EDISON, NJ-Despite the lagging economy, Mack-Cali posted positive leasing numbers in the fourth quarter of 2010, according to its fourth quarter earnings report. For the 12 months ended December 31, the locally based REIT executed 540 leases totaling 4,433,752 square feet, compared with 3.2 million square feet in 2009. The in-service portfolio was 89.1% leased at the end of the quarter, compared to 89% leased at the end of the third quarter. The portfolio was 90.1% leased at the end of the fourth quarter of 2009. “Albeit a challenging year, 2010 was a good one,” said Mitchell E. Hersh, president and CEO. “By year-end we did see some significant leasing activity in both renewals and new tenants.”
During the fourth quarter, Mack-Cali executed 140 leases including: Sumitomo Mitsui Banking Corp., which signed for 71,153 square feet at Harborside Financial Center Plaza 1 and Harborside Plaza 2 in Jersey City; Verizon New Jersey’s five year-renewal for the entire 95,000-square-foot 600 Horizon Dr. in Hamilton Twp., NJ; and Novo Nordisk’s new lease for 48,478 square feet at 500 College Rd. East in Plainsboro, NJ.
However, leases remain challenging, Hersh said. Technology that encourages telecommuting, slow job growth and the obsolescence of some buildings have led to a slowdown thus far in 2011. “Activity has been off to date,” he noted. “Space calls have been down from one year ago.”
Average rents rolled down by 7.7% in the fourth quarter, though that is an improvement over a 12% decline in previous quarter, indicating the market is stabilizing, the company said. Subleases comprised 13% of total vacancy, down from 20% a year ago. “We do have a challenge ahead of us, but despite this environment our portfolio outperforms most of the others,” Hersh said.
For the year, FFO available to common shareholders equaled $251.7 million, compared to $274.8 million at year-end 2009. Net income for 2010 was $52.9 million, up from $52.6 million in the prior year. The company ended with $32.5 million in free cash flow, and Mack-Cali remains open to acquisitions. “I’m not sure when that will happen,” Hersh acknowledged. “But we will be ready with the human capital--the talent--and the financial capital when that happens.”
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