-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NInqYS0NLH5jMk2nxG86Di46UP/LVHxS8nrcpIWSYSwYy712z56OFGr3Q5UIApMJ d+qCUYiHg1+ts1gIWZIKZw== 0000704874-99-000010.txt : 19990222 0000704874-99-000010.hdr.sgml : 19990222 ACCESSION NUMBER: 0000704874-99-000010 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSION WEST PROPERTIES INC CENTRAL INDEX KEY: 0001067419 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 952635431 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: SEC FILE NUMBER: 333-52835-99 FILM NUMBER: 99545808 BUSINESS ADDRESS: STREET 1: 10050 BANDLEY DRIVE CITY: CUPERTINO STATE: CA ZIP: 95014 BUSINESS PHONE: 4087250700 424B3 1 FINAL PROSPECTUS PROSPECTUS MISSION WEST PROPERTIES, INC. 6,370,058 Shares of common stock $.001 par value The stockholders of Mission West Properties, Inc. listed below are offering and selling 6,370,058 shares of common stock, under this prospectus. All of the selling stockholders purchased their shares from us on or after December 29, 1998 under the terms of May 1998 stock purchase agreements. Some or all of the selling stockholders expect to sell their shares. The selling stockholders may offer their shares of common stock through public or private transactions, on or off the United States exchanges, at prevailing market prices, or at privately negotiated prices. The common stock is listed on the American Stock Exchange and the Pacific Exchange and trades on these stock exchanges with the symbol "MSW". On February 18, 1999 the closing price of one share of common stock, as quoted on the American Stock Exchange was $6 7/16. ------------ THE SHARES OF COMMON STOCK INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 2. ------------ The date of this prospectus is February 19, 1999. THE COMPANY We are engaged in the management, leasing, marketing, development and acquisition of R&D office properties, primarily located in the "Silicon Valley" portion of the San Francisco Bay Area. We currently manage 71 properties totaling 4.51 million square feet, which are owned by four separate operating partnerships. We are the sole general partner of each of the operating partnerships. In 1999, we will elect to be taxed as a real estate investment trust ("REIT") for federal income tax purposes and will operate as a self-managed, self-administered and fully integrated REIT. Our principal executive offices are located at 10050 Bandley Drive, Cupertino, California 95014, and our telephone number is (408) 725-0700. RISK FACTORS In addition to the other information contained in this prospectus, investors should consider carefully the following risk factors before making an investment decision concerning the common stock. This prospectus contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). In accordance with the Reform Act, cautionary statements set forth below and additional cautionary statements contained in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Form 10-Q/A for the quarter ended September 30, 1998 pertain to these forward-looking statements. These cautionary statements identify certain important factors that could cause actual results to differ materially from those in the forward-looking statements and from historical trends. DEPENDENCE ON CARL E. BERG We are substantially dependent upon the leadership of Carl E. Berg, our Chairman and Chief Executive Officer. He manages our day-to-day operations and devotes a significant portion of his time to our affairs, but he has a number of other business interests, as well. Some of these other interests involve investment and director relationships with a number of technology companies, including some of our tenants. We obtain valuable information about our markets and business opportunities from Mr. Berg's other activities. Losing Mr. Berg's knowledge and abilities could have a material adverse effect on our business and the value of the common stock. CONTROL OF MISSION WEST PROPERTIES AND THE OPERATING PARTNERSHIPS BY MR. BERG AND HIS AFFILIATES OWNERSHIP INTEREST. Mr. Berg, his brother Clyde J. Berg, members of their family and certain trusts and other entities which they and their family members control (the "Berg Group") own limited partnership interests ("L.P. Units") representing approximately 81.8% ownership of the operating partnerships. The L.P. Units may be converted into shares of common stock under certain circumstances which upon conversion would represent voting control of Mission West Properties. The Berg Group's ability to exchange their L.P. Units for common stock permits them to exert substantial influence over the management and direction of our corporation. BOARD OF DIRECTORS REPRESENTATION. The Berg Group has the right to nominate two of our current five directors for election to the board of directors as long as they and their affiliates beneficially own at least 15% of the total number of our outstanding securities, including all securities, such as L.P. Units, exchangeable or redeemable for common stock or any other voting stock. If the Berg Group's ownership percentage falls below 15% but is at least 10%, the Berg Group has the right to nominate one person for election to our board of directors. Their right to nominate directors may be considered to give the Berg Group and Mr. Berg substantial control and influence over the management and direction of our corporation. SPECIAL BOARD VOTING PROVISIONS. Our