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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 333-57103
MACK-CALI REALTY, L.P.
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(Exact Name of Registrant as specified in its charter)
Delaware 22-3315804
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11 Commerce Drive, Cranford, New Jersey 07016-3599
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(Address of principal executive offices) (Zip code)
(908) 272-8000
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
(Title of Each Class) (Name of Each Exchange on Which Registered)
Securities registered pursuant to Section 12(g) of the Act:
None
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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. |X|
LOCATION OF EXHIBIT INDEX: The index of exhibits is contained in Part IV
herein on page number 63.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Mack-Cali Realty
Corporation's definitive proxy statement to be issued in conjunction with the
Mack-Cali Realty Corporation's annual meeting of shareholders to be held on May
16, 2000 are incorporated by reference in Part III of this Form 10-K.
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TABLE OF CONTENTS
FORM 10-K
PART I Page No.
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Item 1 Business ............................................. 3
Item 2 Properties ........................................... 17
Item 3 Legal Proceedings..................................... 47
Item 4 Submission of Matters to a Vote of Security Holders... 47
PART II
Item 5 Market for Registrant's Common Stock and Related
Stockholder Matters ................................ 47
Item 6 Selected Financial Data............................... 48
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 50
Item 7a Quantitative and Qualitative Disclosures About
Market Risk ........................................ 62
Item 8 Financial Statements and Supplementary Data........... 62
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.............. 62
PART III
Item 10 Directors and Executive Officers of the Registrant ... 62
Item 11 Executive Compensation................................ 62
Item 12 Security Ownership of Certain Beneficial Owners
and Management ..................................... 62
Item 13 Certain Relationships and Related Transactions ....... 63
PART IV
Item 14 Exhibits, Financial Statements, Schedules and
Reports on Form 8-K ................................ 63
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PART I
ITEM 1. BUSINESS
GENERAL
Mack-Cali Realty, L.P., a Delaware limited partnership, (together with its
subsidiaries, the "Operating Partnership"), is a majority-owned subsidiary of
Mack-Cali Realty Corporation, a Maryland corporation (the "Corporation"). The
Operating Partnership owns and operates a portfolio comprised predominantly of
Class A office and office/flex properties located primarily in the Northeast, as
well as commercial real estate leasing, management, acquisition, development and
construction businesses. As of December 31, 1999, the Operating Partnership
owned or had interests in 259 properties, aggregating approximately 28.6 million
square feet, plus developable land (collectively, the "Properties"). The
Properties are comprised of: (a) 253 wholly-owned or Operating
Partnership-controlled properties consisting of 155 office buildings and 85
office/flex buildings totaling approximately 27.0 million square feet, six
industrial/warehouse properties totaling approximately 387,400 square feet, two
multi-family residential complexes consisting of 451 units, two stand-alone
retail properties and three land leases (collectively, the "Consolidated
Properties"); and (b) five office buildings and one office/flex building
aggregating 1.2 million square feet, owned by unconsolidated joint ventures in
which the Operating Partnership has investment interests (see "Investments in
Unconsolidated Joint Ventures"). Unless otherwise indicated, all references to
square feet represent net rentable area. As of December 31, 1999, the office,
office/flex and industrial/warehouse properties, included in the Consolidated
Properties, were approximately 96.5 percent leased to over 2,400 tenants. The
Properties are located in 12 states, primarily in the Northeast, plus the
District of Columbia.
The general partner of the Operating Partnership is the Corporation, which has
elected to be treated and operated so as to qualify as a real estate investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended. The common
stock, par value $0.01 (the "Common Stock") of the Corporation is listed on the
New York Stock Exchange and the Pacific Exchange under the symbol "CLI."
Substantially all of the Corporation's interests in the Properties are held
through, and its operations are conducted through, the Operating Partnership, or
through entities controlled by the Operating Partnership. As of March 1, 2000,
58,477,635 shares of Common Stock were outstanding. Also, as of March 1, 2000,
the Corporation owned a 79.9 percent general partnership interest in the
Operating Partnership, assuming conversion of all preferred limited partnership
units of the Operating Partnership into common limited partnership units.
Without giving effect to the preferred limited partnership units of the
Operating Partnership, the Corporation would own an 87.8 percent general
partnership interest in the Operating Partnership. As used herein, the term
"Units" refers to common limited partnership interests in the Operating
Partnership. Units are redeemable for an equal number of shares of Common Stock
or cash.
The Operating Partnership's strategy has been to focus its acquisition,
operation and development of office properties in markets and sub-markets where
it is, or can become, a significant and preferred owner and operator. The
Operating Partnership believes that its Properties have excellent locations and
access and are well-maintained and professionally managed. As a result, the
Operating Partnership believes that its Properties attract high quality tenants
and achieve among the highest rental, occupancy and tenant retention rates
within their markets. The Operating Partnership will continue this strategy by
expanding, through acquisitions or development in markets and sub-markets where
it has, or can achieve, similar status. Consistent with its growth strategy,
during 1999, the Operating Partnership, directly or through joint ventures in
which it has ownership interests, acquired or placed in service 11 office and
office/flex properties, aggregating approximately 806,142 square feet, for an
aggregate cost to the Operating Partnership of approximately $105.6 million.
Management believes that the recent trend towards increasing rental and
occupancy rates in the Operating Partnership's sub-markets continues to present
significant opportunities for internal growth. The Operating Partnership,
directly or through joint ventures, is underway with the construction of 11
office and office/flex buildings. The Operating Partnership may also develop
additional properties in such sub-markets, particularly with a view towards
development of the Operating Partnership's vacant land holdings, which
principally are located adjacent to the Operating Partnership's existing
properties. Management believes that its extensive market knowledge provides the
Operating Partnership with a significant competitive advantage which is further
enhanced by its strong reputation for, and emphasis on, delivering highly
responsive, professional management services. See "Business Strategies --
Growth".
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The principals of Cali Associates, the entity to whose business the Operating
Partnership succeeded in 1994, have been involved in the development, leasing,
management, operation and disposition of commercial and residential properties
in Northern and Central New Jersey for over 50 years and have been primarily
focusing on office building development for the past 20 years. In January 1997,
the Operating Partnership acquired 65 Class A properties located in Westchester
County, New York and Fairfield County, Connecticut, aggregating approximately
4.1 million square feet from the Robert Martin Company, LLC and affiliates for a
total cost of approximately $450.0 million ("RM Transaction"). In December 1997,
the Operating Partnership acquired 54 Class A office properties, primarily in
New Jersey and Texas, aggregating approximately 9.2 million square feet, from
The Mack Company and Patriot American Office Group for a total cost of
approximately $1.1 billion ("Mack Transaction"). Upon the completion of the Mack
Transaction, the Operating Partnership changed its name from Cali Realty, L.P.
to Mack-Cali Realty, L.P.
The Operating Partnership's executive officers have been employed by the
Corporation and/or its predecessor companies for an average of approximately 10
years. The Operating Partnership and its predecessors have extensive development
experience, having developed 12.5 million square feet or 43.7 percent of the
Operating Partnership's portfolio.
The Operating Partnership performs substantially all construction, development,
leasing, management and tenant improvements on an "in-house" basis and is
self-administered and self-managed. The Operating Partnership was formed on May
31, 1994. The Operating Partnership's executive offices are located at 11
Commerce Drive, Cranford, New Jersey 07016, and its telephone number is (908)
272-8000. The Corporation has an internet website at "www.mack-cali.com".
