Exhibit 99.1

 

 

 

INDEX

 

	PAGE(S)
Company Today	3-4
Strategy	5
2017 MD&A and Lease Expirations	6 - 7
Economic Incentives and Programs	8
Spotlight on:
Results	9 - 11
Leasing	12 - 20
Earnings	21 - 31
Financials	32 - 34
Portfolio	35
Details on:
Earnings	36
Financials	37 - 41
Portfolio	42 - 44
Company Information	45 - 46

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

2

 

 

 

REIT publicly traded on NYSE (“CLI”)

 

Substantial development opportunities for multi-family

 

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

 

 

Monaco, Jersey City, NJ (Full interest acquired April 2017)		Portside at East Pier, East Boston, MA (Full interest acquired April 2016)
51 John F Kennedy Parkway, Short Hills, NJ (Acquired March 2017)		111 River Street, Hoboken, NJ (Acquired July 2016)

 

* Includes Jersey City Urby at Harborside in lease-up.

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

3

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

4

 

 

Mack-Cali has crafted a strategy using its existing platform that strives to achieve the highest possible returns while maintaining a reasonable level of managed risk for its shareholders.

 

This strategy includes the following elements that will be refined each quarter:

 

·                        Own and operate the best assets in carefully targeted markets-focused on the Hudson River Waterfront and transit-based locations adjacent to high-end executive housing or locations attracting employers that draw upon millennial talent

 

·                        Identify and operate in markets where we can scale and operate a full service real estate platform, maximizing our market intelligence and our ability to see all deal flow in these markets which allows us to buy, sell, lease, and invest capital at the highest levels

 

·                        Target the best multi-family or office building in our markets that can increase cash flow through all economic cycles

 

·                        Align with joint venture partners that have a long term view and seek to benefit from our expertise

 

·                        Create a strong balance sheet to allow us to access capital at the lowest cost which will appropriately manage our overall debt levels

 

·                        Maintaining a culture that appreciates every single one of our employees for their unique abilities

 

·                        Operate our business with integrity and fair dealing allowing us to be the choice landlord or counterparty in our market

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

5

 

 

Office revenue is in line with our expectations from price, terms and concessions. Our only drawback this past quarter was that tenants are taking longer to commit to new space; therefore our speculative revenue is one quarter behind target.  After quarter-end, we have seen a large increase in the number of tours from tenants who are also applying for the NJ incentive package.

 

Multi-family revenue is higher than projected as we are leasing up our newly delivered units faster than projected at higher than pro forma rents.  The concessions are normal in all our markets and lighter than projected in Jersey City.  We expect to stabilize all three of our lease-up properties (Quarry Place, Chase II, and Urby), of 1,162 units by the end of the third quarter.

 

Our expenses continue to decline as a percentage of revenue as we reduce headcount and operate our properties more efficiently.  The net result of our operation is that our margins continue to improve to the low 60% range on core office and stabilized multi-family.

 

Regarding dispositions, we continue to market and sell the properties in the portfolio we deem non-core.  Today, we have on the market $600MM assets of non-core office and flex.  We expect to award several deals to buyers in the second quarter and close them in the third quarter.  We will continue to add new assets for sale each quarter.  We expect to be done with our dispositions no later than first quarter 2018.

 

Regarding acquisitions, we have none planned at this time.

 

Our balance sheet is our number one focus as we go forward.  We believe we now have appropriately handled all aspects of the balance sheet regarding maturities, term, and rate.  We view our 3.8 times interest coverage as being a key metric to judge us by.  We believe the strength of this metric and the numerous sourcing of funding we have used (agencies, insurance company, banks, CMBS and unsecured debt) and could use as being crucial to our success.

 

We view our net debt to EBITDA as being a complex number for us based on our operating plan as we are running a growth business (RRT) and a transforming business (Mack-Cali office).

 

For the first quarter annualized, we were at 8.5 times for the combined company. At quarter end, we had the debt, but only one month of the EBITDA, from our $367 million Short Hills/Madison acquisition and had not yet sold the non-core assets to match the purchase.  Considering those two adjustments, net debt to EBITDA for the quarter would have been 7.8 times, similar to where we were at year end 2016.

