UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   -----------

                                    Form 10-Q


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

                          COMMISSION FILE NUMBER 1-8383


                          Mission West Properties, Inc.
             (Exact name of registrant as specified in its charter)

           Maryland                                   95-2635431
           --------                                   ----------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

                               10050 Bandley Drive
                        Cupertino, California 95014-2188
                    (Address of principal executive offices)

      Registrant's telephone number, including area code is (408) 725-0700
                                   -----------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
YES    X      NO
     -----


                      APPLICABLE ONLY TO CORPORATE ISSUERS

  Indicate the number of shares outstanding of each of the issuer's classes of
                 Common stock as of the latest practicable date:

               17,025,365 shares outstanding as of August 11, 2000


                                     - 1 -

<PAGE>


                          Mission West Properties, Inc.

                                    FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 2000


<TABLE>
<CAPTION>

                                      INDEX

                                                                                      Page
<S>          <C>                                                                      <C>
PART I        Financial Information

   Item 1     Financial Statements (unaudited):

              Consolidated Balance Sheets as of June 30, 2000
              and December 31, 1999.....................................................3

              Consolidated Statements of Operations for the three
              and six months ended June 30, 2000 and 1999...............................4

              Consolidated Statements of Cash Flows for the
              six months ended June 30, 2000 and 1999...................................5

              Notes to Consolidated Financial Statements................................6

   Item 2     Management's Discussion and Analysis of Financial
              Condition and Results of Operations......................................10

   Item 3     Quantitative and Qualitative Disclosures About Market Risk...............18

   Item 4     Submission of Matters to a Vote of Security Holders......................19

PART II       Other Information

   Item 5     Other Information........................................................20

   Item 6     Exhibits and Reports on Form 8-K.........................................20


SIGNATURES.............................................................................21

</TABLE>
                                     - 2 -

<PAGE>


PART I - Financial Information
Item 1   CONSOLIDATED FINANCIAL STATEMENTS

                          MISSION WEST PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                  (Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
                                      -----
                                                                    June 30, 2000         December 31, 1999
                                                                ----------------------  ----------------------
                                                                     (Unaudited)
                                    ASSETS
<S>                                                                    <C>                   <C>
Real estate assets, at cost
    Land                                                                $173,339              $149,416
    Building                                                             622,193               566,766
                                                                ----------------------  ----------------------
                                                                         795,532               716,182
    Less accumulated depreciation                                        (26,061)              (18,566)
                                                                ----------------------  ----------------------
       Net real estate assets                                            769,471               697,616
Cash and cash equivalents                                                  6,777                 6,553
Deferred rent                                                              7,290                 5,964
Other assets                                                               3,973                 2,571
                                                                ----------------------  ----------------------
       Total assets                                                     $787,511              $712,704
                                                                ======================  ======================

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Line of credit (related parties)                                      43,323                     -
    Mortgage notes payable                                               133,021               133,952
    Mortgage notes payable (related parties)                              11,771                31,193
    Interest payable                                                       1,005                 1,005
    Security deposits                                                      3,997                 2,335
    Prepaid rental income                                                 12,653                 7,802
    Dividends/distributions payable                                       16,697                14,019
    Refundable option payment                                             21,564                21,564
    Accounts payable and accrued expenses                                  5,265                 3,342
                                                                ----------------------  ----------------------
       Total liabilities                                                 249,296               215,212

Commitments and contingencies (Note 7)

Minority interest                                                        437,028               396,810

Stockholders' equity:
  Preferred stock, $.001 par value, 20,000,000 shares
      authorized, none issued and outstanding                                  -                     -
  Common stock, $.001 par value, 200,000,000 shares
      authorized, 17,025,365 and 16,972,374 shares issued and
      outstanding at June 30, 2000 and December 31, 1999,
      respectively                                                            17                    17
  Paid-in-capital                                                        123,136               122,746
  Accumulated (deficit)                                                  (21,966)              (22,081)
                                                                ----------------------  ----------------------
     Total stockholders' equity                                          101,187               100,682
                                                                ----------------------  ----------------------
     Total liabilities and stockholders' equity                         $787,511              $712,704
                                                                ======================  ======================
</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                     - 3 -
<PAGE>


                          MISSION WEST PROPERTIES, INC
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (Dollars in thousands, except per share amounts)
                                   (unaudited)
                                    ---------
<TABLE>
<CAPTION>

                                                  Three months ended June 30,               Six months ended June 30,
                                            ---------------------------------------- ----------------------------------------
                                                   2000                1999                 2000                 1999
                                            ------------------- -------------------- -------------------- -------------------
<S>                                             <C>                   <C>                 <C>                 <C>
Revenues:
   Rental revenues from real estate                 $23,899              $18,376              $45,134            $32,403
   Tenant reimbursements                              2,930                2,159                6,443              4,395
   Other income, including interest and
      gain on sale of securities                        643                  293                  829                442
                                            ------------------- -------------------- -------------------- -------------------
       Total                                         27,472               20,828               52,406             37,240
                                            ------------------- -------------------- -------------------- -------------------
Expenses:
   Operating expenses                                 1,403                  937                2,496              1,719
   Real estate taxes                                  2,065                1,300                4,439              2,829
   Depreciation of real estate                        3,863                3,399                7,495              6,102
   General and administrative                           206                  346                  570                752
   Interest                                           2,246                3,721                4,503              6,692
   Interest (related parties)                         1,134                  573                1,885                989
                                            ------------------- -------------------- -------------------- -------------------
       Total expenses                                10,917               10,276               21,388             19,083
                                            ------------------- -------------------- -------------------- -------------------

Income before minority interest                      16,555               10,552               31,018             18,157
Minority interest                                    13,625                9,487               25,457             16,211
                                            ------------------- -------------------- -------------------- -------------------
       Net income                                   $ 2,930              $ 1,065              $ 5,561            $ 1,946

                                            =================== ==================== ==================== ===================
Basic net income per share                        $    0.17            $    0.13            $    0.33          $    0.24
                                            =================== ==================== ==================== ===================
Diluted net income per share                      $    0.17            $    0.13            $    0.33          $    0.23
                                            =================== ==================== ==================== ===================
Weighted average number of
  common shares outstanding (basic)              17,025,365            8,166,977           17,007,859          8,196,952
                                            =================== ==================== ==================== ===================
Weighted average number of
  common shares outstanding (diluted)            17,113,346            8,305,603           17,081,696          8,314,757
                                            =================== ==================== ==================== ===================

</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                     - 4 -
<PAGE>


