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Mack-Cali Realty Corporation Announces Second Quarter Results

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EDISON, N.J., July 26, 2012 /PRNewswire/ -- Mack-Cali Realty Corporation (NYSE: CLI) today reported its results for the second quarter 2012.

Recent highlights include:

  • Reported funds from operations of $0.62 per diluted share;
  • Reported net income of $0.11 per diluted share;
  • Signed ground lease with Wegmans Food Markets for site in Hanover Township, New Jersey;
  • Completed sale of $300 million face amount of senior unsecured notes;
  • Redeemed early $121.0 million principal amount of senior unsecured notes; and
  • Declared $0.45 per share quarterly cash common stock dividend.

FINANCIAL HIGHLIGHTS

Funds from operations (FFO) available to common shareholders for the quarter ended June 30, 2012 amounted to $62.1 million, or $0.62 per share.  For the six months ended June 30, 2012, FFO available to common shareholders equaled $136.6 million, or $1.36 per share.

Net income available to common shareholders for the second quarter 2012 equaled $10.1 million, or $0.11 per share.  For the six months ended June 30, 2012, net income available to common shareholders amounted to $35.9 million, or $0.41 per share.

Total revenues for the second quarter 2012 were $178.5 million.  For the six months ended June 30, 2012, total revenues amounted to $361.4 million.

All per share amounts presented above are on a diluted basis.

The Company had 87,819,278 shares of common stock, and 12,177,122 common operating partnership units outstanding as of June 30, 2012.  The Company had a total of 99,996,400 common shares/common units outstanding at June 30, 2012.

As of June 30, 2012, the Company had total indebtedness of approximately $1.9 billion, with a weighted average annual interest rate of 6.32 percent.

The Company had a debt-to-undepreciated assets ratio of 33.9 percent at June 30, 2012.  The Company had an interest coverage ratio of 3.0 times for the quarter ended June 30, 2012.

In July, the Company entered into a ground lease with Wegmans Food Markets, Inc. at its undeveloped site located at Sylvan Way and Ridgedale Avenue in Hanover Township, New Jersey.  Subject to receiving all necessary governmental approvals, Wegmans intends to construct a store of approximately 140,000 square feet on a finished "pad" to be delivered by Mack-Cali.

"Mack-Cali's well-leased portfolio and strong balance sheet continue to position the Company as an industry leader," commented Mitchell E. Hersh, president and chief executive officer. "I'm pleased that despite the continuing challenges in our economy, Mack-Cali outperforms most of the markets in which we do business."

FINANCING ACTIVITY

On April 19, 2012, the Company completed the sale of $300 million face amount of 4.50 percent senior unsecured notes due April 18, 2022 with interest payable semi-annually in arrears.  The net proceeds from the issuance of $296.8 million, after underwriting discount and offering expenses, were used primarily to repay outstanding borrowings under the Company's unsecured revolving credit facility.

On May 25, 2012, the Company redeemed $94.9 million principal amount of its 6.15 percent senior unsecured notes due December 15, 2012 and $26.1 million principal amount of its 5.82 percent senior unsecured notes due March 15, 2013.  The Company funded the redemption price, including accrued and unpaid interest, of approximately $127.9 million from borrowing on its unsecured revolving credit facility, as well as cash on hand.  In connection with the redemption, the Company recorded approximately $4.4 million as a loss from early extinguishment of debt.

DIVIDENDS

In June, the Company's Board of Directors declared a cash dividend of $0.45 per common share (indicating an annual rate of $1.80 per common share) for the second quarter 2012, which was paid on July 13, 2012 to shareholders of record as of July 5, 2012.

LEASING INFORMATION

Mack-Cali's consolidated in-service portfolio was 87.6 percent leased at June 30, 2012, as compared to 87.9 percent leased at March 31, 2012. 

For the quarter ended June 30, 2012, the Company executed 139 leases at its consolidated in-service portfolio totaling 938,873 square feet, consisting of 673,464 square feet of office space and 265,409 square feet of office/flex space.  Of these totals, 338,017 square feet were for new leases and 600,856 square feet were for lease renewals and other tenant retention transactions. 

