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, 1999

                          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 incorporation    (I.R.S. Employer Identification
             or orginization)                                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. [X] YES [ ] 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:

              16,959,874 shares outstanding as of November 8, 1999



                                     - 1 -
<PAGE>


                          Mission West Properties, Inc.

                                    FORM 10-Q
                    FOR THE QUARTER ENDED September 30, 1999



                                      INDEX
<TABLE>
<CAPTION>

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

   Item 1     Financial Statements:

              Consolidated Balance Sheets as of September 30, 1999
              and December 31, 1998...........................................3

              Consolidated Statements of Operations for the three
              and nine months ended September 30, 1999 and 1998...............4

              Consolidated Statements of Cash Flows for the
              nine months ended September 30, 1999 and 1998...................5

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

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

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


PART II       Other Information

   Item 5     Other Information..............................................21

   Item 6     Exhibits and Reports on Form 8-K...............................21


SIGNATURES...................................................................22

</TABLE>
                                     - 2 -
<PAGE>


PART I - Financial Information
Item 1   CONSOLIDATED FINANCIAL STATEMENTS

                          MISSION WEST PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                  (Dollars in thousands, except share amounts)
                                      -----
<TABLE>
<CAPTION>

                                                                    September 30, 1999      December 31, 1998
                                                                    ------------------      -----------------
                                                                        (Unaudited)
                                    ASSETS
<S>                                                                   <C>                     <C>

Real estate assets, at cost
   Land                                                                $146,844                $ 90,929
   Buildings and improvements                                           561,333                 430,510
                                                                        -------                 -------
                                                                        708,177                 521,439
   Less accumulated depreciation                                        (15,022)                 (5,410)
                                                                        -------                 -------
     Net real estate assets                                             693,155                 516,029
Cash and cash equivalents                                                 8,270                     246
Short-term investments                                                    5,000                       -
Deferred rent                                                             4,707                   1,624
Other assets                                                              3,125                   1,967
                                                                        -------                 -------
   Total assets                                                        $714,257                $519,866
                                                                        =======                 =======
</TABLE>
<TABLE>
<CAPTION>


                      LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                                                   <C>                     <C>
Liabilities:
   Line of credit                                                      $  4,295                $ 27,201
   Mortgage notes payable                                               134,405                 157,188
   Mortgage notes payable (related parties)                              30,803                  20,752
   Interest payable                                                       1,005                     632
   Security deposits                                                      2,097                   2,061
   Prepaid rental income                                                  6,963                   3,246
   Dividends/distributions payable                                       13,958                       -
   Refundable option payment                                             21,564                       -
   Accounts payable and accrued expenses                                  5,378                   2,154
                                                                        -------                 -------
     Total liabilities                                                  220,468                 213,234

Commitments and contingencies (Note 8)

Minority interest                                                       393,027                 273,379

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, 16,959,874 and 8,218,594 shares issued and
     outstanding at September 30, 1999 and December 31, 1998,
     respectively                                                            17                       8
   Paid-in-capital                                                      122,690                  55,528
   Less, amounts receivable on private placement                              -                    (900)
   Accumulated (deficit)                                                (21,945)                (21,383)
                                                                        -------                 -------
     Total stockholders' equity                                         100,762                  33,253
                                                                        -------                 -------
     Total liabilities and stockholders' equity                        $714,257                $519,866
                                                                        =======                 =======
</TABLE>

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

                                     - 3 -
<PAGE>


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

                                               Three months ended September 30,          Nine months ended September 30,
                                               --------------------------------          -------------------------------
                                                   1999                1998                  1999                1998
                                                ----------          ----------            ----------          ----------
<S>                                           <C>                  <C>                  <C>                  <C>
Revenues:
   Rental revenues from real estate               $20,517             $13,317               $52,920             $13,317
   Tenant reimbursements                            3,957               2,101                 8,352               2,101
   Other income, including interest                   136                  37                   578                 178
                                                   ------              ------                ------              ------
                                                   24,610              15,455                61,850              15,596
                                                   ------              ------                ------              ------
Expenses:
   Operating expenses                               1,392               1,296                 3,111               1,296
   Real estate taxes                                2,704               1,373                 5,533               1,373
   Depreciation of real estate                      3,510               2,638                 9,612               2,638
   General and administrative                         276                 279                 1,028                 846
   Interest                                         2,594               1,167                 9,286               1,167
   Interest (related parties)                         646               3,183                 1,635               3,183
                                                   ------              ------                ------              ------
     Total expenses                                11,122               9,936                30,205              10,503
                                                   ------              ------                ------              ------

Income before minority interest                    13,488               5,519                31,645               5,093
Minority interest                                  11,310               5,389                27,521               5,389
                                                   ------               -----                ------              ------
   Net income (loss)                              $ 2,178             $   130               $ 4,124             $  (296)
                                                   ======              ======                ======              ======
Basic net income  (loss) per share                $  0.13             $  0.08               $  0.37             $ (0.18)
                                                   ======              ======                ======              ======
Diluted net income (loss) per share               $  0.13             $  0.08               $  0.37             $ (0.18)
                                                   ======              ======                ======              ======
Weighted average number of
   common shares outstanding (basic)           16,715,354           1,698,536            11,067,622           1,634,220
                                               ==========           =========            ==========           =========
Weighted average number of
   common shares outstanidng (diluted)         16,808,181           1,698,536            11,178,229           1,634,220
                                               ==========           =========            ==========           =========

</TABLE>




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

                                     - 4 -
<PAGE>


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

                                                                                         Nine months ended September 30,
                                                                                         -------------------------------
                                                                                            1999                 1998
                                                                                         ----------           ----------
<S>                                                                                     <C>                  <C>

Cash flows from operating activities:
   Net income (loss)                                                                     $   4,124            $    (296)
   Adjustments to reconcile net income (loss) to net cash provided by
     operating activities:
       Minority interest                                                                    27,521                5,389
       Depreciation                                                                          9,612                2,638
     Changes in assets and liabilities:
       Deferred rent                                                                        (3,083)                (752)
       Other assets                                                                         (1,158)              (2,001)
       Interest payable                                                                        373                    -
       Interest payable (related parties)                                                        -                3,183
       Security deposits                                                                       (52)                  52
       Prepaid rental income                                                                 3,717                  449
       Accounts payable and accrued expenses                                                 2,027                1,974
                                                                                          --------             --------
     Net cash provided by operating activities                                              43,081               10,636
                                                                                          --------             --------
Cash flows from investing activities:
   Improvements to real estate assets                                                      (31,376)                (118)
   Purchase of short-term investments                                                       (5,000)                   -
   Deposit on sale of real estate                                                           21,564                    -
                                                                                          --------             --------
     Net cash (used in) investing activities                                               (14,812)                (118)
                                                                                          --------             --------
Cash flows from financing activities:
   Net repayments on line of credit                                                        (22,906)                   -
   Proceeds from mortgage notes payable                                                          -              130,000
   Principal payments on mortgage notes payable                                            (22,783)             (14,553)
   Principal payments on mortgage notes payable (related parties)                          (39,639)            (129,039)
   Payments on receivable from private placements                                              372                    -
   Net proceeds from public offering of stock                                               66,900                    -
   Proceeds from stock options exercised                                                       807                  293
   Repurchase of common stock                                                                   (8)                 (11)
   Minority interest distributions                                                            (846)                   -
   Dividends paid                                                                           (2,142)                   -
                                                                                          --------             --------
     Net cash (used in) financing activities                                               (20,245)             (13,310)
                                                                                          --------             --------
     Net increase (decrease) in cash and cash equivalents                                    8,024               (2,792)
Cash and cash equivalents, beginning                                                           246                5,569
                                                                                          --------             --------
Cash and cash equivalents, ending                                                        $   8,270            $   2,777
                                                                                          ========             ========
Supplemental information:
   Cash paid for interest                                                                $  10,548            $   1,073
                                                                                          ========             ========
   Cash paid for income taxes                                                            $       -            $     115
                                                                                          ========             ========
Supplemental schedule of non-cash investing and financing activities:
  Note receivable in connection with issuance of common stock                            $       -            $     900
                                                                                          ========             ========
  Cancellation of note receivable in connection with repurchase of common stock          $     528                    -
                                                                                          ========             ========
  Conversion of minority interest distributions payable to mortgage notes payable
    (related parties)                                                                    $  16,607                    -
                                                                                          ========             ========
  Assumption of lines of credit                                                                  -            $  39,044
                                                                                          ========             ========
  Assumption of debt in connection with property acquisitions                            $  33,083                    -
                                                                                          ========             ========
  Assumption of other liabilities in connection with property acquisitions               $   1,284                    -
                                                                                          ========             ========
  Issuance of limited partnership units in connection with property acquisitions         $ 120,995                    -
                                                                                          ========             ========
</TABLE>

