Veris Residential, Inc. · NYSE:VRE
Veris Residential — Mack-Cali Realty — Citi Investor Conference March 2016
36 slides from Veris Residential's conference presentation, Mar 14, 2016
Slide 1: Mack-Cali Citi Investor Conference March 2016
_ap Mack-CALI Citi Investor Conference March 2016
Slide 2: Disclosure Regarding Forward-looking Statements
Disclosure Regarding Forward-looking Statements 3 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 statements can be identified by the use of words such as “may,” “will,” “plan
Slide 3: Agenda
Agenda Introduction & Leadership Team Investment Strategy Company Today Focus List Office Platform Roseland Residential Trust Portfolio Repositioning Financial Review Conclusion 4
Slide 4: Management Team Committed to Unlocking Value
Management Team Committed to Unlocking Value 5 Mitch Rudin CEO Mike DeMarco President Tony Krug CFO Gary Wagner General Counsel OFFICE Ricardo Cardoso CIO & EVP Chris DeLorenzo EVP of Leasing MULTI-FAMILY Marshall Tycher Chairman Andrew Marshall President and COO Leadership Team:
Slide 5: Investment Strategy
Investment Strategy 6 Management Team Committed to Unlocking Value Two class A platforms Capital program funded by multiple options: Selling non-core assets Expense savings Increased cash flow Incremental Leverage Disciplined capital allocation and balance sheet management Best in Class disclosure D
Slide 6: Company Today
Company Today 7 $4.6 billion REIT publicly traded on NYSE (“CLI”) 24.2 million sq. ft. of office in 30 submarkets Leased percentage for office 86.2% Substantial development opportunities for office 5,639 operating multi-family units, principally owned in joint ventures Apartment platform managed by
Slide 7: Focus List – Next Months
Focus List – Next 24 Months 8 Completed Staffing levels – reduced by 55 positions or $8M Cost of operations – reduced by $7.5M G&A expenses – reduced by $3M Extended credit facility and refinanced debt for savings – new 5-year term loan for $350M at 3.12%, closed in Jan ’16 First 12 – 18 Months (Bal
Slide 8: Reducing – Lower Net Debt to EBITDA Ratio
Reducing – Lower Net Debt to EBITDA Ratio 9 Multiple options to reduce Net Debt to EBITDA leverage ratio and reduce to a more conservative level. (a) 4Q 2015 Annualized EBITDA is calculated by taking 4Q 2015 EBITDA multiplied by 4. Ratio reflects Net Debt of $2,118,000 as of December 31, 2015. (b) A
Slide 9: Addressing – 2017 Lease Expirations
Addressing – 2017 Lease Expirations 10 2017 expirations total 3.6 million square feet (msf), or 18% of leased space Proactively engage significant tenants well in advance of expirations 1.4 million square feet does not expire until the fourth quarter 2017 Expect occupancy of approximately 89% at yea
Slide 10: Market Supportive of Our Plan
Market Supportive of Our Plan 11 Source: Bloomberg 3-7-2016 27.73% (7.00%) (25.00%) (15.00%) (5.00%) 5.00% 15.00% 25.00% 35.00% 45.00% 6/2/2015 3/4/2016 CLI vs FTSE NAREIT Index Stock Price Percentage Change Since 6 - 2 - 2015 CLI US Equity FNOFF Index CLI 6 - 2 - 15 $17.02 CLI 3 - 4 - 16 $21.74 FNO
Slide 11: Market Recognizing Relative Value
Market Recognizing Relative Value 12 Source: Bloomberg 3-7-2016 27.73% 11.72% (5.81%) (16.81%) 5.97% (30.00%) (25.00%) (20.00%) (15.00%) (10.00%) (5.00%) 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 6/2/2015 3/4/2016 CLI vs Suburban Office Peers Stock Price Percentage Change S
Slide 12: Market Recognizing Relative Value
Mar (5.00%) (10.00%) (15.00%) (20.00%) (25.00%) (30.00%) Source: Bloomberg 8-7-2018 ket Recognizing Relative Value MACICCALI CLI vs Suburban Office Peers Stock Price Percentage Change Since 6-2-2015 6/2/2015 3/4/2016
Slide 13: Economic Incentives and Programs
Economic Incentives and Programs 14 Grow NJ Provides job-based tax credits for job creation and retention Tax credits of $5,000 to $9,750 per job / per year, for up to 10 years for new jobs to the state Limited to specific “Qualified Incentive Areas” Urban Transit Hub municipalities (“UTH”) ‘Mega-pr
