Index
                         
                         
2Q 2015 Supplemental
                               
                               
   
Category
 
Page
                     
   
Roseland Overview
 
3
                     
   
Residential Portfolio Overview
 
4
                     
   
Operating Communities (Stabilized)
 
5
                     
   
Operating Communities (Lease-Up)
 
6
                     
   
In-Construction Communities
 
7
                     
   
Future Development Communities
 
8 - 9
                     
   
Capitalization Highlights - Debt and Equity
 
10 - 11
                     
   
Operating Communities - Repositioning Details
 
12
                     
   
Appendix
 
13
                     
                               
                               
                               
 
 
 
 
                               
   
This Supplemental Operating and Financial Data is not an offer to sell or solicitation to buy any securities of the Company. Any offers to sell or solicitations of the Company shall be made by means of a prospectus. The information in this Supplemental Package must be read in conjunction with, and is modified in its entirety by, the Quarterly on Form 10-Q (the “10-Q”) filed by the Company for the same period with the Securities and Exchange Commission (the “SEC”) and all of the Company’s other public filings with the SEC (the “Public Filings”). In particular, the financial information contained herein is subject to and qualified by reference to the financial statements contained in the 10-Q, the footnotes thereto and the limitations set forth therein. Investors may not rely on the Supplemental Package without reference to the 10-Q and the Public Filings. Any investors’ receipt of, or access to, the information contained herein is subject to this qualification.
 

 

 
1

 


 
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

We consider portions of this information to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act. Such forward-looking statements relate to, without limitation, our future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “potential,” “projected,” “should,” “expect,” “anticipate,” “estimate,” “continue” or comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.
 
Among the factors about which the Company has made assumptions are:
 
   
· 
risks and uncertainties affecting the general economic climate and conditions, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants and residents;
   
· 
the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;
   
· 
the extent of any tenant bankruptcies or of any early lease terminations;
   
· 
our ability to lease or re-lease space at current or anticipated rents;
   
· 
changes in the supply of and demand for our properties;
   
· 
changes in interest rate levels and volatility in the securities markets;
   
· 
our ability to complete construction and development activities on time and within budget, including without limitation obtaining regulatory permits and the availability and cost of materials, labor and equipment;
   
· 
forward-looking financial and operational information, including information relating to future development projects, potential acquisitions or dispositions, and projected revenue and income;
   
· 
changes in operating costs;
   
· 
our ability to obtain adequate insurance, including coverage for terrorist acts;
   
· 
our credit worthiness and the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;
   
· 
changes in governmental regulation, tax rates and similar matters; and
   
· 
other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants or residents will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.

 
For further information on factors which could impact us and the statements contained herein, see Item 1A: Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2014. We assume no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

 
2

 


 

 
                                                       
Roseland Overview
                                               
                                             
2Q 2015 Supplemental
 
 
                                                       
                                                       
Roseland, the Residential Division of Mack-Cali Realty Corporation (“MCRC” or the “Company”), serves as the Company’s platform for the strategic transformation of its real estate holdings into the multi-family sector.  As reflected through the various components of the Roseland portfolio highlighted in this new Supplemental, the Company forecasts short- and long-term value creation through its multi-family investment.  This distinct Supplemental was conceived in mid-June upon installation of new Company leadership, and we anticipate further enhancements and transparency over the coming quarters to allow for full appreciation of the Company’s multi-family expansion.
 
                                                       
                                                       
Roseland’s exceptional track record and proven commitment to excellence has established it as one of the premier residential and mixed-use developers in the Northeast.  Roseland has an industry leading reputation for successful and profitable conception, execution and management of Class A residential developments.  Roseland’s entrepreneurial owner/developer approach is hands on from project conception to operations incorporating all responsibilities of development, construction, financing, marketing, leasing and on-going property management.
 
                                                       
                                                       
Roseland, a full-service real estate company, has a scalable and integrated business platform overseeing operating and in-construction assets, a geographically desirable land portfolio (much of which benefits from historical low, below market land bases) and sourcing of new sites from both strategic Repurposing of MCRC’s office holdings (as further described herein) and new development and acquisition opportunities.  We envision continuous annual production from Roseland’s owned/controlled land inventory, thereby generating ongoing value creation and cash flow growth from the Company’s Residential Division.
 
                                                       
                                                       
Roseland Management Services, the property management division of Roseland, is a best-in class manager with a portfolio of approximately 10,100 apartments under management including properties owned by Roseland as well as third party, institutionally owned assets on a fee-management basis (approximately 4,500).  Roseland Management Services’ active presence in the Washington, DC to Boston corridor provides invaluable market-based contributions as Roseland evaluates and develops new opportunities.
 
                                                       
                                                       
Roseland executive leadership, a cohesive unit since 2003, has an average experience of 17 years at Roseland and 26 years in the industry.
     
