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 2, 2010

MISSION WEST PROPERTIES, INC.
(Exact name of registrant as specified in its charter)

Maryland
 
1-8383
 
95-2635431
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)



10050 Bandley Drive, Cupertino, CA 95014
(Address of principal executive offices, zip code)

 Registrant’s telephone number, including area code: (408) 725-0700

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:


     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o 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 February 2, 2011, the Company issued a press release announcing its earnings results for the fourth quarter and full year ended December 31, 2010. 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.

ITEM 9.01.    FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

Exhibit No.
 
Description
99.1
 
Mission West Properties, Inc. Press Release dated February 2, 2011
     







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 3, 2011
By:
/s/ Wayne N. Pham
   
Wayne N. Pham
   
Vice President of Finance
 
 
 

 
 
 

 
Exhibit 99.1


[Missing Graphic Reference]
 
Press Release

For Immediate News Release
February 2, 2011


Mission West Properties Announces Fourth Quarter and Full Year 2011 Operating Results


Cupertino, CA – Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations (“FFO”) for the quarter ended December 31, 2010 was approximately $11,182,000, 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 $16,604,000, or $0.16 per diluted common share, for the same period in 2009. For the quarter ended December 31, 2009, a forfeited deposit of $2,000,000 under a contract for the sale of a McCandless property accounted for approximately $0.02 per diluted common share and unrealized gain from investment in marketable securities accounted for approximately $871,000, or less than $0.01 per diluted common share. On a sequential quarter basis, FFO for the quarter ended September 30, 2010 was approximately $0.11 per diluted common share. For the year ended December 31, 2010, FFO decreased to approximately $56,018,000, or $0.53 per diluted common share, from FFO of $60,467,000, or $0.57 per diluted common share, for the year ended December 31, 2009. For the year ended December 31, 2010, realized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share. For the year ended December 31, 2009, unrealized gain from investment in marketable securities and a forfeited deposit accounted for approximately $0.07 per diluted common share.

Net income for the quarter ended December 31, 2010 was approximately $10,839,000 as compared to approximately $10,384,000 for the quarter ended December 31, 2009. Net income per diluted share available to common stockholders was approximately $0.10 for the quarter ended December 31, 2010 compared to $0.11 for the quarter ended December 31, 2009, a per share decrease of approximately 9%. For the quarter ended December 31, 2010, gain from the sale of an R&D property accounted for approximately $0.05 per diluted common share. For the quarter ended December 31, 2009, a forfeited deposit under a contract for the sale of a McCandless property accounted for approximately $0.02 per diluted common share. Net income for the year ended December 31, 2010 was approximately $36,495,000 as compared to approximately $34,449,000 for the year ended December 31, 2009. For each of the year ended December 31, 2010 and 2009, net income per diluted share available to common stockholders was approximately $0.38. For the year ended December 31, 2010, realized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share. For the year ended December 31, 2009, unrealized gain from investment in marketable securities and a forfeited deposit accounted for approximately $0.07 per diluted common share.

Disposition Activity

On October 28, 2010, the Company disposed of one R&D property located at 1325-1375 McCandless Drive in Milpitas, California consisting of approximately 78,000 rentable square feet. A total net gain of approximately $6,199,000 was recognized and classified as discontinued operations on the total sales price of $14,123,000. The buyer issued a promissory note to the Company in the amount of $7,123,000 with an interest rate of 3.00% per annum. The principal amount of the note, together with accrued interest, will be due and payable on October 30, 2011.

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. 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 Ended
Dec 31, 2010
   
 
Three Months Ended
Dec 31, 2009
   
 
Twelve Months Ended
Dec 31, 2010
   
 
Twelve Months Ended
Dec 31, 2009
 
OPERATING REVENUES:
                       
  Rental income
  $ 19,657     $ 20,988     $ 81,715     $ 82,466  
  Tenant reimbursements
    3,527       5,036       15,094       18,668  
  Other income
    480       2,850       2,619       3,756  
    Total operating revenues
    23,664       28,874       99,428       104,890  
                                 
OPERATING EXPENSES:
                               