governing corporate documents, which are our Articles of Amendment and Restatement and our Bylaws also provide substantial control rights for Mr. Berg and the Berg Group. These rights include a requirement that Mr. Berg or someone he has designated to replace him as a director approve certain fundamental corporate actions, including amendments to our governing corporate documents and any merger, consolidation or sale of all or substantially all of our assets or the assets of the operating partnerships. In addition, our Bylaws provide that a quorum necessary to hold a valid meeting of the board of directors must include Mr. Berg or someone he has designated to replace him as a director. Also, directors representing more than 75% of the entire board of directors must approve other significant transactions such as incurring debt above certain amounts and conducting business other than through the operating partnerships. LIMITED PARTNER APPROVAL RIGHTS. Mr. Berg and other limited partners, including other members of the Berg Group, also may restrict our operations and activities through rights provided under the terms of the Amended and Restated Agreement of Limited Partnership which governs each of the operating partnerships and our legal relationship to each operating partnership as its general partner. POTENTIAL CONFLICTS OF INTEREST WITH THE BERG GROUP Mr. Berg and other members of the Berg Group possess significant rights to influence and control the Company and the operating partnerships and have a variety of interests that may not be consistent with the interests of our other stockholders. For example, our headquarters are leased from an entity owned by Mr. Berg and other Berg Group members, and we pay them rent of approximately $15,000 per month. Although Mr. Berg has agreed to provide us with the first opportunity to pursue R&D office property development and acquisition activities in Washington, Oregon and California, there are many other real estate activities and other business activities that Mr. Berg and other members of the Berg Group are free to pursue. If we decline an opportunity that has been offered to us, Mr. Berg may pursue it. This would reduce the amount of time that he could devote to our affairs and could result in the development by him or other Berg Group members of properties that compete with our properties for tenants. In general, we have agreed to limit the liability of Mr. Berg and other members of the Berg Group to our corporation and stockholders arising from their pursuit of these other opportunities. Mr. Berg and other Berg Group members have agreed that all new transactions between us and any of them, or between us and any entity in which they directly or indirectly own 5% or more of the equity interests, including the operating partnerships for this purpose, must be approved by the Independent Directors Committee of our board of directors. This Committee currently consists of three directors who are independent of Mr. Berg and the other members of the Berg Group. EXCLUDED PROPERTIES. Mr. Berg and other members of the Berg Group have retained certain R&D office properties in which we and the operating partnerships have no ownership interests. Under certain circumstances, efforts of Mr. Berg to lease these other properties may interfere with similar efforts on our behalf. PENDING DEVELOPMENT PROJECTS. Mr. Berg and other members of the Berg Group currently own four pending development projects located in the Silicon Valley that represent a potential total of 11 R&D office properties aggregating approximately 950,000 rentable square feet. We and the operating partnerships have agreed under the terms of a Pending Projects Acquisition Agreement to acquire each of these properties from Mr. Berg and other members of the Berg Group as it is completed and leased. The sellers may elect to receive cash or L.P. Units at a value of $4.50 per unit. As the current market price of a share of common stock is $6 7/16, this valuation represents a substantial discount from the current market value of the common stock that may be issued in exchange for these L.P. Units. The terms of the Pending Projects Acquisition Agreement were agreed upon in May 1998 prior to the re-commencement of trading of our Common Stock, however. Mr. Berg and other members of the Berg Group currently have the right to obtain as many as 33,513,906 additional L.P. Units in exchange for the pending development projects. They may elect to receive part of the consideration in cash. In addition, prior to the sale of any of these properties the sellers may place debt on the property that we and the operating partnerships would be required to assume. The amount of any assumed debt would reduce the value of the acquired property in determining the amount of other consideration in the form of cash or L.P. Units payable to the sellers, however. The rights of Mr. Berg and other Berg Group members under the Pending Projects Acquisition Agreement permit them to acquire substantial additional interests in the operating partnerships and, in the event of any exchange of their L.P. Units for common stock, in our corporation, as well. BERG LAND HOLDINGS. Mr. Berg and other members of the Berg Group also own several parcels of unimproved land in the Silicon Valley that we and the operating partnerships have the right to acquire under the terms of the Berg