                          MISSION WEST PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                (Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                   (unaudited)
                                                                                              Six months ended June 30,
                                                                                      -------------------------------------
                                                                                               2000               1999
                                                                                      ------------------ ------------------
<S>                                                                                      <C>                <C>
Cash flows from operating activities:
     Net income                                                                           $    5,561         $    1,946
     Adjustments to reconcile net income to net cash provided by
       operating activities:
            Minority interest                                                                 25,457             16,211
            Gain from sale of securities                                                         501                  -
            Depreciation                                                                       7,495              6,102
            Other                                                                                 17                  -
       Changes in assets and liabilities:
            Deferred rent                                                                     (1,326)            (1,656)
            Other assets                                                                      (1,025)               331
            Interest payable                                                                       -                284
            Interest payable (related parties)                                                     -                591
            Security deposits                                                                  1,313                (29)
            Prepaid rental income                                                              4,419              1,930
            Accounts payable and accrued expenses                                                579               (704)
                                                                                      ------------------ ------------------
       Net cash provided by operating activities                                              42,991             25,006
                                                                                      ------------------ ------------------
Cash flows used in investing activities:
     Improvements to real estate assets                                                       (1,148)              (241)
                                                                                      ------------------ ------------------
Cash flows from financing activities:
     Net repayments on line of credit                                                              -             14,670
     Principal payments on mortgage notes payable                                               (931)            (1,074)
     Principal payments on mortgage notes payable (related parties)                                -            (35,455)
     Net advances under line of credit (related parties)                                     (34,984)                 -
     Payments on receivable from private placements                                                -                372
     Net proceeds from issuance of common stock                                                    -                699
     Proceeds from stock options exercised                                                       290                 (8)
     Minority interest distributions                                                            (896)              (341)
     Dividends paid                                                                           (5,098)              (988)
                                                                                      ------------------ ------------------
       Net cash used in financing activities                                                 (41,619)           (22,125)
                                                                                      ------------------ ------------------
       Net increase in cash and cash equivalents                                                 224              2,640
Cash and cash equivalents, beginning                                                           6,553                246
                                                                                      ------------------ ------------------
Cash and cash equivalents, ending                                                         $    6,777         $    2,886
                                                                                      ================== ==================
Supplemental information:
     Cash paid for interest                                                               $    6,344         $    6,806
                                                                                      ================== ==================
Supplemental schedule of non-cash investing and financing activities:
     Cancellation of note receivable in connection with repurchase of common stock                 -                528
                                                                                      ================== ==================
     Advances under line of credit (related parties)                                      $   21,983                  -
                                                                                      ================== ==================
     Assumption of debt in connection with property acquisitions                          $   36,068         $   28,525
                                                                                      ================== ==================
     Assumption of other liabilities in connection with property acquisitions             $    2,372         $   32,145
                                                                                      ================== ==================
     Issuance of limited partnership units in connection with property acquisitions       $   40,587         $  103,995
                                                                                      ================== ==================
</TABLE>


        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                     - 5 -
<PAGE>


                          MISSION WEST PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Amounts in thousands, except share, square footage and limited
                           partnership unit amounts)
                                   (unaudited)
                                      -----


1. Principles of Consolidation and Basis of Presentation

     The accompanying  consolidated financial statements include the accounts of
     Mission West Properties, Inc. and its controlled subsidiaries,  including a
     50% joint  venture and the  operating  partnerships  (the  "Company").  All
     significant intercompany balances have been eliminated in consolidation.

     Minority  interest   represents  the  separate  private  ownership  of  the
     operating  partnerships  by the Berg Group  (defined  as Carl E. Berg,  his
     brother Clyde J. Berg, members of their respective immediate families,  and
     certain entities they control) and other non-affiliate interests, including
     other  unrelated  partners in a joint venture.  In total,  these  interests
     account for approximately 83% of the ownership interests in the real estate
     operations  of the  Company  as of June  30,  2000.  Minority  interest  in
     earnings  has been  calculated  by taking the net  income of the  operating
     partnerships (on a stand-alone basis) multiplied by the respective minority
     interest ownership percentage.

     The financial  statements  have been prepared in accordance  with generally
     accepted  accounting  principles  ("GAAP")  applicable to interim financial
     information and pursuant to the rules and regulations of the Securities and
     Exchange   Commission.   Accordingly,   certain  information  and  footnote
     disclosures   normally  included  in  financial   statements   prepared  in
     accordance with GAAP have been condensed or omitted  pursuant to such rules
     and regulations.  However,  in the opinion of management,  all adjustments,
     consisting  only of  normal  recurring  adjustments,  necessary  for a fair
     presentation  have been  included.  The Company  presumes that users of the
     interim  financial  information  herein  have  read or have  access  to the
     audited  financial  statements  for the preceding  fiscal year and that the
     adequacy of additional  disclosure  needed for a fair  presentation  may be
     determined in that context. The results of operations for the three and six
     months ended June 30, 2000 are not necessarily indicative of the results to
     be expected for the entire year.

     The  Company  intends  to  qualify  and elect to be taxed as a real  estate
     investment  trust  under the  Internal  Revenue  Code of 1986,  as amended,
     commencing with the taxable year ended December 31, 1999.  Accordingly,  no
     provision has been made for income taxes for the three and six months ended
     June 30,  2000.  The  Company has not yet filed its  December  31, 1999 tax
     return, but has filed an extension.


2. Real Estate

     PENDING PROJECTS ACQUISITION AGREEMENT
     The Company has entered into a Pending Projects Acquisition Agreement under
     which the Company has  acquired or will acquire  approximately  one million
     rentable square feet of R&D properties upon the completion and leasing of a
     number of pending development projects owned by certain members of the Berg
     Group and other sellers.  The agreement fixes the  acquisition  value to be
     received  by the sellers  based upon the  capitalized  rental  value of the
     property  when  fully  leased.  During  the first six  months of 2000,  the
     Company  acquired  two  additional  properties  under the Pending  Projects
     Acquisition  Agreement,  representing  141,740  rentable  square  feet (see
     Property  Acquisitions  below).  At June 30, 2000,  there was one remaining
     project  comprising  approximately  110,000 rentable square feet, which the
     Company  expects  to  acquire  under  the  Pending   Projects   Acquisition
     Agreement.  The sellers of the pending  development  projects  may elect to
     receive  cash or limited  partnership  units  ("O.P.  Units") at a value of
     $4.50  per  unit,  which  was set in May 1998  based on the $4.50 per share
     price of the Company's common stock paid in private placement  transactions
     at that time. As the current  market value price of a share of common stock
     exceeds the $4.50 price, this valuation  represents a substantial  discount
     from the  current  market  value of the common  stock that may be issued in
     exchange for these O.P. Units. Under GAAP, the acquisition cost in the form
     of O.P.  Units issued will be valued based upon the current market value of
     the   Company's   common  stock  on  the  date  the   acquisition   closes.
     Consequently,  the Company's actual cost of these future  acquisitions will
     depend in large part on the percentage of the fixed  acquisition value paid
     for by the  issuance of O.P.  Units and the price of the  Company's  common
     stock on the closing date of the acquisition.

                                     - 6 -
<PAGE>

     BERG LAND HOLDINGS OPTION AGREEMENT
     Through the operating partnerships, the Company currently has the option to
     acquire any future R&D,  office and  industrial  property  developed by the
     Berg Group on land  currently  owned or  optioned,  or  acquired  for these
     purposes in the future,  directly or indirectly  by certain  members of the
     Berg Group. At present, there are approximately 374 acres of Silicon Valley
     land owned  directly or under 50% joint  venture by certain  members of the
     Berg Group under the terms of the Berg Land Holdings Option Agreement.  The
     owners of the future R&D property developments may obtain cash or, at their
     option,  O.P. Units valued at the average closing price of shares of common
     stock over the 30-trading-day  period preceding the acquisition date. As of
     June 30, 2000,  the Company had completed six  acquisitions  under the Berg
     Land Holdings Option Agreement representing  approximately 685,000 rentable
     square feet.  Upon the  Company's  exercise of an option to purchase any of
     the future R&D property developments,  the acquisition price will equal the
     sum of (a) the full construction cost of the building;  (b) 10% of the full
     construction cost of the building;  (c) the acquisition value of the parcel
     as defined in the agreement  upon which the  improvements  are  constructed
     (currently ranging from $8.00 to $20.00 per square foot); (d) 10% per annum
     of the acquisition  value of the parcel for the period from January 1, 1998
     to the close of escrow;  and (e) interest at LIBOR (London  Interbank Offer
     Rate) plus 1.65% per annum on the full  construction  costs of the building
     for the period from the date funds were  disbursed by the  developer to the
     close of escrow;  less (f) any debt  encumbering  the  property or a lesser
     amount as approved by the independent directors committee.

