The uncertain economic and political climate continues to linger over our nation, leaving few industries unscathed. This uncertainty—from threats of terrorism and war, a weakened economy, and corporate scandals—has resulted in a corporate America reluctant to make long-term decisions about capital spending, employment, and office space. The consequences for the real estate industry have been weakened demand, higher vacancies, and pressure on rents.

Mack-Cali is not immune to these pressures. With leasing decisions sometimes now excruciatingly slow, our occupancies slipped slightly. However, the steps we've always taken to manage our business allow our Company to succeed even in adverse conditions. As a result, I'm proud to report that in 2002 we kept on track, forged ahead, and made significant progress on our strategic plan of strengthening our position in core high-barrier-to-entry markets in the Northeast and Mid-Atlantic regions. Mack-Cali's 2002 accomplishments were highlighted by progress in selling assets in non-core Southwest and West markets and reinvesting the proceeds to expand our presence in our core markets. We also maintained strong occupancies and a high-caliber tenant base and continued to provide first-rate service to our tenants. In addition, we increased our dividend, generated solid earnings, and enhanced our financial flexibility.

Through strategic acquisitions and development, we increased our presence in our core Northeast and Mid-Atlantic markets—which include New Jersey; Westchester County, New York; suburban Philadelphia; Fairfield County, Connecticut; and Washington, D.C. These core markets now generate 91.0 percent of our base rent compared to 82.3 percent two years ago, when we adopted our current strategy. Our in-depth industry knowledge, years of operating experience, and deep relationships in these core markets enable us to better serve our tenants, increase operating efficiencies, and pursue opportunities for growth. And most of our markets are outperforming others throughout the country, as the supply of new office space in them has been limited.

In 2002, we acquired seven office buildings totaling over 742,000 square feet for $123.5 million, all in our core markets. Each of these acquisitions—including Soundview Plaza in Stamford, Connecticut, and 16 and 18 Sentry Park West in Blue Bell, Pennsylvania—fit well into Mack-Cali's premier suburban property portfolio. Because of the caliber of our assets, our buildings are not only attractive to tenants, but to buyers as well. As a result, we were able to complete the sales of 13 buildings for over $163 million this year in non-core markets such as Dallas, Houston, Phoenix, and Tampa.