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): July 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 July 15, 2009, the Company issued a press release announcing its earnings
results for the second quarter ended June 30, 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: July 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
July 15, 2009
MISSION WEST PROPERTIES ANNOUNCES SECOND 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 June 30, 2009 was
approximately $14,189,000, 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 $13,049,000, or $0.12 per diluted
common share, for the same period in 2008. Unrealized gain from investment in
marketable securities accounted for approximately $2,433,000, or $0.02 per
diluted common share, for the quarter ended June 30, 2009. A net increase in the
reserve related to the Hellyer Avenue Limited Partnership litigation accounted
for approximately $1,300,000 in interest expense, or ($0.01) per diluted common
share, for the quarter ended June 30, 2009. On a sequential quarter basis, FFO
for the quarter ended March 31, 2009 was approximately $0.11 per diluted common
share. For the six months ended June 30, 2009, FFO decreased to $26,259,000, or
$0.25 per diluted common share, from FFO of $28,272,000, or $0.27 per diluted
common share, for the same period in 2008. Net termination fees accounted for
approximately $1,921,000, or $0.02 per diluted common share for the six months
ended June 30, 2008.
Net income for the quarter ended June 30, 2009 was approximately $7,189,000 as
compared to approximately $6,837,000 for the quarter ended June 30, 2008. Net
income per diluted share to common stockholders was $0.08 for the quarter ended
June 30, 2009 compared to $0.07 for the quarter ended June 30, 2008, a per share
increase of approximately 14%. Net income for the six months ended June 30, 2009
was approximately $12,823,000 as compared to approximately $15,958,000 for the
six months ended June 30, 2008. For the six months ended June 30, 2009, net
income per diluted share to common stockholders was $0.15, down from $0.16 a
year ago, a per share decrease of approximately 6%. Net termination fees
accounted for approximately $0.02 per diluted common share for the six months
ended June 30, 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 Six Months Six Months
Ended Ended Ended Ended
June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008
---------------- ---------------- ---------------- ----------------
OPERATING REVENUES:
Rental revenue from real estate $20,424 $19,359 $41,080 $38,356
Tenant reimbursements 4,315 3,710 9,115 7,293
Lease termination and settlement income - - - 1,921
Other income 302 249 622 477
---------------- ---------------- ---------------- ----------------
Total operating revenues 25,041 23,318 50,817 48,047
---------------- ---------------- ---------------- ----------------
OPERATING EXPENSES:
Operating and maintenance 3,921 2,566 6,475 5,042
Real estate taxes 3,351 2,945 6,748 5,356
General and administrative 623 674 1,154 1,347
Depreciation and amortization of real estate 6,334 (1) 5,682 (1) 12,279 (1) 11,305 (1)
---------------- ---------------- ---------------- ----------------
Total operating expenses 14,229 11,867 26,656 23,050
---------------- ---------------- ---------------- ----------------
Operating income 10,812 11,451 24,161 24,997
OTHER INCOME (EXPENSES):
Equity in earnings of unconsolidated joint venture 75 407 164 789
Interest and dividend income 1,125 215 1,065 772
Unrealized gain (loss) from investment 2,433 - (324) -
Interest expense (7,085) (4,956) (11,891) (9,884)
Interest expense - related parties (171) (280) (352) (716)
---------------- ---------------- ---------------- ----------------
Net income 7,189 6,837 12,823 15,958
Net income attributable to noncontrolling interests (5,404) (5,478) (9,607) (12,717)
---------------- ---------------- ---------------- ----------------
Net income attributable to common stockholders $1,785 $1,359 3,216 3,241
================ ================ ================ ================
Net income per share to common stockholders:
Basic $0.08 $0.07 $0.15 $0.16
================ ================ ================ ================
Diluted $0.08 $0.07 $0.15 $0.16
================ ================ ================ ================
Weighted average shares of common stock (basic) 21,766,343 19,695,988 21,691,029 19,681,797
================ ================ ================ ================
Weighted average shares of common stock (diluted) 21,899,906 19,902,304 21,835,545 19,766,535
================ ================ ================ ================
Weighted average O.P. units outstanding 83,508,833 85,528,215 83,584,147 85,529,316
================ ================ ================ ================
FUNDS FROM OPERATIONS
Funds from operations $14,189 $13,049 $26,259 $28,272
================ ================ ================ ================
Funds from operations per share (2) $0.13 $0.12 $0.25 $0.27