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

                                     - 5 -
<PAGE>


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


1.       Principles of Consolidation and Basis of Presentation

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

         Minority  interest  represents  the separate  private  ownership of the
         operating  partnerships by the Berg Group (defined as Carl E. Berg, his
         brother Clyde J. Berg, members of their respective  immediate families,
         and certain entities they control) and other  non-affiliate  interests.
         In total,  these interests  account for  approximately  77%, taken as a
         whole, of the ownership  interests in the real estate operations of the
         Company as of  September  30, 1999.  Minority  interest in earnings has
         been calculated by taking the net income of the operating  partnerships
         (on a stand-alone basis) multiplied by the respective minority interest
         ownership percentage.

         The  financial   statements  have  been  prepared  in  accordance  with
         generally  accepted   accounting   principles   applicable  to  interim
         financial  information and pursuant to the rules and regulations of the
         Securities and Exchange  Commission.  Accordingly,  certain information
         and footnote  disclosures  normally  included in  financial  statements
         prepared in accordance with generally  accepted  accounting  principles
         have been condensed or omitted  pursuant to such rules and regulations.
         However, in the opinion of management, all adjustments, consisting only
         of normal recurring adjustments, necessary for a fair presentation have
         been included. The Company presumes that users of the interim financial
         information  herein have read or have  access to the audited  financial
         statements  for the  preceding  fiscal  year and that the  adequacy  of
         additional  disclosure needed for a fair presentation may be determined
         in that  context.  The  results  of  operations  for the three and nine
         months ended September 30, 1999 are not  necessarily  indicative of the
         results to be expected for the entire year.

         The  Company  intends to qualify and elect to be taxed as a real estate
         investment  trust under the Internal  Revenue Code of 1986, as amended,
         commencing with the taxable year ending December 31, 1999. Accordingly,
         no  provision  has been  made for  income  taxes for the three and nine
         months ended September 30, 1999.

2.       Short-term Investments

         During the third  quarter of 1999,   the Company  invested a portion of
         the cash  received  for the  refundable  option  payment in  short-term
         securities  (Note 3 Refundable Option Payment).  Short- term securities
         are highly liquid investments  with original maturities in excess of 90
         days.  Short-term  securities are  stated at cost,  which  approximates
         market  value.  Subsequent  to September  30,  1999,  such amounts were
         utilized to reduce the Company's debt.

3.       Real Estate

         PENDING PROJECTS ACQUISITIONS AGREEMENT
         The Company has entered into a Pending Projects  Acquisition  Agreement
         under which the Company will acquire approximately one million rentable
         square  feet of R&D  properties  upon the  completion  and leasing of a
         number of pending development  projects owned by certain members of the
         Berg Group and other sellers. The agreement fixes the acquisition value
         to be received by the sellers based upon the  capitalized  rental value
         of the  property  when fully  leased.  During the first nine  months of
         1999,  the  Company  acquired eight  additional  properties  under  the
         Pending Projects  Acquisition  Agreement  representing 710,119 rentable
         square feet (see Property  Acquisitions  below). At September 30, 1999,
         there were three remaining projects  comprising 255,724 rentable square
         feet which the Company  expects to acquire  under the Pending  Projects
         Acquisition Agreement.


                                     - 6 -
<PAGE>



         The sellers of the pending  development  projects  may elect to receive
         cash or limited  partnership  units ("O.P.  Units") at a value of $4.50
         per unit,  which was set in May 1998 based on the $4.50 per share price
         of the Company's common stock paid in private placement transactions at
         that time. As the current market value price of a share of common stock
         exceeds  the $4.50  price,  this  valuation  represents  a  substantial
         discount from the current  market value of the common stock that may be
         issued in  exchange  for these O.P.  Units.  Under  generally  accepted
         accounting  principles  ("GAAP"),  the acquisition  cost in the form of
         O.P. Units issued will be valued based upon the current market value of
         the  Company's  common  stock  on  the  date  the  acquisition  closes.
         Consequently,  the Company's  actual cost of these future  acquisitions
         will depend in large part on the  percentage  of the fixed  acquisition
         value  paid for by the  issuance  of O.P.  Units  and the  price of the
         Company's common stock on the closing date of the acquisition.

         BERG LAND HOLDINGS OPTION AGREEMENT
         Through  the  operating  partnerships,  the Company  currently  has the
         option to  acquire  any future  R&D,  office  and  industrial  property
         developed by the Berg Group on land  currently  owned or  optioned,  or
         acquired for these  purposes in the future,  directly or  indirectly by
         certain members of the Berg Group. At present,  there are approximately
         185 acres of  Silicon  Valley  Land  owned or under  option by  certain
         members  of the Berg  Group  under the terms of the Berg Land  Holdings
         Option  Agreement.  The owners of the future R&D property  developments
         may obtain cash or, at their option,  O.P.  Units valued at the average
         closing price of shares of common stock over the 30-trading-day  period
         preceding the  acquisition  date. As of September 30, 1999, the Company
         had  completed  one  acquisition  under the Berg Land  Holdings  Option
         Agreement representing approximately 109,715 rentable square feet. Upon
         the  Company's  exercise of an option to purchase any of the future R&D
         property developments,  the acquisition price will equal the sum of (a)
         the  full  construction  cost  of the  building;  (b)  10% of the  full
         construction  cost of the building;  (c) the  acquisition  value of the
         parcel as defined in the  agreement  upon  which the  improvements  are
         constructed  (currently  ranging from $8.00 to $20.00 per square foot);
         (d) 10% per annum of the acquisition value of the parcel for the period
         from January 1, 1998 to the close of escrow;  and (e) interest at LIBOR
         (London  Interbank  Offer  Rate)  plus  1.65%  per  annum  on the  full
         construction  costs of the  building for the period from the date funds
         were distributed by the developer to the close of escrow;  less (f) any
         debt encumbering the property.

         No  estimate  can be given  at this  time as to the  total  cost to the
         Company to acquire projects under the Berg Land Holdings Agreement, nor
         the timing as to when the Company will acquire such projects.  However,
         the Berg Group is currently constructing two properties with a total of
         388,000  rentable square feet that the Company has the right to acquire
         under  this  agreement.   As  of  September  30,  1999,  the  estimated
         acquisition value to the operating  partnerships for these two projects
         is $32,226.  The final  acquisition price of these two properties could
         differ significantly from this estimate.

