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Westchester Firm
Becoming Part
of Jersey REIT

Robert Martin's sale to
Cali part of trend to
public ownership.

The New York Times
Sunday, February 2, 1997
by John Holusha

    New York Times

For 40 years, the company created by Robert Weinberg and Martin Berger was a major factor in the two counties immediately north of New York City, with their Robert Martin Company eventually owning 4.1 million square feet of office, mixed-use and industrial space in Westchester and in Fairfield County, Conn.

The name will continue to exist, but Robert Martin is about to become part of a fast growing New Jersey-based real estate investment trust, Cali Realty Corporation. The $440 million transaction will mark the demise of yet another family-owned real estate company attracted by the ready access to capital and the favorable tax treatment a REIT provides.

The transaction had little effect on the price of Cali stock, but investors have been positive about its prospects for the last year. The shares, which traded at about $21 a share early last year, were at $32.375 late last week.

"We had been looking to find a way to recapitalize the company for 18 months," said Brad W. Berger, the chief executive of Robert Martin and the son of Martin Berger. "We wanted to grow the company and diversify geographically, and after exploring a spectrum of alternatives, both public and private, this seemed to be the logical way to go."

He said that without the REIT structure, the company had been at a disadvantage when trying to make acquisitions. "When were were negotiating to acquire Blue Hill Office Plaza, thatís 1.2 million square feet in Pearl River, we had to find a financial partner to get it done," he said. "Now, when we negotiate to buy a property, we wonít have to negotiate the financing at the same time."

Cali agreed to acquire 65 properties and the management operations of Robert Martin for $211 million in cash and 1,401,225 operating-partnership units. The units are convertible into shares of Cali stock worth about $44 million. The company also assumed $185 million of Robert Martin debt.

The Robert Martin acquisition by Cali parallels the takeover of Halpern Enterprises by Reckson Associates Realty Corporation of Melville, N.Y., in November 1995. Like Robert Martin, Halpern, also based in Westchester County, survived the real estate downturn caused by the recession and corporate downsizing of the early 1990ís, but found itself scrambling to find capital to finance growth.

"The recession was a tough period, but we got through it and found ourselves in a position to make a discretionary decision," said Jon Halpern, who was president of Halpern and is now an executive vice president of Reckson. Some, of course, did not make it. The Shulman Realty Group, which had 3 million square feet of office space in Westchester, lost control and most of its properties were taken over by lenders in 1993.

"It became clear that the best access to capital is public markets," Mr. Halpem said. "So the question became whether you go public yourself or join with someone who is already established. It is clear that Robert Martin made a decision similar to what we did. It just took them longer because they are larger."

At the time of its acquisition by Reckson, Halpern owned 935,000 square feet of office space in Westchester. In addition to the 4.1 million square feet of owned space Robert Martin brings to Cali, it has 1.9 million square feet it manages and in which it has an equity interest.

The Halpern and Robert Martin transactions are part of a larger trend toward public ownership in the real estate industry, said Milton Cooper, the chairman of the National Association of Real Estate Investment Trusts. "Real estate is a huge industry, amounting to trillions of dollars nationwide," he said. "It is one of the few of its size that has a relatively small percentage of public ownership."

Mr. Cooper, who is also chairman of Kimco Realty Company in New Hyde Park, N.Y., said the principal advantage to public ownership "is access to nontemperamental capital; private real estate companies are subject to the manic-depressive swings of lenders."

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