EXHIBIT 99.1
PRESS RELEASE
For Immediate News Release
February 7, 2007
MISSION WEST PROPERTIES ANNOUNCES FOURTH QUARTER AND FULL YEAR 2006
OPERATING RESULTS
"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, 2006 was
$18,538,000 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 $19,173,000 or $0.18 per diluted common share for the same period in
2005. On a sequential quarter basis, FFO for the quarter ended September 30,
2006 was $0.16 per diluted common share. For the twelve months ended December
31, 2006, FFO increased to $86,585,000 or $0.83 per diluted common share from
FFO of $79,152,000 or $0.76 per diluted common share for the same period in
2005. Excluding termination fees and security deposit forfeitures relating to
lease terminations, FFO for the twelve months ended December 31, 2006 and 2005
was $0.67 and $0.73 per diluted common share, respectively.
Net income per diluted share to common stockholders was $0.27 for the quarter
ended December 31, 2006 compared to $0.13 for the quarter ended December 31,
2005, a per share increase of approximately 107.7%. Approximately $0.15 was due
to gain from sale of real estate. For the twelve months ended December 31, 2006,
net income per diluted share to common stockholders was $0.76, up from $0.55 one
year ago, a per share increase of approximately 38.2%. Excluding termination
fees and security deposit forfeitures relating to lease terminations, net income
per diluted share to common stockholders for the twelve months ended December
31, 2006 and 2005 was $0.60 and $0.52, respectively.
DISPOSITION ACTIVITY
During the fourth quarter 2006, the Company completed the sale of three R&D
properties consisting of approximately 235,000 rentable square feet at 2033-2243
Samaritan Drive, San Jose, California. A gain of approximately $18.1 million was
realized on the total sales price of $43.3 million.
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 7.7 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.
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, 2006 DEC 31, 2005 DEC 31, 2006 DEC 31, 2005
------------- ------------- ------------- -------------
REVENUES:
Rental revenue from real estate $ 22,838(1) $ 23,982(1) $ 90,110(1) $ 97,735(1)
Tenant reimbursements 3,692 3,393 13,116 14,115
Lease termination income - 429 16,068 2,407
Other income, including interest 1,673 1,154 4,534 2,184
------------- ------------- ------------- -------------
Total revenues 28,203 28,958 123,828 116,441
------------- ------------- ------------- -------------
EXPENSES:
Operating expenses 2,282 2,448 8,330 8,733
Real estate taxes 2,700 2,734 10,324 10,026
Interest 5,129 5,249 20,709 21,295
Interest (related parties) 186 193 755 972
General and administrative 445 368 2,248 1,910
Depreciation and amortization of real estate 5,642(2) 5,122(2) 21,803(2) 20,553(2)
------------- ------------- ------------- -------------
Total expenses 16,384 16,114 64,169 63,489
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Income before equity in earnings of
unconsolidated joint venture and minority
interests 11,819 12,844 59,659 52,952
Equity in earnings of unconsolidated joint
venture 447 46 1,985 724
Minority interests (9,980) (10,635) (50,150) (44,353)
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Income from continuing operations 2,286 2,255 11,494 9,323
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Discontinued operations, net of minority
interests:
Gain from disposal of discontinued operations 2,935 140 2,935 445
Income from discontinued operations 29 78 201 259
------------- ------------- ------------- -------------
Income from discontinued operations 2,964 218 3,136 704
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Net income to common stockholders $ 5,250 $ 2,473 $ 14,630 $ 10,027
============= ============= ============= =============
Net income to minority interests $ 25,301 $ 11,701 $ 66,358 $ 47,524
============= ============= ============= =============
Income per share from continuing operations:
Basic $ 0.12 $ 0.12 $ 0.60 $ 0.51
Diluted $ 0.12 $ 0.12 $ 0.60 $ 0.51
Income per share from discontinued operations:
Basic $ 0.15 $ 0.01 $ 0.16 $ 0.04
Diluted $ 0.15 $ 0.01 $ 0.16 $ 0.04
------------- ------------- ------------- -------------
Net income per share to common stockholders:
Basic $ 0.27 $ 0.13 $ 0.76 $ 0.55
============= ============= ============= =============
Diluted $ 0.27 $ 0.13 $ 0.76 $ 0.55
============= ============= ============= =============
Weighted average shares of common stock
(basic) 19,417,823 18,418,855 19,066,581 18,286,947
============= ============= ============= =============