BUSINESS STRATEGIES
Operations
Reputation: The Operating Partnership has established a reputation as a
highly-regarded landlord with an emphasis on delivering professional quality
tenant services in buildings it owns or manages. The Operating Partnership
believes that its continued success depends in part on enhancing its reputation
as an operator of choice, which will facilitate the retention of current tenants
and the attraction of new tenants. The Operating Partnership believes it
provides a superior level of service to its tenants, which in turn creates
higher than average occupancy rates, as well as lower than average turnover.
Communication with tenants: The Operating Partnership's property management
department emphasizes frequent communication with tenants to ensure first-class
service to the Properties. Property managers generally are located on site at
the Properties to provide convenient access to management and to ensure that the
Properties are well-maintained. Property management's primary responsibility is
to ensure that buildings are operated at peak efficiency in order to meet both
the Operating Partnership's and tenants' needs and expectations. The property
managers additionally budget and oversee capital improvements and building
system upgrades to enhance the Properties' competitive advantages in their
markets.
Additionally, the Operating Partnership's in-house leasing representatives
develop and maintain long-term relationships with the Operating Partnership's
diverse tenant base and coordinate leasing, expansion, relocation and
build-to-suit opportunities within the Operating Partnership's portfolio. This
approach allows the Operating Partnership to offer office space in the
appropriate size and location to current or prospective tenants in any of its
sub-markets.
Growth
The Operating Partnership's objectives are to maximize growth in funds from
operations and to enhance the value of its portfolio through effective
management, acquisition and development strategies, as follows:
Internal Growth: The Operating Partnership seeks to maximize the value of its
existing portfolio through implementing operating strategies to produce
increased effective rental and occupancy rates and decreased concession and
tenant installation costs. The Operating Partnership believes that it has a
unique opportunity for internal growth through re-leasing space at higher
effective rents with contractual rent increases and developing or redeveloping
space for its diverse base of high credit tenants, including AT&T Corporation,
Arthur Anderson and IBM Corporation. In addition, the Operating Partnership's
management seeks volume discounts to take advantage of the Operating
Partnership's size and dominance in particular sub-markets, and operating
efficiencies through the use of in-house management, leasing, marketing,
financing, accounting, legal, development and construction functions. The
Operating Partnership believes that these factors combined should allow the
Operating Partnership internal growth over the next several years.
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Acquisitions: The Operating Partnership also believes that growth opportunities
exist through acquiring operating or redevelopment properties with attractive
returns in sub-markets where, based on its expertise in leasing, managing and
operating properties, it is or can become, a significant and preferred owner and
operator. The Operating Partnership will acquire, invest in or redevelop
additional properties that: (i) provide attractive initial yields with
significant potential for growth in cash flow from operations; (ii) are
well-located, of high quality and competitive in their respective sub-markets;
(iii) are located in its existing sub-markets or in sub-markets in which the
Operating Partnership can become a significant and preferred owner or operator;
and (iv) have been under-managed or are otherwise capable of improved
performance through intensive management, capital improvements and/or leasing
that will result in increased occupancy and rental revenues.
Development: In addition, the Operating Partnership owns 368 acres of land held
for development, on which it can build up to approximately 10.4 million square
feet of office and other space. The Operating Partnership may selectively
develop buildings where such development will result in a favorable
risk-adjusted return on investment in coordination with the above operating
strategies. Such development will primarily occur only when leases have been
executed prior to construction, in stable sub-markets where the demand for such
space exceeds available supply, and where the Operating Partnership is, or can
become, a significant and preferred owner and operator.
Financial
The Operating Partnership currently intends to maintain a ratio of debt-to-total
market capitalization (total debt of the Operating Partnership as a percentage
of the total market value of issued and outstanding units, including interests
redeemable therefor, plus total debt) of approximately 50 percent or less. The
Operating Partnership has three investment grade credit ratings. Standard &
Poor's Rating Services ("S&P") and Duff and Phelps Credit Rating Co. ("DCR")
have each assigned their BBB rating to existing and prospective senior unsecured
debt of the Operating Partnership. S&P and DCR have also assigned their BBB-
rating to prospective preferred stock offerings of the Corporation. Moody's
Investors Service has assigned its Baa3 rating to existing and prospective
senior unsecured debt of the Operating Partnership and its Ba1 rating to
prospective preferred stock offerings of the Corporation. Although there is no
limit in the Operating Partnership's organizational documents on the amount of
indebtedness that the Operating Partnership may incur or the requirement for
maintenance of investment grade credit ratings, the Operating Partnership has
entered into certain financial agreements which contain covenants that limit the
Operating Partnership's ability to incur indebtedness under certain
circumstances. The Operating Partnership also intends to conduct its operations
and resulting financial position in order to maintain its investment grade rated
status. As of December 31, 1999, the Operating Partnership's total debt
constituted approximately 42.8 percent of the total market capitalization of the
Operating Partnership. The Operating Partnership will utilize the most
appropriate sources of capital for future acquisitions, development, capital
improvements and other investments, which may include funds from operating
activities, proceeds from property sales, short-term and long-term borrowings
(including draws on the Operating Partnership's revolving credit facilities),
and issuances of additional debt or equity securities.
EMPLOYEES
As of December 31, 1999, the Operating Partnership had no employees. The
Corporation had over 400 employees.
COMPETITION
The leasing of real estate is highly competitive. The Properties compete for
tenants with lessors and developers of similar properties located in its
respective markets primarily on the basis of location, rent charged, services
provided, and the design and condition of the Properties. The Operating
Partnership also experiences competition when attempting to acquire desirable
real estate, including competition from domestic and foreign financial
institutions, other REITs, life insurance companies, pension trusts, trust
funds, partnerships and individual investors.
REGULATIONS
Many laws and governmental regulations are applicable to the Properties and
changes in these laws and regulations, or their interpretation by agencies and
the courts, occur frequently.
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Under various laws and regulations relating to the protection of the
environment, an owner of real estate may be held liable for the costs of removal
or remediation of certain hazardous or toxic substances located on or in the
property. These laws often impose liability without regard to whether the owner
was responsible for, or even knew of, the presence of such substances. The
presence of such substances may adversely affect the owner's ability to rent or
sell the property or to borrow using such property as collateral and may expose
it to liability resulting from any release of, or exposure to, such substances.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances at another location may also be liable for the costs of removal or
remediation of such substances at the disposal or treatment facility, whether or
not such facility is owned or operated by such person. Certain environmental
laws impose liability for release of asbestos-containing materials into the air,
and third parties may also seek recovery from owners or operators of real
properties for personal injury associated with asbestos-containing materials and
other hazardous or toxic substances. In connection with the ownership (direct or
indirect), operation, management and development of real properties, the
Operating Partnership may be considered an owner or operator of such properties
or as having arranged for the disposal or treatment of hazardous or toxic
substances and, therefore, potentially liable for removal or remediation costs,
as well as certain other related costs, including governmental penalties and
injuries to persons and property.
There can be no assurance that (i) future laws, ordinances or regulations will
not impose any material environmental liability, (ii) the current environmental
condition of the Properties will not be affected by tenants, by the condition of
land or operations in the vicinity of the Properties (such as the presence of
underground storage tanks), or by third parties unrelated to the Operating
Partnership, or (iii) the Operating Partnership's assessments reveal all
environmental liabilities and that there are no material environmental
liabilities of which the Operating Partnership is aware. If compliance with the
various laws and regulations, now existing or hereafter adopted, exceeds the
Operating Partnership's budgets for such items, the Operating Partnership's
ability to make expected distributions to stockholders could be adversely
affected.