Highlights of the quarter's leasing transactions include:

NORTHERN NEW JERSEY:

  • The Bank of Tokyo-Mitsubishi UFJ, Ltd., a subsidiary of Mitsubishi UFJ Financial Group, signed an expansion lease for 100,274 square feet at Harborside Financial Center Plaza 3 in Jersey City giving Bank of Tokyo-Mitsubishi a total of 261,957 square feet at the building. 
  • Also at Harborside Financial Center Plaza 3, Fidelity Brokerage Services, LLC, a brokerage services firm, signed a new lease for 16,130 square feet. The 725,600 square-foot office building is 97.3 percent leased.
  • M.D. On-Line, Inc., a provider of electronic data interchange (EDI) solutions, signed a new lease for 33,196 square feet at 6 Century Drive in Mack-Cali Business Campus in Parsippany, relocating and expanding from 9,867 square feet at another building in the Campus.  The 100,036 square-foot office building is 58 percent leased.
  • Enercon Services, Inc., a provider of professional services to private, public, and government sector clients that help address energy and environmental needs, signed a new lease for 25,768 square feet at 4 Campus Drive in Parsippany. The 147,475 square-foot office building, located in Mack-Cali Business Campus, is 77.9 percent leased.
  • Cover-All Technologies, Inc., developer of software solutions for the property and casualty insurance industry, signed a new lease for 23,412 square feet at 412 Mt. Kemble Avenue in Morris Township.  The 475,100 square-foot office building is 64.4 percent leased.
  • PBF Holding Company LLC, a petroleum refinery operator, signed an expansion lease for 15,242 square feet at One Sylvan Way in Parsippany.  The 150,557 square-foot office building, located in Mack-Cali Business Campus, is 96 percent leased.

CENTRAL NEW JERSEY:

  • Xoriant Corporation, a product development and engineering and product consulting services company, signed a new lease for 17,634 square feet at 343 Thornall Street in Edison.  The 195,709 square-foot office building is 89.5 percent leased.
  • Volt Information Sciences, Inc., a provider of global infrastructure solutions in technology, information services and staffing acquisitions, signed a new lease for 14,760 square feet at 14 Commerce Drive in Cranford.  The 67,189 square-foot office building, located in Cranford Business Park, is 85.2 percent leased.
  • Paragon Solutions, Inc., an advisory consulting and systems integration firm, signed lease renewals totaling 17,565 square feet at 25 Commerce Drive in Cranford.  The 67,749 square-foot office building, located in Cranford Business Park, is 86.8 percent leased.

WESTCHESTER COUNTY, NEW YORK:

  • Bunge Management Services, Inc. and Bunge Limited, international agribusiness and food companies, signed a lease renewal of 66,303 square feet at 50 Main Street in White Plains.  The 309,000 square-foot office building, located in Westchester Financial Center, is 85.4 percent leased.
  • MyPublisher, Inc., a provider of custom photo book software and printing, signed a new lease for 40,032 square feet at 8 Westchester Plaza in Elmsford.  The 67,200 square-foot office/flex building, located in Cross Westchester Executive Park, is 100 percent leased.

SUBURBAN PHILADELPHIA:

  • Sterling Medical Services LLC, a medical supply distributor and subsidiary of McKesson Corporation, signed a lease renewal for the entire 48,600 square-foot office/flex building located at 2 Twosome Drive in Moorestown West Corporate Center in Moorestown, New Jersey. 
  • Sussex Wine Merchants, a wine distributor, signed a lease renewal of 19,075 square feet at 50 Twosome Drive in Moorestown, New Jersey.  The 34,075 square-foot office/flex building, located in Moorestown West Corporate Center, is 100 percent leased.
  • Campbell Campbell Edwards & Conroy P.C., a law firm, signed a new lease for 13,185 square feet at Two Westlakes, located at 1205 Westlakes Drive in Berwyn, Pennsylvania.  The 130,265 square-foot office building, located in Westlakes Corporate Park, is 99.1 percent leased.

Included in the Company's Supplemental Operating and Financial Data for the second quarter 2012 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:
http://www.mack-cali.com/file-uploads/2nd.quarter.sp.12.pdf

ADDITIONAL INFORMATION

The Company expressed comfort with net income and FFO per diluted share for the full year 2012, as follows:


Full Year


2012 Range

Net income available to common shareholders

$0.58 - $0.68

Add: Real estate-related depreciation and amortization

1.96

Deduct: Realized (gains) losses and unrealized losses on disposition of rental properties, net

(0.02)

Funds from operations available to common shareholders

$2.52 - $2.62

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, July 26, 2012 at 10:00 a.m. Eastern Time, which will be broadcast live via the Internet at:
http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=96021&eventID=4798226

The live conference call is also accessible by calling (719) 457-2647 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 July 26, 2012 through August 2, 2012.

A replay of the call will also be accessible during the same time period by calling (719) 457-0820 and using the pass code 3027408.

Copies of Mack-Cali's Form 10-Q and Supplemental Operating and Financial Data are available on Mack‑Cali's website, as follows:

Second Quarter 2012 Form 10-Q:
http://www.mack-cali.com/file-uploads/2nd.quarter.10q.12.pdf

Second Quarter 2012 Supplemental Operating and Financial Data:
http://www.mack-cali.com/file-uploads/2nd.quarter.sp.12.pdf

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 277 properties, primarily office and office/flex buildings located in the Northeast, totaling approximately 32.2 million square feet. The properties enable the Company to provide a full complement of real estate opportunities to its diverse base of over 2,000 tenants.

