Office & Industrial Properties
A Marriage of Minds
for Mack-Cali Realty
By Barri Orlow
Senior Staff Writer
Mitchell E. Hersh and Thomas A. Rizk were good friends and longtime neighbors who often discussed business. But when Hersh and Rizk got together for dinner in May 1997, neither knew their conversation would lead to the inception of one of the countryís largest real estate investment trusts (REIT).
Hersh, who was COO of The Mack Co., a successful family-owned real estate company based in Rochelle Park, N.J., was looking to grow the companyís holdings. Going public or becoming a REIT was discussed, but merging with a company like Cranford, N.J.-based Cali Realty Corp., the publicly traded REIT Rizk headed up as CEO, seemed ideal.
Over lunch the following week, Bill Mack (one of The Mack Co.ís founders) and Rizk discussed the possibilities. And in August 1997, Cali Realty Corp. announced it would merge its $2.3 billion total market capital assets with Mackís $1.2 billion assets. The new entity was named Mack-Cali Realty Corp.
With Rizk as CEO and Hersh as president and COO of Mack-Cali, the company has increased its total market capitalization to almost $4 billion. In the same short time, Rizk has completed more than $2 billion in acquisitions and financing for the company, which owns and manages more than 250 office and office/flex properties, with 2,500 tenants in 12 states and Washington, D.C. More than 75 percent of Mack-Caliís 21 million square feet is located between Washington, D.C., and Fairfield County, Conn. The rest is scattered throughout the Southwest, particularly in Texas, Arizona and California, with an inventory of more than 6 million square feet.
With just six months under its belt as a merged company, Mack-Cali celebrated the first half of 1998 as its most active period ever, with $700 million of equity purchased and a SI billion line of credit put in place. "We hit the ground running," says Rizk, 41. "With the management team we have, we have a lot of potential."
Analysts agree. Prudential Securities in New York has Mack-Cali as a buy-rated stock, says Lou Taylor, senior real estate analyst. "It was the top stock for a while, and will continue to be."
A Family Affair
But things didnít always look so good. In 1994, Rizk, then CFO of Cali Associates (the predecessor to Cali Realty Corp.), was asked by the companyís executive committee to find a way to recapitalize the family owned and operated company. But taking an office building developer public at that time was still pretty novel, and analysts didnít see New Jersey as a strong
market, says Taylor.
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