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Keystone Closes $233M Acquisition of Philadelphia Portfolio

Mack-Cali Realty Corp Divests 15 Properties
August 28, 2013
A joint venture led by Keystone Property Group has closed on the previously-announced acquisition of 15 institutional-quality commercial office properties and three land parcels located in suburban Philadelphia for approximately $233 million. Mack-Cali Realty Corporation sold the assets, which total nearly 1.7 million square feet of office space.

The acquisition significantly expands Keystone's presence in the state where it was founded in 1991. With the execution of a strategic reinvestment program, the buyer plans to modernize the portfolio to enhance the tenant experience as well as developing the three land parcels with up to 162,200 square feet in total.

"This acquisition is closely aligned with our core competencies as a long-time investor in well-located office properties where significant value can be created to achieve best-in-class work environments that meet the requirements of modern companies," said Bill Glazer, president of Keystone Property Group. "Drawing on the strengths of our more than 20-year track record in the Pennsylvania market, our strategy is focused on realizing the full potential of these assets through the creation of vibrant, urban-inspired settings within the context of suburban office campuses."

The portfolio is located across key submarkets around suburban Philadelphia, including several along the state's Main Line. It is comprised of:
  • 150 Monument Rd. in Bala Cynwyd, totaling 125,783 square feet;
  • Four buildings at 1000-1235 Westlakes Dr. in Berwyn, totaling 444,350 square feet;
  • Three buildings at 4-5 Sentry Park in Blue Bell, totaling 193,930 square feet;
  • Three buildings at 100-300 Stevens Dr. in Lester, totaling 371,000 square feet;
  • 1000 Madison Ave. in Lower Providence, totaling 100,700 square feet;
  • Two buildings at 1400 N. Providence Rd. in Media, totaling 260,000 square feet;
  • 502 W. Germantown Pike in Plymouth Meeting, totaling 167,748 square feet.
The three land parcels are located in the Airport Business Center in Lester, Rose Tree Corporate Center in Media, and Westlakes Office Park in Berwyn.

Through its partnership with Keystone, including two previous transactions between the two parties, Mack-Cali will participate in management fees for the portfolio and a percentage of value creation above certain hurdle rates. As part of the transaction, Mack-Cali retains the rights to subdivide and develop multifamily residential units at the Bala Cynwyd site through its wholly owned subsidiary, Roseland.

"This is an important transaction for Mack-Cali," said Mitchell E. Hersh, president and chief executive officer of Mack-Cali. "It allows us to redeploy the proceeds from this sale into our multifamily platform while participating in the upside potential of the PA portfolio. In addition, it gives us an opportunity to develop additional luxury multi-family properties that are in line with our reputation for building best in class residential at the gateway to the Main Line in Philadelphia."

Several lenders were involved in the acquisition, including Deutsche Bank, Cantor Fitzgerald, PCCP, and Purchase Money Mortgage.

Keystone Property Group is a leading real estate investor and developer. Mack-Cali Realty Corporation is a fully-integrated, self-managed REIT providing management, leasing, development, construction and other services for its portfolio.

Please see CoStar COMPS #2824270 for additional information on this transaction.

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