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, 2004

                          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
 incorporation or organization)                              Number)

                               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 [ ] NO [X]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). 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:

              18,077,191 shares outstanding as of November 1, 2004




<PAGE>

                          MISSION WEST PROPERTIES, INC.

                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2004


<TABLE>
<CAPTION>
                                      INDEX

                                                                                                                     PAGE
PART I        FINANCIAL INFORMATION

   Item 1.    Financial Statements (unaudited):

<S>                                                                                                                 <C>
              Consolidated Balance Sheets as of September 30, 2004
              and December 31, 2003 ..................................................................................2

              Consolidated Statements of Operations for the
              three and nine months ended September 30, 2004 and 2003 (As Restated)...................................3

              Consolidated Statements of Cash Flows for the
              nine months ended September 30, 2004 and 2003 (As Restated).............................................4

              Notes to Consolidated Financial Statements..............................................................5

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

   Item 3.    Quantitative and Qualitative Disclosures about Market Risk.............................................21

   Item 4.    Controls and Procedures................................................................................22


PART II       OTHER INFORMATION

   Item 1.    Legal Proceedings......................................................................................23

   Item 6.    Exhibits and Reports on Form 8-K.......................................................................23

SIGNATURES...........................................................................................................24
</TABLE>

Exhibit Index

Certifications
Section 1350 Certification

                                     - 1 -
<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                          MISSION WEST PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
           (dollars in thousands, except share and per share amounts)
                                   (Unaudited)
                                    ---------
<TABLE>
<CAPTION>
                                                                                  September 30, 2004       December 31, 2003
                                                                                 ---------------------   ----------------------
                                     ASSETS
<S>                                                                                  <C>                     <C>
Real estate assets, at cost:
    Land                                                                              $  275,707              $  275,707
    Buildings and improvements                                                           779,558                 779,636
    Real estate related intangible assets                                                 18,284                  19,651
                                                                                 ---------------------   ----------------------
       Total investments in properties                                                 1,073,549               1,074,994
    Less accumulated depreciation and amortization                                      (105,936)                (89,243)
                                                                                 ---------------------   ----------------------
       Net investments in properties                                                     967,613                 985,751
Cash and cash equivalents                                                                  1,597                   4,129
Restricted cash                                                                            1,551                       -
Deferred rent receivable, net of $2,000 allowance
    at September 30, 2004 and December 31, 2003                                           19,111                  18,970
Investment in unconsolidated joint venture                                                 2,431                   2,285
Other assets (net of accumulated amortization of $6,518 and $4,211
    at September 30, 2004 and December 31, 2003, respectively)                            20,240                  21,497
                                                                                 ---------------------   ----------------------
       Total assets                                                                   $1,012,543              $1,032,632
                                                                                 =====================   ======================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Line of credit (related parties)                                                  $    1,105              $    6,320
    Revolving line of credit                                                              26,492                  23,965
    Mortgage notes payable                                                               295,284                 299,858
    Mortgage notes payable (related parties)                                              10,508                  10,762
    Interest payable                                                                         330                     332
    Security deposits                                                                      8,771                  10,248
    Deferred rental income                                                                11,622                  12,723
    Dividend/distribution payable                                                         25,076                  25,031
    Accounts payable and accrued expenses                                                  8,482                   5,085
                                                                                 ---------------------   ----------------------
       Total liabilities                                                                 387,670                 394,324

Commitments and contingencies

Minority interests                                                                       511,777                 524,918

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, 18,077,191 and 17,894,691 shares issued and
       outstanding at September 30, 2004 and December 31, 2003, respectively                  18                      18
    Paid-in-capital                                                                      134,348                 132,136
    Accumulated deficit                                                                  (21,270)                (18,764)
                                                                                 ---------------------   ----------------------
       Total stockholders' equity                                                        113,096                 113,390
                                                                                 ---------------------   ----------------------
       Total liabilities and stockholders' equity                                     $1,012,543              $1,032,632
                                                                                 =====================   ======================
</TABLE>

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

                                     - 2 -
<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,
                                                               2004                2003              2004                 2003
                                                                              (As Restated)                          (As Restated)
                                                         ------------------ ------------------ ------------------ ------------------
Revenues:
<S>                                                          <C>                <C>                <C>                <C>
   Rental revenue from real estate                               $29,580            $33,310            $91,057            $97,464
   Tenant reimbursements                                           3,766              4,796             11,722             14,360
   Other income, including lease terminations,
      settlements and interest                                       397                567              5,404              1,871
                                                         ------------------ ------------------ ------------------ ------------------
                                                                  33,743             38,673            108,183            113,695
                                                         ------------------ ------------------ ------------------ ------------------

Expenses:
   Property operating, maintenance and real estate taxes           4,880              5,559             15,577             15,740
   Interest                                                        4,468              4,335             13,051             12,097
   Interest (related parties)                                        256                280                760                830
   General and administrative                                        395                360              1,628              1,039
   Depreciation and amortization of real estate                    5,428              5,497             16,644             15,273
                                                         ------------------ ------------------ ------------------ ------------------
                                                                  15,427             16,031             47,660             44,979
                                                         ------------------ ------------------ ------------------ ------------------

Income before equity in earnings of unconsolidated joint
   venture and minority interests                                 18,316             22,642             60,523             68,716
Equity in earnings of unconsolidated joint venture,
   including $1,400 gain on sale of property acquired
   from related party in the nine months ended
   September 30, 2003                                                345                599              1,564              3,358
Minority interests                                                15,488             19,348             51,596             60,081
                                                         ------------------ ------------------ ------------------ ------------------

Net income to common stockholders                                $ 3,173            $ 3,893            $10,491            $11,993
                                                         ================== ================== ================== ==================
Net income to minority interests                                 $15,488            $19,348            $51,596            $60,081
                                                         ================== ================== ================== ==================
Net income per share to common stockholders:
   Basic                                                           $0.18              $0.22              $0.58              $0.68
                                                         ================== ================== ================== ==================
   Diluted                                                         $0.18              $0.22              $0.58              $0.68
                                                         ================== ================== ================== ==================
Weighted average shares of
   common stock outstanding (basic)                           18,071,484         17,747,293         18,019,277         17,695,920
                                                         ================== ================== ================== ==================
Weighted average shares of
   common stock outstanding (diluted)                         18,098,174         17,817,917         18,077,854         17,757,461
                                                         ================== ================== ================== ==================
</TABLE>

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

                                     - 3 -
<PAGE>


                          MISSION WEST PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                   (Unaudited)
                                    ---------

<TABLE>
<CAPTION>
                                                                                                 Nine months ended September 30,
                                                                                                     2004                2003
                                                                                                                    (As Restated)
                                                                                              ------------------- ------------------
Cash flows from operating activities:
<S>                                                                                              <C>                  <C>
     Net income                                                                                   $ 10,491             $ 11,993
     Adjustments to reconcile net income to net cash provided by operating activities:
          Minority interests                                                                        51,596               60,081
          Depreciation and amortization of real estate                                              16,644               15,273
          Amortization of above market rent intangible asset                                         1,416                  944
          Equity in earnings of unconsolidated joint venture                                        (1,564)              (3,359)
          Distributions from unconsolidated joint venture                                            1,418                1,500
     Changes in operating assets and liabilities, net of liabilities assumed:
          Deferred rent receivable                                                                    (141)              (1,045)
          Other assets                                                                               1,608               (1,018)
          Interest payable                                                                              (2)                  (2)
          Security deposits                                                                         (1,477)                (795)
          Deferred rental income                                                                    (1,101)               5,127
          Accounts payable and accrued expenses                                                      3,479                3,124
                                                                                              ------------------- ------------------
     Net cash provided by operating activities                                                      82,367               91,823
                                                                                              ------------------- ------------------

Cash flows from investing activities:
     Improvements to real estate assets                                                               (371)              (1,262)
     Purchase of real estate                                                                             -             (110,013)
     Net proceeds from sale of TBI unconsolidated joint venture real estate                              -                1,400
                                                                                              ------------------- ------------------
     Net cash used in investing activities                                                            (371)            (109,875)
                                                                                              ------------------- ------------------

Cash flows from financing activities:
     Principal payments on mortgage notes payable                                                   (4,574)              (3,946)
     Proceeds from mortgage loan payable                                                                 -              180,000
     Principal payments on mortgage notes payable (related parties)                                   (254)                (235)
     Net payments under line of credit (related parties)                                            (5,118)             (58,022)
     Payment on loan payable                                                                             -              (20,000)
     Payment on revolving line of credit                                                                 -               (3,873)
     Proceeds from revolving line of credit                                                          2,527                    -
     Restricted bond                                                                                (1,551)                   -
     Financing costs                                                                                     -                 (863)
     Proceeds from stock options exercised                                                             165                  683
     Minority interest distributions                                                               (62,769)             (62,384)
     Dividends                                                                                     (12,954)             (12,669)
                                                                                              ------------------- ------------------
     Net cash used in/provided by financing activities                                             (84,528)              18,669
                                                                                              ------------------- ------------------
     Net decrease/increase in cash and cash equivalents                                             (2,532)                 617
Cash and cash equivalents, beginning of period                                                       4,129                4,479
                                                                                              ------------------- ------------------
Cash and cash equivalents, ending of period                                                       $  1,597             $  5,096
                                                                                              =================== ==================
Supplemental information:
     Cash paid for interest                                                                       $ 13,602             $ 12,672
                                                                                              =================== ==================
Supplemental schedule of non-cash investing and financing activities:
     Issuance of common stock upon conversion of O.P units                                        $  2,047             $  1,574
                                                                                              =================== ==================
     Assumption of other liabilities in connection with property acquisition                      $      -             $    783
                                                                                              =================== ==================
     Issuance of operating partnership units in connection with joint venture acquisition         $      -             $  1,800
                                                                                              =================== ==================
</TABLE>

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

                                     - 4 -
<PAGE>


                          MISSION WEST PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (Dollars in thousands, except share, per share, O.P units and per
                            square footage amounts)
                                   (Unaudited)


     The Company's consolidated financial statements have been prepared pursuant
     to the Securities and Exchange  Commission's ("SEC") rules and regulations.
     The following notes,  which present interim  disclosures as required by the
     SEC, highlight  significant  changes to the notes to the Company's December
     31,  2003  audited  consolidated  financial  statements  and should be read
     together with the financial  statements  and notes thereto  included in the
     Company's  Form  10-K.  The  results of  operations  for the three and nine
     months  ended  September  30, 2004 are not  necessarily  indicative  of the
     results to be expected for the entire year.

1.   ORGANIZATION AND FORMATION OF THE COMPANY

     Mission  West  Properties,  Inc.  ("the  Company")  is a fully  integrated,
     self-administered  and  self-managed  real estate company that acquires and
     manages R&D/office  properties in the portion of the San Francisco Bay Area
     commonly referred to as Silicon Valley. In July 1998, the Company purchased
     an approximate  12.11% of four existing limited  partnerships  (referred to
     collectively as the "operating partnerships") and obtained control of these
     partnerships  by becoming  the sole general  partner in each one  effective
     July 1, 1998 for financial  accounting and reporting purposes.  The Company
     purchased  an  approximate   12.11%  interest  in  each  of  the  operating
     partnerships.   All  limited   partnership   interests  in  the   operating
     partnerships were converted into 59,479,633 operating  partnership ("O.P.")
     units,  which  represented  a limited  partnership  ownership  interest  of
     approximately   87.89%  of  the  operating   partnerships.   The  operating
     partnerships  are the  vehicles  through  which the Company  holds its real
     estate investments,  makes real estate acquisitions, and generally conducts
     its business.

     On December 30, 1998, the Company was reincorporated  under the laws of the
     State of Maryland  through a merger with and into Mission West  Properties,
     Inc. Accordingly,  shares of the former company, Mission West Properties, a
     California  corporation  (no par),  which were  outstanding at December 30,
     1998,  were  converted  into  shares of common  stock  ($.001 par value per
     share) on a one-for-one basis.

     As of September 30, 2004, the Company owns a general  partnership  interest
     of 17.12%,  21.63%,  16.14% and 12.38% in Mission  West  Properties,  L.P.,
     Mission  West  Properties,  L.P. I, Mission  West  Properties,  L.P. II and
     Mission West  Properties,  L.P.  III,  respectively,  for a 17.30%  general
     partnership interest in the operating partnerships,  taken as a whole, on a
     weighted average basis.

     Through the operating  partnerships,  the Company owns interests in 109 R&D
     properties, all of which are located in Silicon Valley.

     The  Company  has  elected to be taxed as a real  estate  investment  trust
     ("REIT") 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, 2004.

     BUSINESS SEGMENT INFORMATION
     The  Company's   primary  business  is  the  ownership  and  management  of
     R&D/office  real  estate  with a  geographic  concentration  in the Silicon
     Valley  of the  San  Francisco  Bay  Area.  Accordingly,  the  Company  has
     concluded it  currently  has a single  reportable  segment for SFAS No. 131
     purposes.

2.   BASIS OF PRESENTATION

     PRINCIPLES OF CONSOLIDATION AND FINANCIAL STATEMENT PRESENTATION
     The accompanying  consolidated financial statements include the accounts of
     Mission West Properties,  Inc. and its controlled  subsidiaries,  including
     the operating partnerships. All significant intercompany balances have been
     eliminated in consolidation.  The consolidated  financial  statements as of
     and for the three and nine  months  ended  September  30, 2004 and 2003 and
     related footnote  disclosures are unaudited.  In the opinion of management,
     such  financial  statements  reflect all  adjustments  necessary for a fair
     presentation of the results of the interim  periods.  All such  adjustments
     are of a normal recurring nature.

     MINORITY INTERESTS
     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,  2004.
     Minority  interest in net income is  calculated by taking the net income of
     the  operating  partnerships  (on a  stand-alone  basis)  multiplied by the
     respective minority interest ownership percentage.

