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 SEPTEMBER 30, 2001

                          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:

              17,120,279 shares outstanding as of November 12, 2001



                                     - 1 -
<PAGE>


                          Mission West Properties, Inc.

                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001

<TABLE>
<CAPTION>

                                      INDEX

                                                                                                                    PAGE
<S>          <C>                                                                                                    <C>
PART I        FINANCIAL INFORMATION

   Item 1.    Financial Statements (unaudited):

              Consolidated Balance Sheets as of September 30, 2001 (unaudited)
              and December 31, 2000...................................................................................3

              Consolidated Statements of Operations for the three
              and nine months ended September 30, 2001 and 2000 (unaudited)...........................................4

              Consolidated Statements of Cash Flows for the
              nine months ended September 30, 2001 and 2000 (unaudited)...............................................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.............................................19


PART II       OTHER INFORMATION

   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>
                                                                                 September 30, 2001       December 31, 2000
                                                                               ----------------------  ----------------------
                                                                                    (Unaudited)
                                    ASSETS
<S>                                                                                     <C>                   <C>
Real estate assets, at cost
    Land                                                                                 $214,620              $187,219
    Buildings                                                                             688,634               654,259
                                                                               ----------------------  ----------------------
                                                                                          903,254               841,478
    Less accumulated depreciation                                                         (46,182)              (34,022)
                                                                               ----------------------  ----------------------
      Net real estate assets                                                              857,072               807,456
Cash and cash equivalents                                                                   5,435                 4,691
Restricted cash                                                                            15,359                     -
Deferred rent                                                                              16,222                10,869
Other assets                                                                               12,564                 3,894
                                                                               ----------------------  ----------------------
      Total assets                                                                       $906,652              $826,910
                                                                               ======================  ======================

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Line of credit (related parties)                                                     $ 81,466              $ 50,886
    Mortgage notes payable                                                                127,904               132,055
    Mortgage notes payable (related parties)                                               11,441                11,643
    Interest payable                                                                          345                   347
    Security deposits                                                                       7,739                 4,801
    Prepaid rental income                                                                  10,283                11,298
    Dividends/distributions payable                                                        24,654                19,115
    Refundable option payment                                                              19,335                20,835
    Accounts payable and accrued expenses                                                   6,399                 4,525
                                                                               ----------------------  ----------------------
      Total liabilities                                                                   289,566               255,505

Commitments and contingencies (Note 9)

Minority interest                                                                         511,296               469,332

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, 17,120,279 and 17,025,365 shares issued and
      outstanding at September 30, 2001 and December 31, 2000,
      respectively                                                                             17                    17
    Paid-in-capital                                                                       124,036               123,136
    Accumulated deficit                                                                   (18,263)              (21,080)
                                                                               ----------------------  ----------------------
      Total stockholders' equity                                                          105,790               102,073
                                                                               ----------------------  ----------------------
      Total liabilities and stockholders' equity                                         $906,652              $826,910
                                                                               ======================  ======================
</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 share and per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                    ---------

                                                Three months ended September 30,          Nine months ended September 30,
                                                   2001                2000                 2001                 2000
                                            ------------------- -------------------- -------------------- --------------------
<S>                                             <C>                  <C>                 <C>                  <C>
Revenues:
   Rental income from real estate                $   33,227           $   26,822          $   94,561           $   71,957
   Tenant reimbursements                              5,309                3,746              12,553               10,189
   Other income, including interest and
      gain on sales of assets                         9,111                  234              13,552                1,062
                                            ------------------- -------------------- -------------------- --------------------
        Total revenues                               47,647               30,802            $120,666               83,208
                                            ------------------- -------------------- -------------------- --------------------

Expenses:
   Operating expenses                                 2,470                1,449               5,412                3,944
   Real estate taxes                                  2,494                2,123               7,390                6,562
   Depreciation of real estate                        4,326                3,950              12,592               11,445
   General and administrative                           150                  363                 952                  933
   Interest                                           2,144                2,227               6,570                6,730
   Interest (related parties)                         1,272                1,328               3,735                3,213
                                            ------------------- -------------------- -------------------- --------------------
       Total expenses                                12,856               11,440              36,651               32,827
                                            ------------------- -------------------- -------------------- --------------------

Income before minority interest                      34,791               19,362              84,015               50,381
Minority interest                                    29,061               16,005              70,083               41,462
                                            ------------------- -------------------- -------------------- --------------------
       Net income to common stockholders         $    5,730           $    3,357          $   13,932           $    8,919
                                            =================== ==================== ==================== ====================
Basic net income per share                       $     0.33           $    0.20           $     0.82           $     0.52
                                            =================== ==================== ==================== ====================
Diluted net income per share                     $     0.33           $    0.20           $     0.81           $     0.52
                                            =================== ==================== ==================== ====================
Weighted average number of
  common shares outstanding (basic)              17,120,278           17,025,365          17,084,034           17,013,737
                                            =================== ==================== ==================== ====================
Weighted average number of
  common shares outstanding (diluted)            17,320,462           17,191,306          17,302,594           17,129,509
                                            =================== ==================== ==================== ====================
</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)
                                   (Unaudited)
                                    ---------
<TABLE>
<CAPTION>

                                                                                           Nine months ended September 30,
                                                                                         -------------------------------------
                                                                                               2001               2000
                                                                                         ------------------ ------------------
<S>                                                                                     <C>                <C>
Cash flows from operating activities:
     Net income                                                                          $    13,932        $     8,919
     Adjustments to reconcile net income to net cash provided by
       operating activities:
            Minority interest                                                                 70,083             41,462
            Depreciation                                                                      12,592             11,445
            Gain on sales of real estate                                                     (11,553)                 -
            Other                                                                                 92               (364)
     Changes in assets and liabilities:
            Deferred rent                                                                     (5,352)            (3,274)
            Other assets                                                                        (976)            (3,360)
            Interest payable                                                                      (2)                 -
            Security deposits                                                                  1,199              1,733
            Prepaid rental income                                                             (1,015)             4,212
            Accounts payable and accrued expenses                                              2,388              3,010
                                                                                         ------------------ ------------------
     Net cash provided by operating activities                                                81,388             63,783
                                                                                         ------------------ ------------------

Cash flows from investing activities:
     Additions to property                                                                         -               (581)
     Improvements to real estate assets                                                         (411)            (1,371)
     Refundable option payment                                                                (1,500)                 -
     Proceeds from sales of real estate                                                       38,489                  -
     Restricted cash                                                                         (38,489)                 -
                                                                                         ------------------ ------------------
     Net cash used in investing activities                                                    (1,911)            (1,952)
                                                                                         ------------------ ------------------

Cash flows from financing activities:
     Principal payments on mortgage notes payable                                             (4,151)            (1,410)
     Principal payments on mortgage notes payable (related parties)                             (202)               (64)
     Net payments under line of credit (related parties)                                     (62,057)           (53,468)
     Proceeds from stock options exercised                                                       457                290
     Minority interest distributions                                                          (2,538)            (1,467)
     Dividends paid                                                                          (10,242)            (7,991)
                                                                                         ------------------ ------------------
     Net cash used in financing activities                                                   (78,733)           (64,110)
                                                                                         ------------------ ------------------
     Net increase/(decrease) in cash and cash equivalents                                        744             (2,279)
Cash and cash equivalents, beginning                                                           4,691              6,553
                                                                                         ------------------ ------------------
Cash and cash equivalents, ending                                                        $     5,435        $     4,274
                                                                                         ================== ==================

