Mack-Cali reports 1Q net income of $40M

Real Estate Weekly, June 5, 2002

Mack-Cali Realty Corporation 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% over the same period in 2001.

FFO, after adjustment for straight-lining of rents, for the quarter ended March 31 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%.

Cash available for distribution (CAD) for the first quarter 2002 equaled $57 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%.

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% 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%.

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 opearting 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.

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

"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 with property sales:

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

Among development activity was progress on the company's three development projects at its Harborside Financial Center, located on the Hudson River Waterfront in Jersey City, N.J., as follows:

* Plaza 5, a 34-story, 980,000-SF 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% pre-leased;

* Plaza 10, a 19-story, 575,000 SF class A office building, is expected to be completed in late 2002. The building is 100% 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-SF build-to-suit office property at its Horizon Center Business Park in Hamilton Township, N.J. 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-SF office/flex building is fully leased.

Among leasing information was Mack-Call's consolidated in-service portfolio was 93.9% leased at March 31, compared to 94.6% at December 31, 2001.

For the quarter ended March 31, the company executed 182 leases totaling 1,217,608 SF, consisting of 833,142 SF of office space, 354,638 SF of office/flex space and 29,828 SF of industrial/warehouse space. Of these totals, 214,908 SF were for new leases and 1,002,700 SF 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 SF for five years at 20 Commerce Drive in Cranford, N.J. The 176,600-SF class A office building is 100% leased.

* McDonald's Corporation signed a new 10-year lease for 30,713 SF at 105 Eisenhower Parkway in Roseland, N.J. The 220,000-SF class A office property is 64.8% leased.

* FujiFilm Medical Systems USA, Inc. signed a six-year renewal/expansion for its headquarters at 419 West Ave. in Stamford, Conn. With the expansion, FujiFilm now leases 100% of the 88,000-SF office/flex building.