Veris Residential, Inc. · NYSE:VRE
Veris Residential — Mack-Cali Realty — Proxy Contest (May 2020)
89 slides from Veris Residential's proxy contest presentation, May 19, 2020
Slide 1: Putting Shareholders First: The Case for a New Era at Mack-Cali
Putting Shareholders First: The Case for a New Era at Mack-Cali May 2020
Slide 2: Disclaimer
Disclaimer This presentation and any of the information contained herein (this “Presentation”) is for discussion and general informational purposes only and is not complete. Under no circumstances is this Presentation intended to be, nor should it be construed as advice or a recommendation to enter
Slide 3: A Message to Our Fellow Shareholders
A Message to Our Fellow Shareholders We are once again seeking your support to make changes at Mack-Cali – the Company we collectively own. As shareholders, we have all endured many years of underperformance and disappointment No matter what management or the Legacy Board members tell you, Mack-
Slide 4: Warren Buffett quote on directors
“When seeking directors, CEOs don’t look for pit bulls. It’s the cocker spaniel that gets taken home.” - Warren Buffett, 2020(1) (1) Berkshire Hathaway 2019 letter to shareholders https://www.berkshirehathaway.com/letters/2019ltr.pdf 3
Slide 5: Table of Contents
Table of Contents 1) Executive Summary 2) Are Shareholders Better Off Than They Were 5-Years Ago? A Clear-eyed Assessment of Management’s Tenure 3) A Legacy of Broken Corporate Governance 4) The Path Forward: Restoring Oversight and Accountability 5) Appendix: In Management’s Own Words – A Compendiu
Slide 6: Executive Summary
Executive Summary BOW STREET
Slide 7: Putting Shareholders First: A New Era at Mack-Cali
Putting Shareholders First: A New Era at Mack-Cali Since its 1994 IPO, Mack-Cali (“CLI”, or the “Company”) has perennially disappointed shareholders. Over the last five years management and the Legacy Directors (1) have perpetuated this value destruction; as a result, Mack-Cali is now in a financial
Slide 8: Bow Street: Who We Are and Why We Are Here (Again)
Bow Street: Who We Are and Why We Are Here (Again) Bow Street LLC owns ~4.9% of Mack-Cali’s outstanding shares and is advocating for change on behalf of all shareholders at the 2020 Annual Meeting • Bow Street LLC is a New-York based investment manager founded in 2011 that partners with institutiona
Slide 9: Following 2019's AGM, Mack-Cali Shareholders Were Hopeful
Following 2019’s AGM, Mack-Cali Shareholders Were Hopeful Following shareholders’ overwhelming election of 4 new independent directors in 2019, investors believed a new era of transparency and management accountability had begun at Mack-Cali • At the 2019 AGM, shareholders sent Mack-Cali’s managemen
Slide 10: The Market was Optimistic, but the Board Resisted Change
The Market was Optimistic, but the Board Resisted Change… Investor and market sentiment was at highs following last year’s June AGM… In our opinion, the outcome was close to the best case scenario for Bow Street and shareholders; as best case might have been a new Board Chairman, too. - Stifel Resea
Slide 11: Demonstrating a Clear Lack of Independent Oversight
…Demonstrating a Clear Lack of Independent Oversight Broken governance culture: over last 12 months Legacy Board has continued to protect insider interests Bill Mack Stays Chairman, Pursues MBO Rebuffed Strategic Interest (2019-2020) (2019-2020) • Shareholders removed Mr. Mack from CLI’s Board • Man
Slide 12: Leading To Another Year of Operating Underperformance
Leading To Another Year of Operating Underperformance… Even prior to the onset of COVID-19, CLI underperformed on every relevant metric over the last year NAV Has Declined(1)… …While Leverage Has Increased(1)… $37 14x $35.82 11.5x $36 12x Company NAV / Sh Net Debt / EBITDA $35 9.5x 10x $34 8x $32.94
Slide 13: With Predictably Poor Shareholder Returns
….with Predictably Poor Shareholder Returns Since the June 2019 AGM, Mack-Cali has underperformed its office and residential peer set by ~2,000 bps(1) Mack-Cali has significantly underperformed all relevant office, apartment and REIT indices since 2019 AGM (1) 115 CLI Office Index (NAREIT) Apartment
