Welcome to the Mack-Cali Realty Corporation Fourth Quarter 2016 Earnings Conference Call. Today's conference is being recorded. And now at this time, I would like to turn the conference over to Michael J. DeMarco, President and Chief Operating Officer. Please go ahead sir.

Thank you, Operator. Good morning, everyone and thank you for joining the Mack-Cali 2016 fourth quarter earnings call. This is Mike DiMarco, the President of Mack-Cali. I'm joined today as always by my partners Mitch Rudin, CEO, Marshall Tycher, Chairman of Roseland and Tony Krug, CFO. On a legal note, as always, I must remind everyone that certain information discussed in this call may constitute forward-looking statements within the meaning of the Federal Securities law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. We refer you to our press release, annual and quarterly reports filed with the SEC for risk factors that could impact the Company. As always, we look forward to open and spirited dialogue about our results and plans going forward. We again filed expanded disclosure about our operations in two supplements, one for Mack-Cali's office portfolio and one for Roseland. We will be referring to key pages in our the supplementals during this call and as always, we'll continue to provide the best disclosure of operation strategies and results that we can. As we have done before, we're going to break the call into four following areas. Tony will recap our operating results for the quarter, Mitch will discuss our leasing results and our view of the markets. Marshall will provide an overview of our multi-family operations, I will then provide an overview of our capital markets activities and comment on our views of guidance for 2017 as well as provide an update on our strategic plan before we take your questions. As disclosed last night, our results indicate that we had another excellent quarter capping off an excellent year. Showing real positive results for 2016. Our strategy as a…

Thanks, Mike. With respect to earnings, core FFO for the quarter was $56.1 million or $0.56 per share as compared to $47.6 million or $0.47 per share for the quarter ended December 31, 2015. For the current quarter compared to last year, the 19.1% growth in core FFO per share resulted primarily from increased base rents. We reported net income for the quarter of $15.2 million or $0.17 per share, as compared to net loss of $31.7 million $0.35 per share for the quarter ended December 31, 2015. Included in net income for the quarter was $41 million of net gains from property sales and a charge of $23.7 million from the redemption of our balance of August 2019 bonds. As shown on page 32, same-store NOI was up 11.3% on a GAAP basis and 11.2% on cash basis for the quarter with the full year coming in at 10.1% GAAP and 6.4% cash. Total G&A for quarter was $13 million, with $9.2 million for the office public company and $3.8 million for our Roseland subsidiary. G&A included approximately $1.7 million in additional bonuses resulting from Company performance to date. Reducing G&A remains a focus for us and we expect to achieve savings as we streamline our portfolio further. Turning to our financial statistics. As indicated on page 35, our total indebtedness at year and was $2.3 billion, with a weighted average interest rate of 3.79%, down from 5.22% at year end 2015. Debt to undepreciated assets ratio was 41.6% and net debt to EBITDA annualized was 7.5 times for the quarter. We had a fixed charge coverage ratio of 2.7 times for the quarter and interest of 3.5 times. Our $600 million unsecured credit facility had $286 million drawn at year end and $264 million drawn as of today,…

Thanks, Tony. The portfolio transformation we began in September 2015 yielded great results this past year, including a variety of improved leasing metrics. Our core waterfront and flex portfolio of commercial properties was 90.6% leased as of December 31, 150 basis points higher than year end 2015 and our best result since the fourth quarter of 2007. During 2016, we signed deals totaling 2.8 million square feet, with 320,000 square feet in this quarter, securing some of the highest average rental rates we have ever seen particularly along the Jersey City waterfront. You may recall, we entered 2016 with lease expirations of 1.6 million square feet, so as we anticipated, luckily greatly exceeded that number. Our 2016 rent rollup for core waterfront and flex properties was 10.9% cash and 20% on a GAAP basis. As it relates to tenant improvement packages and concessions, our leasing teams continue efforts to reduce leasing costs. Our highest leasing velocity for the year was the Jersey city submarket, where we signed over 850,000 square feet of transactions with amongst others Merrill Lynch, Deutsche Bank and Media Giant, Omnicom and Zurich American insurance. Outside of Jersey City, we had an active year in our Persephone, Princeton and Metro Park submarkets. Companies such as Mizuho and Travelers signed large deals at two of our Metro Park buildings, Marrero U.S.A, B&G Foods and energy firm PBF Holdings each signed for over 50,000 square feet in Persephone. The flex portfolio continued its solid performance in 2016, delivering over 650,000 square feet of transactions, largely in our Westchester and Connecticut properties and it finished the year at 93.1% leaded. That rentroll up for this year's flex deals was 10.9% and leasing costs were a moderate $2.86 per square foot per year of lease term. For 2017, progress on expirations…