         PROPERTY ACQUISITIONS
         Effective March 1, 1999, the Company  acquired a newly  constructed R&D
         property  located on Santa Teresa  Boulevard  in San Jose,  California.
         This  acquisition  added  approximately  54,996 square feet of rentable
         space and was acquired  from the Berg Group under the Pending  Projects
         Acquisition  Agreement.  The total  acquisition price for this property
         was $8,558.  In connection with this  acquisition,  the Company assumed
         $3,525 of debt due Berg & Berg Enterprises,  Inc., an affiliate of Carl
         E. Berg and Clyde J. Berg,  as well as other  liabilities  of $88,  and
         issued 694,030 O.P. Units to various members of the Berg Group.

         Effective April 1, 1999, the Company acquired an approximately  515,700
         square foot  five-building  R&D complex located on L'Avenida  Avenue in
         Mountain View,  California  (the "Microsoft  project"),  which has been
         fully leased to Microsoft Corporation  ("Microsoft") under the terms of
         the Company's  Pending  Projects  Acquisition  Agreement  with the Berg
         Group  members and other owners of projects  subject to the  agreement.
         The total acquisition  price for this property was $156,107,  which was
         funded by (a) assumption by the Company of $25,000 of mortgage debt due
         Berg  &  Berg,  Enterprises,  Inc.;  (b)  assumption  of  the  sellers'
         obligation to reimburse  Microsoft for shell and tenant improvements of
         $32,057 and;  (c) the  issuance of  13,206,629  O.P.  Units,  including
         12,467,058 O.P. Units issued to various members of the Berg Group.

                                     - 7 -
<PAGE>

         In accordance with the terms of the lease, on April 1, 1999,  Microsoft
         began paying  monthly base rent of  approximately  $1,226 for the first
         four buildings,  which consist of approximately 415,700 rentable square
         feet.   In  June  1999,   Microsoft   began  paying   monthly  rent  of
         approximately   $295  for  the  fifth   building,   which  consists  of
         approximately  100,000  rentable  square feet.  Microsoft  controls the
         construction  of this  facility,  which is  currently  scheduled  to be
         completed  and ready for  occupancy  in phases from  October  1999 thru
         first  quarter

         2000.  Microsoft  has  signed a  seven-year  lease that provides  for a
         first year's rent of $2.95 per square foot per month with approximately
         4% annual rent increases.

         In July 1999, the Company acquired two newly constructed R&D properties
         located in San Jose, California.  The acquisitions added 139,423 square
         feet of rentable  space  acquired from the Berg Group under the Pending
         Projects Acquisition  Agreement.  The total acquisition price for these
         two properties  was $21,719.  The  acquisition  price was funded by the
         assumption of $4,558 of debt due Berg & Berg Enterprises,  Inc. and the
         issuance of 2,004,215 O.P. Units to various members of the Berg Group.

         REFUNDABLE OPTION PAYMENT

         During the  third quarter of 1999, the Company entered into a new lease
         agreement for 2001  Logic Drive with Xilinx,  Incorporated  ("Xilinx").
         The lease  agreement  includes an option granted to  Xilinx to purchase
         the  building  at  a  predetermined   price.   In  September  1999,  in
         accordance with the option  provisions  of the lease agreement,  Xilinx
         paid the  Company  a deposit of  $21,564  to secure  its option  right.
         Xilinx can exercise  the option only between  April 30, 2000,  and July
         31,  2000.  Upon  exercise of the option,  the Company will  refund the
         deposit  amount and Xilinx will  deposit into escrow funds equal to the
         purchase price. In the event  Xilinx does not exercise its option,  the
         Company must refund the deposit in full to Xilinx, without interest.

4.       Stock Transactions

         In July 1999,  the  Company  completed a public  offering of  8,680,000
         shares of its common  stock at $8.25 per  share.  The net  proceeds  of
         approximately $66,900, after deducting underwriting discounts and other
         offering  costs,  were used to reduce  the  outstanding  balance on the
         line of  credit with  Wells Fargo Bank,  N.A.  ("Wells Fargo line")  by
         approximately $41,000, and to reimburse Microsoft approximately $25,000
         for  shell  and  tenant  improvements  on the  Microsoft project.   The
         remaining net proceeds of approximately  $900 were retained for general
         corporate purposes.

         Michael  Anderson,  Chief  Operating  Officer  and a  director  of  the
         Company,  resigned  from the  Company  effective  April 30,  1999.  The
         Company had previously issued 200,000 shares of its common stock to Mr.
         Anderson in exchange for a note  receivable  payable to the Company for
         $900. Upon Mr. Anderson's resignation,  the Company, in accordance with
         the  terms  of  its  agreements  with  Mr.  Anderson,  repurchased  and
         subsequently  cancelled  117,361 of the 200,000 shares of common stock,
         representing  $528 of the original $900 note receivable.  The remaining
         portion of the note receivable in the amount of $372 was paid in full.

         During the nine months ended September 30, 1999, options were exercised
         for a total of  179,420  shares.  The  exercise  price for all  options
         exercised  was $4.50 per share and total  proceeds to the Company  were
         $807.


5.       Net Income Per Share

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

                                     - 8 -
<PAGE>

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

                                                             Three Months Ended             Nine Months Ended
                                                                September 30,                  September 30,
                                                          ------------------------       -----------------------
                                                             1999          1998             1999         1998
                                                          ----------    ----------       ----------   ----------
<S>                                                      <C>            <C>             <C>           <C>
        Weighted average shares outstanding (basic)       16,715,354     1,698,536       11,067,622    1,634,220
        Incremental shares from assumed option                92,827             -          110,607            -
                                                          ----------     ---------       ----------    ---------
        Weighted average shares outstanding (diluted)     16,808,181     1,698,536       11,178,229    1,634,220
                                                          ==========     =========       ==========    =========
</TABLE>

         The  outstanding  O.P.  Units,  which become  exchangeable  at the unit
         holder's  option  for  shares of common  stock on a  one-for-one  basis
         beginning on December 29, 1999, have been excluded from the diluted net
         income  per  share  calculation,  as there  would be no  effect  on the
         amounts because the minority  interests'  share of income would also be
         added back to net income.  O.P. Units outstanding at September 30, 1999
         were 75,799,431.


6.       Related Party Transactions

         As of September 30, 1999, the Berg Group owned 71,478,829 O.P. Units of
         the total 75,799,431 O.P. Units issued and outstanding.  Along with the
         Company's  common  shares  owned by the Berg  Group,  the Berg  Group's
         ownership as of September 30, 1999 represented approximately 77% of the
         equity interests of the Company,  assuming conversion of the 75,799,431
         O.P. Units into the common stock of the Company.

         As of September 30, 1999, debt in  the amount of $30,803 was due Berg &
         Berg  Enterprises,  Inc.  at an interest rate equal to the rate charged
         on the Wells Fargo line  (6.99% at September  30,  1999).  Payments are
         made on a demand basis but are due no later than December 1999.  During
         the first nine months of 1999, the  Company assumed $33,083 of debt due
         Berg  &  Berg   Enterprises,   Inc.   in   connection   with   property
         acquisitions.   In  addition,   the  first  and  second  quarter   1999
         distributions  payable to  members  of the  Berg Group of $16,607  were
         converted  to   related  party  debt.   Interest  expense  incurred  in
         connection  with debt  due Berg & Berg  Enterprises,  Inc. was $646 and
         $3,183  for the  three  months  ended  September  30,  1999  and  1998,
         respectively,   and  $1,635  and  $3,183  for  the  nine  months  ended
         September 30, 1999 and 1998, respectively.