                                                       
     
·     Marshall Tycher
 
President
                             
     
·     Andrew Marshall
 
Executive Vice President, Chief Operating Officer
                           
     
·     Ivan Baron
 
Executive Vice President, Chief Legal Counsel
                           
     
·     Bob Cappy
 
Executive Vice President, Chief Financial Officer
                           
     
·     Brenda Cioce
 
President, Roseland Management Services
                           
     
·     Gabriel Shiff
 
Executive Vice President, Finance
                           

 

 

 
3

 


 
                                                       
Residential Portfolio Overview
                                                     
                                         
2Q 2015 Supplemental
 
Overview
                                                     
As of June 30, 2015, Roseland had a current Residential Portfolio, excluding communities under third party management contracts, comprised of:
                                         
                                                       
 
-  Operating & Lease-Up Communities:
   
5,644 apartments
                                 
 
-  In-Construction Communities:
   
1,182 apartments
                                 
 
-  Future Development Communities:
   
9,042 apartments
                                 
                                                       
Through continuous construction production from its Future Development portfolio, the Company envisions cash flow and value creation growth via expansion of its Operating and Lease-Up communities from 5,644 apartments to 9,082 apartments through year-end 2017 (61% increase).  Further, at year-end 2017 we project 2,620 apartments will be in construction, with over 4,000 apartment development opportunities available for ongoing growth.
         
                                                       
                                                       
 
 
 
 
                                                       
                                                       
Note A:  The Company is evaluating alternatives to increase its ownership and cash flow participation throughout the portfolio.
                           
Note B:  The Company is committed to expanding its current Residential Portfolio via strategic acquisitions and Repurposing activities from its office holdings.
                 
                                                       

 
 
 
4

 
 
 
 
                                   
Operating Communities (Stabilized)
                               
                             
2Q 2015 Supplemental
                                   
As of June 30, 2015, the Company held interests in Operating Communities totaling 4,669 apartments, some of which are currently undergoing strategic Repositioning.  The initial Roseland portfolio investment included multiple subordinated joint ventures in which Roseland was the developer and received a promoted interest in excess of a hurdle rate.  Due to the increase of rental income, the embedded value of these interest has increased substantially.  For example, in 2Q-2015 we sold our subordinated interest in Morristown Train Station for approximately $6.4 million on a $2.2 million book basis, producing a 2.9x multiple.  We believe that over the next six to eight quarters we will favorably restructure our ownership or exit these interests.
                                   
               
Operating Highlights
                     
Average
Average
         
               
Percentage
Percentage
 
Revenue
Revenue
         
       
Apartment
Rentable
Avg.
Year
Leased
Leased
 
Per Home
Per Home
 
NOI
NOI
 
NOI
Residential
Location
Ownership
 
Homes
SF
Size
Built
Q2 2015
Q1 2015
 
Q2 2015
Q1 2015
 
Q2 2015
Q1 2015
 
YTD
                                   
Consolidated
                                 
Alterra I (1)
Revere, MA
100.00%
 
310
289,287
933
2004
96.8%
97.4%
 
$                    1,717 
$                    1,668 
 
$                       822 
$                       797 
 
$              1,619 
Alterra IB (1)
Revere, MA
100.00%
 
412
373,852
907
2008
97.3%
96.4%
 
1,704
1,672
 
1,115
1,136
 
2,250
Park Square
Rahway, NJ
100.00%
 
159
184,957
1,163
2009
98.1%
98.1%
 
2,130
2,077
 
510
484
 
994
Richmond Court (1)
New Brunswick, NJ
100.00%
 
82
61,635
752
1995
100.0%
100.0%
 
1,606
1,628
 
209
186
 
395
Riverwatch Commons (1)
New Brunswick, NJ
100.00%
 
118
86,217
731
1997
98.3%
99.2%
 
1,671
1,649
 
293
289
 
582
Andover (1)
Andover, MA
100.00%
 
220
178,101
810
1989
98.6%
96.8%
 
1,373
1,418
 
387
378
 
765
Consolidated
 
100.00%
 
1,301
1,174,049
902
 
97.8%
97.4%
 
$                    1,694 
$                    1,673 
 
$                    3,336 
$                    3,270 
 
$              6,605 
                                   
Participatory Joint Ventures
                                 
Crystal House (1)(2)
Arlington, VA
25.00%
 
798
740,941
928
1962
94.0%
97.2%
 
$                    1,781 
$                    1,774 
 
$                    2,578 
$                    2,473 
 
$              5,051 
Participatory Joint Ventures
 
25.00%
 
798
740,941
928
 
94.0%
97.2%
 
$                    1,781 
$                    1,774 
 
$                    2,578 
$                    2,473 
 
$              5,051 
                                   
Subordinated Joint Ventures
                                 
Marbella
Jersey City, NJ
24.27%
(4)
412
369,515
897
2003
99.5%
99.3%
 
$2,965
$2,915
 
$2,382
$2,373
 
$4,755
Monaco
Jersey City, NJ
15.00%
(4)
523
475,742
910
2011
98.3%
98.5%
 
3,305
3,249
 
3,453
3,381
 
6,834
RiversEdge at Port Imperial
Weehawken, NJ
50.00%
(4)
236
214,963
911
2009
97.0%
97.0%
 