Land Holdings Option Agreement. Mr. Berg and the other Berg Group members are not obligated to exercise certain options they hold to acquire the properties that are subject to the agreement. As a result, we may lose the ability to expand our portfolio of properties and to increase our income through the acquisition of those properties. In addition, we have agreed to pay a fixed amount plus additional charges for any of the properties that we do acquire and must pay the acquisition price in cash unless otherwise agreed by the sellers. At the time of acquisition, these properties may be encumbered by debt that we or the operating partnerships will be required to assume. An increase in our indebtedness could materially adversely affect our financial condition, results of operations or ability to make cash distributions to our stockholders. See "--Real Estate Investment Considerations," "--Uncertainties Regarding Distributions to Stockholders." The exercise of our options under the Berg Land Holdings Option Agreement is subject to approval by the Independent Directors Committee of our board of directors. TAX CONSEQUENCES OF SALE OF PROPERTIES. Many of our properties have unrealized taxable gain, which, if sold, could create adverse income tax consequences for limited partners of the operating partnerships. Mr. Berg, Clyde J. Berg, and one other limited partner have the right to prevent us and the operating partnerships from selling or transferring properties which they designate in any taxable transaction for a period of ten years. As a result, our opportunities to sell those properties may be limited. If we need to sell any of those properties to raise cash to service our debt, acquire new properties, pay cash distributions to stockholders, or for other working capital purposes, we may be unable to do so. TERMS OF TRANSFERS; ENFORCEMENT OF AGREEMENT OF LIMITED PARTNERSHIP. The terms of the Pending Projects Acquisition Agreement, the Berg Land Holdings Option Agreement, the partnership agreement of each operating partnership, and the terms of other material agreements in which we have acquired our interests in the operating partnerships and the properties formerly controlled by Mr. Berg and members of the Berg Group were not determined through arm's-length negotiations. In addition, Mr. Berg and representatives of the Berg Group sitting on our board of directors may be subject to conflicts of interest with respect to their obligations as our directors to enforce the terms of the partnership agreement of each operating partnership when it conflicts with their personal interests. In addition, the terms of our Articles of Amendment and Restatement and Bylaws were not determined through arm's-length negotiations. Some of these terms are not as favorable as those that could have been obtained through arms'-length negotiations. RELATED PARTY DEBT. We are liable for a loan of approximately $18 million payable to Berg & Berg Enterprises, Inc., which is a member of the Berg Group. This loan is secured by three of our properties and matures in March 1999. We believe that we will be able to repay that loan with proceeds of our existing line of credit or other sources of working capital. Effective September 30, 1998, we assumed a $100 million line of credit with Wells Fargo Bank N.A. previously provided to and guaranteed by the members of the Berg Group, which is secured by 14 of our properties. We have the right to draw on the line of credit and are liable for repayment of all amounts owing under the line of credit, which totaled $27,200,992 as of December 31, 1998. The Berg Group members continue to be liable as guarantors under the line of credit, which expires in October 1999. If we are unable to repay our debts to Berg & Berg Enterprises, Inc. or Wells Fargo Bank when due, however, Mr. Berg or other Berg Group Members, in addition to the lenders, could take action to enforce our payment obligations. CHANGES IN POLICIES WITHOUT STOCKHOLDER APPROVAL Our board of directors determines the investment and financing policies of the operating partnerships and our policies with respect to certain other activities, including growth, debt capitalization, distribution and operating policies. Our board of directors may amend these policies at any time without a vote of the stockholders. Changes in these policies could materially adversely affect our financial condition, results of operations, and ability to make cash distributions to our stockholders. ANTI-TAKEOVER PROVISIONS Provisions of our Articles of Amendment and Restatement and our Bylaws could delay, defer or prevent a transaction or a change in control of our corporation, or a similar transaction, that might involve a premium price for holders of common stock or otherwise be in their best interests. REAL ESTATE INVESTMENT CONSIDERATIONS Real property investments are subject to varying degrees of risk. Investment returns available from equity investments in real estate depend in large part on the amount of income earned and capital appreciation generated by our properties, as well as our related expenses incurred. If our properties do not generate revenues sufficient to meet operating expenses, debt service and capital expenditures, our income and ability to make distributions to our stockholders will be affected adversely. Income from our properties may also be adversely affected by general