Mack-Cali Realty Corporation Announces Third Quarter Results
10/23/2014 Category: Earnings
Edison, New Jersey—October 23, 2014—Mack-Cali Realty Corporation (NYSE: CLI) today reported its results for the third quarter 2014.
Recent highlights include:
- Reported funds from operations for the quarter of $0.48 per diluted share;
- Reported net income of $0.02 per diluted share;
- Sold seven office properties totaling approximately 916,000 square feet for net cash proceeds of approximately $83.9 million and joint venture interests; and
- Acquired developable land and increased its interests in two operating multi-family properties for $16.6 million.
Funds from operations (FFO) for the quarter ended September 30, 2014 amounted to $48.0 million, or $0.48 per share. For the nine months ended September 30, 2014, FFO equaled $128.5 million, or $1.29 per share.
Net income available to common shareholders for the third quarter 2014 equaled $2.0 million, or $0.02 per share. For the nine months ended September 30, 2014, net income to common shareholders amounted to $37.8 million, or $0.43 per share.
All per share amounts presented above are on a diluted basis.
Mitchell E. Hersh, president and chief executive officer, commented, “We continue to remain focused on building occupancy within our office portfolio, as well as our commitment to the continual reinvestment in our office properties. Simultaneously, we are executing on our multi-family residential strategy.”
Total revenues for the third quarter 2014 were $155.5 million. For the nine months ended September 30, 2014 total revenues amounted to $485.4 million.
The Company had 89,055,220 shares of common stock, and 11,092,044 common operating partnership units outstanding as of September 30, 2014. The Company had a total of 100,147,264 common shares/common units outstanding at September 30, 2014.
As of September 30, 2014, the Company had total indebtedness of approximately $2.2 billion, with a weighted average annual interest rate of 5.62 percent.
The Company had a debt-to-undepreciated assets ratio of 39.0 percent at September 30, 2014. The Company had an interest coverage ratio of 2.8 times for the quarter ended September 30, 2014.
In the quarter, the Company completed the sale of the remaining seven office properties located in northern New Jersey, Westchester County, New York, and Stamford, Connecticut, aggregating 916,000 square feet, under its agreement with Keystone Property Group for approximately $104 million, comprised of: $77.9 million in cash; Company subordinated equity interests in each of the properties sold with capital accounts aggregating $18.8 million; and Company pari-passu equity interests in five of the properties sold aggregating $7.3 million. The purchasers of these properties are unconsolidated joint ventures formed between the Company and affiliates of the Keystone Property Group.
In August 2014, the Company acquired the equity interests of its joint venture partner in Overlook Ridge, L.L.C, Overlook Ridge JV, L.L.C. and Overlook Ridge JV 2C/3B, L.L.C. for $16.6 million. As a result, the Company increased its ownership to 100 percent of the developable land owned by those entities and acquired an additional 25 percent, for a total of 50 percent of its subordinated, unconsolidated interests in two operating multi-family properties owned by those entities.
Mack-Cali’s consolidated commercial in-service portfolio was 83.7 percent leased at September 30, 2014, unchanged from June 30, 2014.
For the quarter ended September 30, 2014, the Company executed 116 leases at its consolidated in-service portfolio totaling 621,077 square feet, consisting of 332,509 square feet of office space, 282,678 square feet of office/flex space and 5,890 square feet of industrial space. Of these totals, 265,636 square feet were for new leases and 355,441 square feet were for lease renewals and other tenant retention transactions.
Highlights of the quarter’s leasing transactions include:
NORTHERN NEW JERSEY:
- First Data Corporation, a global payment processing company, signed a new lease for 24,179 square feet at 101 Hudson Street in Jersey City. The 1,246,283 square-foot office building is 86.1 percent leased.
- Also at 101 Hudson Street in Jersey City, law firm Eltman, Eltman & Cooper, P.C. signed a new lease for 16,902 square feet.
- Accounting firm KPMG LLP signed an expansion for 17,085 square feet at 300 Tice Boulevard in Woodcliff Lake. The 230,000 square-foot office building is 100 percent leased.
CENTRAL NEW JERSEY:
- Jacobs Engineering Group Inc., providers of technical professional and construction services, signed a new lease for 12,727 square feet at 100 Walnut Avenue in Clark. The 182,555 square-foot office building is 90.1 percent leased.
WESTCHESTER COUNTY, NEW YORK:
- Quintiles, Inc., a provider of biopharmaceutical development and commercial outsourcing services, signed a renewal for 18,620 square feet at 8 Skyline Drive in Hawthorne. Located in Mid-Westchester Executive Park, the 50,000 square-foot office/flex building is 85.4 percent leased.
- Internet grocer Peapod, LLC signed a new lease for 18,000 square feet at 175 Clearbrook Road in Elmsford. Located in Cross Westchester Executive Park, the 98,900 square-foot office/flex building is 96.7 percent leased.
