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, 2000

                          COMMISSION FILE NUMBER 1-8383


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

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

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

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


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


                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

              17,025,365 shares outstanding as of November 13, 2000


                                     - 1 -

<PAGE>


                          Mission West Properties, Inc.

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



                                      INDEX
<TABLE>
<CAPTION>

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

   Item 1     Financial Statements (unaudited):

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

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

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

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

   Item 2     Management's Discussion and Analysis of Financial
              Condition and Results of Operations....................................................................11

   Item 3     Quantitative and Qualitative Disclosures About Market Risk.............................................19

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

PART II       OTHER INFORMATION

   Item 5     Other Information......................................................................................19

   Item 6     Exhibits and Reports on Form 8-K.......................................................................19


SIGNATURES...........................................................................................................19
</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, 2000       December 31, 1999
                                                                               ----------------------  ----------------------
                                                                                    (Unaudited)
                                    ASSETS
<S>                                                                                     <C>                   <C>
Real estate assets, at cost
    Land                                                                                 $176,577              $149,416
    Building                                                                              629,372               566,766
                                                                               ----------------------  ----------------------
                                                                                          805,949               716,182
    Less accumulated depreciation                                                         (30,011)              (18,566)
                                                                               ----------------------  ----------------------
       Net real estate assets                                                             775,938               697,616
Cash and cash equivalents                                                                   4,274                 6,553
Deferred rent                                                                               9,238                 5,964
Other assets                                                                                6,312                 2,571
                                                                               ----------------------  ----------------------
       Total assets                                                                      $795,762              $712,704
                                                                               ======================  ======================

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Line of credit (related parties)                                                       42,654                     -
    Mortgage notes payable                                                                132,542               133,952
    Mortgage notes payable (related parties)                                               11,708                31,193
    Interest payable                                                                        1,005                 1,005
    Security deposits                                                                       4,553                 2,335
    Prepaid rental income                                                                  12,447                 7,802
    Dividends/distributions payable                                                        16,778                14,019
    Refundable option payment                                                              21,564                21,564
    Accounts payable and accrued expenses                                                   7,895                 3,342
                                                                               ----------------------  ----------------------
       Total liabilities                                                                  251,146               215,212

Commitments and contingencies (Note 8)

Minority interest                                                                         442,967               396,810

Stockholders' equity:
  Preferred stock, $.001 par value, 20,000,000 shares
      authorized, none issued and outstanding                                                   -                     -
  Common stock, $.001 par value, 200,000,000 shares
      authorized, 17,025,365 and 16,972,374 shares issued and
      outstanding at September 30, 2000 and December 31, 1999,
      respectively                                                                             17                    17
  Paid-in-capital                                                                         123,136               122,746
  Accumulated (deficit)                                                                   (21,504)              (22,081)
                                                                               ----------------------  ----------------------
       Total stockholders' equity                                                         101,649               100,682
                                                                               ----------------------  ----------------------
       Total liabilities and stockholders' equity                                        $795,762              $712,704
                                                                               ======================  ======================

        The accompanying notes are an integral part of these consolidated
                             financial statements.
</TABLE>


                                     - 3 -
<PAGE>


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

                                               Three months ended September 30,          Nine months ended September 30,
                                            ---------------------------------------- ----------------------------------------
                                                   2000                1999                 2000                 1999
                                            ------------------- -------------------- -------------------- -------------------
<S>                                             <C>                  <C>                  <C>                <C>
Revenues:
   Rental revenues from real estate                 $26,822              $20,517              $71,957            $52,920
   Tenant reimbursements                              3,746                3,957               10,189              8,352
   Other income, including interest and
      gain on sale of securities                        234                  136                1,062                578
                                            ------------------- -------------------- -------------------- -------------------
        Total                                        30,802               24,610               83,208             61,850
                                            ------------------- -------------------- -------------------- -------------------
Expenses:
   Operating expenses                                 1,449                1,392                3,944              3,111
   Real estate taxes                                  2,123                2,704                6,562              5,533
   Depreciation of real estate                        3,950                3,510               11,445              9,612
   General and administrative                           363                  276                  933              1,028
   Interest                                           2,227                2,594                6,730              9,286
   Interest (related parties)                         1,328                  646                3,213              1,635
                                            ------------------- -------------------- -------------------- -------------------
        Total expenses                               11,440               11,122               32,827             30,205
                                            ------------------- -------------------- -------------------- -------------------

Income before minority interest                      19,362               13,488               50,381             31,645
Minority interest                                    16,005               11,310               41,462             27,521
                                            ------------------- -------------------- -------------------- -------------------
        Net income                                $   3,357            $   2,178            $   8,919          $   4,124
                                            =================== ==================== ==================== ===================
Basic net income per share                        $    0.20            $    0.13            $    0.52          $    0.37
                                            =================== ==================== ==================== ===================
Diluted net income per share                      $    0.20            $    0.13            $    0.52          $    0.37
                                            =================== ==================== ==================== ===================
Weighted average number of
  common shares outstanding (basic)              17,025,365           16,715,354          17,013,737          11,067,622
                                            =================== ==================== ==================== ===================
Weighted average number of
  common shares outstanding (diluted)            17,191,306           16,808,181          17,129,509          11,178,229
                                            =================== ==================== ==================== ===================
</TABLE>



