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): April 15, 2009
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 (I.R.S. Employer
of 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))
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 April 15, 2009, the Company issued a press release announcing its earnings
results for the first quarter ended March 31, 2009. 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.
- --------------------------------------------------------------------------------
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: April 16, 2009 By: /s/ Wayne N. Pham
-------------------------------------
Wayne N. Pham
Vice President of Finance and
Controller
EXHIBIT 99.1
PRESS RELEASE
For Immediate News Release
April 15, 2009
MISSION WEST PROPERTIES ANNOUNCES FIRST QUARTER 2009 OPERATING RESULTS
"We build the buildings for the high tech companies that build the internet"
Cupertino, CA - Mission West Properties, Inc. (NASDAQ: MSW) reported today that
Funds From Operations ("FFO") for the quarter ended March 31, 2009 was
approximately $12,070,000, or $0.11 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 $15,223,000, or $0.14 per diluted
common share, for the same period in 2008. Unrealized loss from investment in
marketable securities accounted for approximately ($2,757,000), or ($0.03) per
diluted common share, for the quarter ended March 31, 2009. On a sequential
quarter basis, FFO for the quarter ended December 31, 2008 was approximately
$0.12 per diluted common share. Net termination fee income relating to a lease
termination accounted for approximately $1,921,000, or $0.02 per diluted common
share, for the quarter ended March 31, 2008.
Net income for the quarter ended March 31, 2009 was approximately $5,634,000 as
compared to approximately $9,121,000 for the quarter ended March 31, 2008. Net
income per diluted share to common stockholders was $0.07 for the quarter ended
March 31, 2009 compared to $0.10 for the quarter ended March 31, 2008, a per
share decrease of approximately 30%. Unrealized loss from investment in
marketable securities accounted for approximately ($0.03) per diluted common
share for the quarter ended March 31, 2009. Net termination fee income relating
to a lease termination accounted for approximately $0.02 per diluted common
share for the quarter ended March 31, 2008.
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 111
properties totaling approximately 8.0 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.
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, 2009 Mar 31, 2008
---------------- ----------------
OPERATING REVENUES:
Rental revenue from real estate $20,655 $18,996
Tenant reimbursements 4,800 3,583
Lease termination and settlement income - 1,921
Other income 320 228
---------------- ----------------
Total operating revenues 25,775 24,728
---------------- ----------------
OPERATING EXPENSES:
Operating and maintenance 2,555 2,476
Real estate taxes 3,397 2,411
General and administrative 531 673
Depreciation and amortization of real estate 5,944 (1) 5,623 (1)
---------------- ----------------
Total operating expenses 12,427 11,183
---------------- ----------------
Operating income 13,348 13,545
OTHER INCOME (EXPENSES):
Equity in earnings of unconsolidated joint venture 89 382
Interest and dividend income (59) 558
Unrealized loss from investment (2,757) -
Interest expense (4,806) (4,928)
Interest expense - related parties (181) (436)
---------------- ----------------
Net income 5,634 9,121
Net income attributable to noncontrolling interests (4,202) (7,239)
---------------- ----------------
Net income attributable to common stockholders $1,432 $1,882
================ ================
Net income per share to common stockholders:
Basic $0.07 $0.10
================ ================
Diluted $0.07 $0.10
================ ================
Weighted average shares of common stock (basic) 21,614,878 19,667,605
================ ================
Weighted average shares of common stock (diluted) 21,770,489 19,667,605
================ ================
Weighted average O.P. units outstanding 83,660,298 85,530,417
================ ================
FUNDS FROM OPERATIONS
Funds from operations $12,070 $15,223
================ ================
Funds from operations per share (2) $0.11 $0.14
================ ================
Outstanding common stock 21,748,211 19,669,807
