Mack-Cali Realty Corp. is selling a pair of luxury apartment properties north of Boston and buying a residential high-rise in Jersey City, N.J., as part of a 1031 exchange strategy that will total more than $820 million in value. The New York Stock Exchange-listed REIT has completed the first transaction in the scheme by scooping up Liberty Towers, a 648-unit residential tower on the Jersey City waterfront, for $409 million.
The second deal involves the sale of the Chase at Overlook Ridge and Alterra at Overlook Ridge, two neighboring properties totaling 1,385 units just outside of Boston, for about $411.5 million. All due diligence has been completed and the sale is expected to close by the end of the month.
Mack-Cali subsidiary Roseland Residential Trust developed the Massachusetts properties in 2014 and 2008, respectively. The buyer of the assets is Rockpoint Group LLC, a REIT that acquired a $300 million stake in Roseland in 2017.
The linked deals in the two states are structured to take advantage of Section 1031 of the IRS code, which offers deferred capital gains taxes when the proceeds from the sale of an investment property are reinvested in a like-kind property.
Buying and selling
Located along the Hudson River at 33 Hudson St., Liberty Towers was built in 2005 and comprises two 28-story buildings over parking and retail, with a mix of studio, one-bedroom, two-bedroom and penthouse units. JP Morgan Asset Management acquired the property from Fisher Organization for $280 million in 2011, according to Yardi Matrix.
Community amenities include yoga and spin studios, an on-site concierge and rooftop pool. The retail portion of the tower includes a pharmacy, florist and a nail salon. Mack-Cali CEO Michael J. DeMarco said in a statement that the deal would allow the company to further focus its capital on the waterfront.
The purchase of the community was initially financed with a $232 million mortgage and Mack-Cali’s line of credit. Sales proceeds from the Overlook Ridge properties will be used to repay the company’s line.
Mack-Cali bought Alterra at Overlook Ridge from PGIM Real Estate for $149.3 million in April 2013, according to Yardi Matrix. The five-building community at 11 Overlook Ridge Drive in Revere, Mass., was built in phases and contains a total of 722 studio, one-bedroom and two-bedroom units.
Also developed in two phases, the Chase at Overlook Ridge is sited at 12 Quarry Lane in Malden, Mass. The five-building, 663-unit community offers units ranging in size from studio to three-bedroom layouts.