3,017
3,040
 
1,025
1,173
 
2,198
RiverTrace
Weehawken, NJ
25.00%
(4)
316
295,767
936
2014
98.7%
98.7%
 
2,924
2,893
 
1,575
1,699
 
3,274
The Estuary
Weehawken, NJ
7.50%
(4)
582
530,587
912
2014
98.6%
94.0%
 
2,907
3,004
 
2,989
2,251
 
5,240
Metropolitan at 40 Park
Morristown, NJ
12.50%
(4)
130
124,237
956
2010
97.7%
94.6%
 
3,262
3,222
 
687
680
 
1,367
The Chase at Overlook Ridge
Malden, MA
50.00%
(4)
371
337,060
909
2014
98.9%
96.8%
 
1,825
1,839
 
1,152
1,032
 
2,184
Subordinated Joint Ventures
 
24.16%
 
2,570
2,347,871
914
 
98.5%
97.1%
 
$                    2,871 
$                    2,872 
 
$                  13,263 
$                  12,589 
 
$            25,852 
                                   
Total Operating Communities - Residential (3)
45.43%
 
4,669
4,262,861
913
2003
97.6%
97.2%
 
$                    2,357 
$                    2,350 
 
$                  19,177 
$                  18,332 
 
$            37,508 
                                   
Commercial
     
Parking
                         
       
Spaces
Retail SF
                       
Port Imperial Garage I
Weehawken, NJ
43.75%
 
800
   
2013
NA
NA
       
$506
$413
 
$919
Port Imperial Retail I
Weehawken, NJ
43.75%
   
16,736
 
2013
52.0%
52.0%
       
(26)
(26)
 
(52)
Shops at 40 Park
Morristown, NJ
12.50%
   
50,973
 
2010
60.4%
60.4%
       
205
187
 
392
Riverwalk at Port Imperial
West New York, NJ
20.00%
   
30,745
 
2008
64.0%
64.0%
       
156
157
 
313
Total Operating Communities - Commercial
20.15%
 
800
98,454
   
61.8%
61.8%
 
NA
NA
 
$                       841 
$                       731 
 
$              1,572 
                                   
(1) Assets targeted for or undergoing repositioning.  Additional information on Repositioning Communities can be found on Page 12.
               
(2) Unit count excludes 30 apartments permanently offline for renovation.  Percentage Leased decreased as a result of an additional 69 offline apartments commencing Repositioning in 2Q.
                 
(3) Excludes approximately 45,000 SF of ground floor retail.
                               
(4) Ownership represents Company participation after satisfaction of Priority Capital, as detailed on Page 10.
                     
                                   
See appendix for select financial definitions.
                                 
 
 
 
5

 
 

 
 
                                     
Operating Communities (Lease-Up)
                                 
                               
2Q 2015 Supplemental
As of June 30, 2015, the Company held interests in four communities currently undergoing lease-up, totaling 975 apartments with initial stabilization dates from Q3 2015 to Q2 2016.
                                     
                           
Operating Highlights
                           
Percentage
Percentage
 
Projected
Projected
       
Apartment
Rentable
Avg.
 
Total
 
Initial
Project
Project
 
Leased
Leased
 
Stabilized
Stabilized
Community
Location
Ownership
 
Homes
SF
Size
 
Costs
 
Occupancy
Completion
Stabilization
 
Q2 2015
Q1 2015
(4)
NOI
Yield
                                     
Participatory Joint Ventures
                                   
701 2nd Street, NE
Washington, DC
50.00%
 
378
290,348
768
 
$         194,357 
 
Q1 2015
Q4 2015
Q2 2016
 
40.5%
7.1%
 
$           11,400 
5.87%
RiverPark at Harrison
Harrison, NJ
36.00%
(2)
141
125,498
890
 
27,643
 
Q4 2014
Q2 2015
Q3 2015
 
99.3%
97.2%
 
1,900
6.87%
Participatory Joint Ventures
 
46.20%
 
519
415,846
801
 
$         222,000 
         
56.5%
31.6%
 
$           13,300 
5.99%
                                     
Subordinated Joint Ventures
                                   
Portside at Pier One - 7
East Boston, MA
38.25%
(3)
176
156,693
890
 
$           66,307 
 
Q4 2014
Q2 2015
Q3 2015
 
93.9%
54.7%
 
$             4,300 
6.48%
RiverParc at Port Imperial
Weehawken, NJ
20.00%
(3)
280
255,828
914
 
96,400
 
Q1 2015
Q3 2015
Q1 2016
 
53.9%
14.3%
 
6,700
6.95%
Subordinated Joint Ventures
 
27.04%
 
456
412,521
905
 
$         162,707 
         
69.3%
29.9%
 
$           11,000 
6.76%
                                     
Total Lease-Up Communities (1)
 
37.24%
 
975
828,367
850
 
$         384,707 
         
62.5%
30.8%
 
$           24,300 
6.32%
                                     
                           
Represents 309 units of  initial lease-up success from recently completed inventory
     
