Our team, of whom we are so very proud, completed a highly productive 2018 as we deepened our focus on our core New Jersey waterfront and transit-oriented markets. We leased nearly 2 million square feet and delivered over 1,200 new residential units. The disposition process which required selling over $2.1 billion of non-core assets over the last three plus years is substantially complete, having monetized our last mile with our flex/industrial portfolio in early 2019 for $488 million. The capital and value extracted from this sale enabled us to reduce debt by $210 million as well as purchase an additional brand-new multifamily asset in Jersey City, one that is highly complementary to our dual-asset platform and strategy. We are truly on our way to creating a dual platform, waterfront company with excellent growth fundamentals from existing and development assets.

The disposition process in 2018 had a number of benefits including successfully broadening our market share in key strategic areas as part of a series of 1031 transactions. These transactions included the addition of 99 Wood, a class A transit-oriented office property, that increases our Metropark market share to 33%. This market has been one of the best performers in recent years. In addition, we have added Soho Lofts, a brand-new residential property with condo-level finishes and luxury amenities, to our Jersey City portfolio, and commenced construction on 25 Christopher Columbus Drive, which we named "The Charlotte", a premier 750-unit residential property, adjacent to our Harborside waterfront complex. In our opinion, Jersey City continues to enjoy some of the best fundamentals of any residential market in the country. We also executed the purchase of one of our remaining legacy Roseland joint venture properties bringing our consolidated ownership of Roseland’s portfolio to 82%, meaningfully higher than the 20% ownership position we had at the start of this management teams’ tenure in 2015. It proved to be a great year in fine tuning our strategy.

During the last four years, Mack-Cali has been dramatically transformed operationally. In 2015, we operated in 27 markets, where we had low levels of market share. We carried an inefficient G&A with a management structure of approximately 600 employees and owned assets in significant need of capital improvements. Our multifamily platform was hard to value given its complex ownership structure and the path towards simplification was viewed as dilutive. The evolution process was challenging, but we believe the results are starting to demonstrate that our focused approach can create sustained long-term value.

Today, we operate with over 300 highly talented employees, with a significant 20% market share in our key transit-based market, and a class A+ residential portfolio with just one subordinated interest which has been reduced from eleven in 2015. Our office assets have been substantially repositioned and feature sought-after amenities, collaborative common areas, and convenient access to public transportation. Notably, we produced 59% EBITDA margin in 2018, a full 300 basis point improvement from 2015. While we have made great strides in repositioning the company, as I always say—every single day—we still have work to do.

Even with nearly 2 million square feet of leasing completed in 2018, we ended the year with a core office occupancy of 83.2% and a waterfront office occupancy of 73.2% specifically. This compares to 87.6% and 86.2% respectively in the prior year. The change in occupancy is disappointing. Some of the change was due to large tenants making relocation decisions or being absorbed due to M&A activity. The inability to backfill, despite our best efforts, was a function of a palpable slowing of business leaders making decisions to spend capital. We can speculate whether it was the uncertainty of rising interest rates, or the return of volatility in the market, but it does not matter, leasing is imperative.

In an effort to overcome the occupancy challenges, we proactively enhanced the leasing team with a leadership change, concentrated on advancing the physical repositioning of our properties, and strengthened programming at our properties to stimulate traffic. In the second half of the year, we observed a marked difference in the volume of leasing tours, and in the level of engagement by leasing brokers and tenant prospects. This level of activity in the second half of 2018 was very encouraging and contributed over 62% of all leases signed for the year.

We realized 7.6% cash and 23.1% GAAP increases from old to new lease rates and we are excited about the opportunities that lie ahead. The gap between our waterfront in-place rents and our asking rents is nearly 16%. If we are successful in completing 900,000 square feet of leasing on the waterfront, we will achieve 92% occupancy in this very important market. We also control the only contiguous blocks of space that can accommodate large users. At the time of this letter, we have secured a lease with Whole Foods Market that will take 50,000 square feet in our offices for their regional headquarters as well as an additional 50,000 square-foot Whole Foods Market retail store. This will be the first of its kind for our Jersey City community which we expect will be a hit with our residential tenants. We have approximately 200,000 square feet of leases pending and a strong pipeline of other prospects in which we are actively engaged.

We find ourselves in 2019 with a concentrated portfolio, a focused strategy, and a compelling value proposition for our shareholders, tenants, and residents.

As of the end of February 2019, our portfolio now reflects our target asset mix of 40% residential, 40% waterfront and class A suburban office, and 20% suburban office; we believe the large volume of asset sales are behind us. Our focus is solely on facilitating leasing activity and balance sheet management.

Early in 2019, at our Investor Day, we held a strategy update where we set forth a path for realizing our net asset value and improving our balance sheet over the next 36 months. The plan entails occupancy improvement primarily on the waterfront, residential development deliveries, and subsequent stabilization. We believe the combination of these initiatives should have a meaningful impact on our FFO growth, EBITDA growth, and on the improvement of our debt ratios. It is our intention to get to a loan to stabilized value ratio (LTV) of 50% or less over the next 36 months. We are actively restructuring our debt profile to fund our asset base. We are terming out our short-term debt wherever we are able and using long-term secured debt where we can get a cost of capital advantage—specifically on our premier residential portfolio.

Since Investor Day, we have implemented some of the actions discussed during the meeting. Specifically, we have sold the remainder of our flex portfolio for $488 million and have used $210 million to repay unsecured debt and earmarked the balance to purchase Soho Lofts via a 1031 tax-free exchange.

We have come a long way since our management formation in 2015, and our evolution continues. Simply put, we believe the foundation we have structured will enable us to dominate core submarkets, leverage operational efficiencies, and concentrate our capital investment along the New Jersey Gold Coast. This should result in improved earnings growth and value creation for our shareholders. The value proposition we offer to our future tenants as compared to a Manhattan alternative is unparalleled—and so is the view!

We are excited about what lies ahead for our shareholders, employees, tenants, and residents. We are a stronger Mack-Cali with a solid infrastructure and path toward continued value creation. We thank our investors for sharing our vision and supporting us through this journey.