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


                                     - 4 -
<PAGE>


                          MISSION WEST PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                (Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                   (unaudited)
                                                                                           Nine months ended September 30,
                                                                                         -------------------------------------
                                                                                               2000               1999
                                                                                         ------------------ ------------------
<S>                                                                                      <C>                <C>
Cash flows from operating activities:
     Net income                                                                           $    8,919         $    4,124
     Adjustments to reconcile net income to net cash provided by
       operating activities:
            Minority interest                                                                 41,462             27,521
            Depreciation                                                                      11,445              9,612
            Other                                                                               (364)                 -
     Changes in assets and liabilities:
            Deferred rent                                                                     (3,274)            (3,083)
            Other assets                                                                      (3,360)            (1,158)
            Interest payable                                                                       -                373
            Security deposits                                                                  1,733                (52)
            Prepaid rental income                                                              4,212              3,717
            Accounts payable and accrued expenses                                              3,010              2,027
                                                                                         ------------------ ------------------
     Net cash provided by operating activities                                                63,783             43,081
                                                                                         ------------------ ------------------
Cash flows used in investing activities:
     Additions to property                                                                      (581)                 -
     Improvements to real estate assets                                                       (1,371)           (31,376)
     Purchase of short-term investments                                                            -             (5,000)
     Deposit on sale of real estate                                                                -             21,564
                                                                                         ------------------ ------------------
        Net cash used in investing activities                                                 (1,952)           (14,812)
                                                                                         ------------------ ------------------
Cash flows from financing activities:
     Net repayments on line of credit                                                              -            (22,906)
     Principal payments on mortgage notes payable                                             (1,410)           (22,783)
     Principal payments on mortgage notes payable (related parties)                              (64)           (39,639)
     Net payments under line of credit (related parties)                                     (53,468)                 -
     Payments on receivable from private placements                                                -                372
     Net proceeds from issuance of common stock                                                    -             66,900
     Proceeds from stock options exercised                                                       290                807
     Repurchase of common stock                                                                    -                 (8)
     Minority interest distributions                                                          (1,467)              (846)
     Dividends paid                                                                           (7,991)            (2,142)
                                                                                         ------------------ ------------------
        Net cash used in financing activities                                                (64,110)           (20,245)
                                                                                         ------------------ ------------------
        Net decrease in cash and cash equivalents                                             (2,279)             8,024
Cash and cash equivalents, beginning                                                           6,553                246
                                                                                         ------------------ ------------------
Cash and cash equivalents, ending                                                         $    4,274         $    8,270
                                                                                         ================== ==================
Supplemental information:
     Cash paid for interest                                                               $    9,876         $   10,548
                                                                                         ================== ==================
Supplemental schedule of non-cash investing and financing activities:
     Cancellation of note receivable in connection with repurchase of common stock                 -                528
                                                                                         ================== ==================
     Advances under line of credit (related parties)                                      $   35,053                  -
                                                                                         ================== ==================
     Debt incurred in connection with property acquisitions                               $   41,083         $   33,083
                                                                                         ================== ==================
     Other liabilities in connection with property acquisitions                           $    2,509         $    1,284
                                                                                         ================== ==================
     Issuance of limited partnership units in connection with property acquisitions       $   45,049         $  120,995
                                                                                         ================== ==================
</TABLE>

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


                                     - 5 -
<PAGE>


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


1.   Principles of Consolidation and Basis of Presentation

     The accompanying  consolidated financial statements include the accounts of
     Mission  West  Properties,  Inc.  and  its  controlled  subsidiaries,   the
     operating partnerships,  which include a 50% joint venture (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,  2000.
     Minority  interest in earnings has been calculated by taking the net income
     of the operating  partnerships (on a stand-alone  basis)  multiplied by the
     respective minority interest ownership percentage.

     The financial  statements  have been prepared in accordance  with generally
     accepted  accounting  principles  ("GAAP")  applicable to interim financial
     information and pursuant to the rules and regulations of the Securities and
     Exchange   Commission.   Accordingly,   certain  information  and  footnote
     disclosures   normally  included  in  financial   statements   prepared  in
     accordance with GAAP have been condensed or omitted  pursuant to such rules
     and regulations.  However,  in the opinion of management,  all adjustments,
     consisting  only of  normal  recurring  adjustments,  necessary  for a fair
     presentation  have been  included.  The Company  presumes that users of the
     interim  financial  information  herein  have  read or have  access  to the
     audited  financial  statements  for the preceding  fiscal year and that the
     adequacy of additional  disclosure  needed for a fair  presentation  may be
     determined  in that context.  The results of  operations  for the three and
     nine months ended September 30, 2000 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,  commencing with the taxable
     year ended December 31, 1999.  Accordingly,  no provision has been made for
     income taxes for the three and nine months ended September 30, 2000.


