MISSION WEST PROPERTIES, INC. 
By CUPERTINO, Calif., Feb. 1, 2012 /PRNewswire/ -- Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations ("FFO") for the quarter ended December 31, 2011, was approximately $16,624,000, or $0.16 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 $11,182,000, or $0.11 per diluted common share, for the same period in 2010. The increase was primarily due to higher operating revenues from new leases and lower operating expenses. On a sequential quarter basis, FFO for the quarter ended September 30, 2011, was approximately $0.13 per diluted common share. For the year ended December 31, 2011, FFO increased to $60,693,000, or $0.57 per diluted common share, from FFO of $56,018,000, or $0.53 per diluted common share, for the year ended December 31, 2010. Realized and unrealized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the year ended December 31, 2010.
Net income for the quarter ended December 31, 2011, was approximately $14,159,000 as compared to approximately $10,839,000 for the quarter ended December 31, 2010. Net income per diluted share available to common stockholders was approximately $0.14 for the quarter ended December 31, 2011, compared to $0.10 for the quarter ended December 31, 2010, a per share increase of approximately 40%. The increase was primarily due to higher operating revenues from new leases and lower operating expenses. For the quarters ended December 31, 2011 and 2010, gain from the sale of real estate accounted for approximately $0.03 and $0.05 per diluted common share, respectively. Net income for the year ended December 31, 2011, was approximately $38,901,000 as compared to approximately $36,495,000 for the year ended December 31, 2010. For the year ended December 31, 2011, net income per diluted share available to common stockholders was $0.40, up from $0.38 a year ago, a per share increase of approximately 5%. Realized and unrealized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the year ended December 31, 2010.
Disposition Activity
On October 28, 2011, the Company disposed of one R&D property located at 1425-1455 McCandless Drive in Milpitas, California consisting of approximately 39,000 rentable square feet. A total net gain of approximately $3,891,000 was recognized and classified as discontinued operations on the total sales price of $7,320,000. The buyer issued a promissory note secured by a deed of trust on the property sold to the Company in the amount of $3,660,000 with an interest rate of 6.00% per annum. The principal amount of the note, together with accrued interest, will be due and payable on October 30, 2012.
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 $8,350,000 will be recognized and classified as discontinued operations on the total sales price of $21,780,000. 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.
Company Profile
Mission West Properties, Inc. operates as a selfmanaged, selfadministered 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 108 properties totaling approximately 7.9 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 Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
------ ------ ------- -------
Dec 31, Dec 31, Dec 31, Dec 31,
2011 2010 2011 2010
-------- -------- -------- --------
OPERATING
REVENUES:
Rental
income $20,608 $19,487 $83,574 (6) $81,037
Tenant
reimbursements 4,704 3,467 17,701 14,868
Other
income 1,666 472 3,581 2,590
----- --- ----- -----
Total
operating
revenues 26,978 23,426 104,856 98,495
------ ------ ------- ------
OPERATING
EXPENSES:
Operating
and
maintenance 3,079 3,910 11,174 13,020
Real
estate
taxes 2,195 2,903 10,980 12,084
General
and
administrative 831 558 2,378 2,219
Depreciation
and
amortization 5,923 (1) 5,533 (1) 22,839 (1) 22,122 (1)
-------- -------- --------- ---------
Total
operating
expenses 12,028 12,904 47,371 49,445
------ ------ ------ ------
Operating
income 14,950 10,522 57,485 49,050
OTHER
INCOME
(EXPENSES):
Equity
in
(loss)
earnings
of
unconsolidated
joint
venture (4) 33 27 303
Interest
income 334 51 515 102
Realized
gain
and
unrealized
loss
from
investment,
net - - - 4,067
Interest
expense (4,725) (5,304) (20,505) (20,068)
Interest
expense
-
related
parties (152) (149) (631) (988)
---- ---- ---- ----
Income
from
continuing
operations 10,403 5,153 36,891 32,466
------ ----- ------ ------
Discontinued
operations:
Gain
from
disposal
of
discontinued
operations 3,891 6,199 3,891 6,199
Loss
from
discontinued
operations (135) (513) (1,881) (2,170)
---- ---- ------ ------
Income
from
discontinued
operations 3,756 5,686 2,010 4,029
----- ----- ----- -----
Net
income 14,159 10,839 38,901 36,495
Net
income
attributable
to
noncontrolling
interests (11,038) (8,654) (29,626) (28,022)
------- ------ ------- -------
Net
income
available
to
common
stockholders $3,121 $2,185 $9,275 $8,473
====== ====== ====== ======
Income
per
share
from
continuing
operations:
Basic $0.11 $0.06 $0.40 $0.36
===== ===== ===== =====
Diluted $0.11 $0.06 $0.39 $0.35
===== ===== ===== =====
Income
per
share
from
discontinued
operations:
Basic $0.03 $0.04 $0.01 $0.03
===== ===== ===== =====
Diluted $0.03 $0.04 $0.01 $0.03
===== ===== ===== =====
Net
income
per
share
to
common
stockholders:
Basic $0.14 $0.10 $0.41 $0.39
===== ===== ===== =====
Diluted $0.14 $0.10 $0.40 $0.38
===== ===== ===== =====
Weighted
average
shares
of
common
stock
(basic) 22,585,110 22,076,694 22,489,475 21,973,599
========== ========== ========== ==========
Weighted
average
shares
of
common
stock
(diluted) 23,013,187 22,198,946 22,917,552 22,121,724
========== ========== ========== ==========
Weighted
average
O.P.
