Buying more buildings is a good strategy for Monopoly players, and it works for commercial real estate owners as well. It gives them an advantage in a particular market, because a tenant who wants to change spaces can move between buildings owned by the same landlord without breaking its lease.
So it made sense for Mack-Cali Realty, the Cranford-based commercial real estate investment trust, to expand its holdings in New Jersey. It has bought, basically, everything that Stanley C. Gale owns in New Jersey, including buildings in premiere markets like Princeton, Parsippany, and the Meadowlands. Statewide, the portfolio of the Gale Real Estate Services Company includes 2.8 million square feet valued at $545 million.. In Princeton, Mack-Cali will add 1, 2, and 5 Independence Way, adding to its properties at 103 Carnegie Center , 5 Vaughn Drive , Overlook Center, and 500 College Road East, and 3 Independence Way.
Mack Cali is increasing its portfolio by nearly 10 percent. It paid $12 million in cash plus $10 million in stock (common operating partnership units), but the total potential payout is based on an earn-out formula, and it could be worth as much as $40 million.
Stanley C. Gale, former owner of the New York Nets, will keep New York-based Gale Holdings/International, and the Gale Real Estate Services company will keep its name, management, and Florham Park headquarters. The company, formerly known as Gale and Wentworth, has been an owner of Princeton Forrestal Village and it manages the village and Gale’s other properties in Princeton.
Mack-Cali was under pressure from its investors, according to the Star Ledger, to cut back on its holdings in California and Texas and solidify its leadership position in New Jersey. Meanwhile Gale was under pressure from its investment partner, SL Green, to sell part of its New Jersey portfolio. When Mack-Cali won the auction it decided to buy everything.
Nevertheless, it does not own all the buildings outright. For eight of the properties it has only a 50 percent ownership interest. For instance, it owns all of 2 Independence Way and half of 1 and 5 Independence Way.
The joint venture between Stanley Gale and SL Green, which is also a publicly traded real estate investment trust. will keep its stake in the eight properties. It turns out that the partly-owned properties are those that are only 55 percent leased, whereas the fully-owned properties are 95 percent leased.
Gale will continue to manage 60 million square feet in New Jersey. Mark Yeager, Gale’s current president, will stay in that post.
When the sale closes Mack-Cali will have interests in 290 properties, amounting to 32.8 million square feet, including nearly 20.3 million feet in New Jersey. Mitchell Hersh, the president and CEO of Mack-Cali, will be chairman and CEO of the Gale Real Estate Services Company.
Hersh says that the acquisitions “would cement Mack-Cali’s position as the dominant owner and maanger of Class A office properties in New Jersey, with significant penetration in the strongest submarkets.”
Tyco Unit Before,
Tyco closed the deal on its plastics and adhesives business, which is now known as Covalence Specialty Materials Corp. A New York-based private equity firm, Apollo Management LP, bought the business for $975 million on February 16.
It makes polyethylene-based films, industrial tapes, medical specialties, heat shrinkable coatings and laminates, and claims to be the leading domestic manufacturer of trash bags, duct tape, and niche laminated and coated products.
Terry Sutter, formerly president of the division, is now president and CEO of the new private firm.
Reasearch No More
R&D money is in the news, what with President Bush touting research and development as this country’s brightest hope for revenue generation. But R&D means just that — research. And research does not equal “sure thing.”
Several Princeton firms folded their tents last year and walked away from technology or gave up trying to develop the fruits of their research.
The most surprising loss was PowerZyme, the firm at Princeton Corporate Plaza that was working on mini-fuel cells for portable devices. It was developing what it hoped would be the first high-performance enzyme-catalyzed portable power source, intended as a “drop-in” replacement for lithium batteries.
Instead of using a passive process that counts on diffusion to move protons across a cell’s membrane, PowerZyme’s technology dynamically pumped protons across the membrane. It was billed as a longer-lasting, lighter-weight portable power that did not use heavy metals or toxic materials.
You would think that there would be plenty of money for this, and there was. In 2004, five years after the firm spun out from the Sarnoff Corporation, it had a $7.4 million Series D funding round led by Battelle Ventures LP. Kef Kasdin, a general partner at Battelle Ventures, was on the board of PowerZyme.
