-----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, PboV/zLoXpQyDyLBVkkWVjz+WAVbd32qo3dGx2cZ295yBwkFA8kKr4K3vzK4kpy4 HPVLgix+81AbEMLBzwf4SA== 0001067419-05-000030.txt : 20050414 0001067419-05-000030.hdr.sgml : 20050414 20050414131330 ACCESSION NUMBER: 0001067419-05-000030 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050331 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20050414 DATE AS OF CHANGE: 20050414 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-25235 FILM NUMBER: 05750224 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 1 msw8k041405.txt MISSION WEST PROPERTIES, INC. 8-K 04-14-05 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of report (date of earliest event reported): April 13, 2005 MISSION WEST PROPERTIES, INC. (Exact name of registrant as specified in its charter) Maryland Commission File Number: 95-2635431 -------- 1-8383 ---------- (State or other jurisdiction of (I.R.S. Employer incorporation) Identification) 10050 Bandley Drive, Cupertino, CA 95014 (Address of principal executive offices) (408) 725-0700 (Registrant's telephone number, including area code) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. (a) The following information is being furnished by the Company as required for Item 2.02(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 April 13, 2005, the Company issued a press release announcing its earnings results for the quarter ended March 31, 2005. The press release is attached to this Current Report as Exhibit 99.1 and is incorporated by reference in response to Item 2.02(a) of this report. - -------------------------------------------------------------------------------- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be filed on its behalf by the undersigned hereunto duly authorized. MISSION WEST PROPERTIES, INC. Date: April 14, 2005 By: /s/ Wayne N. Pham -------------------------------- Wayne N. Pham Vice President of Finance and Controller - 2 - Exhibit 99.1 Press Release For Immediate News Release April 13, 2005 MISSION WEST PROPERTIES ANNOUNCES FIRST QUARTER 2005 OPERATING 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 March 31, 2005 was $20,308,000 or $0.19 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 $27,078,000 or $0.26 per diluted common share for the same period in 2004. On a sequential quarter basis, FFO per diluted common share decreased $0.03 compared to the previous quarter ended December 31, 2004. Settlements of former tenants breach of lease lawsuit accounted for approximately $0.01 per diluted share in the fourth quarter 2004. Net income to common stockholders per diluted share was $0.13 for the quarter ended March 31, 2005 compared to $0.19 for the same period in 2004, a per share decrease of approximately 31.6%. Disposition Activity During the first quarter 2005, the Company completed the sale of two R&D properties consisting of 103,000 rentable square feet, which include the R&D properties at 3120 Scott Boulevard, Santa Clara, California and 405 Tasman Drive, Sunnyvale, California. A loss of approximately $2.2 million was realized on the total sales price of $8.5 million for the 3120 Scott property and was recorded in the fourth quarter 2004 as an asset impairment charge under discontinued operations. An estimated gain of approximately $1.4 million will be realized on the total sales price of $4.25 million for the 405 Tasman property. The recorded gain will be based on the installment method of profit recognition since the buyer has not made a sufficient down payment. The Company recorded a $63,000 gain in the first quarter 2005, and the balance of the expected gain is deferred. ACQUISITION ACTIVITY In the first quarter 2005, the Company acquired a 203,800 rentable square foot vacant R&D property located at 5521 Hellyer Avenue in San Jose, California. The total acquisition price for the property was approximately $14.0 million. 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 8.0 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. - 3 - MISSION WEST PROPERTIES, INC. SELECTED FINANCIAL DATA (In thousands, except share, per share and property data amounts)
Three Months Three Months Ended Ended March 31, 2005 March 31, 2004 ------------------ ------------------ REVENUES: Rental revenue from real estate $26,247 (5) $31,210 (5) Tenant reimbursements 3,628 4,168 Other income, including lease terminations, settlements and interest 303 394 ------------------ ------------------ Total revenues 30,178 35,772 ------------------ ------------------ EXPENSES: Operating expenses 2,173 2,504 Real estate taxes 2,716 2,951 Interest 4,647 4,363 Interest (related parties) 307 252 General and administrative 675 348 Depreciation and amortization of real estate 5,574 (1) 5,440 (1) ------------------ ------------------ Total expenses 16,092 15,858 ------------------ ------------------ Income before equity in earnings of unconsolidated joint venture and minority interests 14,086 19,914 Equity in (loss)/earnings of unconsolidated joint venture (6) 591 Minority interests (11,677) (17,044) ------------------ ------------------ Income from continuing operations 2,403 3,461 ------------------ ------------------ Discontinued operations, net of minority interests: Gain from disposal of discontinued operations 14 - (Loss)/income from discontinued operations (9) 62 ------------------ ------------------ Income from discontinued operations 5 62 ------------------ ------------------ Net income to common stockholders $2,408 $3,523 ================== ================== Net income to minority interests $11,902 $17,269 ================== ================== Income per share from continuing operations: Basic $0.13 $0.19 Diluted $0.13 $0.19 Income per share from discontinued operations: Basic - $0.01 Diluted - - Net income per share to common stockholders: Basic $0.13 $0.20 ================== ================== Diluted $0.13 $0.19 ================== ================== Weighted average shares of common stock (basic) 18,110,524 17,969,416 ================== ================== Weighted average shares of common stock (diluted) 18,136,797 18,075,262 ================== ================== Weighted average O.P. units outstanding 86,371,362 86,503,459 ================== ================== FUNDS FROM OPERATIONS Funds from operations $20,308 $27,078 ================== ================== Funds from operations per share (2) $ 0.19 $ 0.26 ================== ================== Outstanding common stock 18,147,191 18,014,691 ================== ================== Outstanding O.P. units 86,334,695 86,467,195 ================== ================== Weighted average O.P. units and common stock outstanding (diluted) 104,508,159 104,578,721 ================== ==================
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Three Months Three Months FUNDS FROM OPERATIONS CALCULATION Ended Ended March 31, 2005 March 31, 2004 ------------------ ------------------ Net income $ 2,408 $ 3,523 Add: Minority interests (3) 11,574 17,145 Depreciation and amortization of real estate from continuing operations 6,001 6,110 Depreciation and amortization of real estate from discontinued operations 33 82 Depreciation & amortization of real estate held in unconsolidated joint venture 355 218 Less: Gain on sale of real estate (63) - ------------------ ------------------ Funds from operations $20,308 $27,078 ================== ==================
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 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 Ended Ended PROPERTY AND OTHER DATA: March 31, 2005 March 31, 2004 ---------------- ---------------- Total properties, end of period 108 109 Total square feet, end of period 8,019,082 7,917,262 Average monthly rental revenue per square foot (4) $1.59 $1.78 Average occupancy 68.1% 75.8% Actual occupancy 67.7% 75.3% Straight-line rent $ 615 ($ 68) Leasing commissions $3,584 $924 Capital expenditures $ 285 $115
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BALANCE SHEET March 31, 2005 December 31, 2004 ------------------ ------------------- Assets: Land $ 277,647 $ 273,663 Buildings and improvements 777,925 770,757 Real estate related intangible assets 18,284 18,284 ------------------ ------------------- Total investments in properties 1,073,856 1,062,704 Less accumulated depreciation and amortization (115,655) (110,062) Assets held for sale, net of accumulated depreciation of $1,578 at December 31, 2004 - 8,221 ------------------ ------------------- Net investments in properties 958,201 960,863 Cash and cash equivalents 2,561 1,519 Restricted cash 1,551 1,551 Note receivable, net of deferred gain on sale of real estate of $1,345 2,714 - Deferred rent receivable 19,126 18,511 Investment in unconsolidated joint venture 3,298 3,559 Other assets 24,130 19,653 ------------------ ------------------- Total assets $1,011,581 $1,005,656 ================== =================== Liabilities: Line of credit - related parties $ 7,910 $ 9,560 Revolving line of credit 32,504 24,208 Mortgage notes payable 290,855 292,822 Mortgage notes payable - related parties 10,330 10,420 Interest payable 327 327 Security deposits 8,101 8,544 Deferred rental income 12,659 11,038 Liabilities related to assets held for sale - 14 Dividend/distribution payable 16,718 16,718 Accounts payable and accrued expenses 9,670 6,704 ------------------ ------------------- Total liabilities 389,074 380,355 Minority interests 509,255 512,089 Stockholders' equity: Common stock, $.001 par value 18 18 Paid in capital 135,075 134,539 Accumulated deficit (21,841) (21,345) ------------------ ------------------- Total stockholders' equity 113,252 113,212 ------------------ ------------------- Total liabilities and stockholders' equity $1,011,581 $1,005,656 ================== ===================
(1) Includes approximately $440 and $577 in amortization expense for the three months ended March 31, 2005 and 2004, respectively, for the amortization of in-place lease value of the San Tomas Technology Park acquisition pursuant to Statement of Financial Accounting Standard ("SFAS") No. 141, "Business Combinations." (2) Calculated on a fully diluted basis. Assumes conversion of O.P. units outstanding into the Company's common stock. (3) The minority interest for third parties has been deducted from total minority interest in calculating FFO. (4) 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. (5) Includes approximately $472 in amortization expense for the three months ended March 31, 2005 and 2004 for the amortization of the above-market lease intangible asset of the San Tomas Technology Park acquisition pursuant to Statement of Financial Accounting Standard ("SFAS") No. 141, "Business Combinations." - 6 - -----END PRIVACY-ENHANCED MESSAGE-----