     RECLASSIFICATIONS
     Certain  reclassifications  have been made to the previously  reported 2003
     statements in order to conform to the 2004 presentation.


                                     - 5 -
<PAGE>


     ACCOUNTING FOR STOCK-BASED COMPENSATION
     SFAS No. 123, "Accounting for Stock-Based  Compensation,"  encourages,  but
     does not require  companies  to record  compensation  cost for  stock-based
     employee  compensation  plans at fair  value.  The  Company  has  chosen to
     continue to account for stock-based  compensation using the intrinsic value
     method  prescribed in Accounting  Principles  Board Opinion ("APB") No. 25,
     "Accounting  for Stock Issued to  Employees"  and related  interpretations.
     Accordingly, compensation cost for stock options is measured as the excess,
     if any, of the quoted  market price of the  Company's  stock at the date of
     the grant over the amount an employee must pay to acquire the stock.

     The  following  table   illustrates  the  unaudited  pro  forma  effect  on
     consolidated net income  available to common  shareholders and consolidated
     earnings  per  share if the fair  value  method  had  been  applied  to all
     outstanding  and unvested stock options for the three and nine months ended
     September 30, 2004 and 2003.

<TABLE>
<CAPTION>
                                                             Three Months Ended September      Nine Months Ended September 30,
                                                                          30,
                                                                 2004             2003              2004             2003
                                                                             (As Restated)                      (As Restated)
                                                            ---------------  ---------------   ---------------  ---------------
                                                                         (dollars in thousands, except per share data)
<S>                                                           <C>              <C>               <C>              <C>
           Historical net income to common stockholders        $3,173           $3,893            $10,491          $11,993
           Deduct compensation expense for stock options
              determined under fair value based method            (44)             (59)              (132)            (176)
           Allocation of expense to minority interest              36               49                109              146
                                                            ---------------  ---------------   ---------------  ---------------
           Pro forma net income to common stockholders         $3,165           $3,883            $10,468          $11,963
                                                            ===============  ===============   ===============  ===============

           Earnings per share - basic:
           Historical net income to common stockholders          $0.18            $0.22              $0.58            $0.68
           Pro forma net income to common stockholders           $0.18            $0.22              $0.58            $0.68
           Earnings per share - diluted:
           Historical net income to common stockholders          $0.18            $0.22              $0.58            $0.68
           Pro forma net income to common stockholders           $0.17            $0.22              $0.58            $0.68
</TABLE>

     No stock options were granted during the first nine months of 2004.

3.   STOCK TRANSACTIONS

     During the nine months ended September 30, 2004,  stock options to purchase
     20,000  shares of common  stock were  exercised  at $8.25 per share.  Total
     proceeds to the  Company  were  approximately  $165.  In 2004,  two limited
     partners  exchanged  104,500 O.P. units for 104,500 shares of the Company's
     common stock under the terms of the December 1998 Exchange Rights Agreement
     among the Company and all limited  partners of the operating  partnerships.
     In 2004,  Carl E. Berg gave 58,000 O.P.  units to  charitable  institutions
     that  exchanged  them for  58,000  shares  of the  Company's  common  stock
     pursuant to the December 1998 Exchange Rights Agreement.

4.   NET INCOME PER SHARE

     Basic  operating net income per share is computed by dividing net income by
     the weighted  average number of common shares  outstanding  for the period.
     Diluted  operating  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 using the
     treasury stock method.

     The computation for weighted average shares is detailed below:

<TABLE>
<CAPTION>
                                                          Three Months Ended September 30,      Nine Months Ended September 30,
                                                               2004              2003               2004               2003
                                                         ---------------    --------------     --------------    ---------------
<S>                                                       <C>                <C>                 <C>               <C>
         Weighted average shares outstanding (basic)       18,071,484         17,747,293          18,019,277        17,695,920
         Incremental shares from assumed option exercise       26,690             70,624              58,577            61,541
                                                         ---------------    --------------     --------------    ---------------
         Weighted average shares outstanding (diluted)     18,098,174         17,817,917          18,077,854        17,757,461
                                                         ===============    ==============     ==============    ===============
</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  calculation  after adding
     the  minority  interests'  share of income  back to net  income.  The total
     number  of O.P.  units  outstanding  at  September  30,  2004  and 2003 was
     86,404,695 and 86,498,064, respectively.

                                     - 6 -
<PAGE>


5.   RELATED PARTY TRANSACTIONS

     As of September 30, 2004, the Berg Group owned  77,577,528 O.P. units.  The
     Berg Group's  ownership as of September 30, 2004 represented  approximately
     74% of the equity  interests,  assuming  conversion of the 86,404,695  O.P.
     units outstanding into the Company's common stock.

     The Berg Group  $20,000 line of credit bears  interest at LIBOR plus 1.30%,
     which was 3.47% as of September  30, 2004,  and matures in March 2005.  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,
     2004, debt in the amount of $1,105 was due the Berg Group under the line of
     credit,  and debt in the amount of $10,508  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
     June 2010 with principal payments amortized over 20 years. Interest expense
     incurred in connection with the Berg Group line of credit and mortgage note
     was $256 and $280 for the three months ended  September  30, 2004 and 2003,
     respectively,  and $760 and $830 for the nine months  ended  September  30,
     2004 and 2003, respectively.

     During the first  nine  months of 2004 and 2003,  Carl E. Berg or  entities
     controlled by Mr. Berg held financial  interests in several  companies that
     lease space from the operating partnerships,  which include three companies
     where Mr. Berg has a greater than 10%  ownership  interest.  These  related
     tenants occupy  approximately  48,000 square feet and contributed  $217 and
     $229 in rental revenue during the three months ended September 30, 2004 and
     2003,  respectively,  and $650 and $687 in rental  revenue during the first
     nine months of 2004 and 2003,  respectively.  Under the Company's  charter,
     bylaws and agreements  with the Berg Group,  the individual  members of the
     Berg Group are  prohibited  from acquiring  shares of the Company's  common
     stock  if such  acquisition  would  result  in their  beneficial  ownership
     percentage of the Company's common stock causing the Company to violate any
     REIT qualification requirement.

     The Berg Group has an approximately  $2,500  commitment to complete certain
     tenant  improvements in connection  with the Company's 2002  acquisition of
     5345 Hellyer Avenue in San Jose.  The Company  recorded this portion of its
     purchase  consideration  paid to the Berg  Group  as an Other  Asset on its
     Consolidated   Balance  Sheets.  The  Berg  Group  plans  to  satisfy  this
     commitment to complete  certain tenant  improvements  when requested by the
     Company  following the approval of the Independent  Directors  Committee of
     the Company's board of directors (the "Independent Directors Committee").

     The Berg  Group has an  approximately  $7,500  commitment  to  complete  an
     approximately  75,000 to 90,000 square foot building in connection with the
     Company's 2001  acquisition of 245 Caspian in Sunnyvale  which is comprised
     of approximately  three acres of unimproved land. The Company recorded this
     portion of its  purchase  consideration  paid to the Berg Group as an Other
     Asset on its Consolidated  Balance Sheets.  The Berg Group plans to satisfy
     this  commitment  to  construct a building  when  requested  by the Company
     following the approval of the Independent Directors Committee.

     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 for
     each of the  three-month  periods ended September 30, 2004 and 2003 and $68
     for each of the nine-month periods ended September 30, 2004 and 2003.

     In January 2003, the Company  acquired a 50% interest in an  unconsolidated
     joint  venture  from the Berg  Group  under the Berg Land  Holdings  Option
     Agreement  for $1,800.  The Company  financed this  acquisition  by issuing
     181,032 O.P. units to various members of the Berg Group. In April 2003, the
     Company, through the joint venture, acquired a property from the Berg Group
     under the Berg Land Holdings  Agreement  and sold it to an unrelated  third
     party.  The  Company  received a net  distribution  and  recorded a gain of
     $1,400 from the sale.

6.   COMMITMENTS AND CONTINGENCIES

     Neither the  operating  partnerships,  the  properties  nor the Company are
     subject to any material litigation nor, to the Company's knowledge,  is any
     material  litigation  threatened  against the operating  partnerships,  the
     properties  or the  Company.  From time to time,  the Company is engaged in
     legal proceedings  arising in the ordinary course of business.  The Company
     does not expect any of such  proceedings to have a material  adverse effect
     on its cash  flows,  financial  condition  or  results of  operations.  The
     Company is currently  involved in or has recently  concluded  the following
     legal  proceedings,  which it believes  the  ultimate  outcome will have no
     material adverse effect on its consolidated financial statements.

     Republic Properties  Corporation  ("RPC") v. Mission West Properties,  L.P.
     ("MWP"),  in the Circuit  Court of  Maryland  for  Baltimore  City Case No.
     24-C-00-005675.  RPC is a former partner with Mission West Properties, L.P.
     in the Hellyer Avenue Limited  Partnership  ("Hellyer  LP"). In April 2004,
     the Circuit Court for Baltimore City,  Maryland issued a Memorandum Opinion
     in  the  case  and  awarded  damages  of  approximately  $934  to  the  RPC
     plaintiffs,  which must be paid by the Company or MWP. The court denied all
     requests by MWP,  including a  declaration  that all of RPC's  interests in
     Heller L.P.  were validly  converted to limited  partnership  interests and
     transferred  to MWP or its  designee  in  accordance  with the terms of the
     Hellyer L.P. partnership agreement. The court also denied RPC's request for
     an injunction ordering the reinstatement of RPC's partnership  interests in
     Hellyer L.P. The Company has appealed the decision to the Maryland  Appeals
     Court. Under the pre-appeal hearing procedures,  the Maryland Appeals Court
     requires a  mediation  hearing  before the  parties  can appear  before the
     Appeals Court. No date has been set for such a

                                     - 7 -
<PAGE>

     hearing.  The Company does not believe that any further court  decisions in
     this case,  for or against it and MWP, will have a material  adverse effect
     on its business.  The Company has a receivable  from a Berg Group affiliate
     for the amount of  distributions  it  received  as the  successor  to RPC's
     interest in the Hellyer LP which exceeds the amount of the damages  awarded
     to the RPC parties and would be used to pay for those  damages in the event
     the decision of the Circuit Court is upheld  ultimately.  Furthermore,  the
     Company has never accounted for the 50% interest of RPC as its asset and if
     RPC is deemed to have retained that interest or reacquires  that  interest,
     the Company's balance sheet and financial  condition would not be impacted.
     In February 2001, the Company filed a suit against RPC in Superior Court of
     the State of  California  for the County of Santa  Clara Case No. CV 796249
     which has been stayed  pending  resolution  of the Maryland  case.  In July
     2004,  RPC attached the Company's  bank account for  approximately  $1,100.
     Following a July 2004 hearing in Superior  Court of the State of California
     for the County of Santa Clara,  the Company  posted a $1,551 bond in August
     2004 and RPC removed the  attachment  on the  Company's  bank account until
     final resolution of the appeal in Maryland.

     In January 2004, the Global Crossing Estate Representative,  for Itself and
     the Liquidating Trustee of the Global Crossing Liquidating Trust v. Mission
     West Properties filed an action in United States  Bankruptcy Court Southern
     District of New York Case No.  02-40188  (REG)  asserting  that payments of
     approximately  $815 made in the ordinary  course of business within 90 days
     of the Global  Crossing  bankruptcy  filing were preference  payments.  The
     Company has engaged legal counsel to defend itself in this claim and intend
     to vigorously contest the matter.

     In December 2003, Craig R. Jalbert  Liquidating CEO, as  representative  of
     the  Estate  of the  Consolidated  Debtors  for ACT  Manufacturing,  Inc v.
     Mission West Properties,  L.P. filed an action in United States  Bankruptcy
     Court District of  Massachusetts  Case No.  01-47641  (JBR)  asserting that
     payments  of  approximately  $482 made in the  ordinary  course of business
     within 90 days of the ACT bankruptcy filing were preference  payments.  The
     Company has engaged legal counsel to defend itself in this claim and intend
     to vigorously contest the matter.

     GUARANTEES
     Under its certificate of incorporation  and bylaws,  the Company has agreed
     to indemnify its officers and directors for certain  events or  occurrences
     arising as a result of the officer or director's  serving in such capacity.
     The  maximum  potential  amount of future  payments  the  Company  could be
     required to make under these indemnification  agreements is unlimited.  The
     Company  believes  the  estimated  fair  value  of  these   indemnification
     agreements is minimal and has no liabilities  recorded for these agreements
     as of September 30, 2004.

     The  Company  also  enters into  indemnification  provisions  under (i) its
     agreements  with  other  companies  in its  ordinary  course  of  business,
     typically with lenders, joint venture partners,  contractors,  and tenants.
     Under these provisions the Company generally indemnifies and holds harmless
     the  indemnified  party for losses  suffered or incurred by the indemnified
     party  as a  result  of the  Company's  activities.  These  indemnification
     provisions generally survive termination of the underlying  agreement.  The
     maximum  potential  amount of future payments the Company could be required
     to make under these  indemnification  provisions is unlimited.  The Company
     has not incurred material costs to defend lawsuits or settle claims related
     to these indemnification  agreements. As a result, the Company believes the
     estimated  fair value of these  agreements  is  minimal.  Accordingly,  the
     Company has no  liabilities  recorded for these  agreements as of September
     30, 2004.

     SEISMIC ACTIVITY
     The Company's  properties  are located in an active seismic area of Silicon
     Valley. Insurance policies currently maintained by the Company do not cover
     seismic  activity,  although  they do  cover  losses  from  fires  after an
     earthquake.

