Attached files
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| 8-K - MSW 8-K 10-13-10 - MISSION WEST PROPERTIES INC | msw8k101310.htm |
Exhibit 99.1
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[Missing Graphic Reference]
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Press Release
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For Immediate News Release
October 13, 2010
Mission West Properties Announces Third Quarter 2010 Operating Results
Cupertino, CA – Mission West Properties, Inc. (NASDAQ: MSW) reported today that Funds From Operations (“FFO”) for the quarter ended September 30, 2010 was approximately $11,770,000, or $0.11 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 approximately $17,604,000, or $0.17 per diluted common share, for the same period in 2009. Unrealized gain from investment in marketable securities accounted for approximately $4,464,000, or $0.04 per diluted common share, for the quarter ended September 30, 2009. On a sequential quarter basis, FFO for the quarter ended June 30, 2010 was approximately $0.16 per diluted common share. For the nine months ended September 30, 2010, FFO increased to $44,836,000, or $0.43 per diluted common share, from FFO of $43,863,000, or $0.42 per diluted common share, for the nine months ended September 30, 2009. Realized gain from investment in marketable securities and litigation proceeds accounted for approximately $0.05 per diluted common share for the nine months ended September 30, 2010. Unrealized gain from investment in marketable securities accounted for approximately $0.04 per diluted common share for the nine months ended September 30, 2009.
Net income for the quarter ended September 30, 2010 was approximately $5,471,000 as compared to approximately $11,242,000 for the quarter ended September 30, 2009. Net income per diluted share available to common stockholders was approximately $0.06 for the quarter ended September 30, 2010 compared to $0.13 for the quarter ended September 30, 2009, a per share decrease of approximately 54%. Net income for the nine months ended September 30, 2010 was approximately $25,655,000 as compared to approximately $24,065,000 for the nine months ended September 30, 2009. For the nine months ended September 30, 2010, net income per diluted share available to common stockholders was $0.28, up from $0.27 a year ago, a per share increase of approximately 4%.
Financing Activity
On August 4, 2010, the Company entered into a fixed rate term agreement and related contracts and instruments for a secured mortgage loan totaling $40,000,000 from Hartford Life Insurance Company and Hartford Life and Accident Insurance Company (the “Hartford Loan II”). The Hartford Loan II bears a fixed interest rate of 6.05%, with a 20 year amortization, and matures September 1, 2030. The Hartford Loan II is secured by five properties consisting of approximately 500,000 rentable square feet.
The Company paid approximately $457,000 in loan fees and costs, which will be amortized over the 20 year loan period. The proceeds were used primarily to repay the remaining balance of an existing loan with the Berg Group.
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 112 properties totaling approximately 8.1 million rentable 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.
MISSION WEST PROPERTIES, INC.
SELECTED FINANCIAL DATA
(In thousands, except share, per share and property data amounts)
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Three Months Ended
Sept 30, 2010
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Three Months Ended
Sept 30, 2009
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Nine Months Ended
Sept 30, 2010
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Nine Months Ended
Sept 30, 2009
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OPERATING REVENUES:
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Rental income
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$ | 20,607 | $ | 20,442 | $ | 62,091 | $ | 61,521 | ||||||||
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Tenant reimbursements
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3,128 | 4,566 | 11,611 | 13,681 | ||||||||||||
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Other income
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276 | 284 | 2,138 | 906 | ||||||||||||
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Total operating revenues
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24,011 | 25,292 | 75,840 | 76,108 | ||||||||||||
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OPERATING EXPENSES:
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Operating and maintenance
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3,630 | 3,539 | 9,662 | 10,014 | ||||||||||||
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Real estate taxes
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3,163 | 3,248 | 9,806 | 9,996 | ||||||||||||
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General and administrative
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580 | 589 | 1,661 | 1,743 | ||||||||||||
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Depreciation and amortization
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5,862 | (1) | 5,921 | (1) | 17,840 | 18,200 | ||||||||||
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Total operating expenses
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13,235 | 13,297 | 38,969 | 39,953 | ||||||||||||
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Operating income
