-----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, K0So4AxqEEdGOH6OTtq6Z6doM7QkSGZJYBRMLX/0g0crtxx4pLWhmmMrbUbPCkZP Qk2X+m4eBbFYL7Vr8bMLWA== 0001067419-09-000004.txt : 20090205 0001067419-09-000004.hdr.sgml : 20090205 20090205104041 ACCESSION NUMBER: 0001067419-09-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20090204 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20090205 DATE AS OF CHANGE: 20090205 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: 001-34000 FILM NUMBER: 09570392 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 msw8k020409.txt 8-K 2-5-09 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 4, 2009 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)) 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 4, 2009, the Company issued a press release announcing its earnings results for the fourth quarter and full year ended December 31, 2008. 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: February 5, 2009 By: /s/ Wayne N. Pham --------------------------------- Wayne N. Pham Vice President of Finance and Controller Exhibit 99.1 PRESS RELEASE For Immediate News Release February 4, 2009 MISSION WEST PROPERTIES ANNOUNCES FOURTH QUARTER AND FULL YEAR 2008 OPERATING RESULTS "We build the buildings for the high tech companies that build the internet" Cupertino, CA - Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations ("FFO") for the quarter ended December 31, 2008 was approximately $12,863,000, or $0.12 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 $13,992,000, or $0.13 per diluted common share, for the same period in 2007. Net termination fee income relating to lease terminations for the fourth quarter ended December 31, 2008 accounted for approximately $833,000, or less than $0.01 per diluted common share. On a sequential quarter basis, FFO for the quarter ended September 30, 2008 was approximately $0.13 per diluted common share. For the twelve months ended December 31, 2008, FFO decreased to $55,334,000, or $0.52 per diluted common share, from FFO of $114,867,000, or $1.09 per diluted common share, for the same period in 2007. Net termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $2,754,000, or $0.03 per diluted common share, and $51,721,000, or $0.49 per diluted common share, for the twelve months ended December 31, 2008 and 2007, respectively. Net income per diluted share to common stockholders was $0.26 for the quarter ended December 31, 2008 compared to $0.08 for the quarter ended December 31, 2007, a per share increase of approximately 225%. Gains from the sale of two R&D properties in the Company's unconsolidated joint venture, TBI-MWP, accounted for approximately $0.20 per diluted common share for the quarter ended December 31, 2008. The gains are recorded under the line item, "Equity in earnings of unconsolidated joint venture," using the equity method of accounting. Net termination fee income relating to lease terminations accounted for approximately less than $0.01 per diluted common share for the three months ended December 31, 2008. For the twelve months ended December 31, 2008, net income per diluted share to common stockholders was $0.50, down from $0.95 a year ago, a per share decrease of approximately 47%. Gains from the sale of two R&D properties in the Company's unconsolidated joint venture, TBI-MWP, accounted for approximately $0.20 per diluted common share for the year ended December 31, 2008. Net termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $0.03 and $0.52 per diluted common share for the twelve months ended December 31, 2008 and 2007, respectively. 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 111 properties totaling approximately 8.0 million rentable square feet, which includes approximately 854,000 rentable square feet (or 16 buildings) that are in the process of being rezoned for residential development. 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. 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, 2008 Dec 31, 2007 Dec 31, 2008 Dec 31, 2007 ---------------- ---------------- ---------------- ---------------- OPERATING REVENUES: Rental revenue from real estate $20,464 $18,986 $79,075 $80,337 Above market lease intangible asset - - - (4,091) (1) amortization Tenant reimbursements 4,505 3,447 16,406 13,355 Lease termination and settlement income 1,087 - 3,007 57,515 Other income 446 659 1,216 4,467 ---------------- ---------------- ---------------- ---------------- Total operating revenues 26,502 23,092 99,704 151,583 ---------------- ---------------- ---------------- ---------------- OPERATING EXPENSES: Operating and maintenance 3,410 2,632 11,404 9,791 Real estate taxes 3,812 2,433 12,056 10,580 General and administrative 684 666 2,635 3,035 Depreciation and amortization of real estate 6,160 (2) 5,503 (2) 23,224 (2) 22,588 (2) ---------------- ---------------- ---------------- ---------------- Total operating expenses 14,066 11,234 49,319 45,994 ---------------- ---------------- ---------------- ---------------- Operating income 12,436 11,858 50,385 105,589 OTHER INCOME (EXPENSES): Equity in earnings of unconsolidated joint 18,701 350 19,617 1,408 venture Interest income 164 985 1,128 3,086 Dividend income 607 - 607 - Unrealized loss from investment (278) - (278) - Interest expense (4,880) (4,956) (19,787) (20,131) Interest expense - related parties (307) (178) (1,332) (724) ---------------- ---------------- ---------------- ---------------- Income from continuing operations before minority interests 26,443 8,059 50,340 89,228 Minority interests from continuing operations (21,186) (6,491) (40,206) (71,471) ---------------- ---------------- ---------------- ---------------- Income from continuing operations 5,257 1,568 10,134 17,757 Discontinued operations, net of minority interests: Gain from disposal of discontinued operations - - - 1,126 Income attributable to discontinued operations - - - 5 ---------------- ---------------- ---------------- ---------------- Income from discontinued operations - - - 1,131 ---------------- ---------------- ---------------- ---------------- Net income to common stockholders $ 5,257 $1,568 $10,134 $18,888 ================ ================ ================ ================ Net income to minority