MISSION WEST PROPERTIES, INC. 
By CUPERTINO, Calif., April 11, 2012 /PRNewswire/ -- Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations ("FFO") for the quarter ended March 31, 2012, was approximately $14,149,000, 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 $16,240,000, or $0.15 per diluted common share, for the same period in 2011. The decrease was primarily due to lower rental revenues. On a sequential quarter basis, FFO for the quarter ended December 31, 2011, was approximately $0.16 per diluted common share.
Net income for the quarter ended March 31, 2012, was approximately $13,253,000 as compared to approximately $9,936,000 for the quarter ended March 31, 2011. Net income per diluted share available to common stockholders was approximately $0.12 for the quarter ended March 31, 2012, compared to $0.11 for the quarter ended March 31, 2011, a per share increase of approximately 9%. The increase was primarily due to gains from sale of real estate, which accounted for approximately $0.04 per diluted share.
Acquisition Activity
On February 1, 2012, the Company acquired the following properties from the Berg Group: three vacant R&D buildings located at 5901, 5921 and 5961 Optical Court in San Jose, California, consisting of approximately 202,500 rentable square feet for a total purchase price of $18,000,000; approximately ten acres of raw land at Hellyer Avenue and Embedded Way for approximately $5,313,000; and approximately nine acres of raw land at Hellyer Avenue and Piercy Road for approximately $4,877,000. The combined purchase price for the three R&D buildings and raw land totaled approximately $28,190,000. The Company acquired these properties by offsetting the purchase price with approximately $9,217,000, the amount the Berg Group owed to the Company from the outcome of the Hellyer Avenue Limited Partnership litigation and approximately $7,494,000, the amount the Berg Group was obligated to pay toward the construction of an R&D building in connection with the Company's 2001 acquisition of 245 Caspian Drive in Sunnyvale, California. The Company issued an unsecured short-term note payable for the remaining amount of approximately $11,479,000. As of March 31, 2012, the note payable and accrued interest had been fully repaid.
Disposition Activity
On January 9, 2012, the Company disposed of three R&D properties located at 1680-1690 McCandless Drive, 1740-1768 McCandless Drive and 1810-1830 McCandless Drive in Milpitas, California, consisting of approximately 165,000 rentable square feet. A total net gain of approximately $7,479,000 will be recognized in installments and classified as discontinued operations on the total sales price of $21,780,000. For the quarter ended March 31, 2012, approximately $1,629,000 was recognized as gain and classified as discontinued operations on sale of real estate under the installment method. The buyer issued an unsecured promissory note to the Company in the amount of $18,780,000 with an interest rate of 0% per annum. The total sales price encompasses the sum of the following amounts: a) The down payment price of $3,000,000; b) Yearly payments of $3,000,000 on the anniversary of the effective date for four years; and c) On the fifth year anniversary of the effective date, the buyer will pay the amount remaining of the unpaid portion of the total sales price.
On February 14, 2012, the Company disposed of three R&D properties located at 1625-1657 McCandless Drive, 1725-1745 McCandless Drive and 1815-1845 McCandless Drive in Milpitas, California, consisting of approximately 112,000 rentable square feet. Only 36.04% of property 1815-1845 McCandless Drive was sold in this phase and the remaining 63.96% will be sold in the second phase at a later date. A total net gain of approximately $3,890,000 was recognized and classified as discontinued operations on the total cash sales price of approximately $13,613,000.
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 Three Months
Ended Ended
Mar 31, 2012 Mar 31, 2011
------------ ------------
OPERATING REVENUES:
Rental income $20,012 $21,723
Tenant reimbursements 3,948 4,618
Other income 272 1,002
--- -----
Total operating revenues 24,232 27,343
------ ------
OPERATING EXPENSES:
Operating and
maintenance 2,409 2,512
Real estate taxes 2,428 3,049
General and
administrative 651 521
Depreciation and
amortization 5,993 (1) 5,491 (1)
-------- --------
Total operating expenses 11,481 11,573
------ ------
Operating income 12,751 15,770
OTHER INCOME (EXPENSES):
Equity in earnings
(loss) of
unconsolidated joint
venture 114 (9)
Interest income 93 70
Interest expense (4,921) (5,279)
Interest expense -
related parties (146) (147)
---- ----
Income from continuing
operations 7,891 10,405
----- ------
Discontinued operations:
Net gain from disposal
of properties
classified as 5,519 -
discontinued operations
Net loss from properties
classified as (157) (469)
discontinued operations
Income (loss) from
discontinued operations 5,362 (469)
----- ----
Net income 13,253 9,936
Net income attributable
to noncontrolling
interests (10,409) (7,536)
------- ------
Net income available to
common stockholders $2,844 $2,400
====== ======
Income per share from
continuing operations:
Basic $0.09 $0.11
===== =====
Diluted $0.08 $0.11
===== =====
Income (loss) per share
from discontinued
operations:
Basic $0.04 -
===== ===
Diluted $0.04 -
===== ===
Net income per share to
common stockholders:
Basic $0.13 $0.11
===== =====
Diluted $0.12 $0.11
===== =====
Weighted average shares
of common stock (basic) 22,637,668 22,288,103
========== ==========
Weighted average shares
of common stock
(diluted) 23,157,454 22,405,276
========== ==========
Weighted average O.P.
