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Cali in $1.2B real estate deal
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August 14, 1997: 12:27 p.m. ET
New Jersey REIT acquires assets of Mack Co., Patriot American Office
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NEW YORK (CNNfn) - Cali Realty Corp. said on Thursday it will acquire the office assets of the Mack Co. and Patriot American Office Group, both private real estate concerns, for $1.2 billion.
The transaction creates one of the nation's largest real estate investment trusts (REITs) with a total market capitalization of $3.3 billion.
Under the terms of the letter of intent, Cali, based in Cranford, New Jersey, will pay $476 million in cash and assume $302 million of mortgage debt. Cali will issue 3.9 million common operating units in Cali Realty L.P. and $250 million of preferred operating units in Cali Realty, paying a 6.75 percent distribution and convertible into 7.2 million common operating units. Cali will also issue warrants to purchase 2 million shares of its own stock at $37.80.
In exchange, the Mack Co., a Cranford, N.J.-based private real estate concern, will contribute its 5.9 million square-foot class A office portfolio and related operations. Patriot American Office Group, a Dallas-based private real estate concern, will contribute its 3.6 million square-foot portfolio and related operations.
The Mack Co.'s properties are located primarily in the New Jersey metropolitan area and Arizona, and the properties of Patriot American Office Group are located primarily in Texas and Arizona.
The combined Mack and Patriot portfolio serves approximately 1,000 tenants including AT&T Corp. Toys "R" Us Inc. and KPMG Peat Marwick LLP.
The new company will be renamed Mack-Cali Realty Corp. and will be managed by Cali's Chief Executive Thomas A. Rizk. Mitchell Hersh of Mack Co. will be president and chief operating officer while John J. Cali will remain chairman and lead a restructured board consisting of 13 directors.
At the close of the transaction, William Mack of Mack Co. and his brothers Earle, David and Fred, will control the largest single block of equity interest in the new company.
Management anticipates that the transaction will be immediately add to the company's earnings.
The transaction is expected to be completed on or around the end of 1997, subject to due diligence and shareholder approval.
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Cali Realty
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