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Keystone Acquires Three NJ Offices for $71.6M Through Mack-Cali Partnership

797,000 SF Trades Hands as Part of Planned $231M Northeast Portfolio Deal
June 24, 2014
A joint venture of Keystone Property Group and Mack-Cali Realty Corporation (NYSE: CLI) has acquired three office buildings in New Jersey for $71.605 million, or about $90 per square foot, from Mack-Cali.

Keystone and Mack-Cali have entered into agreements to form various joint ventures to take control of properties across the Northeast. Earlier this month, the partnership teamed up to buy Philadelphia's Curtis Center for $125 million.

The three New Jersey office properties acquired in this transaction include:
  • 30 Knightsbridge Rd. in Piscataway. The four interconnected office buildings total 686,316 square feet that was fully leased at the time of sale. It features redundant power supply systems and an owned substation on-site, advanced fiber optic systems, and a professionally landscaped site near Exit 8 off I-287.
  • 470 Chestnut Ridge Rd. in Woodcliff Lake. The two-story, 53,730-square-foot office building was also fully leased at the time of sale. It features class A finishes and proximity to the Garden State Pky, I-80, I-287, Rtes 4 and 17, the New York State Thruway and the Palisades Interstate Pky.
  • 530 Chestnut Ridge Rd. in Woodcliff Lake. The three-story, 57,204-square-foot office building was 92 percent leased at the time of sale, but is facing a major rollover in the third year. It is located just minutes from the Garden State Pky and numerous restaurants, retail, and business services.

  • Keystone will reinvest in various improvements and upgrades at the three properties, including upgrades to the elevators and amenities, a new roof, and enhancements to the HVAC system. Ownership will lease and manage the properties in-house, as it has done with previous acquisitions under this partnership.

    "As part of our continued focus on creating lifestyle-oriented, world-class work environments that support tenants in maintaining their competitive edge, we are looking forward to executing on our strategy to unlock value at these properties through capital improvements," commented Bill Glazer, president of Keystone Property Group. "The buildings within this portfolio are well located and are prime candidates for reinvestment. Through our partnership with Mack-Cali, we are strongly positioned to differentiate these properties in the market as stand-out business addresses that appeal to the needs of modern companies."

    The buyer financed this acquisition in-part with new debt from Cantor Fitzgerald in the amount of $62.34 million, carrying a LTC of 87 percent. The loan includes funds for capital improvements totaling roughly $4 million, and lease-up costs.

    This sale marks the first part of a previously-announced portfolio sale of 12 office buildings totaling 2.3 million square feet that Mack-Cali currently owns. The total purchase price of approximately $230.8 million includes $201.7 million in cash and the balance in senior and subordinated equity. The remaining properties in this portfolio are expected to close in the coming weeks.

    Mitchell E. Hersh, president and CEO of Mack-Cali, commented, "This deal is squarely in line with our corporate strategy, whereby we will leverage this transaction to redeploy capital into our growing multi-family platform. At the same time, the deal structure allows us to participate in the upside created through reinvestment in these buildings."

    Both parties handled the direct sale in-house.

    Please see CoStar COMPS #3054155 for additional information on this transaction.
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