There are no other laws or regulations which have a material effect on the
Operating Partnership's operations, other than typical federal, state and local
laws affecting the development and operation of real property, such as zoning
laws.
INDUSTRY SEGMENTS
The Operating Partnership operates in only one industry segment - real estate.
The Operating Partnership does not have any foreign operations and its business
is not seasonal.
RECENT DEVELOPMENTS
The Operating Partnership's funds from operations (after adjustment for
straight-lining of rents) for the year ended December 31, 1999 was $244.2
million as compared to $216.9 million for the year ended December 31, 1998. As a
result of the Operating Partnership's improved operating performance, in
September 1999, the Corporation announced a 5.5 percent increase in its regular
quarterly dividend and distribution, commencing with the third quarter of 1999,
from $0.55 per share ($2.20 per share of Common Stock on an annualized basis) to
$0.58 per share of Common Stock ($2.32 per share of Common Stock on an
annualized basis). The Corporation declared a cash dividend of $0.58 per share
on December 17, 1999 to shareholders of record on January 4, 2000. Also, on that
date, the Operating Partnership declared a cash distribution to the limited
partners in the Operating Partnership of $0.58 per Unit. The dividend and
distributions were paid on January 21, 2000.
In 1999, the Operating Partnership:
o acquired six operating properties aggregating 402,886 square feet at
a total cost of approximately $46.5 million,
o placed in service five properties aggregating 403,256 square feet at
a total cost of approximately $59.1 million,
o acquired three developable land parcels at a total cost of
approximately $20.3 million (with construction of office properties
having been commenced on two of the acquired parcels), and
o sold two office properties aggregating 189,851 square feet for an
aggregate sales price of approximately $18.0 million.
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The completion of these transactions had a net increase to the total square
footage of the Operating Partnership's portfolio of 2.3 percent.
The Operating Partnership, together with seven other public and private real
estate companies and venture capital firm Kleiner Perkins Caufield & Byers,
formed BroadBand Office, Inc. to provide telecommunication and internet services
primarily to office building users nationwide. As part of the agreement, the
Operating Partnership agreed to allow access for the provision of
telecommunication and internet services to tenants at a portion of the Operating
Partnership's properties. The Operating Partnership owns approximately 8 percent
of BroadBand Office, Inc.
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Operating Property Acquisitions
The Operating Partnership acquired the following operating properties during the
year ended December 31, 1999:
<TABLE>
<CAPTION>
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Investment by
Acquisition # of Rentable Operating
Date Property/Portfolio Name Location Bldgs. Square Feet Partnership (a)
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<C> <S> <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 32,799
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Total Office Property Acquisitions: 3 264,286 $ 38,508
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Office/Flex
12/21/99 McGarvey Portfolio - Phase III (c) Moorestown, Burlington County, NJ 3 138,600 $ 8,012
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Total Office/Flex Property Acquisition: 3 138,600 $ 8,012
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Total Operating Property Acquisitions: 6 402,886 $ 46,520
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<CAPTION>
Properties Placed In Service
The Operating Partnership placed in service the following properties through the
completion of development or redevelopment during the year ended December 31,
1999:
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Investment by
Date Placed # of Rentable Operating
in Service Property Name Location Bldgs. Square Feet Partnership (a)
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<C> <S> <C> <C> <C> <C>
Office
8/09/99 2115 Linwood Avenue Fort Lee, Bergen County, NJ 1 68,000 $ 8,147
11/01/99 795 Folsom Street (d) San Francisco, San Francisco County, CA 1 183,445 37,337
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Total Office Properties Placed in Service: 2 251,445 $ 45,484
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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 46,850 5,023
12/10/99 600 West Avenue (e) Stamford, Fairfield County, CT 1 66,000 5,429
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Total Office/Flex Properties Placed in Service: 3 151,811 $ 12,592
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Land Lease
2/01/99 Horizon Center Business Park (f) Hamilton Township, Mercer County, NJ N/A 27.7 acres $ 1,007
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Total Land Lease Transactions: 27.7 acres $ 1,007
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Total Properties Placed in Service: 5 403,256 $ 59,083
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</TABLE>
(a) Unless otherwise noted, transactions were funded by the Operating
Partnership with funds primarily made available through draws on the
Operating Partnership's credit facilities.
(b) William L. Mack, a current member of the Board of Directors of the
Corporation 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 properties were acquired through the exercise of a purchase option
obtained in the initial acquisition of the McGarvey portfolio in January
1998.
(d) On June 1, 1999, the building was acquired for redevelopment for
approximately $34.3 million.
(e) 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, respectively, 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
$2.2 million.
(f) 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 constructed a 134,000
square-foot retail store.
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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 $1.5
million, 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 130,000 square-foot office building on this site.
The Operating Partnership accounts for the joint venture on a consolidated
basis.
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 members 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 $6.1
million. The acquisition was funded with cash and the issuance of 121,624 common
units to the seller (see Note 12 to the Financial Statements). The Operating
Partnership has commenced construction of a 220,000 square-foot office building
on the acquired land.
In August 1999, the Operating Partnership entered into an agreement with SJP
Properties Company ("SJP Properties") which provides for a cooperative effort in
seeking approvals to develop up to approximately 1.8 million square feet of
office development on certain vacant land owned or controlled, respectively, by
the Operating Partnership and SJP Properties, in Hanover and Parsippany, Morris
County, New Jersey. The agreement provides that the parties shall share equally
in the costs associated with seeking such requisite approvals. Subsequent to
obtaining the requisite approvals, upon mutual consent, the Operating
Partnership and SJP Properties may enter into one or more joint ventures to
construct on the vacant land, or seek to dispose of their respective vacant land
parcels subject to the agreement.
Dispositions
On November 15, 1999, the Operating Partnership sold its 70,550 square-foot
office building located at 400 Alexander Road in Princeton, Mercer County, New
Jersey for net proceeds, after selling costs, of approximately $8.6 million.
On December 15, 1999, the Operating Partnership sold its 119,301 square-foot
office building located at 20002 North 19th Avenue in Phoenix, Maricopa County,
Arizona for net proceeds, after selling costs, of approximately $8.8 million.
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
The following is a summary of the Operating Partnership's net investments in
unconsolidated joint ventures as of December 31, 1999:
Operating Partnership's
Net Investments
(in thousands)
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Pru-Beta 3 $17,072
HPMC 23,337
G&G Martco 8,352
American Financial Exchange L.L.C. 11,571
Ramland Realty Associates L.L.C. 2,697
Ashford Loop Associates L.P. 6,073
ARCap Investors, L.L.C. 20,032
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Total $89,134
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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 Mack-Cali Business Campus (formerly Prudential Business Campus) office
complex in Parsippany, Morris County, New Jersey. The Operating Partnership
performs management and leasing services for the property owned by the joint
venture.
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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 named
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 constructed and placed in service a 237,360 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
three one-story buildings aggregating 133,750 square feet of office/flex space.