     No  estimate  can be given at this time as to the total cost to the Company
     to acquire projects under the Berg Land Holdings  Agreement,  or the timing
     as to when the Company will acquire such projects.  However, the Berg Group
     currently has 16 properties under development with a total of approximately
     1,426,536  rentable  square feet of R&D properties that the Company has the
     right to acquire under this  agreement.  As of June 30, 2000, the estimated
     acquisition  price to the operating  partnerships  for these 16 projects is
     approximately  $165,500. The final acquisition price of these 16 properties
     could  differ  significantly  from this  estimate.  In addition to projects
     currently under development,  the Berg Land Holdings Option Agreement gives
     the Company the right to acquire future  developments  by the Berg Group on
     up to 288 additional  acres of land currently  controlled by the Berg Group
     or under 50% joint venture,  which could support approximately 4.53 million
     square  feet of new  developments.  Under  the Berg  Land  Holdings  Option
     Agreement  the Company  also has an option to purchase  all land  acquired,
     directly or indirectly,  by Carl E. Berg or Clyde J. Berg that has not been
     improved with completed  buildings and which is zoned for,  intended for or
     appropriate  for  research  and  development,   office  and/or   industrial
     development or use in the states of California, Oregon, and Washington.

     PROPERTY ACQUISITIONS
     Effective  January 5, 2000, the Company  acquired a newly  constructed  R&D
     property located at 1756 Automation Parkway in San Jose,  California.  This
     acquisition  added  approximately  80,640 square feet of rentable space and
     was  acquired  from the Berg Group under the Pending  Projects  Acquisition
     Agreement.  The total acquisition price for this property was $14,594.  The
     Company  acquired this  property by  increasing  its debt to the Berg Group
     under the line of credit by $5,000, issuing 1,346,480 O.P. Units to various
     members of the Berg Group, and assuming other liabilities of $100.

     Effective  March 1, 2000,  the Company  acquired an  approximately  239,000
     square  foot R&D  building  located at 800  Branham  Lane East in San Jose,
     California  from  the  Berg  Group  under  the Berg  Land  Holdings  Option
     Agreement.  The total acquisition price for this property was $18,359.  The
     Company  acquired this  property by  increasing  its debt to the Berg Group
     under the line of credit by $5,000, issuing 1,438,066 O.P. Units to various
     members of the Berg Group, and assuming other liabilities of $1,331.

     Effective  April 1, 2000,  the  Company  acquired a newly  constructed  R&D
     property located at 1762 Automation Parkway in San Jose,  California.  This
     acquisition  added  approximately  61,100 square feet of rentable space and
     was  acquired  from the Berg Group under the Pending  Projects  Acquisition
     Agreement.  The total acquisition price for this property was $16,014.  The
     Company  acquired this  property by  increasing  its debt to the Berg Group
     under the line of credit by $7,444  and  issuing  1,001,213  O.P.  Units to
     various members of the Berg Group.

     Effective  April 1, 2000,  the  Company  acquired an  approximately  98,500
     square  foot  R&D  building  located  at  255  Caspian  Way  in  Sunnyvale,
     California  from  the  Berg  Group  under  the Berg  Land  Holdings  Option
     Agreement.  The total acquisition price for this property was $11,637.  The
     Company  acquired this  property by

                                     - 7 -

<PAGE>
     increasing  its debt to the Berg Group  under the line of credit by $6,832,
     issuing  550,079  O.P.  Units to  various  members of the Berg  Group,  and
     assuming other liabilities of $167.

     Effective  May  15,  2000,  the  Company  acquired  two  R&D  buildings  of
     approximately  160,000  square feet located at 5300 and 5350 Hellyer Avenue
     in San Jose,  California  from the Berg Group under the Berg Land  Holdings
     Option Agreement.  These properties are operated,  managed,  and owned by a
     partnership in which the Company owns a 50% interest. The total acquisition
     price  for  these  properties  was  $17,184.  The  Company  acquired  these
     properties by increasing its debt to the Berg Group through a mortgage note
     (related parties) by $11,792, issuing 659,223 O.P. Units to various members
     of the Berg Group, and assuming other liabilities of $774.

     REFUNDABLE OPTION PAYMENT
     During the third  quarter of 1999,  the  Company  entered  into a new lease
     agreement for 2001 Logic Drive with Xilinx,  Incorporated  ("Xilinx").  The
     lease  agreement  includes  an option  granted  to Xilinx to  purchase  the
     building at a  predetermined  price.  In September 1999, in accordance with
     the option  provisions  of the lease  agreement,  Xilinx paid the Company a
     deposit of $21,564 to secure its option right. Upon exercise of the option,
     the  Company  will  refund the  remaining  deposit  amount and Xilinx  will
     deposit into escrow funds equal to the purchase price. In July 2000, Xilinx
     and the Company  agreed to extend the option period for one year until July
     31, 2001.  Xilinx and the Company  further  agreed to reduce the deposit by
     $167 per  month  commencing  August 1,  2000  until  the later of:  (1) the
     transfer of title to the  property to Xilinx or (2) July 31,  2001.  In the
     event  Xilinx does not  exercise  its option,  the Company  must refund the
     remaining deposit to Xilinx, without interest.


3. Stock Transactions

     During the six months ended June 30, 2000,  options  were  exercised  for a
     total of 52,991 shares; options to purchase 39,237 shares were exercised at
     $4.50 per share,  and options to purchase  13,754 shares were  exercised at
     $8.25 per share. Total proceeds to the Company were $290. No employee stock
     options were exercised during the second quarter of 2000.


4. Other Income

     In May 2000,  the Company  entered  into a ten-year  lease with ONI Systems
     Corporate ("ONI") for 444,500 square feet of space to be constructed by the
     Berg  Group on land  that is  subject  to the  Berg  Land  Holdings  Option
     Agreement.  As partial consideration for the lease, the Company was granted
     an option to  purchase  100,000  shares of ONI common  stock in its initial
     public  offering.  The Company  realized  net  proceeds of $6,257.  Of this
     amount,  the Company  recognized  $501 during the second  quarter  with the
     balance  deferred as prepaid rent to be amortized  over the ten-year  lease
     term.


5. Net Income Per Share

     Basic net  income  per share is  computed  by  dividing  net  income by the
     weighted-average  number  of  common  shares  outstanding  for the  period.
     Diluted net income per share is computed by dividing  net income by the sum
     of the weighted-average  number of common shares outstanding for the period
     plus the assumed exercise of all dilutive securities.

     The computation for weighted average shares is detailed below:
<TABLE>
<CAPTION>


                                                          Three Months Ended June 30,         Six Months Ended June 30,
                                                        -------------------------------    -------------------------------
                                                             2000             1999              2000             1999
                                                        --------------    -------------    --------------    -------------
<S>                                                      <C>              <C>               <C>               <C>
Weighted average shares outstanding (basic)               17,025,365       8,166,977         17,007,859        8,196,952
Incremental shares from assumed option exercise               87,981         138,626             73,837          117,805
                                                        --------------    --------------   --------------    -------------
Weighted average shares outstanding (diluted)             17,113,346       8,305,603         17,081,696        8,314,757
                                                        ==============    =============    ==============    =============
</TABLE>

     The  outstanding  O.P. Units,  which are  exchangeable at the unit holder's
     option  for  shares  of  common  stock on a  one-for-one  basis,  have been
     excluded from the diluted net income per share calculation,  as there would
     be no

                                     - 8 -

<PAGE>
     effect on the amounts because the minority interests' share of income would
     also  be  added  back  to net  income.  The  total  number  of  O.P.  Units
     outstanding at June 30, 2000 was 81,200,850.