     ENVIRONMENTAL ISSUES
     The environmental  investigations that have been conducted on the Company's
     properties have not revealed any  environmental  liability that it believes
     would have a material adverse effect on its financial condition, results of
     operations  and  assets,  and  it is  not  aware  of  any  such  liability.
     Nonetheless,   it  is  possible  that  there  are  material   environmental
     liabilities of which the Company is unaware. The Company cannot assure that
     future  laws,  ordinances,  or  regulations  will not impose  any  material
     environmental liability, or that the current environmental condition of the
     properties has not been, or will not be,  affected by tenants and occupants
     of the  properties,  by the  condition of properties in the vicinity of the
     properties, or by third parties unrelated to the Company.

7.   RESTATEMENTS

     The Company has restated its previously reported quarterly  information for
     the  three  and  nine  months  ended   September  30,  2003.  The  restated
     consolidated  financial  statements were reported and are further discussed
     in the Company's  2003 Form 10-K filed on July 30, 2004. The items that the
     Company restated for are as follows:

     -    The  Company  recorded  additional  amortization  expense  relating to
          certain leasing  commissions,  which were  originally  being amortized
          over a 40-year period.  The additional  amortization  expense resulted
          from changing the amortization  period of commissions from 40 years to
          the term of the lease and the write-off of certain unamortized leasing
          commissions in connection with tenant bankruptcies.

                                     - 8 -
<PAGE>

     -    The Company corrected the purchase  accounting  originally  applied to
          its 2002 acquisition of the  Orchard-Trimble  property.  In accordance
          with  Statement  of  Financial  Accounting  Standards  (SFAS) No. 141,
          Business  Combinations,  which  became  effective  July 1,  2001,  the
          Company  allocated a portion of the purchase  price to in-place  lease
          intangible assets and recorded  additional  amortization  expense from
          changing the amortization  period of these  intangible  assets from 40
          years to the term of the lease.
     -    The Company recorded additional  depreciation  expense relating to the
          reclassification   of  certain  real  estate  assets  from  a  40-year
          depreciable life to a 7- and 25-year depreciable life.
     -    The Company  reclassified the  amortization of the above-market  lease
          intangible  asset  relating to the 2003  acquisition of the San Thomas
          Technology  Park  from  amortization  expense  to an  offset to rental
          revenue from real estate.

     The  aggregate  net  impact  of all  restatement  items  on  the  Company's
     Consolidated  Statements of Operations  for the three and nine months ended
     September  30,  2003  resulted  in a  decrease  in  net  income  to  common
     stockholders  compared  to  previously  reported  amounts of $50 ($0.00 per
     diluted  share)  and $139  ($0.01 per  diluted  share),  respectively.  The
     effects of the  restatement  items  described  above on the  Company's  net
     income to common stockholders for the three and nine months ended September
     30, 2003 are as follows:

<TABLE>
<CAPTION>

                                                                Three Months Ended   Nine Months Ended
                                                                September 30, 2003   September 30, 2003
                                                               ----------------------------------------
                                                                        (dollars in thousands)
<S>                                                                 <C>                 <C>
     Net income to common stockholders, as previously                $3,943              $12,132
     reported
     Impact of adjustments for:
          Leasing commission amortization                              (128)                (384)
          Intangible asset amortization                                (137)                (410)
          Depreciation of real estate assets                            (35)                 (49)
                                                               -------------------- -------------------
     Total adjustments                                                 (300)                (843)
                                                               -------------------- -------------------

     Minority interest portion of adjustments                           250                  704
                                                               -------------------- -------------------
     Net income to common stockholders, as restated                  $3,893              $11,993
                                                               ==================== ===================
</TABLE>

8.   SUBSEQUENT EVENTS

     On October 7, 2004, the Company paid dividends of $0.24 per share of common
     stock to all common stockholders of record as of September 30, 2004. On the
     same date, the operating partnerships paid a distribution of $0.24 per O.P.
     unit to all holders of O.P. units.

     On October 14, 2004, the Company concluded the renewal and extension of its
     $80,000  mortgage term loan with Citicorp USA, Inc. (the  "Citicorp  Loan")
     for an  additional  two years until  September 6, 2006.  The Citicorp  Loan
     requires monthly principal payments of $215 and carries a variable interest
     rate of LIBOR plus 2%. The loan fee and costs  incurred in connection  with
     the mortgage  loan  extension  amounted to  approximately  $142 and will be
     amortized  over the two-year  term of the loan using the  interest  method.
     Under the previous loan terms Carl E. Berg had  personally  guaranteed  the
     Company's  repayment  obligations  and provided a personal  guaranty of the
     Company's   obligation  to  indemnify  the  lender  for  certain  potential
     environmental  liabilities  with respect to the pledged  properties.  Those
     guaranties were provided in conjunction with Citicorp's  short-term loan of
     $80,000 for the Company's  acquisition of the San Tomas Technology Park and
     were  released by Citicorp as part of the loan renewal and  extension.  The
     loan is secured by seven properties owned by the Company. The Citicorp Loan
     terms  require  the  Company to  maintain a minimum  excess of assets  over
     liabilities of $400,000.

     On October 14, 2004,  in  connection  with the  Company's  extension of the
     Citicorp Loan, the Company  retired an 8.75% mortgage loan from  Prudential
     Capital Group with $548 of outstanding principal,  which was collateralized
     by one property  located at 20400 Mariani Avenue in Cupertino,  California.
     This property has been added as additional security for the Citicorp Loan.

                                     - 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 our  consolidated
financial  statements  and notes thereto  contained in our Annual Report on Form
10-K as of and for the year ended  December 31, 2003.  The results for the three
and nine months ended September 30, 2004 are not  necessarily  indicative of the
results to be expected for the entire fiscal year ending  December 31, 2004. The
following  discussion  includes  forward-looking  statements,  including but not
limited  to,  statements  with  respect  to our  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 under the sub-heading, "Forward-Looking Information."

FORWARD-LOOKING INFORMATION

This quarterly report contains forward-looking  statements within the meaning of
the federal  securities  laws. We intend 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.  Additionally,  all  disclosures  under  Part  I,  Item  3
constitute  forward-looking  statements.  Our ability to predict  results or the
actual effect of future plans or strategies is inherently uncertain.

Factors that could have a material  adverse  effect on our operations and future
prospects include, but are not limited to, the following:

     -    economic conditions generally and the real estate market specifically,
     -    legislative  or  regulatory  provisions  (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 our
          current and proposed market areas,
     -    tenant defaults and bankruptcies,
     -    lease term expirations and renewals, and
     -    general accounting  principles,  policies and guidelines applicable to
          REITs.

In addition, the actual timing of development,  construction, and leasing on any
projects  that we  believe  we may  acquire  in the  future  under the Berg Land
Holdings  Option  Agreement is  presently  unknown,  and reliance  should not be
placed  on  the   estimates   concerning   these   projects.   These  risks  and
uncertainties,  together with the other risks described from time to time in our
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.

OVERVIEW

We acquire,  market, lease, and manage R&D/office properties,  primarily located
in the Silicon Valley portion of the San Francisco Bay Area. As of September 30,
2004, we owned and managed 109  properties  totaling  approximately  7.9 million
rentable   square  feet  through  four   limited   partnerships,   or  operating
partnerships,  for which we are 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. We believe
that we have one of the  largest  portfolios  of  R&D/office  properties  in the
Silicon  Valley.  As of September  30, 2004,  the six tenants who each leased in
excess of  300,000  rentable  square  feet from us were  Microsoft  Corporation,
Fujitsu America (a subsidiary of Fujitsu Limited), JDS Uniphase Corporation, NEC
Electronics America, Inc. (a subsidiary of NEC Electronics  Corporation),  Ciena
Corporation  and Apple Computer,  Inc. For federal income tax purposes,  we have
operated as a self-managed,  self-administered  and fully integrated real estate
investment trust ("REIT") since fiscal 1999.

Our  acquisition,  growth and  operating  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/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/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

                                     - 10 -
<PAGE>
     -    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.

CURRENT ECONOMIC ENVIRONMENT

All of our  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 since 2001 after fast-paced growth in 1999 and 2000. The Silicon Valley
R&D  property  market  has  historically  fluctuated  with  the  local  economy.
According to a recent  report by BT  Commercial  Real Estate,  vacancy rates for
Silicon Valley R&D property was approximately  22.5% in late 2003 and at the end
of the third quarter 2004.  Total vacant R&D square footage in Silicon Valley at
the end of the third  quarter of 2004  amounted to 34.8 million  square feet, of
which 26.7%,  or 9.3 million  square feet,  was being offered  under  subleases.
Total negative net absorption  (which is the computation of gross square footage
leased less gross new square footage  vacated for the period  presented) in 2003
amounted to  approximately  (3.0)  million  square  feet.  During the first nine
months of 2004, there was total negative net absorption of  approximately  (0.7)
million  square feet.  Average asking market rent per square foot have decreased
from  $1.00  in late  2003 to  $0.91 at the end of the  third  quarter  of 2004,
although individual  properties within any particular submarket presently may be
leased above or below the current average asking market rental rates within that
submarket.  The  impact  of the  rental  market  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 by submarket and location within each submarket.

Our  physical  occupancy  rate  at  September  30,  2004  was  69%,  which  is a
significant  decline from the occupancy  rate of 78.3% at September 30, 2003. We
believe that our physical  occupancy rate could decline further going forward if
key tenants seek the protection of bankruptcy  laws,  consolidate  operations or
discontinue  operations.  In  addition,  leases  with  respect to  approximately
140,000  rentable  square  feet  are  expiring  prior  to the end of  2004.  The
properties  subject to these  leases may take  anywhere  from 12 to 18 months or
longer to re-lease.  We believe  that the average 2004 renewal  rental rates for
our properties will be approximately equal to, or perhaps,  below current market
rents,  but we cannot  give any  assurance  that  leases will be renewed or that
available  space will be re-leased at rental rates equal to or above the current
quoted  market  rates.  If we are unable to lease a  significant  portion of any
vacant space or space subject to expiring leases;  if we experience  significant
tenant defaults as a result of the current economic downturn; if we are not able
to lease space at or above current market rates;  or if we restructure  existing
leases and lower existing rents in order to retain tenants for an extended term,
our  results  of  operations   and  cash  flows  will  be  adversely   affected.
Furthermore,  in this  event it is  probable  that our board of  directors  will
reduce the  quarterly  dividend  on the common  stock and the  outstanding  O.P.
units.  Our  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"  above and in the section entitled "Risk Factors"
in our most recent annual report on Form 10-K.

IMPACT OF RESTATEMENTS

We have restated our previously reported quarterly information for the three and
nine months ended  September  30,  2003.  The  restated  consolidated  financial
statements  were reported and are further  discussed in our 2003 Form 10-K filed
on July 30, 2004. The items that we restated for are as follows:

     -    We  recorded  additional  amortization  expense  relating  to  certain
          leasing  commissions,  which were  originally  being  amortized over a
          40-year  period.  The additional  amortization  expense  resulted from
          changing the  amortization  period of commissions from 40 years to the
          term of the lease and the  write-off  of certain  unamortized  leasing
          commissions in connection with tenant bankruptcies.
     -    We corrected the purchase  accounting  originally  applied to our 2002
          acquisition  of  the  Orchard-Trimble  property.  In  accordance  with
          Statement of Financial  Accounting  Standards (SFAS) No. 141, Business
          Combinations,  which  became  effective  July 1, 2001,  we allocated a
          portion of the purchase price to in-place lease intangible  assets and
          recorded   additional   amortization   expense   from   changing   the
          amortization  period of these  intangible  assets from 40 years to the
          term of the lease.
     -    We  recorded   additional   depreciation   expense   relating  to  the
          reclassification   of  certain  real  estate  assets  from  a  40-year
          depreciable life to a 7- and 25-year depreciable life.
     -    We reclassified the amortization of the above-market  lease intangible
          asset relating to the 2003  acquisition  of the San Thomas  Technology
          Park from  amortization  expense to an offset to rental  revenue  from
          real estate.

The aggregate net impact of all restatement items on our Consolidated Statements
of Operations for the three and nine months ended September 30, 2003 resulted in
a decrease in net income to common stockholders  compared to previously reported
amounts of $50,000  ($0.00 per diluted  share) and  $139,000  ($0.01 per diluted
share), respectively.

                                     - 11 -

<PAGE>

The effects of the restatement items described above on our net income to common
stockholders  for the three and nine  months  ended  September  30,  2003 are as
follows:

<TABLE>
<CAPTION>
                                                                Three Months Ended   Nine Months Ended
                                                                September 30, 2003   September 30, 2003
                                                               ----------------------------------------
                                                                        (dollars in thousands)
<S>                                                                 <C>                 <C>
Net income to common stockholders, as previously reported            $3,943              $12,132
Impact of adjustments for:
     Leasing commission amortization                                   (128)                (384)
     Intangible asset amortization                                     (137)                (410)
     Depreciation of real estate assets                                 (35)                 (49)
                                                               -------------------- -------------------
Total adjustments                                                      (300)                (843)
                                                               -------------------- -------------------
Minority interest portion of adjustments                                250                  704
                                                               -------------------- -------------------
Net income to common stockholders, as restated                       $3,893              $11,993
                                                               ==================== ===================
</TABLE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We prepare the consolidated  financial  statements in conformity with accounting
principles  generally  accepted in the United States of America ("GAAP"),  which
requires us to make certain estimates, judgments and assumptions that affect the
reported  amounts  in  the  accompanying   consolidated   financial  statements,
disclosure  of  contingent   assets  and  liabilities  and  related   footnotes.
Accounting and disclosure  decisions with respect to material  transactions that
are subject to significant  management judgments or estimates include impairment
of long lived assets,  deferred rent reserves,  and allocation of purchase price
relating to property  acquisitions and the related  depreciable  lives assigned.
Actual results may differ from these estimates  under  different  assumptions or
conditions.

