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EXHIBIT 99.1
M A C K - C A L I R E A L T Y C O R P O R A T I O N
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NEWS RELEASE
For Immediate Release
Contact: Barry Lefkowitz Darren Brandt
Executive Vice President Sloane & Company
and Chief Financial Officer (212) 446-1861
(908) 272-8000
MACK-CALI TO ACQUIRE PRENTISS PROPERTIES IN
$2.3 BILLION TRANSACTION
--Company to Own and Manage Over 75 Million Square Feet of Properties, with
47 Million Square Feet Owned and 28 Million Square Feet Managed for Third
Parties--
--Establishes National Platform--
--Elevates Company to Become Fourth Largest Office REIT--
--Hersh Remains as CEO; William Mack and Michael Prentiss to Become Co-Chairmen;
Thomas August to Become COO--
Cranford, New Jersey--June 28, 2000--Mack-Cali Realty Corporation (NYSE:CLI) and
Prentiss Properties Trust (NYSE:PP) today announced that they have entered into
a definitive plan of merger in which Prentiss will merge into Mack-Cali in a
transaction valued at $2.3 billion. The acquisition of Prentiss, a Dallas-based
real estate investment trust (REIT), will add over 19 million square feet of
primarily office properties to Mack-Cali's property portfolio, increasing the
portfolio by 68% to over 47.7 million square feet.
Upon completion of the transaction, which is expected in the fourth quarter of
2000, subject to shareholder approval, the combined company will have a total
market capitalization of approximately $5.9 billion, and a portfolio of 457
properties in 16 states and the District of Columbia, with over half of the
portfolio in the Northeast. Prentiss's third-party management company, which
manages over 25 million square feet of properties, will also be acquired as part
of the transaction.
Mitchell E. Hersh, chief executive officer of Mack-Cali, who will remain chief
executive officer of the combined company, commented, "This transaction
substantially enhances the growth potential of our companies and establishes a
new company with a highly-attractive national platform. The strategic benefits
of this transaction go far beyond adding diversity, liquidity, scale and
increased operational efficiencies to our combined portfolio. This transaction
is about depth--depth in strategic geographic markets and depth in management.
Prentiss' high-quality assets not only provide Mack-Cali entry into new markets
like Chicago, but also add greater depth in high-barrier-to-entry markets like
San Francisco, Washington, DC, and Austin. Further, the transaction adds
highly-respected regional management and senior management to the company, and
will enable us to focus our expanded development and value-added capability in
our core markets."
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Hersh added, "Both companies are confident that the long-term winners in the
real estate industry will be national companies with regional strength that can
provide their customers unparalleled levels of choice and service--this
transaction accomplishes that and much more."
Terms of the Transaction
Under the terms of the transaction, Prentiss common shares will be exchanged for
Mack-Cali common shares at a fixed exchange ratio of 0.956. The exchange ratio
is not subject to change based on changes in the market prices of either
company's common stock and there is no "collar" for the exchange ratio. The
transaction values Prentiss at approximately $2.3 billion based on Mack-Cali's
closing stock price of $27.00 per share on June 27, 2000, including
approximately $1.0 billion of debt and $245 million in preferred equity.
Mack-Cali will issue approximately 36.6 million new common shares in the
transaction.
In exchange, Mack-Cali will acquire Prentiss's entire property and land
portfolio, management team and third-party management business. Prentiss's owned
portfolio includes 191 properties--including 184 operating properties and seven
development properties--totaling 19.3 million square feet of space, including
15.1 million square feet of office space and 4.2 million square feet of
industrial space, and land to develop 2.8 million square feet of space.
Prentiss's properties are located in 10 core markets, including Washington, DC,
Dallas, Austin, San Francisco and suburban Philadelphia--where Mack-Cali
currently owns properties--as well as Chicago and Los Angeles. Leading tenants
of Prentiss Properties include IBM Corporation, Kaiser Foundation Health Plan,
and MCI Telecommunications Corporation.
Acquistion to Create Fourth Largest Office REIT
By total market capitalization, the new company will rank as the fourth largest
office REIT in the country, and will own approximately 47.7 million square feet
of properties and land to develop an additional 13 million square feet of
commercial space, manage 28 million square feet of space for third parties, and
serve over 3,700 tenants.
