<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________ to ____________________
Commission file number 333-57103
Mack-Cali Realty, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3315804
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016-3501
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(Address or principal executive office)
(Zip Code)
(908) 272-8000
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(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or such shorter period that the
Registrant was required to file such report) YES X NO and (2) has been
subject to such filing requirements for the past ninety (90) days YES X NO .
<PAGE>
MACK-CALI REALTY, L.P.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
<S> <C>
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998................................................. 4
Consolidated Statements of Operations for the three and nine
month periods ended September 30, 1999 and 1998....................... 5
Consolidated Statement of Changes in Partners' Capital
for the nine months ended September 30, 1999.......................... 6
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998..................................... 7
Notes to Consolidated Financial Statements................................ 8-31
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................. 32-58
Item 3. Quantitative and Qualitative Disclosures about Market Risk................ 59
PART II OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings......................................................... 60
Item 2. Changes in Securities and Use of Proceeds................................. 60
Item 3. Defaults Upon Senior Securities........................................... 60
Item 4. Submission of Matters to a Vote of Security Holders....................... 60
Item 5. Other Information......................................................... 60
Item 6. Exhibits.................................................................. 61-63
Signatures................................................................ 64
</TABLE>
2
<PAGE>
MACK-CALI REALTY, L.P.
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The accompanying unaudited consolidated balance sheets, statements
of operations, of changes in partners' capital, and of cash flows
and related notes, have been prepared in accordance with generally
accepted accounting principles ("GAAP") for interim financial
information and in conjunction with the rules and regulations of
the Securities and Exchange Commission ("SEC"). Accordingly, they
do not include all of the disclosures required by GAAP for
complete financial statements. The financial statements reflect
all adjustments consisting only of normal, recurring adjustments,
which are, in the opinion of management, necessary for a fair
presentation for the interim periods.
The aforementioned financial statements should be read in
conjunction with the notes to the aforementioned financial
statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations and the financial statements
and notes thereto included in the Operating Partnership's Annual
Report on Form 10-K and Form 10-K/A for the fiscal year ended
December 31, 1998.
The results of operations for the three and nine month periods
ended September 30, 1999 are not necessarily indicative of the
results to be expected for the entire fiscal year or any other
period.
3
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT UNIT AMOUNTS)
================================================================================
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rental property
Land and leasehold interests $ 548,572 $ 510,534
Buildings and improvements 2,966,769 2,887,115
Tenant improvements 98,577 64,464
Furniture, fixtures and equipment 5,865 5,686
- ------------------------------------------------------------------------------------------------------------------
3,619,783 3,467,799
Less - accumulated depreciation and amortization (241,746) (177,934)
- ------------------------------------------------------------------------------------------------------------------
Total rental property 3,378,037 3,289,865
Cash and cash equivalents 1,068 5,809
Investments in unconsolidated joint ventures 95,457 66,508
Unbilled rents receivable 51,356 41,038
Deferred charges and other assets, net 60,700 39,020
Restricted cash 6,184 6,026
Accounts receivable, net of allowance for doubtful accounts
of $918 and $670 5,328 3,928
- ------------------------------------------------------------------------------------------------------------------
Total assets $ 3,598,130 $ 3,452,194
==================================================================================================================
LIABILITIES AND PARTNERS' CAPITAL
- ------------------------------------------------------------------------------------------------------------------
Senior Unsecured Notes $ 782,706 $ --
Revolving credit facilities 249,956 671,600
Mortgages and loans payable 545,567 749,331
Distributions payable 42,488 40,564
Accounts payable and accrued expenses 46,359 33,253
Rents received in advance and security deposits 31,838 29,980
Accrued interest payable 3,238 2,246
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 1,702,152 1,526,974
- ------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
PARTNERS' CAPITAL:
Preferred units, 229,304 and 250,256 units outstanding 235,200 223,330
General partner, 58,390,984 and 57,266,137 common units outstanding 1,437,725 1,387,674
Limited partners, 8,286,464 and 9,086,585 common units outstanding 214,529 305,692
Unit warrants, 2,000,000 and 2,000,000 outstanding 8,524 8,524
- ------------------------------------------------------------------------------------------------------------------
Total partners' capital 1,895,978 1,925,220
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and partners' capital $ 3,598,130 $ 3,452,194
==================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS
4
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
================================================================================
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Base rents $ 118,086 $ 112,976 $ 350,665 $ 311,753
Escalations and recoveries from tenants 14,829 14,182 46,055 36,897
Parking and other 5,112 2,684 12,073 7,502
Equity in earnings of unconsolidated joint ventures 834 324 1,462 419
Interest income 159 728 629 2,187
- ---------------------------------------------------------------------------------------------------------------------------------
Total revenues 139,020 130,894 410,884 358,758
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EXPENSES
- ---------------------------------------------------------------------------------------------------------------------------------
Real estate taxes 14,849 13,488 42,900 35,415
Utilities 11,634 11,300 31,055 28,717
Operating services 16,258 15,807 50,401 44,128
General and administrative 5,897 6,118 19,801 18,708
Depreciation and amortization 22,967 21,213 67,401 56,537
Interest expense 26,474 23,881 75,793 64,146
Non-recurring charges -- -- 16,458 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses 98,079 91,807 303,809 247,651
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Income before extraordinary item 40,941 39,087 107,075 111,107
Extraordinary item - loss on early retirement of debt -- -- -- (2,670)
- ---------------------------------------------------------------------------------------------------------------------------------
Net income 40,941 39,087 107,075 108,437
Preferred unit distributions (3,869) (4,194) (11,607) (12,090)
- ---------------------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $ 37,072 $ 34,893 $ 95,468 $ 96,347
=================================================================================================================================
BASIC EARNINGS PER UNIT:
Income before extraordinary item $ 0.55 $ 0.53 $ 1.42 $ 1.58
Extraordinary item - loss on early retirement of debt -- -- -- (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.55 $ 0.53 $ 1.42 $ 1.54
=================================================================================================================================
DILUTED EARNINGS PER UNIT:
Income before extraordinary item $ 0.55 $ 0.53 $ 1.42 $ 1.57
Extraordinary item - loss on early retirement of debt -- -- -- (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.55 $ 0.53 $ 1.42 $ 1.53
=================================================================================================================================
Distributions declared per common unit $ 0.58 $ 0.55 $ 1.68 $ 1.55
- ---------------------------------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding 66,893 65,577 67,025 62,580
Diluted weighted average units outstanding 67,113 65,884 67,294 63,093
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (IN THOUSANDS)
================================================================================
<TABLE>
<CAPTION>
General Limited
Preferred Partner Partner Preferred General Limited Unit
Units Units Units Unitholders Partner Partners Warrants Total
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 250 57,266 9,087 $223,330 $1,387,674 $305,692 $8,524 $1,925,220
Net income -- -- -- 11,607 83,270 12,198 -- 107,075
Distributions -- -- -- (11,607) (98,426) (14,137) -- (124,170)
Conversion of preferred units
to limited partner units (21) -- 605 (21,491) -- 21,491 -- --
Redemption of limited partner
units for shares of common stock -- 1,795 (1,795) -- 52,457 (52,457) -- --
Issuance of limited partner units -- -- 389 -- -- 11,336 -- 11,336
Contributions - proceeds from
stock options exercised -- 47 -- -- 1,032 -- -- 1,032
Repurchase of general partner units -- (912) -- -- (25,000) -- -- (25,000)
Deferred compensation plan
for directors -- -- -- -- 64 -- -- 64
Contributions - proceeds from
dividend reinvestment
and stock purchase plan -- 1 -- -- 32 -- -- 32
Issuance of Restricted Stock Awards -- 194 -- -- -- -- -- --
Amortization of stock compensation -- -- -- -- 389 -- -- 389
Allocation of net equity -- -- -- 33,361 36,233 (69,594) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1999 229 58,391 8,286 $235,200 $1,437,725 $214,529 $8,524 $1,895,978
===============================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
6
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
================================================================================
<TABLE>
<CAPTION>
Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ 107,075 $ 108,437
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 67,401 56,537
Amortization of deferred financing costs 2,413 1,122
Amortization of stock compensation 389 --
Equity in earnings of unconsolidated joint ventures (1,462) (419)
Extraordinary item - loss on early retirement of debt -- 2,670
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (10,318) (9,603)
Increase in deferred charges and other assets, net (17,682) (15,098)
Increase in accounts receivable, net (1,400) (2,584)
Increase in accounts payable and accrued expenses 13,106 4,187
Increase in rents received in advance and security deposits 1,858 7,705
Increase (decrease) in accrued interest payable 992 (1,162)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 162,372 $ 151,792
===============================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
- -------------------------------------------------------------------------------------------------------------------------------
Additions to rental property $ (143,198) $ (666,513)
Issuance of mortgage note receivable -- (20,000)
Repayment of mortgage note receivable -- 20,000
Investments in unconsolidated joint ventures (39,626) (53,908)
Distributions from unconsolidated joint ventures 12,008 1,000
(Increase) decrease in restricted cash (158) 1,167
- -------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (170,974) $ (718,254)
===============================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
- -------------------------------------------------------------------------------------------------------------------------------
Proceeds from Senior Unsecured Notes $ 782,535 --
Proceeds from revolving credit facilities 303,256 $ 1,339,746
Proceeds from mortgages and loans payable 45,500 150,000
Repayments of revolving credit facilities (724,900) (806,258)
Repayments of mortgages and loans payable (249,308) (270,912)
Redemption of common units -- (3,163)
Payment of financing costs (7,039) (8,347)
Repurchase of general partner units (25,000) (20,525)
Net proceeds from common stock offerings -- 284,453
Proceeds from stock options exercised 1,032 5,378
Proceeds from dividend reinvestment and stock purchase plan 32 --
Payment of distributions (122,247) (99,760)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities $ 3,861 $ 570,612
===============================================================================================================================
Net (decrease) increase in cash and cash equivalents $ (4,741) $ 4,150
Cash and cash equivalents, beginning of period $ 5,809 $ 2,704
- -------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 1,068 $ 6,854
===============================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
7
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER
UNIT AMOUNTS)
================================================================================
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Mack-Cali Realty, L.P., a Delaware limited partnership, and its subsidiaries
(the "Operating Partnership") was formed on August 31, 1994 to conduct the
business of leasing, management, acquisition, development, construction, and
tenant-related services for its sole general partner, Mack-Cali Realty
Corporation and its subsidiaries (the "Corporation" or "General Partner"). The
Operating Partnership, through its operating divisions and subsidiaries,
including the Mack-Cali property-owning partnerships and limited liability
companies (collectively, the "Property Partnerships"), as described below, is
the entity through which all of the General Partner's operations are conducted.
The Property Partnerships, not a legal entity, consist of partnerships and
limited liability companies which are engaged in the ownership and operation of
the Properties (as hereinafter defined) of the Operating Partnership, excluding
certain Properties which are wholly-owned by the Operating Partnership. Prior to
January 1, 1998 the Property Partnerships were owned 99 percent by the Operating
Partnership as a non-controlling limited partner, and one percent by the General
Partner, as a controlling general partner. During 1998, the Operating
Partnership obtained control of the Property Partnerships pursuant to agreements
with the General Partner.
The General Partner is a fully integrated, self-administered, self-managed real
estate investment trust ("REIT"). The General Partner controls the Operating
Partnership as its sole general partner, and owned an 87.6 percent and 86.3
percent common unit interest in the Operating Partnership as of September 30,
1999 and December 31, 1998, respectively.
The General Partner's business is the ownership of interests in and operation of
the Operating Partnership, and all of the General Partner's expenses are
incurred for the benefit of the Operating Partnership. The General Partner is
reimbursed by the Operating Partnership for all expenses it incurs relating to
the ownership and operation of the Operating Partnership. The Operating
Partnership earns a management fee of between three percent and five percent of
revenues, as defined, for its management of the Property Partnerships.
As of September 30, 1999, the Operating Partnership owned or had interests in
256 properties plus developable land (collectively, the "Properties"). The
Properties aggregate approximately 28.4 million square feet, and are comprised
of 161 office buildings and 82 office/flex buildings totaling approximately 28.0
million square feet (which includes four office buildings and one office/flex
building, aggregating 1.0 million square feet, owned by unconsolidated joint
ventures in which the Operating Partnership has investment interests), six
industrial/warehouse buildings totaling approximately 387,400 square feet, two
multi-family residential complexes consisting of 453 units, two stand-alone
retail properties and three land leases. The Properties are located in 12
states, primarily in the Northeast, plus the District of Columbia.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include all accounts of the
Operating Partnership and its subsidiaries, including the Property Partnerships.
During 1998, the Operating Partnership obtained control of the Property
Partnerships pursuant to agreements with the General Partner, as discussed
above. Accordingly, the accounts of the Property Partnerships are consolidated
with the financial statements of the Operating Partnership effective January 1,
1998. Prior to January 1, 1998, the Operating Partnership accounted for the
Property Partnerships under the equity method of accounting. All significant
intercompany accounts and transactions have been eliminated. See Investments in
Unconsolidated Joint Ventures in Note 2 for the Operating Partnership's
accounting treatment of unconsolidated joint venture interests.
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
8
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
RENTAL
PROPERTY Rental properties are stated at cost less accumulated
depreciation and amortization. Costs directly related to the
acquisition and development of rental properties are
capitalized. Capitalized development costs include interest,
property taxes, insurance and other project costs incurred
during the period of construction. Ordinary repairs and
maintenance are expensed as incurred; major replacements and
betterments, which improve or extend the life of the asset,
are capitalized and depreciated over their estimated useful
lives. Fully-depreciated assets are removed from the
accounts.
Properties are depreciated using the straight-line method
over the estimated useful lives of the assets. The estimated
useful lives are as follows:
Leasehold interests Remaining lease term
------------------------------------------------------------
Buildings and improvements 5 to 40 years
------------------------------------------------------------
Tenant improvements The shorter of the term of
the related lease or useful life
------------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
------------------------------------------------------------
On a periodic basis, management assesses whether there are
any indicators that the value of the real estate properties
may be impaired. A property's value is impaired only if
management's estimate of the aggregate future cash flows
(undiscounted and without interest charges) to be generated
by the property are less than the carrying value of the
property. To the extent impairment has occurred, the loss
shall be measured as the excess of the carrying amount of
the property over the fair value of the property. Management
does not believe that the value of any of its rental
properties is impaired.
INVESTMENTS IN
UNCONSOLIDATED
JOINT VENTURES The Operating Partnership accounts for its investments in
unconsolidated joint ventures under the equity method of
accounting as the Operating Partnership exercises
significant influence, but does not control these entities.
These investments are recorded initially at cost, as
Investments in Unconsolidated Joint Ventures, and
subsequently adjusted for equity in net earnings (loss) and
cash contributions and distributions. Any difference between
the carrying amount of these investments on the balance
sheet of the Operating Partnership and the underlying equity
in net assets is amortized as an adjustment to equity in
earnings (loss) of unconsolidated joint ventures over 40
years. See Note 4.
CASH AND CASH
EQUIVALENTS All highly liquid investments with a maturity of three
months or less when purchased are considered to be cash
equivalents.
DEFERRED
FINANCING COSTS Costs incurred in obtaining financing are capitalized
and amortized on a straight-line basis, which approximates
the effective interest method, over the term of the related
indebtedness. Amortization of such costs is included in
interest expense and was $895 and $468 for the three months
ended September 30, 1999 and 1998, respectively, and $2,413
and $1,122 for the nine months ended September 30, 1999 and
1998, respectively.
DEFERRED
LEASING COSTS Costs incurred in connection with leases are
capitalized and amortized on a straight-line basis over the
terms of the related leases and included in depreciation and
amortization. Unamortized deferred leasing costs are charged
to amortization expense upon early termination of the lease.
Certain employees provide leasing services to the Properties
and receive compensation based on space leased. The portion
of such compensation, which is capitalized and amortized,
approximated $690 and $589 for the three months ended
September 30, 1999 and 1998, respectively, and $2,091 and
$1,825 for the nine months ended September 30, 1999 and
1998, respectively.
9
<PAGE>
REVENUE
RECOGNITION Base rental revenue is recognized on a straight-line basis
over the terms of the respective leases. Unbilled rents
receivable represents the amount by which straight-line
rental revenue exceeds rents currently billed in accordance
with the lease agreements. Parking revenue includes income
from parking spaces leased to tenants. Rental income on
residential property under operating leases having terms
generally of one year or less is recognized when earned.
Reimbursements are received from tenants for certain costs
as provided in the lease agreements. These costs generally
include real estate taxes, utilities, insurance, common area
maintenance and other recoverable costs. See Note 14.
INCOME AND
OTHER TAXES The Operating Partnership is a partnership and, as a
result, all income and losses of the partnership are
allocated to the partners for inclusion in their respective
income tax returns. Accordingly, no provision or benefit for
income taxes has been made in the accompanying financial
statements.
INTEREST RATE
CONTRACTS Interest rate contracts are utilized by the Operating
Partnership to reduce interest rate risks. The Operating
Partnership does not hold or issue derivative financial
instruments for trading purposes. The differentials to be
received or paid under contracts designated as hedges are
recognized over the life of the contracts as adjustments to
interest expense.
In certain situations, the Operating Partnership uses
forward treasury lock agreements to mitigate the potential
effects of changes in interest rates for prospective
transactions. Gains and losses are deferred and amortized as
adjustments to interest expense over the remaining life of
the associated debt to the extent that such debt remains
outstanding.
EARNINGS
PER UNIT In accordance with the Statement of Financial
Accounting Standards No. 128 ("FASB No. 128"), the Operating
Partnership presents both basic and diluted earnings per
unit ("EPU"). Basic EPU excludes dilution and is computed by
dividing net income available to common unitholders by the
weighted average number of units outstanding for the period.
Diluted EPU reflects the potential dilution that could occur
if securities or other contracts to issue common units were
exercised or converted into common units, where such
exercise or conversion would result in a lower EPU amount.
DISTRIBUTIONS
PAYABLE The distributions payable at September 30, 1999 represents
distributions payable to common unitholders of record on
October 5, 1999 (66,677,448 common units), and preferred
distributions to preferred unitholders (229,304 preferred
units) for the third quarter 1999. The third quarter 1999
common unit distribution of $0.58 per common unit (pro-rated
for units issued during the quarter), as well as the third
quarter preferred unit distribution of $16.875 per preferred
unit, were approved by the Board of Directors of the General
Partner on September 22, 1999 and paid on October 22, 1999.
UNDERWRITING
COMMISSIONS
AND COSTS Underwriting commissions and costs incurred in
connection with the Corporation's stock offerings and
subsequent reinvestment in general partner units are
reflected as a reduction of these unit values.
10
<PAGE>
STOCK OPTIONS The Operating Partnership accounts for stock-based
compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations
("APB No. 25"). Under APB No. 25, compensation cost is
measured as the excess, if any, of the quoted market price
of the Corporation's stock at the date of grant over the
exercise price of the option granted. Compensation cost for
stock options, if any, is recognized ratably over the
vesting period. The Corporation's policy is to grant options
with an exercise price equal to the quoted closing market
price of the Corporation's stock on the business day
preceding the grant date. Accordingly, no compensation cost
has been recognized for the Corporation's stock option
plans. See Note 10.
EXTRAORDINARY
ITEM Extraordinary item represents the effect resulting from the
early settlement of certain debt obligations, including
related deferred financing costs, prepayment penalties,
yield maintenance payments and other related items.
NON-RECURRING
CHARGES The Operating Partnership considers non-recurring charges as
costs incurred specific to significant non-recurring events
that impact the comparative measurement of the Operating
Partnership's performance.
