As a result of the transaction and M&M Real Estate being considered a variable interest entity, Mission West says it will record a net lease termination fee of $45.35 million this quarter. In addition, Mission West will record restricted cash for the balance of the rental obligation due from M&M, and a liability of $7 million related to M&M's obligation under the terms of the lease to complete certain leasehold improvements in two buildings housing approximately 164,000 sf of unimproved space.

Mission West manages 110 properties totaling approximately 7.8 million rentable sf, which includes approximately 894,000 rentable sf in 17 buildings that are in the process of being rezoned for residential development. Last week, the company revealed that that its previously announced $1.8-billion ($13.55 per share and limited partnership unit) acquisition by an undisclosed private equity firm is unlikely to close because the buyer's primary and second lenders have withdrawn from the market. Mission West said it has been in touch with three other possible acquirers that have internal sources of financing and had previously expressed an interest in the company.

Mission West said the initial buyer "had completed substantially all of their due diligence and had agreed to the terms of the definitive merger agreement when they were notified by their lender, one of the top five US banks, that they were withdrawing from the market and would not issue their previously agreed upon financial commitment… ." With regard to the would-be new buyers, Mission West says it is "continuing to have ongoing discussion with these companies and they are in the process of doing financial due diligence to determine if they can meet the pricing conditions set forth by Mission West."