Mack-Cali Realty Corp. has completed a series of lobby renovations at its Harborside complex in Jersey City, a key step in its $75 million overhaul of the flagship property.
By Joshua Burd
Mack-Cali Realty Corp. is pushing back against one of its former CEOs, who had sought to acquire the company but now claims its board had “no genuine intention” of exploring the deal.
The real estate investment trust on Friday released a statement responding to Thomas Rizk, the head of Rizk Ventures LLC, over his recent comments that Mack-Cali and its directors never seriously engaged him to discuss his recent acquisition proposal. Rizk made the claim in a Feb. 24 story by Bloomberg’s Gillian Tan, prompting a series of rebuttals by the REIT.
“As Mack-Cali’s CEO Michael J. DeMarco explained on the Company’s Q4 2019 earnings conference call held on February 27, 2020, Mack-Cali never refused to engage with Rizk Ventures regarding its acquisition proposal,” the company wrote in its Friday statement. “Rather, on several occasions, the Company requested certain information that was necessary for the Mack-Cali Board of Directors to evaluate the proposal. Such critical information was clearly identified in the Company’s February 5, 2020 letter to Rizk Ventures.
“Rizk Ventures never provided the requested information.”
Rizk, who led the REIT from 1997 to 1999, was also the CEO of Cali Realty Corp. before its merger with The Mack Co. and Patriot American Office Group. Published reports in mid-December said his current platform, Rizk Ventures, was exploring a potential takeover of Mack-Cali in partnership with UDR Inc.
DeMarco has said the Jersey City-based company, which has been transitioning away from its once-vast suburban office portfolio, was open to a potential sale. But in last week’s Bloomberg story, Rizk said he had ended his pursuit after being rebuffed in part by requests for additional information.
“We do so reluctantly, but we have no choice as it has become abundantly clear that the company is refusing to engage with us in any substantive way,” Rizk wrote in a Feb. 23 letter to Mack-Cali’s board, according to Bloomberg, while citing the REIT’s requests for additional information.
“We are left with the clear impression that the board has no genuine intention to even explore a sale of the company, and therefore crafted responses to create an appearance of attempting to engage with us while erecting arbitrary and non-commercial obstacles in an effort to justify its often expressed refusal to engage,” Rizk wrote, according to Bloomberg.
Mack-Cali on Friday released a letter that it had sent to Rizk on Feb. 5, which it said clearly identified the “critical information” that it was requesting, but that the would-be buyer had not supplied despite multiple attempts.
“Among other things, you did not specify a price or form of consideration, the amount of equity proposed to be funded by Rizk Ventures, and your equity financing sources,” Mack-Cali board member Irvin D. Reid wrote in the letter. “Moreover, despite the references to the “Buyer Group” in your letter, we have not received any confirmation that UDR is prepared to participate in a potential transaction, any information about the amount of equity expected to be contributed by UDR, or evidence that UDR is aware of the fact that your indication of interest describes UDR as a potential acquiror.”
Rizk Ventures also released two of its own letters, dated Dec. 6 and 13, in which it seemingly addressed Mack-Cali’s questions about its capability to structure and close the transaction. The firm closed the second letter by noting that “additional exchanges of letters are not efficient, and we therefore respectfully request a meeting with you and the Committee in order to discuss a path forward towards a successful transaction.”
With DeMarco at the helm, Mack-Cali has spent the past five years focused on urban, waterfront office buildings and ramping up multifamily development under its Roseland Residential Trust subsidiary. The company announced last spring that it was reviewing those efforts to reposition its portfolio, while exploring a potential sale of the business or any of its properties in the wake of an ongoing proxy fight with activist investors.
In December, the company announced that it has agreed to sell 2.4 million square feet of office space in Parsippany and Madison to a partnership of Onyx Equities LLC, Taconic Capital Advisors LP and Axonic Capital LLC. The $288.5 million transaction is the first step of Mack-Cali’s plan to sell its suburban office assets, as approved by its board on Dec. 17.
Mack-Cali will evaluate business plan, explore possible sale with new committee
