Mack-Cali Realty Corporation Announces 2.2 Percent Increase In Third Quarter FFO Per Share

11/08/2001 Category: Earnings

CRANFORD, NEW JERSEY - November 8, 2001 - Mack-Cali Realty Corporation (NYSE: CLI) today reported its results for the third quarter 2001. The Company reported that its funds from operations (FFO) per diluted share for the third quarter 2001 increased 2.2 percent over the same period in 2000.

FINANCIAL HIGHLIGHTS

FFO, after adjustment for straight-lining of rents and non-recurring charges, for the quarter ended September 30, 2001 amounted to $64.3 million, or $0.91 per share, versus $65.0 million, or $0.89 per share, for the quarter ended September 30, 2000, a per share increase of 2.2 percent. For the nine months ended September 30, 2001, FFO, after adjustment for straight-lining of rents and non-recurring charges, amounted to $194.2 million, or $2.73 per share, versus $197.5 million, or $2.70 per share, for the same period last year, a per share increase of 1.1 percent.

Cash available for distribution (CAD) for the third quarter 2001 equaled $53.5 million, or $0.76 per share, versus $53.6 million, or $0.73 per share, for the same quarter last year, an increase of 4.1 percent on a per share basis. For the nine months ended September 30, 2001, CAD equaled $165.3 million, or $2.33 per share, versus $163.1 million, or $2.23 per share, for the same period last year, an increase of 4.5 percent on a per share basis.

Total revenues for the third quarter 2001 increased $2.5 million to $145.9 million from $143.4 million for the same quarter last year, a 1.7 percent increase. For the nine months ended September 30, 2001, total revenues amounted to $440.8 million, an increase of 2.0 percent over total revenues of $432.3 million for the same period last year.

Income from operations before minority interest in Operating Partnership for the third quarter 2001 equaled $43.0 million, or $0.61 per share, versus $44.5 million, or $0.61 per share, for the same quarter last year. Income from operations before minority interest in Operating Partnership for the nine months ended September 30, 2001 equaled $133.7 million, or $1.89 per share, versus $134.3 million, or $1.83 per share, for the same period last year, a per share increase of 3.3 percent. Income from operations before minority interest in Operating Partnership excludes realized gains and unrealized losses on disposition of rental property and non-recurring charges.

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 56,333,692 shares of common stock, 7,955,525 common operating partnership units and 220,340 $1,000-face-value preferred operating partnership units outstanding at quarter end. The outstanding preferred units are convertible into 6,359,019 common operating partnership units. Assuming conversion of all preferred units into common units, the Company had a total of 70,648,236 shares/common units outstanding at September 30, 2001.

As of September 30, 2001, the Company had total indebtedness of approximately $1.71 billion, with a weighted average annual interest rate of 7.2 percent. Mack-Cali had a total market capitalization of $3.9 billion and a debt-to-undepreciated assets ratio of 41.9 percent at September 30, 2001. The Company had an interest coverage ratio of 3.4 times for the quarter ended September 30, 2001.

Mitchell E. Hersh, chief executive officer of Mack-Cali, commented, "In light of current economic conditions, I am satisfied with our third quarter results as well as the progress we have made with lease renewals, occupancies and our property sales and development programs."

The Company continues to focus its efforts on its strategy of selling non-core and non-strategic assets and using the proceeds to enhance its presence in the Northeast and Mid-Atlantic regions. The following is a summary of the Company's recent activity:

PROPERTY SALES

During the quarter, the Company sold three office properties for total proceeds of approximately $81.5 million, as follows:


    • In July, Preston Centre, a 95,509 square-foot office building located in Dallas, Texas, was sold for approximately $9.1 million;

 

    • In August, Century III, a 72,265 square-foot office building located in West Des Moines, Iowa, was sold for approximately $5.4 million. Century III was the Company's sole asset in Iowa; and

 

    • In September, 1709 New York Avenue, NW, a 166,000 square-foot office building located in Washington, D.C., was sold for approximately $67.0 million.




For the nine months ended September 30, 2001, the Company sold a total of seven office properties, aggregating 1,033,837 square feet, and a 327-unit multi-family, residential complex, for total sales proceeds of approximately $215.1 million.

ACQUISITIONS

In August, the Company added to its significant presence in Westchester County, New York, with the acquisitions of 5 and 6 Skyline Drive, two office/flex properties located in the Mid-Westchester Executive Park in Hawthorne, New York. The properties, which aggregate 168,177 square feet, were acquired for approximately $14.7 million. With the acquisition, the Company owns 69 office and office/flex properties, aggregating approximately 4.7 million square feet in Westchester County, New York.

