'We Build the Buildings for the High Tech Companies That Build the Internet'
CUPERTINO, Calif., April 18 /PRNewswire-FirstCall/ -- 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.
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
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
BALANCE SHEET March 31, December 31,
2007 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. DATASOURCE: Mission West Properties, Inc.
CONTACT: Carl Berg of Mission West Properties, Inc., +1-408-725-0700 Web site: http://www.missionwest.com/
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