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Mack-Cali Acquires Land for 718 Unit Multifamily Project in Jersey City

Reports Continued Repositioning of Portfolio in Fourth-Quarter Earnings Call Thursday
February 22, 2018
Mack-Cali Realty Corp., which sold off more than $500 million in holdings in 2017, switched course last quarter and added to its New Jersey Gold Coast waterfront portfolio with the $53 million acquisition of 25 Christopher Columbus Dr. in Jersey City, the company reported in its 2017 fourth-quarter earnings report.

Michael DeMarco, CEO of the Jersey City-based REIT, discussed the acquisition of the multifamily development site during a conference call with Wall Street analysts on Thursday.

The deal for that property, which has approvals for construction of a 718-unit, 750,000-square-foot residential building and a public school, is No. 2 on the list of Mack-Cali’s five priority parcels this year, DeMarco said. The transaction was done as part of a 1031 exchange, with construction set to start this year.
See CoStar COMPS #4144299.

Mack-Cali’s focus on capital spending this year - in addition to 25 Christopher Columbus Drive - DeMarco said, is on: the 679-unit Plaza 8 in Jersey City; 750 units in Phase II at Urby at Harborside in Jersey City; 326 units at Building 8/9 of Port Imperial South in Weehawken; and the 326-unit Overlook IIIC in Malden, MA.

Under DeMarco’s watch, Mack-Cali has been rejiggering its once office-centric portfolio. The company continued its repositioning efforts in the fourth quarter with the sale of three properties - two non-core buildings and one ground lease - for $56 million. For the full year, Mack-Cali completed $416 million in property sales - for 60 non-core buildings and two ground leases - and $112 million for the sale of joint-venture interests, for a total of $528 million in divestments.

The REIT plans to complete roughly $400 million in sales of its holdings by the second quarter.

Those divestitures will, "conclude the company’s major disposition program with future sales occurring on a select one-off basis," Mack-Cali said in its fourth-quarter earnings release.

The company’s consolidated core office properties were 87.6 percent leased as of the end of last year, compared to 90.1 percent leased as of Sept. 30 last year and 90.6 percent at the end of 2016.

"We made considerable progress during 2017 in repositioning our office portfolio and converting subordinate interests in our Roseland residential portfolio into majority owned positions," DeMarco said in a prepared statement.

"Our office disposition activity has allowed us to further streamline property operations and deepen our focus on core markets," he said. "While leasing in the fourth quarter did not meet our expectations, for 2018 the company is laser-focused on waterfront leasing and executing an additional $400 million of non-core dispositions. Our approach positions Mack-Cali for NAV (net asset value) accretion and stronger earnings growth potential in the years ahead."

The company reported that it made $395 million in office-property acquisitions last year. It also purchased residential development sites, including a mortgage note, totaling $212 million. In addition to that, Mack-Cali bought a multifamily property valued at $315 million using Rockpoint Capital and assuming a mortgage of $165 million, it reported.

Mack-Cali also disclosed that it expects roughly 889,000 square feet of tenant move-outs in its Hudson River waterfront portfolio throughout this year. The major companies moving and creating vacancies are: Allergan, whose lease for 215,000 square feet expired Dec. 31; publisher Wiley has 120,000 square feet expiring throughout 2018; AIG has 271,000 square feet expiring in the second quarter; SunAmerica has 70,000 square feet expiring in the second quarter; ICap has 90,000 square feet expiring in the third quarter; and the Hay Group has 24,000 square feet expiring in the third quarter. Deutsche Bank vacated 285,000 square feet in the fourth quarter last year, according to Mack-Cali.



Linda Moss, Northern New Jersey Market Reporter  CoStar Group   
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