Thanks, Mitch. Roseland's fourth quarter and recent achievements in 2017 materially advanced the strategic residential objectives and growth of the Company. Roseland stabilized operating portfolio completed 2/2016 at a leased percentage of 96.3%. Rents in our largest two submarkets, Jersey City and Overlook Ridge, were up approximately 2% and 5% respectively year over year. In the fourth quarter, we stabilized M2, a luxury tower in Jersey City which absorbed approximately 50 apartments per month. More recently, we delivered three projects to the marketplace representing 1,163 units. These deliveries include Quarry Place, the majority owned 108-unit apartment community in Tuckahoe in lower Westchester. The asset is currently over 25% leased and doing well. Chase II, a wholly owned 292-apartment asset represented in the next phase of development in our master plan to Overlook Ridge Community North of Boston is currently over 30% leased. And Jersey City Urby, formerly know as URL, our 762-unit 69-floor tower on the Hudson Waterfront commenced leasing activities yesterday. We signed 11 leases day one at $58 per square foot. Inclusive of Urby, at the year end 2016, Roseland had 10 projects representing 2,700 apartments and 372 hotel keys in construction. As detailed on page 38 of the supplemental, the construction portfolio represents $1.1 billion of cost, $76 million of projected NOI and average Roseland ownership of 94%. Roseland's construction portfolio includes a two fourth quarter starts, booked from our successful repurposing program. The 200-unit apartments start in Short Hills adjacent to Mack-Cali's 150 JFK office building and mall at Short Hills and a 206-unit apartment start in Balliken Wood outside of Philadelphia. Upon stabilization, we forecast our current lease up and construction portfolio will generate an additional estimated $38 million of net cash flow after debt service to Roseland. 2017, as highlighted on page 40 of…

Thanks, Marshall. As disclosed, we finished 2016 on a strong note in all objectives. We're reaffirming our provided FFO guidance for 2017 in the range of $2.25 to $2.40 per share. Beginning on page 27 of the supplemental, we provide a commentary on some of the updates to our 2017 assumptions. Including, we expect our leasing percentage to range between 90% to 92%, however the achievement and timing could take longer as we have multiple expirations in the fourth quarter of 2017. However our leasing activity is strong with the waterfront at 94.6% currently, as Mitch just mentioned, Metro Park at 94.5%. We also achieved 90.6% on our combined waterfront core and flex portfolio for the fourth quarter. Two, we continue to drive rents in our reshaped portfolio and expect same-store NOI on our post sale portfolio to be between 6% to 8% in GAAP and 3% to 5% on cash. Third, non-core asset sales are expected to be in the range of $700 million to $800 million in 2017. We're advancing our sales process as we go along during the course of the year. We have on the market probably half that amount, they're readying other assets for additional sales. The approach in 2017 is to sell the next layer of the bottom of the portfolio, thereby completing our portfolio transformation by the end of the year. Fourth, acquisitions. We have announced several acquisitions this quarter. We believe each of them will add to our portfolio, increasing our strength and allow us to produce excellent results in the coming quarters. In particular, we believe that the Short Hills acquisition with the creation of value at 150 JFK with the luxury apartments and new hotel will give us an irreplaceable combination of assets in the Short Hills market. Additionally, the…

[Operator Instructions]. We will hear first from John Guinee with Stifel.

John Guiney. Thank you. Roseland finally gave birth and I'm looking at your summary page year NAV 1.35, Rockport said 1.23 and there is $122 million difference. Where did Rockpoint differ from Mack-Cali in terms of both the asset value?

John. I think they took in overall discount across the board for that number. I would say they probably took a more jaundiced view of landholdings because obviously land is a commodity that we mark at a price and they look and said okay, they want to on that at that level and I think they felt very comfortable on our existing operating assets because they produced quarter after quarter and they are obviously tuned to the effect we're buying Monaco this quarter, understood that that would be part of the use of proceeds from them coming in and I also think we marked up our construction book a little bit and they discount that number and lastly, John, I think they just did not want to pay retail. They think [indiscernible] discount to NAV and applied something that the market does for some of the best companies in which they chose around a 9% level.

Okay. And then Plaza 8/9 acquisition of $57 million, did you buy out your partner for $57 which gives an implied evaluation for that dirt of $140 million or what's the math on that?