DEVELOPMENT SUMMARY

Progress continues on the Company's three development projects at its Harborside Financial Center, located on the Hudson River Waterfront in Jersey City, New Jersey, as follows:


    • Plaza 5, a 34-story, 980,000 square-foot class A office tower with a 1,270-car parking garage pedestal, is under construction and due to be completed by the end of 2002. The project is approximately 40 percent pre-leased;

 

    • Plaza 10, a 19-story, 575,000 square-foot class A office building, is expected to be completed in late 2002. The building is 100 percent pre-leased to Charles Schwab & Co., Inc. and will be the site of its newly expanded East Coast regional headquarters; and

 

    • Hyatt Regency South Pier Hotel is a 350-room luxury hotel that is being built on the south pier of Harborside through a joint venture between Mack-Cali and Hyatt. Completion of this project is anticipated by late 2002.




Additionally, in September, the Company commenced construction of a fully pre-leased 33,000 square-foot office/flex building in Elmsford, Westchester County, New York on recently-acquired land.

FINANCING ACTIVITY

In September, the Company raised its quarterly dividend by 1.6 percent to $0.62 per share ($2.48 per share on an annualized basis), effective for the quarter ended September 30, 2001. This increase represented the seventh consecutive year in which the Company has increased its quarterly dividend.

In accordance with the Company's Share Repurchase Program, during the third quarter, the Company purchased 33,800 shares of its outstanding common stock for an aggregate cost of approximately $1.0 million, representing an average price of $28.14 per share. For the nine months ended September 30, 2001, the Company purchased 915,300 shares of its outstanding common stock for an aggregate cost of approximately $25.0 million, representing an average price of $27.28 per share.

LEASING INFORMATION

Mack-Cali's consolidated in-service portfolio was 95.1 percent leased at September 30, 2001, compared to 96.3 percent at June 30, 2001.

For the quarter ended September 30, 2001, the Company executed 184 leases totaling 1,057,856 square feet, consisting of 774,198 square feet of office space, 277,211 square feet of office/flex space and 6,447 square feet of industrial/warehouse space. Of these totals, 229,514 square feet were for new leases and 828,342 square feet were for lease renewals and other tenant retention transactions.

Highlights of the quarter's leasing transactions include:


    • State Street Bank renewed leases totaling 114,500 square feet through 2009 at 500 College Road East in Princeton, New Jersey. 500 College Road East, a 158,235 square-foot class A office property, is 100 percent leased.

 

    • MCI Worldcom Communications renewed its 37,796 square-foot lease for five years at 8 Campus Drive in the Mack-Cali Business Campus in Parsippany, New Jersey. 8 Campus Drive, a 215,265 square-foot class A office property, is 100 percent leased.

 

    • ADT Security Services signed a new 10-year lease for 26,830 square feet at 29 Commerce Way in the Company's Commercenter Business Park in Totowa, New Jersey. 29 Commerce Way, a 48,930 square-foot office/flex property, is 100 percent leased.




Included in the Company's Supplemental Operating and Financial Data for the third quarter 2001 are schedules highlighting the third quarter and year-to-date leasing statistics for both the Company's consolidated and joint venture properties. The supplemental information is available on Mack-Cali's website, as follows: http://www.mack-cali.com/graphics/sharehold ers/pdfs/3rd.quarter.sp.01.pdf.

ADDITIONAL INFORMATION

The Company expressed comfort with FFO per diluted share estimates for the fourth quarter 2001 in the range of $0.91 to $0.93 per share. The Company also provided for the first time its estimates for calendar year 2002 in the range of $3.72 to $3.82 per share. These estimates reflect current market conditions and certain assumptions with regard to rental rates, occupancy levels and other assumptions/projections. Additionally, with the Company's ongoing capital recycling program, the estimates for the fourth quarter and calendar year 2002 may be positively or negatively impacted by the actual timing and business terms of property sales and the corresponding use of the proceeds from these sales. The Company intends to use proceeds from property sales to invest in property acquisitions and development projects in its core Northeast markets, fund stock repurchases and repay debt.

An earnings conference call with management is scheduled for today, November 8, 2001, at 11:00 a.m. Eastern Standard Time, which will be broadcast live via the Internet at: http://www.corporate-ir.net/ireye/ir_site.zhtml?ti cker=CLI&script=2400.

The live conference call is also accessible by calling (719)457-2657 and requesting the Mack-Cali conference call.

The conference call will be rebroadcast immediately following the live call on Mack-Cali's website at http://www.mack-cali.com through November 15, 2001. Beginning at 2:00 p.m. Eastern Standard Time on November 8, 2001 through November 15, 2001, a replay of the call can also be accessed by calling (719)457-0820 and using the pass code 680383.

