Roseland Subsidiary Announces Major 2016 Accomplishments

On Feb 28, 2017

Mack-Cali Realty Corporation announced that Roseland Residential Trust (“Roseland or RRT”), Mack-Cali’s multi-family subsidiary, culminated a year of major achievements, including the signing of a $300 million equity raise with affiliates of Rockpoint Group, L.L.C. (“Rockpoint”), opening of Jersey City Urby, and strategic acquisition activities.

LEASING HIGHLIGHTS:

Roseland’s stabilized residential portfolio was 96.3 percent leased at year-end 2016.  Inclusive of the opening tomorrow of the 762-apartment, 69-story Jersey City Urby, Roseland has delivered 1,163 luxury apartments to the marketplace since the beginning of the fourth quarter 2016.

Select leasing highlights for the year include:

• M2 at Marbella, Jersey City, New Jersey:  The 311-apartment asset achieved stabilization in November, having absorbed at approximately 50 apartments per month during its lease-up. It ended the year at 95.5 percent leased.

• Quarry Place, Tuckahoe, New York:  Roseland commenced leasing activities on this majority-owned, 108-apartment community in Westchester.  At quarter-end, the community was 12 percent leased; as of today it is over 25 percent leased.

• Chase II at Overlook Ridge, Malden, Massachusetts:  Roseland commenced leasing activities on this wholly-owned, 292-apartment community to be operated in conjunction with the adjacent Chase I.  At quarter-end, the community was 11 percent leased; as of today it is over 30 percent leased.

• Jersey City Urby (formerly URL® Harborside), Jersey City, New Jersey:  Tomorrow, Roseland will commence leasing activities on this majority-owned, 762-apartment community on the Hudson Waterfront.

ACQUISITIONS:

Subsequent to year-end, Roseland executed significant acquisitions in accordance with its strategic geographic and ownership objectives.  The execution of these transactions, coupled with multiple acquisitions throughout 2016, will reduce Roseland’s residential subordinate interest to just two communities, including the valuable Marbella in Jersey City.

• Plaza 8/9, Jersey City, New Jersey:  Roseland acquired all joint venture partner interests on the parking lot parcel along the Hudson Waterfront, thereby converting its ownership on the valuable development site from 50 to 100 percent.  The purchase price was $57,100,000.  The site is planned for future residential development and is directly adjacent to Harborside.

• Monaco, Jersey City, New Jersey:  Roseland reached an agreement to acquire all joint venture partner interests in the 523-apartment, two-tower, stabilized community completed in 2011.  The transaction will convert Roseland’s non-cash flowing 15 percent subordinate interest to 100 percent.  The Monaco transaction, valued at $315 million or $602,000/unit, represents a capitalization rate of 4.66 percent on a trailing 12-month basis.  As Roseland harvested its in-place promoted equity value, the Company’s effective capitalization rate was 4.81 percent.  Roseland anticipates a closing in 2Q 2017.

• 2 Campus Drive, Parsippany, New Jersey:  Also in the fourth quarter, the Company acquired 2 Campus Drive in Mack-Cali’s Business Campus for approximately $5.5 million.  The strategic acquisition will pave the way for the execution of the mixed-use master plan for the Campus in Parsippany.

• Estuary, Weehawken, New Jersey:  Roseland disposed of its 7.5 percent minority interest in the community for approximately $5.1 million.

CONSTRUCTION STARTS:

At year-end, the Company had 3,063 units (2,691 apartments; 372 hotel keys) under construction, representing nearly $1.1 billion of activity, with stabilized net operating income forecasted at $75.8 million.  This activity included the following fourth quarter starts from Roseland’s successful repurposing program:

• 233 Canoe Brook Road, Short Hills, New Jersey:  Roseland commenced site-work on the 200-apartment community, adjacent to a future hotel development site and Mack-Cali’s 150 JFK Parkway office asset.

• 150 Monument Road, Bala Cynwyd, Pennsylvania:  The Company commenced garage construction activities on this 206-apartment community, a successful repurposing of a former Mack-Cali office asset.

CAPITAL MARKETS ACTIVITY:

In the fourth quarter and subsequent to year-end, Roseland executed on approximately $850 million of capital markets activities.

Roseland announced the signing of the Rockpoint transaction – a $300 million equity investment that will provide capital to further execute on the objectives of Roseland’s residential business plan.  Highlights of the Rockpoint transaction (see Mack-Cali’s 2016 annual report on Form 10K when filed) include:

Equity Commitment:

• Rockpoint will commit to fund $300 million of equity into RRT over the next two years, with $150 million funded at closing.

• Mack-Cali will have the option to fund up to $200 million of equity into RRT after Rockpoint’s commitment is fully funded.

• RRT will receive a deemed funded existing equity value at closing of $1.23 billion.

• Upon full Rockpoint and Mack-Cali funding, pro forma ownership would be approximately 83 percent Mack-Cali and 17 percent Rockpoint.

Waterfall:

• 6 percent annual dividend on funded equity (Rockpoint and RRT).

• 6 percent annual return on RRT existing equity, with Rockpoint receiving an additional 5 percent of the amount distributed to RRT.

• Pro rata based on funded equity and RRT existing equity.

• RRT Promote:  Upon a capital event, Rockpoint’s pro-rata distribution shall reduce by 50 percent after achieving an 11 percent annual IRR.

Other Key Provisions:

• RRT and Rockpoint will have the right to cause redemption of the Rockpoint equity after the fifth anniversary of the closing date without penalty.

• RRT will control governance of the company, but for limited events where Rockpoint consent is required.

• Mack-Cali will have the right to spinout its interests in RRT or otherwise create a public listing for RRT at anytime.

Other capital market highlights included:

• RiverTrace at Port Imperial, West New York, New Jersey:  In the fourth quarter, the Company refinanced the existing 6.00 percent mortgage, to a 10-year, interest only rate of 3.21 percent – with no penalty.

• Alterra at Overlook Ridge, Malden and Revere, Massachusetts:  Subsequent to year-end, the Company placed a seven-year, $100 million mortgage on the community at an interest only rate of 3.75 percent.

“I am very pleased with the Roseland team’s great performance in 2016 led by Marshall Tycher and Andrew Marshall who created a great platform of current assets and a superb pipeline of new developments,” said Michael J. DeMarco, Mack-Cali President.  “That excellence has led us to Rockpoint becoming our strategic partner.  I have worked with Rockpoint before when I was at Vornado and they are a class act in everything they do and a superb fiduciary for their fund.  We look forward to having great success in the upcoming years with them as our partner.”

 

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