HPMC Development Partners II, L.P.'s efforts have focused on three development
projects, commonly referred to as Lava Ridge, Peninsula Gateway and Stadium
Gateway. Lava Ridge is a 12.1 acre site located in Roseville, Placer County,
California, acquired by the venture upon which it has commenced construction of
three two-story buildings aggregating 183,200 square feet of office space.
Peninsula Gateway is a parcel of land purchased from the City of Daly City,
California, for future development into office space, a hotel and other retail
establishments. Stadium Gateway is a 1.5 acre site located in Anaheim, Orange
County, California, to be acquired by the venture to develop a six-story office
building aggregating 261,554 square feet. 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 such 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
12 to the Financial Statements), 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 12 to the Financial Statements). The
Operating Partnership performs management and leasing services for the property
owned by the joint venture.
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 has acquired land on which it has 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 Financial Center 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, leasing and other services for the property
owned by the joint venture.
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. The Operating Partnership performs management and leasing services
for the properties owned by the joint venture.
10
<PAGE>
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 $20.0 million 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.
North Pier At Harborside Residential Development: On August 5, 1999, the
Operating Partnership entered into an agreement which, upon satisfaction of
certain conditions, provides for the contribution of its North Pier at
Harborside Financial Center, Jersey City, Hudson County, New Jersey to a joint
venture with Lincoln Property Operating Partnership Southwest, Inc., in exchange
for cash and an equity interest in the venture. The venture intends to develop
residential housing on the property.
South Pier At Harborside Hotel Development: On November 17, 1999, the Operating
Partnership entered into an agreement with Hyatt Corporation to develop a
350-room hotel on the Operating Partnership's South Pier at Harborside Financial
Center, Jersey City, Hudson County, New Jersey, subject to the satisfaction of
certain conditions.
FINANCING ACTIVITY
During 1999, in conjunction with the funding of certain acquisitions as well as
redemption of the remaining contingent units issued in the Mack Transaction, the
Operating Partnership issued a total of 397,107 common operating partnership
units ("Common Units") with a total value of approximately $11.5 million at time
of issuance.
During 1999, pursuant to a share repurchase program approved by the Board of
Directors of the Corporation in August 1998, the Corporation purchased in the
open market, for constructive retirement, 1,014,500 shares of its outstanding
Common Stock for an aggregate cost of approximately $27.5 million. Concurrent
with these purchases, the Corporation sold to the Operating Partnership
1,014,500 Common Units for approximately $27.5 million.
On March 16, 1999, the Operating Partnership issued $600.0 million, face amount,
of senior unsecured notes with interest payable semi-annually in arrears. The
total proceeds from the issuance (net of selling commissions and discount) of
approximately $593.5 million were used to pay down outstanding borrowings under
the 1998 Unsecured Facility, as defined in Note 9 to the financial statements,
and to pay off certain mortgage loans. The senior unsecured notes were issued at
a discount of approximately $2.7 million, 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 $185.3 million
of senior unsecured notes with interest payable monthly. The Operating
Partnership used the proceeds to retire the TIAA Mortgage, as defined in Note 10
to the financial statements.
The Operating Partnership's total senior unsecured notes are redeemable at any
time at the option of the Operating Partnership, subject to certain conditions
including yield maintenance.
In November 1999, the Operating Partnership received $2.2 million in settlement
of a forward treasury rate lock agreement entered into in 1998, which is being
amortized to interest expense over the three-year period.
RISK FACTORS
Our results from operations and ability to pay dividends on our equity and debt
service on our indebtedness may be affected by the risk factors set forth below.
All investors should consider the following risk factors before deciding to
purchase securities of the Operating Partnership. The Operating Partnership
refers to itself as "we" or "our" in the following risk factors and in "Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Disruption in Operations Due to Year 2000 Problems".
11
<PAGE>
We are dependent upon the economics of the northeastern office markets.
A majority of our revenues are derived from our properties located in the
Northeast, particularly in New Jersey, New York, Pennsylvania and Connecticut.
Adverse economic developments in these states could adversely impact the
operations of our properties and, therefore, our profitability. Because our
portfolio consists primarily of office and office/flex buildings (as compared to
a more diversified real estate portfolio), a decline in the economy and/or a
decline in the demand for office space may adversely affect our ability to make
distributions or payments to our investors.
Our performance is subject to risks associated with the real estate industry.
General: Our ability to make distributions or payments to our investors depends
on the ability of our properties to generate funds in excess of operating
expenses (including scheduled principal payments on debt and capital expenditure
requirements). Events or conditions that are beyond our control may adversely
affect our operations and the value of our properties. Such events or conditions
could include:
o changes in the general economic climate;
o changes in local conditions such as oversupply of office space or a
reduction in demand for office space;
o decreased attractiveness of our properties to potential tenants;
o competition from other office and office/flex buildings;
o our inability to provide adequate maintenance;
o increased operating costs, including insurance premiums and real
estate taxes, due to inflation and other factors which may not
necessarily be offset by increased rents;
o changes in laws and regulations (including tax, environmental and
housing laws and regulations) and agency or court interpretations of
such laws and regulations and the related costs of compliance;
o changes in interest rate levels and the availability of financing;
o the inability of a significant number of tenants to pay rent;
o our inability to rent office space on favorable terms; and
o civil unrest, earthquakes and other natural disasters or acts of God
that may result in uninsured losses.
Financially distressed tenants may be unable to pay rent: If a tenant defaults,
we may experience delays and incur substantial costs in enforcing our rights as
landlord and protecting our investments. If a tenant files for bankruptcy, a
potential court judgment rejecting and terminating such tenant's lease could
adversely affect our ability to make distributions or payments to our investors.
Illiquidity of real estate limits our ability to act quickly: Real estate
investments are relatively illiquid. Such illiquidity may limit our ability to
react quickly in response to changes in economic and other conditions. If we
want to sell an investment, we might not be able to dispose of that investment
in the time period we desire, and the sales price of that investment might not
recoup or exceed the amount of our investment. The prohibition in the Internal
Revenue Code of 1986, as amended, and related regulations on a real estate
investment trust holding property for sale also may restrict our ability to sell
property. In addition, we acquired a significant number of our properties from
individuals to whom we issued limited partnership units as part of the purchase
price. In connection with the acquisition of these properties, in order to
preserve such individual's tax deferral, we contractually agreed not to sell or
otherwise transfer the properties for a specified period of time, subject to
certain exceptions. The above limitations on our ability to sell our investments
could adversely affect our ability to make distributions or payments to our
investors.
Americans with Disabilities Act compliance could be costly: Under the Americans
with Disabilities Act of 1990, all public accommodations and commercial
facilities must meet certain federal requirements related to access and use by
disabled persons. Compliance with the ADA requirements could involve removal of
structural barriers from certain disabled persons' entrances. Other federal,
state and local laws may require modifications to or restrict further
renovations of our properties with respect to such accesses. Although we believe
that our properties are substantially in compliance with present requirements,
noncompliance with the ADA or related laws or regulations could result in the
United States government imposing fines or private litigants being awarded
damages against us. Such costs may adversely affect our ability to make
distributions or payments to our investors.
