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Mack-Cali Realty's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: CLI

As you'll note from our press release, we did have solid leasing activity, totaling almost 940,000 square feet of lease transactions during the quarter. And that figure included 338,000 square feet of new leases. Our tenant retention was 58.1% of outgoing space, reflecting a continued trend of downsizing and adjustments in businesses that are throughout all of the sectors that we enjoy within our portfolio.

We ended the quarter at 87.6% leased, very slightly down from last quarter's 87.9%. Rent on renewals rolled down this quarter by 3.1% on a cash basis compared to last quarter's 3.7% cash roll down, reflecting the fact that I do believe we're sort of at the bottom of the trough. And now it's just a question of how long it will take to accelerate and increase demand in the service-based economy and add employment.

Remaining lease rollovers for 2012 are just 4.1% of base rent or slightly less than $26 million. Our leasing cost for the quarter were $3.10 per square foot per year, down from last quarter's $3.85 per square foot per year. Again, at the risk of redundancy reflecting the fact that I do believe we are in a trough right now and sort of at the bottom.

Despite a challenging environment, the statistics bear out the fact that our portfolio continues to outperform virtually every market in which we operate. Our lease grades exceed market averages in Northern and Central New Jersey, Westchester, Suburban Philadelphia and even Washington D.C.

Looking at some of the activities during the quarter, as previously announced just a short time ago, we entered into a ground lease with probably one of the most coveted retail tenants, doing business at least in the North East, Wegmans Food Markets. This ground lease will be at a sight that's undeveloped in Hanover Township, New Jersey, Morris County, located at Sylvan Way and Ridgedale Avenue.

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