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

                                    Form 10-Q


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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

                          COMMISSION FILE NUMBER 1-8383


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

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

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

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


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


                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

               17,120,279 shares outstanding as of August 9, 2001


                                     - 1 -

<PAGE>


                          Mission West Properties, Inc.

                                    FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 31, 2001

<TABLE>
<CAPTION>

                                      INDEX


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

   Item 1.    Financial Statements (unaudited):

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

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

              Consolidated Statements of Cash Flows for the
              six months ended June 30, 2001 and 2000 (unaudited)......................................................5

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

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

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


PART II       Other Information

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


Signatures............................................................................................................20
</TABLE>


                                     - 2 -
<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1   CONSOLIDATED FINANCIAL STATEMENTS

                          MISSION WEST PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                  (Dollars in thousands, except share amounts)
                                    ---------
<TABLE>
<CAPTION>
                                                                                   June 30, 2001         December 31, 2000
                                                                               ----------------------  ----------------------
                                                                                    (Unaudited)
                                    ASSETS
<S>                                                                                    <C>                  <C>
Real estate assets, at cost
    Land                                                                                $ 205,489             $ 187,219
    Buildings                                                                             671,293               654,259
                                                                               ----------------------  ----------------------
                                                                                          876,782               841,478
    Less accumulated depreciation                                                         (42,088)              (34,022)
                                                                               ----------------------  ----------------------
       Net real estate assets                                                             834,694               807,456
Cash and cash equivalents                                                                   5,724                 4,691
Deferred rent                                                                              15,196                10,869
Other assets                                                                               11,740                 3,894
                                                                               ----------------------  ----------------------
       Total assets                                                                      $867,354              $826,910
                                                                               ======================  ======================

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Line of credit (related parties)                                                    $  66,895             $  50,886
    Mortgage notes payable                                                                128,384               132,055
    Mortgage notes payable (related parties)                                               11,510                11,643
    Interest payable                                                                          345                   347
    Security deposits                                                                       5,620                 4,801
    Prepaid rental income                                                                  11,948                11,298
    Dividends/distributions payable                                                        22,428                19,115
    Refundable option payment                                                              19,835                20,835
    Accounts payable and accrued expenses                                                   3,941                 4,525
                                                                               ----------------------  ----------------------
       Total liabilities                                                                  270,906               255,505

Commitments and contingencies (Note 9)

Minority interest                                                                         492,279               469,332

Stockholders' equity:
    Preferred stock, $.001 par value, 20,000,000 shares
       authorized, none issued and outstanding                                                  -                     -
    Common stock, $.001 par value, 200,000,000 shares
       authorized, 17,120,276 and 17,025,365 shares issued and
       outstanding at June 30, 2001 and December 31, 2000,
       respectively                                                                            17                    17
    Paid-in-capital                                                                       124,036               123,136
    Accumulated deficit                                                                   (19,884)              (21,080)
                                                                               ----------------------  ----------------------
       Total stockholders' equity                                                         104,169               102,073
                                                                               ----------------------  ----------------------
       Total liabilities and stockholders' equity                                       $ 867,354             $ 826,910
                                                                               ======================  ======================
</TABLE>


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

                                     - 3 -
<PAGE>


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

                                                  Three months ended June 30,               Six months ended June 30,
                                                   2001                2000                 2001                 2000
                                            ------------------- -------------------- -------------------- --------------------
<S>                                             <C>                  <C>                 <C>                   <C>
Revenues:
   Rental revenues from real estate                $ 31,654             $ 23,899            $ 61,333              $ 45,134
   Tenant reimbursements                              3,756                2,930               7,245                 6,443
   Other income, including interest and
      gain on sale of assets                            825                  643               4,442                   829
                                            ------------------- -------------------- -------------------- --------------------
        Total revenues                               36,235               27,472              73,020                52,406
                                            ------------------- -------------------- -------------------- --------------------

Expenses:
   Operating expenses                                 1,717                1,403               2,942                 2,496
   Real estate taxes                                  2,576                2,065               4,897                 4,439
   Depreciation of real estate                        4,165                3,863               8,267                 7,495
   General and administrative                           483                  206                 801                   570
   Interest                                           2,216                2,246               4,426                 4,503
   Interest (related parties)                         1,163                1,134               2,463                 1,885
                                            ------------------- -------------------- -------------------- --------------------
        Total expenses                               12,320               10,917              23,796                21,388
                                            ------------------- -------------------- -------------------- --------------------

Income before minority interest                      23,915               16,555              49,224                31,018
Minority interest                                    19,932               13,625              41,022                25,457
                                            ------------------- -------------------- -------------------- --------------------
        Net income to common stockholders          $  3,983             $  2,930            $  8,202              $  5,561
                                            =================== ==================== ==================== ====================
Basic net income per share                         $   0.23             $   0.17            $   0.48              $   0.33
                                            =================== ==================== ==================== ====================
Diluted net income per share                       $   0.23             $   0.17            $   0.47              $   0.33
                                            =================== ==================== ==================== ====================
Weighted average number of
  common shares outstanding (basic)              17,093,710           17,025,365          17,065,612            17,007,859
                                            =================== ==================== ==================== ====================
Weighted average number of
  common shares outstanding (diluted)            17,308,601           17,113,346          17,293,484            17,081,696
                                            =================== ==================== ==================== ====================

</TABLE>





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

                                      - 4 -
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                               Six months ended June 30,
                                                                                         -------------------------------------
                                                                                               2001               2000
                                                                                         ------------------ ------------------
<S>                                                                                        <C>               <C>
Cash flows from operating activities:
     Net income                                                                             $    8,202        $     5,561
     Adjustments to reconcile net income to net cash provided by
       operating activities:
            Minority interest                                                                   41,022             25,457
            Depreciation                                                                         8,267              7,495
            Gain on sale of real estate                                                         (3,102)                 -
            Gain on sale of securities                                                               -                501
            Other                                                                                  105                 17
     Changes in assets and liabilities:
            Deferred rent                                                                       (4,327)            (1,326)
            Other assets                                                                          (253)            (1,025)
            Interest payable                                                                        (2)                 -
            Security deposits                                                                      819              1,313
            Prepaid rental income                                                                  650              4,419
            Accounts payable and accrued expenses                                                   93                579
                                                                                         ------------------ ------------------
     Net cash provided by operating activities                                                  51,474             42,991
                                                                                         ------------------ ------------------