The size and depth of the combined company will bring Mack-Cali enhanced growth
opportunities and numerous competitive advantages. Highlights of the transaction
include:
. The creation of a national company focused on high growth markets with high
barriers to entry.
. An enhanced position in leading markets such as Washington, DC, Philadelphia,
Dallas and San Francisco.
. Entrance into strategic new markets including Chicago and Southern
California.
. Increased access to capital, liquidity and operating leverage due to greater
size.
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. Improved operating platforms in five major regions with strong regional
management.
. The additional of a significant, revenue-producing third-party leasing,
property management and construction management business.
. Enhanced diversity and quality of earnings.
. The addition of experienced, well-respected real estate entrepreneurs that
complement the existing management team.
. Increased development activities.
. Increased operational efficiencies.
Michael Prentiss to Become Co-Chairman of the Board; Other Management Changes
Announced
Mack-Cali also reported today that while remaining a director, John J. Cali, 81,
chairman of the board of Mack-Cali, will become chairman emeritus and William
L. Mack, director, will be appointed co-chairman of the board with Michael V.
Prentiss, chairman of the board of trustees at Prentiss. Brant B. Cali,
executive vice president, chief operating officer and director, and John R. Cali
executive vice president-development, have decided to pursue other interests and
will not continue to be part of the Company's executive management. However,
John R. Cali will be appointed to board of directors where he will replace Brant
B. Cali, who has resigned as a director of the company. John R. Cali will also
serve on the executive committee of the board. The Cali family's stock holdings
will remain invested in Mack-Cali.
Under the terms of the Prentiss transaction, Mack-Cali's board of directors will
increase from 13 to 14 members. Mr. Prentiss will also serve as a member of the
board's executive and investment committees. Thomas A. August, president and
chief executive officer of Prentiss, will become chief operating officer.
Mack-Cali's president, Timothy M. Jones, its executive vice president and chief
financial officer, Barry Lefkowitz, and its executive vice president, general
counsel and secretary, Roger W. Thomas, will continue to serve in their roles
for the combined company.
Mr. Prentiss commented, "We are thrilled to join with Mack-Cali to further our
shared vision for a 21st century real estate company. Our collective expertise
as industry leading developers and real estate operators offers the promise to
create a unique company, focused on servicing tenants' needs and delivering
shareholder value. We believe combining with a well-regarded, extremely
well-capitalized company like Mack-Cali will offer greatly enhanced growth
opportunities to Prentiss' shareholders, employees and customers." He added, "We
believe in the near term this new company will realize significant multiple
expansion as it executes a focused strategy in its 12 core markets."
Prudential Securities Incorporated is serving as financial advisor to Mack-Cali
and Lazard Freres & Co. LLC is serving as financial advisor to Prentiss for this
transaction. The transaction is structured in order to qualify as a tax-free
merger and will be accounted for using purchase accounting. Mr. Prentiss, an
8.0% shareholder in Prentiss,
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and certain executive officers of both companies have agreed to vote in favor of
the merger agreement.
Mack-Cali Realty Corporation is a fully-integrated, self-administered, self-
managed real estate investment trust (REIT) providing management, leasing,
development, construction and other tenant-related services for its class A real
estate portfolio. Mack-Cali owns or has interests in 266 properties, primarily
office and office/flex buildings, totaling approximately 28.4 million square
feet, located in 12 states and the District of Columbia. The properties, which
are primarily located in the Northeast, enable the Company to provide a full
complement of real estate opportunities to its diverse base of over 2,400
tenants. Additional information on Mack-Cali Realty Corporation is available by
calling the company's investor relations department at 908-272-8000, extension
2484.
Certain information discussed in this press release may constitute
forward-looking statements within the meaning of the Federal Securities law.
Although the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. Forward-looking information is
subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected. Among those risks, trends and
uncertainties are the general economic climate; the supply of and demand for
office, office/flex and industrial/warehouse properties; interest rate levels;
the availability of financing; and other risks associated with the development
and acquisition of properties, including risks that the development may not be
completed on schedule, that the tenants will not take occupancy or pay rent, or
that development or operating costs may be greater than anticipated. For further
information on factors which could impact the Company and the statements
contained herein, reference should be made to the Company's filings with the
Securities and Exchange Commission including quarterly reports on Form 10-Q,
current reports on Form 8-K, and annual reports on Form 10-K.
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