Supplemental information:
     Cash paid for interest                                                              $    10,227        $     9,876
                                                                                         ================== ==================
Supplemental schedule of non-cash investing and financing activities:
     Advances under line of credit from O.P. units distributions (related parties)       $    47,500        $    35,053
                                                                                         ================== ==================
     Debt incurred in connection with property acquisitions                              $    43,884        $    41,083
                                                                                         ================== ==================
     Assumption of other liabilities in connection with property acquisitions            $     2,024        $     2,509
                                                                                         ================== ==================
     Issuance of operating partnership units in connection with property acquisitions    $    28,118        $    45,049
                                                                                         ================== ==================
</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, per share, square footage and
                      operating 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 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. In total,
     these interests account for approximately 83% of the ownership interests in
     the real  estate  operations  of the  Company  as of  September  30,  2001.
     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 accounting
     principles  generally  accepted  in the United  States of America  ("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 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 nine months ended  September 30, 2001 are not necessarily
     indicative of the results to be expected for the entire year.

     The Company has elected to be taxed as a real estate investment trust under
     the Internal  Revenue Code of 1986, as amended.  Accordingly,  no provision
     has been  made for  income  taxes  for the  three  and  nine  months  ended
     September 30, 2001.


2.   REAL ESTATE

     BERG LAND HOLDINGS OPTION AGREEMENT
     Under the terms of the Berg land holdings  option  agreement,  the Company,
     through the  operating  partnerships,  has the option to acquire any future
     Research & Development  ("R&D"),  office and industrial buildings developed
     by the Berg Group on land currently owned,  optioned, or acquired for these
     purposes in the future,  directly or indirectly  by certain  members of the
     Berg Group. At present, there are approximately 297 acres of Silicon Valley
     land,  including land under development,  owned directly or under 50% joint
     venture by certain  members of the Berg Group that are subject to 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,  operating
     partnership ("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 September 30, 2001,  the Company had completed  fifteen  acquisitions
     under the Berg land holdings option  agreement  representing  approximately
     1,475,000 rentable square feet. Upon the Company's exercise of an option to
     purchase any of the future R&D property developments under the terms of the
     Berg land holdings option  agreement,  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 $8.50 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.

                                     - 6 -
<PAGE>

     No  estimate  can be given at this time as to the total cost to the Company
     to acquire projects under the Berg land holdings option  agreement,  or the
     timing of the Company's  acquisition of any of such projects.  However, the
     Berg Group currently has six properties  under  development with a total of
     approximately  699,000  rentable  square  feet of R&D  properties  that the
     Company  has  the  right  to  acquire  under  this  agreement.  Of the  six
     properties,  two are  joint  ventures  in  which  the Berg  Group  holds an
     approximately 50% interest.  The joint venture properties represent a total
     of  approximately  311,000  rentable square feet. As of September 30, 2001,
     the estimated acquisition price to the operating partnerships for these six
     projects would be approximately  $82,100.  The final  acquisition  price of
     these six properties  could differ  significantly  from this  estimate.  In
     addition to projects currently under development, the Company has the right
     to acquire  future  developments  by the Berg Group on up to 250 additional
     acres of land currently  controlled by the Berg Group,  which could support
     approximately 3.9 million square feet of new  developments.  Under the Berg
     land  holdings  option  agreement,  as long as the Berg Group's  percentage
     ownership interest in the Company and the operating partnerships taken as a
     whole is at least 65%,  the Company also has an option to purchase all land
     acquired,  directly or indirectly,  by Carl E. Berg or Clyde J. Berg in the
     future which 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 1, 2001, the Company acquired an  approximately  131,500
     rentable square foot newly constructed R&D building located at 5325 Hellyer
     Avenue  in San Jose,  California  from the Berg  Group  under the Berg land
     holdings option  agreement.  The total  acquisition price for this property
     was $15,472.  The Company  acquired this property by borrowing $9,000 under
     the Berg Group line of credit and  issuing  464,452  O.P.  units to various
     members of the Berg Group.

     Effective  February 1, 2001, the Company acquired an approximately  117,740
     rentable square foot newly constructed R&D building located at 5500 Hellyer
     Avenue  in San Jose,  California  from the Berg  Group  under the Berg land
     holdings option  agreement.  The total  acquisition price for this property
     was $17,809.  The Company acquired this property by borrowing $11,000 under
     the Berg Group line of credit and  issuing  506,599  O.P.  units to various
     members of the Berg Group.

     Effective  April 1, 2001,  the  Company  acquired an  approximately  59,400
     rentable  square foot  property  located at 245 Caspian Drive in Sunnyvale,
     California  from the  Berg  Group in a  tax-deferred  exchange  transaction
     involving the  Company's  former R&D property at 4949 Hellyer  Avenue,  San
     Jose,  California.  The  total  acquisition  price  for this  property  was
     $13,388. The amount of the selling price of the property surrendered in the
     exchange  disposition  was classified as restricted cash at March 31, 2001,
     although the Company had no right to retain the cash under the terms of the
     contract  of  exchange.  No  debt  or  O.P.  units  were  issued  for  this
     acquisition.  This  property is subject to a 15-year  lease.  The lessee is
     currently paying rent to the Company under the lease, although the building
     constructed on the site has not been completed. The Berg Group is obligated
     to  complete  construction  at no cost to the Company  upon  receipt of the
     lessee's request.

     Effective  May 1,  2001,  the  Company  acquired  an  approximately  67,912
     rentable square foot newly  constructed R&D building located at 855 Branham
     Lane East in San Jose,  California  from the Berg  Group in a  tax-deferred
     exchange  transaction  involving the Company's  former R&D property at 4949
     Hellyer Avenue, San Jose, California.  The total acquisition price for this
     property  was  $9,809.  The  amount of the  selling  price of the  property
     surrendered in the exchange  disposition  was classified as restricted cash
     at March 31,  2001,  although  the  Company had no right to retain the cash
     under the terms of the  contract of  exchange  No debt or O.P.  units were
     issued for this acquisition.

     Effective  June 1, 2001,  the  Company  acquired  an  approximately  78,794
     rentable square foot newly constructed R&D building located at 5550 Hellyer
     Avenue  in San Jose,  California  from the Berg  Group  under the Berg land
     holdings option  agreement.  The total  acquisition price for this property
     was $7,134.  The Company  acquired this property by borrowing  $2,973 under
     the Berg Group line of credit and  issuing  314,156  O.P.  units to various
     members of the Berg Group.

     Effective July 1, 2001, the Company  acquired three newly  constructed  R&D
     buildings  totaling  approximately  247,500 rentable square feet located at
     5905-5965  Silver Creek Valley Road in San Jose,  California  from the Berg
     Group under the Berg land holdings option agreement.  The total acquisition
     price for this property was $26,991.  The Company acquired this property by
     borrowing $16,431 under the Berg Group line of credit, issuing 647,279 O.P.
     units to various  members of the Berg Group and assuming other  liabilities
     of $1,602.