Additional information on Mack-Cali Realty Corporation is available 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.


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





Quarter Ended

Six Months Ended


June 30,

June 30,

Revenues

2012

2011

2012

2011

Base rents

$  148,618

$  147,992

$   297,285

$ 295,703

Escalations and recoveries from tenants

20,787

23,748

40,937

50,928

Construction services

4,603

2,826

8,066

6,625

Real estate services

1,113

1,152

2,321

2,384

Other income

3,341

3,450

12,833

7,741

Total revenues

178,462

179,168

361,442

363,381






Expenses





Real estate taxes

24,900

24,133

47,803

48,928

Utilities

14,444

16,657

30,546

36,399

Operating services

27,845

28,267

54,449

58,613

Direct construction costs

4,337

2,784

7,615

6,366

General and administrative

11,898

9,209

22,705

17,832

Depreciation and amortization

47,991

47,846

95,813

95,553

Total expenses

131,415

128,896

258,931

263,691

Operating income

47,047

50,272

102,511

99,690






Other (Expense) Income





Interest expense

(31,645)

(30,916)

(62,274)

(61,808)

Interest and other investment income

7

10

20

20

Equity in earnings (loss) of unconsolidated joint ventures

1,733

736

2,333

635

Loss from early extinguishment of debt

(4,415)

--

(4,415)

--

Total other (expense) income

(34,320)

(30,170)

(64,336)

(61,153)

Income from continuing operations

12,727

20,102

38,175

38,537

Discontinued Operations:





Income (loss) from discontinued operations

318

189

125

329

Realized gains (losses) and unrealized losses on disposition of rental property, net

(1,634)

--

2,378

--

Total discontinued operations, net

(1,316)

189

2,503

329

Net income

11,411

20,291

40,678

38,866

Noncontrolling interest in consolidated joint ventures

92

102

171

212

Noncontrolling interest in Operating Partnership

(1,562)

(2,536)

(4,675)

(4,973)

Noncontrolling interest in discontinued operations

160

(24)

(306)

(43)

Preferred stock dividends

--

(500)

--

(1,000)

Net income available to common shareholders

$   10,101

$    17,333

$     35,868

$   33,062






PER SHARE DATA:










Basic earnings per common share

$       0.11

$       0.20

$         0.41

$       0.39






Diluted earnings per common share

$       0.11

$       0.20

$         0.41

$       0.39






Basic weighted average shares outstanding

87,817

86,936

87,808

84,953






Diluted weighted average shares outstanding

100,069

99,887

100,065

97,963


 

Mack-Cali Realty Corporation
Statements of Funds from Operations
(in thousands, except per share/unit amounts) (unaudited)





Quarter Ended

Six Months Ended


June 30,

June 30,


2012

2011

2012

2011

Net income available to common shareholders

$  10,101

$ 17,333

$  35,868

$     33,062

Add: Noncontrolling interest in Operating Partnership

1,562

2,536

4,675

4,973

Noncontrolling interest in discontinued operations

(160)

24

306

43

Real estate-related depreciation and amortization on continuing operations (1)

48,925

48,816

97,655

97,490

Real estate-related depreciation and amortization on discontinued operations

13

422

428

863

Deduct: Discontinued operations – Realized (gains) losses and unrealized losses on disposition of rental property, net

1,634

--

(2,378)

--

 

Funds from operations available to common shareholders (2)

$  62,075

$ 69,131

$ 136,554

$   136,431






Diluted weighted average shares/units outstanding (3)

100,069

99,887

100,065

97,963






Funds from operations per share/unit – diluted

$     0.62

$     0.69

$      1.36

$         1.39






Dividends declared per common share

$     0.45

$     0.45

$      0.90

$         0.90






Dividend payout ratio:





Funds from operations-diluted

72.55%

65.02%

65.95%

64.62%






Supplemental Information:





Non-incremental revenue generating capital expenditures:





Building improvements

$    4,495

$   4,664

$  10,321

$       8,258

Tenant improvements and leasing commissions (4)

$  11,545

$ 10,285

$  21,095

$     19,442

Straight-line rent adjustments (5)

$    1,807

$   2,575

$    3,180

$       4,791

Amortization of (above)/below market lease intangibles, net

$       299

$      348

$       705

$          557






(1) Includes the Company's share from unconsolidated joint ventures of $996 and $1,083 for the quarters ended June 30, 2012 and 2011, respectively, and $1,989 and $2,168 for the six months ended June 30, 2012 and 2011, respectively.
(2) Funds from operations is calculated in accordance with the definition of FFO of the National Association of Real Estate Investment Trusts (NAREIT) definition. For further discussion, see "Information About FFO" in this release.
(3) Calculated based on weighted average common shares outstanding, assuming redemption of Operating Partnership common units into common shares (12,183 and 12,840 shares for the quarters ended June 30, 2012 and 2011, respectively, and 12,188 and 12,896 for the six months ended June 30, 2012 and 2011, respectively), plus dilutive Common Stock Equivalents (i.e. stock options).
(4) Excludes expenditures for tenant spaces that have not been owned for at least a year or were vacant for more than a year.
(5) Includes the Company's share from unconsolidated joint ventures of $17 and $45 for the quarters ended June 30, 2012 and 2011, respectively, and $34 and $109 for the six months ended June 30, 2012 and 2011, respectively.

