Rockland County-Based Birch Group Buys NJ Office Portfolio for $255M

NANUET—The Birch Group, which is headquartered in Nanuet, has acquired an office portfolio of more than 840,000 square feet in Short Hills, NJ from Mack-Cali Realty Corp. in an off-market deal valued at $255 million.

Last month, the Birch Group acquired an office portfolio in Morristown, NJ from Lincoln Equities Group for $77 million and since 2019 has acquired more than $750 million in office assets.

The 843,300-square-foot portfolio comprises four Class A office buildings located at 51, 101, 103 and 150 JFK Parkway in the Short Hills submarket. Cushman & Wakefield represented Mack-Cali Realty of Jersey City, NJ, the seller in the transaction, and is also being retained by The Birch Group as the exclusive office leasing agent for the properties. C&W’s David Bernhaut, led the assignment alongside Andy Merin, Gary Gabriel, Frank DiTommaso and Seth Zuidema, in conjunction with Adam Spies and Kevin Donner. The team was supported by Cushman & Wakefield’s Equity, Debt & Structured Finance team of John Alascio, Alex Hernandez, Chuck Kohaut and TJ Sullivan.

The portfolio, which represents The Birch Group’s entrance into the Short Hills, NJ submarket, is currently 80% leased to a. roster of 22 tenants. The Birch Group targeted the portfolio as a unique repositioning opportunity. Citibank, Investors Bank, KPMG, Bank of America, UBS, Dun & Bradstreet, Morgan Stanley and Wells Fargo are all current tenants at the properties.

“This portfolio offers a unique opportunity to reposition historically high-performing properties back to best-in-class assets, which is a hallmark of The Birch Group’s strategy. Short Hills is known for its incomparable prestige that manifests in heightened expectations among the regional tenant base,” said The Birch Group CEO and Founder Mark Meisner. “A one-size-fits-all approach to asset management doesn’t work in this submarket, and our focus will be on enacting tailored improvement strategies to create enduring value for our tenants and investors alike.”

The Birch Group will employ its “value-add strategy” for the portfolio, complementing a recently completed $15.2 million of renovations at the properties, in addition to a newly constructed parking deck at 150 JFK Parkway. The Birch Group has tapped commercial design firm Gensler to lead the design enhancements.

“During the pandemic, there has been a demographic shift to the suburbs and the migration of this talent pool represents an extraordinary opportunity to meet the demand for high-quality office assets in prime New Jersey markets,” Meisner added. “Short Hills is among one of the most prestigious suburban locales and it has consistently achieved above average rents in New Jersey, while maintaining the highest occupancy rates within the market.”

For Mack-Cali, the deal continues its ongoing efforts to exit the suburban office sector.

“This transaction represents yet another significant step towards simplifying our company through the disposition of suburban office properties while generating liquidity to pay down corporate debt and strengthen our balance sheet,” said Mahbod Nia, CEO of Mack-Cali.

The transaction releases approximately $100 million of net proceeds to Mack-Cali, after retirement of financing and transaction costs, which is expected to be used to pay down the its unsecured corporate debt during the second quarter of 2021.

“The Short Hills disposition continues our strong sales momentum in the suburban office market and reinforces our ability to achieve our goals at a solid pace without sacrificing value,” added Ricardo Cardoso, executive vice president and chief investment officer of Mack-Cali. “While we have reached a significant milestone in our sales process, we continue to work diligently to finalize terms on our remaining non-core commercial assets.”

The sale of the Short Hills Office portfolio follows Mack-Cali’s successful $254-million sale of its Metropark portfolio to Opal Holdings last month.