Slide 14: Years in: Assessing the Board's Strategy
5 Years in: Assessing the Board’s Strategy Since 2015, Mr. DeMarco and the Board have aggressively pursued the “Waterfront Strategy” Despite their claims of success… “We’ve had a good deal of success turning the company “We went through a period of reflection and we've done [a] around”(1) tremendous
Slide 15: Years in: Current NAV Discount Highest in Company History
5 Years in: Current NAV Discount Highest in Company History DeMarco Discount? Despite significant transaction activity, CLI’s wide NAV discount continues unabated During Mr. DeMarco’s tenure (a period of broad REIT appreciation), Mack-Cali’s significant discount to NAV has widened(1) 0% Sep-15 Mar-1
Slide 16: Years in: Bottom Quartile Returns (Pre-COVID)
5 Years in: Bottom Quartile Returns (Pre-COVID) Mack-Cali has underperformed peer group over sustained period • We believe benchmarking should be a blend of apartment and office REITs as over 50% of current NAV(1) is comprised of apartment assets • For pre-COVID returns Bow Street selected 2/19/2020
Slide 17: Years in: Bottom Quartile Returns (Post-COVID)
5 Years in: Bottom Quartile Returns (Post-COVID) Mack-Cali has underperformed peer group over sustained period • We believe benchmarking should be a blend of apartment and office REITs as over 50% of current NAV(1) is comprised of apartment assets Mack-Cali total shareholder returns have underperfor
Slide 18: Board Endorses CEO Pay Misaligned with Performance
Yet, Board Endorses CEO Pay that is Misaligned with Performance Mack-Cali shareholders paid Mr. DeMarco $9 million in 2019 • Mr. DeMarco’s compensation has increased by a 20%+ CAGR throughout his tenure; over this period, the Company’s share price and NAV have decreased • Mack-Cali’s Compensation Co
Slide 19: The Legacy Board that Controls Mack-Cali
The Legacy Board that Controls Mack-Cali Despite his pending mandatory retirement from the Board – ending a 20-year run as Chairman – Bill Mack is leaving behind an entrenched Board of loyalists and a broken corporate governance culture • Chairman Mack has significant influence and long-standing rel
Slide 20: Can Legacy Board Be Trusted to Select Independent Directors?
Can Legacy Board Be Trusted to Select Independent Directors? If Mack-Cali and its management were truly committed to finding independent directors, why would they have taken the unprecedented step of refusing to re-nominate the four independent Directors duly elected in 2019? • Despite claims of “im
Slide 21: Mack-Cali's Defense: The Disingenuous Control Narrative
Mack-Cali’s Defense: The Disingenuous “Control” Narrative The Claim: Mack-Cali has repeatedly argued that Bow Street is seeking to control the Board and force a sale of the Company The Facts: • Bow Street is NOT seeking control of the Company. We are, however, seeking to free control from current ma
Slide 22: Mack-Cali's Defense: Business Disruption Risk
Mack-Cali’s Defense: Business Disruption Risk The Claim: Mack-Cali has argued that in light of the uncertainty associated with the COVID-19 pandemic, this is not the “right time” for independent Board oversight and capable leadership The Facts: • Given the poor performance of Mr. DeMarco and the Leg
Slide 23: Mack-Cali's Defense: Highly Selective Performance Metrics
Mack-Cali’s Defense: Highly Selective Performance Metrics The Claim: Mack-Cali shareholders have done well since Mr. DeMarco joined the Company • Current CEO Michael DeMarco was appointed President on June 3, 2015 when Mack-Cali stock was on its lows; there has been no durable shareholder value crea
Slide 24: A New Era At Mack-Cali: The Path Forward
A New Era At Mack-Cali: The Path Forward A new, independent Board is required to create a coherent strategy for long-term value realization • Despite its strong collection of assets, it is clear that the current strategy has failed to either grow NAV or close the discount to NAV. We believe that in
Slide 25: Are Shareholders Better Off Than They Were 5-Years Ago?
