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NEWS RELEASE

For Immediate Release
 
 
Contact:
 
 
 
Michael J. DeMarco
President and
 Chief Operating Officer
(732) 590-1589
Anthony Krug
Chief Financial Officer
(732) 590-1030
 
Deidre Crockett
Investor Relations
(732) 590-1025
 
 
 
MACK-CALI REALTY CORPORATION
ANNOUNCES SECOND QUARTER RESULTS

Edison, New Jersey—July 22, 2015—Mack-Cali Realty Corporation (NYSE: CLI) today reported its results for the second quarter 2015.

Recent highlights include:

-  
Reported funds from operations for the quarter of $0.46 per diluted share;

-  
Reported net income of $0.40 per diluted share;

-  
Sold a 203,000 square-foot office property for $80 million;

-  
Sold its interest in a multi-family joint venture property for $6.4 million; and

-  
Declared $0.15 per share quarterly common stock dividend.

FINANCIAL HIGHLIGHTS


 
Funds from operations (FFO) for the quarter ended June 30, 2015 amounted to $46.5 million, or $0.46 per share, as compared to $50.3 million, or $0.50 per share, for the quarter ended June 30, 2014. For the six months ended June 30, 2015, FFO equaled $89.6 million, or $0.89 per share, as compared to $80.5 million, or $0.81 per share, for the same period last year. For the quarter compared to last year, the decrease in FFO per share results primarily from lower NOI as a result of assets sold of $0.05 and lower revenue from decreased percent leased of $0.04, partially offset by increased net real estate tax appeal proceeds of $0.02, decreased acquisition related general and administrative costs of $0.02 and decreased interest expense of $0.01.
 
Net income available to common shareholders for the quarter ended June 30, 2015 amounted to $35.4 million, or $0.40 per share, as compared to $51.1 million, or $0.58 per share, for the quarter ended June 30, 2014.  For the six months ended June 30, 2015, net income to common shareholders equaled $32.9 million, or $0.37 per share, as compared to $35.8 million, or $0.40 per share, for the same period last year.
 
All per share amounts presented above are on a diluted basis.
 
Total revenues for the second quarter 2015 were $148.6 million, as compared to $160.3 million for the second quarter 2014.  For the six months ended June 30, 2015, total revenues amounted to $302.3 million, as compared to $329.9 for the same period last year.
 
The Company had 89,195,529 shares of common stock, and 11,012,069 common operating partnership units outstanding as of June 30, 2015. The Company had a total of 100,207,598 common shares/common units outstanding at June 30, 2015.
 
Mitchell E. Rudin, chief executive officer, commented “We have been diligently assessing our operations and the opportunities available to us.  While we are in the early stages of repositioning and reconstituting Mack-Cali, we are excited by the opportunities we see in the office assets and in the multi-family platform, both of which should begin to provide meaningful value as we commit additional resources to appropriately positioning each of the platforms. In addition, we look forward to enhancing our disclosure and sharing more of our plans in the coming weeks and months.  We recognize that our initiatives will take time; however, we will endeavor to make these changes, thoughtfully and efficiently with an eye towards maximizing value for our shareholders.”
 
 
 
 
 
 

 
RECENT TRANSACTIONS


In June, the Company sold its commercial office property located at 14 Sylvan Way, in Mack-Cali Business Campus, Parsippany, New Jersey, for approximately $80.0 million.  The three-story, 203,506-square-foot class A office building is fully leased to Wyndham.
 
Also in June, the Company sold its interest in The Highlands at Morristown Station in Morristown, New Jersey, realizing net proceeds of approximately $6.4 million.  Mack-Cali had acquired its 25 percent subordinated interest in the 217-unit community in October 2012 as part of the Roseland acquisition for approximately $2 million. The sale represents an approximately 3.0-times multiple on the 2012 acquisition price. Mack-Cali’s Roseland subsidiary will continue to manage the property.
 
Michael J. DeMarco, president and chief operating officer, commented “We have begun the long process of identifying properties for sale and the properties with upside potential over the next six to eight quarters.  Our sole focus is to close completely the gap that exists between our stock price and our NAV.”