11
<PAGE>
3. ACQUISITIONS/TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
The Operating Partnership acquired the following operating properties during the
nine months ended September 30, 1999:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment by
Acquisition # of Rentable Operating
Date Property/Portfolio Name Location Bldgs. Square Feet Partnership(a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OFFICE
3/05/99 Pacifica Portfolio - Phase III (b) Colorado Springs, El Paso County, CO 2 94,737 $ 5,709
7/21/99 1201 Connecticut Avenue, NW Washington, D.C. 1 169,549 32,781
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTY ACQUISITIONS: 3 264,286 $ 38,490
====================================================================================================================================
</TABLE>
The Operating Partnership acquired the following operating properties during the
year ended December 31, 1998:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment by
Acquisition # of Rentable Operating
Date Property/Portfolio Name Location Bldgs. Square Feet Partnership(a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OFFICE
2/05/98 500 West Putnam Avenue (c) Greenwich, Fairfield County, CT 1 121,250 $ 20,125
2/25/98 10 Mountainview Road Upper Saddle River, Bergen County, NJ 1 192,000 24,754
3/12/98 1250 Capital of Texas Highway South Austin, Travis County, TX 1 270,703 37,266
3/27/98 Prudential Business Campus (d) Parsippany, Morris County, NJ 5 703,451 130,437
3/27/98 Pacifica Portfolio- Phase I (b) (e) Denver & Colorado Springs, CO 10 620,017 74,966
3/30/98 Morris County Financial Center Parsippany, Morris County, NJ 2 301,940 52,763
5/13/98 3600 South Yosemite Denver, Denver County, CO 1 133,743 13,555
5/22/98 500 College Road East (f) Princeton, Mercer County, NJ 1 158,235 21,334
6/01/98 1709 New York Ave./1400 L Street N.W. Washington, D.C. 2 325,000 90,385
6/03/98 400 South Colorado Boulevard Denver, Denver County, CO 1 125,415 12,147
6/08/98 Pacifica Portfolio - Phase II (b)(e)(g) Denver & Colorado Springs, CO 6 514,427 85,910
7/16/98 4200 Parliament Drive (h) Lanham, Prince George's County, MD 1 122,000 15,807
9/10/98 40 Richards Avenue (e) Norwalk, Fairfield County, CT 1 145,487 19,587
9/15/98 Seven Skyline Drive (i) Hawthorne, Westchester County, NY 1 109,000 13,379
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTY ACQUISITIONS: 34 3,842,668 $ 612,415
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
1/30/98 McGarvey Portfolio (j) Moorestown, Burlington County, NJ 17 748,660 $ 47,526
7/14/98 1510 Lancer Road (k) Moorestown, Burlington County, NJ 1 88,000 3,700
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTY ACQUISITIONS: 18 836,660 $ 51,226
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING PROPERTY ACQUISITIONS: 52 4,679,328 $ 663,641
====================================================================================================================================
</TABLE>
PROPERTIES PLACED IN SERVICE
The Operating Partnership placed in service the following properties through the
completion of development during the nine months ended September 30, 1999:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment by
Date Placed # of Rentable Operating
in Service Property Name Location Bldgs. Square Feet Partnership (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OFFICE
8/01/99 795 Folsom Street San Francisco, San Francisco County, CA 1 183,445 $ 37,321
8/09/99 2115 Linwood Avenue Fort Lee, Bergen County, NJ 1 68,000 8,147
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES PLACE IN SERVICE: 2 251,445 $ 45,468
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
3/01/99 One Center Court Totowa, Passaic County, NJ 1 38,961 $ 2,140
9/17/99 12 Skyline Drive Hawthorne, Westchester County, NY 1 47,000 5,023
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE: 2 85,961 $ 7,163
- ------------------------------------------------------------------------------------------------------------------------------------
LAND LEASE
2/01/99 Horizon Center Business Park (l) Hamilton Township, Mercer County, NJ N/A 27.7 acres $ 1,007
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LAND LEASE TRANSACTIONS: 27.7 acres $ 1,007
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 4 337,406 $ 53,638
====================================================================================================================================
</TABLE>
SEE FOOTNOTES TO THESE SCHEDULES ON SUBSEQUENT PAGE.
12
<PAGE>
The Operating Partnership placed in service the following properties through the
completion of development or redevelopment during the year ended December 31,
1998:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment by
Date Placed # of Rentable Operating
in Service Property Name Location Bldgs Square Feet Partnership (a)
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE
<S> <C> <C> <C> <C> <C>
1/15/98 224 Strawbridge Drive Moorestown, Burlington County, NJ 1 74,000 $ 7,796
8/01/98 228 Strawbridge Drive Moorestown, Burlington County, NJ 1 74,000 7,986
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES PLACED IN SERVICE: 2 148,000 $ 15,782
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
6/08/98 Two Center Court Totowa, Passaic County, NJ 1 30,600 $ 2,231
10/23/98 650 West Avenue Stamford, Fairfield County, CT 1 40,000 4,952
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE: 2 70,600 $ 7,183
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 4 218,600 $ 22,965
====================================================================================================================================
</TABLE>
(a) Unless otherwise noted, transactions were funded by the Operating
Partnership primarily with funds made available through draws on the
Operating Partnership's credit facilities.
(b) The Operating Partnership may be required to pay additional
consideration due to earn-out provisions in the agreement. William L.
Mack, a director and equity holder of the Operating Partnership, was
an indirect owner of an interest in certain of the buildings contained
in the Pacifica portfolio.
(c) The acquisition was funded with cash as well as the assumption of
mortgage debt (estimated fair value of approximately $12,104, with
annual effective interest rate of 6.52 percent).
(d) The acquisition was funded primarily from proceeds received from the
sale of 2,705,628 shares of common stock (see Note 10). Also included
in the acquisition, but excluded from this schedule, is (i) Nine
Campus Drive, in which the Operating Partnership has a 50 percent
interest through an unconsolidated joint venture (see Note 4), and
(ii) developable land adjacent to the acquired portfolio (see "1998
Redevelopment Properties/Developable Land Acquisitions").
(e) The acquisition was funded with cash and the issuance of common units
to the seller (see Note 11).
(f) The property was acquired subject to a ground lease, which is prepaid
through 2031, and has two 10-year renewal options, at rent levels as
defined in the lease agreement.
(g) Also included in the acquisition, but excluded from this schedule, is
developable land adjacent to the acquired portfolio (see "1998
Redevelopment Properties/Developable Land Acquisitions").
(h) Includes land adjacent to the operating property, which may be
sub-divided for future development.
(i) The property was acquired through the exercise of a purchase option
obtained in connection with the Operating Partnership's acquisition of
65 properties from Robert Martin Company, LLC in January 1997. The
acquisition was funded with cash, net of the repayment by the seller
of the remaining balance of a note receivable.
(j) The acquisition was funded with cash as well as the assumption of
mortgage debt (aggregate estimated fair value of approximately $8,354,
with a weighted average annual effective interest rate of 6.24
percent). The Operating Partnership is under contract to acquire an
additional four office/flex properties and has a right of first
refusal to acquire six additional office/flex properties.
(k) The property was acquired through the exercise of a purchase option
obtained in the acquisition of the McGarvey portfolio in January 1998.
(l) On February 1, 1999, the Operating Partnership entered into a ground
lease agreement to lease 27.7 acres of developable land located at the
Operating Partnership's Horizon Center Business Park, located in
Hamilton Township, Mercer County, New Jersey on which Home Depot is
developing a 134,000 square-foot retail store.
- -------------------------------------
1999 REDEVELOPMENT PROPERTIES/DEVELOPABLE LAND TRANSACTIONS
On February 26, 1999, the Operating Partnership acquired approximately
2.3 acres of vacant land adjacent to one of the Operating
Partnership's operating properties located in San Antonio, Bexar
County, Texas for approximately $1,524, which was made available from
the Operating Partnership's cash reserves.
On March 15, 1999, the Operating Partnership entered into a joint
venture with SJP 106 Allen Road to form MC-SJP Pinson Development,
LLC, which acquired vacant land located in Bernards Township, Somerset
County, New Jersey. The venture has commenced construction of a
135,000 square-foot office building on this site. The Operating
Partnership provided a construction loan with a total commitment of
$22,859 (aggregate borrowings of $10,613 as of September 30, 1999) to
the venture. Upon completion of the building, the Operating
Partnership's construction loan will convert to an equity interest in
the venture. The Operating Partnership accounts for its investment in
the joint venture on a consolidated basis.
13
<PAGE>
On May 4, 1999, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President
of the Corporation, a current member of the Board of Directors and a former
member of the Board of Directors of the Corporation, approximately 2.5 acres
of vacant land in the Stamford Executive Park, located in Stamford, Fairfield
County, Connecticut. The Operating Partnership acquired the land for
approximately $2,181. $1,681 of the purchase price was funded from the
Operating Partnership's cash reserves with an additional $500 due three years
from the closing date contingent upon certain conditions per the acquisition
contract and subject to interest over the term.
On June 1, 1999, the Operating Partnership acquired 795 Folsom Street, a 183,445
square-foot office building located in San Francisco, San Francisco County,
California. The building was acquired for approximately $34,282, which was made
available from drawing on one of the Operating Partnership's credit facilities.
In August 1999, the Operating Partnership completed redevelopment of the
property and placed the office building in service (see "Properties Placed in
Service").
On August 31, 1999, the Operating Partnership acquired, from an entity whose
principals include Brant Cali, Executive Vice President and Chief Operating
Officer of the Corporation and a member of the Board of Directors of
the Corporation and certain immediate family of John J. Cali, Chairman of the
Board of Directors of the Corporation, approximately 28.1 acres of developable
land adjacent to two of the Operating Partnership's operating properties located
in Roseland, Essex County, New Jersey for approximately $6,097. The acquisition
was funded with cash and the issuance of common units to the seller (see Note
11).
1998 REDEVELOPMENT PROPERTIES/DEVELOPABLE LAND ACQUISITIONS
On January 23, 1998, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President of
the Corporation, a current member of the Board of Directors and a
former member of the Board of Directors of the Corporation, approximately 10
acres of vacant land in the Stamford Executive Park, located in Stamford,
Fairfield County, Connecticut for approximately $1,341, which was funded from
the Operating Partnership's cash reserves. In October 1998, the Operating
Partnership completed and placed in service a 40,000 square-foot office/flex
property on the acquired land (see "Properties Placed in Service").
On February 2, 1998, the Operating Partnership acquired 2115 Linwood Avenue, a
68,000 square-foot vacant office building located in Fort Lee, Bergen County,
New Jersey. The building was acquired for approximately $5,164, which was made
available from drawing on one of the Operating Partnership's credit facilities.
In August 1999, the Operating Partnership completed redevelopment of the
property and placed the office building in service (see "Properties Placed in
Service").
On March 27, 1998, as part of the purchase of the Prudential Business Campus
(see "Operating Property Acquisitions"), the Operating Partnership acquired
approximately 95 acres of vacant land adjacent to the operating properties for
approximately $27,500.
On June 8, 1998, as part of the Pacifica portfolio-phase II acquisition (see
"Operating Property Acquisitions"), the Operating Partnership acquired vacant
land adjacent to the operating properties for approximately $2,006.
On September 4, 1998, the Operating Partnership acquired approximately 128 acres
of vacant land located at the Operating Partnership's Horizon Center Business
Park, Hamilton Township, Mercer County, New Jersey, through the exercise of a
purchase option obtained in the Operating Partnership's acquisition of the
Horizon Center Business Park in November 1995. The land was acquired for
approximately $1,698, which was funded from the Operating Partnership's cash
reserves. Subsequently in February 1999, the Operating Partnership leased 27.7
acres of the acquired land to Home Depot (see "Properties Placed in Service").
On November 10, 1998, the Operating Partnership acquired approximately 10.1
acres of land located at Three Vaughn Drive, Princeton, Mercer County, New
Jersey. The Operating Partnership acquired the land for approximately $2,146,
which was funded from the Operating Partnership's cash reserves.
On December 3, 1998, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President of
the Corporation, a current member of the Board of Directors and a
former member of the Board of Directors of the Corporation, approximately 2.7
acres of land located at 12 Skyline Drive, Hawthorne, Westchester County, New
York. The Operating Partnership acquired the land for approximately $1,540,
which was funded from the Operating Partnership's cash reserves. In September
1999, the Operating Partnership completed and placed in service a 47,000
square-foot office/flex property on the acquired land (see "Properties Placed in
Service").
14
<PAGE>
4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
PRU-BETA 3 (NINE CAMPUS DRIVE)
On March 27, 1998, the Operating Partnership acquired a 50 percent interest in
an existing joint venture with The Prudential Insurance Company of America
("Prudential"), known as Pru-Beta 3, which owns and operates Nine Campus Drive,
a 156,495 square-foot office building, located in the Prudential Business Campus
office complex in Parsippany, Morris County, New Jersey (see Note 3). The
Operating Partnership performs management and leasing services for the property
owned by the joint venture and recognized $112 and $50 in fees for such services
in the nine months ended September 30, 1999 and 1998, respectively.
HPMC (CONTINENTAL GRAND II/SUMMIT RIDGE/LAVA RIDGE)
On April 23, 1998, the Operating Partnership entered into a joint venture
agreement with HCG Development, L.L.C. and Summit Partners I, L.L.C. to form
HPMC Development Partners, L.P. and, on July 21, 1998, entered into a second
joint venture, HPMC Development Partners II, L.P. (formerly known as HPMC Lava
Ridge Partners, L.P.), with these same parties. HPMC Development Partners,
L.P.'s efforts have focused on two development projects, commonly referred to as
Continental Grand II and Summit Ridge. Continental Grand II is a 4.2 acre site
located in El Segundo, Los Angeles County, California, acquired by the venture
upon which it has commenced construction of a 237,000 square-foot office
property. Summit Ridge is a 7.3-acre site located in San Diego, San Diego
County, California, acquired by the venture upon which it has commenced
construction of a 132,000 square-foot office/flex property. HPMC Development
Partners II, L.P. has commenced construction of three two-story buildings
aggregating 183,200 square-feet of office space on a 12.1-acre site located in
Roseville, Placer County, California and purchased a parcel of land from the
City of Daly City, California, for future development into office space, a hotel
and other retail establishments. Among other things, the partnership agreements
provide for a preferred return on the Operating Partnership's invested capital
in each venture, in addition to 50 percent of such venture's profit above the
preferred returns, as defined in each agreement.
G&G MARTCO (CONVENTION PLAZA)
On April 30, 1998, the Operating Partnership acquired a 49.9 percent interest in
an existing joint venture, known as G&G Martco, which owns Convention Plaza, a
305,618 square-foot office building, located in San Francisco, San Francisco
County, California. A portion of its initial investment was financed through the
issuance of common units (see Note 11) as well as funds drawn from the Operating
Partnership's credit facilities. Subsequently, on June 4, 1999, the Operating
Partnership acquired an additional 0.1 percent interest in G&G Martco through
the issuance of common units (see Note 11). The Operating Partnership performs
management and leasing services for the property owned by the joint venture and
recognized $176 and $8 in fees for such services in the nine months ended
September 30, 1999 and 1998, respectively.
AMERICAN FINANCIAL EXCHANGE L.L.C.
On May 20, 1998, the Operating Partnership entered into a joint venture
agreement with Columbia Development Corp. to form American Financial Exchange
L.L.C. The venture was initially formed to acquire land for future development,
located on the Hudson River waterfront in Jersey City, Hudson County, New
Jersey, adjacent to the Operating Partnership's Harborside Financial Center
office complex. The Operating Partnership holds a 50 percent interest in the
joint venture. Among other things, the partnership agreement provides for a
preferred return on the Operating Partnership's invested capital in the venture,
in addition to the Operating Partnership's proportionate share of the venture's
profit, as defined in the agreement. The joint venture acquired land on which it
constructed a parking facility, which is currently leased to a parking operator
under a 10-year agreement. Such parking facility serves a ferry service between
the Operating Partnership's Harborside property and Manhattan.
RAMLAND REALTY ASSOCIATES, L.L.C. (ONE RAMLAND ROAD)
On August 20, 1998, the Operating Partnership entered into a joint venture
agreement with S.B. New York Realty Corp. to form Ramland Realty Associates
L.L.C. The venture was formed to own, manage and operate One Ramland Road, a
232,000 square-foot office/flex building plus adjacent developable land, located
in Orangeburg, Rockland County, New York. In August 1999, the joint venture
completed redevelopment of the property and placed the office/flex building in
service. The Operating Partnership holds a 50 percent interest in the joint
venture. The Operating Partnership performs management and leasing services for
the property owned by the joint venture and recognized $7 and none in fees for
such services in the nine months ended September 30, 1999 and 1998,
respectively.
15
<PAGE>
ASHFORD LOOP ASSOCIATES L.P. (1001 SOUTH DAIRY ASHFORD/2100 WEST LOOP SOUTH)
On September 18, 1998, the Operating Partnership entered into a joint venture
agreement with Prudential to form Ashford Loop Associates L.P. The venture was
formed to own, manage and operate 1001 South Dairy Ashford, a 130,000
square-foot office building acquired on September 18, 1998 and 2100 West Loop
South, a 168,000 square-foot office building acquired on November 25, 1998, both
located in Houston, Harris County, Texas. The Operating Partnership holds a 20
percent interest in the joint venture. The joint venture may be required to pay
additional consideration due to earn-out provisions in the acquisition
contracts. During the nine months ended September 30, 1999, the venture paid
$9,991 ($1,998 representing the Operating Partnership's share) in accordance
with the earn-out provisions in the acquisition contracts. The Operating
Partnership performs management and leasing services for the properties owned by
the joint venture and recognized $96 and none in fees for such services in the
nine months ended September 30, 1999 and 1998, respectively.
ARCAP INVESTORS, L.L.C.
On March 18, 1999, the Operating Partnership invested in ARCap Investors,
L.L.C., a joint venture with several participants, which was formed to invest in
sub-investment grade tranches of commercial mortgage-backed securities ("CMBS").
The Operating Partnership has invested $20,000 in the venture. William L. Mack,
a director and equity holder of the Operating Partnership, is a principal of the
managing member of the venture. At September 30, 1999, the venture held
approximately $232,400 face value of CMBS bonds for an aggregate cost of
$132,847.
SUMMARIES OF UNCONSOLIDATED JOINT VENTURES
The following is a summary of the financial position of the unconsolidated joint
ventures in which the Operating Partnership had investment interests as of
September 30, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
September 30, 1999
--------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C>
Rental property, net $ 22,051 $ 56,671 $ 13,063 $ 10,768 $ 17,590 $ 28,879 -- $ 149,022
Other assets 3,193 4,694 3,148 598 2,130 818 $226,677 241,258
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $ 25,244 $ 61,365 $ 16,211 $ 11,366 $ 19,720 $ 29,697 $ 226,677 $ 390,280
============================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable -- $31,615 $ 42,963 -- -- -- $ 106,510 $ 181,088
Other liabilities $ 218 2,841 1,012 $ 1 $ 606 $ 537 24,688 29,903
Partners'/members' capital 25,026 26,909 (27,764) 11,365 19,114 29,160 95,479 179,289
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $25,244 $ 61,365 $ 16,211 $ 11,366 $ 19,720 $ 29,697 $ 226,677 $ 390,280
============================================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $17,148 $22,217 $ 8,790 $ 11,414 $ 9,931 $ 6,176 $ 19,781 $ 95,457
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 1998
--------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $22,711 $ 30,278 $ 11,099 $ 10,621 $8,467 $ 19,166 -- $ 102,342
Other assets 3,995 1,097 4,058 389 1,101 378 -- 11,018
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $26,706 $ 31,375 $ 15,157 $ 11,010 $9,568 $ 19,544 -- $ 113,360
============================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable -- $ 632 $ 39,762 -- -- -- -- $ 40,394
Other liabilities $ 484 3,522 2,096 $ 79 $ 6 $ 509 -- 6,696
Partners'/members' capital 26,222 27,221 (26,701) 10,931 9,562 19,035 -- 66,270
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $26,706 $ 31,375 $ 15,157 $ 11,010 $9,568 $ 19,544 -- $ 113,360
============================================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $17,980 $ 17,578 $ 10,964 $ 10,983 $4,851 $ 4,152 -- $ 66,508
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
The following is a summary of the results of operations of the unconsolidated
joint ventures for the period in which the Operating Partnership had investment
interests during the three and nine month periods ended September 30, 1999 and
1998:
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999
--------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues $1,227 -- $ 2,422 $ 250 $ 580 $ 971 $ 3,223 $ 8,673
Operating and other expenses (389) -- (814) (33) (103) (597) (1,201) (3,137)
Depreciation and amortization (304) -- (233) (24) (178) (163) -- (902)
Interest expense -- -- (813) -- -- -- (1,014) (1,827)
- ----------------------------------------------------------------------------------------------------------------------------
Net income $ 534 -- $ 562 $ 193 $ 299 $ 211 $ 1,008 $ 2,807
============================================================================================================================
Operating Partnership's equity in
earnings of unconsolidated
joint ventures $ 228 -- $ 124 $ 193 $ 150 $ 42 $ 97 $ 834
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended September 30, 1998
--------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues $1,159 -- $1,438 $ 265 -- $ 50 -- $ 2,912
Operating and other expenses (377) -- (680) (31) -- (24) -- (1,112)
Depreciation and amortization (330) -- (252) -- -- (9) -- (591)
Interest expense -- -- (787) -- -- -- -- (787)
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 452 -- $ (281) $ 234 -- $ 17 -- $ 422
============================================================================================================================
Operating Partnership's equity in
earnings (loss) of unconsolidated
joint ventures $ 226 -- $ (140) $ 234 -- $ 4 -- $ 324
- ----------------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30, 1999
------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues $3,697 -- $6,572 $ 667 $ 580 $ 2,959 $ 5,998 $ 20,473
Operating and other expenses (1,134) -- (2,204) (163) (103) (1,645) (3,213) (8,462)
Depreciation and amortization (929) -- (696) (70) (178) (379) -- (2,252)
Interest expense -- -- (2,261) -- -- -- (1,558) (3,819)
- ----------------------------------------------------------------------------------------------------------------------------
Net income $1,634 -- $1,411 $ 434 $ 299 $ 935 $ 1,227 $ 5,940
============================================================================================================================
Operating Partnership's equity in
earnings (loss) of unconsolidated
joint ventures $ 584 -- $ (153) $ 384 $ 150 $ 176 $ 321 $ 1,462
- ----------------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30, 1998
------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues $2,294 -- $2,109 $ 265 -- $ 50 -- $ 4,718
Operating and other expenses (729) -- (986) (31) -- (24) -- (1,770)
Depreciation and amortization (674) -- (387) -- -- (9) -- (1,070)
Interest expense -- -- (1,292) -- -- -- -- (1,292)
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 891 -- $ (556) $ 234 -- $ 17 -- $ 586
============================================================================================================================
Operating Partnership's equity in
earnings (loss) of unconsolidated
joint ventures $ 458 -- $ (277) $ 234 -- $ 4 -- $ 419
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
5. DEFERRED CHARGES AND OTHER ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred leasing costs $ 50,836 $ 35,151
Deferred financing costs 17,177 9,962
- ---------------------------------------------------------------------------------------------------------
68,013 45,113
Accumulated amortization (18,009) (13,527)
- ---------------------------------------------------------------------------------------------------------
Deferred charges, net 50,004 31,586
Prepaid expenses and other assets 10,696 7,434
- ---------------------------------------------------------------------------------------------------------
Total deferred charges and other assets, net $ 60,700 $ 39,020
=========================================================================================================
</TABLE>
6. RESTRICTED CASH
Restricted cash includes security deposits for the Operating Partnership's
residential properties and certain commercial properties, and escrow and reserve
funds for debt service, real estate taxes, property insurance, capital
improvements, tenant improvements, and leasing costs established pursuant to
certain mortgage financing arrangements, and is comprised of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Security deposits $ 6,017 $ 5,696
Escrow and other reserve funds 167 330
- ---------------------------------------------------------------------------------------------------------
Total restricted cash $ 6,184 $ 6,026
=========================================================================================================
</TABLE>
7. SENIOR UNSECURED NOTES
On March 16, 1999, the Operating Partnership issued $600,000 of unsecured
corporate debt with interest payable semi-annually in arrears. The total
proceeds from the issuance (net of selling commissions and discount) of
approximately $593,500 were used to pay down outstanding borrowings under the
1998 Unsecured Facility, as defined in Note 8, and to pay off certain mortgage
loans. The unsecured corporate debt was issued at a discount of approximately
$2,748, which is being amortized over the terms of the respective tranches as an
adjustment to interest expense.