economic conditions, local economic conditions such as over supply of commercial real estate, the attractiveness of our properties to tenants and prospective tenants, competition from other available rental property, our ability to provide adequate maintenance and insurance, the cost of tenant improvements, leasing commissions and tenant inducements and the potential of increased operating costs, including real estate taxes. Various significant expenditures associated with an investment in real estate (such as mortgage payments, real estate taxes and maintenance expenses) generally are not reduced when circumstances cause a reduction in revenue from the investment. Income from properties and real estate values also is affected by a variety of other factors, such as governmental regulations and applicable laws (including real estate, zoning and tax laws), interest rate levels and the availability of financing. Our properties and an investment in our common stock are also subject to a number of specific risks, including the following: o Real estate investments are relatively illiquid which limits our ability to restructure our portfolio in response to changes in economic or other conditions. o All of our properties are located in the southern portion of the San Francisco Bay Area commonly referred to as "Silicon Valley". The Silicon Valley economy has been strong for the past five years but future increases in values and rents for our properties depend to a significant extent on the health of this region's economy. Recent trends suggest that the supply of R&D office space available for rent has increased and that the demand for such space in Silicon Valley has declined from near zero vacancy rates in early 1998 and late 1997. o We might lose key tenants. Most of our properties are occupied by single tenants, many of whom are large, publicly-traded electronics companies. Losing a key tenant could adversely affect our operating results and our ability to make distributions to stockholders if we are unable to obtain replacement tenants promptly. o Key tenants could seek the protection of the bankruptcy laws which could result in the rejection and termination of their leases thereby causing a reduction in our income. o We intend to engage in additional real estate acquisition and development. These activities involve significant risks in addition to those relating to the ownership and operation of existing, fully-leased properties. For example, required approvals may not be obtained or may take more time and resources to obtain them than expected, construction may not be completed on schedule or on budget, and the properties may not achieve anticipated rent or occupancy levels. These activities also depend upon the availability of financing on terms that do not adversely impact our operating results and our ability to make distributions to our stockholders. o Our properties are subject to substantial indebtedness. If we are unable to make required mortgage payments, a loss could be sustained as a result of foreclosure on our properties by the mortgagee. We have adopted a policy of maintaining a consolidated ratio of debt to total market capitalization of less than 50%, which may not be exceeded without the approval of more than 75% of our entire board of directors. Our board of directors may vote to change this policy, however, and we could become more highly leveraged, resulting in an increased risk of default on our obligations, and an increase in debt service requirements that could adversely affect our financial condition, our operating results and our ability to make distributions to our stockholders. o Our properties may expose us to liabilities under applicable environmental and health and safety laws. o We may sustain uninsured losses with respect to some of our properties. o All of our properties are located in areas that are subject to earthquake activity. Our insurance policies do not cover damage caused by seismic activity, although they do cover losses from fires after an earthquake. We generally do not consider such insurance coverage to be economical. If an earthquake occurs and results in substantial damage to our properties, or properties that we may acquire in the future, we could lose our investment in those properties and our financial condition, operating results and ability to make distributions to our stockholders could be materially adversely affected. FEDERAL INCOME TAX RISKS FAILURE TO QUALIFY AS A REIT. We intend to elect to be taxed as a REIT under the federal income tax laws for the year ending December 31, 1999. To maintain that status we must meet certain tests for income, assets, distributions to stockholders, ownership interests and other significant conditions. If we fail to qualify as a REIT in any taxable year we will not be allowed a deduction for distributions to our stockholders in computing our taxable income and would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. Moreover, unless we were entitled to relief under certain provisions of the tax laws, we would be disqualified from treatment as a REIT for the four taxable years following the year in which our qualification was lost. As a result, funds available for distribution to our stockholders would be reduced for each of the years involved and, in addition, we would no longer be required to make distributions to our stockholders. Although