Mack-Cali Agrees to Sell Suburban Philly Portfolio

EDISON, NJ-Mack-Cali Realty Corp. reports it has agreed to sell its suburban Philadelphia office portfolio to Keystone Property Group of Bala Cynwyd, PA for $233 million.

The transaction will be facilitated via various joint ventures with a fund sponsored by Keystone Property Group. The sale involves 15 Mack-Cali commercial office properties and three land parcels located throughout suburban Philadelphia. The portfolio totals approximately 1.663 million square feet of existing office properties and land that can accommodate future development of approximately 162,000 square feet.

Mack-Cali, a REIT, has been shifting its investment focus from office to multifamily. The portfolio will be sold for approximately $233 million: $201 million in cash, a $10-million mortgage secured by the One Plymouth Meeting office building, and subordinated interests in the portfolio with capital accounts aggregating $22 million. The company states that it will participate in management fees and 50% of value creation above certain hurdle rates. As part of the deal, Mack-Cali will receive majority interest in a land parcel in Bala Cynwyd, PA, for multi-family residential development and retains the rights to subdivide and develop multi-family residential units at 150 Monument Road in Bala Cynwyd.

The office buildings to be sold are: 150 Monument Road, Bala Cynwyd; 1000-1235 Westlakes Drive, Westlakes Office Park, Berwyn; 4 & 5 Sentry Park, Blue Bell; 100-300 Stevens Drive, Airport Business Center, Lester; 1000 Madison Ave., Lower Providence; Rose Tree Corporate Center I and II, 1400 N. Providence Road, Media; and One Plymouth Meeting, 502 W. Germantown Pike, Plymouth Meeting. The deal also included three land parcels in Lester, Media and Berwyn, PA.

Mitchell E. Hersh, president and chief executive officer of Mack-Cali, states, “My relationship with Keystone has afforded us the opportunity to make this transaction happen. It offers our Roseland subsidiary an opportunity to develop additional luxury multi-family properties that are in line with our reputation for building best in class residential at the gateway to the Main Line in Philadelphia. In addition, Mack-Cali will have the opportunity to redeploy the proceeds from this sale into more strategic growth opportunities.” The sale is expected to close in late 2013.

Keystone Property Group President and CEO Bill Glazer adds, "This acquisition is a very strategic venture for Keystone, and an expansion of an important relationship with an exceptional partner."