Good morning. My name is Henry, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2020 First Quarter Mack-Cali Realty Corporation Earnings Conference Call. Now I would like to turn the call over to our presenter, Mr. Michael DeMarco, CEO of Mack-Cali Realty Corporation. Sir, you may begin the conference.

Thank you, Operator. Good morning, everyone, and thank you for joining the Mack-Cali First Quarter 2020 Earnings Call. This is Mike DeMarco, CEO of Mack-Cali. I'm joined today by my partners, Marshall Tycher, Chairman of Roseland, our multifamily operation; David Smetana, our CFO; and Nick Hilton, EVP of Leasing. On a legal note, 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. We have filed our supplemental this quarter. As always, please contact David with any further suggestions as the information might change. As we've done before, we're going to break down the call into the following sections: my opening comments. I'll turn it over to my partner, Marshall who will discuss multifamily. We'll turn it over to Nick to discuss office. David will then wrap up and do operating results, and I will end with some additional comments before we take questions. I'd like to add my voice to all my colleagues, CEOs, and others who have commented before on their calls regarding the last 7 weeks, which have been the most difficult for everyone in my experience over the past 60 years. Everyone we know and care for has been affected—literally everyone. We take our responsibilities very seriously regarding shareholder returns. However, in these times, our chief focus has been and will be the concerns regarding the health and welfare of our employees, residents, office tenants, and the communities in which we operate. Regarding that, we've contributed to and helped raise $2 million for the Jersey City small business fund headed by the Mayor of Jersey City. We also contributed to the Jersey City Medical Center Foundation. As people have noticed, we provided rooms and food for doctors and nurses who have worked tirelessly these last several months. We're also contributing early in the year to key arts and not-for-profits who are struggling in this environment. Let's talk about what's going on in the environment and what it's like today to operate our platform. As we prereleased, residential is solid to date. Collections this month were stronger than they were last month at the same time. Just to be clear about how we work in our portfolio, we collect rent for the residential tenants by the 5th of the month except for Massachusetts, which has a significant number of assets that allows tenants to pay throughout the months without penalty. So those rents come in between the 5th and the 30th. As my partner, Marshall, will outline, our payment is almost entirely from our corporate housing tenants, whose business is essentially a long-term hotel. We are in the process of re-leasing these units as that business is likely not to recover in this environment. Renewal rates are up for the month of April. We expect they will be up more significantly in May. We see our tenants focusing on staying in place, valuing their current situations, and unlikely to move in this environment. We are focused on attracting new tenants to fill in the spaces that we need to re-let, and we're offering discounts to attempt to do that. We're offering only virtual and self-guided tours. We hope over the next several weeks, the tours, both virtual and self-guided, will increase as the stay-at-home orders are relaxed in our communities. As Marshall will go over, we're operating and continue to develop our buildings under the orders of the Governor of Massachusetts and New Jersey. In particular, we have delivered and continue to deliver units in Malden and Vivia. Marshall will discuss how well these units are leasing up, which we've been very happy with so far. Regarding office, April was, and we believe May will be, strong for collections. We have a strong credit portfolio in place. Luckily, the WeWorks and other private equity-based startups not being trendy is good for us. Our delinquencies are less than 5%. We expect them to be payment plans and not write-offs. COVID affected us in 3 places the most, which I'd like to dwell on: retail, which is less than 2% of our revenue; hotels, which are less than 4%; and parking, which is approximately 4% or more; in total, about 10%. In retail, we have bank branches and fast food restaurants and takeouts that are doing well in this environment. We suffer today in retail in gyms, daycare, and sit-down restaurants. We expect daycare to rebound quickly. We have no traditional retail in our portfolio. We got apparel. There are no tenants that won't be negatively affected long-term by the web or the Amazons of the world. Parking is a real business for us. We operate over 7,000 spaces in both structured and surface lots. It was hurt by the state homeowners. We expect more people post stay-at-home orders to be driving into work over the next several weeks and months. Lastly, we have three hotels that were affected; two we closed, which is the EnVue, which is the brand-new Marriott, and Port Imperial; and our joint venture with Hyatt in Jersey City; the third, a brand-new residence inn, we kept open on a trial basis to see what would happen. We're running at around 58% occupancy over the last 4 weeks, but at a reduced average daily rate. So it's profitable but marginally. We also expect that hotels will recover slowly over the next several months. We run a tight ship on an everyday basis. We have been restructuring our staff every quarter and reduced by 10% of the first quarter planned reductions. Therefore, we are not planning today to do any staff reductions, but we are monitoring this on a week-by-week basis. And with that, I'd like to turn it over to my partner, Marshall, to discuss multifamily.

