Mack-Cali Buys Two Buildings for $48 Mil

The two buildings, located in the namesake Mack-Cali Business Campus, are 92.6% leased to such tenants as Nabisco, Prudential Insurance, Summit Equities, Rockwell Electronics and ExxonMobil. The buy increases Mack-Cali's holdings at the campus to 1.5 million sf, and to two million sf in the Parsippany submarket.

"Adding these assets to our portfolio strengthens our presence in this submarket and our overall strategic position in high barrier-to-entry markets in the Northeast," according to Mack-Cali CEO Mitchell Hersh. He notes that the company's land holdings in the submarket could support another two million sf of office space.

That's only part of the news. The latest acquisition comes against a backdrop of continuing rumors that the company is in merger talks with Reckson Associates, the Long Island, NY-based REIT. While top Mack-Cali officials continue to refuse comment on the rumors, a report issued by First Union Securities speculates that Reckson would be the buyer. The report notes, however, that "we have not received any confirmations, no subtleties from concerned parties."

The First Union report does indicate that Mack-Cali "adjusted its operating and financing strategy following the failed... Prentiss Properties merger..." It also suggests that the two REITS may have discussed "swapping properties... in overlapping markets," concluding that, "such a merger would create a combination with greater market penetration... in the major suburban New York City markets..."

If Reckson would be the buyer, the report notes that "such a deal would add to Reckson's development pipeline." That's a reference to Mack-Cali's Harborside project in Jersey City.

Mack-Cali's ongoing acquisition activities suggest that the firm is certainly not constrained by a possible takeover by the smaller Reckson. Indeed, according to observers, that aggressiveness itself may even be a signal that Mack-Cali would be the lead partner in any merger.

A source close to the situation, while only saying that "we have a lot going on right now," suggested very broadly that might be the case. In a related matter, and a possible clue, Mack-Cali has retained the services of Rubenstein Associates, the high-powered Manhattan-based PR firm.