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Mack-Cali Closes Alterra IB deal

Zacks Equity Research

Mack-Cali Realty Corp. (CLI) acquired a luxury multi-family property – Alterra at Overlook Ridge IB – in Metro Boston. The company shelled out around $88 million for this acquisition. Notably, the purchase was pursuant to a deal penned by the company that the latter disclosed in January at the time of the ‘Alterra at Overlook Ridge IA’ acquisition.

Alterra IB adds 412 rental units to Mack-Cali’s portfolio. The property is currently 96.1% leased and is situated in the master planned community of Overlook Ridge in Revere and Malden, Mass.

Mack-Cali acquired both Alterra IA and Alterra IB from a joint venture of Prudential Insurance Company of America, an operational arm of Prudential Financial Inc. (PRU). The acquisitions are in line with the company’s strategy of expanding its portfolio and owning premium quality properties in upscale markets.

Together, Alterra IA and Alterra IB brings on board 722-units for a purchase price of $149.3 million. The properties offer locational advantage for their connectivity to major roadways and for its proximity to north of downtown Boston.

As a matter of fact, Alterra IB at Overlook Ridge is developed and managed by Mack-Cali's recently acquired Roseland subsidiary. In Oct 2012, Mack-Cali acquired Roseland Property – one of the largest residential developers in the northeast. Since then, Roseland Property is operating as a subsidiary of Mack-Cali.

We expect the acquired properties to complement the company’s other upscale property in Mass. area – Quarrystone at Overlook Ridge. Also, the transaction will likely be accretive to the company’s earnings in the upcoming quarters.

Mack-Cali currently has a Zacks Rank #2 (Buy). Other REITs that are performing well and are worth a look include Federal Realty Investment Trust (FRT) and Simon Property Group Inc. (SPG), both carrying a Zacks Rank #2.

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