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Press release from PR Newswire

Mack-Cali Realty Corporation Announces Second Quarter Results

Thursday, July 26, 2012

Mack-Cali Realty Corporation Announces Second Quarter Results07:49 EDT Thursday, July 26, 2012EDISON, 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 HIGHLIGHTSFunds 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 ACTIVITYOn 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.DIVIDENDSIn 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 INFORMATIONMack-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.pdfADDITIONAL INFORMATIONThe Company expressed comfort with net income and FFO per diluted share for the full year 2012, as follows:Full Year2012 RangeNet income available to common shareholders$0.58 - $0.68Add: Real estate-related depreciation and amortization1.96Deduct: Realized (gains) losses and unrealized losses on disposition of rental properties, net(0.02)Funds from operations available to common shareholders$2.52 - $2.62These 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=4798226The 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.pdfSecond Quarter 2012 Supplemental Operating and Financial Data:http://www.mack-cali.com/file-uploads/2nd.quarter.sp.12.pdfIn addition, these items are available upon request from:Mack-Cali Investor Relations Department343 Thornall Street, Edison, New Jersey 08837-2206(732) 590-1000 ext. 1143INFORMATION ABOUT FFOFunds 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 COMPANYMack-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 CorporationConsolidated Statements of Operations(in thousands, except per share amounts) (unaudited)Quarter EndedSix Months EndedJune 30,June 30,Revenues2012201120122011Base rents$  148,618$  147,992$   297,285$ 295,703Escalations and recoveries from tenants20,78723,74840,93750,928Construction services4,6032,8268,0666,625Real estate services1,1131,1522,3212,384Other income3,3413,45012,8337,741Total revenues178,462179,168361,442363,381ExpensesReal estate taxes24,90024,13347,80348,928Utilities14,44416,65730,54636,399Operating services27,84528,26754,44958,613Direct construction costs4,3372,7847,6156,366General and administrative11,8989,20922,70517,832Depreciation and amortization47,99147,84695,81395,553Total expenses131,415128,896258,931263,691Operating income47,04750,272102,51199,690Other (Expense) IncomeInterest expense(31,645)(30,916)(62,274)(61,808)Interest and other investment income7102020Equity in earnings (loss) of unconsolidated joint ventures1,7337362,333635Loss 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 12,72720,10238,17538,537Discontinued Operations:Income (loss) from discontinued operations318189125329Realized gains (losses) and unrealized losses on disposition of rental property, net(1,634)--2,378--Total discontinued operations, net(1,316)1892,503329Net income11,41120,29140,67838,866Noncontrolling interest in consolidated joint ventures92102171212Noncontrolling interest in Operating Partnership(1,562)(2,536)(4,675)(4,973)Noncontrolling interest in discontinued operations160(24)(306)(43)Preferred stock dividends--(500)--(1,000)Net income available to common shareholders$   10,101$    17,333$     35,868$   33,062PER SHARE DATA:Basic earnings per common share$       0.11$       0.20$         0.41$       0.39Diluted earnings per common share$       0.11$       0.20$         0.41$       0.39Basic weighted average shares outstanding87,81786,93687,80884,953Diluted weighted average shares outstanding100,06999,887100,06597,963 Mack-Cali Realty CorporationStatements of Funds from Operations(in thousands, except per share/unit amounts) (unaudited)Quarter EndedSix Months EndedJune 30,June 30,2012201120122011Net income available to common shareholders$  10,101$ 17,333$  35,868$     33,062Add: Noncontrolling interest in Operating Partnership1,5622,5364,6754,973Noncontrolling interest in discontinued operations(160)2430643Real estate-related depreciation and amortization on continuing operations (1)48,92548,81697,65597,490Real estate-related depreciation and amortization on discontinued operations13422428863Deduct: Discontinued operations ? Realized (gains) losses and unrealized losses on disposition of rental property, net1,634--(2,378)-- Funds from operations available to common shareholders (2)$  62,075$ 69,131$ 136,554$   136,431Diluted weighted