Cash flows from investing activities:
     Improvements to real estate assets                                                           (324)            (1,148)
     Refundable option payment                                                                  (1,000)                 -
     Proceeds from sale of real estate                                                          23,130                  -
     Restricted cash exchanged for properties                                                  (23,130)                 -
                                                                                         ------------------ ------------------
     Net cash used in investing activities                                                      (1,324)            (1,148)
                                                                                         ------------------ ------------------

Cash flows from financing activities:
     Principal payments on mortgage notes payable                                               (3,671)              (931)
     Principal payments on mortgage notes payable (related parties)                               (133)                 -
     Net payments under line of credit (related parties)                                       (38,505)           (34,984)
     Proceeds from stock options exercised                                                         457                290
     Minority interest distributions                                                              (789)              (896)
     Dividends paid                                                                             (6,476)            (5,098)
                                                                                         ------------------ ------------------
     Net cash used in financing activities                                                     (49,117)           (41,619)
                                                                                         ------------------ ------------------
     Net increase in cash and cash equivalents                                                   1,033                224
Cash and cash equivalents, beginning                                                             4,691              6,553
                                                                                         ------------------ ------------------
Cash and cash equivalents, ending                                                           $    5,724         $    6,777
                                                                                         ================== ==================

Supplemental information:
     Cash paid for interest                                                                 $    6,839        $     6,344
                                                                                         ================== ==================
Supplemental schedule of non-cash investing and financing activities:
     Advances under line of credit (related parties)                                        $   30,289        $    21,983
                                                                                         ================== ==================
     Debt incurred in connection with property acquisitions                                 $   22,973        $    36,068
                                                                                         ================== ==================
     Assumption of other liabilities in connection with property acquisitions               $        -        $     2,372
                                                                                         ================== ==================
     Issuance of operating partnership units in connection with property acquisitions       $   17,442        $    40,587
                                                                                         ================== ==================
</TABLE>



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

                                     - 5 -
<PAGE>


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


1.   Principles of Consolidation and Basis of Presentation

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

     Minority  interest   represents  the  separate  private  ownership  of  the
     operating  partnerships  by the Berg Group  (defined  as Carl E. Berg,  his
     brother Clyde J. Berg, members of their respective immediate families,  and
     certain entities they control) and other non-affiliate interests. In total,
     these interests account for approximately 83% of the ownership interests in
     the real estate  operations  of the Company as of June 30,  2001.  Minority
     interest in earnings  has been  calculated  by taking the net income of the
     operating   partnerships  (on  a  stand-alone   basis)  multiplied  by  the
     respective minority interest ownership percentage.

     The financial  statements  have been prepared in accordance with accounting
     principles  generally  accepted  in the United  States of America  ("GAAP")
     applicable to interim  financial  information and pursuant to the rules and
     regulations of the Securities and Exchange Commission. Accordingly, certain
     information  and  footnote   disclosures  normally  included  in  financial
     statements  prepared in accordance with GAAP have been condensed or omitted
     pursuant  to  such  rules  and  regulations.  However,  in the  opinion  of
     management,   all   adjustments,   consisting  only  of  normal   recurring
     adjustments,  necessary for a fair  presentation  have been  included.  The
     Company presumes that users of the interim financial  information have read
     or have access to the audited financial statements for the preceding fiscal
     year and that the  adequacy  of  additional  disclosure  needed  for a fair
     presentation  may be determined in that context.  The results of operations
     for the  three  and six  months  ended  June 30,  2001 are not  necessarily
     indicative of the results to be expected for the entire year.

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


2.   Real Estate

     BERG LAND HOLDINGS OPTION AGREEMENT
     Under the terms of the Berg land holdings  option  agreement,  the Company,
     through the  operating  partnerships,  has the option to acquire any future
     Research & Development  ("R&D"),  office and industrial buildings developed
     by the Berg Group on land currently owned,  optioned, or acquired for these
     purposes in the future,  directly or indirectly  by certain  members of the
     Berg Group. At present, there are approximately 341 acres of Silicon Valley
     land,  including land under development,  owned directly or under 50% joint
     venture by certain  members of the Berg Group that are subject to the terms
     of the Berg land holdings  option  agreement.  The owners of the future R&D
     property  developments  may  obtain  cash or,  at their  option,  Operating
     Partnership ("O.P.") Units valued at the average closing price of shares of
     common stock over the 30-trading-day period preceding the acquisition date.
     As of June 30, 2001, the Company had completed  eleven  acquisitions  under
     the  Berg  land  holdings  option  agreement   representing   approximately
     1,154,000 rentable square feet. Upon the Company's exercise of an option to
     purchase any of the future R&D property developments under the terms of the
     Berg land holdings option  agreement,  the acquisition price will equal the
     sum of (a) the full construction cost of the building;  (b) 10% of the full
     construction cost of the building;  (c) the acquisition value of the parcel
     as defined in the agreement  upon which the  improvements  are  constructed
     (currently ranging from $8.50 to $20.00 per square foot); (d) 10% per annum
     of the acquisition  value of the parcel for the period from January 1, 1998
     to the close of escrow;  and (e) interest at LIBOR (London  Interbank Offer
     Rate) plus 1.65% per annum on the full  construction  costs of the building
     for the period from the date funds were  disbursed by the  developer to the
     close of escrow;  less (f) any debt  encumbering the property,  or a lesser
     amount as approved by the independent directors committee.


