Mack-Cali Realty Corporation Announces 4.5 Percent Increase In Fourth Quarter FFO Per Share

02/21/2002 Category: Earnings

CRANFORD, NEW JERSEY - February 21, 2002 - Mack-Cali Realty Corporation (NYSE: CLI) today reported its results for the fourth quarter 2001. The Company reported that its funds from operations (FFO) per diluted share for the fourth quarter 2001 increased 4.5 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 December 31, 2001 amounted to $66.3 million, or $0.93 per share, versus $64.5 million, or $0.89 per share, for the quarter ended December 31, 2000, a per share increase of 4.5 percent. For the year ended December 31, 2001, FFO, after adjustment for straight-lining of rents and non-recurring charges, amounted to $260.5 million, or $3.66 per share, versus $262.1 million, or $3.59 per share, for the same period last year, a per share increase of 1.9 percent.

Cash available for distribution (CAD) for the fourth quarter 2001 equaled $49.4 million, or $0.69 per share, versus $51.2 million, or $0.70 per share, for the same quarter last year, a decrease of 1.4 percent on a per share basis. For the year ended December 31, 2001, CAD equaled $214.7 million, or $3.02 per share, versus $214.3 million, or $2.93 per share, for the same period last year, an increase of 3.1 percent on a per share basis.

Total revenues for the fourth quarter 2001 decreased $0.4 million to $143.5 million from $143.9 million for the same quarter last year, a 0.3 percent decrease. For the year ended December 31, 2001, total revenues amounted to $584.3 million, an increase of 1.4 percent over total revenues of $576.2 million for the same period last year.

Income from operations before minority interest in Operating Partnership for the fourth quarter 2001 equaled $44.0 million, or $0.62 per share, versus $43.9 million, or $0.61 per share, for the same quarter last year, a per share increase of 1.6 percent. Income from operations before minority interest in Operating Partnership for the year ended December 31, 2001 equaled $177.7 million, or $2.50 per share, versus $178.2 million, or $2.44 per share, for the same period last year, a per share increase of 2.5 percent. Income from operations before minority interest in Operating Partnership excludes realized gains (losses) 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 56,712,270 shares of common stock, 7,954,775 common operating partnership units and 220,340 $1,000-face-value preferred operating partnership units outstanding as of year 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 71,026,064 shares/common units outstanding at December 31, 2001.

As of December 31, 2001, the Company had total indebtedness of approximately $1.7 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 41.5 percent at December 31, 2001. The Company had an interest coverage ratio of 3.5 times for the quarter ended December 31, 2001.

Mitchell E. Hersh, chief executive officer of Mack-Cali, commented, "In light of the year's challenging economic climate, we finished 2001 in a sound financial position and continue to maintain solid occupancy levels and a consistent, high quality cash flow stream. With the completion of a substantial number of sales of non-core assets, we reinvested the proceeds in development and acquisition opportunities that enhanced our strong Northeast presence."

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 two office properties and a parcel of land for total proceeds of approximately $39.0 million, as follows:

- In November, Concord Plaza, a 248,700 square-foot office building and an adjacent land parcel located in San Antonio, Texas, was sold for approximately $31.9 million; and

- In December, Katy Plaza, a 112,213 square-foot office building located in Houston, Texas, was sold for approximately $7.1 million.

For the year ended December 31, 2001, the Company and its unconsolidated joint ventures sold a total of nine office properties, aggregating 1,394,750 square feet, a 327-unit multi-family residential complex and a parcel of land, for total sales proceeds of approximately $254.1 million.

More recently, 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.

ACQUISITIONS

In November, the Company acquired the remaining 50 percent interest in 9 Campus Drive, a 156,495 square-foot office building located in Parsippany, New Jersey, from its joint venture partner for approximately $15.1 million.

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. In the fourth quarter, Garban Intercapital North America leased 111,451 square feet for 15 years. More recently, Trade Web Group LLC leased 35,900 square feet for 15 years. The project is approximately 55 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.

Additionally, progress continues on construction of a fully pre-leased 33,000 square-foot office/flex building in Elmsford, New York on recently-acquired land, expected to be completed by the second quarter 2002.

FINANCING ACTIVITY

In accordance with the Company's Share Repurchase Program, during the fourth quarter, the Company purchased 354,200 shares of its outstanding common stock for an aggregate cost of approximately $10.4 million, representing an average price of $29.37 per share. For the year ended December 31, 2001, the Company purchased 1,269,500 shares of its outstanding common stock for an aggregate cost of approximately $35.4 million, representing an average price of $27.89 per share.

LEASING INFORMATION

Mack-Cali's consolidated in-service portfolio was 94.6 percent leased at December 31, 2001, compared to 95.1 percent at September 30, 2001.

For the quarter ended December 31, 2001, the Company executed 164 leases totaling 1,054,473 square feet, consisting of 825,127 square feet of office space, 218,346 square feet of office/flex space, 3,000 square feet of industrial/warehouse space and 8,000 square feet of retail space. Of these totals, 328,019 square feet were for new leases and 726,454 square feet were for lease renewals and other tenant retention transactions.

