Mack-Cali CEO calls Roseland acquisition 'a new paradigm for me'
It was a familiar position for Mitchell Hersh, who was seated at the dais in a conference room filled with real estate professionals. But the subject matter, admittedly, was somewhat different from what he's used to.
"Traditionally, I've been at many office summits," said Hersh, president and CEO of Mack-Cali Realty Corp., speaking today at the second annual New Jersey Apartment Summit. "So this is a bit of a new paradigm for me."
All eyes at the conference were on Hersh as he spoke publicly for one of the first times since Mack-Cali, the Edison-based office powerhouse, acquired Roseland Property Co. to make a major splash in the booming multifamily sector. During a 30-minute question-and-answer session in Florham Park, Hersh gave new details about the acquisition of the Millburn-based firm and how Mack-Cali plans to forge ahead with its new focus.
With its strong financial footing, the company will move quickly on Roseland development projects around the region while acquiring multifamily properties originally built and managed by the firm, Hersh said. Mack-Cali also will look to repurpose existing office buildings and "significant" land holdings in its portfolio, which was designed to support more than 11 million square feet of office space.
"Given the somewhat lackluster demand in the office sector, we can put some of that land to work now in the multifamily arena," he said, later adding, "A lot of things that we will be doing in different arenas going forward over the next number of years will build value using this great team that we've acquired."
All told, the company hopes to "put about three quarters of a billion dollars a year to work, at least for the next several years, both in the form of acquisition and development."
Mack-Cali initiated its move into multifamily early last year when Hersh proposed building apartments around the Harborside Financial Center, the firm's sprawling office complex on the Jersey City waterfront, he said. The company has since partnered with Ironstate Development to build a three-tower rental project, the first phase of which could begin early next year.
But Hersh soon looked to expand in the sector, leading to casual discussions with Roseland around January. He said the idea was supported by "the power of familiarity with each other," noting that the firms have discussed partnerships or "the possibility of combining companies" as far back as a decade ago.
The companies "soon found that we had very common ground" in terms of objectives and values, leading to more serious negotiations by mid-year, Hersh said.
With the deal complete, he touted the synergy between Mack-Cali and Roseland, noting that their respective footprints in the Northeast are "almost a direct overlap and overlay" of each other. He also said "if it's not broken, it doesn't need to be fixed," pointing to a transition that allows Roseland's three principals to be co-presidents of Mack-Cali's new multifamily subsidiary, along with the inclusion of its 250 employees.
"The integration process, which so often can jeopardize the success of an acquisition or a merger, really wasn't a factor in this instance from a variety of standpoints," Hersh said. "Primarily we've been an office company, (and) Roseland is a multifamily company. So there was little to no overlap in terms of expertise and core strategies."