Are Shareholders Better Off Than They Were 5-Years Ago? A Clear-eyed Assessment Of Management’s Tenure 24
Slide 26: DeMarco quote on closing the NAV gap
“Our first responsibility and our chief goal is to close the gap between what we perceive our NAV to be and what our share price is…We'll do whatever it takes to make NAV a reality as opposed to a possibility” - Michael DeMarco’s first earnings call with Mack-Cali 7/22/2015, when NAV was $33/share a
Slide 27: An Overview Of Management's Waterfront Strategy
An Overview Of Management’s “Waterfront Strategy”… For the past 5 years, Mr. DeMarco has aggressively advanced his “Waterfront Strategy”, which combines CLI’s residential and commercial assets on the Jersey City waterfront and transit hubs The Waterfront Strategy is predicated on the following princ
Slide 28: …that was Ill-Conceived from the Start
…that was Ill-Conceived from the Start Waterfront Strategy failed to consider inherent constraints/preferences of traditional REIT investors 1) High leverage: management’s strategy is capital intensive, emphasizing prospective growth over cash flow; now at an industry high 11.5x EBITDA, leverage is
Slide 29: Despite Mack-Cali's Generous Self Assessment
Despite Mack-Cali’s Generous Self Assessment… Mr. DeMarco and the Board have continued to give themselves high marks for the last 5-years Mack-Cali’s Self-Assessment, Presented Analyst Day, January 2019 (1) “The successful execution of our Waterfront Strategy has created a portfolio of high-quality
Slide 30: Objectively, the Waterfront Strategy Has Not Delivered
…Objectively, the Waterfront Strategy Has Not Delivered Despite management’s persistent efforts over the prior five years, Mr. DeMarco’s Waterfront Strategy has not produced the desired results • Despite significant transaction volume and portfolio re-positioning, CLI’s NAV and its stock price disco
Slide 31: Strategic Failure #1: No NAV Creation
Strategic Failure #1: No NAV Creation Despite appreciation across broader real estate markets (particularly apartments), Mack-Cali has lost Net Asset Value since 2015 Mack-Cali NAV hasn’t changed in 5-years (Pre-COVID)(1)… …while peers have created substantially more value(2) $50 25% 22.8% NAV Growt
Slide 32: Strategic Failure #2: Excess Leverage
Strategic Failure #2: Excess Leverage Mack-Cali’s elevated leverage profile is a poor fit for public markets and creates significant risk for shareholders Mack-Cali’s leverage is higher than any peer average(1) Leverage has increased despite asset sales 12x 11.5x 12x 11.5x 11x 11x 10x 10x 9.7x 9.3x
Slide 33: Management Promised Leverage Reduction From Day 1
Management Promised Leverage Reduction From Day 1… Despite management’s commentary and a recently completed ~$2+ billion divestment program, CLI’s leverage has increased – and at ~11.5x EBITDA – is now at highest levels in Company history Date Leverage What Mr. DeMarco Said at the Time Leverage Up O
Slide 34: Failure to Deliver has Driven Numerous Rating Downgrades
Failure to Deliver has Driven Numerous Rating Downgrades All three major rating agencies have downgraded Mack-Cali due to its unsustainable leverage Mack-Cali’s debt has been repeatedly downgraded(1) Ratings Downgrades Under Mr. DeMarco: 3-4 notches June Outlook 2015 Today Today S&P BB+ B+ NEG Moody
Slide 35: Strategic Failure #3: Strategy Has Eroded CLI's Cash Flow
Strategic Failure #3: Strategy Has Eroded CLI’s Cash Flow… Broken promises around leasing, portfolio re-positioning, and high expenses have caused Mack- Cali’s core FFO/share to decline ~40% from 2017 levels CLI FFO / share down ~40% from 2017 levels(1) $2.40 $2.23 $2.20 $2.15 $2.00 $1.93 $1.83 $1.8
Slide 36: …and Pressured its Dividend
…and Pressured its Dividend The decline in cash flow has caused Mack-Cali’s dividend to be under-funded, a major red-flag for traditional REIT investors CLI does not cover dividend…(1) …unlike its REIT peers(2) 110% 104% CLI / Sh Cash Flow Low High 100% 2020 FFO Guidance Per Share 1.24 1.36 Base Bui
Slide 37: Strategic Failure #4: Asset Mix Unsuited for Public Markets