Thanks, Mike. In the first quarter, Roseland's percentage leased was 95.7% as compared to 95% last quarter. Our 4,838-unit same-store portfolio experienced a 9.8% quarterly increase in NOI, generated predominantly by a 6% increase in revenues. The largest contributors to revenue growth were RiverHouse 11 and Port Imperial and Signature Place in Morris Plains. Since the onset of COVID, residential collections have exceeded 96% for the month of April, with the bulk of the shortfall comprised of corporate tenancy, which we are addressing with each provider. Operationally, we continue to deliver a high level of service to our residents. Our staff is on-site and responsive. We have increased the quality and quantity of daily cleanings across the portfolio, and we have enhanced our residents' lifestyle by scheduling virtual programming and implementing door-to-door deliveries, introducing additional dining options. April saw a drop in new leasing traffic compared to 2019, but it has been offset by an increased retention rate to 63% of tenants seeking extensions or longer-term leases in lieu of previously issued notices to vacate. Going forward, we are targeting longer-term residential leases, refocusing on distinct targeting prospective renters and reducing the contribution of corporate tenancy in the portfolio, a process we began after the passage last fall of Jersey City's anti-Airbnb legislation. We've temporarily ceased unit renovations at Monaco and Marbella but have continued and/or are nearing completion of our common area improvements in Monaco and prepare to launch more bees renovation once the restrictions are lifted. These improvements represent a complete repositioning, modernizing the units, common areas, and amenities. Initial tenant feedback has been positive, as reflected by re-leased units achieving 18% rent premiums. This month, we will formally launch a complete rebranding of M2 at Marbella and Monaco in Jersey City as the Boulevard Collection. Regarding hotel properties, as Mike said before, the EnVue is closer to the end of March; however, the residence inn continues to operate. For the month of April, the residence inn achieved an average occupancy of 58%. In addition, Mack-Cali provided 42 rooms, including meals and parking, to frontline medical personnel from the Jersey City and Palisades medical centers. As detailed in the supplemental, Roseland's current NAV is estimated at $2.24 billion, which, after netting out Rockpoint participation, is $1.79 billion or $18 per Mack-Cali share. The transactions frequently discussed over the last 4 years, and consistent with the company's overall transformation are reflected in the composition of the NAV. 76% is on the Hudson Waterfront, 81% is in operating or in-construction assets, and less than 1% in subordinated interest. The company's five projects, representing 1,942 units in construction, are projected to generate $62 million of stabilized NOI or development yield of 6.15%. Moreover, we only have $31 million in capital obligations remaining to complete this portfolio. We delivered initial units in Massachusetts in late January and to date, we have leased 74 apartments representing 52% of the completed units at rents in excess of our initial pro forma. The balance of the units is expected to be completed over the next 5 months. Residential has three projects scheduled for delivery within the next 12 months, including 673 units in Port Imperial at both Riverwalk and RiverHouse 9, where our last delivery, RiverHouse 11, is 95% leased, and the Short Hills, 193-unit luxury community in one of New Jersey's premier municipalities adjacent to the Short Hills Mall. Our fifth project in Charlotte is scheduled for delivery in the first quarter of 2022. This signature development is a 750-unit tower located in the Jersey City submarket on Christopher Columbus Drive, which will benefit from an on-site elementary school and a below-market pilot rate fixed at 7% for 20 years. As a result of COVID and ensuing on-site safety protocols and government restrictions, construction has continued but its pace has been modestly curtailed and varies at each site based on local building officials' enforcement guidelines and each building's construction status. Looking ahead, we are continuing pre-development activities on three potential Hudson River waterfront starts in the next 12 months, including Harborside 8, a 679-unit highly amenitized tower adjacent to our corporate headquarters at Harborside 3; the second phase of Urby, a proposed 796-unit tower adjacent to our successful Urby project, which commands the highest rents per square foot in Jersey City; and the Park Parcel at Port Imperial, a 302-unit development with unencumbered 270-degree views of Manhattan. With that, I'll now turn the call over to David.