You are actually correct. So the [indiscernible] has a direct water view, it is a 3 acre site with a 1 acre park adjacent to it, so its got actually some of the real estate that you could find. We had five partners in that deal, the joke was that if we put an orange in the middle of a table and asked them what color it was we would never get a consensus to five parties and they owned the land for 25 years and never move forward because they cannot agree. We came to them with a solution, we gave two of the partners units, the units were described in the press release we gave out earlier. They are 3.5% preferred units pay rate, they are up 25% in price, they convert to $35 and they want to be in the money. They have the right to basically it put it backwards that [indiscernible] per se, so that value in 57, I do not think the street would value that at par that’s a security that would be done for tax reasons that would sell it at a discount. The rest of the money was cash and you are right the evaluation is about $140 million. Marshall has started looking at what we can do with this site and we have zoning -- there is three ways to do it, we have some zoning on our existing Harborside site that we cannot use, ex-bonus earning that we can move over. We can up zone the site by basically merging it into the existing lot that we have now. You can buy zoning from the city at a advantageous rate as we have done in the past, they basically round out the project. When completed it will be a superb project and its literally one of the last great pieces of real estate right on the water in Jersey City.

Okay. Just asking a follow-up question to that, the $140 million translates to $38 million an acre or assuming 275 units it translates to $414,000 a unit.

You are off on the unit count John, you can probably can build $1200 to $1400 units as of rate, so you do it that way and divide it you get a much lower number.

Okay, because the supplemental says 275 units. 1300. We will check on that, John. If it was an error from us we apologize but it should be 1300. About an 80,000 a unit give or take, 80,000, John which by the way, that’s the number today. If we think we can get it down to more like 60 by the time we moved the zoning and get some little up zoning or [indiscernible] from the city at a more advantageous rate and its -- forgiven what [indiscernible] announced today in rents it’s a great buy for us. I mean its not like we sold [ph] it we obviously paid retail to guys we tot were very knowledgeable, they have been in the land forever but it will be a great project once we complete it.

Okay. And then I think you said you had a plan to get down you are at about 7.5 debt-to-EBITDA now. Is that only Mack-Cali or is that Mack-Cali plus Roseland and then what's' the plan to get to where you want to be by when?

There is three things you can do obviously. We can grow our way out of it, we can cut expenses a little bit and we can pay down debt with some asset sales. The last is the most difficult because you have to pay a lot of [indiscernible] we think we are about $350 million more in debt and we're 2 bi today versus the number we have and I think we would be perfectly fine, we would be sub7 give or take. That number takes us about the way we look at it every $1 million you get a $16 million hit on the net debt to EBITDA so that 300 some odd we need about $20 million of revenue, John. That can come from interest savings which is little we can do, there is some debt that we can actually pay. There is some our cost reduction that we still get because we're trimming the portfolio and we do -- each time we do that and then there is revenue growth. I would comment to solely the thousand units that Marshall has of the rent -- that is occurring -- if you looked at on net contribution after debt service we got about 20 million from that maybe about -- maybe about 20 gross but after interest expense we wind up about 12 million. So as a 20 million I need I can get some from Roseland, and I can get some from Mack-Cali's rollout, I can get some from cost reductions and I can get some from interest reduction and less but not least I can sell assets and apply those proceeds to pay down debt. One of the benefits of the Roseland the Rockpoint transaction is we no longer have to find Roseland's growth which was allowing us to increase our debt each quarter.

Now we will take a question from Emmanuel Korchman with Citigroup.

Mike if we look at your NAV disclosure a lot of moving pieces and sort of hard to track things maybe on a sequential basis but we are going to do our best here. So two things are sent out to me, New Jersey waterfront cap rates are now back to sort of levels that you first presented in September of 2015 and down 75 basis point sequentially maybe you can help us figure out why you think those assets are all of a sudden 75 basis points better than they were four months ago or three months ago.

We really visited it yearly [indiscernible] goes through, talks with some of the brokers we have a detailed review with -- they shift about NAV because the end of the year is when we really focus on it as we make our board presentations and talk about our corporate strategy. One of things we tried to do Manny and we change things around and we apologize but we're evolving business and unfortunately change produces change. So two things we did, we moved some assets from the office business into the flex parks they are actually part of those parks and we intend to sell those parks so we're trying to give disclosure as to what the flex business is going to be worth to us and the goal of seeking to it. We gave you expanded disclosure on the dispositions we have a new view about what we want to sell and we gave that out. We then did the third thing which is we said listen office business is really bifurcated, they are all the supercharge markets that we get in Metro Park, Short Hills we get rents similar to waterfront and margins are about the same. Obviously expenses is a little bit less than in the suburbs. So that’s going to be a growing part of our business and we want to highlight that at the beginning of '17 as we will produce bigger and bigger numbers in that business. So lastly to answer your question more directly the waterfront. We had rent growth since the tie Mitch, Marshall and I have been together that when we took over rents were in the low to mid-30s and now they are in their mid to high-40s right, we keep on looking and saying today what are the assets worth? So when we travel to the brokers in December and January they came back and said you will are going to sell your buildings if you did so them at 450 a square foot, to 500 or four and quarter, the way we have in place rents because of past leasing practices we needed to basically adjusted the cap rate to decide what the markets would trade on a per square foot basis and what they would trade on an IRR basis because of the embedded rent growth. So we looked over the last and said instead of doing a quarter to quarter, at the end of the year we sat down and looked at all our leases and said what is expiring? Where are the real rents? What is the competition doing? It came down to if you want to buy in Jersey City today you are going to be spending $450 to $500 per square foot that just the market. There are several buildings that we know maybe available or not and we look at our buildings and the changes we made, and work accordingly the cap rates becomes a product of that analysis.

