'We Build the Buildings for the High Tech Companies That Build the Internet'
CUPERTINO, Calif., Feb. 7 /PRNewswire-FirstCall/ -- Mission West Properties, Inc. (AMEX:MSW) reported today that Funds From Operations ("FFO") for the quarter ended December 31, 2006 was $18,538,000 or $0.18 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 $19,173,000 or $0.18 per diluted common share for the same period in 2005. On a sequential quarter basis, FFO for the quarter ended September 30, 2006 was $0.16 per diluted common share. For the twelve months ended December 31, 2006, FFO increased to $86,585,000 or $0.83 per diluted common share from FFO of $79,152,000 or $0.76 per diluted common share for the same period in 2005. Excluding termination fees and security deposit forfeitures relating to lease terminations, FFO for the twelve months ended December 31, 2006 and 2005 was $0.67 and $0.73 per diluted common share, respectively.
Net income per diluted share to common stockholders was $0.27 for the quarter ended December 31, 2006 compared to $0.13 for the quarter ended December 31, 2005, a per share increase of approximately 107.7%. Approximately $0.15 was due to gain from sale of real estate. For the twelve months ended December 31, 2006, net income per diluted share to common stockholders was $0.76, up from $0.55 one year ago, a per share increase of approximately 38.2%. Excluding termination fees and security deposit forfeitures relating to lease terminations, net income per diluted share to common stockholders for the twelve months ended December 31, 2006 and 2005 was $0.60 and $0.52, respectively.
Disposition Activity During the fourth quarter 2006, the Company completed the sale of three R&D properties consisting of approximately 235,000 rentable square feet at 2033-2243 Samaritan Drive, San Jose, California. A gain of approximately $18.1 million was realized on the total sales price of $43.3 million.
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 Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2006 2005 2006 2005
REVENUES:
Rental revenue
from real estate $22,838 (1) $23,982 (1) $90,110 (1) $97,735 (1)
Tenant reimbursements 3,692 3,393 13,116 14,115
Lease termination
income - 429 16,068 2,407
Other income,
including interest 1,673 1,154 4,534 2,184
Total revenues 28,203 28,958 123,828 116,441
EXPENSES:
Operating expenses 2,282 2,448 8,330 8,733
Real estate taxes 2,700 2,734 10,324 10,026
Interest 5,129 5,249 20,709 21,295
Interest
(related parties) 186 193 755 972
General and
administrative 445 368 2,248 1,910
Depreciation and
amortization of
real estate 5,642 (2) 5,122 (2) 21,803 (2) 20,553 (2)
Total expenses 16,384 16,114 64,169 63,489
Income before equity
in earnings of
unconsolidated joint
venture and minority
interests 11,819 12,844 59,659 52,952
Equity in earnings
of unconsolidated
joint venture 447 46 1,985 724
Minority interests (9,980) (10,635) (50,150) (44,353)
Income from
continuing
operations 2,286 2,255 11,494 9,323 Discontinued
operations, net of
minority interests:
Gain from disposal
of discontinued
operations 2,935 140 2,935 445
Income from
discontinued
operations 29 78 201 259
Income from
discontinued
operations 2,964 218 3,136 704 Net income to common
stockholders $5,250 $2,473 $14,630 $10,027
Net income to minority
interests $25,301 $11,701 $66,358 $47,524
Income per share
from continuing
operations:
Basic $0.12 $0.12 $0.60 $0.51
Diluted $0.12 $0.12 $0.60 $0.51
Income per share
from discontinued
operations:
Basic $0.15 $0.01 $0.16 $0.04
Diluted $0.15 $0.01 $0.16 $0.04
Net income per share
to common
stockholders:
Basic $0.27 $0.13 $0.76 $0.55
Diluted $0.27 $0.13 $0.76 $0.55
Weighted average
shares of common
stock (basic) 19,417,823 18,418,855 19,066,581 18,286,947
Weighted average
shares of common
stock (diluted) 19,630,674 18,432,819 19,298,664 18,325,659
Weighted average
O.P. units
outstanding 85,215,982 86,118,031 85,510,491 86,220,117 FUNDS FROM OPERATIONS
Funds from
operations $18,538 $19,173 $86,585 $79,152
Funds from
operations per
share (3) $0.18 $0.18 $0.83 $0.76
Outstanding common
stock 19,443,587 18,437,791 19,443,587 18,437,791
Outstanding O.P. units 85,206,199 86,099,095 85,206,199 86,099,095
Weighted average
O.P. units and
common stock
outstanding
(diluted) 104,846,655 104,550,850 104,809,155 104,545,776
FUNDS FROM OPERATIONS CALCULATION Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2006 2005 2006 2005 Net income $5,250 $2,473 $14,630 $10,027
Add:
Minority
interests (4) 25,184 11,602 65,859 47,045
Depreciation
and
amortization
of real
estate from
continuing
operations 6,017 5,530 23,316 22,256
Depreciation
and amortization
of real estate
from discontinued
operations - 156 471 1,046
Depreciation
& amortization
of real estate
held in
unconsolidated
joint venture 189 210 849 984
Less:
Gain on sale of
real estate or
JV real
estate (18,102) (798) (18,540) (2,206)
Funds from
operations $18,538 $19,173 $86,585 $79,152
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.
PROPERTY AND OTHER DATA:
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2006 2005 2006 2005 Total properties,
end of period 107 107 107 107
Total square feet,
end of period 7,701,359 7,780,084 7,701,359 7,780,084
Average monthly
rental revenue
per square
foot (5) $1.54 $1.62 $1.57 $1.58
Occupancy for
leased properties 69.5% 68.9% 69.5% 68.9%
Straight-line
rent $318 ($84) ($729) $707
Leasing commissions $342 $1,306 $1,157 $5,296
Capital
expenditures $2,928 $267 $4,278 $1,138
BALANCE SHEET
December 31, December 31,
2006 2005
Assets:
Land $272,223 $273,933
Buildings and improvements 756,596 766,457
Real estate related intangible assets 19,529 17,410
Total investments in properties 1,048,348 1,057,800
Less accumulated depreciation and
amortization (149,459) (130,419)
Net investments in properties 898,889 927,381
Cash and cash equivalents 33,785 31,441
Restricted cash 48,245 16,712
Deferred rent receivable 18,489 19,218
Investment in unconsolidated joint venture 3,468 3,263
Other assets, net 24,611 25,362
Total assets $1,027,487 $1,023,377 Liabilities:
Mortgage notes payable $348,101 $357,481
Mortgage notes payable - related parties 9,654 10,051
Interest payable 1,375 321
Security deposits 6,977 8,047
Deferred rental income 6,874 6,103
Dividend/distribution payable 16,745 16,725
Accounts payable and accrued expenses 7,601 8,952
Total liabilities 397,327 407,680 Minority interests 501,282 500,682 Stockholders' equity:
Common stock, $.001 par value 19 18
Paid-in capital 149,541 138,038
Accumulated deficit (20,682) (23,041)
Total stockholders' equity 128,878 115,015
Total liabilities and
stockholders' equity $1,027,487 $1,023,377 (1) Includes approximately $472 in amortization expense for the three
months ended December 31, 2006 and 2005 and $1,888 in amortization
expense for the twelve months ended December 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 $425 and $321 in amortization expense for the
three months ended December 31, 2006 and 2005, respectively, and
$1,613 and $1,444 in amortization expense for the twelve months ended
December 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: Mission West Properties, +1-408-725-0700 Web site: http://www.missionwest.com/
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