On August 2, 1999, the Operating Partnership issued an additional $185,283 of
unsecured corporate debt with interest payable monthly. The Operating
Partnership used the proceeds to retire the TIAA Mortgage, as defined in Note 9.
The Operating Partnership issued the $785,283 of total unsecured corporate debt
("Senior Unsecured Notes") under a shelf registration statement which was
declared effective by the SEC in September 1998. The Senior Unsecured Notes are
redeemable at any time at the option of the Operating Partnership, subject to
certain conditions including yield maintenance.
A summary of the terms of the Senior Unsecured Notes outstanding as of September
30, 1999 is presented below:
<TABLE>
<CAPTION>
Effective
Amount Rate (1)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7.18% Senior Unsecured Notes, due December 31, 2003 $185,283 7.23%
7.00% Senior Unsecured Notes, due March 15, 2004 299,644 7.27%
7.25% Senior Unsecured Notes, due March 15, 2009 297,779 7.49%
- ---------------------------------------------------------------------------------------------------------
Total Senior Unsecured Notes $782,706 7.34%
=========================================================================================================
</TABLE>
(1) Includes the cost of terminated treasury lock agreements (if any), offering
and other transaction costs and the discount on the notes, as applicable.
18
<PAGE>
The terms of the Senior Unsecured Notes include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.
8. REVOLVING CREDIT FACILITIES
ORIGINAL UNSECURED FACILITY
The Original Unsecured Facility ("Original Unsecured Facility") was repaid in
full and retired in connection with the Operating Partnership obtaining the 1998
Unsecured Facility in April 1998, as defined below. On account of prepayment
fees, loan origination fees, legal fees, and other costs incurred in the
retirement of the Original Unsecured Facility, an extraordinary loss of $2,478
was recorded for the year ended December 31, 1998.
1998 UNSECURED FACILITY
In April 1998, the Operating Partnership repaid in full and terminated the
Original Unsecured Facility and obtained a new unsecured revolving credit
facility ("1998 Unsecured Facility") with a current borrowing capacity of
$1,000,000 from a group of 28 lenders. The interest rate is based on the
Operating Partnership's achievement of investment grade unsecured debt ratings
and at the Operating Partnership's election, bears interest at either 90 basis
points over London Inter-Bank Offered Rate ("LIBOR") or the higher of the
lender's prime rate or the Federal Funds rate plus 50 basis points. The interest
rate is currently LIBOR (5.40 percent at September 30, 1999) plus 90 basis
points. The 1998 Unsecured Facility matures in April 2001.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Corporation to
continue to qualify as a REIT under the Code, the Corporation will not during
any four consecutive fiscal quarters make distributions with respect to common
stock or other equity interests in an aggregate amount in excess of 90 percent
of funds from operations for such period, subject to certain other adjustments.
The 1998 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.
PRUDENTIAL FACILITY
The Operating Partnership has a revolving credit facility ("Prudential
Facility") from Prudential Securities Corp. ("PSC") in the amount of $100,000,
which currently bears interest at 110 basis points over one-month LIBOR, with a
maturity date of September 30, 2000. The Prudential Facility is a recourse
liability of the Operating Partnership and is secured by the Operating
Partnership's equity interest in Harborside. The Prudential Facility limits the
ability of the Operating Partnership to make any distributions during any fiscal
quarter in an amount in excess of 100 percent of the Operating Partnership's
available funds from operations for the immediately preceding fiscal quarter
(except to the extent such excess distributions or dividends are attributable to
gains from the sale of the Operating Partnership's assets or are required for
the Corporation to maintain its status as a REIT under the Code); provided,
however, that the Operating Partnership may make distributions and pay dividends
in excess of 100 percent of available funds from operations for the preceding
fiscal quarter for not more than three consecutive quarters. In addition to the
foregoing, the Prudential Facility limits the liens placed upon the subject
property and certain collateral, the use of proceeds from the Prudential
Facility, and the maintenance of ownership of the subject property and assets
derived from said ownership.
SUMMARY
As of September 30, 1999, the Operating Partnership had outstanding borrowings
of $249,956 under its revolving credit facilities (with aggregate borrowing
capacity of $1,100,000). The outstanding borrowings were comprised of $249,956
from the 1998 Unsecured Facility, with no outstanding borrowings on its
Prudential Facility.
19
<PAGE>
9. MORTGAGES AND LOANS PAYABLE
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Portfolio Mortgages $150,000 $335,283
Property Mortgages 395,567 414,048
- ---------------------------------------------------------------------------------------------------------
Total Mortgages and Loans Payable $545,567 $749,331
=========================================================================================================
</TABLE>
PORTFOLIO MORTGAGES
TIAA MORTGAGE
Several of the Property Partnerships had an aggregate $185,283 non-recourse
mortgage loan with Teachers Insurance and Annuity Association of America, with
interest only payable monthly at a fixed annual rate of 7.18 percent ("TIAA
Mortgage"). The TIAA Mortgage was secured and cross-collateralized by 43
properties. The Property Partnerships had the option to convert, without any
yield maintenance obligation or prepayment premium, the TIAA Mortgage to
unsecured public debt as a result of the achievement of an investment grade
credit rating. The TIAA Mortgage was prepayable in whole or in part subject to
certain provisions, including yield maintenance.
Using the proceeds from the issuance of $185,283 of unsecured corporate debt on
August 2, 1999 (see Note 7), the Property Partnerships repaid in full and
retired the TIAA Mortgage.
$150,000 PRUDENTIAL MORTGAGE LOAN
On April 30, 1998, the Operating Partnership obtained a $150,000, interest-only,
non-recourse mortgage loan from Prudential ("$150,000 Prudential Mortgage
Loan"). The loan, which is secured by 12 properties, has an effective annual
interest rate of 7.10 percent and a seven-year term. The Operating Partnership
has the option to convert the mortgage loan to unsecured debt as a result of the
achievement of an investment grade credit rating. The mortgage loan is
prepayable in whole or in part subject to certain provisions, including yield
maintenance.
Certain mortgages and loans payable were repaid and retired in connection with
the Operating Partnership obtaining the $150,000 Prudential Mortgage Loan. On
account of prepayment fees, loan origination fees, legal fees and other costs
incurred in the retirement of certain mortgages and loans payable in April 1998,
an extraordinary loss of $192 was recorded for the year ended December 31, 1998.
PROPERTY MORTGAGES
Property mortgages are comprised of various non-recourse loans which are
collateralized by certain of the Operating Partnership's and Property
Partnerships' rental properties. Payments on property mortgages are generally
due in monthly installments of principal and interest, or interest only.
A summary of the Operating Partnership's and Property Partnerships' property
mortgages as of September 30, 1999 and December 31, 1998 is as follows:
20
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL BALANCE AT
INTEREST SEPTEMBER 30, DECEMBER 31, DATE OF
PROPERTY NAME LENDER RATE 1999 1998 MATURITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mack-Cali Centre VI CIGNA 7.600% $ -- $29,223 03/31/99
Mack-Cali Airport CIGNA 7.600% -- 6,849 03/31/99
Mack-Cali Murray Hill Horace Mann 7.850% -- 8,027 05/01/99
Mack-Cali Manhasset IDA Financing TENR 8,000 8,000 12/01/99
201 Commerce Drive Sun Life Assurance Co. 6.240% 1,075 1,121 09/01/00
3 & 5 Terri Lane First Union National Bank 6.220% 4,445 4,476 10/31/00
101 & 225 Executive Drive Sun Life Assurance Co. 6.270% 2,420 2,553 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.510% 2,245 2,292 12/31/01
Harborside Financial Center(1) Contingent Obligation(1) 6.764% 6,462 6,150 11/04/02
Mack-Cali Willowbrook CIGNA 8.670% 10,376 10,918 10/01/03
1717 Route 208, Fair Lawn Prudential Insurance Co. 8.250% -- 17,586 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.440% 14,581 14,983 07/01/04
Mack-Cali Centre VI Principal Life Insurance Co. 6.865% 35,000 -- 04/01/05
Mack-Cali Bridgewater I New York Life Ins. Co. 7.000% 23,000 23,000 09/10/05
Mack-Cali Woodbridge II New York Life Ins. Co. 7.500% 17,500 17,500 09/10/05
Mack-Cali Short Hills Prudential Insurance Co. 7.740% 26,808 27,696 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.520% 10,952 11,471 10/10/05
Harborside - Plaza I U.S. West Pension Trust 6.990% 50,740 48,148 01/01/06
Harborside - Plaza II and III Northwestern Mutual Life Ins. 7.320% 99,260 101,852 01/01/06
Mack-Cali Airport Allstate Life Insurance Co. 7.050% 10,500 -- 04/01/07
Kemble Plaza II Mitsubishi Tr & Bk Co. LIBOR+0.65% 40,025 40,025 01/31/08
Kemble Plaza I Mitsubishi Tr & Bk Co. LIBOR+0.65% 32,178 32,178 01/31/09
- -----------------------------------------------------------------------------------------------------------------------------------
Total Property Mortgages $395,567 $414,048
===================================================================================================================================
</TABLE>
(1) As part of the Harborside acquisition in November 1996, a Property
Partnership agreed to make payments (with an estimated net present value of
approximately $5,252 at acquisition date) to the seller for development
rights ("Contingent Obligation") if and when such Property Partnership
commences construction on the acquired site during the next several years.
However, the agreement provides, among other things, that even if the
Property Partnership does not commence construction, the seller may
nevertheless require the Property Partnership to acquire these rights
during the six-month period after the end of the sixth year. After such
period, the seller's option lapses, but any development in years 7 through
30 will require a payment, on an increasing scale, for the development
rights. The Property Partnership is currently in the pre-development phase
of a long-range plan to develop the Harborside site on multi-property,
multi-use basis. On November 2, 1999, the Operating Partnership paid off
the Contingent Obligation in full to the seller for the development rights.
INTEREST RATE CONTRACTS
On May 24, 1995, the Operating Partnership entered into an interest rate swap
agreement with a commercial bank. The swap agreement fixes the Operating
Partnership's one-month LIBOR base to 6.285 percent per annum on a notional
amount of $24,000. The swap agreement expired in August 1999.
On January 23, 1996, the Operating Partnership entered into an interest rate
swap agreement with a commercial bank. The swap agreement fixed the Operating
Partnership's one-month LIBOR base to 5.265 percent per annum on a notional
amount of $26,000. The swap agreement expired in January 1999.
On October 1, 1998, the Operating Partnership entered into a forward treasury
rate lock agreement with a commercial bank. The agreement locked an interest
rate of 4.089 percent per annum for the three-year U.S. Treasury Note
effective November 4, 1999, on a notional amount of $50,000. The agreement
will be used to fix the Index Rate on $50,000 of the Harborside-Plaza I
mortgage, for which the Operating Partnership's interest rate re-sets for
three years beginning November 4, 1999 to the three-year U.S. Treasury Note
plus 110 basis points (see "Property Mortgages: Harborside-Plaza I").
In connection with the issuance of the Senior Unsecured Notes in March 1999, the
Operating Partnership entered into and settled forward treasury rate lock
agreements. These agreements were settled at a cost of approximately $517, which
is being amortized to interest expense over the terms of the respective
tranches.
21
<PAGE>
The Operating Partnership is exposed to credit loss in the event of
non-performance by the other parties to the interest rate contracts. However,
the Operating Partnership does not anticipate non-performance by any of the
counterparties. The Operating Partnership is also exposed to market risk from
the movement in interest rates pertaining to the forward treasury rate lock
agreement.
SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates
for the Senior Unsecured Notes, revolving credit facilities and mortgages and
loans payable as of September 30, 1999 are as follows:
<TABLE>
<CAPTION>
WEIGHTED AVG.
SCHEDULED PRINCIPAL INTEREST RATE OF
YEAR AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
October through December 1999 $ 490 $ 8,000 $ 8,490 6.22%
2000 2,808 5,419 8,227 6.67%
2001 3,010 254,168 257,178 6.31%
2002 3,201 7,814 11,015 7.02%
2003 3,680 192,093 195,773 7.28%
Thereafter 4,721 1,092,825 1,097,546 7.22%
- -----------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted Average $ 17,910 $ 1,560,319 $ 1,578,229 7.07%
===================================================================================================================================
</TABLE>
Scheduled principal payments during the three and nine month periods ended
September 30, 1999 amounted to $805 and $2,621, respectively.
(a) Assumes a weighted average LIBOR rate at September 30, 1999 of 5.38 percent
in calculating revolving credit facility and other variable rate debt
interest rates.
CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the nine months ended September 30, 1999 and 1998,
was $76,902 and $67,550, respectively. Interest capitalized by the Operating
Partnership for the nine months ended September 30, 1999 and 1998 was $4,726 and
$2,308, respectively.
SUMMARY OF INDEBTEDNESS
As of September 30, 1999, the Operating Partnership's total indebtedness of
$1,578,229, (weighted average interest rate of 7.07 percent) was comprised of
$330,160 of credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 6.21 percent), fixed rate debt of $1,241,607 (weighted
average rate of 7.31 percent), and a Contingent Obligation of $6,462.
10. PARTNERS' CAPITAL
Partners' capital in the accompanying financial statements of the Operating
Partnership, prior to August 21, 1998, relates to common units held by the
Corporation in the Operating Partnership, in addition to warrants to purchase
common units ("Unit Warrants") in the Operating Partnership issued in connection
with the Operating Partnership's December 1997 acquisition of 54 office
properties ("Mack Properties") from the Mack Company and Patriot American Office
Group ("Mack Transaction"). Subsequent to August 21, 1998, partners' capital
also includes common units held by the limited partners and preferred units
("Preferred Units") held by the preferred unitholders of the Operating
Partnership.
Net income allocated to the preferred unitholders and limited partners reflects
their pro-rata share of net income and distributions subsequent to August 21,
1998. Net income and distributions for the period prior to August 21, 1998 is
included in the changes in redeemable partnership units (see Note 11).
COMMON STOCK
On February 25, 1998, the Corporation completed an underwritten public offer and
sale of 2,500,000 shares of its common stock and used the net proceeds, which
totaled approximately $92,194 (after offering costs) to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities
and fund the acquisition of 10 Mountainview Road (see Note 3).
22
<PAGE>
On March 18, 1998, in connection with the acquisition of Prudential Business
Campus, the Corporation completed an offer and sale of 2,705,628 shares of its
common stock using the net proceeds of approximately $99,899 (after offering
costs) in the funding of such acquisition (see Note 3).
On March 27, 1998, the Corporation completed an underwritten public offer and
sale of 650,407 shares of its common stock and used the net proceeds, which
totaled approximately $23,690 (after offering costs) to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.
On April 29, 1998, the Corporation completed an underwritten offer and sale of
994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34,570 (after offering costs), primarily to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.
On May 29, 1998, the Corporation completed an underwritten offer and sale of
984,615 shares of its common stock and used the net proceeds, which totaled
approximately $34,100 (after offering costs), primarily to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.
On December 31, 1998, the Corporation completed an offer and sale of 132,710
shares of its common stock, using the net proceeds of approximately $3,940 for
general corporate purposes.
The proceeds of the above offerings were contributed by the Corporation to the
Operating Partnership in exchange for common units.
On August 6, 1998, the Board of Directors of the Corporation authorized a share
repurchase program ("Repurchase Program") under which the Corporation was
permitted to purchase up to $100,000 of the Corporation's outstanding common
stock. Purchases could be made from time to time in open market transactions at
prevailing prices or through privately negotiated transactions.
For the year ended December 31, 1998, the Corporation purchased, for
constructive retirement, 854,700 shares of its outstanding common stock for an
aggregate cost of approximately $25,058. Concurrent with these purchases, the
Corporation sold to the Operating Partnership 854,700 common units for
approximately $25,058.
For the nine months ended September 30, 1999, the Corporation purchased, for
constructive retirement, 911,700 shares of its outstanding common stock for an
aggregate cost of approximately $25,000. Concurrent with these purchases, the
Corporation sold to the Operating Partnership 911,700 common units for
approximately $25,000.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Corporation filed a registration statement with the SEC for the
Corporation's dividend reinvestment and stock purchase plan ("Plan") which was
declared effective in February 1999. The Plan commenced on March 1, 1999.
During the nine months ended September 30, 1999, 1,082 shares were issued and
proceeds of approximately $32 were received from stock purchases and/or
dividend reinvestments under the Plan. The proceeds of the shares issued were
contributed by the Corporation to the Operating Partnership in exchange for
common units.
SHAREHOLDER RIGHTS PLAN
On June 10, 1999, the Board of Directors of the Corporation authorized a
dividend distribution of one preferred share purchase right ("Right") for each
outstanding share of common stock to be distributed to all holders of record of
the common stock on July 6, 1999. Each Right entitles the registered holder to
purchase from the Corporation one one-thousandth of a share of Series A junior
participating preferred stock, par value $0.01 per share ("the Preferred
Shares"), at a price of $100.00 per one one-thousandth of a Preferred Share
("Purchase Price"), subject to adjustment as provided in the rights agreement.
The Rights expire on July 6, 2009, unless the expiration date is extended or the
Right is redeemed or exchanged earlier by the Corporation.
The Rights will be attached to each share of common stock. The Rights will
generally be exercisable only if a person or group becomes the beneficial owner
of 15 percent or more of the outstanding common stock or announces a tender
offer for 15 percent or more of the outstanding common stock ("Acquiring
Person"). In the event that a person or group becomes an Acquiring Person, each
holder of a Right will have the right to receive, upon exercise, common stock
having a market value equal to two times the Purchase Price of the Right.
23
<PAGE>
STOCK OPTION PLANS
In 1994, and as subsequently amended, the Corporation established the Mack-Cali
Employee Stock Option Plan ("Employee Plan") and the Mack-Cali Director Stock
Option Plan ("Director Plan") under which a total of 5,380,188 shares (subject
to adjustment) of the Corporation's common stock have been reserved for issuance
(4,980,188 shares under the Employee Plan and 400,000 shares under the Director
Plan). Stock options granted under the Employee Plan in 1994 and 1995 become
exercisable over a three-year period and those options granted under the
Employee Plan in 1996, 1997 and 1998 become exercisable over a five-year period.
