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Deals & Dealmakers

Mack-Cali sheds 5 million s/f of underperforming assets

Mack-Cali continues to trim its portfolio, shedding underperforming and non-core assets as it focuses on “transit-based” locations.

According to company’s 2016 and year-to-date 2017 capital market results, it generated proceeds of $745 million by selling 36 commercial office assets totaling five million square feet and a 220-unit multifamily community.

Starting in the fourth quarter of last year, the firm completed its exit from the Washington D.C. market with the sale of its seven-building portfolio in Greenbelt, Maryland. It also offloaded its investments in the Jersey office sub-markets of Freehold, Roseland and Cranford.

The transactions, which include the sale of the minority interests in Tri-State area office assets owned by Keystone Property Group, amounted to dispositions worth $280 million.

However, the company has not completely soured on the multifamily market. It bought out its joint venture partner at its Jersey City waterfront project Plaza 8/9 for $57.1 million. It also executed a similar transaction for the Monaco. Mack-Cali bought its partner’s 85 percent stake in the 523-unit Jersey City project.

The company is now targeting properties near transit locations. Last November, the firm acquired 333 Thornall Street in Edison, New Jersey for $53.1 million. It also bought properties in the waterfront markets of Jersey City, Hoboken and Weehawken.

“As a result of refining our office portfolio, consistent with our earnings and debt range, we continue to increase our profit margins by creating operating efficiencies with reduced expenses, higher rents, and increased occupancy,” said Michael DeMarco, the firm’s president. “This positions us to better focus on our high-growth markets and reposition these assets by introducing robust amenity programs that will drive demand and produce higher rents. We believe we are well on our way to owning a totally class A portfolio.”

The company has been active this quarter. It closed on the acquisition of a three-building portfolio in Red Bank, New Jersey for $27 million. It also agreed to buy three-building portfolios in Short Hills and the Giralda Farms campus in Madison.

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