2.   Real Estate

     PENDING PROJECTS ACQUISITION AGREEMENT
     In December 1998 the Company  entered into a Pending  Projects  Acquisition
     Agreement  under  which the  Company  agreed to acquire  approximately  one
     million  rentable  square feet of R&D  properties  upon the  completion and
     leasing  of a number  of  pending  development  projects  owned by  certain
     members  of the Berg  Group  and other  sellers.  The  agreement  fixes the
     acquisition  value to be received by the sellers based upon the capitalized
     rental  value of the  property  when  fully  leased.  During the first nine
     months of 2000, the Company  acquired two additional  properties  under the
     Pending  Projects  Acquisition  Agreement,  representing  141,740  rentable
     square feet (see Property Acquisitions below). At September 30, 2000, there
     was one remaining project comprising  approximately 110,952 rentable square
     feet,  which the  Company  expects to acquire  under the  Pending  Projects
     Acquisition Agreement.  The sellers of the pending development projects may
     elect to receive  cash or limited  partnership  units  ("O.P.  Units") at a
     value of $4.50 per unit,  which was set in May 1998  based on the $4.50 per
     share  price  of the  Company's  common  stock  paid in  private  placement
     transactions  at that time. As the current market value price of a share of
     common  stock  exceeds  the  $4.50  price,  this  valuation   represents  a
     substantial discount from the current market value of the common stock that
     may be issued in exchange for these O.P. Units. Under GAAP, the acquisition
     cost in the form of O.P. Units issued will be valued based upon the current
     market  value of the  Company's  common  stock on the date the  acquisition
     closes.   Consequently,   the   Company's   actual  cost  of  these  future
     acquisitions  will  depend  in large  part on the  percentage  of the fixed
     acquisition  value paid for by the issuance of O.P.  Units and the price of
     the Company's common stock on the closing date of the acquisition.


                                     - 6 -
<PAGE>
     BERG LAND HOLDINGS OPTION AGREEMENT
     Under the terms of the Berg Land  Holdings  Option  Agreement,  the Company
     currently has the option to acquire any future R&D,  office and  industrial
     buildings  developed by the Berg Group on land currently owned or optioned,
     or acquired for these  purposes in the future,  directly or  indirectly  by
     certain members of the Berg Group. At present,  there are approximately 368
     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,  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, 2000,  the Company had  completed  seven  acquisitions
     under the Berg Land Holdings Option  Agreement  representing  approximately
     762,000  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 $8.00 to $20.00 per square foot); (d) 10% per annum
     of the acquisition  value of the parcel for the period from January 1, 1998
     to the close of escrow;  and (e) interest at LIBOR (London  Interbank Offer
     Rate) plus 1.65% per annum on the full  construction  costs of the building
     for the period from the date funds were  disbursed by the  developer to the
     close of escrow;  less (f) any debt  encumbering the property,  or a lesser
     amount as approved by the independent directors committee.

     No  estimate  can be given at this time as to the total cost to the Company
     to acquire projects under the Berg Land Holdings Option  Agreement,  or the
     timing of the Company's  acquisition of any of such projects.  However, the
     Berg Group currently has 21 properties  under  development  with a total of
     approximately  1,809,352  rentable  square feet of R&D properties  that the
     Company  has  the  right  to  acquire  under  this  agreement.  Of  the  21
     properties,  six are 50% joint  ventures  consisting  of  471,000  rentable
     square feet. As of September 30, 2000, the estimated  acquisition  price to
     the  operating  partnerships  for these 21 projects is  approximately  $217
     million.  The final  acquisition  price of these 21 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 257 additional  acres of land currently  controlled
     by the Berg Group,  which could support  approximately  4.06 million square
     feet of new developments. Under the Berg Land Holdings Option Agreement, as
     long  as  the  Berg  Group  ownership  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 5, 2000, the Company  acquired a newly  constructed  R&D
     property located at 1756 Automation Parkway in San Jose,  California.  This
     acquisition  added  approximately  80,640 square feet of rentable space and
     was  acquired  from the Berg Group under the Pending  Projects  Acquisition
     Agreement.  The total acquisition price for this property was $14,594.  The
     Company acquired this property by borrowing $5,000 under its line of credit
     from the Berg Group, issuing 1,346,480 O.P. Units to various members of the
     Berg Group, and assuming other liabilities of $100.

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

     Effective  April 1, 2000,  the  Company  acquired a newly  constructed  R&D
     property located at 1762 Automation Parkway in San Jose,  California.  This
     acquisition  added  approximately  61,100 square feet of rentable space and
     was  acquired  from the Berg Group under the Pending  Projects  Acquisition
     Agreement.  The total acquisition price for this property was $17,028.  The
     Company acquired this property by borrowing $8,458 under its line of credit
     from the Berg Group and issuing  1,001,213 O.P. Units to various members of
     the Berg Group.

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

                                     - 7 -
<PAGE>

     borrowing  $6,832  under its line of credit  from the Berg  Group,  issuing
     550,079 O.P. Units to various members of the Berg Group, and assuming other
     liabilities of $167.

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

     Effective July 1, 2000, the Company acquired an approximately 77,184 square
     foot R&D building  located at 5400 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 $8,598.  The Company acquired
     this  property by  borrowing  $4,000 under its line of credit from the Berg
     Group, issuing 466,377 O.P. Units to various members of the Berg Group, and
     assuming other liabilities of $136.