6. Related Party Transactions

     As of June 30, 2000, the Berg Group owned 76,880,248 O.P. Units. Along with
     the  Company's  common  shares  owned by the Berg Group,  the Berg  Group's
     ownership as of June 30, 2000 represented  approximately  78% of the equity
     interests of the Company,  assuming conversion of the 81,200,850 O.P. Units
     into the common stock of the Company.

     As of June 30,  2000,  debt in the amount of $43,323 was due the Berg Group
     under the line of credit established March 1, 2000. The $50,000 Wells Fargo
     line of credit  expired on February  29, 2000 and was repaid with  proceeds
     from and  replaced by a $50,000  line of credit  from the Berg  Group.  The
     $50,000  line of  credit  from the Berg  Group  was  increased  to  $75,000
     effective  April 1,  2000.  The Berg  Group  line of  credit  is  currently
     collateralized  by seven  properties,  bears  interest  at LIBOR  plus 1.30
     percent,  and matures in February 2001. The Company believes that the terms
     of the Berg Group line of credit were more favorable  than those  available
     from  Wells  Fargo or similar  lenders.  As of June 30,  2000,  debt in the
     amount of $11,771 was due the Berg Group under a mortgage note  established
     May 15, 2000 in connection with the Company's acquisition of a 50% interest
     in a Hellyer  Avenue  Limited  Partnership,  the obligor under the mortgage
     note.  The mortgage note bears  interest at 7.65%,  and is due in ten years
     with principal payments  amortized over twenty years.  During the first six
     months  of 2000,  the  Company  increased  its  borrowings  by  $36,068  in
     connection  with  property  acquisitions,  including the Berg Group line of
     credit and mortgage note. Interest expense incurred in connection with debt
     due the Berg Group was $1,134 and $573 for the three  months ended June 30,
     2000 and 1999,  respectively,  and $1,885 and $989 for the six months ended
     June 30, 2000 and 1999, respectively.

     Carl E. Berg has a  substantial  financial  interest  in one  company  that
     leases space from the operating  partnerships.  This company occupies 5,862
     square  feet at $0.93 per square  foot per month.  This lease was in effect
     prior to the Company's  acquisition of its general partnership interests in
     July 1998. The lease expires in 2001.

     The Company currently leases office space owned by Berg & Berg Enterprises,
     Inc.,  an affiliate of Carl E. Berg and Clyde J. Berg.  Rental  amounts and
     overhead reimbursements paid to Berg & Berg Enterprises,  Inc. were $20 for
     the three  months ended June 30, 2000 and 1999,  respectively,  and $40 for
     the six months ended June 30, 2000 and 1999, respectively.


7. Subsequent Events

     On June 13, 2000,  the Company  declared a $0.17 per share  dividend on its
     common  stock.  The  dividend  was  paid  on July  7,  2000  to all  common
     stockholders of record as of June 28, 2000. On the same date, the operating
     partnerships paid a distribution of $0.17 per O.P. Unit. The amount of this
     distribution  payable  to  members  of the Berg Group of $13,070 on July 7,
     2000 was considered an advance on the Berg Group line of credit.


8. Commitments and Contingencies

     The Company and the operating partnerships,  from time to time, are parties
     to litigation arising out of the normal course of business. Management does
     not expect that such matters  would have a material  adverse  effect on the
     consolidated financial position, results of operations or cash flows of the
     Company.

     Insurance policies currently maintained by the Company do not cover seismic
     activity, although they do cover losses from fires after an earthquake.

                                     - 9 -
<PAGE>

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  should be read in  conjunction  with the  accompanying  consolidated
financial  statements  and notes  thereto  contained  herein  and the  Company's
consolidated  financial  statements and notes thereto contained in the Company's
Annual Report on Form 10-K as of and for the year ended  December 31, 1999.  The
results  for the three and six months  ended June 30,  2000 are not  necessarily
indicative  of the  results to be  expected  for the entire  fiscal  year ending
December 31, 2000. The following discussion includes forward-looking statements,
including  but not limited to statements  with respect to the  Company's  future
financial performance,  operating results, plans and objectives.  Actual results
may differ materially from those currently  anticipated depending upon a variety
of  factors,   including   those   described   below   under  the   sub-heading,
"Forward-Looking Information."

OVERVIEW

In May 1998, Mission West Properties,  Inc. (the "Company"),  the members of the
Berg  Group,  John  Kontrabecki  and  certain  other  persons  entered  into  an
acquisition   agreement  providing,   among  other  things,  for  the  Company's
acquisition  of  interests  as  the  sole  general   partner  of  four  separate
partnerships  (the  "operating  partnerships").   At  the  time,  the  operating
partnerships  held  approximately  4.34  million  rentable  square  feet  of R&D
property  located in the Silicon  Valley.  The  agreement  also provided for the
parties to enter into the Pending  Projects  Acquisition  Agreement and the Berg
Land  Holdings  Option  Agreement  with the Berg Group and the  exchange  rights
agreement  with all limited  partners in the operating  partnerships,  following
stockholder  approval.  Effective  July 1, 1998,  the  Company  consummated  its
acquisition of the general partnership interests in the operating  partnerships.
The  Company  effected  its  purchase of the general  partnership  interests  by
issuing to each of the operating  partnerships a demand note bearing interest at
7.25% per annum, aggregating approximately $35.2 million of principal payable no
later than July 1, 2000.

Effective  July 1, 1998,  all limited  partnership  interests  in the  operating
partnerships were converted into 59,479,633  operating  partnership units ("O.P.
Units"),  representing  ownership  of  approximately  87.89%  of  the  operating
partnerships,  upon  consummation  of the  acquisition.  Under  the terms of the
exchange  rights  agreement,  after  December  29,  1999 each  O.P.  Unit may be
exchanged for one share of common stock, subject to certain conditions. The O.P.
Units represent the minority ownership interests.  At June 30, 2000, the Company
owned a 17% general partnership interest in the operating partnerships, taken as
a whole, on a weighted average basis.

In December 1998,  the Company sold 6,495,058  shares of common stock at a price
of $4.50 per share to a number of accredited  investors to complete its May 1998
private placements.  The aggregate proceeds,  net of fees and offering costs, of
approximately  $27.8 million were used to pay down amounts outstanding under the
demand notes due to the operating  partnerships.  Also, as of December 29, 1998,
the Company and the limited partners in the operating  partnerships entered into
the exchange rights agreement, and the Company entered into the Pending Projects
Acquisition  Agreement and the Berg Land Holdings Option Agreement with the Berg
Group and other sellers.

In July 1999,  the Company  completed a public  offering of 8,680,000  shares of
common stock at $8.25 per share.  The net  proceeds  from this  offering,  after
deducting  underwriting  discounts and other offering costs, were  approximately
$66.9 million and were used primarily to repay indebtedness.

At June 30,  2000,  the  outstanding  balance  under the  demand  notes that the
Company owes to the operating  partnerships was approximately $1.14 million. The
principal  of the  demand  notes,  along  with the  interest  expense,  which is
interest income to the operating  partnerships,  is eliminated in  consolidation
and is not  included in the  corresponding  line items  within the  consolidated
financial  statements.  However,  the interest income earned on this debt by the
operating partnerships, which is interest expense to the Company, is included in
the calculation of minority interest as reported on the consolidated  statements
of operations,  thereby reducing net income by this same amount. At present, the
Company's  only  means  for  repayment  of  this  debt,  be it in  this  form or
refinanced  with  another  lender,  is through  distributions  that the  Company
receives from the operating partnerships in excess of the amount of dividends to
be paid to the Company's stockholders.