Strategic Failure #4: Asset Mix Unsuited for Public Markets There is no public precedent for a successful dual-asset class REIT, and large development pipeline is problematic in the context of CLI’s elevated leverage • The Waterfront Strategy failed to address key public market concerns for long-ter
Slide 38: Strategic Failure #5: Mack-Cali's JVs are Deceivingly Dilutive
Strategic Failure #5: Mack-Cali’s JVs are Deceivingly Dilutive By using complex preferred equity from Rockpoint Group to finance its residential development, Mack-Cali has subordinated its shareholders and created a poison pill against future strategic transactions • Given Mack-Cali’s cash-flow cons
Slide 39: Rockpoint Group Equity Subordinates CLI Shareholders
Rockpoint Group “Equity” Subordinates CLI Shareholders… Management characterizes the Rockpoint / Roseland JV structure as raising equity at NAV; this is misleading • Rockpoint Group preferred equity carries a 6% preferred return, after which Mack-Cali receives only a partial catch-up • This agreemen
Slide 40: …and has Grown to Become an Effective Poison Pill
…and has Grown to Become an Effective Poison Pill Rockpoint’s JV agreement with Mack-Cali entails a ~$150m+ “poison pill” or make-whole payment through March 2023 • Mack-Cali’s Rockpoint agreement doesn’t allow for a buyer to purchase Roseland in its entirety until March 2023 without paying Rockpoin
Slide 41: Wall Street Concurs: Analysts Negative on Mack-Cali
Wall Street Concurs: Analysts Negative on Mack-Cali… Analysts continue to be “bearish” regarding Mack-Cali’s go-forward strategy; average price target has fallen precipitously over the past several years • 7 of 8 analysts have underweight or hold ratings • Following last June’s optimism around the 2
Slide 42: …Concerned About Leverage, Strategy and Execution
…Concerned About Leverage, Strategy and Execution “Bow Street (activist shareholder) leaned into its view that the legacy board and CEO of CLI should be replaced. Its press release outlined its view of the path forward that included simplifying further, de-leveraging, and reducing development exposu
Slide 43: A Legacy of Broken Corporate Governance
A Legacy of Broken Corporate Governance 42
Slide 44: Mack-Cali was Built on a Foundation of Weak Governance
Mack-Cali was Built on a Foundation of Weak Governance… At its effective founding in 1997, Mack-Cali’s governance was designed to benefit Chairman Bill Mack and his family; this culture – prioritizing the Board and management over other stakeholders – persists to this day • Mack Family advantaged at
Slide 45: Recent Changes have Proven Illusory
Recent Changes have Proven Illusory… In direct response to shareholder pressure at the 2019 AGM, Mack-Cali made a series of shareholder friendly governance changes; however, one year into these changes, it is clear that the Legacy Board views governance as a “check the box” exercise rather than a co
Slide 46: Myriad Governance Violations in Past Year
…as Evidenced by Myriad Governance Violations in Past Year Led by CEO Michael DeMarco and his captive Legacy Board members, Mack-Cali has repeatedly acted against shareholder interests over the past year 1) Bill Mack Voted Off Board, Remains Chairman (June 2019) – Subverting the 2019 shareholder vot
Slide 47: 1) Bill Mack Voted Off Board, Yet Retains Chairmanship
1) Bill Mack Voted Off Board, Yet Retains Chairmanship On the day of the 2019 Annual Meeting – at the same time it was assuring shareholders that governance was fixed – the Mack-Cali Board stealthily forced the resignation of four of its nominees in order to keep Mr. Mack on the Board • Despite havi
Slide 48: 2) 2019 Directors: Marginalized by Committee
2) 2019 Directors: Marginalized by Committee Despite promises of constructive engagement, the Legacy Directors marginalized the 2019 Directors by limiting committee roles and excluding them from key committees such as Nominating & Governance, and Compensation Nominating & Corp. Gov Committee – No 20
Slide 49: 2) 2019 Directors: Marginalized by Committee (cont'd)
2) 2019 Directors: Marginalized by Committee (cont’d) Shareholder Value Committee was quietly disbanded and replaced with a new “Special Committee” comprised of the Legacy Directors and CEO Michael DeMarco Shareholder Value Committee – Two 2019 Directors Special Committee – Majority Legacy Directors