 

Mack-Cali Realty Corporation
Statements of Funds from Operations Per Diluted Share
(amounts are per diluted share, except share count in thousands) (unaudited)





Quarter Ended

Six Months Ended


June 30,

June 30,


2012

2011

2012

2011

Net income available to common shareholders

$  0.11

$   0.20

$  0.41

$  0.39

Add:  Real estate-related depreciation and amortization on continuing operations (1)

0.49

0.49

0.98

1.00

Real estate-related depreciation and amortization on discontinued operations

--

--

--

0.01

Deduct: Discontinued operations - Realized (gains) losses and
                  unrealized losses on disposition of rental property, net

0.02

--

(0.02)

--

 Noncontrolling interest/rounding adjustment

--

--

(0.01)

(0.01)

 

Funds from operations available to common shareholders (2)

$  0.62

$   0.69

$  1.36

$  1.39






Diluted weighted average shares/units outstanding (3)

100,069

99,887

100,065

97,963






(1) Includes the Company's share from unconsolidated joint ventures of $0.01 and $0.01 for the quarters ended June 30, 2012 and 2011, respectively, and $0.02 and $0.02 for the six months ended June 30, 2012 and 2011, respectively.
(2) Funds from operations is calculated in accordance with the definition of FFO of the National Association of Real Estate Investment Trusts (NAREIT) definition. For further discussion, see "Information About FFO" in this release.
(3) Calculated based on weighted average common shares outstanding, assuming redemption of Operating Partnership common units into common shares (12,183 and 12,840 shares for the quarters ended June 30, 2012 and 2011, respectively, and 12,188 and 12,896 for the six months ended June 30, 2012 and 2011, respectively), plus dilutive Common Stock Equivalents (i.e. stock options).


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





June 30,

December 31,


2012

2011

Assets



Rental property



Land and leasehold interests

$    765,646

$     773,026

Buildings and improvements

3,977,332

4,001,943

Tenant improvements

466,711

500,336

Furniture, fixtures and equipment

3,106

4,465


5,212,795

5,279,770

Less - accumulated deprec. & amort.

(1,416,190)

(1,409,163)


3,796,605

3,870,607

Rental property held for sale, net

22,404

--

Net investment in rental property

3,819,009

3,870,607

Cash and cash equivalents

19,303

20,496

Investments in unconsolidated joint ventures

64,359

32,015

Unbilled rents receivable, net

135,856

134,301

Deferred charges and other assets, net

201,919

210,470

Restricted cash

20,818

20,716

Accounts receivable, net

8,943

7,154




Total assets

$  4,270,207

$  4,295,759




Liabilities and Equity



Senior unsecured notes

$  1,198,294

$  1,119,267

Revolving credit facility

10,000

55,500

Mortgages, loans payable and other obligations

721,302

739,448

Dividends and distributions payable

44,999

44,999

Accounts payable, accrued expenses and other liabilities

109,220

100,480

Rents received in advance and security deposits

53,220

53,019

Accrued interest payable

26,895

29,046

Total liabilities

2,163,930

2,141,759

Commitments and contingencies






Equity:



Mack-Cali Realty Corporation stockholders' equity:



Common stock, $0.01 par value, 190,000,000 shares authorized,



 87,819,278 and 87,799,479 shares outstanding

878

878

Additional paid-in capital

2,538,042

2,536,184

Dividends in excess of net earnings

(690,664)

(647,498)

Total Mack-Cali Realty Corporation stockholders' equity

1,848,256

1,889,564




Noncontrolling interests in subsidiaries:



Operating Partnership

256,281

262,499

Consolidated joint ventures

1,740

1,937

Total noncontrolling interests in subsidiaries

258,021

264,436




Total equity

2,106,277

2,154,000




Total liabilities and equity

$  4,270,207

$  4,295,759

 

Contact:

Barry Lefkowitz

Ilene Jablonski


Executive Vice President

Vice President of Marketing


and Chief Financial Officer

Mack-Cali Realty Corporation


Mack-Cali Realty Corporation

(732) 590-1000


(732) 590-1000


SOURCE Mack-Cali Realty Corporation



RELATED LINKS
http://www.mack-cali.com

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