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

         The Company  currently  leases space owned by Berg & Berg  Enterprises,
         Inc.  Rental  amounts and overhead  reimbursements  paid to Berg & Berg
         Enterprises,  Inc.  were $20 for the three months ended  September  30,
         1999 and 1998, and $60 and $40 for the nine months ended  September 30,
         1999 and 1998, respectively.

7.       Subsequent Events

         On September 15, 1999, the Company  declared a $0.15 per share dividend
         on its common  stock.  The dividend was paid on October 11, 1999 to all
         common  stockholders  of record as of September  30, 1999.  At the same
         time, the operating  partnerships paid a distribution of $0.15 per O.P.
         Unit on October  11,  1999,  as well.  The amount of this  distribution
         payable to members of the Berg  Group of $9,748,  was  retained  by the
         operating  partnerships  and  converted  to  related  party  debt as of
         October 11, 1999.

         The line of credit agreement  between Wells Fargo Bank and the Company,
         which has been  guaranteed by  certain  members of the Berg Group,  was
         modified to extend  the maturity  date from October 1, 1999 to November
         30, 1999.  Additionally,  the Compan  reduced the line from $100,000 to
         $50,000 with all other major terms  (interest rate,  collateral,  etc.)
         remaining unchanged.

                                     - 9 -
<PAGE>

8.       Commitments and Contingencies

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

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

                                     - 10 -
<PAGE>



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


This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  should be read in  conjunction  with the  accompanying  consolidated
financial  statements  and notes  thereto  contained  herein  and the  Company's
consolidated  financial  statements and notes thereto contained in the Company's
Annual Report on Form 10-K as of and for the year ended  December 31, 1998.  The
results  for the  three  and  nine  months  ended  September  30,  1999  are not
necessarily  indicative of the results to be expected for the entire fiscal year
ending  December 31, 1999.  The following  discussion  includes  forward-looking
statements,  including  but  not  limited  to  statements  with  respect  to the
Company's future financial performance, operating results, plans and objectives.
Actual results may differ materially from those currently  anticipated depending
upon  a  variety  of  factors,   including   those  described  below  under  the
sub-heading, "Forward-Looking Information."

OVERVIEW

In May 1998, Mission West Properties,  Inc. (the "Company"),  the members of the
Berg  Group,  John  Kontrabecki  and  certain  other  persons  entered  into  an
acquisition   agreement  providing,   among  other  things,  for  the  Company's
acquisition  of  interests  as  the  sole  general   partner  of  four  separate
partnerships  (the  "operating  partnerships").   At  the  time,  the  operating
partnerships held approximately 4.3 million rentable square feet of R&D property
located in the Silicon  Valley.  The agreement  also provided for the parties to
enter into the Pending Projects Acquisition Agreement and the Berg Land Holdings
Option  Agreement with the Berg Group and the exchange rights agreement with all
limited partners in the operating partnerships,  following stockholder approval.
Effective July 1, 1998, the Company  consummated  its acquisition of the general
partnership  interests in the operating  partnerships.  The Company effected its
purchase  of the  general  partnership  interests  by  issuing  to  each  of the
operating  partnerships  a demand  note  bearing  interest  at 7.25% per  annum,
aggregating  approximately $35.2 million of principal payable no later than July
1, 2000.

Effective  July 1, 1998,  all limited  partnership  interests  in the  operating
partnerships were converted into 59,479,633  operating  partnership units ("O.P.
Units"),  representing  ownership  of  approximately  87.89%  of  the  operating
partnerships,  upon  consummation  of the  acquisition.  Under  the terms of the
exchange  rights  agreement,  each O.P.  Unit may be exchanged  for one share of
common stock after December 29, 1999,  subject to certain  conditions.  The O.P.
Units  represent the minority  ownership  interests.  At September 30, 1999, the
Company owned an 18% general partnership interest in the operating partnerships,
taken as a whole.

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

In April  1999,  the  Company  acquired  an  approximately  515,700  square foot
five-building  R&D  complex  located  on  L'Avenida  Avenue  in  Mountain  View,
California  (the  "Microsoft  project") by  purchasing  all of the  interests of
Baccarat  Shoreline  LLC,  which the Company has renamed  Mission West Shoreline
LLC, a wholly owned limited liability company.  In the transaction,  the Company
assumed debt totaling  approximately  $57.1 million on a consolidated basis, and
the former members of Baccarat Shoreline LLC received  13,206,629 O.P. Units, of
which various members of the Berg Group received 12,467,058 O.P. Units.

In July 1999,  the Company  completed a public  offering of 8,680,000  shares of
common stock at $8.25 per share.  The net  proceeds  from this  offering,  after
deducting  underwriting  discounts and other offering costs, were  approximately
$66.9 million. The net proceeds were used to repay amounts outstanding under the
Company's  line of credit with Wells Fargo Bank,  N.A.  ("Wells  Fargo line") to
reimburse Microsoft  Corporation for shell and tenant  improvements,  as well as
for general corporate purposes.

                                     - 11 -
<PAGE>



At September 30, 1999, the  outstanding  balance under the demand notes that the
Company owes to the operating  partnerships was approximately $1.1 million.  The
principal  of the  demand  notes,  along  with the  interest  expense,  which is
interest income to the operating  partnerships,  is eliminated in  consolidation
and is not  included in the  corresponding  line items  within the  consolidated
financial  statements.  However,  the interest income earned on this debt by the
operating partnerships, which is interest expense to the Company, is included in
the calculation of minority interest as reported on the consolidated  statements
of operations,  thereby reducing our net income by this same amount. At present,
the  Company's  only means for  repayment  of this  debt,  be it in this form or
refinanced  with  another  lender,  is through  distributions  that the  Company
receives from the operating partnerships in excess of the amount of dividends to
be paid to the Company's stockholders.

The Company  intends to elect and qualify to be taxed as a REIT  commencing with
the taxable year ending December 31, 1999.


RESULTS OF OPERATIONS

Comparison  of the three and nine months ended  September  30, 1999 to the three
and nine months ended September 30, 1998.

As of September 30, 1999, the Company,  through its controlling interests in the
operating  partnerships,  owned 79 properties totaling approximately 5.2 million
square feet compared to 69 properties totaling  approximately 4.3 million square
feet owned by the Company as of September 30, 1998.  This represents an increase
of  approximately  21% in total  rentable  square footage from one year ago. The
increase resulted from the following acquisitions:

<TABLE>
<CAPTION>

             Date of                                                        Rentable Square
           Acquisition            Address                                       Footage
          ------------------     --------------------------------------     ---------------
<S>                             <C>                                              <C>
          10/98                  1688 Richard Avenue                               52,800
          11/98                  5850-5870 Hellyer Avenue                         109,715
          3/99                   6810 Santa Teresa Boulevard                       54,996
          5/99                   L'Avenida Avenue (5 buildings)                   515,700
          7/99                   1750 Automation Parkway                           80,640
          8/99                   1700 Richard Avenue                               58,783
          ---------------------------------------------------------------------------------
                                                                                  872,634
                                                                                  =======
</TABLE>

The following table provides information regarding the Company's rental revenues
for the three months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>

                                                   Three months ended September 30,
                                       -------------------------------------------------------
                                         1999         1998         $ Change         % Change
                                       --------     --------     ------------     ------------
                                                (Dollars in thousands)
<S>                                    <C>          <C>            <C>               <C>
          Same Property (1)             $13,945      $13,317        $  628             4.7%
          1998 Acquisitions                 586            -           586               -
          1999 Acquisitions               5,986            -         5,986               -
                                        -------      -------        ------
                                        $20,517      $13,317        $7,200            54.1%
                                        =======      =======        ======
</TABLE>

(1)  "Same Property" is defined as properties owned as of July 1, 1998 and still
     owned as of September 30, 1999.

