Mack-Cali Realty Corporation Announces 3.4 Percent Increase in First Quarter FFO Per Share

05/07/2002 Category: Earnings

CRANFORD, NEW JERSEY - May 7, 2002 - Mack-Cali Realty Corporation (NYSE: CLI) today reported its results for the first quarter 2002. The Company reported that its funds from operations (FFO) per diluted share for the first quarter 2002 increased 3.4 percent over the same period in 2001.



FINANCIAL HIGHLIGHTS




FFO, after adjustment for straight-lining of rents, for the quarter ended March 31, 2002 amounted to $65.9 million, or $0.92 per share, versus $63.7 million, or $0.89 per share, for the quarter ended March 31, 2001, a per share increase of 3.4 percent.



Cash available for distribution (CAD) for the first quarter 2002 equaled $57.0 million, or $0.80 per share, versus $55.5 million, or $0.78 per share, for the same quarter last year, a per share increase of 2.6 percent.



Total revenues for the first quarter 2002 decreased $4.7 million to $141.8 million from $146.5 million for the same quarter last year, a 3.2 percent decrease.



Net income for the first quarter 2002 equaled $40.6 million, or $0.70 per share, versus $16.7 million, or $0.29 per share, for the same quarter last year, a per share increase of 141.4 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 57,197,440 shares of common stock, 7,951,775 common operating partnership units and 220,340 $1,000-face-value preferred operating partnership units outstanding as of 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 71,508,234 shares/common units outstanding at March 31, 2002.



As of March 31, 2002, the Company had total indebtedness of approximately $1.7 billion, with a weighted average annual interest rate of 7.1 percent. Mack-Cali had a total market capitalization of $4.2 billion and a debt-to-undepreciated assets ratio of 41.7 percent at March 31, 2002. The Company had an interest coverage ratio of 3.6 times for the quarter ended March 31, 2002.



"While uncertain economic conditions continue, we are seeing signs of increased activity in the office sector," said Mitchell E. Hersh, chief executive officer of Mack-Cali. "Overall, our strong and diversified tenant base is healthy and stable. We remain confident that we are well positioned for the future," he added.



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




In January, the Company sold 25 Martine Avenue, a 124-unit multi-family, residential property located in White Plains, New York, for approximately $18.1 million. The property was Mack-Cali's remaining multi-family, residential asset.



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 58 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



- 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.



In addition, in the first quarter, the Company started development on a 95,000 square-foot build-to-suit office property at its Horizon Center Business Park in Hamilton Township, New Jersey. The project, which has been fully pre-leased to Verizon New Jersey, Inc. for 10 years, is expected to be completed by the end of 2002.



In April, the Company completed construction and placed in service 125 Clearbrook Road in Elmsford, New York. The 33,000 square-foot office/flex building is fully leased.



LEASING INFORMATION




Mack-Cali's consolidated in-service portfolio was 93.9 percent leased at March 31, 2002, compared to 94.6 percent at December 31, 2001.



For the quarter ended March 31, 2002, the Company executed 182 leases totaling 1,217,608 square feet, consisting of 833,142 square feet of office space, 354,638 square feet of office/flex space and 29,828 square feet of industrial/warehouse space. Of these totals, 214,908 square feet were for new leases and 1,002,700 square feet were for lease renewals and other tenant retention transactions.



Highlights of the quarter's leasing transactions include:



- Public Service Electric and Gas renewed its lease of 46,191 square feet for five years at 20 Commerce Drive in Cranford, New Jersey. The 176,600 square-foot class A office building is 100 percent leased.



- McDonald's Corporation signed a new 10-year lease for 30,713 square feet at 105 Eisenhower Parkway in Roseland, New Jersey. The 220,000 square-foot class A office property is 64.8 percent leased.



- FujiFilm Medical Systems USA, Inc. signed a six-year renewal/expansion for its headquarters at 419 West Avenue in Stamford, Connecticut. With the expansion, FujiFilm now leases 100 percent of the 88,000 square-foot office/flex building.



