Mack-Cali Realty Corporation Announces 11.1 Percent Increase in First Quarter FFO Per Share

05/04/2000 Category: Earnings

CRANFORD, NEW JERSEY - May 4, 2000 - Mack-Cali Realty Corporation (NYSE: CLI) today announced its results for the first quarter of 2000. The Company reported that its funds from operations (FFO) per diluted share for the first quarter 2000 increased 11.1 percent over the same period in 1999.

FINANCIAL HIGHLIGHTS

FFO, after adjustment for straight-lining of rents, for the quarter ended March 31, 2000, amounted to $66.1 million, or $0.90 per share, versus $60.2 million, or $0.81 per share, for the quarter ended March 31, 1999, a per share increase of 11.1 percent.

Cash available for distribution (CAD) for the first quarter 2000 equaled $55.4 million, or $0.76 per share, versus $54.0 million, or $0.73 per share, for the same quarter last year, a per share increase of 4.1 percent.

Included in FFO and CAD for the first quarter 2000 was a gain on sale of land of $2.2 million, or $0.03 per share.

Total revenues for the current quarter increased 6.0 percent to $143.0 million from $134.9 million for the same quarter last year.

Net income for the first quarter 2000 equaled $36.6 million, or $0.62 per share, versus $32.1 million, or $0.55 per share, for the same quarter last year, a per share increase of 12.7 percent. All per share amounts presented are on a diluted basis; basic per share information is included in the financial tables accompanying this press release.

The Company had 58,489,135 shares of common stock, 8,116,827 common operating partnership units and 229,304 $1,000-face-value preferred operating partnership units (6.75 percent annual rate) outstanding at quarter end. The outstanding preferred units are convertible into 6,617,721 common operating partnership units. Assuming conversion of all preferred units into common units, the Company had a total of 73,223,683 shares/common units outstanding at March 31, 2000.

As of March 31, 2000, the Company had total indebtedness of approximately $1.53 billion, with a weighted average annual interest rate of 7.19 percent. Mack-Cali's total market capitalization was $3.5 billion with a debt-to-market capitalization ratio of 43.9 percent. The Company had an interest coverage ratio of 3.66 times for the quarter ended March 31, 2000.

Commenting on the results, Mitchell E. Hersh, chief executive officer, said, "Our first quarter showed solid results, continuing the positive momentum from 1999. Rents continue to increase with occupancies remaining high. Our development projects continue to unfold as planned. We remain focused on the growth in our real estate operations while exploring ancillary opportunities."

PORTFOLIO MANAGEMENT TRANSACTIONS

In January 2000, the Company purchased land for $2.1 million adjacent to the Company's 371,000 square-foot, 96.8 percent leased three-building office complex at the Airport Business Center in Lester, Pennsylvania. The acquired land can accommodate up to 135,000 square feet of additional office space.

The Company sold 39 acres of vacant land in Mercer County, New Jersey for $4.4 million in February 2000. The entire 128-acre land track was originally acquired in 1998 for $1.7 million.

In March 2000, Mack-Cali increased its presence in the Moorestown West Corporate Center in Moorestown, New Jersey by acquiring a 60,800 square-foot office/flex building for approximately $4 million. The Company now owns 19 office/flex buildings in the complex, aggregating 875,405 square feet.

Mack-Cali completed the sale of 95 Christopher Columbus Drive in Jersey City, New Jersey for $152.5 million in April 2000. The 622,000 square-foot office building is 100 percent leased and the Company will continue to manage and lease the property for the new owner.

Also in April, Mack-Cali sold Atrium at Coulter Ridge, a 71,771 square-foot office building in Amarillo, Texas, for $1.6 million.

DEVELOPMENT PIPELINE

The Company remains on schedule to meet the aggressive occupancy requirements of TD Waterhouse, the sole tenant of the Company's 185,000 square-foot office facility being developed at Harborside Financial Center in Jersey City, New Jersey. The office facility is being built atop a 1,100-car parking structure.

Harborside's south pier Hyatt Regency Hotel development project will be launched in a groundbreaking ceremony this month.

The 183,000 square-foot, six-story office facility being developed at the Denver Tech Center, located in Denver, Colorado, is on target for a first quarter 2001 completion. 90,000 square feet of the property is currently leased to URS Greiner Woodward Clyde.