The Company  intends to elect as part of the Company's 1999 income tax return to
qualify to be taxed as a REIT  commencing  with the taxable year ended  December
31, 1999.

The Company has two wholly owned subsidiaries, MIT Realty, Inc. and Mission West
Executive Aircraft Center. Both corporations are inactive.

                                     - 10 -

<PAGE>
RESULTS OF OPERATIONS

Comparison  of the three and six months ended June 30, 2000 to the three and six
months ended June 30, 1999.

As of June 30,  2000,  the  Company,  through its  controlling  interests in the
operating partnerships,  owned 86 properties totaling approximately 5.93 million
square feet compared to 77 properties totaling approximately 5.09 million square
feet owned by the Company as of June 30, 1999.  This  represents  an increase of
approximately  17% in total  rentable  square  footage  from one year  ago.  The
increase resulted from the following acquisitions:
<TABLE>
<CAPTION>

               Date of                                                   Rentable Square
             Acquisition                      Address                        Footage
          -------------------    ----------------------------------    -------------------
<S>                               <C>                                           <C>
            7/99                   1750 Automation Parkway                        80,640
            8/99                   1700 Richard Avenue                            58,783
            10/99                  5749 Fontanosa Way                             77,700
            1/00                   1756 Automation Parkway                        80,640
            3/00                   800 Branham Lane East                         239,000
            4/00                   1762 Automation Parkway                        61,100
            4/00                   255 Caspian Way                                98,500
            5/00                   5300 & 5350 Hellyer Avenue                    160,000
          --------------------------------------------------------------------------------
                                                                                 856,363
</TABLE>


The following  tables reflect the increase in the Company's  rental revenues for
the three and six  months  ended  June 30,  2000 over  rental  revenues  for the
comparable three and six months in 1999:
<TABLE>
<CAPTION>

                                                        Three months ended June 30,
                                     -------------------------------------------------------------------
                                         2000             1999            $ Change          % Change
                                     -------------    -------------     -------------    ---------------
                                                 (Dollars in thousands)
<S>                                      <C>              <C>               <C>                 <C>
          Same Property (1)               $14,758          $13,219           $ 1,539              11.6%
          1998 Acquisitions                   586              586                 -                 -
          1999 Acquisitions                 5,718            4,571             1,147              25.1%
          2000 Acquisitions                 2,836                -             2,836                 -
                                     -------------    -------------     -------------
                                          $23,899          $18,376           $ 5,523              30.1%
                                     =============    =============     =============


                                                         Six months ended June 30,
                                     -------------------------------------------------------------------
                                         2000             1999            $ Change          % Change
                                     -------------    -------------     -------------    ---------------
                                                 (Dollars in thousands)

          Same Property (1)               $28,420          $26,576           $ 1,844               7.0%
          1998 Acquisitions                 1,171            1,171                 -                 -
          1999 Acquisitions                11,939            4,656             7,283             156.4%
          2000 Acquisitions                 3,604                -             3,604                 -
                                     -------------    -------------     -------------
                                          $45,134          $32,403          $ 12,731              39.3%
                                     =============    =============     =============
</TABLE>


(1)  "Same Property" is defined as properties owned as of July 1, 1998 and still
     owned as of June 30, 2000.

For the quarter ended June 30, 2000,  rental revenues  increased by $5.5 million
from $18.4 million for the three months ended June 30, 1999 to $23.9 million for
the same period of 2000. Of the $5.5 million increase in rental  revenues,  $1.5
million was generated by the Company's "Same Property"  portfolio,  $1.2 million
was generated by properties  acquired in 1999, and $2.8 million was generated by
properties  acquired in 2000.  Rental  revenues  increased by $12.7 million from
$32.4  million for the six months  ended June 30, 1999 to $45.1  million for the
same period of 2000.  Of the $12.7  million  increase in rental  revenues,  $1.8
million was generated by the Company's "Same Property"  portfolio,  $7.3 million
was generated by properties  acquired in 1999, and $3.6 million was generated by
properties acquired in 2000.

Tenant  reimbursements  increased by $0.7 million or 32%,  from $2.2 million for
the three  months ended June 30, 1999 to $2.9 million for the three months ended
June 30, 2000.  Operating  expenses and real estate taxes,  on a combined basis,
increased  by $1.2  million or 55%,  from $2.2  million to $3.4  million for the
three months ended June 30, 1999 and 2000,  respectively.  Tenant reimbursements
increased  by $2.0  million or 45%,  from $4.4  million for the six months ended
June 30, 1999 to $6.4 million for the six months ended June 30, 2000.  Operating
expenses and real estate taxes, on a combined  basis,  increased by $2.4 million
or 53%, from $4.5 million to $6.9 million for the six months ended June 30, 1999
and 2000,

                                     - 11 -

<PAGE>
respectively.  The  increases  resulted  primarily  from the growth in the total
rentable square footage during the periods presented.

Depreciation  expense  increased by $464 and $1,393 for the three and  six-month
period ended June 30, 2000,  respectively,  over the same period a year ago. The
increase was  attributable to the acquisitions of nine properties since June 30,
1999.

Interest  expense  decreased  by $1.5  million or 41% from $3.7  million for the
three months ended June 30, 1999 to $2.2 million for the three months ended June
30, 2000.  Interest expense (related parties) increased by $561 or 98% from $573
for the three  months  ended June 30, 1999 to $1.1  million for the three months
ended June 30, 2000. Interest expense decreased by $2.2 million or 33% from $6.7
million  for the six months  ended  June 30,  1999 to $4.5  million  for the six
months ended June 30, 2000. Interest expense (related parties) increased by $896
or 91% from $989 for the six months  ended June 30, 1999 to $1.9 million for the
six months  ended June 30, 2000.  On a net basis,  interest  expense  (including
amounts to related  parties)  has  decreased  given the decrease in overall debt
levels.  As a result of proceeds  received  from the July 1999 public  offering,
receipt  of a  refundable  option  payment,  as  well  as  cash  generated  from
operations,  debt  outstanding,  including  amounts  due  related  parties,  has
decreased by $30.6  million or 14.0% from $218.7  million as of June 30, 1999 to
$188.1 million as of June 30, 2000.

The  minority  interest  portion of income was $13.6  million,  resulting in net
income to stockholders of $2.9 million for the three months ended June 30, 2000.
Minority  interest  represents the limited partners'  ownership  interest in the
operating partnerships, which was 83% as of June 30, 2000, taken as a whole.

CHANGES IN FINANCIAL CONDITION

During  the first six  months  of 2000,  the  Company  acquired  six  additional
properties  representing  639,240 rentable square feet of newly  constructed R&D
properties  located in Silicon Valley.  These  properties were acquired from the
Berg Group under the Pending  Projects  Acquisition  Agreement and the Berg Land
Holdings Option Agreement.  The aggregate acquisition price for these properties
was $77.8 million.  The Company financed these acquisitions by a) increasing $36
million  of debt due the Berg  Group;  b)  assumption  by the  Company  of other
liabilities of $2.4 million; c) and the issuance of 4,995,061 O.P. Units.

During the six months ended June 30, 2000, employee stock options were exercised
to  purchase  a total of 52,991  shares of common  stock,  consisting  of 39,237
shares  exercised  at $4.50 per share and 13,754  shares  exercised at $8.25 per
share. Total proceeds to the Company were approximately  $290. No employee stock
options were exercised during the second quarter of 2000.

