-----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, HBg27KCKkrz8rXF8rtHChehfr5/a0B5AGs3I/lxSxYWoOxEbLwBcsXo2DfIsSB0T bMhx/X2pmvIj9EhSdKLtug== 0001067419-06-000024.txt : 20060501 0001067419-06-000024.hdr.sgml : 20060501 20060501162735 ACCESSION NUMBER: 0001067419-06-000024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060501 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20060501 DATE AS OF CHANGE: 20060501 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: 06795440 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 may01068k.txt FORM 8-K 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): May 1, 2006 MISSION WEST PROPERTIES, INC. (Exact name of registrant as specified in its charter) Maryland Commission File Number: 95-2635431 (State or other jurisdiction of 1-8383 (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 May 1, 2006, the Company issued a press release announcing its earnings results for the first quarter ended March 31, 2006. 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 signed on its behalf by the undersigned hereunto duly authorized. MISSION WEST PROPERTIES, INC. Date: May 1, 2006 By: /s/ Wayne N. Pham ----------------------------- Wayne N. Pham Vice President of Finance and Controller - 2 - EX-99 2 exh991.txt EXHIBIT 99.1 EXHIBIT 99.1 Press Release For Immediate News Release May 1, 2006 Mission West Properties Announces First Quarter 2006 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, 2006 was $34,526,000 or $0.33 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 $20,308,000 or $0.19 per diluted common share for the same period in 2005. On a sequential quarter basis, FFO per diluted common share increased $0.15 compared to the prior quarter ended December 31, 2005. Termination fees and security deposit forfeitures relating to lease terminations accounted for approximately $16,056,000, or $0.15 per diluted common share. Excluding termination fees and security deposit forfeitures, FFO for the quarter ended March 31, 2006 was $0.18 per diluted common share. Net income to common stockholders per diluted share was $0.28 for the quarter ended March 31, 2006 compared to $0.13 for the quarter ended March 31, 2005. Excluding termination fees and security deposit forfeitures relating to lease terminations, net income to common stockholders per diluted share for the quarter ended March 31, 2006 was $0.13 per diluted share. The impact of stock option compensation expense from the adoption of SFAS No. 123R, "Share-based Payment", had minimal impact on the Company's financial position and results of operations. ACQUISITION ACTIVITY In March 2006, the Company acquired a fully leased office/R&D property with approximately 95,700 rentable square feet located at 233 South Hillview Drive in Milpitas, California from Sipex Corporation. The total acquisition price for this property was approximately $13,450,000 and was funded from the proceeds received from the 800 Embedded Way property sale in October 2005. 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 109 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", "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 Mar 31, 2006 Mar 31, 2005 ----------------- --------------- REVENUES Rental revenue from real estate $24,316 (1) $26,247 (1) Tenant reimbursements 3,309 3,628 Other income, including lease terminations and interest 16,788 303 ----------------- --------------- Total revenues 44,413 30,178 ----------------- --------------- EXPENSES: Operating expenses 2,056 2,173 Real estate taxes 2,625 2,716 Interest 5,215 4,647 Interest (related parties) 192 307 General and administrative 635 675 Depreciation and amortization of real estate 5,479 (2) 5,574 (2) ----------------- --------------- Total expenses 16,202 16,092 ----------------- --------------- Income before equity in earnings of unconsolidated joint venture and minority interests 28,211 14,086 Equity in earnings of unconsolidated joint venture 331 (6) Minority interests (23,390) (11,677) ----------------- --------------- Income from continuing operations 5,152 2,403 ----------------- --------------- Discontinued operations, net of minority interests: Gain from disposal of discontinued operations - 14 Loss from discontinued operations - (9) ----------------- --------------- Income from discontinued operations - 5 ----------------- --------------- Net income to