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. will form a committee of independent directors to review the company’s 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.
The real estate investment trust announced the move on Wednesday, seeking to “ensure that all available alternatives for continuing stockholder value creation are carefully and thoughtfully considered.” The company’s board expects to form the strategic review committee after its upcoming annual shareholder meeting, which is scheduled for June 12, and then await a recommendation from the panel as to its plan going forward.
Mack-Cali has moved in recent years to right-size its office portfolio to buildings on the Hudson waterfront and in high-end suburban submarkets, while ramping up its pipeline of luxury apartments through its Roseland Residential Trust division. The new committee, which will include four independent directors, will help it determine whether it should continue with that strategy, consider a sale of the company or any of its assets or take other action.
The panel will feature at least two new independent directors not currently serving on the board, the Jersey City-based company said.
Meantime, expected to join the board after the annual meeting are MaryAnne Gilmartin and Frederic Cumenal, who are among the nominees supported by Bow Street Special Opportunities Fund XV LP. Bow Street, which is based in New York, is leading the investor group that unsuccessfully offered $2.4 billion for the company’s office portfolio earlier this year.
The group, which owns about 4.5 percent of the REIT’s outstanding shares, has since clashed with Mack-Cali’s leadership since and has nominated a total of four directors in an attempt to take over the board. The REIT has said that it has attempted to reach “an amicable resolution” to the bitter proxy fight, including the establishment of an independent committee with two Bow Street nominees, but said the two parties have reached a stalemate.
“The initiatives announced today are the result of an ongoing, constructive dialogue between the Company and its stockholders,” said William L. Mack, the REIT’s board chairman. “Contrary to the baseless assertions made by Bow Street in the course of its self-serving campaign, the Mack-Cali board of directors remains open-minded and is not opposed to any action that is in the best interests of our stockholders.
“While the board and management team remain focused on the execution of the company’s business plan and completion of its strategic transformation, the formation of a new committee of independent directors to review the company’s strategic direction will ensure that all available opportunities for maximizing stockholder value are thoroughly considered,” he added. “The board is also committed to best practices of corporate governance and will continue the comprehensive board refreshment process that is currently underway, with at least two of our long-standing directors to be replaced by two additional new independent directors in 2020.”
Mack-Cali has said that Bow Street’s $2.4 billion offer earlier this year was “a grossly inadequate, unworkable and self-interested proposal” that undervalued its office portfolio and threatened the viability of its residential business. But the company has nonetheless invited Gilmartin and Cumenal to join its board and said it intends to appoint at least one of them to the new strategic review committee.
“It is unfortunate that the company has been unable to reach a constructive resolution of Bow Street’s lengthy and distracting proxy contest,” Mack-Cali CEO Michael DeMarco said. “However, the initiatives announced today will allow the company to be responsive to the wishes of our stockholders without agreeing to Bow Street’s unreasonable demands, which would be detrimental to all other Mack-Cali stockholders.”