Real estate investment trust – Mack-Cali Realty Corporation (CLI) – finally disposed six New York and Connecticut office properties to a joint venture led by Keystone Property Group for around $91.5 million.
With this move, the companies closed the tri-state area portfolio sell-off deal that had been announced earlier this year. Notably, Keystone and Mack-Cali had inked deals previously to form various joint ventures for a number of property sales.
The disposed properties included 555 and 565 Taxter Road in Taxter Corporate Park, as well as 570 Taxter Road, in Elmsford, NY; Talleyrand Office Park, located at 200 and 220 White Plains Road in Tarrytown and Soundview Plaza in Stamford. Prior to this, Mack-Cali had disposed five New Jersey office properties as part of this deal.
However, shedding this portfolio does not entirely cut off Mack-Cali from the income generated by these properties. This is because, while Keystone will deal with reinvestment in redevelopment, management and upgrade of these properties, Mack-Cali would be involved in the portfolio management fees, lease handling, value creation over certain hurdle rates and keep a senior pari-passu equity position at 555, 565 and 570 Taxter Road.
Amid the continued weakness in the core-office markets, Mack-Cali has been divesting a substantial part of its office portfolio so as to reap decent capital. This is being redeployed in its multi-family residential sector ventures, which has traditionally been more of a stable product type. As the latest deal arrangement allows the company to join in the upside as well as management fees of these assets, we consider the move a strategic one.
Mack-Cali currently carries a Zacks Rank #3 (Hold) stock. Investors interested in the REIT industry may consider stocks like DCT Industrial Trust Inc. (DCT), Extra Space Storage Inc. (EXR) and Gladstone Commercial Corp. (GOOD). All these stocks hold a Zacks Rank #2 (Buy).
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