OPERATING HIGHLIGHTS

Mack-Cali’s consolidated commercial in-service portfolio was 82.3 percent leased at June 30, 2015, as compared to 84.3 percent leased at March 31, 2015.
   
For the quarter ended June 30, 2015, the Company executed 138 leases at its consolidated in-service commercial portfolio totaling 1,377,100 square feet, consisting of 970,472 square feet of office space, 391,328 square feet of office/flex space and 15,300 square feet of industrial/warehouse space. Of these totals, 214,577 square feet were for new leases and 1,162,523 square feet were for lease renewals and other tenant retention transactions.

BALANCE SHEET/CAPITAL MARKETS

As of June 30, 2015, the Company had total indebtedness of approximately $2.0 billion, with a weighted average annual interest rate of 5.67 percent.  The Company had a total market capitalization of $3.9 billion and a debt-to-undepreciated assets ratio of 36.3 percent at June 30, 2015.  The Company had an interest coverage ratio of 2.7 times for the quarter eneded June 30, 2015 and an interest coverage ratio of 2.7 times for the six months ended June 30, 2015.

DIVIDENDS

In June, the Company’s Board of Directors declared a cash dividend of $0.15 per common share (indicating an annual rate of $0.60 per common share) for the second quarter 2015, which was paid on July 14, 2015 to shareholders of records as of July 6, 2015.

GUIDANCE/OUTLOOK

The Company expressed comfort with net income and FFO per diluted share for the full year 2015, as follows:


           
 
Full Year
  
 
2015 Range
  
Net income available to common shareholders
$
0.22
-
$
0.32
  
Add: Real estate-related depreciation and amortization
  
1.88
  
Deduct: Realized (gains) losses and unrealized losses on disposition of rental property, net
  
(0.34)
  
Gain on sale of investment in unconsolidated joint ventures
  
(0.06)
  
Funds from operations
$
1.70
-
$
1.80
  
 
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.


 
 
 

CONFERENCE CALL/SUPPLEMENTAL INFORMATION

An earnings conference call with management is scheduled for today, July 22, 2015 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=5196679

The live conference call is also accessible by calling (719) 325-2448 and requesting the Mack-Cali conference call.

The conference call will be rebroadcast on Mack-Cali’s website at https://www.mack-cali.com/investors/events beginning at 2:00 p.m. Eastern Time on July 22, 2015 through July 29, 2015.

A replay of the call will also be accessible during the same time period by calling (719) 457-0820 and using the pass code 7712551.

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 2015 Form 10-Q:
https://www.mack-cali.com/media/765181/2ndquarter10q15.pdf

Second Quarter 2015 Supplemental Operating and Financial Data:
https://www.mack-cali.com/media/765184/2ndquartersp15.pdf

Second Quarter 2015 Supplemental Operating and Financial Data for Roseland Residential Platform:
https://www.mack-cali.com/media/765279/2ndquartersp15Roseland.pdf

In addition, these items are available upon request from:
Mack-Cali Investor Relations Department - Deidre Crockett
343 Thornall Street, Edison, New Jersey 08837-2206
(732) 590-1025


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 operates two highly successful platforms, the Mack-Cali office division and the Roseland apartment subsidiary.  Roseland is a premier real estate development and management company with a highly acclaimed reputation for creating exceptional residential communities in some of the most desirable settings across the Northeast. From elegant townhomes and brownstones to upscale rentals and vibrant mixed-use communities, Roseland's extraordinary portfolio of multi-family real estate properties represents the very best in quality, design excellence, and luxury living.
 
 
 
 
 
 

 
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.

