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CRANFORD, NJ-Stop waiting for the long-awaited merger between Mack-Cali Realty Corp. and Prentiss Properties. The deal, valued at $2.3 billion, has been deep-sixed by the boards of both firms.

Mack CEO Mitchell Hersh was unavailable for comment, but in a prepared statement, he explains that the termination agreement calls for Prentiss to gain Mack’s 270,000-sf Cielo Center in Austin for $47.1 million. In addition, the locally based REIT has deposited $25 million into an escrow account for the “benefit of Prentiss Properties.”

According to published reports, the sale of the Austin asset might be the first step in a major shedding of properties beyond the REIT’s original Northeast concentration. In yet another prepared statement, the REIT has unveiled only “strategic property divestitures to further enhance Mack-Cali’s financial strength.”

Turning a negative into a positive, Hersh has said on the record that that while “we’re disappointed that the merger will not occur, this settlement allows Mack-Cali and Prentiss to refocus on their core strategies.”

He may be disappointed, but investors might relax a bit. The deal was not a favorite on Wall Street; Mack-Cali share price took a beating and several analysts downgraded the company’s rating. “The deal is dilutive to earnings by at least 10 cents a share and dilutive to net asset value by almost 10%, which is enormous,” Christopher Haley, an analyst with First Union Securities, said at the time.

But the wisdom of the marriage might be a concern to fewer investors going forward, since Mack-Cali has also announced this morning that it will repurchase up to $150 million of its outstanding common stock.

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