Mighty Mack-Cali makes $329m gold coast buy

Real Estate Weekly, March 9, 2005 by Daniel Geigher

If there was any question whether Mack-Call was the class A office king of the Jersey City waterfront, its recent $329 million acquisition of 101 Hudson Street should remove all doubt.

A 1.2 million s/f office tower located in close proximity to the Mack-Call's Harborside Financial Center, 101 Hudson Street gives the New Jersey REIT a near 25% share of class A office space in the Jersey City submarket.

"One of the significant advantages that tenants have in working with Mack-Call is that, to the extent that we enter into submarkets, we take a significant position in those submarkets," said Mitchell Hersh, president and CEO of Mack-Cali.

"It enables tenants to grow with us and also to contract if they have changes in their business plans. We provide them with a lot of options because we have so much space."

There aren't many options in 101 Hudson Street currently however, as only about 46K s/f of space is available in the building. But many of its leases are scheduled to expire as soon as 2007, a timeframe that coincides with commensurate expirations at Harborside.

The simultaneous timeframe could allow for some shuffling of Mack-Cali tenants and will also provide the REIT with the chance to secure market value rents at 101 Hudson Street.

"We're probably 10% below market rents right now in the building," said Hersh, who noted that Mack-Call bought into a 7% cap at 101 Hudson Street.

"It's going to yield great returns and give our tenants a lot more choices. This is a win-win situation."

Hersh noted that the building has enjoyed increased attention from financial and technology firms now that Midtown vacancy has significantly tightened.

Mack-Cali purchased the 42-story building from a joint venture composed of LCOR Incorporated, The State Teachers Retirement System of Ohio, and Merrill Lynch.

Eastdil Realty represented the sellers in the transaction.