Exhibit 99.1

 

 

 

THIRD QUARTER 2016

 

Supplemental Operating and Financial Data

 

 

INDEX

 

		PAGE(S)
Company Today		3 - 4
Focus List		5 - 6
Economic Incentives and Programs		7 - 8
Spotlight on:
Results		9 - 11
Leasing		12 - 16
Earnings		17 - 26
Financials		27 - 29
Portfolio		30 - 31
Details on:
Leasing		32 - 47
Earnings		48
Financials		49 - 53
Portfolio		54 - 60
Company Information		61 - 62

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

2

 

Company Today

 

We are a two platform company — office and multi-family. We own assets in the Hudson River Waterfront area and other transit-based locations.

 

REIT publicly traded on NYSE (“CLI”)

 

Substantial development opportunities for multi-family

 

Apartment platform managed by Roseland Residential Trust (“RRT”)

 

 

101 Wood Avenue South, Iselin, NJ (Acquired June 2016)		Portside at East Pier, East Boston, MA (Full interest acquired April 2016)
The Chase at Overlook Ridge, Malden, MA (Full interest acquired January 2016)		111 River Street, Hoboken, NJ (Acquired July 2016)

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

3

 

 

4

 

Focus List

 

Our changes over the next 24 months

 

Completed/Underway (Generate Increased Cash Flow)

 

1.                          Staffing levels — reduced by 71 positions or $10M, hiring freeze in place, expected further reduction in 4Q-16

 

2.                          Cost of operations — reduced by $7.5M, with continued focus

 

3.                          G&A expense — reduced by $3M, with continued focus

 

4.                          Refinance debt for savings — new 5-year term loan for $350M at 3.13% closed in Jan 2016. $250M secured financing at 3.197% in September 2016. Bought back $115M of 7.75% bonds in September 2016.

 

5.                          In 2016 — continued expense reductions as we reduce the size of the office platform (underway)

 

6.                          Expected margin improvement (currently approx. 59%, up from 54% two years ago) with increased rental rates and occupancy in core markets and reduced costs

 

Next 12 — 18 Months (Balance Sheet / Capital Expenditures / Long-term Cash Flow)

 

7.                          Increase occupancy — 87.7% at 9/30/16 and project a clear path to meeting objective of 90% leased by year end 2016. Was 86.2% at 12/31/15 and 84.2% at 12/31/14

 

8.                          Planned dispositions — $730M of assets. $465M closed year-to-date; remainder by end of year & in early 2017

 

9.                          Reposition assets to “A” quality — six major capital investment programs currently in place

 

24 Months (Long-term Strategy Execution)

 

10.                   New capital investment — we look for 6% initial yield and 11% IRR on new investments. Purchased 101 Wood Avenue in Iselin, NJ and 111 River Street in Hoboken, NJ

 

11.                   Focus on our key markets — exited NYC, DC, and certain NJ suburban markets

 

12.                   Funding and growth of the Roseland operations — in the market with Eastdil - Investor to be Selected by Year-End 2016

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

5

 

Focus List - 2017 Lease Expirations

 

As of 9/30/16, 2017 is shaping up very well to have excellent cash and GAAP results.

 

·                  2017 expirations total 2.9 million square feet, or 14.4% of leased space (reduced from 3.6 million at 12/31/15).

·                  1.1 million square feet do not expire until the fourth quarter.

·                  Anticipate occupancy of approximately 89-90% at year-end 2016; at that level will backfill any vacant space quickly.

·                  As of now, 2017 is the size of a normal year for our expirations and by year end 2016, it will be reduced further.

 

·                  Progress on 2017 expirations has been made as follows:

 

(Square footage in 000’s)

 

2017 expirations as of December 31, 2015		3,591
Reduction in 2017 expirations, year-to-date 2016		(695	)
2017 expirations as of September 30, 2016		2,896

 

Following is our approach to remaining 2017 expirations:

 

(Square footage in 000’s)

 

	2,896		expiring
	(668	)	in properties we plan to sell
	(699	)	remaining on Waterfront, with a growing backlog of tenant demand
	(625	)	in Flex space, with historically high retention and occupancy rates
	904		remaining in Core suburban properties

 

·                  904,000 square feet expiring within Core suburban portfolio of 9.7 million square feet represents a manageable 9.4% rollover in 2017.

 

Future Expirations:

 

·                  Our goal in re-shaping the portfolio through sales and strategic acquisitions is to have longer leases, 7 years, with less costs per square foot per year and a more manageable lease expiration schedule, no more than 12% each year.

