-----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, M2M+QCaSKQZClaAmTXP8YTHtX8vahxkKr/2fDw3Ke5NNHM5HeNtIqBl5/pCWsxBE pIH7gOUxUYHKgXGVjelj1Q== 0001067419-09-000025.txt : 20090716 0001067419-09-000025.hdr.sgml : 20090716 20090716130350 ACCESSION NUMBER: 0001067419-09-000025 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20090630 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20090716 DATE AS OF CHANGE: 20090716 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: 09947681 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 q220098k.txt 2ND QTR 2009 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): July 15, 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 (I.R.S. Employer of 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 July 15, 2009, the Company issued a press release announcing its earnings results for the second quarter ended June 30, 2009. 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: July 16, 2009 By: /s/ Wayne N. Pham ---------------------------------------- Wayne N. Pham Vice President of Finance and Controller Exhibit 99.1 PRESS RELEASE For Immediate News Release July 15, 2009 MISSION WEST PROPERTIES ANNOUNCES SECOND QUARTER 2009 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 June 30, 2009 was approximately $14,189,000, or $0.13 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 $13,049,000, or $0.12 per diluted common share, for the same period in 2008. Unrealized gain from investment in marketable securities accounted for approximately $2,433,000, or $0.02 per diluted common share, for the quarter ended June 30, 2009. A net increase in the reserve related to the Hellyer Avenue Limited Partnership litigation accounted for approximately $1,300,000 in interest expense, or ($0.01) per diluted common share, for the quarter ended June 30, 2009. On a sequential quarter basis, FFO for the quarter ended March 31, 2009 was approximately $0.11 per diluted common share. For the six months ended June 30, 2009, FFO decreased to $26,259,000, or $0.25 per diluted common share, from FFO of $28,272,000, or $0.27 per diluted common share, for the same period in 2008. Net termination fees accounted for approximately $1,921,000, or $0.02 per diluted common share for the six months ended June 30, 2008. Net income for the quarter ended June 30, 2009 was approximately $7,189,000 as compared to approximately $6,837,000 for the quarter ended June 30, 2008. Net income per diluted share to common stockholders was $0.08 for the quarter ended June 30, 2009 compared to $0.07 for the quarter ended June 30, 2008, a per share increase of approximately 14%. Net income for the six months ended June 30, 2009 was approximately $12,823,000 as compared to approximately $15,958,000 for the six months ended June 30, 2008. For the six months ended June 30, 2009, net income per diluted share to common stockholders was $0.15, down from $0.16 a year ago, a per share decrease of approximately 6%. Net termination fees accounted for approximately $0.02 per diluted common share for the six months ended June 30, 2008. 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 Six Months Six Months Ended Ended Ended Ended June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008 ---------------- ---------------- ---------------- ---------------- OPERATING REVENUES: Rental revenue from real estate $20,424 $19,359 $41,080 $38,356 Tenant reimbursements 4,315 3,710 9,115 7,293 Lease termination and settlement income - - - 1,921 Other income 302 249 622 477 ---------------- ---------------- ---------------- ---------------- Total operating revenues 25,041 23,318 50,817 48,047 ---------------- ---------------- ---------------- ---------------- OPERATING EXPENSES: Operating and maintenance 3,921 2,566 6,475 5,042 Real estate taxes 3,351 2,945 6,748 5,356 General and administrative 623 674 1,154 1,347 Depreciation and amortization of real estate 6,334 (1) 5,682 (1) 12,279 (1) 11,305 (1) ---------------- ---------------- ---------------- ---------------- Total operating expenses 14,229 11,867 26,656 23,050 ---------------- ---------------- ---------------- ---------------- Operating income 10,812 11,451 24,161 24,997 OTHER INCOME (EXPENSES): Equity in earnings of unconsolidated joint venture 75 407 164 789 Interest and dividend income 1,125 215 1,065 772 Unrealized gain (loss) from investment 2,433 - (324) - Interest expense (7,085) (4,956) (11,891) (9,884) Interest expense - related parties (171) (280) (352) (716) ---------------- ---------------- ---------------- ---------------- Net income 7,189 6,837 12,823 15,958 Net income attributable to noncontrolling interests (5,404) (5,478) (9,607) (12,717) ---------------- ---------------- ---------------- ---------------- Net income attributable to common stockholders $1,785 $1,359 3,216 3,241 ================ ================ ================ ================ Net income per share to common stockholders: Basic $0.08 $0.07 $0.15 $0.16 ================ ================ ================ ================ Diluted $0.08 $0.07 $0.15 $0.16 ================ ================ ================ ================ Weighted average shares of common stock (basic) 21,766,343 19,695,988 21,691,029 19,681,797 ================ ================ ================ ================ Weighted average shares of common stock (diluted) 21,899,906 19,902,304 21,835,545 19,766,535 ================ ================ ================ ================ Weighted average O.P. units outstanding 83,508,833 85,528,215 83,584,147 85,529,316 ================ ================ ================ ================ FUNDS FROM OPERATIONS Funds from operations $14,189 $13,049 $26,259 $28,272 ================ ================ ================ ================ Funds from operations per share (2) $0.13 $0.12 $0.25 $0.27 ================ ================ ================ ================ Outstanding common stock 21,770,211 19,743,557 21,770,211 19,743,557 ================ ================ ================ ================ Outstanding O.P. units 83,504,965 85,528,215 83,504,965 85,528,215 ================ ================ ================ ================ Weighted average O.P. units and common stock outstanding (diluted) 105,408,739 105,430,519 105,419,692 105,295,851 ================ ================ ================ ================