LIQUIDITY AND CAPITAL RESOURCES

The Company  expects its  principal  sources of liquidity for  distributions  to
stockholders,   debt  service,   leasing   commissions  and  recurring   capital
expenditures  to be Funds  from  Operations  ("FFO"),  or the Berg Group line of
credit.  The Company  expects  these sources of liquidity to be adequate to meet
projected   distributions  to  stockholders  and  other  presently   anticipated
liquidity  requirements  in 2000.  The  Company  expects  to meet its  long-term
liquidity  requirements  for  the  funding  of  property  development,  property
acquisitions  and other  material  non-recurring  capital  improvements  through
long-term  secured and  unsecured  indebtedness  and the issuance of  additional
equity  securities  by the  Company.  The  Company  has the  ability to meet any
short-term  obligations  or other  liquidity  needs  based on the line of credit
(related parties).

The  Company's  $50  million  line of credit  with Wells  Fargo Bank  expired on
February  29,  2000 and was repaid  with  proceeds  from and  replaced  by a $50
million  line of credit  from the Berg  Group.  The Berg Group line of credit is
currently collateralized by seven properties,  bears interest at LIBOR plus 1.30
percent,  and matures in February  2001.  The  Company is  currently  evaluating
alternative  sources of credit.  There can be no assurance that the Company will
be able to obtain a line of credit with terms  similar to the Berg Group line of
credit,  and its cost of borrowing  could  increase  substantially.  The Company
believes  that the terms of the Berg  Group line of credit  were more  favorable
than those available from Wells Fargo or similar lenders.  On April 1, 2000, the
$50 million  credit line with the Berg Group was  increased  to $75 million with
all other terms remaining the same.

At June 30, 2000, the Company had total indebtedness of $188.1 million including
$133.0 million of fixed rate mortgage  debt,  $11.8 million under the Berg Group
mortgage note (related parties),  and $43.3 million under the Berg Group line of
credit (related parties).

As of June 30, 2000,  the Debt to Total Market  Capitalization  ratio,  which is
computed as the  Company's  total debt  outstanding  divided by the sum of total
debt  outstanding  plus the market value of common stock (based upon the closing

                                     - 12 -

<PAGE>
price of $10.50 per share on June 30, 2000) on a fully diluted basis,  including
the  conversion of all O.P.  Units into common stock,  was  approximately  15.4%
based upon an  estimated  Total Market  Capitalization  of  approximately  $1.22
billion.

MORTGAGE DEBT

The following table sets forth certain information regarding debt outstanding as
of June 30, 2000:

<TABLE>
<CAPTION>

                                                                                                       Maturity     Interest
             Debt Description                    Collateral Properties                  Balance          Date         Rate
------------------------------------------  --------------------------------         ---------------  -----------  -----------
                                                                                     ($ in thousands)
<S>                                        <C>                                           <C>            <C>         <C>
Line of Credit  (related parties):
                                            2033-2043 Samaritan Drive, San Jose, CA        43,323         2/01          (1)
                                            2133 Samaritan Drive, San Jose, CA
                                            2233-2243 Samaritan Drive, San Jose, CA
                                            1310-1450 McCandless Drive, Milpitas, CA
                                            1315-1375 McCandless Drive, Milpitas, CA
                                            1650-1690 McCandless Drive, Milpitas, CA
                                            1795-1845 McCandless Drive, Milpitas, CA

Mortgage Notes Payable (related parties):   5300 & 5350 Hellyer Avenue, San Jose, CA       11,771         6/20        7.65%


Mortgage Notes Payable:
Prudential Capital Group                    20400 Mariani, Cupertino, CA                    1,831         3/09        8.75%
New York Life Insurance Company             10440 Bubb Road, Cupertino, CA                    392         8/09       9.625%
Home Savings & Loan Association             10460 Bubb Road, Cupertino, CA                    450         1/07        9.50%
Mellon Mortgage Company                     3530 Bassett, Santa Clara, CA                   2,795         6/01       8.125%
Prudential Insurance Company of America     10300 Bubb, Cupertino, CA                     127,553(2)     10/08        6.56%
                                            10500 N. DeAnza, Cupertino, CA
                                            4050 Starboard, Fremont, CA
                                            45700 Northport Loop, Fremont, CA
                                            45738 Northport Loop, Fremont, CA
                                            450-460 National, Mountain View, CA
                                            4949 Hellyer, San Jose, CA
                                            6311 San Ignacio, San Jose, CA
                                            6321 San Ignacio, San Jose, CA
                                            6325 San Ignacio, San Jose, CA
                                            6331 San Ignacio, San Jose, CA
                                            6341 San Ignacio, San Jose, CA
                                            6351 San Ignacio, San Jose, CA
                                            3236 Scott, Santa Clara, CA
                                            3560 Bassett, Santa Clara, CA
                                            3570 Bassett, Santa Clara, CA
                                            3580 Bassett, Santa Clara, CA
                                            1135 Kern, Sunnyvale, CA
                                            1212 Bordeaux, Sunnyvale, CA
                                            1230 E. Arques, Sunnyvale, CA
                                            1250 E. Arques, Sunnyvale, CA
                                            1170 Morse, Sunnyvale, CA
                                            3540 Bassett, Santa Clara, CA
                                            3542 Bassett, Santa Clara, CA
                                            3544 Bassett, Santa Clara, CA
                                            3550 Bassett, Santa Clara, CA
                                                                                     ---------------
Mortgage Notes Payable Subtotal                                                           144,792
                                                                                     ---------------
                    Total                                                                $188,115
                                                                                     ===============

</TABLE>

(1)  The debt owed to the Berg Group  carries a variable  interest rate equal to
     LIBOR plus 1.30 percent and is payable in full in February 2001.
(2)  John Kontrabecki, one of the limited partners, has guaranteed approximately
     $12.0 million of this debt.


                                     - 13 -
<PAGE>


ACQUIRING PROPERTIES DEVELOPED BY THE BERG GROUP

The following table presents certain  information  concerning projects for which
the Company, through its interests in the operating partnerships,  has the right
to  acquire  under the Berg  Land  Holdings  Option  Agreement  and the  Pending
Projects Acquisition Agreement.

<TABLE>
<CAPTION>

                                   Approximate
                                  Rentable Area                                            Total Estimated
    Property                      (Square Feet)         Anticipated Acquisition Date     Acquisition Value (1)
------------------------------ -------------------- ----------------------------------- -----------------------
BERG LAND HOLDINGS
UNDER DEVELOPMENT                                                                        (dollars in thousands)
<S>                              <C>                     <C>                                 <C>
Hellyer View                         77,184               3rd Quarter 2000                    $ 10,000
Hellyer III (Phase I)               117,740               4thQtr 2000/1stQtr 2001               13,800
Hellyer Vista (Phase I)             131,500               4thQtr 2000/1stQtr 2001               15,000
Silver Creek                        346,000               1st Quarter 2001                      38,500
Morgan Hill (JV I) (2)              211,000               1st Quarter 2001                      22,000
5550 Hellyer                         79,800               1st Quarter 2001                      10,200
5750 Hellyer                         73,312               1st Quarter 2001                       9,000
Creekside                            65,000               1st Quarter 2001                       8,200
Caspian (Phase II)                  100,000               2nd Quarter 2001                      14,900
Morgan Hill (JV II) (2)              60,000               2nd Quarter 2001                       5,700
Morgan Hill (JV III) (2)             40,000               2nd Quarter 2001                       4,000
5535 Hellyer                        125,000               3rd Quarter 2001                      14,200
                                  ---------                                                   --------
               Subtotal           1,426,536                                                   $165,500

AVAILABLE LAND
Morgan Hill (2)                     650,000
King Ranch                          248,500
Hellyer & Piercy                    763,000
Fremont & Cushing                   387,000
Evergreen                         2,480,000
                                  ---------
              Subtotal            4,528,500

PENDING PROJECTS ACQUISITION
PENDING PROJECT
Automation IV (1 building)          110,000               1st Quarter 2001                      12,500

TOTAL                             6,065,036                                                   $178,000
                                  =========                                                   ========
</TABLE>


(1)  The Estimated  Acquisition  Value  represents  the estimated  economics for
     acquiring  the pending  projects  under the terms of the  Pending  Projects
     Acquisition  Agreement and the Berg Land Holdings Option  Agreement,  which
     may differ from the actual acquisition cost as determined under GAAP.
(2)  The Company  expects to own an approximate  50% interest in the partnership
     to be formed to develop the  property.  The  property  will be operated and
     managed by the other partner in the entity. The rentable area and estimated
     acquisition  value shown above  reflect  both the  Company's  and the other
     partner's combined interest in these properties.