                                     - 6 -
<PAGE>

     No  estimate  can be given at this time as to the total cost to the Company
     to acquire projects under the Berg land holdings option  agreement,  or the
     timing of the Company's  acquisition of any of such projects.  However, the
     Berg Group currently has 13 properties  under  development  with a total of
     approximately  1,250,000  rentable  square feet of R&D properties  that the
     Company  has  the  right  to  acquire  under  this  agreement.  Of  the  13
     properties,  six are  joint  ventures  in  which  the Berg  Group  holds an
     approximately 50% interest.  The joint venture properties represent a total
     of  approximately  541,000  rentable  square feet. As of June 30, 2001, the
     estimated  acquisition  price to the  operating  partnerships  for these 13
     projects would be approximately  $139,700.  The final  acquisition price of
     these 13  properties  could differ  significantly  from this  estimate.  In
     addition to projects currently under development, the Company has the right
     to acquire  future  developments  by the Berg Group on up to 261 additional
     acres of land currently  controlled by the Berg Group,  which could support
     approximately 4.2 million square feet of new  developments.  Under the Berg
     land  holdings  option  agreement,  as long as the Berg Group's  percentage
     ownership interest in the Company and the operating partnerships taken as a
     whole is at least 65%,  the Company also has an option to purchase all land
     acquired,  directly or indirectly,  by Carl E. Berg or Clyde J. Berg in the
     future which has not been  improved with  completed  buildings and which is
     zoned for, intended for or appropriate for research and development, office
     and/or industrial  development or use in the states of California,  Oregon,
     and Washington.

     PROPERTY ACQUISITIONS
     Effective  January 1, 2001, the Company acquired an  approximately  131,500
     rentable square foot newly constructed R&D building located at 5325 Hellyer
     Avenue  in San Jose,  California  from the Berg  Group  under the Berg land
     holdings option  agreement.  The total  acquisition price for this property
     was $15,472.  The Company  acquired this property by borrowing $9,000 under
     its line of credit from the Berg Group and issuing  464,452  O.P.  Units to
     various members of the Berg Group.

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

     Effective  April 1, 2001,  the  Company  acquired an  approximately  59,400
     rentable  square foot  property  located at 245 Caspian Drive in Sunnyvale,
     California  from  the Berg  Group in a  tax-deferred  exchange.  The  total
     acquisition  price for this  property was $13,388.  The Company  funded the
     acquisition  with  proceeds from a property  disposition  that were held as
     restricted  cash for the use in  tax-deferred  property  exchanges  and was
     included in restricted  cash at March 31, 2001. No debt or O.P.  Units were
     issued for this acquisition.  The lessee of the property has not authorized
     the  completion of  construction  of the building as of June 30, 2001.  The
     Berg Group has the obligation to build the building upon the request of the
     lessee at no cost to the Company.  The lessee of the property has a 15-year
     lease and is making the lease payments on the property.

     Effective  May 1,  2001,  the  Company  acquired  an  approximately  67,912
     rentable square foot newly  constructed R&D building located at 855 Branham
     Lane East in San Jose,  California  from the Berg  Group in a  tax-deferred
     exchange.  The total  acquisition  price for this property was $9,809.  The
     Company funded the  acquisition  with proceeds from a property  disposition
     that  were held as  restricted  cash for the use in  tax-deferred  property
     exchanges and was included in restricted cash at March 31, 2001. No debt or
     O.P. Units were issued for this acquisition.

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

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

                                     - 7 -

<PAGE>



3.   Restricted Cash

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

4.   Stock Transactions

     During the six months ended June 30, 2001, stock options to purchase 14,588
     shares of common stock were exercised at $4.50 per share,  stock options to
     purchase  38,000 shares of common stock were  exercised at $8.25 per share,
     and stock options to purchase  6,000 shares of common stock were  exercised
     at $13.00 per share.  Total  proceeds  to the Company  were $457.  Also one
     minority  interest holder exchanged  36,323 O.P. Units,  under the exchange
     rights  agreement,  for the Company's  common stock on an exchange ratio of
     1:1.

5.   Other Income

     As explained in Note 2 "Property Disposition" above, the Company realized a
     gain of $3,102 on the total sale  price of $23,130 in the first  quarter of
     2001.  Interest income generated from the proceeds was  approximately  $481
     for the six months ended June 30, 2001.

6.   Net Income Per Share

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

     The computation for weighted average shares is detailed below:

<TABLE>
<CAPTION>

                                                         Three Months Ended June 30,          Six Months Ended June 30,
                                                        -------------------------------    -------------------------------
                                                              2001            2000               2001            2000
                                                        --------------    -------------    --------------    -------------
<S>                                                      <C>              <C>               <C>              <C>
Weighted average shares outstanding (basic)               17,093,710       17,025,365        17,065,612       17,007,859
Incremental shares from assumed option exercise              214,891           87,981           227,872           73,837
                                                        --------------    -------------    --------------    -------------
Weighted average shares outstanding (diluted)             17,308,601       17,113,346        17,293,484       17,081,696
                                                        ==============    =============    ==============    =============
</TABLE>

     The  outstanding  O.P. Units,  which are  exchangeable at the unit holder's
     option,  subject to  certain  conditions,  for shares of common  stock on a
     one-for-one  basis have been excluded from the diluted net income per share
     calculation,  as there  would  be no  effect  on the  amounts  because  the
     minority interests' share of income would also be added back to net income.
     The total number of O.P.  Units  outstanding  at June 30, 2001 and 2000 was
     84,824,911 and 81,200,850, respectively.

7.   Related Party Transactions

     As of June 30, 2001, the Berg Group owned 79,364,181 O.P. Units. Along with
     the  Company's  common  shares  owned by the Berg Group,  the Berg  Group's
     ownership as of June 30, 2001 represented  approximately  78% of the equity
     interests of the Company,  assuming conversion of the 84,824,911 O.P. Units
     outstanding into the common stock of the Company.

     As of June 30,  2001,  debt in the amount of $66,895 was due the Berg Group
     under the line of credit  established  March 1, 2000.  The $50,000  line of
     credit  from the Berg Group was  increased  to $75,000  effective  April 1,
     2000.  The Berg Group line of credit is currently  collateralized  by seven
     properties,  bears interest at LIBOR plus 1.30%, and matures in March 2002.
     The  Company  believes  that the terms of the Berg Group line of credit are
     more favorable than those available from commercial lenders. As of June 30,
     2001, debt in the amount of $11,510 was due the Berg Group under a mortgage
     note  established  May 15, 2000 in connection with the acquisition of a 50%
     interest in Hellyer  Avenue  Limited  Partnership,  the  obligor  under the
     mortgage note. The mortgage note bears interest at 7.65%,  and is due in 10
     years with principal payments amortized over 20 years.

