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Outgoing Mack-Cali Chairman Weighs Bid

By Alexandra Garfinkle

As Mack-Cali Realty Corp. (CLI) receives no shortage of public interest, chairman Bill Mack and his son, Richard, have been attempting to put together their own bid to take the REIT private, a source familiar with the situation said.

Mack, who is 80, is scheduled to age off of Mack-Cali’s board by the end of this summer, according to the company’s Thursday, Feb. 27 earnings call. CEO Michael DeMarco said on the call it was “extremely unlikely” Mack’s seat would be filled by an insider.

The Macks have retained Cushman & Wakefield Inc. and approached Deutsche Bank and other parties in an effort to attain debt and equity financing, the source said.

Another source said Deutsche Bank has not been officially contacted about a Mack-led bid, however.

Mack-Cali, the Macks and Deutsche Bank declined to comment. Cushman & Wakefield did not return a request for comment.

John W. Guinee, a managing director at Stifel, Nicolaus & Co., is skeptical of the validity of a potential bid by Mack, adding that he would have to team up with a big-name real estate player.

“Any bid for Mack-Cali by a current or prior Board member would require the [Mack-Cali] Board to conduct a full and fully disclosed marketing process,” he said. “[There’s] no chance that Bill Mack could take [Mack-Cali] private without a full and fully disclosed marketing process.”

Mack has been on the company’s board for more than 22 years, according to BoardEx, a sister company of The Deal. His son Richard is currently the CEO of both the Mack Real Estate Group, which has holdings in Brooklyn, and Claros Fund Management LLC, an investment firm.

The news comes some nine months after the Jersey City, N.J., company said it would review strategic alternatives and two months after it decided to sell its suburban office portfolio, which totals 6.6 million square feet. Mack-Cali in December announced as part of the determination it would sell office properties totaling 2.4 million square feet in Parsippany and Madison, N.J., to Onyx Equities LLC, Taconic Capital Advisors LP and Axonic Capital LLC for $288.5 million.

At least one prospective bidder has been unsatisfied with the company’s engagement as the review process has unfolded.

According to a Bloomberg report, Tom Rizk of Rizk Ventures LLC sent a letter to Mack-Cali’s board on Feb. 23, claiming he dropped a $1.8 billion bid for the REIT due to the company’s “[refusal] to engage.” Rizk, a former CEO of Mack-Cali, planned to pursue a deal with United Dominion Realty Trust Inc. (UDR), which has publicly acknowledged it was in talks with Rizk, but not Mack-Cali directly, through Feb. 7.

In a Friday response, Mack-Cali refuted Rizk’s assertions and alleged the suitor did not comply with requests for information needed to evaluate the offer, including financing and structuring details, as well as the identities of members of the bidding group.

Rizk isn’t the only non-insider bidder to show interest in Mack-Cali’s assets.

Since the company’s June annual meeting — in which insurgent investor Bow Street LLC won board seats for its four candidates —  four parties, besides Rizk, have reached out, the source told The Deal. The source also confirmed that numerous parties reached out as recently as two to three weeks ago to express interest in acquiring Mack-Cali.

The company owns office and multifamily properties in the Northeast, with a key focus along the Hudson River waterfront in New Jersey. The company is also the largest office landlord in New Jersey.

Goldman, Sachs & Co. advised a Mack-Cali committee of independent directors on the strategic review. Although the company disbanded the committee after December, Securities and Exchange Commission filings show a special committee is monitoring Mack-Cali’s strategic direction and considering any submitted offers.

Mack-Cali shares traded at $19.78 apiece on Tuesday morning and are down about 17% year-to-date.

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