All stock options granted under the Director Plan become exercisable in one
year. All options were granted at the fair market value at the dates of grant
and have terms of ten years. As of September 30, 1999 and December 31, 1998, the
stock options outstanding had a weighted average remaining contractual life of
approximately 7.6 and 8.5 years, respectively.
Information regarding the Corporation's stock option plans is summarized below:
<TABLE>
<CAPTION>
Weighted
Shares Average
Under Exercise
Options Price
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at January 1, 1998 3,287,290 $31.47
Granted 1,048,620 $35.90
Exercised (267,660) $20.47
Lapsed or canceled (128,268) $36.61
- -----------------------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1998 3,939,982 $33.22
Granted 37,000 $31.63
Exercised (46,583) $22.42
Lapsed or canceled (517,717) $37.10
- -----------------------------------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1999 3,412,682 $32.77
===================================================================================================================================
Options exercisable at December 31, 1998 1,334,137 $27.84
Options exercisable at September 30, 1999 1,749,379 $29.83
- -----------------------------------------------------------------------------------------------------------------------------------
Available for grant at December 31, 1998 709,223
Available for grant at September 30, 1999 996,347
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
STOCK WARRANTS
The Corporation has outstanding a total of 400,000 warrants to purchase an equal
number of shares of common stock ("Stock Warrants") at $33 per share (the market
price at date of grant). Such warrants generally vest equally over a three-year
period through January 31, 2000 and expire on January 31, 2007.
The Corporation also has outstanding a total of 514,976 Stock Warrants to
purchase an equal number of shares of common stock at $38.75 per share (the
market price at date of grant). Such warrants vest equally over a five-year
period through December 12, 2002 and expire on December 12, 2007.
As of September 30, 1999 and December 31, 1998, there were 914,976 Stock
Warrants outstanding. As of September 30, 1999 and December 31, 1998, there were
585,989 and 565,991 Stock Warrants exercisable, respectively. No Stock Warrants
have been exercised or canceled.
EXECUTIVE STOCK COMPENSATION
Effective July 1, 1999, the Corporation entered into amended and restated
employment contracts with six of its key executive officers which provided for,
among other things, compensation in the form of stock awards ("Restricted Stock
Awards") and associated tax obligation payments. In connection with the
Restricted Stock Awards, the executive officers are to receive up to a total of
193,593 shares of the Corporation's common stock vesting over a five-year period
contingent upon the Corporation meeting certain performance and/or stock
appreciation objectives.
24
<PAGE>
DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS
The Deferred Compensation Plan for Directors ("Deferred Compensation Plan")
commenced January 1, 1999 and is a plan which allows non-employee directors of
the Corporation to elect to defer up to 100 percent of their annual retainer fee
into deferred stock units. The deferred stock units are convertible into an
equal number of shares of common stock upon the directors' termination of
service from the Board of Directors or a change in control of the Corporation,
as defined in the plan. Deferred stock units are credited to each director
quarterly using the closing price of the Corporation's common stock on the
applicable dividend record date for the respective quarter. Each participating
director's account is also credited for an equivalent amount of deferred stock
units based on the dividend rate for each quarter.
During the nine months ended September 30, 1999, 2,284 deferred stock units were
earned.
EARNINGS PER UNIT
FASB No. 128 requires a dual presentation of basic and diluted EPU on the face
of the income statement for all companies with complex capital structures even
where the effect of such dilution is not material. Basic EPU excludes dilution
and is computed by dividing net income available to common unitholders by the
weighted average number of units outstanding for the period. Diluted EPU
reflects the potential dilution that could occur if securities or other
contracts to issue common units were exercised or converted into common units.
The following information presents the Operating Partnership's results for the
three and nine month periods ended September 30, 1999 and 1998 in accordance
with FASB No. 128.
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998
---- ----
Basic EPU Diluted EPU Basic EPU Diluted EPU
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $37,072 $ 37,072 $ 34,893 $ 34,893
Weighted average units 66,893 67,113 65,577 65,884
- -------------------------------------------------------------------------------------------------------------------
Per Unit $ 0.55 $ 0.55 $ 0.53 $ 0.53
===================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 1998
---- ----
Basic EPU Diluted EPU Basic EPU Diluted EPU
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $95,469 $ 95,469 $ 96,347 $ 96,347
Weighted average units 67,025 67,294 62,580 63,093
- -------------------------------------------------------------------------------------------------------------------
Per Unit $ 1.42 $ 1.42 $ 1.54 $ 1.53
===================================================================================================================
</TABLE>
The following schedule reconciles the units used in the basic EPU calculation to
the units used in the diluted EPU calculation.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic EPU Units: 66,893 65,577 67,025 62,580
Add: Stock options 220 307 269 455
Stock Warrants -- -- -- 58
- -------------------------------------------------------------------------------------------------------------------
Diluted EPU Units: 67,113 65,884 67,294 63,093
===================================================================================================================
</TABLE>
Preferred Units, Contingent Units and Restricted Stock Awards outstanding in
1999 and 1998 were not included in the computation of diluted EPU as such units
were anti-dilutive during the period.
Pursuant to the Repurchase Program, during 1998, the Corporation purchased
for constructive retirement, 854,700 shares of its outstanding common stock
for approximately $25,058. Additionally, during the nine months ended
September 30, 1999, the Corporation purchased for constructive retirement,
911,700 shares of its outstanding common stock for approximately $25,000.
Concurrent with these purchases, the Corporation sold an equivalent number of
common units to the Operating Partnership.
25
<PAGE>
11. REDEEMABLE PARTNERSHIP UNITS
The outstanding preferred and common units, excluding those common units held by
the Corporation, have been classified as redeemable partnership units outside of
permanent partners' capital prior to August 21, 1998. These units were initially
recorded at fair value and subsequently adjusted based on the fair value at the
balance sheet date as measured by the closing price of the Corporation's common
stock on that date multiplied by the total number of units outstanding.
Effective August 21, 1998, pursuant to an amendment to the Operating Partnership
agreement, in which the Operating Partnership obtained the control over the
redemption rights of the units, these units were reclassified as a component of
permanent partners' capital. The fair value of the reclassified units was
measured by the closing price of the Corporation's common stock on that date
multiplied by the total number of units outstanding.
PREFERRED UNITS
In connection with the Mack Transaction in December 1997, the Operating
Partnership issued 15,237 Series A Preferred Units and 215,325 Series B
Preferred Units, with an aggregate value of $236,491. The Preferred Units have a
stated value of $1,000 per unit and are preferred as to assets over any class of
common units or other class of preferred units of the Operating Partnership,
based on circumstances per the applicable unit certificates.
The quarterly distribution on each Preferred Unit (representing 6.75 percent of
the Preferred Unit stated value of $1,000 on an annualized basis) is an amount
equal to the greater of (i) $16.875 or (ii) the quarterly distribution
attributable to a Preferred Unit determined as if such unit had been converted
into common units, subject to adjustment for customary anti-dilution rights.
Each of the Series A Preferred Units may be converted at any time into common
units at a conversion price of $34.65 per unit, and, after the one year
anniversary of the date of the Series A Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the Series B Preferred Units may be converted at any time into
common units at a conversion price of $34.65 per unit, and, after the three year
anniversary of the date of the Series B Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the common units are redeemable for an equal number of shares of
common stock.
During 1998, the Operating Partnership issued 19,694 additional Preferred Units
(11,895 of Series A and 7,799 of Series B), convertible into 568,369 common
units and valued at approximately $20,200, in connection with the achievement of
certain performance goals at the Mack Properties in redemption of an equivalent
number of contingent Preferred Units.
During the nine months ended September 30, 1999, 20,952 Series A Preferred Units
were converted into 604,675 common units.
As of September 30, 1999, there were 229,304 Preferred Units outstanding
(convertible into 6,617,721 common units).
COMMON UNITS
Certain individuals and entities own common units in the Operating Partnership.
A common unit and a share of common stock of the General Partner have
substantially the same economic characteristics in as much as they effectively
share equally in the net income or loss of the Operating Partnership.
Common units are redeemable by the common unitholders (other than the General
Partner) at their option, subject to certain restrictions, on the basis of one
common unit for either one share of common stock or cash equal to the fair
market value of a share at the time of the redemption. The General Partner has
the option to deliver shares of common stock in exchange for all or any portion
of the cash requested. When a unitholder redeems a common unit for common stock
of the Corporation, limited partner's capital is reduced and the General
Partner's capital is increased. Effective August 21, 1998, the partnership
agreement was amended to vest this right in the Operating Partnership, rather
than in the General Partnership (see Note 2). Common units held by the General
Partner are not redeemable.
During 1998, the Operating Partnership redeemed a total of 82,880 common units
in exchange for an aggregate of $3,163 in cash. Additionally, the Operating
Partnership redeemed an aggregate of 29,300 common units for an equivalent
number of shares of common stock in the General Partner.
26
<PAGE>
On March 26, 1998, in connection with the Pacifica portfolio-phase I
acquisition, the Operating Partnership issued 100,175 common units, valued at
approximately $3,779.
On April 30, 1998, in connection with the acquisition of a 49.9 percent interest
in the G&G Martco joint venture (see Note 4), the Operating Partnership issued
218,105 common units, valued at approximately $8,334.
On June 8, 1998, in connection with the Pacifica portfolio-phase II acquisition,
the Operating Partnership issued 585,263 common units, valued at approximately
$20,753.
On July 20, 1998, in connection with the expansion of one of the Mack
Properties, the Operating Partnership issued 52,245 common units, valued at
approximately $1,632.
On September 10, 1998, in connection with the acquisition of 40 Richards Avenue,
the Operating Partnership issued 414,114 common units, valued at approximately
$12,615.
During 1998, the Operating Partnership also issued 1,731,386 common units,
valued at approximately $58,936, in connection with the achievement of certain
performance goals at the Mack Properties in redemption of an equivalent number
of contingent common units.
On June 4, 1999, in connection with the acquisition of a 0.1 percent interest in
G&G Martco joint venture (see Note 4), the Operating Partnership issued 437
common units, valued at approximately $17.
On August 31, 1999 in connection with the acquisition of 28.1 acres of
developable land located in Roseland, New Jersey, the Operating Partnership
issued 121,624 common units, valued at approximately $3,345.
During the nine months ended September 30, 1999, the Operating Partnership
redeemed an aggregate of 1,795,289 common units for an equivalent number of
shares of common stock in the Corporation.
During the nine months ended September 30, 1999, the Operating Partnership also
issued 268,432 common units, valued at approximately $7,974, in connection with
the achievement of certain performance goals at the Mack Properties in
redemption of an equivalent number of contingent common units.
As of September 30, 1999, there were 8,286,464 common units outstanding.
CONTINGENT COMMON & PREFERRED UNITS
In conjunction with the Mack Transaction in December 1997, 2,006,432 contingent
common units, 11,895 Series A contingent Preferred Units and 7,799 Series B
contingent Preferred Units were issued as contingent non-participating units
("Contingent Units"). Such Contingent Units have no voting, distribution or
other rights until such time as they are redeemed into common units, Series A
Preferred Units, and Series B Preferred Units, respectively. Redemption of such
Contingent Units shall occur upon the achievement of certain performance goals
relating to certain of the Mack Properties, specifically the achievement of
certain leasing activity. When Contingent Units are redeemed for common and
Preferred Units, an adjustment to the purchase price of certain of the Mack
Properties is recorded, based on the value of the units issued.
On account of certain of the performance goals at the Mack Properties having
been achieved during 1998, the Operating Partnership redeemed 1,731,386
contingent common units and 19,694 contingent Preferred Units and issued an
equivalent number of common and Preferred Units, as indicated above.
On account of certain of the performance goals at the Mack Properties having
been achieved during the nine months ended September 30, 1999, the Company
redeemed 268,432 contingent common units and issued an equivalent number of
common units, as indicated above. There were no contingent Preferred Units
outstanding and 6,614 contingent common units outstanding as of September 30,
1999.
UNIT WARRANTS
The Operating Partnership has 2,000,000 Unit Warrants outstanding. The Unit
Warrants are exercisable at $37.80 per common unit and expire on December 11,
2002.
27
<PAGE>
CHANGES IN REDEEMABLE PARTNERSHIP UNITS
The following table sets forth the changes in redeemable partnership units for
the year ended December 31, 1998:
<TABLE>
<CAPTION>
Limited
Preferred Partner Preferred Limited
Units Units Unitholders Partners Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 231 6,097 $ 272,815 $ 249,997 $ 522,812
Net income -- -- 10,267 9,260 19,527
Distributions -- -- (7,896) (6,827) (14,723)
Issuance of units in connection with acquisitions -- 1,735 -- 64,628 64,628
Redemption of units for shares of common stock -- (22) -- (848) (848)
Redemption of units -- (83) -- (3,163) (3,163)
Issuance of Preferred Units 17 -- 17,943 -- 17,943
Adjustment to reflect preferred unitholders'
and limited partners' capital at redemption value -- -- (69,686) (46,172) (115,858)
Reclassification of redeemable partnership units
as permanent partners' capital (248) (7,727) (223,443) (266,875) (490,318)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 -- -- -- -- --
===================================================================================================================================
</TABLE>
12. EMPLOYEE BENEFIT PLAN
All employees of the Corporation who meet certain minimum age and period of
service requirements are eligible to participate in a 401(k) defined
contribution plan (the "401(k) Plan"). The 401(k) Plan allows eligible employees
to defer up to 15 percent of their annual compensation. The amounts contributed
by employees are immediately vested and non-forfeitable. The Corporation, at
management's discretion, may match employee contributions, although no employer
contributions have been made to date.
13. COMMITMENTS AND CONTINGENCIES
TAX ABATEMENT AGREEMENTS
GROVE STREET PROPERTY
Pursuant to an agreement with the City of Jersey City, New Jersey, as
amended, expiring in 2004, one of the Property Partnerships is required to
make payments in lieu of property taxes ("PILOT") on its property at 95
Christopher Columbus Drive, Jersey City, Hudson County, New Jersey. Such
PILOT, as defined, is $1,267 per annum through May 31, 1999 and $1,584 per
annum through May 31, 2004. Such PILOT totaled $1,063 and $950 for the nine
months ended September 30, 1999 and 1998, respectively.
HARBORSIDE FINANCIAL CENTER PROPERTY
Pursuant to an agreement with the City of Jersey City, New Jersey obtained by
the former owner of the Harborside property in 1988 and assumed by one of the
Property Partnerships as part of the acquisition of the property in November
1996, the Property Partnerships are required to make PILOT payments on its
Harborside property. The agreement, which commenced in 1990, is for a term of
15 years. Such PILOT is equal to two percent of Total Project Costs, as
defined, in year one and increases by $75 per annum through year fifteen.
Total Project Costs, as defined, are $145,644. Such PILOT totaled $1,955 and
$1,920 for the nine months ended September 30, 1999 and 1998, respectively.
28
<PAGE>
GROUND LEASE AGREEMENTS
Future minimum rental payments under the terms of all non-cancelable ground
leases, under which the Operating Partnership or Property Partnerships are the
lessees as of September 30, 1999, are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
October 1, 1999 to December 31, 1999 $ 106
2000 425
2001 427
2002 427
2003 427
Thereafter 21,934
- -----------------------------------------------------------------------------------------------------------------------------------
Total $23,746
===================================================================================================================================
</TABLE>
Grounds lease payments incurred during the three and nine month periods ended
September 30, 1999 amounted to $106 and $316, respectively.
OTHER
On April 19, 1999, the Corporation announced the following changes in the
membership of its Board of Directors and the identities, titles and
responsibilities of its executive officers: (i) Thomas A. Rizk resigned from the
Board of Directors, the Executive Committee of the Board of Directors, his
position as Chief Executive Officer and as an employee of the Corporation; (ii)
Mitchell E. Hersh was appointed Chief Executive Officer of the Corporation
simultaneous with his resignation from his positions as President and Chief
Operating Officer of the Corporation; (iii) Timothy M. Jones was appointed
President of the Corporation simultaneous with his resignation from his
positions as Executive Vice President and Chief Investment Officer of the
Corporation; and (iv) Brant Cali was appointed to the Board of Directors of the
Corporation to fill the remainder of Thomas A. Risk's term as a Class III
Director and was appointed Chief Operating Officer of the Corporation, also
remaining as an Executive Vice President and Assistant Secretary of the
Corporation.
Pursuant to the terms of Mr. Rizk's employment agreement entered into with the
Corporation in December 1997 and an agreement entered into simultaneous with his
resigning from the Corporation, Mr. Rizk received a payment of approximately
$14,490 in April 1999 and will receive $500 annually over the next three years.
All costs associated with Mr. Rizk's resignation are included in non-recurring
charges for the nine months ended September 30, 1999.
The Operating Partnership is a defendant in certain litigation arising in the
normal course of business activities. Management does not believe that the
resolution of these matters will have a materially adverse effect upon the
Operating Partnership and the Property Partnerships.
14. TENANT LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2016. Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the tenant's
proportionate share of and/or increases in real estate taxes and certain
operating costs, as defined, and the pass through of charges for electrical
usage.
15. SEGMENT REPORTING
The Operating Partnership operates in one business segment - real estate. The
Operating Partnership provides leasing, management, acquisition, development,
construction and tenant-related services for its portfolio. The Operating
Partnership does not have any foreign operations. The accounting policies of the
segment are the same as those described in Note 2, excluding straight-line rent
adjustments and depreciation and amortization.
The Operating Partnership evaluates performance based upon net operating income
from the combined properties in the segment.
29
<PAGE>
Selected results of operations for the three and nine month periods ended
September 30, 1999 and 1998 and selected asset information as of September 30,
1999 and December 31, 1998 regarding the Operating Partnership's operating
segment are as follows:
<TABLE>
<CAPTION>
Total Corporate & Total
Segment Other (e) Operating Partnership
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL CONTRACT REVENUES (a):
Three months ended:
September 30, 1999 $ 135,350 $ 595 $ 135,945 (f)
September 30, 1998 126,355 1,185 127,540 (g)
Nine months ended:
September 30, 1999 $ 399,469 $ 961 $ 400,430 (h)
September 30, 1998 344,834 4,224 349,058 (i)
TOTAL OPERATING AND INTEREST EXPENSES (b):
Three months ended:
September 30, 1999 $ 46,130 $ 28,982 $ 75,112
September 30, 1998 43,857 26,737 70,594
Nine months ended:
September 30, 1999 $ 117,395 $ 119,013 $ 236,408
September 30, 1998 115,554 75,560 191,114
NET OPERATING INCOME (c):
Three months ended:
September 30, 1999 $ 89,220 $ (28,387) $ 60,833 (f)
September 30, 1998 82,498 (25,552) 56,946 (g)
Nine months ended:
September 30, 1999 $ 282,074 $ (118,052) $ 164,022 (h)
September 30, 1998 229,280 (71,336) 157,944 (i)
TOTAL ASSETS:
September 30, 1999 $ 3,562,356 $ 35,774 $ 3,598,130
December 31, 1998 3,430,865 21,329 3,452,194
TOTAL LONG-LIVED ASSETS (d):
September 30, 1999 $ 3,501,184 $ 23,666 $ 3,524,850
December 31, 1998 3,393,313 4,098 3,397,411
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total contract revenues represents all revenues during the period
(including the Operating Partnership's share of net income from
unconsolidated joint ventures), excluding adjustments for straight-lining
of rents and the Operating Partnership's share of straight-line rent
adjustments from unconsolidated joint ventures. All interest income is
excluded from the segment amounts and is classified in Corporate and Other
for all periods.
(b) Total operating and interest expenses represents the sum of real estate
taxes, utilities, operating services, general and administrative and
interest expense. All interest expense (including for property-level
mortgages) is excluded from the segment amounts and is classified in
Corporate and Other for all periods.
(c) Net operating income represents total contract revenues [as defined in Note
(a)] less total operating and interest expenses [as defined in Note (b)]
for the period.
(d) Long-lived assets are comprised of total rental property, unbilled rents
receivable and investments in unconsolidated joint ventures.
(e) Corporate & Other represents all corporate-level items (including interest
and other investment income, interest expense and non-property general and
administrative expense) as well as intercompany eliminations necessary to
reconcile to consolidated Operating Partnership totals.
(f) Excludes $2,920 of adjustments for straight lining of rents and $155 for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(g) Excludes $3,264 of adjustments for straight lining of rents and $90 for the
Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(h) Excludes $10,343 of adjustments for straight lining of rents and $111 for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(i) Excludes $9,604 of adjustments for straight lining of rents and $96 for the
Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
30
<PAGE>
16. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Cost of Start-Up Activities" ("SOP 98-5"), which is effective
for fiscal years beginning after December 15, 1998. SOP 98-5 requires costs of
start-up and organizational activities be expensed as incurred. The adoption of
SOP 98-5 did not have a material effect on the Operating Partnership's financial
statements.
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("FASB No.
