BALA CYNWYD, PA-Keystone Property Group and Mack-Cali Realty Corp. closed on a $71.6 million deal for three New Jersey office properties that Keystone will renovate and upgrade, as part of the larger joint-venture agreement between the two companies that was announced earlier this year. (See previous story)
The strategy behind the joint venture is to allow Keystone to expand and strengthen its office portfolio, while Mack-Cali continues shifting its primary focus to multi-family property. Keystone is acquiring various office properties from Mack-Cali's portfolio, while Mack-Cali retains certain management interests on the properties. Meanwhile, Mack-Cali is handling multi-family development at various sites that were controlled by Keystone.
"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," said Bill Glazer, Keystone's president. "The buildings within this portfolio are well located and are prime candidates for reinvestment.”
The three office properties for which deals were closed Monday are in Piscataway and Woodcliff Lake. Keystone expects to close on various other properties in a $233 million Tri-State portfolio within the next several weeks. The Bala Cynwyd, PA-based company plans to redevelop and provide overall management at each site.
According to Keystone's agreement with Mack-Cali, the Edison, NJ-based REIT will earn a share of value creation above certain hurdle rates, handle leasing of the portfolio properties and share in management fees.
The three New Jersey properties include:
- 30 Knightsbridge Rd. in Piscataway, a complex of four interconnected buildings totaling 686,316 square feet, where Keystone will invest $4 million in upgrades to elevators and roofs The corporate campus has built-in redundant power supply systems, a landlord-owned substation onsite and advanced fiber optic systems.
- 470 Chestnut Ridge Rd. in Woodcliff Lake, a two-story, 53,730-square-foot class A building, which the company will manage to maintain full occupancy.
- 530 Chestnut Ridge Rd. in Woodcliff Lake, a three-story, 57,204-square-foot class A office building, where HVAC systems will be upgraded.
Mitchell E. Hersh, president and CEO of Mack-Cali, said the deal allows his company to redeploy capital into its multi-family platform. “At the same time, the deal structure allows us to participate in the upside created through reinvestment in these buildings," Hersh said.
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