Mission West Properties Announces Fourth Quarter and Full Year 2011 Operating Results

MISSION WEST PROPERTIES, INC.

SELECTED FINANCIAL DATA

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

Three Months Ended

Dec 31, 2010

Three Months Ended

Dec 31, 2009

Twelve Months Ended

Dec 31, 2010

Twelve Months Ended

Dec 31, 2009

OPERATING REVENUES:

 Rental income

$19,657

$20,988

$81,715

$82,466

 Tenant reimbursements

3,527

5,036

15,094

18,668

 Other income

480

2,850

2,619

3,756

   Total operating revenues

23,664

28,874

99,428

104,890

OPERATING EXPENSES:

 Operating and maintenance

4,066

4,321

13,620

14,193

 Real estate taxes

3,077

3,447

12,780

13,339

 General and administrative

558

593

2,219

2,336

 Depreciation and amortization

5,869 (1)

5,829 (1)

23,466 (1)

23,786 (1)

   Total operating expenses

13,570

14,190

52,085

53,654

   Operating income

10,094

14,684

47,343

51,236

OTHER INCOME (EXPENSES):

 Equity in earnings of unconsolidated joint venture

33

72

303

309

 Interest and dividend income

51

151

102

1,309

 Realized gain from investment

-

-

8,800

-

 Unrealized gain (loss) from investment

-

871

(4,733)

5,011

 Interest expense

(5,304)

(5,046)

(20,069)

(22,117)

 Interest expense – related parties

(149)

(211)

(988)

(765)

   Net income from continuing operations

4,725

10,521

30,758

34,983

Discontinued operations:

Gain from disposal of discontinued operations

6,199

-

6,199

-

Loss attributable to discontinued operations

(85)

(137)

(462)

(534)

   Net income (loss) from discontinued

    operations

6,114

(137)

5,737

(534)

       Net income

10,839

10,384

36,495

34,449

Net income attributable to noncontrolling interests

(8,654)

(7,975)

(28,022)

(26,058)

Net income available to common stockholders

$2,185

$2,409

$8,473

$8,391

Income per share from continuing operations:

  Basic

$0.05

$0.11

$0.34

$0.39

  Diluted

$0.05

$0.11

$0.34

$0.39

Income per share from discontinued operations:

  Basic

$0.05

-

$0.04

-

  Diluted

$0.05

-

$0.04

-

Net income per share to common stockholders:

  Basic

$0.10

$0.11

$0.39

$0.39

  Diluted

$0.10

$0.11

$0.38

$0.38

Weighted average shares of common stock (basic)

22,076,694

21,793,037

21,973,599

21,736,699

Weighted average shares of common stock (diluted)

22,198,946

21,979,442

22,121,724

21,923,104

Weighted average O.P. units outstanding

83,209,341

83,482,139

83,310,364

83,538,477

FUNDS FROM OPERATIONS

Funds from operations

$11,182

$16,604

$56,018

$60,467

Funds from operations per share (2)

$0.11

$0.16

$0.53

$0.57

Outstanding common stock

22,135,770

21,870,211

22,135,770

21,870,211

Outstanding O.P. units

83,150,265

83,404,965

83,150,265

83,404,965

Weighted average O.P. units and common stock outstanding (diluted)

105,408,287

105,461,581

105,432,088

105,461,581

FUNDS FROM OPERATIONS CALCULATION

Three Months Ended

Dec 31, 2010

Three Months Ended

Dec 31, 2009

Twelve Months Ended

Dec 31, 2010

Twelve Months Ended

Dec 31, 2009

Net income

$10,839

$10,384

$36,495

$34,449

Add:

  Depreciation and amortization

6,526

6,391

25,840

26,187

  Depreciation and amortization in

    unconsolidated joint venture

60

60

238

238

Less:

  Noncontrolling interests in joint ventures

(44)

(231)

(356)

(407)

  Gain on sale of real estate

(6,199)

-

(6,199)

-

Funds from operations

$11,182

$16,604

$56,018

$60,467

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

Dec 31, 2010

Three Months Ended

Dec 31, 2009

Twelve Months Ended

Dec 31, 2010

Twelve Months Ended

Dec 31, 2009

Total properties, end of period

111

111

111

111

Total square feet, end of period

8,011,026

8,047,569

8,011,026

8,047,569

Average monthly rental revenue per

   square foot (3)

$1.25

$1.33

$1.30

$1.30

Occupancy for leased properties

69.9%

65.5%

69.9%

65.5%

Straight-line rent

($481)

$195

($770)

$   870

Leasing commissions

$   812

$328

$1,753

$1,621

Non-recurring capital expenditures

$1,142

$  22

$2,841

$   178

LEASE ROLLOVER SCHEDULE:

Year

# of Leases

Rentable Square Feet

2010 Base Rent (5)

2010

-

-

$3,104,873

2011 (4)

13

691,304

10,301,766

2012

13

791,223

12,870,081

2013

7

401,645

5,626,016

2014

20

1,625,113

24,498,533

2015

8

587,437

9,309,659

2016

4

196,279

3,434,208

2017

9

543,035

6,771,073

2018

3

265,612

539,323

2019

1

165,000

2,862,504

Thereafter

3

208,768

3,203,912

   Total

81

5,475,416

$82,521,948

BALANCE SHEETS

December 31, 2010

December 31, 2009

Assets

Investments in real estate:

 Land

$322,076

$320,911

 Buildings and improvements

790,424

799,649

 Real estate related intangible assets

3,240

3,240

    Total investments in properties

1,115,740

1,123,800

 Accumulated depreciation and amortization

(224,027)

(204,153)

 Assets held for sale, net

3,267

-

     Net investments in properties

894,980

919,647

 Investment in unconsolidated joint venture

3,830

3,828

     Net investments in real estate

898,810

923,475

Cash and cash equivalents

3,988

986

Restricted cash

6,892

197

Restricted investment in marketable securities

-

12,069

Deferred rent receivables

17,941

18,711

Other assets, net

40,653

30,951

     Total assets

$968,284

$986,389

Liabilities and Equity

Liabilities:

 Mortgage notes payable

$345,770

$318,818

 Mortgage note payable – related parties

7,721

8,261

 Note payable – related parties

-

9,325

 Revolving line of credit

-

14,466

 Interest payable

1,659

1,573

 Security deposits

4,605

4,849

 Deferred rental income

6,526

6,539

 Dividends and distributions payable

15,793

15,791

 Accounts payable and accrued expenses

16,239

9,638

     Total liabilities

398,313

389,260

Commitments and contingencies.

Equity:

Stockholders' equity:

 Common stock, $.001 par value

22

22

 Additional paid-in capital

172,568

170,606

 Distributions in excess of accumulated earnings

(30,520)

(25,784)

     Total stockholders' equity

142,070

144,844

Noncontrolling interests in operating partnerships

427,901

452,285

     Total equity

569,971

597,129

     Total liabilities and equity

$968,284

$986,389

(1)

Includes approximately $124 and $159 in amortization expense for the three months ended December 31, 2010 and 2009, respectively, and $708 and $637 in amortization expense for the twelve months ended December 31, 2010 and 2009, 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)

Excludes six month-to-month leases for approximately 63,000 rentable square feet and $270 cash rent.

(5)

Base rent reflects cash rent.