'We build the buildings for the high tech companies that build the internet'
CUPERTINO, Calif., July 18 /PRNewswire-FirstCall/ -- Mission West Properties, Inc. (AMEX:MSW) reported today that Funds From Operations ("FFO") for the quarter ended June 30, 2007 was approximately $15,954,000 or $0.15 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 $16,954,000 or $0.16 per diluted common share for the same period in 2006. On a sequential quarter basis, FFO for the quarter ended March 31, 2007 was approximately $0.23 per diluted common share. For the six months ended June 30, 2007, FFO decreased to $39,859,000 or $0.38 per diluted common share from FFO of $51,480,000 or $0.49 per diluted common share for the same period in 2006. Termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $10,475,000 or $0.10 per diluted common share and $16,068,000 or $0.15 per diluted common share for the six months ended June 30, 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 six months ended June 30, 2007.
Net income per diluted share to common stockholders was $0.10 for the quarter ended June 30, 2007 compared to $0.11 for the quarter ended June 30, 2006, a per share decrease of approximately 9.1%. For the six months ended June 30, 2007, net income per diluted share to common stockholders was $0.27, down from $0.38 a year ago, a per share decrease of approximately 28.9%. 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 six months ended June 30, 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 six months ended June 30, 2007.
Acquisition Activity On April 20, 2007, the Company acquired three office/R&D buildings comprised of approximately 149,000 rentable square feet at Montague Expressway in Milpitas, California for approximately $15,351,000. The acquisition was funded from a portion of the proceeds received from the Samaritan property sale, which was classified as restricted cash as of March 31, 2007. With the exception of one lease, the property was purchased without any long-term tenants.
On April 27, 2007, the Company acquired approximately five acres of vacant land in Morgan Hill, California, which could support approximately 73,000 rentable square feet of space. The land is currently zoned for industrial use. The acquisition price for this property was approximately $2,297,000 and was funded from the remaining proceeds received from the Samaritan property sale, which was classified as restricted cash as of March 31, 2007.
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 110 properties totaling approximately 7.8 million rentable square feet (or 17 buildings), which includes approximately 894,000 rentable square feet 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
Jun 30, Jun 30, Jun 30, Jun 30,
2007 2006 2007 2006
REVENUES:
Rental revenue from
real estate $21,283 $22,060 $42,621 $46,108
Above market lease
intangible asset
amortization -- (472)(1) (4,091)(1) (944)(1)
Tenant reimbursements 3,254 2,954 6,482 6,151
Lease termination income 168 12 10,277 16,068
Other income, including
interest 959 1,085 4,014 1,814
Total revenues 25,664 25,639 59,303 69,197 EXPENSES:
Operating expenses 1,850 1,948 3,818 3,887
Real estate taxes 2,766 2,216 5,343 4,784
Interest 5,046 5,193 10,115 10,408
Interest (related
parties) 182 190 366 381
General and
administrative 673 637 1,387 1,272
Depreciation and
amortization of real
estate 5,454(2) 5,269(2) 11,664(2) 10,591(2)
Total expenses 15,971 15,453 32,693 31,323
Income before equity in
earnings of
unconsolidated
joint venture and
minority interests 9,693 10,186 26,610 37,874
Equity in earnings of
unconsolidated joint
venture 350 351 687 682
Minority interests (8,039) (8,505) (21,918) (31,456)
Income from
continuing
operations 2,004 2,032 5,379 7,100 Discontinued operations,
net of minority interests:
Income attributable to
discontinued operations -- 89 -- 174
Income from
discontinued operations -- 89 -- 174 Net income to common
stockholders $2,004 $2,121 $5,379 $7,274
Net income to minority
interests $8,039 $8,968 $21,918 $32,358 Income per share from
continuing operations:
Basic $0.10 $0.11 $0.27 $0.38
Diluted $0.10 $0.11 $0.27 $0.38
Income per share from
discontinued operations:
Basic -- -- -- $0.01
Diluted -- -- -- $0.01
Net income per share to
common stockholders:
Basic $0.10 $0.11 $0.27 $0.39
Diluted $0.10 $0.11 $0.27 $0.39
Weighted average
shares of common
stock (basic) 19,639,928 19,028,240 19,611,515 18,743,649
Weighted average
shares of common
stock (diluted) 20,020,596 19,123,945 19,956,752 18,824,340
Weighted average
O.P. units
outstanding 85,009,858 85,522,039 85,038,271 85,800,741 FUNDS FROM OPERATIONS
Funds from operations $15,954 $16,954 $39,859 $51,480
Funds from operations
per share (3) $0.15 $0.16 $0.38 $0.49
Outstanding common
stock 19,640,087 19,342,187 19,640,087 19,342,187
Outstanding O.P. units 85,009,699 85,235,999 85,009,699 85,235,999
Weighted average O.P. units and common
stock outstanding
(diluted) 105,030,454 104,645,984 104,995,023 104,625,081 FUNDS FROM OPERATIONS
CALCULATION
Net income $2,004 $2,121 $5,379 $7,274
Add:
Minority interests(4) 7,922 8,855 21,677 32,110
Depreciation and
amortization of real
estate 5,839 5,767 12,424 11,674
Depreciation &
amortization of real
estate held in
unconsolidated
joint venture 189 211 379 422
Funds from operations $15,954 $16,954 $39,859 $51,480 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 Six Months Six Months
Ended Ended Ended Ended
PROPERTY AND OTHER Jun 30, Jun 30, Jun 30, Jun 30,
DATA: 2007 2006 2007 2006
Total properties,
end of period 110 110 110 110
Total square feet,
end of period 7,849,993 7,936,481 7,849,993 7,936,481
Average monthly rental
revenue per square
foot(5) $1.40 $1.60 $1.46 $1.61
Occupancy for leased
properties 67.8% 63.0% 67.8% 63.0%
Straight-line rent ($106) ($152) ($1,701) ($830)
Leasing commissions $1,444 $46 $1,901 $316
Capital expenditures $1,546 $85 $2,409 $163 BALANCE SHEET June 30, 2007 December 31, 2006
Assets:
Land $307,903 $272,223
Buildings and improvements 766,515 756,596
Real estate related intangible assets 6,422 19,529
Total investments in properties 1,080,840 1,048,348
Less accumulated depreciation and
amortization (152,107) (149,459)
Net investments in properties 928,733 898,889
Cash and cash equivalents 39,053 33,785
Restricted cash 1,640 48,245
Deferred rent receivable 16,788 18,489
Investment in unconsolidated
joint venture 2,914 3,468
Other assets, net 26,015 24,611
Total assets $1,015,143 $1,027,487 Liabilities:
Mortgage notes payable $342,879 $348,101
Mortgage notes payable - related
parties 9,443 9,654
Interest payable 1,343 1,375
Security deposits 6,595 6,977
Deferred rental income 6,891 6,874
Dividend/distribution payable 16,745 16,745
Accounts payable and accrued expenses 7,346 7,601
Total liabilities 391,242 397,327 Minority interests 493,004 501,282 Stockholders' equity:
Common stock, $.001 par value 20 19
Paid-in capital 152,463 149,541
Accumulated deficit (21,586) (20,682)
Total stockholders' equity 130,897 128,878
Total liabilities and
stockholders' equity $1,015,143 $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 $347 and $425 in amortization expense for the
three months ended June 30, 2007 and 2006, respectively, and $1,540
and $764 in amortization expense for the six months ended June 30,
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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