BOSTON-The Cranford, NJ-based Mack-Cali Realty Corp. marks its entry into the metro-area market via a joint venture with the New York City-based Gale International and JPMorgan Chase’s Special Situation Property Fund. The JV has acquired a seven-property portfolio aggregating 666,697 sf in the Route 495 N. submarket for $53.6 million.

The properties include class A office and office/R&D space in three suburbs. Among them are 300, 600 and 800 Federal St. in Andover, which have 119,970 sf, 115,572 sf, and 158,655 sf, respectively. The firm also acquired Three and Eight Federal St. in Billerica, which have 90,000 sf and 80, 000 sf, respectively; and Seven and Eight Oak Park Dr. in Bedford, which have 40,000 sf and 62,500 sf of office/R&D space, respectively.

Mitchell Hersh, president and CEO of Mack-Cali, says the buildings were completed between the early 1980s and 1990s. The rental rates average in the low $20s per sf.

“Boston has been in my sights for quite awhile,” Hersh tells GlobeSt.com. “These are all along the Amtrak line and this is a logical extension for us. It extends our Northeast presence into the Boston area, an office market with considerable value-added potential.” His company now has interests in 304 properties aggregating 34.3 million sf, primarily located from Washington, DC to Boston.

Robert Mahoney, chief investment officer in Gale International’s Boston office, arranged the transaction, which traded as a single portfolio. William Callahan, a developer based in Bedford, sold all but Eight Federal St., which was sold by the Philadelphia-based Berwind Property Group. Meredith & Grew represented Callahan and Jones Lang LaSalle represented Berwind.

The JPMorgan Chase fund owns 70% of the venture, and Mack-Cali owns 83.3% of the remaining 30%. The agreement included a promoted structure that allows the Mack-Cali/Gale International entity to achieve a 50% interest once unspecified internal rate-of-return thresholds are met. The Boston office of LJ Melody/CBRE arranged an undisclosed amount of financing from lender UBS Real Estate Investments Inc.

The JV plans to invest $4.4 million in property improvements, and Mack-Cali/Gale International will oversee construction, manage the properties and handle leasing. The portfolio is currently 58.8% leased to eight tenants.

This May, Mack-Cali acquired Gale Real Estate Services, formerly affiliated with Gale International, in a $545-million deal. Expansion to Boston, Hersh says, “was part and parcel of our acquisition of Gale Real Estate Services Co. and something I had in mind that could be accomplished through Gale’s expertise and presence in Boston.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.