interests $21,186 $6,491 $40,206 $76,960 ================ ================ ================ ================ Income per share from continuing operations: Basic $0.27 $0.08 $0.51 $0.90 ================ ================ ================ ================ Diluted $0.26 $0.08 $0.50 $0.89 ================ ================ ================ ================ Basic - - - $0.06 ================ ================ ================ ================ Diluted - - - $0.06 ================ ================ ================ ================ Net income per share to common stockholders: Basic $0.27 $0.08 $0.51 $0.96 ================ ================ ================ ================ Diluted $0.26 $0.08 $0.50 $0.95 ================ ================ ================ ================ Weighted average shares of common stock (basic) 19,748,211 19,645,304 19,714,414 19,627,234 ================ ================ ================ ================ Weighted average shares of common stock (diluted) 20,018,836 19,710,909 20,226,385 19,854,411 ================ ================ ================ ================ Weighted average O.P. units outstanding 85,526,965 85,552,718 85,528,329 85,162,240 ================ ================ ================ ================
FUNDS FROM OPERATIONS Funds from operations $12,863 $13,992 $55,334 $114,867 ================ ================ ================ ================ Funds from operations per share (3) $0.12 $0.13 $0.52 $1.09 ================ ================ ================ ================ Outstanding common stock 19,748,211 19,664,087 19,748,211 19,664,087 ================ ================ ================ ================ Outstanding O.P. units 85,526,965 85,533,935 85,526,965 85,533,935 ================ ================ ================ ================ Weighted average O.P. units and common stock outstanding (diluted) 105,545,801 105,263,627 105,754,713 105,016,651 ================ ================ ================ ================ Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended FUNDS FROM OPERATIONS CALCULATION Dec 31, 2008 Dec 31, 2007 Dec 31, 2008 Dec 31, 2007 ---------------- ---------------- ---------------- ---------------- Net income $ 5,257 $1,568 $10,134 $ 18,888 Add: Minority interests (4) 21,125 6,360 39,838 76,458 Depreciation and amortization of real estate from continuing operations 6,620 5,875 24,933 25,043 Depreciation and amortization of real estate from discontinued operations - - - 250 Depreciation and amortization of real estate held in unconsolidated joint venture 332 189 900 757 Less: Gain on sale of real estate (20,471) - (20,471) (6,529) ---------------- ---------------- ---------------- ---------------- Funds from operations $12,863 $13,992 $55,334 $114,867 ================ ================ ================ ================
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 neither be considered as an alternative for net income as a measure of profitability nor 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, 2008 Dec 31, 2007 Dec 31, 2008 Dec 31, 2007 ---------------- ---------------- ---------------- ---------------- Total properties, end of period 111 109 111 109 Total square feet, end of period 8,047,569 7,861,692 8,047,569 7,861,692 Average monthly rental revenue per square foot (5) $1.26 $1.28 $1.25 $1.42 Occupancy for leased properties 66.4% 61.7% 66.4% 61.7% Straight-line rent $563 $310 $3,008 ($3,656) Leasing commissions $458 $352 $1,699 $3,000 Capital expenditures $305 $257 $6,468 $4,878
LEASE ROLLOVER SCHEDULE: Year # of Leases Rentable Square Feet - ---------------- ------------- --------------------- 2009 22 369,613 2010 12 572,000 2011 15 827,605 2012 13 1,001,452 2013 6 459,737 2014 11 1,281,952 2015 4 328,211 2016 2 144,600 2017 3 241,089 Thereafter 1 119,756 ------------- --------------------- Total 89 5,346,015 ============= ===================== BALANCE SHEETS
December 31, 2008 December 31, 2007 -------------------- -------------------- Assets Investments in real estate: Land $ 320,911 $ 312,152 Buildings and improvements 799,471 764,665 Real estate related intangible assets 3,240 2,119 -------------------- -------------------- Total investments in properties 1,123,622 1,078,936 Accumulated depreciation and amortization (180,043) (156,819) -------------------- -------------------- Net investments in properties 943,579 922,117 Investment in unconsolidated joint venture 3,768 2,735 -------------------- -------------------- Net investments in real estate 947,347 924,852 Cash and cash equivalents - 23,691 Restricted cash 39,478 65,509 Investment in marketable securities 3,368 - Deferred rent 17,841 14,833 Other assets, net 26,251 25,000 -------------------- -------------------- Total assets $1,034,285 $1,053,885 ==================== ==================== Liabilities and Stockholders' Equity Liabilities: Mortgage notes payable $ 330,908 $ 337,520 Mortgage note payable - related parties 8,761 9,224 Revolving line of credit 13,079 - Interest payable 1,596 1,331 Security deposits 5,272 4,754 Deferred rental income 3,964 3,302 Dividends and distributions payable 21,055 16,832 Accounts payable and accrued expenses 17,747 15,618 -------------------- -------------------- Total liabilities 402,382 388,581 -------------------- -------------------- Commitments and contingencies. Minority interests in operating partnerships 497,485 526,626 -------------------- -------------------- Stockholders' equity: Common stock, $.001 par value 20 20 Additional paid-in capital 154,412 153,024 Distributions in excess of accumulated (20,014) (14,366) earnings -------------------- -------------------- Total stockholders' equity 134,418 138,678 -------------------- -------------------- Total liabilities and stockholders' equity $1,034,285 $1,053,885 ==================== ====================
(1) Amortization of an above-market lease intangible asset pursuant to Statement of Financial Accounting Standard No. 141, "Business Combinations." (2) Includes approximately $159 and $267 in amortization expense for the three months ended December 31, 2008 and 2007, respectively, and $600 and $2,153 in amortization expense for the twelve months ended December 31, 2008 and 2007, 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-----