Press Release
For Immediate News Release
July 13, 2011
MISSION WEST PROPERTIES ANNOUNCES SECOND QUARTER 2011 OPERATING RESULTSCupertino, 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.
- 1 -
MISSION WEST PROPERTIES, INC.SELECTED FINANCIAL DATA(In thousands, except share, per share and property data amounts)
STATEMENTS OF OPERATIONSOPERATING REVENUES:Three MonthsEndedJun 30, 2011
Three MonthsEndedJun 30, 2010
Six MonthsEndedJun 30, 2011
Six MonthsEndedJun 30, 2010
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 51,777OPERATING 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 26,337OTHER 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 |
- 2 -
FUNDS FROM OPERATIONSThree MonthsEndedJun 30, 2011
Three MonthsEndedJun 30, 2010
Six MonthsEndedJun 30, 2011
Six MonthsEndedJun 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) 105,546,436 105,450,492 105,476,966 105,452,538FUNDS FROM OPERATIONS CALCULATIONThree MonthsEndedJun 30, 2011
Three MonthsEndedJun 30, 2010
Six MonthsEndedJun 30, 2011
Six MonthsEndedJun 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 MonthsEndedJun 30, 2011
Three MonthsEndedJun 30, 2010
Six MonthsEndedJun 30, 2011
Six MonthsEndedJun 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
- 3 -
BALANCE SHEETSJune 30, 2011 December 31, 2010Assets
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: Liabilities and EquityMortgage 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.
- 4 -