The 105 Eisenhower Parkway development, located in the Company's Eisenhower Corporate Center in Roseland, New Jersey, will be the Center's newest four-story, 220,000 square-foot office building. Completion is slated for the first quarter 2001. Arthur Andersen has leased 50 percent of the building.

In Bernards Township, New Jersey, Mack-Cali is nearing completion of a 130,000 square-foot office property at Liberty Corner. KPMG Peat Marwick, LLP signed a lease in April for 37,962 square feet of the building. The tenant is due to occupy the space in the third quarter of 2000.

Leasing interest on Mack-Cali's development projects remains strong.

JOINT VENTURE ACTIVITY

Mack-Cali's development joint venture in California with Highridge Partners resulted in six buildings being placed in service during the quarter in Roseville and San Diego with construction beginning on another development project in Anaheim. These projects are summarized as follows:

  • Lava Ridge Business Center encompasses three office buildings totaling 183,200 square feet. The high profile business park located in Roseville was 73.4 percent leased as of March 31, 2000.

  • Summit Ridge Business Center, a three-building, research and development complex, aggregating 133,750 square feet of office/flex space was 40.3 percent leased as of March 31, 2000. The Center is located in Carroll Mesa Business Park in the heart of San Diego's medical/technology community.

  • Stadium Gateway, located in Anaheim, is a planned six-story, 261,554 square-foot office building that is due to break ground this month. New Horizons Worldwide, Inc., the largest computer training company in the world and one of Orange County's fastest-growing businesses, has leased 75,000 square feet and will occupy the space in 2001.



LEASING INFORMATION

Mack-Cali's consolidated in-service portfolio was 96.7 percent leased at March 31, 2000, compared to 96.5 percent at December 31, 1999.

For the quarter ended March 31, 2000, the Company executed 224 leases totaling 1,309,574 square feet, consisting of 1,107,067 square feet of office space, 156,253 square feet of office/flex space and 46,254 square feet of industrial/warehouse space. Of these totals, 407,772 square feet were for new leases and 901,802 square feet were for lease renewals and other tenant retention transactions. Accompanying this press release are schedules highlighting the first quarter leasing statistics for both the Company's consolidated and joint venture properties.

Copies of Mack-Cali's Form 10-Q and Supplemental Operating and Financial Data for the first quarter 2000 are available upon request from:

Mack-Cali Investor Relations Dept. 11 Commerce Drive, Cranford, NJ 07016 [via phone: 908.497.2001].

In addition, these items are available on Mack-Cali's website, as follows:

First Quarter 2000 Form 10-Q:

http://www.mack-cali.com/graphics/shareholders/pdfs/1st.quarter.10q.00.pdf

First Quarter 2000 Supplemental Operating and Financial Data:

http://www.mack-cali.com/graphics/shareholders/pdfs/1st.quarter.sp.00.pdf

ABOUT THE COMPANY

Mack-Cali Realty Corporation is a fully-integrated, self-administered, self-managed real estate investment trust (REIT) providing management, leasing, development, construction and other tenant-related services for its class A real estate portfolio. Mack-Cali owns or has interests in 266 properties, primarily office and office/flex buildings, totaling approximately 29.0 million square feet, located in 12 states and the District of Columbia. The properties, which are primarily located in the Northeast, enable the Company to provide a full complement of real estate opportunities to its diverse base of over 2,400 tenants.

Additional information on Mack-Cali Realty Corporation is available on the Company's website at http://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 and Form 10-K/A.



Mack-Cali Realty Corporation Consolidated Statements of Operations (in thousands, except per share amounts)-------------------------------------------------------------------- Quarter Ended March 31, 2000 1999

Base rents $121,598 $116,080Escalations & recoveries 16,668 14,860Parking and other 3,322 3,900Equity in earnings (loss) of unconsolidated joint ventures 1,137 (206)Interest income 254 255

Total revenues 142,979 134,889

Real estate taxes 14,704 13,843Utilities 10,379 9,592Operating services 17,742 17,087General and administrative 6,113 7,963Depreciation and amortization 22,182 21,969Interest expense 26,426 23,622

Total expenses 97,546 94,076

Income before gain on sale of land and minority interests 45,433 40,813Gain on sale of land 2,248 --

Income before minority interests 47,681 40,813

Minority interests: Operating Partnership (8,976) (8,749) Partially-owned properties (2,090) --

Net income $36,615 $32,064

PER SHARE DATA:Basic earnings per share $0.63 $0.55Diluted earnings per share $0.62 $0.55Dividends declared per common share $0.58 $0.55