================ ================ ================ ================
Outstanding common stock 21,770,211 19,743,557 21,770,211 19,743,557
================ ================ ================ ================
Outstanding O.P. units 83,504,965 85,528,215 83,504,965 85,528,215
================ ================ ================ ================
Weighted average O.P. units and common stock
outstanding (diluted) 105,408,739 105,430,519 105,419,692 105,295,851
================ ================ ================ ================
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
FUNDS FROM OPERATIONS CALCULATION June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008
---------------- ---------------- ---------------- ----------------
Net income $ 7,189 $ 6,837 $12,823 $15,958
Add:
Depreciation and amortization of real estate 6,994 6,086 13,411 12,110
Depreciation and amortization of real estate
held in unconsolidated joint venture 60 189 119 378
Less:
Noncontrolling interests in joint ventures (54) (63) (94) (174)
---------------- ---------------- ---------------- ----------------
Funds from operations $14,189 $13,049 $26,259 $28,272
================ ================ ================ ================
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) (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 Six Months Six Months
Ended Ended Ended Ended
PROPERTY AND OTHER DATA: June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008
---------------- ---------------- ---------------- ----------------
Total properties, end of period 111 111 111 111
Total square feet, end of period 8,047,569 8,047,569 8,047,569 8,047,569
Average monthly rental revenue per square foot (3) $1.29 $1.24 $1.29 $1.24
Occupancy for leased properties 66.1% 64.9% 66.1% 64.9%
Straight-line rent $238 $ 882 $560 $1,587
Leasing commissions $204 $ 318 $320 $ 634
Capital expenditures $ - $2,116 $ - $2,337
LEASE ROLLOVER SCHEDULE:
Year # of Leases Rentable Square Feet 2009 Base Rent (5)
- ---------------- ------------- --------------------- ----------------------
2009 10 114,267 (4) $ 1,809,503
2010 9 363,475 6,070,722
2011 16 838,692 12,333,272
2012 14 1,010,825 14,226,818
2013 6 397,215 5,081,754
2014 17 1,492,430 24,794,529
2015 6 485,036 8,784,074
2016 2 144,600 2,959,748
2017 5 349,949 3,510,351
Thereafter 1 119,756 2,608,286
------------- --------------------- ----------------------
Total 86 5,316,245 $82,179,057
============= ===================== ======================
BALANCE SHEETS
June 30, 2009 December 31, 2008
-------------------- --------------------
Assets
Investments in real estate:
Land $ 320,911 $ 320,911
Buildings and improvements 799,471 799,471
Real estate related intangible assets 3,240 3,240
-------------------- --------------------
Total investments in properties 1,123,622 1,123,622
Accumulated depreciation and amortization (192,322) (180,043)
-------------------- --------------------
Net investments in properties 931,300 943,579
Investment in unconsolidated joint venture 3,833 3,768
-------------------- --------------------
Net investments in real estate 935,133 947,347
Restricted cash 7,078 39,478
Restricted investment in marketable securities 6,585 -
Investment in marketable securities - 3,368
Deferred rent receivables 18,401 17,841
Other assets, net 26,241 26,251
-------------------- --------------------
Total assets $ 993,438 $1,034,285
==================== ====================
Liabilities and Equity
Liabilities:
Mortgage notes payable $ 324,941 $ 330,908
Mortgage note payable - related parties 8,516 8,761
Revolving line of credit 3,892 13,079
Interest payable 1,556 1,596
Security deposits 5,125 5,272
Deferred rental income 6,372 3,964
Dividends and distributions payable 15,791 21,055
Accounts payable and accrued expenses 19,631 17,747
-------------------- --------------------
Total liabilities 385,824 402,382
-------------------- --------------------
Commitments and contingencies.
Equity: (6)
Stockholders' equity:
Common stock, $.001 par value 22 20
Additional paid-in capital 169,682 154,412
Distributions in excess of accumulated earnings (24,413) (20,014)
-------------------- --------------------
Total stockholders' equity 145,291 134,418
Noncontrolling interests 462,323 497,485
-------------------- --------------------
Total equity 607,614 631,903
-------------------- --------------------
Total liabilities and equity $ 993,438 $1,034,285
==================== ====================
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(1) Includes approximately $159 in amortization expense for the three months
ended June 30, 2009 and 2008, and $319 and $281 in amortization expense for
the six months ended June 30, 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) Six leases for approximately 87,000 rentable square feet are month to month
leases.
(5) Base rent reflects cash rent.
(6) Reflects adoption of Statement of Financial Accounting Standard No. 160,
"Noncontrolling Interests in Consolidated Financial Statements - an
amendment of ARB No. 51."