-----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, MRLJz2d+C7iWyI5FA8CN/4KukF3tf2ZuT9TapZxdzQLmLGwOnNs6jmac1Dc8wBKT MzmuiWc5KWTNbq4Qx95Oag== 0001067419-06-000002.txt : 20060207 0001067419-06-000002.hdr.sgml : 20060207 20060206181144 ACCESSION NUMBER: 0001067419-06-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20051231 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20060207 DATE AS OF CHANGE: 20060206 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: 06583166 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 q48k2005.txt Q4 8-K 2005 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): February 6, 2006 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) - 1 - 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 February 6, 2006, the Company issued a press release announcing its earnings results for the fourth quarter and full year ended December 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: February 6, 2006 By: /s/ Wayne N. Pham ------------------------------ Wayne N. Pham Vice President of Finance and Controller - 2 - Exhibit 99.1 PRESS RELEASE For Immediate News Release February 6, 2006 MISSION WEST PROPERTIES ANNOUNCES FOURTH QUARTER AND FULL YEAR 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 December 31, 2005 was $19,173,000 or $0.18 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 $22,982,000 or $0.22 per diluted common share for the same period in 2004. On a sequential quarter basis, FFO per diluted common share remained evenly compared to the previous quarter ended September 30, 2005. For the twelve months ended December 31, 2005, FFO decreased to $79,152,000 or $0.76 per diluted share from FFO of $103,320,000 or $0.99 per diluted share for the same period in 2004. Net income to common stockholders per diluted share was $0.13 for the quarter ended December 31, 2005 compared to $0.16 for the quarter ended December 31, 2004, a per share decrease of approximately 18.8%. For the twelve months ended December 31, 2005, net income to common stockholders per diluted share was $0.55, down from $0.74 one year ago, a per share decrease of approximately 25.7%. 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 107 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. - 3 - MISSION WEST PROPERTIES, INC. SELECTED FINANCIAL DATA (In thousands, except share, per share and property data amounts)
Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended Dec 31, 2005 Dec 31, 2004 Dec 31, 2005 Dec 31, 2004 ----------------- --------------- --------------- --------------- REVENUES: Rental revenue from real estate $24,722 (1) $28,814 (1) $100,765 (1) $119,339 (1) Tenant reimbursements 3,508 3,295 14,762 14,919 Other income, including lease terminations, settlements and interest 1,588 1,512 4,606 6,913 ----------------- --------------- --------------- --------------- Total revenues 29,818 33,621 120,133 141,171 ----------------- --------------- --------------- --------------- EXPENSES: Operating expenses 2,585 2,139 9,219 9,016 Real estate taxes 2,792 2,666 10,259 11,030 Interest 5,249 4,530 21,295 17,581 Interest (related parties) 193 317 972 1,077 General and administrative 368 382 1,910 2,011 Depreciation and amortization of real estate 5,278 (2) 5,180 (2) 21,283 (2) 21,347 (2) ----------------- --------------- --------------- --------------- Total expenses 16,465 15,214 64,938 62,062 ----------------- --------------- --------------- --------------- Income before equity in earnings of unconsolidated joint venture and minority interests 13,353 18,407 55,195 79,109 Equity in earnings of unconsolidated joint 46 1,383 724 2,947 venture Minority interests (11,062) (16,442) (46,234) (68,199) ----------------- --------------- --------------- --------------- Income from continuing operations 2,337 3,348 9,685 13,857 ----------------- --------------- --------------- --------------- Discontinued operations, net of minority interests: Gain from disposal of discontinued operations 140 - 445 - (Loss)/income from discontinued operations (4) (527) (103) (545) ----------------- --------------- --------------- --------------- Income from discontinued operations 136 (527) 342 (545) ----------------- --------------- --------------- --------------- Net income to common stockholders $2,473 $2,821 $10,027 $13,312 ================= =============== =============== =============== Net income to minority interests $11,701 $14,504 $47,524 $66,100 ================= =============== =============== =============== Income per share from continuing operations: Basic $0.13 $0.19 $0.53 $0.77 Diluted $0.13 $0.19 $0.53 $0.77 Income per share from discontinued operations: Basic - ($0.03) $0.02 ($0.03) Diluted - ($0.03) $0.02 ($0.03) ----------------- --------------- --------------- --------------- Net income per share to common stockholders: Basic $0.13 $0.16 $0.55 $0.74 ================= =============== =============== =============== Diluted $0.13 $0.16 $0.55 $0.74 ================= =============== =============== =============== Weighted average shares of common stock (basic) 18,418,855 18,081,321 18,286,947 18,034,873 ================= =============== =============== =============== Weighted average shares of common stock (diluted) 18,432,819 18,104,454 18,325,659 