                                     - 7 -
<PAGE>

     Effective  August 1, 2001,  the Company  acquired an  approximately  73,312
     rentable square foot newly constructed R&D building located at 5750 Hellyer
     Avenue  in San Jose,  California  from the Berg  Group  under the Berg land
     holdings option  agreement.  The total  acquisition price for this property
     was $6,620.  The Company  acquired this property by borrowing  $4,480 under
     the Berg  Group  line of  credit,  issuing  127,438  O.P.  units to various
     members of the Berg Group and assuming other liabilities of $422.

     PROPERTY DISPOSITIONS
     In January 2001,  the Company  completed the sale of a 200,484  square foot
     R&D property located at 4949 Hellyer Avenue, San Jose,  California to Cisco
     Systems,  Inc.,  which  exercised its purchase option in November 2000. The
     Company  realized a gain of $3,102,  which is included in other income,  on
     the total sale price of $23,130.

     In September  2001, the Company  completed the sale of a 77,700 square foot
     R&D property  located at 5713-5729  Fontanoso Way, San Jose,  California to
     Cisco Systems,  Inc., which exercised its purchase option in November 2000.
     The Company  realized a gain of $8,452,  which is included in other income,
     on the total sale price of $15,445.

3.   RESTRICTED CASH

     At March 31, 2001, restricted cash represents proceeds from a property sale
     and  interest  income  being  held in a  separate  cash  account at a trust
     company  in order to  preserve  the  Company's  option of  reinvesting  the
     proceeds on a tax-deferred  basis. On June 25, 2001, the proceeds were used
     in an exchange for two  properties as discussed  above in Note 2, "Property
     Acquisitions."

     At September 30, 2001, the balance represents proceeds from a property sale
     and  interest  income  being  held in a  separate  cash  account at a trust
     company  in order to  preserve  the  Company's  option of  reinvesting  the
     proceeds on a tax-deferred basis.

4.   STOCK TRANSACTIONS

     During the nine months ended September 30, 2001,  stock options to purchase
     14,588  shares of common  stock were  exercised  at $4.50 per share,  stock
     options to purchase  38,000 shares of common stock were  exercised at $8.25
     per share,  and stock options to purchase 6,000 shares of common stock were
     exercised at $13.00 per share. Total proceeds to the Company were $457. One
     limited partner in an operating partnership exchanged 36,323 O.P. units for
     36,323 shares of the Company's common stock under the terms of the exchange
     rights agreement.

5.   OTHER INCOME

     See Note 2 "Property  Dispositions." The Company realized a gain of $11,554
     on the sale of two  properties  in the first nine months of 2001.  Interest
     income generated from the sale proceeds was approximately $487 for the nine
     months ended September 30, 2001.

6.   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 September 30,    Nine Months Ended September 30,
                                                        --------------------------------    -------------------------------
                                                             2001             2000              2001              2000
                                                        --------------    --------------    --------------    -------------
<S>                                                      <C>              <C>               <C>               <C>
        Weighted average shares outstanding (basic)       17,120,278       17,025,365        17,084,034        17,013,737
        Incremental shares from assumed option exercise      200,184          165,941           218,560           115,772
                                                        --------------    --------------    --------------    -------------
        Weighted average shares outstanding (diluted)     17,320,462       17,191,306        17,302,594        17,129,509
                                                        ==============    ==============    ==============    =============
</TABLE>

     The  outstanding  O.P. units,  which are  exchangeable at the unit holder's
     option,  subject to  certain  conditions,  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  effect  on the  amounts  because  the
     minority interests' share of income would

                                     - 8 -
<PAGE>

     also  be  added  back  to net  income.  The  total  number  of  O.P.  units
     outstanding at September 30, 2001 and 2000 was  85,599,628 and  81,667,227,
     respectively.

7.   RELATED PARTY TRANSACTIONS

     As of September 30, 2001, the Berg Group owned 78,845,976 O.P. units. Along
     with the Company's  common shares owned by the Berg Group, the Berg Group's
     ownership as of September  30, 2001  represented  approximately  77% of the
     equity interests of the Company, assuming conversion of the 85,599,628 O.P.
     units outstanding into the common stock of the Company.

     As of September  30,  2001,  debt in the amount of $81,466 was due the Berg
     Group under the line of credit  established March 1, 2000. The $75,000 line
     of credit from the Berg Group was increased to $100,000  effective  July 1,
     2001. The Berg Group line of credit is currently  collateralized  by eleven
     properties,  bears interest at LIBOR plus 1.30%,  and matures in July 2002.
     The  Company  believes  that the terms of the Berg Group line of credit are
     more  favorable  than  those  available  from  commercial  lenders.  As  of
     September  30,  2001,  debt in the amount of $11,441 was due the Berg Group
     under a mortgage  note  established  May 15,  2000 in  connection  with the
     acquisition of a 50% interest in Hellyer Avenue  Limited  Partnership,  the
     obligor under the mortgage note. The mortgage note bears interest at 7.65%,
     and is due in 10 years with principal payments amortized over 20 years.

     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 May 2003.

     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 $23 and
     $20 for the three months ended  September 30, 2001 and 2000,  respectively,
     and $65 and $60 for the nine  months  ended  September  30,  2001 and 2000,
     respectively.

8.   SUBSEQUENT EVENTS

     On October 11,  2001,  the  Company  paid  dividends  of $0.24 per share of
     common stock to all common stockholders of record as of September 28, 2001.
     On the same date, the operating  partnerships  paid a distribution of $0.24
     per O.P. unit.

9.   COMMITMENTS AND CONTINGENCIES

     The Company and the operating  partnerships are or may become, from time to
     time,  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>


ITEM 2
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, 2000.  The
results  for the  three  and  nine  months  ended  September  30,  2001  are not
necessarily  indicative of the results to be expected for the entire fiscal year
ending  December 31, 2001.  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

Mission West Properties,  Inc. (the "Company")  acquires,  markets,  leases, and
manages  R&D and office  properties,  primarily  located in the  Silicon  Valley
portion of the San Francisco  Bay Area.  As of September  30, 2001,  the Company
owned and managed 96  properties  totaling  approximately  6.7 million  rentable
square feet through four limited partnerships,  or operating  partnerships,  for
which it is the sole  general  partner.  This class of property is designed  for
research and development and office uses and, in some cases,  includes space for
light manufacturing  operations with loading docks. The Company believes that it
has one of the largest  portfolios of R&D properties in the Silicon Valley.  The
four tenants who lease the most square  footage  from the Company are  Microsoft
Corporation,  JDS Uniphase  Corporation,  Amdahl  Corporation  (a  subsidiary of
Fujitsu Limited),  and Apple Computer,  Inc. For federal income tax purposes the
Company operates as a self-managed,  self-administered and fully integrated real
estate investment trust ("REIT") since 1999.