average shares/units outstanding (3)100,06999,887100,06597,963Funds from operations per share/unit ? diluted$     0.62$     0.69$      1.36$         1.39Dividends declared per common share$     0.45$     0.45$      0.90$         0.90Dividend payout ratio:Funds from operations-diluted72.55%65.02%65.95%64.62%Supplemental Information:Non-incremental revenue generating capital expenditures:Building improvements$    4,495$   4,664$  10,321$       8,258Tenant improvements and leasing commissions (4)$  11,545$ 10,285$  21,095$     19,442Straight-line rent adjustments (5)$    1,807$   2,575$    3,180$       4,791Amortization 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 $109 for the six months ended June 30, 2012 and 2011, respectively. Mack-Cali Realty CorporationStatements of Funds from Operations Per Diluted Share(amounts are per diluted share, except share count in thousands) (unaudited)Quarter EndedSix Months EndedJune 30,June 30,2012201120122011Net income available to common shareholders$  0.11$   0.20$  0.41$  0.39Add:  Real estate-related depreciation and amortization on continuing operations (1)0.490.490.981.00Real estate-related depreciation and amortization on discontinued operations------0.01Deduct: Discontinued operations - Realized (gains) losses and                   unrealized losses on disposition of rental property, net0.02--(0.02)-- Noncontrolling interest/rounding adjustment----(0.01)(0.01) Funds from operations available to common shareholders (2)$  0.62$   0.69$  1.36$  1.39Diluted weighted average shares/units outstanding (3)100,06999,887100,06597,963(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 $0.02 for the six months ended June 30, 2012 and 2011, respectively.(2) Funds from operations is calculated in accordance with the definition of FFO of the National Association of Real Estate Investment Trusts (NAREIT) definition. For further discussion, see "Information About FFO" in this release.(3) Calculated based on weighted average common shares outstanding, assuming redemption of Operating Partnership common units into common shares (12,183 and 12,840 shares for the quarters ended June 30, 2012 and 2011, respectively, and 12,188 and 12,896 for the six months ended June 30, 2012 and 2011, respectively), plus dilutive Common Stock Equivalents (i.e. stock options).Mack-Cali Realty CorporationConsolidated Balance Sheets(in thousands, except per share amounts) (unaudited)June 30,December 31,20122011AssetsRental propertyLand and leasehold interests$    765,646$     773,026Buildings and improvements3,977,3324,001,943Tenant improvements466,711500,336Furniture, fixtures and equipment3,1064,4655,212,7955,279,770Less - accumulated deprec. & amort.(1,416,190)(1,409,163)3,796,6053,870,607Rental property held for sale, net22,404--Net investment in rental property3,819,0093,870,607Cash and cash equivalents19,30320,496Investments in unconsolidated joint ventures64,35932,015Unbilled rents receivable, net135,856134,301Deferred charges and other assets, net201,919210,470Restricted cash20,81820,716Accounts receivable, net8,9437,154Total assets$  4,270,207$  4,295,759Liabilities and EquitySenior unsecured notes$  1,198,294$  1,119,267Revolving credit facility10,00055,500Mortgages, loans payable and other obligations721,302739,448Dividends and distributions payable44,99944,999Accounts payable, accrued expenses and other liabilities109,220100,480Rents received in advance and security deposits53,22053,019Accrued interest payable26,89529,046Total liabilities2,163,9302,141,759Commitments and contingenciesEquity:Mack-Cali Realty Corporation stockholders' equity:Common stock, $0.01 par value, 190,000,000 shares authorized, 87,819,278 and 87,799,479 shares outstanding878878Additional paid-in capital2,538,0422,536,184Dividends in excess of net earnings(690,664)(647,498)Total Mack-Cali Realty Corporation stockholders' equity1,848,2561,889,564Noncontrolling interests in subsidiaries:Operating Partnership256,281262,499Consolidated joint ventures1,7401,937Total noncontrolling interests in subsidiaries258,021264,436Total equity2,106,2772,154,000Total liabilities and equity$  4,270,207$  4,295,759 Contact: Barry Lefkowitz Ilene JablonskiExecutive Vice President Vice President of Marketingand Chief Financial Officer Mack-Cali Realty CorporationMack-Cali Realty Corporation(732) 590-1000(732) 590-1000SOURCE Mack-Cali Realty Corporation