133"). FASB No. 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. In June 1999, the FASB delayed the implementation
date of FASB No. 133 by one year (January 1, 2001 for the Operating
Partnership). FASB No. 133 requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. Management of the
Operating Partnership anticipates that, due to its limited use of derivative
instruments, the adoption of FASB No. 133 will not have a significant effect on
the Operating Partnership's results of operations or its financial position.
17. PRO FORMA FINANCIAL INFORMATION
The following pro forma financial information for the nine months ended
September 30, 1999 and 1998 are presented as if all acquisitions and common
stock offerings (if any) completed during the nine months ended September 30,
1999 and the year ended December 31, 1998 had occurred on January 1, 1998. In
management's opinion, all adjustments necessary to reflect the effects of these
transactions have been made.
This pro forma financial information is not necessarily indicative of what the
actual results of operations of the Operating Partnership would have been
assuming such transactions had been completed as of January 1, 1998, nor do they
represent the results of operations of future periods.
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total revenues $ 413,439 $ 390,737
Operating and other expenses 125,093 117,079
General and administrative 19,855 20,129
Depreciation and amortization 67,745 61,373
Interest expense 77,391 79,732
Non-recurring charges 16,458 --
- ------------------------------------------------------------------------------------------------------------------------------------
Income before preferred unit distributions 106,897 112,424
Preferred units distributions (11,607) (12,090)
- ------------------------------------------------------------------------------------------------------------------------------------
Income available to common unitholders $ 95,290 $ 100,334
====================================================================================================================================
Basic earnings per common unit $ 1.42 $ 1.52
Diluted earnings per common unit $ 1.42 $ 1.51
- ------------------------------------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding 67,025 65,849
Diluted weighted average units outstanding 67,294 66,363
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
M A N A G E M E N T'S D I S C U S S I O N A N D A N A L Y S I S O F
F I N A N C I A L C O N D I T I O N A N D R E S U L T S O F
O P E R A T I O N S
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Mack-Cali Realty, L.P. and subsidiaries and the notes
thereto. Certain defined terms used herein have the meaning ascribed to them in
the Consolidated Financial Statements.
The following comparisons for the three and nine month periods ended September
30, 1999 ("1999"), as compared to the three and nine month periods ended
September 30, 1998 ("1998") make reference to the following: (i) the effect of
the "Same-Store Properties," which represents all in-service properties owned by
the Operating Partnership at June 30, 1998 (for the three-month period
comparisons), and which represents all in-service properties owned by the
Operating Partnership at December 31, 1997 (for the nine-month period
comparisons) and (ii) the effect of the "Acquired Properties," which represents
all properties acquired or placed in service by the Operating Partnership from
July 1, 1998 through September 30, 1999 (for the three-month period
comparisons), and which represents all properties acquired or placed in service
by the Operating Partnership from January 1, 1998 through September 30, 1999
(for the nine-month period comparisons).
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Quarter Ended
September 30, Dollar Percent
(IN THOUSANDS) 1999 1998 Change Change (%)
- -----------------------------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
<S> <C> <C> <C> <C>
Base rents $118,086 $112,976 $5,110 4.5%
Escalations and recoveries from tenants 14,829 14,182 647 4.6
Parking and other 5,112 2,684 2,428 90.5
- -----------------------------------------------------------------------------------------------------------------------------------
Sub-total 138,027 129,842 8,185 6.3
Equity in earnings of
unconsolidated joint ventures 834 324 510 157.4
Interest income 159 728 (569) (78.2)
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenues 139,020 130,894 8,126 6.2
- -----------------------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 14,849 13,488 1,361 10.1
Utilities 11,634 11,300 334 3.0
Operating services 16,258 15,807 451 2.9
- -----------------------------------------------------------------------------------------------------------------------------------
Sub-total 42,741 40,595 2,146 5.3
General and administrative 5,897 6,118 (221) (3.6)
Depreciation and amortization 22,967 21,213 1,754 8.3
Interest expense 26,474 23,881 2,593 10.9
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 98,079 91,807 6,272 6.8
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 40,941 39,087 1,854 4.7
Preferred unit distribution (3,869) (4,194) 325 (7.7)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income available to
common unitholders $37,072 $34,893 $2,179 6.2%
===================================================================================================================================
</TABLE>
32
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties and Same-Store Properties (in
thousands).
<TABLE>
<CAPTION>
Total Acquired Same-Store
Operating Partnership Properties Properties
--------------------- ---------------- -----------------
Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $5,110 4.5% $3,124 2.8% $1,986 1.7%
Escalations and recoveries from tenants 647 4.6 208 1.5 439 3.1
Parking and other 2,428 90.5 65 2.4 2,363 88.1
- -----------------------------------------------------------------------------------------------------------------------------------
Total $8,185 6.3% $3,397 2.6% $4,788 3.7%
===================================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $1,361 10.1% $430 3.2% $931 6.9%
Utilities 334 3.0 337 3.0 (3) 0.0
Operating services 451 2.9 600 3.8 (149) (0.9)
- -----------------------------------------------------------------------------------------------------------------------------------
Total $2,146 5.3% $1,367 3.4% $779 1.9%
===================================================================================================================================
OTHER DATA:
Number of wholly-owned properties 251 12 239
Square feet (in thousands) 27,369 1,090 26,279
</TABLE>
Base rents for the Same-Store Properties increased $2.0 million, or 1.7 percent,
for 1999 as compared to 1998, due primarily to rental rate increases in 1999.
Escalations and recoveries from tenants for the Same-Store Properties increased
$0.4 million, or 3.1 percent, for 1999 over 1998, due to the recovery of an
increased amount of total property expenses, as well as additional settle-up
billings in 1999. Parking and other income for the Same-Store Properties
increased $2.4 million, or 88.1 percent, which is primarily attributable to
lease termination fees received in 1999.
Real estate taxes on the Same-Store Properties increased $0.9 million, or 6.9
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Operating
Partnership increased $0.3 million, or 3.0 percent, for 1999 as compared to
1998, due substantially to the Acquired Properties. Operating services for the
Same-Store Properties decreased $0.1 million, or 0.9 percent, due primarily to a
reduction in maintenance costs incurred.
Equity in earnings of unconsolidated joint ventures increased $0.5 million in
1999 as compared to 1998. This is due to additional joint ventures being entered
into by the Operating Partnership (see Note 4 to the Financial Statements).
Interest income decreased by approximately $0.6 million, or 78.2 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998 with no interest income from
mortgage note receivables in 1999.
General and administrative decreased by $0.2 million, or 3.6 percent for 1999 as
compared to 1998. This decrease is due primarily to decreased payroll and
related costs in 1999.
Depreciation and amortization increased by $1.8 million, or 8.3 percent, for
1999 over 1998. Of this increase, $0.7 million, or 3.1 percent, is attributable
to the Acquired Properties, and $1.1 million, or 5.2 percent, is due to the
Same-Store Properties.
Interest expense increased $2.6 million, or 10.9 percent, for 1999 as
compared to 1998. This increase is due primarily to the replacement in 1999
of short-term credit facility borrowings with long-term fixed rate unsecured
debt and net additional drawings from the Operating Partnership's revolving
credit facilities generally as a result of Operating Partnership acquisitions
in 1998. These increases were partially offset by the reduction in spread
over LIBOR due to the 1998 Unsecured Facility signed in April 1998 and the
achievement by the Operating Partnership of investment grade credit ratings
in November 1998.
33
<PAGE>
Net income available to common unitholders increased to $37.1 million in 1999
from $34.9 million in 1998. The increase of $2.2 million is due to the factors
discussed above. Additionally, there were preferred dividends of $3.9 million in
1999 and $4.2 million in 1998.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Dollar Percent
(IN THOUSANDS) 1999 1998 Change Change (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 350,665 $ 311,753 $ 38,912 12.5%
Escalations and recoveries from tenants 46,055 36,897 9,158 24.8
Parking and other 12,073 7,502 4,571 60.9
- -----------------------------------------------------------------------------------------------------------------------------------
Sub-total 408,793 356,152 52,641 14.8
Equity in earnings of
unconsolidated joint ventures 1,462 419 1,043 248.9
Interest income 629 2,187 (1,558) (71.2)
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenues 410,884 358,758 52,126 14.5
- -----------------------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 42,900 35,415 7,485 21.1
Utilities 31,055 28,717 2,338 8.1
Operating services 50,401 44,128 6,273 14.2
- -----------------------------------------------------------------------------------------------------------------------------------
Sub-total 124,356 108,260 16,096 14.9
General and administrative 19,801 18,708 1,093 5.8
Depreciation and amortization 67,401 56,537 10,864 19.2
Interest expense 75,793 64,146 11,647 18.2
Non-recurring charges 16,458 -- 16,458 --
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 303,809 247,651 56,158 22.7
- -----------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 107,075 111,107 (4,032) (3.6)
Extraordinary item - loss on early
retirement of debt -- (2,670) 2,670 (100.0)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 107,075 108,437 (1,362) (1.3)
Preferred unit distribution (11,607) (12,090) 483 (4.0)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income available to
common unitholders $ 95,468 $ 96,347 $ (879) $ (0.9)%
===================================================================================================================================
</TABLE>
34
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties and Same-Store Properties (in
thousands).
<TABLE>
<CAPTION>
Total Acquired Same-Store
Operating Partnership Properties Properties
--------------------- ---------------- -----------------
Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $38,912 12.5% $29,395 9.4% $ 9,517 3.1%
Escalations and recoveries from tenants 9,158 24.8 5,042 13.7 4,116 11.1
Parking and other 4,571 60.9 2,074 27.6 2,497 33.3
- -----------------------------------------------------------------------------------------------------------------------------------
Total $52,641 14.8% $36,511 10.3% $16,130 4.5%
===================================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $ 7,485 21.1% $ 5,580 15.7% $ 1,905 5.4%
Utilities 2,338 8.1 2,415 8.4 (77) (0.3)
Operating services 6,273 14.2 5,742 13.0 531 1.2
- -----------------------------------------------------------------------------------------------------------------------------------
Total $16,096 14.9% $13,737 12.7% $ 2,359 2.2%
===================================================================================================================================
OTHER DATA:
Number of wholly-owned properties 251 62 189
Square feet (in thousands) 27,369 5,404 21,965
</TABLE>
Base rents for the Same-Store Properties increased $9.5 million, or 3.1 percent,
for 1999 as compared to 1998, due primarily to rental rate increases in 1999.
Escalations and recoveries from tenants for the Same-Store Properties increased
$4.1 million, or 11.1 percent, for 1999 over 1998, due to the recovery of an
increased amount of total property expenses, as well as additional settle-up
billings in 1999. Parking and other income for the Same-Store Properties
increased $2.5 million, or 33.3 percent, which is primarily attributable to
lease termination fees received in 1999.
Real estate taxes on the Same-Store Properties increased $1.9 million, or 5.4
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Same-Store
Properties decreased $0.1 million, or 0.3 percent, for 1999 as compared to 1998,
due primarily to decreased electric rates and usage in 1999. Operating services
for the Same-Store Properties increased $0.5 million, or 1.2 percent, due
primarily to increased snow removal costs incurred at the Same-Store Properties
in 1999.
Equity in earnings of unconsolidated joint ventures increased $1.0 million in
1999 as compared to 1998. This is due to additional joint ventures being entered
into by the Operating Partnership (see Note 4 to the Financial Statements).
Interest income decreased by approximately $1.6 million, or 71.2 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998 with no interest income from
mortgage note receivables in 1999.
General and administrative increased by $1.1 million, or 5.8 percent for 1999 as
compared to 1998. This increase is due primarily to an increase in payroll and
related costs and professional fees as a result of the Operating Partnership's
expansion in 1998.
Depreciation and amortization increased by $10.9 million, or 19.2 percent, for
1999 over 1998. Of this increase, $7.1 million, or 12.5 percent, is attributable
to the Acquired Properties, and $3.8 million, or 6.7 percent, is due to the
Same-Store Properties.
Interest expense increased $11.6 million, or 18.2 percent, for 1999 as compared
to 1998. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt and net
additional drawings from the Operating Partnership's revolving credit facilities
generally as a result of Operating Partnership acquisitions in 1998. These
increases were partially offset by a reduction in LIBOR in 1999, the reduction
in spread over LIBOR due to the 1998 Unsecured Facility signed in April 1998 and
the achievement by the Operating Partnership of investment grade credit ratings
in November 1998.
Non-recurring charges of $16.5 million were incurred in 1999, as a result of the
resignation of Thomas A. Rizk (see Note 13 to the Financial Statements).
35
<PAGE>
Net income available to common unitholders decreased to $95.5 million in 1999
from $96.3 million in 1998. The decrease of $0.8 million is due to the factors
discussed above, partially offset by an extraordinary item of $2.7 million in
1998. Additionally, there were preferred dividends of $11.6 million in 1999 and
$12.1 million in 1998.
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the nine months ended September 30, 1999, the Operating Partnership
generated $162.4 million in cash flows from operating activities, and together
with $1.1 billion in borrowings from the Operating Partnership's revolving
credit facilities, the issuance of unsecured notes and funds from additional
mortgage debt, $12.0 million in distributions received from unconsolidated joint
ventures, $1.0 million in proceeds from stock options exercised, and $4.7
million from cash and cash equivalents, used an aggregate of approximately $1.3
billion to acquire properties and land parcels and pay for other tenant and
building improvements totaling $143.2 million, repay outstanding borrowings on
its revolving credit facilities and other mortgage debt of $974.2 million, pay
quarterly distributions of $122.2 million, invest $39.6 million in
unconsolidated joint ventures, repurchase 911,700 shares of the Corporation's
outstanding common stock for $25.0 million, pay deferred financing costs of $7.0
million and add $0.2 million to restricted cash.
CAPITALIZATION
During the nine months ended September 30, 1999, in conjunction with the
redemption of certain of the contingent units issued in the Mack Transaction,
the Operating Partnership issued a total of 268,432 common units with a total
value of approximately $8.0 million at time of issuance.
In August 1998, the Board of Directors of the Corporation authorized a share
repurchase program under which the Corporation was permitted to purchase up to
$100.0 million of the Corporation's outstanding common stock. Purchases could be
made from time to time in open market transactions at prevailing prices or
through privately negotiated transactions. Subsequently, through September 30,
1999, the Corporation purchased for constructive retirement, 1,766,400 shares
of its outstanding common stock for an aggregate cost of approximately $50.1
million. Concurrent with these purchases, the Corporation sold to the Operating
Partnership 1,766,400 common units for approximately $50.1 million.
On June 10, 1999, the Board of Directors of the Corporation authorized a
dividend distribution of one preferred share purchase right for each outstanding
share of common stock to be distributed to all holders of record of the common
stock on July 6, 1999. Each Right entitles the registered holder to purchase
from the Corporation one one-thousandth of a share of Series A junior
participating preferred stock, par value $0.01 per share, at a price of $100.00
per one one-thousandth of a Preferred Share, subject to adjustment as provided
in the rights agreement. The Rights expire on July 6, 2009, unless the
expiration date is extended or the Right is redeemed or exchanged earlier by the
Corporation.
The Rights will be attached to each share of common stock. The Rights will
generally be exercisable only if a person or group becomes the beneficial owner
of 15 percent or more of the outstanding common stock or announces a tender
offer for 15 percent or more of the outstanding common stock. In the event that
a person or group becomes an Acquiring Person, each holder of a Right will have
the right to receive, upon exercise, common stock having a market value equal to
two times the Purchase Price of the Right. The Corporation's adoption of the
shareholder rights plan was not taken in response to any known effort to acquire
control of the Corporation.
As of September 30, 1999, the Operating Partnership's total indebtedness of $1.6
billion (weighted average interest rate of 7.07 percent) was comprised of $330.2
million of revolving credit facility borrowings and other variable rate mortgage
debt (weighted average rate of 6.21 percent), fixed rate debt of $1.2 billion
(weighted average rate of 7.31 percent), and a Contingent Obligation of $6.5
million.
As of September 30, 1999, the Operating Partnership had outstanding borrowings
of $250.0 million under its revolving credit facilities (with aggregate
borrowing capacity of $1.1 billion). The outstanding borrowings were comprised
of $250.0 million from the 1998 Unsecured Facility, with no outstanding
borrowings on the Prudential Facility. The 1998 Unsecured Facility, with 28
lender banks, carries an interest rate, at the Operating Partnership's election,
of either 90 basis points over LIBOR or the higher of the lender's prime rate or
the Federal Funds rate plus 50 basis points and matures in April 2001. The
interest rate is currently LIBOR plus 90 basis points. The Prudential Facility
carries an interest rate of 110 basis points over LIBOR and matures in September
2000.
36
<PAGE>
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Corporation to
continue to qualify as a REIT under the Code, the Corporation will not during
any four consecutive fiscal quarters make distributions with respect to common
stock or other equity interests in an aggregate amount in excess of 90 percent
of funds from operations for such period, subject to certain other adjustments.
The 1998 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.
The Operating Partnership has three investment grade credit ratings. Duff &
Phelps Credit Rating Co. ("DCR") and Standard & Poors Rating Services ("S&P")
have each assigned their BBB rating to the $785.3 million of total unsecured
corporate debt of the Operating Partnership. DCR and S&P have also assigned
their BBB- rating to prospective preferred stock offerings of the Corporation.
Moody's Investors Service has assigned its Baa3 rating to the unsecured
corporate debt and its Ba1 rating to prospective preferred stock offerings of
the Corporation.
The terms of the unsecured corporate debt include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.
In October 1998, the Operating Partnership entered into a forward treasury rate
lock agreement with a commercial bank. The agreement locked an interest rate of
4.089 percent per annum for the three-year U.S. Treasury Note effective November
4, 1999, on a notional amount of $50.0 million. The agreement will be used to
fix the Index Rate on $50.0 million of the Harborside - Plaza I mortgage, for
which the Operating Partnership's interest rate re-sets for three years
beginning November 4, 1999 to the interpolated three-year U.S. Treasury Note
plus 110 basis points (see Note 9 to the Financial Statements - "Property
Mortgages: Harborside-Plaza I").
As of September 30, 1999, the Operating Partnership had 218 unencumbered
properties, totaling 20.2 million square feet, representing 74.0 percent of the
Operating Partnership's total portfolio on a square footage basis. The Operating
Partnership is currently reviewing its option to convert the $150.0 Million
Prudential Mortgage Loan, encumbering 12 properties aggregating 2.4 million
square feet, to unsecured corporate debt.
The Operating Partnership and Corporation has an effective shelf registration
statement with the SEC for an aggregate of $2.0 billion in debt securities,
preferred stock and preferred stock represented by depositary shares, under
which the Operating Partnership has issued an aggregate of $785.3 million of
unsecured corporate debt.
Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures. Management believes that the Operating
Partnership will have access to the capital resources necessary to expand and
develop its business. To the extent that the Operating Partnership's cash flow
from operating activities is insufficient to finance its non-recurring capital
expenditures such as property acquisition and construction project costs and
other capital expenditures, the Operating Partnership expects to finance such
activities through borrowings under its credit facilities and other debt and
equity financing.
The Operating Partnership expects to meet its short-term liquidity requirements
generally through its working capital and net cash provided by operating
activities, along with the 1998 Unsecured Facility and the Prudential Facility.
The Operating Partnership is frequently examining potential property
acquisitions and construction projects and, at any given time, one or more of
such acquisitions or construction projects may be under consideration.
Accordingly, the ability to fund property acquisitions and construction projects
is a major part of the Operating Partnership's financing requirements. The
Operating Partnership expects to meet its financing requirements through funds
generated from operating activities, long-term or short-term borrowings
(including draws on the Operating Partnership's revolving credit facilities) and
the issuance of additional debt or equity securities. In addition, the Operating
Partnership anticipates utilizing the 1998 Unsecured Facility and the Prudential
Facility primarily to fund property acquisitions and construction projects.
As of quarter end, the Operating Partnership's total debt had a weighted average
term to maturity of 5.5 years. The Operating Partnership does not intend to
reserve funds to retire its unsecured corporate debt, Harborside mortgages,
$150.0 Million Prudential Mortgage Loan, its other property mortgages or other
long-term mortgages and loans payable
37
<PAGE>
upon maturity. Instead, the Operating Partnership will seek to refinance such
debt at maturity or retire such debt through the issuance of additional debt or
equity securities. The Operating Partnership is reviewing various refinancing
options, including the issuance of additional unsecured corporate debt,
preferred stock, and/or obtaining additional mortgage debt, some or all of which
may be completed during 1999. The Operating Partnership anticipates that its
available cash and cash equivalents and cash flows from operating activities,
together with cash available from borrowings and other sources, will be adequate
to meet the Operating Partnership's capital and liquidity needs both in the
short and long-term. However, if these sources of funds are insufficient or
unavailable, the Operating Partnership's ability to make the expected
distributions discussed below may be adversely affected.
