Mack-Cali Realty Corporation Announces Over $147 Million in Transactions
01/13/1998 Category: Acquisitions
Transactions Add 1.6 Million Square Feet to Company's Portfolio
Deals Include Northeast and Southwest Property and Land Acquisitions; Build-to-Suit Agreement
CRANFORD, NJ--January 13, 1998--Mack-Cali Realty Corporation (NYSE:CLI) today announced over $147 million in acquisition and development transactions in the Northeast and Southwest totaling approximately 1.6 million square feet. In six separate transactions, the Company agreed to acquire 26 office and office/flex properties and develop one build-to-suit office/flex property.
Commenting on the announcement, Thomas A. Rizk, chief executive officer, said, "These transactions further solidify Mack-Cali's dominant super-regional status and our strategy of pursuing transactions to enhance our dominant presence in the Northeast, as well as our presence in the Southwest. Today's announcement clearly confirms the efficient integration of Cali, Mack and Patriot management, and is indicative of our full acquisition pipeline. We are confident about the future of Mack-Cali, and are especially optimistic about our growth prospects for 1998."
With the completion of all six transactions, Mack-Cali's property portfolio will increase by over 7%, from 21.6 to 23.2 million square feet; its total properties will increase from 187 to 213; and its tenant base will increase from approximately 2,200 to over 2,300.
The sources of funding for the transactions include the Company's cash reserves, credit facilities, assumption of debt, and issuance of operating partnership units.
Northeast Portfolio To Increase to 19 Million Square Feet
In the Northeast, five transactions were announced totaling 1.4 million square feet of office and office/flex space in New Jersey and Connecticut. The transactions enhance the Company's position as the dominant owner in New Jersey and the Northeast's super-regional real estate investment trust (REIT). Specifically, the transactions:
- Increase Mack-Cali's holdings in New Jersey from 78 properties to 101 properties, and its square footage from 11.3 to 12.4 million square feet of office and office/flex space.
- Enhance the Company's position in several strong markets and submarkets, particularly the tight Princeton market and affluent Bergen County market, where Mack-Cali's presence increases to 526,000 square feet and 3.6 million square feet, respectively.
- Provide the Company with upside potential through development opportunities in strong markets.
- Add over 100 tenants to the Company's Northeast tenant base, increasing tenant diversity.
- Provide additional property choices to tenants wishing to expand or relocate their businesses throughout the region.
Northeast Transactions Include:
- Acquisition of Princeton Overlook--In December 1997, the Company acquired Princeton Overlook, a 149,600 square-foot class A office building, and a 20 acre land parcel zoned for an additional 149,600 square feet of office development, in Princeton, New Jersey, for $26.9 million. Princeton Overlook is 99% leased to 11 tenants, with leading tenants including Novo Nordisk Pharmaceutical, Xerox Corporation, and PaineWebber. The building was acquired from Princeton Overlook Limited Liability Company.
The added value of the Princeton Overlook transaction is its vacant land parcel, since Princeton is one of the state's tightest real estate markets. Mack-Cali's holdings in the Princeton market now total five office buildings with over 526,000 square feet of space.
- Connecticut Build-to-Suit Agreement--In a build-to-suit transaction, Mack-Cali agreed to acquire 10 acres of vacant land in Stamford Executive Park, in Stamford, Connecticut, from RMC Development Co., LLC, the residual company of the Robert Martin Company, for $1.3 million. Mack-Cali will develop a 40,000 square-foot office/flex building for Davidoff of Geneva, an existing tenant in the park. Davidoff will occupy the entire building, and has signed a 15-year lease on a triple net basis. The development of the flex building, which can be expanded to 60,000 square feet, is expected to yield a high return for the Company.
- Agreement to Acquire Vacant Fort Lee Property--Mack-Cali entered into a contract to purchase 2115 Linwood Avenue, a 68,000 square-foot vacant office property in Fort Lee, New Jersey, for $5 million. The property, to be acquired from Banque Nationale de Paris, is located near the George Washington Bridge, and offers immediate access to New York City and the Fort Lee business district, in affluent Bergen County.
To be purchased at less than $74 per square foot, the property is expected to yield high "development-type" returns after it is refurbished and leased in the tight Fort Lee market. With the acquisition of 2115 Linwood Avenue, which is expected to close by mid February, Mack-Cali's holdings in Bergen County now total 19 office properties and 3.6 million square feet.
- Agreement to Acquire a Greenwich, Connecticut Office Property--Mack-Cali also entered into a contract to acquire 500 West Putnam Avenue, a 121,250 square-foot class A office building in Greenwich, Connecticut, for $18 million. The four-story building is 100% leased to 17 tenants, including Equitable Life Insurance, Putnam Trust Company, Hachette Filipacci Magazines, and American Express. Mack-Cali will purchase the property from 500 West Putnam Associates. With this acquisition, which is expected to close by January 31, subject to the satisfactory completion of due diligence, the Company will own five properties totaling 420,000 square feet in the strong Fairfield County, Connecticut market.
- Agreement to Acquire One Million Square-Foot Office/Flex Portfolio--In the largest of the transactions, Mack-Cali entered into a contract to acquire the Southern New Jersey office/flex portfolio of McGarvey Development Company for $61.9 million. The portfolio consists of 21 existing buildings and one building under construction totaling over one million square feet, located in two business parks--Moorestown West Corporate Center in Moorestown and Bromely Commons in Burlington.
The existing buildings in the portfolio are 97% leased to 85 tenants, including ADP, Tropicana, Aramark, and Whirlpool. The building under construction, an 88,000 square-foot office/flex building, is 100% pre-leased and is expected to be completed in the Spring.
The contract also includes an agreement for Mack-Cali to purchase up to six office/flex properties totaling 202,000 square feet upon completion of development and lease up by McGarvey.
The Company's acquisition of the McGarvey portfolio offers significant upside potential to Mack-Cali, since the rents on the properties are significantly below market, and approximately 30% of leases will roll over in the next two years. In addition, the buildings under development are expected to produce attractive yields for the Company.
The purchase of the McGarvey portfolio, which is expected to close by February 15, will increase the Company's holdings to 1.1 million square feet in Burlington County, New Jersey, and 2.6 million square feet in the overall suburban Philadelphia/Southern New Jersey market.
Southwest Property Acquired
In the Southwest, Mack-Cali acquired Concord Plaza, a 248,700 square-foot class A office property in suburban San Antonio, Texas, for $34 million. Located in the north-central corridor of San Antonio, minutes from the San Antonio Airport, the property is 98% leased to 30 tenants, including Merrill Lynch, PaineWebber, and Harte-Hanks Communications. The property was purchased from Concord Plaza Joint Venture in December.
The acquisition of Concord Plaza, which represents the Company's first purchase in the Southwest since its merger on December 11, brings Mack-Cali's holdings in San Antonio to four office properties totaling 940,000 square feet.
Commenting on the Southwest transaction, Mitchell Hersh, president and chief operating officer, said, "This acquisition complements our existing beachheads in the Southwest, and strengthens our position in San Antonio." Mr. Hersh continued, "These transactions further position Mack-Cali as a leading property owner and developer in key markets with opportunities for future growth, and reinforce Mack-Cali's strategic objectives."
Mack-Cali Realty Corporation, formerly 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 completed transactions and the closing of the pending transactions, Mack-Cali will own 213 properties, primarily office and office/flex buildings, totaling approximately 23.2 million square feet, serving over 2300 tenants. Mack-Cali's properties are located in 10 states, primarily in the Northeast and Southwest.
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.