                                     - 8 -
<PAGE>

     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 2003.

     The Company currently leases office space owned by Berg & Berg Enterprises,
     Inc.,  an affiliate of Carl E. Berg and Clyde J. Berg.  Rental  amounts and
     overhead reimbursements paid to Berg & Berg Enterprises,  Inc. were $20 for
     the three months ended June 30, 2001 and 2000,  and $43 and $40 for the six
     months ended June 30, 2001 and 2000, respectively.

8.   Subsequent Events

     On July 12,  2001 the Company  paid $0.22 per share  dividend on its common
     stock to all common stockholders of record as of June 29, 2001. On the same
     date,  the operating  partnerships  paid a  distribution  of $0.22 per O.P.
     Unit.

9.   Commitments and Contingencies

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

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

                                     - 9 -
<PAGE>


ITEM 2 MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS
OF OPERATIONS

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  should be read in  conjunction  with the  accompanying  consolidated
financial  statements  and notes  thereto  contained  herein  and the  Company's
consolidated  financial  statements and notes thereto contained in the Company's
Annual Report on Form 10-K as of and for the year ended  December 31, 2000.  The
results  for the three and six months  ended June 30,  2001 are not  necessarily
indicative  of the  results to be  expected  for the entire  fiscal  year ending
December 31, 2001. The following discussion includes forward-looking statements,
including but not limited to,  statements  with respect to the Company's  future
financial performance,  operating results, plans and objectives.  Actual results
may differ materially from those currently  anticipated depending upon a variety
of  factors,   including   those   described   below   under  the   sub-heading,
"Forward-Looking Information."

OVERVIEW

Mission West Properties,  Inc. (the "Company")  acquires,  markets,  leases, and
manages R&D properties,  primarily  located in the Silicon Valley portion of the
San Francisco  Bay Area.  As of June 30, 2001,  the Company owned and managed 93
properties  totaling  approximately  6.4  million  rentable  square  feet of R&D
properties through four limited  partnerships,  or operating  partnerships,  for
which it is the sole  general  partner.  This class of property is designed  for
research and development and office uses and, in some cases,  includes space for
light manufacturing  operations with loading docks. The Company believes that it
has one of the largest  portfolios of R&D properties in the Silicon Valley.  The
four tenants who lease the most square  footage  from the Company are  Microsoft
Corporation,  Amdahl  Corporation  (a  subsidiary  of  Fujitsu  Limited),  Apple
Computer, Inc. and JDS Uniphase Corporation. For federal income tax purposes the
Company has operated as a self-managed,  self-administered  and fully integrated
real estate investment trust ("REIT") since 1999.

Our acquisition and growth strategy incorporates the following elements:

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

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

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

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


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

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

- 10 -

<PAGE>

RESULTS OF OPERATIONS

Comparison  of the three and six months ended June 30, 2001 to the three and six
months ended June 30, 2000.

As of June 30,  2001,  the  Company,  through its  controlling  interests in the
operating  partnerships,  owned 93 properties totaling approximately 6.4 million
square feet compared to 86 properties totaling  approximately 5.9 million square
feet owned by the Company as of June 30, 2000.  This  represents  an increase of
approximately  8% in total  rentable  square  footage  from one  year  ago.  The
increase  resulted  from the  following  acquisitions  less the  disposition  of
200,484 rentable square feet at 4949 Hellyer Avenue as discussed under Note 2 of
Notes to Consolidated Financial Statements, "Property Disposition":
<TABLE>
<CAPTION>

               Date of                                                   Rentable Square
             Acquisition                      Address                        Footage
          -------------------    ----------------------------------     ------------------
<S>            <C>              <C>                                         <C>
                07/00            5400 Hellyer Avenue                          77,184
                10/00            45365 Northport Loop                         64,218
                12/00            1768 Automation Parkway                     110,592
                01/01            5325 Hellyer Avenue                         131,500
                02/01            5500 Hellyer Avenue                         117,740
                04/01            245 Caspian Drive (1)                        59,400
                05/01            855 Branham Lane East                        67,912
                06/01            5550 Hellyer Avenue                          78,794
                                                                        ------------------
                                                                             707,340
                                                                        ==================
</TABLE>


(1)  The  lessee  of  the  property  has  not   authorized   the  completion  of
     construction  of the building as of June 30,  2001.  The Berg Group has the
     obligation  to build the building upon the request of the lessee at no cost
     to the  Company.  The  lessee of the  property  has a 15-year  lease and is
     making the lease payments on the property.

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

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

<S>                                      <C>              <C>              <C>                <C>
          Same Property (1)               $17,293          $14,758           $ 2,535            17.2%
          1998 Acquisitions                   582              586               (4)               -
          1999 Acquisitions                 6,512            5,718               794            13.9%
          2000 Acquisitions (2)             5,089            2,836             2,253            79.4%
          2001 Acquisitions                 2,178                -             2,178           100.0%
                                     -------------    -------------     -------------
                                          $31,654          $23,898           $ 7,756            32.5%
                                     =============    =============     =============


                                                           Six months ended June 30,
                                     -----------------------------------------------------------------------
                                         2001             2000            $ Change       Percentage Change
                                     -------------    -------------     -------------    -------------------
                                                    ($ in thousands)

          Same Property (1)               $33,340          $28,420           $ 4,920            17.3%
          1998 Acquisitions                 1,165            1,171               (6)               -
          1999 Acquisitions                13,037           11,939             1,098             9.2%
          2000 Acquisitions (2)            10,177            3,604             6,573           182.4%
          2001 Acquisitions                 3,614                -             3,614           100.0%
                                     -------------    -------------     -------------
                                          $61,333          $45,134           $16,199            35.9%
                                     =============    =============     =============
</TABLE>

(1)  "Same Property" is defined as properties owned as of July 1, 1998 and still
     owned as of June 30, 2001.
(2)  The difference in comparison of 2000  acquisitions  is due to the timing of
     the acquired property during the year 2000.

