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Mack-Cali Realty Corp (NYSE:CLI)
Q4 2019 Earnings Call
Feb 27, 2020, 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 Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions]

At this time, I would like to turn the call over to Michael J. DeMarco, Chief Executive Officer. Please go ahead, sir.

Michael J. DeMarco -- Chief Executive Officer

Good morning, everyone, and thank you for joining the Mack-Cali fourth quarter 2019 earnings call. This is Mike DeMarco, CEO of Mack-Cali. I am 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. Although, 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 have filed our supplemental this quarter. As always, please contact David with any further suggestions. As we have done before, we're going to break the call down into the following sections. I will make some opening remarks; Nick will discuss the leasing performance and our view of the markets going forward. We believe 2020 is shaping up to be a very good year. Marshall will provide insight into our multifamily operations, which is really benefiting in the mild winter for the constructions and the strengthening of the Waterfront market regarding weight and velocity. And David will recap our operating results; and I will close with some comments.

We had a very good operating quarter in both multifamily and office as we delivered positive results across all operating metrics. We had another quarter with a great deal of transaction activity that allows us to continue executing our plan regarding sales, purchase and financings. We expect the upcoming quarters to be equally robust as we execute our plan on evolving to just a Waterfront company. We have and continue to make progress. Executing our vision for the Waterfront, I could not be happier with our efforts. That vision is simply to be the largest owner of Class A multifamily with a selected core group of office which allow us to define the live, work and play in our markets.

Regarding the New Jersey office market, as discussed before several times, as of June 30, 2019, the government did not approve the continuation of Grow New Jersey incentive. There is an ongoing disagreement between the government and the legislative branches regarding the size and scope of new program, not whether there should be a program. All the branches of the government in New Jersey are democratically held, reaching [Phonetic] new articles and direct conversations we've had indicate they're compromised to be forthcoming. I expect tour activity to be light until there is certainty around these programs. However, we do have several new deals in the marketplace that we're pursuing and expect to get in the next 12 weeks or on the next quarter or so. Regarding our overall office portfolio, we have the right price and have the right locations. As we exit the suburbs, which we intend to do in 2020, I still believe we have been making a strong 2020, especially regarding the Waterfront mostly due to tenant expansions.

Regarding our multifamily platform, I'd like to make some brief comments before my partner, Marshall. We are able to push rents in the multifamily business as we continue to invest in our product and add to our holdings with acquisitions and brand new developments. We're also renovating to a first-class level of a 30 apartments per month in some of our older product in New Jersey City. Jersey City and Hudson County overall are becoming the place of choice for tenants to live, based on affordability and transportation. The 1,300 units delivered last year in the Waterfront area of Jersey City are fully rented. Rents have and continue to trend up quarter-to-quarter. The upcoming supply is light for the next several quarters which we monitor very closely.

We are remodeling our product in our older buildings in order to capture the higher rents. Our return to date has been solid, if not excellent, which Marshall will elaborate on. We look forward to accepting deliveries of our 2020 products, which has already started to happen and will substantially add to Class A Holdings. You can also expect us to announce three new towers, two towers in Jersey City and one in Port Imperial in the upcoming quarters.

As I've stated before, starting now in 2020 and continue in 2020, new product that we deliver both Harborside Plaza 1 which is rapidly coming to the completion and 25 Christopher Columbus, which is rapidly rising to the sky from its development site and the planned retail changes in Harborside with the inclusion of Whole Foods, which is expected to open in 2021 and several other restaurants will totally change the way our Jersey operation will be looked at. We will be expanding restaurants in our locations in the upcoming quarters. Additionally, New Marriott in Port Imperial, EnVue, which opened last spring is continuing to positively impact and define that market. We have the necessary capital to complete our pipeline, which David will go over.

David will talk about our planned sales for 2020. As you know, we announced that we're exiting the suburban business in its entirety. We are ahead of schedule. We are in the process of making every suburban office assets for sale. These efforts are going very well. We expect if they progress to present to our board in March a definitive transaction additional sales beyond Parsippany and Giralda Farms which has agreed to in December. Pending board approval of these sales, we expect these sales will be completed by the third 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 and only in certain circumstances will be reinvested in Waterfront multifamily via the 1031 if the tax situation warrants it. Therefore, in our plan for 2020 which will continue to come down in a form of repayment of the line of credit and then we plan to redeem our bonds next year with future sales.

I'd like to turn over to my partner Nick to discuss an overview of leasing.

Nicholas A. Hilton -- Executive Vice President, Leasing

Thank you, Mike. Across our portfolio, we posted a solid fourth quarter in 2019, signing just over 169,000 square feet of transactions, which resulted in our Core and Waterfront portfolio finishing at 80.7% leased at year-end. Of these transactions, approximately 30% or 51,000 square feet were new leases and 70% or 118,000 square feet were in place renewals. Across all core markets, our rents on Q4 deals rolled up 6.5% on a cash basis and 19.9% on a GAAP basis and we committed $5.41 per square foot per year of lease term. In comparison to last year, our rents on 2018 deals rolled up 6.9% on a cash basis and 23.1% on a GAAP basis, and we committed $5.88 per square foot per year of lease term.

Looking back at 2019 as a whole, our Core and Waterfront portfolio saw over 648,000 square feet of transactions signed with overall cash and GAAP roll-ups at 8.1% and 19.1% respectively. While we do not formally provide guidance on total leasing activity, we beat our internal projections of approximately 584,000 square feet by 11%.

As we turn our focus to the specific markets, the Waterfront closed just over 27,000 square feet of new transactions, finishing the fourth quarter at 77.8% leased. And we continue to see a positive rent push with increases of 17.1% on a cash basis and 27% on a GAAP basis. Looking at our current activity level, we have approximately 500,000 square feet of new transactions currently in active negotiations across a diverse tenancy mix, including financial services, pharmaceutical, co-working and shipping to name a few.

The improvements we have made and continue to make within our Waterfront development are translating to steady interest and touring activity. Looking ahead, we have a limited amount of lease roll with only 61,000 square feet expiring in 2020. And as a result, we expect to make continued gains as we improve the overall occupancy levels on the Waterfront. Our suburban portfolio also posted a strong fourth quarter. Specifically, we executed over 141,000 square feet of transactions, achieving a positive rent push with increases of 5.3% on a cash basis and 19.2% on a GAAP basis.

Turning to 2020, we have over 403,000 square feet expiring in our suburban portfolios, of which over 128,000 square feet are included in our Morris County portfolios, which will be sold this year. Of the 275,000 square feet remaining in our suburban portfolios, we know that 59,000 square feet or 21% will vacate. We are confident in addressing the balance of this rollover as we are already in active negotiations with over 229,000 square feet of transactions across the suburban portfolio.

With that, I'd like to turn the call over to Marshall.

Marshall B. Tycher -- Chairman, Roseland Residential Trust

Thanks, Nick. Roseland's 4,287 unit same-store portfolio on a GAAP basis experienced a 5.4% quarterly increase in NOI, generating annual NOI growth of 3.4%. The increase in annual NOI as a result of the 2.2% increase in revenues, offset by a modest two-tenths of a percent increase in operating expenses. Largest contributors to revenue growth in the portfolio were Urby in Jersey City and Quarry Place in Westchester.