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

3.   Stock Transactions

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

4.   Other Income

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

5.   Net Income Per Share

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

     The computation for weighted average shares is detailed below:

                                     - 8 -

<PAGE>

<TABLE>
<CAPTION>

                                                            Three Months Ended Sept             Nine Months Ended Sept
                                                                     30,                                30,
                                                        -------------------------------    -------------------------------
                                                             2000              1999             2000             1999
                                                        --------------   --------------    --------------   --------------
<S>                                                      <C>              <C>               <C>              <C>
        Weighted average shares outstanding (basic)       17,025,365       16,715,354        17,013,737       11,067,622
        Incremental shares from assumed option exercise      165,941           92,827           115,772          110,607
                                                        --------------   --------------    --------------   --------------
        Weighted average shares outstanding (diluted)     17,191,306       16,808,181        17,129,509       11,178,229

                                                        ==============   ==============    ==============   ==============
</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 also be added back to net income.
     The total  number of O.P.  Units  outstanding  at  September  30,  2000 was
     81,667,227.


6.   Related Party Transactions

     As of September 30, 2000, the Berg Group owned 77,346,625 O.P. Units. Along
     with the Company's  common shares owned by the Berg Group, the Berg Group's
     ownership as of September  30, 2000  represented  approximately  78% of the
     equity interests of the Company, assuming conversion of the 81,667,227 O.P.
     Units outstanding into the common stock of the Company.

     As of September  30,  2000,  debt in the amount of $42,654 was due the Berg
     Group under the line of credit established March 1, 2000. The $50,000 Wells
     Fargo  line of credit  expired on  February  29,  2000 and was repaid  with
     proceeds from and replaced by a $50,000 line of credit from the Berg Group.
     The  $50,000  line of credit from the Berg Group was  increased  to $75,000
     effective  April 1,  2000.  The Berg  Group  line of  credit  is  currently
     collateralized  by seven  properties,  bears  interest  at LIBOR  plus 1.30
     percent, and matures in February 2001. Management expects that the maturity
     date for the Berg Group line of credit will be  extended to February  2002.
     The  Company  believes  that the terms of the Berg Group line of credit are
     more favorable than those available from Wells Fargo or similar lenders. As
     of September 30, 2000, debt in the amount of $11,708 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.
     During the first nine months of 2000, the Company  increased its borrowings
     by  $41,083  in  connection  with  property  acquisitions,  including  debt
     incurred  under the Berg Group line of credit and mortgage  note.  Interest
     expense  incurred in connection with debt due the Berg Group was $1,328 and
     $646 for the three months ended September 30, 2000 and 1999,  respectively,
     and $3,213 and $1,635 for the nine  months  ended  September  30,  2000 and
     1999, respectively.

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

     The Company currently leases office space owned by Berg & Berg Enterprises,
     Inc.,  an affiliate of Carl E. Berg and Clyde J. Berg.  Rental  amounts and
     overhead reimbursements paid to Berg & Berg Enterprises,  Inc. were $20 for
     the three months ended September 30, 2000 and 1999,  respectively,  and $60
     for the nine months ended September 30, 2000 and 1999, respectively.


7.   Subsequent Events

     On September 18, 2000,  the Company  declared a $0.17 per share dividend on
     its common  stock.  The dividend was paid on October 10, 2000 to all common
     stockholders  of record as of  September  29, 2000.  On the same date,  the
     operating  partnerships  paid a  distribution  of $0.17 per O.P.  Unit.

                                     - 9 -
<PAGE>

8.   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.

                                     - 10 -

<PAGE>
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS


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

OVERVIEW

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

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

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

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

At September 30, 2000, the  outstanding  balance under the demand notes that the
Company owes to the operating  partnerships was approximately $1.16 million. The
Company and the operating  partnerships have extended the due date of the demand
notes until  September 30, 2001.  The principal of the demand notes,  along with
the interest expense, which is interest income to the operating partnerships, is
eliminated in consolidation and is not included in the corresponding  line items
within the  consolidated  financial  statements.  However,  the interest  income
earned on this debt by the operating partnerships,  which is interest expense to
the Company,  is included in the calculation of minority interest as reported on
the consolidated  statements of operations,  thereby reducing net income by this
same amount. At present, the Company's only means for repayment of this debt, be
it in this form or refinanced with another lender, is through distributions that
the Company receives from the operating  partnerships in excess of the amount of
dividends to be paid to the Company's stockholders.

The Company has  elected,  under the Internal  Revenue Code of 1986,  as amended
(the  "Code"),  to be taxed as a REIT  commencing  with the  taxable  year ended
December 31, 1999.

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


                                     - 11 -
<PAGE>

RESULTS OF OPERATIONS

Comparison  of the three and nine months ended  September  30, 2000 to the three
and nine months ended September 30, 1999.