Value Creation Summary
                                   
                                     
Projected Stabilized NOI
 
$            24,300 
                               
Average - Projected Stabilized Yield
6.32%
                               
Average - Stabilized Cap Rate
4.66%
                               
                                     
Projected Asset Valuation
 
$          521,172 
                               
Less: Total Costs
 
(384,707)
                               
Projected Value Creation
 
$          136,465 
                               
Projected Development Margin
 
35%
                               
                                     
Company Share of Value Creation ($)
$            40,961 
                               
Company Share of Value Creation (%)
30%
                               
                                     
Company Capital Requirement - Total
$            49,760 
                               
Company Capital Requirement - Remaining
$0
                               
                                     
(1) Excludes approximately 28,800 SF of ground floor retail.
                               
(2) Subsequent to quarter-end, RiverPark at Harrison was refinanced resulting in an ownership buy-up to 45% as well as a cash distribution of approximately $1.7 million.
           
(3) Ownership represents Company participation after satisfaction of Preferred Capital, as detailed on Page 10.
                   
(4) Percentage Leased of Lease-Up communities represents quarter-end levels.
                           
                                     
See appendix for select financial definitions.
                                   

 
 
 
6

 
 
 
 
                                         
In-Construction Communities
                                   
                                 
2Q 2015 Supplemental
                                         
As of June 30, 2015, the company had four In-Construction Communities representing 1,182 apartments with lease-up commencement dates from Q4 2015 to Q4 2016.
       
                                         
             
Project Capitalization - Total
 
Capital as of 2Q 2015
 
Development Schedule
     
                   
Third
               
Projected
Projected
         
Apartment
 
Total
 
MCRC
Party
 
Total
MCRC
   
Initial
Project
 
Stabilized
Stabilized
Community
 
Location
 
Ownership
Homes
 
Costs
Debt
Capital
Capital
 
Costs
Capital
 
Start
Occupancy
Stabilization
 
NOI
Yield
                                         
Consolidated
                                       
Eastchester (Tuckahoe)
 
Eastchester, NY
 
76.25%
108
 
$           49,950 
$           28,750 
$          20,941 
$              259 
 
$           18,431 
$           12,706 
 
Q1 2014
Q1 2016
Q1 2017
 
$            3,300 
6.61%
Consolidated
     
76.25%
108
 
$           49,950 
$           28,750 
$          20,941 
$              259 
 
$           18,431 
$           12,706 
         
$            3,300 
6.61%
                                         
Participatory Joint Ventures
                                   
Marbella South (M2)
 
Jersey City, NJ
 
24.27%
311
 
$         132,100 
$           77,400 
$          13,271 
$         41,429 
 
$           95,244 
$             9,745 
 
Q3 2013
Q4 2015
Q4 2016
 
$            8,470 
6.41%
URL® Harborside - I
 
Jersey City, NJ
 
85.00%
763
 
320,305
192,000
108,889
19,416
 
128,375
91,522
 
Q4 2013
Q4 2016
Q3 2018
 
19,500
6.09%
Participatory Joint Ventures
     
67.41%
1,074
 
$         452,405 
$         269,400 
$        122,160 
$         60,845 
 
$         223,619 
$         101,267 
         
$          27,970 
6.18%
                                         
Commercial
                                       
Port Imperial Garage II
 
Weehawken, NJ
 
100.00%
 -
 
$           31,200 
$                     - 
$          31,200 
$                   - 
 
$           18,848 
$           16,550 
 
Q3 2014
Q3 2015
N/A
 
$            1,975 
6.33%
Commercial
     
100.00%
 -
 
$           31,200 
$                     - 
$          31,200 
$                   - 
 
$           18,848 
$           16,550 
         
$            1,975 
6.33%
                                         
Total In-Construction Communities
   
1,182
 
$         533,555 
$         298,150 
$        174,301 
$         61,104 
 
$         260,898 
$         130,523 
         
$          33,245 
6.23%
                                         
Value Creation Summary (Residential)
                                       
                                         
Projected Stabilized NOI
   
$31,270
                             
Average - Projected Stabilized Yield
   
6.22%
                             
Average - Stabilized Cap Rate
   
4.75%
                             
                                         
Projected Asset Valuation
       
$658,316
                             
Less: Total Costs
       
(502,355)
                             
Projected Value Creation
       
$155,961
                             
Projected Development Margin
   
31%
                             
                                         
Company Share of Value Creation ($)
   
$106,399
 
An increase in participation as compared to Roseland's historic pattern.
             
Company Share of Value Creation (%)
   
68%
 
The Company envisions comparable or enhanced participation in future value creation activities.
       
                                         
Company Capital Requirement - Total
   
$174,301
                             
Company Capital Requirement - Remaining
   
$43,778
                             
                                         
See appendix for select financial definitions.
                               

 
 
7

 

 
                               
Future Development Communities
                           
                     
2Q 2015 Supplemental
 
 
                               
The Company anticipates additional value creation from construction production of its Land Inventory, all of which is owned or controlled by the Company.
 