Excluding our renovation property, same-store NOI growth for our portfolio was 10.1% with a 6% increase in revenues. Our active renovation programs at Monaco and Marbella represents a complete repositioning that is modernizing the units, common areas and amenities. Initial tenant feedback has been positive as reflected by release units achieving 18% rent premiums.

During the quarter, Roseland completed the disposition of the Alterra and Chase communities, which completes the asset swap from Suburban Boston to Liberty Towers and Jersey City at 648 unit high-rise community in our core residential geography. Following the swap and continued improvements in our operating portfolio, Roseland has an estimated NAV of $2.25 billion. Mack-Cali's share in this figure after netting out Rockpoint participation is $1.79 billion or nearly $18 per outstanding Mack-Cali share. The transaction is frequently discussed over the last four years and reflect in the asset the composition of Roseland's NAV. 76% of NAV is on with us at Waterfront, 81% of NAV is in operating or in construction assets and less than 1% of NAV is in subordinate interest.

The company's 1,940 tour unit in construction portfolio is projected to generate $62 million of stabilized NOI. Initial deliveries of 1,192 units are scheduled within the next 12 months, including the recent start of lease-up at the AmREIT [Phonetic] Overlook Ridge. Initial 4 weeks since opening, we have signed 38 leases representing 12% of the building at rents in excess of our pro forma. As a result of capital invested in the fourth quarter, Roseland's remaining capital obligation to complete this in construction portfolio is $47 million, down from $70 million last quarter. This obligation along with future requirements will be sourced from a combination of Roseland's cash flow, refinancing proceeds, select dispositions and Rockpoint's remaining capital commitment as admitted in June.

Other properties currently in construction include The Charlotte, a 750 unit tower, which is located in Jersey City's Waterfront on Christopher Columbus Drive, 673 units in Port Imperial at both the Riverwalk and RiverHouse 9 where our last delivery of RiverHouse 11 is 97% leased and The Upton at Short Hills, 193 unit luxury community in one of New Jersey's premier municipalities adjacent to the Short Hills Mall.

Looking ahead in 2020, we have scheduled three dozen Waterfront starts including Harborside 8, 679 unit highly amenitized tower adjacent to our corporate headquarters here in Harborside 3. The second phase of Urby, a proposed 796 unit tower adjacent to our successful Urby project with the highest rents per square foot in Jersey City. And the Park Parcel at Port Imperial, 302 unit unencumbered, 270 degree views of Manhattan and the Hudson River. Through this series of recent transactions and active and pending construction commitments, we will further expand our market-leading position of luxury housing in New Jersey's Waterfront community with excellent access to Manhattan.

I will now turn the call over to Dave.

David J. Smetana -- Chief Financial Officer

Thanks, Marshall. I have a few brief highlights before turning the call back over to Mike. The quarter came in largely as expected and there were some key trends that continue to emerge that give a glimpse of what the company will look like after the disposition of its suburban office assets. We reported core FFO per share for the quarter of $0.44 versus $0.45 in the prior year. Included in the fourth quarter was $0.03 of FFO related to the sale of our Urby tax credit. As we projected, all of this cash same-store NOI turned positive and increased by 3.5% in the fourth quarter as we now anniversary quarters that have the full effect of the 2018 Waterfront move-outs. Residential same-store NOI was plus 5.4% for the quarter and we finished above our initial and revised guidance ranges due to better than expected tax and operating savings.

On the transaction side, we disposed of two suburban office buildings during the quarter, a building in Neptune New Jersey for $26 million, which was fully occupied and traded at $145 per square foot and 5 Wood Hollow in Parsippany for $29.2 million, which was only 65% occupied at closing and traded at $92 per square foot. These assets were part of the 6.6 million square feet of suburban office dispositions announced in December. We completed our 1031 reverse exchange with the sale of Alterra and Overlook Ridge multifamily assets in suburban Boston for $411.5 million in the quarter and closed the sale of two development parcels in Philadelphia that we chose not to develop for $17.9 million.

Turning to the balance sheet. During the quarter, we paid off our sole remaining term loan with the availability on our credit line. Our corporate debt now consists of; $300 million of our April '22 bonds and $275 million of our May '23 bonds and we ended the year with $329 million drawn on our credit line for a total of $904 million of corporate debt.

Execution of the suburban asset sales at the midpoint of our NAV table would provide $946 million of liquidity, enough to retire all of our current corporate debt balances. The sale of the suburban office assets that will greatly enhance the company's liquidity. We have no principal maturities in 2020. Assuming the retirement of our outstanding bond issues with suburban office sale proceeds, we will have no corporate or office debt maturities until 2026 with the exclusion of our credit line maturity in 2021. The net debt to EBITDA metric was 9.7 times at quarter end. And at 12/31/19, as Marshall mentioned, we were into the construction loan portion of all five development projects, totaling $1 billion in construction costs. We therefore expect this metric to remain in this range of close to 10 times until the development pipeline begins to stabilize and our vacancy is relived.

I want to take a second now to walk through our discontinued operations accounting and then 2020 guidance. On December '19, the company announced that as a result of the findings of its shareholder value committee that the company would exit its entire 6.6 million square foot suburban office portfolio. The decision to sell the suburban office portfolio is deemed a strategic shift. And therefore, in accordance with GAAP accounting for discontinued operations, its results will be reported separately from our continuing operations on our income statement. As you hopefully saw last night with our supplement, we will continue to show all relevant line items on the income statement in regards to the operations of the suburban properties until our disposal date.

Guidance. Our initial core FFO guidance is $1.24 to $1.36 per share. This assumes an initial same-store NOI guidance on the residential side comprising revenue growth of 2.2% to 3.2% which includes over 150 basis point estimated drag on revenue from the renovation activities at Marbella and Monaco that we've been talking about. We model an expense growth of 1.5% to 2.5% resulting in an NOI range of 2.2% to 3.3% inclusive of the renovation drag.

With respect to office, we see the same-store office cash NOI, which is importantly now just our Waterfront assets, coming in, in a range of 3% to 7% driven by increased occupancy and the benefit of a full year of cash rent payments on our 2018-2019 sign, blend and extend deals at Harborside 2 and Harborside 3. Based on information available today, we believe modeling proceeds from the annual sale of our Urby tax credits for roughly 2.6 million at Mack-Cali share in the third quarter is prudent.

Now for dispositions, the biggest swing factor in our guidance by far. We think the best way to view the $1.2 billion asset sale range of our support -- suburban office portfolio is in conjunction with our NAV schedule groupings. We see the bulk of the sales occurring within four major geographic portfolios and in our non-core bucket. The Parsippany and Giralda portfolios are now broken out separately from our other suburban properties with 2.4 million square feet which are under contract for $288.5 million with an expected closing date between March 31 and May 15.

Bucket one, Monmouth County or Red Bank. It's really one office park. It's part of our suburban bucket, 648,000 square feet and has an expected timing, sales timing of mid-Q3 to Q4. Bucket two, Short Hills, part of our Class A suburban bucket, 829,000 square feet with the projected timing of Q3. Bucket three, we are modeling the sale of Metropark with 1.1 million square feet toward the middle to the end of the fourth quarter. Bucket four, our remaining suburban assets, and I'll also touch on our non-core assets.

