Mack-Cali Realty Corporation Announces 18.2% Increase in FFO Per Share for Third Quarter 1998

11/12/1998 Category: Earnings

CRANFORD, NJ--November 12, 1998--Mack-Cali Realty Corporation (NYSE:CLI) today reported that third quarter 1998 funds from operations (FFO) per diluted share were $0.78, representing an increase of 18.2% over the same period in 1997.

Financial Highlights

For the quarter ended September 30, 1998, FFO, after adjustment for straight-lining of rents, amounted to $57.3 million, or $0.78 per share, versus $27.3 million, or $0.66 per share, for the quarter ended September 30, 1997. For the nine months ended September 30, 1998, FFO, after adjustment for straight-lining of rents, amounted to $158.3 million, or $2.26 per share, versus $77.8 million, or $1.90 per share, for the same period last year, a per share increase of 18.9%.

Cash available for distribution (CAD) for the quarter equaled $52.1 million, or $0.71 per share, versus $25.4 million, or $0.62 per share, for the same quarter last year, an increase of 14.5% on a per share basis. For the nine months ended September 30, 1998, CAD equaled $141.8 million, or $2.03 per share, versus $73.3 million, or $1.79 per share, for the same period last year, a per share increase of 13.4%.

Total revenues for the quarter increased 109.1% to $130.9 million from $62.6 million for the same quarter last year. For the nine months ended September 30, 1998, total revenues amounted to $358.8 million, an increase of 104.7% over the $175.3 million for the same period last year.

Income from operations before minority interest and extraordinary item for the quarter totaled $39.1 million, or $0.53 per common share, versus $20.0 million, or $0.49 per common share, for the same period last year, an increase of 8.2% on a per share basis. Income from operations before minority interest and extraordinary item for the nine months ended September 30, 1998 totaled $111.1 million, or $1.57 per common share, versus $58.1 million, or $1.42 per common share, for the same period last year, a per share increase of 10.6%.

All per share amounts presented are diluted; basic per share information is included in the financial tables accompanying this press release.

As of September 30, 1998, the Company had total debt of approximately $1.4 billion, with a weighted average annual interest rate of 6.83%. The Company had 57,281,697 shares of common stock, 8,626,266 common operating partnership units and 250,256 of 6.75%, $1,000 face-value preferred operating partnership units outstanding as of quarter end. The outstanding preferred units are convertible into 7,222,395 common operating partnership units at $34.65 per unit.

Barry Lefkowitz, executive vice president and chief financial officer, stated, "The Company has substantial financial resources as evidenced by one of the strongest balance sheets in the industry. This financial strength, coupled with a seasoned management team and solid operating infrastructure, positions Mack-Cali to continue to be one of the most successful companies in the real estate sector."

Summary of Third Quarter Transactions

During the third quarter, Mack-Cali acquired four properties in the Northeast, totaling 473,000 square feet, three of which were previously announced. The previously-announced acquisitions consisted of: East Point I, a six-story, 122,000 square-foot, class A office property with nine acres of adjacent developable land in Lanham, Maryland, for $15.5 million; Seven Skyline Drive, a three-story, 117,000 square-foot, class A office property in Hawthorne, New York, for $13.3 million; and 1510 Lancer Road, an 88,000 square-foot, class A office/flex property in Moorestown, New Jersey, for $3.7 million. The Company also acquired 40 Richards Avenue, a seven-story, 146,000 square-foot, class A office property in Norwalk, Connecticut, for $18.6 million.

In August 1998, Mack-Cali completed its redevelopment of 228 Strawbridge Drive, a 74,000 square-foot, class A office property in Moorestown, New Jersey, which was purchased vacant by the Company in July 1997. The building is now fully leased.

In third quarter financing transactions, Mack-Cali raised its dividend by 10%, from $0.50 per share to $0.55 per share ($2.20 per share on an annualized basis) effective for the quarter ended September 30, 1998.

The Company also expanded its unsecured credit facility by $30 million to $900 million. Combined with the Company's existing $100 million credit facility, Mack-Cali's revolving credit lines now total $1 billion.