As of September 30, 2000, the Company,  through its controlling interests in the
operating  partnerships,  owned 87 properties totaling approximately 6.0 million
square feet compared to 79 properties totaling  approximately 5.2 million square
feet owned by the Company as of September 30, 1999.  This represents an increase
of  approximately  15% in total  rentable  square footage from one year ago. The
increase resulted from the following acquisitions:
<TABLE>
<CAPTION>

               Date of                                                   Rentable Square
             Acquisition                      Address                        Footage
          -------------------    ----------------------------------     ------------------
<S>      <C>                    <C>                                              <C>
          10/99                  5749 Fontanoso Way                                77,700
          1/00                   1756 Automation Parkway                           80,640
          3/00                   800 Branham Lane East                            239,000
          4/00                   1762 Automation Parkway                           61,100
          4/00                   255 Caspian Way                                   98,500
          5/00                   5300 & 5350 Hellyer Avenue                       160,000
          7/00                   5400 Hellyer Avenue                               77,184
          -------------------    ----------------------------------     ------------------
                                                                                  794,124
</TABLE>


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

                                                      Three months ended September 30,
                                     -------------------------------------------------------------------
                                         2000             1999            $ Change          % Change
                                     -------------    -------------     -------------    ---------------
                                                  (Dollars in thousands)

<S>                                      <C>              <C>               <C>                 <C>
          Same Property (1)               $15,338          $13,605           $ 1,733              12.7%
          1998 Acquisitions                   583              585               (2)                 -
          1999 Acquisitions                 6,745            6,327               418               6.6%
          2000 Acquisitions                 4,156                -             4,156             100.0%
                                     -------------    -------------     -------------
                                          $26,822          $20,517           $ 6,305              30.7%
                                     =============    =============     =============


                                                      Nine months ended September 30,
                                     -------------------------------------------------------------------
                                         2000             1999            $ Change          % Change
                                     -------------    -------------     -------------    ---------------
                                                 (Dollars in thousands)

          Same Property (1)               $43,762          $40,180           $ 3,582               8.9%
          1998 Acquisitions                 1,748            1,757               (9)              (.5%)
          1999 Acquisitions                18,685           10,983             7,702              70.1%
          2000 Acquisitions                 7,762                -             7,762             100.0%
                                     -------------    -------------     ------------
                                          $71,957          $52,920           $19,037              36.0%
                                     =============    =============     =============
</TABLE>


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

For the quarter ended  September  30, 2000,  rental  revenues  increased by $6.3
million  from $20.5  million for the three months  ended  September  30, 1999 to
$26.8  million  for the same  period of 2000.  Of the $6.3  million  increase in
rental  revenues,  $1.7 million  resulted  from the  Company's  "Same  Property"
portfolio,  $0.4 million  resulted from  properties  acquired in 1999,  and $4.2
million resulted from properties  acquired in 2000. Rental revenues increased by
$19.0 million from $52.9 million for the nine months ended September 30, 1999 to
$71.9 million for the same period of 2000. The $19.0 million  increase in rental
revenues consisted of $3.6 million from the Company's "Same Property" portfolio,
$7.7 million from properties  acquired in 1999, and $7.7 million from properties
acquired in 2000.

Tenant reimbursements decreased by $0.2 million or 5%, from $3.9 million for the
three months ended September 30, 1999 to $3.7 million for the three months ended
September  30, 2000.  Operating  expenses and real estate  taxes,  on a combined
basis,  decreased  by $.5 million or 12%,  from $4.1 million to $3.6 million for
the three months ended September 30, 1999 and 2000,  respectively.  The decrease
was due to the anticipation of additional property taxes in the third quarter of
1999 for the Microsoft project at La Avenida. Tenant reimbursements increased by
$1.8 million or 21%,  from $8.4 million for the nine months ended  September 30,
1999 to $10.2 million for the nine months ended  September  30, 2000.  Operating
expenses and real estate taxes, on a combined  basis,  increased by $1.9 million
or 22%, from $8.6 million to $10.5  million for the nine


                                     - 12 -
<PAGE>

months ended September 30, 1999 and 2000,  respectively.  The increases resulted
primarily  from the  growth in the total  rentable  square  footage  during  the
periods presented.

Depreciation  expense  increased by $440 and $1,833 for the three and nine-month
period ended September 30, 2000, respectively,  over the same period a year ago.
The increase was  attributable  to the  acquisitions of eight  properties  since
September 30, 1999.

Interest  expense  decreased  by $0.4  million or 15% from $2.6  million for the
three months ended September 30, 1999 to $2.2 million for the three months ended
September 30, 2000 due to debt repayment.  Interest  expense  (related  parties)
increased  by $0.7  million or 116% from $0.6 million for the three months ended
September 30, 1999 to $1.3 million for the three months ended September 30, 2000
due to debt  incurred  under the Berg  Group line of credit in  connection  with
property  acquisitions.  Interest expense  decreased by $2.6 million or 28% from
$9.3  million for the nine months ended  September  30, 1999 to $6.7 million for
the nine months ended September 30, 2000.  Interest  expense  (related  parties)
increased by $1.6 million or 100% from $1.6 for the nine months ended  September
30, 1999 to $3.2 million for the nine months  ended  September  30, 2000.  Total
interest  expense  (including  amounts to related  parties) has decreased due to
repayment  of the Wells Fargo line of credit.  As a result of eight R&D property
acquisitions  since September 30, 1999, debt outstanding,  including amounts due
related parties,  had increased by $17.4 million, or 10%, from $169.5 million as
of September  30, 1999 to $186.9  million as of September  30, 2000.  Management
expects  that  interest  expense  will  increase  as new  debt  is  incurred  in
connection with property acquisitions.