But last month Michael Powell, who replaced Don Sciulli as CEO of PowerZyme, issued this statement: “On December 19, 2005, PowerZyme filed a ‘certificate of dissolution’ with the secretary of state of Delaware, the company’s state of incorporation. The board of directors and management concluded after extensive testing that the technological promise the company had believed was achievable could not be realized, and determined that dissolving the company — ceasing operations — was the responsible course of action. [The company was not insolvent and, therefore, did not file for bankruptcy, but rather for dissolution, based solely on discovering that the technology would not prove out.]
“While the dissolution of the company is obviously disappointing to management and shareholders, entrepreneurs and investors in early-stage companies understand the inherent short-term and long-term risks involved in ventures such as PowerZyme. They know and fully appreciate that many dollars must be expended at the research-and-development level to determine commercial viability.”
PowerZyme Inc., 7 Deer Park, Princeton Corporate Plaza, 732-438-9300; www.powerzyme.com
Investors in preproduct/prerevenue early-stage tech businesses understand that they are investing first in research and testing,” says a spokesperson for PowerZyme. Those cautionary words could just as well apply to Checkspert Inc., the recipient of a Seed Capital Loan from the New Jersey Economic Development Authority. It was featured on the cover of U.S. 1’s annual Survival Guide (January 1, 2004).
Checkspert started with four employees in 2002 and moved into Forrestal Village in April, 2003. After being turned down for a loan by three banks and the Small Business Administration, it received the NJEDA loan at a rate of 3 percent. Now it has moved from 125 Village Boulevard, Suite 280, to an East Windsor address, and though the company appears to be in operation, perhaps virtually, the company has not returned several calls.
Checkspert met the requirements for the EDA program because it had a viable business plan and a promising technology: on-line verifiable certification and video resumes using webcams with microphones. Among its products are those for remote proctoring of exams, conference calls for distance learners, and video capabilities for recruiting and training.
For whatever reason — perhaps market timing — the business plan has not yet panned out. Checkspert planned to turn a profit by the end of 2004 and grow to 30 workers by 2005.
A spokesperson for the New Jersey Economic Development Authority now ways that the $250,000 loaned to Checkspert was “a bad loan.” At least for now.
Checkspert Inc., 84 Winchester Drive, East Windsor 08520; 609-919-9190; fax, 609-490-1370. Home page: www.checkspert.com
New in Town
DaVinci Integration, 379 Princeton-Hightstown Road, Building 1, Cranbury 08512; 609-448-7790; fax, 609-939-0300. Brad Miller, CEO. Home page: www.davincint.com
Founded in 2004, DaVinci Integration’s five employees recently moved into 1,500 square feet in Cranbury. The firm does next-generation telecommunication consulting, assisting companies like AT&T in VoIP and internet phone calling. According to CEO Brad Miller, the company expects to quadruple in employee base and sales over the next year. DaVinci Integration’s web site says that it is funded by industry leading companies and provides Telecom Integration, VoIP Outsourcing, Field Operations, and Turnkey VoIP Solutions to carriers, prepaid service providers, and broadband service providers.
Center for Health Care Strategies Inc., 242 Princeton Avenue, American Metro Center Suite 119, Hamilton 08619; 609-895-8101; fax, 609-895-9648. Stephen A. Somers PhD, president. Home page: www.chcs.org
On February 17 the Center for Health Care Strategies moved from Lenox Drive to a similar-sized space, 12,000 square feet, at the American Metro Center. It was represented by Robert Sobol of R.P. Sobol & Company.
“We wanted to be near the train station,” says Susan Fares. “We travel for our work, and many of our employees commute from New York.” This nonprofit organization administers health care programs funded by several large foundations including the Robert Wood Johnson Foundation.
China Human Resources Group, 31 Airpark Road, Princeton 08540; 609-683-4521; fax, 609-683-9670. Christine Casati, managing director.
China Human Resources Group moved from 29 to 31 Airpark Road this week. The 20-year-old company trains United States multinational companies and coaches their senior executives to be more effective in international markets, with a special focus on China. The firm has staff members here and in China.
Pro:act Financial Services/Raymond James, 1540 Kuser Road, Suite A4, , Mercerville 08619-; 609-581-0700; fax, 609-581-2250. Scott R. Carpenter, president. Home page: www.proactcapital.com
Scott Carpenter moved his financial planning business from 23 Route 31 North in Pennington to Kuser Road in Mercerville. Phone and fax are new. Carpenter is a comprehensive asset manager who does financial planning and has a particular focus on athletes and entertainers.