Veris Residential, Inc. · NYSE:VRE
Veris Residential — Mack-Cali Realty — Proxy Contest (May 2019)
41 slides from Veris Residential's proxy contest presentation, May 21, 2019
Slide 1: Forward-Looking Statements
This presentation should be read in connection with our Annual Report on Form 10-K for the year ended December 31, 2018. Statements made in this presentation may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statem
Slide 2: Today's Agenda
Today’s Agenda 3 1.Executive Summary 2.Situation Background: Bow Street’s Proposal 3.Bow Street's Campaign 4.Mack-Cali’s Plan to Deliver Stockholder Value 5.Your Board’s Commitment to Investor Stewardship 6.Concluding Remarks
Slide 3: Bow Street is Engaged in a Self-Interested Campaign
Bow Street is Engaged in a Self-Interested Campaign to Facilitate Its Grossly Inadequate Proposed Transaction Bow Street has nominated four candidates for election to the Mack-Cali Board in a clear attempt to facilitate its grossly inadequate, illusory and unworkable proposed transaction at the expe
Slide 4: Bow Street's Objectives are Not Aligned with Mack-Cali Stockholders
Bow Street’s Objectives are Not Aligned with Mack-Cali Stockholders Bow Street has changed its public narrative to divert attention from its poorly-received and self-interested proposal • • Bow Street is now looking to force a “fire sale” of Mack-Cali before full value can be unlocked Bow Street’s n
Slide 5: Board Committed to Strong Corporate Governance and Maximizing Value
Our Board of Directors is Committed to Ensuring Strong Corporate Governance Practices And Maximizing Value For All Stockholders Since 2016, the Board has pursued a refreshment program, including adding 2 new directors in 2016 and 2 others in 2019, and has committed to replace at least 2 additional d
Slide 6: Waterfront Strategy: Leading Residential & Office Owner Along NJ Waterfront
Waterfront Strategy: Mack-Cali is The Leading Residential & Office Owner Along New Jersey ’s Waterfront Value Proposition Access to New York & professional hubs, discount to NYC, room to grow as millennials start families, tax benefits Thesis NJ Waterfront transit hubs will experience unparalleled g
Slide 7: Dual Platforms Form One Strategy
Dual Platforms Form One Strategy $5.7bn Total Enterprise Value $3.6bn 7,770 11.7mm Net Asset Value 96.4% 84.2% 2,155 (1) 9.9% 30.9% $38.85 Mack-Cali $45.00 Market 16% Premium 6.22% $32.21 Mack-Cali $33.00 Market 3% Premium $47.09 12% 29% 8 (1) Excludes The Residence Inn (164 keys). Waterfront repres
Slide 8: Today's Agenda
Today’s Agenda 9 1.Executive Summary 2.Situation Background: Bow Street’s Proposal 3.Bow Street's Campaign 4.Mack-Cali’s Plan to Deliver Stockholder Value 5.Your Board’s Commitment to Investor Stewardship 6.Concluding Remarks
Slide 9: Overview of Bow Street's Proposal
Overview of Bow Street’s Proposal Note: Listed asset groups reflect the primary assets associated with each separated entity. (1) Based on 4Q18. (2) Based on Company estimates as of 4Q18. Reflects the NAV of Roseland and Harborside Land 4 and the acquisition cost of the recently acquired Soho Lofts
Slide 10: The Rationale for Rejecting Bow Street's Proposal
The Rationale for Rejecting Bow Street’s Proposal 1 The proposal grossly undervalues (by ~$1.0 billion) the Company’s core office assets The proposal significantly overstates the value (by potentially as much as ~$675 million) that would be delivered to Mack-Cali stockholders in respect of ResiCo 2
Slide 11: Proposal Grossly Undervalues the Company's Core Office Assets
1 Proposal Grossly Undervalues the Company’s Core Office Assets Bow Street’s proposal contemplates an aggregate purchase price of $2.4bn - $2.6bn for Mack-Cali’s prime suburban and waterfront office assets, hotel joint venture interests and retail assets • Implied valuation of $2.0bn (midpoint) for
Slide 12: Proposal Significantly Overstates Value Delivered to Stockholders
Proposal Significantly Overstates Value Delivered to Mack-Cali 2 Stockholders Key Financial Characteristics of ResiCo • • Equity Market Cap: $1.3bn (1) Total Enterprise Value: $3.2bn (1) • • Net Debt / EBITDA: 12.8x (2) (Net Debt + Preferred) / EBITDA: 15.7x (2) • • Development Pipeline / Total Asse
Slide 13: The Premium and Value Claimed in the Proposal are Illusory
3 The Premium and Value Claimed in the Proposal are Illusory Bow Street claims its unfinanced proposal delivers aggregate consideration to stockholders of up to $27 - $29 per share However, Bow Street ignores the following realities: • • Likelihood that ResiCo will trade at a significant discount to
Slide 14: Proposal Does Not Take Into Account Cash Flow Constraints of ResiCo