Today, we have two assets totaling $80 million in gross proceeds under contract. These include; 1 GW Bridge in our Class A suburban bucket and our Wegmans retail property in our non-core bucket, both to be sold around the end of the quarter or very beginning of Q2. The remaining four suburban properties totaling 766,000 square feet are made up of two Princeton properties, one in Florham Park and one single-tenant building in [Indecipherable] The Princeton property should close at the end of Q2 and the others are expected to close in the second half of the year.

While we will not give individual cap rates on sales being negotiated, the in-place NOI provided on a cash basis in our NAV table is a decent guide. On average, the corresponding GAAP cap rates run about 20 basis points that 30 basis points higher than the cash. We've given ourselves a wide range, so we can act -- so we can execute these sales opportunistically, as we are moving as quickly as possible to crystallize our suburban office values and repay our corporate debt, which we believe despite the short-term dilution, places the company in a stronger financial position for the long-term.

After completion of this final disposition exercise, we will be left with six operating office assets and 22 residential operating properties. Based on the midpoint of our NAV, the average asset size will be $209 million. And we believe that all of these properties will have positive net effective rental growth for the foreseeable future. Lastly, I want to thank our Chief Accounting Officer, John DeBari and Chief Technology Officer, Nick Mitarotonda for navigating us through a year that included burdensome discontinued operations accounting and implementation of a new accounting system.

With that, I turn it back over to Mike.

Michael J. DeMarco -- Chief Executive Officer

Thank you, David. In closing, as my colleagues have outlined, I continue to believe we're set up to have a solid 2020 from an execution point of view with results showing up in the years going forward. We have a good deal of work to do, which we are doing each and every day. Our focus, as David outlined, is now 100% at the Waterfront which means growing our multifamily business, for example. We intend to exit our DC joint ventures and had made great progress on those transactions. We expect to have them done this year.

We have exited land sales in Philadelphia in the last two quarters. And land sale sites in suburban New Jersey, which we don't expect to build on are being marketed currently with several expected to close in the upcoming quarters. All of this goes down to pay down debt or fund our development, but really contributes to our focus on what we intend to do, which is focus on the Hudson County multifamily market. We additionally are in the process of selling the remaining portions of our Boston assets this year. And we look forward to purchasing additional assets at Hudson County to complement our development if available.

We are very excited about our operating portfolio and how we continue to grow with excellent new products. The real key to our plan is creating a sense of place on the Waterfront. We can see real change from everywhere we look. I'm confident that total effect of our coordinated efforts on development and the weak -- and the remodeling of our assets plus the efforts from other developers in the office, retail and multi will produce excellent returns in the short and long-term for Mack-Cali.

One last point, our Chairman, Bill Mack turned 80 today. We all wish him the best and may he have decades more of healthy and happy birthdays. As we all know, Bill took care of the wealthy part for quite a while ago. Unfortunately, this will make Bill subject to our mandatory retirement age policy for directors of 80 years old of age, which means he will not be able to continue to serve on the board after our 2020 Annual Meeting of Shareholders. On a personal note, I can tell you he will be missed, His Acxiom, his intelligence, his wit and charm is very difficult to replace. We wish him the very best today and going forward.

With that I could take some questions. Operator, please.

Questions and Answers:

Operator

Thank you, sir. [Operator Instructions] We'll now take our first question from Jamie Feldman from Bank of America. Please go ahead.

James C. Feldman -- Bank of America Merrill Lynch -- Analyst

Thank you, and good morning. And we appreciate all the details and color. It seems like you guys -- it wasn't that easy to collect all the information. So thank you. I guess, you know, seeing a lot of volatility in the market this week, a lot of fears out there, can you just give us a better sense of starting I guess with the guidance. What's kind of baked in? What's kind of done when you think about where your occupancy needs to be on the office side to hit your same-store numbers? And then similarly with the asset sales, I mean I know you said you've got Parsippany and Giralda Farms under contract, but just how can we kind of handicap certainty to close on some of these given the market seems to be changing pretty rapidly? And if you could kind of talk through some of the other -- you laid out the four or five other buckets, how do you feel about that?

Michael J. DeMarco -- Chief Executive Officer

Well Jim, this was part of our strategy. I'm going to go first and David will answer the questions about the same-stores. Our strategy was done in anticipation of the fact that we didn't want to wait till the last minute to sell the suburban assets. If you think about it, replacement income is coming next year from the multifamily. So we take a dip this year in earnings. That is great if people think what the timing will be for the back end of the year, it will have an effect, lesser effect on cash flow because you're signing a relatively high income asset with high cost associated with them, leasing capex, base building so on and so forth and moving into multi, which has a better format, especially if it's brand new. But we took the view when it was really set up about the election that we wanted to be in front of the curve. We thought that 2021 had the potential from a political point of view to be somewhat disruptive. So we took the bold step of saying let's sell the assets in advance of the replacement income.

Regarding Parsippany and Giralda, we have a higher deposit. I talked to the buyer weekly if not biweekly. He's confident, he is close, his finance has been arranged. We expect to close it in the next few months. On the other sales that we have, the Wegmans and the George Washington Bridge, I have the same view on. One of the buildings got hit by Princeton University on the buy-sell. So we think that will close. With the other ones, I think it will close to certain buyer groups. The market still remains very open for financing, rates have dropped to unbelievable low and spreads have actually narrowed to some degree as nobody wants to go into fixed income.

So I think the financing will be there. I think I'll -- We don't have any really discombobulation from tenants. So our view is as fast as possible, get it done as quickly as possible. We have to leave a few dollars on the table, we're OK with that because we moved to a better level. And as we pointed out, we have a little bit of a cushion. We have 947, call it 950, 906 is our debt amount. We have 44 million, about 5% if we had to basically take it. We get to the same place. But this was a strategy. With the CIP is coming online. As Marshall pointed out, the first multifamily got delivered in Malden and Revere, Short Hills should be the summer, end of the summer is Port Imperial and two different projects and then next year is Jersey City. And all those should be great winners for us.

I'll turn it to David now for his conversation.

David J. Smetana -- Chief Financial Officer

Hey, Jamie. So with respect to guidance, we feel like we said a very conservative mark, as we always try to do. And specifically on the office guidance, baked in at the midpoint is only 135,000 square feet of lease execution, 65,000 of which are already out for signature. As Nick also pointed out, we only have 61,000 square feet of roll this year and most of that is weighted toward the end of the third and fourth quarters. It is also interesting to get from the 165 or to get from the 65, the 135 with just one lease that we feel pretty good about within a pipeline of deals that Nick's looking at over 300,000 square feet, we would hit our guidance. And our cash same-store NOI guidance is pretty much baked for the year based on what we already have signed and in-place.

James C. Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. That's very helpful. And then how do you think about distribution or dividend coverage after -- if you get to this new run rate of FFO? And then do you have any thoughts on what AFFO might look like at that lower level?