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10,776 | 11,995 | 36,871 | 36,155 | ||||||||||||
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OTHER INCOME (EXPENSES):
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Equity in earnings of unconsolidated joint venture
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46 | 72 | 270 | 237 | ||||||||||||
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Interest and dividend income
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1 | 93 | 51 | 1,158 | ||||||||||||
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Realized gain from investment
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- | - | 8,800 | - | ||||||||||||
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Unrealized gain (loss) from investment
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- | 4,464 | (4,733 | ) | 4,140 | |||||||||||
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Interest expense
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(5,138 | ) | (5,180 | ) | (14,765 | ) | (17,071 | ) | ||||||||
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Interest expense – related parties
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(214 | ) | (202 | ) | (839 | ) | (554 | ) | ||||||||
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Net income
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5,471 | 11,242 | 25,655 | 24,065 | ||||||||||||
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Net income attributable to noncontrolling interests
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(4,101 | ) | (8,476 | ) | (19,367 | ) | (18,083 | ) | ||||||||
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Net income available to common stockholders
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$ | 1,370 | $ | 2,766 | $ | 6,288 | $ | 5,982 | ||||||||
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Net income per share to common stockholders:
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Basic
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$ | 0.06 | $ | 0.13 | $ | 0.29 | $ | 0.28 | ||||||||
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Diluted
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$ | 0.06 | $ | 0.13 | $ | 0.28 | $ | 0.27 | ||||||||
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Weighted average shares of common stock (basic)
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21,976,679 | 21,770,211 | 21,938,857 | 21,717,713 | ||||||||||||
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Weighted average shares of common stock (diluted)
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22,109,391 | 21,902,387 | 22,095,602 | 21,858,067 | ||||||||||||
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Weighted average O.P. units outstanding
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83,309,356 | 83,504,965 | 83,344,408 | 83,557,463 | ||||||||||||
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FUNDS FROM OPERATIONS
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Funds from operations
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$ | 11,770 | $ | 17,604 | $ | 44,836 | $ | 43,863 | ||||||||
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Funds from operations per share (2)
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$ | 0.11 | $ | 0.17 | $ | 0.43 | $ | 0.42 | ||||||||
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Outstanding common stock
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22,013,070 | 21,770,211 | 22,013,070 | 21,770,211 | ||||||||||||
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Outstanding O.P. units
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83,272,965 | 83,504,965 | 83,272,965 | 83,504,965 | ||||||||||||
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Weighted average O.P. units and common stock
outstanding (diluted)
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105,418,747 | 105,407,352 | 105,440,010 | 105,415,530 | ||||||||||||
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FUNDS FROM OPERATIONS CALCULATION
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Three Months Ended
Sept 30, 2010
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Three Months Ended
Sept 30, 2009
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Nine Months Ended
Sept 30, 2010
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Nine Months Ended
Sept 30, 2009
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Net income
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$ | 5,471 | $ | 11,242 | $ | 25,655 | $ | 24,065 | ||||||||
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Add:
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Depreciation and amortization
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6,350 | 6,385 | 19,314 | 19,796 | ||||||||||||
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Depreciation and amortization in
unconsolidated joint venture
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60 | 60 | 179 | 179 | ||||||||||||
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Less:
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Noncontrolling interests in joint ventures
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(111 | ) | (83 | ) | (312 | ) | (177 | ) | ||||||||
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Funds from operations
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$ | 11,770 | $ | 17,604 | $ | 44,836 | $ | 43,863 | ||||||||
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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.