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

6

 

Economic Incentives and Programs

 

The State of New Jersey currently offers a compelling incentive program to attract and retain businesses in the State through its “Grow New Jersey” program.  Below is a program summary and example of an incentive calculation.

 

Grow NJ

 

·                              Provides job-based tax credits for job creation and retention

 

·                              Tax credits of $5,000 to $9,750 per job/per year, for up to 10 years for new jobs to the state

 

·                              Limited to specific “Qualified Incentive Areas”

 

·                  Urban Transit Hub municipalities (“UTH”)

 

·                  ‘Mega projects’—logistics, manufacturing, energy, defense, or maritime businesses in a port district

 

·                  Distressed municipalities

 

·                  Projects in other priority areas

 

·                              Eligibility:

 

·                  Minimum 35 new jobs and/or 50 retained jobs for most commercial projects

 

Example — New Tenant to Jersey City

 

·                              New jobs at a 6 employees (EEs) per 1,000sf density

 

# of				Starting		Base
New EEs		SF		Rental Rate		Rent/yr
		60,000		$40/sf		$	2,400,000
360						(2,880,000		)
		Effective rent after incentive				(480,000		)

 

Base award (UTH)		$	5,000
Bonuses
Within 0.5 miles of transit station		$	2,000
251-400 jobs		500
Targeted Industry		500
		$	8,000	per job/per year
		or
		$	2,880,000	per year

 

·                  If occupancy is higher than 6 EEs per 1,000sf, the tenant receives the further benefit, which adds to their NOI

·                  Award based on targeted industry

·                  Tenant must commit to 1.5 years of term to qualify for 1 year of benefit

·                  Urban Transit Hub location

·                  Doesn’t include increases in fixed rent or additional rent payable under the lease

·                  Retention benefit could be substantially less than as illustrated

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

7

 

Tenants Taking Advantage of NJ Incentives

 

Company		Size (SF)		Addresss		Number of Employees		Incentive (Millions)
JP Morgan Chase (Purchase)		1,098,265		575 Washington Street		3,612		$	224.9
JP Morgan Chase		305,069		545 Washington Street		2,150		$	187.8
Pearson Education		206,000		221 River Street		650		$	90.0
RBC		206,861		30 Hudson Street		900		$	78.7
WeWork (Joint Venture)		75,000		1 Journal Square		723		$	59.0
Ernst & Young		168,165		121 River Street		430		$	39.8
Omnicom Group*		79,771		Harborside Plaza 2		493		$	39.4
Charles Komar		159,141		90 Hudson Street		480		$	37.2
New York Life		114,691		30 Hudson Street		625		$	33.8
New Avon, LLC		113,625		TBD		396		$	31.6
Zurich Insurance *		64,413		Harborside Plaza 2		314		$	28.2
Forbes Media		93,000		499 Washington Blvd.		350		$	27.1
Newell Rubbermaid		99,975		221 River Street		300		$	27.0

 

*CLI tenants

 

8

 

Spotlight on Results

 

Operating Highlights

 

Net income (loss) available to common shareholders for the quarter ended September 30, 2016 amounted to $(8.5) million, or $(0.10) per share, as compared to $(126.9) million, or $(1.42) per share, for the quarter ended September 30, 2015.    For the nine months ended September 30, 2016, net income (loss) available to common shareholders equaled $102.0 million, or $1.13 per share, as compared to $(94.0) million, or $(1.05) per share, for the same period last year.  Included in net income (loss) for the quarter ended September 30, 2016 was $17.1 million of a net loss from property-related transactions, and net loss from extinguishment of debt of $19.3 million, which were partially offset by $21.7 million of equity in earnings from refinancing proceeds received from a joint venture.  The total net non-controlling interests for these items was $1.6 million.

 

Funds from operations (FFO) for the quarter ended September 30, 2016 amounted to $59.9 million, or $0.60 per share, as compared to $51.5 million, or $0.51 per share, for the quarter ended September 30, 2015.  For the nine months ended September 30, 2016, FFO equaled $172.2 million, or $1.71 per share, as compared to $141.1 million, or $1.41 per share, for the same period last year.

 

For the third quarter 2016, Core FFO was $0.56 per share after adjusting for certain items, primarily $21.7 million from a joint venture loan refinancing, and a $19.3 million loss from extinguishment of debt.  The quarter’s Core FFO per share of $0.56 increased 16.7 percent from the same quarter last year primarily due to increased base rents in 2016.

 

Mack-Cali’s consolidated commercial in-service portfolio was 87.7 percent leased at September 30, 2016, as compared to 86.7 percent leased at June 30, 2016 and 85.8 percent at September 30, 2015.