Michael J. DeMarco -- Chief Executive Officer

Jamie, it's Mike again. AFFO, as I said earlier, will probably not as greatly affected as FFO was because you're selling assets in the suburban business which always had a high income level, but the net was lower because of capex and leasing commissions and vacancy, which would then sometimes be poor. So we pay $0.80. I think we'll continue to pay $0.80 for the foreseeable future. We need the $0.80 for tax distribution reasons for next year. We look at our model for 2021, we clearly cover the $0.80 by great margin. So this is a slight blip in 2020 which gets recouped in 2021. Don't expect us to have a dividend change in policy.

James C. Feldman -- Bank of America Merrill Lynch -- Analyst

Okay, great. Thank you.

Michael J. DeMarco -- Chief Executive Officer

Pleasure. Next question, operator.

Operator

Certainly, sir. [Operator Instructions] We'll now take our next question from Emmanuel Korchman from Citi. Please go ahead. Your line is open.

Emmanuel Korchman -- Citigroup -- Analyst

Hey, good morning, guys. Just thinking about leverage and the fact that these are higher yielding assets not -- irrespective of the capex you just talked about. How do you actually bring down the leverage, especially with new developments that are now slated to come online at Harborside?

Michael J. DeMarco -- Chief Executive Officer

So Manny, we always talked about that we would need to do a recap at some time in the future. We needed to do some event to basically recapitalize the company. I've always argued that we need to do it once we had our portfolio set. I think we're getting very close to having that moment when the portfolio will be set. So after we sell everything, we're down to the 28 assets, maybe it goes to 33 or 34 with some other acquisitions. It will primarily be multifamily that has been a good performer, excellent results, can actually look at the market and say, hey, this is the numbers that will continue to grow.

We also believe the Waterfront is at its turning point and also will grow. If not, we also have -- by the way, just for the record, we have two buildings up for sale in the Waterfront currently listed. So we're looking at exiting that if we get the right price in each one. At that point, you'll be looking at a multifamily portfolio that will be well into the 70% of your NOI basis, maybe a bit higher. And that's a point you can either say OK, private, recap public is that the numbers are, and we have a stand-alone business.

When we invested in office over the years, the question was always, we'll be getting the right result. We were able to improve cash and GAAP numbers quarter-over-quarter for five years. But that doesn't mean it was a great business to be in because it was a difficult business to transact. The Waterfront from our experience the last four years has had excellent results both in rental growth and velocity and appeal for tenants. So that's a business that we think going forward we'll be levered highly on. We have a number of pieces of debt that we can pay off and we can take either equity partners in it with the joint ventures or we can take it through additional equity issuance get down to a real level, but it'll be a real company that you want to invest in as opposed to a business that was a hodgepodge included flex, suburban, despaired ventures and a real estate business that just wasn't thought out. So it took us a while to get there, but I think we're getting to the point now that you can deal with the leverage going forward.

Emmanuel Korchman -- Citigroup -- Analyst

Thanks. And Dave, it sounds like you guys think that 2020 will be a trough year for AFFO, but assuming that all these sales have been through the year and developments are starting, even though you've got some delivering. Is 2021 not going to be lower? Is it going to be lower on FFO, but not AFFO? How do we think about sort of the trajectory just going a year forward?

David J. Smetana -- Chief Financial Officer

Yeah. Thanks, Manny. So depending on the timing of asset sales during the year, as we all know, if we sold everything in the first half of 2021 wouldn't be that bad. So the first thing that is going to factor in on the question is when we get our sales executed this year. But you are correct, as we head into next year, we'll be developing that won't really affect our AFFO. But what will be coming online is the $1 billion pipeline that Marshall talked about we're projecting about a 6.2% yield that $60 million of NOI and with debt at current rates, we're probably projecting a little high given what's going on. But you get about $0.40 of FFO.

So the way Mike and I really think about it big picture is, if you sold -- let's see around numbers, $1 billion of suburban office assets at a 9 cap, paid down debt at 4, we'd lose $0.50 of FFO on a run rate. We're going to bring back on $0.40 of apartment FFO, have some G&A savings in our organic growth. So we'll replace that $0.50 on an annual basis with apartment NOI and some real savings in EBITDA. And then to Mike's point, what he is trying to drive home our dropdown from FFO this year was $1.62 to $1.02. On a residential side, it's maybe 10 million to 15 million tops as you go or $0.10 to $0.15 a share on that portion of FFO to AFFO as you go forward.

So '21 if we sell late, yeah, would then becomes the trough year. So let's wait to see that timing of the sale of this year. But '21 could very well be the trough year. But then as these developments come online and stabilized, definitely on a stable basis, we get up to AFFO levels that are much higher than they are today.

Emmanuel Korchman -- Citigroup -- Analyst

Thanks Dave.

Operator

We'll now take our next question from Derek Johnston from Deutsche Bank. Please go ahead.

Derek Johnston -- Deutsche Bank North America -- Analyst

Hi, good morning, everybody, and thank you. I mean just quickly getting back to leasing, didn't really talk too much about it. But how is leasing traction with life science companies? Any news on that front that you can discuss? And I guess the other half of this question would be, with only 61,000 square feet of Waterfront lease expirations, as you've mentioned a couple of times, does the occupancy guidance will be above or at least conservative this time around?

Michael J. DeMarco -- Chief Executive Officer

Good question, Derek. Given everything that's going on, we did take a conservative bent to a numbers which we thought was appropriate. We have been aggressive or thoughtfully aggressive on leasing in the last several years and we've common -- hit our numbers, but not exceeded them and people expected us to do more. So this year given the sales which were obviously dramatic given the nature of exiting the suburban portfolio, we took a very, very jaundiced view of Waterfront leasing.

There's a lot of things going on. If you give me a minute or two, I'll give you some update. So as you know, Columbia Property Trust has a building nearby that person division, which is part of Bank of New York, very large operation, clears half of the Street's trade basically renewed, extended out for extended period of time. Bank [Indecipherable] is in the market, we look to basically take them from a building. They decided to stay, but they're expanding some jobs in New York. AIG, which is a rumor [Phonetic] but I think if the deal is complete, it's going to move 300,000 square feet into the Goldman Sachs building. We were very close to get them, but we didn't have 300,000 square feet contiguous and Goldman did, but we felt good about that. Our building showed incredibly well and we know what the price point was.

So you look at a couple of trades like that which are financial institutions and AIG is moving off a Pine Street, they sold the building and I think they're doing what I call the Goldman Express and then moving into the world Financial Center and then using the ferry as a means of going back and forth. And then moving jobs from suburban New Jersey to Jersey City. All good signs. I was a guy who knew the business, understood the market and knew how to build a platform.

We have on our books a couple of tenant expansions, which we'll announce going forward which are significant. People are expanding in our place, wanted to do 10 to 12, 15 year deals. We have a couple of tenants that we have signed smaller spaces halfway here. Quarter four, companies that are also growing. Some people have indicated they want to expand by floor or two. We have not really put those numbers into our guidance. We just felt that given past history, it's better to have them announced than announce and not have.

So to answer your questions, we've actually planned and hope on a conservative band, we also feel given all the other noise about it, we wanted to make our numbers easily and have more upside potential than downside.