Highlights of the quarter's leasing transactions include:

- KPMG, LLP renewed 70,000 square feet for 10 years at 150 J.F. Kennedy Parkway in Millburn, New Jersey. 150 J.F. Kennedy Parkway, a 247,476 square-foot class A office property, is 88.5 percent leased.

- Salomon Smith Barney signed a five-year renewal totaling 45,678 square feet at 140 Ridgewood Avenue in Paramus, New Jersey. 140 Ridgewood Avenue, a 239,680 square-foot class A office property, is 100 percent leased.

- BMW of North America, LLC signed a new, five-year lease for 34,539 square feet at 300 Tice Boulevard in Woodcliff Lake, New Jersey. 300 Tice Boulevard, a 230,000 square-foot class A office property, is 99.3 percent leased.

- DFDS Transport leased 25,565 square feet for 10 years at 100 Walnut Avenue in Clark, New Jersey. 100 Walnut Avenue, a 182,555 square-foot class A office property, is 100 percent leased.

- Ameriquest Mortgage Company signed a new, five-year lease for 25,300 square feet at 8 Skyline Drive in Hawthorne, New York. 8 Skyline Drive, a 50,000 square-foot office/flex property, is 98.7 percent leased.

Included in the Company's Supplemental Operating and Financial Data for the fourth quarter 2001 are schedules highlighting the fourth quarter and full year 2001 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/4th.quarter.sp.01.pdf.

ADDITIONAL INFORMATION

The Company expressed comfort with FFO per diluted share estimates for the first quarter 2002 in the range of $0.91 to $0.93 per share and a range of $3.72 to $3.82 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 first 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, February 21, 2002, 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?ticker=CLI&script=2400&item_id=598583.

The live conference call is also accessible by calling (719)457-2621 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 February 28, 2002. Beginning at 2:00 p.m. Eastern Standard Time on February 21, 2002 through February 28, 2002, a replay of the call can also be accessed by calling (719)457-0820 and using the pass code 499009.

Copies of Mack-Cali's 2001 Form 10-K and Supplemental Operating and Financial Data for the fourth quarter 2001 are available on Mack-Cali's website, as follows:

2001 Form 10-K:

http://www.mack-cali.com/graphics/shareholders/pdfs/10k.01.pdf

Fourth Quarter 2001 Supplemental Operating and Financial Data:

http://www.mack-cali.com/graphics/shareholders/pdfs/4th.quarter.sp.01.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 266 properties, primarily office and office/flex buildings located in the Northeast, totaling approximately 28.4 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 FFO per share and certain other information discussed in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. 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. 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 December 31, 2001 2000-----------------------------------------------------------------------Base rents $124,973 $123,923Escalations & recoveries from tenants 13,947 13,430Parking and other 2,502 2,341Equity in earnings of unconsolidated joint ventures 1,674 3,654Interest income 416 555

Total revenues 143,512 143,903

Real estate taxes 15,206 14,231Utilities 9,720 10,038Operating services 16,878 19,292General and administrative 6,857 6,543Depreciation and amortization 23,507 23,641Interest expense 27,311 26,271

Total expenses 99,479 100,016

Income from operations before minority interest in Operating Partnership 44,033 43,887 Minority interest in Operating Partnership(1) (8,876) (8,735)Income from operations 35,157 35,152 Realized gains (losses) and unrealized losses on disposition of rental property(2) (1,918) (749)

Net income $33,239 $34,403

PER SHARE DATA:Income from operations - basic $0.62 $0.61Net income — basic $0.59 $0.60Income from operations — diluted $0.62 $0.61Net income — diluted $0.58 $0.59Dividends declared per common share $0.62 $0.61

Basic weighted average shares outstanding 56,703 57,788Diluted weighted average shares outstanding 65,024 66,013

(1) Excludes effect of minority interest's share of non-recurring charges and realized gains (losses) and unrealized losses on disposition of rental property.(2) Net of minority interest's share of $269 and $103 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 December 31, 2001 2000----------------------------------------------------------------------------Income from operations before minority interest in Operating Partnership $44,033 $43,887Add: Real estate depreciation and amortization(1) 23,948 24,178Deduct: Adj. to rental income for straight-lining of rents(2) (1,707) (3,530)Funds from operations(3), after adj. for straight- lining of rents and non-recurring charges $66,274 $64,535Deduct: Non-incremental revenue generating capital expenditures: Capital expenditures (2,125) (1,378) Tenant improvements and leasing commissions (14,725) (11,909)

Cash available for distribution $49,424 $51,248

Basic weighted average shares/units outstanding(4) 64,658 65,772Diluted weighted average shares/units outstanding(5) 71,383 72,440

Per Share/Unit - Basic(6): Funds from operations $0.96 $0.92 Cash available for distribution $0.70 $0.72Per Share/Unit - Diluted: Funds from operations $0.93 $0.89 Cash available for distribution $0.69 $0.70

Dividends declared per common share $0.62 $0.61

Dividend payout ratios: Funds from operations-diluted 66.78% 68.47% Cash available for distribution-diluted 89.55% 86.23%

(1) Includes the Company's share from unconsolidated joint ventures of $661 and $724 for 2001 and 2000, respectively.(2) Includes the Company's share from unconsolidated joint ventures of $19 and $6 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 $3,879 in 2001 and 2000, respectively.

