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Mack-Cali Realty Corp (NYSE:CLI)
Q3 2019 Earnings Call
Oct 31, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day everyone and welcome to the Mack-Cali Realty Corporation Third Quarter 2019 Earnings Conference Call. [Operator Instructions] At this time I would like to turn the conference over to Michael J. DeMarco Chief Executive Officer. Please go ahead sir.

Michael J. DeMarco -- Chief Executive Officer and Director

Good morning everyone and thank you for joining the Mack Cali's Third Quarter 2019 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 our 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. As always we believe the estimates reflecting 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 filed our supplemental this quarter. As always please contact my partner David with any further suggestions about disclosure you'd like to see. As we have done before we're going to break our call down into the following sections: I will make some opening comments nick will discuss our office leasing performance and our view of the markets going forward Marshall will provide insight into multifamily operations which is really hitting on all cylinders; and then David will recap our operating results and I will close with some comments. We had a similar operating quarter this quarter and we delivered positive results across all operating metrics. We had another quarter with a greater deal of transaction activity which is disclosed in our supplemental that allows us to continue executing our plan regarding sales purchases and financings. I continue to believe that our teams are operating at the highest levels.

This quarter combined with the last 2 quarters activity in transactions is allowing us to execute our vision for the Waterfront. That vision is simply to be the largest owner of Class A multifamily with a core group of office which allows us to define the live work and play in our market. However on Waterfront leasing results so far for 2019 are below expectations for velocity regarding total amount of square foot leased. Rates are hitting on our expectations as are concessions. We believe we can achieve greater results over the upcoming quarters which Nick will go outline when he goes through his comments. We are working on a number of large new deals in the suburbs and the Waterfront which are both active. Regarding the New Jersey office market in general as discussed before in the last call as of June 30 the government did not approve the continuation of the Grow New Jersey incentive.

There's still a disagreement between the government and legislative branches regarding the size and scope of the new program not whether there should be a problem at all. All the branches of the government in New Jersey are democratically held which will continue to be at next Tuesday's election. We expect based on recent conversations with several parties that this disagreement will be resolved in the upcoming weeks after the election. I expect tour activity to be light until then and until there's certainty around these programs. However we do have several new deals in the marketplace that we are pursuing. Regarding our overall portfolio we see no pushback in prices nor do we feel we have the wrong type of space. I still believe we've the makings of strong 2020. Regarding our multifamily platform I'd like to make some brief comments before my partner Marshall makes his. We are still able to push rent in the multifamily business as we continue to invest in our products and add to our holdings with the acquisition of brand-new developments.

Jersey City and Hudson county overall becoming a place of choice for tenants to live in the New York metropolitan area. The 1300 units delivered in the last four months in the Waterfront area of Jersey City are fully rented. The upcoming supply is light for the next several quarters. We're remodeling our product in our older buildings in order to capture the higher rent. Our return to dates have been solid which Marshall will elaborate on. We look forward to accepting deliveries of our 2020 product which will substantially add to our class A holdings. As I said before starting in 2020/2021 the new product that we deliver of both Harborside Plaza 1 and 25 Christopher Columbus and the planned retail changes at Harborside with the inclusion of Whole Foods and several other restaurants will totally change the way our Jersey operation will be looked at. We will be expanding restaurants and allocations in the upcoming quarters.

Additionally New Marriott Hotel Imperial called EnVue which opened last quarter is to continue to positively impact and define that market. We have the capital necessary to complete our pipeline which David will outline. We expect to announce new development deals in the Waterfront in the upcoming quarters. David will talk about our planned sales for 2019 which are ahead of schedule. We're in the process of marking a new sizable -- marketing a new sizable suburban office deployable for sale. These efforts are going very well.

We expect if they progress to present to our Board of Directors in December a definitive transaction pending Board approval of these sales which we expect they will be completed in the first quarter of 2020. We will update you on these efforts on our next call. The proceeds from the sale as David will elaborate will be used to repay outstanding debt. All of our 2019 sales will go to pay down debt. Therefore leverage will continue to come down in the form of repayment of our unsecured term loans which we only have one remaining to date and we plan to redeem our bonds next year with future sales. I'd now like to turn it over to Nick for an overview of leasing. Nick?

Nicholas A. Hilton -- Executive Vice President of Leasing

Thank you Mike. Across our portfolio we posted an unusually slow quarter for Q3 2019 signing just over 69000 square feet of transactions resulting in our Core and Waterfront portfolio finishing at 80.8% leased at quarter end. Of these transactions approximately 62% or 43000 square feet were new leases and 38% or 26000 square feet were in place renewals. Across all core markets our rents on Q3 deals rolled up 10.9% on a cash basis and 22.4% on a GAAP basis and we committed $5.62 per square foot per year of lease term. As we turn our focus to the specific markets the Waterfront closed just over 30000 square feet of new transactions finishing the third quarter 77.9% leased and we continue to see a positive rent push with increases of 18.8% on a cash basis and 36% on a GAAP basis.

Looking at our current activity level we have approximately 600000 square feet of new transactions currently in active negotiations across our diverse tenancy mix including financial services co-working and shipping just to name a few. We also continue to have strong tour activity with positive responses to the improvements we have made and continue to make within our Waterfront development. Looking ahead we have a limited amount of lease rollover the next 15 months with only 61000 square feet expiring in 2020. As a result we expect to make continued gains as we improve the overall occupancy levels on the Waterfront. Our suburban portfolio also posted an unusually slow third quarter. Specifically we executed approximately 34000 square feet of transactions.

However although our overall transaction square footage was light we continue to see a positive rent push with increases of 1.9% on a cash basis and 7.8% on a GAAP basis and our starting rents averaged above $32 a square foot. Turning to 2020 we have over 487000 square feet expiring that year of which we know approximately 26% or 131000 square feet will vacate. We are confident in addressing the balance of this rollover as we are already in active negotiations with approximately 225000 square feet of transactions across the suburban portfolio. With that I'd like to turn the call over to Marshall.

Marshall Tycher -- Chairman, Roseland Residential Trust

Thanks Nick. During the quarter Roseland continued the execution of the company's New Jersey Waterfront strategy with 2 significant transactions. In September we acquired Liberty Towers institutional quality 648-unit community in Jersey City's Paulus Hook. We are actively evaluating operating efficiencies and are preparing a comprehensive common area and unit improvement plan for the property. The Liberty Towers acquisition was an asset swap with the disposition of the Alterra and Chase communities north of Boston. Though the swap will initially be slightly dilutive to earnings we sold suburban Boston assets for high-rise Waterfront towers in our core geography. Our third quarter NAV estimate is $2.24 billion. Net of Rockpoint's interest in Mack-Cali share this figure is $1.79 billion nearly $18 for Mack-Cali share.