Derek Johnston -- Deutsche Bank North America -- Analyst

Okay, great. That's helpful. And then just on the multifamily development opportunity and priorities. And specifically, if you can address the potential and the plan of the residential land bank that we don't really talk that much about?

Michael J. DeMarco -- Chief Executive Officer

Right. So one good thing is the price of land continues to go up in the metropolitan areas that we deal in. So whether it's Weehawken in West New York, Hoboken, Jersey City, land prices have gone up and modernize partnership by almost 100%. There were 40,000 when we first started together, 45,000 I think, probably total over 90,000 going to 100,000. And this was straight rentals not condos.

You may ask why that is? Well, Derek, rents have gone in our experience as a partner has shipped from $40 to $54 in the last five years. If you take the $14 on base rents even with construction costs, which have gone up, it still gives you a lot of room to pay more for land. Our holdings, we have a concentrated ones around Harborside and obviously around Port Imperial. And we've built out what we're going to build in New England for the next development deals in the older ones foreseeable will be in the Hudson County area.

So, as we pointed out, there is a building outside my office windows for those who've visited the office, called Plaza 8, we got approval from the city to go forward with a 640 unit. So project, a spectacular piece of land, great returns. We want that land for a long period of time. Urby 2, which is really the project next to Urby. We have a view about starting that going back to the city and getting the site plan approval, which means the zoning has already been baked, it's already been pre-approved. We just have to worry about getting the site from the new guidelines about where we want to place exits and egress and so forth.

Marshall has done a great job in getting the project moving forward, called the Park, which is one of the end of the Weehawken site. It's literally 100 yards maybe from Whole Foods and a light-rail station [Indecipherable] basically and Hoboken becomes maybe a quarter-mile away. Renewable side 270 degree views of New York City. It seems to be a real winner, 300 unit project and it's built around a series of public improvements that Weehawken did for parks, swimming pools, soft ball fields and so forth. Those are the next three projects. After that 107 Morgan, likely Plaza 9, maybe Plaza 48 is a couple of the states in Port Imperial and that we'll finish this out in the next three to four years.

Derek Johnston -- Deutsche Bank North America -- Analyst

Okay. Thanks guys.

Michael J. DeMarco -- Chief Executive Officer

Pleasure.

Operator

We'll now take our next question from Steve Sakwa from Evercore. Please go ahead. Your line is open.

Steve Sakwa -- Evercore ISI -- Analyst

Thanks. I just wanted to circle back maybe on Jamie's question about just maybe, Mike, the confidence level of getting the suburban sales. I know you -- I can't mention names of buyers, but just how deep is the buyer pool for some of those different pools that you talked about and the types of financing and equity and leverage that they're using to purchase these?

Michael J. DeMarco -- Chief Executive Officer

The pool is actually relatively deep. I mean, not truly deep like 75 names, but maybe a half dozen, like 15 names. We've done business with a number of them before. So far, we have a history of knowing what we can and can't accomplish. The key is to look at it in totality, Stephen. We had about $1.3 billion to do when we started. And we've done about $200 million already in various sales over the past year. Of that remaining, we have a big chunk with Giralda Farms and Parsippany. And as David mentioned on his remarks, we have several other buildings that have already been contracted for in the box.

So of the remaining $1.1 billion, we have about $550 million done give or take. So we're below the 50% category. That's assuming the contracts stay. One of them is with Princeton, which hit us on a buy-sell, others have serious deposits for people to arrange financing. So I feel really good about the first 55%. The last 45%, I got a call last night at 9:30 from a buyer who wants to buy an asset group. We have another asset we think it's really going to get done. That's kind of -- we only down to like 15 buildings. I think we can get six to seven committed to by the next board meeting, which would leave us with six. And that six I still feel very good about. I think we have a good process.

We started this a year ago, we worked on it judiciously. I would point out, we started with 295 buildings, they're going to get down to 30. We've never not sold a building in the last five years we've been as a team. We bring it to market, we get it done, one way or the other. So I still feel good.

Steve Sakwa -- Evercore ISI -- Analyst

Okay, thanks. And then maybe, David, just taking a step back and trying to just think about cash needs. I realize some of this will be mortgage or construction financing. But as you sort of think about 2021, maybe I wanted to go after '22. But as you think the next two years, what is your development spend at Mack-Cali's share looking forward?

Michael J. DeMarco -- Chief Executive Officer

I'm going to go quicker than return over to,David Stephen. We had $70 million disclosed last quarter, it's $47 million disclosed this quarter. So it goes down by about $4 million, $5 million a month, which we handle through cash flow. So put that aside, that's get done -- that does all of what's in the ground already. We're basically finished then as far as capital. And I'll let David talk through about the three projects.

David J. Smetana -- Chief Financial Officer

Hey Steve. So we all sat closely with our Roseland partners and remodeled out what we call the next wave of development. So beyond what's in the pipe, we have another $800 million our share roughly to come, that's Urby 2. You guys all know Urby Plaza 8 out makes window and the Park Parcel up in Port Imperial Weehawken.

So based on what we call within our residential bucket kind of our non-core asset sales that includes hotels, things that aren't in Jersey, so Boston and DC. We think we have that entire equity covered without even drawing down this additional Rockpoint equity commitment. So we think on the capital side in Roseland from cash flow within that joint venture and the recycling of assets not in our core geographies, we have the equity in place. and when you sell assets at NAV that's equity at NAV to develop out that next wave of developments.

Steve Sakwa -- Evercore ISI -- Analyst

Okay. Got it. Thanks.

Michael J. DeMarco -- Chief Executive Officer

Next call, operator.

Operator

Certainly, sir. We'll now take our next question from John Guinee from Stifel. Please go ahead. Your line is open.

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

Great. Thank you. A little bit like Casablanca or on the Waterfront, I have seen this movie before. Basically you guys say you're going to get down to 22 assets, multifamily assets, six office assets and then you imply five or six acquisitions because of necessary tax protection. David, of the $946 million of asset sales, how much of that will have to be reinvested via 1031s for tax protection?

Michael J. DeMarco -- Chief Executive Officer

It's Mike. It's about 85% to 90% of it's going to be paid under debt. It's maybe 10% to 15% we're struggling with. We may have a little bit of issue about where the taxes come out, we may have to invest. It's like a $100 million out of the $1.1 billion or maybe $150 million that much more.

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

But then you also implied five or six acquisitions...

Michael J. DeMarco -- Chief Executive Officer

No, John, we didn't say that. we said that we had six office assets, 28 -- 22 multifamily assets, so a total of 28, and gets us down. And I would think that I may sell Waterfront asset that may have tax implications. I may have to buy a building forward. We'll get down to 32, 33 assets at the end of the day not much more.

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

And when you're talking about tax protection, there is two tax protections. One is tax protecting the common shareholders via the REIT store...

Michael J. DeMarco -- Chief Executive Officer

They're all common, John. Not a unit, it's all common. These are deals that we owned for 20 years and I have -- look, at the end, John, to give it a more expensive answer. When we first started we get to basically move things around. It's easier because you're talking about assets. If you get down to the last couple of dozen, if you move your tax basis problems into a select few. When I sell those few, I still have the same problem, which I've just postpone that were a REIT issue, not a unit issue from three years ago. I now have to deal with it. I just have to move it to something else. It's not a big deal, but we've done as a REIT, not unit.