Thanks, Marshall. I'll first detail our Q1 results, which were quite strong, and provide some context for those results in terms of our original expectations. I will then go through each of the building blocks of our financial results for the remainder of the year so that all of our stakeholders have an idea of the major areas in our operations that have exposure to disruptions caused by the pandemic. The quarter came in better than expected in our office and multifamily segments, which accounted for 60% and 33% of our revenues in the quarter, respectively, while our exposure to hotel operations at 4% of revenues and parking operations, which are 3% of revenues, were disrupted. Our hotels and transient parking were negatively impacted in the quarter by $2.1 million or $0.02 per share compared to our base case projections in our original guidance. We reported core FFO per share for the quarter of $0.33 versus $0.40 in the prior year. The year-over-year decrease is mainly attributable to our disposition program. Not counting the negative effects of our hotel and parking revenues, we're ahead of our original expectations by $0.01 per share in the first quarter. Office cash same-store NOI increased by 13.1% in the first quarter, as we continue to receive the benefit of all of our major blend and extend leases at Harborside now cash flowing over prior periods but still had free rent provisions. We have expected this growth to moderate from the second quarter on as we begin to anniversary these cash commencements. Our initial same-store guidance included only our Waterfront properties and continuing operations, I will note that the total portfolio in the first quarter, including discontinued operations, had same-store NOI growth of 11.9% and revenue growth of 4.6%, with expense savings driven mainly from utilities being lower due to a mild winter. Residential same-store NOI, as Marshall mentioned, was plus 9.8% for the quarter and above our expectations. We had expense savings of 1.4% and the burn-up of concessions in under-market leases from new developments benefited the number in the quarter. As Marshall pointed, retention rates have increased, which have had the effect of slowing some of our renovations at Monaco and Marbella in Jersey City, which will lessen the drag on our revenues versus our original forecast that had more units offline for renovations. Now, given the COVID-19 related disruptions to the economy and our operations, I wanted to bracket each of our main product lines and highlight ranges of potential impacts, both negative and positive, to the original guidance we gave. In the office segment, we originally gave guidance that included 135,000 square feet of Waterfront leasing for the year. To date, we have signed 51,000 square feet of transactions on the Waterfront with another 11,000 square feet in leases today. We currently have another 77,000 square feet of leases in proposal, versus the balance of 74,000 square feet remaining in our original 135,000 square foot targeted signings to be completed this year. In our disposition portfolio in the suburbs, there are 283,000 square feet of expirations remaining for 2020. 112,000 square feet of these are in our Parsippany Dorado portfolio or other assets, which are under contract for sale. The remaining 171,000 square feet of expirations are almost entirely in our suburban portfolios of Metropark, Short Hills, and Monmouth. Within the 171,000 square feet of expirations, we have 56,000 square feet of known move-outs occurring evenly throughout the balance of the year. Of the 115,000 square feet of move-outs remaining to address, we have renewal leases out for 108,000 square feet of these, including a tenant renewal for our largest 2020 expiration in Metropark for 62,000 square feet. Now for multifamily. The operations, as Mike noted, have been a standout in many ways. Same-store NOI was running at the top end of expectations, and we had expected these results to moderate in the second half, mostly due to tougher comparisons before factoring in any COVID-19-related responses. We only have one new development project, the Emory in Malden, Massachusetts, coming online in 2020 that was projected to add to earnings. The first phase of the Emory opened in the quarter, and we had only budgeted $1.2 million or $0.01 per share of NOI in the third and fourth quarters of this year, which may now be delayed depending on new construction timing. We are also evaluating the ongoing operations of three corporate and short-term housing providers in the portfolio who have been impacted by statewide shelter-in-place orders. We will have more on this when we report in the second quarter. In total, the receivable balances are approximately $210,000, and we have not reserved yet against these balances at this time. Our hotel operations consist of a dual flagged EnVue and residence inn asset in Port Imperial with 372 rooms in total in our 50-50 Hyatt Regency joint venture in Jersey City. We currently only have the residence inn portion of the Port Imperial hotel in operation. The Port Imperial hotel