Transformative transactions over the last four years reflect the composition of our NAV. 70% is long that's in the Waterfront 79% of NAV is in operating or in construction assets and just 0.3% is now in subordinate interest. Operationally Roseland's same-store portfolio experienced a 2.7% increase in NOI over second quarter 2018 on a GAAP basis and finished third quarter at 96.1% leased. Our same-store results were negatively impacted by our active renovation programs at Monaco and Marbella. At these properties we have embarked on a full repositioning to modernize the units common areas and amenities. Initial feedback has been positive with releasing units achieving 10% premiums to the unrenovated apartments. If we adjust the reporting same-store results to account for these off-line units third quarter NOI growth would have been 6.6%. In 2018 we delivered 1212 units in the marketplace.

This portfolio is excluded from the reported same-store results is currently 98% leased and is forecasted to produce stabilized NOI of $26 million. In July the company opened a 208 key EnVue Autograph Collection Hotel. Initial performance of our 2 Port Imperial hotels has been strong and they serve as a cornerstone amenity and source of place-making and cross-marketing opportunities with the maturing Port Imperial community. Primary source of future cash flow and value growth is our active construction portfolio comprised of 1944 units. Collectively this portfolio is forecasted to generate NOI of approximately $61 million at a yield on cost slightly above 6%. The company's remaining capital commitment to this portfolio is approximately $70 million. This capital obligation along with future development requirements will be sourced from a combination of Roseland's organic cash flow refinancings select dispositions and Rockpoint's remaining capital commitment as amended in June.

The construction portfolio is highlighted by 3 developments along the Hudson Waterfront totaling 1410 units. RiverHouse C and RiverHouse 9 and Port Imperial where our last delivery RiverHouse 11 is 99% leased and the Charlotte in Jersey City which will include a 36000 square foot onsite elementary school which will be a significant amenity to the Jersey Waterfront neighborhood. Looking ahead we are preparing for a series of additional construction starts in Port Imperial and Jersey City in 2020 and are also evaluating nonstrategic apartment and suburban land dispositions. With that I will turn the call over to David.

David J. Smetana -- Chief Financial Officer

Thank you Marshall. I will have a few brief highlights before turning the call back over to Mike. It was another in-line quarter for the company. Office operations continue to fall within budget and operations remain healthy in our multifamily division. We reported core FFO per share for the quarter of $0.38 versus $0.43 in the prior year. The year-over-year decrease once again is due mainly to move out of tenants on the Waterfront and lost NOI from asset sales executed as part of our disposition program. Cash same-store NOI in our office portfolio declined by 4.4% and GAAP same-store NOI increased by 1.1% in the third quarter. The declines on the office side have moderated as the last of the Waterfront move-outs in 2018 were mostly complete by the end of the third quarter last year and rent commencements for 2 major blend-and-extend deals we announced at the beginning of the year are now being recognized in income.

As mentioned by Marshall Roseland's same-store NOI improved by 2.7% this quarter and revenue growth continues to be affected by ongoing renovations of lobbies and units at both of our Monaco and Marbella properties. On the transaction side we had no office dispositions in the quarter. After quarter end we had a suburban office property trade for $26 million with an additional $84 million of assets under contract expected to close by end of the year 2019. If all remaining assets were completed by year-end this would place disposition activity toward the high end of our range. I would also note we have an additional noncore office asset under contract was set to close in early 2020 for $36 million. The remaining 2019 sales will be weighted toward the end of the fourth quarter with proceeds targeted toward debt repayment namely our term loan. I will also mention the $409 million Liberty Towers acquisition was completed on September 23.

Turning to the balance sheet. During the quarter we continued to migrate toward our secured borrowing strategy. On August 5 we received $150 million in proceeds and a 10-year 3.8% coupon interest-only mortgage that we placed on our 111 River office asset in Hoboken New Jersey. The proceeds were used to retire the $100 million balance remaining on our $350 million 2016 term loan and we used another $45 million to reduce the 2017 term loan balance to a balance of $280 million. We've notified our banks of our intention to use the first of 2 extensions on the 2000 term loan in January 2020 for any remaining balances after paydown from our noncore asset sales. I would note the net debt-to-EBITDA metric at quarter end was inflated by our multifamily asset swap. Accounting for the proceeds received in October this metric would have been 10.0x at quarter end.

Our residential secured debt balances will continue to increase as we fund our value-creating $1 billion multifamily pipeline. These developments are projected to produce a roughly 6% NOI yield and thus will provide $60 million of additional NOI when they come online and stabilize throughout 2020 and 2021. Lastly shifting to our guidance and supplement. We are tightening our core FFO guidance range to $1.59 to $1.64 per share. The range still straddles our initial guidance midpoint despite an earlier than anticipated sale of our flex portfolio partially dilutive multifamily asset swaps and increased disposition guidance all of which were not contemplated at the time of original guidance. We received proceeds from the sale of our Urby tax credit for roughly $2.6 million at share in October and thus will have a benefit to our Q4 FFO of approximately $0.03 per share.

We've increased our same-store NOI guidance on the office side to minus 1% to minus 4% on a GAAP basis and minus 6% to minus 9% on a cash basis an increase at the midpoint of minus -- of plus 1.5% and 2.5% respectively. We are leaving full year multifamily same-store NOI guidance in place. This multifamily guidance takes into effect the drag from redevelopment activities at our Monaco and Marbella assets and does not include our Boston assets for the full year which contributed a 100 basis points excess benefit to the same-store NOI pool through September 30. Our NAV was updated as it is each quarter based on our most recent underwriting of each of our assets including individual adjustments for the net value of assets being placed under contract. GAV on a companywide basis was decreased by 1.53%. With that I now turn it back over to Mike.

Michael J. DeMarco -- Chief Executive Officer and Director

Thank you David. In closing as my colleagues have outlined I continue to believe we're set up to have a solid 2019 from an execution point of view with the results of our hard work showing up in 2020 and beyond. Our focus as we've outlined is now 100% on the Waterfront which really means growing our multifamily business. For example we intend to exit our D.C. joint ventures and have made progress on these transactions. We have land sites in Philadelphia now under contract as before they were marketing. We have land sites in suburban New Jersey that are now being marketed which we expect some of them to be closed in the upcoming months.

All this goes to either pay down debt or fund our development. Additionally we're in the process of selling the remaining portion of our Boston assets. We look forward to purchasing additional assets in Hudson county to compliment our development. We are very excited about our operating portfolio and how we'll continue to grow with excellent new projects and dispositions being taken out of our operating metrics. The real key of our strategy is creating a sense of place on the Waterfront. I'm confident the total effect of our coordinated efforts of office retail and multifamily will produce excellent returns in the short and long term. And with that I'd like to take some questions. Operator let's go trick or treating.

Questions and Answers:

Operator

[Operator Instructions] Our first question today comes from Derek Johnston of Deutsche Bank. Please go ahead.