Our acquisition and growth strategy incorporates the following elements:

-    working  with  the Berg  Group to take  advantage  of their  abilities  and
     resources to pursue  development  opportunities  which we have an option to
     acquire, on pre-negotiated terms, upon completion and leasing;

-    capitalizing   on   opportunistic   acquisitions   from  third  parties  of
     high-quality  R&D and office  properties  that provide  attractive  initial
     yields and significant potential for growth in cash-flow;

-    focusing on general  purpose,  single-tenant  Silicon Valley R&D and office
     properties for  information  technology  companies in order to maintain low
     operating costs, reduce tenant turnover and capitalize on our relationships
     with these  companies  and our  extensive  knowledge  of their real  estate
     needs; and

-    maintaining prudent financial management  principles that emphasize current
     cash flow while building  long-term  value,  the  acquisition of pre-leased
     properties to reduce  development  and leasing risks and the maintenance of
     sufficient liquidity to acquire and finance properties on desirable terms.

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 NINE MONTHS ENDED  SEPTEMBER  30, 2001 TO THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2000.

As of September 30, 2001, the Company,  through its controlling interests in the
operating  partnerships,  owned 96 properties totaling approximately 6.7 million
square feet compared to 87 properties totaling  approximately 6.0 million square
feet owned by the  Company as of  September  30,  2000.  This  represents  a net
increase of  approximately  12% in total  rentable  square footage from one year
ago. Since September 30, 2000 the Company has acquired the following  properties
and disposed of 200,484  rentable  square feet at 4949 Hellyer Avenue and 77,700
rentable square feet at 5713-5729 Fontanoso Way.
<TABLE>
<CAPTION>

               Date of                                                   Rentable Square
             Acquisition                      Address                        Footage
          -------------------    ----------------------------------     ------------------
<S>            <C>                <C>                                         <C>
                10/00              45365 Northport Loop                        64,218
                12/00              1768 Automation Parkway                    110,592
                01/01              5325 Hellyer Avenue                        131,500
                02/01              5500 Hellyer Avenue                        117,740
                04/01              245 Caspian Drive (1)                       59,400
                05/01              855 Branham Lane East                       67,912
                06/01              5550 Hellyer Avenue                         78,794
                07/01              5906-65 Silver Creek Valley Rd.            247,500
                08/01              5750 Hellyer Avenue                         73,312
                                                                        ------------------
                                                                              950,968
                                                                        ==================
</TABLE>

(1)  A lessee currently pays rent for this site under a 15-year lease,  although
     the building has not been completed for occupancy by this lessee.

The following  tables reflect the increase in the Company's  rental revenues for
the three and nine months ended  September 30, 2001 over rental revenues for the
comparable three and nine months in 2000:
<TABLE>
<CAPTION>

                                     Three months ended September 30,
                                     -----------------------------------------------------------------------
                                         2001             2000            $ Change       Percentage Change
                                     -------------    -------------     -------------    -------------------
                                                    ($ in thousands)

<S>                                      <C>              <C>               <C>               <C>
          Same Property (1)               $16,270          $15,789           $   481             3.0%
          1998 Acquisitions                   582              582                 -                -
          1999 Acquisitions                 6,512            6,295               217             3.4%
          2000 Acquisitions (2)             5,153            4,156               997            24.0%
          2001 Acquisitions                 4,710                -             4,710           100.0%
                                     -------------    -------------     -------------
                                          $33,227          $26,822           $ 6,405            23.9%
                                     =============    =============     =============


                                     Nine months ended September 30,
                                     -----------------------------------------------------------------------
                                         2001             2000            $ Change       Percentage Change
                                     -------------    -------------     -------------    -------------------
                                                    ($ in thousands)

          Same Property (1)               $49,610          $43,762           $ 5,848            13.4%
          1998 Acquisitions                 1,748            1,748                 -                -
          1999 Acquisitions                19,549           18,685               864             4.6%
          2000 Acquisitions (2)            15,331            7,762             7,569            97.5%
          2001 Acquisitions                 8,323                -             8,323           100.0%
                                     -------------    -------------     -------------
                                          $94,561          $71,957           $22,604            31.4%
                                     =============    =============     =============
</TABLE>

(1)  "Same Property" is defined as properties owned as of July 1, 1998 and still
     owned as of September 30, 2001.
(2)  The figures for "2000 Acquisitions" in year 2000 for some properties do not
     reflect a full  three-  and  nine-months  of rent due to the  timing of the
     acquisition of the properties during the year 2000.

For the quarter ended  September 30, 2001,  rental  revenues  increased by $6.41
million from $26.82  million for the three months  ended  September  30, 2000 to
$33.23 million for the same period of 2001. Approximately 73.5% of the increased
rental revenue came from properties acquired in 2001, 15.6% came from properties
acquired in the second  half of 2000 and the  remaining  balance  came from rent
increases or new leases on existing  properties at higher  rental rates.  Rental
revenues  increased by $22.60  million  from $71.96  million for the nine months
ended  September  30,  2000 to  $94.56  million  for the  same  period  of 2001.
Approximately 36.8% of the increased rental revenue for the first nine months of
2001 was generated by R&D  properties  acquired by the Company this year,  33.5%
was generated from properties acquired in the second half of 2000, and 25.9% was
attributable  to rental rate  increases and new leases at market rental

                                     - 11 -

<PAGE>

rates on properties originally owned by the Berg Group acquired when the Company
became the sole general partner of the operating partnerships in July 1998.

Tenant reimbursements increased by $1.56 million, or 42%, from $3.75 million for
the three months ended  September 30, 2000 to $5.31 million for the three months
ended  September  30,  2001.  Operating  expenses  and real estate  taxes,  on a
combined basis,  increased by $1.39 million, or 39%, from $3.57 million to $4.96
million for the three months ended  September  30, 2000 and 2001,  respectively.
Tenant  reimbursements  increased by $2.36 million,  or 23%, from $10.19 million
for the nine months  ended  September  30,  2000 to $12.55  million for the nine
months ended September 30, 2001.  Operating expenses and real estate taxes, on a
combined  basis,  increased by $2.30  million,  or 22%,  from $10.50  million to
$12.80  million  for  the  nine  months  ended  September  30,  2000  and  2001,
respectively.  The  increases  in all  categories  resulted  primarily  from the
increase in the total rentable square footage during the periods presented.

Depreciation  expense increased by $0.38 million and $1.15 million for the three
and  nine-month  period ended  September 30, 2001,  respectively,  over the same
period a year ago. The increase was  attributable  to the  acquisition of eleven
R&D properties since September 30, 2000.