Slide 50: 3) Shareholder Value Committee had no Authority
3) Shareholder Value Committee had no Authority… Shareholder Value Committee established by the Legacy Board was designed to fail • Despite broad shareholder support for a robust and transparent strategic alternatives process intended to provide shareholders and the Board with prospective bids for a
Slide 51: …and Board Misled Shareholders Regarding its Status
. …and Board Misled Shareholders Regarding its Status Mack-Cali Press Release December 18, 2019: Publicly Released Statement strongly implied selling suburban assets was sole conclusion… “Mack-Cali also announced that, based on the recommendations of the Shareholder Value Committee, the Board has de
Slide 52: 4) Management and Board Have Impeded Strategic Interest
4) Management and Board Have Impeded Strategic Interest… Despite Mr. DeMarco’s protests to the contrary, recent press reports indicate interest from no less than five prospective bidders in 2019-2020 Mack-Cali repeatedly turned away suitors… …bidder released letters catching Mr. DeMarco in public li
Slide 53: …To Point Where a Bidder Went Public With Frustration
…To Point Where a Bidder Went Public With Frustration… Bidder took the unprecedented step of publicly abandoning a take-over bid due to lack of engagement by Company • Despite the Company’s claim to the contrary, Rizk Ventures was interested in 100% of Mack-Cali with an offer range of $24-27/share w
Slide 54: …Proving Mr. DeMarco Intentionally Misled Shareholders
…Proving Mr. DeMarco Intentionally Misled Shareholders… When questioned about the Rizk/UDR bid on the Q4 2019 investor call (in February 2020), Mr. DeMarco offered a series of outright lies; these were definitively unmasked on Feb 28 th when Rizk Ventures publicly released the two letters it sent in
Slide 55: …and Lied to Shareholders about this Strategic Approach
…and Lied to Shareholders about this Strategic Approach Lies: The DeMarco Narrative(1) Documented Truth: Rizk Ventures Letters to CLI Board “he [Rizk] didn't have an advisor or a law firm” “As previously indicated, the legal advisors to the Buyer Group are Latham & Watkins LLP and Dechert LLP. The f
Slide 56: 5) Meanwhile the Mack Family prepared an MBO
5) Meanwhile the Mack Family prepared an MBO On March 3rd, 2020 press reports(1) indicated that Chairman Bill Mack and his family were pursuing a transaction to take Mack-Cali private • As reported in The Deal, Mack-Cali’s Chairman and his son/partner Richard Mack pursued a bid to privatize Mack-Cal
Slide 57: 6) 2019 Directors Marginalized, Then Removed
6) 2019 Directors Marginalized, Then Removed Board is Subverting Shareholders’ 2019 vote by refusing to re-nominate four independent 2019 directors • Despite the overwhelming support these directors received at the 2019 AGM, the Company has refused to re- nominate MaryAnne Gilmartin, Frederic Cumena
Slide 58: Nominee Selection Tightly Controlled By Loyal Insiders
Nominee Selection Tightly Controlled By Loyal Insiders Board created a small committee of “insiders” (Michael DeMarco, Irvin Reid, and Laura Pomerantz) to oversee process for identifying new nominees • Having served on the Board since 1994, Irvin Reid is Mack-Cali’s longest tenured director • Laura
Slide 59: 7) Compensation Committee: Pay Misaligned with Performance
7) Compensation Committee: Pay Misaligned with Performance Mr. DeMarco’s 2019 compensation was $9.0m • Despite the fact that over 50% of its NAV derives from apartment/residential assets, Mack-Cali continues to use a peer group comprised exclusively of office REITs, (which have significantly underpe
Slide 60: Who Should We Believe? Highly Credentialed Executives
Who Should We Believe? 4 Highly Credentialed Executives… Mack-Cali has accused these four distinguished executives of being bad fiduciaries 1) Alan Batkin (previously Vice Chairman Eton Park, Kissinger Associates) – Mr. Batkin is a renowned business leader with a proven track record of success over
Slide 61: …or CEO/Board who Dislike Oversight and Fear for their Jobs?
