A Pennsylvania-based commercial real estate development and investment company will enter the Westchester and Fairfield County markets with a nearly $231 million deal to purchase a dozen office properties from Mack-Cali Realty Corp. in the tristate region.
In its first venture into New York, Keystone Property Group will buy five class A office buildings in Elmsford and Tarrytown from Mack-Cali”™s Westchester portfolio. The properties total nearly 600,000 square feet of space.
Keystone, headquartered in the Philadelphia suburb of Bala Cynwyd, also will acquire Soundview Plaza, a seven-story, 179,610-square-foot office building at 1266 E. Main St. in Stamford, Conn.
The purchase agreements, announced jointly by Keystone and Mack-Cali, the real estate investment trust and longtime Westchester office and flex building landlord based in Edison N.J., involve various joint ventures between the two companies. The 12-property portfolio, which totals approximately 2.3 million square feet of office space, will be bought for approximately $207.1 million in cash and the balance in the form of senior and subordinated equity.
The pending deal also includes Keystone”™s acquisitions of four northern New Jersey office buildings in Fairlawn, Piscataway, Morris Township and Montvale.
Westchester office properties included in the deal are:
Ӣ 555 and 565 Taxter Road in Taxter Corporate Park in Elmsford, totaling 344,563 square feet.
Ӣ 570 Taxter Road in Elmsford, totaling 77,859 square feet.
Ӣ 200 and 220 White Plains Road in Talleyrand Office Park in Tarrytown, totaling 175,749 square feet.
Through its joint venture partnership, Mack-Cali will share in management fees for the portfolio and a percentage of value creation above certain rates of return. Mack-Cali will also retain a senior equity position at the three Taxter Road properties.
Mack-Cali and Keystone will jointly provide leasing representation for the portfolio.
Founded in 1991 as a real estate brokerage, Keystone Property Group owns commercial properties in Pennsylvania, New Jersey, Delaware, Florida and Illinois.
The transaction represents the fifth deal since 2012 between Keystone and Mack-Cali as part of Keystone”™s strategy to expand its regional footprint by investing in high-quality commercial assets and repositioning them to create what the company called “dynamic, lifestyle-oriented business environments.”
Bill Glazer, founder and president of Keystone Property Group, in the announcement said his company”™s latest deal with Mack-Cali “reflects our aggressive strategy to establish a strong, regional presence by expanding our focus on the creation of differentiated, urban-inspired live-work-play destinations in the context of well-located suburban parks.”
“The profound impact that technology is having on how today”™s professionals work is drastically changing the commercial real estate requirements of modern companies,” Glazer said. “Today”™s workplaces need to foster these new and different ways of working in order for companies to remain competitive, which means transforming the business environment to put greater emphasis on lifestyle and shared, collaborative spaces that appeal to a wide variety of professionals.”
Mitchell E. Hersh, president and CEO of Mack-Cali, said the Keystone deal “is another step forward in our strategy to redeploy capital into our multifamily platform, while participating in the upside that will be created by the repositioning of this portfolio.”
The deal is subject to due diligence by the companies and the waiver or non-exercise of certain rights of first offer by third parties for most properties in the portfolio. Mack-Cali expects that most, if not all, of those rights will be waived or not exercised.