we currently intend to operate in a manner designed to enable us to qualify and maintain our REIT status, it is possible that economic, market, legal, tax or other considerations may cause us to fail to qualify as a REIT, or may cause our board of directors either to refrain from making the REIT election or to revoke that election once made. REIT DISTRIBUTION REQUIREMENTS. To maintain REIT status we must distribute as a dividend to our stockholders at least 95% of our otherwise taxable income (after certain adjustments) with respect to each tax year. We may also be subject to a 4% non-deductible excise tax in the event our distributions to stockholders fail to meet certain other requirements. Failure to comply with these requirements could result in our income being subject to tax at regular corporate rates and could cause us to be liable for the excise tax. OWNERSHIP LIMIT NECESSARY TO MAINTAIN REIT QUALIFICATION. As a REIT we are subject to certain restrictions on the percentage of the total value of our stock that may be owned by five or fewer individuals which may not exceed 50% as determined under federal income tax laws. Our Articles of Amendment and Restatement generally prohibit the direct or indirect ownership of more than 9% of our common stock by any stockholder. This limit excludes the members of the Berg Group, who have an aggregate ownership limit of 20%. In addition, as permitted by our Articles of Amendment and Restatement, our board of directors recently provided an exception to two other stockholders that permits them to collectively own, directly or indirectly, up to 15% of our common stock on an aggregate basis. In general, our Articles of Amendment and Restatement prohibit the transfer of shares which result in a loss of our REIT qualification and provide that any such transfer or any other transfer which causes a stockholder to exceed the ownership limit will be subject to mandatory forfeiture provisions. UNCERTAINTIES REGARDING DISTRIBUTIONS TO STOCKHOLDERS Our income will consist primarily of our share of the income of the operating partnerships, and our cash flow will consist primarily of our share of distributions from the operating partnerships. Differences in timing between the receipt of income and the payment of expenses in arriving at our taxable income or the taxable income of the operating partnerships and the effect of required debt amortization payments could require us directly or through the operating partnerships to borrow funds on a short-term basis to meet our intended distribution policy. The amount and timing of distributions by the operating partnerships and of our distributions to our stockholders will be determined by our board of directors. Our board of directors will consider many factors prior to making any distributions, including the following: o The amount of cash available for distribution; o The operating partnerships' financial condition; o Any decisions by the board of directors to reinvest funds rather than to distribute such funds; o The operating partnerships' capital expenditures; o The annual distribution requirements under the REIT provisions of the federal income tax laws; and o Other factors as our board of directors deems relevant. There is no assurance that we will be able to meet or maintain our intended cash distribution policies. OUR OBLIGATION TO PURCHASE TENDERED L.P. UNITS Each of the limited partners of the operating partnerships (other than Carl E. Berg and Clyde J. Berg) has the annual right to exercise put rights and cause the operating partnerships to purchase a portion of the limited partner's L.P. Units at a purchase price based on the average market value of the common stock for the 10-trading day period immediately preceding the date of tender. Upon the exercise of any such right by a limited partner, we will have the option to purchase the tendered L.P. Units with available cash, borrowed funds or the proceeds of an offering of newly issued shares of common stock. These put rights become exercisable on December 29, 1999, and are available once a year for a maximum of one-third of the eligible limited partners' total L.P. Units. If the total purchase price of the L.P. Units tendered by all of the eligible limited partners in one year exceeds $1 million, we or the operating partnerships will be entitled to reduce proportionately the number of L.P. Units to be acquired from each tendering limited partner so that the total purchase price does not exceed $1 million dollars. The exercise of these put rights may reduce the amount of cash that we have available to distribute to our stockholders. SHARES ELIGIBLE FOR FUTURE SALE There are nearly 8.2 million shares of common stock outstanding as of the date of this prospectus. We cannot predict the effect, if any, that future sales of shares of common stock, or the availability of shares for future sale, will have on the market price of the common stock. Sales of substantial amounts of common stock (including shares issued in connection with the exercise of the exchange rights held by the limited partners of the operating partnerships), or the perception that such sales could occur, could adversely affect prevailing market prices for the common stock. Additional shares of common stock may be issued to limited partners (subject to the applicable REIT qualification ownership limit), if they exchange