CLI
#Okay.
So I referenced 2 factors, right.
So I referenced organic growth within the marketplace that we are seeing within our own portfolio and active negotiations, and that was 100,000 square feet of these negotiations we're currently in.
It's approximately 100,000 square feet of net absorption from in-place tenants.
Okay, so that was the first figure, and then towards ---+ at the end of my statement, I spoke about overall negotiations we're in, right.
So this inclusive of the 100,000 I spoke about earlier, but this is taking into account new tenants as well.
So total footprint or total square footage would be about 700,000 square feet, and the resulting net absorption would be about 540,000 square feet.
Now, again, these are in negotiation.
This is not signed, but the idea of talking about this was to kind of juxtapose last year to this year.
<UNK>, it's Mike <UNK>.
We had a tour with, actually, AllianceBernstein, an extensive one.
We showed them some space.
They were interested.
They came back, and we've had conversations with them because they're actually a shareholder, so we see them at all the conferences.
It's really about moving their entire back-office processing out of 1345 Avenue of the Americas, which is a relatively expensive space, into Nashville.
We don't get a lot of processing here in Jersey City anymore.
That's the old school.
We get computer operations or tech.
So if you look at all the buildings and you look at the wires in the street, which has the best network, I've been told, in the country ---+ you have Goldman Sach's back office, but their trading operations in Jersey City.
Deutsche, Sumitomo, Bank of America.
In Newport, you would have (inaudible), JPMorgan, DTC, a couple of the other ---+ UBS. That's what you're finding.
So the number of tech workers, when you run the map, that are concentrated in the Jersey City market is off the hook.
I mean, it's a huge number.
I actually sit on a board with the woman who runs the wealth management division of JPMorgan, and she says they just expanded extensively in Jersey City for the third time in the last 4 years, and it's because of that tech worker, which they can recruit, attract and then retain.
Bank of America did the same thing to us about 3 years ago when they did the expansion at 101 Hudson.
So the back office label needs to be dropped.
It's really the tech part of it that we get.
The tech isn't the tech that you know of as Amazon, but it's the tech in the sense of the data networks that run all these financial institutions, which are crucial to them, and they want to be on the wires, and the best wire network in the world is in New York City, and it really runs through New Jersey because that's where it comes in from the ocean.
It comes in at Wall Township and runs its way up the turnpike.
We've grown Roseland from virtually nothing.
It'll be 3 years and a month from now that we had a dinner that <UNK> <UNK> hosted in front of a bunch of investors, which one of the opening questions is what was Roseland worth, and it went from a negative value of $2 to a positive value of maybe $3 or $4.
I argued $6 at the time, and now we're looking at getting close to $16.
So we've done a good job of creating NAV there, and we think there are still some things to go.
We have now filled out the portfolio.
The next move to go on the table is to trim Roseland, which we're starting to do, which is sell some of the older asset, as <UNK> laid out, repurpose the capital, and then we have a spectacular development pipeline, which, honestly, is probably too large for a company of that size, so we're going to have to think about how we capitalize it or whether it's actually within Mack-Cali.
And there's another question on the table, which I've always asked at each board meeting, is should Mack-Cali exist given the fact that investors look at New Jersey, and we've proven out that rents can rise, but is that a long-term prognosis that we can attract capital at.
I've always made it a very clear function that my job was to increase NAV to basically get this platform cleaned up, and then harvest that NAV either through having the market accept the pricing or basically find a way to basically get the shareholders their money.
That hasn't changed, and I think I'm on a path to achieve that with very good clarity.
I think it\
So it came from a John Guinee comment 2 calls ago about putting money out, which we commented that it was something we had announced since the beginning that we needed to invest in assets, that my predecessor hadn't done that.
That process is being completed probably in the next 30 days.
I scream and yell at the construction meeting every Monday, if you want to come by, about that, because it just takes time to get the last few items done.
But we've done all of the Red Bank market, the entire Metropark market.
We've done substantially half of the Short Hills market.
The rest we're going to do on some more minor things.
We've done a decent ---+ maybe 40% or 50% of what we own in Parsippany, all right, and this has been from lobbies to gyms to cafes to conference centers, and we're seeing rents basically go up around, as Nick pointed out, 14%, 15% over what we used to achieve, which is a relatively good payment, and we're getting better velocity.
That's being done.
In the Harborside market, we've dropped about $40 million to date, which is already completed.
That involved a couple of new restaurants, new seating.
We have 2 new lobbies.
We did the MEP package on the first floor to modernize it, so we can do the next round of retail off of that segment.
You have to actually do it in one thing, which we have a number of restaurant tours that we're negotiating with to bring in into the marketplace.
Well, the $75 million we referenced was substantially for Harborside 1, right.
That's a 600,000-some-odd square-foot building.
We're basically going to reskin it, bring it up to modern standards.
It sits at the foot of the path.
It'll be probably the best building in the marketplace from an amenities point of view and as a package, so it'll have new elevators, new bathrooms, new MEP, and a new skin, which is basically everything but the concrete.
That building was built with relatively good clear heights and good column widths, so it actually works well for us.
That's a project where we've been emptying the building out, and we're moving tenants into other parts of our complex.
We're getting that back, and we'll be able to do that.
The remainder is really going to be now more curating the space.
So we've been buying liquor licenses up for the last couple of years.
I'm proud to say we own just around 5% of the market, and we now have a number of tenants.
