Mack-Cali Realty Corporation Announces 20% Increase in FFO Per Share for First Quarter 1998

05/12/1998 Category: Earnings

CRANFORD, NJ--May 12, 1998--Mack-Cali Realty Corporation (NYSE:CLI) today reported that its first quarter 1998 funds from operations (FFO) per share was $0.72, representing an increase of 20% over the same period in 1997.

Financial Highlights
Funds from operations, after adjustment for straight-lining of rents, amounted to $46.8 million, or $0.72 per share, versus $24.0 million, or $0.60 per share, for the quarter ended March 31, 1997.

For the quarter ended March 31, 1998, cash available for distribution (CAD) equaled $40.7 million, or $0.63 per share, versus $22.6 million, or $0.56 per share, for the same period last year; representing an increase of 13% on a per share basis.

Income from operations before minority interest for the quarter totaled $33.8 million, or $0.52 per common share, versus $18.1 million, or $0.45 per common share, for the quarter ended March 31, 1997; representing an increase of 16% on a per share basis.

Thomas A. Rizk, chief executive officer, stated, "We are very pleased with the results of our first full quarter of operations since the completion of The Mack Company and Patriot American Office Group merger. These results are indicative of our strategy of pursuing relationship-based, opportunistic transactions that strategically grow our asset base, as well as enhance shareholder value." Mr. Rizk continued, "We continue to carefully evaluate the environment as we look to expand in targeted regions. With a robust pipeline of transactions, significant operating experience and an appetite for growth, Mack-Cali remains on track to sustain its leadership as one of the best performing REITs in the country."

Acquisition and Financing Highlights
The first quarter of 1998 represented Mack-Cali's most active first quarter to date. During the period, the Company announced $1.8 billion in acquisition and financing transactions, consisting of $547 million in acquisitions and $1.2 billion in additional financings. Most notably, the Company completed the acquisition of Prudential Business Campus and Morris County Financial Center, an aggregate of 1.2 million square feet of office space in Parsippany, New Jersey; and also agreed to acquire the 1.4 million square-foot office portfolio and related operations of the Denver-based Pacifica Holding Company. Financing transactions included the addition of a new $870 million unsecured revolving credit facility, a $150 million secured, fixed-rate mortgage loan from Prudential Insurance Company of America, and $225 million in equity placements.

Leasing Information
Mack-Cali Realty's portfolio was 95.8% leased at March 31, 1998, unchanged from December 31, 1997.

During the first quarter 1998, the Company executed 163 leases totaling 993,770 square feet, consisting of 854,350 square feet of office space, 96,506 square feet of office/flex space and 42,914 square feet of industrial/warehouse space; 244,256 square feet resulting from new leases and 749,514 square feet from lease renewals, expansions and other leasing transactions with existing tenants.

A schedule is attached highlighting the first 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 241 properties, primarily office and office/flex buildings, totaling approximately 26.1 million square feet, serving over 2,300 tenants in 11 states, 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 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.




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


Quarter Ended
March 31,
1998 1997


Total revenues $105,823 $52,155


Operating and other expenses (31,067) (15,574)
General and administrative (6,196) (3,173)
Depreciation and amortization (16,231) (7,493)
Interest expense (18,480) (7,820)


Total expense (71,974) (34,060)
Income from operations before
minority interest 33,849 18,095

Minority interest (7,306) (1,636)


Net income $26,543 $16,459

Basic weighted average common
shares outstanding 51,363 36,461

Basic earnings per common share $0.52 $0.45
Dividends declared per
common share $0.50 $0.45






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


Quarter Ended
March 31,
1998 1997


Income from operations before
minority interest $33,849 $18,095


Add:
Real estate depreciation
and amortization 16,120 7,479
Deduct:
Adjustment to rental income for
straight-lining of rents (3,203) (1,607)
Funds from operations(1) after
adjustment for straight-lining
of rents $46,766 $23,967


Deduct:
Non-incremental revenue generating
capital expenditures:
Capital improvements (362) (292)
Tenant improvements and leasing
commissions (5,746) (1,055)


Cash available for distribution $40,658 $22,620

Weighted average shares/units
outstanding (2) 64,622 40,085


Per share/unit:
Funds from operations $0.72 $0.60


Cash available for distribution $0.63 $0.56


Dividend per common share $0.50 $0.45


Dividend payout ratios:
Funds from operations 69.09% 75.26%
Cash available for distribution 79.47% 79.75%


(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 redemption/conversion of 13,258,527 (in 1998) and 3,624,095
(in 1997) weighted average limited partnership common and convertible
preferred units in Mack-Cali Realty, L.P. to common shares in
Mack-Cali Realty Corporation.


