Mission West Properties Announces First Quarter 2010 Operating Results

MISSION WEST PROPERTIES, INC.

SELECTED FINANCIAL DATA

(In thousands, except share, per share and property data amounts)

Three Months Ended

Mar 31, 2010

Three Months Ended

Mar 31, 2009

OPERATING REVENUES:

 Rental income

$20,814

$20,655

 Tenant reimbursements

4,440

4,800

 Other income

658

320

   Total operating revenues

25,912

25,775

OPERATING EXPENSES:

 Operating and maintenance

2,943

2,555

 Real estate taxes

3,220

3,397

 General and administrative

518

531

 Depreciation and amortization

5,921 (1)

5,944 (1)

   Total operating expenses

12,602

12,427

   Operating income

13,310

13,348

OTHER INCOME (EXPENSES):

 Equity in earnings of unconsolidated joint venture

76

89

 Interest and dividend income

50

(59)

 Unrealized holding gain (loss) from investment

1,853

(2,757)

 Interest expense

(4,849)

(4,806)

 Interest expense – related parties

(297)

(181)

   Net income

10,143

5,634

Net income attributable to noncontrolling interests

(7,685)

(4,202)

Net income available to common stockholders

$2,458

$1,432

Net income per share to common stockholders:

  Basic

$0.11

$0.07

  Diluted

$0.11

$0.07

Weighted average shares of common stock (basic)

21,881,189

21,614,878

Weighted average shares of common stock (diluted)

22,056,805

21,770,489

Weighted average O.P. units outstanding

83,397,876

83,660,298

FUNDS FROM OPERATIONS

Funds from operations

$16,506

$12,070

Funds from operations per share (2)

$0.16

$0.11

Outstanding common stock

21,953,211

21,748,211

Outstanding O.P. units

83,326,965

83,526,965

Weighted average O.P. units and common

 stock outstanding (diluted)

105,454,681

105,430,787

FUNDS FROM OPERATIONS CALCULATION

Three Months Ended

Mar 31, 2010

Three Months Ended

Mar 31, 2009

Net income

$10,143

$5,634

Add:

  Depreciation and amortization of real estate

6,406

6,416

  Depreciation and amortization of real estate held in

   unconsolidated joint venture

60

59

Less:

  Noncontrolling interests in joint ventures

(103)

(39)

Funds from operations

$16,506

$12,070

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.

PROPERTY AND OTHER DATA:

Three Months Ended

Mar 31, 2010

Three Months Ended

Mar 31, 2009

Total properties, end of period

112

111

Total square feet, end of period

8,088,923

8,047,569

Average monthly rental revenue per square foot (3)

$1.33

$1.29

Occupancy for leased properties

65.1%

65.3%

Straight-line rent

($237)

$322

Leasing commissions

$     -

$117

Capital expenditures

$     -

$     -

Lease Rollover Schedule:

Year

# of Leases

Rentable Square Feet

2010 Base Rent (5)

2010

9

251,112 (4)

$2,164,307

2011

16

781,347

12,227,420

2012

14

1,009,205

15,356,955

2013

7

460,320

6,150,363

2014

16

1,466,930

26,334,237

2015

8

620,801

9,873,164

2016

3

159,600

3,421,708

2017

5

349,949

4,955,733

Thereafter

1

119,756

2,695,260

   Total

79

5,219,020

$83,179,147

BALANCE SHEETS

March 31,

2010

December 31, 2009

Assets

Investments in real estate:

 Land

$324,563

$320,911

 Buildings and improvements

799,849

799,649

 Real estate related intangible assets

3,240

3,240

    Total investments in properties

1,127,652

1,123,800

 Accumulated depreciation and amortization

(210,074)

(204,153)

     Net investments in properties

917,578

919,647

 Investment in unconsolidated joint venture

3,829

3,828

     Net investments in real estate

921,407

923,475

 Cash and cash equivalents

5,894

986

 Restricted cash

98

197

 Restricted investment in marketable securities

13,996

12,069

 Deferred rent receivables

18,474

18,711

 Other assets, net

31,233

30,951

     Total assets

$991,102

$986,389

Liabilities and Equity

Liabilities:

 Mortgage notes payable

$315,673

$318,818

 Mortgage note payable – related parties

8,130

8,261

 Note payable – related parties

34,082

9,325

 Revolving line of credit

-

14,466

 Interest payable

1,504

1,573

 Security deposits

4,872

4,849

 Deferred rental income

6,364

6,539

 Dividends and distributions payable

15,792

15,791

 Accounts payable and accrued expenses

13,097

9,638

     Total liabilities

399,514

389,260

Commitments and contingencies.

Equity: (6)

Stockholders' equity:

 Common stock, $.001 par value

22

22

 Additional paid-in capital

171,188

170,606

 Distributions in excess of accumulated earnings

(26,619)

(25,784)

     Total stockholders' equity

144,591

144,844

Noncontrolling interests in operating partnerships

446,997

452,285

     Total equity

591,588

597,129

     Total liabilities and equity

$991,102

$986,389

1)  Includes approximately $159 in amortization expense for the three months ended March 31, 2010 and 2009 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)  Excludes five month-to-month leases for approximately 53,000 rentable square feet.

5)  Base rent reflects cash rent.

6)  Reflects adoption of the Consolidation Topic of the FASB ASC.