For the quarter ended  September  30, 1999,  rental  revenues  increased by $7.2
million  from $13.3  million for the three months  ended  September  30, 1998 to
$20.5  million  for the same  period of 1999.  Of the $7.2  million  increase in
rental revenues,  the majority of the increase,  $6.0 million,  was generated by
properties  acquired in 1999. The remaining $1.2 million increase  resulted from
an increase of $628,000 in revenues  generated by the Company's  "Same Property"
portfolio,  as well as $586,000  generated by properties  acquired in the fourth
quarter of 1998. The increase in the "Same Property"  portfolio was attributable
to higher  roll-over  rental  rates  realized on the renewal and  re-leasing  of
space.  During  the  period of October 1, 1998 to  September  30,  1999,  leases
representing approximately 760,000 square feet expired.

Base rents, on a cash basis (giving no effect to straight-lined  rents), for the
Company's "Same  Property" portfolio  increased  5% for the  three months  ended
September 30, 1999 as compared to the same period of 1998.

                                     - 12 -
<PAGE>

Tenant  reimbursements  increased by $1.9 million or 90%,  from $2.1 million for
the three months ended  September  30, 1998 to $4.0 million for the three months
ended  September  30,  1999.  Operating  expenses  and real estate  taxes,  on a
combined  basis,  increased  by $1.4  million or 52%,  from $2.7 million to $4.1
million for the three months ended  September  30, 1998 and 1999,  respectively.
The increases  resulted  primarily from the growth in the total rentable  square
footage during the periods presented.

Depreciation  expense  increased  by $872,000  for the three-month  period ended
September 30, 1999. The increase was attributable to the ten properties acquired
since September 30, 1998.

Interest  expense  increased  by $1.4 or 117%  from $1.2  million  for the three
months  ended  September  30, 1998 to $2.6  million for the three  months  ended
September 30, 1999. Interest expense (related parties) decreased by $2.5 million
or 78% from $3.2  million  for the three  months  ended  September  30,  1998 to
$646,000  for the three  months ended  September  30,  1999.  As a result of the
Company  obtaining a $130.0 million loan with  Prudential  Insurance  Company of
America in  September of 1998,  of which  $115.8  million was used to reduce the
outstanding  principal  balance owing under the mortgage notes payable  (related
parties),  the mix of debt has shifted  from  mortgage  notes  payable  (related
parties) to mortgage notes payable. On a net basis,  interest expense (including
amounts to related  parties)  has  decreased  given the decrease in overall debt
levels.  As a result  of  proceeds  received  from  the  December  1998  private
placement,  the July  1999  public  offering,  receipt  of a  refundable  option
payment, as well as cash generated from operations, debt outstanding,  including
amounts due related  parties,  has decreased by $50.5 million or 23% from $220.0
million as of September 30, 1998 to $169.5 million as of September 30, 1999.

The  minority  interest  portion of income was $11.3  million,  resulting in net
income of $2.2 million for the three months ended  September 30, 1999.  Minority
interest  represents the limited partners'  ownership  interest in the operating
partnerships, which was 82% as of September 30, 1999, taken as a whole.

The Company's  acquisition of the general partnership interests in the operating
partnerships  during  the  third  quarter  of  1998  substantially  altered  the
Company's  operations.  For the first six  months of 1998,  the  Company's  only
assets were cash and receivables,  and therefore,  the Company had insignificant
revenue-generating and cash generating capabilities and minimal operations. As a
consequence,  operating results for the nine months ended September 30, 1999 are
not meaningfully comparable to operating results for the same period of 1998.

CHANGES IN FINANCIAL CONDITION

During the first nine months of 1999,  the  Company  acquired  eight  additional
properties  representing  710,119 rentable square feet of newly  constructed R&D
properties  located in Silicon Valley.  All these  properties were acquired from
the Berg Group under the Pending Projects Acquisition  Agreement.  The aggregate
acquisition price for these properties was $186.4 million.  The Company financed
these  acquisitions by a) assumption by the Company of $33.1 million of debt due
Berg & Berg Enterprises, Inc.; b) assumption by the Company of other liabilities
of $32.2  million  (including  the  assumption  of the  sellers'  obligation  to
reimburse  Microsoft for shell and tenant improvements of $32.1 million) and; c)
the issuance of 15,904,874  O.P.  Units,  of which  15,166,303  O.P.  Units were
issued to various members of the Berg Group.

Michael  Anderson,  Chief  Operating  Officer  and a  director  of the  Company,
resigned from the Company  effective  April 30, 1999. The Company had previously
issued 200,000 shares of its common stock to Mr. Anderson in exchange for a note
receivable payable to the Company for $900,000. Upon Mr. Anderson's resignation,
the Company,  in accordance with the terms of its agreements with Mr.  Anderson,
repurchased and subsequently  cancelled  117,361 of the 200,000 shares of common
stock,  representing  approximately  $528,000  of  the  original  $900,000  note
receivable.  The  remaining  portion  of the note  receivable  in the  amount of
approximately $372,000 was paid in full.

In July 1999, the Company completed a public offering of 8,680,000 shares of its
common stock at $8.25 per share. The net proceeds of approximately $66.9 million
after  deducting  underwriting  discounts and other  offering costs were used to
reduce the outstanding  balance on its Wells Fargo line by  approximately  $41.0
million,  reimburse  Microsoft  approximately $25.0 million for shell and tenant
improvements on the Microsoft  project  property,  with the remaining  amount of
approximately $900,000 retained for general corporate purposes.

                                     - 13 -
<PAGE>

During the third quarter of 1999, the Company entered into a new lease agreement
for 2001 Logic Drive with Xilinx,  Incorporated ("Xilinx").  The lease agreement
includes an option granted to Xilinx to purchase the building at a predetermined
price. In September 1999, in accordance with the option  provisions of the lease
agreement,  the  Xilinx  paid to the  Company a deposit of $21,564 to secure its
option right.  Xilinx can exercise the option only between  April 30, 2000,  and
July 31, 2000.  Upon exercise of the option,  the Company will apply the deposit
amount to satisfy  Xilinx's  obligation  for the  purchase  price.  In the event
Xilinx does not exercise its option, the Company must refund the deposit in full
to lessee,  without interest.  A portion of the option payment received was used
to paydown outstanding debt.

During the nine months ended  September  30, 1999,  employee  stock options were
exercised  to  purchase a total of 179,420  shares of common  stock at $4.50 per
share. Total proceeds to the Company were approximately $807,000.