Derek Johnston -- Deutsche Bank -- Analyst

Hi, good morning, everyone. You guys have now posted 7 consecutive quarters of negative same-store NOI. And I know a lot has been driven by the dispose and the portfolio repositioning. But at what -- or how about this when do you believe we will see an inflection point back to same-store NOI growth given that the comps are certainly more favorable at this point?

David J. Smetana -- Chief Financial Officer

Eric it's Dave Smetana. As I mentioned you noticed in our release actually our GAAP same-store NOI for office has started to turn positive this quarter because we're recognizing GAAP rents from some of our big renovations or our big releasings to large tenants. And so that has already turned. We believe cash will follow. The last tough comp we have on the move-outs was that 90000 ICAP move-out in October of last year. But basically from here we believe without any further tenant fallout and we only have 40000 square feet rolling next year that cash is going to turn positive in 2020. GAAP is already positive.

Derek Johnston -- Deutsche Bank -- Analyst

Okay. Great. And just look regarding the overall office portfolio just wondering like where is the pushback guys? I mean are you concerned about companies leaving New Jersey and maybe New York City and seeking tax incentives elsewhere I don't know lower tax states maybe the Sunbelt? Could it be a pushback on pricing or TI packages? And look I'm asking this because we appreciate the improvements you've made especially to the Waterfront offering. So I'm really just trying to understand the dynamics or headwinds given the quality of the portfolio and favorable pricing versus Manhattan and also acknowledging that it's not like you're getting a lot of credit for this portfolio right? But just something on the overall leasing market in general please.

Michael J. DeMarco -- Chief Executive Officer and Director

Excellent question Derek. This is Mike. If you looked at it from a macro to micro point of view macro it's been a tough setting for all office product other than some spots on the West Coast which have been really benefiting from tech. I mean you look at my colleagues at Vornado SL Green Paramount Empire State even Boston Properties I don't think the last five years has really been a superb year from a return point of view. I think New Jersey City is still a mecca for job creation especially on the tech side of it. It's been amazing how many square feet have been absorbed. Now you have a little bit of the WeWork fallout which will be affecting portfolios. On the New Jersey side we've always been a secondary location. People came to us because they wanted to have a benefit of having a lower cost which we're starting to see a little bit of that.

So we think as things slowdown and recession might be looming people look at saying "hey let's move people to New Jersey." So we're getting some activity. For the core portfolio in the state itself it's a big pharmacology state. I mean it's big on pharmaceutical companies. We have seen a little bit of that ebb and flow as far as new product come in. So we've been looking at shedding assets that we don't think that we could find the right home for them over time. So we continue to shrink our portfolio which is why we've invested in multifamily. I still believe in a core portfolio on the Waterfront could work under the right scenarios. But if that doesn't work I'll be happy to basically exit that business also.

So we look at it as very an open-eyed kind of jaundiced way and say it would be better if the state was more open for business which it's clearly not; we'd be better if the incentives are already embraced by the governor and legislative branch. We think there's a lot of things happening in New York that favor us to some degree. There's a lot of things happening in New York that are getting people to look at say is this the right place for people to work and live? Especially when you have conversations about a housing index and cost of whether employees can actually live here versus Austin Texas or Charlotte or Jacksonville. But a lot of those markets fill up relatively quickly. I mean they get relatively tight and you can see stories already surfacing about education problems and transportation problems in these new burgeoning submarkets.

But we look at it -- every quarter we look we've been selling every quarter. We continue to basically harvest we take the money invest in multifamily. Interesting to note Derek you haven't covered us for the five years we've been doing this but the day we started June of 2015 we were at $17.02 that morning. Our multifamily division is worth about $18 today which we grew from a couple of dollars back then. So we made a decision to basically reposition our portfolio. So we're not weathered to anything.

Derek Johnston -- Deutsche Bank -- Analyst

Which makes sense. And just as a last follow-up do you think that there could be ultimately a shift from the 40-40-20 model 40 multifamily 40 Waterfront and 20 suburban? You think there could be a shift to that going forward based on the environment?

Michael J. DeMarco -- Chief Executive Officer and Director

Yes I would love for the suburban to be 0 in a year or so. I would also like the multi to be 60 or more growing the other way. I mean I will follow the money and that's what we do. We think if you look at our returns in the multifamily business we've done an excellent job of producing. We've not -- I think we've done a very good job of being defensive in earning. We've had -- every quarter we've had positive cash and GAAP on a company that had negative for several years before we took over but you're still fighting a tide that maybe doesn't work your way. As again before open-eyed we will look at it very carefully.

Derek Johnston -- Deutsche Bank -- Analyst

Thank you, Mike. Thanks, everyone.

Operator

Our next question comes from Jamie Feldman of Bank of America Merrill Lynch. Please go ahead.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Thank you. Good morning. So I guess you guys had mentioned a 600000 square foot of new transactions in the pipeline across multiple industries. I think you had mentioned co-working as one of the industries. Can you talk about the composition of that pipeline in terms of suburban versus Waterfront? And then how much co-working would you be willing to add to the portfolio at this point and which operators?

David J. Smetana -- Chief Financial Officer

Yes no problem. The 600000 square feet I referred to was Waterfront specific. The -- I later referenced 225000 square feet we're in active negotiations on in the suburban portfolio. The overwhelming tenant mix right now is financial services and that's a large chunk of it but we do have a -- we are talking with co-working as well for about 70000 to 80000 square feet of that Mark? That's in suburban it runs through a large gamut but also again financial services insurance the FIRE industries as well.

Michael J. DeMarco -- Chief Executive Officer and Director

Jamie we have a current tenant that's in our portfolio in 2 buildings for about 40000 square feet. And with the absence of WeWork in the marketplace they wanted to expand with a new concept to go 120000 square feet an extra 80000 square feet. That's what we're looking at.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

And that's at the waterfront?

Michael J. DeMarco -- Chief Executive Officer and Director

Yes. So in 2 buildings existing we'll have a -- that will go into -- one of the same buildings for another 4.5.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. And then as you think about -- it sounds like you want to keep selling down the non-Jersey City apartment assets. I guess how do you think about the big picture? I mean if you were to eventually spin off that portfolio the idea of being completely concentrated in one submarket as opposed to something a little bit more diversified I'm just curious what your thought process is there.

Michael J. DeMarco -- Chief Executive Officer and Director

Well I looked at all the great companies I have had the pleasure to work with as a banker in my career whether it's Vornado who started out with a fairly big Penn Station portfolio. My pals at SL Green who dominated Grand Central. Mort Zuckerman had 3 blocks on Park Avenue and Lex that probably had several billion dollars. The conversation doesn't bother if you have the ability to operate it. We're looking at a region that runs from the battery to like 75th Street in Manhattan. It's effectively it's just like being in Manhattan on the New Jersey side. We tend to have a fairly good foothold on getting things done in these marketplaces. And I'd rather be that than have a disparate portfolio in D.C. and Boston in which I'm more of a tourist than I am a professional.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. And then what are your latest thoughts on a residential spin?

