Mack-Cali Bonds are Downgraded

CRANFORD, NJ—Standard & Poor’s has changed its outlook on Mack-Cali Realty Corp. and its operating partnership Mack-Cali Realty LP. At the same time, outstanding ratings on both entities were affirmed.

The locally based REIT is in the process of acquiring Dallas-based Prentiss Properties Trust, and the rating affirmation acknowledges that the acquisition will improve the company’s geographic reach and market position, in effect creating a national operating platform. The post-merger organization will be capitalized to the tune of $5.8 million with a portfolio of 48 million sf of office and industrial properties in 18 markets.

For the short term, however, Mack-Cali’s downgrade from stable to negative reflects concerns about its ability to shift smoothly to a decentralized national operating platform; its potential to grow more rapidly and to use the new, larger platform for further consolidations; and its reduced financial capability because of increased encumbrance levels.