 
 
 

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

                     
   
Three Months Ended
  
Six Months Ended
   
June 30,
  
June 30,
REVENUES
  
2015
    
2014
  
2015
    
2014
Base rents
$
 121,246 
  
$
 133,210 
  
 245,039 
  
$
267,261 
Escalations and recoveries from tenants
  
 15,842 
    
 16,996 
  
 34,241 
    
42,564 
Real estate services
  
 7,401 
    
 7,009 
  
 15,045 
    
13,701 
Parking income
  
 2,850 
    
 2,236 
  
 5,392 
    
4,350 
Other income
  
 1,228 
    
 849 
  
 2,565 
    
2,020 
    Total revenues
  
 148,567 
    
 160,300 
  
 302,282 
    
329,896 
                     
EXPENSES
                    
Real estate taxes
  
 21,410 
    
 23,375 
  
 43,862 
    
47,726 
Utilities
  
 13,399 
    
 14,573 
  
 30,974 
    
42,854 
Operating services
  
 25,844 
    
 27,840 
  
 54,072 
    
57,062 
Real estate services expenses
  
 6,208 
    
 6,571 
  
 12,847 
    
13,280 
General and administrative
  
 11,988 
    
 13,673 
  
 22,999 
    
36,554 
Depreciation and amortization
  
 42,365 
    
 44,711 
  
 83,167 
    
 89,696 
    Total expenses
  
 121,214 
    
 130,743 
  
 247,921 
    
287,172 
Operating income
  
 27,353 
    
29,557
  
54,361
    
42,724 
                     
OTHER (EXPENSE) INCOME
                    
Interest expense
  
 (26,773)
    
 (28,159)
  
 (53,988)
    
(58,105)
Interest and other investment income
  
 291 
    
 922 
  
 558 
    
1,308 
Equity in earnings (loss) of unconsolidated joint ventures
  
 (2,329)
    
 443 
  
 (5,858)
    
(792)
Realized gains (losses) on disposition of rental property, net
  
 34,399 
    
 54,584 
  
 34,543 
    
 54,584 
Gain on sale of investment in unconsolidated joint ventures
  
 6,448 
    
- 
  
 6,448 
    
- 
    Total other (expense) income
  
 12,036 
    
 27,790 
  
 (18,297)
    
 (3,005)
Net income
  
 39,389 
    
 57,347 
  
 36,064 
    
 39,719 
  Noncontrolling interest in consolidated joint ventures
  
 373 
    
 290 
  
 863 
    
612 
  Noncontrolling interest in Operating Partnership
  
 (4,383)
    
 (6,514)
  
 (4,069)
    
(4,506)
Net income available to common shareholders
$
 35,379 
    
 51,123 
  
 32,858 
  
$
35,825 
                     
Basic earnings per common share:
                    
Net income available to common shareholders
$
 0.40 
    
 0.58 
  
 0.37 
  
$
0.40 
                     
Diluted earnings per common share:
                    
Net income available to common shareholders
$
 0.40 
    
 0.58 
  
 0.37 
  
$
0.40 
                     
Basic weighted average shares outstanding
  
 89,244 
    
 88,691 
  
 89,218 
    
88,491 
                     
Diluted weighted average shares outstanding
  
 100,314 
    
 100,023 
  
 100,313 
    
99,964 









 
 
 


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


                             
 
Three Months Ended
  
Six Months Ended
 
June 30,
  
June 30,
   
2015
    
2014
      
2015
      
2014
  
Net income available to common shareholders
$
 35,379 
  
$
 51,123 
    
$
 32,858 
    
$
 35,825 
  
Add (deduct): Noncontrolling interest in Operating Partnership
  
 4,383 
    
 6,514 
      
 4,069 
      
 4,506 
  
Real estate-related depreciation and amortization on continuing operations (a)
  
 47,634 
    
 47,291 
      
 93,665 
      
 94,739 
  
Deduct: Realized (gains) losses and unrealized losses on disposition of rental property, net
  
 (34,399)
    
 (54,584)
      
 (34,543)
      
 (54,584)
  
Gain on sale of investment in unconsolidated joint ventures
  
 (6,448)
    
- 
      
 (6,448)
      
- 
  
Funds from operations available to common shareholders (b)
$
 46,549 
  
$
 50,344 
    
$
 89,601 
    
$
 80,486 
  
                             
Diluted weighted average shares/units outstanding (c)
  
