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 13, 2011

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 July 13, 2011, the Company issued a press release announcing its earnings results for the second quarter ended June 30, 2011. 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 July 13, 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: July 14, 2011
By:
/s/ Wayne N. Pham
   
Wayne N. Pham
   
Vice President of Finance

 
 
 
 


Exhibit 99.1


 
 
Press Release

For Immediate News Release
July 13, 2011


Mission West Properties Announces Second Quarter 2011 Operating Results


Cupertino, CA – Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations (“FFO”) for the quarter ended June 30, 2011, was approximately $13,708,000, 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 $16,559,000, or $0.16 per diluted common share, for the same period in 2010. Realized gain from investment in marketable securities accounted for approximately $2,215,000, or $0.02 per diluted common share, and litigation proceeds accounted for approximately $903,000, or $0.01 per diluted common share, for the quarter ended June 30, 2010. On a sequential quarter basis, FFO for the quarter ended March 31, 2011, was approximately $0.15 per diluted common share. For the six months ended June 30, 2011, FFO decreased to $29,950,000, or $0.28 per diluted common share, from FFO of $33,066,000, or $0.31 per diluted common share, for the six months ended June 30, 2010. Realized and unrealized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the six months ended June 30, 2010.

Net income for the quarter ended June 30, 2011, was approximately $7,370,000 as compared to approximately $10,041,000 for the quarter ended June 30, 2010. Net income per diluted share available to common stockholders was approximately $0.08 for the quarter ended June 30, 2011, compared to $0.11 for the quarter ended June 30, 2010, a per share decrease of approximately 27%. Net income for the six months ended June 30, 2011, was approximately $17,305,000 as compared to approximately $20,185,000 for the six months ended June 30, 2010. For the six months ended June 30, 2011, net income per diluted share available to common stockholders was $0.19, down from $0.22 a year ago, a per share decrease of approximately 14%. Realized and unrealized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the six months ended June 30, 2010.

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,” “intend,” 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 from 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)

STATEMENTS OF OPERATIONS
                       
   
Three Months Ended
Jun 30, 2011
   
Three Months Ended
Jun 30, 2010
   
Six Months Ended
Jun 30, 2011
   
Six Months Ended
Jun 30, 2010
 
OPERATING REVENUES:
                       
  Rental income
  $ 20,295     $ 20,659     $ 42,072 (6)   $ 41,462  
  Tenant reimbursements
    4,045       4,028       8,690       8,453  
  Other income
    462       1,204       1,562       1,862  
    Total operating revenues
    24,802       25,891       52,324       51,777  
                                 
OPERATING EXPENSES:
                               
  Operating and maintenance
    2,595       3,061       5,250       5,972  
  Real estate taxes
    3,150       3,388       6,354       6,571  
  General and administrative
    522       563       1,043       1,081  
  Depreciation and amortization
    5,844 (1)     5,976 (1)     11,671 (1)     11,816 (1)
    Total operating expenses
    12,111       12,988       24,318       25,440  
                                 
    Operating income
    12,691       12,903       28,006       26,337  
                                 
OTHER INCOME (EXPENSES):
                               
  Equity in earnings of unconsolidated joint venture
    27       147       18       224  
  Interest and dividend income
    57       -       126       50  
  Realized and unrealized gain from investment
    -       2,215       -       4,067  
  Interest expense
    (5,246 )     (4,778 )     (10,525 )     (9,627 )
  Interest expense – related parties
    (144 )     (327 )     (291 )     (624 )
    Income from continuing operations
    7,385       10,160       17,334       20,427  
                                 
Discontinued operations:
                               
    Loss from discontinued operations
    (15 )     (119 )     (29 )     (242 )
                                 
        Net income
    7,370       10,041       17,305       20,185  
                                 
Net income attributable to noncontrolling interests
    (5,491 )     (7,581 )     (13,027 )     (15,267 )
Net income available to common stockholders
  $ 1,879     $ 2,460     $ 4,278     $ 4,918  
                                 
Income per share from continuing operations:
                               
   Basic
  $ 0.08     $ 0.11     $ 0.19     $ 0.23  
   Diluted
  $ 0.08     $ 0.11     $ 0.19     $ 0.22  
Income per share from discontinued operations:
                               
   Basic
    -       -       -       -  
   Diluted
    -       -       -       -  
Net income per share to common stockholders:
                               
   Basic
  $ 0.08     $ 0.11     $ 0.19     $ 0.22  
   Diluted
  $ 0.08     $ 0.11     $ 0.19     $ 0.22  
Weighted average shares of common stock (basic)
    22,495,605       21,957,654       22,392,427       21,919,632  
Weighted average shares of common stock (diluted)
    22,756,006       22,123,527       22,583,358       22,090,313  
Weighted average O.P. units outstanding
    82,790,430       83,326,965       82,893,608       83,362,225  
                                 

 
 
 
 



 
 
