Mack-Cali to Sell Suburban Philly Office, Land Assets for $233M

By Barbra Murray, Contributing Editor

Keeping in line with its diversification strategy into multi-family projects and its retreat from non-core office assets, Mack-Cali has struck a deal to dispose of its nearly 1.7 million-square-foot office portfolio and three land parcels in suburban Philadelphia. Per an agreement involving joint ventures sponsored by Keystone Property Group, Mack-Cali will sell the assets for approximately $233 million.

Financial terms of the agreement involve $201 million in cash, a $10 million mortgage secured by one of the assets, and subordinated interests in the portfolio with capital accounts totaling $22 million. As Mitchell Hersh, president & CEO of Mack-Cali, said during the company’s first quarter earnings call in April, “In some instances such as a planned joint venture with several Pennsylvania buildings, we will continue to retain a carried interest in a joint venture so that without any further capital commitment on the part of Mack-Cali, we will retain the ability to harvest future value in the assets.”

The largest of the office properties in the Philly-area portfolio is the four-building 444,400-square-foot complex at 1000-1235 Westlakes Dr. at the Westlakes Office Park in Berwyn, and the smallest is the 100,700-square-foot building at 1000 Madison Ave. in Providence. Rounding out the group are 100-300 Stevens Dr., featuring 371,000 square feet at the Airport Business Center in Lester; the 260,000-square-foot Rose Tree Corporate Center I & II in Media; 4 & 5 Sentry Park, accounting for 194,000 square feet in Blue Bell; the 168,000-square-foot One Plymouth Meeting in Plymouth Meeting; and in Bala Cynwyd, the 126,000-square-foot 150 Monument Rd. As part of the deal, Mack-Cali will retain the right to subdivide 150 Monument for multi-family residential development.

And then there’s the land. The agreement includes a total of nearly four acres at Airport Business, Rose Tree Corporate Center and Westlakes Office Park.

Mack-Cali expects the transaction to close in late 2013. The deal dovetails well with a rather significant transaction the company completed in October 2012: the acquisition of the real estate development and management business of multi-family developer and operator Roseland Partners.

“Roseland is the real deal, the best in class,” Hersh said during the call. “The platform allowed us to put in place expertise to be competitive in the multi-family sector with a very limited capital commitment, to build a significant multi-family portfolio through both development and value-added acquisitions.”