We have a new restaurant going in the bottom of Urby, we have 3 deals that we're looking to put in the bottom of Harborside, and so on and so forth, and that's really where the money goes in, and those spends, to be honest, are about $2 million to $3 million per restaurant, sometimes as low as $1.5 million, but assuming $2 million to $3 million as an average, and we probably have 4 or 5 of these to do, and then some other retailing, but that's really about it.
I would say that's a very generous number.
It could be a little less than that too.
Maybe $20 million or less would be the right number.
That would be done, by the way ---+ and that would be done over an 18-month period, because as much as I'd like to get things done tomorrow, it just doesn't work that way.
As my partner <UNK> has taught me, everything we do in the construction business is built by hand.
I think we'll be 100% retained, by the way, no moveouts.
As it stands today, based on the conversations we've had, 100% stay.
It's not a big number, as you know, but that's only really 2 tenants who make up the bulk, and we've had really good conversations with both of them.
Well, the 'burbs ---+ I was doing the waterfront.
That's what we're focused on.
And in the suburbs, we'll probably have the same retention ratio we've been having, which is about 70%, and you can take it back out from there.
Flex is usually higher.
Flex has been probably in the 75% range.
So we have Regus in the space already.
They have 2 operations in Jersey City.
They're also in Hoboken, at a competitor's building.
We've seen WeWork has come out for tours.
I had a conversation with them, as other people have had, and they look at the world and think that most of the people that are going to their locations in Lower Manhattan ---+ a lot of them are coming from the New Jersey waterfront community.
So if you live in Hoboken or Jersey City or Weehawken or West New York and you want to go to WeWork, you're getting on the ferry or the path and you're going over to Chelsea or Canal Street or all the other locations they have.
The question is whether or not they want to cannibalize their own business or grow it accordingly.
That's a conversation.
We also see a lot of other startups in that space who come in, and the big question, as you've always known, in that space is the amount of capital you put out, the rent you receive, and the fact that the guarantor is usually nonexistent, so we look at that.
We think it's a good use.
We think that that's actually worked out well with Regus.
We like Regus as a tenant here on the waterfront.
They get a good pop.
And we would also envision that we might see other people over time.
It's a case-by-case basis, right.
The thing that you have to learn in that business is it helps us in the following scenario.
We're not a very big ---+ we're not a small-tenant market in Jersey City, right.
Buildings are big; tenants are big.
They do very well at attracting guys who want to be in 5,000 square feet, who go inside their envelope of 75 or 60.
The problem my colleagues in the business have is, if you put them in, then all of a sudden the 5,000 doesn't come to you, it goes to WeWork or it goes to Workshare or whatever, so you have to be careful about how you're putting them in and then how the formula works.
Sometimes they want to do a revenue share, which I'm not a big fan of.
But as a concept, I mean, the time I've spent in their places, I like the WeWork and Regus concept.
I think friends of mine have used them, and they make sense in the marketplace.
And I saw something recently in a piece that was out there that talked about how even corporations are utilizing them now for startups, like Apple might have tenancy in a WeWork or Regus because they needed to have 10,000 square feet.
It was efficient for them, and they get started, they do it quickly, and the world has become a quick place.
So the answer is we're very open to them, and you might see something from us, but it's a case-by-case basis.
Thanks, Mike.
So, yes, the 664 cap rate is a forward 12 cash cap rate.
That is very close or almost on top of the in-place cash NOI.
The GAAP cap rate for this batch of sales is 6.9%, just about 7%.
And here I'd also like to highlight to everyone, on our remaining sales, because it is heavily skewed towards land and nonoperating office, we have less than $1 million of NOI on an annual basis left in those properties, so holding onto those properties is really not going to help us much.
I'd rather have the proceeds to pay down debt earlier.
So I'd just note that for everybody.
Yes.
No, all free and clear.
Like I said before, we don't have any office mortgages due until 2026.
So, <UNK>, it's Mike <UNK>.
So with the $232 million ---+ which is about, say, 55% ---+ in the first quarter, the 2 biggest pieces of the remaining $170 million is 650 from road, which is the remaining piece that we have in the Bergen County portfolio, which we have a deal signed, and the guy is going through due diligence.
We've sold assets to this individual and his affiliations before, so we feel pretty comfortable about that, and that should probably close in the third quarter.
We can make no guarantees.
It might slip into early fourth.
The other piece, that's the largest one, is the infamous Pearson site in Upper Saddle River, which is like a $44 million, $44.5 million deal that my colleague <UNK> has under contract to Toll Brothers.
It's a hard contract, full due diligence.
It needs to get certain county and local approvals, which they're at the very, very end of it, and that deal should basically close ---+ it could close as early as next month, or it could close in 5 months, but it's going to close.
That's one pretty much that's baked, I would say, very fully.
Those make up the majority of that number.
The last $60 million or $70 million ---+ if it's not that number, then it's $80 million ---+ is in about another 10 deals that are relatively minor, and we're in various stages of negotiation with people, some hard, some deals are signed on for, and some deals still have due diligence to do.
We feel very comfortable, given how much we've accomplished over the last 2-plus years in this process, this is all going to get done.
It's also built into the numbers already.
This is no ---+ there's nothing new in this number.
Mike, I'd just point you to the roll-forward schedule.
We had between $0.17 and $0.11 of year-over-year dilution from the dispositions, and it'll be skewed more towards the $0.17 than the $0.11 because we're selling the income producing upfront.
In the rest of our guidance, the interest expense still falls in between.
As always, we thank everyone for joining us.
We know time is valuable.
We appreciate it.
Have a great day.