12
<PAGE>
Environmental problems are possible and may be costly: Various federal, state
and local laws and regulations subject property owners or operators to liability
for the costs of removal or remediation of certain hazardous or toxic substances
located on or in the property. These laws often impose liability without regard
to whether the owner or operator was responsible for or even knew of the
presence of such substances. The presence of or failure to properly remediate
hazardous or toxic substances may adversely affect our ability to rent, sell or
borrow against contaminated property. Various laws and regulations also impose
liability on persons who arrange for the disposal or treatment of hazardous or
toxic substances at another location for the costs of removal or remediation of
such substances at the disposal or treatment facility. These laws often impose
liability whether or not the person arranging for such disposal ever owned or
operated the disposal facility. Certain other environmental laws and regulations
impose liability on owners or operators of property for injuries relating to the
release of asbestos-containing materials into the air. As owners and operators
of property and as potential arrangers for hazardous substance disposal, we may
be liable under such laws and regulations for removal or remediation costs,
governmental penalties, property damage, personal injuries and related expenses.
Payment of such costs and expenses could adversely affect our ability to make
distributions or payments to our investors.
Competition for acquisitions may result in increased prices for properties: We
plan to acquire additional properties in New Jersey, New York and Pennsylvania
and in the Northeast generally. We may be competing for investment opportunities
with entities that have greater financial resources and more experienced
managers. Several office building developers and real estate companies may
compete with us in seeking properties for acquisition, land for development and
prospective tenants. Such competition may adversely affect our ability to make
distributions or payments to our investors by:
o reducing the number of suitable investment opportunities offered to
us;
o increasing the bargaining power of property owners;
o interfering with our ability to attract and retain tenants;
o increasing vacancies which lowers market rental rates and limits our
ability to negotiate rental rates; and/or
o adversely affecting our ability to minimize expenses of operation.
Development of real estate could be costly: As part of our operating strategy,
we may acquire land for development under certain conditions. Included among the
risks of the real estate development business are the following, which may
adversely affect our ability to make distributions or payments to our investors:
o financing for development projects may not be available on favorable
terms;
o long-term financing may not be available upon completion of
construction; and
o failure to complete construction on schedule or within budget may
increase debt service expense and construction costs.
Debt financing could adversely affect our economic performance.
Scheduled debt payments and refinancing could adversely affect our financial
condition: We are subject to the risks normally associated with debt
financing. These risks, including the following, may adversely affect our
ability to make distributions or payments to our investors:
o our cash flow may be insufficient to meet required payments of
principal and interest;
o payments of principal and interest on borrowings may leave us with
insufficient cash resources to pay operating expenses;
o we may not be able to refinance indebtedness on our properties at
maturity; and
o if refinanced, the terms of refinancing may not be as favorable as
the original terms of the related indebtedness.
As of December 31, 1999, we had total outstanding indebtedness of $1.5 billion
comprised of $782.8 million of senior unsecured notes, outstanding borrowings of
$177.0 million under our unsecured $1.0 billion revolving credit facility and
approximately $530.4 million of mortgage indebtedness. We may have to refinance
the principal due on our mortgage indebtedness at maturity, and we may not be
able to refinance any indebtedness we incur in the future.
13
<PAGE>
If we are unable to refinance our indebtedness on acceptable terms, or at all,
events or conditions that may adversely affect our ability to make distributions
or payments to our investors include the following:
o we may need to dispose of one or more of our properties upon
disadvantageous terms;
o prevailing interest rates or other factors at the time of refinancing
could increase interest rates and, therefore, our interest expense;
o if we mortgage property to secure payment of indebtedness and are unable
to meet mortgage payments, the mortgagee could foreclose upon such
property or appoint a receiver to receive an assignment of our rents and
leases; and
o foreclosures upon mortgaged property could create taxable income without
accompanying cash proceeds and, therefore, hinder our ability to meet the
real estate investment trust distribution requirements of the Internal
Revenue Code.
Rising interest rates may adversely affect our cash flow: Outstanding borrowings
of approximately $177.0 million (as of December 31, 1999) under our revolving
credit facilities and approximately $72.2 million (as of December 31, 1999) of
our mortgage indebtedness bear interest at variable rates. We may incur
additional indebtedness in the future that also bears interest at variable
rates. Variable rate debt creates higher debt service requirements if market
interest rates increase. Higher debt service requirements could adversely affect
our ability to make distributions or payments to our investors or cause us to
default under certain debt covenants.
Our degree of leverage could adversely affect our cash flow: We fund acquisition
opportunities and development partially through short-term borrowings (including
our revolving credit facilities), as well as out of undistributed cash. We
expect to refinance projects purchased with short-term debt either with
long-term indebtedness or equity financing depending upon the economic
conditions at the time of refinancing. The Board of Directors of Mack-Cali
Realty Corporation, our general partner, has a general policy of limiting the
ratio of our indebtedness to total market capitalization (total debt as a
percentage of the total market value of the issued and outstanding shares of
Mack-Cali Realty Corporation's common stock, including interests redeemable
therefore, plus total debt) to 50 percent or less, although there is no limit in
Mack-Cali Realty Corporation's or our organizational documents on the amount of
indebtedness that we may incur. However, we have entered into certain financial
agreements which contain financial and operating covenants that limit our
ability under certain circumstances to incur additional secured and unsecured
indebtedness. The Board of Directors could alter or eliminate its current policy
on borrowing at any time in its discretion. If this policy were changed, we
could become more highly leveraged, resulting in an increase in debt service
that could adversely affect our cash flow and our ability to make distributions
or payments to our investors and could cause an increased risk of default on our
obligations.
Any unsecured indebtedness that we may issue is effectively subordinated to our
secured indebtedness and indebtedness of our subsidiaries: Any unsecured
indebtedness that we may issue will be effectively subordinated to any of our
secured indebtedness to the extent of the value of the assets securing such
indebtedness and indebtedness of our subsidiaries. As of December 31, 1999, our
total secured indebtedness (including secured indebtedness issued by our
subsidiaries) was approximately $530.4 million. Consequently, in the event we
are involved in a bankruptcy, liquidation, dissolution, reorganization or
similar proceeding, the holders of any secured indebtedness will be entitled to
proceed against the collateral that secures any such secured indebtedness, and
such collateral will not be available for satisfaction of any amounts owned
under our unsecured indebtedness, including the notes. In addition, in the event
of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding
of our subsidiaries, holders of indebtedness of our subsidiaries (whether
secured or unsecured) and trade creditors of our subsidiaries generally will be
entitled to payment of their claims from the assets of those subsidiaries before
any assets are made available for distribution to us.
We are dependent on our key personnel whose continued service is not guaranteed.
We are dependent upon our executive officers for strategic business direction
and real estate experience. While we believe that we could find replacements for
these key personnel, loss of their services could adversely affect our
operations. We have entered into an employment agreement (including
non-competition provisions) which provides for a continuous four-year employment
term with each of Mitchell E. Hersh, Brant B. Cali, John R. Cali, Timothy M.
Jones, Barry Lefkowitz and Roger W. Thomas. We do not have key man life
insurance for our executive officers.
14
<PAGE>
Consequences of failure to qualify as a real estate investment trust could
adversely affect our financial condition.
Failure to maintain ownership limits could cause our general partner to lose its
qualification as a real estate investment trust: In order for Mack-Cali Realty
Corporation to maintain its qualification as a real estate investment trust, not
more than 50 percent in value of its outstanding stock may be actually and/or
constructively owned by five or fewer individuals (as defined in the Internal
Revenue Code to include certain entities). Mack-Cali Realty Corporation has
limited ownership of the outstanding shares of its common stock by any single
stockholder to 9.8 percent of the outstanding shares of its common stock. The
Board of Directors of Mack-Cali Realty Corporation could waive this restriction
if it was satisfied, based upon the advice of tax counsel or otherwise, that
such action would be in the best interests of Mack-Cali Realty Corporation and
would not affect its qualifications as a real estate investment trust. Common
stock of Mack-Cali Realty Corporation acquired or transferred in breach of the
limitation may be redeemed by Mack-Cali Realty Corporation for the lesser of the
price paid and the average closing price for the 10 trading days immediately
preceding redemption or sold at the direction of Mack-Cali Realty Corporation.
