Occupancy, Rents Decline for Mission West

CUPERTINO, CA-There was little good news revealed during a mid-year conference call held Thursday by Mission West Properties, a locally based R&D REIT whose 110 properties (7.9 million sf) are concentrated here in the Silicon Valley. Principal accounting office Wayne Pham told analysts that occupancy fell slightly to 63% in the second quarter compared to 2005 while rental revenue declined 11.1%. Same-store NOI was down 10.7% and operating expenses rose 4.4%, he said.

The 37% vacancy rate in Mission West’s portfolio is well above average in the Silicon Valley. Citing preliminary second quarter numbers from CPS/Corfac International, company president Ray Marino said the R&D vacancy rate in the Silicon Valley stands at 21%.

Through the first six months of 2006, Mission West’s occupancy is down 11.7% and rental revenue is down 9.2% compared to 2005, Pham said. Company chairman Carl Berg predicted the company’s occupancy will be down to 61% by the end of 2007.