Michael J. DeMarco -- Chief Executive Officer and Director

Well we've been building that toward and we've had these conversations Jamie you and I for this last several quarters. It depends on the size and we're getting close to it. And when we deliver the next year deliveries which is $1.2 billion we'll probably put into the ground Marshall and I were chatting about maybe $1 billion some really great projects. You'll have the size and scope where you could look and say "wow that is a really really solid multifamily company with great operating metrics." And by that time hopefully you'll have exited the suburban and you're left with hopefully a leasing up Waterfront. If not you have to deal with the Waterfront accordingly.

But you have value creation as I said before. Each quarter the multifamily business continues to perform better numbers. We keep on taking land turning it into service which introduces increasing NAV. It goes on and on. It's a little bit of a production cycle for us. We're in the manufacturing business today but from where we started several quarters ago to where we are now it's a linear progress. And at some point you're looking to say "oh it's time. " I don't know when it is. I don't think it's this quarter but I can see it in the future.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. And then finally how should we think about the need for a special dividend if you're going to be selling assets and paying down debt as opposed to redeploying into real estate?

David J. Smetana -- Chief Financial Officer

No we're good. I think we have -- I mean the first -- everything else has been tax strategies. And I don't think people really -- they give us credit. I'm not looking for more credit. But the complexity of taking an existing REIT and rebottling it up and going into a different business without paying taxes is somewhat more art than science. Maybe it's a combination of both. We don't have a tax problem or a special dividend need in the foreseeable future. We're pretty good.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. All right. Thank you. Great Day, Jenny.

David J. Smetana -- Chief Financial Officer

Thank you.

Operator

Our next questions today come from Emmanuel Korchman of Citi. Please go ahead.

Michael Bilerman -- Citigroup -- Analyst

It's Michael Bilerman here with Manny. Mike can you talk a little bit about the potential dilution as you migrate and sell down the suburban assets? In your updated NAV you have those at about a 10% cap rate. And if you're going to use that to pay down your debt there's a pretty big dilutive spread. Putting aside all the other things you're working on just executing that selling assets at the 10 cap paying down debt at 4 to 5 could cause anywhere from a $0.25 to $0.30 drag on FFO. So can you talk a little bit about how you sort of envision executing a sale without the dilution?

Michael J. DeMarco -- Chief Executive Officer and Director

Well there's going to be dilution. That's just a reality. We're going to basically -- the latest batch we're doing is about a 7% cap rate. So the dilution isn't that bad. The multifamily comes online starting in next year. So we pick up some income. We have the hotels ramping up this year which picks up some income. We think we're going to have hopefully a little bit of leasing which picks up some income. And we have to make a determination Michael do you want to have debt and hold it out when you have a recession coming on or would you like to be a little less levered and exit maybe a portfolio that you don't want to own long term? That's a conversation for the Board to have on December 19 at our board meeting which we're prepared to make those comments.

And at that time when we give guidance for next year we'll break work into those numbers. But yes it is going to be dilutive. It's not substantially dilutive but it's -- I would put it in a slightly dilutive category. But we've been managing that forever. But I also think that if you look at where we wind up with a portfolio and less debt and more multi it's a good trade-off. And also looking at FFO our AFFO basically stays in a pretty solid range because we're shedding assets that use a lot of capital a lot of leasing commissions a lot of downtime a lot of enriched dollars. So the portfolio actually is pretty clean. So it's a balancing act.

Michael Bilerman -- Citigroup -- Analyst

But if looking at the supplemental right pages seven eight and nine right? You have the suburban portfolio valued today at a 10 cap. And I think in response to another question you said you want to see that at 0 by the end of the year ideally selling out of the suburban. So why wouldn't it -- if you just updated the slide to a 10% cap you're saying it's a 7% cap? I'm sort of missing the 2.

Michael J. DeMarco -- Chief Executive Officer and Director

Well it's a 10 cap because we look at the tenants that are moving out but the income's going to migrate down and we haven't replaced yet. We also haven't spent the capital. What I said was the asset that we currently have for sale the $250 million that we've put out is running around a 7% in-place NOI rate. The next batch which we have to do right? And I'm not saying we're selling everything at one time right? But we're going to start selling assets in buckets. That bucket will be slightly dilutive and then there'll be a bucket after that and we try to match that with deliveries of multifamily. As I said before the hotels are kicking in a little bit which gives some incomes.

We got some cost savings to do. There's a few other places we can do it. But don't just look at the numbers you've done this before where you go and say 10.5% doesn't make sense dilutive. We've been doing this now for the last several years. We want to get down in debt. You want us to get down in debt. You want us to exit the suburban. We want to exit suburban. There is a path. I think we wind up in a relatively good spot as evidenced by the FFO.

Michael Bilerman -- Citigroup -- Analyst

In the $250 million you're talking about is the transaction you talked about saying that you're going to bring it to the Board at the end of the year.

Michael J. DeMarco -- Chief Executive Officer and Director

$250 million is the portfolio I already have so we have -- stuff that we have in '19 and '20 closing is about $250 million.

Michael Bilerman -- Citigroup -- Analyst

And then how much of the deal you referenced in your opening comments another batch of suburban sales that you want eventually to take to the Board that would be the remaining $250 million out of the suburban portfolio?

Michael J. DeMarco -- Chief Executive Officer and Director

No. The remaining portfolio is probably worth about $900 million and change. A portion of that I'm going to recommend to the Board on December 19. I haven't figured out exactly what that is yet. And when I disclose it to them I will disclose it to you.

Michael Bilerman -- Citigroup -- Analyst

How big is that then?

Michael J. DeMarco -- Chief Executive Officer and Director

Let me put it to you in slow math. And this is -- I'm doing this off the top of my head but I usually get it pretty good. We have about $1.150 billion of total suburban assets about $250 million of it we've already contracted for sale in various small bits. And it's again the theory of doing you worse. That would leave you with 5 assets -- 5 pools of assets Monmouth Metropark Short Hills Giralda and Parsippany remaining. Those equal somewhere around $900 million-plus. I can't get exactly the right number. We go through it. Now that $900 million plus I have a portion of it that I'd like to recommend to the Board for sale in December.

I haven't gotten approval yet. I don't front-run my Board I don't front-run the process. So neither the amount will I source to you because that would be in effect front-running but I will go recommend a portion. I will then recommend a strategy to see if we can't rid of all of that over the next 12 months. That's a strategy we have a conversation on in December.

Michael Bilerman -- Citigroup -- Analyst

So it's a combination of both the class A suburban and the suburban where you're going to be left with Hudson Waterfront and the residential. So that total $1 billion is what you're chipping away at which reflects both a 10 cap...