Maybe if I can ask a follow-up on waterfront, your projected 2017 NOI came down by roughly 2%. Is there anything specific that’s driving that?

No just a timing. We're looking at where we're renting and I think the Trump affect and I hate to use the President in that respect but it did slow down leasing activity a little bit, because people weren’t sure what they were doing. The tours that we're having and we have had one yesterday, we have several on the last few weeks. The breadth of tenants they are looking at the market range much, much better than when we took over 21 months. You are seeing leading fashion companies. We have seen several pharmaceuticals, medical devices, financial service companies not banks that asset managers who are looking at the city and saying we want to move 400,000 square feet, 200,000 square feet. We are also building a block of tenant in the 50,000 to 75,000 square foot range. We just haven’t achieved, it’s a timing thing, we haven’t achieved the number that we want today but we think in the next couple of quarters we will get on track.

Maybe switching gears a little bit, your 2017 explorations didn’t really change all that much aside from the assets you're going selling from 3Q. It looks like the vacancy rate and new Jersey City market overall increased in 4Q. How do you weigh those two things and do you still have the same confidence you had we last spoke about the taking care of those maturities?

As we do this quarter to quarter we have been giving basically 21 months, seven quarters, its like our eight call you take that the first thing. I would tell you we're matched better attuned today on every square foot that’s leased and we took over the information we were getting from our field people was let's say average. I would say it is excellent. We actually have agency agreements with six different brokerage firms so we got market data and we track every square foot coming on the market today and nowhere tenants are going. I will tell you that my biggest competitor was [indiscernible] was pretty much full and its three buildings in Jersey City they have lots of space that could to be competitive with us and we think our spaces some of the finest. So our confidence level is high, we still need companies to make decisions and they make it on their schedule , they are big deals, they are 200,000 square foot or more there is eight or nine of them in the marketplace today looking for it. I would think that with where the rents are today the incentive program and the way -- I am also -- we actually have an announcement to say but we might as well do it now but we have an agreement Manny with a ferry provider New York waterways to add a service at Harborside and the service would applying for the DEP permit now, They are directly from our entrance way on the water to the World Trade Center and 39 Street which is effective at Hudson Yards and we look at the Hudson Yards activity, we look at Downtown's activity and we look at what we're doing to our complex here and we think that added benefit of transportation improvements and some of the improvements we're making to the base retail doesn’t abode well for us in the upcoming quarters.

We will now take a question from Jed Reagan with Green Street Advisors.

Just following up on that, can you give an updates on back-fill prospects specifically for some of the bulkier move outs that are coming up in the near term? And I think I heard you say that the 90% to 92% occupancy goal might be tought to reach by year-end. Did I hear that correctly and so should we think about something maybe closer to the low end of guidance is being more realistic?

Jed it is a moving target and we could be better position to answer that question in the first quarter because this is the time when we get the tours going, so we have a better view. One of our tenants was a [indiscernible] extend into 18 so we are not going capture that space back. The other block of space we have to take it out of service which is the Deutsche Bank space and that Deutsche Bank space is going to be basically totally redone by us. We have hired a contractor, a leading company that help us redo that building and we are looking at tenants to take over that space and the plans to do that superb, and the remaining spaces as we know will come in and we should be able to hit those targets, it may be a quarter late and you might be more [indiscernible] do on the low end of the range. We will give you as always a clearance view when we know it and its like the end of the first quarter call we will do it. Mitch Rudin you have further comments?

The rhythm in this market performed a little differentially than what you saw when you talk to the people in Manhattan. We had a surge of interest in November and we had a lot of tours, lot of people out and they then went home for the holidays and the deals were not at the point like in New York where they searched into the year-end and picked up again in January. That has resumed in the last three weeks and as Mike indicated so we're very busy with tours--

Mitch, and I also think our message is better, don’t you think?

The messaging is much better and the breath of tenants that we're seeing is different.

It looks like you lowered your 2017 guidance for base building CapEx and leasing costs, can you just talk a little bit more about what drove those changes?

