Mission West Properties Announces First Quarter 2011 Operating Results

MISSION WEST PROPERTIES, INC.

SELECTED FINANCIAL DATA

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

Three Months

Ended

Mar 31, 2011

Three Months

Ended

Mar 31, 2010

OPERATING REVENUES:

 Rental income

$21,777 (6)

$20,814

 Tenant reimbursements

4,644

4,440

 Other income

1,101

658

   Total operating revenues

27,522

25,912

OPERATING EXPENSES:

 Operating and maintenance

2,654

2,938

 Real estate taxes

3,205

3,212

 General and administrative

521

518

 Depreciation and amortization

5,827 (1)

5,921 (1)

   Total operating expenses

12,207

12,589

   Operating income

15,315

13,323

OTHER INCOME (EXPENSES):

 Equity in (loss) earnings of unconsolidated joint venture

(8)

76

 Interest and dividend income

69

50

 Unrealized gain from investment

-

1,853

 Interest expense

(5,279)

(4,849)

 Interest expense – related parties

(146)

(297)

   Income from continuing operations

9,951

10,156

Discontinued operations:

   Loss from discontinued operations

(15)

(13)

       Net income

9,936

10,143

Net income attributable to noncontrolling interests

(7,536)

(7,685)

Net income available to common stockholders

$2,400

$2,458

Income per share from continuing operations:

  Basic

$0.11

$0.11

  Diluted

$0.11

$0.11

Income per share from discontinued operations:

  Basic

-

-

  Diluted

-

-

Net income per share to common stockholders:

  Basic

$0.11

$0.11

  Diluted

$0.11

$0.11

Weighted average shares of common stock (basic)

22,288,103

21,881,189

Weighted average shares of common stock (diluted)

22,405,276

22,056,805

Weighted average O.P. units outstanding

82,997,932

83,397,876

FUNDS FROM OPERATIONS

Funds from operations

$16,240

$16,506

Funds from operations per share (2)

$0.15

$0.16

Outstanding common stock

22,370,770

21,953,211

Outstanding O.P. units

82,915,265

83,326,965

Weighted average O.P. units and common stock

  outstanding (diluted)

105,403,208

105,454,681

FUNDS FROM OPERATIONS CALCULATION

Three Months

Ended

Mar 31, 2011

Three Months

Ended

Mar 31, 2010

Net income

$9,936

$10,143

Add:

  Depreciation and amortization

6,351

6,406

  Depreciation and amortization in

    unconsolidated joint venture

60

60

Less:

  Noncontrolling interests in joint ventures

(107)

(103)

Funds from operations

$16,240

$16,506

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, 2011

Three Months

Ended

Mar 31, 2010

Total properties, end of period

111

112

Total square feet, end of period

8,011,026

8,088,923

Average monthly rental revenue per square foot (3)

$1.39 (7)

$1.33

Occupancy for leased properties

68.5%

65.1%

Straight-line rent

($635)

($237)

Leasing commissions

$194

-

Non-recurring capital expenditures

$926

-

LEASE ROLLOVER SCHEDULE:

Year

# of Leases

Rentable Square Feet

2011 Base Rent (5)

2011 (4)

10

441,970

$7,608,267

2012

13

791,223

15,267,698

2013

6

339,123

4,971,350

2014

20

1,625,113

26,223,937

2015

8

587,437

9,178,833

2016

4

196,279

3,672,284

2017

10

605,557

7,826,608

2018

3

265,612

1,120,944

2019

1

165,000

2,931,834

Thereafter

3

208,768

4,327,563

   Total

78

5,226,082

$83,129,318

BALANCE SHEETS

March 31, 2011

December 31, 2010

                                   Assets

Investments in real estate:

 Land

$322,076

$322,076

 Buildings and improvements

791,350

790,424

 Real estate related intangible assets

1,120

3,240

    Total investments in properties

1,114,546

1,115,740

 Accumulated depreciation and amortization

(227,734)

(224,027)

 Assets held for sale, net

3,267

3,267

     Net investments in properties

890,079

894,980

 Investment in unconsolidated joint venture

3,747

3,830

     Net investments in real estate

893,826

898,810

Cash and cash equivalents

2,108

3,988

Restricted cash

6,820

6,892

Deferred rent

17,306

17,941

Other assets, net

40,903

40,653

     Total assets

$960,963

$968,284

                               Liabilities and Equity

Liabilities:

 Mortgage notes payable

$342,182

$345,770

 Mortgage note payable – related parties

7,580

7,721

 Interest payable

1,642

1,659

 Security deposits

4,415

4,605

 Prepaid rent

4,768

6,526

 Liability related to assets held for sale

8

-

 Dividends and distributions payable

13,832

15,793

 Accounts payable and accrued expenses

20,566

16,239

     Total liabilities

394,993

398,313

Commitments and contingencies.

Equity:

Stockholders' equity:

 Common stock, $.001 par value

22

22

 Additional paid-in capital

174,186

172,568

 Distributions in excess of accumulated earnings

(31,028)

(30,520)

     Total stockholders' equity

143,180

142,070

Noncontrolling interests in operating partnerships

422,790

427,901

     Total equity

565,970

569,971

     Total liabilities and equity

$960,963

$968,284

(1)

Includes approximately $124 and $159 in amortization expense for the three months ended March 31, 2011 and 2010, 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.

(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 86,000 rentable square feet and $63 in cash rent.

(5)

Base rent reflects cash rent.

(6)

Includes a one-time rent adjustment of approximately $1,638 from a tenant dispute resolution.

(7)

Includes a one-time rent adjustment of approximately $1,638. Excluding the adjustment, the average monthly rental revenue per square foot would have been $1.29.