Waterfront Corporate Center One, 111 River St., Hoboken, NJ Waterfront Corporate Center One, 111 River St., Hoboken, NJ

JERSEY CITY, NJ—Mack-Cali Realty Corp. says it sold approximately $465 million of assets so far this year, as part of its previously announced strategic repositioning, and its Roseland Residential Trust exited a non-core market, broke ground on several key luxury rental communities, and completed financing on several other projects, including closing two transactions at RiverTrace at Port Imperial in West New York, NJ.

Mack-Cali says it has contracts out for an additional $265 million of dispositions, on which it expects to close in the fourth quarter. The firm anticipates 2016 dispositions to total approximately $730 million, consisting of 27 office buildings totaling 4.5 million square feet and one residential building with a GAAP NOI yield of approximately 5.5 percent overall.

The proceeds from the dispositions are expected to be used to pay down debt, fund development, and purchase suitable acquisitions if available, the company says.

During the third quarter, Mack-Cali acquired 111 River Street in Hoboken, NJ, for $235 million. The 566,215 square-foot property is on the Hudson River Waterfront, offering river views and superior transportation options. The company says it is under contract to acquire a $27 million portfolio adjacent to an existing office campus.

Michael DeMarco, president of Mack-Cali Realty Corporation Michael DeMarco, president of Mack-Cali Realty Corporation

“As we look to refine our plan for 2017, we anticipate disposition activity in the $500 to $600 million range depending on market conditions,” says Michael J. DeMarco, Mack-Cali president. “We continue to be focused on strengthening our balance sheet and possibly increasing our holdings in waterfront and transit-based locations that will return significant value to shareholders.”

As previously reported by GlobeSt.com, in September 2015, the company outlined a new strategic plan that coincided with the naming of a new leadership team. The plan, dubbed “20/15,” called for a focus on Hudson River Waterfront properties in Jersey City, Weehawken, Hoboken, and West New York. This focus includes both office properties and multi-family communities.

Under its plan, Mack-Cali hopes to lengthen its debt maturity profile and reduce its average cost of debt. As part of that effort, the firm says it completed the following financing activity in the quarter:

  • Closed on a $250 million mortgage loan secured by 101 Hudson Street, its 1.2 million-square-foot class A office building located on the Hudson River Waterfront in Jersey City, NJ. The loan has a 10-year term, interest only and has an effective annual interest rate of 3.12 percent.
  • Closed on a $59 million mortgage loan secured by Portside 7, its 175-unit, luxury multi-family community located on the Boston Harbor Waterfront. The loan has a seven-year term, interest only and has an effective annual interest rate of 3.569 percent.
  • The company’s joint venture with Hyatt Corporation completed a $100 million mortgage loan refinancing, secured by the venture’s 350-room Hyatt Regency on the Hudson in Jersey City, NJ. The loan has a 10-year term, interest only and has an effective annual interest rate of 3.668 percent.  At the closing, Mack-Cali received a distribution from the venture of approximately $18 million representing its share of the excess proceeds of the refinancing.

Proceeds from the completed financing activity were used primarily to repay outstanding secured and unsecured debt.

In September, the company redeemed $114.9 million of its 7.75 percent unsecured bonds scheduled to mature in 2019 paying 115.977 percent of the principal, plus accrued and unpaid interest.

As a result of the successful execution of these highlighted financing activities, at quarter end, the company’s $2.5 billion of total debt had a weighted average interest rate of 4.48 percent, down from 4.79 percent at June 30. Additionally, at quarter-end, the weighted average maturity of its indebtedness was 3.93 years, up from 3.38 years at June 30.

“The steps we’ve taken this quarter and throughout 2016 clearly demonstrate the lending community’s continued confidence in Mack-Cali, and have meaningfully reduced our interest cost and lengthened our debt maturity profile, as we have planned,” says Tony Krug, chief financial officer of Mack-Cali. “We plan to continue our strategic balance sheet plan going into 2017, including extending our unsecured credit facility which is scheduled to mature in July 2017, obtaining additional secured and unsecured financings on favorable terms and utilizing proceeds from planned property sales to reduce our debt levels.”

The firm’s Roseland unit began construction on these projects:

  • Conshohocken, PA (51 Washington): Broke ground on a wholly owned, 310-apartment home, luxury community.
  • Morristown, NJ (Lofts at 40 Park): Broke ground on a 59-apartment home, joint venture community adjacent to Roseland’s Metropolitan at 40 Park.
  • Worcester, MA (145 Front Street at City Square): Broke ground on the second phase of City Square, a 128-apartment home, luxury community in downtown Worcester.

During the third quarter, Roseland sold its 100-percent interest in the non-strategic, 220-apartment home, Andover Place in Andover, MA, for approximately $40.4 million.

After the quarter-end, Roseland closed on two transactions on RiverTrace, the 316-apartment home community located at Port Imperial in West New York. The transactions include refinancing the outstanding permanent loan with a lower-rate interest-only loan, and conversion of its subordinate 50-percent ownership interest to a heads-up 22.8 percent ownership, with no remaining preferred capital. Roseland projects these transactions will generate over $1 million of cash flow in year one of its converted ownership.

“Roseland continues to move the needle forward with respect to our ownership structure in our multi-family assets. RiverTrace is a perfect example where we’ve been able to achieve greater ownership and cash flow participation in a premier waterfront asset,” says Andrew Marshall, president and chief operating officer of Roseland.

“We are seeing continued growth and vitality in the market, and Roseland is responding to meet that demand,” says Mack-Cali president DeMarco. “As we continue to grow our multi-family portfolio with an eye toward increasing our presence in the market, we are looking toward breaking future ground and bringing new luxury inventory to the markets as they continue to emerge and expand.”