The dissident investment firm has proposed a slate of four directors for election to the Mack-Cali board, including the former chairman of Tiffany & Co., a former vice chairman of Kissinger & Associates, the consulting firm founded by the former secretary of state; a Harvard professor and real estate investor; and the head of a real estate investment firm who also sits on the board of a boutique investment bank.

Under the terms of the Bow Street proposal, Mack-Cali stockholders will receive expected net cash consideration of $8-$10 per Mack-Cali share, as well as an equity distribution of what Bow Street calls “a new, high-growth apartment REIT, comprised of Mack-Cali's current multifamily portfolio with a calculated net asset value of $19.20 per share.”

Bow Street's proposal to buy Mack-Cali's office portfolio and convert the rest of the company into a multifamily REIT “is based on unrealistic assumptions regarding the post-transaction trading levels of the new residential REIT,” DeMarco's letter says.

“The proposed transaction would leave Mack-Cali stockholders with shares of a small, highly leveraged public company unlikely to achieve an attractive market valuation,” DeMarco writes.

Bow Street claims that its original proposal made in February “was hastily and publicly rejected prior to any meaningful inquiry from the Company regarding valuation, structure, tax or other implications for stockholders.”

Bow Street's letter says it strongly believes that the Mack-Cali board's perfunctory response “suggests an alarming lack of commitment to good governance and long-term stockholder value, as well as an unwillingness to explore value-maximizing opportunities following years of company underperformance.”

Bow Street criticized the longevity of the Mack-Cali board, some of whose members have served for more than 15 years, the firm notes.

“Mack-Cali's share price has consistently trailed its peers, resulting in bottom quartile performance across 3, 5, 10, and 15 year periods,” says the letter, signed by Akiva Katz and Howard Shainker, Bow Street's managing partners. “In fact, since its IPO in August of 1994, Mack-Cali shares have appreciated a mere ~1% per year during a period of unprecedented real estate value appreciation across the New York City Metro area and nationwide.  Absent a transformational transaction, we believe Mack-Cali shares will continue to languish, extending this underperformance.”

Bow Street nominated four board candidates it described as “highly-qualified, independent director candidates” that it would propose for election to the board at the 2019 stockholders meeting, to “ensure the Board seriously evaluates all solutions that may achieve a superior result for stockholders.”

Mack-Cali's letter says it offered to work with Bow Street to select two board nominees from among the four named by Bow Street.

“It is unfortunate that instead of engaging in a constructive dialogue with the company, Bow Street chose to make misleading and inaccurate statements regarding its grossly inadequate, unworkable and self-interested proposal,” says DeMarco, in a press release that accompanied his letter. “The board, in consultation with its financial and legal advisors, has given careful consideration to Bow Street's proposal and determined that it is unworkable, illusory in nature and unlikely to deliver aggregate consideration to stockholders that would be anywhere near the hypothetical transaction value of $27.00 to $29.00 per share, as suggested by Bow Street in its letter to the Board. We believe that, despite its public statements about maximizing value for all stockholders, Bow Street is commencing a proxy contest to try to force a sale of Mack-Cali's suburban and waterfront office assets far below their fair market value for its own benefit and to the detriment of all other Mack-Cali stockholders.”

The Bow Street board candidates are:

• Alan R. Batkin, chief executive officer and chairman of the board of directors of Converse Associates, a strategic advisory firm. Batkin earlier was a senior executive with former Secretary of State Henry Kissinger's consulting firm.

• Frederic Cumenal, chief executive officer of Tiffany & Co. from 2015 to 2017 and president from 2013 to 2015.

• MaryAnne Gilmartin, co-founder and chief executive officer of L&L MAG, a New York-based real estate development firm. Gilmartin has also served as a director of Jefferies Financial Group, an investment banking firm, since 2014.

• Nori Gerardo Lietz, a senior lecturer of business administration in the Finance and Entrepreneurial Management Units at Harvard Business School, where she currently teaches Real Estate Private Equity and Venture Capital Private Equity. Gerardo Lietz is president of Areté Capital, a real estate advisory firm she founded in 2010.

“Contrary to Bow Street's misleading assertions, our board of directors is committed to continued stockholder value creation and considers all credible alternatives for maximizing value, including potential strategic transactions,” says DeMarco. “However, the board does not believe that now would be the right time for the company to engage in a strategic transaction, including the transaction proposed by Bow Street. Rather, the board believes that the company has made substantial progress on both its residential and waterfront office portfolios, and that continuing to advance the company's ongoing transformation and Waterfront strategy is the best way to maximize value at this time.”

Among its concerns, Mack-Cali says the new residential REIT “would likely have insufficient cash flows to carry its substantial debt burden, fund its multifamily development activities or pay meaningful dividends to its stockholders.”

The company also says tax concerns make a partial sale of a substantial portion of its assets, such as the one contemplated in the proposed transaction, “economically inadvisable for the company and its stockholders.”

This is a developing story and will be updated.