We're selling more assets Jed that actually had 17 explorations and we don’t fund them the new buyer does, we do a net deal. We don’t put money and get $0.60 on a dollar business model. So the buildings we sold and we advanced at the end of the year come off of the total. So we gave guidance initially in November, we had those built-in so reduce those numbers. We then reduced it for what we are about to sell in the first quarter. That gives you a net exploration of about a $1.7 million right, and on those 1.7 million we kind of a good view now about who is going to renew so those numbers come down because renewals are cheaper and then we built in what we think we are going to spend on the new deals in this year. Now we had to balance that act with tenants who are still accruing charges from last year and some of the expenses that we may contract for this year might be spent next year but today is the best estimate and my comment about AFFO was always something the Company had suffered from. I would be very candid is always to say the day we took over I think our AFFO was zero. If you looked at what we actually spent, think about this, two years Mack-Cali did almost 4 million square feet in lease explorations, right that’s enormous for a Company of our size and capitalization and far more than our colleagues will say that's what Green [ph] does, we're actually with a 2.8. Okay, that’s great. Now we're doing 17. If we can do 17 or 15 which I think will average we will spend far less money, stay at 91% occupied, I might actually smile more days.

Was there any CapEx especially on the base rolling site that you are pushing out to '18 or '19?

No. We're advancing but we're doing fewer buildings. We started off with 270 buildings, now we are around 200. I think when we get down to 17 we may only be 70 buildings. 70 valuable buildings, we put a page in there about how certain markets equal 80% of what we own that’s the strategy. We do not want to be bigger we want to be better. We used to lead with a tag on, we are the biggest REIT in the North-East, one of the largest companies in square footage. I can make $4 a share and we can have 50 buildings, count me in.

And then I guess just last one for me it looks like you slowed down the growth trajectory that you're planning for Roseland a bit. I think it’s a 1000 fewer units by the end of 2018, to what extent is that reflect a slowing pace of plan starts versus maybe higher disposition targets?

I think we're at the stage now at Roseland, we have done a great job and I couldn’t be more happy than as Mitch [indiscernible] of Marshall and his team's activities. We took a Company people divided the [indiscernible] worked together and turned it into a superb company may be a little bit of juggernaut. But we're rational, we know that every start basically comes out of our capitalization. So we're very careful of every dollar we spent, some deals is just taking a little longer on planning, some deals we're just pushing out based on where we want to spend our money. But we look at what we put on the table now and obviously in the next several years, it’s a great deal and then we manage our book to say how much money do we want in the construction bucket quarter to quarter as you should pragmatically in this business. To answer the question, it’s a combination of us getting little smarter about the business, a little more reactive to the market and also the realization that we have done a lot on acquisitions to fill out where our capital needs to be.

And the next question will come from Robert Simone with Evercore ISI.

Mike, you kind of touched on this at the end bit but just in terms of assets sales you guys are guiding the 700 million, 800 million and I think you mentioned the portfolio transformation would be substantially complete but is there any potential for some of that to kind of into 2018 and are there additional properties you guys would consider selling beyond 2017?

We hope to get it down now. My Irish grandmother who has been long passed had a quote that I particularly liked said you should be in heaven a half hour before the devil knows you're dead, so we view the market today as saying rates are low, capital activities are actually quote good, we've been successful in assessing the market, we've gotten so much knowledge about where deals are done and so many buyers we're attuned to, really if you do not love the asset and its not long term while wait, I mean why hold onto something. Every deal we sell is dilutive to our earnings capacity because we're effectively not getting the optimal price, its hard to say accretively but we know when we transform the Company, when we lose the suburban label, when people say to us oh, this is a waterfront [indiscernible] company, heavy multifamily, heavy office on the waterfront, [indiscernible] will get better, so we have to move as quickly as possible to that objective and if we can do it faster we will do it but we process a certain number of deals that have been running that effort, [indiscernible] directly to me and he has done a superb job. I think anyone looks at what we've sold and how much of we sold the number we put up we think its achievable, some of it makes trip over into '18 that is just because of asset management. We won't leave money on the table and on the other hand we are not going to wait make more money and so I the market will be better six months for now let's wait, that’s not a good model actually.

Yes. Could you one more time comment on the market in New Jersey that your 100% absolutely looking to exit?

I never do that because my tenants could get upset and my brokers call my tenants and said they are leaving. I will tell you that we look at growth profiles and now we have become more attuned to leasing activity. I will tell you the markets that we really love. We really love the waterfront, rents are rolled up, we're making significant improvements to the base assets. Short Hills, you cannot get better rents. Short Hills is west of Jersey City, the next time you get the rents at Short Hills in Joyce you're in San Francisco or LA. I mean they get high 40s to low 50s in some of the deals. You don’t get those rents in Chicago, you don’t get them in Detroit, you don't get them in Dallas, you don’t get them in Houston, you don’t get them in Phoenix or Las Vegas until you get to the West Coast you get those rents and quality tenants, Metro Park, Monmouth [ph] is a work in progress so its Parsippany, after that as we like to say we call [indiscernible] farm we don’t name our animals for a reason.