their L.P. Units for shares of common stock pursuant to their exchange rights, or may be sold by the Company to raise funds required to purchase such L.P. Units if the limited partners elect to tender L.P. Units to us using their put rights. In addition, the pending offer of common stock under this prospectus may adversely affect the market price of the common stock. Subject to certain rights that we possess to halt offers and sales of shares of common stock under this prospectus under certain circumstances, we intend to maintain the effectiveness of the registration statement under which these shares are offered for sale with the SEC until the end of December 1999. See "THE SELLING STOCKHOLDERS." USE OF PROCEEDS All net proceeds from the sale of the shares of common stock will go to the stockholders who offer and sell their shares. Accordingly, we will not receive any of the proceeds from sales of their shares by the selling stockholders. THE SELLING STOCKHOLDERS The following table sets forth the name and the number of shares of common stock beneficially owned by the stockholders listed below as of February 11, 1999, the number of shares of common stock that may be offered by selling stockholders and the number and percentage of shares to be owned beneficially by the selling stockholders assuming the sale of the shares offered by this prospectus. As a condition to receiving our permission to offer and sell shares of common stock under this prospectus, each selling stockholder has signed a Registration Rights Agreement under which the stockholder has agreed not to offer or sell any of such shares from the third business day after the date of the Stop Trading Notice for a period of up to 30 days. We will send a Stop Trading Notice to the selling stockholders if we determine, in our sole discretion, that it would be detrimental to us or our stockholders for any selling stockholder to offer or sell any such shares during the period set forth in the notice. In this prospectus, the term "selling stockholders" includes donees and pledgees selling shares received from a named stockholder after the date of this prospectus. Except as otherwise described below, none of the selling stockholders has held any office with, been employed by, or otherwise had a material relationship with us or our affiliates since February 11, 1996.
Percentage of Shares of Number of Outstanding common stock Shares of Shares Beneficially Common Stock of Stock Owned Before Offered Stock After Name of Selling Stockholder Offering (1) Hereby Offering (2) - --------------------------- --------------- ------------ ------------- Thelmer Aalgaard(3) 128,640 70,000 * James H. and Edna J. 50,000 40,000 * Anderson Joseph F. Antizzo 20,000 20,000 * Bancorp Equities LLC 20,000 20,000 * Ron Bender 16,668 5,556 * Carl and Mary Ann Berg 77,333 50,000 * (4) Howard Clowes 20,000 20,000 * Clarion Offshore Fund 13,889 13,889 * L.T.D. c/o Morty Cohen, Investment Manager Clarion Partners, L.P. 41,667 41,667 * c/o Morty Cohen, Investment Manager Mariana P. Cotton 55,000 55,000 * Revocable Living Trust John J. Dougherty 30,000 30,000 * John B. Estill, 8,892 8,892 * Co-Trustee of The John and Teresa Estill 1977 Trust Harry L. Fox 10,000 10,000 * Walter C.Frank 2,200 2,200 * Richard S. Frary 85,000 85,000 * Hugh C. Fraser 17,000 12,000 * Ian H. Fraser 5,000 5,000 * William S. Friedman 80,000 80,000 * Tom Furlong 5,000 5,000 * Thomas L. Gipson 200,000 200,000 * James M. Greenleaf 11,000 11,000 * Jennifer Greenleaf 11,000 11,000 * Lewis S. Greenleaf III 142,500 142,500 * Victoria Greenleaf 11,000 11,000 * Richard V. and Catherine 10,000 10,000 * P. Guerin JTWROS Jeff Harris 45,000 45,000 * Helzel Family Foundation 22,000 22,000 * (5) Leo B. and Florence 401,800 401,800 * Helzel Living Trust (5) Lawrence B. Helzel (5) (6) 182,083 80,000 * Michael H. Weed and 20,000 20,000 * Patricia A. Hurley Ingalls & Snyder Value 1,125,067 1,125,067 * Partners, L.P. Investors Forum 50,000 50,000 * Scott A. Katzmann 11,100 11,100 * Helzel Kirshman L.P. (6) 100,000 100,000 * Joseph Klein 15,000 15,000 * Michael Knapp (7) 70,067 60,000 * Joseph E. Kos and Amy 11,000 11,000 * Davis JTWROS Aaron Kozak Revocable 50,000 50,000 * Trust Lawton S. Lamb 11,000 11,000 * Donald M. Liddell, Jr. 100,000 100,000 * Joel Mael 25,000 25,000 * Bradley T. and Wendy R. Marlin 39,609 39,609 * Marquette National Bank 395,000 335,000 * Trust FBO John F. McCarthy Charitable Lead Annuities Trust (8) Marquette National 405,000 400,000 * Corporation (9) Marquette National Bank 720,000 720,000 * Trust FBO Dan McCarthy (10) David L. Mendel 11,000 11,000 * John B. and Beverly J. 39,000 39,000 * Miles JTWROS John S. Moran 250,000 250,000 * William M. Moran 5,000 5,000 * William Moran Jr. 35,000 35,000 * Martin and Anne Roher 50,000 50,000 * JTWROS Michael O'Rosky (11) 43,300 22,000 * Poutiatine Living Trust 111,000 111,000 dtd 12/28/89 Ivan S. Poutiatine, Trustee Poutiatine Living Trust 11,000 11,000 * dtd 12/28/89 Lochiel C.Poutiatine, Trustee Michael Poutiatine Trust 55,000 55,000 * Prism Partners I, LP 418,500 418,500 * Prism Partners Offshore Fund 31,500 31,500 * Katherine A. Ray 100,000 100,000 * Antonio Rigoni 18,445 18,445 * Katharine Plourde Simmons 16,000 16,000 * William Reed Simmons 39,000 39,000 * Evelyn Slavin 11,000 11,000 * Talkot Crossover Fund LP 333,333 333,333 * Arnold Toren 10,000 10,000 * Dean Witter, Cust. FBO 15,000 15,000 * Lindell Van Dyke IRA 112-122618-054 Lindell and Lynn Van Dyke 25,000 25,000 * Carl E. Warden 109,000 109,000 * Jeffrey Warmoth 11,000 11,000 * David Wollersheim 4,000 4,000 * Revocable Trust Marlene A. Zielinski 25,000 25,000 * Raymond Zielinski 33,000 33,000 *