Critical  accounting  policies are defined as those that require  management  to
make  estimates,   judgments  and  assumptions,   giving  due  consideration  to
materiality,  in certain  circumstances  that  affect  amounts  reported  in the
consolidated   financial  statements,   and  potentially  result  in  materially
different  results under different  conditions and assumptions.  We believe that
the following best describe our critical accounting policies:

BUSINESS  COMBINATIONS.  Statement of  financial  Accounting  Standards  No. 141
("SFAS No.  141"),  Business  Combinations,  was  effective  July 1,  2001.  The
acquisition costs of each property acquired prior to July 1, 2001were  allocated
only to building,  land and leasing commissions with building depreciation being
computed  based on an estimated  weighted  average  composite  useful life of 40
years and leasing  commissions  amortization being computed over the term of the
lease.  Acquisitions of properties made subsequent to the effective date of SFAS
No. 141 are based on an allocation of the  acquisition  cost to land,  building,
tenant  improvements,  and  intangibles  for at market and above market in place
leases,  and the determination of their useful lives are guided by a combination
of SFAS No. 141 and management's  estimates. If we do not appropriately allocate
these  components  or  we  incorrectly   estimate  the  useful  lives  of  these
components,  our computation of depreciation  and  amortization  expense may not
appropriately  reflect the actual  impact of these  costs over  future  periods,
which will affect net income.

IMPAIRMENT OF  LONG-LIVED  ASSETS.  We review real estate assets for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be  recoverable  in  accordance  with  Statement  of  Financial
Accounting Standards No. 144 ("SFAS No. 144"), Accounting for the Impairment and
Disposal of Long-Lived  Assets.  If the carrying amount of the asset exceeds its
estimated  undiscounted  net cash flow,  before  interest,  we will recognize an
impairment  loss equal to the  difference  between its  carrying  amount and its
estimated fair value. If impairment is recognized,  the reduced  carrying amount
of the asset will be accounted for as its new cost. For a depreciable asset, the
new cost will be depreciated over the asset's remaining useful life.  Generally,
fair values are estimated using discounted cash flow, replacement cost or market
comparison analyses. The process of evaluating for impairment requires estimates
as to future events and conditions, which are subject to varying market factors,
such as the vacancy  rates,  future  rental  rates and  operating  costs for R&D
facilities in the Silicon Valley area and related submarkets.  Therefore,  it is
reasonably  possible that a change in estimate  resulting  from  judgments as to
future  events  could  occur  which  would  affect the  recorded  amounts of the
property. To date we have not recognized an impairment of any long-lived assets.

ALLOWANCE  FOR DOUBTFUL  ACCOUNTS  AND DEFERRED  RENT.  The  preparation  of the
consolidated financial statements requires us to make estimates and assumptions.
As  such,  we  must  make  estimates  of the  uncollectibility  of our  accounts
receivable based on the evaluation of our tenants' financial position,  analyses
of accounts  receivable and current economic trends.  We also make estimates for
reserves  against our deferred  rent  receivable  for existing  tenants with the
potential of early termination,  bankruptcy or ceasing operations.  We charge or
credit rental  income for increases or decreases to our deferred rent  reserves.
Our estimates are based on our review of tenants'  payment  histories,  publicly
available  financial  information  and such additional  information  about their
financial  condition as tenants provide to us. The  information  available to us
might lead us to overstate  or  understate  these  reserve  amounts.  The use of
different  estimates or assumptions could produce different  results.  Moreover,
actual  future  collections  of  accounts  receivable  or  reductions  in future
reported  rental income due to tenant  bankruptcies  or other business  failures
could differ materially from our estimates.

                                     - 12 -
<PAGE>

CONSOLIDATED  JOINT VENTURES.  We, through an operating  partnership,  own three
properties that are in joint ventures of which we have controlling interests. We
manage and operate all three properties. The recognition of these properties and
their  operating  results  are  100%  reflected  on our  consolidated  financial
statements,  with appropriate  allocation to minority interest,  because we have
operational  and financial  control of the  investments.  We make  judgments and
assumptions  about the estimated  monthly payments made to our minority interest
joint  venture  partners,  which  are  reported  with our  periodic  results  of
operations.  Actual  results may differ  from these  estimates  under  different
assumptions or conditions.

INVESTMENT  IN   UNCONSOLIDATED   JOINT   VENTURE.   We,  through  an  operating
partnership,  have a 50%  non-controlling  limited  partnership  interest in one
unconsolidated joint venture. This investment is not consolidated because the we
do  not  exercise   significant  control  over  major  operating  and  financial
decisions.  We  account  for the  joint  venture  using  the  equity  method  of
accounting.

FAIR VALUE OF FINANCIAL INSTRUMENTS.  Our financial instruments include cash and
cash equivalents,  accounts receivable, accounts payable, and debt. Considerable
judgment is required in  interpreting  market data to develop  estimates of fair
value. Our estimates of fair value are not necessarily indicative of the amounts
that we could realize in a current market exchange.  The use of different market
assumptions  and/or  estimation  methodologies may have a material effect on the
estimated fair value amounts.  Cash and cash equivalents,  accounts  receivable,
and accounts payable are carried at amounts that  approximate  their fair values
due to their  short-term  maturities.  The carrying amounts of our variable rate
debt  approximate  fair value since the interest rates on these  instruments are
equivalent  to rates  currently  offered to us. For fixed rate debt, we estimate
fair value by using  discounted  cash flow analyses based on borrowing rates for
similar kinds of borrowing  arrangements.  The fair value of our fixed rate debt
at September 30, 2004 was approximately $234 million.

REVENUE RECOGNITION. Rental revenue is recognized on the straight-line method of
accounting  required by GAAP under which  contractual rent payment increases are
recognized evenly over the lease term,  regardless of when the rent payments are
received by us. The difference  between recognized rental income and rental cash
receipts is recorded as Deferred  Rent  Receivable on the  consolidated  balance
sheets.

Certain lease  agreements  contain terms that provide for additional rents based
on reimbursement  of certain costs.  These additional rents are reflected on the
accrual basis.

Rental revenue is affected if existing tenants  terminate or amend their leases.
We try to  identify  tenants  who may be likely to declare  bankruptcy  or cease
operations.  By anticipating these events in advance, we expect to take steps to
minimize  their  impact on our  reported  results of  operations  through  lease
renegotiations,  reserves against deferred rent, and other appropriate measures.
Our judgments and estimations  about tenants' capacity to continue to meet their
lease   obligations  will  affect  the  rental  revenue   recognized.   Material
differences  may result in the amount and timing of our rental  revenue  for any
period if we made different judgments or estimations.

Lease  termination  fees are  included in other  income.  These fees are paid by
tenants  who want to  terminate  their lease  obligations  before the end of the
contractual term of the lease.  There is no way of predicting or forecasting the
timing or amounts of future lease termination fees.

We recognize income from rent, tenant  reimbursements and lease termination fees
and other income once all of the following  criteria are met in accordance  with
SEC Staff Accounting Bulletin 104:

     -    the agreement has been fully executed and delivered;
     -    services have been rendered;
     -    the amount is fixed and determinable; and
     -    collectibility is reasonably assured.

                                     - 13 -
<PAGE>

RESULTS OF OPERATIONS

COMPARISON  OF THE THREE AND NINE MONTHS ENDED  SEPTEMBER  30, 2004 TO THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2003

As of September  30, 2004,  through our  controlling  interests in the operating
partnerships,  we  owned  109  properties  totaling  approximately  7.9  million
rentable  square feet  compared to 108  properties  totaling  approximately  7.8
million  rentable  square  feet  owned  by us as of  September  30,  2003.  This
represents a net increase of  approximately 1% in total rentable square footage,
which is  primarily  attributable  to our  acquisition  in December  2003 of one
property located in San Jose,  California  consisting of  approximately  129,000
rentable square feet from the Berg Group.

Rental  revenue from real estate for the three and nine months  ended  September
30, 2004 compared to the three- and nine-month periods in 2003 are as follows:

<TABLE>
<CAPTION>
                            Three Months Ended September 30,
                                                                                      % Change by         % of Total Net
                                2004               2003             $ Change         Property Group           Change
                            --------------     --------------     --------------     ---------------     -----------------
                                          (dollars in thousands)

<S>                           <C>                <C>              <C>                  <C>                  <C>
   Same Property (1)           $26,662            $30,537          ($3,875)             (12.7%)              (11.6%)
   2003 Acquisitions (2)         2,918              2,773               145                5.2%                 0.4%
                            --------------     --------------     --------------                         -----------------
                               $29,580            $33,310          ($3,730)             (11.2%)              (11.2%)
                            ==============     ==============     ==============                         =================


                            Nine Months Ended September 30,
                                                                                      % Change by         % of Total Net
                                2004               2003             $ Change         Property Group           Change
                            --------------     --------------     --------------     ---------------     -----------------
                                          (dollars in thousands)

   Same Property (1)           $82,303            $92,227          ($9,924)             (10.8%)              (10.2%)
   2003 Acquisitions (2)         8,754              5,237             3,517               67.2%                 3.6%
                            --------------     --------------     --------------                         -----------------
                               $91,057            $97,464          ($6,407)              (6.6%)               (6.6%)
                            ==============     ==============     ==============                         =================
</TABLE>


(1)  "Same Property" is defined as properties  owned by us prior to 2003 that we
     still owned as of September 30, 2004.
(2)  Operating rental revenue for 2003  Acquisitions  does not reflect a full 12
     months of  operations  in 2003 because  these  properties  were acquired at
     various times during 2003. The 2003 acquisition amount for the three months
     ended September 30, 2004 and 2003 each includes  approximately $0.5 million
     of above market rent  amortization  against rental revenue from real estate
     in connection with the implementation of SFAS No. 141. The 2003 acquisition
     amount for the nine  months  ended  September  30,  2004 and 2003  includes
     approximately $1.4 million and $0.9 million,  respectively, of above market
     rent  amortization  against  rental  revenue from real estate in connection
     with the implementation of SFAS No. 141.

RENTAL REVENUE FROM REAL ESTATE
For the quarter  ended  September  30,  2004,  rental  revenue  from real estate
decreased by approximately  ($3.7) million, or 11.2%, from $33.3 million for the
three months ended  September  30, 2003 to $29.6  million for the same period of
2004.  The net  decrease  resulted  from a decline  of ($3.9)  million in rental
revenue from our "Same Property"  portfolio and an increase of $0.1 million from
properties  acquired in 2003. Rental revenue  decreased by approximately  ($6.4)
million,  or 6.6%,  from $97.5  million for the nine months ended  September 30,
2003 to  $91.1  million  for the same  period  of 2004.  Of the  ($6.4)  million
decrease in rental  revenue,  ($9.9) million  resulted from our "Same  Property"
portfolio,  which was partially  offset by $3.5 million  generated by properties
acquired in 2003. The overall  decline in rental revenue was a result of adverse
market conditions,  lower rental rate on new leases and renewals and the loss of
several tenants due to their  bankruptcy,  relocation or cessation of operations
since September 30, 2003. Our physical  occupancy rate at September 30, 2004 was
approximately 69%, compared to approximately 78% at September 30, 2003.

EQUITY IN EARNINGS FROM UNCONSOLIDATED JOINT VENTURE
As of September 30, 2004, we had  investments  in four R&D  buildings,  totaling
593,000 rentable square feet, through an unconsolidated joint venture,  TBI-MSW,
in which we acquired a 50%  interest  in January  2003 from the Berg Group under
the Berg Land  Holdings  Option  Agreement.  We have a  non-controlling  limited
partnership  interest  in this joint  venture,  which we  account  for using the
equity method of accounting.  For the three months ended  September 30, 2004, we
recorded   equity  in  earnings  from  the   unconsolidated   joint  venture  of
approximately $0.3 million compared to $0.6 million for the same period in 2003.
Our equity in earnings from this  unconsolidated  joint venture  declined in the
third  quarter of 2004 due to a rent  reduction  under a lease with an  existing
tenant For the nine-month  periods ended September 30, 2004 and 2003,  equity in
earnings from the  unconsolidated  joint venture was approximately  $1.6 million
and $3.4 million, respectively. Included in equity in earnings of unconsolidated
joint  venture  for  the   nine-month   period  ended   September  30,  2003  is
approximately  $1.4 million relating to a gain from the sale of real estate. Our
50%  interest in this  property  was acquired by TBI-MSW from the Berg Group and
sold to an  unrelated  party  during  the second  quarter of 2003.  This type of
transaction did not recur in 2004.

                                     - 14 -

<PAGE>


OTHER INCOME
Other income decreased to approximately  $0.4 million for the three months ended
September  30, 2004 from $0.6  million for the second  quarter of 2003.  For the
nine months ended September 30, 2004 and 2003, other income was $5.4 million and
$1.9 million, respectively. Lease termination fees of approximately $2.6 million
and  tenant  bankruptcy   settlement   income  of  approximately   $1.1  million
represented most of the 2004 increase.  We do not consider these transactions to
be recurring items.