 100,314 
    
 100,023 
      
 100,313 
      
 99,964 
  
                             
Funds from operations per share/unit-diluted
$
0.46
  
$
0.50
    
$
0.89
    
$
 0.81 
  
                             
Dividends declared per common share
$
0.15
  
$
0.15
    
$
0.30
    
$
 0.45 
  
                             
Dividend payout ratio:
                            
     Funds from operations-diluted
  
32.33
%
  
 29.80 
%
    
33.59
%
    
 55.89 
%
                             
Supplemental Information:
                            
Non-incremental revenue generating capital expenditures:
                            
     Building improvements
$
 7,763 
  
$
 2,784 
    
$
 14,562 
    
$
 5,253 
  
     Tenant improvements and leasing commissions (d)
$
 6,188 
  
$
 17,548 
    
$
 11,409 
    
$
 24,335 
  
Straight-line rent adjustments (e)
$
 56 
  
$
 1,110 
    
$
 (83)
    
$
 4,189 
  
Amortization of (above)/below market lease intangibles, net (f)
$
 194 
  
$
 314 
    
$
 425 
    
$
 582 
  
Acquisition transaction costs (h)
  
- 
  
$
 1,943 
      
- 
    
$
 1,943 
  
Net effect of unusual electricity rate spikes (g)
  
- 
    
- 
      
- 
    
$
 4,845 
  
Executives severance costs (h)
  
- 
    
- 
      
- 
    
$
 11,044 
  
                             

 
   
(a)
Includes the Company’s share from unconsolidated joint ventures of $5,512 and $2,658 for the three months ended June 30, 2015 and 2014, respectively, and $10,983 and $5,215 for the six months ended June 30, 2015 and 2014, respectively. Excludes non-real estate-related depreciation and amortization of $243 and $78 for the three months ended June 30, 2015 and 2014, respectively, and $485 and $172 for the six months ended June 30, 2015 and 2014, respectively.
(b)
Funds from operations is calculated in accordance with the definition of FFO of the National Association of Real Estate Investment Trusts (NAREIT). See “Information About FFO” in this release.
(c)
Calculated based on weighted average common shares outstanding, assuming redemption of Operating Partnership common units into common shares (11,028 and 11,302 shares for the three months ended June 30, 2015 and 2014, respectively, and 11,050 and 11,444 for the six months ended June 30, 2015 and 2014, respectively), plus dilutive Common Stock Equivalents (i.e. stock options).
(d)
Excludes expenditures for tenant spaces that have not been owned for at least a year or were vacant for more than a year.
(e)
Includes the Company’s share from unconsolidated joint ventures of $362 and $52 for the three months ended June 30, 2015 and 2014, respectively, and $538 and $0 for the six months ended June 30, 2015 and 2014, respectively.
(f)
Includes the Company’s share from unconsolidated joint ventures of $114 and $124 for the three months ended June 30, 2015 and 2014, respectively, and $238 and $248 for the six months ended June 30, 2015 and 2014, respectively.
(g)
Approximately $10 million in utilities expense, net of approximately $5 million in escalations and recoveries from tenants related to such costs.
(h)
Included in general and administrative expense.


 
 
 

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


                         
 
Three Months Ended
    
Six Months Ended
 
June 30,
  
June 30,
   
2015
    
2014
    
2015
      
2014
Net income available to common shareholders
$
 0.40 
  
$
 0.58 
  
$
 0.37 
    
$
 0.40 
Add: Real estate-related depreciation and amortization on continuing operations (a)
  
 0.47 
    
 0.47 
    
 0.93 
      
 0.95 
Deduct: Realized (gains) losses and unrealized losses on disposition of rental property, net
  
 (0.34)
    
 (0.55)
    
 (0.34)
      
 (0.55)
Gain on sale of investment in unconsolidated joint ventures
  
 (0.06)
    
- 
    
 (0.06)
      
- 
Noncontrolling interest/rounding adjustment
  
 (0.01)
    