Interest expense  decreased by $0.09 million,  or 4%, from $2.23 million for the
three  months  ended  September  30, 2000 to $2.14  million for the three months
ended  September  30,  2001  due to a  reduction  in  scheduled  principal  debt
repayments.  Interest expense (related parties)  decreased by $0.06 million,  or
4%, from $1.33  million for the three months ended  September  30, 2000 to $1.27
million for the three  months  ended  September  30, 2001 due to lower  interest
rates and  repayments  on the Berg Group line of  credit.  As a result,  overall
interest  expense  (including  amounts to related parties) for the quarter ended
September 30, 2001  decreased by $0.15  million  compared to the third quarter a
year ago. Interest expense decreased by $0.16 million, or 2%, from $6.73 million
for the nine  months  ended  September  30,  2000 to $6.57  million for the nine
months ended September 30, 2001. Interest expense (related parties) increased by
$0.52  million,  or 16%, from $3.21 million for the nine months ended  September
30, 2000 to $3.73 million for the nine months ended September 30, 2001.  Overall
interest expense for the nine months ended September 30, 2001 increased by $0.36
million  compared to the nine months ended  September  30, 2000.  The eleven R&D
property  acquisitions  increased total debt outstanding,  including amounts due
related parties, by $33.91 million, or 18%, from $186.90 million as of September
30,  2000 to $220.81  million  as of  September  30,  2001.  Management  expects
interest expense to increase as new debt is incurred in connection with property
acquisitions,  as the Company draws on the Berg Group line of credit,  and as it
seeks alternative sources of credit.

The minority  interest  portion of income was $29.06  million,  resulting in net
income to stockholders of $5.73 million for the three months ended September 30,
2001.  For the nine months  ended  September  30, 2001,  the  minority  interest
portion of income was $70.08 million, resulting in net income to stockholders of
$13.93  million.  Minority  interest  represents  the ownership  interest of all
limited  partners  in the  operating  partnerships  taken as a whole,  which was
approximately 83% as of September 30, 2001 and 2000.

RECENT RENTAL MARKET DEVELOPMENTS

All of the  Company's  properties  are located in the Northern  California  area
known as Silicon  Valley,  which  generally  consists of portions of Santa Clara
County,  Southwestern Alameda County,  Southeastern San Mateo County and Eastern
Santa Cruz County.  The Silicon Valley economy and business activity have slowed
markedly  during the first nine months of 2001 after  fast-paced  growth in 1999
and 2000. In the past several years,  the Silicon Valley R&D property market has
fluctuated with the local economy. According to a recent report by BT Commercial
Real  Estate,  vacancy  rates for Silicon  Valley R&D  property  increased  from
approximately  3.4% in late  2000 to 12.6% at the end of the  third  quarter  of
2001.  Total vacant R&D square footage in Silicon Valley at the end of the third
quarter of 2001  amounted  to 19.1  million  square  feet,  of which 49%, or 9.3
million square feet, was sublease  space.  Total net absorption in 2000 amounted
to approximately 12.8 million square feet. During the first nine months of 2001,
there was a total negative net absorption of approximately (12.2) million square
feet.  The impact of this  decline  has not been  uniform  throughout  the area,
however.  The Silicon  Valley R&D property  market has been  characterized  by a
substantial   number  of  submarkets,   with  rent  and  vacancy  rates  varying
considerably  by submarket  and location  within each  submarket.  The Company's
average occupancy rate for the three- and nine-month periods ended September 30,
2001 was 98% and 99%, respectively.  The Company does not currently anticipate a
material  decline in occupancy or rental rates for its existing R&D  properties.
Nonetheless,  the  Company's  operating  results and ability to pay dividends at
current levels remain subject to a number of material  risks, as indicated under
the caption  "Forward-Looking  Information"  below and in the  section  entitled
"Risk Factors" in the Company's most recent annual report on Form 10-K.

                                     - 12 -

<PAGE>

LEASE EXPIRATIONS

The  following  table  sets forth a schedule  of the lease  expirations  for the
properties  beginning  with 2001,  assuming  that none of the  tenants  exercise
existing renewal options or termination rights, as of September 30, 2001.

<TABLE>
<CAPTION>

                   Number of                                                           Percentage of Total Annual
  Year of Lease     Leases      Rentable Square Footage      2001 Annual Base Rent      Base Rent Represented By
   Expiration      Expiring   Subject to Expiring Leases   Under Expiring Leases (1)       Expiring Leases (2)
--------------------------------------------------------------------------------------------------------------------
<S>                 <C>              <C>                       <C>                              <C>
      2001             6                236,208                 $  3,485,064                       2.8%

      2002            14                541,046                    8,641,395                       6.9%

      2003            14                487,332                    8,407,922                       6.7%

      2004            21              1,049,926                   13,518,995                      10.7%

      2005            20                884,059                   15,303,832                      12.2%

      2006            16              1,211,185                   34,209,949                      27.2%

      2007            14                986,729                   19,865,130                      15.8%

      2008             3                264,750                    2,797,625                       2.2%

      2009             2                 58,783                      632,920                       0.5%

   Thereafter          6                976,309                   18,855,327                      15.0%
                  --------------------------------------------------------------------------------------------------
                     116              6,696,327                 $125,718,159                     100.0%
                  ==================================================================================================
</TABLE>


(1)  The base rent for leases  expiring is based on January 2001  monthly  rents
     multiplied by 12.
(2)  Based upon 2001 annual rents as discussed in Note (1).

CHANGES IN FINANCIAL CONDITION

In January  2001,  the Company  completed  the sale in a tax-free  exchange of a
200,484  square foot R&D  property  located at 4949  Hellyer  Avenue,  San Jose,
California  to Cisco  Systems,  Inc.,  which  exercised  its purchase  option in
November 2000. The Company realized a gain of $3.1 million, which is included in
other income,  on the total sale price of $23.1 million.  In September 2001, the
Company also  completed the sale in a tax-free  exchange of a 77,700 square foot
R&D property located at 5713-5729  Fontanoso Way, San Jose,  California to Cisco
Systems, Inc., which exercised its purchase option in November 2000. The Company
realized a gain of $8.5 million, which is included in other income, on the total
sale price of $15.4 million. The selling prices of the properties surrendered by
the  Company  were  classified  as  restricted  cash to be used in  tax-deferred
property exchanges.

During the first nine months of 2001,  the  Company  acquired  seven  additional
properties  representing  approximately  649,000  rentable  square  feet  of R&D
properties  located in Silicon Valley.  These  properties were acquired from the
Berg  Group  under  the Berg  land  holdings  option  agreement.  The  aggregate
acquisition  price for these  properties  was  approximately  $74  million.  The
Company  financed  these  acquisitions  by a) borrowing a total of $43.9 million
under the Berg Group line of credit;  b) assuming a total of $2 million in other
liabilities  and c) issuing  2,059,924  O.P.  units.  In addition to those seven
property  purchases,  the Company also acquired two R&D properties  representing
approximately  127,312 rentable square feet for approximately $23.2 million in a
tax-deferred  exchange.  The selling prices of the properties surrendered by the
Company were classified as restricted cash for the use in tax-deferred  property
exchanges and was included in restricted cash at March 31, 2001. No debt or O.P.
units were issued for these  acquisitions.  At September  30, 2001,  real estate
assets have  increased by  approximately  $61.8  million from  December 31, 2000
because of seven property acquisitions and some tenant improvements.

At September 30, 2001, total  liabilities have increased by approximately  $34.1
million from December 31, 2000 due to mainly debt  incurred in  connection  with
seven property  acquisitions,  increase in security deposits and higher dividend
payable.

