EX-99.1 CHARTER 2 exh99_1.htm EXHIBIT 99.1 exh99_1.htm

Exhibit 99.1

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Press Release

For Immediate News Release
October 13, 2010


Mission West Properties Announces Third Quarter 2010 Operating Results


Cupertino, CA – Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations (“FFO”) for the quarter ended September 30, 2010 was approximately $11,770,000, or $0.11 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 $17,604,000, or $0.17 per diluted common share, for the same period in 2009. Unrealized gain from investment in marketable securities accounted for approximately $4,464,000, or $0.04 per diluted common share, for the quarter ended September 30, 2009. On a sequential quarter basis, FFO for the quarter ended June 30, 2010 was approximately $0.16 per diluted common share. For the nine months ended September 30, 2010, FFO increased to $44,836,000, or $0.43 per diluted common share, from FFO of $43,863,000, or $0.42 per diluted common share, for the nine months ended September 30, 2009. Realized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the nine months ended September 30, 2010. Unrealized gain from investment in marketable securities accounted for approximately $0.04 per diluted common share for the nine months ended September 30, 2009.

Net income for the quarter ended September 30, 2010 was approximately $5,471,000 as compared to approximately $11,242,000 for the quarter ended September 30, 2009. Net income per diluted share available to common stockholders was approximately $0.06 for the quarter ended September 30, 2010 compared to $0.13 for the quarter ended September 30, 2009, a per share decrease of approximately 54%. Net income for the nine months ended September 30, 2010 was approximately $25,655,000 as compared to approximately $24,065,000 for the nine months ended September 30, 2009. For the nine months ended September 30, 2010, net income per diluted share available to common stockholders was $0.28, up from $0.27 a year ago, a per share increase of approximately 4%.

Financing Activity

On August 4, 2010, the Company entered into a fixed rate term agreement and related contracts and instruments for a secured mortgage loan totaling $40,000,000 from Hartford Life Insurance Company and Hartford Life and Accident Insurance Company (the “Hartford Loan II”). The Hartford Loan II bears a fixed interest rate of 6.05%, with a 20 year amortization, and matures September 1, 2030. The Hartford Loan II is secured by five properties consisting of approximately 500,000 rentable square feet.

The Company paid approximately $457,000 in loan fees and costs, which will be amortized over the 20 year loan period. The proceeds were used primarily to repay the remaining balance of an existing loan with the Berg Group.

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 112 properties totaling approximately 8.1 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.

 
 
 

MISSION WEST PROPERTIES, INC.
SELECTED FINANCIAL DATA
(In thousands, except share, per share and property data amounts)

   
 
Three Months Ended
Sept 30, 2010
    
 
Three Months Ended
Sept 30, 2009
    
 
Nine Months Ended
Sept 30, 2010
    
 
Nine Months Ended
Sept 30, 2009
  
OPERATING REVENUES:
                        
  Rental income
   $ 20,607     $ 20,442     $ 62,091     $ 61,521  
  Tenant reimbursements
     3,128       4,566       11,611       13,681  
  Other income
     276       284       2,138       906  
    Total operating revenues
     24,011       25,292       75,840       76,108  
                                 
OPERATING EXPENSES:
                                
  Operating and maintenance
     3,630       3,539       9,662       10,014  
  Real estate taxes
     3,163       3,248       9,806       9,996  
  General and administrative
     580       589       1,661       1,743  
  Depreciation and amortization
     5,862 (1)     5,921 (1)     17,840       18,200  
    Total operating expenses
     13,235       13,297       38,969       39,953  
                                 
    Operating income
     10,776       11,995       36,871       36,155  
                                 
OTHER INCOME (EXPENSES):
                                
  Equity in earnings of unconsolidated joint venture
     46       72       270       237  
  Interest and dividend income
     1       93       51       1,158  
  Realized gain from investment
     -       -       8,800       -  
  Unrealized gain (loss) from investment
     -       4,464       (4,733 )     4,140  
  Interest expense
     (5,138 )     (5,180 )     (14,765 )     (17,071 )
  Interest expense – related parties
     (214 )     (202 )     (839 )     (554 )
    Net income
     5,471       11,242       25,655       24,065  
                                 
Net income attributable to noncontrolling interests
     (4,101 )     (8,476 )     (19,367 )     (18,083 )
Net income available to common stockholders
   $ 1,370     $ 2,766     $ 6,288     $ 5,982  
                                 
Net income per share to common stockholders:
                                
   Basic
   $ 0.06     $ 0.13     $ 0.29     $ 0.28  
   Diluted
   $ 0.06     $ 0.13     $ 0.28     $ 0.27  
Weighted average shares of common stock (basic)
     21,976,679       21,770,211       21,938,857       21,717,713  
Weighted average shares of common stock (diluted)
     22,109,391       21,902,387       22,095,602       21,858,067  
Weighted average O.P. units outstanding
     83,309,356       83,504,965       83,344,408       83,557,463  
                                 