Now we will hear from Tom Catherwood with BTIG.

Going over to Harborside, if we look at page 5 of the strategic plan 24 months objective includes renovating Plaza 1, So Deutsche Bank coming out in 2017 during that renovation, is this going to be a phased renovation where you would do Harborside 1 and move over to 2 and 3 or would it be -- is this a multiyear project that could be done in 2021 or 2022 or are you thinking of accelerating this project? I want to get a sense of timing?

We're doing it as quickly as we think practical. If you came today and we invite you to come and see it we have transformed the atrium, when we first took over there wasn’t one piece of furniture in the entire building 1.7 million square foot, not one chair. Right now if you go downstairs there are several 100 people, I mean in the 200 to 300 people everyday sitting having lunch, collaborating with the portable devices plugged in as we provide WiFi and power where we can, we have added almost 10 different pop-up tenants providing things from Asian Street food to [indiscernible] to Barbecue to Gelato. As you know you live in Hamilton Park and we have really done a good job of making this a place to be, we think when we add the ferry service we will get 4000 to 5000 people commuting to here because we're attached to the light rail. We also a number of parking facilities nearby that people could use. Harborside 1 and Plaza one is a tentative in place for 35 years. We want to take their space and gut it, new bathrooms, new Wi-Fi, the density that people want today require a better AC units, larger facilities, elevators would make all those improvements. That should get done relatively quickly and obviously before 24 months lease expired. We will then re-skin that building, we may add some square footage to the top of it, at the same time we will be doing a a base retail of Harborside which will be in conjunction. We hope to get both projects done within a 24 month period. That some of may lag if we cannot find the right tenant, but it will be transformational each and every quarter as we go through it. As you came over to now you would say, hey this place looks totally different than it did two months ago.

I actually walked at a week ago and I completely agree with you, it looks like you have made progress in your changing over some of the retailers, changing over the corporate food layout and it looks completely different. The initial plan when you guys first laid the vision for Harborside a while ago included potentially a gourmet grocer for the north corner of the building with co-foods allegedly moving in 2020 half a mile away from your property. Is the plan still to do a grocery anchor there or are you open to a variety of different tenants maybe chopping that space up?

The bad news is good side is not going and because it is the ground and the bad news is hopefully they won't much is because they don't want to go and turn of assisting silty the good news is they sat next to as Plaza 8/9 is a great side for Hopewell post office to go to and second Street and Hudson Street are perfect blocks to access the area and we will probably do a number of different retailers and looking at constant restaurants and other day spas and other high-end retelling to go on the side. We have had a number of conversations and tors with shares almost every week and they are picking a list and we happily we identified currently and going out to about eight or nine.

Switching over to Roseland Row quick, one comment on page 20 of the supplement was helpful. Thank you for that edition. As far as same-store NOI growth this quarter, what were the results for Roseland?

Same-store NOI growth is up a little bit.

Okay. As far as concessions, any changes in the market or anything impacted your lease but anything that is impacted the economics?

No. Concessions have not change brick, concessions on lease of new properties but stabilize property has not changed at all. As you saw the occupancy is within a few points of less quarter and frankly within higher last year same quarter and the market has been stable and slight growth and we're up a couple of points in Jersey City and almost five points at Overland.

Just one more quick one on Roseland. On page 42 there are eight office assets you identified as potentially repositioning. How many of those office assets are currently held by Roseland and how many are part of the Mack-Cali office portfolio?

They will be transferred as the Rockpoint transaction whatever want to do will be transferred to want to set the stage and has made selling and next quarter we will have a supplement to show would we transfer them.

We will now hear a follow-up from Emmanuel Korchman with Citigroup

Its Michael Bilerman [ph] here with Manny. I want to ask about the Roseland deal in terms of the structure of the transaction and you think about the variety of different joint ventures and clearly one option was to just go head to head and share economics on an economic basis. Whether it was a 50:50 or 75:25 or 80:20, you structured your deal to allow Rockpoint to get effectively preferred return upfront and that would come back upon a realization or monetization down the road where the net back down to R&R. I am curious how you thought about complexity of structuring the transaction how much additional proceeds you got by structuring the higher return upfront and when there is any clawback on the backend should the modernization events not be positive and results in a better return?