 

Further, the RRT construction in process is producing no EBITDA. Removing the debt associated with the CIP, net debt to EBITDA would have been 7.4 times for the total company or 7.2 times if we look at the office company alone.

 

Although still higher than where we want to be, we see a path, through a combination of additional sales, increased office EBITDA, other joint venture or other equity, to a more comfortable ratio of below 7 times for the office company.

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

6

 

 

Significant progress made on 2017 expirations during the first quarter:

 

·                  Remaining 2017 expirations aggregate 1.4 million square feet (net of 453,000 square feet in properties we plan to sell/repurpose):

 

·                  Represent 7.9% of the Core/Waterfront/Flex portfolio;

 

·                  445,000 SF remaining on Waterfront, with increasing tenant interest;

 

·                  Average lease expirations on the Waterfront have in-place rental rates at approximately $35 per square-foot.  Similar space in adjacent buildings have leased within the past year at average in-place rental rates of $45 per square-foot by us and our competitors.  It is expected that the lease-up of this space is a “when not if” scenario.  Tour activity has picked up, and Mack-Cali continues to add amenities to make these the buildings of choice in this market;

 

·                  500,543 SF in Flex space, with historically high retention and occupancy rates. We expect no issue in reletting this space at increasing rents;

 

·                  453,365 SF in Urban and Suburban Core properties, represents a manageable 6.6% of Core portfolio. The product quality has drastically increased in this category as we removed the non-core buildings through sales.  We should retain a significant amount of this space at increasing rents and replace the remainder with new tenants.

 

·                  Almost half of remaining 2017 expirations do not expire until the fourth quarter.

 

·                  Moving forward, our goal in re-shaping the portfolio through sales, strategic acquisitions and selective leasing, is to generate longer leases with less cost per square-foot per year and a more manageable lease expiration schedule of no more than 12% each year.

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

7

 

 

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 1,000 sf, 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 March 31, 2017

 

8

 

Spotlight on Results

 

Operating Highlights

 

Net income available to common shareholders for the quarter ended March 31, 2017 amounted to $19.9 million, or $0.11 per share, as compared to $62.2 million, or $0.69 per share, for the quarter ended March 31, 2016. 

 

Funds from operations (FFO) for the quarter ended March 31, 2017 amounted to $55.9 million, or $0.56 per share, as compared to $48.2 million, or $0.48 per share, for the quarter ended March 31, 2016. 

 

For the first quarter 2017, Core FFO was $0.56 per share after adjusting for certain items.  The quarter’s Core FFO per share of $0.56 increased 14 percent from the same quarter last year primarily due to increased base rents in 2017 and interest expense savings from refinancing of high rate debt.

 

Adjusted funds from operations (AFFO) increased by $20.2 million to $38.3 million for the quarter ended March 31, 2017, as compared to $18.1 million for the comparable period in 2016.

 

Mack-Cali’s consolidated Core, Waterfront and Flex properties were 90.4 percent leased at March 31, 2017, as compared to 90.6 percent leased at December 31, 2016 and 89.1 percent leased at December 31, 2015.

 

For the quarter ended March 31, 2017, the Company executed 54 leases at its consolidated in-service commercial portfolio totaling 362,075 square feet. Of these totals, 15 percent were for new leases and 85 percent were for lease renewals and other tenant retention transactions.  Rental rate roll up for first quarter 2017 transactions in the Company’s Core, Waterfront and Flex properties was 1.2 percent on a cash basis and 11.4 percent on a GAAP basis. 

 

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

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

9

 

Spotlight on Results

 

Office Property Acquisitions

(dollars in thousands)

 

For the quarter ended March 31, 2017

 

Rentable

Acquisition

# of

Square

Purchase

Date

Property/Address

Location

Buildings

Feet

Price

01/11/17

Red Bank portfolio

Red Bank, New Jersey

3

279,472

$

27,228

03/06/17

Short Hills/Madison portfolio

Short Hills & Madison, New Jersey

6

1,113,028

367,361

Total Acquisitions:

9

1,392,500

$

394,589

 

Office Property Sales/Dispositions

(dollars in thousands)

 

For the quarter ended March 31, 2017

 

Sale						# of		Rentable		Realized Gains/
Date		Property/Address		Location		Buildings		Square Feet		Unrealized Losses, net
01/30/17		Cranford portfolio		Cranford, New Jersey		6		435,976		$	3,862
01/31/17		440 Route 22 East (a)		Bridgewater, New Jersey		1		198,376		5
02/07/17		3 Independence Way		Princeton, New Jersey		1		111,300		1,639
Totals						8		745,652		$	5,506

 

(a)      The Company recorded a valuation allowance of $7.7 million on this property during the year ended December 31, 2016.