Leasing Summary

Mack-Cali Realty Corporations's in-service portfolio (excluding joint venture properties) was 96.1% leased at September 30, 1998, unchanged from June 30, 1998. The Company's development/ redevelopment properties (excluding joint venture properties) not-in-service as of September 30, 1998, totaled 147,000 square feet of space.

During the third quarter 1998, the Company executed 188 leases totaling 999,316 square feet, consisting of 700,670 square feet of office space, 277,030 square feet of office/flex space and 21,616 square feet of industrial/warehouse space; 466,523 square feet resulting from new leases and 532,793 square feet from lease renewals, expansions and other leasing transactions with existing tenants.

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

About the Company

Mack-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. With the completion of pending transactions, Mack-Cali will own or have interests in 253 properties, primarily office and office/flex buildings, totaling approximately 27.9 million square feet, serving over 2,300 tenants. The Company's portfolio is located in 12 states and the District of Columbia, primarily in the Northeast, as well as the Southwest and West.

Additional information on Mack-Cali Realty Corporation is available on the Company's website at www.mack-cali.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 differ 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 operating costs may be greater than anticipated. For further 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, current reports on Form 8-K, and annual reports on Form 10-K.


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Mack-Cali Realty Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)


Quarter Ended September 30,
1998 1997
-----------------------------------------------------------------------------------------
Base rents $112,976 $52,148
Escalations & recoveries 14,182 8,185
Parking and other 3,008 1,648
Interest income 728 628


Total revenues 130,894 62,609


Real estate taxes 13,488 6,584
Utilities 11,300 5,061
Operating services 15,807 7,283
General and administrative 6,118 3,675
Depreciation and amortization 21,213 9,339
Interest expense 23,881 10,694


Total expenses 91,807 42,636

Income from operations before
minority interest and
extraordinary item 39,087 19,973
Minority interest (8,375) (2,015)
Extraordinary item-loss on
early retirement of debt(1) -- (3,583)


Net income $30,712 $14,375


Earnings per Common Share-Basic:
Income from operations
before extraordinary item $0.53 $0.49
Extraordinary item -- (0.10)
Net income per common share $0.53 $0.39


Earnings per Common Share-Diluted:
Income from operations
before extraordinary item $0.53 $0.49
Extraordinary item -- (0.10) Net
income per common share $0.53 $0.39


Dividends declared per
common share $0.55 $0.50


Basic weighted average common
shares outstanding 57,720 36,457 Diluted weighted
average common
shares outstanding 65,884 41,421


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



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


Quarter Ended September 30,
1998 1997
-----------------------------------------------------------------------------------------
Income from operations before
minority interest and
extraordinary item $39,087 $19,973
Add: Real estate depreciation
and amortization(1) 21,520 9,327 Deduct: Adj. to rental
income for
straight-lining of rents(1) (3,355) (1,969)
Funds from operations(2) after adj.
for straight-lining of rents $57,252 $27,331
Deduct:
Non-incremental revenue generating
capital expenditures:
Capital improvements (965) (489) Tenant
improvements and leasing
commissions (4,165) (1,412)


Cash available for distribution $52,122 $25,430
Basic
weighted average shares/units
outstanding (3) 65,577 40,547 Diluted
weighted average shares/units
outstanding(4) 73,044 41,222


Per Share/Unit - Basic(5):
Funds from operations $0.81 $0.67
Cash available for distribution $0.73 $0.63


Per Share/Unit - Diluted:
Funds from operations $0.78 $0.66
Cash available for distribution $0.71 $0.62


Dividend per common share $0.55 $0.50


Dividend payout ratios:
Funds from operations-diluted 70.17% 75.41%
Cash available for distribution-diluted 77.08% 81.05%

(1) Includes FFO adjustments in 1998 related to Company's investments in
joint ventures.
(2) 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.
(3) Calculated based on weighted average common shares outstanding,
assuming redemption of operating partnership common units into common shares.
(4) Calculated based on shares and units included in basic per share/unit
computation, plus dilutive Common Stock Equivalents (i.e. convertible
preferred units, options and warrants).
(5) 1998 amount calculated after deduction for distributions to preferred
unitholders of $4,194.



