Cali Realty Corporation Announces Third Quarter and Nine Months Results

11/10/1997 Category: Earnings

FFO per Share up 20 Percent for Quarter
Cash Available for Distribution Grows 25 Percent on Per Share Basis for Quarter

CRANFORD, NJ--November 10, 1997--Cali Realty Corporation (NYSE:CLI) today reported its results for the third quarter and the nine months ended September 30, 1997.

Financial Highlights
In the third quarter, funds from operations (FFO) before minority interest and after adjustment for straight-lining of rents increased 20 percent to $.67 per share, or $27.3 million, compared to $.56 per share, or $11.1 million, for the 1996 period. Cash available for distribution (CAD) increased 26 percent to $.63 per share, or $25.4 million, versus $.50 per share, or $9.9 million, for the 1996 period. Revenues increased 178 percent to $62.6 million from $22.5 million for the same quarter a year ago. Income before extraordinary item increased 26 percent to $.49 per share, or $18.0 million, versus $.39 per share, or $6.6 million, a year ago.

For the nine months ended September 30, 1997, FFO before minority interest and after adjustment for straight-lining of rents increased 19 percent to $1.93 per share, or $77.8 million, compared to $1.62 per share, or $30.0 million, reported for the same period a year ago. CAD increased 26 percent to $1.81 per share, or $73.3 million, versus $1.44 per share, or $26.7 million, reported for the first nine months of 1996. Revenues increased 178 percent to $175.3 million from $63.1 million for the same period in 1996. Income before gain on sale of rental property and extraordinary item increased 30 percent to $1.44 per share, or $52.4 million, versus $1.11 per share, or $17.5 million, a year ago.

At September 30, 1997, Cali Realty had a total market capitalization of approximately $2.3 billion, with an equity market value of $1.7 billion, and a total debt-to-total market capitalization ratio of 26 percent.

Thomas A. Rizk, President and Chief Executive Officer, stated, "We are pleased with the strength of our performance in the third quarter and for the first nine months of the year. Our markets in the Northeast continue to show growing strength and our deal flow for further acquisitions has never been stronger. We are also gratified by the confidence in our potential expressed by the financial community through the completion of our recent stock offering. Finally, we are excited by the prospects offered by our union with the Mack Company and Patriot American Office Group."

Third Quarter Highlighted by Mack Merger Announcement
During the third quarter, Cali announced its largest transaction to date, its pending $1.2 billion merger with the Mack Company and Patriot American Office Group.

The transaction, which was announced in August and is expected to close by year-end based on regulatory and shareholder approval, will add approximately 9.2 million square feet of office space to Cali's portfolio. The combined company, which will be renamed Mack-Cali Realty Corporation, will have a portfolio of approximately 21.5 million square feet and will be one of the largest REITs in the country, with a total market capitalization of approximately $3.5 billion.

Cali also acquired five properties totaling 476,000 square feet in the third quarter, including: the Moorestown Corporate Center, a 148,000 square-foot, two-building class A office complex in Moorestown, New Jersey; Shelton Place, a 133,000 square-foot class A office property in Shelton, Connecticut; 200 Corporate Boulevard South, an 84,000 square-foot office/flex property in Yonkers, New York; and Three Independence Way, an 111,000 square-foot class A office property in the Princeton Corporate Center, in South Brunswick, New Jersey. During the third quarter, Cali also obtained a new revolving credit facility, bringing the company's total borrowing capacity under its two revolving credit facilities to $500 million, as compared to Cali's previous facilities which totaled $225 million. In conjunction with the closing of the $400 million unsecured facility, Cali retired two existing secured revolving credit facilities.

$1.8 Billion in Transactions in 1997
For the first nine months of 1997, Cali has completed or announced deals aggregating approximately $1.8 billion, including the $440 million acquisition of Westchester-based Robert Martin Company in January, and the pending $1.2 billion merger with the Mack Company and Patriot American Office Group.

In October 1997, Cali completed a public offering of 13 million shares of common stock which resulted in aggregate net proceeds to the Company of approximately $491 million.

Leasing Summary
Cali Realty's portfolio of office buildings was 95.8 percent leased at September 30, 1997 compared to 96.5 percent at June 30, 1997.

During the third quarter of 1997, the Company executed 91 leases totaling 474,518 square feet, consisting of 252,770 square feet of office space, 183,966 square feet of office/flex space and 37,782 square feet of industrial/warehouse space; 261,736 square feet for new leases and 212,782 square feet for lease renewals.

A schedule is attached highlighting the third quarter's leasing statistics.

About the Company
Cali Realty Corporation is a fully integrated, self-administered, self-managed real estate investment trust (REIT) providing leasing, management, acquisition, development, construction and tenant-related services for its portfolio. The Company owns 132 properties, primarily office and office/flex buildings, totaling approximately 12.2 million square feet. All of the properties are located in New Jersey, New York, Pennsylvania and Connecticut.