 

For the quarter ended September 30, 2016, the Company executed 62 leases at its consolidated in-service commercial portfolio totaling 664,490 square feet. Of these totals, 289,991 square feet were for new leases and 374,499 square feet were for lease renewals and other tenant retention transactions.  Lease transactions included 216,205 square feet in Core properties, 150,454 square feet in Waterfront properties, 241,634 square feet in Flex properties and 56,197 square feet in Non-Core properties. Lease spreads on a GAAP basis were 16.2 percent for new leases and 8.3 percent for renewed or retained leases, for an average of 9.1 percent for the quarter.

 

Rental Property Acquisitions

 

For the nine months ended September 30, 2016

 

								Rentable
Acquisition						# of		Square		Purchase
Date		Property/Address		Location		Buildings		Feet		Price
04/04/16		11 Martine Avenue (a)		White Plains, New York		1		82,000		$	10,750
04/07/16		320, 321 University Avenue (b)		Newark, New Jersey		2		147,406		23,000
06/02/16		101 Wood Avenue South (c)		Iselin, New Jersey		1		262,841		82,300
07/01/16		111 River Street (c)		Hoboken, New Jersey		1		566,215		235,000		(d)
Total Acquisitions:						5		1,058,462		$	351,050

 

(a)	Acquisition represented four units of condominium interests which collectively comprise floors 2 through 5. Upon completion of the acquisition, the Company owns the entire 14-story 262,000 square-foot building. The acquisition was funded using available cash.
(b)	This acquisition was funded through borrowings under the Company’s unsecured revolving credit facility.
(c)	This acquisition was funded using available cash and through borrowings under the Company’s unsecured revolving credit facility.
(d)	The Company paid $210.8 million at closing, net of purchase credits.

 

On January 5, 2016, the Company, which held a 50 percent subordinated joint venture interest in the unconsolidated Overlook Ridge Apartment Investors LLC, 371-unit multi-family operating property located in Malden, Massachusetts, acquired the remaining interest for $39.8 million in cash plus the assumption of a first mortgage loan secured by the property with a principal balance of $52.7 million.  The cash portion of the acquisition was funded primarily through borrowings under the Company’s unsecured revolving credit facility.

 

On April 1, 2016, the Company, which held a 38.25 percent subordinated joint venture interest in the unconsolidated Portside Apartment Developers, LLC, a joint venture which owns a 175-unit operating multi-family property located in East Boston, Massachusetts, acquired the remaining interests of its joint venture partners for $38.6 million in cash plus the assumption of a first mortgage loan secured by the property with a principal balance of $42.5 million and interest at LIBOR plus 215 basis points, with a floor of 275 basis points, maturing in December 2017.  The cash portion of the acquisition was funded primarily through borrowings under the Company’s unsecured revolving credit facility.

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

9

 

Spotlight on Results

 

Rental Property Sales/Dispositions

(dollars in thousands)

 

The Company sold approximately $465 million of assets for year to date 2016. Currently, Mack-Cali has contracts out for an additional $265 million of office sales.

 

For the nine months ended September 30, 2016

 

Sale						Realized
Date		Property/Address		Location		Gain (loss)
03/11/16		2 Independence Way		Princeton, New Jersey		$	(164	)
03/24/16		1201 Connecticut Avenue, NW		Washington, D.C.		58,764
04/26/16		125 Broad Street		New York, New York		(7,860		)
05/09/16		9200 Edmonston Road		Greenbelt, Maryland		246
05/18/16		1400 L Street		Washington, D.C.		38,346
07/14/16		600 Parsippany Road		Parsippany, New Jersey		4,590
07/14/16		4, 5, 6 Century Drive		Parsippany, New Jersey		(2,775		)
08/11/16		Andover Place		Andover, Massachusetts		2,713
09/26/16		222, 223 Mount Airy Road		Basking Ridge, New Jersey		(222		)
09/27/16		10 Mountainview Road		Upper Saddle River, New Jersey		(581		)
Sub-total						$	93,057
Unrealized losses on properties held for sale						(24,393		)
Total Property Sales and Dispositions:						$	68,664

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

10

 

Spotlight on Results

 

Balance Sheet/Capital Markets

 

In furtherance of its plan to lengthen its debt maturity profile and reduce its average cost of debt, the Company completed the following financing activity in the quarter:

 

Closed on a $250 million mortgage loan secured by 101 Hudson Street, its 1.2 million-square-foot Class A office building located on the Hudson River waterfront in Jersey City, NJ. The loan has a ten-year term, interest only and has an effective annual interest rate of 3.197 percent;