- -------- (1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities that the person has the right to acquire within 60 days of February 11, 1999. Unless otherwise indicated, the persons or entities identified in the table have sole voting and investment power with respect to all shares shown beneficially owned by them. The numbers do not include shares of common stock which may be acquired by the exchange of L.P. Units, which generally cannot occur within 60 days. (2) Less than one percent of outstanding shares of Common Stock indicated by "*". (3) Mr. Aalgaard is a director and employee of Berg & Berg Enterprises, Inc., an affiliate of Carl E. Berg. Includes (i) 33,400 shares held of record by Carl E. Berg, Trustee, Berg & Berg Profit Sharing Plan FBO Thelmer G. Aalgaard Dated 1/1/84, (ii) 4,160 shares held of record by Carl E. Berg, Trustee, Berg & Berg Profit Sharing Plan FBO Thelmer G. Aalgaard Dated 1/1/84, 1997 Contribution, and (iii) 2,220 shares held of record by Thelmer G. Aalgaard, Custodian, Rachel Michaels, Under the California Uniform Gifts to Minor Act. (4) Mr. Berg is an officer and director of the Company and of Berg & Berg Enterprises, Inc. Includes 27,333 shares of common stock held of record by Berg & Berg Enterprises, Inc., of which Mr. Berg disclaims beneficial ownership except as to his pecuniary interest therein. Mr. Berg is a principal shareholder of the Company. Does not include 53,071 shares of common stock held of records as trustee under various pension and profit sharing plans. (5) Leo B. Helzel and Lawrence B. Helzel have only voting power with respect to shares owned by the Helzel Family Foundation, of which they are directors. Leo B. Helzel disclaims beneficial ownership of the shares held by the Living Trust except to the extent of his pecuniary interest in the shares. (6) Mr. Helzel became a director of Mission West Properties in December 1998. Mr. Helzel has voting power with respect to the shares owned by Helzel Kirshman, L.P. but disclaims any pecuniary interest in one-half of those shares. (7) Mr. Knapp was formerly an officer and director of Mission West Properties. Mr. Knapp is currently an officer of Berg & Berg Enterprises, Inc., an affiliate of Carl E. Berg. Includes (i) 3,333 shares held of record by Carl E. Berg, Trustee, Berg & Berg Enterprises, Inc. 401K FBO Michael L. Knapp Dated 1/1/84, (ii) 2,000 shares held of record by Michael L. Knapp, Custodian, Ryan Michael Knapp Under the California Uniform Gifts to Minor Act and (iii) 2,000 shares held of record by Michael L. Knapp, Custodian, Kayla Marie Knapp Under the California Uniform Gifts to Minor Act. (8) Paul McCarthy may be deemed to be the beneficial owner of the shares of the trust because he is the trustee of the trust, but he disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. (9) Paul McCarthy may be deemed to be the beneficial owner of these shares because he is the Chairman and Chief Executive Officer of Marquette National Corporation, but he disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein as a minority shareholder of the corporation. (10) Dan McCarthy may be deemed to be the beneficial owner of all of these shares. Mr. McCarthy and an individaul retirement account for his sole benefit are separate record holders of shares that are not included in this prospectus. The total number of these shares is 150,000. (11) Mr. O'Rosky is an employee of Berg & Berg Enterprises, Inc., an affiliate of Carl E. Berg. Mr. O'Rosky is also the son-in-law of Clyde J. Berg, who is a director of Berg & Berg Enterprises, Inc. and brother of Carl E. Berg. Includes (i) 4,000 shares held of record by Michael J. O'Rosky, Custodian, Mason Michael O'Rosky, Under the California Uniform Gifts to Minor Act; and (ii) 4,000 shares held of record by Michael J. O'Rosky, Custodian, Hannah Rae O'Rosky, Under the California Uniform Gifts to Minor Act. PLAN OF DISTRIBUTION The selling stockholders may offer their shares of common stock at various times in one or more of the following transactions: o on any of the United States securities exchanges where the common stock is listed and traded, including the American Stock Exchange and the Pacific Stock Exchange; o in the over-the-counter market; o in transactions other than on such exchanges or in the over-the-counter market; o in connection with short sales of the shares; o by pledge to secure debts and other obligations; o in connection with the writing of non-traded and exchange-traded call options, in hedge transactions and in settlement of other transactions in standardized or over-the-counter options; or o in a combination of any of the above transactions. The selling stockholders may sell their shares of common stock at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices, or at fixed prices. WHERE YOU CAN FIND MORE INFORMATION This prospectus, filed as a part of a Post-Effective Amendment No. 1 to S-4 Registration Statement on Form S-3 Registration Statement, does not contain all the information set forth in the registration statement or the exhibits and schedules to the registration statement filed