UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (date of earliest event reported): April 14, 2004
MISSION WEST PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland Commission File Number: 95-2635431
-------- 1-8383 ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification)
10050 Bandley Drive, Cupertino, California 95014
(Address of principal executive offices)
(408) 725-0700
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS.
(a) The following information is being furnished by the Company as required for
Item 12(a) of this report and shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934:
On April 14, 2004, the Company issued a press release announcing its unaudited
earnings results for the quarter ended March 31, 2004. The press release is
attached to this Current Report as Exhibit 99.1 and is incorporated by reference
in response to Item 12(a) of this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MISSION WEST PROPERTIES, INC.
Date: April 14, 2004 By: /s/ Wayne N. Pham
------------------------------------
Wayne N. Pham
Vice President of Finance and Controller
- 2 -
Exhibit 99.1
Press Release
For Immediate News Release
April 14, 2004
MISSION WEST PROPERTIES, INC. ANNOUNCES FIRST QUARTER 2004 UNAUDITED EARNINGS
RESULTS
"We build the buildings for the high tech companies that build the internet"
CUPERTINO, CA - MISSION WEST PROPERTIES, INC. (AMEX/PCX: MSW) reported today
that Funds From Operations ("FFO") for the quarter ended March 31, 2004 was
$27,178,000 or $0.26 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 $28,655,000 or $0.28 per diluted common share for the same period in
2003, a per share decrease of approximately 7.1%. On a sequential quarter basis,
FFO per diluted common share decreased $0.04 over the previous quarter ended
December 31, 2003, which included $0.02 per diluted share from prior tenant
bankruptcy settlements.
Net income to common stockholders per diluted share was $0.20 for the quarter
ended March 31, 2004 compared to $0.23 for the same period in 2003, a per share
decrease of approximately 13%.
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 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.
- 3 -
MISSION WEST PROPERTIES, INC.
SELECTED FINANCIAL DATA
UNAUDITED
(In thousands, except share, per share and property data amounts)
Three Months Three Months
Ended Ended
Mar 31, 2004 Mar 31, 2003
----------------- -----------------
REVENUES:
Rental revenues from real estate $32,048 $31,431
Tenant reimbursements 4,218 4,575
Other income, including interest 394 735
----------------- -----------------
Total revenues 36,660 36,741
----------------- -----------------
EXPENSES:
Operating expenses 1,991 1,519
Real estate taxes 2,994 3,075
Depreciation & amortization of real estate 5,852 (1) 4,563
General and administrative 348 358
Interest 4,363 3,406
Interest (related parties) 252 294
----------------- -----------------
Total expenses 15,800 13,215
----------------- -----------------
Income before minority interests & equity in
earnings of unconsolidated joint venture 20,860 23,526
Equity in earnings of unconsolidated joint
venture 591 737
----------------- -----------------
Income before minority interests 21,451 24,263
Minority interests 17,817 20,229
----------------- -----------------
Income from continuing operations 3,634 4,034
----------------- -----------------
Net income to common stockholders $3,634 $4,034
================= =================
Net income to minority interests $17,817 $20,229
================= =================
Income per share from continuing operations:
Basic $0.20 $0.23
================= =================
Diluted $0.20 $0.23
================= =================
Net income per share to common stockholders:
Basic $0.20 $0.23
================= =================
Diluted $0.20 $0.23
================= =================
Weighted average shares of common stock (basic) 17,969,416 17,637,260
================= =================
Weighted average shares of common stock 18,075,262 17,695,001
(diluted) ================= =================
Weighted average O.P. units outstanding 86,503,459 86,511,686
================= =================
FUNDS FROM OPERATIONS
Funds from operations $27,178 $28,655
================= =================
Funds from operations per share (2) $ 0.26 $ 0.28
================= =================
Outstanding common stock 18,014,691 17,653,691
================= =================
Outstanding O.P. units 86,467,195 86,498,064
================= =================
Weighted average O.P. units & common stock
outstanding (diluted) 104,578,721 104,206,687
================= =================
- 4 -
Three Months Three Months
Ended Ended
FUNDS FROM OPERATIONS CALCULATION Mar 31, 2004 Mar 31, 2003
----------------- -----------------
Net income $3,634 $4,034
Add:
Minority interests (3) 17,692 20,057
Depreciation and amortization of real estate 5,852 4,564
----------------- -----------------
Funds from operations $27,178 $28,655
================= =================
Funds From Operations ("FFO") is a non-GAAP financial measurement used by real
estate investment trusts 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, amortization
of commission and depreciation of non-real estate assets) and after adjustments
for unconsolidated partnerships and joint ventures. Management considers FFO an
appropriate measure of performance of an equity REIT because, along with cash
flows from operating activities, financing activities and investing activities,
it provides investors with an understanding of our ability to incur and service
debt, and make capital expenditures. 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
Ended Ended
PROPERTY AND OTHER DATA: Mar 31, 2004 Mar 31, 2003
----------------- -----------------
Total properties, end of period 109 101
Total square feet, end of period 7,917,262 7,163,930
Average monthly rental revenue per square foot (4) $1.78 $1.74
Average occupancy 75.8% 83.2%
Actual occupancy 75.3% 82.8%
Straight-line rent ($ 68) $244
Capital expenditures $1,076 $653
- 5 -
BALANCE SHEET (UNAUDITED)
March 31, 2004 December 31, 2003
-------------------- --------------------
Assets:
Land $ 279,163 $ 279,163
Buildings and improvements 785,812 785,660
Real estate related intangible assets 18,284 18,284
-------------------- --------------------
Total investments in properties 1,083,259 1,083,107
Less accumulated depreciation (93,968) (88,116)
-------------------- --------------------
Net investments in properties 989,291 994,991
Investments in unconsolidated joint venture 2,377 2,285
-------------------- --------------------
Net investments in real estate assets 991,668 997,276
Cash 3,094 4,129
Deferred rent 18,903 18,970
Other assets 14,547 16,025
-------------------- --------------------
Total assets $1,028,212 $1,036,400
==================== ====================
Liabilities:
Line of credit - related parties $ 2,957 $ 6,320
Revolving line of credit 20,810 23,965
Mortgage notes payable 298,564 299,858
Mortgage notes payable - related parties 10,679 10,762
Interest payable 332 332
Security deposits 9,696 10,248
Prepaid rental income 13,315 12,723
Dividend/distribution payable 25,076 25,031
Accounts payable and accrued expenses 8,297 5,085
-------------------- --------------------
Total liabilities 389,726 394,324
Minority interests 523,693 528,062
Stockholders' equity:
Common stock, $.001 par value 18 18
Paid in capital 133,604 132,136
Accumulated deficit (18,829) (18,140)
-------------------- --------------------
Total stockholders' equity 114,793 114,014
-------------------- --------------------
Total liabilities and stockholders' equity $1,028,212 $1,036,400
==================== ====================
(1) Includes approximately $912 in amortization expense for the three months
ended March 31, 2004 for the amortization of the origination value and fair
market value of acquired leases of the San Tomas Technology Park
acquisition pursuant to Statement of Financial Accounting Standard ("SFAS")
No. 141, "Business Combinations."
(2) Calculated on a fully diluted basis. Assumes conversion of O.P. units
outstanding into the Company's common stock.
(3) The minority interest for third parties has been deducted from total
minority interest in calculating FFO.
(4) 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.
- 6 -