It was a learning process and let's look at the beginning of what we wanted to do. We wanted to set Roseland on a course and we funded out from Mack-Cali balance sheet and we thought was appropriate to get started and it is well on its way and Marshall and his team have done a superb job of producing stocks to produce revenue we laid out in the subliminal quarter by quarter. We're out a demarcation point in look at what we can and cannot find and we felt $500 million would do everything we could possibly ever need and the 500 W. land we have we could do well over 2 billion additional dollars of construction. Of the 500 we were willing to put into hundred and we wanted someone to be in the first 300 and 300 became a size requirement for us that God is essentially through the plan as much as we really needed to do that we could plan today. Now you look at 300 and we had at least a half-dozen to one dozen people wanted to give $1 billion in the wanted to on control and it was superb and we looked at what we had and I can see how many people came and said I will give you half for all but I get to run the place. You become the 20 and I become the 80 and we go back to being insubordinate developer. You lead out those participants and then you look and say strikeout hedge funds and opportunity funds and look for someone who has a core mentality and basically things the business is the way you are and Rockpoint they had a sterling reputation and they are the easy an easy out guys and effectively they…

Had we think about your cash flow distribution in your recognition of economic interest in the modernization of in if Rockpoint will give a higher return on their committee capital upfront? Is there going to be a mismatch or a mismatch of reported earnings but they destroyed a cash flow to Mack-Cali shareholders?

It should be slight because given the size of the deal us out of the Company it is an excellent question and we will give further disclosure as we find the deal we will layout the map but initially it is a relatively small equity of 130 in a Company that has 3 billion and we pay them essentially six on the initial 150.9 million, the earnings for that division actually should be about that little less. So we probably have a little leakage. I don’t think its meaningful, I think we catch up Marshall next year you actually passover in which there is no issue on reporting. So you are astute as obviously had a goodnight sleep last night and there was a little bit of a loss on the numbers but it is very minor and immaterial in my opinion and it goes away after the 12 to 18 months as earnings pick up.

And then last on Roseland, how does your partner think about a future modernization event? Clearly you could spin this business to shareholders, you could IPO it and raise additional capital, or you can essentially sell it? How do they think about ultimately how -- do they just want to get their money or do the view this as a long term holding that they would want to have, how should we think about when that as monetization then happens and the characteristics of that would be?

I think they are no different in their approach than two dozen of my current investors. So use names like Fidelity or Blackstone or Wellington or anyone who is my list today who looks and says at a certain price on a seller and I would buy more at a different price. My good friend Ted [indiscernible] at Morgan Stanley who said never take it personally on stock because its just business. They are not looking at this as something they want to own for 30 years, they have a 10 year fund, of 10 to 12 years, on the outside date they put a minimum whole period [indiscernible] five years was a good point of view of holding after that I think it would be totally commercial. It is in the best interest of the entity and I think we're near to their benefit and reputation is stellar on the subject and not someone who ever bothered someone for someone other than commercial aspect. They do not look at things and say well this is what we need to do, we want to own this because it is part of why we want to own it.

We have a follow up from John Guinee with Stifel.

I get the simplicity premium thought process, by the way is Roseland going to be consolidated, unconsolidated? How are you going to bifurcate those financial statements?

Just consolidated, John. No change. It will be simple, we will keep it simple and we strive to make ourselves easier to understand not more difficult. If we had done this another way that was totally transparent and totally not one hiccup we would have done this, but this is the best we can do and we think we did a good job on it.

You bought about 1.1 million square feet in Short Hills and I think you paid about 360 a foot, what is the cash and GAAP cap rate on that?

It will probably be above a seven maybe close to an eight, its an interesting deal, John. We've brought -- it as a restructuring product, to be very candid people will know this, so the holdings is by RXR and Teacher's Insurance [ph] they were levied, we came in and we made a bid that was agreed by the servicer and another asset gets spun out, we get to buy those assets and we think we did it an advantageous number. The interesting thing about that I have never had this experience John and I find it somewhat comical but we do the interviews and you meet the guy and see what is wrong with the building and he gives you only complaints and when you go in and sometimes have a provider -- I am going to leave the building, I am going to go because they want you to make sure they have leverage. Every single tenant we interviewed in the market says I am not leaving. You can't get me out of my space, I have got renewal options and every space has four or five different people looking for the same renewal option and if someone does not pass I get a second option and if I don't have a second I got a third, fourth, primarily because it’s a drive time, well its mostly CEOs, they operate in 20,000 and 40,000 square foot blocks and they are not moving. So it's actually was in some respects refreshing is to own space where people actually really want to be in and would rather die than leave.

Okay. I think your introductory remarks was you want to lose the suburban office label and generate a waterfront Jersey City label, it looks like you spent $400 million on suburban asset and can you help me understand or help investors understand why you are going to lose your suburban label by just buying 1.4 million square feet for $395 million in the suburbs?