To maintain its qualification as a REIT, the Corporation must make annual
distributions to its stockholders of at least 95 percent of its REIT taxable
income, determined without regard to the dividends paid deduction and by
excluding net capital gains. The Corporation currently relies on the
distributions it receives from the Operating Partnership to make its
distributions to its stockholders. Moreover, the Operating Partnership intends
to continue to make regular quarterly distributions to its unitholders which,
based upon current policy, in the aggregate would equal approximately $135.5
million on an annualized basis. However, any such distribution would only be
paid out of available cash after meeting operating requirements, scheduled debt
service on mortgages and loans payable, and preferred unit distributions.
38
<PAGE>
SIGNIFICANT TENANTS
The following table sets out a schedule of the Operating Partnership's 20
largest tenants, for the Operating Partnership's wholly-owned properties as of
September 30, 1999, based upon annualized base rents:
<TABLE>
<CAPTION>
Percentage of Percentage of
Annualized Operating Partnership Square Total Year of
Number of Base Rental Annualized Base Feet Operating Partnership Lease
Properties Revenue ($)(1) Rental Revenue (%) Leased Leased Sq.Ft. (%) Expiration
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AT&T Corporation 6 15,433,136 3.4 1,034,779 4.0 2009 (2)
Donaldson, Lufkin &
Jenrette Securities Corp. 2 11,713,357 2.6 543,282 2.1 2009 (3)
AT&T Wireless Services 2 8,199,960 1.8 382,030 1.5 2007 (4)
International Business
Machines Corporation 5 7,522,499 1.7 390,370 1.5 2007 (5)
Allstate Insurance Company 10 6,377,507 1.4 293,820 1.1 2009 (6)
Prentice-Hall Inc. 1 5,794,893 1.3 474,801 1.8 2014
Nabisco Inc. 2 5,467,178 1.2 300,378 1.2 2000
Toys 'R' US - NJ, Inc. 1 5,342,672 1.2 242,518 0.9 2012
American Institute of Certified
Public Accountants 1 4,981,357 1.1 249,768 1.0 2012
CMP Media Inc. 1 4,826,107 1.1 206,274 0.8 2014
Board of Gov./Federal Reserve 1 4,605,091 1.0 117,008 0.5 2009 (7)
Dean Witter Trust Company 1 4,319,507 0.9 221,019 0.9 2008
Winston & Strawn 1 4,214,885 0.9 108,100 0.4 2003
KPMG Peat Marwick, LLP 2 3,824,080 0.8 161,760 0.6 2007 (8)
Rent Net Inc. 1 3,701,763 0.8 94,917 0.4 2006
Bank of Tokyo - Mitsubishi Ltd. 1 3,378,924 0.7 137,076 0.5 2009
Telerate Systems, Inc. 1 3,340,823 0.7 179,286 0.7 2006 (9)
Bankers Trust Harborside Inc. 1 3,272,500 0.7 385,000 1.5 2003
Dean Witter Reynolds Inc. 4 3,185,372 0.7 137,181 0.5 2008(10)
Deloitte & Touche USA LLP 1 3,162,933 0.7 118,864 0.5 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Totals 45 112,664,544 24.7 5,778,231 22.4
====================================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
(2) 39,183 square feet expire February 2000; 66,268 square feet expire December
2000; 3,950 square feet expire August 2002; 63,278 square feet expire May
2004; 475,100 square feet expire January 2008; 387,000 square feet expire
January 2009.
(3) 426,691 square feet expire July 2009; 15,776 square feet expire September
2009; 100,815 square feet expire November 2009.
(4) 12,150 square feet expire September 2004; 345,799 square feet expire March
2007; 24,081 square feet expire June 2007.
(5) 29,157 square feet expire October 2000; 85,000 square feet expire December
2000; 26,749 square feet expire January 2002; 1,065 square feet expire
November 2002; 248,399 square feet expire December 2007.
(6) 22,444 square feet expire July 2001; 70,517 square feet expire June 2002;
71,030 square feet expire September 2002; 18,882 square feet expire April
2003; 2,867 square feet expire January 2004; 36,305 square feet expire
January 2005; 23,024 square feet expire October 2005; 6,108 square feet
expire August 2006; 31,143 square feet expire April 2008; 11,500 square
feet expire April 2009.
(7) 94,719 square feet expire May 2005; 22,289 square feet expire July 2009.
(8) 104,556 square feet expire September 2002; 57,204 square feet expire July
2007.
(9) 129,399 square feet expire June 2000; 4,700 square feet expire March 2001;
45,187 square feet expire June 2006.
(10) 13,140 square feet expire April 2005; 19,390 square feet expire October
2007; 85,151 square feet expire February 2008; 19,500 square feet expire
June 2008.
39
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS
The following table sets forth a schedule of the lease expirations for the total
of the Operating Partnership's wholly-owned office, office/flex,
industrial/warehouse and stand-alone retail properties beginning October 1,
1999, assuming that none of the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/1/99-12/31/99 148 707,437 2.7 12,390,441 17.51 2.7
2000.......... 521 3,503,101 13.6 61,431,744 17.54 13.5
2001.......... 494 2,882,291 11.1 47,835,702 16.60 10.5
2002.......... 498 3,479,390 13.5 60,892,235 17.50 13.4
2003.......... 383 3,847,104 14.9 66,256,428 17.22 14.5
2004.......... 283 2,268,519 8.8 41,203,386 18.16 9.0
2005.......... 111 1,648,840 6.4 31,771,923 19.27 7.0
2006.......... 58 1,036,981 4.0 21,847,131 21.07 4.8
2007.......... 44 1,237,123 4.8 23,989,253 19.39 5.3
2008.......... 37 1,537,693 5.9 24,378,236 15.85 5.3
2009.......... 39 1,471,920 5.7 27,987,138 19.01 6.1
2010 and thereafter 44 2,220,021 8.6 36,068,738 16.25 7.9
- ---------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,660 25,840,420 100.0(4) 456,052,355 17.65 100.0
=================================================================================================================================
</TABLE>
(1) Includes office, office/flex, industrial/warehouse and stand-alone retail
property tenants only. Excludes leases for amenity, retail, parking and
month-to-month tenants. Some tenants have multiple leases.
(2) Excludes all space vacant as of September 30, 1999.
(3) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
(4) Reconciliation to the Operating Partnership's total net rentable square
footage is as follows:
<TABLE>
<CAPTION>
SQUARE FEET PERCENTAGE OF TOTAL
----------- -------------------
<S> <C> <C>
Square footage leased to commercial tenants 25,840,420 94.4%
Square footage used for corporate offices, management offices,
building use, retail tenants, food services, other ancillary
service tenants and occupancy adjustments 471,518 1.7
Square footage vacant 1,056,587 3.9
----------- -----
Total net rentable square footage (does not include
residential, land lease, retail or not-in-service properties) 27,368,525 100.0%
=========== ======
</TABLE>
40
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office properties beginning October 1, 1999, assuming that none of the tenants
exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/1/99-12/31/99 122 581,392 2.7 11,130,020 19.14 2.7
2000.......... 444 2,979,579 13.7 55,380,906 18.59 13.6
2001.......... 411 2,332,009 10.7 41,451,414 17.77 10.1
2002.......... 409 2,657,865 12.3 52,331,688 19.69 12.8
2003.......... 320 3,253,262 15.0 60,329,775 18.54 14.8
2004.......... 241 1,823,349 8.4 36,194,913 19.85 8.9
2005.......... 86 1,378,335 6.4 28,657,467 20.79 7.0
2006.......... 47 805,306 3.7 17,938,641 22.28 4.4
2007.......... 38 1,123,542 5.2 22,384,919 19.92 5.5
2008.......... 34 1,388,098 6.4 23,436,378 16.88 5.7
2009.......... 28 1,313,670 6.1 25,944,428 19.75 6.3
2010 and thereafter 35 2,030,555 9.4 33,514,482 16.51 8.2
- ---------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,215 21,666,962 100.0 408,695,031 18.86 100.0
=================================================================================================================================
</TABLE>
(1) Includes office tenants only. Excludes leases for amenity, retail, parking
and month-to-month office tenants. Some tenants have multiple leases.
(2) Excludes all space vacant as of September 30, 1999.
(3) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
41
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office/flex properties beginning October 1, 1999, assuming that none of the
tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/1/99-12/31/99 23 120,660 3.2 1,208,651 10.02 2.8
2000.......... 73 503,418 13.3 5,813,259 11.55 13.4
2001.......... 78 518,735 13.7 5,780,261 11.14 13.4
2002.......... 87 775,085 20.5 8,062,840 10.40 18.6
2003.......... 60 502,368 13.3 5,494,905 10.94 12.7
2004.......... 34 262,350 7.0 3,108,468 11.85 7.2
2005.......... 25 270,505 7.2 3,114,456 11.51 7.2
2006.......... 11 231,675 6.1 3,908,490 16.87 9.0
2007.......... 6 113,581 3.0 1,604,334 14.13 3.7
2008.......... 3 149,595 4.0 941,858 6.30 2.2
2009.......... 10 146,450 3.9 1,936,510 13.22 4.5
2010 and thereafter 8 181,466 4.8 2,289,256 12.62 5.3
- ---------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 418 3,775,888 100.0 43,263,288 11.46 100.0
=================================================================================================================================
</TABLE>
(1) Includes office/flex tenants only. Excludes leases for amenity, retail,
parking and month-to-month office/flex tenants. Some tenants have multiple
leases.
(2) Excludes all space vacant as of September 30, 1999.
(3) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
42
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
industrial/warehouse properties beginning October 1, 1999, assuming that none of
the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/1/99-12/31/99 3 5,385 1.4 51,770 9.61 1.4
2000.......... 4 20,104 5.3 237,579 11.82 6.6
2001.......... 5 31,547 8.3 604,027 19.15 16.6
2002.......... 2 46,440 12.2 497,707 10.72 13.7
2003.......... 3 91,474 24.1 431,748 4.72 11.9
2004.......... 7 173,520 45.6 1,705,005 9.83 46.9
2009.......... 1 11,800 3.1 106,200 9.00 2.9
- ---------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 25 380,270 100.0 3,634,036 9.56 100.0
=================================================================================================================================
</TABLE>
(1) Includes industrial/warehouse tenants only. Excludes leases for amenity,
retail, parking and month-to-month industrial/warehouse tenants. Some
tenants have multiple leases.
(2) Excludes all space vacant as of September 30, 1999.
(3) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rent revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, the historical results may differ from those set forth above.
SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES
The following table sets forth a schedule of the lease expirations for the
stand-alone retail properties beginning October 1, 1999, assuming that none of
the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) Leases ($) (2) Leases ($) Leases (%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2004.......... 1 9,300 53.8 195,000 20.97 42.4
2012 ......... 1 8,000 46.2 265,000 33.12 57.6
- ---------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2 17,300 100.0 460,000 26.59 100.0
=================================================================================================================================
</TABLE>
(1) Includes stand-alone retail property tenants only.
(2) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
43
<PAGE>
INDUSTRY DIVERSIFICATION
The following table lists the Operating Partnership's 30 largest industry
classifications based on annualized contractual base rent for the month of
September 1999:
<TABLE>
<CAPTION>
Annualized Percentage of Percentage of Total
Base Rental Operating Partnership Square Operating
Revenue Annualized Base Feet Partnership
Industry Classification ($) (1) (2) Rental Revenue (%) Leased Leased Sq. Ft. (%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities, Commodity Contracts & Other Financial 46,702,227 10.2 2,370,242 9.2
Manufacturing 44,274,194 9.7 2,731,460 10.6
Telecommunications 34,976,699 7.7 2,211,130 8.6
Insurance Carriers & Related Assistance 31,831,333 7.0 1,686,953 6.5
Computer System Design Svcs. 30,025,620 6.6 1,638,894 6.3
Legal Services 25,647,623 5.7 1,231,485 4.8
Credit Intermediation & Related Activities 22,870,659 5.0 1,358,786 5.3
Wholesale Trade 18,833,730 4.1 1,330,562 5.1
Health Care & Social Assistance 17,591,042 3.9 962,709 3.7
Information Services 16,888,979 3.7 828,099 3.2
Accounting/Tax Prep. 14,924,779 3.3 718,136 2.8
Other Professional 13,478,417 3.0 828,362 3.2
Publishing Industries 13,177,407 2.9 562,168 2.2
Retail Trade 12,751,401 2.8 784,426 3.0
Arts, Entertainment & Recreation 10,510,745 2.3 791,534 3.1
Transportation 9,806,177 2.2 728,660 2.8
Public Administration 8,874,718 1.9 312,030 1.2
Other Services (except Public Administration) 8,505,491 1.8 643,701 2.5
Advertising/Related Services 7,573,900 1.7 372,430 1.4
Data Processing Services 7,031,427 1.5 318,119 1.2
Management of Companies & Finance 6,462,814 1.4 366,311 1.4
Architectural/Engineering 6,439,680 1.4 385,446 1.5
Scientific Research/Development 6,421,898 1.4 375,569 1.4
Management/Scientific 5,727,197 1.3 302,081 1.2
Real Estate & Rental & Leasing 5,526,210 1.2 312,373 1.2
Monetary Authorities - Central Banks 4,617,017 1.0 273,024 1.1
Construction 4,346,551 0.9 258,203 1.0
Educational Services 4,288,213 0.9 255,045 1.0
Utilities 3,987,263 0.9 196,366 0.8
Admin & Support, Waste Mgt. & Remediation Svcs. 3,321,837 0.7 239,425 0.9
Other 8,637,107 1.9 466,691 1.8
- --------------------------------------------------------------------------------------------------------------------------
Totals 456,052,355 100.0 25,840,420 100.0
=========================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual September 1999
billings times 12. For leases whose rent commences after September 30,
1999, annualized base rental revenue is based on the first month's
billing times 12. As annualized base rental revenue is not derived from
historical GAAP results, historical results may differ from those set
forth above.
(2) Includes office, office/flex and industrial/warehouse tenants only.
Excludes leases for amenity, retail, parking and month-to-month office
tenants. Some tenants have multiple leases.
44
<PAGE>
MARKET DIVERSIFICATION
The following table lists the Operating Partnership's 25 largest markets (MSAs),
based on annualized contractual base rent for the month of September 1999:
<TABLE>
<CAPTION>
Annualized Percentage of
Base Rental Operating Partnership Total
Revenue Annualized Base Property Size Percentage of
Market (MSA) ($) (1) (2) Rental Revenue (%) Rentable Area Rentable Area (%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bergen-Passaic, NJ 78,314,803 17.2 4,530,091 16.5
New York, NY (Westchester-Rockland Counties) 70,380,162 15.3 4,355,070 15.9
Newark, NJ (Essex-Morris-Union Counties) 68,810,307 15.1 3,671,218 13.4
Jersey City, NJ 46,625,068 10.2 2,508,700 9.2
Philadelphia, PA-NJ 32,810,387 7.2 2,458,458 9.0
Washington, DC-MD-VA 17,155,936 3.8 616,549 2.2
Denver, CO 16,738,421 3.7 1,007,931 3.7
Dallas, TX 15,036,172 3.3 959,463 3.5
Trenton, NJ (Mercer County) 14,292,659 3.1 742,915 2.7
Middlesex-Somerset-Hunterdon, NJ 12,149,438 2.7 659,041 2.4
San Antonio, TX 11,415,427 2.5 940,302 3.4
San Francisco, CA 9,598,327 2.1 450,891 1.6
Houston, TX 8,516,811 1.9 700,008 2.5
Stamford-Norwalk, CT 8,492,240 1.9 461,250 1.7
Monmouth-Ocean, NJ 6,675,456 1.5 577,423 2.1
Nassau-Suffolk, NY 6,382,207 1.4 261,849 1.0
Phoenix-Mesa, AZ 6,126,837 1.3 536,268 2.0
Austin-San Marcos, TX 5,432,957 1.2 270,703 1.0
Boulder-Longmont, CO 3,502,029 0.8 270,421 1.0
Omaha, NE-IA 3,018,071 0.7 319,535 1.2
Bridgeport, CT 2,919,710 0.6 145,487 0.5
Tampa-St. Peters, FL 2,667,732 0.6 297,429 1.1
Colorado Springs, CO 2,624,878 0.6 209,987 0.8
Dutchess County, NY 2,136,199 0.5 118,727 0.4
Atlantic-Cape May, NJ 1,509,816 0.3 80,344 0.3
Other 2,720,305 0.5 218,465 0.9
- -------------------------------------------------------------------------------------------------------------------------
Totals 456,052,355 100.0 27,368,525 100.0
=========================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual September 1999
billings times 12. For leases whose rent commences after September 30,
1999, annualized base rental revenue is based on the first month's
billing times 12. As annualized base rental revenue is not derived from
historical GAAP results, historical results may differ from those set
forth above.
(2) Includes office, office/flex and industrial/warehouse tenants only.
Excludes leases for amenity, retail, parking and month-to-month office
tenants. Some tenants have multiple leases.