Additional information on Cali Realty Corporation is available on the Company's website at http://www.calirealty.com.

Certain information discussed in this press release may constitute forward-looking statements within the meaning of the Federal Securities law. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to different materially from those projected. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office, office/flex and industrial/warehouse properties; interest rate levels; the availability of financing; and other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants will not take occupancy or pay rent, or that development or information on factors which could impact the Company and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission including quarterly reports on Form 10-Q on Form 8-K, and annual reports on Form 10-L.




Cali Realty Corporation
Condensed Statements of Operations
(in thousands, except per share amounts)


Quarter Ended
September 30,
1997 1996
----------------------------------------------------------------
Revenues $62,609 $22,518


Operating and other expenses (18,928) (7,035)
General and administrative (3,675) (1,371)
Depreciation and amortization (9,339) (3,469)
Interest expense (10,694) (2,999)


Total expenses (42,636) (14,874)


Income before minority interest 19,973 7,644
and extraordinary item
Minority interest (2,015) (1,045)

Extraordinary item-loss on early (3,583) --
retirement of debt (1)


Net income $14,375 $ 6,599


Weighted average shares
outstanding 36,457 17,045


Net income per common share:
Income before extraordinary item $ 0.49 $ 0.39
Extraordinary item-loss on early (0.10) --
retirement of debt
Net income $ 0.39 $ 0.39


Dividends declared per
common share $ 0.50 $ 0.45


(1) Net of minority interest's share of $402 in 1997.


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Cali Realty Corporation
Statements of Funds from Operations and
Cash Available for Distribution
(in thousands, except per share amounts)


Quarter Ended
September 30,
1997 1996
----------------------------------------------------------------
Income before minority interest,
gain on sale of rental property
and extraordinary item $19,973 $ 7,644
Add:
Real estate depreciation and amortization 9,327 3,456
Deduct:
Adjustment to rental income for
straight line rents (1,969) ( 29)
Funds from Operations(1)after adjustment
for straight-lining of rents $27,331 $11,071
Deduct:
Non-incremental revenue generating
capital expenditures:
Capital improvements (489) (298)
Tenant improvements and leasing
commissions (1,412) (849)


Cash available for distribution $25,430 $ 9,924


Weighted average shares/units
outstanding(2) 40,547 19,744


Per share/unit:
Funds from Operations $ 0.67 $ 0.56


Cash available for distribution $ 0.63 $ 0.50


Dividend $ 0.50 $ 0.45


Dividend payout ratios:
Funds from Operations(1) 74.18% 80.25%
Cash available for distribution 79.72% 89.53%


(1) Funds from Operations for both periods are calculated in
accordance with the National Association of Real Estate
Investment Trusts (NAREIT) definition, as published in March
1995.


(2) Assumes conversion of 4,090 (1997) and 2,699 (1996) weighted
average limited partnership units in Cali Realty, L.P. to
shares of Cali Realty Corporation.


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Cali Realty Corporation
Condensed Statements of Operations
(in thousands, except per share amounts)


Nine Months Ended
September 30,
1997 1996
----------------------------------------------------------------
Revenues $175,305 $63,094
Gain on sale of rental property -- 5,658


Operating and other expenses (52,570) (20,259)
General and administrative (10,601) (3,427)
Depreciation and amortization (25,631) (9,850)
Interest expense (28,398) (9,093)


Total expenses (117,200) (42,629)


Income before minority interest
and extraordinary item 58,105 26,123
Minority interest (5,663) (3,866)
Extraordinary items-loss on early
retirement of debt(1) (3,583) (475)


Net income $ 48,859 $ 21,782


Weighted average shares
outstanding 36,469 15,803


Net income per common share:
Before gain on sale of
rental property and
extraordinary item(2) $ 1.44 $ 1.11
Gain on sale of
rental property(3) -- $ 0.30
Extraordinary item (.10) (0.03)
Net income: $ 1.34 $ 1.38


Dividends declared per
common share $ 1.40 $ 1.30


(1) Net of minority interest's share of $402 and $86 in 1997 and 1996.
(2) 1996 amount calculated by taking net income, adding back the
extraordinary item, and deducting the gain on sale of rental
property (net of minority interest's share of $864), divided by
weighted average shares outstanding.
(3) 1996 amount calculated by taking the gain on sale of rental
property (net of minority interest's share of $864), divided
by weighted average shares outstanding.