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

Year Ended December 31, 2001 2000-------------------------------------------------------------------------Base rents $506,557 $491,193Escalations & recoveries from tenants 56,083 58,488Parking and other 10,518 15,325Equity in earnings of unconsolidated joint ventures 9,004 8,055Interest income 2,186 3,092

Total revenues 584,348 576,153

Real estate taxes 62,015 59,400Utilities 43,892 42,035Operating services 68,779 70,711General and administrative 28,490 23,276Depreciation and amortization 91,471 92,088Interest expense 112,003 105,394

Total expenses 406,650 392,904

Minority interest in partially-owned properties -- (5,072)Income from operations before minority interest in Operating Partnership 177,698 178,177 Minority interest in Operating Partnership(1) (35,636) (35,181)Income from operations 142,062 142,996 Non-recurring charges(2) -- (32,666) Realized gains (losses) and unrealized losses on disposition of rental property(3) (10,403) 75,008

Net income $131,659 $185,338

PER SHARE DATA:Income from operations - basic $2.51 $2.45Net income — basic $2.33 $3.18Income from operations — diluted $2.50 $2.44Net income — diluted $2.32 $3.10Dividends declared per common share $2.46 $2.38

Basic weighted average shares outstanding 56,538 58,338Diluted weighted average shares outstanding 64,775 73,070

(1) Excludes effect of minority interest's share of non-recurring charges and realized gains (losses) 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 $1,461 and $10,345 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)

Year Ended December 31, 2001 2000-------------------------------------------------------------------------Income from operations before minority interest in Operating Partnership $177,698 $178,177Add: Real estate depreciation and amortization(1) 94,198 94,250 Gain on sale of land -- 2,248Deduct: Adj. to rental income for straight-lining of rents(2) (11,399) (12,604)Funds from operations(3), after adj. for straight- lining of rents and non-recurring charges $260,497 $262,071Deduct: Non-incremental revenue generating capital expenditures: Capital expenditures (5,977) (5,472) Tenant improvements and leasing commissions (39,808) (42,278)

Cash available for distribution $214,712 $214,321

Basic weighted average shares/units outstanding(4) 64,495 66,392Diluted weighted average shares/units outstanding(5) 71,134 73,070

Per Share/Unit - Basic(6): Funds from operations $3.80 $3.71 Cash available for distribution $3.09 $3.00Per Share/Unit - Diluted: Funds from operations $3.66 $3.59 Cash available for distribution $3.02 $2.93

Dividends declared per common share $2.46 $2.38

Dividend payout ratios: Funds from operations-diluted 67.18% 66.36% Cash available for distribution-diluted 81.50% 81.14%

(1) Includes the Company's share from unconsolidated joint ventures of $3,567 and $2,928 for 2001 and 2000, respectively.(2) Includes the Company's share from unconsolidated joint ventures of $83 and $24 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 $15,644 and $15,441 in 2001 and 2000, respectively.



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

December 31, 2001 2000-----------------------------------------------------------------------ASSETS: Rental property Land and leasehold interests $ 479,358 $ 542,841 Buildings and improvements 2,751,453 2,934,383 Tenant improvements 140,071 106,208 Furniture, fixtures and equipment 7,189 6,445 3,378,071 3,589,877Less-accumulated deprec. & amort. (350,705) (302,932) 3,027,366 3,286,945 Rental property held for sale, net 384,626 107,458 Net investment in rental property 3,411,992 3,394,403 Cash and cash equivalents 12,835 13,179Investments in unconsolidated joint ventures 146,540 101,438Unbilled rents receivable, net 60,829 50,499Deferred charges and other assets, net 101,499 102,655Restricted cash 7,914 6,557Accounts receivable, net 5,161 8,246Total assets $3,746,770 $3,676,977

LIABILITIES AND STOCKHOLDERS' EQUITY:Senior unsecured notes $1,096,843 $ 798,099Revolving credit facilities 59,500 348,840Mortgages and loans payable 543,807 481,573Dividends and distributions payable 44,069 43,496Accounts payable and accrued expenses 64,620 53,608Rents received in advance and security deposits 33,512 31,146Accrued interest payable 25,587 17,477 Total liabilities 1,867,938 1,774,239Minority interests: Operating Partnership 446,244 447,523 Partially-owned properties -- 1,925 Total minority interests 446,244 449,448Commitments and contingenciesStockholders' equity:Preferred stock, 5,000,000 shares authorized, none issued -- --Common stock, $0.01 par value, 190,000,000 shares authorized, 56,712,270 and 56,980,893 shares outstanding 567 570Additional paid-in capital 1,501,623 1,513,037Dividends in excess of net earnings (64,906) (57,149)Unamortized stock compensation (4,696) (3,168) Total stockholders' equity 1,432,588 1,453,290Total liabilities and stockholders' equity $3,746,770 $3,676,977