For the quarter ended June 30, 2001, rental revenues  increased by $7.75 million
from $23.90  million for the three months ended June 30, 2000 to $31.65  million
for the same period of 2001. Of the $7.75 million  increase in rental  revenues,
$2.53 million  resulted  from the Company's  "Same  Property"  portfolio,  $0.79
million  resulted from properties  acquired in 1999, $2.25 million resulted from
properties acquired in 2000, and $2.18 million resulted from properties acquired
in 2001. Rental revenues increased by $16.20 million from $45.13 million for the
six months ended June 30, 2000 to $61.33 million for the same period of 2001. Of
the $16.20 million increase in rental  revenues,  $4.92 million was generated by
the  Company's  "Same  Property"  portfolio,  $1.10  million  was  generated  by
properties  acquired in 1999, $6.57 million was generated by properties acquired
in 2000, and $3.61 million resulted from properties acquired in 2001.

                                     - 11 -
<PAGE>

Tenant reimbursements  increased by $0.83 million, or 28% from $2.93 million for
the three months ended June 30, 2000 to $3.76 million for the three months ended
June 30, 2001.  Operating  expenses and real estate taxes,  on a combined basis,
increased by $0.82  million,  or 24% from $3.47 million to $4.29 million for the
three months ended June 30, 2000 and 2001,  respectively.  Tenant reimbursements
increased by $0.80  million,  or 12% from $6.44 million for the six months ended
June 30, 2000 to $7.24 million for the six months ended June 30, 2001. Operating
expenses and real estate taxes, on a combined basis, increased by $0.91 million,
or 13% from $6.93  million to $7.84  million  for the six months  ended June 30,
2000 and 2001, respectively.  The increases in all categories resulted primarily
from the  increase  in the total  rentable  square  footage  during the  periods
presented.

Depreciation  expense  increased  by  $302,000  and  $772,000  for the three and
six-month period ended June 30, 2001, respectively,  over the same period a year
ago. The increase was  attributable  to the  acquisition of eight R&D properties
since June 30, 2000.

Interest  expense  decreased  by $30,000 or 1% from $2.25  million for the three
months ended June 30, 2000 to $2.22  million for the three months ended June 30,
2001 due to debt repayment.  Interest  expense  (related  parties)  increased by
$30,000 or 3% from $1.13  million  for the three  months  ended June 30, 2000 to
$1.16 million for the three months ended June 30, 2001 from increased  borrowing
under the Berg  Group  line of credit for  property  acquisitions.  As a result,
overall interest expense  (including amounts to related parties) for the quarter
ended June 30, 2001 slightly  changed compared to the second quarter a year ago.
Interest  expense  decreased  by $70,000 or 2% from  $4.50  million  for the six
months  ended June 30, 2000 to $4.43  million for the six months  ended June 30,
2001. Interest expense (related parties) increased by $580,000 or 31% from $1.88
million  for the six months  ended June 30,  2000 to $2.46  million  for the six
months ended June 30, 2001.  Overall  interest  expense for the six months ended
June 30, 2001  increased  by $501,000  compared to the six months ended June 30,
2000.  The eight R&D property  acquisitions  increased  total debt  outstanding,
including  amounts due related parties,  by $18.68 million,  or 10% from $188.11
million as of June 30, 2000 to $206.79  million as of June 30, 2001.  Management
expects  interest expense to increase as new debt is incurred in connection with
property acquisitions and as it seeks alternative sources of credit.

The minority  interest  portion of income was $19.93  million,  resulting in net
income to  stockholders  of $3.98  million for the three  months  ended June 30,
2001. For the six months ended June 30, 2001, the minority  interest  portion of
income was $41.02  million,  resulting  in net income to  stockholders  of $8.20
million.  Minority  interest  represents  the ownership  interest of all limited
partners in the  operating  partnerships  taken as a whole,  which was 83% as of
June 30, 2001 and 2000.

RECENT RENTAL MARKET DEVELOPMENTS

All of the  Company's  properties  are located in the Northern  California  area
known as Silicon  Valley,  which  generally  consists of portions of Santa Clara
County,  Southwestern Alameda County,  Southeastern San Mateo County and Eastern
Santa Cruz County.  The Silicon Valley economy and business activity have slowed
markedly  during the first half of 2001,  most  noticeably  in the last quarter,
after fast-paced growth in 1999 and 2000. In the past several years, the Silicon
Valley R&D property market has fluctuated with the local economy. According to a
recent report by BT Commercial Real Estate, vacancy rates for Silicon Valley R&D
property  increased from  approximately 3.6% in late 2000 to 10.2% at the end of
the second  quarter  of 2001.  The total  vacant  R&D square  footage in Silicon
Valley at the end of the second  quarter of 2001 amounted to 15.7 million square
feet of which 48% or 7.5  million  square  feet was  sublease  space.  Total net
absorption in 2000 amounted to  approximately  12.8 million square feet.  During
the  first six  months of 2001  there was a total  negative  net  absorption  of
approximately (9.1) million square feet. The impact of this decline has not been
uniform throughout the area, however. The Silicon Valley R&D property market has
been characterized by a substantial number of submarkets. Rent and vacancy rates
vary considerably by submarket and location within each submarket. The Company's
average  occupancy rate for the three and six-month  periods ended June 30, 2001
was 98% and 99%,  respectively.  The Company  does not  currently  anticipate  a
material  decline in occupancy or rental rates for its existing R&D  properties.
Nonetheless,  the  Company's  operating  results and ability to pay dividends at
current levels remain subject to a number of material  risks, as indicated under
the caption  "Forward-Looking  Information"  below and in the  section  entitled
"Risk Factors" in the Company's most recent annual report on Form 10-K.

CHANGES IN FINANCIAL CONDITION

In January 2001, the Company  completed the sale of 200,484 rentable square feet
of the R&D  property  at 4949  Hellyer  Avenue,  San Jose,  California  to Cisco
Systems, Inc., which exercised its purchase option in November 2000. The Company
realized a gain of $3,102,  which is included in other income, on the total sale
price of  $23,130.  The  proceeds  were  held as  restricted  cash to be used in
tax-deferred property exchanges.