                               
Predevelopment Communities
                           
As of June 30, 2015, the Company owned 10 Predevelopment Communities aggregating 2,979 apartments and hotel keys that have forecasted construction starts through year-end 2016.
   
                               
         
MCRC
Anticipated
                 
     
Apartment
 
Current
Construction
 
Approved /
 
Projected
         
Community
 
Location
Homes
 
Ownership
Start
 
Entitled
 
Costs
   
Notes
   
Chase II
 
Malden, MA
290
 
100.00%
Q3 2015
 
fully
 
$                     73,000 
   
(1)
   
Worcester
 
Worcester, MA
365
 
100.00%
Q3 2015
 
fully
 
91,400
         
PI South - 4/5 Hotel
 
Weehawken, NJ
364
 
50.00%
Q3 2015
 
fully
 
128,900
   
(2)
   
Conshohocken
 
Conshohocken, PA
294
 
100.00%
Q4 2015
 
fully
 
79,800
         
PI South - Building 11
 
Weehawken, NJ
296
 
50.00%
Q4 2015
 
fully
 
110,000
         
Lofts at 40 Park
 
Morristown, NJ
59
 
25.00%
Q4 2015
 
partial
 
18,000
         
Freehold
 
Freehold, NJ
400
 
100.00%
Q1 2016
 
partial
 
95,000
   
(3)
   
Portside 5/6
 
East Boston, MA
296
 
85.00%
Q1 2016
 
fully
 
110,000
   
(4)
   
PI North - Building C
 
West New York, NJ
363
 
20.00%
Q3 2016
 
partial
 
157,000
         
Crystal House - III
 
Arlington, VA
252
 
50.00%
Q3 2016
 
fully
 
87,000
         
Predevelopment Communities
   
2,979
           
$                   950,100 
         
                               
Value Creation Summary
                             
Projected Average Yield
                 
6.40%
         
Projected NOI
                 
$                     60,806 
         
                               
Approximate Gross Value @ 5.00% Cap
               
$                1,216,128 
         
Less:  Projected Costs
                 
(950,100)
         
Net Value Creation
                 
$                   266,028 
         
                               
Repurposing Communities
                             
The Company defines Repurposing Communities as commercial holdings of the Company which have been targeted for re-zoning from their existing office to new multi-family use and have a likelihood of achieving desired re-zoning and project approvals.  As of June 30, 2015, the Company had three active Repurposing Communities aggregating 595 potential apartments.  Further, the Company has ongoing municipal negotiations for additional residential approvals and is evaluating numerous MCRC office holdings for Repurposing potential.
         
                               
         
MCRC
Anticipated
                 
     
Apartment
 
Current
Construction
 
Approved /
 
Projected
         
Community
 
Location
Homes
 
Ownership
Start
 
Entitled
 
Costs
         
250 Johnson Road
 
Morris Plains, NJ
188
 
100.00%
Q3 2015
 
fully
 
$                     54,800 
         
150 Monument Road
 
Bala Cynwyd, PA
207
 
100.00%
Q1 2016
 
partial
 
54,700
         
233 Canoe Brook Road
 
Short Hills, NJ
200
 
100.00%
Q2 2016
 
partial
 
63,000
   
(5)
   
Repurposing Communities
   
595
           
$                   172,500 
         
                               
Value Creation Summary
                             
Projected Average Yield
                 
6.75%
         
Projected NOI
                 
$                     11,644 
         
                               
Approximate Gross Value @ 5.00% Cap
               
$                   232,875 
         
Less:  Projected Costs
                 
(172,500)
         
Net Value Creation
                 
$                     60,375 
         
 
 
 
 
8

 
 

 
                               
                                 
Future Development Communities (cont.)
                         
                   
2Q 2015 Supplemental
 
                               
Future Developments
         
Anticipated
                 
     
Apartment
 
Current
Construction
 
Approved /
             
Community
 
Location
Homes
 
Ownership
Start
 
Entitled
       
Notes
   
Liberty Landing Phase I
 
Jersey City, NJ
265
 
50.00%
2017
 
partial
             
PI North - Building J
 
West New York, NJ
141
 
20.00%
2017
 
partial
             
PI North - Building I
 
West New York, NJ
224
 
20.00%
2017
 
partial
             
San Remo
 
Jersey City, NJ
250
 
41.67%
2017
 
partial
             
Portside 1-4
 
East Boston, MA
160
 
85.00%
2017
 
none
             
Overlook IIIC
 
Malden, MA
252
 
100.00%
2017
 
partial
             
PI South - Building 8/9
 
Weehawken, NJ
275
 
50.00%
2017
 
partial
             
PI North - Riverbend 6
 
West New York, NJ
471
 
20.00%
Beyond
 
partial
             
PI South - Building 16
 
Weehawken, NJ
131
 
50.00%
Beyond
 
partial
             
PI South - Building 2
 
Weehawken, NJ
200
 
50.00%
Beyond
 
partial
             
PI South - Park Parcel
 
Weehawken, NJ
224
 
50.00%
Beyond
 
partial
             
PI South - Office 1/3
 
Weehawken, NJ
N/A
 
50.00%
Beyond
 
partial
             
Overlook IIIA
 
Malden, MA
445
 
100.00%
Beyond
 
partial
             
Overlook IV
 
Malden, MA
45
 
100.00%
Beyond
 
partial
             
URL® Harborside - Future
 
Jersey City, NJ
1,500
 
100.00%
Beyond
 
partial
             
Crystal House - Future
 
Arlington, VA
300
 
50.00%
Beyond
 
partial
             
Liberty Landing
 
Jersey City, NJ
585
 
50.00%
Beyond
 
partial
             
Future Developments
   
5,468
                       
                               
                               