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

Yes. But we want to -- the discussion really is, you can't -- when you do a special dividend or a dividend out, you're only dividending out your gains. When you do a 1031 to protect your basis, you have to reinvest 100% of capital and there is a huge difference between the two in terms of the your sources and uses. And what I'm getting at is, how much of this is going to be tax protection that ends up being a transfer, a 100% of the capital into a new asset. And what you told me is only about $100 million or $150 million, is that correct?

Michael J. DeMarco -- Chief Executive Officer

That's correct, John, Max. It could be less.

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

Then the second thing is, I think you mentioned it will be a real company which someone will want to invest in. In the multifamily world that usually means a 5 times net debt to EBITDA or less in the 25% debt to total enterprise value. That's really what it takes to get on the A-list in the multifamily world. How do you get down to 5 times net debt to EBITDA or below? And how do you get to a 25% debt to TEV?

Michael J. DeMarco -- Chief Executive Officer

Excellent point. But John, everything is done in sequential. When we started, we weren't even close to be the multifamily company. So now we have a portfolio that actually looks like a multifamily company, performs like a multifamily company that a leverage. I think you will grant me those points, right? We have relatively excellent development yields and we used to at least expect that. In the past, we've had good solid rent growth in our markets over the last several years.

The question is structure. What's the right leverage? What's the right term? We'll do it -- when it comes up, we'll do it sequentially. The point is, would you rather have us own a bunch of suburban assets and stay a suburban company, which the answer was no. We've been able to preserve capital, grow NAV, grow FFO, AFFO and get to the right spot. If we're not the perfect company then we'll be sold and we'll be acquired by a public or private entity will rent us. But they will not acquire us with $1.3 billion $1.1 billion of suburban assets. So a gating item which is the term I'd like to use is you need to exit the suburban, get to a box which has only six or maybe less Waterfront assets, we may sell one or two, have a larger multifamily portfolio that has gone from land to CAP and CAP to stabilize. And someone says, hey, I'm at a point now I will purchased them for a number that actually is beneficial to the shareholders. Thinking around waiting for someone to help you has never been a good strategy. John?

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

Correct. All right. So that's a great segue. So net asset value is your goal, it's your board's goal, it's every shareholders' goal, it's everybody on this call's goal. Everybody wants to see the share price get up to NAV, give you an acceptable cost of capital to run the business. Do you have a timeframe at which you're going to either get there or throw in the towel?

Michael J. DeMarco -- Chief Executive Officer

I wouldn't call it throwing a towel, John, it's a little defeat, it's what it is. The question is, I think we made the right steps. So we went and have done an excellent job of pruning the asset portfolio and building multi-out. We made a bold statement. I said it last year, we're going to get approval and we talked about it a couple of times on a one-to-one basis that we would sell the suburban, we're doing that. We were the largest suburban company when I took over. 30 million square feet. Mitch Hersh, my predecessor touted, you know the fact that one of the largest companies in the space whatever. We're exiting suburban business. Exiting suburban business in 2020 would I think to a degree of certainty. At that point, that's the inflection point.

When the suburban is done and you're really left with a multi-business which has excellent growth potential, but maybe as you point out so eloquently not perfect for the public markets and hopefully Waterfront business, if we're good, maybe we've cut it down a little bit or leased up to where it's therefore salable or it's producing the rent income, that's the inflection point. I wouldn't call it the towel, but just use inflection, if you don't mind.

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

So is it fair to say that your NAV in your supplemental sort of north of 30 by the end of 2020, you've gotten sold the suburban assets that inflection point is in NAV of north of 30 and you continue business as usual or at that point in time, you let's not say throw in the towel, but you will look at different alternative kind of the throwing the towel is not right 2020?

Michael J. DeMarco -- Chief Executive Officer

100%. You're 100% on it. 100% correct.

David J. Smetana -- Chief Financial Officer

But John, can I do a little math that gives you that -- you've done with me before. When we started, people used to judge us by square footage. We worth $100 a square foot, $120 a square foot for suburban. That's how they valued us. That metric has gone. Let's assume we're done, right? We've sold and we agree that we got rid of the debt and we're really left with just the Roseland NAV and the office. Let's do a simple math. We have 5 million square feet of Waterfront office. Picking up, let's say it's $300 a foot, which is $56,000 lower than we charge, then we have with it NAV, which is substantial, it's 15%. At $300 time 5 million square feet, it's 1.5. We have $400 million of secured debt. We will have no other debt because we already explained, all the other debt has gone. That's $11 of NAV at $300. Okay. $11, you add my Roseland number, if you think it's a good number, which people have indicated it is. $11 plus 18 is 29. It gets you a 30 number.

Let's you say, Mike, I think you're Whacked. I don't think Roseland is worth what it's worth? I said OK. Well, if that's the case, tell me where we're trading at $20. Where if you take to my NAV for the Waterfront and say OK, I'm good on the $3,300, but I want to buy the company at $25, that means you're buying a multi at a 6.5 cap yield. With an unbelievable pipeline that is actually robust. They start to become a clearer view of someone to have about value. It's not modeled by saying I can get to this, but I have to buy a $1.3 billion of suburban. That suburban has gone. It's a clearer picture. It's better. It's a better strategy. We had two firms that came in, gave us reports and both of them said exit the suburban business, which I have been advocating, and they agreed, and we're doing that. But to your point, this train is going down a station and the next station is it have one, two names to it. It's either you're trading at NAV, you're a normalized company or you no longer listed under New York Stock Exchange.

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

Well, thank you. I love you.

Michael J. DeMarco -- Chief Executive Officer

Love you too, John. All the best.

Operator

We'll now take our next question from Daniel Ismail from Green Street Advisors. Please go ahead.

Danny Ismail -- Green Street Advisors -- Analyst

Great. Thank you. Just given this -- just following up on the last question, can you talk about the appetite out there for a full NAV level of deal details?

Michael J. DeMarco -- Chief Executive Officer

I'm sorry, Jim. I couldn't hear you, Danny. You need to speak -- say it one more time, please?

Danny Ismail -- Green Street Advisors -- Analyst

Yeah. To follow-up on the last question, just given the recent headlines in the disposition plan. Can you talk about the appetite out there in the market for an entity level deal these days?

Michael J. DeMarco -- Chief Executive Officer

We don't see it. We don't get inquiries that makes sense to us. We get people come in and say, we want to do -- and we get four questions we ask people when they come in and everyone takes a meeting with us because they all say that took meetings with us as my calendar is open for anyone who tells me they want to meet.

The four questions are very simply; what's your range of price, where is your equity sourced, is it committed, your debt to replace the amount that -- when we have a pretty good structure, you can assume most. And fourth, most importantly, is it a corporate or is it a real estate deal. And we've never got any anyone who answer the questions correctly. Where we get people to come in and say, well, we want to spend something out, the shareholders will get value, this will trade up. That's not the way we want to run NAV.