At September 30, 2001,  total  stockholders'  equity  increased by approximately
$3.7 million from December 31, 2000 because of the  combination of net earnings,
declared  dividends,  and option  exercises  and the exchange of O.P.  units for
common stock.  During the nine months ended September 30, 2001, stock options to
purchase 14,588 shares of common stock were exercised at $4.50 per share,  stock
options to purchase  38,000  shares of common stock were  exercised at

                                     - 13 -

<PAGE>

$8.25 per share, and stock options to purchase 6,000 shares of common stock were
exercised at $13.00 per share.  Total proceeds to the Company were approximately
$0.46 million. One limited partner of an operating  partnership exchanged 36,323
O.P.  units for 36,323 shares of the  Company's  common stock under the exchange
rights  agreement  among the Company and the limited  partners in the  operating
partnerships.

LIQUIDITY AND CAPITAL RESOURCES

The Company  expects its  principal  sources of liquidity for  distributions  to
stockholders and unitholders,  debt service,  leasing  commissions and recurring
capital  expenditures to come from Funds From Operations ("FFO") and/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 2001.  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
short-term  obligations  or other  liquidity  needs  based on the line of credit
(related parties).

On July 1, 2001,  our $75 million  credit line with the Berg Group was increased
to $100  million  with all other  terms  remaining  the  same.  The  Company  is
continually  evaluating  alternative sources of credit to replace the Berg Group
line 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  are more  favorable  than  those
available from institutional lenders.

On May 17, 2001, the Company  obtained a $5 million variable rate revolving line
of credit loan from Cupertino  National  Bank. The loan,  maturing May 17, 2002,
bears an initial interest rate of 7% that is subject to change from time to time
based on the changes in the Prime Rate.  The Company  paid a loan fee of $10,000
and expects to use the loan for general  business  purposes.  At  September  30,
2001, the Cupertino National Bank line of credit had a zero outstanding balance.

At September 30, 2001,  the Company had total  indebtedness  of $220.8  million,
including  $127.9 million of fixed rate mortgage  debt,  $11.4 million under the
Berg Group  mortgage  note (related  parties),  and $81.5 million under the Berg
Group  line  of  credit  (related  parties).  In June  2001,  the  Company  paid
approximately  $2.7  million  to  retire a  maturing  note due  Mellon  Mortgage
Company.

As of September  30, 2001,  the  Company's  Debt to Total Market  Capitalization
ratio was  approximately  15.2%,  based upon a Total  Market  Capitalization  of
approximately  $1.5  billion.  The Company  computed  this ratio by dividing the
Company's  total debt  outstanding by the sum of this debt plus the market value
of common stock  (based upon the closing  price of $12.00 per share on September
28, 2001) on a fully diluted  basis,  taking into account the  conversion of all
O.P. units into common stock.

                                     - 14 -
<PAGE>



Mortgage Debt

The following  table sets forth  information  regarding  debt  outstanding as of
September 30, 2001:

<TABLE>
<CAPTION>


                                                                                                             Maturity     Interest
  Debt Description                               Collateral Properties                         Balance         Date         Rate
---------------------------------------------  ------------------------------------------  ---------------  -----------  -----------
                                                                                               ($ in
                                                                                              thousands)
<S>                                           <C>                                             <C>             <C>         <C>
Line of Credit:
Berg Group (related parties)                   2033-2043 Samaritan Drive, San Jose, CA         $ 81,466         7/02          (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
                                               5325 Hellyer Avenue, San Jose, CA
                                               5345 Hellyer Avenue, San Jose, CA
                                               2610 N. First Street, San Jose, CA
                                               75 E. Trimble Road, San Jose, CA

Mortgage Notes Payable (related parties):      5300 & 5350 Hellyer Avenue, San  Jose, CA         11,441         6/10       7.650%
                                                                                           ---------------
Mortgage Notes Payable:
Prudential Capital Group                       20400 Mariani Avenue, Cupertino,  CA               1,638         4/09       8.750%
New York Life Insurance Company                10440 Bubb Road, Cupertino, CA                       355         9/09       9.625%
Home Savings & Loan Association                10460 Bubb Road, Cupertino, CA                       378        12/06       9.500%
Prudential Insurance Company of America        10300 Bubb Road, Cupertino, CA                   125,533(2)     10/08       6.560%
                                               10500 N. DeAnza Blvd, Cupertino, CA
                                               4050 Starboard Drive, Fremont, CA
                                               45700 Northport Loop, Fremont, CA
                                               45738 Northport Loop, Fremont, CA
                                               450-460 National Avenue, Mountain View, CA
                                               6311 San Ignacio Avenue, San Jose, CA
                                               6321 San Ignacio Avenue, San Jose, CA
                                               6325 San Ignacio Avenue, San Jose, CA
                                               6331 San Ignacio Avenue, San Jose, CA
                                               6341 San Ignacio Avenue, San Jose, CA
                                               6351 San Ignacio Avenue, San Jose, CA
                                               3236 Scott Blvd, Santa Clara, CA
                                               3560 Bassett Street, Santa Clara, CA
                                               3570 Bassett Street, Santa Clara, CA
                                               3580 Bassett Street, Santa Clara, CA
                                               1135 Kern Avenue, Sunnyvale, CA
                                               1212 Bordeaux Lane, Sunnyvale, CA
                                               1230 E. Arques, Sunnyvale, CA
                                               1250 E. Arques, Sunnyvale, CA
                                               1170 Morse Avenue, Sunnyvale, CA
                                               1600 Memorex Drive, Santa Clara, CA
                                               1688 Richard Avenue, Santa Clara, CA
                                               1700 Richard Avenue, Santa Clara, CA
                                               3540 Bassett Street, Santa Clara, CA
                                               3542 Bassett Street, Santa Clara, CA
                                               3544 Bassett Street, Santa Clara, CA
                                               3550 Bassett Street, Santa Clara, CA
                                                                                           ---------------
Mortgage Notes Payable Subtotal                                                                 127,904
                                                                                           ---------------
Total                                                                                          $220,811
                                                                                           ===============

</TABLE>

(1)  The debt owed to the Berg Group under the line of credit carries a variable
     interest  rate  equal to LIBOR  plus  1.30% and is payable  in full in July
     2002. The interest rate at September 30, 2001 was 3.832%.
(2)  John Kontrabecki, one of the limited partners, has guaranteed approximately
     $12.0 million of this debt.


