Mack-Cali, Winthrop Acquire Senior Mezz Loan on 1.7 MSF Stamford Portfolio

Mack-Cali Realty Corp. and Winthrop Realty Trust have attached themselves to a 1.7 million square-foot commercial real estate portfolio in Stamford, Conn., with their acquisition of a $40 million senior mezzanine loan position in the capital stack of the group of seven Class A office and multi-family assets.

February 23, 2012
By Barbra Murray, Contributing Editor

Mack-Cali Realty Corp. and Winthrop Realty Trust have attached themselves to a 1.7 million square-foot commercial real estate portfolio in Stamford, Conn., with their acquisition of a senior mezzanine loan position in the capital stack of the group of seven Class A office and multi-family assets. The partners formed a joint venture to purchase the loan, featuring a face value of $50 million, for $40 million.

The portfolio, which encompasses nearly 1.7 million square feet of office space and 106 apartment residences spanning a total of 70,500 square feet, makes its home in Stamford’s Central Business District. Mack-Cali and Winthrop have not revealed details about the assets; however, the respective performances of the office and apartment markets in Stamford may offer some insight into the demand for the properties. The CBD’s overall office vacancy rate of 26.9 percent is the highest in Fairfield County, according to a study by Cushman & Wakefield. But the picture is a lot brighter for apartments, as per a report by Marcus & Millichap Real Estate Investment Services Inc. With the demand for Class A rentals in transit-friendly locations like Stamford fueling the market, the vacancy rate in Fairfield County is on track to continue its decline, dropping down to an anticipated 3.7 percent this year.

“This acquisition combines Winthrop’s expertise in commercial real estate debt investments with Mack-Cali’s core expertise,” Michael L. Ashner, chairman and CEO of Winthrop, said. “Partnering with Mack-Cali represents an opportunity to forge a sustainable alliance with the potential to participate in any recapitalization of this portfolio.”

Mack-Cali and Winthrop’s acquisition of the loan secured by the Stamford portfolio marks Winthrop’s second joint venture loan buy this month. Two weeks ago, the REIT, along with partner Elad Canada Inc., completed the $128 million purchase of a $140.3 million existing mortgage loan collateralized by the 942,000-square-foot One South State Street mixed-use office property in downtown Chicago.

Real estate debt acquisition will likely play a substantial role in industry investors’ activities this year. In a recent survey by the real estate private investment funds practice of law firm Goodwin Procter L.L.P., opinion leaders were asked to identify their greatest commercial real estate investment opportunities, and 21 percent put distressed debt purchases first. Twenty-nine percent listed property acquisitions from third parties as having the greatest potential, but the recapitalization of existing investments was at the top of the list for 45 percent of respondents.