FUNDS FROM OPERATIONS
                        
Funds from operations
   $ 11,770     $ 17,604     $ 44,836     $ 43,863  
Funds from operations per share (2)
   $ 0.11     $ 0.17     $ 0.43     $ 0.42  
Outstanding common stock
     22,013,070       21,770,211       22,013,070       21,770,211  
Outstanding O.P. units
     83,272,965       83,504,965       83,272,965       83,504,965  
Weighted average O.P. units and common stock
   outstanding (diluted)
     105,418,747       105,407,352       105,440,010       105,415,530  


 
 
 


 
 
 
FUNDS FROM OPERATIONS CALCULATION
  
Three Months Ended
Sept 30, 2010
    
Three Months Ended
Sept 30, 2009
    
Nine Months Ended
Sept 30, 2010
    
Nine Months Ended
Sept 30, 2009
  
Net income
   $ 5,471     $ 11,242     $ 25,655     $ 24,065  
Add:
                                
   Depreciation and amortization
     6,350       6,385       19,314       19,796  
   Depreciation and amortization in
     unconsolidated joint venture
     60       60       179       179  
Less:
                                
   Noncontrolling interests in joint ventures
     (111 )     (83 )     (312 )     (177 )
Funds from operations
   $ 11,770     $ 17,604     $ 44,836     $ 43,863  
                                 
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.
  
   
 
 
PROPERTY AND OTHER DATA:
  
Three Months Ended
Sept 30, 2010
    
Three Months Ended
Sept 30, 2009
    
Nine Months Ended
Sept 30, 2010
    
Nine Months Ended
Sept 30, 2009
  
Total properties, end of period
     112       111       112       111  
Total square feet, end of period
     8,088,923       8,047,569       8,088,923       8,047,569  
Average monthly rental revenue per square foot (3)
   $ 1.29     $ 1.30     $ 1.31     $ 1.29  
Occupancy for leased properties
     67.8%       65.7%       67.8%       65.7%  
Straight-line rent
   $ ( 61 )   $ 115     $ ( 289 )   $ 675  
Leasing commissions
   $ 495     $ 973     $ 940     $ 1,294  
Non-recurring capital expenditures
   $ 1,699     $ 156     $ 1,699     $ 156  


LEASE ROLLOVER SCHEDULE:
             
Year
  
# of Leases
  
Rentable Square Feet
  
2010 Base Rent (5)
2010 (4)
  
5
  
144,411
  
$2,764,570
2011
  
15
  
739,221
  
11,312,732
2012
  
15
  
1,023,342
  
15,400,474
2013
  
7
  
401,645
  
5,626,016
2014
  
15
  
1,301,930
  
22,685,061
2015
  
9
  
631,693
  
9,969,073
2016
  
4
  
196,279
  
3,434,208
2017
  
5
  
349,949
  
4,955,733
Thereafter
  
7
  
639,380
  
6,605,740
    Total
  
82
  
5,427,850
  
$82,753,607
             


 
 
 


 
BALANCE SHEETS
            
   
September 30, 2010
    
December 31, 2009
  
             
Assets
            
Investments in real estate:
            
  Land
   $ 324,563     $ 320,911  
  Buildings and improvements
     801,548       799,649  
  Real estate related intangible assets
     3,240       3,240  
     Total investments in properties
     1,129,351       1,123,800  
  Accumulated depreciation and amortization
     (221,993 )     (204,153 )
      Net investments in properties
     907,358       919,647  
  Investment in unconsolidated joint venture
     3,872       3,828  
      Net investments in real estate
     911,230       923,475  
  Cash and cash equivalents
     15,226       986  
  Restricted cash
     89       197  
  Restricted investment in marketable securities
     -       12,069  
  Deferred rent receivables
     18,422       18,711  
  Other assets, net
     33,396       30,951  
      Total assets
   $ 978,363     $ 986,389  
                 
Liabilities and Equity
                
Liabilities:
                
  Mortgage notes payable
   $ 349,297     $ 318,818  
  Mortgage note payable – related parties
     7,860       8,261  
  Note payable – related parties
     -       9,325  
  Revolving line of credit
     -       14,466  
  Interest payable
     1,664       1,573  
  Security deposits
     4,886       4,849  
  Deferred rental income
     5,706       6,539  
  Dividends and distributions payable
     15,793       15,791  
  Accounts payable and accrued expenses
     18,021       9,638  
      Total liabilities
     403,227       389,260  
                 
Commitments and contingencies.
                
                 
Equity:
                
Stockholders’ equity:
                
  Common stock, $.001 par value
     22       22  
  Additional paid-in capital
     171,692       170,606  
  Distributions in excess of accumulated earnings
     (29,384 )     (25,784 )
      Total stockholders’ equity
     142,330       144,844  
Noncontrolling interests in operating partnerships
     432,806       452,285  
      Total equity
     575,136       597,129  
      Total liabilities and equity
   $ 978,363     $ 986,389  



(1)  
Includes approximately $124 and $159 in amortization expense for the three months ended September 30, 2010 and 2009, respectively, and $584 and $478 in amortization expense for the nine months ended September 30, 2010 and 2009, respectively, for the amortization of in-place lease value intangible asset pursuant to the Business Combinations Topic of the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”).

(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)  
Excludes five month-to-month leases for approximately 53,000 rentable square feet and $212 cash rent.

(5)  
Base rent reflects cash rent.