Mack-Cali Realty Corporation may elect to redeem such shares of common stock for
limited partnership units, which are nontransferable except in very limited
circumstances. Any transfer of shares of common stock which, as a result of such
transfer, causes Mack-Cali Realty Corporation to be in violation of any
ownership limit will be deemed void. Although Mack-Cali Realty Corporation
currently intends to continue to operate in a manner which will enable Mack-Cali
Realty Corporation to continue to qualify as a real estate investment trust, it
is possible that future economic, market, legal, tax or other considerations may
cause Mack-Cali Realty Corporation's Board of Directors to revoke the election
for Mack-Cali Realty Corporation to qualify as a real estate investment trust.
Under Mack-Cali Realty Corporation's organizational documents, its Board of
Directors can make such revocation without the consent of Mack-Cali Realty
Corporation's stockholders.
In addition, the consent of the holders of at least 85 percent of our
partnership units is required: (i) to merge (or permit the merger of) us with
another unrelated person, pursuant to a transaction in which we are not the
surviving entity; (ii) to dissolve, liquidate or wind us up; or (iii) to convey
or otherwise transfer all or substantially all of our assets. As of December 31,
1999, Mack-Cali Realty Corporation, as our general partner, owned approximately
79.8 percent of our outstanding partnership units (assuming conversion of all
preferred limited partnership units).
Tax liabilities as a consequence of failure to qualify as a real estate
investment trust: Mack-Cali Realty Corporation has elected to be treated and has
operated so as to qualify as a real estate investment trust for federal income
tax purposes since its taxable year ended December 31, 1994. Although Mack-Cali
Realty Corporation believes it will continue to operate in such manner, we
cannot guarantee that Mack-Cali Realty Corporation will do so. Qualification as
a real estate investment trust involves the satisfaction of various requirements
(some on an annual and quarterly basis) established under highly technical and
complex tax provisions of the Internal Revenue Code. Because few judicial or
administrative interpretations of such provisions exist and qualification
determinations are fact sensitive, we cannot assure you that Mack-Cali Realty
Corporation will qualify as a real estate investment trust for any taxable year.
If Mack-Cali Realty Corporation fails to qualify as a real estate investment
trust in any taxable year, it will be subject to the following:
o it will not be allowed a deduction for dividends to shareholders;
o it will be subject to federal income tax at regular corporate rates,
including any alternative minimum tax, if applicable; and
o unless it is entitled to relief under certain statutory provisions,
it will not be permitted to qualify as a real estate investment
trust for the four taxable years following the year during which it
was disqualified.
A loss of Mack-Cali Realty Corporation's status as a real estate investment
trust could have an adverse effect on us. Failure to qualify as a real estate
investment trust also would eliminate the requirement that Mack-Cali Realty
Corporation pay dividends to its shareholders.
Other tax liabilities: Even if Mack-Cali Realty Corporation qualifies as a real
estate investment trust, it is subject to certain federal, state and local taxes
on our income and property and, in some circumstances, certain other state
taxes. Our net income from third party management and tenant improvements, if
any, also may be subject to federal income tax.
15
<PAGE>
Risk of changes in the tax law applicable to real estate investment trusts:
Since the Internal Revenue Service, the United States Treasury Department and
Congress frequently review federal income tax legislation, we cannot predict
whether, when or to what extent new federal tax laws, regulations,
interpretations or rulings will be adopted. Any of such legislative action may
prospectively or retroactively modify our and Mack-Cali Realty Corporation's tax
treatment and, therefore, may adversely affect taxation of us, Mack-Cali Realty
Corporation and/or investors.
There is no public market for our unsecured indebtedness.
We may issue debt securities for which there is no active trading market. If
traded after their initial issuance, such securities may trade at a discount
from their initial offering price, depending upon prevailing interest rates, the
market for similar securities, our financial condition and performance and other
factors beyond our control, including general economic conditions. We may not
list our debt securities on any securities exchange.
Disclosure Regarding Forward-looking Statements.
The Operating Partnership considers portions of this information to be
forward-looking statements. Although the Operating Partnership believes that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
achieved.
16
<PAGE>
ITEM 2. PROPERTIES
PROPERTY LIST
As of December 31, 1999, the Operating Partnership's Properties consisted of 246
in-service office, office/flex and industrial/warehouse properties, ranging from
one to 19 stories, as well as two multi-family residential properties, two
stand-alone retail properties and three land leases. The Consolidated Properties
are located primarily in the Northeast. The Consolidated Properties are easily
accessible from major thoroughfares and are in close proximity to numerous
amenities. The Consolidated Properties contain a total of approximately 27.4
million square feet, with the individual properties ranging from approximately
6,600 to 761,200 square feet. The Consolidated Properties, managed by on-site
employees, generally have attractively landscaped sites, atriums and covered
parking in addition to quality design and construction. The Operating
Partnership's tenants include many service sector employers, including a large
number of professional firms and national and international businesses. The
Operating Partnership believes that all of its Properties are well-maintained
and do not require significant capital improvements.