                                     - 12 -
<PAGE>

During the first six  months of 2001,  the  Company  acquired  three  additional
properties  representing  approximately  328,000  rentable  square  feet  of R&D
properties  located in Silicon Valley.  These  properties were acquired from the
Berg  Group  under  the Berg  land  holdings  option  agreement.  The  aggregate
acquisition  price for these  properties was  approximately  $40.4 million.  The
Company financed these acquisitions by a) borrowing $23.0 million under the Berg
Group line of credit;  and b) the issuance of 1,285,207 O.P.  Units. In addition
to the acquisitions,  the Company also acquired two R&D properties  representing
127,312 rentable square feet for  approximately  $23.2 million in a tax-deferred
exchange.  The lessee for one of these tax-deferred exchanged properties has not
authorized the completion of  construction  of the building as of June 30, 2001.
The Berg Group has the  obligation to build the building upon the request of the
lessee at no cost to the Company. The lessee of the property has a 15-year lease
and is making  the lease  payments  on the  property.  The  Company  funded  the
acquisitions  with  proceeds  from a  property  disposition  that  were  held as
restricted cash for the use in tax-deferred  property exchanges and was included
in  restricted  cash at March 31,  2001.  No debt or O.P.  Units were issued for
these acquisitions.

During the six months  ended June 30,  2001,  stock  options to purchase  14,588
shares of common  stock  were  exercised  at $4.50 per share,  stock  options to
purchase  38,000 shares of common stock were  exercised at $8.25 per share,  and
stock options to purchase  6,000 shares of common stock were exercised at $13.00
per share. Total proceeds to the Company were approximately  $457,000.  Also one
minority interest holder exchanged 36,323 O.P. Units,  under the exchange rights
agreement, for the Company's common stock on an exchange ratio of 1:1.

LIQUIDITY AND CAPITAL RESOURCES

The Company  expects its  principal  sources of liquidity for  distributions  to
stockholders and unitholders,  debt service,  leasing  commissions and recurring
capital  expenditures to come from Funds from Operations ("FFO") and/or the Berg
Group line of credit.  The Company  expects  these  sources of  liquidity  to be
adequate to meet projected  distributions  to  stockholders  and other presently
anticipated  liquidity  requirements  in 2001.  The Company  expects to meet its
long-term  liquidity  requirements  for the  funding  of  property  development,
property  acquisitions  and other material  non-recurring  capital  improvements
through  long-term  secured  and  unsecured  indebtedness  and the  issuance  of
additional equity securities by the Company. The Company has the ability to meet
any short-term  obligations or other liquidity needs based on the line of credit
(related parties).

The  Company's  $50  million  line of credit  with Wells  Fargo Bank  expired on
February  29,  2000 and was repaid  with  proceeds  from and  replaced  by a $50
million  line of credit from the Berg Group.  On April 1, 2000,  the $50 million
credit  line with the Berg Group was  increased  to $75  million  with all other
terms   remaining  the  same.  The  Berg  Group  line  of  credit  is  currently
collateralized  by seven  properties,  bears  interest at LIBOR plus 1.30%,  and
matures in March 2002. The Company is continually evaluating alternative sources
of credit.  There can be no assurance  that the Company will be able to obtain a
line of credit with terms similar to the Berg Group line of credit, and its cost
of borrowing could increase  substantially.  The Company believes that the terms
of the Berg Group line of credit are more  favorable  than those  available from
Wells Fargo or similar lenders.

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

At June 30,  2001,  the  Company  had  total  indebtedness  of  $206.8  million,
including  $128.4 million of fixed rate mortgage  debt,  $11.5 million under the
Berg Group  mortgage  note (related  parties),  and $66.9 million under the Berg
Group line of credit  (related  parties).  During the second quarter the Company
paid  approximately  $2.7  million to close out one of its  outstanding  debt to
Mellon Mortgage Company, which matured in June 2001.

As of June 30, 2001, the Company's Debt to Total Market Capitalization ratio was
approximately  14.3%.  The Company computed this ratio by dividing the Company's
total debt  outstanding  by the sum of this debt plus the market value of common
stock  (based upon the closing  price of $12.10 per share on June 29, 2001) on a
fully diluted  basis,  taking into account the conversion of all O.P. Units into
common stock.  On June 29, 2001,  the last trading day during the period,  Total
Market Capitalization was approximately $1.4 billion.

                                     - 13 -
<PAGE>



MORTGAGE DEBT

The following table sets forth certain information regarding debt outstanding as
of June 30, 2001:
<TABLE>
<CAPTION>

                                                                                                           Maturity     Interest
            Debt Description                      Collateral Properties                      Balance         Date         Rate
-------------------------------------------  --------------------------------            ---------------  -----------  -----------
                                                                                         ($ in thousands)
<S>                                         <C>                                           <C>               <C>          <C>
Line of Credit:
Berg Group (related parties)                 2033-2043 Samaritan Drive, San  Jose, CA      $  66,895          3/02          (1)

                                                                                         ---------------
                                             2133 Samaritan Drive, San Jose,CA
                                             2233-2243 Samaritan Drive, San Jose, CA
                                             1310-1450 McCandless Drive, Milpitas, CA
                                             1315-1375 McCandless Drive, Milpitas, CA
                                             1650-1690 McCandless Drive, Milpitas, CA
                                             1650-1690 McCandless Drive,Milpitas, CA

