Mack-Cali Sells Colorado Holdings for $195M

CRANFORD, NJ-Mack-Cali Realty Corp., which has been shedding western properties in recent years to focus on the Northeast, is set to exit another non-core market. The REIT is under contract to sell its entire property and land portfolio in suburban Denver and Colorado Springs to Westcore Properties LLC, a private firm based in San Diego.

The price tag for those holdings is $195.3 million, and for that Westcore will add 19 office buildings totaling approximately 1.4 million sf. Also part of the package is 7.1 acres of vacant land and 1.6 acres occupied by a parking facility. The deal is expected to close near the end of Q3 2006.

“With this transaction, we are executing our strategic plan to realign our property portfolio and focus more on growth opportunities in our core Northeast markets,” says Mitchell E. Hersh, Mack-Cali president and CEO. “With our success in leasing up this portfolio to 96%, and along with the positive trends we’ve been seeing in the Denver office market overall, we determined that the time was right for this sale.”

For Westcore, which has most of its holdings in California and the southwestern US, the acquisition marks the firm’s entry into the Denver-area marketplace. It also follows the firm’s announcement in July that it had formed a joint venture with a new capital partner, the Denver-based Dividend Capital Total Realty Trust, to target investment opportunities in several western markets, including Denver. Other target markets include Northern and Southern California, Phoenix, Las Vegas and the Pacific Northwest.

“We have primarily been in the business of acquiring value-added properties,” says Westcore president/CEO Dan Ankeny. “We did not have the capital structure to pursue core and core-plus assets on a programmatic basis. With this new joint venture and other arrangements, we hope to grow these businesses over the next few years.”

As far as the Denver-area Mack-Cali properties being acquired, the largest is the 185,000-sf URS Center in Denver. Among the other buildings are the 125,000-sf 400 S. Colorado Blvd., also Denver; Pyramid Pointe, 120,000 sf, in Englewood; the 115,000-sf Corporate Point at Briargate in Colorado Springs; the 112,000-sf 400 Inverness Parkway in Englewood; and the 103,000-sf 5975 South Quebec St. in Centennial. The others range between 37,000 and 75,000 sf and are scattered throughout metro Denver.