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Mack-Cali Realty Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)


Nine Months Ended September 30,
1998 1997
-----------------------------------------------------------------------------------------
Base rents $311,753 $145,328
Escalations & recoveries 36,897 22,464
Parking and other 7,921 5,245
Interest income 2,187 2,268


Total revenues 358,758 175,305


Real estate taxes 35,415 18,513
Utilities 28,717 13,001
Operating services 44,128 21,056
General and administrative 18,708 10,601
Depreciation and amortization 56,537 25,631
Interest expense 64,146 28,398


Total expenses 247,651 117,200


Income from operations before
minority interest and
extraordinary item 111,107 58,105


Minority interest (23,464) (5,663)
Extraordinary item-loss on early
retirement of debt(1) (2,373) (3,583)


Net income $85,270 $48,859


Earnings per Common Share-Basic:
Income from operations before
extraordinary item $1.58 $1.44
Extraordinary item (0.04) (0.10)
Net Income per common share $1.54 $1.34


Earnings per Common Share-Diluted:
Income from operations before
extraordinary item $1.57 $1.42
Extraordinary item (0.04) (0.10)
Net income per common share $1.53 $1.32
Dividends declared per
common share $1.55 $1.40


Basic weighted average common
shares outstanding 55,391 36,469 Diluted weighted
average common
shares outstanding 63,093 41,152

(1) Net of minority interest's share of extraordinary item of $297 in 1998
and $402 in 1997.



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


Nine Months Ended September 30,
1998 1997
-----------------------------------------------------------------------------------------
Income from operations before
minority interest & extraordinary item $111,107 $58,105
Add: Real estate depreciation
and amortization(1) 56,850 25,592 Deduct:
Adj. to rental income for
straight-lining of rents(1) (9,700) (5,913)
Funds from operations(2) after adj.
for straight-lining of rents $158,257 $77,784
Deduct:
Non-incremental revenue generating
capital expenditures:
Capital improvements (1,704) (1,122) Tenant
improvements and leasing
commissions (14,789) (3,338)


Cash available for distribution $141,764 $73,324


Basic weighted average shares/units
outstanding (3) 62,580 40,406
Diluted weighted average shares/units
outstanding(4) 69,983 40,953


Per Share/Unit - Basic(5):
Funds from operations $2.34 $1.93
Cash available for distribution $2.07 $1.81


Per Share/Unit - Diluted:
Funds from operations $2.26 $1.90
Cash available for distribution $2.03 $1.79


Dividend per common share $1.55 $1.40


Dividend payout ratios:
Funds from operations-diluted 68.54% 73.71%
Cash available for distribution-diluted 76.52% 78.19%

(1) Includes FFO adjustments in 1998 related to Company's investments in
joint ventures.
(2) 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.
(3) Calculated based on weighted average common shares outstanding,
assuming redemption of operating partnership common units into common shares.
(4) Calculated based on shares and units included in basic per share/unit
computation, plus dilutive Common Stock Equivalents (i.e. convertible
preferred units, options and warrants).
(5) 1998 amount calculated after deduction of distributions to preferred
unitholders of $12,090.



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Mack-Cali Realty Corporation
Leasing Statistics
For Quarter Ended September 30, 1998


SPACE LEASED
-----------------------------------------------------------------------------------------
IN-SERVICE PROPERTIES:
Square feet leased at June 30, 1998 25,172,345
Net leasing activity in 3rd quarter 1998 62,391
Leased s.f. from 3rd quarter 1998 acquisitions 456,252
Occupancy adjustment(1) 2,550


Square feet leased at September 30, 1998 25,693,538


Percent leased at September 30, 1998 96.1%


Square feet of Development/Redevelopment
Properties Not-in-Service as of September 30, 1998 147,000


OFFICE SPACE


Number Weighted Average
of Rentable Average Term
Leases S.F. Base Rent (Years)
-----------------------------------------------------------------------------------------
New Leases:
First generation space 5 104,068 $20.21 5.0
Second generation space 57 322,817 $28.83 8.0
Total new leasing 62 426,885 $26.73


Renewals & extensions 54 177,513 $19.76 3.6
Other retained tenants 34 96,272 $19.91 4.4
Total leasing 150 700,670