contributed a minus $687,000 EBITDA loss in the first quarter. The Hyatt, the JV asset contributed approximately $0 of JV FFO in the first quarter. We estimate that the Port Imperial and Hyatt assets combined at share may lose $500,000 each month in the second quarter if operations remain closed. Our original guidance midpoint for 2020 called for nearly $8.6 million of EBITDA for the year from the Port Imperial assets, both flags, and $4.8 million of JV FFO for the Hyatt or $0.13 per share in total of FFO. Our parking operations produced $21.4 million of revenue in 2019. We expected a similar amount in 2020, despite the closing of one of our lots for predevelopment in Jersey City as other Port Imperial transit parking has been increasing as the neighborhood matures. We estimate approximately 50% of this revenue, or about $10 million in 2020 will be from transient operations, both monthly and daily customers. Approximately $2.5 million of transient revenue was booked in the first quarter. The parking activity is managed by a third party and recorded on a 1-month lag basis so that the clients recorded in the first quarter were relatively modest and are expected to increase in April and into the second quarter. Now, to the transaction side. We disposed of two land parcels during the quarter totaling $17.3 million in our 1 GW bridge office building in Fort Lee, New Jersey, for $36 million or $184 per square foot at a 6.2% cap rate. This asset was previously grouped in the class A suburban section of our NAV schedule. That section now only includes our Short Hills portfolio and our Metropark portfolio. The sale was negotiated and put under contract in the fourth quarter of 2019. All proceeds from first quarter transactions were used to retire corporate debt. At the end of April, our 111 River asset in Hoboken, New Jersey, was placed under contract with an institutional buyer for $245 million or $432 per square foot. The asset carries a $150 million mortgage that will be assumed in the sale. Last night, we also announced that the closing of our Parsippany and Dorado portfolios have been restructured with the original purchaser to close in two phases. The first phase is now scheduled to occur in mid-June for $200 million and will include 12 of the original 15 properties. The second phase for $85 million will be for 3 of the remaining 15 properties, and those closings are now scheduled to take place in the fourth quarter. For the Monmouth, Short Hills, and Metropark portfolios, we believe these portfolios will take at least one additional quarter to close from original expectations due to the pandemic disruptions. We also highlighted that we are in various stages of LOI, in contract, and five assets totaling 784,000 square feet, mainly located in our Princeton market. We see these closings happening at various times from late Q3 into Q4. Using in-place NOI on our NAV chart on page 7 of the supplement, there's an approximate 550 basis point spread from the NOI cap rate to our debt cost. Delays in sales will positively affect the original FFO guidance by this spread applied to sales amounts. Turning to the balance sheet, we have no corporate and property-level debt maturities in 2020. And in 2021, outside of our corporate credit line, only one major property-level maturity is left, the $165 million multifamily loan held by a life insurance company on our Monaco asset in Jersey City. We have already begun talks to refinance that asset. Our $600 million line of credit had a $277 million balance at quarter-end. It matures in January of '21, with up to 1 year of extensions available. As proceeds from the suburban office asset sales are received, we will use the proceeds to retire our line of credit first and then approach our bond maturities. The net debt-to-EBITDA metric was 11.5x at quarter-end. The metric was negatively affected and increased by 1.2 turns alone from Q4's 9.7x due to the Urby tax credit timing and the seasonal and pandemic-related hotel operations disruptions that I've just detailed. Briefly touching on our development funding, we only have $31 million of equity left to fund in our development pipeline as of March 31, all relating to our 750 unit project called the Charlotte in Jersey City. We will then begin the construction loan portion on all five development projects, totaling $1 billion in construction costs. So in conclusion, the pivot we made to multifamily was fortuitous given the resiliency of the asset class. Our Waterfront rollover is very light this year with only 38,000 square feet of move-outs remaining, and is weighted towards the third and fourth quarters. And by marketing our entire suburban office portfolio in the summer of 2019, we're not starting from a standstill in the sales process and are dealing with many buyer groups who are very familiar with the assets but need time for the capital markets to heal. The longer we hold the suburban office assets, the better our intermediate-term cash flows will be. And by dealing with our toughest assets first, we are left with our best ones. With that, I'll turn it over to Nick.