LIQUIDITY AND CAPITAL RESOURCES

The Company  expects its  principal  sources of liquidity for  distributions  to
stockholders,   debt  service,   leasing   commissions  and  recurring   capital
expenditures to be Funds from Operations ("FFO"), the borrowings under the Wells
Fargo line or replacement  line of credit.  The Company expects these sources of
liquidity to be adequate to meet projected  distributions  to  stockholders  and
other presently anticipated liquidity requirements in 1999, assuming the renewal
or replacement of the Wells Fargo line. The Company  believes it will be able to
renew or replace this line of credit on acceptable  terms,  although the Company
can give no assurance  that it will succeed in doing so. The Company  expects to
meet  its  long-term   liquidity   requirements  for  the  funding  of  property
development,  property  acquisitions  and other material  non-recurring  capital
improvements  through  long-term  secured  and  unsecured  indebtedness  and the
issuance of additional equity securities by the Company.

The  Wells  Fargo  line is  currently  collateralized  by 14  properties  and is
guaranteed by Mr. Berg and certain  other  members of the Berg Group.  The Wells
Fargo line expired on October 1, 1999.  The Company had the capacity of the line
reduced  from $100.0  million to $50.0  million and Wells Fargo has extended the
maturity  date to November  30,  1999.  All other major  terms  (interest  rate,
collateral,  etc.) have  remained  unchanged.  The Company is  negotiating a new
$50.0 million  credit  facility.  The Company  expects to obtain this new credit
facility  prior to November  30, 1999,  but there can be no  assurance  that the
Company  will be able to  obtain a line of  credit  with  terms  similar  to the
existing line, and its cost of borrowing could increase  substantially.  Failure
to obtain a new credit facility would  substantially limit the Company's ability
to purchase additional properties.

At September  30, 1999,  the Company had total  indebtedness  of $169.5  million
including  $134.4 million of fixed rate mortgage debt, $30.8 million of variable
rate mortgage debt (due to related parties),  and $4.3 million outstanding under
its  Wells  Fargo  line.  During  the nine  months  ended  September  30,  1999,
distributions  payable to members of the Berg Group of $16,607  relating  to the
first and second  quarter of 1999 were  converted to related  party debt.  As of
September 30, 1999, the Company had available borrowing capacity under the Wells
Fargo line of $95.7 million, which was reduced to $45.7 in October 1999.

As of September 30, 1999, Debt to Total Market  Capitalization  ratio,  which is
computed as the  Company's  total debt  outstanding  divided by the sum of total
debt  outstanding plus the market value of common stock (based upon an $8.00 per
share price) on a fully  diluted  basis,  including  the  conversion of all O.P.
Units into common stock, was  approximately  18.6% based upon an estimated Total
Market Capitalization of approximately $911.6 million.


                                     - 14 -

<PAGE>


MORTGAGE DEBT

The debt owed to the Berg Group  carries a variable  interest  rate equal to the
rate  applicable to the Wells Fargo line,  which was 6.99% annually at September
30, 1999 and is payable in full upon demand.

         The  following  table sets forth  certain  information  regarding  debt
outstanding as of September 30, 1999:

<TABLE>
<CAPTION>
                                                                                                        Maturity     Interest
Debt Description                              Collateral Properties                         Balance       Date         Rate
----------------------------------            ------------------------------------         ---------  ------------  ----------
<S>                                          <C>                                          <C>           <C>          <C>
LINE OF CREDIT:
Wells Fargo Bank, N.A.                        1810 McCandless Drive, Milpitas, CA          $  4,295       11/99        (1)
                                              1740 McCandless Drive, Milpitas, CA
                                              1680 McCandless Drive, Milpitas, CA
                                              1600 McCandless Drive, Milpitas, CA
                                              1500 McCandless Drive, Milpitas, CA
                                              1450 McCandless Drive, Milpitas, CA
                                              1350 McCandless Drive, Milpitas, CA
                                              1325 McCandless Drive, Milpitas, CA
                                              1425 McCandless Drive, Milpitas, CA
                                              1526 McCandless Drive, Milpitas, CA
                                              1575 McCandless Drive, Milpitas, CA
                                              1625 McCandless Drive, Milpitas, CA
                                              1745 McCandless Drive, Milpitas, CA
                                              1765 McCandless Drive, Milpitas, CA
MORTGAGE NOTES PAYABLE (related parties):
                                              2033-2043 Samaritan Drive, San Jose, CA        30,803       12/99        (1)
                                              2133 Samaritan Drive, San Jose, CA
                                              2233-2243 Samaritan Drive, San Jose, CA
MORTGAGE NOTES PAYABLE:
Prudential Capital Group                      20400 Mariani, Cupertino, CA                    1,936        4/09       8.75%
New York Life Insurance Company               10440 Bubb Road, Cupertino, CA                    412        1/09       9.625%
Home Savings & Loan Association               10460 Bubb Road, Cupertino, CA                    489       12/06       9.5%
Mellon Mortgage Company                       3530 Bassett, Santa Clara, CA                   2,881        6/01       8.125%
Prudential Insurance Company of America       10300 Bubb, Cupertino, CA                     128,687(2)    10/08       6.56%
                                              10500 N. DeAnza, Cupertino, CA
                                              4050 Starboard, Fremont, CA
                                              45700 Northport Loop, Fremont, CA
                                              45738 Northport Loop, Fremont, CA
                                              450-460 National, Mountian View, CA
                                              4949 Hellyer, San Jose, CA
                                              6311 San Ignacio, San Jose, CA
                                              6321 San Ignacio, San Jose, CA
                                              6325 San Ignacio, San Jose, CA
                                              6331 San Ignacio, San Jose, CA
                                              6341 San Ignacio, San Jose, CA
                                              6351 San Ignacio, San Jose, CA
                                              3236 Scott, Santa Clara, CA
                                              3560 Bassett, Santa Clara, CA
                                              3570 Bassett, Santa Clara, CA
                                              3580 Bassett, Santa Clara, CA
                                              1135 Kern, Sunnyvale, CA
                                              1212 Bordeaux, Sunnyvale, CA
                                              1230 E. Arques, Sunnyvale, CA
                                              1250 E. Arques, Sunnyvale, CA
                                              1170 Morse, Sunnyvale, CA
                                              3540 Bassett, Santa Clara, CA
                                              3542 Bassett, Santa Clara, CA
                                              3544 Bassett, Santa Clara, CA
                                              3550 Bassett, Santa Clara, CA
                                                                                           --------
Mortgage Notes Payable Subtotal                                                             134,405
                                                                                           --------
                                  TOTAL                                                    $169,503
                                                                                           ========
</TABLE>

(1)  The lesser of (a) Wells Fargo prime rate in effect on the first day of each
     calendar  month;  (b) LIBOR plus 1.65%;  or (c) the Wells  Fargo  Purchased
     Funds Rate quoted on the first day of each calendar month plus 1.65%.  Rate
     in effect as of September 30, 1999 was 6.99%.

(2)  John Kontrabecki, one of the limited partners, has guaranteed approximately
     $12,000 of this debt.


                                     - 15 -
<PAGE>



In April 1999, the Company acquired the Microsoft project.  Microsoft has signed
a  seven-year  lease that  provides  for a first year's rent of $2.95 per square
foot per month with  annual rent  increases  of  approximately  4%. The lease is
triple net, and the Company  receives a management fee equal to 1% of the annual
base rent. In accordance  with the lease terms,  in April 1999,  Microsoft began
paying  monthly  base rent of  approximately  $1.2  million  for the first  four
buildings,  consisting of  approximately  415,700  rentable square feet. In June
1999,  Microsoft  began paying  monthly rent of  approximately  $295,000 for the
fifth building, consisting of approximately 100,000 rentable square feet.