Michael J. DeMarco -- Chief Executive Officer and Director

It's a $1.150 billion.

Michael Bilerman -- Citigroup -- Analyst

Yes the totality of those -- I'm just using GAV right? The totality of those 2 columns of narrowing and ratcheting that down? Manny you had something sorry?

Emmanuel Korchman -- Citi -- Analyst

Thanks Michael. Just if you think about the leasing comments that Nick made earlier and combine those with your comments Mike the tours and the traffic and demand in New York proper hasn't been great. And I think that's a conversation we've had. So what's tempting those tenants to look at your portfolio especially without the tax advantages in place? Or is it simply just a pricing game and they continue to look at it from that perspective?

Michael J. DeMarco -- Chief Executive Officer and Director

So it breaks into 4 tenants make up the 600000 Manny I'm going to do it slowly. So one of them is 80000 square feet or 60000 to 80000 square feet of co-working from an existing tenant that we already have which you can easily look up and find what that is. Two we have a shipping company that wants to be on the New Jersey side because of the port of -- the Port Authority relationship with Port Newark and Elizabeth right? That's about 60000 square feet. That's 140000 or about 25% of what we just discussed. The next tenant is a tenant that has been in our market before has been in our buildings before but has exited and is not looking and saying "I want to move out to New York again. And I've always done well driving in Jersey City.

They're about 150000 give or take maybe a little bit more maybe 180000. So that's -- and now we're moving up to about 300000 plus. The last tenant is a tenant that's existing in the New Jersey market who's in a building for a long period of time coming up on one of those 15-year renewals. And they look at the knife and say do I want to -- everybody has to restack at the end of 15 years. Nobody has it right. Technologies has changed the whole millennial class seating open format. Do I want to do it in place? Or do I want to move to Mack-Cali's nice new building they renovated that I can do it as I meet -- as I need to and they're leaning toward moving and that's the mix of the 4 tenants is that clear?

Michael Bilerman -- Citigroup -- Analyst

Yeah, thank you for that.

Michael J. DeMarco -- Chief Executive Officer and Director

Thank you.

Operator

Our next question today comes from John Guinee of Stifel. Please go ahead. Your mind is open.

John Guinee -- Stifel -- Analyst

Okay. I think your last quote Mike was operator let's go trick or treating. So tell me in this dialogue what's a trick and what's a treat?

Michael J. DeMarco -- Chief Executive Officer and Director

John I was assuming that getting you on a lovely Thursday with this is nice cloudy weather is just a treat that I just -- I can't believe. This is getting the big candy bar from the neighbor. I didn't expect to get it; plus money is found in the wrapper. That's what I get when I get you John on the phone on a Thursday in the middle of a long week.

John Guinee -- Stifel -- Analyst

Let me just ask this really quickly. Your suburban office portfolio is worth about $1.150 billion I think you said that's an 8.5% cap. And I think David or Marshall said that you're going to -- you have about $70 million of spend and then $1 billion worth of starts on multifamily which actually gets you to about $1.150 billion also. So is it safe to say your maximum both office disposition matches your development starts dollar for dollar in the next 12 months?

Michael J. DeMarco -- Chief Executive Officer and Director

No it's unrelated. So what we were trying to convey and I'll try to make it clear is that with the existing pipeline people often ask us do we have the capital? We only have $70 million remaining and we clearly have the capital to complete that pipeline. And what Marshall didn't outline which I might as well we will have starts delivering in more than Revere in the first quarter; we'll deliver a Short Hills shortly thereafter; October shortly thereafter. The Port Imperial -- it depends on how you look at time. Port Imperial has 2 buildings coming on at the end of 2020. And then at the end of 2021 we deliver the project in Jersey City we call the Charlotte. So we have those starts already built. We get a tremendous amount of income from that which is what I was trying to convey to Michael Bilerman about.

Hey you've got to match up the 2 you may have a little bit of lag but people can see a path of suburban with high capital low growth to multifamily brand-new in a market that you have expertise and dominance. Is this a good trade? I would assume yes. The next start that I outlaid because people always want to know is we have several sites as we continue our building program that will be done either in Port Imperial and 2 sites in Jersey City. One is going to be done as a joint venture. They total about $1 billion give or take. We haven't really whacked down every dollar of the capital but we'll be doing that over the next several quarters. We don't expect those starts to be until June of 2021.

John Guinee -- Stifel -- Analyst

Okay. So you're talking about on page 37 basically at the Weehawken and the 2 Jersey deals here which say target start is 2020 right?

Michael J. DeMarco -- Chief Executive Officer and Director

Yes. Basically yes. It's one we call the Park which is at the southern end of our Weehawken holdings. It's next to a building we built with Hartz called the Estuary. It's a great submarket. It's a beautiful site. It's got 270 degrees of frontage looking at New York City and it surrounds it by ball fields that the city has put in. It's actually a gorgeous building especially for families. We expect that one to be a true winner. We have a site outside my window which we call Plaza 8 and we have the second building of Urby which has obviously been a very successful project for us that we'll be doing a joint venture with Ironstate.

John Guinee -- Stifel -- Analyst

So -- and then I think David said that you're going to lever up the stabilized multifamily portfolio on a secured basis?

Michael J. DeMarco -- Chief Executive Officer and Director

No. What will happen is we will be selling assets and taking capital out of existing deals. We will sell Worcester for example John which we've done a very good job on fully leased not a core holding for us. We probably have $50 million to $60 million of equity in that project. We have the same and we have some Boston projects that have the same that we could look at Phase 3 which will be coming online. We probably have $60 million of profit in that deal or equity. Those will become the foundation pieces to build at least one of those towers.

John Guinee -- Stifel -- Analyst

Gotcha. Okay. Thanks a lot.

Michael J. DeMarco -- Chief Executive Officer and Director

Thank you.

Operator

Our next questions come from Daniel Ismail of Green Street Advisors. Please go ahead.

Daniel Ismail -- Green Street Advisors -- Analyst

Morning, everyone. Just can you talk a little bit more about the changes in the NAV estimates? Are any of the reductions a result of the feedback received on the assets you're marketing? Or is this kind of skating to the puck on -- based on where you see general market conditions?

Michael J. DeMarco -- Chief Executive Officer and Director

We take a pretty big-ish review quarter-to-quarter and we do a really deep dive at the year-end obviously because you file a 10-K versus Q. The Qs we basically use a couple of things: asset sales we look carefully at what has transpired in the quarter but it's more of an adjustment period. So we're looking at numbers and saying look it's multi-up yes look at some of the things happening in office. Let's move it down. We're going to look at as we go through the sale process I just laid out looking at the numbers we get in then look at the remaining portfolio and probably take a very very deep dive on this year-end. We'll have the time to do that and then you can expect it. But I look at the NAV as being well thought of as of the information we use now and we're going to spend more time and more depth which will go through things that we're looking at now.

