Mack-Cali Realty Corporation Announces Acquisition and Financing Transactions Totaling $1.1 Billion
03/04/1998 Category: Acquisitions
Over $1.3 Billion in Transactions Announced in First Quarter, Including Over $586 Million in Acquisitions and $746 Million in Financing
CRANFORD, NJ-- March 4, 1998-- Mack-Cali Realty Corporation (NYSE:CLI) today announced acquisition and financing transactions totaling over $1.1 billion.
Highlights of the transactions announced today, all expected to close within 30 to 60 days, include:
- An agreement to acquire substantially all of the interests in Prudential Business Campus, an 875,000 square-foot class A office complex and 74 acres of developable land in Parsippany, New Jersey;
- An agreement to acquire Morris County Financial Center, a 308,215 square-foot, two-building class A office complex adjacent to Prudential Business Campus in Parsippany, New Jersey;
- The acquisition of 10 Mountainview Road, a 192,000 square-foot class A office building in Upper Saddle River, New Jersey;
- An agreement to acquire the assets and operations of Pacifica Holding Company, a private real estate concern in Denver, Colorado, with a 1.4 million square-foot office portfolio;
- An agreement to obtain a $150 million secured loan;
- An agreement with Chase Manhattan Bank and Fleet Bank to expand the Company's existing unsecured credit facility from $400 million to $800 million; and
- The placement of $100 million in common equity with a fund managed by Prudential Real Estate Investors.
Thomas A. Rizk, chief executive officer of Mack-Cali, stated, "When we formed Mack-Cali, our objectives were to build on our strong relationships in the real estate industry to gain access to the best assets in the best markets, to grow our super-regional presence in the Northeast and enhance our presence in promising markets where we are or can become a dominant player. Our activity in this first quarter--our most active first quarter in Company history--represents our first step in achieving those goals."
New Acquisitions Add 2.8 Million Square Feet to Company's Portfolio
Parsippany, NJ Acquisitions
- Prudential Business Campus--Mack-Cali agreed to acquire for $170 million substantially all of the interests in Prudential Business Campus, a 875,000 square-foot, class A office complex with five office buildings and a daycare center plus land parcels, located at the intersection of routes 10, 202 and 287, in Morris County, New Jersey. The complex is 97% leased to 31 tenants, including Nabisco, Deloitte & Touche, Prudential Insurance, and MCI.
The land included with the acquisition consists of 74 acres zoned for up to 1.3 million square feet of office development.
- Morris County Financial Center--Mack-Cali announced that it has signed a contract to purchase Morris County Financial Center, a 308,215 square-foot, class A office complex also located in Parsippany, for $52.5 million. The two-building complex, which adjoins Prudential Business Campus, is 94% leased to 15 tenants, including Coopers & Lybrand, Integrated Communications, Experian and MDL Communications.
Mack-Cali's purchase of this complex, in addition to its acquisition of Prudential Business Campus, will increase the Company's holdings in the Parsippany submarket to nine office properties totaling approximately 1.3 million square feet. Parsippany, a 10 million square-foot submarket, is one of the strongest and most important submarkets in the state.
Bergen County, NJ Acquisition
- 10 Mountainview Road--The Company also announced it has acquired 10 Mountainview Road, a 192,000 square-foot class A office building in Upper Saddle River, Bergen County, New Jersey, for $24.5 million. The property is 96% leased to 14 tenants, including ITT Fluid Technology, Thompson Minwax and Corning Life Sciences. 10 Mountainview Road is located adjacent to another Company property, Mack-Cali Upper Saddle River at One Lake Street.
The acquisition of 10 Mountainview Road increases Mack-Cali's presence in the affluent Bergen County market to 20 office properties totaling 3.8 million square feet.
Commenting on today's New Jersey acquisitions, Mitchell E. Hersh, president and chief operating officer of Mack-Cali, said, "The addition of these premier properties to our portfolio will further enhance our position as the dominant player in New Jersey with superior assets in top submarkets throughout the state. We will continue to acquire such assets in New Jersey and the Northeast going forward."
