annual rate of
$0.80 per share, which represents an 8.4 percent annualized yield based on the
latest closing price of $9.53 per share. The Company intends to make regular
quarterly distributions to holders of its Common Stock based upon its cash
avaliable for distribution.
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, which
includes approximately 854,000 rentable square feet (or 16 buildings) that are
in the process of being rezoned for residential development. 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, 2007 Dec 31, 2006 Dec 31, 2007 Dec 31, 2006
----------------- --------------- --------------- ---------------
REVENUES:
Rental revenue from real estate $18,986 $23,175 $80,337 $91,457
Above market lease intangible asset amortization - (472) (1) (4,091) (1) (1,888) (1)
Tenant reimbursements 3,447 3,678 13,355 13,061
Lease termination income - - 57,515 16,068
Other income, including interest 1,644 1,673 7,553 4,498
----------------- --------------- --------------- ---------------
Total revenues 24,077 28,054 154,669 123,196
----------------- --------------- --------------- ---------------
EXPENSES:
Operating expenses 2,631 2,273 9,791 8,282
Real estate taxes 2,433 2,673 10,580 10,222
Interest 4,956 5,129 20,131 20,709
Interest (related parties) 178 186 724 755
General and administrative 667 445 3,035 2,248
Depreciation and amortization of real estate 5,503 (2) 5,586 (2) 22,588 (2) 21,579 (2)
----------------- --------------- --------------- ---------------
Total expenses 16,368 16,292 66,849 63,795
----------------- --------------- --------------- ---------------
Income before equity in earnings of unconsolidated
joint venture and minority interests 7,709 11,762 87,820 59,401
Equity in earnings of unconsolidated joint venture 350 447 1,408 1,985
Minority interests (6,491) (9,930) (71,471) (49,928)
----------------- --------------- --------------- ---------------
Income from continuing operations 1,568 2,279 17,757 11,458
----------------- --------------- --------------- ---------------
Discontinued operations, net of minority interests:
Gain from disposal of discontinued operations - 2,935 1,126 2,935
(Loss)/income attributable to discontinued operations - 36 5 237
----------------- --------------- --------------- ---------------
Income from discontinued operations - 2,971 1,131 3,172
----------------- --------------- --------------- ---------------
Net income to common stockholders $1,568 $ 5,250 $18,888 $14,630
================= =============== =============== ===============
Net income to minority interests $6,491 $25,301 $76,960 $66,358
================= =============== =============== ===============
Income per share from continuing operations:
Basic $0.08 $0.12 $0.90 $0.60
================= =============== =============== ===============
Diluted $0.08 $0.12 $0.89 $0.59
================= =============== =============== ===============
Income per share from discontinued operations:
Basic - $0.15 $0.06 $0.17
================= =============== =============== ===============
Diluted - $0.15 $0.06 $0.17
================= =============== =============== ===============
Net income per share to common stockholders:
Basic $0.08 $0.27 $0.96 $0.77
================= =============== =============== ===============
Diluted $0.08 $0.27 $0.95 $0.76
================= =============== =============== ===============
Weighted average shares of common stock (basic) 19,645,304 19,417,823 19,627,234 19,066,581
================= =============== =============== ===============
Weighted average shares of common stock (diluted) 19,710,909 19,630,674 19,854,411 19,298,664
================= =============== =============== ===============
Weighted average O.P. units outstanding 85,552,718 85,215,982 85,162,240 85,510,491
================= =============== =============== ===============
FUNDS FROM OPERATIONS
Funds from operations $13,992 $18,538 $114,867 $86,585
================= =============== =============== ===============
Funds from operations per share (3) $ 0.13 $ 0.18 $ 1.09 $ 0.83
================= =============== =============== ===============
Outstanding common stock 19,664,087 19,443,587 19,664,087 19,443,587
================= =============== =============== ===============
Outstanding O.P. units 85,533,935 85,206,199 85,533,935 85,206,199
================= =============== =============== ===============
Weighted average O.P. units and common stock
outstanding (diluted) 105,263,627 104,846,655 105,016,651 104,809,155
================= =============== =============== ===============
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Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended
FUNDS FROM OPERATIONS CALCULATION Dec 31, 2007 Dec 31, 2006 Dec 31, 2007 Dec 31, 2006
----------------- --------------- --------------- ---------------
Net income $ 1,568 $ 5,250 $ 18,888 $14,630
Add:
Minority interests (4) 6,360 25,184 76,458 65,859
Depreciation and amortization of real estate
from continuing operations 5,875 5,961 25,043 23,092
Depreciation and amortization of real estate
from discontinued operations - 56 250 695
Depreciation & amortization of real estate
held in unconsolidated joint venture 189 189 757 849
Less:
Gain on sale of real estate - (18,102) (6,529) (18,540)
----------------- --------------- --------------- ---------------
Funds from operations $13,992 $18,538 $114,867 $86,585
================= =============== =============== ===============
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, 2007 Dec 31, 2006 Dec 31, 2007 Dec 31, 2006
--------------- --------------- ----------------- ---------------
Total properties, end of period 109 107 109 107
Total square feet, end of period 7,861,692 7,701,359 7,861,692 7,701,359
Average monthly rental revenue per square foot (5) $1.28 $1.54 $1.42 $1.57
Occupancy for leased properties 61.7% 69.5% 61.7% 69.5%
Straight-line rent $310 $ 318 ($3,656) ($ 729)
Leasing commissions $352 $ 342 $ 3,000 $1,157
Capital expenditures $257 $2,928 $ 4,878 $4,278
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BALANCE SHEET December 31, 2007 December 31, 2006
-------------------- --------------------
Assets:
Land $ 312,152 $ 272,223
Buildings and improvements 764,665 756,596
Real estate related intangible assets 2,119 19,529
-------------------- --------------------
Total investments in properties 1,078,936 1,048,348
Less accumulated depreciation and amortization (156,819) (149,459)
-------------------- --------------------
Net investments in properties 922,117 898,889
Cash and cash equivalents 23,691 33,785
Restricted cash 65,509 48,245
Deferred rent receivable 14,833 18,489
Investment in unconsolidated joint venture 2,735 3,468
Other assets, net 25,000 24,611
-------------------- --------------------
Total assets $1,053,885 $1,027,487
==================== ====================
Liabilities:
Mortgage notes payable $ 337,520 $ 348,101
Mortgage notes payable - related parties 9,224 9,654
Interest payable 1,331 1,375
Security deposits 4,754 6,977
Deferred rental income 3,302 6,874
Dividend/distribution payable 16,832 16,745
Accounts payable and accrued expenses 15,618 7,601
-------------------- --------------------
Total liabilities 388,581 397,327
-------------------- --------------------
Minority interests 526,626 501,282
-------------------- --------------------
Stockholders' equity:
Common stock, $.001 par value 20 19
Paid-in capital 153,024 149,541
Distributions in excess of accumulated earnings (14,366) (20,682)
-------------------- --------------------
Total stockholders' equity 138,678 128,878
-------------------- --------------------
Total liabilities and stockholders' equity $1,053,885 $1,027,487
==================== ====================
(1) Amortization of an above-market lease intangible asset pursuant to
Statement of Financial Accounting Standard No. 141, "Business
Combinations."
(2) Includes approximately $267 and $425 in amortization expense for the three
months ended December 31, 2007 and 2006, respectively, and $2,153 and
$1,613 in amortization expense for the twelve months ended December 31,
2007 and 2006, 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.
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