The  minority  interest  portion of income was $16.0  million,  resulting in net
income to  stockholders of $3.4 million for the three months ended September 30,
2000.  Minority  interest  represents  the  ownership  interest  of all  limited
partners in the  operating  partnerships  taken as a whole,  which was 83% as of
September 30, 2000.

CHANGES IN FINANCIAL CONDITION

During the first nine months of 2000,  the  Company  acquired  seven  additional
properties  representing  716,424 rentable square feet of R&D properties located
in Silicon Valley.  These properties were acquired from the Berg Group under the
Pending  Projects  Acquisition  Agreement  and the  Berg  Land  Holdings  Option
Agreement.  The  aggregate  acquisition  price  for these  properties  was $87.4
million.  The Company financed these  acquisitions by a) borrowing $41.1 million
under the Berg Group  line of  credit;  b)  assumption  by the  Company of other
liabilities of $2.5 million; c) and the issuance of 5,461,438 O.P. Units.

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

LIQUIDITY AND CAPITAL RESOURCES

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

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


                                     - 13 -
<PAGE>

At September 30, 2000,  the Company had total  indebtedness  of $186.9  million,
including  $132.5 million of fixed rate mortgage  debt,  $11.7 million under the
Berg Group  mortgage  note (related  parties),  and $42.7 million under the Berg
Group line of credit (related parties).

As of September  30, 2000,  the  Company's  Debt to Total Market  Capitalization
ratio was  approximately  12.0%. 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 $13.88 per share on September
29, 2000) on a fully diluted  basis,  taking into account the  conversion of all
O.P. Units into common stock. On September 29, 2000, the last trading day during
the period, Total Market Capitalization was approximately $1.56 billion.

MORTGAGE DEBT

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

<TABLE>
<CAPTION>
                                                                                                        Maturity     Interest
           Debt Description                           Collateral Properties               Balance         Date         Rate
-------------------------------------------  --------------------------------         ---------------  -----------  -----------
                                                                                           ($ in
                                                                                         thousands)
<S>                                         <C>                                          <C>             <C>           <C>
LINE OF CREDIT (related parties):
                                             2033-2043 Samaritan Drive, San Jose, CA       $42,654          2/01          (1)
                                             2133 Samaritan Drive, San Jose, CA
                                             2233-2243 Samaritan Drive, San Jose, CA
                                             1310-1450 McCandless Drive, Milpitas, CA
                                             1315-1375 McCandless Drive, Milpitas, CA
                                             1650-1690 McCandless Drive, Milpitas, CA
                                             1795-1845 McCandless Drive, Milpitas, CA

MORTGAGE NOTES PAYABLE (related parties):    5300 & 5350 Hellyer Avenue, San Jose, CA       11,708          6/20         7.65%

MORTGAGE NOTES PAYABLE:
Prudential Capital Group                     20400 Mariani, Cupertino, CA                    1,794          4/09         8.75%
New York Life Insurance Company              10440 Bubb Road, Cupertino, CA                    385          9/09        9.625%
Home Savings & Loan Association              10460 Bubb Road, Cupertino, CA                    437         12/06         9.50%
Mellon Mortgage Company                      3530 Bassett, Santa Clara, CA                   2,765          6/01        8.125%
Prudential Insurance Company of America      10300 Bubb, Cupertino, CA                     127,161(2)      10/08         6.56%
                                             10500 N. DeAnza, Cupertino, CA
                                             4050 Starboard, Fremont, CA
                                             45700 Northport Loop, Fremont, CA
                                             45738 Northport Loop, Fremont, CA
                                             450-460 National, Mountain View, CA
                                             4949 Hellyer, San Jose, CA
                                             6311 San Ignacio, San Jose, CA
                                             6321 San Ignacio, San Jose, CA
                                             6325 San Ignacio, San Jose, CA
                                             6331 San Ignacio, San Jose, CA
                                             6341 San Ignacio, San Jose, CA
                                             6351 San Ignacio, San Jose, CA
                                             3236 Scott, Santa Clara, CA
                                             3560 Bassett, Santa Clara, CA
                                             3570 Bassett, Santa Clara, CA
                                             3580 Bassett, Santa Clara, CA
                                             1135 Kern, Sunnyvale, CA
                                             1212 Bordeaux, Sunnyvale, CA
                                             1230 E. Arques, Sunnyvale, CA
                                             1250 E. Arques, Sunnyvale, CA
                                             1170 Morse, Sunnyvale, CA
                                             3540 Bassett, Santa Clara, CA
                                             3542 Bassett, Santa Clara, CA
                                             3544 Bassett, Santa Clara, CA
                                             3550 Bassett, Santa Clara, CA
                                                                                      ---------------
Mortgage Notes Payable Subtotal                                                            132,542
                                                                                      ---------------
                                      TOTAL                                               $186,904
                                                                                      ===============
</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  percent  and is payable in full in
     February 2001.
(2)  John Kontrabecki, one of the limited partners, has guaranteed approximately
     $12.0 million of this debt.