                                     - 16 -
<PAGE>


CURRENT PROPERTIES SUBJECT TO OUR ACQUISITION AGREEMENT WITH THE BERG GROUP

The following table presents certain projected information at September 30, 2001
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.
<TABLE>
<CAPTION>

                                                Approximate
                                Number of      Rentable Area                                     Total Estimated
Property                        Buildings      (Square Feet)     Anticipated Acquisition Date  Acquisition Value (1)
------------------------------ ------------ -------------------- ----------------------------- ---------------------
<S>                                <C>        <C>                       <C>                      <C>
BERG LAND HOLDINGS OPTION
UNDER DEVELOPMENT                                                                                ($ in thousands)
Silver Creek                        1             98,000                 4th Quarter 2001          $  12,500
Morgan Hill (JV I) (2)              2            160,000                 4th Quarter 2001             17,500
Morgan Hill (JV II) (2)             1            151,242                 1st Quarter 2002             16,200
5345 Hellyer                        1            125,000                 1st Quarter 2002             15,000
Piercy & Hellyer                    1            165,000                 3rd Quarter 2002             20,900
                                    -            -------                                              ------
               SUBTOTAL             6            699,242                                              82,100

AVAILABLE LAND
Piercy & Hellyer                                 490,000
Morgan Hill (2)                                  368,025
King Ranch                                       207,000
Fremont & Cushing                                387,000
Evergreen                                      2,480,000
                                               ---------
              SUBTOTAL                         3,932,025


TOTAL                               6          4,631,267                                           $  82,100
                                    =          =========                                           =========

</TABLE>

(1)  The estimated  acquisition  value  represents  the estimated cash price for
     acquiring  the projects  under the terms of the Berg land  holdings  option
     agreement,  which may differ from the actual acquisition cost as determined
     under GAAP, if O.P units or any other  securities based on the market value
     of our common stock are issued in the transaction.
(2)  The Company  expects to own an approximate  50% interest in the partnership
     through one of its  operating  partnerships.  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.

The time required to complete the leasing of developments varies from project to
project.  The acquisition dates and acquisition costs set forth in the table are
only estimates by management. 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  would be  realized.  No  estimate  can be  given  at this  time as to the
Company's  total cost to acquire  projects  under the Berg land holdings  option
agreement,  nor can we be certain of the period in which we will  acquire any of
the projects.

Although the Company expects to acquire the new properties available to it under
the terms of the Berg land holdings option agreement, subsequent to the approval
by the  independent  directors  committee,  there can be no  assurance  that the
Company  actually will  consummate any 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.

                                     - 16 -
<PAGE>

For  example,  in July 2001,  the Berg Group  informed  the Company that tenants
under five R&D  properties  being  developed by the Berg Group were  unlikely to
perform under their existing  leases.  The five properties  represent a total of
approximately  422,000  rentable  square feet that the  Company had  intended to
purchase for approximately $62.0 million by exercising its option under the Berg
land holdings option agreement.  The Company has no obligation to purchase these
properties,  however,  and failure to acquire them when  originally  anticipated
will not adversely impact the Company's financial condition or current operating
results.  The Company does not expect to acquire any of these properties,  if at
all,  until each property is fully  completed and leased by a tenant  capable of
performing its lease obligations. Management considers this unlikely in the near
term  and  believes  the  Company  will  not  receive  as much  as $2.0  million
additional  rental revenues that it had projected for the fourth quarter of this
year.  If none of these  properties  are acquired by the Company next year,  the
Company will forego as much as $18.0 million of anticipated  additional revenues
in 2002.  The Berg Group  will  continue  to own and bear the  entire  risk with
respect to these properties, and will receive any rent that these tenants pay if
their existing obligations under the leases are enforced successfully or settled
by partial payment.

The Company  believes that one of its tenants which  currently  pays rent at two
properties representing  approximately 284,000 rentable square feet is likely to
file for protection  under the federal  bankruptcy  laws at the end of the year.
One of the properties, consisting of approximately 239,000 square feet, may take
twelve  months  or  nore  to  re-lease  if  vacated.  If  this  tenant  declares
bankruptcy,  the  Company  will  forego  as much as $6.0  million  of  projected
additional rent revenues in 2002. Another tenant,  Exodus  Communications,  Inc.
("Exodus"),  filed a voluntary petition for bankruptcy  protection under Chapter
11 of the U.S.  Bankruptcy Code on September 26, 2001.  Exodus has not disavowed
its lease  agreement  with the  Company  and has  continued  to pay its  monthly
obligations  under the lease.  The Exodus lease has been  guaranteed by Citizens
Communications  Company in the event of default by Exodus. The Company currently
believes that it will receive the lease  payments due under the Exodus lease but
cannot  provide  assurances  that all payments will be timely or that some legal
action to enforce its payments rights will not be necessary.

In addition,  leasing activity for new  build-to-suit and vacated R&D properties
has slowed considerably during the past nine months.  Consequently,  the Company
believes that the projected  acquisition dates for other development  properties
subject  to the Berg  land  holdings  option  agreement  may be  delayed  for an
indefinite  period of time.  Such delays could reduce future growth in revenues,
operating income and Funds Available for Distribution ("FAD").

HISTORICAL CASH FLOWS

Net cash provided by operating  activities  for the nine months ended  September
30,  2001 was $81.4  million  compared  to $63.8  million for the same period in
2000, a 28% increase. The change was a direct result of rent increases and newly
acquired properties.

Net cash used in  investing  activities  was  approximately  $1.9 million and $2
million for the nine months ended September 30, 2001 and 2000, respectively.  Of
the $1.9  million  net cash used in  investing  activities,  $0.4  million  were
related to tenant  improvements  and $1.5 million related to the Xilinx purchase
option  agreement  where Xilinx and the Company  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)  December  31, 2002.  In the event Xilinx
does not exercise its option,  the Company must refund the remaining  deposit to
Xilinx, without interest.

Net cash used in  financing  activities  was $78.7  million  for the nine months
ended  September 30, 2001 compared to $64.1 million for the same period in 2000,
a 23%  increase.  Of the $78.7  million net cash used in  financing  activities,
$66.4  million  were used to pay  outstanding  debt,  $2.5  million for minority
interest  distributions,  $10.2 million for dividend payments,  and $0.4 million
received from exercised  stock options.  During the nine months ended  September
30,  2001,  the Company  paid its debt  outstanding  and made  distributions  to
holders of its common stock and O.P.  units by  utilizing  cash  generated  from
operating activities.

CAPITAL EXPENDITURES

The Company's  existing R&D properties  require periodic  investments of capital
for tenant-related  capital  expenditures and for general capital  improvements.
For the years ended  December 31, 1995 through  December 31, 2000, the recurring
tenant  improvement costs and leasing  commissions  incurred with respect to new
leases and lease  renewals of the  properties  that were owned or  controlled by
members of the Berg Group  prior to July 1, 1998  averaged  approximately  $1.75
million annually.  The Company expects that the average annual cost of recurring
tenant improvements and leasing commissions,  related to the properties, will be
approximately  $2.0 million  during 2001.  The Company  believes it will recover
substantially  all of these sums from the  tenants  under 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.

                                     - 17 -
<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.

The minority  interest in earnings for unrelated parties are deducted from total
minority interest in earnings in calculating FFO.

