The Real Deal New York

Mack-Cali to buy back $250M in debt, refi 101 Hudson in JC

Office REIT seeks to lower financing costs

September 12, 2016 12:47PM
By Konrad Putzier

101 Hudson Street in Jersey City and Michael DeMarco

101 Hudson Street in Jersey City and Michael DeMarco

Mack-Cali Realty Corporation wants to buy back $250 million worth of high-yield debt early as part of an effort to reduce its financing costs, the real estate investment trust announced Monday.

The company sent investors a tender offer to buy senior unsecured notes carrying an interest rate of 7.75 percent that don’t expire until 2019. Michael DeMarco, president of Mack-Cali, told The Real Deal that the firm plans to refinance the notes with a new $250 million mortgage on its Jersey City office building at 101 Hudson Street, at a floating rate of currently around 3 percent.

The move is part of an effort to “reduce credit costs through refinancing opportunities in 2016 and 2017,” according to a separate statement, and DeMarco said the company will announce more refinancings in the future.

Mack-Cali is an owner of suburban office properties and multifamily buildings, primarily in New Jersey. While most other REITs saw their stock prices soar in the years after the 2009 recession, Mack-Cali struggled amid a broader swoon in suburban commercial real estate. Between April 2010 and May 2015 its share price fell by more than half, from $35.17 to $16.90. Last June, Brookfield Property Partners TRData LogoTINY veteran Mitch Rudin took over as CEO, replacing Mitchell Hersh, and DeMarco became president and COO.

In September 2015, the new leadership announced a strategic plan that includes a reduction in debt costs and investment in capital improvements at its office properties. The stock price has since recovered to $27.90 as of Monday.

Last month, activist investor Jonathan Litt resigned from Mack-Cali’s board, which he had joined in 2014.