Mortgage Notes Payable (related parties):    5300 & 5350 Hellyer Avenue, San Jose, CA         11,510          6/10         7.65%
                                                                                         ---------------
Mortgage Notes Payable:
Prudential Capital Group                     20400 Mariani Avenue, Cupertino, CA               1,678          4/09         8.75%
New York Life Insurance Company              10440 Bubb Road, Cupertino, CA                      363          9/09        9.625%
Home Savings & Loan Association              10460 Bubb Road, Cupertino, CA                      393         12/06         9.50%
Prudential Insurance Company of America      10300 Bubb Road, Cupertino, CA                  125,950(2)      10/08         6.56%
                                             10500 N. DeAnza Blvd, Cupertino, CA
                                             4050 Starboard Drive, Fremont, CA
                                             45700 Northport Loop, Fremont, CA
                                             45738 Northport Loop, Fremont, CA
                                             450-460 National Avenue, Mountain View, CA
                                             6311 San Ignacio Avenue, San Jose, CA
                                             6321 San Ignacio Avenue, San Jose, CA
                                             6325 San Ignacio Avenue, San Jose, CA
                                             6331 San Ignacio Avenue, San Jose, CA
                                             6341 San Ignacio Avenue, San Jose, CA
                                             6351 San Ignacio Avenue, San Jose, CA
                                             3236 Scott Blvd, Santa Clara, CA
                                             3560 Bassett Street, Santa Clara, CA
                                             3570 Bassett Street, Santa Clara, CA
                                             3580 Bassett Street, Santa Clara, CA
                                             1135 Kern Avenue, Sunnyvale, CA
                                             1212 Bordeaux Lane, Sunnyvale, CA
                                             1230 E. Arques, Sunnyvale, CA
                                             1250 E. Arques, Sunnyvale, CA
                                             1170 Morse Avenue, Sunnyvale, CA
                                             1600 Memorex Drive, Santa Clara, CA
                                             1688 Richard Avenue, Santa Clara, CA
                                             1700 Richard Avenue, Santa Clara, CA
                                             3540 Bassett Street, Santa Clara, CA
                                             3542 Bassett Street, Santa Clara, CA
                                             3544 Bassett Street, Santa Clara, CA
                                             3550 Bassett Street, Santa Clara, CA
                                                                                         ---------------
Mortgage Notes Payable Subtotal                                                              128,384
                                                                                         ---------------
                    Total                                                                  $ 206,789
                                                                                         ===============
</TABLE>


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


                                     - 14 -
<PAGE>


CURRENT PROPERTIES SUBJECT TO OUR ACQUISITION AGREEMENT WITH THE BERG GROUP

The following  table  presents  certain  projected  information at June 30, 2001
concerning  projects  for  which  the  Company,  through  its  interests  in the
operating  partnerships,  has the right to acquire  under the Berg land holdings
option agreement.
<TABLE>
<CAPTION>

                                                Approximate
                                Number of      Rentable Area                                     Total Estimated
Property                        Buildings      (Square Feet)     Anticipated Acquisition Date   Acquisition Value(1)
------------------------------ ------------ -------------------- ----------------------------- ---------------------
                                                                                                  ($ in thousands)
<S>                               <C>         <C>                       <C>                       <C>
Berg Land Holdings Option
Under Development
Silver Creek                        4            346,000                 3rd Quarter 2001          $  44,800
5750 Hellyer                        1             73,312                 3rd Quarter 2001              7,100
Morgan Hill (JV I) (2)              1            155,000                 3rd Quarter 2001             13,500
Morgan Hill (JV IA) (2)             1            126,000                 3rd Quarter 2001              8,600
Morgan Hill (JV IV) (2)             2            160,000                 4th Quarter 2001             19,100
5345 Hellyer                        1            125,000                 1st Quarter 2002             15,400
Piercy & Hellyer                    1            165,000                 3rd Quarter 2002             21,500
Morgan Hill (JV II) (2) (3)         1             60,000                 4th Quarter 2002              5,700
Morgan Hill (JV III) (2) (3)        1             40,000                 4th Quarter 2002              4,000
                                   --          ---------                                             -------
               Subtotal            13          1,250,312                                             139,700

Available Land
Construction in Progress (3)                     490,000
Piercy & Hellyer                                 165,000
Morgan Hill (2)                                  420,000
King Ranch                                       248,500
Fremont & Cushing                                387,000
Evergreen                                      2,480,000
                                               ---------
              Subtotal                         4,190,500

TOTAL                              13          5,440,812                                            $139,700
                                   ==          =========                                            ========
</TABLE>

(1)  The estimated  acquisition  value  represents  the estimated cash price for
     acquiring  the projects  under the terms of the Berg land  holdings  option
     agreement,  which may differ from the actual acquisition cost as determined
     under GAAP, if O.P Units or any other  securities based on the market value
     of our common stock are issued in the transaction.
(2)  The Company  expects to own an approximate  50% interest in the partnership
     through one of its  operating  partnerships.  The property will be operated
     and  managed by the other  partner in the  entity.  The  rentable  area and
     estimated  acquisition value shown above reflect both the Company's and the
     other partner's combined interest in these properties.
(3)  Unleased.


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

The time required to complete the leasing of developments varies from project to
project.  The acquisition dates and acquisition costs set forth in the table are
only estimates by management. Generally, the Company will not acquire any of the
above  projects  until  they are fully  completed  and  leased.  There can be no
assurance that the  acquisition  date and final cost to the Company as indicated
above  would be  realized.  No  estimate  can be  given  at this  time as to the
Company's  total cost to acquire  projects  under the Berg land holdings  option
agreement,  nor can we be certain of the period in which we will  acquire any of
the projects.

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

                                     - 15 -
<PAGE>

Company  actually will  consummate any intended  transactions,  including all of
those discussed above. Furthermore, the Company has not yet determined the means
by which it would  acquire and pay for any such  properties or the impact of any
of the acquisitions on its business, results of operations, financial condition,
FFO or available cash for distribution.

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

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

HISTORICAL CASH FLOWS

Net cash provided by operating activities for the six months ended June 30, 2001
was $51.5  million  compared to $43.0 million for the same period in 2000, a 20%
increase.  The change was a direct result of rent  increases and newly  acquired
properties.

Net cash used in investing  activities was  approximately  $1.3 million and $1.1
million for the six months  ended June 30, 2001 and 2000,  respectively,  an 18%
increase. Of the $1.3 million net cash used in investing  activities,  $324 were
related to tenant improvements and $1.0 million related to the Xilinx agreement.

Net cash used in financing activities was $49.1 million for the six months ended
June 30,  2001  compared to $41.6  million  for the same period in 2000,  an 18%
increase.  Of the $49.1  million net cash used in  financing  activities,  $42.3
million  were used to pay  outstanding  debt,  $789,000  for  minority  interest
distributions,  $6.5 million for dividend  payments,  and $457,000 received from
exercised stock options.  During the six months ended June 30, 2001, the Company
paid its debt outstanding and made  distributions to holders of its common stock
and O.P. Units by utilizing cash generated from operating activities.

