Mack Cali Realty : Announces Third Quarter 2016 Results

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Net income (loss) of $(0.10) per diluted share for the quarter;

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Funds from Operations (FFO) per diluted share increased 17.6% to $0.60; with Core FFO growth of 16.7% to $0.56 for the quarter;

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Increased rental rates by 9.1% on a GAAP basis and 2.3% on a cash basis;

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Overall portfolio 87.7% leased at quarter end; a 2.2% improvement over third quarter 2015;

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Core/Waterfront/Flex properties 90.3% leased at quarter end;

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664,000 square feet leased in third quarter;

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Acquired 111 River Street, a 566,000 square-foot office property in Hoboken, NJ for $235 million;

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Completed $465 million in property sales year-to-date;

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Purchased $114.9 million of its 7.75% bonds due August 2019;

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Declared $0.15 per share quarterly common stock dividend;

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Increased 2016 Core FFO guidance of $2.14 to $2.16; and

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Introduced 2017 FFO guidance of $2.25 to $2.40 per diluted share.

Michael J. DeMarco, president, commented 'We continue to successfully execute against our strategic initiatives making meaningful strides across all aspects of the enterprise including improvements in our operations, portfolio composition and capital structure. The progress completed to date gives us the confidence to introduce preliminary 2017 guidance that would again represent meaningful year-over-year growth. While we have made great progress, there are many additional opportunities to extract value. Our singular focus is to position Mack-Cali for improved cash flow and growth over the long term.'

* All per share amounts presented below are on a diluted basis.

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 leased 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.

Mitchell E. Rudin, chief executive officer, commented 'Mack-Cali's repositioning efforts are well underway. Interest in our properties are strong as evidenced by our occupancy gains and lease success year-to-date. We remain keenly focused on 2017 expirations and feel confident in our ability to minimize exposure to potential vacancies.'

In July, the Company purchased a 566,000 square-foot class A office asset on the Hudson River waterfront in Hoboken, NJ, for approximately $235 million.

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.

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 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.

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.