'We build the buildings for the high tech companies that build the internet'
CUPERTINO, Calif., Oct. 17 /PRNewswire/ -- Mission West Properties, Inc. (AMEX:MSW) reported today that Funds From Operations ("FFO") for the quarter ended September 30, 2007 was approximately $61,016,000 or $0.58 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 $16,567,000 or $0.16 per diluted common share for the same period in 2006. Net termination fee income relating to lease terminations for the third quarter ended September 30, 2007 accounted for approximately $46,340,000, or $0.44 per diluted common share. On a sequential quarter basis, FFO for the quarter ended June 30, 2007 was approximately $0.15 per diluted common share. For the nine months ended September 30, 2007, FFO increased to $100,875,000 or $0.96 per diluted common share from FFO of $68,047,000 or $0.65 per diluted common share for the same period in 2006. Net termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $51,721,000 or $0.49 per diluted common share and $14,784,000 or $0.14 per diluted common share for the nine months ended September 30, 2007 and 2006, respectively.
Net income per diluted share to common stockholders was $0.60 for the quarter ended September 30, 2007 compared to $0.11 for the quarter ended September 30, 2006, a per share increase of approximately 445.5%. Net termination fee income relating to lease terminations accounted for approximately $0.47 per diluted common share for the three months ended September 30, 2007. For the nine months ended September 30, 2007, net income per diluted share to common stockholders was $0.87, up from $0.49 a year ago, a per share increase of approximately 77.6%. Net termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $0.52 and $0.15 per diluted common share for the nine months ended September 30, 2007 and 2006, respectively.
Status of Pending Merger Three parties are actively evaluating the Company data under non-disclosure agreements and have all the data necessary to make a reasonable decision. The Company hopes to conclude this process by the end of October 2007. If an acceptable offer is not received, the Company will end all active interest in a merger and actively pursue its efforts to expand and grow the Company as it has in the past.
Acquisition Activity On September 30, 2007, the Company acquired one vacant R&D property consisting of approximately 98,500 rentable square feet located at 5845 Hellyer Avenue in San Jose, California from the Berg Group under the Berg Land Holdings Option Agreement for an acquisition cost of approximately $10.9 million.
Disposition Activity During the third quarter of 2007, the Company completed the sale of two R&D properties, which include 45700 Northport Loop, Fremont, California consisting of approximately 47,600 rentable square feet and 1170 Morse Avenue, Sunnyvale, California consisting of approximately 39,200 rentable square feet. Gains of approximately $1.7 million and $4.8 million were realized on the total sale prices of $7.7 million and $8.3 million for 45700 Northport Loop and 1170 Morse Avenue, respectively.
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, which includes approximately 854,000 rentable square feet (or 16 buildings) 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 Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2007 2006 2007 2006
REVENUES:
Rental revenue from real
estate $19,000 $22,444 $61,350 $68,281
Above market lease
intangible asset
amortization - (472)(1) (4,091)(1) (1,416)(1)
Tenant reimbursements 3,454 3,260 9,908 9,383
Lease termination income 47,238 - 57,515 16,068
Other income, including
interest 1,895 1,011 5,909 2,826
Total revenues 71,587 26,243 130,591 95,142 EXPENSES:
Operating expenses 3,383 2,141 7,160 6,009
Real estate taxes 2,846 2,814 8,147 7,549
Interest 5,061 5,172 15,175 15,580
Interest (related parties) 180 188 546 569
General and administrative 982 531 2,369 1,803
Depreciation and
amortization 5,532(2) 5,513(2) 17,084(2) 15,993(2)
of real estate
Total expenses 17,984 16,359 50,481 47,503
Income before equity in
earnings of unconsolidated
joint venture and
minority interests 53,603 9,884 80,110 47,639
Equity in earnings of
unconsolidated joint
venture 371 856 1,058 1,538
