Exclusive: Property firm UDR explores deal with Mack-Cali Realty – sources

This post was originally published on this site

https://i-invdn-com.akamaized.net/news/LYNXNPEB6J0AJ_M.jpg
© Reuters. Exclusive: Property firm UDR explores deal with Mack-Cali Realty - sources© Reuters. Exclusive: Property firm UDR explores deal with Mack-Cali Realty – sources

By Greg Roumeliotis

(Reuters) – U.S. multi-family apartment firm UDR Inc (N:) is exploring a combination with Mack-Cali Realty Corp (N:), an owner of multi-family rental properties and commercial office space, people familiar with the matter said on Thursday.

UDR’s interest coincides with a board committee established by Mack-Cali to review its strategic options mulling whether to pursue a sale of the company. Mack-Cali said on Thursday that it would follow the committee’s recommendation to sell its suburban office portfolio totaling approximately 6.6 million square feet.

UDR is in talks about partnering on its bid for Mack-Cali with investment firm Rizk Ventures CEO Thomas Rizk, and has contacted Mack-Cali to express its interest, the sources said. Rizk was CEO of Mack-Cali from 1997 to 1999, and previously led Cali Realty, whose merger with Mack Company created Mack-Cali in 1997.

UDR and Rizk are discussing whether to make an offer for the entirety of Mack-Cali, using debt financing to help fund the deal, two of the sources said. Mack-Cali has a market capitalization of $1.8 billion, and total debt as of the end of September of $3.2 billion.

UDR is interested in the company’s residential properties, while Rizk is eying some of its commercial offices space, according to the sources.

The sources cautioned that no deal is certain and asked not to be identified because the matter is confidential. UDR and Mack-Cali did not immediately respond to requests for comment, while Rizk Ventures declined to comment.

Mack-Cali has a property portfolio across six states in the northeastern United States, but has been shedding many suburban properties to focus on Jersey City’s waterfront area overlooking New York City, where it owns luxury apartments and offices. It is betting this prime location will shield it from the high vacancy and low rents seen in suburban markets.

Mack-Cali said on Thursday it had approved the sale of two suburban office portfolios, encompassing 2.4 million square feet in Parsippany, New Jersey and Madison, New Jersey, to Onyx Equities LLC and other investment firms for about $285 million in cash and $3.5 million of assumed lease obligations. 

In March, Mack-Cali turned down an offer of between $2.4 billion and $2.6 billion for its suburban and waterfront office assets, hotel joint venture interests and retail assets from invest firms Bow Street and David Werner Real Estate Investments. It argued such a deal would shortchange Mack-Cali shareholders at a time when its turnaround strategy had not been fully implemented.

Bow Street subsequently succeeded in installing four independent directors to Mack-Cali’s board, expanding it to 11 members.

UDR owned 52,070 apartment homes as of the end of September, including 658 homes under development. It has a market capitalization of about $14 billion.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.