CAPITAL EXPENDITURES

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

                                     - 16 -
<PAGE>

with cash flows from operating  activities,  financing  activities and investing
activities, it provides investors with an understanding of the Company's ability
to incur and service  debt,  and make  capital  expenditures.  FFO should not be
considered as an alternative for net income as a measure of profitability and it
is not comparable to cash flows provided by operating  activities  determined in
accordance  with GAAP, nor is FFO  necessarily  indicative of funds available to
meet the Company's cash needs,  including its need to make cash distributions to
satisfy REIT requirements.

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

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

Furthermore, FFO is not comparable to similarly entitled items reported by other
REITs that do not define them  exactly as the Company  defines  FFO. FFO for the
three and six months ended June 30, 2001 and 2000 are  summarized  in the tables
below:
<TABLE>
<CAPTION>

                                  Three Months Ended June 30,                     Six Months Ended June 30,
                            -----------------------------------------     ------------------------------------------
                                  2001                   2000                    2001                   2000
                            ------------------     ------------------     -------------------    -------------------
                                        ($ in thousands)                              ($ in thousands)
<S>                                 <C>                    <C>                     <C>                    <C>
Net income                            $3,983                 $2,930                  $8,202                 $5,561
Add:
    Minority interest (1)             19,779                 13,558                  40,696                 25,390
    Depreciation                       4,165                  3,863                   8,267                  7,495
Less:
    Gain on sale of assets                 -                    501                   3,102                    501
                            ------------------     ------------------     -------------------    -------------------
FFO                                  $27,927                $19,850                 $54,063                $37,945
                            ==================     ==================     ===================    ===================

</TABLE>

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


DISTRIBUTION POLICY

The Company intends to pay  distributions  to stockholders and O.P. Unit holders
based upon total Funds Available for Distribution  ("FAD"),  which is calculated
as  FFO  less  straight-lined   rents,  leasing  commissions  paid  and  capital
expenditures made during the respective  period. The calculations of FAD for the
three and six months ended June 30, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>


                                   Three Months Ended June 30,                     Six Months Ended June 30,
                            ------------------------------------------     ------------------------------------------
                                   2001                   2000                    2001                   2000
                            -------------------    -------------------     -------------------    -------------------
                                        ($ in thousands)                               ($ in thousands)
<S>                                  <C>                    <C>                     <C>                    <C>
FFO                                   $27,927                $19,850                 $54,063                $37,945
Less:
    Straight-line rents                 2,238                    357                   4,327                  1,326
    Leasing commissions                   419                    753                     582                    902
    Capital expenditures                  170                    248                     324                  1,148
                            -------------------    -------------------     -------------------    -------------------
FAD                                   $25,100                $18,492                 $48,830                $34,569
                            ===================    ===================     ===================    ===================
</TABLE>


The Company intends to make regular quarterly distributions to holders of common
stock  and O.P.  Units  based on its FAD.  The  Company's  ability  to make such
distributions will be affected by numerous factors, including, most importantly,
the receipt of distributions  from rental  operations  payable to the Company as
the sole general partner of the operating partnerships.

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

                                     - 17 -
<PAGE>

The Company  anticipates  that FAD will exceed  earnings and profits for federal
income tax purposes, as the latter figure is reduced by non-cash expenses,  such
as depreciation and  amortization,  that the Company will incur.  Distributions,
other  than  capital  gain  distributions,  by the  Company to the extent of its
current and  accumulated  earnings  and profits for federal  income tax purposes
most likely will be taxable to U.S.  stockholders  as ordinary  dividend  income
unless a stockholder is a tax-exempt entity. Distributions in excess of earnings
and profits  generally  will be treated as a  non-taxable  reduction of the U.S.
stockholder's  basis  in the  common  stock to the  extent  of such  basis,  and
thereafter as a taxable gain. The percentage of such  distributions in excess of
earnings  and  profits,  if any,  may vary from  period to period.  The  Company
anticipates that a substantial  percentage of the  distributions to stockholders
for the year ending December 31, 2001 will constitute  taxable ordinary dividend
income to its shareholders.

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


IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

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


FORWARD-LOOKING INFORMATION

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

                                     - 18 -

<PAGE>


ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

No material changes have occurred since the Annual Report on Form 10-K for the
year ended December 31, 2000.

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

Part II - Other Information

ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

a)   The annual meeting of  stockholders of the Company was held on May 17, 2001
     in which proxies representing  13,946,753 shares of common stocks, or 81.6%
     of the total outstanding shares, voted.

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

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

     Proposal No. 1: Election of Directors

<TABLE>
<CAPTION>
                                         Total Vote for Each       Total Vote Withheld     Total Vote Against
             Directors                        Director             from Each Directors        Each Director
          --------------------------   ------------------------   ---------------------   ---------------------

<S>                                        <C>                         <C>                         <C>
          Carl E. Berg                      13,566,952                  379,733                     68
          John C. Bolger                    13,566,952                  379,733                     68
          William A. Hasler                 13,566,952                  379,733                     68
          Lawrence B. Helzel                13,566,952                  379,733                     68

</TABLE>

     Proposal No. 2: The second  matter voted upon was the  ratification  of the
     selection of PricewaterhouseCoopers,  LLP as independent public accountants
     for the  Company  for  the  year  ending  December  31,  2001.  There  were
     13,936,678  votes  in  favor  of the  proposal,  6,855  votes  against  the
     proposal, and 3,220 abstentions.



                                     - 19 -
<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.
<TABLE>
<CAPTION>


                                           Mission West Properties, Inc.
                                           (Registrant)


<S>                                       <C>
Date:   August 10, 2001                     By: /s/ Wayne N. Pham
                                              ----------------------------------
                                              Wayne N. Pham
                                              Vice President of Finance and Controller
                                              (Principal Accounting Officer and Duly Authorized Officer)
</TABLE>

                                     - 20 -