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Mission West Properties Announces Fourth Quarter And Full Year 2009 Operating Results

CUPERTINO, Calif., Feb. 3 /PRNewswire-FirstCall/ -- Mission West Properties, Inc. (Nasdaq: MSW) reported today that Funds From Operations ("FFO") for the quarter ended December 31, 2009 was approximately $16,604,000, or $0.16 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 $12,863,000, or $0.12 per diluted common share, for the same period in 2008. A forfeited deposit of $2,000,000 under a contract for the sale of the McCandless property accounted for approximately $0.02 per diluted common share and unrealized gain from investment in marketable securities accounted for approximately $871,000, or less than $0.01 per diluted common share, for the quarter ended December 31, 2009. Net termination fee income relating to lease terminations for the fourth quarter ended December 31, 2008 accounted for less than $0.01 per diluted common share. On a sequential quarter basis, FFO for the quarter ended September 30, 2009 was approximately $0.17 per diluted common share. For the year ended December 31, 2009, FFO increased to $60,467,000, or $0.57 per diluted common share, from FFO of $55,334,000, or $0.52 per diluted common share, for the year ended December 31, 2008. Net termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $0.03 per diluted common share for the year ended December 31, 2008.

Net income for the quarter ended December 31, 2009 was approximately $10,384,000 as compared to approximately $26,443,000 for the quarter ended December 31, 2008. Net income per diluted share to common stockholders was approximately $0.11 for the quarter ended December 31, 2009 compared to $0.26 for the quarter ended December 31, 2008, a per share decrease of approximately 58%. A forfeited deposit under a contract for the sale of the McCandless property accounted for approximately $0.02 per diluted common share for the quarter ended December 31, 2009. Gains from the sale of two R&D properties in the Company's unconsolidated joint venture, TBI-MWP, accounted for approximately $0.20 per diluted common share for the quarter ended December 31, 2008. Net income for the year ended December 31, 2009 was approximately $34,449,000 as compared to approximately $50,340,000 for the year ended December 31, 2008. For the year ended December 31, 2009, net income per diluted share to common stockholders was approximately $0.38, down from $0.51 a year ago, a per share decrease of approximately 25%. Gains from the sale of two R&D properties in the Company's unconsolidated joint venture, TBI-MWP, accounted for approximately $0.20 per diluted common share for the year ended December 31, 2008 and net termination fees and security deposit forfeitures income relating to lease terminations accounted for approximately $0.03 per diluted common share for the year ended December 31, 2008.

In October 2009, the Company entered into a change in terms agreement with Heritage Bank of Commerce to amend the maturity date of the $17,500,000 revolving line of credit to September 15, 2011. The interest rate on the revolving line of credit is the greater of LIBOR plus 1.75% or 4.00% per annum. The Heritage Bank of Commerce loan is secured by three properties consisting of approximately 219,000 rentable square feet. The revolving line of credit contains certain customary covenants as defined in the loan agreement. The Company paid approximately $25,000 in loan and legal fees in obtaining the revolving line of credit.

On January 8, 2010, the Company acquired a leased R&D property with approximately 41,300 rentable square feet located at 1040-1050 La Avenida Street in Mountain View, California from an unrelated third party. The total acquisition price for this property was approximately $3,853,000.

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 112 properties totaling approximately 8.1 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,
                              2009       2008         2009       2008
                            --------   --------     --------   --------
    OPERATING REVENUES:
      Rental revenue        $20,999     $20,464     $82,520     $79,075
      Tenant reimbursements   5,051       4,505      18,732      16,406
      Lease termination
       income                     -       1,087           -       3,007
      Other income            2,850         446       3,756       1,216
                              -----         ---       -----       -----
        Total operating
         revenues            28,900      26,502     105,008      99,704
                             ------      ------     -------      ------
    
