-----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, IgLbFOhgWyvHBD2etQNE+wktCn1THs306F9OgihGp3k3ATOt94H+X2CsFVEmSCjr Btn/hOD3z9MTGbkah48e0A== 0001067419-03-000011.txt : 20030724 0001067419-03-000011.hdr.sgml : 20030724 20030715133210 ACCESSION NUMBER: 0001067419-03-000011 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030714 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSION WEST PROPERTIES INC CENTRAL INDEX KEY: 0001067419 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 952635431 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-25235 FILM NUMBER: 03786838 BUSINESS ADDRESS: STREET 1: 10050 BANDLEY DRIVE CITY: CUPERTINO STATE: CA ZIP: 95014 BUSINESS PHONE: 4087250700 MAIL ADDRESS: STREET 1: 10050 BANDLEY DR CITY: CUPERTINO STATE: CA ZIP: 95014 8-K/A 1 q28k2003.txt 2003 Q2 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K AMENDMENT TO CURRENT REPORT 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 14, 2003 MISSION WEST PROPERTIES, INC. (Exact name of registrant as specified in its charter) Maryland Commission File Number: 95-2635431 -------- ---------- (State or other jurisdiction 1-8383 (I.R.S. Employer of incorporation) Identification) 10050 Bandley Drive, Cupertino, California 95014 (Address of principal executive offices) (408) 725-0700 (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS. (a) The following information is being furnished by the Company as required for Item 12(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 14, 2003, the Company issued a press release announcing its earnings results for the quarter ended June 30, 2003. The press release is attached to this Current Report as Exhibit 99.1 and is incorporated by reference in response to Item 12(a) of this report. SIGNATURES 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, 2003 By: /s/ Wayne N. Pham ----------------------------- Wayne N. Pham Vice President of Finance and Controller - 2 - Exhibit 99.1 Press Release For Immediate News Release July 14, 2003 Mission West Properties, Inc. Announces Second Quarter 2003 Earnings Results "We build the buildings for the high tech companies that build the internet" Cupertino, CA - Mission West Properties, Inc. (AMEX/PCX: MSW) reported today that Funds From Operations ("FFO") for the quarter ended June 30, 2003 was $28,952,000 or $0.28 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 $29,199,000 or $0.28 per diluted common share for the same period in 2002. On a sequential quarter basis, FFO per diluted common share remained the same compared to the previous quarter ended March 31, 2003. In addition to FFO for the quarter ended June 30, 2003, the Company recognized a gain of $1,400,000 from the sale of joint venture real estate, which was recorded as equity in earnings of unconsolidated joint venture. Net income per diluted share was $0.23 for the quarters ended June 30, 2003 and 2002. For the six months ended June 30, 2003, net income per diluted share was $0.46, down from $0.52 per diluted share in the first half of 2002, which included $0.06 gain from sale of real estate. INVESTMENT ACTIVITY On April 1, 2003, the Company obtained a 50% interest in a 60,000 rentable square foot shell building in Morgan Hill, California from the Berg Group under the Berg Land Holdings Option Agreement in connection with its joint venture with TBI. The joint venture financed 100% of the cost of the building. The shell building was sold and the Company recognized a gain of approximately $1.4 million. On April 9, 2003, the Company acquired a 36 acre seven building campus style office/R&D project comprised of approximately 625,000 rentable square feet at San Tomas and Central Expressway in Santa Clara, California, which is adjacent to Nvidia Corporation's headquarters campus. The project was acquired for $110 million from an unrelated third party and financed with a combination of debt and cash reserves. The debt component is comprised of a new short term mortgage note with a commercial bank secured by the assets in the acquisition for the sum of $80 million at LIBOR plus 200 basis points and matures in April 2004. In addition, the Company utilized approximately $19.2 million of its operating line of credit with Cupertino National Bank in connection with this acquisition. - 3 - 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 108 properties totaling approximately 7.8 million 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", "intends", 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 under the Berg Land Holdings Option Agreement with the Berg Group and other factors detailed in the Company's registration statements, and periodic filings with the Securities & Exchange Commission. - 4 - MISSION WEST PROPERTIES, INC. SELECTED FINANCIAL DATA (In thousands, except share, per share and property data amounts)
Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002 ----------------- --------------- --------------- --------------- REVENUES: Rental revenues from real estate $33,194 $32,753 $64,626 $65,238(1) Tenant reimbursements 4,990 4,875 9,565 10,201 Other income, including interest 569 278 1,303 774 ----------------- --------------- --------------- --------------- Total revenues 38,753 37,906 75,494 76,213 ----------------- --------------- --------------- --------------- EXPENSES: Operating expenses 1,891 1,921 3,410 4,196 Real estate taxes 3,440 3,003 6,515 6,060 Depreciation & amortization of real estate 5,397(2) 4,455 9,961(2) 8,811 General and administrative 322 370 680 804 Interest 4,356 2,362 7,761 4,633 Interest (related parties) 256 899 550 1,909 ----------------- --------------- --------------- --------------- Total expenses 15,662 13,010 28,877 26,413 ----------------- --------------- --------------- --------------- Income before minority interests & equity in earnings of unconsolidated joint venture 23,091 24,896 46,617 49,800 Equity in earnings of unconsolidated joint venture 2,023 - 2,760 - ----------------- --------------- --------------- --------------- Income before minority interests 25,114 24,896 49,377 49,800 Minority interests 20,958 20,823 41,187 41,591 ----------------- --------------- --------------- --------------- Income from continuing operations 4,156 4,073 8,190 8,209 ----------------- --------------- --------------- --------------- Discontinued operations, net of minority interests: Gain from disposal of discontinued operations - - - 1,017 Income attributable to discontinued operations - - - 48 ----------------- --------------- --------------- --------------- Income from discontinued operations - - - 1,065 ----------------- --------------- --------------- --------------- Net income to common stockholders $ 4,156 $ 4,073 $ 8,190 $ 9,274 ================= =============== =============== =============== Net income to minority interests $20,958 $20,823 $41,187 $46,917 ================= =============== =============== =============== Income per share from continuing operations: Basic $0.23 $0.23 $0.46 $0.47 ================= =============== =============== =============== Diluted $0.23 $0.23 $0.46 $0.46 ================= =============== =============== =============== Income per share from discontinued operations: Basic - - - $0.06 ================= =============== =============== =============== Diluted - - - $0.06 ================= =============== =============== =============== Net income per share to common stockholders: Basic $0.23 $0.23 $0.46 $0.53 ================= =============== =============== =============== Diluted $0.23 $0.23 $0.46 $0.52 ================= =============== =============== =============== Weighted average shares of common stock (basic) 17,701,999 17,464,692 17,669,808 17,434,796 ================= =============== =============== =============== Weighted average shares of common stock 17,762,773 17,902,853 17,728,638 17,878,483 (diluted) ================= =============== =============== =============== Weighted average O.P. units outstanding 86,498,064 86,163,983 86,504,837 86,181,702 ================= =============== =============== =============== FUNDS FROM OPERATIONS Funds from operations $28,952 $29,199 $57,607 $58,632 ================= =============== =============== =============== Funds from operations per share (3) $ 0.28 $ 0.28 $ 0.55 $ 0.56 ================= =============== =============== =============== Outstanding common stock 17,739,691 17,467,329 17,739,691 17,467,329 ================= =============== =============== =============== Outstanding O.P. units 86,498,064 86,161,346 86,498,064 86,161,346 ================= =============== =============== =============== Weighted average O.P. units & common stock outstanding (diluted) 104,260,837 104,066,836 104,233,476 104,060,185 ================= =============== =============== ===============
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Three Months Three Months Six Months Six Months Ended Ended Ended Ended FUNDS FROM OPERATIONS CALCULATION June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002 ----------------- --------------- --------------- --------------- Net income $ 4,156 $ 4,073 $ 8,190 $ 9,273 Add: Minority interests (4) 20,799 20,671 40,856 46,605 Depreciation and amortization of real 5,397 4,455 9,961 8,857 estate Less: Gain on sale of JV assets / assets 1,400 - 1,400 6,103 ----------------- --------------- --------------- --------------- Funds from operations $28,952 $29,199 $57,607 $58,632 ================= =============== =============== ===============
