New Developer Buys Roseland

January 31, 2013
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A New Jersey-based company has acquired the Roseland Development Company and its Overlook Ridge project in North Revere and has aggressive plans to revive several long-stalled Roseland projects.

Mack-Cali Realty Corporation of Edison, NJ, announced a barrage of development action last week, not long after finalizing a deal to take over Roseland Development Company and buy out most of the stake of its funding partner, Prudential Insurance Company.

Mack-Cali Realty first announced last week that it has purchased Alterra at Overlook Ridge 1A for $61.3 million (310 units) and also Alterra at Overlook Ridge 1B for $88.7 million (412 units). Alterra 1A came online in 2004 and 1B came online in 2008. The two projects contain 722 rental units and are currently 97.2 percent leased.

Mitchell E. Hersh, president and chief executive officer of Mack-Cali, commented, “The acquisition of Alterra perfectly complements our recent acquisition of the real estate development and management businesses of Roseland and its imminent development interests at Overlook Ridge. We expect to place mortgage financing on the property that will provide a cash on cash yield in excess of 9 percent.”
Marshall B. Tycher, co-president of Roseland, commented, “We were attracted to this acquisition because these premier assets represent the finest in luxury, location, and amenities, and are consistent with the highest quality properties in the marketplace, as well as the opportunity for a value-add component. With a planned interior cosmetic modernization we are confident we can command today’s higher market rents.”

Mack-Cali acquired the Overlook Ridge project from long-time investor and Overlook partner, Prudential Insurance Company. That purchase came after Mack-Cali announced last October that it was acquiring Roseland and folding it into their company.

That deal closed at the end of 2012, and came at a total price of $134.6 million. Some $115 million of that price came in cash and approximately $4 million of assumed debt at closing and an additional earn-out of up to $15.6 million in cash over the next three years. During the three-year earn-out period, each of Roseland’s principals, Marshall Tycher, Brad Klatt, and Carl Goldberg, will serve as co-presidents of Roseland Management Services, L.P., a newly formed wholly owned subsidiary of Mack-Cali, pursuant to employment agreements executed at closing. Mitchell E. Hersh, President and Chief Executive Officer of Mack-Cali Realty Corporation, also will assume the role of Chairman and Chief Executive of Roseland Management Services, L.P.
The Roseland transaction was financed through a combination of cash on hand and borrowings under Mack-Cali’s $600 million unsecured revolving credit facility. It included not only the massive Revere project, but also numerous other finished developments in the Northeast and 13 projects still in development – including a long-halted project on the East Boston waterfront.

Also last week, continuing their aggressive schedule as the new head of Roseland, Mack-Cali announced that it would commence construction of The Highlands at Overlook Ridge, along with another Roseland project in New Jersey.

The Highlands will be located almost entirely in Malden, and will consist of a 371-unit luxury apartment complex – a fourth piece in the Overlook Ridge Master Plan Development. The project is expected to cost $75 million and comes in partnership with UBS Global Asset Management. A construction loan commitment is led by Bank of America with participation from TD Bank.

Roseland will oversee the leasing and management of The Highlands upon completion, and will continue to lease and manage the other three Overlook Ridge properties.

On Monday, Mack-Cali hosted Gov. Deval Patrick in East Boston for a groundbreaking on it Portside at Pier One project – which has been bogged down in politics and red tape for nearly 10 years as Roseland has tried to build on the waterfront in Eastie.

This first phase of the project will contain 176 units and is expected to cost $67 million. The overall project will contain 566 luxury apartments and 70,000 sq. ft. of retail and public space.

Mack-Cali is one of the largest real estate investment trust (REIT) companies in the Northeast and has been in existence since the 1950s. It owns luxury apartment developments and commercial offices spaces all over the Northeast.

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