EDISON, NJ-Despite political turmoil and conservative business decisions, Mack-Cali is poised for growth, president and CEO Mitchell E. Hersh said at the Citi 2011 Global Property CEO conference, being held March 13 to 16 at the Westin Diplomat Hotel in Hollywood, FL.
Recent events, including last week’s earthquake and tsunami in Japan, ongoing turmoil in the Middle East and resulting rising fuel prices are keeping job growth down, Hersh reported. “In general, there is still an uncertain and unclear attitude among CEOs,” Hersh said. “They are reluctant to add employment. We see an attitude of doing more with less.”
Leasing was slowed in January due to the weather, and Hersh noted that tenants are opting to remain in place rather than relocate, if possible. Retention rates have been in the 60% to 70% range, he reported, particularly strong given consolidation in the pharmaceutical and biomedical industries. “Caution is the word right now,” Hersh said.
Mack-Cali spent 2010 deleveraging and raising capital to prepare for future growth, particularly in New York City and Washington, DC. The company is ready to acquire properties, but banks are still slow to sell some of their projects because of greater oversight. “From a liquidity perspective, we have enormous capacity,” underwritten by a $600-million revolver and other sources Hersh said. “However, the investment opportunities are very limited unless you taking on repositioning value-added properties.”
Looking ahead, the company is planning to sell the bottom tier of its assets when they are fully leased, and--further out--it is considering some strategic ventures with successful operators.
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