units
outstanding 82,700,925 83,209,341 82,796,560 83,310,364
========== ========== ========== ==========
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
FUNDS
FROM
OPERATIONS ----- ----- ----- -----
Dec 31, Dec 31, Dec 31, Dec 31,
2011 2010 2011 2010
-------- -------- -------- --------
Funds
from
operations $16,624 $11,182 $60,693 $56,018
======= ======= ======= =======
Funds
from
operations
per
share
(2) $0.16 $0.11 $0.57 $0.53
===== ===== ===== =====
Outstanding
common
stock 22,586,020 22,135,770 22,586,020 22,135,770
========== ========== ========== ==========
Outstanding
O.P.
units 82,700,015 83,150,265 82,700,015 83,150,265
========== ========== ========== ==========
Weighted
average
O.P.
units
and
common
stock
outstanding
(diluted) 105,714,112 105,408,287 105,714,112 105,432,088
=========== =========== =========== ===========
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
FUNDS
FROM
OPERATIONS
CALCULATION ----- ----- ----- -----
Dec 31, Dec 31, Dec 31, Dec 31,
2011 2010 2011 2010
-------- -------- -------- --------
Net
income $14,159 $10,839 $38,901 $36,495
Add:
Depreciation
and
amortization 6,399 6,526 25,859 25,840
Depreciation
and
amortization
in 60 60 238 238
unconsolidated
joint venture
Less:
Noncontrolling
interests
in
joint
ventures (103) (44) (414) (356)
Gain
on
sale
of
real
estate (3,891) (6,199) (3,891) (6,199)
------ ------ ------ ------
Funds
from
operations $16,624 $11,182 $60,693 $56,018
======= ======= ======= =======
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.
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
PROPERTY
AND
OTHER
DATA: ----- ----- ----- -----
Dec 31, Dec 31, Dec 31, Dec 31,
2011 2010 2011 2010
-------- -------- -------- --------
Total
properties,
end
of
period 111 111 111 111
Total
square
feet,
end
of
period 8,039,947 8,011,026 8,039,947 8,011,026
Average
monthly
rental
revenue
per
square
foot
(3) $1.34 $1.25 $1.25 $1.30
Occupancy
for
leased
properties
(7) 72.6% 69.9% 72.6% 69.9%
Straight-
line
rent ($877) ($481) ($1,291) ($770)
Leasing
commissions $679 $812 $1,087 $1,753
Non-
recurring
capital
expenditures $670 $1,142 $2,442 $2,841
LEASE ROLLOVER SCHEDULE:
# of Rentable Square 2011 Base Rent
Year Leases Feet (5)
---- ------- ---------------- ---------------
2011 - - $3,745,880
2012 (4) 9 425,587 6,754,892
2013 7 361,923 5,217,260
2014 22 1,823,675 30,259,873
2015 8 587,437 9,178,835
2016 8 394,806 5,957,657
2017 12 727,552 7,831,158
2018 5 431,606 4,058,174
2019 2 212,480 3,567,224
2020 3 208,768 4,327,563
Thereafter 1 105,000 3,809,319
--- ------- ---------
Total 77 5,278,834 $84,707,835
=== ========= ===========
BALANCE SHEETS
December 31, December 31,
2011 2010
------------- -------------
Assets
Investments in real estate:
Land $306,474 $322,076
Buildings and improvements 745,962 790,424
Real estate related intangible
assets 3,561 3,240
----- -----
Total investments in
properties 1,055,997 1,115,740
Accumulated depreciation and
amortization (229,221) (224,027)
Assets held for sale, net 54,361 3,267
------ -----
Net investments in properties 881,137 894,980
Investment in unconsolidated
joint venture 3,558 3,830
----- -----
Net investments in real estate 884,695 898,810
Cash and cash equivalents - 3,988
Restricted cash - 6,892
Deferred rent 16,650 17,941
Other assets, net 35,142 40,653
------ ------
Total assets $936,487 $968,284
======== ========
Liabilities and Equity
Liabilities:
Mortgage notes payable $331,166 $345,770
Mortgage note payable -
related parties 7,139 7,721
Revolving line of credit 3,305 -
Interest payable 1,606 1,659
Security deposits 4,317 4,605
Prepaid rent 5,836 6,526
Dividends and distributions
payable 13,687 15,793
Accounts payable and accrued
expenses 16,344 16,239
------ ------
Total liabilities 383,400 398,313
------- -------
Commitments and contingencies.
Equity:
Stockholders' equity:
Common stock, $.001 par value 23 22
Additional paid-in capital 175,900 172,568
Distributions in excess of
accumulated earnings (32,962) (30,520)
------- -------
Total stockholders' equity 142,961 142,070
Noncontrolling interests in
operating partnerships 410,126 427,901
------- -------
Total equity 553,087 569,971
------- -------
Total liabilities and equity $936,487 $968,284
======== ========
Includes approximately $406 and $124 in amortization expense
for the three months ended December 31, 2011 and 2010,
respectively, and $981 and $708 in amortization expense for
the years ended December 31, 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
(1) Codification.
Calculated on a fully diluted basis. Assumes conversion of
(2) 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 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
(3) from the 2011 calculation.
Excludes seven month-to-month leases for approximately
88,000 rentable square feet and approximately $494 in cash
(4) rent.
(5) Base rent reflects cash rent.
Includes a one-time rent adjustment of approximately $1,638
(6) from a tenant dispute resolution.
The occupancy rate at December 31, 2011, excludes properties
(7) classified as assets held for sale.
SOURCE Mission West Properties, Inc.