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

10

 

Spotlight on Results

 

Balance Sheet/Capital Markets

 

As of March 31, 2017, the Company had a debt-to-undepreciated assets ratio of 43.8 percent compared to 41.6 percent at December 31, 2016 and 40.4 percent at March 31, 2016.   Net debt to EBITDA for the quarter ended March 31, 2017 was 8.5 times compared to 7.5 times for the quarter ended December 31, 2016.  The Company had an interest coverage ratio of 3.8 times for the quarter ended March 31, 2017 compared to 3.5 times for the quarter ended December 31, 2016 and 3.0 times for the quarter ended March 31, 2016.

 

In January 2017, the Company closed on senior unsecured credit facilities totaling $925 million with a group of 13 lenders, with Wells Fargo Securities, LLC; J.P. Morgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint bookrunners; and Capital One, National Association and U.S. Bank National Association as joint lead arrangers.

 

The credit facilities are comprised of a renewal and extension of the Company’s existing $600 million unsecured revolving facility and a new $325 million unsecured delayed-draw term loan. The $600 million credit facility carries an interest rate equal to LIBOR plus 120 basis points and a facility fee of 25 basis points.  The facility has a term of four years with two six-month extension options.  The new $325 million  term loan was drawn in full by March 31, 2017 and carries an interest rate equal to LIBOR plus 140 basis points and a ticking fee of 25 basis points on any undrawn balance during the first 12 months after closing.  On March 29, 2017, the Company executed interest rate swap arrangements to fix LIBOR with an aggregate average rate of 1.6473% for the swaps and a current aggregate fixed rate of 3.0473% on borrowings under the term loan.  The term loan matures in three years with two one-year extension options.  The interest rate on the revolving credit facility and new term loan and the facility fee on the revolving credit facility are subject to adjustment, on a sliding scale, based upon the Company’s unsecured debt ratings, or at the Company’s option, based on a defined leverage ratio.

 

The credit facilities also contain accordion features providing for expansion of the facilities up to a total of $1.275 billion.

 

On February 27, 2017, Roseland announced the signing of the Rockpoint transaction — a $300 million equity investment that will provide capital to further execute on the objectives of Roseland’s residential business plan.  Highlights of the Rockpoint transaction include:

 

·                  Rockpoint committed to fund $300 million of equity into RRT over the next two years, of which $150 million was funded at the closing on March 10, 2017.

 

·                  Mack-Cali will have the option to fund up to $200 million of equity into RRT after Rockpoint’s commitment is fully funded.

 

·                  RRT received a deemed funded existing equity value at closing of $1.23 billion.

 

Upon full Rockpoint and Mack-Cali funding, pro forma ownership would be approximately 83 percent Mack-Cali and 17 percent Rockpoint.

 

Alterra at Overlook Ridge, Malden and Revere, Massachusetts:  In January, the Company placed a seven-year, $100 million mortgage on the community at an interest-only rate of 3.75 percent.

 

Dividends

 

In March, 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 first quarter 2017, which was paid on April 13, 2017 to shareholders of record as of April 5, 2017.  The Company’s Core FFO dividend payout ratio for the quarter was 26.9 percent.