================ ================
Outstanding O.P. units 83,526,965 85,528,215
================ ================
Weighted average O.P. units and common stock
outstanding (diluted) 105,430,787 105,198,022
================ ================
Three Months Three Months
Ended Ended
FUNDS FROM OPERATIONS CALCULATION Mar 31, 2009 Mar 31, 2008
---------------- ----------------
Net income $ 5,634 $ 9,121
Add:
Depreciation and amortization of real estate 6,416 6,024
Depreciation and amortization of real estate
held in unconsolidated joint venture 59 189
Less:
Noncontrolling interests in joint ventures (39) (111)
---------------- ----------------
Funds from operations $12,070 $15,223
================ ================
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 noncontrolling
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 neither be considered as an alternative for net income as a measure of
profitability nor 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, 2009 Mar 31, 2008
---------------- ----------------
Total properties, end of period 111 111
Total square feet, end of period 8,047,569 8,047,569
Average monthly rental revenue per square foot (3) $1.29 $1.23
Occupancy for leased properties 65.3% 64.4%
Straight-line rent $322 $705
Leasing commissions $117 $316
Capital expenditures $ - $221
LEASE ROLLOVER SCHEDULE:
Year # of Leases Rentable Square Feet
- ---------------- ------------- ---------------------
2009 15 140,332 (4)
2010 12 572,000
2011 15 827,605
2012 13 1,001,452
2013 6 459,737
2014 13 1,357,782
2015 4 328,211
2016 2 144,600
2017 3 241,089
Thereafter 1 119,756
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Total 84 5,192,564
============= =====================
BALANCE SHEETS
March 31, 2009 December 31, 2008
-------------------- ---------------------
Assets
Investments in real estate:
Land $ 320,911 $ 320,911
Buildings and improvements 799,469 799,471
Real estate related intangible assets 3,240 3,240
-------------------- --------------------
Total investments in properties 1,123,620 1,123,622
Accumulated depreciation and amortization (185,987) (180,043)
-------------------- --------------------
Net investments in properties 937,633 943,579
Investment in unconsolidated joint venture 3,832 3,768
-------------------- --------------------
Net investments in real estate 941,465 947,347
Cash and cash equivalents - -
Restricted cash 22,048 39,478
Restricted investment in marketable securities 4,078 -
Investment in marketable securities - 3,368
Deferred rent receivables 18,164 17,841
Other assets, net 18,620 18,758
-------------------- --------------------
Total assets $1,004,375 $1,026,792
==================== ====================
Liabilities and Equity
Liabilities:
Mortgage notes payable $ 327,933 $ 330,908
Mortgage note payable - related parties 8,639 8,761
Revolving line of credit 5,456 13,079
Interest payable 1,583 1,596
Security deposits 5,122 5,272
Deferred rental income 5,735 3,964
Dividends and distributions payable 21,055 21,055
Accounts payable and accrued expenses 20,063 17,747
-------------------- --------------------
Total liabilities 395,586 402,382
-------------------- --------------------
Commitments and contingencies.
Equity: (5)
Stockholders' equity:
Common stock, $.001 par value 22 20
Additional paid-in capital 169,415 154,412
Distributions in excess of accumulated earnings (22,932) (20,014)
-------------------- --------------------
Total stockholders' equity 146,505 134,418
Noncontrolling interests 462,284 489,992
-------------------- --------------------
Total equity 608,789 624,410
-------------------- --------------------
Total liabilities and equity $1,004,375 $1,026,792
==================== ====================
(1) Includes approximately $159 and $122 in amortization expense for the three
months ended March 31, 2009 and 2008, respectively, for the amortization of
in-place lease value intangible asset pursuant to Statement of Financial
Accounting Standard No. 141, "Business Combinations."
(2) Calculated on a fully diluted basis. Assumes conversion of O.P. units
outstanding into the Company's common stock.
(3) 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.
(4) Eight leases for approximately 113,000 rentable square feet are month to
month lease.
(5) Reflects adoption of Statement of Financial Accounting Standard No. 160,
"Noncontrolling Interests in Consolidated Financial Statements - an
amendment of ARB No. 51."