 

Closed on a $59 million mortgage loan secured by Portside 7, its 175-unit, luxury multi-family community located on the Boston Harbor waterfront. The loan has a seven-year term, interest only and has an effective annual interest rate of 3.569 percent;

 

The Company’s joint venture with Hyatt Corporation completed a $100 million mortgage loan refinancing, secured by the venture’s 350-room Hyatt Regency on the Hudson in Jersey City, NJ. The loan has a ten-year term, interest only and has an effective annual interest rate of 3.668 percent.  At the closing, the Company received a distribution from the venture of approximately $18 million representing its share of the excess proceeds of the refinancing;

 

Proceeds from the completed financing activity were used primarily to repay outstanding secured and unsecured debt;

 

In September, the Company purchased $114.9 million of its 7.75 percent unsecured bonds scheduled to mature in 2019 paying 115.977 percent of the face amount of the notes, plus accrued and unpaid interest.

 

As a result of the successful execution of these highlighted financing activities, at quarter end, the Company’s $2.5 billion of total debt had a weighted average interest rate of 4.48 percent,  down from 4.79 percent at June 30. Additionally, at quarter end, the weighted average maturity of its indebtedness was 3.93 years, up from 3.38 years at June 30. As of September 30, 2016, the Company had total a debt-to-undepreciated assets ratio of 42.4 percent and an interest coverage ratio of 3.3 times for the quarter ended September 30, 2016..

 

Dividends

 

In September, 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 third quarter 2016, which was paid on October 14, 2016 to shareholders of records as of October 5, 2016.

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

11

 

Spotlight on Leasing - Quarter in Review

 

Consolidated Commercial Leasing Summary

 

The Company had another successful quarter of leasing with solid activity in the Core and Waterfront portfolios.

 

Portfolio Summary

 

		9/30/2016		6/30/16		3/31/16		12/31/15
Number of buildings		207		212		215		217
Total square feet		23,355,409		23,463,605		23,974,930		24,211,880
Square feet leased		20,473,696		20,342,158		20,910,999		20,865,233
Square feet vacant		2,881,713		3,121,447		3,063,931		3,346,647
Number of tenants		1,490		1,542		1,588		1,611

 

Summary of Leasing Transaction Activity

 

For the three months ended September 30, 2016

See detail on pages 34-35

 

																Wtd.			Wtd. Avg.
																Avg.			Costs Per
		Number of		Total		Sq. Ft.		Sq. Ft. Renewed		Average		Median		Weighted Avg.		Base			Sq. Ft.
		Transaction		Sq. Ft.		New Leases		and Other Retained		Sq. Ft.		Sq. Ft.		Term (Yrs)		Rent			Per Year
Core		25		216,205		12,877		203,328		8,648		3,515		3.3		$	29.17		$	3.47
Waterfront		3		150,454		144,185		6,269		50,151		64,414		15.0		44.18			7.37
Flex		23		241,634		102,025		139,609		10,506		8,179		5.0		15.76			3.23
Sub-Total		51		608,293		259,087		349,206		11,927		5,155		6.9		27.56			4.34
Non-Core		11		56,197		30,904		25,293		5,109		2,018		4.1		24.74			5.59
TOTALS		62		664,490		289,991		374,499		10,718		4,898		6.6		$	27.32		$	5.52

 

For the nine months ended September 30, 2016

See detail on pages 38-39

 

																Wtd.			Wtd. Avg.
																Avg.			Costs Per
		Number of		Total		Sq. Ft.		Sq. Ft. Renewed		Average		Median		Weighted Avg.		Base			Sq. Ft.
		Transaction		Sq. Ft.		New Leases		and Other Retained		Sq. Ft.		Sq. Ft.		Term (Yrs)		Rent			Per Year
Core		94		835,827		223,221		612,606		8,892		3,654		5.9		$	28.09		$	4.39
Waterfront		14		829,873		299,964		529,909		59,277		42,302		10.2		39.72			6.81
Flex		66		548,082		192,682		355,400		8,304		5,977		4.6		17.12			2.67
Sub-Total		174		2,213,782		715,867		1,497,915		12,723		5,107		7.2		29.73			4.94
Non-Core		44		235,221		113,851		121,370		5,346		2,693		4.2		23.48			4.01
TOTALS		218		2,449,003		829,718		1,619,285		11,234		4,666		6.9		$	29.13		$	5.33

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

12

 

Spotlight on Leasing - Quarter in Review

 