                                     - 14 -
<PAGE>

CURRENT PROPERTIES SUBJECT TO OUR ACQUISITION AGREEMENT WITH THE BERG GROUP

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

<TABLE>
<CAPTION>
                                                Approximate
                                               Rentable Area                                      Total Estimated
Property                         Building      (Square Feet)      Anticipated Acquisition Date  Acquisition Value(1)
------------------------------ ------------ -------------------- ----------------------------- ----------------------
BERG LAND HOLDINGS                                                                             (dollars in thousands)
UNDER DEVELOPMENT
<S>                                <C>        <C>                  <C>                             <C>
Hellyer III (Phase I)               1            117,740            2nd Qtr 2001                    $ 14,400
Hellyer Vista (Phase I)             1            131,500            4th Qtr 2000/1st Qtr 2001         16,500
Silver Creek                        4            346,000            2nd Quarter 2001                  40,500
Morgan Hill (JV I) (2)              2            211,000            1st Quarter 2001                  22,000
5550 Hellyer                        1             79,800            2nd Quarter 2001                  10,200
5750 Hellyer                        1             73,312            3rd Quarter 2001                  10,100
Creekside                           1             65,000            2nd Quarter 2001                   9,000
Caspian (Phase II)                  1            100,000            2nd Quarter 2001                  14,900
Morgan Hill (JV II) (2)             1             60,000            2nd Quarter 2001                   5,700
Morgan Hill (JV III) (2)            1             40,000            2nd Quarter 2001                   4,000
5535 Hellyer                        1            125,000            2nd Quarter 2001                  15,400
Morgan Hill (JV IV) (2)             2            160,000            3rd Quarter 2001                  17,500
Piercy & Hellyer                    2            130,000            4th Quarter 2001                  14,900
Piercy & Hellyer                    1             65,000            4th Quarter 2001                   8,696
Piercy & Hellyer                    1            105,000            4th Quarter 2001                  13,200
                                    -          ---------                                            --------
               SUBTOTAL            21          1,809,352                                            $216,996

AVAILABLE LAND
Morgan Hill (2)                                  490,000
King Ranch                                       248,500
Piercy & Hellyer                                 458,000
Fremont & Cushing                                387,000
Evergreen                                      2,480,000
                                               ---------
               SUBTOTAL                        4,063,500

PENDING PROJECTS ACQUISITION
PENDING PROJECT
Automation IV                       1            110,952            4th Quarter 2000                  14,000
                                    -          ---------                                            --------

TOTAL                              22          5,983,804                                            $230,996
                                   ==          =========                                            ========
</TABLE>


(1)  The Estimated  Acquisition  Value  represents  the estimated cash price for
     acquiring  the pending  projects  under the terms of the  Pending  Projects
     Acquisition  Agreement and the Berg Land Holdings Option  Agreement,  which
     may differ from the actual  acquisition  cost as determined  under GAAP, 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 its  operating  partnership,  to be formed to develop the property.
     The  property  will be  operated  and  managed by the other  partner in the
     entity.  The  rentable  area and  estimated  acquisition  value shown above
     reflect both the Company's  and the other  partner's  combined  interest in
     these properties.  The Company's actual acquisition cost will be determined
     without  regard  to the  other  partner's  interest  in  these  properties,
     however.



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


                                     - 15 -
<PAGE>

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. Generally, the Company will not acquire any of the above projects until
they  are  fully  completed  and  leased.  There  can be no  assurance  that the
acquisition  date and final  cost to the  Company  as  indicated  above  will be
realized.

Although the Company expects to acquire the new properties available to it under
the  terms of the  Pending  Projects  Acquisition  Agreement  and the Berg  Land
Holdings  Option  Agreement,  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.

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

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

HISTORICAL CASH FLOWS

Net cash provided by operating  activities  for the nine months ended  September
30,  2000 was $63.8  million  compared  to $43.0  million for the same period in
1999, a 48% increase.  The change was a direct result of rent  increases and new
acquisitions.

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

Net cash used in investing  activities was approximately  $2.0 million and $14.8
million for the nine months  ended  September  30, 2000 and 1999,  respectively.
Cash used in investing  activities  during the nine months ended  September  30,
2000 was related to tenant  improvements made to existing real estate assets and
additions to property.

Net cash used in  financing  activities  was $64.1  million  for the nine months
ended  September 30, 2000 compared to $20.2 million for the same period in 1999.
During the nine months  ended  September  30,  2000,  the Company  paid its debt
outstanding and made  distributions  to holders of its common stock and the O.P.
Units by utilizing cash generated from operating activities.

CAPITAL EXPENDITURES

The  properties  require  periodic  investments  of capital  for  tenant-related
capital expenditures and for general capital  improvements.  For the years ended
December 31, 1994 through  December 31, 1999, the recurring  tenant  improvement
costs and  leasing  commissions  incurred  with  respect to new leases and lease
renewals of the properties previously owned or controlled by members of the Berg
Group averaged approximately $1.5 million annually. The Company expects that the
average annual cost of recurring tenant  improvements  and leasing  commissions,
related to the properties, will be approximately $3.0 million for the year 2000.
The Company  believes it will recover  substantially  all of these sums from the
tenants under the new or renewed leases through  increases in rental rates.  The
Company expects to meet its long-term liquidity  requirements for the funding of
property  development,  property  acquisitions and other material  non-recurring


                                     - 16 -
<PAGE>

capital  improvements  through long-term secured and unsecured  indebtedness and
the issuance of additional equity securities by the Company.

