BALA CYNWYD, PA –A joint venture led by Keystone Property Group, a leading real estate developer, manager and investor of office and industrial properties, today announced that it has closed on its acquisition of 15 institutional-quality commercial office properties and three land parcels located in key suburban Philadelphia submarkets for approximately $233 million.
The acquisition adds approximately 1.7 million square feet of existing office space to Keystone’s portfolio and significantly expands the company’s presence in Pennsylvania, where Keystone has been headquartered and active since its inception in 1991.
Through the execution of a strategic reinvestment program, Keystone plans to modernize the office portfolio to enhance the quality of work life afforded to tenants. The partnership will also seek to develop the three land parcels – located in Lester, Media and Berwyn – which can accommodate future development of up to approximately 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.”
Added Glazer, “The institutional balance sheet and stewardship of Mack-Cali, coupled with the entrepreneurial platform of Keystone, positions the partnership strongly as we identify opportunities to further strengthen the portfolio, capitalizing on economies of scale and increased market penetration.”
The office properties included in the portfolio are located in key submarkets, several of which are situated along Pennsylvania’s Main Line. The portfolio comprises:
o 150 Monument Road, totaling 125,783 square feet in Bala Cynwyd
o Four buildings at 1000 – 1235 Westlakes Drive in Berwyn’s Westlakes Office Park, totaling 444,350 square feet
o Three buildings at 4 & 5 Sentry Park in Blue Bell, totaling 193,930 square feet
o Three buildings at 100 – 300 Stevens Drive in Airport Business Center in Lester, totaling 371,000 square feet
o 1000 Madison Avenue in Lower Providence, totaling 100,700 square feet
o Two buildings at Rose Tree Corporate Center I & II at 1400 N. Providence Road in Media, totaling 260,000 square feet
o One Plymouth Meeting, located at 502 W. Germantown Pike in Plymouth Meeting, totaling 167,748 square feet
Noted Glazer, “We believe this is a unique time in the market cycle to expand our office holdings as the Pennsylvania market begins to show signs of positive growth, as reflected by an increase in occupancy gains and positive net absorption. Meanwhile, there is virtually no new supply of office space coming to market. As a result, we anticipate increased demand for modernized office space in core markets, and are well-positioned to fill this demand.”
Through its partnership with Keystone, 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 multi-family residential units at 150 Monument Road in Bala Cynwyd through its wholly owned subsidiary, Roseland. The parties also agreed to pursue a separate transaction by which Mack-Cali would acquire a majority interest in a land parcel in Bala Cynwyd for multi-family residential development.
“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 multi-family 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.”
The portfolio sale is the third transaction between the two companies as part of Mack-Cali’s strategic diversification into the multi-family sector. Mack-Cali previously sold Moorestown Corporate Center in Moorestown, New Jersey, and 16 and 18 Sentry Park West in Blue Bell, Pennsylvania, to Keystone.
About Keystone Property Group
Keystone Property Group is a leading real estate investor and developer, with offices located in Bala Cynwyd, Pa.; Chicago, Ill.; Miami, Fla.; and New York, NY. Keystone also sponsors and manages a series of opportunistic real estate investment funds. Keystone creates value for its investors through development, redevelopment, financing, leasing, property management and asset management. The company has been recognized by Inc. 500 magazine, the Entrepreneurs’ Forum and the Wharton Small Business Center, and several of its projects have earned “Best Real Estate Awards” from the Philadelphia Business Journal and BOMA (Chicago). For more information, please visit www.keystonepropertygroup.com.
About Mack-Cali Realty Corporation
Mack-Cali Realty Corporation is a fully integrated, self-administered, self-managed real estate investment trust (REIT) providing management, leasing, development, construction and other tenant-related services for its class A real estate portfolio. Mack-Cali owns or has interests in 257 properties, consisting of 248 office and office/flex properties totaling approximately 28.8 million square feet and nine multi-family rental properties containing over 3,300 residential units, all located in the Northeast. The properties enable the Company to provide a full complement of real estate opportunities to its diverse base of commercial and residential tenants.
Additional information on Mack-Cali Realty Corporation and the commercial real estate properties and multi-family residential communities available for lease can be found on the Company’s website at www.mack-cali.com.