Mack-Cali Acquires Joint Venture Interests in Suburban Boston Office Portfolio
06/05/2006 Category: Acquisitions
Venture with a JP Morgan Fund and Gale International Acquires Seven-Building Portfolio for $53.6 Million
Cranford, New Jersey—June 5, 2006—Mack-Cali Realty Corporation (NYSE: CLI) today announced that in a joint venture with JPMorgan Chase's Special Situation Property Fund and Gale International it has acquired a stake in a seven-building class A office and office/r&d portfolio in the Boston suburbs. The properties, totaling 666,697 square feet, were purchased for $53.6 million.
The investment is Mack-Cali's first in the Boston market, extending its presence northward. The company already is a major office property owner in the Washington, D.C. to Connecticut corridor, with a dominant presence in its home state of New Jersey.
The properties are located in Andover, Bedford and Billerica, Massachusetts, in the Route 495 North submarket of Greater Boston, and are 58.8 percent leased to eight tenants. Tenants include Alliance Imaging, CGI, Eastman Kodak, GN NetTest, Navisite, Aastra Telecom, and EM4.
The Special Situation Property Fund owns 70 percent of the venture, with an entity of Mack-Cali and Gale International owning 30 percent. Of the Mack-Cali/Gale International entity, Mack-Cali owns 83.3 percent. The joint venture agreement includes a promoted structure allowing for the Mack-Cali and Gale International entity to achieve a 50 percent interest based on IRR thresholds. Mack-Cali and Gale International will provide management, leasing and construction services for the portfolio and will receive all fees associated with those services.
Mitchell E. Hersh, Mack-Cali president and chief executive officer, commented, "This transaction is a significant step forward for Mack-Cali. It extends our Northeast presence into the Boston area, an office market with considerable value-add potential. The investment was facilitated by the industry relationships obtained through our recent acquisition of The Gale Real Estate Services Company, a former affiliate of Gale International. We are especially pleased to have the opportunity to participate in a joint venture with JPMorgan, a firm for which we have a tremendous amount of respect."
With the completion of this transaction, Mack-Cali now owns or has interests in 304 properties totaling 34.3 million square feet, primarily located in the Northeast and Mid-Atlantic regions from Washington, D.C., north to Boston.
The following buildings were acquired in the transaction:
|300 Federal Street, Andover||Two-story office||119,970|
|600 Federal Street, Andover||Two-story office||115,572|
|800 Federal Street, Andover||Three-story office||158,655|
|3 Federal Street, Billerica||Three-story office||90,000|
|8 Federal Street, Billerica||Two-story office||80,000|
|7 Oak Park Drive, Bedford||Two-story office/r&d||40,000|
|8 Oak Park Drive, Bedford||Two-story office/r&d||62,500|
The transaction was arranged by Robert Maloney, chief investment officer for Gale International's Boston office. With the exception of the 8 Federal Street building, which was acquired from Berwind Properties in a transaction represented by JLL, the portfolio was acquired from William Callahan, a real estate developer based in Bedford, Mass. Meredith & Grew represented William Callahan in the transaction.
Financing for the transaction was provided by UBS Real Estate Investments, Inc., which was arranged through L.J. Melody's Boston office.
The venture will also invest approximately $4.4 million in the portfolio for building improvements.
Mack-Cali Realty Corporation is a fully-integrated, self-administered, self-managed real estate investment trust (REIT) providing management, leasing, development, construction and other tenant-related services for its class A real estate portfolio. Mack-Cali currently owns or has interests in 304 properties, primarily office and office/flex buildings located in the Northeast, totaling approximately 34.3 million square feet. The properties enable the Company to provide a full complement of real estate opportunities to its diverse base of approximately 2,400 tenants.
Additional information on Mack-Cali Realty Corporation is available on the Company's website at www.mack-cali.com.
Statements made in this press release may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by the use of words such as "may," "will," "plan," "should," "expect," "anticipate," "estimate," "continue," or comparable terminology. Such forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate, and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the headings "Disclosure Regarding Forward-Looking Statements" and "Risk Factors" in the Company's Annual Reports on Form 10-K. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.