Funds From Operations ("FFO") is a non-GAAP financial measurement used by real estate investment trusts to measure and compare operating performance. As defined by NAREIT, FFO represents net income (loss) before minority interest of unit holders (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, amortization of commission and depreciation of non-real estate assets) and after adjustments for unconsolidated partnerships and joint ventures. Management considers FFO an appropriate measure of performance of an equity REIT because, along with cash flows from operating activities, financing activities and investing activities, it provides investors with an understanding of our ability to incur and service debt, and make capital expenditures. FFO should not be considered as an alternative for net income as a measure of profitability or 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 Months Three Months Six Months Six Months Ended Ended Ended Ended PROPERTY AND OTHER DATA: June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002 ----------------- --------------- --------------- --------------- Total properties, end of period 108 100 108 100 Total square feet, end of period 7,788,742 6,998,930 7,788,742 6,998,930 Average monthly rental revenue per square foot (5) $ 1.73 $ 1.69 $ 1.73 $ 1.69 Average occupancy 81.5% 90.9% 82.6% 93.1% Actual occupancy 80.2% 90.3% 80.2% 90.3% Straight-line rent $206 $176 $ 450 ($ 605) Capital expenditures $756 $217 $1,409 $358
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BALANCE SHEET June 30, 2003 December 31, 2002 ----------------- -------------------- Assets: Land $ 276,405 $234,707 Buildings and improvements 795,415(6) 726,581 ----------------- -------------------- Total investments in properties 1,071,820 961,288 Less accumulated depreciation (76,049) (66,560) ----------------- -------------------- Net investments in properties 995,771 894,728 Investments in unconsolidated joint venture 2,159 - ----------------- -------------------- Net investments in real estate assets 997,930 894,728 Cash 2,745 4,479 Deferred rent 17,451 17,001 Other assets 13,477 13,198 ----------------- -------------------- Total assets $1,031,603 $929,406 ================= ==================== Liabilities: Line of credit - related parties $ 4,185 $ 58,792 Revolving line of credit 18,431 23,839 Loan payable - 20,000 Mortgage notes payable 302,352 125,062 Mortgage notes payable - related parties 10,923 11,078 Interest payable 335 337 Security deposits 10,664 11,184 Prepaid rental income 14,056 9,876 Dividend/distribution payable 25,017 24,951 Accounts payable and accrued expenses 4,672 4,698 ----------------- -------------------- Total liabilities 390,635 289,817 Minority interests 528,317 528,768 Stockholders' equity: Common stock, $.001 par value 18 17 Paid in capital 130,429 128,295 Accumulated deficit (17,796) (17,491) ----------------- -------------------- Total stockholders' equity 112,651 110,821 ----------------- -------------------- Total liabilities and stockholders' equity $1,031,603 $929,406 ================= ====================
(1) The Company recorded an adjustment of $1.4 million to establish a reserve relating to the recapture of straight-line revenues and other tenant related items for the quarter ended March 31, 2002. (2) Includes approximately $472 in amortization expense from the adoption of Statement of Financial Accounting Standard ("SFAS") No. 141, "Business Combinations," which requires the purchase price allocation and amortization of the origination value and fair market value of the acquired leases associated with properties acquired after July 1, 2001. (3) Calculated on a fully diluted basis. Assumes conversion of O.P. units outstanding into the Company's common stock. (4) The minority interest for unrelated third parties has been deducted from total minority interest in calculating FFO. (5) 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. (6) Effective January 1, 2003, the Company adopted SFAS No. 141, which was applied to the San Tomas Technology Park acquisition. The amount allocated, in accordance with SFAS No. 141, was approximately $11.2 million, which will be amortized over six years. - 7 - -----END PRIVACY-ENHANCED MESSAGE-----