The Proposal Does Not Take Into Account the Cash Flow 4 Constraints of ResiCo The proposal fails to account for the cash flow constraints inherent in ResiCo’s business and structure • Significant debt service burden given overall high leverage • Significant non-income producing land and development
Slide 15: Transaction Structure Would Create Serious Tax Risks
The Proposal Contemplates a Transaction Structure That Would 5 Create Serious Tax Risks for Mack-Cali and its Stockholders The Company believes that the proposed transaction structure would create serious tax risks for the Company The Company’s preliminary analysis indicates that the proposed transa
Slide 16: Bow Street Has Not Provided Evidence of Ability to Finance
Bow Street Has Not Provided any Evidence of its Ability to Finance 6 the Proposed Transaction Bow Street and DWREI have failed to provide any information that would demonstrate that they have an ability to finance the proposed transaction and related costs and expenses, including, among other things
Slide 17: Research Opinions Echo the Board's Concerns
Research Opinions Echo the Board’s Concerns “The Bow Street proposal remains unworkable from CLI’s standpoint and we would not expect their slate of directors to be approved at the upcoming shareholder vote. CLI has made meaningful strides in improving the portfolio and changing over the board compo
Slide 18: Today's Agenda
Today’s Agenda 19 1.Executive Summary 2.Situation Background: Bow Street’s Proposal 3.Bow Street's Campaign 4.Mack-Cali’s Plan to Deliver Stockholder Value 5.Your Board’s Commitment to Investor Stewardship 6.Concluding Remarks
Slide 19: A Self-Interested Campaign Not Aligned With Stockholder Interests
A Self-Interested Campaign Not Aligned With Stockholder Interests Despite its public statements about maximizing value for all stockholders, Bow Street has commenced a proxy contest to facilitate its grossly inadequate proposal or, failing that, force a “fire sale” of the Company at a price that wou
Slide 20: Key Events of Mack-Cali's Interaction With Bow Street
Key Events of Mack-Cali's Interaction With Bow Street including their proposal, indication that the proposal of stockholders, with Bow Street attempting to to suffer another “bait and 21 March 13: The Board of Directors, after careful review and evaluation of the proposal, in consultation with its f
Slide 21: Bow Street's Actions in Settlement Discussions Demonstrate Conflicted Position
Bow Street’s Actions in Settlement Discussions Demonstrate Its Conflicted Position In an effort to resolve the proxy contest, Mack-Cali engaged in settlement discussions with Bow Street and agreed to: •Add 2 of Bow Street’s nominees to the Company’s slate, a generous offer given Bow Street’s 4.5% ow
Slide 22: Bow Street Is Trying to Deceive Stockholders
Bow Street Is Trying to Deceive Stockholders Into Supporting Its Self-Interested Campaign 23 Bow Street’s Disinformation Facts Mack-Cali rejected Bow Street and DWREI’s proposal “without proper inquiry” The Board carefully reviewed and considered the proposal and unanimously determined that it is gr
Slide 23: Bow Street's Campaign Is Really an Effort to Precipitate a Sale
Bow Street’s Campaign Purports to Be About Value Creation and Governance; Really an Effort to Precipitate a Sale at a Lowball Price • • Bow Street is targeting William L. Mack, Mack-Cali Board Chairman Mr. Mack carries extensive knowledge, relationships, expertise and experience in commercial and mu
Slide 24: Bow Street's Nominees Lack Critical Ingredients
Bow Street’s Nominees Lack Critical Ingredients to Maximize Value for All Mack-Cali Shareholders Business Administration 3 Boards Blue Nile - Private 1 Board 2 Committees 25 Occupation Alan R. Batkin CEO & Chairman Convers e As s oci a tes , Inc. Frederic Cumenal Independent Director Bl ue Ni l e, I
Slide 25: Today's Agenda
Today’s Agenda 26 1.Executive Summary 2.Situation Background: Bow Street’s Proposal 3.Bow Street's Campaign 4.Mack-Cali’s Plan to Deliver Stockholder Value 5.Your Board’s Commitment to Investor Stewardship 6.Concluding Remarks
Slide 26: Significant Progress on its Strategic Objectives
Mack-Cali Has Made Significant Progress on its Strategic Objectives 20/15 Business Plan Update Own 20 MSF Class A Office and 15k Luxury Apartment Units 27 Improve Operating Efficiencies •EBITDA Margin: 56% (2015) 62% (2020E) •Employees: 600 (2015) 273 (2018) Rebuild Operational Excellence •Office: C
Slide 27: Mack-Cali has Transformed its Portfolio
Mack-Cali has Transformed its Portfolio Through the executed disposition program, strategic acquisitions and residential development, Mack-Cali has and will continue to dramatically shift its NOI composition Residential 8% Flex Office 14% Flex Office 15% Suburban Office 20% Residential 29% Waterf nt
