Press Release

Mack-Cali Realty Corporation Announces Second Quarter Results

Company Release - 7/22/2015 7:06 AM ET

EDISON, N.J., July 22, 2015 /PRNewswire/ -- 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 million 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 ended 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 record 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

 

Contact:      

Michael J. DeMarco                    

Anthony Krug                       

Deidre Crockett


President and                               

Chief Financial Officer         

Investor Relations


Chief Operating Officer             

(732) 590-1030                         

(732) 590-1025


(732) 590-1589



 

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SOURCE Mack-Cali Realty Corporation