Thank you, Dave. We posted a solid first quarter in 2020, signing just over 173,000 square feet of transactions, resulting in our core and Waterfront portfolio finishing at 81.1% leased at quarter-end. Of these transactions, approximately 24% or 41,000 square feet were new leases and 76% or 132,000 square feet were in-place renewals. Across all core markets, our rents on Q1 deals rolled up 4.6% on a cash basis and 19.7% on a GAAP basis, and we committed at $5.18 per square foot per year of lease term. As we turn our focus to the specific markets, the Waterfront closed just over 51,000 square feet of transactions, finishing the first quarter at 78.5% leased, and we continue to see a positive rent push with increases of 17.9% on a cash basis and 26.2% on a GAAP basis. While the pandemic has paused many of our discussions, we still have approximately 90,000 square feet of transactions currently in negotiation across a diverse tenancy mix, including technology, financial services, and insurance. Looking ahead to the rest of the year, we have a limited amount of lease roll with only 38,000 square feet expiring on the Waterfront in 2020. We expect 24,000 square feet or 65,000 square feet to vacate, and we expect to renew the balance. Our suburban portfolio also posted a strong first quarter. Specifically, we executed over 122,000 square feet of transactions, achieving a positive rent push with increases of 3.5% on a cash basis and 19.5% on a GAAP basis. For the remainder of the year, we have over 283,000 square feet expiring in our suburban portfolios, of which over 112,000 square feet pertained to the Parsippany and Tarola assets, which are expected to be sold this year. Of the 171,000 square feet remaining in our suburban portfolios, we know that 56,000 square feet or 33% will vacate. We are confident in addressing the balance of this rollover as we are already in active negotiations with over 115,000 square feet of transactions across that portfolio. Finally, I'd be remiss if I didn't acknowledge and thank the hard work of our property management staff and security personnel during this challenging time and their efforts to get our 10 million square foot portfolio ready for reentry. For the past 6 weeks, our whole team has spent hours researching and planning on how to implement protocols to facilitate the health and safety of our tenants as they make plans to reenter their office environments across an array of product types. The reentry plan will concentrate on the employee experience. We want to focus on the entry, mid, and executive level employee and how their day goes, how they arrive and by what means, touchpoints from the elevator buttons to bathroom doors and fixtures, elevator queuing, where to stand, how many can safely distance inside the cab, food and beverage accessibility for carryout and catered lunches, places to relax that are clean and provide ample room for proper social distancing, both indoors and outdoors as the weather continues to improve. Simply put, and where we can provide, the easier the reentry process will be for our tenants. As it relates to our business today, we have been in active communication with our tenants and tenants in the market as the situation evolves each day. As we disclosed on April 23, we collected 90% of April charges from our office tenants, and we are working with those businesses that have been severely impacted by the virus and/or government regulations to ensure we can all get through the situation on the right path to succeed. From a new business perspective, we understandably expect physical activity to be muted in the immediate future. Therefore, we have adapted quickly and are implementing virtual tour capabilities throughout our entire portfolio. These tours are focusing on our best spaces, which require little to no construction and provide quick solutions for tenants that are reassessing their immediate real estate needs. Moving forward, I believe overall activity will fall into 3 categories: immediate, medium-term, and long-term solutions. In the immediate term, we see anyone with a lease event today looking for shorter-term renewals to push out the decisions necessary for space construction and density studies for about 1 to 3 years. In the medium term, I believe tenants will look to decentralize their footprints as a means to reduce overall density, which could benefit surrounding markets with good access to multiple transit modes. I might add that mass transit in these areas will be recreated, not eliminated, thinking of air travel pre and post-9/11. In the long term, as new build-out standards are created and shared ingress and egress plans are altered, we will see a push for employee-centric real estate decisions that focus on amenity availability and live-work-play convenience. For these reasons, I see our portfolio having a good footing for both the immediate, medium, and long-term. With that, I'd like to turn the call back over to Mike.

