Mack-Cali Signs Development/ Acquisition Deal With AAA

HAMILTON TWP., NJ-Mack-Cali Realty Corp. has signed a deal with AAA Mid-Atlantic that calls for the REIT to develop a new operations center here for the travel services company. Mack-Cali will also acquire several of AAA’s existing assets here, all of which will be redeveloped.

Robert Bull, Philip Lipper and Michael Kennedy of Studley, who have had a long-term client relationship with AAA Mid-Atlantic, arranged the deal. The financial terms of which have not been released.

“Our agreement allows us to keep our workforce in the region, and continue to serve our members and the traveling public,” says Donald R. Gagnon, EVP and COO of AAA Mid-Atlantic. “It’s the next step in our company’s growth and expansion.”

“This transaction allows us to accomplish several objectives,” says Mitchell E. Hersh, president and CEO of the Cranford, NJ-based Mack-Cali. “We will accommodate AAA’s needs to consolidate and expand and secure a new long-term lease with a quality tenant. And it will increase our presence in Mercer County.”

Under the terms of the agreement, the REIT will develop a three-story, 120,000-sf class A building on a 21.6-acre site within its Horizon Center Business Park here. AAA has pre-leased the building for 15 years, and construction is expected to be completed by Q3 of 2006.

Once the new building is ready for move-in, Mack-Cali will take over three office and office/flex buildings from AAA, totaling nearly 84,000 sf, as well as land for the development of up to another 243,000 sf of commercial space. The largest existing building is a 36,000-sf asset on 17 acres at 3 and 5 AAA Dr. The site has the capacity for up to another 161,000 sf of commercial space.

Also part of the deal is a 34,000-sf facility on 9.5 acres at 2 South Gold Dr. here, which has the capacity for development of up to another 120,000 sf. AAA will lease back just under 9,000 sf for a 10-year term. And a 13,800-sf office/flex building at 6 South Gold Dr., which has PARS Engineering as its major tenant with an occupancy of 7,915 sf, will also move into Mack-Cali’s holdings. Finally, the deal also includes a 2.4-acre land parcel at 6 AAA Dr., which has the development potential of up to 32,000 sf of commercial space.