Pursuant to the Berg Land Holdings Option Agreement  between the Company and the
Berg  Group,  the  Company  currently  has the option to acquire any future R&D,
office and industrial  property developed by the Berg Group on land it currently
owns or has under option, or acquires for these purposes in the future, directly
or indirectly by certain members of the Berg Group.

                                     - 14 -

<PAGE>
The time required to complete the leasing of developments varies from project to
project. Generally, the Company will not acquire any of the above projects until
they  are  fully  completed  and  leased.  There  can be no  assurance  that the
acquisition  date and final  cost to the  Company  as  indicated  above  will be
realized.

Although the Company expects to acquire the new properties available to it under
the  terms of the  Pending  Projects  Acquisition  Agreement  and the Berg  Land
Holdings Option  Agreement,  there can be no assurance that the Company actually
will  consummate  any of  the  intended  transactions,  including  all of  those
discussed  above.  Furthermore,  the Company has not yet determined the means by
which it would  acquire and pay for any such  properties or the impact of any of
the acquisitions on its business,  results of operations,  financial  condition,
FFO or available cash for distribution.

The minority  interest in earnings for unrelated parties was deducted from total
minority interest in earnings in calculating Funds from Operation ("FFO").

During the third quarter of 1999, the Company entered into a new lease agreement
for 2001 Logic Drive with Xilinx,  Incorporated ("Xilinx").  The lease agreement
includes an option granted to Xilinx to purchase the building at a predetermined
price. In September 1999, in accordance with the option  provisions of the lease
agreement,  Xilinx  paid the  Company a deposit  of $21,564 to secure its option
right.  Upon  exercise of the  option,  the  Company  will refund the  remaining
deposit  amount and Xilinx will  deposit into escrow funds equal to the purchase
price.  In July 2000,  Xilinx and the Company agreed to extend the option period
for one year  until July 31,  2001.  Xilinx and the  Company  further  agreed to
reduce the deposit by $167 per month  commencing  August 1, 2000 until the later
of: (1) the transfer of title to the property to Xilinx or (2) July 31, 2001. In
the event  Xilinx  does not  exercise  its option,  the Company  must refund the
remaining deposit to Xilinx, without interest.

HISTORICAL CASH FLOWS

Net cash provided by operating activities for the six months ended June 30, 2000
was $43.0  million  compared to $25.0  million for the same period in 1999.  The
change was a direct result of rent increases and new acquisitions.

In May  2000,  the  Company  entered  into a  ten-year  lease  with ONI  Systems
Corporate ("ONI") for 444,500 square feet of space to be constructed by the Berg
Group on land that is subject to the Berg Land  Holdings  Option  Agreement.  As
partial  consideration  for the  lease,  the  Company  was  granted an option to
purchase 100,000 shares of ONI common stock in its initial public offering.  The
Company realized net proceeds of $6,257.  Of this amount the Company  recognized
$501 during the second  quarter with the balance  deferred as prepaid rent to be
amortized over the ten-year lease term.

Net cash used in investing  activities was  approximately  $1.1 million and $241
for the six months  ended  June 30,  2000 and 1999,  respectively.  Cash used in
investing  activities  during the six months  ended June 30, 2000 was related to
tenant improvements made to existing real estate assets.

Net cash used in financing activities was $41.6 million for the six months ended
June 30, 2000 compared to $22.1 million for the same period in 1999.  During the
six months ended June 30, 2000, the Company  reduced debt  outstanding  and made
distributions  to holders of its common  stock and the O.P.  Units by  utilizing
cash generated from operating activities.

CAPITAL EXPENDITURES

The  properties  require  periodic  investments  of capital  for  tenant-related
capital expenditures and for general capital  improvements.  For the years ended
December 31, 1994 through  December 31, 1999, the recurring  tenant  improvement
costs and  leasing  commissions  incurred  with  respect to new leases and lease
renewals of the properties previously owned or controlled by members of the Berg
Group averaged approximately $1.5 million annually. The Company expects that the
average annual cost of recurring tenant  improvements  and leasing  commissions,
related to the properties, will be approximately $2.5 million for the year 2000.
The Company  believes it will recover  substantially  all of these sums from the
tenants under the new or renewed leases through  increases in rental rates.  The
Company expects to meet its long-term liquidity  requirements for the funding of
property  development,  property  acquisitions and other material  non-recurring
capital  improvements  through long-term secured and unsecured  indebtedness and
the issuance of additional equity securities by the Company.

                                     - 15 -

<PAGE>
FUNDS FROM OPERATIONS

As  defined  by the  National  Association  of  Real  Estate  Investment  Trusts
("NAREIT"),  FFO represents net income (loss) before  minority  interest of unit
holders  (computed in accordance  with GAAP),  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 an appropriate measure
of performance  of an equity REIT because,  along with cash flows from operating
activities, financing activities and investing activities, it provides investors
with an  understanding  of the Company's  ability to incur and service debt, and
make capital  expenditures.  FFO should not be considered as an alternative  for
net income as a measure of profitability  and it is not comparable to cash flows
provided by operating activities  determined in accordance with GAAP, nor is FFO
necessarily  indicative  of funds  available to meet the  Company's  cash needs,
including its need to make cash distributions to satisfy REIT requirements.

The Company's  definition of FFO also assumes conversion at the beginning of the
period of all convertible securities, including minority interests that might be
exchanged  for common stock.  FFO does not  represent  the amount  available for
management's  discretionary  use;  as  such  funds  may be  needed  for  capital
replacement  or expansion,  debt service  obligations or other  commitments  and
uncertainties.

Furthermore, FFO is not comparable to similarly entitled items reported by other
REITs that do not define them  exactly as the Company  defines  FFO. FFO for the
three months ended June 30, 2000 and 1999 and the six months ended June 30, 2000
are summarized in the table below:

<TABLE>
<CAPTION>

                                               Three Months Ended June 30,
                                     -------------------------------------------------       Six Months Ended
                                              2000                       1999                 June 30, 2000
                                     ------------------------    ---------------------    ---------------------
                                                    (Dollars in thousands)
<S>                                            <C>                      <C>                      <C>
          Net income                            $ 2,930                  $ 1,065                  $ 5,561
          Add:
              Minority interest (1)              13,558                    9,487                   25,390
              Depreciation                        3,863                    3,399                    7,495
          Less:
              Gain on sale of                       501                        -                      501
          security
                                     ------------------------    ---------------------    ---------------------
          FFO                                   $19,850                  $13,951                  $37,945
                                     ========================    =====================    =====================
</TABLE>


(1)  The  minority  interest  for  unrelated  parties  was  deducted  from total
     minority interest in calculating FFO.