    OPERATING EXPENSES:
      Operating and
       maintenance            4,365       3,410      14,379      11,404
      Real estate taxes       3,485       3,812      13,481      12,056
      General and
       administrative           593         684       2,336       2,635
      Depreciation and
       amortization of
       real estate            5,910(1)    6,160(1)   24,110(1)   23,224(1)
                           --------    --------   ---------   ---------
        Total operating
         expenses            14,353      14,066      54,306      49,319
                             ------      ------      ------      ------
    
        Operating income     14,547      12,436      50,702      50,385
    
    OTHER INCOME
     (EXPENSES):
      Equity in earnings
       of unconsolidated
       joint venture             72      18,701         309      19,617
      Interest and
       dividend income          150         771       1,309       1,735
      Unrealized gain
       (loss) from
       investment               871        (278)      5,011        (278)
      Interest expense       (5,045)     (4,880)    (22,117)    (19,787)
      Interest expense –
       related parties         (211)       (307)       (765)     (1,332)
                               ----        ----        ----      ------
        Net income           10,384      26,443      34,449      50,340
    
    Net income attributable 
     to noncontrolling
     interests               (7,975)    (21,186)    (26,058)    (40,206)
                             ------     -------     -------     -------
    Net income
     attributable to
     common stockholders     $2,409      $5,257      $8,391     $10,134
                             ======      ======      ======     =======
    
    Net income per share
     to common stockholders:
      Basic                   $0.11       $0.27       $0.39       $0.51
                              =====       =====       =====       =====
      Diluted                 $0.11       $0.26       $0.38       $0.51
                              =====       =====       =====       =====
    Weighted average
     shares of common
     stock (basic)       21,793,037  19,748,211  21,736,699  19,714,414
                         ==========  ==========  ==========  ==========
    Weighted average
     shares of common
     stock (diluted)     21,979,442  19,889,016  21,923,104  19,996,348
                         ==========  ==========  ==========  ==========
    Weighted average
     O.P. units
     outstanding         83,482,139  85,526,965  83,538,477  85,528,329
                         ==========  ==========  ==========  ==========
    
    FUNDS FROM
     OPERATIONS
    Funds from
     operations             $16,604     $12,863     $60,467     $55,334
                            =======     =======     =======     =======
    Funds from
     operations
     per share (2)            $0.16       $0.12       $0.57       $0.52
                              =====       =====       =====       =====
    Outstanding
     common stock        21,870,211  19,748,211  21,870,211  19,748,211
                         ==========  ==========  ==========  ==========
    Outstanding
     O.P. units          83,404,965  85,526,965  83,404,965  85,526,965
                         ==========  ==========  ==========  ==========
    Weighted
     average O.P.
     units and
     common stock
     outstanding
     (diluted)          105,461,581 105,415,981 105,461,581 105,524,677
                        =========== =========== =========== ===========
    
    FUNDS FROM               Three      Three        Twelve     Twelve
     OPERATIONS              Months     Months       Months     Months
     CALCULATION             Ended      Ended        Ended      Ended
                             Dec 31,    Dec 31,      Dec 31,    Dec 31,
                              2009       2008         2009       2008
                            --------   --------     --------   --------
    Net income              $10,384     $26,443     $34,449     $50,340
    Add:
      Depreciation
       and amortization
       of real estate         6,391       6,620      26,187      24,933
      Depreciation
       and amortization
       of real estate held 
       in unconsolidated
       joint venture             60         332         238         900
    Less:
      Gain on sale
       of real estate             -     (20,471)          -     (20,471)
      Noncontrolling
       interests in joint
       ventures                (231)        (61)       (407)       (368)
                               ----        ----        ----        ----
    Funds from operations   $16,604     $12,863     $60,467     $55,334
                            =======     =======     =======     =======
    
    
    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 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
    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      Twelve     Twelve
                               Months     Months     Months     Months
                               Ended      Ended      Ended      Ended
    PROPERTY AND               Dec 31,    Dec 31,    Dec 31,    Dec 31,
     OTHER DATA:                2009       2008       2009       2008
                              --------   --------   --------   --------
    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)          $1.33       $1.26       $1.30       $1.25
    Occupancy for leased
     properties                65.5%       66.4%       65.5%       66.4%
    Straight-line rent         $195        $563        $870      $3,008
    Leasing commissions        $328        $458      $1,621      $1,699
    Capital expenditures        $22        $305        $178      $6,468
    
