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And as real estate becomes more of a business than a class of assets, he said, working executives want to know that the enterprise is not dependent on the health of the founder and are attracted by corporate perquisites such as stock options, which are not possible in a private company.

There are tax advantages as well. If a family-owned company sells its assets for cash, it could trigger a huge capital gains tax for properties that have been held for a long time. "If an entrepreneurial firm contributes its assets to an operating partnership controlled by a REIT, it triggers no tax," said Roger L. Johnson, national director of real estate practice for the KPMG Peat Marwick accounting firm.

"Those partnership shares can be converted to shares of the REIT, again triggering no tax," he said. "So now you have converted an illiquid investment into a very liquid investment ó shares that are traded on the New York Stock Exchange ó and one whose value is easy to determine. You look up the stock listing in the newspaper."


Thomas A. Rizk, Cali chief executive, calls acquisition quick way to become a "super-regional power."


Thomas A. Rizk, the president and chief executive of Cali, said the acquisition was a quick way to achieve the companyís goal of becoming a "super-regional" real estate power, with properties extending from suburban Philadelphia to Stamford, Conn. "We were unrepresented in Westchester and Fairfield," he said. "Robert Martin is the biggest and best company up there, so the acquisition seemed like the best way to accomplish that."

Although corporate mergers usually result in the departure of many senior executives of the company that has been acquired, Mr. Rizk said the Robert Martin structure would be left essentially intact to manage and acquire properties in Westchester, Fairfield and Rockland Counties.

In addition, he said Brad Berger and Timothy M. Jones, Robert Martinís chief operating officer, would become executive vice presidents of Cali, with corporatewide responsibility. "We are a fast-growing company and we think it is important to add senior managers to help with that growth," Mr. Rizk said.

"Tim and I will have companywide responsibility at Cali," Mr. Berger said. "I expect that we will spend a day a week in New Jersey and the other four days in Elmsford," the headquarters of Robert Martin. In addition, Robert Weinberg will have a place on the Cali board of directors along with Brad Berger.

Once again this arrangement parallels the Reckson-Halpern deal. Jon Halpern and his organization were left in place to manage property in Westchester and buildings later acquired in Stamford from another troubled family company, F. D. Rich. Now, Mr. Halpern said, he is being asked to play a broader corporate role.


Brad W. Berger, left, and Timothy M. Jones of Robert Martin.

Executives of Cali and Robert Martin say they expect to be compatible because of their similar backgrounds. Both were started by young men who parlayed a small house-building business into a real estate empire. Both have passed active management to a second generation. Although Mr. Rizk is chief executive of Cali, John R. Cali, the son of one of the founders, is director of acquisitions, and Brant Cali, son of another founder, is chief operating officer.

Upon completion of the acquisition of Robert Martin, Cali will own 122 properties with over 11.3 million square feet of space. That is quite a change from its beginnings as a public company in 1994 when it had 13 buildings with 2.2 million square feet of space.

There is no reason the company cannot continue to grow, Mr. Rizk said. Indeed, Cali appears to be a favorite on Wall Street, where the company raised $545 million in cash last year in two secondary stock offerings. The company can use this low-cost capital to make acquisitions or, if circumstances permit, new developments.

"Investors in REITís are looking for returns in the mid to high teens," said Steven L. Kantor, managing director of the real estate operations group at Donaldson, Lufkin & Jenrette. "The dividend and increases in cash flow get you to 10 or 11 percent, so the rest comes from acquisitions and development. REITís are very active acquirers and developers."

"We are at heart a development company," Mr. Rizk said. "It has been our history to buy land, get the approvals, build without a general manager, lease and manage." He said rents are currently still too low to justify speculative construction: "They would have to go up 15 to 20 percent, but that is possible in a couple of years."

To prepare for that day, the company has been quietly building up its land bank. "We have enough land to do 5.5 million square feet of development and options on 2.5 million more," he said. He said the company was discussing building projects with specific tenants, a less risky undertaking than a purely speculative project.

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