Basic weighted average shares outstanding 58,295 58,162Diluted weighted average shares outstanding 73,191 67,283



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, 2000 1999

Income before minority interests $47,681 $40,813Add: Real estate depreciation and amortization(1) 22,718 22,951Deduct: Adj. to rental income for straight-lining of rents(2) (2,190) (3,545)Deduct: Minority interest- partially-owned properties (2,090) --Funds from operations(3) after adj. for straight-lining of rents $66,119 $60,219Deduct: Non-incremental revenue generating capital expenditures: Capital expenditures (847) (569) Tenant improvements and leasing commissions (9,909) (5,653)

Cash available for distribution $55,363 $53,997

Basic weighted average shares/units outstanding(4) 66,428 67,011Diluted weighted average shares/units outstanding(5) 73,191 73,975

Per Share/Unit - Basic(6): Funds from operations $0.94 $0.84 Cash available for distribution $0.78 $0.75Per Share/Unit - Diluted: Funds from operations $0.90 $0.81 Cash available for distribution $0.76 $0.73

Dividends declared per common share $0.58 $0.55

Dividend payout ratios: Funds from operations-diluted 64.20% 67.56% Cash available for distribution-diluted 76.68% 75.35%

(1) Includes the Company's share from unconsolidated joint ventures of $734 and $1,101 for 2000 and 1999, respectively.(2) Includes the Company's share from unconsolidated joint ventures of $57 and $(18) for 2000 and 1999, respectively.(3) Funds from operations for both periods are calculated in accordance with the National Association of Real Estate Investment Trusts (NAREIT) definition, as published in October 1999.(4) Calculated based on weighted average common shares outstanding, assuming redemption of operating partnership common units into common shares.(5) 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).(6) Amounts calculated after deduction for distributions to preferred unitholders of $3,869 for both 2000 and 1999.

Mack-Cali Realty Corporation Consolidated Balance Sheets (in thousands, except share amounts)------------------------------------------------------------------------ March 31, December 31,ASSETS: 2000 1999Rental property Land and leasehold interests $ 552,893 $ 549,096 Buildings and improvements 3,041,833 3,014,532 Tenant improvements 91,788 85,057 Furniture, fixtures and equipment 6,200 6,160 3,692,714 3,654,845Less-accumulated depreciation and amortization (277,065) (256,629)Total rental property 3,415,649 3,398,216

Cash and cash equivalents 6,174 8,671Investments in unconsolidated joint ventures 91,497 89,134Unbilled rents receivable 55,386 53,523Deferred charges and other assets, net 66,805 66,436Restricted cash 6,390 7,081Accounts receivable, net 8,855 6,810

Total assets $3,650,756 $3,629,601

LIABILITIES AND STOCKHOLDERS' EQUITY:Senior unsecured notes $ 782,863 $ 782,785Revolving credit facilities 216,208 177,000Mortgages and loans payable 529,432 530,390Dividends and distributions payable 42,501 42,499Accounts payable and accrued expenses 50,674 63,394Rents received in advance and security deposits 38,395 36,150Accrued interest payable 5,630 16,626 Total liabilities 1,665,703 1,648,844Minority interests: Operating Partnership 454,717 455,275 Partially-owned properties 84,497 83,600 Total minority interests 539,214 538,875Commitments and contingenciesStockholders' equity:Preferred stock, 5,000,000 shares authorized, none issued -- --Common stock, $0.01 par value, 190,000,000 shares authorized, 58,489,135 and 58,446,552 shares outstanding 584 584Additional paid-in capital 1,550,989 1,549,888Dividends in excess of net earnings (101,211) (103,902)Unamortized stock compensation (4,523) (4,688) Total stockholders' equity 1,445,839 1,441,882

Total liabilities and stockholders' equity $3,650,756 $3,629,601

Mack-Cali Realty Corporation Leasing Statistics For The Quarter Ended March 31, 2000

CONSOLIDATED PORTFOLIO SUMMARY OF SPACE LEASED DURING PERIOD------------------------------------------------------------------------IN-SERVICE PROPERTIES: Square feet leased at December 31, 1999 26,411,471 Net leasing activity in 1st quarter 2000 89,361 Leased s.f. from 1st quarter 2000 acquisitions/ properties placed in service 60,800 Occupancy adjustment(1) (10,011)