…or CEO/Board who Dislike Oversight and Fear for their Jobs? Mr. DeMarco and the Legacy Directors – two of whom have served on Mack-Cali’s Board for 16 and 26 years respectively – evidently do not like independent oversight • Compensation – Mr. DeMarco’s compensation amounts to ~$9m / year(1) • The
Slide 62: Company's Nominees: Hastily Chosen, Checkered Pasts
Company’s Nominees: Hastily Chosen, Checkered Pasts Mack-Cali’s choices to replace the elected 2019 Directors appear to have been poorly vetted; all but one of these nominees is retired, suggesting board fees (from CLI and other boards) to be a meaningful source of income Lee Wielansky (CEO of Midla
Slide 63: The Path Forward: Restoring Oversight and Accountability
The Path Forward: Restoring Oversight and Accountability 62
Slide 64: The Path Forward
The Path Forward Bow Street supports a coherent strategy for value realization led by a strong, independent Board • Despite a strong collection of assets, it is clear that Mack-Cali’s current strategy has failed to either grow NAV or close the NAV discount. Bow Street believes that in order to trade
Slide 65: 1) High Integrity Leadership
1) High Integrity Leadership 20+ years of underperformance and insider dealings at Mack-Cali have created a toxic culture where loyalty is prized over skill, and insider interests trump shareholder returns • While it is ultimately the responsibility of the new Board to identify a new CEO if necessar
Slide 66: 2) Simplify Residential Platform (Roseland)
2) Simplify Residential Platform (Roseland) Residential platform (Roseland) must be simplified and streamlined to comport with public REIT investor preferences– low leverage, no joint-ventures, limited development exposure • Rockpoint Preferred Capital – Highly complicated joint-venture agreement wi
Slide 67: 3) Restructure Office Portfolio
3) Restructure Office Portfolio Bow Street believes Mack-Cali should continue its disposition of suburban assets and select waterfront assets • Mack-Cali’s current portfolio is an amalgamation of hotels, retail, sub-institutional suburban office assets, higher quality Metropark and Short Hills offic
Slide 68: 4) Focus On Reducing Leverage
4) Focus On Reducing Leverage Leverage must come down for Mack-Cali to succeed • Bow Street believes that CLI isn’t likely to close the valuation gap to peers and to NAV unless it addresses its excessive leverage problem – Mack-Cali leverage is nearly 2x that of peers; management has failed to deliv
Slide 69: 5) Genuine Receptivity to Strategic Transactions
5) Genuine Receptivity to Strategic Transactions Prior to COVID there was robust buyer appetite and a deep pool of prospective acquirors for CLI’s assets • Despite the Company’s proxy statement which recently pivoted to “strategic alternatives,” Mack-Cali needs a long-term plan; we DO NOT advocate a
Slide 70: 6) Strong, Independent Board and Oversight
6) Strong, Independent Board and Oversight Bow Street Board nominees bring independent oversight and experience • Bow Street believes the current CEO and Legacy Board have created a toxic environment that prioritizes insider interests and has long failed to be accountable to shareholders • We believ
Slide 71: 2019 Elected Director: Alan Batkin
2019 Elected Director: Alan Batkin Leadership experience • Mr. Batkin serves as the Chief Executive Officer and Chairman of Converse Associates, a strategic advisory firm • He previously served as Vice Chairman of Eton Park Capital Management, L.P. and Vice Chairman of Kissinger Associates, Inc Boar
Slide 72: 2019 Elected Director: Frederic Cumenal
2019 Elected Director: Frederic Cumenal Leadership experience • Mr. Cumenal served as the Chief Executive Officer and President of Tiffany & Co. • Prior to his service at Tiffany & Co., Mr. Cumenal held several senior executive positions in LVMH Group’s wine and spirits businesses over a fifteen-yea
Slide 73: 2019 Elected Director: Nori Gerardo Lietz
2019 Elected Director: Nori Gerardo Lietz Leadership experience • Ms. Gerardo Lietz is a Senior Lecturer of Real Estate Private Equity at Harvard Business School and the President of Areté Capital, a real estate advisory firm she founded. • Previously, she was a Partner at Partners Group, a $50 bill
Slide 74: 2019 Elected Director: MaryAnne Gilmartin
2019 Elected Director: MaryAnne Gilmartin Leadership experience • Ms. Gilmartin is Co-Founder and Chief Executive Officer of MAG Partners, a New York-based real estate development firm. • Previously, she served as the Chief Executive Officer and President of Forest City Ratner Companies, LLC, a subs
Slide 75: 2020 Nominee: Tammy Jones