45
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive .................. 1987 40,422 100.0 780 0.17 19.30
200 Decadon Drive .................. 1991 39,922 99.8 708 0.15 17.77
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Route 208 North .............. 1987 143,000 94.5 3,327 0.71 24.62
FORT LEE
One Bridge Plaza ................... 1981 200,000 95.2 4,765 1.02 25.03
2115 Linwood Ave (4) ............... 1981 68,000 39.2 110 0.02 4.13
LITTLE FERRY
200 Riser Road ..................... 1974 286,628 100.0 1,858 0.40 6.48
MONTVALE
95 Chestnut Ridge Road ............. 1975 47,700 100.0 565 0.12 11.84
135 Chestnut Ridge Road ............ 1981 66,150 100.0 1,217 0.26 18.40
PARAMUS
140 Ridgewood Avenue ............... 1981 239,680 100.0 5,090 1.09 21.24
15 East Midland Avenue ............. 1988 259,823 100.0 6,748 1.45 25.97
461 From Road ...................... 1988 253,554 99.8 6,011 1.29 23.75
650 From Road ...................... 1978 348,510 97.6 7,464 1.60 21.94
61 South Paramus Avenue ............ 1985 269,191 93.9 5,396 1.16 21.35
ROCHELLE PARK
120 Passaic Street ................. 1972 52,000 100.0 575 0.12 11.06
365 West Passaic Street ............ 1976 212,578 88.0 3,499 0.75 18.70
SADDLE RIVER
1 Lake Street ......................1973/94 474,801 100.0 7,465 1.60 15.72
UPPER SADDLE RIVER
10 Mountainview Road ............... 1986 192,000 99.0 3,699 0.79 19.46
WOODCLIFF LAKE
400 Chestnut Ridge Road ............ 1982 89,200 100.0 2,120 0.45 23.77
470 Chestnut Ridge Road ............ 1987 52,500 100.0 1,192 0.26 22.70
530 Chestnut Ridge Road ............ 1986 57,204 100.0 1,166 0.25 20.38
50 Tice Boulevard .................. 1984 235,000 99.8 4,657 1.00 19.86
300 Tice Boulevard ................. 1991 230,000 100.0 5,012 1.08 21.79
BURLINGTON COUNTY, NEW JERSEY
MOORESTOWN
224 Strawbridge Drive .............. 1984 74,000 67.7 952 0.20 19.00
228 Strawbridge Drive .............. 1984 74,000 100.0 1,434 0.31 19.38
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway ........... 1980 247,476 86.8 6,187 1.33 28.80
ROSELAND
101 Eisenhower Parkway ............. 1980 237,000 89.9 4,114 0.88 19.31
103 Eisenhower Parkway.............. 1985 151,545 93.7 3,053 0.66 21.50
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
95 Christopher Columbus Drive ...... 1989 621,900 100.0 12,864 2.76 20.68
Harborside Financial Center Plaza I 1983 400,000 98.8 3,287 0.71 8.32
Harborside Financial Center Plaza II 1990 761,200 100.0 17,838 3.83 23.43
Harborside Financial Center Plaza III 1990 725,600 100.0 17,004 3.65 23.43
</TABLE>
46
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MERCER COUNTY, NEW JERSEY
PRINCETON
5 Vaughn Drive ..................... 1987 98,500 100.0 2,187 0.47 22.20
400 Alexander Road ................. 1987 70,550 100.0 1,270 0.27 18.00
103 Carnegie Center ................ 1984 96,000 96.0 2,073 0.44 22.49
100 Overlook Center ................ 1988 149,600 100.0 3,801 0.82 25.41
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road ................ 1977 40,000 100.0 373 0.08 9.33
PLAINSBORO
500 College Road East .............. 1984 158,235 100.0 3,393 0.73 21.44
SOUTH BRUNSWICK
3 Independence Way ................. 1983 111,300 99.9 1,792 0.38 16.12
WOODBRIDGE
581 Main Street .................... 1991 200,000 100.0 4,150 0.89 20.75
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66 ...................... 1989 180,000 100.0 2,411 0.52 13.39
WALL TOWNSHIP
1305 Campus Parkway ................ 1988 23,350 92.3 403 0.09 18.70
1350 Campus Parkway ................ 1990 79,747 94.7 1,347 0.29 17.84
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway ............... 1987 168,144 100.0 3,830 0.82 22.78
PARSIPPANY
1 Sylvan Way ....................... 1989 150,557 100.0 3,241 0.70 21.53
2 Dryden Way ....................... 1990 6,216 100.0 67 0.01 10.78
2 Hilton Court ..................... 1991 181,592 100.0 4,397 0.94 24.21
5 Sylvan Way ....................... 1989 151,383 96.7 3,393 0.73 23.18
7 Campus Drive ..................... 1982 154,395 100.0 2,548 0.55 16.50
7 Sylvan Way ....................... 1987 145,983 100.0 2,920 0.63 20.00
8 Campus Drive ..................... 1987 215,265 92.8 4,597 0.99 23.01
600 Parsippany Road ................ 1978 96,000 94.0 1,568 0.34 17.38
MORRIS PLAINS
201 Littleton Road ................. 1979 88,369 100.0 1,708 0.37 19.33
250 Johnson Road ................... 1977 75,000 100.0 1,090 0.23 14.53
MORRIS TOWNSHIP
340 Mt. Kemble Avenue .............. 1985 387,000 100.0 5,530 1.19 14.29
412 Mt. Kemble Avenue .............. 1986 475,100 100.0 6,902 1.48 14.53
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue ................. 1983 75,000 77.4 1,024 0.22 17.64
TOTOWA
999 Riverview Drive ................ 1988 56,066 92.0 968 0.21 18.77
WAYNE
201 Willowbrook Boulevard .......... 1970 178,329 99.0 2,446 0.52 13.85
</TABLE>
47
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road .................. 1986 49,000 100.0 613 0.13 12.51
233 Mt. Airy Road .................. 1987 66,000 100.0 762 0.16 11.55
BRIDGEWATER
721 Route 202/206 .................. 1989 192,741 100.0 4,011 0.86 20.81
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue .................. 1985 182,555 100.0 4,488 0.96 24.58
CRANFORD
6 Commerce Drive ................... 1973 56,000 96.9 1,115 0.24 20.55
11 Commerce Drive (5) .............. 1981 90,000 100.0 1,102 0.24 12.24
12 Commerce Drive .................. 1967 72,260 88.1 607 0.13 9.53
20 Commerce Drive .................. 1990 176,600 92.7 3,375 0.72 20.62
65 Jackson Drive ................... 1984 82,778 100.0 1,645 0.35 19.87
NEW PROVIDENCE
890 Mountain Road 1977 80,000 100.0 2,044 0.44 25.55
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE 12,010,199 97.6 229,348 49.21 19.57
- --------------------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive ............... 1987 118,727 99.8 2,062 0.44 17.40
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
111 East Shore Road ................ 1980 55,575 100.0 1,518 0.33 27.31
600 Community Drive ................ 1983 206,274 100.0 4,966 1.07 24.07
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard ................ 1988 180,000 98.2 3,445 0.74 19.49
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
100 Clearbrook Road (5) ............ 1975 60,000 98.3 938 0.20 15.90
101 Executive Boulevard ............ 1971 50,000 92.8 807 0.17 17.39
570 Taxter Road .................... 1972 75,000 86.2 1,382 0.30 21.38
HAWTHORNE
1 Skyline Drive .................... 1980 20,400 99.0 269 0.06 13.32
2 Skyline Drive .................... 1987 30,000 98.9 437 0.09 14.73
17 Skyline Drive ................... 1989 85,000 100.0 1,233 0.26 14.51
30 Saw Mill River Road ............. 1982 248,400 100.0 5,216 1.12 21.00
7 Skyline Drive .................... 1987 109,000 100.0 2,165 0.46 19.86
TARRYTOWN
200 White Plains Road .............. 1982 89,000 92.3 1,813 0.39 22.07
220 White Plains Road .............. 1984 89,000 95.2 1,567 0.34 18.49
WHITE PLAINS
1 Barker Avenue .................... 1975 68,000 99.0 1,519 0.33 22.56
3 Barker Avenue .................... 1983 65,300 97.5 1,382 0.30 21.71
1 Water Street ..................... 1979 45,700 99.8 929 0.20 20.37
11 Martine Avenue .................. 1987 180,000 100.0 3,731 0.80 20.73
50 Main Street ..................... 1985 309,000 98.3 7,560 1.62 24.89
</TABLE>
48
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YONKERS
1 Executive Boulevard .............. 1982 112,000 100.0 2,273 0.49 20.29
3 Executive Plaza 1987 58,000 100.0 699 0.15 12.05
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE 2,254,376 98.3 45,911 9.86 20.71
- --------------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive ............... 1989 60,696 100.0 1,372 0.29 22.60
1055 Westlakes Drive ............... 1990 118,487 100.0 2,298 0.49 19.39
1205 Westlakes Drive ............... 1988 130,265 99.8 2,802 0.60 21.55
1235 Westlakes Drive ............... 1986 134,902 96.6 2,869 0.62 22.02
DELAWARE COUNTY, PENNSYLVANIA
MEDIA
1400 Providence Road - Center I .... 1986 100,000 87.9 1,909 0.41 21.72
1400 Providence Road - Center II ... 1990 160,000 98.2 3,160 0.68 20.11
LESTER
100 Stevens Drive .................. 1986 95,000 16.1 1,822 0.39 119.12
200 Stevens Drive .................. 1987 208,000 99.7 4,168 0.89 20.10
300 Stevens Drive .................. 1992 68,000 50.9 1,350 0.29 39.00
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue ................ 1990 100,700 96.5 1,667 0.36 17.15
PLYMOUTH MEETING
Five Sentry Parkway East ........... 1984 91,600 100.0 1,497 0.32 16.34
Five Sentry Parkway West ........... 1984 38,400 100.0 640 0.14 16.67
1150 Plymouth Meeting Mall 1970 167,748 91.9 3,307 0.71 21.45
- --------------------------------------------------------------------------------------------------------------------------
TOTAL PENNSYLVANIA OFFICE 1,473,798 89.8 28,861 6.19 21.81
- --------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam .................... 1973 121,250 96.9 2,730 0.59 23.24
NORWALK
40 Richards Avenue ................. 1985 145,487 98.6 2,925 0.63 20.39
SHELTON
1000 Bridgeport Avenue 1986 133,000 100.0 2,593 0.56 19.50
- --------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE 399,737 98.6 8,248 1.78 20.94
- --------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA
WASHINGTON
1201 Connecticut Ave, NW (4) ....... 1940 169,549 86.3 4,471 0.96 30.56
1400 L Street, NW .................. 1987 159,000 94.9 5,715 1.23 37.88
1709 New York Avenue, NW 1972 166,000 91.0 5,996 1.29 39.69
- --------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA OFFICE 494,549 90.6 16,182 3.48 36.10
- --------------------------------------------------------------------------------------------------------------------------
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place 1989 122,000 95.8 2,139 0.46 18.30
- --------------------------------------------------------------------------------------------------------------------------
TOTAL MARYLAND OFFICE 122,000 95.8 2,139 0.46 18.30
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BEXAR COUNTY, TEXAS
SAN ANTONIO
111 Soledad ........................ 1918 248,153 85.7 2,296 0.49 10.80
1777 N.E. Loop 410 ................. 1986 256,137 95.3 3,508 0.75 14.37
84 N.E. Loop 410 ................... 1971 187,312 88.3 2,480 0.53 14.99
200 Concord Plaza Drive ............ 1986 248,700 97.7 4,533 0.97 18.66
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place ................. 1986 97,889 96.1 1,368 0.29 14.54
DALLAS COUNTY,TEXAS
DALLAS
3030 LBJ Freeway (5) ............... 1984 367,018 93.7 6,059 1.30 17.62
3100 Monticello .................... 1984 173,837 97.2 2,790 0.60 16.51
8214 Westchester ................... 1983 95,509 92.6 1,359 0.29 15.37
IRVING
2300 Valley View ................... 1985 142,634 99.7 2,667 0.57 18.75
RICHARDSON
1122 Alma Road ..................... 1977 82,576 100.0 607 0.13 7.35
HARRIS COUNTY, TEXAS
HOUSTON
10497 Town & Country Way ........... 1981 148,434 88.0 1,904 0.41 14.58
14511 Falling Creek ................ 1982 70,999 93.1 656 0.14 9.92
1717 St. James Place ............... 1975 109,574 98.2 1,328 0.29 12.34
1770 St. James Place ............... 1973 103,689 98.4 1,340 0.29 13.13
5225 Katy Freeway .................. 1983 112,213 95.1 1,211 0.26 11.35
5300 Memorial ...................... 1982 155,099 100.0 2,022 0.43 13.04
POTTER COUNTY, TEXAS
AMARILLO
6900 IH - 40 West .................. 1986 71,771 79.9 528 0.11 9.21
TARRANT COUNTY, TEXAS
EULESS
150 West Parkway ................... 1984 74,429 95.9 1,061 0.23 14.86
TRAVIS COUNTY, TEXAS
AUSTIN
1250 Capital of Texas Hwy. South 1985 270,703 98.9 5,513 1.18 20.59
- --------------------------------------------------------------------------------------------------------------------------
TOTAL TEXAS OFFICE 3,016,676 94.5 43,230 9.26 15.17
- --------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard ......... 1991 181,596 100.0 1,736 0.37 9.56
PHOENIX
19640 North 31st Street ............ 1990 124,171 100.0 1,575 0.34 12.68
20002 North 19th Avenue ............ 1986 119,301 100.0 661 0.14 5.54
SCOTTSDALE
9060 E. Via Linda Boulevard 1984 111,200 100.0 2,402 0.52 21.60
- --------------------------------------------------------------------------------------------------------------------------
TOTAL ARIZONA OFFICE 536,268 100.0 6,374 1.37 11.89
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
760 Market Street .................. 1908 267,446 90.0 6,963 1.49 28.93
795 Folsom Street (4) 1977 183,445 86.2 2,094 0.45 13.24
- --------------------------------------------------------------------------------------------------------------------------
TOTAL CALIFORNIA OFFICE 450,891 88.5 9,057 1.94 22.71
- --------------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street ......... 1997 108,240 100.0 2,911 0.62 26.89
DENVER
400 South Colorado Boulevard ....... 1983 125,415 100.0 1,840 0.39 14.67
ENGLEWOOD
5350 South Roslyn Street (5) ....... 1982 63,754 98.3 1,058 0.23 16.88
9359 East Nichols Avenue ........... 1997 72,610 100.0 903 0.19 12.44
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court ......... 1997 37,574 100.0 526 0.11 14.00
303 South Technology Court-A ....... 1997 34,454 100.0 384 0.08 11.15
303 South Technology Court-B ....... 1997 40,416 100.0 451 0.10 11.16
LOUISVILLE
1172 Century Drive ................. 1996 49,566 100.0 613 0.13 12.37
248 Centennial Parkway ............. 1996 39,266 100.0 486 0.10 12.38
285 Century Place .................. 1997 69,145 100.0 1,094 0.23 15.82
DENVER COUNTY, COLORADO
DENVER
3600 South Yosemite ................ 1974 133,743 100.0 1,287 0.28 9.62
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
384 Inverness Drive South .......... 1985 51,523 100.0 826 0.18 16.03
400 Inverness Drive ................ 1997 111,608 99.9 2,688 0.58 24.11
5975 South Quebec Street ........... 1996 102,877 99.8 2,306 0.49 22.46
67 Inverness Drive East ............ 1996 54,280 100.0 639 0.14 11.77
PARKER
9777 Pyramid Court ................. 1995 120,281 100.0 1,323 0.28 11.00
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
1975 Research Parkway .............. 1997 115,250 100.0 1,606 0.34 13.93
2375 Telstar Drive (4) ............. 1998 47,369 57.1 461 0.10 17.04
8415 Explorer (4) .................. 1998 47,368 100.0 459 0.10 9.69
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard 1985 63,600 97.0 993 0.21 16.10
- --------------------------------------------------------------------------------------------------------------------------
TOTAL COLORADO OFFICE 1,488,339 98.4 22,854 4.88 15.60
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard 1982 297,429 91.3 3,423 0.73 12.61
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FLORIDA OFFICE 297,429 91.3 3,423 0.73 12.61
- --------------------------------------------------------------------------------------------------------------------------
POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway 1988 72,265 97.5 1,133 0.24 16.08
- --------------------------------------------------------------------------------------------------------------------------
TOTAL IOWA OFFICE 72,265 97.5 1,133 0.24 16.08
- --------------------------------------------------------------------------------------------------------------------------
DOUGLAS COUNTY, NEBRASKA
OMAHA
210 South 16th Street 1894 319,535 96.5 3,253 0.70 10.55
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NEBRASKA OFFICE 319,535 96.5 3,253 0.70 10.55
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES 22,936,062 96.4 420,013 90.10 18.99
==========================================================================================================================
</TABLE>
52
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane ....................... 1991 64,500 77.7 450 0.10 8.98
5 Terri Lane ....................... 1992 74,555 100.0 550 0.12 7.38
MOORESTOWN
1 Executive Drive .................. 1989 20,570 43.0 74 0.02 8.37
101 Commerce Drive ................. 1988 64,700 100.0 336 0.07 5.19
101 Executive Drive ................ 1990 29,355 45.8 172 0.04 12.79
102 Executive Drive ................ 1990 64,000 100.0 370 0.08 5.78
1256 North Church .................. 1984 63,495 49.9 380 0.08 11.99
1507 Lancer Drive .................. 1995 32,700 100.0 83 0.02 2.54
1510 Lancer Drive .................. 1998 88,000 100.0 370 0.08 4.20
201 Commerce Drive ................. 1986 38,400 100.0 194 0.04 5.05
225 Executive Drive ................ 1990 50,600 100.0 289 0.06 5.71
30 Twosome Drive ................... 1997 39,675 100.0 223 0.05 5.62
40 Twosome Drive ................... 1996 40,265 100.0 263 0.06 6.53
50 Twosome Drive ................... 1997 34,075 100.0 269 0.06 7.89
840 North Lenola ................... 1995 38,300 100.0 271 0.06 7.08
844 North Lenola ................... 1995 28,670 100.0 213 0.05 7.43
97 Foster Road ..................... 1982 43,200 100.0 186 0.04 4.31
WEST DEPTFORD
1451 Metropolitan Drive ............ 1996 21,600 100.0 148 0.03 6.85
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive .................. 1989 13,275 0.0 107 0.02 N/A
200 Horizon Drive .................. 1991 45,770 85.3 445 0.10 11.40
300 Horizon Drive .................. 1989 69,780 100.0 912 0.20 13.07
500 Horizon Drive .................. 1990 41,205 81.9 404 0.09 11.97
MONMOUTH COUNTY, NEW JERSEY
WALL TOWNSHIP
1320 Wykoff Avenue ................. 1986 20,336 0.0 56 0.01 N/A
1324 Wykoff Avenue ................. 1987 21,168 75.0 227 0.05 14.30
1325 Campus Parkway ................ 1988 35,000 92.9 335 0.07 10.30
1340 Campus Parkway ................ 1992 72,502 94.6 774 0.17 11.28
1345 Campus Parkway ................ 1995 76,300 100.0 702 0.15 9.20
1433 Highway 34 .................... 1985 69,020 65.3 458 0.10 10.16
PASSAIC COUNTY, NEW JERSEY
TOTOWA
1 Center Court (4) ................. 1999 38,961 100.0 149 0.03 3.82
2 Center Court ..................... 1998 30,600 99.3 348 0.07 11.45
11 Commerce Way .................... 1989 47,025 100.0 352 0.08 7.49
20 Commerce Way .................... 1992 42,540 85.9 371 0.08 10.15
29 Commerce Way .................... 1990 48,930 100.0 470 0.10 9.61
40 Commerce Way .................... 1987 50,576 100.0 544 0.12 10.76
45 Commerce Way .................... 1992 51,207 100.0 470 0.10 9.18
60 Commerce Way .................... 1988 50,333 56.9 346 0.07 12.08
80 Commerce Way .................... 1996 22,500 89.1 274 0.06 13.67
100 Commerce Way ................... 1996 24,600 100.0 300 0.06 12.20
120 Commerce Way ................... 1994 9,024 100.0 89 0.02 9.86
140 Commerce Way 1994 26,881 99.5 264 0.06 9.87
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE/FLEX 1,744,193 89.2 13,238 2.87 8.51
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Westchester Plaza ................ 1967 25,000 100.0 292 0.06 11.68
2 Westchester Plaza ................ 1968 25,000 100.0 448 0.10 17.92
3 Westchester Plaza ................ 1969 93,500 100.0 1,116 0.24 11.94
4 Westchester Plaza ................ 1969 44,700 99.8 598 0.13 13.40
5 Westchester Plaza ................ 1969 20,000 76.3 276 0.06 18.09
6 Westchester Plaza ................ 1968 20,000 100.0 238 0.05 11.90
7 Westchester Plaza ................ 1972 46,200 100.0 634 0.14 13.72
8 Westchester Plaza ................ 1971 67,200 100.0 921 0.20 13.71
11 Clearbrook Road ................. 1974 31,800 100.0 326 0.07 10.25
75 Clearbrook Road ................. 1990 32,720 100.0 816 0.18 24.94
150 Clearbrook Road ................ 1975 74,900 100.0 1,040 0.22 13.89
175 Clearbrook Road ................ 1973 98,900 98.5 1,202 0.26 12.34
200 Clearbrook Road ................ 1974 94,000 99.8 1,018 0.22 10.85
250 Clearbrook Road ................ 1973 155,000 94.5 1,141 0.24 7.79
50 Executive Boulevard ............. 1969 45,200 97.2 388 0.08 8.83
77 Executive Boulevard ............. 1977 13,000 100.0 180 0.04 13.85
85 Executive Boulevard ............. 1968 31,000 83.3 322 0.07 12.47
300 Executive Boulevard ............ 1970 60,000 99.7 575 0.12 9.61
350 Executive Boulevard ............ 1970 15,400 98.8 243 0.05 15.97
399 Executive Boulevard ............ 1962 80,000 100.0 892 0.19 11.15
400 Executive Boulevard ............ 1970 42,200 100.0 614 0.13 14.55
500 Executive Boulevard ............ 1970 41,600 100.0 546 0.12 13.13
525 Executive Boulevard ............ 1972 61,700 100.0 846 0.18 13.71
HAWTHORNE
4 Skyline Drive .................... 1987 80,600 100.0 1,195 0.26 14.83
8 Skyline Drive .................... 1985 50,000 98.9 646 0.14 13.06
10 Skyline Drive ................... 1985 20,000 100.0 281 0.06 14.05
11 Skyline Drive ................... 1989 45,000 100.0 676 0.15 15.02
12 Skyline Drive (4) ............... 1999 46,850 100.0 228 0.05 4.87
15 Skyline Drive ................... 1989 55,000 100.0 915 0.20 16.64
200 Saw Mill River Road ............ 1965 51,100 100.0 628 0.13 12.29
YONKERS
1 Odell Plaza ...................... 1980 106,000 100.0 1,227 0.26 11.58
5 Odell Plaza ...................... 1983 38,400 99.6 489 0.10 12.79
7 Odell Plaza ...................... 1984 42,600 99.6 650 0.14 15.32
4 Executive Plaza .................. 1986 80,000 99.9 1,029 0.22 12.88
6 Executive Plaza .................. 1987 80,000 90.4 989 0.21 13.68
100 Corporate Boulevard ............ 1987 78,000 89.5 1,011 0.22 14.48
200 Corporate Boulevard South 1990 84,000 99.8 1,357 0.29 16.19
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE/FLEX 2,076,570 98.1 25,993 5.58 12.76
- --------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
419 West Avenue .................... 1986 88,000 97.5 1,516 0.33 17.67
500 West Avenue .................... 1988 25,000 82.3 338 0.07 16.43
550 West Avenue .................... 1990 54,000 100.0 778 0.17 14.41
650 West Avenue (4) 1998 40,000 100.0 559 0.12 13.98
- --------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE/FLEX 207,000 96.8 3,191 0.69 15.93
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES 4,027,763 94.2 42,422 9.14 11.18
==========================================================================================================================
</TABLE>
54
<PAGE>
PROPERTY LISTING
THE INDUSTRIAL/WAREHOUSE PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane ................... 1957 6,600 100.0 57 0.01 8.64
2 Warehouse Lane ................... 1957 10,900 100.0 122 0.03 11.19
3 Warehouse Lane ................... 1957 77,200 100.0 290 0.06 3.76
4 Warehouse Lane ................... 1957 195,500 97.4 1,871 0.40 9.83
5 Warehouse Lane ................... 1957 75,100 97.1 681 0.15 9.34
6 Warehouse Lane 1982 22,100 100.0 506 0.11 22.90
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INDUSTRIAL/WAREHOUSE
PROPERTIES 387,400 98.1 3,527 0.76 9.28
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX, AND
INDUSTRIAL/WAREHOUSE PROPERTIES 27,351,225 96.1 465,962 100.00 17.72
==========================================================================================================================
</TABLE>
(1) Based on all leases in effect as of September 30, 1999.