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

11

 

Spotlight on Leasing - Quarter in Review

 

Consolidated Commercial Leasing Summary

 

Portfolio Summary

 

		3/31/17		12/31/16		9/30/16		6/30/16		3/31/16
Number of buildings		198		190		207		212		215
Total square feet		21,448,339		20,951,376		23,355,409		23,463,605		23,974,930
Square feet leased		18,803,631		18,756,661		20,473,696		20,342,158		20,910,999
Square feet vacant		2,644,708		2,194,715		2,881,713		3,121,447		3,063,931
Number of tenants		1,191		1,253		1,490		1,542		1,588

 

Summary of Leasing Transaction Activity

 

For the three months ended March 31, 2017

 

														Wtd.		Wtd. Avg.
														Avg.		Costs Per
		Number of		Total		Sq. Ft.		Sq. Ft. Renewed		Average		Weighted Avg.		Base		Sq. Ft.
		Transactions		Sq. Ft.		New Leases		and Other Retained		Sq. Ft.		Term (Yrs)		Rent ($)		Per Year ($)
Waterfront		1		38,134		—		38,134		38,134		6.4		44.76		6.43
Urban Core		15		39,949		9,436		30,513		2,663		3.5		33.08		4.02
Suburban Core		5		21,307		16,590		4,717		4,261		3.2		25.63		5.58
Flex		21		217,881		20,991		196,890		10,375		4.3		16.79		1.60
Sub-Total		42		317,271		47,017		270,254		7,554		4.4		22.80		3.49
Non-Core		12		44,804		6,195		38,609		3,734		4.0		28.20		2.64
TOTALS		54		362,075		53,212		308,863		6,705		4.3		23.47		2.87

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

12

 

Spotlight on Leasing - Quarter in Review

 

Consolidated Commercial Leasing Summary

(continued)

 

For the three months ended March 31, 2017

 

				Number of		Number of		Number of
		GAAP		Transactions		Transactions		Transactions
		Roll Up/(Down)		Rolled Up		Flat		Rolled Down		Total
New		8.8	%	7		—		—		7
Renew/Other Retained		11.8	%	33		1		1		35
TOTAL		11.6	%	40		1		1		42

 

Core, Waterfront and Flex Properties Only

 

For the three months ended March 31, 2017

 

				Number of		Number of		Number of
		GAAP		Transactions		Transactions		Transactions
		Roll Up/(Down)		Rolled Up		Flat		Rolled Down		Total
New		9.0	%	6		—		—		6
Renew/Other Retained		11.5	%	25		1		1		27
TOTAL		11.4	%	31		1		1		33

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

13

 

Spotlight on Leasing - Rental Rate Effects

 

The following schedule sets forth the percentage change in GAAP rent for transactions signed within the period.  Transactions signed for space which has been vacant for longer than 12 months are excluded.

 

				1st Quarter, 2017				4th Quarter, 2016				3rd Quarter, 2016				2nd Quarter, 2016
		Transaction Type		Sq. Ft.		Pct. Change		Sq. Ft.		Pct. Change		Sq. Ft.		Pct. Change		Sq. Ft.		Pct. Change
Waterfront
		New		—		N/A		27,684		10.0	%	—		N/A		1,829		23.3	%
		Renew/Other Retained		38,134		(0.6	)%	—		N/A		—		N/A		125,916		70.6	%
		Weighted Average		38,134		(0.6	)%	27,684		10.0	%	—		N/A		127,745		69.8	%
Urban Core
		New		1,468		11.8	%	1,643		17.3	%	600		13.7	%	1,322		10.6	%
		Renew/Other Retained		25,916		12.0	%	31,812		23.3	%	6,295		15.7	%	36,745		18.6	%
		Weighted Average		27,384		12.0	%	33,455		23.0	%	6,895		15.5	%	38,067		18.3	%
Suburban Core
		New		5,310		2.5	%	1,027		(6.6	)%	—		N/A		—		N/A
		Renew/Other Retained		4,717		17.7	%	20,339		8.3	%	106,962		3.9	%	125,416		5.7	%
		Weighted Average		10,027		10.1	%	21,366		7.7	%	106,962		3.9	%	125,416		5.7	%
Flex Parks
		New		12,599		12.8	%	53,794		8.9	%	62,774		17.1	%	38,319		8.8	%
		Renew/Other Retained		196,243		18.6	%	58,838		10.0	%	142,604		10.3	%	111,891		6.9	%
		Weighted Average		208,842		18.2	%	112,632		9.5	%	205,378		12.0	%	150,210		7.4	%
Sub-Total
		New		19,377		9.0	%	84,148		9.5	%	63,374		17.0	%	41,470		10.1	%
		Renew/Other Retained		265,010		11.5	%	110,989		14.2	%	255,861		6.9	%	399,968		34.3	%
		Weighted Average		284,387		11.4	%	195,137		12.1	%	319,235		8.1	%	441,438		32.4	%
Non-Core
		New		1,465		7.0	%	1,021		41.7	%	3,538		7.0	%	15,337		(13.2	)%
		Renew/Other Retained		36,765		13.4	%	47,297		11.1	%	92,151		11.6	%	81,787		8.5	%
		Weighted Average		38,230		13.1	%	48,318		11.6	%	95,689		11.5	%	97,124		4.7	%
TOTAL
		New		20,842		8.8	%	85,169		9.8	%	66,912		16.2	%	56,807		2.2	%
		Renew/Other Retained		301,775		11.8	%	158,286		13.3	%	348,012		8.3	%	481,755		29.9	%
		Weighted Average		322,617		11.6	%	243,455		12.0	%	414,924		9.1	%	538,562		27.3	%