units outstanding 82,648,367 82,997,932
========== ==========
Three Months Three Months
Ended Ended
FUNDS FROM OPERATIONS Mar 31, 2012 Mar 31, 2011
------------ ------------
Funds from operations $14,149 $16,240
======= =======
Funds from operations
per share(2) $0.13 $0.15
===== =====
Outstanding common
stock 22,668,020 22,370,770
========== ==========
Outstanding O.P. units 82,618,015 82,915,265
========== ==========
Weighted average O.P. units and common stock
outstanding (diluted) 105,805,821 105,403,208
=========== ===========
Three Months Three Months
Ended Ended
FUNDS FROM OPERATIONS
CALCULATION Mar 31, 2012 Mar 31, 2011
------------ ------------
Net income $13,253 $9,936
Add:
Depreciation and
amortization 6,465 6,351
Depreciation and amortization in
unconsolidated joint
venture 60 60
Less:
Noncontrolling
interests in joint
ventures (110) (107)
Gain on sale of real
estate (5,519) -
------ ---
Funds from operations $14,149 $16,240
======= =======
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
Three Months Three Months
Ended Ended
PROPERTY AND OTHER
DATA: Mar 31, 2012 Mar 31, 2011
------------ ------------
Total properties, end
of period 111 111
Total square feet, end
of period 7,985,569 8,011,026
Average monthly rental
revenue per square
foot (3) $1.28 $1.39
Occupancy for leased
properties (6) 71.3% 68.5%
Straight-line rent ($201) ($635)
Leasing commissions $26 $194
Non-recurring capital
expenditures $176 $926
LEASE ROLLOVER SCHEDULE:
Year # of Leases Rentable Square Feet 2012 Base Rent (5)
---- ----------- -------------------- -----------------
2012 (4) 9 419,767 $3,349
2013 8 367,683 5,418
2014 22 1,823,675 29,384
2015 8 587,437 9,334
2016 8 394,806 4,551
2017 12 727,552 9,817
2018 5 431,606 5,281
2019 2 232,480 3,731
2020 3 208,768 4,471
Thereafter 1 105,000 2,441
--- ------- -----
Total 78 5,298,774 $77,777
=== ========= =======
BALANCE SHEETS
March 31, 2012 December 31, 2011
-------------- -----------------
Assets
Investments in real estate:
Land $323,173 $306,474
Buildings and improvements 757,631 745,962
Real estate related intangible
assets 3,561 3,561
----- -----
Total investments in properties 1,084,365 1,055,997
Accumulated depreciation and
amortization (235,204) (229,211)
Assets held for sale, net 31,804 54,361
------ ------
Net investments in properties 880,965 881,147
Investment in unconsolidated joint
venture 3,575 3,557
----- -----
Net investments in real estate 884,540 884,704
Cash and cash equivalents 2,850 -
Deferred rent 16,449 16,650
Other assets, net 31,629 35,133
------ ------
Total assets $935,468 $936,487
======== ========
Liabilities and Equity
Liabilities:
Mortgage notes payable $327,380 $331,166
Mortgage note payable - related
parties 6,986 7,139
Revolving line of credit - 3,305
Interest payable 1,577 1,606
Security deposits 4,366 4,317
Prepaid rent and deferred revenue 11,185 5,836
Dividends and distributions payable 23,163 13,687
Accounts payable and accrued
expenses 18,238 16,344
------ ------
Total liabilities 392,895 383,400
------- -------
Commitments and contingencies.
Equity:
Stockholders' equity:
Common stock, $.001 par value 23 23
Additional paid-in capital 176,722 175,900
Distributions in excess of
accumulated earnings (35,104) (32,962)
------- -------
Total stockholders' equity 141,641 142,961
Noncontrolling interests in
operating partnerships 400,932 410,126
------- -------
Total equity 542,573 553,087
------- -------
Total liabilities and equity $935,468 $936,487
======== ========
Includes approximately $406 and
$124 in amortization expense for
the three months ended March 31,
2012 and 2011, respectively, for
(1) 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.
Average monthly rental revenue per
square foot has been determined by
taking the cash base rent for the
period divided by the number of
(3) months
in the period, and then divided by
the average occupied square feet
in the period. Properties
classified as assets held for sale
were excluded from the 2012
calculation.
(4) Excludes seven month-to-month
leases for approximately 88,000
rentable square feet and
approximately $107 in cash rent.
(5) Base rent reflects cash rent.
(6) The occupancy rate at March 31,
2012, excludes properties
classified as assets held for
sale.
SOURCE Mission West Properties, Inc.