common stockholders $5,152 $2,408 ================= =============== Net income to minority interests $23,390 $11,695 ================= =============== Income per share from continuing operations: Basic $0.28 $0.13 Diluted $0.28 $0.13 Income per share from discontinued operations: Basic - - Diluted - - ----------------- --------------- Net income per share to common stockholders: Basic $0.28 $0.13 ================= =============== Diluted $0.28 $0.13 ================= =============== Weighted average shares of common stock (basic) 18,455,897 18,110,524 ================= =============== Weighted average shares of common stock (diluted) 18,520,297 18,136,797 ================= =============== Weighted average O.P. units outstanding 86,082,539 86,371,362 ================= =============== FUNDS FROM OPERATIONS Funds from operations $34,526 $20,308 ================= =============== Funds from operations per share ((3)) $ 0.33 $ 0.19 ================= =============== Outstanding common stock 18,511,291 18,147,191 ================= =============== Outstanding O.P. units 86,038,095 86,334,695 ================= =============== Weighted average O.P. units and common stock outstanding (diluted) 104,602,836 104,508,159 ================= ===============
- 4 -
Three Months Three Months FUNDS FROM OPERATIONS CALCULATION Ended Ended Mar 31, 2006 Mar 31, 2005 ----------------- --------------- Net income $5,152 $2,408 Add: Minority interests ((4)) 23,256 11,574 Depreciation and amortization of real estate from continuing operations 5,907 6,001 Depreciation and amortization of real estate from discontinued operations - 33 Depreciation & amortization of real estate held in unconsolidated joint venture 211 355 Less: Gain on sale of real estate - (63) ----------------- --------------- Funds from operations $34,526 $20,308 ================= ===============
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 Ended Ended PROPERTY AND OTHER DATA: Mar 31, 2006 Mar 31, 2005 ----------------- --------------- Total properties, end of period 109 108 Total square feet, end of period 7,894,355 8,019,082 Average monthly rental revenue per square foot (5) $1.63 $1.59 Occupancy for leased properties 67.3% 67.7% Straight-line rent ($ 677) $ 615 Leasing commissions $ 270 $ 3,584 Capital expenditures $ 79 $ 285
- 5 -
BALANCE SHEET March 31, 2006 December 31, 2005 -------------------- -------------------- Assets: Land $ 277,269 $ 273,933 Buildings and improvements 775,237 766,457 Real estate related intangible assets 18,784 17,410 -------------------- -------------------- Total investments in properties 1,071,290 1,057,800 Less accumulated depreciation and amortization (136,370) (130,419) -------------------- -------------------- Net investments in properties 934,920 927,381 Cash and cash equivalents 39,937 31,441 Restricted cash 12,698 16,712 Deferred rent receivable 18,540 19,218 Investment in unconsolidated joint venture 3,340 3,263 Other assets 28,212 25,362 -------------------- -------------------- Total assets $1,037,647 $1,023,377 ==================== ==================== Liabilities: Mortgage notes payable $ 355,009 $ 357,481 Mortgage notes payable - related parties 9,955 10,051 Interest payable 321 321 Security deposits 6,608 8,047 Deferred rental income 10,585 6,103 Dividend/distribution payable 16,729 16,725 Accounts payable and accrued expenses 10,939 8,952 -------------------- -------------------- Total liabilities 410,146 407,680 Minority interests 509,522 500,682 Stockholders' equity: Common stock, $.001 par value 18 18 Paid in capital 138,811 138,038 Accumulated deficit (20,850) (23,041) -------------------- -------------------- Total stockholders' equity 117,979 115,015 -------------------- -------------------- Total liabilities and stockholders' equity $1,037,647 $1,023,377 ==================== ====================
(1) Includes approximately $472 in amortization expense for the three months ended March 31, 2006 and 2005 for the amortization of an above-market lease intangible asset pursuant to Statement of Financial Accounting Standard No. 141, "Business Combinations." (2) Includes approximately $340 and $440 in amortization expense for the three months ended March 31, 2006 and 2005, respectively, for the amortization of in-place lease value intangible asset 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. -----END PRIVACY-ENHANCED MESSAGE-----