Daniel Ismail -- Green Street Advisors -- Analyst

And can you frame year-over-year net effective rent growth for some of your office exposure particularly for the suburban assets?

Michael J. DeMarco -- Chief Executive Officer and Director

I apologize that you came in a little garbled on that one.

Daniel Ismail -- Green Street Advisors -- Analyst

Yes can you frame year-over-year net effective rent growth for your office exposure particularly for the suburban assets you're marketing?

Michael J. DeMarco -- Chief Executive Officer and Director

The suburban have been relatively in the same line as the overall metrics. We've been getting some good roll-ups in places like [Indecipherable] we put a bunch of money into Metro Park does really well for us. We've got some good things in Parsippany. And we've had I would say between the dollars that we've invested maintained our cash flow growth. And it's become somewhat more stabilized. We get $32 today in Monmouth. When I started in this company we were probably $26 to $27. You picked up $5. Metro Park is a $37 $38 market; it used to be a $31.

Short Hills is relatively flat but we get some great numbers there. And people still can get the roll-ups. And Parsippany we probably moved from a $20 to a low $30 market. But I look forward -- what I don't think is existing there is that much more movement which is one reason we're looking at basically shedding those assets. We've stabilized and we put money in. Now we should take that money and redeploy it into assets we think can grow more precipitously.

Daniel Ismail -- Green Street Advisors -- Analyst

And just last one for me. Are there any other delevering actions being considered or equity issuances on the table for '20 to reduce debt?

Michael J. DeMarco -- Chief Executive Officer and Director

No. What's going to happen is I've outlined the strategy before. When we get to the right portfolio which Jamie Feldman might put out as a multifamily portfolio you either have a spin in which you do a recapitalization in order to get to the right level. You can sell that company to get the right amount of money but to recapitalize today to raise equity on a portfolio that you're still shifting through is I think a fallacy and false use of time. So no equity raises in the foreseeable future other than what we do it with the Rockpoint people which is basically at NAV which is useful and productive for us.

Daniel Ismail -- Green Street Advisors -- Analyst

Thanks, guys.

Michael J. DeMarco -- Chief Executive Officer and Director

Thank you.

Operator

Our next question comes from Jason Green of Evercore. Please go ahead.

Jason Green -- Evercore -- Analyst

to morning Just a question on New Jersey incentives. In your opinion being closer to this what's the downside risk for how long this incentives process could play out?

Michael J. DeMarco -- Chief Executive Officer and Director

I think if it goes past the first quarter I would be shocked. I mean I think they continue to make proposals which the governor has rebuffed but it's going to get to a short end of that spectrum as people really do believe the incentives need to be done. You can see that the economy is slightly slowing across the United States the government -- obviously the treasury cut rates yesterday. You have to be somewhat truly opaque not to look and say at the governance level say hey "I should have an incentive program in order to secure jobs."

I think he wants it. I talked to his CDA people. He's pro business on a certain modified scale. The Senate President has a different view. I think the 2 of them need to come together and reach an agreement. As I said in my remarks they're both democratically held institutions which is the legislative senate and the governor. We have the assembly men get reelected this coming Tuesday in a general election. I think after that election I expect to see activity because you'll have reconstituted houses.

Jason Green -- Evercore -- Analyst

Got it. And then just on co-working given some of the WeWork difficulties you talked about expanding a co-working tenant. How are you thinking about those deals given some of the fundamental business concerns that have started to come to light?

Michael J. DeMarco -- Chief Executive Officer and Director

I think the name that we're thinking about has been in the business longer than WeWork and has always been considered to be relatively good credit. They just didn't grow as rapidly. I think WeWork's problems came from both growth and management obviously. I mean I'd just like to end my comments there. We're looking and saying it's co-working in a business market this size there's very little of it. We would have the only location so we would have in a market of 20 million plus square feet you'd have probably 120000. I mean it's not exactly what New York City has which is a lot larger. So I feel pretty good about the addition.

Jason Green -- Evercore -- Analyst

Okay, thank you.

Michael J. DeMarco -- Chief Executive Officer and Director

Thank you.

Operator

Next question comes from Tom Catherwood of BTIG. Please go ahead.

Tom Catherwood -- BTIG -- Analyst

Thank you. Good morning, guys. A couple of cleanup questions here. First you pulled Harborside 1 out of the operating portfolio this quarter which I assume means you got the Deutsche Bank space back. What are the next steps on that asset? And how long until you can start kind of marketing that? Does the shell have to be done? You have to put in that additional capex? Or is that something that can happen kind of part and parcel with the renovation?

Michael J. DeMarco -- Chief Executive Officer and Director

So we've gone toward the last few months one of the times we've mentioned is looking at that building because of the way it lays out. If you go by the building today they're ripping their sides of it off. The panels have been taken down and there's new panels going up. We expect to have that reskinned. It's already been totally demolished or substantially demolished inside. We'll be putting in new bathrooms and elevators over the next couple of quarters. We'll bring that building back online as quick as possible. But we think given its location at the foot of the path attached to the ferry and actually would be brand-new space effectively. It would be something that's going to be well rented hopefully or well sought after by tenants.

Tom Catherwood -- BTIG -- Analyst

Got it. And Mike you had mentioned in your opening remarks that kind of all capex was already accounted for. So I assume that that includes that refresh as well correct?

Michael J. DeMarco -- Chief Executive Officer and Director

No I said capital for the multifamily division. Capital for that is ongoing. We spend it quarter-by-quarter. We spent maybe about 20% of the number so far. And if it'll be played out over the next several quarters then we have the cash flow to basically pay for it.

Tom Catherwood -- BTIG -- Analyst

Okay. So that comes out of retained cash flow. Got it. And then Marshall one question just on the resi. I know there was the NOI roll down at Monaco and M2 obviously because of the unit refresh. But it looked like there was a bit of a roll down too at SoHo Lofts. And it was my understanding that this just kind of the first generation of leases that were rolling off and there was -- those rents were kind of a little more promotional to fill the building up. Was that just kind of a onetime lumpy results or were rents kind of rolling down there in the second generation?

Michael J. DeMarco -- Chief Executive Officer and Director

That SoHo is really not in our same-store number because we just bought it in April. Those rents are rolling up basically it was -- we're the beneficiary of the discounts they gave when we bought the building. That's worked out relatively well for us. It stays 96% occupied even as of today and rents are moving up nicely. I mean there'll be some things we have to go through and find units that some people don't love when they get in and think about the repricing other people love them more but it's one of hottest pool decks in our city. In the summertime we have some new retail options going at the bottom of it. The Monaco Marbella comment you made perfectly on point. We're basically renovating those units.