Slide 14: Current Portfolio
Current Portfolio 9.4 million sq. ft. of Core, 4.3 million sq. ft. of Waterfront, and 5.2 million sq. ft. of Flex Source: Company filings as of December 31, 2015 Core: Long-term hold properties in select suburban markets. Transit-based growth markets Waterfront: Office assets located on NJ Waterfron
Slide 15: Current Portfolio
Current Portfolio Mack-CAaLlI 9.4 million sq. ft. of Core 3 million sq. ft. of Waterfront, and 5.2 million sq. ft. of Flex Core: Squarefeet Percent sed seed Long-term hold properties in select suburban markets. = Transit-based growth markets cove 6s 9,401,105 8334490 88.7% Waterfront: Waterfront, 6
Slide 16: Roseland Residential Trust
Roseland Residential Trust 1 17 Integrated and scalable platform Will execute development, construction, financing, and property management Put together one of the best teams in the business Build out and monetize geographically desirable land portfolio Strategic repurposing of select Mack-Cali offi
Slide 17: Roseland Portfolio Well Positioned
Roseland Portfolio Well Positioned 18 Highest Revenue Per Home Lowest Average Age, Highest Transit Orientation 0 $500 $1,000 $1,500 $2,000 $2,500 Revenue per Home Equity Residential Post Properties Camden Essex UDR Avalon Bay Roseland Source: Public company filings
Slide 18: Multi-Family Portfolio Overview
Multi-Family Portfolio Overview 19 Roseland contributes significant value through the evolution of its development portfolio 2Q15 2016 2017 2018 (1) Includes 364 hotel keys. (2) We are actively exploring conversion alternatives to wholly owned or joint venture structures. Source: Roseland Supplement
Slide 19: Multi-Family Ownership Evolution
Multi-Family Ownership Evolution PORTFOLIO OWNERSHIP (UNITS) PORTFOLIO OWNERSHIP (CASH FLOW CONTRIBUTION ) 100% RRT will continue maximizing its ownership and economic participation on future communities while evaluating conversions of existing subordinated interests (for example, the January 5, 201
Slide 20: Portfolio Overview – In-Construction Assets
Portfolio Overview – In-Construction Assets 21 RRT has eight projects representing 2,204 apartments and 364 hotel keys in construction. We forecast approximately $387 million of value creation from these developments of which RRT’s share is approximately 80%. Value Creation Summary ($ in millions) P
Slide 21: Portfolio Overview – Repurposing Candidates
Portfolio Overview – Repurposing Candidates 22 RRT is actively repurposing select Mack‐Cali office holdings to residential use, with the first construction start in 4Q 2015 (Signature Place at Morris Plains) and two scheduled starts: Signature Place at Morris Plains, NJ Apts: 197 Started: 4Q 2015 Ba
Slide 22: Financial Highlights – 2016 Starts
Financial Highlights – 2016 Starts 23 Projected Predevelopment Communities Location Apartments Current Ownership Scheduled Start Costs MC Capital NOI YIELD PI South ‐ Building 11 Weehawken, NJ 295 50.00% Q1 2016 $117,620 $38,145 $7,578 6.44% Lofts at 40 Park Morristown, NJ 59 25.00% Q2 2016 17,924 3
Slide 23: Financial Highlights — 2016 Starts
Financial Highlights — 2016 Starts * As of December 31, 2015, RRT had a future development portfolio of approximately 11,286 apartments comprised = Predevelopment (1,906 apartments): Communities with likely starts through year-end 2016 * Future Developments (9,380 apartments): Roseland ownedi/contro
Slide 24: NJ Waterfront — A Long-Term Growth Opportunity
NJ Waterfront — A Long-Term Growth Opportunity To Create a True Live, Work, Play Neighborhood 25 Retail — Three contiguous blocks up to 200,000 sq. ft. Create a waterfront destination with spectacular Manhattan skyline views Add relevant retail, fitness, food concepts; and potential marina Estimated