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

14

 

Spotlight on Leasing - Rollforwards

 

(for the three months ended March 31, 2017)

 

Leasing Activity

 

						Sq. Ft.						Inventory		Leased Sq. Ft.						Net				Sq. Ft.
		Pct. Leased		Inventory		Leased		Inventory		Leased Sq. Ft.		Acquired/		Acquired/		Expiring/		Incoming		Leasing		Inventory		Leased		Pct. Leased
		12/31/16		12/31/16		12/31/16		Reclassed		Reclassed		Disposed		Disposed		Adj. Sq. Ft.		Sq. Ft.		Activity		3/31/17		3/31/17		3/31/17
Waterfront		94.4	%	4,884,193		4,608,926		—		—		—		—		(61,889	)	38,134		(23,755	)	4,884,193		4,585,171		93.9	%
Core		87.0	%	8,893,852		7,738,170		(8,893,852	)	(7,738,170	)
Urban Core				—		—		1,992,454		1,804,605		580,937		575,691		(145,779	)	39,949		(105,830	)	2,573,391		2,274,466		88.4	%
Suburban Core				—		—		3,482,157		3,130,045		811,563		563,798		(18,493	)	21,307		2,814		4,293,720		3,696,657		86.1	%
Flex		93.1	%	5,216,213		4,855,896		(5,216,213	)	(4,855,896	)
Flex Parks				—		—		5,887,938		5,476,059		—		—		(311,229	)	217,881		(93,348	)	5,887,938		5,382,711		91.4	%
Sub-Totals		90.6	%	18,994,258		17,202,992		(2,747,516	)	(2,183,357	)	1,392,500		1,139,489		(537,390	)	317,271		(220,119	)	17,639,242		15,939,005		90.4	%
Non-Core		79.7	%	1,950,153		1,553,669		2,747,516		2,183,357		(888,572	)	(658,950	)	(258,254	)	44,804		(213,450	)	3,809,097		2,864,626		75.2	%
TOTALS		89.6	%	20,944,411		18,756,661		—		—		503,928		480,539		(795,644	)	362,075		(433,569	)	21,448,339		18,803,631		87.7	%

 

Percentage Leased

 

		Pct. Leased		Impact of		Impact of		Pct
		12/31/16		Acquisition/		Leasing		Leased
		After Inventory Reclassed		Disposition		Activity		3/31/17
Waterfront		94.4	%	0.0	%	(0.5	)%	93.9	%
Urban Core		90.6	%	3.1	%	(5.3	)%	88.4	%
Suburban Core		89.9	%	(4.1	)%	0.3	%	86.1	%
Flex Parks		93.0	%	0.0	%	(1.6	)%	91.4	%
Sub-Totals		92.4	%	(0.7	)%	(1.3	)%	90.4	%
Non-Core		79.6	%	0.2	%	(4.6	)%	75.2	%
TOTALS		89.6	%	0.2	%	(2.1	)%	87.7	%

 

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

 

Mack-Cali Realty Corporation Supplemental Operating and Financial Data for the Quarter Ended March 31, 2017

 

15