We take them out 20-something a month turn them over redo the floors back splashes full kitchen cabinetry basically turn it into a new looking apartment. As you know because you're local Avalon Bay has planned to put across the street from our holdings of Marbella and Monaco a building they sought approval on received planning approval on of 950 units 69 Stories 525 unit car garage 50000 square foot of retail things going to have to cost $600 million to $700 million the way we price our deals. They believe the returns are there so do we. They'll get great views. It's attached 2 projects. They currently own but those rents are going to have to be in the 60s in order to justify that new construction as Marshall his shaking his head at me. So we're across the street in the high 40s. We think if we renovate our units when they come online in three years from now we'll have a nice little complement and the neighborhood would totally change. So we're preparing for that.

Tom Catherwood -- BTIG -- Analyst

That's a fair point Mike but kind of along those lines too the newer stuff that you're going to be doing whether it's the next phase of Urby which that may be a kind of different product type. But definitely when you're looking at Plaza 8 9 would you get into the ground and complete before Avalon? Or is it going to be kind of a race to the finish there?

Michael J. DeMarco -- Chief Executive Officer and Director

I think it's both of us might come out the same time. But we keep careful track. As you get closer to the water as you know Tom there's very few sites. We own most of them. We've acquired a number of them. So the Charlotte at Christopher Columbus comes will be done first there's 2 projects one by Kushner one by Albanese Monaco and Silverman on Grove Street. Those are the only projects I'm aware of. Avalon has to still go out and buy that job. They have a lot of work to do. They have a lot of prep work. They have to basically cut off a front of a building in order to make a site equivalent.

I think we would beat them out of the ground. Urby is a different product. And then we have some other additions. But the market has absorbed these units at a phenomenal rate. And these would be excellent alternatives. So I feel pretty confident. Each building that gets added creates a greater sense of place in Jersey City. Look at Lion City. At first everyone said "there's too many units." Now they keep on adding units and it's creating a sense of neighborhood same concept. Battery Park City would be another example. More is actually better.

Tom Catherwood -- BTIG -- Analyst

Understood. Thanks. Bye.

Michael J. DeMarco -- Chief Executive Officer and Director

Thank you.

Operator

We will now take a follow-up question from Emmanuel Korchman. please go ahead.

Michael Bilerman -- Citigroup -- Analyst

It's Mike Bilerman again. Look you were talking about the -- trick or treat which one is it?

Michael J. DeMarco -- Chief Executive Officer and Director

Costume. Maybe it's you pretending you're Michael Bilerman it's really Manny doing your voice. That would be interesting actually but go ahead.

Michael Bilerman -- Citigroup -- Analyst

I'm going to dress up as a tenant looking for space. I don't know if I'm going to go to Jersey City though.

Michael J. DeMarco -- Chief Executive Officer and Director

Hopefully it won't be scary.

Michael Bilerman -- Citigroup -- Analyst

Yes. So on the 600000 does that take into account any of the 400000 that's rolling in 21 in terms of those tenants renewing or that's separate from those discussions?

Michael J. DeMarco -- Chief Executive Officer and Director

Separate and we're having good conversations on those tenants in '21. They're actually we think are going to stay all of them.

Michael Bilerman -- Citigroup -- Analyst

So the 1 million square feet of vacancy is what you're talking is trying to backfill the 600000. How would you characterize -- you talked a little bit about the 60000 to 80000 square feet of co-working as part of that 600000. I guess can you talk about the tenor of the conversations? Where they are in the pipeline? Just to give it a little bit more meat around that because that obviously if you're able to get that leasing would be a dramatic change to everything.

Michael J. DeMarco -- Chief Executive Officer and Director

There's 4 tenants I feel we have an LOI out for the co-working space. So we've agreed to terms. Now it's a matter of getting it to a lease. I feel pretty good about. They are existing tenants so they know the market. The shipping company is somebody who's looked at the space for the last couple of years. I think we're going to make a very competitive offer we're trading paper on that now. We have received RFPs for both of the last 2 tenants which is the 2 financial companies.

We haven't -- so we gave the -- they did an RFP. We went back. Now we've gone back again. We'll see if we go to the next level. We're going to be very competitive on this because we're going as competitive as we can be. And that's really the meat of it. And I think we're looking for more things coming out. And I got some good space to show people. So the improvements we've made are now coming to fruition. People like the vision that we've enacted.

Michael Bilerman -- Citigroup -- Analyst

And what would the timing of these leases that you're discussing? Are these a 2020 type start or something that's further out?

Michael J. DeMarco -- Chief Executive Officer and Director

I think that probably the 2 small ones could be 2020. The 2 larger ones likely would be 21 because those big companies come out to you 24 to 30 months in advance because of the size and complexity of the move. So this is something now that are about 18 months out. So by the time they document or whatever we have to build out that space which is lengthy because they take it all in one shot.

Michael Bilerman -- Citigroup -- Analyst

Right. That number you had talked previously about like 150000 or 200000 square feet of negotiations. I don't know if those had fallen through. Or that's just -- that's embedded in the 600000 that you're talking to today?

Michael J. DeMarco -- Chief Executive Officer and Director

Yes 100000 was WeWork actually. So the last time we talked about that. The other 50000 is still going but the 100000 was WeWork.

Michael Bilerman -- Citigroup -- Analyst

Okay. So that's not happening?

Michael J. DeMarco -- Chief Executive Officer and Director

No thank God for that. That was the best deal -- that was a trick or treat too by the way. And Mike again one minute.

Michael Bilerman -- Citigroup -- Analyst

I have as much time as you'd like Mike.

Michael J. DeMarco -- Chief Executive Officer and Director

The one thing I haven't mentioned which I was going to mention depending if came up in the Q&A was the special committee. So since you're last my last caller I figured I might as well give a report on it. If you want to ask me a question on it then we can end the conversation on the call. So the special committee was formed in June had 4 members laid out Frederick Cumenal; MaryAnne Gilmartin my head of my audit Committee; my lead director Al Bernikow; and I had Lisa Myers one of my new directors who's had to step off the committee because of work needs; and we basically put on Dr. Irvin Reed who runs my governance committee.

So they started work they're undertaking the work they're hoping to report to the board in middle of December at the 19th meeting. They've hired a financial advisor which I'm not at liberty to say because of the disclosure requirements. It's a household name somebody I've worked with and very happy with the choice. And the second thing is they've also hired a legal advisor another household name I haven't worked with them but the name is let's just say one of the distinguished lawyers in the city. That work is undergoing. We've been doing processes and hopefully during the 19th we'll have some type of report back to the Board. Can make no assurances but I just want to give an update. Do you have a question now that I gave you that information?

Michael Bilerman -- Citigroup -- Analyst

And so you're going to progress down it sounds like you're embarking on continuing asset sales and leasing as they are working on the strategic plan?