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 and nine months ended  September  30, 2001 and 2000 are  summarized in the
tables below:
<TABLE>
<CAPTION>

                                Three Months Ended September 30,               Nine Months Ended September 30,
                            -----------------------------------------     ------------------------------------------
                                  2001                   2000                    2001                   2000
                            ------------------     ------------------     -------------------    -------------------
                                        ($ in thousands)                              ($ in thousands)
<S>                                  <C>                    <C>                     <C>                    <C>
Net income                            $ 5,730                $ 3,357                 $13,932                $ 8,919
Add:
    Minority interest (1)              28,897                 15,894                  69,593                 41,284
    Depreciation                        4,326                  3,950                  12,592                 11,445
Less:
    Gain on sale of assets              8,452                      -                  11,553                    501
                            ------------------     ------------------     -------------------    -------------------
FFO                                   $30,501                $23,201                 $84,564                $61,147
                            ==================     ==================     ===================    ===================

</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 and O.P. unit holders
based upon total Funds Available for Distribution  ("FAD"),  which is calculated
as FFO less adjustment for straight-lined  rent included in net income,  leasing
commissions paid and capital expenditures made during the respective period. The
calculations  of FAD for the three and nine months ended  September 30, 2001 and
2000 are as follows:
<TABLE>
<CAPTION>



                                Three Months Ended September 30,                Nine Months Ended September 30,
                            ------------------------------------------     ------------------------------------------
                                   2001                   2000                    2001                   2000
                            -------------------    -------------------     -------------------    -------------------
                                        ($ in thousands)                                ($ in thousands)
<S>                                   <C>                    <C>                     <C>                    <C>
FFO                                    $30,501                $23,201                 $84,564                $61,147
Less:
    Straight-line rents                  1,025                  1,947                   5,352                  3,274
    Leasing commissions                     71                    436                     653                  1,338
    Capital expenditures                    87                    223                     411                  1,371
                            -------------------    -------------------     -------------------    -------------------
FAD                                    $29,318                $20,595                 $78,148                $55,164
                            ===================    ===================     ===================    ===================
</TABLE>

The Company intends to make regular quarterly distributions to holders of common
stock  and O.P.  units  based on its FAD.  The  Company's  ability  to make such
distributions will be affected by numerous factors, including, most

                                     - 18 -
<PAGE>

importantly,  the receipt of distributions from rental operations payable to the
Company as the sole general partner of the operating partnerships.

FAD does not represent cash  generated  from operating  activities in accordance
with  GAAP 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 FAD 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 100% of the  distributions to stockholders for the year ending
December  31,  2001 will  constitute  taxable  ordinary  dividend  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 R&D, office and industrial  properties in
the  Company's   current  and  proposed   market  areas,   tenant  defaults  and
bankruptcies,  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. 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.

                                     - 19 -

<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, 2000.

================================================================================

PART II - OTHER INFORMATION

ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K

         a.       Exhibits

                  10.27 Revolving Credit - $100,000,000 Secured Promissory Note

         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:   November 12, 2001            By:/s/ Wayne N. Pham
                                        --------------------------------------
                                        Wayne N. Pham
                                        Vice President of Finance and Controller
                                        (Principal Accounting Officer and Duly
                                         Authorized Officer)



                                     - 21 -
<PAGE>



EXHIBIT 10.27

                                REVOLVING CREDIT
                             SECURED PROMISSORY NOTE
                                    ("Note")

$100,000,000.00                                                     July 1, 2001

FOR  VALUE  RECEIVED,   Mission  West  Properties,   L.P.,  a  Delaware  limited
partnership,  Mission West Properties,  L.P. I, a Delaware limited  partnership,
Mission West Properties  L.P. II, a Delaware  limited  partnership,  and Mission
West  Properties,   L.P.  III,  a  Delaware  limited  partnership  (collectively
"Borrower"),  promises  to pay to the order of Berg & Berg  Enterprises,  LLC, a
California limited liability company ("Lender") or its assigns, at 10050 Bandley
Drive, Cupertino, California 95014, or at such other place as the holder of this
Note may from time to time  designate,  the principal sum of One Hundred Million
Dollars ($100,000,000.00) (the "Credit Amount") or so much of that sum as may be
advanced  under  this Note from time to time by any  holder,  plus  interest  as
computed herein.

Interest on the principal sum of this Note from time to time outstanding will be
computed  from the date of each  advance of  principal  at LIBOR plus 1.30% (the
"Applicable  Interest Rate").  Interest will be computed on the basis of a three
hundred sixty (360) day year and the actual  number of days elapsed,  which will
result in the payment of more interest than if a 365-day year were used.

All accrued and unpaid  principal and interest shall be due and payable no later
than July 1, 2002.

Advances under this Note may be drawn by Borrower, up to the Credit Amount, upon
not less than 5 days notice to Lender.

Each payment shall be credited  first on the interest then due and the remainder
on the principal sum.

The undersigned  agrees that the holder of this Note may,  without notice to the
undersigned  and without  affecting  the  liability of the  undersigned,  accept
additional or substitute  security for this Note, or release any security or any
party liable for this Note, or extend or renew this Note.

If the undersigned  consists of more than one person or entity,  their liability
and obligations under this Note will be joint and several.  Borrower jointly and
severally waives diligence,  presentment, protest and demand, notice of protest,
dishonor and  non-payment of this Note,  expressly  agrees that this Note or any
payment  hereunder,  may be  extended  from time to time,  and  consents  to the
acceptance of further security for this Note, including other types of security,
all without in any way affecting  the  liability of the  Borrower.  The right to
plead any and all  statutes  of  limitations  as a defense to any demand on this
Note, or on any guaranty hereof,  or to any agreement to pay the same, or to any
demand  secured by the Deed of Trust,  or other  security,  securing  this Note,
against Borrower,  the holder of any property encumbered by the Deed of Trust or
other  instrument  securing  this  Note,  and any  guarantors  or  sureties,  is
expressly waived by each and all said parties.

All amounts  payable  under this Note are payable in lawful  money of the United
States, free from any offset, deduction or counterclaim.  Checks will constitute
payment only when collected.

Upon any  default in the  payment of any amounts due under this Note or upon any
default under the Deed of Trust, the holder may, at its option and upon ten (10)
days' written notice to the undersigned, declare the entire unpaid principal sum
of this Note together with all accrued interest to be due and payable  provided,
however, that if the undersigned should cure such default under this Note or the
Deed of Trust within the time period described above, the right of the holder to
declare the entire  unpaid  principal sum of this Note together with all accrued
interest immediately due and payable shall terminate as to such default as if no
such default occurred.

The undersigned  agrees to pay all costs of collection when incurred,  including
but not  limited  to  reasonable  attorneys'  fees.  If any  suit or  action  is
instituted to enforce this Note, the undersigned promises to pay, in addition to
the costs and disbursements  otherwise allowed by law, such sum as the court may
adjudge as reasonable attorneys' fees in such suit or action.

This Note may be prepaid in whole or in part at any time without penalty.  Until
the maturity  date,  including all  extensions  thereof,  amounts  repaid may be
subsequently advanced under this Note, up to the Credit Amount.

                                     - 22 -
<PAGE>

This Note will be governed by the laws of the State of California.

This Note is a  non-recourse  loan secured by a Deed of Trust and  Assignment of
Rents (the "Deed of Trust")  executed by the  undersigned in favor of Lender and
covering  real  property  located  in San  Jose,  California.  The Deed of Trust
contains provisions for the acceleration of the maturity of this Note.

         Mission West Properties, L.P.,
         Mission West Properties, L.P. I,
         Mission West Properties, L.P. II, and
         Mission West Properties, L.P. III

         By: Mission West Properties, Inc., their general partner


         /s/ Wayne N. Pham
         ---------------------------------------------
         By: Wayne N. Pham, VP of Finance & Controller



                                     - 23 -