- EM Industries, Inc., an affiliate of Merck KGaA, renewed its lease of 33,325 square feet at 7 Skyline Drive in Hawthorne, New York for six years. The 109,000 square-foot class A office building is 92.5 percent leased.



- Turner Investment Partners renewed its existing 12,270 square-foot lease and expanded by 27,374 square feet for eight years, consolidating its headquarters at 1205 Westlakes Drive in Berwyn, Pennsylvania. The 130,265 square-foot office property is 93.5 percent leased.



More recently, Garban Intercapital North America signed a 15-year lease expansion for 24,750 square feet at Plaza 5, one of the projects in development at the Company's Harborside Financial Center in Jersey City, New Jersey. With the expansion, Garban has leased a total of 136,201 square feet at Plaza 5, which is currently 57.8 percent leased.



Included in the Company's Supplemental Operating and Financial Data for the first quarter 2002 are schedules highlighting the first quarter 2002 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/shareholders/pdfs/1st.quarter.sp.02.pdf.



ADDITIONAL INFORMATION




The Company expressed comfort with FFO per diluted share estimates for the second quarter 2002 in the range of $0.92 to $0.94 per share and a range of $3.70 to $3.78 per share for calendar year 2002. These estimates reflect management's view of 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 second 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, May 7, 2002, at 11:00 a.m. Eastern Daylight Time, which will be broadcast live via the Internet at: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=96021&eventID=624600



The live conference call is also accessible by calling (719)867-0640 and requesting the Mack-Cali conference call.



The conference call will be rebroadcast on Mack-Cali's website at http://www.mack-cali.com beginning at 2:00 p.m. Eastern Daylight Time on May 7, 2002 through May 14, 2002. A replay of the call will also be accessible during the same time period by calling (719)457-0820 and using the pass code 573039.



Copies of Mack-Cali's Form 10-Q and Supplemental Operating and Financial Data for the first quarter 2002 are available on Mack-Cali's website, as follows:



First Quarter 2002 Form 10-Q:

http://www.mack-cali.com/graphics/shareholders/pdfs/1st.quarter.10q.02.pdf



First Quarter 2002 Supplemental Operating and Financial Data:

http://www.mack-cali.com/graphics/shareholders/pdfs/1st.quarter.sp.02.pdf



In addition, these items are available upon request from:



Mack-Cali Investor Relations Dept.

11 Commerce Drive, Cranford, NJ 07016

(908)272-8000 ext. 2484



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 268 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 2,300 tenants.



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



Estimates of future Funds From Operations per share are by definition, and certain other matters discussed in this literature may constitute, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws, including Section 21E of the Securities Exchange Act of 1934. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements relate to, without limitation, the Company's future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "anticipate," "estimate," "continue" or comparable terminology. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved. Forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Among the risks, trends and uncertainties are changes in the general economic conditions, including those affecting industries in which the Company's principal tenants compete; any failure of the general economy to recover timely from the current economic downturn; the extent of any tenant bankruptcies; the Company's ability to lease or re-lease space at current or anticipated rents; changes in the supply of and demand for office, office/flex and industrial/warehouse properties; changes in interest rate levels; changes in operating costs; the Company's ability to obtain adequate insurance, including coverage for terrorist acts; 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. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.




