Mack-Cali Realty Corp.
) and Keystone Property Group have penned a deal to form joint
ventures whereby Keystone would acquire 12 office properties
across Northern New Jersey, New York and Connecticut from
Mack-Cali for around $230.8 million. The move comes as part of
Mack-Cali's efforts to shed its office portfolio and diversify
into the more promising multi-family residential sector.
This marks the fifth deal signed by Keystone and Mack-Cali and
involves 2.3 million square feet of space in total. The purchase
price of $230.8 million comprises $201.7 million in cash and the
rest in the form of senior and subordinated equity.
Mack-Cali will take part in the portfolio management fees as well
as a percentage of value creation over certain hurdle rates. It
would also keep a senior pari-passu equity position at 570, 555
and 565 Taxter Road.
Amid continued weakness in the company's core office markets,
Mack-Cali has been divesting a notable part of its office
portfolio and deploying its capital to expand its holdings in the
multi-family residential sector that has traditionally been more
of a stable product type. The growth in the echo boomers
population is particularly expected to drive the demand for these
Notable acquisitions in this respect involve multi-family
residential properties in New Brunswick, NJ, Alterra at Overlook
Ridge 1A and 1B - luxury multi-family properties in Mass., and
Park Square in Rahway, NJ.
While we believe that the venture into the multi-family apartment
sector is expected to help in long term growth of Mack-Cali, the
aggressive disposition of office assets would continue to have a
dilutive impact on its financials in the near-to-medium term.
Mack-Cali currently carries a Zacks Rank #4 (Sell) stock.
However, investors interested in the REIT industry may consider
Cousins Properties Inc.
Liberty Property Trust
). All these stocks carry a Zacks Rank #2 (Buy).
MACK CALI CORP (CLI): Free Stock Analysis
COUSIN PROP INC (CUZ): Free Stock Analysis
LIBERTY PPTY TR (LRY): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
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