Cali to merge with Robert Martin Company.

Cali Realty Corporation, a self-managed real estate investment trust (REIT), has entered into a $440 million merger agreement with Westchester-based Robert Martin Company L.L.C. The transition, one of the largest private real estate transaction in REIT history, was expected to close on or about January 31. The combined company will continue to operate as Cali Realty Corporation.

Cali will pay $211 million in cash, assume $185 million in debt, and issue $44 million in operating partnership units convertible into common stock of Cali Realty Corporation.

Robert Martin Company, headquartered in Elmsford, NY, is the largest real estate development company in the Westchester/Fairfield region. The privately-held firm currently owns and manages a core portfolio of over 4.1 million square feet of office, office/flex, and industrial/warehouse space throughout the region.

"This transaction enhances Cali's position as the premier REIT in the Northeast region, with properties stretching across four states," said Thomas A. Rizk, Cali's president and CEO. "This strategic merger brings together two companies with similar operating histories and successes and provides Cali an immediate, dominant position in Westchester County and a presence in Connecticut. This deal furthers Cali's strategic goal of expanding our presence in the Northeast region and becoming a super-regional REIT."

Cali Realty Corporation will now own a portfolio of 11.3 million square feet of Class A office, office/flex, and industrial/warehouse properties. The company will also manage an additional 1.9 million square feet of office space in which Robert Martin holds an equity interest. The portfolio will include 122 properties located in a contiguous area from Philadelphia to Stamford, Connecticut.

As part of the agreement, Brad Berger, president and CEO of Robert Martin, and Tim Jones, chief operating officer of Robert Martin, will become part of Cali's management team as executive vice presidents. Specifically, both Berger and Jones will have three-year employment agreements with Cali, and continue to be responsible for operations and growth in the Westchester, Rockland and Fairfield County regions. In addition, Berger and Jones will be a part of the management team responsible for developing the company's long-term strategic plans.

"Cali's tremendous acquisition track record has clearly demonstrated the competitive advantages of having proven access to the capital markets," Berger said. "We at Robert Martin look forward to joining Cali's management team and to helping build upon Cali's superb performance to-date as one of the top REITs in the country."

Robert Weinberg, co-founder and co-chairman of Robert Martin Company, and Berger will serve on Cali's Board of Directors for an initial term of three years.

Under the terms of the agreement, Cali Realty Corporation will acquire 65 properties and the management operations of the Robert Martin Company for $211 million in cash, 1,401,225 operating partnership units convertible into approximately $44 million of Cali Realty Corporation stock, and the assumption of $185 million in debt, which has a remaining term of approximately seven years and bears interest at a rate of 7.18 percent.

"This transaction, which is the largest in Cali's history, follows what has been by all measures a truly extraordinary year for Cali Realty Corporation," said Rizk. During 1996, Cali acquired approximately 3.3 million square feet of Class A office properties for approximately $455 million, including the acquisition of the 1.9 million square-foot Harborside Financial Center in Jersey City, NJ for $287 million. The company also successfully raised over $545 million in two public offerings of the company's common stock during the year. The most recent offering, which was completed in November, was the largest secondary offering of any REIT to date.

Over the course of 1996, Cali's market capitalization grew by 178 percent to over $1.4 billion and its equity capitalization grew by 208 percent to over $1.2 billion. For the second year in a row, its total return to shareholders was approximately 50 percent.

Upon completion of the Robert Martin merger, the company's total market capitalization will reach overs $1.7 billion, and the company will have closed approximately $850 million in transactions since November.