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NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings affirms the credit ratings of Mack-Cali Realty Corporation (NYSE: CLI) and Mack-Cali Realty, L.P. (collectively, Mack-Cali) as follows:

Mack-Cali Realty Corporation

--Issuer Default Rating (IDR) at 'BBB'.

Mack-Cali Realty, L.P.

--IDR at 'BBB';

--Unsecured revolving credit facility at 'BBB';

--Senior unsecured notes at 'BBB'.

In addition, Fitch has withdrawn the 'BB+' preferred stock rating as the company has called all preferred stock outstanding for redemption. The preferred stock rating is no longer considered by Fitch to be relevant to the agency's coverage.

The Rating Outlook is Stable.

The rating affirmations reflect the strength of Mack-Cali's credit metrics supported by a solid liquidity position and granular tenant base. Strong credit metrics include low leverage and strong fixed-charge coverage, which are expected to remain consistent with the 'BBB' ratings. Credit concerns include the lack of geographic diversification and exposure to markets with weak fundamentals, most notably including the suburban office market.

Fixed-charge coverage, calculated as recurring operating EBITDA less Fitch's estimate of routine capital expenditures less straight-line rent adjustments, divided by total interest incurred and preferred distributions, was 2.5 times (x) for the 12 months ended Sept. 30, 2011, compared with 2.3x and 2.5x during 2010 and 2009, respectively. Fitch projects that over the next 12-to-24 months, fixed charge coverage will remain in the mid 2x range, consistent with the assigned ratings.

Mack-Cali's leverage, defined as net debt to recurring operating EBITDA, is relatively low for the rating category at 4.6x as of Sept. 30, 2011 (5.0x and 4.8x as of Dec. 31, 2010 and Dec. 31, 2009, respectively). Fitch anticipates that leverage may rise slightly above 5.0x in 2013, assuming that continued challenges in the suburban office market negatively impact recurring operating EBITDA and the company does not raise common equity to delever. The forecasted leverage is consistent with a 'BBB' rating.

Mack-Cali's liquidity coverage ratio is adequate for the rating category, driven by availability on the company's unsecured credit facility. Sources of liquidity (unrestricted cash, availability under its unsecured revolving credit facility, and retained cash flows from operating activities after dividend payments) divided by uses of liquidity (debt maturities, projected routine capital expenditures and development commitments) result in a liquidity coverage ratio of 1.2x for the period from Oct. 1, 2011 to Dec. 31, 2013. Additionally, the company's debt maturities are sufficiently laddered with no more than 18% coming due in any one year.

The majority of Mack-Cali's assets are unencumbered, providing a large asset pool for contingent liquidity. Unencumbered asset coverage of unsecured debt (calculated as unencumbered annualized trailing six-months net operating income as of Sept. 30 2011, divided by a 9% capitalization rate, divided by unsecured debt) results in coverage of 2.9x as of Sept. 30, 2011.

Separately, Mack-Cali's portfolio benefits from a granular tenant base consisting of over 2,000 tenants, the largest of which represented just 2.1% of annualized base rent as of Sept. 30, 2011. The top ten tenants represented 14.4% of annualized base rent.

Mack-Cali's solid credit metrics are partially offset by the challenging leasing environment resulting from Mack-Cali's geographic concentration in suburban office markets that have weak fundamentals and are expected to remain challenged in the near- to medium-term. New Jersey is Mack-Cali's most notable geographic concentration, representing 71.1% of base rental revenue as of Sept. 30, 2011.

Economic headwinds, persistently high unemployment, high market vacancies and consolidation amongst market tenants have diminished the company's ability to maintain occupancy and drive rental growth. Prior to the most recently ended quarter, Mack-Cali reported seven straight quarters of declining same-store net operating income. In addition, same-store occupancy has declined to 88.1% as of third-quarter 2011 (3Q'11), from 89.0% at 3Q'10 and leasing costs remain high on an absolute level.

The Stable Outlook reflects management's commitment to maintain conservative metrics which offset continued weak suburban office fundamentals. The Stable Outlook is further supported by Mack-Cali's sufficient liquidity ratios and solid credit metrics.

Although Fitch does not anticipate positive ratings momentum in the near- to medium-term, the following factors may have a positive impact on Mack-Cali's ratings and/or Outlook:

--Sustaining positive same-store net operating income growth for several consecutive quarters;

--Maintaining a liquidity coverage ratio above 2.0x;

--Net debt to recurring operating EBITDA ratio sustaining below 4.5x (as of Sept. 30, 2011 the company's leverage was 4.6x);

--Fixed-charge coverage ratio sustaining above 2.7x (for the trailing 12 months ended Sept. 30, 2011, coverage was 2.5x).

The following factors may have a negative impact on Mack-Cali's ratings and/or Outlook:

--Leverage ratio sustaining above 6.0x;

--Fixed-charge coverage ratio sustaining below 2.0x;

--A sustained liquidity shortfall.

Mack-Cali Realty Corporation is a real estate investment trust (REIT) headquartered in Edison, New Jersey. As of Sept. 30, 2011, Mack-Cali had $5.7 billion in undepreciated book assets, a common equity capitalization of $2.7 billion and a total market capitalization of $4.6 billion. As of Sept. 30, 2011, Mack-Cali owned a portfolio of 278 predominantly suburban office buildings totaling 32.4 million square feet of leasable space.

Additional information is available at '[ www.fitchratings.com ]'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--Corporate Rating Methodology, August 12, 2011.

--Parent and Subsidiary Rating Linkage, August 12, 2011.

--Recovery Rating and Notching Criteria for REITs, May 12, 2011.

--Criteria for Rating U.S. Equity REITs and REOCs, March 15, 2011.

Applicable Criteria and Related Research:

Criteria for Rating U.S. Equity REITs and REOCs

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=610687 ]

Parent and Subsidiary Rating Linkage

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647210 ]

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