Slide 28: Mack-Cali Today is a Fundamentally Reshaped Entity
Mack-Cali Today is a Fundamentally Reshaped Entity… s Source: Company information. (1) (2) (3) Represents consolidated annualized Residential NOI. Excluding JVs. Represents quarterly Core FFO. 29 Office Buildings 11539(66%) Operating / In-Construction Residential Units 3,8003,0269,211130+142%(96%) W
Slide 29: Stockholder Returns Reflect the Change in Strategy
…and Stockholder Returns Reflect the Change in Strategy 52.8% 39.6% 28.2% Mack-Cali NAREIT Office Index (4) RMS (5) Mack-Cali NAREIT Office Index (4) RMS (5) Mack-Cali NAREIT Office Index (4) RMS (5) Source: FactSet as of May 17, 2019. Note: Total return reflects reinvestment of all dividends on the
Slide 30: Research and Investor Community Recognizes Progress
Research and Investor Community Recognizes the Significant Progress Mack-Cali Has Made on Its Transformation “We acquired the shares at what we believe to be a discount to net asset value (NAV), and we believe Mack-Cali holds material upside potential.” “The company has articulated and is executing
Slide 31: Continued Execution is the Best Way to Maximize Stockholder Value
Continued Execution on Mack-Cali Portfolio Transformation is the Best Way to Maximize Stockholder Value Execute leases with quality tenants on over 1.0 million square feet of currently vacant office space Achieve economic stabilization of 1,212 apartment units delivered in 2018 and complete and stab
Slide 32: Continued Execution on Portfolio Transformation (cont'd)
Continued Execution on Mack-Cali Portfolio Transformation is the Best Way to Maximize Stockholder Value (cont’d) In-Construction Portfolios • • • 2018 delivery portfolio of 1,212 units is 94.1% leased (1) In-construction portfolio of 1,947 residential units and 372 hotel keys projected to generate a
Slide 33: Continued Execution on Portfolio Transformation (cont'd)
Continued Execution on Mack-Cali Portfolio Transformation is the Best Way to Maximize Stockholder Value (cont’d) • • Successfully sold $2.2bn of Suburban Office, leaving a portfolio of recently improved Class A Office product Pay-down of corporate debt with proceeds from strategic asset sales • • Ex
Slide 34: Today's Agenda
Today’s Agenda 35 1.Executive Summary 2.Situation Background: Bow Street’s Proposal 3.Bow Street's Campaign 4.Mack-Cali’s Plan to Deliver Stockholder Value 5.Your Board’s Commitment to Investor Stewardship 6.Concluding Remarks
Slide 35: Highly Qualified Directors with Relevant Experience
Mack-Cali has Highly Qualified Directors with Relevant Experience Committee Service Executive Compensation Nomination and Position with the Company Audit and Option Corporate Governance Wi l l i a m L. Ma ck Cha i rma n Na tha n Ga ntcher Independent Di rector Chair Al a n G. Phi l i bos i a n Indep
Slide 36: Mack-Cali Has Strong Governance Infrastructure
Mack-Cali Has Strong Governance Infrastructure Directors alone own a ~3% stake (2) (1) Based on Mack-Cali Proxy dated April 29, 2019 and includes shares of Common Stock that may be issued upon redemption of limited partnership interests in the Operating Partnership and 100.8mm shares outstanding as
Slide 37: Comprehensive Board Refreshment Underway
Comprehensive Board Refreshment Underway Since 2016, the Board has been in the process of a comprehensive refreshment and is actively seeking the most qualified directors with the goal of reducing average director tenure, increasing gender and racial diversity, and ensuring structured and orderly Bo
Slide 38: Comprehensive Board Refreshment Underway (cont'd)
Comprehensive Board Refreshment Underway (cont’d) management and financial Catterton, a global 39 (1) On February 11, 2019, Mack-Cali announced that Lisa Myers and Laura Pomerantz will stand for election to the Board at the Company's 2019 Annual Meeting of Stockholders. Lisa Myers Nominated 2019 (1)
Slide 39: Today's Agenda
Today’s Agenda 40 1.Executive Summary 2.Situation Background: Bow Street’s Proposal 3.Bow Street's Campaign 4.Mack-Cali’s Plan to Deliver Stockholder Value 5.Your Board’s Commitment to Investor Stewardship 6.Concluding Remarks
Slide 40: Concluding Remarks
Concluding Remarks Bow Street is engaging in a self-serving, “bait and switch” campaign, not a constructive attempt to enhance long-term value for all stockholders or corporate governance • Bow Street initially made a low-ball offer for the Company’s office assets, offering to withdraw a proxy chall
Slide 41: Concluding Remarks
Concluding Remarks Bow Street is engaging in a self-serving, “bait and switch” campaign, not a constructive attempt to enhance long-term value for all stockholders or corporate governance * Bow Street initially made a low-ball offer for the Company's office assets, offering to withdraw a proxy chall