Pacifica Acquisition Marks Company's Entrance into Denver Market
Mack-Cali also announced today an agreement to acquire Pacifica Holding Company, a private real estate owner and operator in Denver, for $188 million. The acquisition will include Pacifica's entire 1.4 million square-foot office portfolio, which includes 19 class A office buildings, and related operations; and 2.5 acres of land located in the Denver Tech Center and approved for over 400,000 square feet of development. Pacifica's office properties are located in suburban Denver and Colorado Springs, and are leased to 60 tenants, including TRW, Sun Micro Systems, HBO & Company, and Northern Telecom.
Mr. Hersh stated, "The acquisition of Pacifica provides us with an immediate presence in the attractive Denver market, where we believe there are tremendous opportunities. Further, the acquisition is in line with our strategy of entering new markets by acquiring experienced, smart management teams that offer Mack-Cali an immediate competitive advantage in the markets it serves. We look forward to working with Steve Leonard, co-founder and president of Pacifica, and Chetter Latcham, vice president of development and leasing, who will join our management team, and the rest of the Pacifica staff in maximizing our investment in the Denver marketplace."
As part of the acquisition, Mack-Cali will issue common equity of approximately $20 million to Pacifica's investor group, which includes Apollo Investment Fund II, LP.
The acquisition of Pacifica Holding Company provides Mack-Cali with a significant presence in the promising Denver suburban market, and demonstrates the Company's strategy of expanding into promising regional markets where Mack-Cali can become a major player.
The Denver market, consisting of approximately 70 million square feet of space, had an 8.0% vacancy rate, and a 7.0% suburban vacancy rate, at year-end 1997. Denver's economy, among the country's fastest growing in population and employment, is driven by high-technology and communications companies.
Mr. Hersh stated, "We are quite impressed with both the assets and the management team at Pacifica. In addition to providing us with local management expertise, Pacifica and its holdings will act as an additional beachhead upon which to grow the Company through further acquisition and market opportunities."
$650 Million in Debt and Equity Financing Transactions Announced
- $150 Million Secured Loan--The Company announced it has obtained a commitment for a seven-year, 7% interest-only $150 million secured loan from Prudential Insurance Company of America. The loan includes a conversion feature whereby the Company, upon achieving an investment grade credit rating, will have the option to convert the loan into senior unsecured debt.
- $400 Million Increase in Credit Facility--Mack-Cali has an agreement with Chase Manhattan Bank and Fleet Bank to expand its unsecured credit facility from $400 million to $800 million. The facility, which is expected to close within 60 days, will have a three-year term and bear interest at LIBOR plus 110 basis points.
- Equity Placement--In a separate transaction, concurrent with the acquisition of Prudential Business Campus, the Company agreed to sell $100 million in common equity to Strategic Value Investors, an investment fund managed by Prudential Real Estate Investors.
Commenting on the multiple transactions with Prudential and its affiliates, Mr. Rizk said, "These transactions illustrate how our Company continues to build on our 30-year relationship with Prudential. We intend to continue to pursue relationship-driven transactions such as these."
First Quarter Transactions Total Over $1.3 Billion
The transactions announced today, in addition to the transactions already announced by Mack-Cali this quarter, total over $1.3 billion, including $586 million in acquisitions and $746 million in financings. Previously, the Company announced, in January, $147 million in acquisitions, and, in February, a $96 million equity offering. The $1.3 billion in transactions represent the Company's most active first quarter to date.
The acquisitions announced today will add 2.8 million square feet to Mack-Cali's portfolio, including 1.4 million square feet in New Jersey and 1.4 million square feet in Colorado. The Company's announced first quarter transactions will add 4.2 million square feet to its portfolio, an increase of approximately 19%. Most of the increase, 2.7 million square feet, will be added to the Company's Northeast holdings, in New Jersey and Connecticut.
Upon completion of all pending transactions, Mack-Cali's portfolio will include:
- Total holdings of 240 properties totaling approximately 25.8 million square feet of space.
- Properties in 11 states, with significant holdings in New Jersey, New York, Pennsylvania, Connecticut, Texas, Arizona and Colorado.
- New Jersey holdings of 110 properties totaling 13.8 million square feet.
- Northeast holdings of over 20 million square feet.
- Holdings in the West and Southwest of approximately 4.9 million square feet.
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.
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.