Mack-Cali Realty Corp. (CLI: 29.66 +0.40 +1.37%), a fully integrated real estate investment trust (REIT), has recently extended its lease agreement with National Union Fire Insurance Company of Pittsburgh, a subsidiary of the American International Group, Inc. (AIG: 36.00 +0.49 +1.38%) – a leading international insurance organization with operations in more than 130 countries.The transaction is one of the largest of its kind year to date in New Jersey. With the lease extension, the lessee would continue to occupy 341,477 square feet of space at the property through 2012, and 271,533 square feet through April 2018 commencing Jan 1, 2013.
Spanning across 1.25 million square feet of space, the leased property is located amidst a thriving business district on the Jersey City waterfront, and offers a premier office environment with state-of-the-art facilities. In addition, the property offers easy access to mass transportation services with nearby PATH (Port Authority Trans-Hudson) and ferry service to downtown and midtown Manhattan, and Hudson-Bergen Light Rail service to surrounding New Jersey communities. Port Authority Trans-Hudson is a rapid transit railroad linking Manhattan, New York with New Jersey.
Mack-Cali is primarily engaged in owning, leasing, managing, and developing Class A office and industrial/flex properties. The company focuses on high-barrier markets mostly in the suburban areas in the northeast and mid-Atlantic regions in the U.S., and derives most of its annualized base rents from New Jersey.
With debt-free ownership of the bulk of its portfolio, Mack-Cali offers a faster and more streamlined leasing process. In addition, the company is structured as a vertically integrated company, providing a full range of leasing, property management, construction, legal, space planning, and architectural services under a single platform.However, Mack-Cali has a concentration of assets in some very competitive markets, which are getting worse in conjunction with the overall U.S. economy. As such, we think the company will have a difficult time raising rents as leases roll over the next couple of quarters. Consequently, we maintain our Neutral rating on Mack-Cali.
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