    
    
    LEASE ROLLOVER SCHEDULE:
    
                          # of         Rentable Square          2009
    Year                 Leases             Feet             Base Rent(5)
    ----                 ------       ---------------      ---------------
    2009                    -                     -           $1,595,158
    2010                   14               270,448 (4)        4,045,285
    2011                   17               844,452           12,333,272
    2012                   14             1,010,825           13,538,262
    2013                    6               397,215            5,081,754
    2014                   17             1,492,430           24,794,530
    2015                    7               613,556           10,722,042
    2016                    3               159,600            3,299,764
    2017                    5               349,949            3,632,723
    Thereafter              1               119,756            2,608,286
                         ----               -------            ---------
        Total              84             5,258,231          $81,651,076
                         ====             =========          ===========
    
    
    
    BALANCE SHEETS
                                             December 31,      December 31,
                                                 2009              2008
                                             ------------      ------------
                   Assets
    Investments in real estate:
      Land                                     $320,911          $320,911
      Buildings and improvements                799,649           799,471
      Real estate related intangible assets       3,240             3,240
                                                  -----             -----
        Total investments in properties       1,123,800         1,123,622
      Accumulated depreciation and
       amortization                            (204,153)         (180,043)
                                               --------          --------
        Net investments in properties           916,647           943,579
      Investment in unconsolidated joint 
       venture                                    3,828             3,768
                                                  -----             -----
        Net investments in real estate          923,475           947,347
      Cash and cash equivalents                     986                 -
      Restricted cash                               197            39,478
      Restricted investment in marketable 
       securities                                12,069                 -
      Investment in marketable securities             -             3,368
      Deferred rent receivables                  18,711            17,841
      Other assets, net                          30,951            26,251
                                                 ------            ------
        Total assets                           $986,389        $1,034,285
                                               ========        ==========
    
           Liabilities and Equity
    Liabilities:
      Mortgage notes payable                   $318,818          $330,908
      Mortgage note payable – related parties     9,325             8,761
      Note payable – related parties              8,261                 -
      Revolving line of credit                   14,466            13,079
      Interest payable                            1,573             1,596
      Security deposits                           4,849             5,272
      Deferred rental income                      6,539             3,964
      Dividends and distributions
       payable                                   15,791            21,055
      Accounts payable and accrued expenses       9,638            17,747
                                                  -----            ------
        Total liabilities                       389,260           402,382
                                                -------           -------
    
    Commitments and contingencies.
    
    Equity: (6)
    Stockholders' equity:
      Common stock, $.001 par value                  22                20
      Additional paid-in capital                170,606           154,412
      Distributions in excess of
       accumulated earnings                     (25,784)          (20,014)
                                                -------           -------
        Total stockholders' equity              144,844           134,418
    Noncontrolling interests in
     operating partnerships                     452,285           497,485
                                                -------           -------
        Total equity                            597,129           631,903
                                                -------           -------
        Total liabilities and equity           $986,389        $1,034,285
                                               ========        ==========
    
    
    (1) Includes approximately $159 in amortization expense for the three 
        months ended December 31, 2009 and 2008, and $637 and $600 in 
        amortization expense for the twelve months ended December 31, 2009
        and 2008, respectively, for the amortization of in-place lease value 
        intangible asset pursuant to the Business Combinations Topic of the 
        Financial Accounting Standards Board Accounting Standards Codification
        ("FASB ASC").
    
    (2) Calculated on a fully diluted basis. Assumes conversion of O.P. units
        outstanding into the Company's common stock. 
    
    (3) 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.
    
    (4) Five leases for approximately 53,000 rentable square feet are month to
        month leases.
    
    (5) Base rent reflects cash rent.
    
    (6) Reflects adoption of the Consolidation Topic of the FASB ASC.

SOURCE Mission West Properties, Inc.

Copyright 2009 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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