17
<PAGE>
Property Listing
Office Properties
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY
Egg Harbor
100 Decadon Drive............... 1987 40,422 100.0 783 783 0.17
200 Decadon Drive............... 1991 39,922 94.9 747 715 0.16
BERGEN COUNTY, NEW JERSEY
Fair Lawn
17-17 Route 208 North........... 1987 143,000 94.5 3,349 3,229 0.72
Fort Lee
One Bridge Plaza................ 1981 200,000 99.3 4,691 4,547 1.01
2115 Linwood Avenue (7)......... 1981 68,000 61.3 103 97 0.02
Little Ferry
200 Riser Road.................. 1974 286,628 100.0 1,876 1,876 0.40
Montvale
95 Chestnut Ridge Road.......... 1975 47,700 100.0 568 568 0.12
135 Chestnut Ridge Road......... 1981 66,150 100.0 1,023 1,023 0.22
Paramus
140 Ridgewood Avenue ........... 1981 239,680 100.0 5,098 5,067 1.10
15 East Midland Avenue.......... 1988 259,823 100.0 6,647 6,647 1.43
461 From Road................... 1988 253,554 99.8 6,020 6,015 1.30
650 From Road................... 1978 348,510 100.0 7,480 7,472 1.61
61 South Paramus Avenue......... 1985 269,191 96.2 5,345 5,241 1.15
Rochelle Park
120 Passaic Street.............. 1972 52,000 100.0 576 576 0.12
365 West Passaic Street......... 1976 212,578 84.9 3,506 3,419 0.76
Saddle River
1 Lake Street................... 1973/94 474,801 100.0 7,466 7,466 1.61
Upper Saddle River
10 Mountainview Road............ 1986 192,000 100.0 3,663 3,505 0.79
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY
Egg Harbor
100 Decadon Drive............... 19.37 19.37 Computer Sciences Corp. (80%), United States of America (20%)
200 Decadon Drive............... 19.72 18.87 Computer Sciences Corp. (45%), Advanced Casino Systems
Corp. (33%), Dimensions International Inc. (15%)
BERGEN COUNTY, NEW JERSEY
Fair Lawn
17-17 Route 208 North........... 24.78 23.89 Lonza, Inc. (63%), Boron-Lepore Assoc., Inc. (16%)
Fort Lee
One Bridge Plaza................ 23.62 22.90 PricewaterhouseCoopers (35%), Broadview Associates LLP
(16%), Bozell Worldwide, Inc. (16%)
2115 Linwood Avenue (7)......... 6.22 5.86 Ameribrom Inc. (14%), Morgan Stanley Dean Witter (10%)
Little Ferry
200 Riser Road.................. 6.55 6.55 Ford Motor Company (34%), Dassault Falcon Jet Corp. (33%),
Sanyo Fischer Services Corp. (33%)
Montvale
95 Chestnut Ridge Road.......... 11.91 11.91 Roussel-UCLAF Holding Corp. (100%)
135 Chestnut Ridge Road......... 15.46 15.46 Ramland Realty (74%), Automated Resources Group (26%)
Paramus
140 Ridgewood Avenue ........... 21.27 21.14 AT&T Wireless Services (51%), Smith Barney Shearson
(19%)
15 East Midland Avenue.......... 25.58 25.58 AT&T Wireless Services (100%)
461 From Road................... 23.79 23.77 Toys 'R' Us, Inc. (96%)
650 From Road................... 21.46 21.44 Western Union Financial Services, Inc. (38%)
61 South Paramus Avenue......... 20.64 20.24 --
Rochelle Park
120 Passaic Street.............. 11.08 11.08 Electronic Data Systems Corp. (100%)
365 West Passaic Street......... 19.43 18.94 United Retail Inc. (31%), Catalina Marketing Corp. (10%),
Regulus LLC (10%)
Saddle River
1 Lake Street................... 15.72 15.72 Prentice-Hall Inc. (100%)
Upper Saddle River
10 Mountainview Road............ 19.08 18.26 Thomson Minwax Company (23%), Professional Detailing Inc.
(19%), Corning Life Sciences (15%), ITT Fluid Technology (14%),
Pearson Education (14%)
</TABLE>
18
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Woodcliff Lake
400 Chestnut Ridge Road.................. 1982 89,200 100.0 2,119 2,119 0.46
470 Chestnut Ridge Road.................. 1987 52,500 100.0 1,192 1,192 0.26
530 Chestnut Ridge Road.................. 1986 57,204 100.0 1,166 1,166 0.25
50 Tice Boulevard........................ 1984 235,000 100.0 4,721 4,098 1.02
300 Tice Boulevard....................... 1991 230,000 100.0 4,980 4,862 1.07
BURLINGTON COUNTY, NEW JERSEY
Moorestown
224 Strawbridge Drive.................... 1984 74,000 95.2 985 735 0.21
228 Strawbridge Drive.................... 1984 74,000 100.0 1,434 1,067 0.31
ESSEX COUNTY, NEW JERSEY
Millburn
150 J.F. Kennedy Parkway................. 1980 247,476 95.0 5,859 5,846 1.26
Roseland
101 Eisenhower Parkway................... 1980 237,000 92.0 4,139 3,835 0.89
103 Eisenhower Parkway................... 1985 151,545 96.6 3,003 2,756 0.65
HUDSON COUNTY, NEW JERSEY
Jersey City
95 Christopher Columbus Drive............ 1989 621,900 100.0 12,900 11,788 2.78
Harborside Financial Center Plaza I...... 1983 400,000 98.8 3,294 3,292 0.71
Harborside Financial Center Plaza II..... 1990 761,200 100.0 17,508 17,297 3.78
Harborside Financial Center Plaza III.... 1990 725,600 100.0 16,687 16,486 3.61
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Woodcliff Lake
400 Chestnut Ridge Road.................. 23.76 23.76 Timeplex, Inc. (100%)
470 Chestnut Ridge Road.................. 22.70 22.70 Andermatt LP (100%)
530 Chestnut Ridge Road.................. 20.38 20.38 KPMG Peat Marwick, LLP (100%)
50 Tice Boulevard........................ 20.09 17.44 Syncsort, Inc (22%)
300 Tice Boulevard....................... 21.65 21.14 Merck-Medco Managed Care LLC (20%), Xerox Corp. (14%),
Chase Home Mortgage Corp. (12%), Comdisco, Inc. (13%),
NYCE, Corp. (11%)
BURLINGTON COUNTY, NEW JERSEY
Moorestown
224 Strawbridge Drive.................... 13.98 10.43 Allstate Insurance Co. (49%), Harleysville Mutual Insurance
(27%)
228 Strawbridge Drive.................... 19.38 14.42 Cendant Mortgage Corp. (100%)
ESSEX COUNTY, NEW JERSEY
Millburn
150 J.F. Kennedy Parkway................. 24.92 24.87 KPMG Peat Marwick, LLP (42%), Budd Larner Gross (23%)
Roseland
101 Eisenhower Parkway................... 18.98 17.59 Arthur Andersen, LLP (31%), Brach, Eichler, Rosenberg,
Silver, Bernstein & Hammer (13%)
103 Eisenhower Parkway................... 20.51 18.83 Ravin, Sarasohn, Cook, Baumgarten (21%),
Chelsea GCA Realty (18%), Lum, Danzis, Drasco (15%),
Salomon Smith Barney, Inc. (11%)
HUDSON COUNTY, NEW JERSEY
Jersey City
95 Christopher Columbus Drive............ 20.74 18.95 Donaldson, Lufkin & Jenrette Securities Corp. (69%),
NTT Data Corp. (22%)
Harborside Financial Center Plaza I...... 8.34 8.33 Bankers Trust Harborside, Inc. (96%)
Harborside Financial Center Plaza II..... 23.00 22.72 Morgan Stanley Dean Witter (35%), Dow Jones Telerate
Systems, Inc. (24%), DLJ Securities Corp. (15%), Lewco
Securities (11%)
Harborside Financial Center Plaza III.... 23.00 22.72 AICPA (34%), BTM Information Services, Inc. (19%)
</TABLE>
19
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MERCER COUNTY, NEW JERSEY
Princeton
5 Vaughn Drive................... 1987 98,500 100.0 2,217 2,045 0.48
400 Alexander Road (8)........... 1987 n/a n/a 1,101 929 0.24
103 Carnegie Center.............. 1984 96,000 96.4 2,119 1,972 0.46
