EXHIBIT 10.54

WHEN RECORDED RETURN TO:
Blackwell Sanders Peper Martin LLP
4801 Main Street, Suite 1000
Kansas City, Missouri  64112
Attn:  Gaylord G. Smith

                           LOAN MODIFICATION AGREEMENT

     THIS LOAN  MODIFICATION  AGREEMENT (this  "Agreement") is made as of the 26
day of July,  2005,  by and between  MISSION WEST  PROPERTIES,  L.P., a Delaware
limited partnership, whose address is 10050 Bandley Drive, Cupertino, California
95014  ("Borrower"),  and ALLIANZ LIFE  INSURANCE  COMPANY OF NORTH  AMERICA,  a
Minnesota corporation,  whose address is c/o Allianz of America, Inc., 55 Greens
Farms Road, Post Office Box 5160, Westport, Connecticut,  06881-5160, Attn: Real
Estate Department ("Lender").

                                   WITNESSETH:

     WHEREAS,  Lender has made a mortgage  loan in the amount of  $25,800,000.00
(the "Loan") to Borrower,  as  evidenced  by a Secured  Installment  Note in the
amount of the Loan dated April 6, 2005 (the "Note"); and

     WHEREAS, the Loan is secured by Deed of Trust, Security Agreement,  Fixture
Filing  with  Absolute  Assignment  of Rents  dated  April 6,  2005,  granted by
Borrower for the benefit of Lender,  and recorded on April 6, 2005,  as Document
No.  18305259  (the "Deed of Trust"),  and by an Absolute  Assignment of Leases,
Rents and Income dated April 6, 2005, given by Borrower to Lender,  and recorded
on April 6, 2005, as Document No. 10305260 (the  "Assignment"),  encumbering the
"Property,"  as  defined  in the Deed of  Trust,  including  the  real  property
described on Exhibit A, attached  hereto (the Note,  Deed of Trust,  Assignment,
and all other  documents  or  instruments  evidencing  or securing  the Loan are
hereinafter referred to as the "Security Documents"); and

     WHEREAS,   certain  obligations  of  Borrower  under  the  Loan  have  been
guaranteed by Mission West Properties,  Inc. ("Guarantor") pursuant to a Limited
Guaranty dated April 6, 2005 (the "Guaranty"); and

     WHEREAS,  Lender has agreed to make a new loan to Borrower and Mission West
Properties I, L.P., in the amount of  $125,000,000.00,  to be secured by certain
real property in Santa Clara County, California (the "New Loan"); and

     WHEREAS,  Lender  has  agreed  to make the New Loan on the  condition  that
Borrower  modify the Deed of Trust to provide  that a default by Borrower  under
the New Loan will constitute a default under the Deed of Trust and the Loan; and

     WHEREAS,  Borrower has agreed to Lender's  conditions  for the New Loan and
Lender and Borrower have agreed to amend the Security  Documents as  hereinafter
set forth.

     NOW, THEREFORE, in consideration of the agreement of Lender to make the New
Loan, and of the mutual covenants herein contained,  and other good and valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Lender and Borrower hereby agree as follows:

     1.  AMENDMENT  OF NOTE.  The Note is hereby  amended by deleting  therefrom
Paragraph 1 in its entirety and by substituting the following therefor:

          1. PAYMENT.  Said  principal  sum, and interest as herein  provided to
     accrue on the unpaid principal, shall be paid as follows:

               (a)  On  August  10,  2005,  Borrower  shall  make a  payment  of
          principal and interest in the amount of $178,351.00.

               (b) On each  "Payment  Date"  to and  including  July  10,  2025,
          payments of principal and interest in the amount of $176,713.00  shall
          be due and payable.  "Payment Date" means the tenth (10th) day of each
          consecutive  calendar  month  for the  term of  this  Note  commencing
          September 10, 2005. The payments due under this  subparagraph  (b) are
          each called a "Monthly Installment."

               (c) The entire  remaining  principal  amount,  together  with any
          accrued and unpaid  interest (the "Final  Installment"),  shall be due
          and payable in full on August 10, 2025 (the "Maturity Date").

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               (d)  Interest  shall be computed on the basis of a three  hundred
          sixty (360) day year  consisting  of twelve (12) months of thirty (30)
          days each.

     2.  AMENDMENT  OF DEED OF TRUST.  (a) Section  1.13 of the Deed of Trust is
hereby deleted in its entirety and the following is substituted therefor:

