-----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, BO2/D9/GK7hI1LISB+p/tYqGpa14rw7Qgx0gKQL9inC115UcmnKsBpR2Xt0RVd/I R954cG3QJpPg1bg4mfpdqg== 0001067419-07-000015.txt : 20070419 0001067419-07-000015.hdr.sgml : 20070419 20070419132855 ACCESSION NUMBER: 0001067419-07-000015 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20070418 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20070419 DATE AS OF CHANGE: 20070419 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: 07775621 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 q18k041907.txt FORM 8-K 04-19-07 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 18, 2007 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 April 18, 2007, the Company issued a press release announcing its earnings results for the first quarter ended March 31, 2007. 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: April 18, 2007 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 18, 2007 MISSION WEST PROPERTIES ANNOUNCES FIRST QUARTER 2007 OPERATING RESULTS "We build the buildings for the high tech companies that build the internet" Cupertino, CA - Mission West Properties, Inc. (AMEX: MSW) reported today that Funds From Operations ("FFO") for the quarter ended March 31, 2007 was approximately $23,905,000 or $0.23 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 approximately $34,526,000 or $0.33 per diluted common share for the same period in 2006. On a sequential quarter basis, FFO for the quarter ended December 31, 2006 was approximately $0.18 per diluted common share. Termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $10,109,000, or $0.10 per diluted common share and $16,056,000, or $0.15 per diluted common share for the quarters ended March 31, 2007 and 2006, respectively. Write-off of an above market lease intangible asset against income relating to one lease termination accounted for approximately $3,619,000, or $0.03 per diluted common share for the quarter ended March 31, 2007. Net income per diluted share to common stockholders was $0.17 for the quarter ended March 31, 2007 compared to $0.28 for the quarter ended March 31, 2006, a per share decrease of approximately 39.3%. Termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $0.10 and $0.16 per diluted common share for the quarters ended March 31, 2007 and 2006, respectively. Write-off of in-place lease intangible assets against income relating to two lease terminations accounted for approximately $0.04 per diluted common share for the quarter ended March 31, 2007. ACQUISITION ACTIVITY In March 2007, the Company acquired 50 acres of vacant land in Morgan Hill, California, which could support approximately 725,000 rentable square feet of space. The land is currently zoned for industrial use and a portion has the potential to be rezoned for residential use. The acquisition price for this property was approximately $25,543,000 and was funded from a portion of the proceeds received from the Samaritan property sale, which was classified as restricted cash as of December 31, 2006. 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 7.7 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, 2007 Mar 31, 2006 ---------------- ---------------- REVENUES: Rental revenue from real estate $21,338 $24,788 Above market lease intangible asset amortization (4,091)(1) (472)(1) Tenant reimbursements 3,227 3,309 Lease termination income 10,109 16,056 Other income, including interest 3,056 732 ---------------- ---------------- Total revenues 33,639 44,413 ---------------- ---------------- EXPENSES: Operating expenses 1,968 2,056 Real estate taxes 2,578 2,625 Interest 5,069 5,215 Interest (related parties) 184 192 General and administrative 713 635 Depreciation and amortization of real estate 6,210(2) 5,479(2) ---------------- ---------------- Total expenses 16,722 16,202 ---------------- ---------------- Income before equity in earnings of unconsolidated joint venture and minority interests 16,917 28,211 Equity in earnings of unconsolidated joint venture 337 331 Minority interests (13,879) (23,390) ---------------- ---------------- Income from operations 3,375 5,152 Net income to common stockholders $ 3,375 $ 5,152 ================ ================ Net income to minority interests $13,879 $23,390 ================ ================ Net income per share to common stockholders: Basic $0.17 $0.28 ================ ================ Diluted $0.17 $0.28 ================ ================ Weighted average shares of common stock (basic) 19,582,787 18,455,897 ================ ================ Weighted average shares of common stock (diluted) 19,889,453 18,520,297 ================ ================ Weighted average O.P. units outstanding 85,066,999 86,082,539 ================ ================ FUNDS FROM OPERATIONS Funds from operations $23,905 $34,526 ================ ================ Funds from operations per share (3) $ 0.23 $ 0.33 ================ ================ Outstanding common stock 19,625,587 18,511,291 ================ ================ Outstanding O.P. units 85,024,199 86,038,095 ================ ================ Weighted average O.P. units and common stock outstanding (diluted) 104,956,452 104,602,836 ================ ================
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Three Months Three Months Ended Ended FUNDS FROM OPERATIONS CALCULATION Mar 31, 2007 Mar 31, 2006 ----------------- --------------- Net income $ 3,375 $ 5,152 Add: Minority interests (4) 13,755 23,256 Depreciation and amortization of real estate 6,586 5,907 Depreciation & amortization of real estate held in unconsolidated joint venture 189 211 ----------------- --------------- Funds from operations $23,905 $34,526 ================= ===============
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, 2007 Mar 31, 2006 ----------------- --------------- Total properties, end of period 107 109 Total square feet, end of period 7,701,359 7,894,355 Average monthly rental revenue per square foot (5) $1.50 $1.63 Occupancy for leased properties 69.4% 67.3% Straight-line rent ($1,595) ($677) Leasing commissions $ 458 $ 270 Capital expenditures $ 863 $ 79
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BALANCE SHEET March 31, 2007 December 31, 2006 -------------------- -------------------- Assets: Land $ 297,765 $ 272,223 Buildings and improvements 757,459 756,596 Real estate related intangible assets 6,422 19,529 -------------------- -------------------- Total investments in properties 1,061,646 1,048,348 Less accumulated depreciation and amortization (146,653) (149,459) -------------------- -------------------- Net investments in properties 914,993 898,889 Cash and cash equivalents 45,703 33,785 Restricted cash 21,503 48,245 Deferred rent receivable 16,894 18,489 Investment in unconsolidated joint venture 3,155 3,468 Other assets, net 25,051 24,611 -------------------- -------------------- Total assets $1,027,299 $1,027,487 ==================== ==================== Liabilities: Mortgage notes payable $ 345,495 $ 348,101 Mortgage notes payable - related parties 9,549 9,654 Interest payable 1,366 1,375 Security deposits 6,798 6,977 Deferred rental income 7,915 6,874 Dividend/distribution payable 16,745 16,745 Accounts payable and accrued expenses 8,795 7,601 -------------------- -------------------- Total liabilities 396,663 397,327 -------------------- -------------------- Minority interests 498,970 501,282 -------------------- -------------------- Stockholders' equity: Common stock, $.001 par value 20 19 Paid-in capital 152,094 149,541 Accumulated deficit (20,448) (20,682) -------------------- -------------------- Total stockholders' equity 131,666 128,878 -------------------- -------------------- Total liabilities and stockholders' equity $1,027,299 $1,027,487 ==================== ====================
(1) Amortization of an above-market lease intangible asset pursuant to Statement of Financial Accounting Standard No. 141, "Business Combinations." (2) Includes approximately $1,193 and $340 in amortization expense for the three months ended March 31, 2007 and 2006, 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-----