Weighted average shares of common stock
(diluted) 19,630,674 18,432,819 19,298,664 18,325,659
============= ============= ============= =============
Weighted average O.P. units outstanding 85,215,982 86,118,031 85,510,491 86,220,117
============= ============= ============= =============
FUNDS FROM OPERATIONS
Funds from operations $ 18,538 $ 19,173 $ 86,585 $ 79,152
============= ============= ============= =============
Funds from operations per share (3) $ 0.18 $ 0.18 $ 0.83 $ 0.76
============= ============= ============= =============
Outstanding common stock 19,443,587 18,437,791 19,443,587 18,437,791
============= ============= ============= =============
Outstanding O.P. units 85,206,199 86,099,095 85,206,199 86,099,095
============= ============= ============= =============
Weighted average O.P. units and common stock
outstanding (diluted) 104,846,655 104,550,850 104,809,155 104,545,776
============= ============= ============= =============
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THREE MONTHS THREE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
FUNDS FROM OPERATIONS CALCULATION DEC 31, 2006 DEC 31, 2005 DEC 31, 2006 DEC 31, 2005
- --------------------------------------------- ------------- ------------- ------------- -------------
Net income $ 5,250 $ 2,473 $ 14,630 $ 10,027
Add:
Minority interests (4) 25,184 11,602 65,859 47,045
Depreciation and amortization of real
estate from continuing operations 6,017 5,530 23,316 22,256
Depreciation and amortization of real
estate from discontinued operations - 156 471 1,046
Depreciation & amortization of real estate
held in unconsolidated joint venture 189 210 849 984
Less:
Gain on sale of real estate or JV real
estate (18,102) (798) (18,540) (2,206)
------------- ------------- ------------- -------------
Funds from operations $ 18,538 $ 19,173 $ 86,585 $ 79,152
============= ============= ============= =============
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, 2006 DEC 31, 2005 DEC 31, 2006 DEC 31, 2005
- --------------------------------------------- ------------- ------------- ------------- -------------
Total properties, end of period 107 107 107 107
Total square feet, end of period 7,701,359 7,780,084 7,701,359 7,780,084
Average monthly rental revenue per square
foot (5) $ 1.54 $ 1.62 $ 1.57 $ 1.58
Occupancy for leased properties 69.5% 68.9% 69.5% 68.9%
Straight-line rent $ 318 $ (84) $ (729) $ 707
Leasing commissions $ 342 $ 1,306 $ 1,157 $ 5,296
Capital expenditures $ 2,928 $ 267 $ 4,278 $ 1,138
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DECEMBER 31, DECEMBER 31,
BALANCE SHEET 2006 2005
- --------------------------------------------- ------------- -------------
Assets:
Land $ 272,223 $ 273,933
Buildings and improvements 756,596 766,457
Real estate related intangible assets 19,529 17,410
------------- -------------
Total investments in properties 1,048,348 1,057,800
Less accumulated depreciation and
amortization (149,459) (130,419)
------------- -------------
Net investments in properties 898,889 927,381
Cash and cash equivalents 33,785 31,441
Restricted cash 48,245 16,712
Deferred rent receivable 18,489 19,218
Investment in unconsolidated joint venture 3,468 3,263
Other assets, net 24,611 25,362
------------- -------------
Total assets $ 1,027,487 $ 1,023,377
============= =============
Liabilities:
Mortgage notes payable $ 348,101 $ 357,481
Mortgage notes payable - related parties 9,654 10,051
Interest payable 1,375 321
Security deposits 6,977 8,047
Deferred rental income 6,874 6,103
Dividend/distribution payable 16,745 16,725
Accounts payable and accrued expenses 7,601 8,952
------------- -------------
Total liabilities 397,327 407,680
------------- -------------
Minority interests 501,282 500,682
------------- -------------
Stockholders' equity:
Common stock, $.001 par value 19 18
Paid-in capital 149,541 138,038
Accumulated deficit (20,682) (23,041)
------------- -------------
Total stockholders' equity 128,878 115,015
------------- -------------
Total liabilities and stockholders' equity $ 1,027,487 $ 1,023,377
============= =============
(1) Includes approximately $472 in amortization expense for the three months
ended December 31, 2006 and 2005 and $1,888 in amortization expense for the
twelve months ended December 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 $425 and $321 in amortization expense for the three
months ended December 31, 2006 and 2005, respectively, and $1,613 and
$1,444 in amortization expense for the twelve months ended December 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.
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