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SMALL BUSINESS
Mission West Properties Announces Second Quarter 2009 Operating Results
CUPERTINO, Calif., July 15 /PRNewswire-FirstCall/ -- Mission West Properties, Inc. (Nasdaq: MSW) reported today that Funds From Operations ("FFO") for the quarter ended June 30, 2009 was approximately $14,189,000, or $0.13 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 $13,049,000, or $0.12 per diluted common share, for the same period in 2008. Unrealized gain from investment in marketable securities accounted for approximately $2,433,000, or $0.02 per diluted common share, for the quarter ended June 30, 2009. A net increase in the reserve related to the Hellyer Avenue Limited Partnership litigation accounted for approximately $1,300,000 in interest expense, or ($0.01) per diluted common share, for the quarter ended June 30, 2009. On a sequential quarter basis, FFO for the quarter ended March 31, 2009 was approximately $0.11 per diluted common share. For the six months ended June 30, 2009, FFO decreased to $26,259,000, or $0.25 per diluted common share, from FFO of $28,272,000, or $0.27 per diluted common share, for the same period in 2008. Net termination fees accounted for approximately $1,921,000, or $0.02 per diluted common share for the six months ended June 30, 2008.
Net income for the quarter ended June 30, 2009 was approximately $7,189,000 as compared to approximately $6,837,000 for the quarter ended June 30, 2008. Net income per diluted share to common stockholders was $0.08 for the quarter ended June 30, 2009 compared to $0.07 for the quarter ended June 30, 2008, a per share increase of approximately 14%. Net income for the six months ended June 30, 2009 was approximately $12,823,000 as compared to approximately $15,958,000 for the six months ended June 30, 2008. For the six months ended June 30, 2009, net income per diluted share to common stockholders was $0.15, down from $0.16 a year ago, a per share decrease of approximately 6%. Net termination fees accounted for approximately $0.02 per diluted common share for the six months ended June 30, 2008.
Company Profile
Mission West Properties, Inc. operates as a selfmanaged, selfadministered 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 111 properties totaling approximately 8.0 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 Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
-------- -------- -------- --------
OPERATING
REVENUES:
Rental revenue
from real
estate $20,424 $19,359 $41,080 $38,356
Tenant
reimbursements 4,315 3,710 9,115 7,293
Lease
termination
and
settlement
income - - - 1,921
Other income 302 249 622 477
--- --- --- ---
Total
operating
revenues 25,041 23,318 50,817 48,047
------ ------ ------ ------
OPERATING
EXPENSES:
Operating and
maintenance 3,921 2,566 6,475 5,042
Real estate
taxes 3,351 2,945 6,748 5,356
General and
administrative 623 674 1,154 1,347
Depreciation
and
amortization
of real
estate 6,334(1) 5,682(1) 12,279(1) 11,305(1)
----- ----- ------ ------
Total
operating
expenses 14,229 11,867 26,656 23,050
------ ------ ------ ------
Operating
income 10,812 11,451 24,161 24,997
OTHER INCOME
(EXPENSES):
Equity in
earnings of
unconsolidated
joint venture 75 407 164 789
Interest and
dividend
income 1,125 215 1,065 772
Unrealized
gain (loss)
from
investment 2,433 - (324) -
Interest
expense (7,085) (4,956) (11,891) (9,884)
Interest
expense -
related
parties (171) (280) (352) (716)
---- ---- ---- ----
Net income 7,189 6,837 12,823 15,958
Net income
attributable
to
noncontrolling
interests (5,404) (5,478) (9,607) (12,717)
------ ------ ------ -------
Net income
attributable
to common
stockholders $1,785 $1,359 3,216 3,241
====== ====== ===== =====
Net income per
share to
common
stockholders:
Basic $0.08 $0.07 $0.15 $0.16
===== ===== ===== =====
Diluted $0.08 $0.07 $0.15 $0.16
===== ===== ===== =====
Weighted
average
shares of
common stock
(basic) 21,766,343 19,695,988 21,691,029 19,681,797
========== ========== ========== ==========
Weighted
average
shares of
common stock
(diluted) 21,899,906 19,902,304 21,835,545 19,766,535
========== ========== ========== ==========
Weighted
average O.P.
units
outstanding 83,508,833 85,528,215 83,584,147 85,529,316
========== ========== ========== ==========
FUNDS FROM OPERATIONS
Funds from operations $14,189 $13,049 $26,259 $28,272
======= ======= ======= =======
Funds from operations
per share (2) $0.13 $0.12 $0.25 $0.27
===== ===== ===== =====
Outstanding common stock 21,770,211 19,743,557 21,770,211 19,743,557
========== ========== ========== ==========
Outstanding O.P. units 83,504,965 85,528,215 83,504,965 85,528,215
========== ========== ========== ==========
Weighted average O.P.