Total Development Communities - Future
   
9,042
                       
                               
Notes:
                             
(1) The Chase II project represents two development parcels: IIB and IIID.
               
(2) Number of units reflects programmed hotel keys.
                       
(3) The Company has a signed agreement to acquire this land, subject to certain conditions.                        
(4) Prudential has an option to participate in East Boston Parcels 5 and 6, under similar terms as Parcel 7.
                     
(5) Target approvals will likely also include approximately 225 hotel keys.
                       
 
                       

 

 
9

 


 
                           
Capitalization Highlights
                     
                   
2Q 2015 Supplemental
                           
     
Project Debt
 
Priority Capital Balances (1)
   
                   
Third
     
       
Outstanding
Maximum
Maturity
Interest
 
MCRC
Party
Return
   
   
Ownership
 
Balance
Balance
Date
Rate
 
Capital
Capital
Rate
 
Note
Operating Communities
                         
                           
Consolidated Communities
                         
Park Square
 
100.00%
 
$              27,500 
$              27,500 
4/10/2019
L + 1.75%
           
Consolidated Communities
     
$              27,500 
$              27,500 
     
$                    - 
$                        - 
     
                           
Participatory Joint Ventures
                         
Crystal House
 
25.00%
 
$            165,000 
$            165,000 
4/1/2020
3.17%
 
$           25,870 
$              77,611 
   
(2)
Participatory Joint Ventures
     
$            165,000 
$            165,000 
     
$           25,870 
$              77,611 
     
                           
Subordinated Joint Ventures
                         
Marbella
 
24.27%
 
$              95,000 
$              95,000 
5/1/2018
4.99%
 
$                125 
$                7,567 
9.50%
 
(3) *
Monaco
 
15.00%
 
165,000
165,000
2/1/2021
4.19%
 
-
81,082
9.00%
 
*
RiversEdge at Port Imperial
 
50.00%
 
57,500
57,500
9/1/2020
4.32%
 
-
42,188
9.00%
 
*
RiverTrace
 
25.00%
 
79,380
79,380
7/15/2021
6.00%
 
-
45,575
7.75%
 
*
The Estuary
 
7.50%
 
210,000
210,000
3/1/2030
4.00%
 
-
23,361
8.50%
 
*
Metropolitan at 40 Park
 
12.50%
 
38,600
38,600
9/1/2020
3.25%
 
695
21,010
9.00%
 
(4) *
The Chase at Overlook Ridge
 
50.00%
 
52,662
55,500
12/26/2015
L + 2.50%
 
-
26,356
6.50%
 
(5) (6) *
Subordinated Joint Ventures
     
$            698,142 
$            700,980 
     
$                820 
$            247,139 
     
Commercial Operating Communities
                         
Port Imperial Garage I
 
43.75%
 
 -
 -
N/A
N/A
 
$           17,238 
 -
8.00%
   
Shops at 40 Park
 
12.50%
 
$                6,500 
$                6,500 
8/13/2018
3.63%
 
 -
 -
     
Riverwalk at Port Imperial
 
20.00%
 
 -
 -
N/A
N/A
 
 -
$                6,216 
9.00%
   
Commercial Operating Communities
     
$                6,500 
$                6,500 
     
$           17,238 
$                6,216 
     
                           
Total Operating Communities
     
$            897,142 
$            899,980 
     
$           43,928 
$            330,966 
     
                           
Lease-Up Communities
                         
Participatory Joint Ventures
                         
701 2nd Street, NE
 
50.00%
 
$              91,434 
$            100,700 
7/1/2033
4.82%
 
 -
 -
     
RiverPark at Harrison
 
36.00%
 
23,400
23,400
6/27/2016
L + 2.35%
 
$             3,261 
$                4,867 
7.25%
 
(7)
Participatory Joint Ventures
 
 
 
$            114,834 
$            124,100 
     
$             3,261 
$                4,867 
     
Subordinated Joint Ventures
                         
Portside at Pier One - Building 7
 
38.25%
 
$              42,108 
$              42,500 
12/4/2015
L + 2.50%
 
 -
$              28,509 
9.00%
   
RiverParc at Port Imperial
 
20.00%
 
64,927
73,350
6/27/2016
L + 2.15%
 
$             2,296 
52,601
9.00%
 
(8)
Subordinated Joint Ventures
 
 
 
$            107,035 
$            115,850 
     
$             2,296 
$              81,110 
     
                           
Total Lease-Up Communities
 
 
 
$            221,869 
$            239,950 
     
$             5,557 
$              85,977 
     

 
 
 
10

 
 
 

                           
Capitalization Highlights (cont.)
                         