EXPENSES
Property  operating  expenses and real estate taxes during the third  quarter of
2004 decreased by approximately  ($0.7) million,  or 12.5%, from $5.6 million to
$4.9  million  for  the  three  months  ended   September  30,  2003  and  2004,
respectively,  due to lower property tax expense  associated  with reductions in
assessed property values on existing  properties and lower occupancy rate on our
properties.  Tenant reimbursements decreased by approximately ($1.0) million, or
20.8%,  from $4.8 million for the three months ended  September 30, 2003 to $3.8
million for the three  months  ended  September  30,  2004.  Property  operating
expenses and real estate taxes decreased by  approximately  ($0.2)  million,  or
1.3%,  from $15.7 million to $15.5  million for the nine months ended  September
30, 2003 and 2004,  respectively,  due to lower  property  tax expense  from the
reductions  in  assessed   property  values  on  existing   properties.   Tenant
reimbursements  decreased by approximately  ($2.6) million, or 18.2%, from $14.3
million for the nine months ended  September  30, 2003 to $11.7  million for the
nine months ended September 30, 2004. The decrease in tenant  reimbursements for
both periods  ended  September  30, 2004 as compared to the same periods in 2003
was due to lower  occupancy  in the current  period.  Certain  expenses  such as
property  insurance,  real  estate  taxes,  and  other  fixed  expenses  are not
recoverable from vacant properties. General and administrative expenses remained
relatively  the same at $0.4 million for the three months  ended  September  30,
2003 and 2004.  For the nine months ended  September 30, 2003 and 2004,  general
and administrative  expenses  increased by approximately  $0.6 million,  or 60%,
from $1.0  million to $1.6  million,  respectively.  The increase in general and
administrative  expenses  for the nine  months  ended  September  30, 2004 was a
result of incurring  additional legal and accounting expenses in connection with
the   resignation  of   PricewaterhouseCoopers   LLP,  our  former   independent
accountants and the need to re-audit consolidated financial statements for years
2001 and 2002 and audit 2003 results.

Depreciation and amortization  expense of real estate decreased by approximately
$0.1  million,  or 1.8%,  from $5.5 million to $5.4 million for the three months
ended  September  30, 2003 and 2004,  respectively,  reflecting  the decrease in
amortization  expense of in-place  leases in  connection  with the  write-off of
certain  remaining  in-place lease intangible asset due to lease  termination in
the second quarter 2004.  Depreciation and  amortization  expense of real estate
increased by  approximately  $1.3 million,  or 8.5%, from $15.3 million to $16.6
million for the nine months  ended  September  30, 2003 and 2004,  respectively,
because of the  depreciation on the newly acquired San Tomas Technology Park and
the   amortization   expense  of  in-place   leases  in   connection   with  the
implementation  of SFAS No. 141. The $5.5 million and the $15.3  million of such
expense for the three and nine months ended  September  30, 2003,  respectively,
include $0.17 million and $0.46  million,  respectively,  that resulted from the
reclassification of assets and the resulting  restatement described in Note 7 of
Notes to Consolidated Financial Statements in Part I, Item 1, above.

Interest  expense  increased by approximately  $0.1 million,  or 2.3%, from $4.3
million for the three  months ended  September  30, 2003 to $4.4 million for the
three months  ended  September  30, 2004.  Interest  expense  (related  parties)
remained  relatively  stable  at  approximately  $0.3  million  for the  current
three-month  period  compared  to the same  period  one  year  ago.  Total  debt
outstanding,  including amounts due related parties,  increased by approximately
$0.7 million,  or 0.2%,  from $332.7  million as of September 30, 2003 to $333.4
million as of September 30, 2004.  Overall interest  expense,  including amounts
paid to related  parties,  for the quarter ended September 30, 2004 increased by
approximately $0.1 million compared to the same quarter a year ago.

Interest expense  increased by approximately  $1.0 million,  or 8.3%, from $12.1
million for the nine months ended  September  30, 2003 to $13.1  million for the
nine months ended September 30, 2004 primarily  because the $80 million mortgage
loan from Citicorp USA, Inc. was  outstanding  for the full nine months in 2004.
Interest expense (related  parties)  decreased by  approximately  ($70,000),  or
8.4%, from $830,000 for the nine months ended September 30, 2003 to $760,000 for
the nine months ended September 30, 2004 due to a lower balance owed on the Berg
Group  line of credit.  Overall  interest  expense,  including  amounts  paid to
related  parties,  for the nine months  ended  September  30, 2004  increased by
approximately  $0.9 million compared to the nine months ended September 30, 2003
principally  because the Citicorp  mortgage loan was  outstanding for the entire
period and we substituted new debt at slightly higher rates for borrowings under
the Berg Group line of credit.

NET INCOME TO COMMON STOCKHOLDERS AND NET INCOME TO MINORITY INTEREST
Minority  interest in net income 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.   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, 2004 and 2003.

Net income to common stockholders  decreased by approximately ($0.7) million, or
17.9%,  from $3.9 million for the three months ended  September 30, 2003 to $3.2
million for the same period in 2004.  The  minority  interest  portion of income
decreased by approximately  ($3.8) million, or 19.7%, from $19.3 million for the
three  months  ended  September  30, 2003 to $15.5  million for the three months
ended September 30, 2004. For the nine months ended September 30, 2004 and 2003,
the minority  interest  portion of income was  approximately  $51.6  million and
$60.1  million,  respectively,  resulting  in  net  income  to  stockholders  of
approximately $10.5 million and $12.0 million,  respectively. The decline in net
income and  minority  interest  portion of income was  primarily  due to reduced
rental revenue,  un-reimbursed  operating  expenses from vacant properties and a
$1.4 million  gain on sale of property by the  unconsolidated  joint  venture in
2003 that did not recur in 2004.

                                     - 15 -
<PAGE>


CHANGES IN FINANCIAL CONDITION

At  September  30,  2004,  total   stockholders'   equity,   net,  decreased  by
approximately  ($0.3)  million from December 31, 2003 as we obtained  additional
capital from stock option exercises and the exchange of O.P. units for shares of
our common stock while incurring a deficit of  approximately  ($2.5) million due
to  dividends  declared in excess of net income for the period.  During the nine
months ended  September  30, 2004,  stock  options to purchase  20,000 shares of
common  stock  were   exercised  at  $8.25  per  share.   Total   proceeds  were
approximately  $0.17 million.  During the first nine months of 2004, two limited
partners exchanged 104,500 O.P. units for 104,500 shares of our common stock and
Carl E. Berg gave 58,000 O.P.  units to charitable  institutions  that exchanged
them for 58,000 shares of our common stock under the Exchange  Rights  Agreement
among us and the  limited  partners  in the  operating  partnerships.  The newly
issued  shares  increased  additional  paid in  capital  by  approximately  $2.2
million.

LIQUIDITY AND CAPITAL RESOURCES

We expect our principal  source of liquidity for  distributions  to stockholders
and O.P. unit holders,  debt service,  leasing commissions and recurring capital
expenditures  to come from cash  provided by  operations  and/or the  borrowings
under the lines of credit with the Berg Group and  Cupertino  National  Bank. We
expect these sources of liquidity to be adequate to meet projected distributions
to stockholders and other presently anticipated liquidity  requirements in 2004.
We  expect to meet our  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 us. We have the ability to meet
short-term  obligations or other  liquidity  needs based on lines of credit with
the Berg Group and Cupertino National Bank, assuming renewal of our existing $40
million  line of credit  which  expires in  November  2004.  Despite the current
weakness in the  economy,  we expect our total  interest  expense to increase as
interest rates rise and as we incur debt through  acquisitions of new properties
and financing activities. In the remainder of 2004, we will be obligated to make
payments totaling  approximately  $28.6 million of debt principal under mortgage
notes without  regard to any debt  refinancing or new debt  obligations  that we
might incur, or optional payments of debt principal.

DISTRIBUTIONS
On October 7, 2004, we paid  dividends of $0.24 per share of common stock to all
common  stockholders  of record as of September 30, 2004. On the same date,  the
operating partnerships paid a distribution of $0.24 per O.P. unit to all holders
of O.P. units.

CONTRACTUAL OBLIGATIONS
The following table  identifies our contractual  obligations as of September 30,
2004 that will impact liquidity and cash flow in future periods:

<TABLE>
<CAPTION>
                                     Three Months
                                      Remaining                  Year Ending December 31,
                                                   -----------------------------------------------------
                                        2004          2005          2006          2007         2008       Thereafter     Total
                                   -------------------------------------------------------------------------------------------------
                                                                       (dollars in thousands)
<S>                                   <C>           <C>          <C>            <C>         <C>           <C>          <C>
  Debt Obligations (1)                 $28,565       $9,662       $82,375        $6,350      $116,674      $89,763      $333,389
  Operating Lease Obligations (2)           23           90            90            23             -            -           226
                                   -------------- ------------ ------------- ------------- ------------- ------------ --------------
  Total                                $28,588       $9,752       $82,465        $6,373      $116,674      $89,763      $333,615
                                   ============== ============ ============= ============= ============= ============ ==============
</TABLE>

(1)  Debt  obligations are set forth in detail in the schedule below. The amount
     due in  2004  does  not  reflect  the  planned  two-year  extension  of the
     Cupertino  National Bank loan described in Liquidity and Capital  Resources
     above and does not take into account the Prudential Capital Group loan paid
     off in October 2004.
(2)  Operating  lease  obligations  relate  to a lease of our  corporate  office
     facility from a related party.

At September 30, 2004, we had total  indebtedness of $333.4  million,  including
$215.9 million of fixed rate mortgage  debt,  $10.5 million under the Berg Group
mortgage note (related  parties),  $79.4 million under the Citicorp USA mortgage
loan, $26.5 million under the Cupertino  National Bank line of credit,  and $1.1
million under the Berg Group line of credit  (related  parties),  as detailed in
the table below.

On October 14, 2004,  we concluded  the renewal and extension of our $80 million
mortgage term loan with  Citicorp  USA,  Inc. for an additional  two years until
September 6, 2006 (the  "Citicorp  Loan").  The Citicorp Loan  requires  monthly
principal  payments of $215 and carries a variable  interest  rate of LIBOR plus
2%.  The loan fee and  costs  incurred  in  connection  with the  mortgage  loan
extension amounted to approximately $0.14 million and will be amortized over the
term of the loan.  Under the  previous  loan terms  Carl E. Berg had  personally
guaranteed  our repayment  obligations  and provided a personal  guaranty of our
obligation  to  indemnify  the  lender  for  certain   potential   environmental
liabilities  with  respect to the  pledged  properties.  Those  guaranties  were
provided in conjunction  with Citicorp's  short-term loan of $80 million for our
acquisition  of the San Tomas  Technology  Park and were released by Citicorp as
part of the loan  renewal  and  extension.  The loan is  secured by seven of our
properties.  The Citicorp Loan terms require us to maintain a minimum  excess of
assets  over  liabilities  of  $400,000,  in addition  to  complying  with other
customary loan covenants and conditions.

In July 2004,  the $40 million line of credit with  Cupertino  National Bank was
scheduled  to mature.  Cupertino  National  Bank has granted an extension of the
loan to November 2, 2004. We are in the process of  renegotiating  the terms and
extending  this loan for an  additional  two-year  period.  Assuming the renewal
occurs,  which we  anticipate,  we do not believe that the terms of the extended
loan will differ

                                     - 16 -
<PAGE>
materially  from its current  terms.  We are the  borrower  under the  Cupertino
National  Bank line of credit which is  guaranteed  by Mission West  Properties,
L.P. and Mission West Properties,  L.P. II. Mission West Properties, L.P. is the
borrower  under the  Citicorp,  USA,  Inc.  mortgage loan which is guaranteed by
Mission West  Properties,  L.P. I, Mission West  Properties  L.P. II and Mission
West  Properties  L.P.  III.  The  Cupertino  National  Bank line of credit  and
Citicorp USA, Inc. mortgage loan contain certain loan covenants. As of September
30, 2004, we were in compliance with such loan covenants.

                                     - 17 -
<PAGE>

The following  table sets forth  information  regarding  debt  outstanding as of
September 30, 2004:

<TABLE>
<CAPTION>
                                                                                                             Maturity     Interest
              Debt Description                           Collateral Properties             Balance             Date         Rate
---------------------------------------------- ---------------------------------------- ----------------- ------------- ------------
                                                                                     (dollars in thousands)
Line of Credit:
<S>                                            <C>  <C>                                     <C>               <C>          <C>
Berg Group (related parties)                   2033-2043 Samaritan Dr., San Jose, CA         $  1,105           3/05          (1)
                                               2133 Samaritan Drive, San Jose, CA       -----------------
                                               2233-2243 Samaritan Dr., San Jose, CA
                                               1310-1450 McCandless Dr., Milpitas, CA
                                               1795-1845 McCandless Dr., Milpitas, CA

Cupertino National Bank                        Not Applicable                                  26,492          11/04          (4)
                                                                                        -----------------

Mortgage Notes Payable (related parties):      5300 & 5350 Hellyer Ave., San Jose, CA          10,508           6/10        7.650%
                                                                                        -----------------
Mortgage Notes Payable (2):
Prudential Capital Group (6)                   20400 Mariani Avenue, Cupertino, CA                548          10/06        8.750%
Washington Mutual (Home Savings & Loan Assoc.) 10460 Bubb Road, Cupertino, CA                     167          12/06        9.500%
Prudential Insurance Company of America (3)    10300 Bubb Road, Cupertino, CA                 119,957          10/08        6.560%
                                               10500 N. De Anza Blvd., Cupertino, CA
                                               4050 Starboard Drive, Fremont, CA
                                               45700 Northport Loop, Fremont, CA
                                               45738 Northport Loop, Fremont, CA
                                               450 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 Boulevard, 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

Northwestern Mutual Life Insurance Company (5) 1750 Automation Parkway, San Jose, CA           95,257           1/13        5.640%
                                               1756 Automation Parkway, San Jose, CA
                                               1762 Automation Parkway, San Jose, CA
                                               6320 San Ignacio Avenue, San Jose, CA
                                               6540-6541 Via Del Oro, San Jose, CA
                                               6385-6387 San Ignacio Ave., San Jose, CA
                                               2251 Lawson Lane, Santa Clara, CA
                                               1325 McCandless Drive, Milpitas, CA
                                               1650-1690 McCandless Drive, Milpitas, CA
                                               20605-20705 Valley Green Dr., Cupertino, CA