Thanks, Nick. As my colleagues have outlined, I think we have the makings of a year where we will need to do a lot of work, but where we can make progress on our objectives and continue to improve our portfolio along every element. As I said earlier, I think some things are strong today. I think residential has held up very well. I think our core office business is doing well. Obviously, we have to do more leasing. For the areas of parking, I think we'll rebound relatively quickly, as will retail. Our real weakness is the hotel segment, which is uncertain today regarding how that will react in the upcoming months. We do have some brand-new products, which bode well for us. We are aware that there are a lot of things to do. It's going to be a changing environment for us. We're very reactive as a company. I think as David pointed out, we had the support site to basically have most of our assets up and running to be sold, which is a significant advantage against our competitors who are still trying to deal with stay-at-home locations and trying to put portfolios out. With that, I'd like to take any questions that anyone may have. Operator, I'll take the first question.

Presenters, no questions so far. Please continue.

Operator, are you sure the Q&A is working? Because we know we have questions. Okay. With that, I thank everyone for joining us this morning. If for some reason the Q&A is not working, please contact David and me with any questions you may have, and we'll publish. I apologize. The Q&A has come up on the list now. Operator, we'll take the first question. I think it's a question. Hi, Emmanuel.

Of course, we had questions. What kind of question was that? Mike, so I guess what caught us a little bit by surprise is, a, the fact that your sales are continuing; and b, that you've been able to set a timeline to get sort of those sales across the goal line. I appreciate the comments that you guys were out in the market earlier, but how are those conversations with buyers going? Has there been any conversation on changes in pricing? And how are they getting comfortable with closing on the timelines they're closing on when it feels like the entire world is paused?

The interesting thing, Manny, is this recession compared to the one that we experienced post the Great Recession in 2006 and '07. The government reacted a lot quicker. I mean, they had a playbook they could work with. I think the secondary treasury was more astute in the capital markets. So they pumped money into power and other programs. So you look at the treasury market, the asset-backed market—even CMBS—they're trading, what I call, more regularly. Right? So people are now trying to figure out what price they should deal at, not whether or not they can actually do it. Rates have dropped, obviously, precipitously low. So a lot of our buyers are looking at this and saying, wow, I can lock up relatively stable cash flows and finance advantageously. We do have a buying group, which consists mostly of individuals or groups of people that put together syndicates. The deal we have in Hoboken, in particular, is one where we're selling to a competitor of ours—a Japanese fund—a big bank that basically is funding equity sources for them. They're really waiting for the market to ensure there is no second bounce, and then they'll close on that transaction, which we felt was an opportune price. The deal we had with Onyx, the significant deal in Parsippany, got delayed a bit due to the financing, but now they're very close to recompleting the syndicate. It's not easy. We're a group that has done it. And I would point out, if you haven't done it in the last few years and start now, there's a learning curve. We are already at the end of that curve. My team is good at putting things together. The books were already prepared. The material was already arranged, and we can move on any asset we have at a moment's notice. That's a benefit for us. If you're starting today, it would take you several months to catch up to where we are.

Just turning to the suburbs. There's certainly been press about newfound demand for the suburbs, de-urbanization, satellite offices. Do you think that truly drives demand for the suburban assets that you guys currently own or are trying to sell? And does that change any of your desire to sell those rather than just be on the Waterfront?

We're going to sell them because we made a business decision to sell them, whether they'll be more valuable when we sell them or not is yet to be determined in the next few months. But Manny, let's look at what the trends are going to be. If you needed to restack your office location in Manhattan, the way to do it is similar to the residential business—you have to actually move out in order to restack, right? We're talking about changing density or maybe changing the platform from residential to a less densified environment. You don't need swing space. So one of the things that happened, just anecdotally, in our market is Citibank, which has about 300,000 square feet of sublease space on the market in Jersey City, pulled all of it last month. 300,000 is a lot of square footage to pull. When we asked, they said, 'Look, we may need this. It's space we already own. It's furnished or standard. And if we need to restack, we're going to use Jersey City as a place to do it.' We think that Jersey City should do well in the downturn, right? Because it's a price advantage. It has the type of available space today that you can use it. As you know, AIG is likely to—though not yet confirmed—move most of their operations from New York City to the Goldman Sachs building in our market, which is a couple of hundred thousand square feet. Our understanding this is a spinoff that will do a rework steel in that same space, about 120,000 square feet. Both are not an exit from New York, but I think there'll be a restacking as people reassess their footprint.

And I'm going to sneak in one more question, assuming maybe you have no other questions.

Go ahead. We'll have a few, Manny. We're in a good mood today.

Can you just give us an update on the proxy fight, if you will?

Last year, we had a different group of directors, with two from Glass and three from ISS, and all four were elected. We welcomed them to the Board, especially in the Audit committee, which provides the best insight into the company's operations. Two of these directors are part of the shareholder value committee, while one is currently on the strategic committee, dealing with strategic offers we have for a global transaction. In January, we reached out to the ten of us to ask if we wanted to continue serving, excluding Mike due to his retirement. All ten of us said yes, and we thought it was settled. However, unbeknownst to us, there were discussions with the four directors we believed to be independent. They approached us, expressing a desire for control and the ability to sell the company on their terms. They requested Mike's removal, considering him an obstacle, and indicated they wanted control. We proposed possible compromises but were met with a firm rejection, resulting in all eight directors being included on the slate without any prior communication or disagreement. Consequently, we had to rethink our approach. We had already interviewed Ferguson to fill Bill Mack's position and to find backups for longtime directors Albert and Urban Reid, who would be departing in the next cycle. We decided to expand our search for new directors and successfully identified candidates. We took our time to find five individuals who are willing to serve without compensation and understand the complexities ahead. I can confidently say our list of directors is impressive compared to competitors, featuring individuals experienced in navigating challenging industry changes, particularly in retail. This includes professionals like Don Wood, Mike from Brixmor, Lou from Acadia, Jimmy Behar from General Motors, and Howard Walk, who has extensive experience in real estate. Now we are facing a proxy battle with the vote scheduled for June 10. I'm happy to answer any other questions, but I think I should rejoin the queue for further inquiries.

