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NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings assigns a 'BBB' rating to the $300 million 4.5% senior unsecured notes due 2022 issued by Mack-Cali Realty, L.P., the operating partnership of Mack-Cali Realty Corporation (NYSE: CLI). The notes were issued at 99.801% of par to yield 4.525%.

Net proceeds from the offering are expected to be used for general corporate purposes including the repayment of amounts outstanding on the company's unsecured revolving credit facility and the purchasing and retiring of other outstanding debt securities.

Fitch currently rates the company as follows:

Mack-Cali Realty Corporation

--Issuer Default Rating (IDR) 'BBB';

Mack-Cali Realty, L.P.

--IDR 'BBB';

--Unsecured revolving credit facility 'BBB';

--Senior unsecured notes 'BBB'.

The Rating Outlook is Stable.

The ratings reflect Mack-Cali's strong fixed charge coverage, low leverage, solid liquidity position and granular tenant base. Fitch expects the credit profile to remain consistent with the 'BBB' ratings pro forma for the unsecured note issuance. Credit concerns include the lack of geographic diversification and exposure to markets with weak fundamentals, most notably the suburban office market.

Fixed charge coverage was 2.5 times (x) for the trailing 12 months (TTM) ended Dec. 31, 2011, compared with 2.3x and 2.5x during 2010 and 2009, respectively. Fitch projects fixed charge coverage will weaken modestly pro forma for the unsecured note issuance until the proceeds are utilized fully to repay or retire other debt obligations outstanding. Fitch defines fixed charge coverage 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.

Mack-Cali's leverage is relatively low for the rating category at 4.8x as of Dec. 31, 2011 as compared to 5.1x and 4.8x for 2010 and 2009, respectively. As a result of the indicative use of proceeds, Fitch does not anticipate the issuance having a material impact on leverage. Fitch projects leverage will rise modestly above 5.0x through 2013, assuming the challenging operating environment continues to negatively impact recurring operating EBITDA.

Mack-Cali's liquidity coverage is solid for the rating pro forma for the issuance at 1.6x. Liquidity coverage is defined as sources of liquidity (unrestricted cash, availability under the company's unsecured 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).

Unencumbered asset coverage of unsecured debt is solid for the rating as the majority of Mack-Cali's assets are unencumbered providing ample contingent liquidity. Coverage as of Dec. 31, 2011 was 2.5x though Fitch estimates it will weaken modestly pro forma for the issuance and repayment of 2012 unsecured debt maturities including amounts outstanding on the credit facility.

Mack-Cali's solid credit metrics are partially offset by the challenging leasing environment resulting from the geographic concentration in suburban office markets that have weak fundamentals. Same-store net operating income (SSNOI) declined 3% in 2011, the second straight year of decline. Further, operating fundamentals were worse than the reported results as SSNOI was positively impacted by one-time tax reversals.

Economic headwinds, high unemployment and high market vacancies have diminished the company's ability to maintain occupancy and drive rental growth. Although newly signed leases for the year ended Dec. 31, 2011 were modestly higher than expirations at $23.86 versus $23.21, net effective rents were approximately 14% lower than expiring in-place rents. Additionally, overall portfolio occupancy declined 80 basis points to 88.3% over the same period. Absent a material rebound in underlying market fundamentals, Fitch anticipates that declining SSNOI will continue to negatively impact the company's credit metrics. As of Dec. 31, 2011, New Jersey was the most notable geographic concentration, representing 71.2% of base rental revenue.

The Stable Outlook reflects the company's solid liquidity position that mitigates refinance risk. In addition, Fitch expects leverage and coverage to stay within levels appropriate for the 'BBB' IDR. Further, management remains committed to maintaining conservative credit metrics, mitigating weak suburban office fundamentals.

Although Fitch does not anticipate positive ratings momentum in the near to medium term, the following factors may result in positive momentum on the rating and/or Outlook:

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

--Net debt to recurring operating EBITDA sustaining below 4.5x (as of Dec. 31, 2011 leverage was 4.8x);

--Fixed-charge coverage ratio sustaining above 2.7x (for year ended Dec. 31, 2011, coverage was 2.5x);

--Maintaining a liquidity coverage ratio above 2.0x.

The following factors may result in negative momentum on the rating and/or Outlook:

--Leverage sustaining above 6.0x;

--Fixed-charge coverage sustaining below 2.0x;

--A sustained liquidity shortfall.

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:

--'Criteria for Rating U.S. Equity REITs and REOCs,' Feb. 27, 2012;

--'Corporate Rating Methodology,' Aug. 12, 2011;

--'Parent and Subsidiary Rating Linkage,' Aug. 12, 2011;

--'Recovery Rating and Notching Criteria for Equity REITs,' May 12, 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=671869 ]

Corporate Rating Methodology

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647229 ]

Parent and Subsidiary Rating Linkage

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

Recovery Rating and Notching Criteria for Equity REITs

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=628490 ]

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