Citicorp USA, Inc.                             2001 Walsh Avenue, Santa Clara, CA              79,355           9/06          (4)
                                               2880 Scott Boulevard, Santa Clara, CA
                                               2890 Scott Boulevard, Santa Clara, CA
                                               2770-2800 Scott Boulevard, Santa Clara, CA
                                               2300 Central Expressway, Santa Clara, CA
                                               2220 Central Expressway, Santa Clara, CA
                                               2330 Central Expressway, Santa Clara, CA
                                                                                        -----------------
Mortgage Notes Payable Subtotal                                                               295,284
                                                                                        -----------------
Total                                                                                        $333,389
                                                                                        =================
</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 March
     2005. The interest rate at September 30, 2004 was 3.47%.
(2)  Mortgage notes payable generally  require monthly  installments of interest
     and  principal  over various  terms  extending  through the year 2013.  The
     weighted  average  interest  rate of  mortgage  notes  payable was 6.23% at
     September 30, 2004.
(3)  The Prudential  Insurance loan is payable in monthly  installments of $827,
     which includes principal (based upon a 30-year  amortization) and interest.
     John Kontrabecki, one of the limited partners, has guaranteed approximately
     $12,000 of this debt.  Costs and fees  incurred  with  obtaining  this loan
     aggregated approximately $900.
(4)  Interest rate equal to LIBOR plus 2%. The interest  rates for the Cupertino
     National Bank ("CNB") line of credit and the Citicorp  USA,  Inc.  mortgage
     loan at September 30, 2004 were 3.67% and 4.25%, respectively. In September
     2004, the line of credit with CNB was scheduled to mature.  CNB has granted
     an extension until November 2, 2004 while the parties finalize the terms of
     the $40,000 line of credit renewal for an additional two  year-period.  The
     Company does not believe that the terms of the extended line of credit will
     differ materially from its current terms. On October 14, 2004, the Citicorp
     Loan was  extended  for an  additional  two years until  September  2006 as
     discussed above.
(5)  The  Northwestern  loan is payable in monthly  installments of $696,  which
     includes principal (based upon a 20-year amortization) and interest.  Costs
     and fees incurred with obtaining this loan aggregated approximately $675.
(6)  The Prudential  Capital Group mortgage note was paid off in its entirety in
     October 2004 and the 20400 Mariani Avenue  property  securing this loan was
     added to the  properties  collateralizing  the Citicorp USA, Inc.  mortgage
     loan.

                                     - 18 -
<PAGE>

At September 30, 2004, our debt to total market  capitalization  ratio, which is
computed  as our  total  debt  outstanding  divided  by the  sum of  total  debt
outstanding  plus the market value of common stock (based upon the closing price
of $10.35 per share on September 30, 2004) on a fully diluted  basis,  including
the conversion of all O.P. units into common stock, was approximately  23.6%. On
September  30,  2004,  the  last  trading  day for  the  quarter,  total  market
capitalization was approximately $1.4 billion.

At September 30, 2004, the  outstanding  balance  remaining under certain demand
notes that we owed to the operating  partnerships was $1.6 million. The due date
of the demand notes has been  extended to September  30, 2005.  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 by the operating  partnerships,  which is
interest  expense  to us, in  connection  with this  debt,  is  included  in the
calculation of minority  interest as reported on the  consolidated  statement of
operations, thereby reducing our net income by this same amount. At present, our
only means for repayment of this debt is through  distributions  that we receive
from the operating partnerships that are in excess of the amount of dividends to
be paid to our stockholders or raising additional equity capital.

HISTORICAL CASH FLOWS

COMPARISON OF THE NINE MONTHS ENDED  SEPTEMBER 30, 2004 TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2003

Net cash provided by operating  activities  for the nine months ended  September
30,  2004 was $82.4  million  compared  to $91.8  million for the same period in
2003. The decline  resulted from the reduction in tenant expense  reimbursements
and  decrease in rental  revenue  from our current  portfolio of property due to
tenant lease  obligation  defaults,  tenant  re-locations and lower rent renewal
rates during the last quarter of 2003 and the first nine months of 2004.

Net cash used in investing  activities was ($0.4)  million and ($109.9)  million
for the nine months ended September 30, 2004 and 2003,  respectively.  Cash used
in investing activities during the first nine months of 2003 related principally
to the acquisition of the San Tomas Technology Park for $110 million.

Net cash used in financing  activities  was ($84.5)  million for the nine months
ended  September  30, 2004  compared  to $18.7  million  provided  by  financing
activities for the same period in 2003. During the first nine months of 2004, we
used $9.9 million to pay outstanding  debt, drew an additional $2.5 million from
the  Cupertino  National Bank line of credit and paid $62.8 million for minority
interest  distributions and $13.0 million for dividends to common  stockholders.
During the nine months ended September 30, 2003,  financing  activities included
borrowing $180 million under two new  collateralized  mortgage  loans,  of which
$100 million was used to repay short-term debt and the Berg Group line of credit
and $80 million was used for the acquisition of the San Tomas Technology Park as
discussed  above.  During the same period in 2003, we used $86.1 million of cash
to repay outstanding debt, $62.4 million for minority interest distributions and
$12.7 million for dividends to common stockholders.

FUNDS FROM OPERATIONS ("FFO")

FFO is a non-GAAP financial measurement used by real estate investment trusts to
measure and compare operating performance.  As defined by NAREIT, FFO represents
net income (loss)  before  minority  interest of O.P. unit holders,  computed in
accordance with GAAP, plus non-recurring events other than "extraordinary items"
under  GAAP,  excluding  gains and losses  from sales of  depreciable  operating
properties,  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.  FFO does include  impairment  losses for properties held for sale and
held for use. 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 our  ability  to incur  and  service  debt  and  make  capital
expenditures.  With the emphasis on the  disclosure  of  operating  earnings per
share,  we will still continue to use FFO as a measure of our  performance.  FFO
should  not be  considered  as an  alternative  for net  income as a measure  of
profitability  nor  is  it  comparable  to  cash  flows  provided  by  operating
activities determined in accordance with GAAP, nor is FFO necessarily indicative
of funds  available  to meet our cash  needs,  including  the need to make  cash
distributions to satisfy REIT requirements. For example, FFO is not adjusted for
payments of debt principal required under our debt service obligations.

Our 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 FFO exactly as we do.

We  have  revised  our FFO  computations  for  2003  for  the  inclusion  of the
amortization  of leasing  commissions in depreciation  and  amortization of real
estate in order to be comparable to our 2004 FFO presentation in accordance with
NAREIT  guidelines and to more closely  conform to the NAREIT's FFO  definition.
Additionally,  our FFO calculation  includes our portion of the depreciation and
amortization of real estate from our unconsolidated joint venture.

                                     - 19 -

<PAGE>


FFO for the  three  and nine  months  ended  September  30,  2004 and  2003,  as
reconciled to net income to common stockholders, are summarized in the following
tables:

<TABLE>
<CAPTION>
                                                  Three Months Ended September 30,              Nine Months Ended September 30,
                                                    2004                   2003                   2004                   2003
                                                                       (As Restated)                                 (As Restated)
                                             ------------------     ------------------     ------------------     ------------------
                                                       (dollars in thousands)                        (dollars in thousands)
<S>                                             <C>                    <C>                   <C>                    <C>
Net income to common stockholders (1)            $ 3,173                $ 3,893               $10,491                $11,993
Add:
   Minority interests (2)                         15,377                 19,225                51,228                 59,627
   Depreciation & amortization of real             5,969                  5,992                18,619                 16,834
      estate (3)
Less:
   Gain on sale of unconsolidated joint                -                      -                     -                  1,400
      venture asset
                                             ------------------     ------------------     ------------------     ------------------
FFO (4)                                          $24,519                $29,110               $80,338                $87,054
                                             ==================     ==================     ==================     ==================
</TABLE>

(1)  As  restated  for the  three  and nine  months  ended  September  30,  2003
     described in Note 7 of Notes to  Consolidated  Financial  Statements  under
     Part I, Item 1 above.
(2)  Excludes minority interest for third parties.
(3)  Includes   depreciation   and   amortization   of  real   estate  from  our
     unconsolidated joint venture and amortization of leasing commissions.
(4)  As restated for the three and nine months  ended  September  30,  2003.  As
     originally  reported  for that  quarter,  FFO was  $29,214.  As  originally
     reported for the nine months ended September 30, 2003, FFO was $86,821.

DISTRIBUTION POLICY

Our board of directors will determine the amount and timing of  distributions to
our  stockholders.  The board of directors  will  consider many factors prior to
making any distributions, including the following:

-    the amount of cash available for distribution;
-    our financial condition;
-    whether to reinvest funds rather than to distribute such funds;
-    our committed and projected capital expenditures;
-    the  amount  of cash  required  for new  property  acquisitions,  including
     acquisitions under existing agreements with the Berg Group;
-    prospects  of tenant  renewals  and  re-leases  of  properties  subject  to
     expiring leases;
-    cash  required  for  re-leasing  activities;   o  the  annual  distribution
     requirements under the REIT provisions of the federal income tax laws; and
-    such other factors as the board of directors deems relevant.

We  cannot  assure  you  that we will be  able  to  meet or  maintain  our  cash
distribution objectives.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

We do not believe recently issued  accounting  standards will materially  impact
our financial position, results of operations, or cash flows.

In December 2003, the FASB issued FIN 46R,  "Consolidation  of Variable Interest
Entities,"  a revision to FIN 46,  which was issued in January  2003.  Under FIN
46R,  a  variable  interest  entity  must be  consolidated  by a company if that
company is subject to a majority of the entity's  expected losses or entitled to
receive a majority of the entity's  expected  residual  returns or both. FIN 46R
requires  disclosures  about  variable  interest  entities that a company is not
required to consolidate,  but in which it has a significant  variable  interest.
The consolidation requirements apply to existing entities in the first reporting
period that ends after March 15, 2004. We adopted the consolidation requirements
of FIN 46R in the first quarter of 2004. There was no significant  effect on the
consolidated financial position, results of operations or cash flows as a result
of the initial adoption of this standard in regard to existing variable interest
entities;  however, newly formed entities could meet these requirements and will
be recorded as appropriate.

In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with  Characteristics of both Liabilities and Equity. This Statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  SFAS No. 150 was effective
beginning in the third quarter of 2003. The FASB deferred the  implementation of
SFAS No. 150 as applied to certain  minority  interests in finite life entities,
however.  We adopted the  requirements  of SFAS No. 150 in the third  quarter of
2003,  and  considering  the  aforementioned  deferral,  it did not  impact  our
financial position, results of operations or cash flows.

                                     - 20 -

<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not generally hold market risk sensitive instruments for trading purposes.
We use fixed and variable rate debt to finance our  operations.  Our exposure to
market risk for changes in interest  rates relates  primarily to our current and
future debt  obligations.  We are  vulnerable  to  significant  fluctuations  of
interest  rates on our  floating  rate debt and pricing on our future  debt.  We
manage our market risk by  monitoring  interest  rates where we try to recognize
the  unpredictability  of the financial  markets and seek to reduce  potentially
adverse effect on the results of our operations.  This takes frequent evaluation
of available  lending rates and examination of  opportunities to reduce interest
expense  through new sources of debt financing.  Several  factors  affecting the
interest rate risk include governmental monetary and tax policies,  domestic and
international  economics  and other  factors  that are beyond our  control.  The
following table provides  information  about the principal cash flows,  weighted
average interest rates,  and expected  maturity dates for debt outstanding as of
September  30,  2004.  The current  terms of this debt are  described in Item 2,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Liquidity and Capital Resources."

For variable rate debt, the table presents the assumption  that the  outstanding
principal balance at September 30, 2004 will be paid upon maturity.

For fixed rate debt,  the table  presents the  assumption  that the  outstanding
principal  balance at  September  30, 2004 will be paid  according  to scheduled
principal payments and that we will not prepay any of the outstanding  principal
balance.

<TABLE>
<CAPTION>
                                        Three
                                        Months
                                       Remaining             Year Ending December 31,
                                                  ----------------------------------------------
                                         2004        2005        2006       2007        2008     Thereafter     Total     Fair Value
                                      ----------------------------------------------------------------------------------------------
                                                                          (dollars in thousands)
<S>                                   <C>          <C>       <C>          <C>       <C>          <C>          <C>         <C>
Variable Rate Debt:
  Secured and unsecured debt           $27,137      $3,685    $76,130           -           -           -      $106,952    $106,952
  Weighted average interest rate         3.69%       4.19%      4.25%
Fixed Rate Debt:
  Secured notes payable                 $1,428      $5,977     $6,245      $6,350    $116,674     $89,763      $226,437    $233,806
  Weighted average interest rate         6.23%       6.23%      6.23%       6.23%       6.23%       6.23%
</TABLE>


The primary  market  risks we face are  interest  rate  fluctuations.  Principal
amounts  outstanding under the Berg Group line of credit, the Cupertino National
Bank line of credit and the Citicorp USA, Inc.  mortgage loan, which are tied to
a LIBOR based interest rate, were approximately $1.1 million, $26.5 million, and
$79.4  million,  or 0.3%,  7.9% and  23.8%,  respectively,  of the total  $333.4
million of outstanding debt as of September 30, 2004. As a result,  we pay lower
rates of interest in periods of  decreasing  interest  rates and higher rates of
interest in periods of increasing interest rates. All of our debt is denominated
in United  States  dollars.  We had no interest  rate caps or interest rate swap
contracts at September 30, 2004.

The  following  discussion  of  market  risk  is  based  solely  on  a  possible
hypothetical  change in future market  conditions  related to our  variable-rate
debt. It includes "forward-looking statements," as previously defined, regarding
market risk, but we are not forecasting the occurrence of these market changes.

Based on the amount of variable debt  outstanding as of September 30, 2004, a 1%
increase or decrease in interest  rates on our $107.0  million of floating  rate
debt would  decrease or increase,  respectively,  nine months  earnings and cash
flows by approximately  $0.8 million,  as a result of the increased or decreased
interest  expense  associated  with the  change  in rate,  and would not have an
impact on the fair value of the floating rate debt. This amount is determined by
considering the impact of hypothetical interest rates on our borrowing cost. Due
to the uncertainty of  fluctuations  in interest rates and the specific  actions
that might be taken by us to mitigate of such  fluctuations  and their  possible
effects, the foregoing  sensitivity analysis assumes no changes to our financial
structure.