               1.13  Financial  Statements/Records.  Borrower  shall  deliver or
          cause to be delivered to Lender, within ninety (90) days after the end
          of  each  of the  respective  party's  fiscal  years,  (i)  an  annual
          operating  statement of income and expenses (which shall be audited if
          an Event of  Default  exists)  with  respect to the  operation  of the
          Property,  in reasonable  detail and certified by the chief  financial
          officer or manager of Borrower as complete and correct in all material
          respects, (ii) a financial statement of Mission West Properties, Inc.,
          a Maryland corporation,  the general partner of Borrower ("Principal")
          (which  shall be audited if an Event of Default  exists),  prepared in
          accordance with generally accepted accounting principles, consistently
          applied,  and  certified  as  complete  and  correct  in all  material
          respects  by the  chief  financial  officer  of  Principal,  and (iii)
          financial  statements of all tenants under leases of the Property,  if
          available  according to such leases.  Borrower agrees to keep adequate
          books and records of account, and shall permit Lender, and its agents,
          accountants and attorneys,  upon reasonable prior notice, to visit and
          inspect the Property and examine the  Property's  books and records of
          account at  Borrower's  office during normal  business  hours,  and to
          discuss the Property's  affairs,  finances and accounts with Borrower,
          at such reasonable times as Lender may request.  Such statements shall
          be  prepared  in a form  acceptable  to Lender,  to  include,  without
          limitation,  a current leasing  summary (which shall  disclose,  among
          other  things,  names of  tenants,  square  footage  of  leased  area,
          commencement  dates  and  expiration  dates of the  leases  as well as
          concessions  granted to Lessees),  gross rental income,  other income,
          real estate  taxes,  insurance,  operating  expenses and  depreciation
          deduction  accompanied  by financial  statements  received by Borrower
          from tenants. If the operating statements for the Property provided by
          Borrower are not in a form  acceptable to Lender or Borrower  fails to
          furnish such  statements  and reports,  Lender shall have the right to
          audit the respective  books and records of the Property at the expense
          of Borrower  and if Borrower  prevents  Lender  from  conducting  such
          audit, Lender may at the election of Lender declare this Deed of Trust
          in default.


          (b)  Section  4.1 of the Deed of Trust is  hereby  amended  by  adding
     thereto the following new subparagraph (h):

               (h) There shall exist an "Event of  Default"  under that  certain
          Deed of  Trust,  Security  Agreement,  Fixture  Filing  with  Absolute
          Assignment  of Rents  dated July ___,  2005,  granted by Mission  West
          Properties,  L.P. and Mission West  Properties,  L.P. I, d/b/a Mission
          West Properties I, L.P., for the benefit of Lender,  and recorded July
          ___, 2005, as Instrument Number _____________, in the Records of Santa
          Clara  County,  California,  or under the Note secured by said Deed of
          Trust, or under any other "Security Documents" as defined in said Deed
          of Trust.

     3. SECURITY DOCUMENTS TO CONTINUE IN EFFECT.  Except as herein modified and
amended,  the Note,  Deed of Trust and all Security  Documents shall continue in
full force and effect in accordance with their terms.

     4.  GOVERNING  LAW.  This  Agreement  shall be governed by and construed in
accordance  with the laws of the  State of  California.  In the  event  that any
provision  or clause of this  Agreement  conflicts  with  applicable  law,  such
conflicts shall not affect other provisions of this Agreement which can be given
effect  without the conflict  provisions  and to this end the provisions of this
Agreement are declared to be severable.

     5.  ENTIRE  AGREEMENT.  This  Agreement  constitutes  the entire  agreement
between the parties  hereto with respect to the  transactions  set forth herein.
This  Agreement  may only be  modified  or amended  in  writing by an  agreement
executed by all parties hereto.

     6. HEADINGS.  The headings used herein are for convenience only and are not
to be used in interpreting this Agreement.

     7. COUNTERPARTS.  This Agreement may be executed in multiple  counterparts,
each of  which  shall be an  original,  and all of which  shall  constitute  the
complete  Agreement.  One complete,  original Agreement shall be attached to the
Note, and one complete,  original  Agreement shall be recorded in the Records of
Santa Clara County, California.

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     IN  WITNESS   WHEREOF,   Borrower  and  Lender  have   executed  this  Loan
Modification Agreement as of the day and year first above written.

                                            MISSION WEST PROPERTIES, L.P.,
                                            a Delaware limited partnership

                                            By:   Mission West Properties, Inc.,
                                                  a Maryland corporation,
                                                  General Partner


                                                  By: /s/ Carl E. Berg

                                                  Name: Carl E. Berg

                                                  Title: Chief Executive Officer




                                                  ALLIANZ LIFE INSURANCE COMPANY
                                                  OF NORTH AMERICA,
                                                  a Minnesota corporation


                                                  By:
                                                     ---------------------------

                                                  Name:
                                                       -------------------------

                                                  Title:
                                                        ------------------------


                                                  By:
                                                     ---------------------------

                                                  Name:
                                                       -------------------------

                                                  Title:
                                                        ------------------------


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                              CONSENT OF GUARANTOR

     The below  entity,  as  "Guarantor"  under the Guaranty with respect to the
Loan  described in the  foregoing  Agreement,  hereby  consents to the terms and
provisions of the  foregoing  Agreement,  and hereby  ratifies and confirms said
Agreement,  and declares that the terms of the Guaranty, and the liabilities and
obligations  of the  Guarantor  thereunder  shall be and  continue to be in full
force  and  effect  with  respect  to the Loan and the  Security  Documents,  as
modified and amended by the foregoing Agreement.

                                             MISSION WEST PROPERTIES, INC.,
                                             a Maryland corporation


                                             By: /s/ Carl E. Berg

                                             Name: Carl E. Berg

                                             Title: Chief Executive Officer