Capital Expenditures - Second Generation Space(2):


Tenant Leasing
Improvements(3) Commissions Total
-----------------------------------------------------------------------------------------
Expend. committed-3rd qtr $5,957,962 $3,529,335 $9,487,297
Rentable s.f. leased-3rd qtr 596,602
Cap. ex. committed
per r.s.f. per year $1.33 $0.82 $2.15

(1) Represents the net change in the amount of space leased/expired since
the prior reporting period in excess of 100 percent of the gross
rentable area of certain properties in the portfolio.
(2) Represents amounts committed, but not necessarily expended during
period.
(3) Equals estimated workletter costs, net of estimated profit and
overhead.



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OFFICE/FLEX SPACE
-----------------------------------------------------------------------------------------
Number Weighted Average
of Rentable Average Term
Leases S.F. Base Rent(1) (Years)
-----------------------------------------------------------------------------------------
New Leases:
First generation space 1 10,100 $13.08 5.0
Second generation space 6 29,538 $12.13 3.7
Total new leasing 7 39,638 $12.37


Renewals & extensions 21 217,656 $12.53 4.2
Other retained tenants 7 19,736 $15.14 4.6
Total leasing 35 277,030


Capital Expenditures - Second Generation Space(2):


Tenant Leasing
Improvements(3) Commissions Total
-----------------------------------------------------------------------------------------
Expend. committed-3rd qtr $358,282 $372,826 $731,108
Rentable s.f. leased-3rd qtr 266,930
Cap. ex. committed
per r.s.f. per year $0.32 $0.33 $0.65


INDUSTRIAL/WAREHOUSE SPACE
-----------------------------------------------------------------------------------------
Number Weighted Average
of Rentable Average Term
Leases S.F. Base Rent(1) (Years)
-----------------------------------------------------------------------------------------
Renewals & extensions 1 557 $11.50 3.0
Other retained tenants 2 21,059 $ 8.48 1.0
Total leasing 3 21,616


Capital Expenditures - Second Generation Space(2):


Tenant Leasing
Improvements(3) Commissions Total
-----------------------------------------------------------------------------------------
Expend. committed-3rd qtr $ 401 $4,546 $4,947 Rentable
s.f. leased-3rd qtr 21,616
Cap. ex. committed
per r.s.f. per year $0.01 $0.20 $0.21

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

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LEASE RENEWALS
-----------------------------------------------------------------------------------------
Number of
Leases Rentable S.F.
-----------------------------------------------------------------------------------------
Leases expiring 184 936,925


Leases renewed & extended 76 395,726
Other retained tenants 43 137,067
Total leases retained 119 532,793
Percent retained 64.7% 56.9%


Future expirations renewed or relet
(included in totals above) 44 301,012


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Leasing Statistics
Joint Venture Properties
For Quarter Ended September 30, 1998


TOTAL SPACE LEASED
-----------------------------------------------------------------------------------------
JOINT VENTURE PROPERTIES:
Square feet leased at June 30, 1998 349,343
Net leasing activity in 3rd quarter 1998 51,917
Leased s.f. from 3rd quarter 1998 acquisitions 122,765


Square feet leased at September 30, 1998 524,025


Percent leased at September 30, 1998 88.5%


Square feet of Development/Redevelopment


Properties Not-in-Service as of September 30, 1998 601,300


Number Weighted Average
of Rentable Average Term
Leases S.F. Base Rent (Years)
-----------------------------------------------------------------------------------------
New Leases:
First generation space 1 15,350 $37.00 5.0
Second generation space 1 9,839 $25.99 5.0
Total new leasing 2 25,189 $32.70


Renewals & extensions 0 0 N/A N/A
Other retained tenants 1 26,728 $33.00 5.0
Total leasing 3 51,917


Capital Expenditures - Second Generation Space(1):


Tenant Leasing
Improvements(2) Commissions Total


Expend. committed-3rd qtr $534,560 $300,981 $835,541
Rentable s.f. leased-3rd qtr 36,567
Cap. ex. committed
per r.s.f. per year $2.92 $1.64 $4.56


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