in accordance with the rules and regulations of the SEC, and we are incorporating omitted information by this reference. Statements made in this prospectus concerning the contents of any contract, agreement or other document filed as an exhibit to the registration statement are summaries of the terms of the contracts, agreements or documents and are not necessarily complete. You should read each exhibit for a more complete description of the matters involved. The registration statement and the exhibits filed with the SEC may be inspected, without charge, and copies may be obtained at prescribed rates, at the SEC's Public Reference facility maintained by the Room, 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The registration statement and other information filed by the Company with the SEC also are available at the Web site maintained by the SEC on the World Wide Web at http://www.sec.gov. Reports, proxy statements and other information about us filed with the SEC may also be inspected at the offices of the American Stock Exchange, 86 Trinity Place, New York, New York, and the Pacific Exchange Incorporated, 301 Pine Street, San Francisco, California. Under SEC rules we are disclosing additional information to you by referring to documents that we have filed previously with the SEC. Information that we incorporate by reference into this prospectus is considered to be part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934: 1. The Form S-4 Registration Statement filed on May 15, 1998 and declared effective on November 23, 1998 (Registration No. 333-52835-99) (the "Registration Statement"), and the prospectus dated November 23, 1998 filed pursuant to SEC Rule 424(b)(3). 2. Our Annual Report on Form 10-K for the one-month transition period and fiscal year ended December 31, 1997. 3. All other reports filed since December 31, 1997 under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, including all reports filed after the date of the Registration Statement and prior to the effective date of this Post-Effective Amendment No. 1 to such Registration Statement, including our report on Form 10-Q/A for the quarter ended September 30, 1998 and our report on Form 8-K dated December 31, 1998. 4. The description of the common stock contained in the Registration Statement. You may request a copy of these filings, at no cost upon written or oral request by writing or telephoning us at the following address or telephone number: Mission West Properties, Inc., 10050 Bandley Drive, Cupertino, California 95014; telephone: (408) 725-0700. RECENT DEVELOPMENTS We recently acquired two newly constructed R&D office properties located on Richard Avenue in Santa Clara, California and Hellyer Avenue in San Jose, California consisting of a total of approximately 163,000 square feet of rentable space. We acquired these properties from Carl E. Berg and other members of the Berg Group under the Pending Projects Acquisition Agreement and the Berg Land Holdings Option Agreement. We paid $4,197,600 for the Richard Avenue property, which consists of approximately 52,800 rentable square feet, and $9,494,000 for the Hellyer Avenue property, which consists of approximately 110,000 rentable square feet. Each property was acquired by a different operating partnership, which assumed debt of $9,605,718 and issued 672,064 L.P. Units to the sellers. Each of the L.P. Units may be exchanged for shares of common stock in the same manner as other L.P. Units held by the same limited partner. The terms of the acquisitions were approved by the Independent Directors Committee of our board of directors. We have agreed with the sellers of the properties to treat our acquisitions as effective as of September 1, 1998 with respect to the Richard Avenue property, and November 1, 1998 with respect to the Hellyer Avenue property. This has allowed us to earn the rental income from the properties from the applicable date. LEGAL MATTERS We have received opinions of counsel from Graham & James, LLP, Palo Alto, California and Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland concerning the validity of the shares of common stock offered for sale by this prospectus. A partner of Graham & James, LLP who is rendering services to us beneficially owns 12,333 shares of common stock. EXPERTS The consolidated financial statements of Mission West Properties incorporated by reference to the Annual Report on Form 10-K for the period ended December 31, 1997 and the Combined Financial Statement for the Berg Properties as of December 31, 1997 and 1996, and for the three years in the period ended December 31, 1997, the Statement of Revenue and Certain Expenses of Fremont Properties for the year ended December 31, 1997 and the Combined Statements of Revenue and Certain Expenses for the Kontrabecki Properties for the years ended December 31, 1997, 1996 and 1995 included in the Registration Statement and prospectus have been audited by PricewaterhouseCoopers LLP, independent accountants. Such financial statements have been included or incorporated by reference in reliance upon the reports of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The financial statements as of November 30, 1996 and for each of the two years then ended incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 1997, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. -----END PRIVACY-ENHANCED MESSAGE-----