2020 Nominee: Tammy Jones Leadership experience • Ms. Jones is Co-Founder and Chief Executive Officer of Basis Investment Group, a multi-strategy commercial real estate investment manager and registered investment advisor that invests capital on behalf of institutional investors, including some of t
Slide 76: 2020 Nominee: Akiva Katz
2020 Nominee: Akiva Katz Leadership experience • Mr. Katz is the Co-Founder and Managing Partner of Bow Street LLC, a New York-based investment firm that invests extensively in real estate • Prior to founding Bow Street, Mr. Katz served as a Managing Director at Brahman Capital Corp. from 2007 to 20
Slide 77: 2020 Nominee: Mahbod Nia
2020 Nominee: Mahbod Nia Leadership experience • Mr. Nia served as Chief Executive Officer of NorthStar Realty Europe Corp (“NRE”), a NYSE listed REIT; grew NRE to $2.6 billion in assets and sold it to AXA in 2019, realizing a 15% IRR since inception. • He also previously served as Managing Director
Slide 78: 2020 Nominee: Howard Stern
2020 Nominee: Howard Stern Leadership experience • Mr. Stern is the Founder and Principal of Stern & Associates, LLC, a full-service real estate advisory and consulting firm. • Mr. Stern is the Founder and former President of Hudson Pacific Properties Inc. (HPP), a California-based office REIT. HPP
Slide 79: Shareholders Have a Clear Choice
Shareholders Have a Clear Choice A New Era at Mack-Cali The Status Quo • Newly constituted independent Board of • A Board of Directors that prioritizes its Directors, mandated to create value for all own interests at shareholders’ expense: shareholders and provide deeply needed weak governance and u
Slide 80: Appendix: In Management's Own Words: A Compendium of Broken Promises
Appendix: In Management’s Own Words: A Compendium of Broken Promises 79
Slide 81: I'm a NAV guy quote
“I'm a NAV guy. That's why we talk NAV and we live NAV because end of the day [the] proof is in the pudding. You start with cash, you end with cash. But you're 100% correct. There's a reckoning coming in, I recognize it. We work toward that and no one's taking their job or their responsibilities lig
Slide 82: Proof is in the Pudding: Closing the NAV Discount #1 Priority
Proof is in the Pudding: Closing the NAV Discount #1 Priority 2015 “Our chief goal is to close the gap between what we perceive our NAV to be and what our share price is…We'll do whatever it takes to make NAV a reality as opposed to a possibility” – M. DeMarco Q2 Earnings “But we look at maximizing
Slide 83: Proof is in the Pudding: Closing the NAV Discount #1 Priority
Proof is in the Pudding: Closing the NAV Discount #1 Priority 2018 “I have always made a very clear function that my job was to increase NAV, the things to get this platform cleaned up and then harvest that NAV…I’m on a path to achieve that with very good clarity” – M. DeMarco Q1 2018 “I feel very c
Slide 84: The Proof: Discount To NAV Remains Robust
The Proof: Discount To NAV Remains Robust Despite significant transaction activity, CLI’s wide NAV discount continues unabated and NAV is DOWN During Mr. DeMarco’s tenure (a period of broad REIT appreciation), Mack-Cali’s large discount to NAV has widened(1) 0% Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar
Slide 85: Proof is in the Pudding #2: Leverage will Come Down
Proof is in the Pudding #2: Leverage will Come Down 2016 “Two, we are over-leveraged. We are working toward reducing our net debt to EBITDA ratio in 2016. We truly value financial flexibility and are aligned with you on this issue” – M. DeMarco Q4 2015 “We value financial flexibility and are working
Slide 86: Proof is in the Pudding #2: Leverage will Come Down
Proof is in the Pudding #2: Leverage will Come Down 2018 “leverage is going to come down” – M. DeMarco Q1 2018 “the important topic for us is leverage. It's going to come down. We're sticking with our balance sheet for easy repayment... We expect to have improved leverage in 2019” – M. DeMarco Q2 20
Slide 87: The Proof: Leverage Continues To Increase
The Proof: Leverage Continues To Increase Leverage has continued to increase(1) 12x 11.5x 11x 10x 9.7x 9.3x 9.3x CLIL Net Debt / EBITDA 9x 8x 7.7x 7.5x 7.1x 7x 6x 5x 4x 2014 2015 2016 2017 2018 2019 Q1 2020 (1) Mack-Cali quarterly reports 86
Slide 88: Proof is in the Pudding #3: Waterfront Occupancy will Improve
Proof is in the Pudding #3: Waterfront Occupancy will Improve Big talk, broken promises: Despite repeated promises of leasing on waterfront, vacancy has grown Date Occupancy What Management Said at the Time May 94% “We have someone looking at the space now who is going through the incentive process…
Slide 89: Bow Street
BOW STREET