Nearly two years after Mack-Cali Realty Corp. acquired Roseland Property Co. in a high-profile push into the multifamily sector, two of Roseland's top three executives are leaving the company.
Brad Klatt and Carl Goldberg, two of the principals who became co-presidents of Mack-Cali's Roseland subsidiary, will leave two years into their three-year contracts that began in October 2012. At the time, Mack-Cali acquired the prominent luxury multifamily builder for what was described as a deal worth up to $135 million.
The moves were outlined late last month in a second-quarter earnings call led by Mitchell E. Hersh, Mack-Cali's president and CEO, but have garnered little attention since then. Speaking to analysts, he described "separation agreements that have been executed" with the two New Jersey real estate industry veterans.
"(Klatt and Goldberg) have agreed in connection with our efforts to reduce our costs, reduce our (general and administrative expenses) and streamline our organization to leave one year ahead of schedule," Hersh said, according to a transcript of the call. "Based on their three-year contracts, they will be leaving at the end of two years."
They will receive payments of $750,000 and $500,000, respectively, "which represented or does represent target bonuses for each of them," Hersh told analysts. He added that Goldberg and his daughter Debra will "continue on in the capacity of a consultant to the company in the area of governmental affairs" for at least one year from this coming October "and maintain the consistency that we've had with our relationships in so many of the, particularly New Jersey, communities that Carl has been active in."
Marshall Tycher, the original founder of Roseland, will remain with Mack-Cali "at least through his contract term and is extremely active in the business on a day-to-day basis."
The announcements come after a blockbuster deal that vaulted the Edison-based company into the multifamily space in fall 2012, after it spent decades building a vast portfolio of office space in the Northeast. Seeking to diversify beyond the slumping office market, the real estate investment trust acquired Roseland and brought Tycher, Klatt and Goldberg on as co-presidents of the new dedicated subsidiary.
Since then, Mack-Cali has acquired or started to develop thousands of multifamily units throughout its footprint, while aggressively selling its "non-core" office properties to build up cash for its new strategy.
The upcoming departures of Klatt and Goldberg will result in savings of $4 million or $5 million, Hersh told analysts during the July 24 call, noting that such "transitions (are) … something that our investors have asked us to take ... a hard look at in reducing our G&A."
Hersh said Goldberg's main responsibility will be as a liaison with governing bodies and planners in places such as Weehawken, West New York, Morristown and other places in which the company has been active.
"So I frankly see a complete continuity and consistency with respect to what Carl has been doing," Hersh said. "Carl's been extremely active in our repurposing."
He added that Klatt "has spent most of his time since the acquisition … mentoring the finance team," including Gabe Shiff, Roseland's executive vice president for finance. Shiff has taken on the main role in the finance area alongside Mack-Cali's finance team, Hersh said, "so that we are sharing all the relationships and we're taking advantage of the economies of scale, if you will, that we enjoy now as an even larger company in the financial market."
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