- 
    
 (0.01)
      
 0.01 
Funds from operations (b)
$
 0.46 
  
$
 0.50 
  
$
 0.89 
    
$
 0.81 
                         
Add: Net effect of unusual electricity rate spikes
  
- 
    
- 
    
- 
    
$
 0.05 
   Executives severance costs
  
- 
    
- 
    
- 
      
 0.11 
Noncontrolling interests/rounding adjustment
  
- 
    
- 
    
- 
      
 (0.01)
FFO excluding certain items
$
 0.46 
  
$
 0.50 
  
$
 0.89 
    
$
 0.96 
                         
Diluted weighted average shares/units outstanding (c)
  
100,314 
    
100,023 
    
 100,313 
      
99,964 

 
   
(a)
Includes the Company’s share from unconsolidated joint ventures of $0.05 and $0.03 for the three months ended June 30, 2015 and 2014, respectively, and $0.11 and $0.05 for the six months ended June 30, 2015 and 2014, respectively.
(b)
Funds from operations is calculated in accordance with the definition of FFO of the National Association of Real Estate Investment Trusts (NAREIT). See “Information About FFO” in this release.
(c)
Calculated based on weighted average common shares outstanding, assuming redemption of Operating Partnership common units into common shares (11,028 and 11,302 shares for the three months ended June 30, 2015 and 2014, respectively, and 11,050 and 11,444 for the six months ended June 30, 2015 and 2014, 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,
Assets
  
2015
    
2014
Rental property
          
  Land and leasehold interests
$
749,359 
  
$
760,855 
  Buildings and improvements
  
3,751,805 
    
3,753,300 
  Tenant improvements
  
414,166 
    
431,969 
  Furniture, fixtures and equipment
  
12,867 
    
12,055 
   
 4,928,197 
    
 4,958,179 
Less – accumulated depreciation and amortization
  
(1,448,791)
    
(1,414,305)
           
Net investment in rental property
  
 3,479,406 
    
 3,543,874 
Cash and cash equivalents
  
19,813 
    
29,549 
Investments in unconsolidated joint ventures
  
 284,507 
    
 247,468 
Unbilled rents receivable, net
  
117,777 
    
123,885 
Deferred charges, goodwill and other assets, net
  
 197,773 
    
 204,650 
Restricted cash
  
42,052 
    
34,245 
Accounts receivable, net of allowance for doubtful accounts
          
of $1,871 and $2,584
  
12,137 
    
8,576 
           
Total assets
$
 4,153,465 
  
$
 4,192,247 
           
Liabilities and Equity
          
Senior unsecured notes
$
1,268,293 
  
$
1,267,744 
Mortgages, loans payable and other obligations
  
766,526 
    
820,910 
Dividends and distributions payable
  
15,582 
    
15,528 
Accounts payable, accrued expenses and other liabilities
  
134,089 
    
126,971 
Rents received in advance and security deposits
  
49,093 
    
52,146 
Accrued interest payable
  
30,659 
    
26,937 
   Total liabilities
  
 2,264,242 
    
 2,310,236 
Commitments and contingencies
          
           
Equity:
          
Mack-Cali Realty Corporation stockholders’ equity:
          
Common stock, $0.01 par value, 190,000,000 shares authorized,
          
89,195,529 and 89,076,578 shares outstanding
  
892 
    
891 
Additional paid-in capital
  
2,562,507 
    
2,560,183 
Dividends in excess of net earnings
  
(930,167)
    
(936,293)
   Total Mack-Cali Realty Corporation stockholders’ equity
  
 1,633,232 
    
 1,624,781 
           
Noncontrolling interests in subsidiaries:
          
Operating Partnership
  
201,639 
    
202,173 
Consolidated joint ventures
  
54,352 
    
55,057 
Total noncontrolling interests in subsidiaries
  
 255,991 
    
 257,230 
           
Total equity
  
 1,889,223 
    
 1,882,011 
           
Total liabilities and equity
$
 4,153,465 
  
$
 4,192,247