                   
2Q 2015 Supplemental
                           
       
Project Debt
 
Priority Capital Balances (1)
   
                   
Third
     
       
Outstanding
Maximum
Maturity
Interest
 
MCRC
Party
Return
   
   
Ownership
 
Balance
Balance
Date
Rate
 
Capital
Capital
Rate
 
Note
In-Construction Communities
                         
Consolidated
                         
Eastchester
 
76.25%
 
$          3,493
$        28,750
3/30/2017
L + 2.35%
 
$     14,289
$          756
8.00%
    (9)
Consolidated Communities
     
$          3,493
$        28,750
     
$     14,289
$          756
     
Participatory Joint Ventures
                       
Marbella South (M2)
 
24.27%
 
$        51,206
$        77,400
3/30/2017
L + 2.25%
 
$     10,736
$     33,758
9.00%
   
URL Harborside - I
 
85.00%
 
0
192,000
8/1/2029
5.20%
 
-
-
     
Participatory Joint Ventures
     
$        51,206
$      269,400
     
$     10,736
$     33,758
     
                           
   Total In-Construction Communities
 
 
 
$        54,699
$      298,150
     
$     25,025
$     34,514
     
                           
Future Developments
                         
Lofts at 40 Park
 
25.00%
 
$          1,116
$          1,116
9/30/2015
L + 2.50%
 
 -
$       1,085
8.00%
   
PI North - Building C
 
20.00%
 
-
-
     
 -
26,132
10.00%
   
Port Imperial North
 
20.00%
 
-
-
     
$       4,985
 59,733
     
Port Imperial South
 
50.00%
 
44,550
45,100
9/19/2015
L + 1.75%
 
13,663
 -
Prime + 8.00%
 
(10)
Total Future Developments
 
 
 
$        45,666
$        46,216
     
$     18,648
$     86,950
     
                           
Total Residential Portfolio
     
$   1,219,376
$   1,484,296
     
$     93,158
$   538,407
     
                           
Notes:
                         
*    Ownership represents Company participation after satisfaction of Priority Capital.
(1)  Includes outstanding preferred returns, where applicable.
(2)  Upon a capital event, the Company receives a promoted additional 25 percent interest over a 9.00 percent IRR to heads-up capital accounts.
(3)  The MCRC Balance represents capital account held by Marbella Rosegarden, L.L.C., of which the Company owns a 48.53 percent interest.
(4)  Equity Capital balances apply to Metropolitan at 40 Park and Shoppes at 40 Park.  The MCRC balance represents capital account held by Rosewood Epsteins, L.L.C., of which the Company owns a 50 percent interest.
       
(5)  On January 18, 2013, Overlook Apartments Investors entered into an interest rate swap agreement with a commercial bank. The swap agreement fixes the all-in rate to 3.0875 percent per annum for the period from September 3, 2013 to November 2, 2015.
(6)  The operating agreement allows for MCRC to participate in operating cash flows after equity partner receives a 6.5 percent preferred return on their capital balance. Upon a capital event, the partner receives 100 percent of cash flows until receiving a 9 percent IRR.  Then, 70 percent is distributed to the partner and 30 percent is distributed to MCRC until an 11 percent IRR, with excess proceeds distributed in accordance with the members’ ownership percentages.
(7)  Subsequent to quarter end, the RiverPark at Harrison venture secured $30M, ten-year permanent financing.  The financing fully amortized the PNC construction loan, and provided to the MCRC member ownership increase to 45% and excess financing proceeds of approximately $1.7 million.
(8)  On December 28, 2012, PruRose 13 entered into an interest rate swap agreement with a commercial bank. The swap agreement fixes the all-in rate to 2.79 percent per annum for the period  from July 1, 2013 to January 1, 2016.
 
(9)  Third Party Capital includes land capital of $391,000.
(10)  Represents Member Loan Balance and accrued unpaid interest as of 2Q 2015. After repayment of outstanding member loans, venture distributions are subject to tiered priority land payments between MCRC and the joint venture partner as described in the operating agreement.

 
11

 


 

 
                                       
Operating Communities - Repositioning Details
                         
                                   
2Q 2015 Supplemental
                                       
The Company defines Repositioning Communities as communities targeted for additional investment by the Company for unit and common area renovations.  During repositioning it is often necessary to take apartments offline for a period of time to allow for renovations which can have a short-term impact on occupancy and operations.  As of June 30, 2015, the company owned interests in six Repositioning Communities totaling 1,940 apartments.
                                       
           
MCRC
       
Company's
               
           
Share of
       
Share of Cost
Homes
 
Acquisition
Post Repos.
 
Projected Schedule
     
Acq.
 