Mack-Cali Realty Corporation
Leasing Statistics
For Quarter Ended March 31, 1998


TOTAL SPACE LEASED


Square feet leased at December 31, 1997 21,045,625
Net leasing activity in 1st quarter 1998 76,793
Leased s.f. from first quarter 1998 acquisitions 3,036,090
Occupancy adjustment(1) (6,106)


Square feet leased at March 31, 1998 24,152,402


Percent leased at March 31, 1998 95.8%


OFFICE SPACE

Number Weighted Average
of Rentable Average Term
Leases S.F. Base Rent (Years)


New Leases:
First generation space - - N/A N/A
Second generation space 61 198,661 $19.88 4.3
Total new leasing: 61 198,661


Renewals & extensions 46 408,266 $15.55(2) 7.0
Other retained tenants 35 247,423 $21.19 7.4
Total leasing: 142 854,350



Capital Expenditures- Second Generation Space(3):


Tenant Leasing
Improvements(4) Commissions Total


Expend. committed-1st qtr. $3,401,364 $2,071,833 $5,473,197
Rentable s.f. leased-1st qtr. 854,350
Cap ex. committed per r.s.f. $3.98 $2.43 $6.41


(1) Represents the amount of space leased during the period in excess of
100% of the gross rentable area of certain properties in the
portfolio.


(2) Includes a 181,596 square foot "triple-net" lease at $9.49 per
square foot. Weighted average base rent for all lease renewals in
this period excluding this transaction is $20.35 per square foot.


(3) Represents amounts committed, but not necessarily expended during
period.


(4) Equals estimated workletter costs, net of estimated profit and
overhead.



Mack-Cali Realty Corporation
Leasing Statistics
For Quarter Ended March 31, 1998
(continued)


OFFICE/FLEX SPACE


Number Weighted Average
of Rentable Average Term
Leases S.F. Base Net Rent(1)(Years)


New leases:
First generation space - - N/A N/A
Second generation space 3 9,319 $13.24 3.4
Total new leasing: 3 9,319


Renewals and extensions 13 82,444 $12.43 8.1
Other retained tenants 2 4,743 $18.87 3.0
Total leasing: 18 96,506



Capital Expenditures - Second Generation Space (2)


Tenant Leasing
Improvements(3) Commissions Total


Expend. committed-1st qtr. $67,897 $117,312 $185,209
Rentable s.f. leased-1st qtr. 96,506
Cap ex. committed per r.s.f.: $0.70 $1.22 $1.92


INDUSTRIAL/WAREHOUSE SPACE

Number Weighted Average
of Rentable Average Term
Leases S.F. Base Rent(1) (Years)
New Leases:
First generation space - - N/A N/A
Second generation space 2 36,276 $9.43 5.8
Total new leasing: 2 36,276


Renewals & extensions 1 6,638 $8.13 3.0
Other retained tenants - -
Total leasing: 3 42,914


(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 Capital Expenditures- Second Generation Space(1)




Tenant Leasing
Improvements(2) Commissions Total


Expend. committed-1st qtr. $51,790 $111,449 $163,239
Rentable s.f. leased-1st qtr. 42,914
Cap ex. committed per r.s.f. $1.21 $2.59 $3.80


(1) Represents amounts committed, not necessarily expended during period.


(2) Equals estimated workletter costs, net of estimated profit and overhead.


LEASE RENEWALS


Number of
Leases Rentable S.F.


Leases expiring 197 990,744

Leases renewed & extended 60 497,348
Other retained tenants 37 252,166
Total leases retained 97 749,514
% Retained 49.2% 75.7%


Future expirations
renewed or relet
(included in totals above) 42 488,848