We think it should end and start with cash. Someone coming and say, here is a price, we'll take this off your burden, it's earlier than you expect, but it's a couple of dollars discount, instead of getting the 30, you're getting something less, we're rational, totally open for business. But I think that bid becomes more clearer and more available to people and it hasn't been a ton of M&A activity in the general in the REIT space when we exit the suburban business because as you know, Danny, it will make us cleaner and easier to analyze, 30 deals, right? 30 deals and all of them averaging over $200 million and not that complicated. Probably no ground leases of any consequence, no major JVs, no subordinated interests. We've done a great job of creating this thing up.

Danny Ismail -- Green Street Advisors -- Analyst

And at the shareholder value committee, I believe you've discussed before potentially, I believe your words were different battling the company if it's not trading your NAV. I'm just wondering is a liquidation on the table, let's say, a year or two from now, the company's still not trading at NAV?

Michael J. DeMarco -- Chief Executive Officer

100%. I just said it to John. I mean, we look at it and the board has view that we have a commitment to get the highest NAV. The strategy that we inherited was a suburban strategy, it was not getting the right number. We've used our resources to create a multifamily business inside of it. We've gone from 295 assets to 30. Of those 30, I think only four or five are ones that we originally started with. It's a completely different company.

The one thing we couldn't correct was leverage. We needed to leverage in order to be able to do this box, right, because we haven't got out and issued equity in a long time. We've paid down debt. And even though we'll have a, to say, a 10 times debt level, it will be secured, no covenant based, we covered interest coverage by three times. I wouldn't say we're fortress proof, but the walls are lot higher than what when we first started.

Danny Ismail -- Green Street Advisors -- Analyst

And maybe just one for Dave on same-store NOI guidance. Can you talk about how office expenses should trend and are you expecting a continued benefit on a same-store basis from overall expense growth?

David J. Smetana -- Chief Financial Officer

Thanks, Danny. Yeah, so one, I read your note and tried to clarify my prepared remarks. For same-store NOI, guidance for 2020, it's just the Waterfront. And the revenues and expenses are really in line, it's not driven by expense savings. Next year I see expense growth about inflation or what inflation should be a 2% to 3%.

Danny Ismail -- Green Street Advisors -- Analyst

Okay. That's helpful. Thanks guys.

Operator

We'll now take a follow-up question from Jamie Feldman from Bank of America. Please go ahead. Your line is open.

James C. Feldman -- Bank of America Merrill Lynch -- Analyst

Great. Thank you. I just wanted to dig a little bit deeper into the Waterfront leasing pipeline you guys mentioned, I think you said financial services, co-working, pharma, shipping. Can you just talk about the size of some of those deals and what the holdup is like? Because I think you've talked about all of them in the past. And is it contingent on Grow New Jersey? And if we do see that come into effect, those deals finally get signed or is there something else holding up decision making?

Michael J. DeMarco -- Chief Executive Officer

A couple of them go across the board, Jamie. This is Mike. I'll turn it over to Nick in a minute. The shipping company was clearly based on Grow New Jersey. They've been hanging around for a while. They're moving out of another port city to Port Elizabeth, but they want to have the headquarters in Jersey City. The pharma company is just strategically making its decision. They take their time. It's a relatively decent commitment. It's about 100,000 square feet, maybe 80,000 to 100,000, so it's two to three floors in a building that we've designated for them. A few others are just expansions that just fell to the process. We're very close on those. And one of them is a co-working company that's already a tenant of ours that wants to expand. We've been trading paper on it. So we're relatively long. But Nick, if you want to add my commentary?

Nicholas A. Hilton -- Executive Vice President, Leasing

Sure. As we talk about sort of the low-end, as David mentioned, obviously technology, online gaming, they're looking to expand by a floor or two. We've got engineering, financial services in that call it 20,000 to 25,000 square foot range. And then as we move toward the high-end, it's, Mike alluded to, pharmaceutical, shipping, construction, all north of about 50,000 square feet. So we feel pretty good there. And that would be new leases, right? And then we also are looking at some renewals and expansions in the insurance sector, technology, financial services. So we just -- that's the reason for the positive.

Michael J. DeMarco -- Chief Executive Officer

And Jamie, one last comment to add into Nick. We're also getting a good bid from smaller tenants for the first time that I've been here, 10,000, 15,000 square feet. We had about six of those which add up to about 90,000 square feet, which is significant and coming from people that either have moved to the Hoboken or Jersey City area, live in a Brownstone who want to run their business in a close commute. We also had expansion from the gaming companies that operate their platforms in this area. So William Hill, DraftKings and others had expanded with us. That's the type of tenants we're seeing lately. Operator, next question I think.

Operator

We'll now take a follow-up question from Emmanuel Korchman from Citi. Please go ahead. Your line is open.

Michael Bilerman -- Citigroup -- Analyst

Hey, it's Michael Bilerman here with Manny. Mike, you talked a little bit about, and I think in your comments to an answer you said, we had two parties in here recently, which I assume were two parties potentially in multifamily company and a private real estate company that were examining potential transaction. Can you sort of just elaborate a little bit more on that process that the Board went through and why you decided not to go down the road and what were the considerations?

Michael J. DeMarco -- Chief Executive Officer

No problem. Actually not what I said. I had two consultants that came in that was Goldman and Merrill, who basically gave me advice. But your question is still valid, Michael, it's worthy of an answer. I'll be happy to answer it. To go through the whole thing, Goldman and Merrill both advised the company. Goldman advised the special committee and Merrill has already been an advisor of ours also presented to the special committee. Both made recommendations about strategy and process. Both had firmly talked to the marketplace on a wide basis and solicited degrees of interest from people and it came back that the gating item was -- had been and always had been the suburban leasing -- suburban office, excuse me. That was why the board made the decision to exit the suburban market the way we did it made the announcement.

Regarding what you've talked about what has happened was I was approached by Tom Rizk, it's documented in a letter they published last Sunday. Rizk came in to see us. I gave him the four questions that I alluded to earlier. I asked him very simply, Tom, I'd love to deal with you. I've also had meetings with them before about buying assets, you've never bought an asset from us yet. But I said to him could you please identify the price, he wasn't willing at that moment. Tell me your equity sources since we're going to raise it. Debt, he commented he could get it from a bank. And the question was about structure and he really alluded to the fact he wanted to do what I would have thought would have been a complicated real estate deal. He also expressed interest in trying to get the Mack's to roll over their equity and stay with him and so on so forth. That I would tell you is probably a non-starter. I don't speak for Bill Mack, but the idea that Bill Mack returned over his tax position and his fortunate to someone else is probably not something I think is of a high possibility.

The REIT that I was mentioning, I won't mention their name because they've never actually formally acknowledged. I think they should have preserved their privacy. That company was never in the picture. I never saw a document that basically said, hey, this is being CCed to somebody, here is the document. It was Tom Rizk. Rizk had the -- I wouldn't say audacity, but the interesting quality of spending the term sheet.