Your next question comes from Steve Sakwa.

I was wondering if you could just provide a little more detail on the apartments and the trends that you're seeing in terms of move-ins and move-outs with all the shelter in place and how you're thinking about renewal increases in the marketplace today.

So what happens is obviously a shock to ourselves and our tenants. So when the stay-at-home came in place, people had already issued notices to vacate. They don't vacate—because they do it 60 to 90 days. We have a 60-day rule, so people sometimes give us 90 days and say, listen, I'm moving out in May, I'm moving out in June, I'm moving out in April. So many of those tenants came back and said, I'm not moving out. I didn't find a new place. I'm actually happy here. I want to extend for 6 months to a year. Some will even extend for 2 years. So as Marshall commented, you have buoyancy in the renewal rate. Normally, it was 55%, give or take, and it's around 63% to 65%. It's up like 5% to 8% in the first month alone. He and I both think that might go up another 10% to more like in the 70s, as people sit there and say, looking at where I am, am I happy? Do I really want to embrace moving change? We've done a good job of catering to our tenants' needs. It's kind of funny running an office business and a residential business, Steve, because the office guys—most of my colleagues are like not much is happening, no tenants. Well, in the residential business, everyone's home, and we have a lot to do. We believe that we will be able to attract new tenants. One of the things about the construction delay is it affects you differently based on which cycle you're in. If you were about to finish or build the last 10% or 15%, the stay is 100% no work because that close work prevents people from working within 6 feet. If you're pouring concrete and trying to finish on the outside of a building, the state doesn’t allow you to do that in order to protect you from weather. So our competition will not be able to deliver any new product to us also in the next 60 to 90 days. That's where we are, Stephen.

So can you maybe just discuss, Mike, kind of like what kind of renewal increases are you providing whether it's for June or July? I mean, are you at 0 increases for tenants and preserving their tenancy, or are you still able to push renewal increases through on multifamily?

It depends on the product. I mean, obviously, there are some tenants that are on the market. There were some that had a concession given to them when they first took the apartment. So when you look at that, we're burning off that concession. There were paying more the second year versus the first. So it looks like it is a rental increase. We're actually very fair-minded about what people are going through. I deal with Marshall every week to list the people that have issues. We go to everyone who's lost a job, who lost a roommate, so forth. Some tenants are obviously getting a hard hit in this environment, but others are getting 0 increases and others are getting a modest increase. We expect overall because we had a very robust first quarter. That will probably be 1.5 to 2 for the year if we can maintain where we are.

I was hoping you could go back to your comments on converting some of the corporate residential tenants and trying to extend lease durations. Can you just provide more details on exactly how that might play out?

Sure. So what's happened is that it's almost like you've seen the mindset of various customers go through and give them a curry of choices. We go back to people and say, listen, if you want to extend here are the options; some people are going and saying, listen, I really like it here. I don't think I'll move. I'll take the renewal increase for the next 2 years, but I want to lock in the next 24, 26 months. Others come and say, I want to commit, but I want to commit by the end of the year. I want to get to January because of my bonuses, so once 7, 8 months to basically get me to the end. And there's a hodgepodge in between people that are moving around for apartments and saying, I want to move to a better unit; I want to upgrade because they feel they can basically lock in. The corporate housing providers we had were essentially people who added corporate housing for executives who moved into the area to serve New York. It was essentially a long-term hotel business, indistinguishable from our regular rentals because most of them would say 3, 6, 9 months, whatever you are assigned to. If you worked at Goldman, Merrill, Morgan Stanley, you got an apartment in Jersey City, Boston, D.C. We have been winding it down over the last several months because the Airbnb pushback has been nationwide and will effectively fall under if they don’t have really long-term corporate stays. We're going to re-rent those apartments. We're about to do them now. We might be getting the furniture back, and Marshall and I have been talking about renting units out to students, which is a part of our business cycle. It will be fully furnished, but we will be able to get these units back. They typically tend to be in some of our better locations because the corporate guys were good at picking right buildings and right locations. So it's just something we will deal with over the next few months.