(2) Total base rent for the 12 months ended September 30, 1999, determined in
accordance with generally accepted accounting principles ("GAAP").
Substantially all of the leases provide for annual base rents plus
recoveries and escalation charges based upon the tenant's proportionate
share of and/or increases in real estate taxes and certain operating costs,
as defined, and the pass through of charges for electrical usage. For those
properties acquired or placed in service during the 12 months ended
September 30, 1999, amounts are annualized, as per Note 4.
(3) Base rent for the 12 months ended September 30, 1999 divided by net
rentable square feet leased at September 30, 1999. For those properties
acquired or placed in service during the 12 months ended September 30,
1999, amounts are annualized, as per Note 4.
(4) As this property was acquired or placed in service during the 12 months
ended September 30, 1999, the amounts represented for base rent are
annualized. These annualized amounts may not be indicative of the
property's results had the Operating Partnership owned or placed such
property in service for the entire 12 months ended September 30, 1999.
(5) Excludes office space leased by the Operating Partnership.
55
<PAGE>
FUNDS FROM OPERATIONS
The Operating Partnership considers funds from operations ("FFO"), after
adjustment for straight-lining of rents, one measure of REIT performance. Funds
from operations is defined as net income (loss) before distribution to preferred
unitholders, computed in accordance with generally accepted accounting
principles ("GAAP"), excluding gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and sales of property, plus
real estate-related depreciation and amortization. Funds from operations should
not be considered as an alternative to net income as an indication of the
Operating Partnership's performance or to cash flows as a measure of liquidity.
Funds from operations presented herein is not necessarily comparable to funds
from operations presented by other real estate companies due to the fact that
not all real estate companies use the same definition. However, the Operating
Partnership's funds from operations is comparable to the funds from operations
of real estate companies that use the current definition of the National
Association of Real Estate Investment Trusts ("NAREIT"), after the adjustment
for straight-lining of rents.
NAREIT's definition of funds from operations indicates that the calculation
should be made before any extraordinary item (determined in accordance with
GAAP), and before any deduction of significant non-recurring events that
materially distort the comparative measurement of the Operating Partnership's
performance.
Funds from operations for the three and nine month periods ended September 30,
1999 and 1998, as calculated in accordance with NAREIT's definition as published
in March 1995, after adjustment for straight-lining of rents, are summarized in
the following table (IN THOUSANDS):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
- --------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income before non-recurring charges, distributions
to preferred unitholders and extraordinary item $40,941 $ 39,087 $ 123,533 $ 111,107
Add: Real estate-related depreciation and
amortization (1) 23,419 21,520 69,139 56,850
Deduct: Rental income adjustment for
straight-lining of rents (1) (3,076) (3,355) (10,454) (9,700)
- --------------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment
for straight-lining of rents, before distributions
to preferred unitholders $61,284 $ 57,252 $ 182,218 $ 158,257
Deduct: Distributions to preferred unitholders (3,869) (4,194) (11,607) (12,090)
- --------------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for
straight-lining of rents, after distributions
to preferred unitholders $57,415 $ 53,058 $ 170,611 $ 146,167
==========================================================================================================================
Cash flows provided by operating activities $ 162,372 $ (151,792)
Cash flows used in investing activities $ (170,974) $ (718,254)
Cash flows provided by financing activities $ 3,861 $ 570,612
- --------------------------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding (2) 66,893 65,577 67,025 62,580
- --------------------------------------------------------------------------------------------------------------------------
Diluted weighted average units outstanding (2) 73,731 73,044 73,936 69,983
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes FFO adjustments related to the Operating Partnership's investments
in unconsolidated joint ventures.
(2) See calculations for the amounts presented in the following reconciliation.
56
<PAGE>
The following schedule reconciles the Operating Partnership's basic weighted
average units to the diluted weighted average units presented above:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic weighted average units: 66,893 65,577 67,025 62,580
Add: Weighted average preferred units 6,618 7,160 6,642 6,890
(after conversion to common units)
Stock options 220 307 269 455
Stock Warrants -- -- -- 58
- --------------------------------------------------------------------------------------------------------------------------
Diluted weighted average units: 73,731 73,044 73,936 69,983
==========================================================================================================================
</TABLE>
INFLATION
The Operating Partnership's leases with the majority of its tenants provide for
recoveries and escalation charges based upon the tenant's proportionate share
of, and/or increases in, real estate taxes and certain operating costs, which
reduce the Operating Partnership's exposure to increases in operating costs
resulting from inflation.
DISRUPTION IN OPERATIONS DUE TO YEAR 2000 PROBLEMS.
GENERAL
The Year 2000 issue is the result of computer programs and embedded chips using
a two-digit format, as opposed to four digits, to indicate the year. Such
computer systems may be unable to interpret dates beyond the year 1999, which
could cause a system failure or other computer errors, leading to disruptions in
operations. We have developed a three-phase Year 2000 project (the "Project") to
determine our Year 2000 systems compliance. Phase I was to identify those
systems with which we have exposure to Year 2000 issues. Phase II was the
development and implementation of action plans to be Year 2000 compliant in all
areas. Phase III is the final testing of each major area of exposure to assure
compliance. We have identified three major areas critical for successful Year
2000 compliance: (i) our central accounting and operating computer system at our
Cranford, New Jersey headquarters and local networks and related systems in our
regional offices, (ii) inquiries of our tenants and key vendors as to their Year
2000 readiness and (iii) assessment of our individual buildings as to the Year
2000 readiness of their operating systems. We believe that progress in all such
areas is proceeding on schedule and that we will experience no material adverse
effect as a result of the Year 2000 issue. There can, however, be no assurance
that this will be the case. Set forth below is a more detailed analysis of the
Project and its anticipated impact on us.
CENTRAL ACCOUNTING AND OPERATING SYSTEMS
We have completed a review of key computer hardware and software and other
equipment, and have modified, upgraded or replaced all identified hardware and
equipment in our corporate and regional offices that we believe may be affected
by problems associated with Year 2000. Such hardware includes, but is not
limited to, desktop and laptop computers, servers, printers, telecopier machines
and telephones. We, as part of our routine modernization efforts, have completed
necessary upgrades to identified secondary software systems, such as word
processing, spreadsheet applications, telephone voicemail systems and computer
calendar programs. The software supplier of our accounting system completed its
Year 2000 upgrade and supplied us with Year 2000 compliant software at no cost
to us. We have substantially completed our internal testing of such software
with satisfactory results.
TENANT COMPLIANCE
We believe that the completion of the Project as scheduled will minimize Year
2000 related issues in our internal operations. However, we may still be
adversely impacted by Year 2000 related issues as a result of problems outside
our control, such as the inability of tenants to pay rent when due. In order to
gauge such risk, we sent questionnaires to each of our then existing tenants in
August 1998 to assess their Year 2000 compliance status. The responses to these
questionnaires continue to be received, reviewed and evaluated. Based on the
responses received, we do not anticipate any material adverse impact on the
orderly payment of monthly rent. Therefore, while there can be no assurance that
Year 2000 problems of tenants will not have a material adverse effect on our
operating results or financial condition, the information available to us
indicates such an occurrence is not likely.
57
<PAGE>
PROPERTY COMPLIANCE
Our property managers have completed Phase I of the Project, a building by
building survey of all of our properties to determine whether building support
systems such as heat, power, light, security, garages and elevators will be
affected by the advent of the Year 2000. Most of such systems either are already
Year 2000 compliant or contain no computerized parts. Our property managers have
completed Phase II of the Project, the development and implementation of action
plans to modify, upgrade or replace non-compliant building systems. We have
successfully completed the implementation of these action plans and replaced or
upgraded identified non-compliant building systems. Our property managers have
also completed Phase III of the Project, the testing of these installed building
systems to assure Year 2000 compliance. Our testing results have confirmed the
compliance of these installed building systems.
We have communicated with vendors of building systems or other services to our
buildings regarding their Year 2000 compliance. In many instances, we will rely
on the written representations from these vendors regarding the Year 2000
compliance of their product or service. We are also relying on assurances
requested from utility providers of their Year 2000 compliance and their
continued ability to provide uninterrupted service to our buildings.
Substantially all of the costs necessary to modify, upgrade and/or replace
identified building support systems for Year 2000 compliance have been incurred
and were not material.
WORST CASE EXPOSURE
We are aware that it is generally believed that the Year 2000 problem, if
uncorrected, may result in a worldwide economic crisis. We are unable to
determine whether such predictions are true or false. However, if such
predictions prove true, we assume that all companies (including ours) will
experience the effects in one way or another. The most reasonably likely worst
case scenario we anticipate in connection with the Year 2000 issue relates to
the failure of the upgrade to our accounting system to effectively become Year
2000 compliant. We believe that such an event is most unlikely, but an
occurrence of the foregoing might have a material adverse impact on our
operations. We cannot currently assess the financial impact of such a worst case
scenario.
CONTINGENCY PLANS
We are developing contingency plans to address the Year 2000 non-compliance of
(i) critical building support systems and (ii) our accounting system.
CRITICAL BUILDING SYSTEMS. We believe that the failure of any of the
following critical building support systems due to Year 2000 issues could have a
material adverse impact on the performance of an individual building: security
systems, elevator systems or fire/life safety systems. We believe that in the
event of a Year 2000 related failure in a building security system, we would be
able to maintain adequate security at the building through the use of security
guards. We believe that in the event of a Year 2000 related failure in a
building elevator system, adequate access would exist at most of our buildings
through existing stairways. We believe that in the event of a Year 2000 related
failure in a building fire/life safety system, our property's management staff
would be able to manually operate such system.
ACCOUNTING SOFTWARE. We believe that failure of the Year 2000
compliance upgrade to our accounting software might have a material adverse
impact on our operations. However, we believe that financial data within any
given fiscal year will remain intact and retrievable. We believe that
alternative accounting software and/or manual bookkeeping would minimize the
impact of a Year 2000 related failure of our current accounting software.
RISKS
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect our results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of the
Year 2000 readiness of third-party vendors and tenants, we are unable to
determine at this time whether the consequences of Year 2000 failures will have
a material impact on our results of operations, liquidity or financial
condition. However, our completion of the Project has significantly reduced our
level of uncertainty about the Year 2000 problem. We believe that we have taken
prudent measures to address possible Year 2000 failures and minimized the
possibility of significant interruptions of normal operations.
58
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Approximately $1.2 billion of the Operating Partnership's long-term debt bears
interest at fixed rates, and therefore the fair value of these instruments is
affected by changes in the market interest rates. The following table presents
principal cash flows (in thousands) based upon maturity dates of the debt
obligations and the related weighted-average interest rates by expected maturity
dates for the fixed rate debt. The interest rate on the variable rate debt as of
September 30, 1999 ranged from LIBOR plus 65 basis points to LIBOR plus 90 basis
points.
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
LONG-TERM DEBT, FAIR
INCLUDING CURRENT PORTION 1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
- ----------------------------- ---- ---- ---- ---- ---- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate $ 490 $8,227 $ 7,222 $11,015 $ 195,773 $1,025,342 $ 1,248,069 $ 1,204,128
Average Interest Rate 7.61% 6.67% 7.19% 7.02% 7.28% 7.27% 7.29%
Variable Rate $8,000 $ 249,956 $ 72,204 $ 330,160 $ 330,160
</TABLE>
59
<PAGE>
MACK-CALI REALTY, L.P.
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Reference is made to "Other" in Note 13 (Commitments and
Contingencies) to the Consolidated Financial Statements, which
is specifically incorporated by reference herein.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Reference is made to the tenth and eleventh paragraphs under
"Common Units" in Note 11 (Redeemable Partnership Units) to
the Consolidated Financial Statements, which are specifically
incorporated by reference herein.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Item 5. OTHER INFORMATION
Effective as of the close of business on November 21, 1999,
ChaseMellon Shareholder Services LLC will be terminated and
replaced by EquiServe Trust Company, N.A., as the
Corporation's transfer agent, registrar, and paying agent.
60
<PAGE>
MACK-CALI REALTY, L.P.
PART II -- OTHER INFORMATION (CONTINUED)
ITEM 6 - EXHIBITS
(a) Exhibits.
The following exhibits are filed herewith or are incorporated by reference
to exhibits previously filed:
EXHIBIT NUMBER EXHIBIT TITLE
3.1 Restated Charter of Mack-Cali Realty Corporation
dated June 10, 1999, together with Articles
Supplementary thereto (filed as Exhibit 3.1 to the
General Partner's Form 8-K dated June 10, 1999 and as
Exhibit 4.2 to the Operating Partnership's Form 8-K
dated July 6, 1999 and each incorporated herein by
reference).
3.2 Amended and Restated Bylaws of Mack-Cali Realty
Corporation dated June 10, 1999 (filed as Exhibit 3.2
to the General Partner's Form 8-K dated June 10, 1999
and incorporated herein by reference).
3.3 Second Amended and Restated Agreement of Limited
Partnership dated December 11, 1997, for Mack-Cali
Realty, L.P. (filed as Exhibit 10.110 to the General
Partner's Form 8-K dated December 11, 1997 and
incorporated herein by reference).
3.4 Amendment No. 1 to the Second Amended and Restated
Agreement of Limited Partnership of Mack-Cali
Realty, L.P. (filed as Exhibit 3.1 to the General
Partner's and the Operating Partnership's
Registration Statement on Form S-3, Registration
No. 333-57103, and incorporated herein by reference).
3.5 Second Amendment to the Second Amended and Restated
Agreement of Limited Partnership of Mack-Cali Realty,
L.P. (filed as Exhibit 10.2 to the Operating
Partnership's Form 8-K dated July 6, 1999 and
incorporated herein by reference).
4.1 Shareholder Rights Agreement, dated as of July 6,
1999, between Mack-Cali Realty Corporation and
ChaseMellon Shareholder Services, LLC, as Rights
Agent (filed as Exhibit 4.1 to the Operating
Partnership's Form 8-K dated July 6, 1999 and
incorporated herein by reference).
4.2 Indenture dated as of March 16, 1999, by and among
Mack-Cali Realty, L.P., as issuer, Mack-Cali Realty
Corporation, as guarantor, and Wilmington Trust
Company, as trustee (filed as Exhibit 4.1 to the
Operating Partnership's Form 8-K dated March 16, 1999
and incorporated herein by reference).
4.3 Supplemental Indenture No. 1 dated as of March 16,
1999, by and among Mack-Cali Realty, L.P., as issuer,
and Wilmington Trust Company, as trustee (filed as
Exhibit 4.2 to the Operating Partnership's Form 8-K
dated March 16, 1999 and incorporated herein by
reference).
61
<PAGE>
EXHIBIT NUMBER EXHIBIT TITLE
4.4 Supplemental Indenture No. 2 dated as of August 2,
1999, by and among Mack-Cali Realty, L.P., as issuer,
and Wilmington Trust Company, as trustee (filed as
Exhibit 4.4 to the Operating Partnership's Form 10-Q
dated June 30, 1999 and incorporated herein by
reference).
10.1 Amended and Restated Employment Agreement dated as of
July 1, 1999 between Mitchell E. Hersh and Mack-Cali
Realty Corporation (filed as Exhibit 10.2 to the
Operating Partnership's Form 10-Q dated June 30, 1999
and incorporated herein by reference).
10.2 Second Amended and Restated Employment Agreement
dated as of July 1, 1999 between Timothy M. Jones and
Mack-Cali Realty Corporation (filed as Exhibit 10.3
to the Operating Partnership's Form 10-Q dated
June 30, 1999 and incorporated herein by reference).
10.3 Amended and Restated Employment Agreement dated as of
July 1, 1999 between John R. Cali and Mack-Cali
Realty Corporation (filed as Exhibit 10.4 to the
Operating Partnership's Form 10-Q dated June 30, 1999
and incorporated herein by reference).
10.4 Amended and Restated Employment Agreement dated as of
July 1, 1999 between Brant Cali and Mack-Cali Realty
Corporation (filed as Exhibit 10.5 to the Operating
Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.5 Second Amended and Restated Employment Agreement
dated as of July 1, 1999 between Barry Lefkowitz and
Mack-Cali Realty Corporation (filed as Exhibit 10.6
to the Operating Partnership's Form 10-Q dated
June 30, 1999 and incorporated herein by reference).
10.6 Second Amended and Restated Employment Agreement
dated as of July 1, 1999 between Roger W. Thomas and
Mack-Cali Realty Corporation (filed as Exhibit 10.7
to the Operating Partnership's Form 10-Q dated
June 30, 1999 and incorporated herein by reference).
10.7 Restricted Share Award Agreement dated as of July 1,
1999 between Mitchell E. Hersh and Mack-Cali Realty
Corporation (filed as Exhibit 10.8 to the Operating
Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.8 Restricted Share Award Agreement dated as of July 1,
1999 between Timothy M. Jones and Mack-Cali Realty
Corporation (filed as Exhibit 10.9 to the Operating
Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.9 Restricted Share Award Agreement dated as of July 1,
1999 between John R. Cali and Mack-Cali Realty
Corporation (filed as Exhibit 10.10 to the Operating
Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
62
<PAGE>
EXHIBIT NUMBER EXHIBIT TITLE
10.10 Restricted Share Award Agreement dated as of July 1,
1999 between Brant Cali and Mack-Cali Realty
Corporation (filed as Exhibit 10.11 to the Operating
Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.11 Restricted Share Award Agreement dated as of July 1,
1999 between Barry Lefkowitz and Mack-Cali Realty
Corporation (filed as Exhibit 10.12 to the Operating
Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.12 Restricted Share Award Agreement dated as of July 1,
1999 between Roger W. Thomas and Mack-Cali Realty
Corporation (filed as Exhibit 10.13 to the Operating
Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.13 Credit Agreement, dated as of December 10, 1997, by
and among Cali Realty, L.P. and the other signatories
thereto (filed as Exhibit 10.122 to the General
Partner's Form 8-K dated December 11, 1997 and
incorporated herein by reference).
10.14 Amendment No. 1 to Revolving Credit Agreement dated
July 20, 1998, by and among Mack-Cali Realty, L.P.
and The Chase Manhattan Bank, Fleet National Bank and
Other Lenders Which May Become Parties Thereto (filed
as Exhibit 10.5 to the Operating Partnership's Form
10-K dated December 31, 1998 and incorporated herein
by reference).
10.15 Amendment No. 2 to Revolving Credit Agreement dated
December 30, 1998, by and among Mack-Cali Realty,
L.P. and The Chase Manhattan Bank, Fleet National
Bank and Other Lenders Which May Become Parties
Thereto (filed as Exhibit 10.6 to the Operating
Partnership's Form 10-K dated December 31, 1998 and
incorporated herein by reference).
10.16 Contribution and Exchange Agreement among The MK
Contributors, The MK Entities, The Patriot
Contributors, The Patriot Entities, Patriot American
Management and Leasing Corp., Cali Realty, L.P. and
Cali Realty Corporation, dated September 18, 1997
(filed as Exhibit 10.98 to the General Partner's Form
8-K dated September 19, 1997 and incorporated herein
by reference).
10.17 First Amendment to Contribution and Exchange
Agreement, dated as of December 11, 1997, by and
among the Company and the Mack Group (filed as
Exhibit 10.99 to the General Partner's Form 8-K dated
December 11, 1997 and incorporated herein by
reference).
27 Financial Data Schedule
(b) Reports on Form 8-K.
During the quarter ended September 30, 1999, the Operating Partnership
filed a Current Report on Form 8-K dated July 6, 1999.
63
<PAGE>
MACK-CALI REALTY, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MACK-CALI REALTY, L.P.
------------------------------------
(Registrant)
By: Mack-Cali Realty Corporation,
as its General Partner
Date: November 12, 1999 /s/ MITCHELL E. HERSH
------------------------------------
Mitchell E. Hersh
Chief Executive Officer
Date: November 12, 1999 /s/ BARRY LEFKOWITZ
-----------------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
64
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,252
<SECURITIES> 0
<RECEIVABLES> 6,246
<ALLOWANCES> 918
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,619,783
<DEPRECIATION> 241,746
<TOTAL-ASSETS> 3,598,130
<CURRENT-LIABILITIES> 0
<BONDS> 1,578,229
0
0
<COMMON> 0
<OTHER-SE> 1,895,978
<TOTAL-LIABILITY-AND-EQUITY> 3,598,130
<SALES> 0
<TOTAL-REVENUES> 410,884
<CGS> 0
<TOTAL-COSTS> 191,757
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,793
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