  Operating and maintenance
    4,066       4,321       13,620       14,193  
  Real estate taxes
    3,077       3,447       12,780       13,339  
  General and administrative
    558       593       2,219       2,336  
  Depreciation and amortization
    5,869 (1)     5,829 (1)     23,466  (1)     23,786  (1)
    Total operating expenses
    13,570       14,190       52,085       53,654  
                                 
    Operating income
    10,094       14,684       47,343       51,236  
                                 
OTHER INCOME (EXPENSES):
                               
  Equity in earnings of unconsolidated joint venture
    33       72       303       309  
  Interest and dividend income
    51       151       102       1,309  
  Realized gain from investment
    -       -       8,800       -  
  Unrealized gain (loss) from investment
    -       871       (4,733 )     5,011  
  Interest expense
    (5,304 )     (5,046 )     (20,069 )     (22,117 )
  Interest expense – related parties
    (149 )     (211 )     (988 )     (765 )
    Net income from continuing operations
    4,725       10,521       30,758       34,983  
                                 
Discontinued operations:
                               
Gain from disposal of discontinued operations
    6,199       -       6,199       -  
Loss attributable to discontinued operations
    (85 )     (137 )     (462 )     (534 )
    Net income (loss) from discontinued operations
    6,114       (137 )     5,737       (534 )
                                 
        Net income
    10,839       10,384       36,495       34,449  
                                 
Net income attributable to noncontrolling interests
    (8,654 )     (7,975 )     (28,022 )     (26,058 )
Net income available to common stockholders
  $ 2,185     $ 2,409     $ 8,473     $ 8,391  
                                 
Income per share from continuing operations:
                               
   Basic
  $ 0.05     $ 0.11     $ 0.34     $ 0.39  
   Diluted
  $ 0.05     $ 0.11     $ 0.34     $ 0.39  
Income per share from discontinued operations:
                               
   Basic
  $ 0.05       -     $ 0.04       -  
   Diluted
  $ 0.05       -     $ 0.04       -  
Net income per share to common stockholders:
                               
   Basic
  $ 0.10     $ 0.11     $ 0.39     $ 0.39  
   Diluted
  $ 0.10     $ 0.11     $ 0.38     $ 0.38  
Weighted average shares of common stock (basic)
    22,076,694       21,793,037       21,973,599       21,736,699  
Weighted average shares of common stock (diluted)
    22,198,946       21,979,442       22,121,724       21,923,104  
Weighted average O.P. units outstanding
    83,209,341       83,482,139       83,310,364       83,538,477  
                                 
 
 
 
 
 
 

 

 

FUNDS FROM OPERATIONS
                       
Funds from operations
  $ 11,182     $ 16,604     $ 56,018     $ 60,467  
Funds from operations per share (2)
  $ 0.11     $ 0.16     $ 0.53     $ 0.57  
Outstanding common stock
    22,135,770       21,870,211       22,135,770       21,870,211  
Outstanding O.P. units
    83,150,265       83,404,965       83,150,265       83,404,965  
Weighted average O.P. units and common stock
   outstanding (diluted)
    105,408,287       105,461,581       105,432,088       105,461,581  
                                 
 
 
 
FUNDS FROM OPERATIONS CALCULATION
 
Three Months Ended
Dec 31, 2010
   
Three Months Ended
Dec 31, 2009
   
Twelve Months Ended
Dec 31, 2010
   
Twelve Months Ended
Dec 31, 2009
 
Net income
  $ 10,839     $ 10,384     $ 36,495     $ 34,449  
Add:
                               
   Depreciation and amortization
    6,526       6,391       25,840       26,187  
   Depreciation and amortization in
     unconsolidated joint venture
    60       60       238       238  
Less:
                               
   Noncontrolling interests in joint ventures
    (44 )     (231 )     (356 )     (407 )
   Gain on sale of real estate
    (6,199 )     -       (6,199 )     -  
Funds from operations
  $ 11,182     $ 16,604     $ 56,018     $ 60,467  
                                 
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.
 