Three Months Three Months Six Months Six Months Ended Ended Ended Ended FUNDS FROM OPERATIONS CALCULATION June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008 ---------------- ---------------- ---------------- ---------------- Net income $ 7,189 $ 6,837 $12,823 $15,958 Add: Depreciation and amortization of real estate 6,994 6,086 13,411 12,110 Depreciation and amortization of real estate held in unconsolidated joint venture 60 189 119 378 Less: Noncontrolling interests in joint ventures (54) (63) (94) (174) ---------------- ---------------- ---------------- ---------------- Funds from operations $14,189 $13,049 $26,259 $28,272 ================ ================ ================ ================
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) (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 Six Months Six Months Ended Ended Ended Ended PROPERTY AND OTHER DATA: June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008 ---------------- ---------------- ---------------- ---------------- Total properties, end of period 111 111 111 111 Total square feet, end of period 8,047,569 8,047,569 8,047,569 8,047,569 Average monthly rental revenue per square foot (3) $1.29 $1.24 $1.29 $1.24 Occupancy for leased properties 66.1% 64.9% 66.1% 64.9% Straight-line rent $238 $ 882 $560 $1,587 Leasing commissions $204 $ 318 $320 $ 634 Capital expenditures $ - $2,116 $ - $2,337
LEASE ROLLOVER SCHEDULE: Year # of Leases Rentable Square Feet 2009 Base Rent (5) - ---------------- ------------- --------------------- ---------------------- 2009 10 114,267 (4) $ 1,809,503 2010 9 363,475 6,070,722 2011 16 838,692 12,333,272 2012 14 1,010,825 14,226,818 2013 6 397,215 5,081,754 2014 17 1,492,430 24,794,529 2015 6 485,036 8,784,074 2016 2 144,600 2,959,748 2017 5 349,949 3,510,351 Thereafter 1 119,756 2,608,286 ------------- --------------------- ---------------------- Total 86 5,316,245 $82,179,057 ============= ===================== ======================
BALANCE SHEETS June 30, 2009 December 31, 2008 -------------------- -------------------- Assets Investments in real estate: Land $ 320,911 $ 320,911 Buildings and improvements 799,471 799,471 Real estate related intangible assets 3,240 3,240 -------------------- -------------------- Total investments in properties 1,123,622 1,123,622 Accumulated depreciation and amortization (192,322) (180,043) -------------------- -------------------- Net investments in properties 931,300 943,579 Investment in unconsolidated joint venture 3,833 3,768 -------------------- -------------------- Net investments in real estate 935,133 947,347 Restricted cash 7,078 39,478 Restricted investment in marketable securities 6,585 - Investment in marketable securities - 3,368 Deferred rent receivables 18,401 17,841 Other assets, net 26,241 26,251 -------------------- -------------------- Total assets $ 993,438 $1,034,285 ==================== ==================== Liabilities and Equity Liabilities: Mortgage notes payable $ 324,941 $ 330,908 Mortgage note payable - related parties 8,516 8,761 Revolving line of credit 3,892 13,079 Interest payable 1,556 1,596 Security deposits 5,125 5,272 Deferred rental income 6,372 3,964 Dividends and distributions payable 15,791 21,055 Accounts payable and accrued expenses 19,631 17,747 -------------------- -------------------- Total liabilities 385,824 402,382 -------------------- -------------------- Commitments and contingencies. Equity: (6) Stockholders' equity: Common stock, $.001 par value 22 20 Additional paid-in capital 169,682 154,412 Distributions in excess of accumulated earnings (24,413) (20,014) -------------------- -------------------- Total stockholders' equity 145,291 134,418 Noncontrolling interests 462,323 497,485 -------------------- -------------------- Total equity 607,614 631,903 -------------------- -------------------- Total liabilities and equity $ 993,438 $1,034,285 ==================== ====================
- -------------------------------------------------------------------------------- (1) Includes approximately $159 in amortization expense for the three months ended June 30, 2009 and 2008, and $319 and $281 in amortization expense for the six months ended June 30, 2009 and 2008, respectively, for the amortization of in-place lease value intangible asset pursuant to Statement of Financial Accounting Standard 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) 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. (4) Six leases for approximately 87,000 rentable square feet are month to month leases. (5) Base rent reflects cash rent. (6) Reflects adoption of Statement of Financial Accounting Standard No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51." -----END PRIVACY-ENHANCED MESSAGE-----