Yes, John, we have a transit-based and a waterfront transit-based strategy. So we bought assets like we did Monaco [ph] on the water and we bought Hoboken last year, we bought two buildings in Metro Park and now we're buying buildings in Short Hills. These are markets that we think enjoyed the same margin as the rest. The suburban label I am losing I want to lose is that oh you can't make many in New Jersey but I want people to focus on its a five consecutive quarter we produced GAAP and cash rollout that are in the top quartile of all our competitors, there is a market to be made in this state in providing high-end office space to tenants who are willing to pay the price for it. Pharmaceuticals, investment advisors, lawyers, accountants, the certain submarkets that work and many that don’t. We're going to exit the ones that don't and we are going to make money on the ones that do. We looked at the opportunity and we looked at the asset in Short Hills an looked at the investment that Marshall was making in the hotel and apartments, looked at three buildings across the way which is the majority the value we bought and said you know what, this is a one-time chance to basically own one of the best markets in the country. And for that we will stop with the suburban label.

One additional point on that, unlike New York and we have already paid a lot of attention to that, when we drive rents here, you do not see a commensurate driving of concession packages. So when you get to the actual NERs neither do the concessions go up nor do the expenses of the attendant to buildings go up because they do not reassess baseline income and expense like they do in New York. So we're driving here as we move those rents and that’s a pure bottom line.

We have a follow-up from Jed Reagan from Green Street Advisors.

I guess following up on that I want to confirm, so the price for the Short Hills and Madison is 395 total and can you mention how much of that was allocated to the Madison fees?

I do not have the number and I will give it to you and we will do a call shortly it will be in the press release. The stuff at Short Hills is probably, actually I have to get it I don’t want to do on the call I will call you later. Madison, just the information is the next market to West and it is in the high wealth carter [ph] it’s a park moving which Allergen is just moving and taking over 0.5 million square feet and we think park will get reinvigorated but I will give you the breakout for the asses on the other ones, I apologize I do not have the numbers in front of me.

But kind of the 395 all in sounds directionally about right?

Yes I think it sounds directionally about correct.

Okay. That is helpful. Where do you expect to finish the year on debt to EBITDA and just looking ahead where do you think you can get that metric by the end of 2018?

There is a tale of two companies actually. If you look at what Mack-Cali is doing because our earnings are going up, our net debt to EBITDA goes down for the office business, it goes down in the sixes by the end of 2017 and continues to go down in 2018 and 2019 as we project out, Roseland because of the business model as higher than that in the two combined equal to the number you project out for us we need to see were Roseland will be, Roseland continues to produce relative excellent cash flow growth. The key is the base as I said earlier we need to have an epiphany about where I can get revenue at the end of the year, what expenses reduced and the interest savings and the way that elevate the total number of dollars of we are having debt. We have a plan. I don't want to weigh much more than that right now but I tell you it’s a number one thing we think about and I believe it’s the one way we can unlock further value and I don’t want to sacrifice that as we have talked about at an event with the other growth aspects of the business. It is a balancing act and we are definitely attuned to it.

Okay just, any latest thoughts on the flex portfolio and how that might factor into things?

Well one of the things we're doing is we are highlight obviously what we think the flex business is, its in entirety so we moved some office assets back into the parks in which they are self-contained as we intend to basically sell them as a park so you could expect us to start to think about exciting that business or letting those assets for sale on the upcoming month. Its one way to lose the suburban label and another way to transform the company and basically getting rid of a large number of buildings. They do have excellent [indiscernible] one of the last things we want to sell but its something we look at as things we might sell in 2017.

I think Morris Town is in this year's number is there anything else in that portfolio kind of in the '17 guidance?

No nothing else in that portfolio just Morris Town and [indiscernible] country what we gave you for '17 so far.

We will now take our final question and that will be a follow-up from Emmanuel Korchman with Citigroup.

Tony, a question for you on guidance. It looks like you increased disposition guidance and also increased interest expense guidance but you haven’t changed the range, now I am wondering what the offsets are I could not find them in the release.

I am sorry, we increased clearly interest expense guidance specifically for the acquisition increased acquisitions for the multifamily. It went up early dramatically. As Mike said earlier, the timing of the additional sales is going to impact greatly the amount of interest expense we will have in the year. I am not sure if that answers your question but it is within the range obviously and the timing of the sale will have all today with where we end up in the range. Spot

One clarification on 2017 expiration in the release you had two point 1,000,000 square feet net sales, I think Mitch said 1.8 man square feet earlier we target at the same numbers or some caveat there?

We already have some other sales if you [indiscernible] which is not in the numbers you drop down again. We got down to 2.1 after some of the sales that have already been completed and that’s how we got to 2.1, and the ones that are contemplated in the first six months got you to 1.8 and 1.7.

Ladies and general that does conclude your question-and-answer session. I will turn the call back to your host for closing remarks.

Wish everyone a great day. Have a nice time and we will talk to you in three months. Bye.