   
 
 
PROPERTY AND OTHER DATA:
 
Three Months Ended
Dec 31, 2010
   
Three Months Ended
Dec 31, 2009
   
Twelve Months Ended
Dec 31, 2010
   
Twelve Months Ended
Dec 31, 2009
 
Total properties, end of period
    111       111       111       111  
Total square feet, end of period
    8,011,026       8,047,569       8,011,026       8,047,569  
Average monthly rental revenue per square foot (3)
  $ 1.25     $ 1.33     $ 1.30     $ 1.30  
Occupancy for leased properties
    69.9 %     65.5 %     69.9 %     65.5 %
Straight-line rent
  $ (481 )   $ 195     $ (770 )   $ 870  
Leasing commissions
  $ 812     $ 328     $ 1,753     $ 1,621  
Non-recurring capital expenditures
  $ 1,142     $ 22     $ 2,841     $ 178  


LEASE ROLLOVER SCHEDULE:
             
Year
 
# of Leases
 
Rentable Square Feet
 
2010 Base Rent (5)
2010
 
-
 
-
 
$3,104,873
2011 (4)
 
13
 
691,304
 
10,301,766
2012
 
13
 
791,223
 
12,870,081
2013
 
7
 
401,645
 
5,626,016
2014
 
20
 
1,625,113
 
24,498,533
2015
 
8
 
587,437
 
9,309,659
2016
 
4
 
196,279
 
3,434,208
2017
 
9
 
543,035
 
6,771,073
2018
 
3
 
265,612
 
539,323
2019
 
1
 
165,000
 
2,862,504
Thereafter
 
3
 
208,768
 
3,203,912
    Total
 
81
 
5,475,416
 
$82,521,948
 
 
 
 
 

 
 

 
 
BALANCE SHEETS
           
   
December 31, 2010
   
December 31, 2009
 
             
Assets
           
Investments in real estate:
           
  Land
  $ 322,076     $ 320,911  
  Buildings and improvements
    790,424       799,649  
  Real estate related intangible assets
    3,240       3,240  
     Total investments in properties
    1,115,740       1,123,800  
  Accumulated depreciation and amortization
    (224,027 )     (204,153 )
  Assets held for sale, net
    3,267       -  
      Net investments in properties
    894,980       919,647  
  Investment in unconsolidated joint venture
    3,830       3,828  
      Net investments in real estate
    898,810       923,475  
Cash and cash equivalents
    3,988       986  
Restricted cash
    6,892       197  
Restricted investment in marketable securities
    -       12,069  
Deferred rent receivables
    17,941       18,711  
Other assets, net
    40,653       30,951  
      Total assets
  $ 968,284     $ 986,389  
                 
Liabilities and Equity
               
Liabilities:
               
  Mortgage notes payable
  $ 345,770     $ 318,818  
  Mortgage note payable – related parties
    7,721       8,261  
  Note payable – related parties
    -       9,325  
  Revolving line of credit
    -       14,466  
  Interest payable
    1,659       1,573  
  Security deposits
    4,605       4,849  
  Deferred rental income
    6,526       6,539  
  Dividends and distributions payable
    15,793       15,791  
  Accounts payable and accrued expenses
    16,239       9,638  
      Total liabilities
    398,313       389,260  
                 
Commitments and contingencies.
               
                 
Equity:
               
Stockholders’ equity:
               
  Common stock, $.001 par value
    22       22  
  Additional paid-in capital
    172,568       170,606  
  Distributions in excess of accumulated earnings
    (30,520 )     (25,784 )
      Total stockholders’ equity
    142,070       144,844  
Noncontrolling interests in operating partnerships
    427,901       452,285  
      Total equity
    569,971       597,129  
      Total liabilities and equity
  $ 968,284     $ 986,389  




(1)  
Includes approximately $124 and $159 in amortization expense for the three months ended December 31, 2010 and 2009, respectively, and $708 and $637 in amortization expense for the twelve months ended December 31, 2010 and 2009, respectively, for the amortization of in-place lease value intangible asset pursuant to the Business Combinations Topic of the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”).

(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)  
Excludes six month-to-month leases for approximately 63,000 rentable square feet and $270 cash rent.

(5)  
Base rent reflects cash rent.                                                                      
 
 
 
 

 
 
 

 

The following information was filed by Mission West Properties Inc (MSW) on Thursday, February 3, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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