Under the terms of the Pending Projects Acquisition  Agreement,  the acquisition
price of the Microsoft project was approximately  $116.5 million,  determined as
follows:

     -    assumption of $25.0 million of mortgage debt due the Berg Group
     -    assumption of the sellers' obligation to reimburse Microsoft for shell
          and tenant improvements of approximately $32.1 million and;
     -    issuance of 13,206,629  O.P.  Units,  at the agreed value of $4.50 per
          unit for a total of $59.4 million.

Under generally accepted accounting principles,  the value of the O.P. Units was
equal  to the  closing  price  of the  Company's  common  stock  on the date the
acquisition  closed, or $7.50 per share as reported on the AMEX,  resulting in a
recorded purchase price of $156.1 million for the Microsoft project.

Additionally  in July 1999,  the  Company  acquired  two newly  constructed  R&D
properties  located in San Jose,  California.  These  acquisitions added 139,423
square feet of rentable  space and were  acquired  from the Berg Group under the
Pending Projects  Acquisition  Agreement.  The aggregate  acquisition  price for
these two properties was $21.7 million.  The acquisition price was funded by the
assumption  of $4.6  million of debt due Berg & Berg  Enterprises,  Inc. and the
issuance of 2,004,215 O.P. Units to various members of the Berg Group.

The following table presents certain  information  concerning projects for which
the Company, through its interests in the operating partnerships,  has the right
to acquire  under the Pending  Projects  Acquisition  Agreement or the Berg Land
Holdings  Option  Agreement.  The table  includes only those  projects for which
construction has commenced.
<TABLE>
<CAPTION>

                                    Approximate
                                   Rentable Area            Anticipated               Total Estimated
Property                           (Square Feet)          Acquisition Date          Acquisition Value (1)
---------------------------       ---------------        ------------------        -----------------------
<S>                                  <C>                 <C>                            <C>
PENDING PROJECTS
Automation (1 building)                80,640             1st Quarter 2000                  8,986
Automation (1 building)                61,056             2nd Quarter 2000                  6,803
Automation (1 building)               114,028             4th Quarter 2000                 12,706
                                      -------                                             -------
               Subtotal               255,724                                            $ 28,495

BERG LAND HOLDINGS
Fontanosa                              77,000             4th Quarter 1999               $  7,226
Hellyer/Branham                       311,000             2nd Quarter 2000                 25,000
                                      -------                                             -------
              Subtotal                388,000                                            $ 32,226

TOTAL                                 643,724                                            $ 60,721
                                      =======                                             =======
</TABLE>


(1)      The  Estimated  Acquisition  Value which  represents  the economics for
         acquiring the pending  projects under the terms of the Pending Projects
         Acquisition Agreement,  will differ from the actual acquisition cost as
         determined under GAAP.

Pursuant to the Berg Land Holdings Option Agreement  between the Company and the
Berg  Group,  the  Company  currently  has the option to acquire any future R&D,
office and industrial  property developed by the Berg Group on land it currently
owns or has under option, or acquires for these purposes in the future, directly
or indirectly by certain members of the Berg Group, including its September 1999
acquisition  of 40 acres  on  Piercy  Avenue  in South  San  Jose,  California.
Excluding the Fontanosa and  Branham/Hellyer  projects,  there are currently 156
acres of land which are to be developed  under the Berg Land Holdings Agreement.
The Berg Group projects that it can develop  approximately  2.5 million rentable
square feet on these 156 acres.

                                     - 16 -

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

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

HISTORICAL CASH FLOWS

Net cash provided by operating  activities  for the nine months ended  September
30,  1999 was $43.1  million  compared  to $10.6  million for the same period in
1998. The change was a direct result of the Company's acquisition of its general
partnership interests in the operating  partnerships during the third quarter of
1998.

Net cash used in  investing  activities  was  approximately  $14.8  million  and
$118,000 for the nine months ended  September  30, 1999 and 1998,  respectively.
Cash used in investing  activities  during the nine months ended  September  30,
1999 related to  improvements  made to existing real estate  assets  acquired as
part of the Company's investment in the operating partnerships,  as well as cash
used to purchase short-term  securities,  partially offset by cash received with
regards to a refundable option payment.

Net cash used in  financing  activities  was $20.2  million  for the nine months
ended  September 30, 1999 compared to $13.3 million for the same period in 1998.
During the nine months  ended  September  30,  1999,  the Company  reduced  debt
outstanding and made  distributions  to holders of its common stock and the O.P.
Units by  utilizing  net proceeds of $66.9  million from its public  offering of
8,680,000 shares,  cash received with regards to a refundable option payment and
by utilizing cash generated from operating activities.

CAPITAL EXPENDITURES

The  properties  require  periodic  investments  of capital  for  tenant-related
capital expenditures and for general capital  improvements.  For the years ended
December 31, 1994 through  December 31, 1998, the recurring  tenant  improvement
costs and  leasing  commissions  incurred  with  respect to new leases and lease
renewals of the properties previously owned or controlled by members of the Berg
Group averaged approximately $1.5 million annually. The Company expects that the
average annual cost of recurring tenant  improvements  and leasing  commissions,
related to the  properties,  will be  approximately  $1.5  million.  The Company
believes it will recover  substantially all of these sums from the tenants under
the new or renewed leases through increases in rental rates. The Company expects
to meet  its  long-term  liquidity  requirements  for the  funding  of  property
development,  property  acquisitions  and other material  non-recurring  capital
improvements  through  long-term  secured  and  unsecured  indebtedness  and the
issuance of additional equity securities by the Company.

FUNDS FROM OPERATIONS

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

                                     - 17 -
<PAGE>
The Company's  definition of FFO also assumes conversion at the beginning of the
period of all convertible securities, including minority interests that might be
exchanged  for common stock.  FFO does not  represent  the amount  available for
management's  discretionary  use,  as  such  funds  may be  needed  for  capital
replacement  or expansion,  debt service  obligations or other  commitments  and
uncertainties.

Furthermore, FFO is not comparable to similarly entitled items reported by other
REITs that do not define them  exactly as the Company  defines  FFO. FFO for the
three  months  ended  September  30,  1999 and 1998  and the nine  months  ended
September 30, 1999 are summarized in the table below:
<TABLE>
<CAPTION>

                                         Three Months Ended September 30,
                                         --------------------------------       Nine Months Ended
                                            1999                  1998          September 30, 1999
                                          --------              --------        ------------------
                                              (Dollars in thousands)
<S>                                      <C>                    <C>                 <C>
          Net income                      $ 2,178                $  130              $ 4,124
          Add:
              Minority interest            11,310                 5,389               27,521
              Depreciation                  3,510                 2,638                9,612
                                          -------                ------              -------
          FFO                             $16,998                $8,157              $41,257
                                          =======                ======              =======
</TABLE>




The Company intends to pay distributions to stockholders  based upon total Funds
Available   for   Distribution   ("FAD"),   which  is  calculated  as  FFO  less
straight-lined  rents,  leasing  commissions paid and capital  expenditures made
during the respective period. The calculations of FAD for the three months ended
September 30, 1999 and 1998 and the nine months ended  September 30, 1999 are as
follows:

<TABLE>
<CAPTION>

                                         Three Months Ended September 30,
                                         --------------------------------       Nine Months Ended
                                            1999                  1998          September 30, 1999
                                          --------              --------        ------------------
                                              (Dollars in thousands)
<S>                                      <C>                    <C>                 <C>
          FFO                             $16,998                $8,157              $41,257
          Less:
              Straight-line rents           1,427                   752                3,083
              Leasing commissions             301                     -                  379
              Capital expenditures            274                   118                  515
                                          -------               -------              -------
          FAD                             $14,996                $7,287              $37,280

