or Mack-Cali, 2007 was a year of sound accomplish-
ment. Our Company improved occupancies, enhanced and extended its Northeast presence, and delivered solid financial results. And we remained focused on our core business—providing our tenants with superior work environments.
The year began with a continuation of intense investor appetite for commercial real estate and with extensive merger and buyout activity. But as 2007 progressed, the effects of the subprime lending crisis that hit the housing sector earlier in the year began to spill over to commercial real estate, and the investment sales market and transaction activity cooled as the markets felt the effects of tightening lending standards and reduced liquidity. These conditions have contributed to a great deal of economic uncertainty. This uncertainty, along with a slowing economy, naturally causes a slowing of strategic decision-making on the part of office space users.
Mack-Cali has always adhered to conservative financial principles of modest leverage, strong debt service coverage ratios, and a high ratio of unencumbered assets. Combined with our other strengths—a well-leased portfolio, high-credit-quality tenants and superior assets—these principles have helped us succeed in both strong and weak economic conditions.

Refining Our Portfolio
Our Company's overall corporate strategy is to expand our critical mass in high-barrier-to-entry markets in the Northeast and Mid-Atlantic regions. Mack-Cali's vast market knowledge, deep relationships, and almost 60 years of experience in these core markets allow us to make smart strategic decisions, better identify and serve our tenant's critical needs, increase operating efficiencies, and pursue opportunities for growth.
During the year, we continued to refine our property portfolio, and extended our reach into a significant new market. We added five New Jersey properties to our holdings through both acquisitions and development. But clearly our most significant transaction in 2007 was our acquisition of interests in 125 Broad Street, marking our entrance into the adjacent downtown Manhattan market. We acquired a 40 percent ownership interest, or 524,500 square feet, in this stunning 40-story property from SL Green for $273 million. The 15 floors we own at the property are 100 percent leased to blue-chip tenants such as Citigroup and Oppenheimer & Co., at rents well below market—offering significant upside potential.
We believe that 125 Broad Street provides us with an excellent starting point in the attractive downtown market.