Michael J. DeMarco -- Chief Executive Officer and Director

Yes exactly right. They'll come back and give us advice maybe we do something different. We have -- so we have 2 advisors. Merrill Lynch is currently engaged with the company. Therefore if anyone who wants to make an inquiry we have Merrill as an advisor. The second firm is going to basically look at Merrill's work give another form of opinion basically kind of belt and suspenders. We have JLL updating our individual asset numbers as I mentioned before for when I talked about looking at the end of the year valuations. So we're undertaking every effort possible.

Michael Bilerman -- Citigroup -- Analyst

And then when the committee has one member from the activist slate such as MaryAnne?

Michael J. DeMarco -- Chief Executive Officer and Director

No 2 both Frederick Cumenal and MaryAnne were both propose by Grove Street.

Michael Bilerman -- Citigroup -- Analyst

Right. And then how many meetings have there been since the new Board has gotten reconstituted?

Michael J. DeMarco -- Chief Executive Officer and Director

We've had audit committee meetings. We've had continuities but they meet all the time. I'm not part of that committee Michael. I give information I'm like ex officio I basically get the data but they have numerous conversations and calls which I don't even know about and nor should I know about obviously because of the idea of being independent and special. Working hard.

Michael Bilerman -- Citigroup -- Analyst

You still have the same phone number?

Michael J. DeMarco -- Chief Executive Officer and Director

Well the same phone number works email works Michael open for business everything works. All good.

Michael Bilerman -- Citigroup -- Analyst

Perfect. Thank you.

Michael J. DeMarco -- Chief Executive Officer and Director

Mike. Have a great day. Enjoy something. Right. Thank you.

Operator

We will now take a follow-up question from Jamie Feldman. please go ahead.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Thanks. I guess just any feedback from the committee so far?

Michael J. DeMarco -- Chief Executive Officer and Director

No that's not how they do. They will do a report to the Board and the Board will undertake a -- deliver a conversation about what we've -- what thoughts have come out and we will make a determination about update on strategy.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. And in your mind I mean what can you do differently today than you've been doing in the past?

Michael J. DeMarco -- Chief Executive Officer and Director

Well I think you could advance some conversations. I think that gives more credence to it. It also on underlays the fear people had about "oh this company is not open for business. It's not looking out for the best interest of shareholders." I think those will be dispelled. I mean when the special committee was formed the thought was there was a conflict right that the Max had undue control over the Board and that was basically the need for a special committee as proposed to by Grove Street. Well that's no longer the case right? I've got 6 new directors. Myself as seventh we had a new one before eighth. There's only 3 legacy directors. Al Bernikow beyond reproach in my opinion; Dr. Irvin Reed beyond reproach; and Bill Mack who I hold in the highest esteem out of 11. So Grove Street proposed 4 independents which we've got gotten along very well all very talented people.

We elected 2. I was a new one and I guess I consider myself obviously an independent. Everyone else who knows me think I'm independent. And then Rebecca Robinson who's a joy to work with who's proposed the year before. So we have a newly constituted Board. I also would like to point out my understanding is I got a one rating from ISS on board governance. We went from an 8 to 1 which is pretty remarkable given the history of Mack-Cali right? So we're a one ranking. We have 5 female directors. One of them runs my comp committee. I have a distinguished person who's African-American who runs my governance committee and I have basically a Chairman who is not a CEO. So we fit all the requirements for having the best practices.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. All right. That's helpful. I actually got in the queue to ask a different question but that worked out pretty well. Can you just talk about the structure of the co-working lease you're working on? Is it a revenue share? Is it a straight [Indecipherable]? Is it flex office?

Michael J. DeMarco -- Chief Executive Officer and Director

It will be more enterprise that's really what they're building it for and it'll be -- that's what we think the market needs. I think that it has a decent TI package but we got a very long rent schedule good growth in it made up the differential. I would say the TI package might be kind of $15 more than I would have normally gave but I thought it was a good use. I'm looking forward to having that type of atmosphere. It's a good market for that type of tenant because you can get relatively modest cost of space and be very close to Manhattan to commute. Jamie for example if you weren't base in -- if you left Merrill Lynch and you wanted to have a co-working spot we would be a good choice of you. You would commute from Short Hills park here work out of the office and then you could pop into the city as you know rather quickly. Only takes 8 to 10 minutes.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Right. I mean I guess what's your appetite to fill -- I mean it does seem like the idea of enterprise kind of short-term leases is here to stay. I mean what's your appetite to do that on your own? And I assume you can fill up pretty fast.

Michael J. DeMarco -- Chief Executive Officer and Director

No. No. I'm good. No I'm good. I wanted to work with a pro. They're difficult enough to know that they're good to what they do. We think they're a good tenant we've dealt with them before at a number of locations. It should work out fine.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. No I guess what I'm asking is would you entertain even direct like shorter term leases to get rid of some of that space?

Michael J. DeMarco -- Chief Executive Officer and Director

No. No I'm a focus guy. It's not the right focus for me right? I don't think that would be a good business model for us. We're doing some prebuilts. It's an interesting thing that stirs up my thought process. And 101 Hudson was always a big tenant building. We're finding a phenomenon more people coming in and want 15000 18000 12000 square feet partial floors. They usually tend to be people who are local so guys who move out of the city buy a Brownstone in Jersey City want to run a business here for 10000 15000 20000 square feet. So we're thinking about doing some prebuilds for floor about 30000 square feet that will break into maybe 7 to 10 units but that's about the extent of our thinking on the subject.

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. All right. Thank you

Michael J. DeMarco -- Chief Executive Officer and Director

all the best Have a great day.

Operator

Thank you. That will now conclude our question-and-answer session. I'd like to hand back to our speakers for any additional or closing remarks. Thank you.

Michael J. DeMarco -- Chief Executive Officer and Director

We thank everyone for joining us on this Halloween. Hope everyone has a very safe day and enjoy themselves and we appreciate your time and attention. We'll see you at NAREIT in a few weeks. Look forward to continuing our conversations. Thank you so much. Bye-bye.

Operator

[Operator Closing Remarks]

Duration: 63 minutes

Call participants:

Michael J. DeMarco -- Chief Executive Officer and Director

Nicholas A. Hilton -- Executive Vice President of Leasing

Marshall Tycher -- Chairman, Roseland Residential Trust

David J. Smetana -- Chief Financial Officer

Derek Johnston -- Deutsche Bank -- Analyst

Jamie Feldman -- Bank of America Merrill Lynch -- Analyst

Michael Bilerman -- Citigroup -- Analyst

Emmanuel Korchman -- Citi -- Analyst

John Guinee -- Stifel -- Analyst

Daniel Ismail -- Green Street Advisors -- Analyst

Jason Green -- Evercore -- Analyst

Tom Catherwood -- BTIG -- Analyst

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