Copies of Mack-Cali's Form 10-Q and Supplemental Operating and Financial Data for the third quarter 2001 are available upon request from:

Mack-Cali Investor Relations Dept.
11 Commerce Drive, Cranford, NJ 07016
(908)272-8000 ext. 2484

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

Third Quarter 2001 Form 10-Q:
http://www.mack-cali.com/graphics/sharehol ders/pdfs/3rd.quarter.10q.01.pdf

Third Quarter 2001 Supplemental Operating and Financial Data:
http://www.mack-cali.com/graphics/sharehold ers/pdfs/3rd.quarter.sp.01.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 269 properties, primarily office and office/flex buildings located in the Northeast, totaling approximately 28.7 million square feet. The properties enable the Company to provide a full complement of real estate opportunities to its diverse base of approximately 2,400 tenants.

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

Estimates of future FFO per share are by definition, and certain other matters 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.




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


Quarter Ended September 30,
2001 2000
--------------------------------------------------------------------------------
Base rents $126,789 $123,600
Escalations & recoveries from tenants 13,944 13,763
Parking and other 2,610 3,534
Equity in earnings of
unconsolidated joint ventures 1,884 2,194
Interest income 685 291


Total revenues 145,912 143,382


Real estate taxes 16,012 15,732
Utilities 11,517 11,604
Operating services 16,336 16,855
General and administrative 8,767 5,461
Depreciation and amortization 22,529 23,320
Interest expense 27,772 25,862


Total expenses 102,933 98,834


Income from operations before minority
interest in Operating Partnership 42,979 44,548
Minority interest in Operating
Partnership(1) (8,789) (8,809)
Income from operations 34,190 35,739
Non-recurring charges(2) -- (24,557)
Realized gains and unrealized losses on
disposition of rental property(3) (10,181) 8,830


Net income $24,009 $20,012
PER SHARE DATA:
Income from operations - basic $0.61 $0.61
Net income -- basic $0.43 $0.34
Income from operations -- diluted $0.61 $0.61
Net income -- diluted $0.43 $0.34
Dividends declared
per common share $0.62 $0.61


Basic weighted average
shares outstanding 56,129 58,711
Diluted weighted average
shares outstanding 64,403 66,914


(1) Excludes effect of minority interest's share of non-recurring charges and
realized gains and unrealized losses on disposition of rental property.
(2) Net of minority interest's share of $3,354 in 2000.
(3) Net of minority interest's share of $1,443 and $1,206 in 2001 and 2000,
respectively.


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,
2001 2000
--------------------------------------------------------------------------------
Income from operations before minority interest
in Operating Partnership $42,979 $44,548
Add: Real estate depreciation and amortization(1) 23,179
23,920
Deduct: Adj. to rental income for straight-lining
of rents(2) (1,830) (3,484)
Funds from operations(3), after adj. for straight-
lining of rents and non-recurring charges $64,328
$64,984
Deduct: Non-incremental revenue generating
capital expenditures:
Capital expenditures (1,478) (1,484)
Tenant improvements and leasing commissions (9,359)
(9,909)


Cash available for distribution $53,491 $53,591


Basic weighted average shares/units
outstanding(4) 64,084 66,729
Diluted weighted average shares/units
outstanding(5) 70,762 73,353


Per Share/Unit - Basic(6):
Funds from operations $0.94 $0.92
Cash available for distribution $0.77 $0.74
Per Share/Unit - Diluted:
Funds from operations $0.91 $0.89
Cash available for distribution $0.76 $0.73


Dividends declared per common share $0.62
$0.61


Dividend payout ratios:
Funds from operations-diluted 68.20% 68.86%
Cash available for distribution-diluted 82.02%
83.49%


(1) Includes the Company's share from unconsolidated joint ventures of $863
and $784 for 2001 and 2000, respectively.
(2) Includes the Company's share from unconsolidated joint ventures of $62
and $36 for 2001 and 2000, 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 $3,943 and $3,928 in 2001 and 2000, respectively.