Consolidated Commercial Leasing Summary (continued)

 

For the three months ended September 30, 2016

 

				Number of		Number of		Number of
		GAAP		Transactions		Transactions		Transactions
		Roll Up/(Down)		Rolled Up		Flat		Rolled Down		Total
New		16.2	%	8		—		1		9
Renew/Other Retained		8.3	%	33		2		1		36
TOTAL		9.1	%	41		2		2		45

 

For the nine months ended September 30, 2016

 

				Number of		Number of		Number of
		GAAP		Transactions		Transactions		Transactions
		Roll Up/(Down)		Rolled Up		Flat		Rolled Down		Total
New		8.4	%	24		—		3		27
Renew/Other Retained		20.2	%	115		4		14		133
TOTAL		19.3	%	139		4		17		160

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

13

 

Spotlight on Leasing - Rollforwards

 

(for the three months ended September 30, 2016)

 

Leasing Activity

See detail on pages 32-33

 

Continued momentum on disposition of non-core assets and positive absorption through leasing activity produced a 100-basis-point gain in space leased during the third quarter.

 

						Sq. Ft.										Net				Sq. Ft.
		Pct. Leased		Inventory		Leased		Inventory		Leased Sq. Ft.		Expiring/		Incoming		Leasing		Inventory		Leased		Pct. Leased
		06/30/16		06/30/16		06/30/16		Acquired/Disposed		Acquired/Disposed		Adj. Sq. Ft.		Sq. Ft.		Activity		9/30/16		9/30/16		9/30/16
Core		88.1	%	9,663,946		8,512,602		—		—		(348,781	)	216,205		(132,576	)	9,663,946		8,380,026		86.7	%
Waterfront		90.9	%	4,317,978		3,923,074		566,215		558,969		(12,173	)	150,454		138,281		4,884,193		4,620,324		94.6	%
Flex		92.1	%	5,207,813		4,794,305		8,400		8,400		(199,962	)	241,634		41,672		5,216,213		4,844,377		92.9	%
Sub-Total		89.8	%	19,189,737		17,229,981		574,615		567,369		(560,916	)	608,293		47,377		19,764,352		17,844,727		90.3	%
Non-Core		72.8	%	4,273,868		3,112,177		(682,811	)	(475,435	)	(63,970	)	56,197		(7,773	)	3,591,057		2,628,969		73.2	%
TOTALS		86.7	%	23,463,605		20,342,158		(108,196	)	91,934		(624,886	)	664,490		39,604		23,355,409		20,473,696		87.7	%

 

Percentage Leased

 

		Pct. Leased		Impact of		Impact of		Pct. Leased
		06/30/16		Portfolio Changes		Leasing Activity		9/30/16
Core		88.1	%	0.0	%	(1.4	)%	86.7	%
Waterfront		90.9	%	0.9	%	3.2	%	94.6	%
Flex		92.1	%	0.0	%	0.8	%	92.9	%
Sub-Total		89.8	%	0.2	%	0.2	%	90.3	%
Non-Core		72.8	%	0.6	%	(0.2	)%	73.2	%
TOTALS		86.7	%	0.8	%	0.2	%	87.7	%

 

“Core”	Long-term hold office properties (excluding Waterfront locations)
“Waterfront”	Office assets located on NJ Hudson River waterfront
“Flex”	Non-office commercial assets, primarily office/flex properties
“Non-Core”	Properties designated for eventual sale/disposition or repositioning

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

14

 

Spotlight on Leasing - Quarter Stats

 

Summary of Lease Expirations

 

(as of September 30, 2016)

 

See detail on pages 40-47

 

				Net Rentable		Pct of Leased		Annualized			Avg.			Pct of
		Number of		Area of		Sq. Ft.		Base Rental			Annualized			Annualized
Year of		Leases		Leases		Leases		Revenue			Base Rent			Base Rent
Expiration		Expiring		Expiring		Expiring		Expiring			Per Sq. Ft.			Expiring
October 1-December 31, 2016		74		361,208		1.8		$	8,260,369		$	22.87		1.7
2017		311		2,895,800		14.4		74,939,164			25.88			15.2
2018		310		2,967,162		14.7		68,911,082			23.22			13.9
2019		271		2,600,433		12.9		57,620,541			23.16			11.7
2020		212		1,750,636		8.7		39,318,855			22.46			8.0
2021 & beyond		583		9,530,512		47.5		244,408,223			25.64			49.5
TOTALS		1,761		20,105,751		100.0		$	493,458,234		$	24.54		100.0

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended September 30, 2016

 

15