"We build the buildings for the high tech companies that build the internet"
CUPERTINO, Calif., May 1 /PRNewswire-FirstCall/ -- Mission West Properties, Inc. (AMEX:MSW)(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.
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
FUNDS FROM OPERATIONS CALCULATION Three Months Three Months
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
BALANCE SHEET
March 31, December 31,
2006 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. DATASOURCE: Mission West Properties, Inc.
CONTACT: Karl Berg of Mission West Properties, Inc., +1-408-725-0700 Web site: http://www.missionwest.com/
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