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


Nine Months Ended September 30,
2001 2000
--------------------------------------------------------------------------------
Base rents $381,584 $367,270
Escalations & recoveries from tenants 42,136 45,058
Parking and other 8,016 12,984
Equity in earnings of
unconsolidated joint ventures 7,330 4,401
Interest income 1,770 2,537


Total revenues 440,836 432,250


Real estate taxes 46,809 45,169
Utilities 34,172 31,997
Operating services 51,901 51,419
General and administrative 21,633 16,733
Depreciation and amortization 67,964 68,447
Interest expense 84,692 79,123


Total expenses 307,171 292,888


Minority interest in partially-owned
properties -- (5,072)
Income from operations before minority
interest in Operating Partnership 133,665 134,290
Minority interest in Operating
Partnership(1) (26,760) (26,446)
Income from operations 106,905 107,844
Non-recurring charges(2) -- (32,666)
Realized gains and unrealized losses on
disposition of rental property(3) (8,485) 75,757


Net income $98,420 $150,935
PER SHARE DATA:
Income from operations - basic $1.89 $1.84
Net income -- basic $1.74 $2.58
Income from operations -- diluted $1.89 $1.83
Net income -- diluted $1.74 $2.50
Dividends declared
per common share $1.84 $1.77


Basic weighted average
shares outstanding 56,482 58,518
Diluted weighted average
shares outstanding 64,691 73,276


(1) Excludes effect of minority interest's share of non-recurring charges and
realized gains and unrealized losses on disposition of rental property.
(2) Net of minority interest's share of $4,473 in 2000.
(3) Net of minority interest's share of $1,192 and $10,448 in 2001 and
2000, respectively.

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,
2001 2000
--------------------------------------------------------------------------------
Income from operations before minority interest
in Operating Partnership $133,665 $134,290
Add: Real estate depreciation and amortization(1) 70,250
70,072
Gain on sale of land -- 2,248
Deduct: Adj. to rental income for straight-lining
of rents(2) (9,692) (9,074)
Funds from operations(3), after adj. for straight-
lining of rents and non-recurring charges $194,223
$197,536
Deduct: Non-incremental revenue generating
capital expenditures:
Capital expenditures (3,852) (4,094)
Tenant improvements and leasing commissions (25,083)
(30,369)


Cash available for distribution $165,288 $163,073


Basic weighted average shares/units
outstanding(4) 64,440 66,595
Diluted weighted average shares/units
outstanding(5) 71,050 73,276


Per Share/Unit - Basic(6):
Funds from operations $2.83 $2.79
Cash available for distribution $2.38 $2.28
Per Share/Unit - Diluted:
Funds from operations $2.73 $2.70
Cash available for distribution $2.33 $2.23


Dividends declared per common share $1.84
$1.77


Dividend payout ratios:
Funds from operations-diluted 67.31% 65.66%
Cash available for distribution-diluted 79.09%
79.53%


(1) Includes the Company's share from unconsolidated joint ventures of $2,906
and $2,204 for 2001 and 2000, respectively.
(2) Includes the Company's share from unconsolidated joint ventures of $64 and
$18 for 2001 and 2000, 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 $11,701 and $11,562 in 2001 and 2000, respectively.



Mack-Cali Realty Corporation
Consolidated Balance Sheets
(in thousands, except share amounts)


September 30, December 31,
2001 2000
--------------------------------------------------------------------------------
ASSETS:
Rental property
Land and leasehold interests $ 473,363 $ 542,841
Buildings and improvements 2,676,999 2,934,383
Tenant improvements 124,769 106,208
Furniture, fixtures and equipment 7,060 6,445
3,282,191 3,589,877
Less-accumulated deprec. & amort. (330,027)
(302,932)
2,952,164 3,286,945
Rental property held for sale, net 422,735 107,458
Net investment in rental property 3,374,899 3,394,403
Cash and cash equivalents 44,966 13,179
Investments in unconsolidated
joint ventures 135,416 101,438
Unbilled rents receivable, net 59,294 50,499
Deferred charges and other assets, net 100,678
102,655
Restricted cash 7,543 6,557
Accounts receivable, net 6,043 8,246
Total assets $3,728,839 $3,676,977


LIABILITIES AND STOCKHOLDERS' EQUITY:
Senior unsecured notes $1,096,721 $ 798,099
Revolving credit facilities 73,000 348,840
Mortgages and loans payable 544,697 481,573
Dividends and distributions payable 43,998 43,496
Accounts payable and accrued expenses 55,439
53,608
Rents received in advance and
security deposits 30,922 31,146
Accrued interest payable 9,664 17,477
Total liabilities 1,854,441 1,774,239
Minority interests:
Operating Partnership 446,532 447,523
Partially-owned properties -- 1,925
Total minority interests 446,532 449,448
Commitments and contingencies
Stockholders' equity:
Preferred stock, 5,000,000 shares
authorized, none issued -- --
Common stock, $0.01 par value,
190,000,000 shares authorized,
56,333,692 and 56,980,893
shares outstanding 564 570
Additional paid-in capital 1,495,369 1,513,037
Dividends in excess of net earnings (62,951) (57,149)
Unamortized stock compensation (5,116) (3,168)
Total stockholders' equity 1,427,866 1,453,290
Total liabilities and
stockholders' equity $3,728,839 $3,676,977