18,076,498 ================= =============== =============== =============== Weighted average O.P. units outstanding 86,118,031 86,400,565 86,220,117 86,444,773 ================= =============== =============== =============== FUNDS FROM OPERATIONS Funds from operations $19,173 $22,982 $79,152 $103,320 ================= =============== =============== =============== Funds from operations per share (3) $ 0.18 $ 0.22 $ 0.76 $ 0.99 ================= =============== =============== =============== Outstanding common stock 18,437,791 18,097,191 18,437,791 18,097,191 ================= =============== =============== =============== Outstanding O.P. units 86,099,095 86,384,695 86,099,095 86,384,695 ================= =============== =============== =============== Weighted average O.P. units and common stock outstanding (diluted) 104,550,850 104,505,019 104,545,776 104,521,271 ================= =============== =============== ===============
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Three Months Three Months Twelve Months Twelve Months FUNDS FROM OPERATIONS CALCULATION Ended Ended Ended Ended Dec 31, 2005 Dec 31, 2004 Dec 31, 2005 Dec 31, 2004 ----------------- --------------- --------------- --------------- Net income $2,473 $2,821 $10,027 $ 13,312 Add: Minority interests (4) 11,602 14,387 47,045 65,614 Depreciation and amortization of real estate from continuing operations 5,686 5,503 22,987 22,991 Depreciation and amortization of real estate from discontinued operations - 53 315 529 Depreciation & amortization of real estate held in 210 218 984 874 unconsolidated joint venture Less: Gain on sale of real estate (798) - (2,206) - ----------------- --------------- --------------- --------------- Funds from operations $19,173 $22,982 $79,152 $103,320 ================= =============== =============== ===============
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) 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 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 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 Twelve Months Twelve Months Ended Ended Ended Ended PROPERTY AND OTHER DATA: Dec 31, 2005 Dec 31, 2004 Dec 31, 2005 Dec 31, 2004 --------------- --------------- ----------------- --------------- Total properties, end of period 107 109 107 109 Total square feet, end of period 7,780,084 7,917,262 7,780,084 7,917,262 Average monthly rental revenue per square foot $1.62 $1.80 $1.58 $1.80 (5) Average occupancy 67.0% 70.0% 67.9% 71.7% Actual occupancy 66.7% 70.7% 66.7% 70.7% Leased properties 68.9% 71.2% 68.9% 71.2% Straight-line rent ($ 84) ($ 600) $ 707 ($ 460) Leasing commissions $1,306 $ 410 $5,296 $1,801 Capital expenditures $ 267 $1,148 $1,138 $1,519
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BALANCE SHEET December 31, 2005 December 31, 2004 -------------------- -------------------- Assets: Land $ 273,933 $ 273,663 Buildings and improvements 766,457 770,757 Real estate related intangible assets 17,410 18,284 -------------------- -------------------- Total investments in properties 1,057,800 1,062,704 Less accumulated depreciation and (130,419) (110,062) amortization Assets held for sale, net of accumulated depreciation of $1,578 at 12/31/04 - 8,221 -------------------- -------------------- Net investments in properties 927,381 960,863 Cash and cash equivalents 31,441 1,519 Restricted cash 16,712 1,551 Deferred rent receivable 19,218 18,511 Investment in unconsolidated joint venture 3,263 3,559 Other assets 25,362 19,653 -------------------- -------------------- Total assets $1,023,377 $1,005,656 ==================== ==================== Liabilities: Mortgage notes payable $ 357,481 $ 292,822 Mortgage notes payable - related parties 10,051 10,420 Line of credit - related parties - 9,560 Revolving line of credit - 24,208 Interest payable 321 327 Security deposits 8,047 8,544 Deferred rental income 6,103 11,038 Liabilities related to assets held for sale - 14 Dividend/distribution payable 16,725 16,718 Accounts payable and accrued expenses 8,952 6,704 -------------------- -------------------- Total liabilities 407,680 380,355 Minority interests 500,682 512,089 Stockholders' equity: Common stock, $.001 par value 18 18 Paid in capital 138,038 134,539 Accumulated deficit (23,041) (21,345) -------------------- -------------------- Total stockholders' equity 115,015 113,212 -------------------- -------------------- Total liabilities and stockholders' equity $1,023,377 $1,005,656 ==================== ====================
(1) Includes approximately $472 in amortization expense for the three months ended December 31, 2005 and 2004 and approximately $1,888 in amortization expense for the twelve months ended December 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 No. 141, "Business Combinations." (2) Includes approximately $321 and $440 in amortization expense for the three months ended December 31, 2005 and 2004, respectively, and approximately $1,444 and $2,172 in amortization expense for the twelve months ended December 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 No. 141, "Business Combinations." (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 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 - -----END PRIVACY-ENHANCED MESSAGE-----