GlobeSt.com UPDATE: $34M-Plus Deal Finally Passes Muster

The acquisition, totaling about $34 million, brought together Paul A. Nussbaum, former Mack-Cali Realty Corp. director and one of the founders of the former Patriot American; David Gruber of Metro American and former head of MEPC American; Grady "Buddy " Jordan Jr. and his son-in-law, Gary Horn, both of the Ashwood Cos.; and Steven H. Levin, principal in Centennial Real Estate Corp.

Nussbaum and the 489,000 sf of top office product have been a packaged deal since December 1992, when Patriot American paid $125 million to the RTC for 24 office buildings and a 700-room hotel. Nussbaum took 3.6 million sf, including the four just acquired buildings, with him to Mack-Cali in December 1997 when Patriot American Office Group, Cali Realty Corp. and Mack Co. merged. Now, Nussbaum and the buildings have formed the nucleus for yet another real estate play--a deal structured through Brookview Partners LP as the buyer of record for 3100 Monticello; Landmark Bank Centre in Euless; Metroport in Irving; and 555 Republic Place in Plano.

Mark Robertson is the team leader for Insignia/ESG's Capital Advisors Group hired to market the Mack-Cali Dallas portfolio. He, Roger Burke, a director in Dallas, and Kevin Haggarty, executive managing director in New York City handled the talks. Nussbaum was poised to buy, but Sept. 11, 2001 caused a change of plan, Robertson reveals. Gruber then rose to the forefront as a likely purchaser for the Dallas quartet. He and Nussbaum started talking and the rest, as they say, is history, with everyone finally coming together yesterday at the closing table.

"With Sept. 11 (2001) thrown in the middle of this deal," Robertson tells GlobeSt.com, "it's a testimony to the character and the perseverance of our client, Mack-Cali, and the Gruber-Nussbaum team that they were able to complete this transaction during the difficult times and sagging office markets."

Mack-Cali financed a $5-million mezzanine loan for Brookview Partners, comprised of Ashwood American Partners MC Dallas LP and Nussbaum Centennial Partners LP. Robertson says equity investors include Insignia Realty Investors LLC and a roster of high net-worth individuals. The subordinated loan matures in November 2007 and bears a 15% interest with a current pay rate of 11%, according to Mack-Cali. David Mott of Minneapolis-based NorthMarq Capital Corp.'s Dallas office arranged about $27 million in senior debt financing through John Hancock Life Insurance Co. for the acquisition.

With the sale now closed, Mack-Cali will reinvest the proceeds "in strategic opportunities to further build on our strong position in our core markets along the Northeast corridor," Mitchell E. Hersh, Mack-Cali CEO, said in a prepared statement. Mack-Cali executives were not available by press time for additional comment.

The 3100 Monticello is a 173,837-sf, 84.5%-leased building; Landmark Bank Centre, a 74,429-sf, 96.7%-leased building at 150 Westpark Way in Euless; Metroport, a 142,634-sf, 84.1%-occupied building at 2300 Valley View Lane in Irving; and 555 Republic Place, a 97,889-sf, 94.2%-leased building in Plano. Insignia/ESG has two Mack-Cali buildings left to sell in Dallas. They aren't under contract as yet, says Robertson, who will continue to lead the Insignia team although he has left the rank-and-file to form a buying group of his own, with sights focused on Texas and Colorado product. Stay tuned, Robertson says, because those plans are being polished.