</TABLE>

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

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

The  Company  anticipates  that cash  available  for  distribution  will  exceed
earnings and profits for federal  income tax  purposes,  as the latter figure is
reduced by non-cash  expenses,  such as depreciation and amortization,  that the
Company will incur. Distributions, other than capital gain distributions, by the
Company to the extent of its current and  accumulated  earnings  and profits for
federal income tax purposes most likely will be taxable to U.S.  stockholders as
ordinary   dividend  income  unless  a  stockholder  is  a  tax-exempt   entity.
Distributions  in excess of earnings and profits  generally will be treated as a
non-taxable reduction of the U.S. stockholder's basis in the common stock to the
extent of such basis,  and  thereafter as a taxable gain. The percentage of such
distributions in excess of earnings and profits, if any, may vary from period to
period.   The  Company   anticipates  that  a  substantial   percentage  of  the
distributions  to  stockholders  for the year  ending  December  31,  1999  will
constitute taxable income.

Distributions  will be determined  by the Company's  board of directors and will
depend on actual FAD, the Company's financial condition,  capital  requirements,
the annual  distribution  requirements under the REIT provisions of the Code and
such other factors as the board of directors deems relevant. The Company expects
to pay aggregate  distributions totaling $0.56 per share of common stock for the
fiscal year 1999.

                                     - 18 -
<PAGE>
IMPACT OF RECENTLY ISSUED STANDARDS

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

YEAR 2000

Forward  Looking  Information.  The statements in the following  section include
Year 2000 readiness  disclosure  within the meaning of the Year 2000 Information
and Readiness  Disclosure Act. The Company intends such 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.  See "Forward  Looking
Information".

Introduction

The term "Year 2000 issue" is a general term used to describe  various  problems
that may result from the improper  processing by computer systems of dates after
1999. These problems could result in a system failure or miscalculations causing
disruptions of operations.

The Company's  efforts to address its Year 2000 issues  consist of reviewing the
Company's computer information  systems,  evaluating other computer systems that
do not  relate  to the  Company's  internal  information  systems,  but  include
embedded technology at its properties,  such as security,  heating,  ventilation
and air conditioning,  elevator, fire and safety systems, and communicating with
certain  significant  third-party  service  providers to determine whether there
will be any interruption in their systems that could affect the Company.

The Company's State of Readiness

Information  Technology  Systems.  The  Company  has  reviewed  its  information
technology  systems and has contacted  vendors to determine whether such systems
are Year 2000  compliant.  Based upon the Company's  inquiries,  the Company has
determined that its primary network operating system, Windows NT Server 4.0, and
all of its desktop  personal  computers are Year 2000 compliant.  The vendor for
the  Company's  property  management  and  accounting  software  has advised the
Company  that it will  provide a Year 2000  compliant  software  upgrade  to the
Company by the end of November 1999.

Embedded Systems.  The Company believes that in most cases under the lease terms
it is the  tenant's  sole  responsibility  to ensure that the  embedded  systems
(e.g., security,  heating,  ventilation and air conditioning,  fire and elevator
systems)  are Year 2000  compliant.  The Company has made  limited  inquiries to
various  vendors  concerning  embedded  systems used on some of its  properties.
Based upon responses to its  inquiries,  the Company is not aware of any systems
that are not Year 2000 compliant.

Third Party  Relationships.  The Company  plans to contact third  parties,  like
utility  companies,  financial  institutions and its transfer agent that provide
important services to the Company and will ascertain whether those third parties
are  aware of Year  2000  issues  that  would  adversely  impact  the  Company's
operations.  At this time,  the  Company  does not intend to contact  all of its
third party service providers, however.

Costs to Address the Company's Year 2000 Issues

The Company has not budgeted any amount to address Year 2000 issues. Because the
Company's Year 2000  assessment is ongoing and additional  funds may be required
as a result of future findings, the Company may need to add accrual amounts as a
result of  unanticipated  delays or  preparedness  issues.  While the  Company's
efforts to  address  its Year 2000  issues may  involve  additional  costs,  the
Company believes, based on available information, that these costs will not have
a material  adverse  effect on its business,  financial  condition or results of
operations.  Although  the  Company has  concluded  that many of its tenants are
responsible for certain Year 2000 compliance costs,  there is a possibility that
certain tenants will not agree with such conclusions.

                                     - 19 -

<PAGE>


Risks Presented by Year 2000 Issues and the Company's Contingency Plan

At this time,  the Company has not identified  any specific  business  functions
that are likely to suffer material  disruption as a result of Year  2000-related
events. Due to the unique and pervasive nature of the Year 2000 issue, it is not
possible  to  anticipate   each  of  the  wide  variety  of  Year  2000  events,
particularly  outside of the Company,  that might arise in a worst-case scenario
which might have a material adverse impact on the Company's business,  financial
condition and results of operations.

A  reasonably  likely  worst-case  scenario  might be the  failure  of an energy
management  system in a  building.  Such a failure  could  adversely  affect the
environmental  conditions of the occupied  space,  thus creating  discomfort and
inconvenience  to the tenants until the condition  could be manually  corrected.
Persistence  of this  problem  for a long  period  of time  could  result  in an
increase in operating costs for the building until the energy  management system
is restored to proper operations.

The Company  utilizes  computer  software for its  corporate  and real  property
accounting records and to prepare its financial  statements.  If necessary,  the
Company could prepare all required accounting entries manually without incurring
material additional operating expenses.

Conceivably,  tenants of the properties  could  experience  delays in processing
their accounting  records and making required lease payments,  if they encounter
Year 2000 compliance problems. The Company does not believe that any such delays
would have a material adverse effect on the Company.

Although  the  Company  believes  that  the   expectations   reflected  in  such
forward-looking  statements are based on reasonable  assumptions,  the Company's
actual  cost,  progress and  expenses,  with respect to its plan to address Year
2000 issues could differ  materially  as those set forth in the  forward-looking
statements.  Factors which could have a material adverse effect on the Company's
results and progress include, but are not limited to, changes in the expenses or
delays in: the  identification  and  upgrade or  replacement  by the  Company of
computer  systems  that do not relate to  information  technology,  but  include
embedded technology;  and the Year 2000 compliance of vendors, including vendors
of the Company's computer information systems, or third party-service providers,
including the Company's  primary bank. These risks and  uncertainties  should be
considered in evaluating  forward-looking  statements and undue reliance  should
not be placed on such statements.

FORWARD LOOKING INFORMATION

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


Item 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISk

No material  changes have occurred  since our Annual Report on Form 10-K for the
year ended December 31, 1998.


                                     - 20 -

<PAGE>



================================================================================
PART II - Other Information

Item 2
CHANGES IN SECURITIES AND USE OF PROCEEDS

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

Item 6
EXHIBITS AND REPORTS ON FORM 8-K

         a.       Exhibits

                  27.1 Financial Data Schedule

         b.       Reports on Form 8-K

                  None

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

                                     - 21 -
<PAGE>


Signatures

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


                                              Mission West Properties, Inc.
                                              (Registrant)


Date:   November 10, 1999                     By:  /s/ Marianne K. Aguiar
                                                  -----------------------
                                                  Marianne K. Aguiar
                                                  Chief Financial Officer
                                                  (Principal Accounting Officer)



                                     - 22 -