And Michael, I spent my career being a CMBS expert. I'm actually pretty good at it. The term sheet actually said, this is not a term sheet. This is actually said this is not for distribution, this shouldn't go out, signed by a junior guy at a bank and had a number on it $1.8 billion, which has no association with anything on my portfolio. It had -- all the exhibits were missing and all blanks in it. And he put it out in front of me and said look, I have the money. Look, if he wanted to run, he wrote a very long goodbye letter on Sunday. Right now, you can say goodbye in a lot of less words, right? And he had spoken to a front of mine, who was one of the bankers at Merrill who I have great respect for who was told I didn't want to be hostile, but sending out letter is the idea of hostility.

If Tom wanted to be serious, he would have sent a letter and said, here's the letter we sent into you which is a standard M&A practice. That didn't have it, right? He does identified his parties in a letter for good reason. It doesn't have the authority to do so. That board is more than willing to take any serious offer that comes in. And the letter that we may publish and you'll probably get it published is awaiting for someone to ask the question that we will release as an email -- sorry as a press release tomorrow is the letter we sent to them basically saying we welcome a response. Here is the rules. You need to answer these questions. We can't let you come in, start a process without knowing that you have your equity or who your buyer group is and how they want to raise the money. Where your debt is coming from. And more importantly, is it really a normative transaction, which is a corporate deal or it's going to be some convoluted real estate deal, which has a spin and assets left behind which we'd rather deal with our own problems than do that. But the board is 100% open and is more than we'll have conversations with me.

Michael Bilerman -- Citigroup -- Analyst

Sort of like, I know a guy who knows a guy who knows a guy that I may be able to get this thing done?

Michael J. DeMarco -- Chief Executive Officer

Yes. And to be candid that was the response and that's you know, you cover the industry as long as I have it, it just wasn't a rational process. But look, we're open. But the one thing I would comment. He did get a meeting with me. He got a meeting immediately. As did Kushner as did Bow Street. You call up. You say you want to come in and talk, I make my schedule open for you. But you got to have a real deal. Otherwise, there is no reason to have the compensation.

Michael Bilerman -- Citigroup -- Analyst

And then...

Michael J. DeMarco -- Chief Executive Officer

The other point is we -- I'm sorry. I'll go after you. Please.

Michael Bilerman -- Citigroup -- Analyst

I wish Bill Mack happy birthday too. Are you going at his seat -- are you downsizing the board or is that going to be a vacancy where you're going to add a new member to the board?

Michael J. DeMarco -- Chief Executive Officer

We're not allowed under Maryland law to basically downsize a board, it's a purely out of it. So Bill Mack's seat will be open, we'll be nominating someone new for that spot.

Michael Bilerman -- Citigroup -- Analyst

Will it be insider or is that not going to become an independent seat?

Michael J. DeMarco -- Chief Executive Officer

I can't speak for the board. I'm not the nominating governance committee. If you ask me on a personal note, I would be highly unlikely there would be an insider, extremely unlikely.

Michael Bilerman -- Citigroup -- Analyst

Okay. And then as you think about executing the suburban asset sales to effectively become a multifamily in Jersey Waterfront office company. Is there any reason why you wouldn't be sort of pursuing potential sale of Roseland today or a recapitalization or a spin of that or seek to sell the Jersey Waterfront office business to a potential buyer who may see that strategic to their other holdings? I'm just wondering, why not try to do everything today rather than sell the suburban and then wait and sort of see where the stock is relative to NAV? If you know ultimately you want to get there, why not try to do all the pieces at once?

Michael J. DeMarco -- Chief Executive Officer

That would be a little complicated, a lot to do. Putting that aside, there are some serious tax implications that you can't do it. So you need, in order to get out of the tax problem we have, which is assets that we've owned for 20, 30 years that have -- like the building I sit which has a basis of $100 million and a value of like $800 million. You need to either do a spin and a sale at the same time or sale on a sale at the same time. You can't do one and the other. We've had complication with both.

Goldman and Merrill, other advisors came back to the same situation. Get rid of the suburban, then you'll left with options. You either sell and spin, sell and sell, stay, one of the three options, which is what we're planning to do. But it becomes an option because normally we would -- do we think Roseland is salable? 100%. Do I think the office on the Waterfront as we've cut it down is salable? 100%. Can we do it right now independent of doing the suburban? No. I need to get rid of the suburban first. We paid a debt because I wouldn't be able to do it under the covenants of the banks and the bonds to basically do the sale and the spin unless I paid them off, which means that I've to devote sale proceeds from one to the other and then -- shareholders have to wait and so on so forth. This has been considered well thought out, the easiest and the most direct way to get to the right spot.

Michael Bilerman -- Citigroup -- Analyst

All right. And you just have to roll $150 million from a tax protection perspective, from an -- this is relating to Danny's question. You have to roll...

Michael J. DeMarco -- Chief Executive Officer

You have to roll a little bit possibly. But Michael, it goes into Roseland which is a series of rolls. I mean I rolled about 10 deals into Roseland already which has tax issues, right? I mean a lot of the deals, the lands we bought with the deals that we had very tax issues, right? So we already have that problem. That's why we need to sell Roseland in a spin or a sale and as part of a dissolution as opposed to keeping it. If we just sold Roseland today and we -- let's say someone said we got $1.8 billion, we wouldn't get $1.8 billion. We would get $1.8 billion that would be grows on NAV and we will pay a very large tax bill. It could be as much as $1 billion, my CFO is mounting. I think it's $900 million, but it's about the right number. And that tax bill will be paid by the shareholders at the entity level, which means I can't distribute it to you. If I sell it and sell it at the same time and it's dissolution, I give you money and you don't pay the tax because it's left behind. The other guy picks up the basis issue.

Michael Bilerman -- Citigroup -- Analyst

Okay. I appreciate the color, Mike.

Michael J. DeMarco -- Chief Executive Officer

Got it?

Michael Bilerman -- Citigroup -- Analyst

Yeah.

Michael J. DeMarco -- Chief Executive Officer

And I hope you have a great week planning music next week.

Michael Bilerman -- Citigroup -- Analyst

I got it all for you, Mike. I look forward to it.

Operator

Ladies and gentlemen, this concludes today's question-and-answer session. Mr. DeMarco, I would like to hand the call back over to yourself for any additional or closing remarks.

Michael J. DeMarco -- Chief Executive Officer

As always, we thank everyone for joining us. We know it's a time-constraint world we live in. We look forward to seeing hopefully all our investors next week at Citibank. Hopefully the weather will be perfect and we'll be in a perfect mood. Everyone have a great weekend. Thank you.

Operator

[Operator Closing Remarks]

Duration: 69 minutes

Call participants:

Michael J. DeMarco -- Chief Executive Officer

Nicholas A. Hilton -- Executive Vice President, Leasing

Marshall B. Tycher -- Chairman, Roseland Residential Trust

David J. Smetana -- Chief Financial Officer

James C. Feldman -- Bank of America Merrill Lynch -- Analyst

Emmanuel Korchman -- Citigroup -- Analyst

Derek Johnston -- Deutsche Bank North America -- Analyst

Steve Sakwa -- Evercore ISI -- Analyst

John Guinee -- Stifel, Nicolaus & Company, Inc. -- Analyst

Danny Ismail -- Green Street Advisors -- Analyst

Michael Bilerman -- Citigroup -- Analyst

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