Okay. And I guess, how do you think about the NOI impact? Is there going to be a dip for a while before you can re-lease those spaces or—and then on rent also?

It's a small hit because they won't be paying us, and then we will be able to merge our way into that, hopefully getting better rents than they were paying us to begin with, then we’ll wind up in the next 3 to 6 months. This is the leasing season. Like I said earlier, there were two buildings I knew that would have to be delivered that will face competition from that will be postponed for the next 90 days. Because even if the governor looks to stay today, by the time they got the crews back to finalize punch lists and get the COs, we'll have a competitive advantage. And when they use that time, they basically rent out our product.

Yes. Just wanted to see if you could provide a bit more detail on the 111 River Street sale. It looks like pretty healthy pricing at $430 per square foot that keeps popping up around that market? And it looks like a pretty good read-through for the remaining portfolio. So just curious if you can start shedding more color there.

Yes. So I wanted to market the suburbs, which we did, and we're working through that. I also felt that I wanted to be able to transact, if I could, on some Waterfront assets to right our load. I looked at assets that were—good access but weren't core to the strategy, which basically has multifamily as the core and then the Harborside because of the zoning and the retail components space we build into it. So we marketed last year, Danny, to be very candid, 101 Hudson and 111 River. 111 River is one building of a three-building complex; two other buildings are owned by a competitor of ours who we deal with every day. We went to them and said, 'Listen, we're in the market; a couple of people wanted it; but do you want to buy this?' He wanted to buy it, right? It's a tight market. It's where—it's where Walmart has expanded. It's where Ernst & Young moved in a couple of years ago—some publishing companies—and it's a solid acute market, right? It has all the attributes of being in a dense area. The price is deceivingly higher than you think because that's a ground lease. That's a building that we have a long-term lease with the Port Authority in New York and New Jersey—a relatively attractive lease but ground. The building sits above it. We have John Wiley in for $37 escalated for long-term lease, and we've been renting at $50 for the remainder of the building. So a healthy remarket spread. He has long-term capital. He wanted to buy it. He didn't want to catch a deal where Wiley goes bankrupt. There are others—happening. So we signed a deal and we're waiting. We have to get through to get the portfolio assumption done. We have a loan on it that's going to be assumed. And that should close, hopefully, barring no other economic occurrence, sometime in August, we're hoping. Now 101 Hudson, just to give you more information, we were getting a price of around $400 per square foot, and that was still essentially a straight deal. There's no ground lease. Big building, 80% occupied. We thought we could get a little higher than that. It came out to about $500 million in total, and we were working through that. Bids kind of fell away as the market slipped, but we think we could go back to that as the market rebounds. People are looking at that attractively. And we've been backed up. There has obviously been a sale—sold the building at those levels. They sold an empty building by SJP Properties to Joe and Company for $385 or $4—sorry, $285 a foot, excuse me. So there's been a decent amount of activity in this marketplace. And the rent levels have been good so far.

Okay, that's helpful. And then just to touch on the Grow New Jersey program, it looks like local budgets across the nation are under strain because of the pandemic-related quarantines. Any thoughts or any updates on that program and discussions on restarting it? And how do you guys see that playing out?

I have conversations with the Governor's staff, the Governor, and the Speaker of the Senate on a regular basis, and they always come back to the same thing, right? It's on the build—the ability to pass as soon as Murphy and the Senate President agree on the cap level. Murphy's held out. Governor Murphy has held out for cash—the extent of presidential cash is not appropriate in this environment. It only gets addressed in this economic budget sense because they're going to want to grow the company, grow the state, and get jobs. One thing we didn't mention, we have a deal poking around for a couple of hundred thousand square feet from a tech tenant that we assume would have to take a Grow New Jersey incentive, right? But the company has done a lot of due diligence on our buildings. We're expecting RFP in soon, but we look favorably at this environment going forward.

No more questions so far. You may continue, sir.

Thank you. I wish everyone well—stay happy, safe, and healthy. Look forward to a more normalized environment in the upcoming months. And I thank all for the time and attention this morning. Greatly appreciated by all of us. Do well.

This concludes today's conference. You may now all disconnect.