Purchase
Purchase
 
Reposition
MCRC
 
Incurred
Completed
 
Avg. Rent
Avg. Rent
   
Estimated
Estimated
Repositioning Communities
 
Homes
Date
 
Price
Price (1)
 
Budget
Participation
 
@6/30/15
@ 6/30/15
 
Per Home
Per Home
 
Start
Completion
Stabilization
                                       
Consolidated
                                     
Alterra I
 
310
Jan 2013
 
$      61,250
$       61,250
 
$          5,800
$          5,800
 
$              2,457
170
 
$        1,414
$          1,600
 
Q4 2013
Q4 2015
Q1 2016
Alterra IB
 
412
Apr 2013
 
87,950
87,950
 
3,800
3,800
 
1,867
234
 
1,499
1,650
 
Q4 2013
Q4 2015
Q1 2016
Richmond Court
 
82
Dec 2013
 
20,492
20,492
 
3,075
3,075
 
382
3
 
1,541
1,892
 
Q3 2014
Q3 2017
Q4 2017
Riverwatch Commons
 
118
Dec 2013
 
20,493
20,493
 
4,425
4,425
 
325
 -
 
1,507
1,856
 
Q3 2014
Q3 2017
Q4 2017
Andover
 
220
Apr 2014
 
37,700
37,700
 
5,930
5,930
 
691
 -
 
1,345
1,637
 
Q3 2014
Q3 2017
Q4 2017
Consolidated
 
1,142
   
$227,885
$227,885
 
$23,030
$23,030
 
$5,722
407
 
$1,450
$1,673
       
                                       
Participatory Joint Ventures
                                     
Crystal House (2)
 
798
Mar 2013
 
$    262,500
$       30,210
 
$        29,900
$          7,475
 
$              1,591
$            27
 
$        1,888
$          2,282
 
Q1 2014
Q1 2017
Q2 2017
Participatory Joint Ventures
798
   
$262,500
$30,210
 
$29,900
$7,475
 
$1,591
27
 
$1,888
$2,282
       
                                       
Total Repositioning
 
1,940
   
$    490,385
$     258,095
 
$        52,930
$        30,505
 
$              7,313
$          434
 
$        1,630
$          1,923
       
                                       
Note:  The Company projects an approximate 10% return on its incremental repositioning capital investment.
                   
                                       
                                       
(1) The balance of purchase price repositioning capital to be provided by Joint Venture partner.
                   
(2) Unit count excludes 30 apartments permanently offline for renovation.
                   
                                       
See appendix for select financial definitions.
                               

 

 

 
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Appendix
                           
                       
2Q 2015 Supplemental
 
                             
Average Revenue Per Home:  Calculated as total apartment revenue for the quarter ended June 30, 2015, divided by the average percent occupied for the quarter ended June 30, 2015, divided by the number of units and divided by 3.
   
Post Repositioning Average Rent Per Home:  The projected average monthly rental rate the Company expects to achieve post implementation of a repositioning plan (see Page 14).
 
                             
Consolidated Operating Communities:  Wholly owned communities and communities whereby the Company has a controlling interest.
   
Predevelopment Communities: Communities where the Company has commenced predevelopment activities that have a near-term projected project start.
 
                             
Development Communities - Future:  Represents land inventory currently owned or controlled by the Company.
   
Project Completion:  As evidenced by a certificate of completion by a certified architect or issuance of a final or temporary certificate of occupancy.
 
                             
In-Construction Communities: Communities that are under construction and have not yet commenced initial leasing activities.
   
Projected Stabilized NOI:  Pro forma NOI for Lease-Up, In-Construction or Future Development communities upon achieving Project Stabilization.
 
                             
Lease-Up Communities: Communities that have commenced initial operations but have not yet achieved Project Stabilization.
   
Project Stabilization: Lease-Up communities that have achieved over 95 Percent Leased for six consecutive weeks.
 
                             
MCRC Capital: Represents cash equity that the Company has contributed or has a future obligation to contribute to a project.
   
Projected Stabilized Yield:  Represents Projected Stabilized NOI divided by Total Costs.
   
                   
Net Operating Income (NOI): Total property revenues less real estate taxes, utilities and operating expenses.
   
Repurposing Communities:  Commercial holdings of the Company which have been targeted for re-zoning from their existing office to new multi-family use and have a likelihood of achieving desired rezoning and project approvals.
 
                             
Operating Communities:  Communities that have achieved Project Stabilization.
   
Subordinated Joint Ventures:  Joint Venture communities where the Company's ownership distributions are subordinate to payment of priority capital preferred returns.
 
                             
Participatory Joint Ventures: Joint ventures in which the Company invests capital alongside Joint Venture partners with contributions made in proportion to each member's ownership percentage.
   
Third Party Capital: Capital invested other than MCRC Capital.
   
                             
Percentage Leased: The percentage of units that are either currently occupied or vacant units leased for future occupancy.
   
Total Costs:  Represents full project budget, including land and developer fees, and interest expense through Project Completion.
 
                             
                             
                             
                             
                             
                             

 

 
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