units and common stock
outstanding (diluted) 105,408,739 105,430,519 105,419,692 105,295,851
=========== =========== =========== ===========
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
FUNDS FROM -------- -------- -------- --------
OPERATIONS
CALCULATION
Net income $7,189 $6,837 $12,823 $15,958
Add:
Depreciation and
amortization of
real estate 6,994 6,086 13,411 12,110
Depreciation and
amortization of
real estate held in
unconsolidated joint
venture 60 189 119 378
Less:
Noncontrolling
interests in joint
ventures (54) (63) (94) (174)
--- --- --- ----
Funds from
operations $14,189 $13,049 $26,259 $28,272
======= ======= ======= =======
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) (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 nonreal 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 neither be considered as an alternative for net income as a measure of profitability nor 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 Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
PROPERTY AND OTHER DATA: --------- -------- --------- --------
Total properties, end of
period 111 111 111 111
Total square feet, end of
period 8,047,569 8,047,569 8,047,569 8,047,569
Average monthly rental
revenue per square foot
(3) $1.29 $1.24 $1.29 $1.24
Occupancy for leased
properties 66.1% 64.9% 66.1% 64.9%
Straight-line rent $238 $882 $560 $1,587
Leasing commissions $204 $318 $320 $634
Capital expenditures $- $2,116 $- $2,337
LEASE ROLLOVER SCHEDULE:
Year # of Rentable Square 2009 Base
Leases Feet Rent (5)
---- -------- --------------- --------------
2009 10 114,267 (4) $1,809,503
2010 9 363,475 6,070,722
2011 16 838,692 12,333,272
2012 14 1,010,825 14,226,818
2013 6 397,215 5,081,754
2014 17 1,492,430 24,794,529
2015 6 485,036 8,784,074
2016 2 144,600 2,959,748
2017 5 349,949 3,510,351
Thereafter 1 119,756 2,608,286
-- ------- ---------
Total 86 5,316,245 $82,179,057
== ========= ==========
BALANCE SHEETS
June 30, December 31,
2009 2008
------------- ------------
Assets
Investments in real estate:
Land $320,911 $320,911
Buildings and improvements 799,471 799,471
Real estate related intangible
assets 3,240 3,240
----- -----
Total investments in
properties 1,123,622 1,123,622
Accumulated depreciation and
amortization (192,322) (180,043)
-------- --------
Net investments in properties 931,300 943,579
Investment in unconsolidated
joint venture 3,833 3,768
----- -----
Net investments in real estate 935,133 947,347
Restricted cash 7,078 39,478
Restricted investment in
marketable securities 6,585 -
Investment in marketable
securities - 3,368
Deferred rent receivables 18,401 17,841
Other assets, net 26,241 26,251
------ ------
Total assets $993,438 $1,034,285
======== ==========
Liabilities and Equity
Liabilities:
Mortgage notes payable $324,941 $330,908
Mortgage note payable -
related parties 8,516 8,761
Revolving line of credit 3,892 13,079
Interest payable 1,556 1,596
Security deposits 5,125 5,272
Deferred rental income 6,372 3,964
Dividends and distributions
payable 15,791 21,055
Accounts payable and accrued
expenses 19,631 17,747
------ ------
Total liabilities 385,824 402,382
------- -------
Commitments and contingencies.
Equity: (6)
Stockholders' equity:
Common stock, $.001 par value 22 20
Additional paid-in capital 169,682 154,412
Distributions in excess of
accumulated earnings (24,413) (20,014)
------- -------
Total stockholders' equity 145,291 134,418
Noncontrolling interests 462,323 497,485
------- -------
Total equity 607,614 631,903
------- -------
Total liabilities and equity $993,438 $1,034,285
======== ==========
- Includes approximately $159 in amortization expense for the three months ended June 30, 2009 and 2008, and $319 and $281 in amortization expense for the six months ended June 30, 2009 and 2008, respectively, for the amortization of in-place lease value intangible asset pursuant to Statement of Financial Accounting Standard No. 141, "Business Combinations."
- Calculated on a fully diluted basis. Assumes conversion of O.P. units outstanding into the Company's common stock.
- 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.
- Six leases for approximately 87,000 rentable square feet are month to month leases.
- Base rent reflects cash rent.
- Reflects adoption of Statement of Financial Accounting Standard No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51."
SOURCE Mission West Properties, Inc.