Mack-Cali is a company defined by focus. Over the years, our greatest success has been achieved by staying true to a consistent and conservative strategy. We continued that approach in 2003. By providing our tenants with magnificent work environments, we maintained strong occupancies despite a challenging economy. We added to our already deep presence in core markets and further reduced our holdings in non-strategic markets. We secured additional financing that enhanced our balance sheet and improved our ability to take advantage of opportunity. And we progressed on a large-scale "smart growth" development project for which we are uniquely qualified by our experience and market knowledge.

Succeeding in Challenging Times
This past year did have its challenges. Businesses—especially large employers— continued to be reluctant to make long-term decisions about capital spending and business expansion. And while the nation's economy has started to show signs of recovery, this has yet to translate into noteworthy employment growth, which is the key driver of office space demand. A widespread real estate recovery will not occur until there is sustained eco-nomic expansion that gives businesses the confidence to add staff.
         Our portfolio's occupancy did slip slightly in 2003—to 91.5% leased at year-end from last year's 92.3%. The decline can be attributed in part to the addition of a new development, Harborside Financial Center Plaza 5, to our leasing statistics. However, our net leasing activity produced positive absorption of over 140,000 square feet—a commendable achievement given the year's economic conditions.