Mission West Properties Announces First Quarter 2012 Operating Results

MISSION WEST PROPERTIES, INC.
SELECTED FINANCIAL DATA
(In thousands, except share, per share and property data amounts)

STATEMENTS OF OPERATIONS

Three Months
Ended

Mar 31, 2012

Three Months
Ended

Mar 31, 2011

OPERATING REVENUES:

  Rental income

$20,012

$21,723

  Tenant reimbursements

3,948

4,618

  Other income

272

1,002

    Total operating revenues

24,232

27,343

OPERATING EXPENSES:

  Operating and maintenance

2,409

2,512

  Real estate taxes

2,428

3,049

  General and administrative

651

521

  Depreciation and amortization

5,993 (1)

5,491 (1)

    Total operating expenses

11,481

11,573

    Operating income

12,751

15,770

OTHER INCOME (EXPENSES):

  Equity in earnings (loss) of unconsolidated joint venture

114

(9)

  Interest income

93

70

  Interest expense

(4,921)

(5,279)

  Interest expense – related parties

(146)

(147)

    Income from continuing operations

7,891

10,405

Discontinued operations:

    Net gain from disposal of properties classified as

      discontinued operations

5,519

-

    Net loss from properties classified as

      discontinued operations

(157)

(469)

        Income (loss) from discontinued operations

5,362

(469)

        Net income

13,253

9,936

Net income attributable to noncontrolling interests

(10,409)

(7,536)

Net income available to common stockholders

$2,844

$2,400

Income per share from continuing operations:

   Basic

$0.09

$0.11

   Diluted

$0.08

$0.11

Income (loss) per share from discontinued operations:

   Basic

$0.04

-

   Diluted

$0.04

-

Net income per share to common stockholders:

   Basic

$0.13

$0.11

   Diluted

$0.12

$0.11

Weighted average shares of common stock (basic)

22,637,668

22,288,103

Weighted average shares of common stock (diluted)

23,157,454

22,405,276

Weighted average O.P. units outstanding

82,648,367

82,997,932

FUNDS FROM OPERATIONS

Three Months
Ended

Mar 31, 2012

Three Months
Ended

Mar 31, 2011

Funds from operations

$14,149

$16,240

Funds from operations per share (2)

$0.13

$0.15

Outstanding common stock

22,668,020

22,370,770

Outstanding O.P. units

82,618,015

82,915,265

Weighted average O.P. units and common stock

   outstanding (diluted)

105,805,821

105,403,208

FUNDS FROM OPERATIONS CALCULATION

Three Months
Ended

Mar 31, 2012

Three Months
Ended

Mar 31, 2011

Net income

$13,253

$9,936

Add:

   Depreciation and amortization

6,465

6,351

   Depreciation and amortization in

     unconsolidated joint venture

60

60

Less:

   Noncontrolling interests in joint ventures

(110)

(107)

   Gain on sale of real estate

(5,519)

-

Funds from operations

$14,149

$16,240

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.

PROPERTY AND OTHER DATA:

Three Months
Ended

Mar 31, 2012

Three Months
Ended

Mar 31, 2011

Total properties, end of period

111

111

Total square feet, end of period

7,985,569

8,011,026

Average monthly rental revenue per square foot (3)

$1.28

$1.39

Occupancy for leased properties (6)

71.3%

68.5%

Straight-line rent

($201)

($635)

Leasing commissions

$26

$194

Non-recurring capital expenditures

$176

$926

LEASE ROLLOVER SCHEDULE:

Year

# of Leases

Rentable Square Feet

2012 Base Rent (5)

2012 (4)

9

419,767

$3,349

2013

8

367,683

5,418

2014

22

1,823,675

29,384

2015

8

587,437

9,334

2016

8

394,806

4,551

2017

12

727,552

9,817

2018

5

431,606

5,281

2019

2

232,480

3,731

2020

3

208,768

4,471

Thereafter

1

105,000

2,441

    Total

78

5,298,774

$77,777

BALANCE SHEETS

March 31, 2012

December 31, 2011

                                  Assets

Investments in real estate:

     Land

$323,173

$306,474

     Buildings and improvements

757,631

745,962

     Real estate related intangible assets

3,561

3,561

         Total investments in properties

1,084,365

1,055,997

     Accumulated depreciation and amortization

(235,204)

(229,211)

     Assets held for sale, net

31,804

54,361

         Net investments in properties

880,965

881,147

     Investment in unconsolidated joint venture

3,575

3,557

         Net investments in real estate

884,540

884,704

Cash and cash equivalents

2,850

-

Deferred rent

16,449

16,650

Other assets, net

31,629

35,133

      Total assets

$935,468

$936,487

                       Liabilities and Equity

Liabilities:

     Mortgage notes payable

$327,380

$331,166

     Mortgage note payable – related parties

6,986

7,139

     Revolving line of credit

-

3,305

     Interest payable

1,577

1,606

     Security deposits

4,366

4,317

     Prepaid rent and deferred revenue

11,185

5,836

     Dividends and distributions payable

23,163

13,687

     Accounts payable and accrued expenses

18,238

16,344

         Total liabilities

392,895

383,400

Commitments and contingencies.

Equity:

Stockholders' equity:

     Common stock, $.001 par value

23

23

     Additional paid-in capital

176,722

175,900

     Distributions in excess of accumulated earnings

(35,104)

(32,962)

         Total stockholders' equity

141,641

142,961

Noncontrolling interests in operating partnerships

400,932

410,126

         Total equity

542,573

553,087

         Total liabilities and equity

$935,468

$936,487

(1)

Includes approximately $406 and $124 in amortization expense for the three months ended March 31, 2012 and 2011, 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 all 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. Properties classified as assets held for sale were excluded from the 2012 calculation.

(4)

Excludes seven month-to-month leases for approximately 88,000 rentable square feet and approximately $107 in cash rent.

(5)

Base rent reflects cash rent.

(6)

The occupancy rate at March 31, 2012, excludes properties classified as assets held for sale.