CUPERTINO, CA-An undisclosed real estate private equity firm is in negotiations to take locally based R&D REIT Mission West Properties private in a transaction valued at $1.8 billion. Mission West says in an SEC filing that the buyer has made a cash offer of $13.55 per share and limited partnership unit.

Mission West manages, leases, markets, develops and acquires commercial R&D properties located primarily in the Silicon Valley. The company’s portfolio includes 107 properties totaling approximately 7.7 million sf (net rentable).

The negotiations were announced late Friday. Mission West’s closing share price on Thursday was $13.40. On Friday, share closed at $13.69.

The proposed deal is subject to the buyer’s due diligence and the negotiation and execution of a definitive agreement. The transaction is also dependent upon the buyer’s acquisition financing, resolution of tax issues, regulatory reviews and a vote of Mission West stockholders.

In it’s first quarter report issued in May, Mission West said the occupancy rate in its portfolio was 69.4%, with nearly 500,000 sf of leases set to expire before the end of the year. That compares to an average R&D occupancy in the Silicon Valley of 81.4%, according to a first quarter report from NAI BT Commercial Real Estate. That percentage translates to 28.8 million sf of vacant space, of which 5.6 million sf was being offered for sublease.

First quarter net absorption in the Silicon Valley R&D market was negative at 300,000 sf, according to BT. For all of 2006, net absorption was 1.9 million sf. Average asking market rent per sf at the end of March was $1.05 compared to $0.99 in late 2006.

“We believe that the average 2007 renewal rental rates for our properties will be approximately equal to, or perhaps below, current market rents, but we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current quoted market rates,” states Mission West in its quarterly report.

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