- Also at 175 Clearbrook Road, Matthews International Corporation, a designer, manufacturer and marketer of memorialization products and brand solutions, signed a new lease for 13,000 square feet.
- Wright Brothers Services, Inc., specializing in freight transportation, signed transactions totaling 12,120 square feet consisting of a 5,255 square-foot renewal at 150 Clearbrook Road and a 6,865 square-foot renewal at 200 Clearbrook Road in Elmsford. Located in Cross Westchester Executive Park, 150 Clearbrook Road is a 74,900 square-foot office/flex building that is 99.3 percent leased and 200 Clearbrook Road is a 94,000 square-foot office/flex building that is 98.8 percent leased.
SOUTHERN NEW JERSEY:
- EVO Merchant Services, LLC, a payments service provider, signed a renewal of 19,200 square feet at 102 Commerce Drive in Moorestown. Located in Moorestown West Corporate Center, the 38,400 square-foot office/flex building is 100 percent leased.
- Tricomm Services Corporation, an IT technology service provider, is relocating within the building to 12,000 square feet at 1247 North Church Street in Moorestown. The transaction represents an expansion of 7,200 square feet and extension of 4,800 square feet. Also located in Moorestown West Corporate Center, the 52,790 square-foot office/flex building is 86.7 percent leased.
Included in the Company’s Supplemental Operating and Financial Data for the third quarter 2014 are schedules highlighting the leasing statistics for both the Company’s consolidated and joint venture properties.
The supplemental information is available on Mack-Cali’s website, as follows:
The Company expressed comfort with net income and FFO per diluted share for the full year 2014 and 2015, as follows:
These estimates reflect management’s view of current market conditions and certain assumptions with regard to rental rates, occupancy levels and other assumptions/projections. Actual results could differ from these estimates.
An earnings conference call with management is scheduled for today, October 23, 2014 at 10:00 a.m. Eastern Time, which will be broadcast live via the Internet at:
The live conference call is also accessible by calling (719) 457-2727 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 Time on October 23, 2014 through October 30, 2014.
A replay of the call will also be accessible during the same time period by calling (719) 457-0820 and using the pass code 2502711.
Copies of Mack-Cali’s Form 10-Q and Supplemental Operating and Financial Data are available on Mack Cali’s website, as follows:
Third Quarter 2014 Form 10-Q:
Third Quarter 2014 Supplemental Operating and Financial Data:
In addition, these items are available upon request from:
Mack-Cali Investor Relations Department
343 Thornall Street, Edison, New Jersey 08837-2206
(732) 590-1000 ext. 1143
INFORMATION ABOUT FFO
Funds from operations (“FFO”) is defined as net income (loss) before noncontrolling interest of unitholders, computed in accordance with generally accepted accounting principles (“GAAP”), excluding gains (or losses) from extraordinary items, sales of depreciable rental property, and impairments related to depreciable rental property, plus real estate-related depreciation and amortization. The Company believes that FFO per share is helpful to investors as one of several measures of the performance of an equity REIT. The Company further believes that as FFO per share excludes the effect of depreciation, gains (or losses) from sales of properties and impairments related to depreciable rental property (all of which are based on historical costs which may be of limited relevance in evaluating current performance), FFO per share can facilitate comparison of operating performance between equity REITs.
FFO per share should not be considered as an alternative to net income available to common shareholders per share as an indication of the Company’s performance or to cash flows as a measure of liquidity. FFO per share presented herein is not necessarily comparable to FFO per share presented by other real estate companies due to the fact that not all real estate companies use the same definition. However, the Company’s FFO per share is comparable to the FFO per share of real estate companies that use the current definition of the National Association of Real Estate Investment Trusts (“NAREIT”). A reconciliation of net income per share to FFO per share is included in the financial tables accompanying this press release.
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 282 properties, consisting of 266 office and office/flex properties totaling approximately 31.5 million square feet and 16 multi-family rental properties containing over 4,900 residential units, all located in the Northeast. The properties enable the Company to provide a full complement of real estate opportunities to its diverse base of commercial and residential tenants.
Additional information on Mack-Cali Realty Corporation and the commercial real estate properties and multi-family residential communities available for lease can be found on the Company’s website at www.mack cali.com.
The information in this press release must be read in conjunction with, and is modified in its entirety by, the Quarterly Report on Form 10-Q (the “10-Q”) filed by the Company for the same period with the Securities and Exchange Commission (the “SEC”) and all of the Company’s other public filings with the SEC (the “Public Filings”). In particular, the financial information contained herein is subject to and qualified by reference to the financial statements contained in the 10-Q, the footnotes thereto and the limitations set forth therein. Investors may not rely on the press release without reference to the 10-Q and the Public Filings.
Statements made in this press release may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “potential,” “should,” “expect,” “anticipate,” “estimate,” “continue,” or comparable terminology. Such 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, and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Disclosure Regarding Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Reports on Form 10-K, as may be supplemented or amended by the Company's Quarterly Reports on Form 10-Q, which are incorporated herein by reference. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.