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


Quarter Ended
March 31,
2002 2001
---------------------------------------------------------------------------
Base rents $126,457 $125,376
Escalations & recoveries from tenants 13,270 14,762
Parking and other 3,064 2,346
Equity in (loss) earnings of
unconsolidated joint ventures (1,305) 3,409
Interest income 338 613


Total revenues 141,824 146,506


Real estate taxes 15,333 15,287
Utilities 10,130 11,956
Operating services 16,198 17,879
General and administrative 6,705 6,010
Depreciation and amortization 23,953 23,484
Interest expense 26,359 28,365


Total expenses 98,678 102,981


Income before realized gains and unrealized
losses on disposition of rental property
and minority interest 43,146 43,525
Realized gains and unrealized losses
on disposition of rental property, net 7,098 (20,563)
Income before minority interest 50,244 22,962


Minority interest in Operating Partnership (9,629) (6,224)


Net income $40,615 $16,738


PER SHARE DATA:
Basic earnings per share $0.72 $0.29
Diluted earnings per share $0.70 $0.29


Dividends declared per common share $0.62 $0.61


Basic weighted average shares outstanding 56,799 56,807
Diluted weighted average shares outstanding 71,461 64,994






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,
2002 2001
---------------------------------------------------------------------------
Income before realized gains and unrealized
losses on disposition of rental property
and minority interest $43,146 $43,525
Add: Real estate depreciation and amortization(1) 24,449 24,003
Deduct: Adj. to rental income for straight-lining
of rents(2) (1,713) (3,805)
Funds from operations(3), after adj. for straight-
lining of rents $65,882 $63,723
Deduct: Non-incremental revenue generating
capital expenditures:
Capital expenditures (318) (913)
Tenant improvements and leasing commissions (8,566) (7,325)


Cash available for distribution $56,998 $55,485


Basic weighted average shares/units
outstanding(4) 64,751 64,767
Diluted weighted average shares/units
outstanding(5) 71,461 71,353


Per Share/Unit - Basic(6):
Funds from operations $0.96 $0.92
Cash available for distribution $0.82 $0.80
Per Share/Unit - Diluted:
Funds from operations $0.92 $0.89
Cash available for distribution $0.80 $0.78


Dividends declared per common share $0.62 $0.61


Dividend payout ratios:
Funds from operations-diluted 67.25% 68.30%
Cash available for distribution-diluted 77.73% 78.45%


(1) Includes the Company's share from unconsolidated joint ventures of $714 and $721
for 2002 and 2001, respectively.
(2) Includes the Company's share from unconsolidated joint ventures of ($1,047) and $35
for 2002 and 2001, 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 $3,879 in 2002 and 2001, respectively.







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


March 31, December 31,
2002 2001
---------------------------------------------------------------------------
ASSETS:
Rental property
Land and leasehold interests $ 479,914 $ 479,358
Buildings and improvements 2,781,630 2,751,453
Tenant improvements 139,385 140,071
Furniture, fixtures and equipment 7,268 7,189
3,408,197 3,378,071
Less-accumulated deprec. & amort. (363,271) (350,705)
3,044,926 3,027,366
Rental property held for sale, net 376,141 384,626
Net investment in rental property 3,421,067 3,411,992
Cash and cash equivalents 2,136 12,835
Investments in unconsolidated
joint ventures 164,093 146,540
Unbilled rents receivable, net 63,572 60,829
Deferred charges and other assets, net 104,951 101,499
Restricted cash 7,401 7,914
Accounts receivable, net 5,151 5,161


Total assets $3,768,371 $3,746,770


LIABILITIES AND STOCKHOLDERS' EQUITY:
Senior unsecured notes $1,096,965 $1,096,843
Revolving credit facilities 81,000 59,500
Mortgages and loans payable 542,899 543,807
Dividends and distributions payable 44,346 44,069
Accounts payable and accrued expenses 61,189 64,620
Rents received in advance and
security deposits 34,724 33,512
Accrued interest payable 9,392 25,587
Total liabilities 1,870,515 1,867,938
Minority interest in Operating
Partnership 446,920 446,244
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,
57,197,440 and 56,712,270
shares outstanding 572 567
Additional paid-in capital 1,514,965 1,501,623
Dividends in excess of net earnings (59,764) (64,906)
Unamortized stock compensation (4,837) (4,696)
Total stockholders' equity 1,450,936 1,432,588


Total liabilities and
stockholders' equity $3,768,371 $3,746,770