DISTRIBUTION POLICY

The Company intends to pay distributions to stockholders  based upon total Funds
Available   for   Distribution   ("FAD"),   which  is  calculated  as  FFO  less
straight-lined  rents,  leasing  commissions paid and capital  expenditures made
during the respective period. The calculations of FAD for the three months ended
June 30, 2000 and 1999 and the six months ended June 30, 2000 are as follows:

<TABLE>
<CAPTION>

                                               Three Months Ended June 30,
                                     -------------------------------------------------       Six Months Ended
                                              2000                       1999                 June 30, 2000
                                     ------------------------    ---------------------    ---------------------
                                                    (Dollars in thousands)
<S>                                            <C>                      <C>                      <C>
          FFO                                   $19,850                  $13,951                  $37,945
          Less:
              Straight-line rents                   357                      903                    1,326
              Leasing commissions                   753                        -                      902
              Capital expenditures                  248                      133                    1,148
                                     ------------------------    ---------------------    ---------------------
          FAD                                   $18,492                  $12,915                  $34,569
                                     ========================    =====================    =====================
</TABLE>


The Company intends to make regular quarterly distributions to holders of common
stock based on its FAD. The Company's ability to make such distributions will be
affected  by  numerous  factors,  including,  most  importantly,  the receipt of
distributions from the operating partnerships.

                                     - 16 -

<PAGE>
FAD does not represent cash  generated  from operating  activities in accordance
with generally accepted accounting principles and is not necessarily  indicative
of cash  available to fund cash needs.  The actual  return that the Company will
realize and the amount available for  distributions to its stockholders  will be
affected  by a number of  factors,  including  the  revenues  received  from its
properties,  its operating expenses, the interest expense incurred on borrowings
and planned and unanticipated capital expenditures.

The  Company  anticipates  that cash  available  for  distribution  will  exceed
earnings and profits for federal  income tax  purposes,  as the latter figure is
reduced by non-cash  expenses,  such as depreciation and amortization,  that the
Company will incur. Distributions, other than capital gain distributions, by the
Company to the extent of its current and  accumulated  earnings  and profits for
federal income tax purposes most likely will be taxable to U.S.  stockholders as
ordinary   dividend  income  unless  a  stockholder  is  a  tax-exempt   entity.
Distributions  in excess of earnings and profits  generally will be treated as a
non-taxable reduction of the U.S. stockholder's basis in the common stock to the
extent of such basis,  and  thereafter as a taxable gain. The percentage of such
distributions in excess of earnings and profits, if any, may vary from period to
period.   The  Company   anticipates  that  a  substantial   percentage  of  the
distributions  to  stockholders  for the year  ending  December  31,  2000  will
constitute taxable income to its shareholders.

Distributions  will be determined  by the Company's  board of directors and will
depend on actual FAD, the Company's financial condition,  capital  requirements,
the annual  distribution  requirements under the REIT provisions of the Code and
such other factors as the board of directors deems relevant.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The  Company  does  not  believe  recently  issued  accounting   standards  will
materially impact the Company's financial statements.


FORWARD LOOKING INFORMATION

This quarterly report contains forward-looking  statements within the meaning of
the federal securities laws. The Company intends such forward-looking statements
to be covered  by the safe  harbor  provisions  for  forward-looking  statements
contained in the Private  Securities  Reform Act of 1995,  and is including this
statement  for  purposes  of  complying  with  these  safe  harbor   provisions.
Forward-looking statements,  which are based on certain assumptions and describe
future  plans,  strategies  and  expectations  of  the  Company,  are  generally
identifiable by use of the words "believe,"  "expect,"  "intend,"  "anticipate,"
"estimate,"  "project" or similar expressions.  The Company's ability to predict
results  or the  actual  effect  of future  plans or  strategies  is  inherently
uncertain.  Factors which could have a material adverse effect on the operations
and future prospects of the Company include, but are not limited to, changes in:
economic  conditions   generally  and  the  real  estate  market   specifically,
legislative or regulatory provisions affecting the Company (including changes to
laws governing the taxation of REITs),  availability of capital, interest rates,
competition,  supply of and demand for office and  industrial  properties in the
Company's current and proposed market areas, and general accounting  principles,
policies and guidelines  applicable to REITs. In addition,  the actual timing of
development, construction, and leasing on the projects that the Company believes
it may acquire in the future under the Berg Land  Holdings  Option  Agreement is
unknown presently, and reliance should not be placed on the estimates concerning
these projects set forth under the caption,  "Acquiring  Properties Developed by
the Berg Group," above. The acquisition costs of projects acquired from the Berg
Group under the Pending Projects Acquisition  Agreement will vary based upon the
number of O.P. Units issued in exchange for the property and the price of common
stock,   which  is  issuable  upon   conversion  of  O.P.  Units  under  certain
circumstances,  at the time of the acquisition.  These risks and  uncertainties,
together  with the other  risks  described  from  time to time in the  Company's
reports and other documents  filed with the Securities and Exchange  Commission,
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.

                                     - 17 -
<PAGE>




ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

No material  changes have occurred  since the Annual Report on Form 10-K for the
year ended December 31, 1999.


                                     - 18 -
<PAGE>


ITEM 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

a)   The annual meeting of  stockholders of the Company was held on May 31, 2000
     in which proxies representing  15,069,428 shares of common stocks, or 88.5%
     of the total outstanding shares, voted.

b)   At the annual meeting of  stockholders,  Mr. Carl E. Berg,  John C. Bolger,
     William A. Hasler, and Lawrence B. Helzel were elected as directors for the
     ensuing year, all who were  currently  serving on the board of directors of
     the Company.

c)   The following proposals were voted upon at the meeting:

     Proposal No. 1: Election of Directors
<TABLE>
<CAPTION>
                                       Total Vote for Each        Total Vote Withheld      Total Vote Against
           Directors                        Director               from Each Director         Each Director
          -------------------------- ------------------------    ---------------------    ---------------------
<S>                                       <C>                            <C>                      <C>
          Carl E. Berg                     15,034,913                     0                        0
          John C. Bolger                   15,034,913                     0                        0
          William A. Hasler                15,034,913                     0                        0
          Lawrence B. Helzel               15,034,913                     0                        0
</TABLE>

     Proposal No. 2: The second  matter voted upon was the  ratification  of the
     selection of PricewaterhouseCoopers,  LLP as independent public accountants
     for the  Company  for  the  year  ending  December  31,  2000.  There  were
     14,956,644  votes  in favor  of the  proposal,  11,406  votes  against  the
     proposal, and 101,378 abstentions.


                                     - 19 -
<PAGE>


PART II - OTHER INFORMATION

ITEM 2

CHANGES IN SECURITIES AND USE OF PROCEEDS

The  information  provided in Part I,  "Management's  Discussion and Analysis of
Financial  Condition  and Results of Operations - Overview" is  incorporated  by
reference in response to this item.

ITEM 6

EXHIBITS AND REPORTS ON FORM 8-K

         a.       Exhibits

                  27.1 Financial Data Schedule not attached

         b.       Reports on Form 8-K

                  None


                                     - 20 -
<PAGE>


SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereto duly authorized.


                                               MISSION WEST PROPERTIES, INC.
                                               (Registrant)


Date:   August 11, 2000                        By:    /s/ Carl E. Berg
                                                  ----------------------------
                                                  Carl E. Berg
                                                  Chief Executive Officer
                                                  (Principal Accounting Officer)




                                     - 21 -