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Cali Realty Corporation
Statements of Funds from Operations and
Cash Available for Distribution
(in thousands, except per share amounts)


Nine Months Ended
September 30,
1997 1996
----------------------------------------------------------------
Income before minority interest,
gain on sale of rental property
and extraordinary item $ 58,105 $ 20,465
Add:
Real estate depreciation and amortization 25,592 9,811
Deduct:
Adjustment to rental income for
straight line rents (5,913) (233)
Funds from Operations(1) after adjustment
for straight-lining of rents $ 77,784 $ 30,043
Deduct:
Non-incremental revenue generating
capital expenditures:
Capital improvements (1,122) (849)
Tenant improvements and leasing
commissions (3,338) (2,459)


Cash available for distribution $ 73,324 $ 26,735


Weighted average shares/units
outstanding(2) 40,406 18,519


Per share/unit:
Funds from Operations $ 1.93 $ 1.62
Cash available for distribution $ 1.81 $ 1.44
Dividend $ 1.40 $ 1.30


Dividend payout ratios:
Funds from Operations(1) 72.72% 80.13%
Cash available for distribution 77.15% 90.05%


(1) Funds from Operations for both periods are calculated in
accordance with the National Association of Real Estate
Investment Trusts (NAREIT) definition, as published in March
1995.


(2) Assumes conversion of 3,937 (1997) and 2,716 (1996) weighted
average limited partnership units in Cali Realty, L.P. to
shares of Cali Realty Corporation.

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Cali Realty Corporation
Leasing Statistics
For Quarter Ended September 30, 1997


Leased Area Percentage
Rentable S.F. Leased
----------------------------------------------------------------
June 30, 1997 11,349,176 96.5%
3rd quarter leasing, net 49,404
3rd quarter acquisitions 323,226
September 30, 1997 11,721,806 95.8%


Third Quarter Leasing Activity:




OFFICE SPACE

Number Weighted Average
of Rentable Average Term
Leases S.F. Base Rent (Years)
----------------------------------------------------------------
New Leases:
First generation space 1 3,517 $25.00 5.0
Second generation space 29 114,349 $20.81 4.3
Total new leasing: 30 117,866
Renewals & extensions 27 134,904 $22.55 3.0
Total leasing: 57 252,770



Capital Expenditures- Tenant Leasing
Second Generation Space: Improvements Commissions Total

Expend. committed-3rd qtr.(1) $979,390(2) $ 656,128 $1,635,518
Rentable s.f. leased-3rd qtr. 249,253 249,253 249,253
Cap ex. committed per r.s.f. $3.93 $2.63 $6.56


(1) Represents amounts committed but not necessarily expended during period.
(2) Equals estimated workletter costs, net of estimated profit and overhead.

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Cali Realty Corporation
Leasing Statistics
For Quarter Ended September 30, 1997
(continued)


OFFICE/FLEX SPACE


Number Weighted Average
of Rentable Average Base Term
Leases S.F. Net Rent (3) (Years)
-------------------------------------------------------------------
New leases:
First generation space 3 23,278 $14.60 5.0
Second generation space 18 94,110 $13.19 4.6
Total new leasing: 21 117,388
Renewals & extensions 9 66,578 $13.04 3.1
Total leasing: 30 183,966

Capital Expenditures- Tenant Leasing
Second Generation Space: Improvements(2) Commissions Total

Expend. committed-3rd qtr.(1) $594,045 $391,812 $985,857
Rentable s.f. leased-3rd qtr. 160,688 160,688 160,688
Cap ex. committed per r.s.f. $3.70 $2.44 $6.14


(1) Represents amounts committed, but not necessarily expended during period.
(2) Equals estimated workletter costs, net of estimated profit and overhead.
(3) Equals "triple net" rent plus common area costs and real estate taxes.


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INDUSTRIAL/WAREHOUSE SPACE

Number Weighted Average
of Rentable Average Term
Leases S.F. Base Rent(3)(Years)
--------------------------------------------------------------------
New Leases:
First generation space -- -- -- --
Second generation space 2 26,482 $8.55 4.1
Total new leasing: 2 26,482


Renewals & extensions 2 11,300 $10.53 4.0
Total leasing: 4 37,782


Note: Avg. Base Net Rent is being reported on a "modified net"
basis. See note #3 above.


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Capital Expenditures-
Second Generation Space
Tenant Leasing
Improvements Commissions Total
-------------------------------------------------------------------
Expend. Committed-3rd qtr.(1) $12,800 (2) $37,207 $50,007
Rentable s.f. leased-3rd qtr. 37,782 37,782 37,782
Cap. ex. committed per r.s.f. $0.34 $0.98 $1.32


(1) Represents amounts committed not necessarily expended during
period.
(2) Equals estimated workletter costs net of estimated profit and
overhead.
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Lease Renewals


Number of
Lease renewals Leases Rentable S.F.
----------------------------------------------------------------
Expiring: (3) 85 425,114
Renewed: 38 212,732
Renewed: 45% 50%


Expiring in future periods
& renewed in 3rd Qtr. (included
in totals above): 15 82,836


Expiring in future periods
& relet in 3rd Qtr. (included
in totals above): 6 17,238


(3) Includes leases expiring in future periods for which leases
were renewed or relet in 3rd quarter.

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