Slide 25: Harborside Today
Harborside Today Retail Space of 100,000 sq. ft. 26
Slide 26: Proposed New Harborside
27 Proposed New Harborside Retail Space of 150,000 sq. ft.
Slide 27: Proposed New Harborside
Proposed New Harborside Retail Space of 150,000 sq. ft. Mace Can TTT
Slide 28: Select Financial Information
Select Financial Information 29 As of and for the quarter ended: December 31, 2015 Total Market Equity $2.4BN Total Market Capitalization $4.6BN Total Debt $2.2BN Sr. Unsecured Debt Ratings (Moody’s/S&P/Fitch) Baa3/BBB-/BB+ Debt-to-Undepreciated Assets 39.0% Interest Coverage 2.9x Fixed Charge Cover
Slide 29: Mack-Cali Has Operated as an Investment Grade Company
Source: Company filings as of and for the periods ended December 31st Mack-Cali Has Operated as an Investment Grade Company with Low Leverage and High Coverage Ratios 30 2.8x 3.2x 3.2x 2.9x 2.4x 2.9x 2.6x 3.1x 3.0x 2.6x 2.1x 2.4x 37.0% 33.6% 36.7% 39.9% 37.3% 39.0% 30.0% 32.0% 34.0% 36.0% 38.0% 40.0
Slide 30: Earnings Guidance Assumptions
Earnings Guidance Assumptions as of February 24, 2016 31 2016 Revised Guidance 2016 Initial Guidance Metric Assumption Range ($ in millions) Assumption Range ($ in millions) Funds from Operations (FFO) per share $2.00 to $2.10 $2.00 to $2.10 OFFICE PORTFOLIO Occupancy (% Leased) at YE-2016 88.0% to
Slide 31: Sources and Uses of Funds
Sources and Uses of Funds as of February 24, 2016 32 2016 Range ($ in millions) Sources of Funds FFO Net of Straight-Line Rent $180 - $200 Office Sales Net Proceeds 700 - 800 Net Proceeds from Roseland Residential Equity Raise 325 - 375 Total Sources $1,205 - $1,375 Uses of Funds Base Bldg CapEx $45
Slide 32: NAV Building Blocks Today
NAV Building Blocks Today 33 Source: Portfolio as of January 1, 2016 Current CAP RATE RANGE VALUE RANGE 2016 PROJECTED NOI LOW HIGH LOW HIGH COMMERCIAL NJ Waterfront 2016 Projected NOI $80.9 6.00% 6.50% $1,245 $1,348 NJ Waterfront 2017 Projected Income from Lease Up of Vacant Space 9.1 6.00% 6.50% 1
Slide 33: NAV Building Blocks Today
NJ Waterfront 2016 Projected NOI NJ Waterfront 2017 Projected Income from Lease Up of Vacant Space Flex Core Suburban Office Non-Core Office / Hotel Interests Land — Harborside Plaza 4 CIP —Wegman's ‘Commercial Land/ CIP TOTAL COMMERCIAL MULTI-FAMILY (Gross Value before Debt) Sa | GROSS ASSET VALUE
Slide 34: Definitions
Definitions 35 Average Revenue Per Home: Calculated as total apartment revenue for the year ended December 31, 2015, divided by the average percent occupied for the year ended December 31, 2015, divided by the number of units and divided by three. Percentage Leased: The percentage of units that are
Slide 35: Definitions
Definitions 36 Projected Stabilized NOI: Pro forma NOI for Lease-Up, In-Construction or Future Development communities upon achieving Project Stabilization. Joint Ventures: Joint ventures in which the Company invests capital alongside Joint Venture partners with contributions made in proportion to e
Slide 36: Definitions
Definitions Mack-CALI Projected Stabilized NOI: Pro forma NOI for Lease-Up, In-Construction or Future Development communities upon achieving Project Stabilization. Joint Ventures: Joint ventures in which the Company invests capital alongside Joint Venture partners with contributions made in proporti
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