                                     - 21 -

<PAGE>


ITEM 4. CONTROLS AND PROCEDURES

We strive to maintain  disclosure  controls and procedures  that are designed to
ensure that information  required to be disclosed in our Exchange Act reports is
recorded,  processed,  summarized and reported within the time periods specified
in the SEC's  rules and forms,  and that such  information  is  accumulated  and
communicated to our management,  including our chief executive officer and chief
financial  officer,  as  appropriate,  to allow for timely  decisions  regarding
required  disclosure.  In designing and evaluating  the disclosure  controls and
procedures,  management  recognizes that any controls and procedures,  no matter
how well  designed  and  operated,  can provide  only  reasonable  assurance  of
achieving the desired control objectives and management  necessarily is required
to apply its judgment in evaluating the  cost-benefit  relationship  of possible
controls.

Until  their  resignation  on  January  26,  2004,  our  independent  registered
accounting  firm was  PricewaterhouseCoopers  LLP.  In May  2004,  we hired  new
independent accountants,  BDO Seidman, LLP who conducted audits of our financial
statements  for 2001,  2002 and 2003.  In  connection  with the  issuance of its
report of  independent  registered  public  accounting  firm,  BDO Seidman,  LLP
reported  to  our  audit   committee  a  "material   weakness"  under  standards
established  by the Public Company  Accounting  Oversight  Board  regarding some
elements of our system of internal controls. They noted a material weakness with
respect to our review and oversight of our  application  of purchase  accounting
relating to the amortization of leasing commissions on acquired buildings,  as a
result of which we  amortized  such  commissions  over the  40-year  term of the
acquired building rather than the lease term. In addition, due to our total head
count of four,  they have also identified  certain  segregation of duties issues
without compensating controls.

In the view of BDO Seidman, LLP this material weakness led to certain accounting
adjustments  for 2003,  principally  pertaining  to purchase  accounting  errors
related  to  leasing  commissions  and  to a much  smaller  extent,  to  correct
depreciable lives for tenant  improvements and base interior  improvements.  The
error in accounting for lease commissions  necessitated a significant portion of
the restatements  described elsewhere in this report and resulted in adjustments
to our 2003 financial  statements  upon audit. We have conducted a review of the
errors requiring restatement, including a separate review by our audit committee
to determine what remedial  measures were  necessary.  We believe our management
has taken or is in the  process of taking  the steps  necessary  to correct  the
errors and avoid similar errors in the future.  One important measure is to have
our President  also become  involved in the review of our internal  controls and
procedures.

As required by SEC Rule  13a-15(b) we conducted an  evaluation  as of the end of
the third quarter of 2004,  under the supervision and with the  participation of
our  management,  including  our Chief  Executive  Officer,  President  and Vice
President of Finance,  of the  effectiveness  of the design and operation of our
disclosure  controls  and  procedures.  Based  upon that  evaluation,  the Chief
Executive  Officer,  President and Vice President of Finance  concluded that our
disclosure  controls and  procedures  are  effective in timely  alerting them to
material information relating to us (including our subsidiaries)  required to be
included in our periodic SEC filings.

While we have taken or are in the process of taking the foregoing steps in order
to address the  adequacy of our  disclosure  controls  and  procedures,  and, in
addition,  to develop  and  implement  a formal  set of  internal  controls  and
procedures for financial  reporting in accordance  with the SEC's rules to adopt
the  internal  control  report  requirements  included  in  Section  404  of the
Sarbanes-Oxley  Act of 2002, the efficacy of the steps we have taken to date and
the steps we are still in the  process of  completing  is  subject to  continued
management  review  supported  by  confirmation  and testing by our internal and
external  auditors.  As a result,  it is likely that additional  changes will be
made to our internal controls and procedures.

CHANGES IN INTERNAL CONTROLS
Other than the foregoing  initiatives,  there were no significant changes in our
internal controls or to our knowledge, in other factors that could significantly
affect such  internal  controls  subsequent  to the date of the  above-described
evaluation of disclosure controls and procedures.

                                     - 22 -
<PAGE>


PART II - OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS

Legal  proceedings are  incorporated  herein by reference from Part 1 "Item 1. -
Financial Statements - Note 6 - Commitments and Contingencies."

ITEM 6.  EXHIBITS AND REPORTS ON FROM 8-K

<TABLE>
<CAPTION>
         a.       EXHIBITS

<S>              <C>
                  10.29.1  Cupertino National Bank Revolving Credit Loan Agreement Change in Terms Agreement
                  10.45.4  Citicorp USA, Inc. $80,000,000 Fourth Amendment to Promissory Note
                  31.1     Section 1350 Certificate of CEO
                  31.2     Section 1350 Certificate of President & COO
                  31.3     Section 1350 Certificate of Principal Financial Officer
                  32       Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

         b.       REPORTS ON FORM 8-K

                  None

</TABLE>

                                     - 23 -

<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: October 29, 2004              By:    /s/ Carl E. Berg
                                    --------------------------------------------
                                    Carl E. Berg
                                    Chief Executive Officer


Date: October 29, 2004              By:    /s/ Wayne N. Pham
                                    --------------------------------------------
                                    Wayne N. Pham
                                    Vice President of Finance and Controller
                                    (Principal Accounting Officer and Duly
                                    Authorized Officer)

                                     - 24 -

<PAGE>

EXHIBIT 10.29.1
<TABLE>
<CAPTION>


                            CHANGE IN TERMS AGREEMENT

------------------------------------------------------------------------------------------------------------------------------------
<S> <C>                  <C>              <C>          <C>            <C>               <C>        <C>        <C>
        Principal         Loan Date        Maturity      Loan No       Call / Coll       Account    Officer    Initials
     $40,000,000.00       08-27-2004       11-02-2004   301099227                                     188
------------------------------------------------------------------------------------------------------------------------------------
      References in the shaded area are for Lender's use only and do not limit the applicability of this document to
      any particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------------------
Borrower: Mission West Properties, Inc., A Maryland corporation       Lender: Cupertino National Bank - part of Greater Bay Bank NA
          10050 Bandley Drive                                                 Main Office
          Cupertino, CA   95014-2244                                          20230 Stevens CreekBlvd.
                                                                              Cupertino, CA   95014-2244
</TABLE>




LOAN TYPE. This is a Variable Rate Nondisclosable  Revolving Line of Credit Loan
to a Corporation for $40,000,000.00 due on November 2, 2004.  The reference rate
(Three Month Libor Rate,  as published on the first  business day of each month,
currently 1.700%) is added to the margin of 2.000%, resulting in an initial rate
of 3.700. This is an unsecured renewal loan.

PRIMARY  PURPOSE  OF LOAN.  The  primary  purpose  of this  loan is for  (please
initial):
________________ Personal, Family, or Household Purposes or Personal Investment.
___X CEB RM_____ Business (Including Real Estate Investment).

SPECIFIC PURPOSE.  The specific purpose of this loan is: Extend maturity date of
revolving line of credit.
DISBURSEMENT  INSTRUCTIONS.  Borrower  understands that no loan proceeds will be
disbursed  until  all of  Lender's  conditions  for  making  the loan  have been
satisfied. Please disburse the loan proceeds of $40,000,000.00 as follows:

UNDISBURSED FUNDS:                                       $10,137,437.70
AMOUNT PAID ON BORROWER'S ACCOUNT:                       $29,862,562.30
$29,862,562.30 Payment on Loan # 301099227 (Disbursed)   _______________
NOTE PRINCIPAL:                                          $40,000,000.00

CHARGES  PAID IN  CASH.  Borrower  has paid or will  pay in cash as  agreed  the
following charges:

                PREPAID FINANCE CHARGES PAID IN CASH:                $1,000.00
                              $1,000.00   Loan Fee
                                                                    ------------
                              TOTAL CHARGES PAID IN CASH:            $1,000.00

FINANCIAL  CONDITION.  BY SIGNING THIS  AUTHORIZATION,  BORROWER  REPRESENTS AND
WARRANTS TO LENDER THAT THE  INFORMATION  PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED  IN  BORROWER'S  MOST RECENT  FINANCIAL  STATEMENT TO LENDER.  THIS
AUTHORIZATION IS DATED AUGUST 27, 2004.


BORROWER:


MISSION WEST PROPERTIES, INC., A MARYLAND CORPORATION


By: /s/ Carl E. Berg                   By: /s/ Raymond V. Marino
   -----------------------------          ------------------------------
   Carl E. Berg, Chairman & CEO           Raymond V. Marino, President & COO
   of Mission West Properties, Inc.       of Mission West Properties, Inc.
   A Maryland corporation                 A Maryland corporation

<PAGE>

EXHIBIT 10.45.4

                       FOURTH AMENDMENT TO PROMISSORY NOTE

     THIS FOURTH AMENDMENT TO PROMISSORY NOTE (the  "Amendment"),  is made as of
August 31, 2004 by and between MISSION WEST PROPERTIES, L.P., a Delaware limited
partnership  ("Borrower"),  and  CITICORP  USA,  INC.,  a  Delaware  corporation
("Lender") as follows:

                                    RECITALS

     A. In  connection  with a loan (the  "Loan"),  made by Lender to  Borrower,
Borrower  executed  that  certain  Promissory  Note,  dated as of April 8, 2003,
payable to  Lender,  in the amount of  $80,000,000,  as amended by that  certain
First  Amendment to  Promissory  Note dated as of June 30, 2003, by that certain
Second  Amendment to  Promissory  Note dated as of March 29,  2004,  and by that
certain  Third  Amendment  to  Promissory  Note  dated as of June  11,  2004 (as
amended, the "Note").  Borrower's  obligations under the Note are secured, among
other security,  by that certain Deed of Trust,  Assignment of Leases and Rents,
Security  Agreement and Fixture Filing (the "Deed of Trust"),  dated as of April
8, 2003 executed by Borrower,  as trustor,  in favor of Lender,  as Beneficiary,
and recorded in the official records of Santa Clara County,  California on April
8, 2003 as document  number  16947181,  and guaranteed by that certain  Guaranty
(the  "Guaranty"),  dated as of April  8,  2003  executed  by Carl E.  Berg,  an
individual  ("Berg"),  Mission  West  Properties,  L.P.  I, a  Delaware  limited
partnership  ("MW I"),  Mission West  Properties,  L.P.  II, a Delaware  limited
partnership ("MW II"), and Mission West Properties, L.P. III, a Delaware limited
partnership  ("MW  III").  Borrower,  Berg,  MW I,  MW II and MW III  have  also
executed and delivered to Lender that certain Environmental  Indemnity Agreement
(the  "Environmental  Indemnity")  dated  April 8, 2003.  The Note,  the Deed of
Trust,  the  Guaranty,  the  Environmental  Indemnity  and the other  documents,
instruments  and  agreements  evidencing  or securing  the Loan are  hereinafter
referred to collectively as the "Loan Documents".

     B. Borrower has  requested  and Lender has agreed,  subject to the terms of
this Amendment,  to modify the terms of the Note to extend the Maturity Date (as
defined in the Note). NOW, THEREFORE,  in consideration of the foregoing and for
other good  valuable  consideration,  the receipt and  sufficiency  of which are
hereby acknowledged, Lender and Borrower hereby agree as follows:

                                    AGREEMENT

     1. DEFINITIONS.  Except as modified herein, terms defined in the Note shall
have the same meaning when used in this Amendment.

     2. MODIFICATIONS TO NOTE.

          (a) On and  after  the  date  of this  Amendment,  the  definition  of
     "Maturity  Date" set forth in  Paragraph  1(a) of the Note shall be amended
     and modified to mean September 6, 2006.

          (b) Effective as of June 1, 2004 and continuing on the first (1st) day
     of each month  thereafter,  in  addition  to payments of accrued and unpaid
     interest then due on the Note,  Borrower shall make  principal  payments in
     respect  of the  Note in the  amount  of  $215,000.00.  The  entire  unpaid
     principal  balance  of the  Note,  together  with all  accrued  and  unpaid
     interest thereon, and all other amounts then due and payable under the Note
     and the other Loan Documents  shall be due and payable on the Maturity Date
     of September 6, 2006.

     3.  REAFFIRMATION  OF NOTE AND OTHER  LOAN  DOCUMENTS.  Except as  modified
pursuant to Section 2 hereof,  the Note is unmodified  and remains in full force
and effect.

