A rendering of Mack-Cali Realty Corp.’s soon-to-be-upgraded Harborside complex in Jersey City — Courtesy: Mack-Cali
By Joshua Burd
Mack-Cali Realty Corp. has completed a set of leases with Whole Foods Market that will allow the grocer to open both a retail location and its new Northeast headquarters within the developer’s flagship Harborside complex in Jersey City.
The real estate investment trust announced this week that it has inked the long-rumored deals with Whole Foods, which is owned by Amazon. The high-end supermarket chain is now in line to open a 47,542-square-foot store, reportedly at Mack-Cali’s Harborside 4A building, while occupying 47,398 square feet of office space within the nearby Harborside 3 property.
The landlord highlighted the leases as part of its first-quarter earnings call on Thursday, which recapped the ongoing overhaul of the Harborside complex. The deals were among more than 114,000 square feet of activity within its waterfront portfolio during Q1, while the REIT also recorded about 84,000 square feet in transactions within its suburban assets.
The earnings call highlighted additional efforts under the REIT’s now four-year-old strategic plan, including efforts by its Roseland Residential Trust subsidiary to ramp up construction and consolidate ownership of its prime multifamily properties. Mack-Cali CEO Michael DeMarco also recapped the company’s efforts to reshape its commercial portfolio by selling lower-end office buildings and large flex campuses, including the recent $487.5 million sale of a 3.1 million-square portfolio in New York and Connecticut.
“We have started 2019 on solid footing, securing Whole Foods Market in both our retail and office space at our signature Harborside center as part of our waterfront strategy,” DeMarco said. “As we look ahead, our greatest opportunity and most valuable asset is our empty space and we fully intend to extract its value as we stabilize our office holdings and lease our newly developed multifamily properties.”
An Avison Young team of William E. McCaffrey, a principal in the firm’s New Jersey office, and Charlie Allen, a principal in the Oakland office, represented Whole Foods in the office lease.
DeMarco also addressed the ongoing proxy fight with an activist investor group led by Bow Street, a New York-based investment firm. The group, which owns about 4.5 percent of the REIT’s outstanding shares, on Wednesday nominated four directors to Mack-Cali’s board after unsuccessfully offering $2.4 billion for the company’s office portfolio earlier this year.
“We firmly believe these nominations are simply a means to an end, intended to advance Bow Street’s self-interests to acquire Mack-Cali’s office assets at an inadequate price,” DeMarco told analysts and investors on the call. “It’s worth noting that we met with the board and management and sought to avoid a costly and distracting proxy fight by proposing to add two of the Bow Street directors.
“Bow Street rejected those efforts to amicably resolve (the dispute), which we believe is very telling of their true objective,” he added. “We believe it’s clear that Bow Street had a single-minded focus of forcing a sale to the detriment of all other shareholders.”
Besides calling the offer “a grossly inadequate, unworkable and self-interested proposal,” DeMarco reiterated concerns about the viability of the residential REIT that would be left after being separated from the office portfolio. The deal would “would leave Mack-Cali stockholders with shares of a small, highly leveraged public company unlikely to achieve an attractive market valuation,” he said in an earlier statement late Wednesday.
During Thursday’s call, DeMarco urged investors to support Mack-Cali’s own slate of nominees ahead of the REIT’s annual meeting next month and rebuff the attempted takeover.
“We listened carefully and ran what I would honestly say is a thorough process,” he said. “They may not agree with the decision, but I stake my personal reputation on that statement.”