FUNDS FROM OPERATIONS
 
Three Months Ended
Jun 30, 2011
   
Three Months Ended
Jun 30, 2010
   
Six Months Ended
Jun 30, 2011
   
Six Months Ended
Jun 30, 2010
 
Funds from operations
  $ 13,708     $ 16,559     $ 29,950     $ 33,066  
Funds from operations per share (2)
  $ 0.13     $ 0.16     $ 0.28     $ 0.31  
Outstanding common stock
    22,584,770       21,959,070       22,584,770       21,959,070  
Outstanding O.P. units
    82,701,265       83,326,965       82,701,265       83,326,965  
Weighted average O.P. units and common stock
   outstanding (diluted)
     105,546,436        105,450,492        105,476,966        105,452,538  
                                 
                                 
 
 
FUNDS FROM OPERATIONS CALCULATION
 
Three Months Ended
Jun 30, 2011
   
Three Months Ended
Jun 30, 2010
   
Six Months Ended
Jun 30, 2011
   
Six Months Ended
Jun 30, 2010
 
Net income
  $ 7,370     $ 10,041     $ 17,305     $ 20,185  
Add:
                               
   Depreciation and amortization
    6,384       6,556       12,736       12,963  
   Depreciation and amortization in
     unconsolidated joint venture
     60        60        119        119  
Less:
                               
   Noncontrolling interests in joint ventures
    (106 )     (98 )     (210 )     (201 )
Funds from operations
  $ 13,708     $ 16,559     $ 29,950     $ 33,066  
                                 
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
Jun 30, 2011
   
Three Months Ended
Jun 30, 2010
   
Six Months Ended
Jun 30, 2011
   
Six Months Ended
Jun 30, 2010
 
Total properties, end of period
    111       112       111       112  
Total square feet, end of period
    8,011,026       8,088,923       8,011,026       8,088,923  
Average monthly rental revenue per square foot (3)
  $ 1.29     $ 1.31     $ 1.34 (7)   $ 1.32  
Occupancy for leased properties
    66.5 %     64.1 %     66.5 %     64.1 %
Straight-line rent
  $ 260     $ 9     $ (375 )   $ (228 )
Leasing commissions
  $ 128     $ 445     $ 323     $ 445  
Non-recurring capital expenditures
  $ 613       -     $ 1,539       -  


LEASE ROLLOVER SCHEDULE:
                   
Year
 
# of Leases
   
Rentable Square Feet
   
2011 Base Rent (5)
 
2011 (4)
    6       284,099     $ 7,369,853  
2012
    12       784,393       15,046,671  
2013
    6       339,123       4,971,350  
2014
    21       1,677,913       26,653,825  
2015
    8       587,437       9,178,833  
2016
    7       275,251       4,280,551  
2017
    10       606,553       7,831,158  
2018
    3       265,612       1,120,944  
2019
    1       165,000       2,931,834  
Thereafter
    3       208,768       4,327,563  
    Total
    77       5,194,149     $ 83,712,582  

 
 
 
 


BALANCE SHEETS
           
   
June 30, 2011
   
December 31, 2010
 
             
Assets
           
Investments in real estate:
           
     Land
  $ 322,076     $ 322,076  
     Buildings and improvements
    791,963       790,424  
     Real estate related intangible assets
    1,121       3,240  
         Total investments in properties
    1,115,160       1,115,740  
     Accumulated depreciation and amortization
    (233,578 )     (224,027 )
     Assets held for sale, net
    3,267       3,267  
         Net investments in properties
    884,849       894,980  
     Investment in unconsolidated joint venture
    3,698       3,830  
         Net investments in real estate
    888,547       898,810  
Cash and cash equivalents
    -       3,988  
Restricted cash
    -       6,892  
Deferred rent
    17,566       17,941  
Other assets, net
    41,866       40,653  
      Total assets
  $ 947,979     $ 968,284  
                 
Liabilities and Equity
               
Liabilities:
               
     Mortgage notes payable
  $ 338,566     $ 345,770  
     Mortgage note payable – related parties
    7,436       7,721  
     Interest payable
    1,614       1,659  
     Security deposits
    4,385       4,605  
     Prepaid rent
    4,402       6,526  
     Dividends and distributions payable
    13,687       15,793  
     Accounts payable and accrued expenses
    18,492       16,239  
         Total liabilities
    388,582       398,313  
                 
Commitments and contingencies.
               
                 
Equity:
               
Stockholders’ equity:
               
     Common stock, $.001 par value
    22       22  
     Additional paid-in capital
    175,863       172,568  
     Distributions in excess of accumulated earnings
    (32,086 )     (30,520 )
         Total stockholders’ equity
    143,799       142,070  
Noncontrolling interests in operating partnerships
    415,598       427,901  
         Total equity
    559,397       569,971  
         Total liabilities and equity
  $ 947,979     $ 968,284  



(1)  
Includes approximately $56 and $301 in amortization expense for the three months ended June 30, 2011 and 2010, respectively, and $180 and $461 in amortization expense for the six months ended June 30, 2011 and 2010, 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.

(2)  
Calculated on a fully diluted basis. Assumes conversion of all 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 five month-to-month leases for approximately 78,000 rentable square feet and approximately $106 in cash rent.

(5)  
Base rent reflects cash rent.

(6)  
Includes a one-time rent adjustment of approximately $1,638 from a tenant dispute resolution.

 (7)  Includes a one-time rent adjustment of approximately $1,638. Excluding the adjustment, the average monthly rental revenue per square foot would have been
       $1.29.


The following information was filed by Mission West Properties Inc (MSW) on Thursday, July 14, 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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