Minority interests (43,153) (8,644) (64,980) (39,997)
Income from
continuing
operations 10,821 2,096 16,188 9,180 Discontinued operations,
net of minority
interests:
Gain from disposal of
discontinued operations 1,127 - 1,127 -
(Loss)/income attributable
to discontinued
operations (7) 10 5 200
Income from
discontinued
operations 1,120 10 1,132 200 Net income to common
stockholders $11,941 $2,106 $17,320 $9,380
Net income to minority
interests $48,550 $8,700 $70,469 $41,057
Income per share from
continuing operations:
Basic $0.55 $0.11 $0.82 $0.49
Diluted $0.54 $0.11 $0.81 $0.48
Income per share from
discontinued operations:
Basic $0.06 - $0.06 $0.01
Diluted $0.06 - $0.06 $0.01
Net income per share to
common stockholders:
Basic $0.61 $0.11 $0.88 $0.50
Diluted $0.60 $0.11 $0.87 $0.49
Weighted average
shares of
common stock (basic) 19,640,087 19,350,672 19,621,144 18,948,214
Weighted average
shares of common
stock (diluted) 19,818,806 19,418,884 19,914,374 19,024,662
Weighted average
O.P. units
outstanding 85,015,658 85,233,964 85,030,650 85,609,739 FUNDS FROM OPERATIONS
Funds from operations $61,016 $16,567 $100,875 $68,047
Funds from operations
per share (3) $0.58 $0.16 $0.96 $0.65
Outstanding
common stock 19,640,087 19,397,287 19,640,087 19,397,287
Outstanding O.P. units 85,557,935 85,231,199 85,557,935 85,231,199
Weighted average O.P. units and
common stock
outstanding
(diluted) 104,834,464 104,652,848 104,945,024 104,634,401 Three Three Nine Nine
Months Months Months Months
FUNDS FROM OPERATIONS Ended Ended Ended Ended
CALCULATION Sept 30, Sept 30, Sept 30, Sept 30,
2007 2006 2007 2006 Net income $11,941 $2,106 $17,320 $9,380
Add:
Minority interests (4) 48,420 8,566 70,098 40,676
Depreciation and
amortization of real 6,856 5,881 19,168 17,130
estate from
continuing operations
Depreciation and
amortization of real 139 214 250 639
estate from
discontinued operations
Depreciation &
amortization of real 189 238 568 660
estate held in
unconsolidated joint
venture
Less:
Gain on sale of real
estate (6,529) (438) (6,529) (438)
Funds from operations $61,016 $16,567 $100,875 $68,047
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 Three Nine Nine
Months Months Months Months
PROPERTY AND OTHER DATA: Ended Ended Ended Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2007 2006 2007 2006
Total properties, end of
period 109 110 109 110
Total square feet, end of
period 7,861,692 7,936,481 7,861,692 7,936,481
Average monthly rental
revenue per square foot (5) $1.47 $1.55 $1.47 $1.59
Occupancy for leased
properties 62.6% 64.2% 62.6% 64.2%
Straight-line rent ($2,265) ($218) ($3,966) ($1,048)
Leasing commissions $746 $500 $2,647 $815
Capital expenditures $2,212 $1,186 $4,621 $1,349 BALANCE SHEET September 30, December 31,
2007 2006
Assets:
Land $312,152 $272,223
Buildings and improvements 764,408 756,596
Real estate related intangible
assets 6,422 19,529
Total investments in properties 1,082,982 1,048,348
Less accumulated depreciation and
amortization (155,619) (149,459)
Net investments in properties 927,363 898,889
Cash and cash equivalents 37,800 33,785
Restricted cash 65,468 48,245
Deferred rent receivable 14,523 18,489
Investment in unconsolidated joint
venture 2,835 3,468
Other assets, net 25,522 24,611
Total assets $1,073,511 $1,027,487 Liabilities:
Mortgage notes payable $340,225 $348,101
Mortgage notes payable - related
parties 9,335 9,654
Interest payable 1,334 1,375
Security deposits 4,738 6,977
Deferred rental income 4,021 6,874
Dividend/distribution payable 16,832 16,745
Accounts payable and accrued
expenses 22,906 7,601
Total liabilities 399,391 397,327 Minority interests 534,268 501,282 Stockholders' equity:
Common stock, $.001 par value 20 19
Paid-in capital 152,619 149,541
Accumulated deficit (12,787) (20,682)
Total stockholders' equity 139,852 128,878
Total liabilities and
stockholders' equity $1,073,511 $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 September 30, 2007 and 2006, respectively, and
$1,886 and $1,189 in amortization expense for the nine months ended
September 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: Investor Relations of Mission West Properties, Inc., +1-408-725-0700 Web site: http://www.missionwest.com/
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