     4.  Conditions  Precedent.  Before this Amendment  becomes  effective,  the
following  conditions  shall be satisfied at Borrower' sole cost and expense and
in a manner  satisfactory to Lender in the exercise of its reasonable  judgment:
(a) no Event of Default shall have occurred and be continuing and no other event
shall have occurred and be  continuing if the event,  with notice or the passage
of time or both, would be such an Event of Default;  (b) if requested by Lender,
Borrower  shall have provided such title  endorsements  as Lender may request to
insure the continuing  first-lien priority of the Deed of Trust; (c) no material
adverse change shall have  occurred,  or be reasonably  likely to occur,  in the
Collateral or in Borrower's or any Guarantor's business conditions (financial or
otherwise),  operations,  properties or prospects, or ability to repay the Loan;
(d) MW I,  MW II and  MW  III  shall  have  executed  the  reaffirmation  of its
obligations  attached  hereto;  (e) Borrower shall have paid an extension fee to
Lender in an amount equal to  $100,000.00;  (f) receipt by Lender of an executed
and, where appropriate,  acknowledged  copies of a Deed of Trust,  Assignment of
Leases  and Rents,  Security  Agreement  and  Fixture  Filing  (the MW I Deed of
Trust"),  executed by MW I and an Environmental  Indemnity Agreement executed by
MW I, MW II, MW III and Mission West  Properties,  Inc., a Maryland  corporation
("MW  Inc."),  and a First  Amendment to Guaranty  and  Environmental  Indemnity
Agreement executed by Berg, MW I, MW II, MW III and MW Inc.; (g)


<PAGE>

receipt  and review by Lender of all  Leases (as  defined in the Deed of Trust),
together  with all  financial  statements  of any tenant  under  such  Leases as
Borrower shall have obtained in the course of its due diligence; (h) receipt and
review by Lender of a property condition report of the Land, the Real Estate and
the Improvements  (as such terms are defined in the Deed of Trust);  (i) receipt
and review by Lender of a phase I environmental  site assessment with respect to
the Land, the Real Estate and the Improvements; (j) receipt and review by Lender
of an ALTA lender's  policy of title  insurance with respect to the MW I Deed of
Trust; and (k) receipt and review by Lender of an opinion of counsel to Borrower
and  Guarantor  opining that the  Guaranty as amended by the First  Amendment to
Guaranty and Environmental  Indemnity  Agreement has been duly authorized by all
necessary corporate and partnership action, as the case may be Lender's claim on
the assets of  Guarantor  is superior to the claim on the assets of Guarantor of
any partner or any holder of any operating unit of any Guarantor.

     5. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower hereby reaffirms all
of the  representations  and  warranties  set  forth in the Loan  Documents  and
further  represents  and warrants  that: (a) the recitals set forth above in the
Recitals  are true,  accurate  and  correct;  (b) Borrower is the sole legal and
beneficial owner of the Collateral;  (c) the Deed of Trust  constitutes a valid,
first priority lien encumbering the Collateral and there are no other mortgages,
deeds of trust or other such liens  encumbering  the  Collateral  or any portion
thereof; (d) this Amendment  constitutes the legal, valid and binding obligation
of  Borrower  enforceable  in  accordance  with its  terms;  (e) the  execution,
delivery and  performance  of this  Amendment  are within  Borrower's  power and
authority and have been duly authorized by all requisite partnership action, and
are not in  contravention  of any law, or of Borrower's  certificate  of limited
partnership or partnership agreement; (f) there exists no Event of Default under
the Note or any other  Loan  Document;  and (g) there  are no  offsets,  claims,
counterclaims, cross-claims or defenses with respect to the Loan.

     6. GOVERNING  LAW;  SEVERABILITY.  This Amendment  shall be governed by and
construed  under the internal  laws (as opposed to the laws of conflicts) of the
State of California. In the event that any provision or clause of this Amendment
is  construed  by a court  of  competent  jurisdiction  to be void,  invalid  or
unenforceable,  such  construction  shall not affect  other  provisions  of this
Amendment which can be given effect without the void,  invalid or  unenforceable
provision,  and to this end the  provisions of this Amendment are declared to be
severable.

     7. CAPTIONS.  Titles and headings  appearing in this Amendment are intended
solely  for  means  of  reference  and are not  intended  to  modify  any of the
provisions of this Amendment.

     8.  ENTIRE  AGREEMENT.  This  Amendment  constitutes  the entire  agreement
between Borrower and Lender with respect to the subject matter of this Amendment
and may not be modified or amended in any manner except in writing  executed and
delivered by Borrower and Lender.

     9. COUNTERPARTS.  This Amendment may be executed in multiple  counterparts,
each of which, taken together, shall constitute one and the same agreement.


<PAGE>


IN WITNESS  WHEREOF,  this  Amendment  has been duly executed as of the date set
forth above.

                                   BORROWER:

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

                                   By:      Mission West Properties, Inc.,
                                            a Maryland corporation
                                            its general partner

                                            By:  /s/ Carl E. Berg
                                                 -------------------------------
                                                 Carl E. Berg
                                                 Chief Executive Officer




                                   LENDER:

                                   CITICORP USA, INC.,
                                   a Delaware corporation


                                   By:      /s/ David Taylor
                                            --------------------------------
                                            David Taylor
                                            Vice President


<PAGE>


                           REAFFIRMATION OF GUARANTORS

Guarantor  hereby (a)  represents and warrants to Lender that, if Guarantor is a
partnership, the execution,  delivery, and performance of this Reaffirmation are
within its  partnership  powers and have been duly  authorized  by all necessary
partnership  action;  (b)  represents and warrants to Lender that the execution,
delivery, and performance of this Reaffirmation shall not constitute a breach of
any other  document,  instrument or agreement to which it is a party or by which
its  property is bound;  (c)  consents to the  amendment  of the Loan  Documents
pursuant to and on the terms stated in the Amendment,  including but not limited
to the extension of the Maturity Date to September 6, 2006; (d) acknowledges and
reaffirms its obligations owing to Lender under the Guaranty,  the Environmental
Indemnity and any other Loan Documents to which it is a party; and (e) ratifies,
affirms, reaffirms, acknowledges, confirms agrees that each of the Guaranty, the
Environmental  Indemnity and any other Loan  Documents to which it is a party is
and shall remain in full force and effect and represents a valid and enforceable
obligation  of the  Guarantor;  provided,  however,  with respect  solely to the
obligations  of Carl E. Berg,  an  individual  ("Berg"),  the  Guaranty  and the
Environmental  Indemnity  shall be null, void and of no further force and effect
with respect to events or circumstances  first occurring after the date that the
conditions  precedent to the effectiveness of the Fourth Amendment to Promissory
Note shall have been satisfied.

                                   GUARANTOR:



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

                                   By:   Mission West Properties, Inc.,
                                         a Maryland corporation
                                         its general partner

                                         By:  /s/ Carl E. Berg
                                              ----------------------------------
                                              Carl E. Berg
                                              Chief Executive Officer


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

                                   By:   Mission West Properties, Inc.,
                                         a Maryland corporation
                                         its general partner

                                         By:  /s/ Carl E. Berg
                                              ----------------------------------
                                              Carl E. Berg
                                              Chief Executive Officer


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

                                   By:   Mission West Properties, Inc.,
                                         a Maryland corporation
                                         its general partner

                                         By:  /s/ Carl E. Berg
                                              ----------------------------------
                                              Carl E. Berg
                                              Chief Executive Officer


                                   RELEASED GUARANTOR:

                                   /s/ Carl E. Berg
                                   ---------------------------------
                                   CARL E. BERG, an individual


<PAGE>


EXHIBIT 31.1


                             CERTIFICATE PURSUANT TO
                 RULE 13a-14 THE SECURITIES EXCHANGE ACT OF 1934


I, Carl E. Berg, certify that:

     1.   I have  reviewed this Form 10-Q of Mission West  Properties,  Inc. for
          the quarterly period ended September 30, 2004;

     2.   Based on my  knowledge,  this  report  does  not  contain  any  untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this report,  fairly  present in all material
          respects the financial condition, results of operations and cash flows
          of the  registrant  as of,  and for,  the  periods  presented  in this
          report;

     4.   The registrant's other certifying officer(s) and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined  in  Exchange  Act  Rules  13a-15(e)  and  15d-15(e))  for the
          registrant and have:

               (a) Designed such disclosure  controls and procedures,  or caused
               such disclosure  controls and procedures to be designed under our
               supervision,  to ensure that material information relating to the
               registrant,  including  its  consolidated  subsidiaries,  is made
               known to us by others within those entities,  particularly during
               the period in which this report is being prepared;

               (b) Evaluated the  effectiveness of the  registrant's  disclosure
               controls  and   procedures  and  presented  in  this  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               report based on such evaluation; and

               (c)  Disclosed  in this  report  any  change in the  registrant's
               internal  control over financial  reporting that occurred  during
               the period ended September 30, 2004 that has materially affected,
               or is reasonably  likely to materially  affect,  the registrant's
               internal control over financial reporting; and

     5.   The  registrant's  other  certifying  officer(s) and I have disclosed,
          based on our most recent evaluation of internal control over financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's  board of directors (or persons performing the equivalent
          functions):

               (a) All significant  deficiencies and material  weaknesses in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability  to  record,  process,  summarize  and  report  financial
               information; and

               (b) Any fraud, whether or not material,  that involves management
               or  other   employees  who  have  a   significant   role  in  the
               registrant's internal control over financial reporting.



Carl E. Berg
Chairman and CEO

October 29, 2004



<PAGE>


Exhibit 31.2


                             CERTIFICATE PURSUANT TO
                 RULE 13a-14 THE SECURITIES EXCHANGE ACT OF 1934


I, Raymond V. Marino, certify that:

     1.   I have  reviewed this Form 10-Q of Mission West  Properties,  Inc. for
          the quarterly period ended September 30, 2004;

     2.   Based on my  knowledge,  this  report  does  not  contain  any  untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this report,  fairly  present in all material
          respects the financial condition, results of operations and cash flows
          of the  registrant  as of,  and for,  the  periods  presented  in this
          report;

     4.   The registrant's other certifying officer(s) and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined  in  Exchange  Act  Rules  13a-15(e)  and  15d-15(e))  for the
          registrant and have:

               (a) Designed such disclosure  controls and procedures,  or caused
               such disclosure  controls and procedures to be designed under our
               supervision,  to ensure that material information relating to the
               registrant,  including  its  consolidated  subsidiaries,  is made
               known to us by others within those entities,  particularly during
               the period in which this report is being prepared;

               (b) Evaluated the  effectiveness of the  registrant's  disclosure
               controls  and   procedures  and  presented  in  this  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               report based on such evaluation; and

               (c)  Disclosed  in this  report  any  change in the  registrant's
               internal  control over financial  reporting that occurred  during
               the period ended September 30, 2004 that has materially affected,
               or is reasonably  likely to materially  affect,  the registrant's
               internal control over financial reporting; and

     5.   The  registrant's  other  certifying  officer(s) and I have disclosed,
          based on our most recent evaluation of internal control over financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's  board of directors (or persons performing the equivalent
          functions):

               (a) All significant  deficiencies and material  weaknesses in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability  to  record,  process,  summarize  and  report  financial
               information; and

               (b) Any fraud, whether or not material,  that involves management
               or  other   employees  who  have  a   significant   role  in  the
               registrant's internal control over financial reporting.



Raymond V. Marino
President and Chief Operating Officer

October 29, 2004



<PAGE>


Exhibit 31.3


                             CERTIFICATE PURSUANT TO
                 RULE 13a-14 THE SECURITIES EXCHANGE ACT OF 1934


I, Wayne N. Pham, certify that:

     1.   I have  reviewed this Form 10-Q of Mission West  Properties,  Inc. for
          the quarterly period ended September 30, 2004;

     2.   Based on my  knowledge,  this  report  does  not  contain  any  untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this report,  fairly  present in all material
          respects the financial condition, results of operations and cash flows
          of the  registrant  as of,  and for,  the  periods  presented  in this
          report;

     4.   The registrant's other certifying officer(s) and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined  in  Exchange  Act  Rules  13a-15(e)  and  15d-15(e))  for the
          registrant and have:

               (a) Designed such disclosure  controls and procedures,  or caused
               such disclosure  controls and procedures to be designed under our
               supervision,  to ensure that material information relating to the
               registrant,  including  its  consolidated  subsidiaries,  is made
               known to us by others within those entities,  particularly during
               the period in which this report is being prepared;

               (b) Evaluated the  effectiveness of the  registrant's  disclosure
               controls  and   procedures  and  presented  in  this  report  our
               conclusions  about the  effectiveness of the disclosure  controls
               and  procedures,  as of the  end of the  period  covered  by this
               report based on such evaluation; and

               (c)  Disclosed  in this  report  any  change in the  registrant's
               internal  control over financial  reporting that occurred  during
               the period ended September 30, 2004 that has materially affected,
               or is reasonably  likely to materially  affect,  the registrant's
               internal control over financial reporting; and

     5.   The  registrant's  other  certifying  officer(s) and I have disclosed,
          based on our most recent evaluation of internal control over financial
          reporting, to the registrant's auditors and the audit committee of the
          registrant's  board of directors (or persons performing the equivalent
          functions):

               (a) All significant  deficiencies and material  weaknesses in the
               design or operation of internal control over financial  reporting
               which are reasonably  likely to adversely affect the registrant's
               ability  to  record,  process,  summarize  and  report  financial
               information; and

               (b) Any fraud, whether or not material,  that involves management
               or  other   employees  who  have  a   significant   role  in  the
               registrant's internal control over financial reporting.



Wayne N. Pham
Vice President of Finance and Controller

October 29, 2004



<PAGE>


Exhibit 32


                    CERTIFICATION OF CEO AND CFO PURSUANT TO
                               18 U.S.C. ss. 1350,
                             AS ADOPTED PURSUANT TO
                    ss. 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the  Quarterly  Report  on Form 10-Q of  Mission  West
Properties,  Inc. (the  "Company") for the quarterly  period ended September 30,
2004 as filed with the  Securities  and Exchange  Commission  on the date hereof
(the "Report"),  each of Carl E. Berg, Chairman of the Board and Chief Executive
Officer  of the  Company,  and Wayne N. Pham,  Vice  President  of  Finance  and
Controller of the Company,  hereby certify,  pursuant to 18 U.S.C.  ss. 1350, as
adopted  pursuant to ss. 906 of the  Sarbanes-Oxley  Act of 2002, to the best of
his knowledge, that:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.


--------------------------------------------
Carl E. Berg
Chairman of the Board and Chief Executive Officer
October 29, 2004


--------------------------------------------
Wayne N. Pham
Vice President of Finance and Controller
October 29, 2004

     This  certification  accompanies  this  Report  pursuant  to ss. 906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002,  or  otherwise  required,  be  deemed  filed by the
Company  for  purposes  of ss. 18 of the  Securities  Exchange  Act of 1934,  as
amended.