FUNDS FROM OPERATIONS

As  defined  by the  National  Association  of  Real  Estate  Investment  Trusts
("NAREIT"),  FFO represents net income (loss) before  minority  interest of unit
holders  (computed in accordance  with GAAP),  excluding  gains (or losses) from
debt restructuring and sales of property,  plus real estate related depreciation
and  amortization  (excluding  amortization  of  deferred  financing  costs  and
depreciation of non-real estate assets) and after adjustments for unconsolidated
partnerships and joint ventures. Management considers FFO an appropriate measure
of performance  of an equity REIT because,  along with cash flows from operating
activities, financing activities and investing activities, it provides investors
with an  understanding  of the Company's  ability to incur and service debt, and
make capital  expenditures.  FFO should not be considered as an alternative  for
net income as a measure of profitability  and it is not comparable to cash flows
provided by operating activities  determined in accordance with GAAP, nor is FFO
necessarily  indicative  of funds  available to meet the  Company's  cash needs,
including its need to make cash distributions to satisfy REIT requirements.

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

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

<TABLE>
<CAPTION>
                                   Three Months Ended September 30,               Nine Months Ended September 30,
                               -----------------------------------------     ------------------------------------------
                                     2000                   1999                    2000                   1999
                               ------------------     ------------------     -------------------    -------------------
                                         (Dollars in thousands)                        (Dollars in thousands)
<S>                                     <C>                    <C>                     <C>                    <C>
Net income                               $ 3,357                $ 2,178                 $ 8,919                $ 4,124
Add:
    Minority interest (1)                 15,894                 11,310                  41,284                 27,521
    Depreciation                           3,950                  3,510                  11,445                  9,612
Less:
    Gain on sale of security                   -                      -                     501                      -
                               ------------------     ------------------     -------------------    -------------------
FFO                                      $23,201                $16,998                 $61,147                $41,257
                               ==================     ==================     ===================    ===================
</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  straight-lined   rents,  leasing  commissions  paid  and  capital
expenditures made during the respective  period. The calculations of FAD for the
three  months  ended  September  30,  2000 and 1999  and the nine  months  ended
September 30, 2000 are as follows:

<TABLE>
<CAPTION>
                                Three Months Ended September 30,                Nine Months Ended September 30,
                            ------------------------------------------     ------------------------------------------
                                   2000                   1999                    2000                   1999
                            -------------------    -------------------     -------------------    -------------------
                                     (Dollars in thousands)                         (Dollars in thousands)
<S>                                   <C>                    <C>                     <C>                    <C>
FFO                                    $23,201                $16,998                 $61,147                $41,257
Less:
    Straight-line rents                  1,947                  1,427                   3,274                  3,083
    Leasing commissions                    436                    301                   1,338                    379
    Capital expenditures                   223                    274                   1,371                    515
                            -------------------    -------------------     -------------------    -------------------
FAD                                    $20,595                $14,996                 $55,164                $37,280
                            ===================    ===================     ===================    ===================
</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


                                     - 17 -
<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 generally accepted accounting principles and is not necessarily  indicative
of cash  available to fund cash needs.  The actual  return that the Company will
realize and the amount available for  distributions to its stockholders  will be
affected  by a number of  factors,  including  the  revenues  received  from its
properties,  its operating expenses, the interest expense incurred on borrowings
and planned and unanticipated capital expenditures.

The Company  anticipates  that 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 a substantial  percentage of the  distributions to stockholders
for the year ending December 31, 2000 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 office and  industrial  properties in the
Company's current and proposed market areas, and general accounting  principles,
policies and guidelines  applicable to REITs. In addition,  the actual timing of
development, construction, and leasing on the projects that the Company believes
it may acquire in the future under the Berg Land  Holdings  Option  Agreement is
unknown presently, and reliance should not be placed on the estimates concerning
these projects set forth under the caption,  "Acquiring  Properties Developed by
the Berg Group," above. The acquisition costs of projects acquired from the Berg
Group under the Pending Projects Acquisition  Agreement will vary based upon the
number of O.P. Units issued in exchange for the property and the price of common
stock,   which  is  issuable  upon   conversion  of  O.P.  Units  under  certain
circumstances,  at the time of the acquisition.  These risks and  uncertainties,
together  with the other  risks  described  from  time to time in the  Company's
reports and other documents  filed with the Securities and Exchange  Commission,
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements.


                                     - 18 -
<PAGE>

ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None


================================================================================
PART II - OTHER INFORMATION

ITEM 2
CHANGES IN SECURITIES AND USE OF PROCEEDS

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

ITEM 5
OTHER INFORMATION

None

ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K

         a.       Exhibits

                  27.1 Financial Data Schedule

         b.       Reports on Form 8-K

                  None

================================================================================
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.

<TABLE>
<CAPTION>

                                           Mission West Properties, Inc.
                                           (Registrant)

<S>                                       <C>

Date:   November 13, 2000                  By:  /s/ Wayne N. Pham
                                              ----------------------------------
                                              Wayne N. Pham
                                              Vice President of Finance and Controller
                                              (Principal Accounting Officer)
</TABLE>


                                     - 19 -