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Deals & Dealmakers

Keystone scoops up $230M Mack-Cali office portfolio

Keystone Property Group, a real estate developer, manager and investor of office, industrial and mixed-use properties, has purchased 12 office properties owned by Mack-Cali throughout Northern New Jersey, New York and Connecticut.

The portfolio, which totals approximately 2.3 million square feet, will be purchased for approximately $230.8 million, including $201.7 million in cash with the balance in the form of senior and subordinated equity.

The transaction represents the fifth deal between Keystone and Mack-Cali as part of Keystone’s strategy to expand its regional footprint by investing in high-quality commercial assets and repositioning them to create dynamic, lifestyle-oriented business environments.

Last year, Keystone closed on its acquisition of 14 institutional-quality commercial office properties and three land parcels located in key suburban Philadelphia submarkets through a joint venture with Mack-Cali.

That deal was followed by the purchase of 100 Independence Mall West, a 400,000 s/f, Class A office building in Philadelphia’s Central Business District, by a joint venture of Keystone, Mack-Cali and Parkway Corporation.

In 2012, Keystone purchased two properties from Mack-Cali: Moorestown Corporate Center in Moorestown, N.J., and 16 and 18 Sentry Park West in Blue Bell, Pa.

BILL GLAZER

“This latest deal reflects our aggressive strategy to establish a strong, regional presence by expanding our focus on the creation of differentiated, urban-inspired live-work-play destinations in the context of well-located suburban parks,” commented Bill Glazer, president of Keystone Property Group.

“The profound impact that technology is having on how today’s professionals work is drastically changing the commercial real estate requirements of modern companies. Today’s workplaces need to foster these new and different ways of working in order for companies to remain competitive, which means transforming the business environment to put greater emphasis on lifestyle and shared, collaborative spaces that appeal to a wide variety of professionals.”

Added Glazer: “We continue to expand our relationship with Mack-Cali, leveraging the strengths of the partnership’s distinct capabilities to fill a void in the market for next generation work environments that enable tenants to attract and retain top talent.”

The Tri-State office portfolio that Keystone has entered into agreement to purchase comprises:

o Two buildings at 555 and 565 Taxter Road in Taxter Corporate Park in Elmsford, N.Y., totaling 344,563 square feet
o 570 Taxter Road in Elmsford N.Y., totaling 77,859 square feet
o Two buildings at 200 and 220 White Plains Road in Talleyrand Office Park in Tarrytown, N.Y., totaling 175,749 square feet
o 1717 Route 208 North in Fairlawn, N.J., totaling 150,477 square feet
o 30 Knightsbridge Road in Piscataway, N.J., totaling 686,316 square feet
o 412 Mt. Kemble Road in Morris Township, N.J., totaling 477,843 square feet
o Three buildings at 470, 400 and 530 Chestnut Ridge Road in Montvale, N.J., totaling 200,444 square feet
o Soundview Plaza at 1266 East Main Street in Stamford, Conn., totaling 179,610 square feet.

MITCHELL HERSH

Through its partnership with Keystone, Mack-Cali will participate in management fees for the portfolio and a percentage of value creation above certain hurdle rates, and retain a senior pari-passu equity position at 570, 555 and 565 Taxter Road. As part of the transaction, Mack-Cali and Keystone will jointly provide leasing representation for the portfolio.

“This transaction is another step forward in our strategy to redeploy capital into our multi-family platform, while participating in the upside that will be created by the repositioning of this portfolio,” said Mitchell E. Hersh, president and CEO of Mack-Cali. “We look forward to building on our partnership with Keystone and further strengthening our market position by drawing on the synergies of our collective expertise and relationships.”

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