Square feet leased at March 31, 2000 26,551,621

Percent leased at March 31, 2000 96.7%

Square feet of Development/Redevelopment Properties Not-in-Service as of March 31, 2000 718,000

OFFICE SPACE------------------------------------------------------------------------ Number Weighted Average of Rentable Average Term Leases S.F. Base Rent (Years)New Leases:First generation space 11 65,901 $24.56 4.7Second generation space 61 268,096 $22.95 4.6 Total New Leasing 72 333,997 $23.27 4.7

Renewals & extensions 85 519,451 $26.84 3.1Other retained tenants 37 253,619 $27.88 6.2 Total Leasing 194 1,107,067

Capital Expenditures - Second Generation Space(2):

Tenant Leasing Improvements(3) Commissions Total

Expend. committed-1st qtr $4,765,320 $4,471,758 $9,237,078Rentable s.f. leased-1st qtr 1,041,166Cap. ex. committed per r.s.f. per year $1.07 $1.00 $2.07

(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. OFFICE/FLEX SPACE------------------------------------------------------------------------ Number Weighted Average of Rentable Average Term Leases S.F. Base Rent(1) (Years)New Leases:First generation space 1 6,000 $15.90 5.0Second generation space 9 63,275 $14.83 5.7 Total New Leasing 10 69,275 $14.93 5.7

Renewals & extensions 11 64,383 $11.38 3.7Other retained tenants 3 22,595 $13.94 2.8 Total Leasing 24 156,253

Capital Expenditures - Second Generation Space(2):

Tenant Leasing Improvements(3) Commissions Total

Expend. committed-1st qtr $350,667 $277,336 $628,003Rentable s.f. leased-1st qtr 150,253Cap. ex. committed per r.s.f. per year $0.52 $0.42 $0.94

INDUSTRIAL/WAREHOUSE SPACE------------------------------------------------------------------------ Number Weighted Average of Rentable Average Term Leases S.F. Base Rent(1) (Years)New Leases:Second generation space 1 4,500 $14.00 4.0

Renewals & extensions 3 34,104 $20.44 3.7Other retained tenants 2 7,650 $10.91 3.3 Total Leasing 6 46,254

Capital Expenditures - Second Generation Space(2):

Tenant Leasing Improvements(3) Commissions Total

Expend. committed-1st qtr $51,769 $33,876 $85,645Rentable s.f. leased-1st qtr 46,254Cap. ex. committed per r.s.f. per year $0.31 $0.20 $0.51

(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.

LEASE RENEWALS------------------------------------------------------------------------ Number of Rentable Leases S.F.

Leases expiring 193 1,220,213Leases renewed & extended 99 617,938Other retained tenants 42 283,864Total leases retained 141 901,802Percent retained 73.1% 73.9%Future expirations renewed orrelet (included in totals above) 72 640,854



UNCONSOLIDATED JOINT VENTURE PROPERTIES SUMMARY OF SPACE LEASED DURING PERIOD------------------------------------------------------------------------IN-SERVICE PROPERTIES: Square feet leased at December 31, 1999 1,071,411 Net leasing activity in 1st quarter 2000 1,416 Leased s.f. from 1st quarter 2000 acquisitions/ properties placed in service 170,222

Square feet leased at March 31, 2000 1,243,049

Percent leased at March 31, 2000 80.4%

Square feet of Development/Redevelopment Properties Not-in-Service as of March 31, 2000 361,428

OFFICE SPACE------------------------------------------------------------------------ Number Weighted Average of Rentable Average Term Leases S.F. Base Rent (Years)New Leases:First generation space 1 1,416 $19.50 5.0

Renewals & extensions 1 8,769 $39.40 3.0Total Leasing 2 10,185

Capital Expenditures - Second Generation Space(1):

Tenant Leasing Improvements(2) Commissions Total

Expend. committed-1st qtr $0.00 $5,261 $5,261Rentable s.f. leased-1st qtr 8,769Cap. ex. committed per r.s.f. per year $0.00 $0.20 $0.20

(1) Represents amounts committed, but not necessarily expended during period.(2) Equals estimated workletter costs. LEASE RENEWALS------------------------------------------------------------------------ Number of Rentable Leases S.F.

Leases expiring 1 8,769Leases renewed & extended 1 8,769Percent retained 100.0% 100.0%Future expirations renewed orrelet (included in totals above) 1 8,769