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Mack-Cali Vends Clifton Assets

Zacks Equity Research

Mack-Cali Realty Corporation (CLI) sold a Clifton, NJ office building to a joint venture of Gottesman Real Estate Partners and Mountain Development Corp. (MDC).

The deal helped Mack-Cali reap around $5.8 million which the company plans to redeploy for funding its other strategic growth prospects. The property that was sold is a five-storied one, spanning 77,000-square-feet and located at 777 Passaic Avenue in Clifton. It is approximately 65% occupied.

As a matter of fact, Mack-Cali has a strong presence in high barrier-to-entry markets in the Northeast and Mid-Atlantic regions in the U.S. However, holding occupancy and increasing rents are a concern due to the tough environment in the office sector along its footprints. Hence, in the midst of the current unimpressive demand for office space, Mack-Cali has been focusing on expanding its multifamily apartment portfolio.

Notably, the above-mentioned Clifton asset disposition also depicts Mack-Cali’s motive of utilizing the funds generated from non-core assets sale for boosting its diversifying activities.

In recent times, Mack-Cali also sold a Hawthorne-based office property – 19 Skyline Drive – to New York Medical College for approximately $17.5million. New York Medical College is a member of the Touro College and University System.

On the other hand, Mack-Cali has been inking various acquisition deals in expanding its multifamily apartment portfolio. Among the recent acquisitions, Alterra IA and Alterra IB at Overlook Ridge – in Metro Boston are noteworthy. Mack-Cali acquired the properties from a joint venture of Prudential Insurance Company of America, an operational arm of Prudential Financial Inc. (PRU).

Also, the company entered the DC multifamily market, through the buyout of Crystal House. The property was acquired through a joint venture (:JV) with a fund advised by UBS Global Asset Management of UBS AG (UBS). We believe such efforts will ultimately help the company diversify its business and stay on the growth trajectory in the long term.

Mack-Cali currently carries a Zacks Rank #3 (Hold). However, another REIT that is performing well and is worth a look includes Host Hotels & Resorts Inc. (HST) that carries a Zacks Rank #2.

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