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PROPERTY AND OTHER DATA:
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Three Months Ended
Sept 30, 2010
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Three Months Ended
Sept 30, 2009
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Nine Months Ended
Sept 30, 2010
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Nine Months Ended
Sept 30, 2009
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Total properties, end of period
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112 | 111 | 112 | 111 | ||||||||||||
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Total square feet, end of period
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8,088,923 | 8,047,569 | 8,088,923 | 8,047,569 | ||||||||||||
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Average monthly rental revenue per square foot (3)
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$ | 1.29 | $ | 1.30 | $ | 1.31 | $ | 1.29 | ||||||||
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Occupancy for leased properties
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67.8% | 65.7% | 67.8% | 65.7% | ||||||||||||
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Straight-line rent
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$ | ( 61 | ) | $ | 115 | $ | ( 289 | ) | $ | 675 | ||||||
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Leasing commissions
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$ | 495 | $ | 973 | $ | 940 | $ | 1,294 | ||||||||
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Non-recurring capital expenditures
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$ | 1,699 | $ | 156 | $ | 1,699 | $ | 156 | ||||||||
LEASE ROLLOVER SCHEDULE:
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Year
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# of Leases
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Rentable Square Feet
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2010 Base Rent (5)
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2010 (4)
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5
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144,411
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$2,764,570
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2011
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15
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739,221
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11,312,732
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2012
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15
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1,023,342
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15,400,474
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2013
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7
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401,645
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5,626,016
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2014
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15
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1,301,930
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22,685,061
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2015
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9
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631,693
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9,969,073
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2016
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4
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196,279
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3,434,208
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2017
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5
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349,949
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4,955,733
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Thereafter
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7
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639,380
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6,605,740
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Total
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82
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5,427,850
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$82,753,607
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BALANCE SHEETS
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September 30, 2010
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December 31, 2009
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Assets
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Investments in real estate:
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Land
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$ | 324,563 | $ | 320,911 | ||||
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Buildings and improvements
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801,548 | 799,649 | ||||||
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Real estate related intangible assets
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3,240 | 3,240 | ||||||
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Total investments in properties
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1,129,351 | 1,123,800 | ||||||
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Accumulated depreciation and amortization
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(221,993 | ) | (204,153 | ) | ||||
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Net investments in properties
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907,358 | 919,647 | ||||||
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Investment in unconsolidated joint venture
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3,872 | 3,828 | ||||||
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Net investments in real estate
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911,230 | 923,475 | ||||||
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Cash and cash equivalents
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15,226 | 986 | ||||||
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Restricted cash
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89 | 197 | ||||||
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Restricted investment in marketable securities
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- | 12,069 | ||||||
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Deferred rent receivables
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18,422 | 18,711 | ||||||
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Other assets, net
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33,396 | 30,951 | ||||||
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Total assets
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$ | 978,363 | $ | 986,389 | ||||
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Liabilities and Equity
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Liabilities:
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Mortgage notes payable
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$ | 349,297 | $ | 318,818 | ||||
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Mortgage note payable – related parties
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7,860 | 8,261 | ||||||
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Note payable – related parties
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- | 9,325 | ||||||
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Revolving line of credit
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- | 14,466 | ||||||
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Interest payable
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1,664 | 1,573 | ||||||
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Security deposits
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4,886 | 4,849 | ||||||
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Deferred rental income
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5,706 | 6,539 | ||||||
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Dividends and distributions payable
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15,793 | 15,791 | ||||||
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Accounts payable and accrued expenses
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18,021 | 9,638 | ||||||
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Total liabilities
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403,227 | 389,260 | ||||||
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Commitments and contingencies.
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Equity:
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Stockholders’ equity:
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Common stock, $.001 par value
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22 | 22 | ||||||
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Additional paid-in capital
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171,692 | 170,606 | ||||||
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Distributions in excess of accumulated earnings
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(29,384 | ) | (25,784 | ) | ||||
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Total stockholders’ equity
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142,330 | 144,844 | ||||||
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Noncontrolling interests in operating partnerships
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432,806 | 452,285 | ||||||
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Total equity
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575,136 | 597,129 | ||||||
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Total liabilities and equity
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$ | 978,363 | $ | 986,389 | ||||
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(1)
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Includes approximately $124 and $159 in amortization expense for the three months ended September 30, 2010 and 2009, respectively, and $584 and $478 in amortization expense for the nine months ended September 30, 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”).
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(2)
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Calculated on a fully diluted basis. Assumes conversion of O.P. units outstanding into the Company’s common stock.
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(3)
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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.
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(4)
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Excludes five month-to-month leases for approximately 53,000 rentable square feet and $212 cash rent.
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(5)
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Base rent reflects cash rent.
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