Mack-Cali Realty Corporation Acquires Two Washington, D.C. Office Properties, Agrees to Acquire A Third in Suburban Maryland
06/15/1998 Category: Acquisitions
$104.5 Million Transaction Enhances Company's Dominant Northeast Position
CRANFORD, NJ--June 15, 1998--Mack-Cali Realty Corporation (NYSE:CLI) today announced it has acquired two Washington D.C. class A office properties and entered into a contract to acquire a third property with developable land in suburban Maryland. The aggregate purchase price for the three properties, which total 447,000 square feet, is $104.5 million.
The two acquired properties, 1709 New York Avenue Northwest, and 1400 L Street Northwest, are located in Washington, D.C. The third property, East Point, is located in Lanham, Prince George's County, Maryland. The acquisition of East Point is expected to be completed shortly, subject to completion of due diligence and full consent of the selling entity.
Commenting on the acquisitions, Thomas A. Rizk, chief executive officer of Mack-Cali, said, "The purchase price for these acquisitions, which are adjacent to our already significant Northeast holdings, are well below replacement cost. In addition, these acquisitions are in-line with our business plan of entering markets where we can build a substantial presence. The 215 million square-foot Metropolitan Washington D.C. office market meets the criteria of quality and growth potential we require in entering a new market and is complementary to our existing portfolio."
The three-building portfolio has an average occupancy rate of 93%. The individual properties consist of:
1709 New York Avenue Northwest--Acquired for $49 million, or $295 per square foot. The eight-story, 166,000 square-foot class A office building is 100% leased to 6 tenants, including the Federal Reserve, General Services Administration (GSA), and the World Resources Institute. The property, which features underground parking, was completely renovated in 1994, and is located within a block of the White House in the Washington CBD submarket.
1400 L Street Northwest--Acquired for $40 million, or $251 per square foot. The 12-story, 159,000 square-foot class A office building is 86% leased to 12 tenants, including the law firm of Winston & Strawn, the Equal Employment Opportunity Commission (EEOC) and the District of Columbia Retirement Board. The property, which was built in 1987 and features underground parking, is located in Washington's East End submarket and is located near Franklin Square.
East Point--To be acquired for $15.5 million or $127 per square foot. East Point is located at 4200 Parliament Drive, Lanham, Prince George's County, Maryland, and is a six-story, 122,000 square-foot class A office building. The property is 90% leased to nine tenants, including Comnet Corporation, State Farm Life Insurance, and Bell Atlantic/Chesapeake Directory Sales. Nine acres of developable land will also be included with the purchase, which is zoned and improved for the development of a 123,000 square-foot twin office building.
Mitchell E. Hersh, president and chief operating officer of Mack-Cali, commented, "We see this entrance into the Metropolitan Washington D.C. market as a natural extension of our significant Northeast portfolio. In addition, the developable land will provide Mack-Cali with additional future growth opportunities."
METROPOLITAN WASHINGTON D.C. ONE OF THE COUNTRY'S LARGEST OFFICE MARKETS
The Metropolitan Washington D.C. office market, which includes northern Virginia (89 million square feet), Washington, D.C. (81 million square feet), and suburban Maryland (45 million square feet), is one of the country's largest office markets, with 215 million square feet.
According to the first quarter report of Cushman & Wakefield Research Services, Washington, D.C., one of the top-performing office markets in the country, has a first quarter overall class A vacancy rate of 7.2% and an average class A asking rent of $36.09 per square foot.
The submarkets in which the properties are located are also strong. The 31 million square-foot Washington office CBD submarket has a 7.9% overall class A vacancy rate; the 27 million square-foot East End office submarket's overall class A vacancy rate is 7.0%; and the 2.5 million square-foot Lanham/Landover office submarket, a transforming submarket considered among the best in Prince George's County, has an overall class A vacancy rate of 9.8%.
COMPANY'S NORTHEAST HOLDINGS INCREASE TO OVER 21 MILLION SQUARE FEET
Upon the completion of the East Point acquisition and other pending acquisitions, Mack-Cali's holdings in the Northeast will increase to over 21 million square feet of office and office/flex space spanning from Washington, D.C. to Fairfield County, Connecticut.
Mack-Cali Realty Corporation is a fully-integrated, self-administered, self-managed real estate investment trust (REIT) providing leasing, management, acquisition, development, construction and tenant-related services for its portfolio. With the completion of pending transactions, Mack-Cali will own or have interests in 248 properties, primarily office and office/flex buildings, totaling approximately 27.4 million square feet, serving over 2,300 tenants in 12 states and the District of Columbia.
Additional information on Mack-Cali Realty Corporation is available on the Company's website at www.mack-cali.com.
Certain information discussed in this press release may constitute forward-looking statements within the meaning of the Federal Securities law. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to different materially from those projected. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office, office/flex and industrial/warehouse properties; interest rate levels; the availability of financing; and other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants will not take occupancy or pay rent, or that development or information on factors which could impact the Company and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission including quarterly reports on Form 10-Q on Form 8-K, and annual reports on Form 10-L.