100 Overlook Center ............. 1988 149,600 100.0 3,792 3,777 0.82
MIDDLESEX COUNTY, NEW JERSEY
East Brunswick
377 Summerhill Road.............. 1977 40,000 100.0 373 373 0.08
Plainsboro
500 College Road East............ 1984 158,235 100.0 3,398 3,373 0.73
South Brunswick
3 Independence Way............... 1983 111,300 99.9 1,911 1,895 0.41
Woodbridge
581 Main Street.................. 1991 200,000 100.0 4,420 4,393 0.95
MONMOUTH COUNTY, NEW JERSEY
Neptune
3600 Route 66.................... 1989 180,000 100.0 2,414 2,414 0.52
Wall Township
1305 Campus Parkway.............. 1988 23,350 92.3 406 388 0.09
1350 Campus Parkway.............. 1990 79,747 94.7 1,334 1,250 0.29
MORRIS COUNTY, NEW JERSEY
Florham Park
325 Columbia Parkway............. 1987 168,144 100.0 3,869 3,473 0.83
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MERCER COUNTY, NEW JERSEY
Princeton
5 Vaughn Drive................... 22.51 20.76 U.S. Trust of NJ (19%), Woodrow Wilson National Fellowship
Foundation (14%), Princeton Venture Research Corp. (14%),
Villeroy & Boch Tableware Ltd. (14%)
400 Alexander Road (8)........... n/a n/a n/a (8)
103 Carnegie Center.............. 22.90 21.31 Ronin Development Corp. (15%), R.G. Vanderweil Engineers
(14%), Kurt Salmon Assoc. (11%)
100 Overlook Center ............. 25.35 25.25 Novo-Nordisk Pharmaceuticals (24%), Xerox Corp. (23%),
IFP North America (14%)
MIDDLESEX COUNTY, NEW JERSEY
East Brunswick
377 Summerhill Road.............. 9.33 9.33 Greater New York Mutual Insurance Company (100%)
Plainsboro
500 College Road East............ 21.47 21.32 Merrill Lynch Asset Mgmt (72%), Buchanan Ingersoll P.C. (17%)
South Brunswick
3 Independence Way............... 17.19 17.04 Merrill Lynch Pierce Fenner & Smith (84%)
Woodbridge
581 Main Street.................. 22.10 21.97 First Investors Management Company, Inc. (38%), Cast North
America (11%)
MONMOUTH COUNTY, NEW JERSEY
Neptune
3600 Route 66.................... 13.41 13.41 The United States Life Insurance Company (100%)
Wall Township
1305 Campus Parkway.............. 18.84 18.00 Centennial Cellular Corp. (41%), McLaughlin, Bennet, Gelson
(35%), NJ Natural Energy Co. (10%)
1350 Campus Parkway.............. 17.66 16.55 Meridan Health Realty Corp. (22%), New Jersey National Bank
(17%), Stephen E. Gertler (17%), Milestone Material Inc. (14%),
Health Care Software (11%)
MORRIS COUNTY, NEW JERSEY
Florham Park
325 Columbia Parkway............. 23.01 20.65 Bressler Amery & Ross (24%), Atlantic Health Systems (12%),
Dun & Bradstreet Inc. (12%), Qwest Communications (11%)
</TABLE>
20
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Morris Plains
201 Littleton Road........... 1979 88,369 100.0 1,706 1,705 0.37
250 Johnson Road............. 1977 75,000 100.0 1,090 1,090 0.24
Morris Township
340 Mt. Kemble Avenue........ 1985 387,000 100.0 5,530 5,530 1.19
412 Mt. Kemble Avenue........ 1986 475,100 100.0 6,902 6,902 1.49
Parsippany
1 Sylvan Way................. 1989 150,557 100.0 3,484 3,136 0.75
2 Dryden Way................. 1990 6,216 100.0 67 67 0.01
2 Hilton Court............... 1991 181,592 100.0 4,470 4,455 0.95
5 Sylvan Way................. 1989 151,383 96.7 3,432 3,429 0.74
7 Campus Drive............... 1982 154,395 100.0 2,548 2,548 0.55
7 Sylvan Way................. 1987 145,983 100.0 2,919 2,919 0.63
8 Campus Drive .............. 1987 215,265 92.8 4,730 4,651 1.02
600 Parsippany Road.......... 1978 96,000 57.6 1,527 1,475 0.33
PASSAIC COUNTY, NEW JERSEY
Clifton
777 Passaic Avenue........... 1983 75,000 77.4 1,028 865 0.22
Totowa
999 Riverview Drive.......... 1988 56,066 100.0 918 894 0.20
Wayne
201 Willowbrook Boulevard.... 1970 178,329 99.0 2,446 2,432 0.53
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Morris Plains
201 Littleton Road........... 19.31 19.29 Xerox Corp. (35%), Bozell Worldwide Inc. (34%), Willis Corroon
Corp. of New Jersey (20%), CHEP USA (11%)
250 Johnson Road............. 14.53 14.53 Electronic Data Systems Corp. (100%)
Morris Township
340 Mt. Kemble Avenue........ 14.29 14.29 AT&T Corp. (100%)
412 Mt. Kemble Avenue........ 14.53 14.53 AT&T Corp. (100%)
Parsippany
1 Sylvan Way................. 23.14 20.83 Cendant Operations Inc. (99%)
2 Dryden Way................. 10.78 10.78 Bright Horizons Childrens Center (100%)
2 Hilton Court............... 24.62 24.53 Deloitte & Touche USA LLP (64%), Northern Telecom Inc.
(16%)
5 Sylvan Way................. 23.44 23.42 Integrated Communications (49%), Experian Information Solution
(15%), DRS Technologies (12%)
7 Campus Drive............... 16.50 16.50 Nabisco Inc. (100%)
7 Sylvan Way................. 20.00 20.00 Nabisco Inc. (100%)
8 Campus Drive .............. 23.68 23.28 Prudential Insurance Co. (31%), Bay Networks Inc. (27%), MCI
Telecommunications Corp. (18%)
600 Parsippany Road.......... 27.62 26.67 IBM Corporation (30%)
PASSAIC COUNTY, NEW JERSEY
Clifton
777 Passaic Avenue........... 17.71 14.90 Motorola Inc. (19%)
Totowa
999 Riverview Drive.......... 16.37 15.95 Medical Logistics Inc. (22%), Telesources Corp. (19%),
Humana Press (15%), Medical Logistics Inc. (14%),
Bankers Financial Corp. (10%)
Wayne
201 Willowbrook Boulevard.... 13.85 13.78 The Grand Union Co. (76%), Woodward-Clyde Consultants
(23%)
</TABLE>
21
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SOMERSET COUNTY, NEW JERSEY
Basking Ridge
222 Mt. Airy Road............... 1986 49,000 100.0 690 646 0.15
233 Mt. Airy Road............... 1987 66,000 100.0 762 721 0.16
Bridgewater
721 Route 202/206............... 1989 192,741 100.0 3,990 3,990 0.86
UNION COUNTY, NEW JERSEY
Clark
100 Walnut Avenue............... 1985 182,555 100.0 4,511 3,957 0.97
Cranford
6 Commerce Drive................ 1973 56,000 96.9 1,046 1,028 0.23
11 Commerce Drive............... 1981 90,000 90.8 1,100 968 0.24
12 Commerce Drive............... 1967 72,260 89.4 612 611 0.13
20 Commerce Drive............... 1990 176,600 92.7 3,529 3,150 0.76
65 Jackson Drive................ 1984 82,778 94.8 1,620 1,226 0.35
New Providence
890 Mountain Road............... 1977 80,000 100.0 2,046 2,044 0.44
- ----------------------------------------------------------------------------------------------------------------------------
Total New Jersey Office 11,939,649 97.9 228,985 221,506 49.36
- ----------------------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
Fishkill
300 South Lake Drive............ 1987 118,727 99.8 2,094 2,079 0.45
NASSAU COUNTY, NEW YORK
North Hempstead
111 East Shore Road............. 1980 55,575 100.0 1,515 1,515 0.33
600 Community Drive............. 1983 206,274 100.0 4,939 4,939 1.06
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOMERSET COUNTY, NEW JERSEY
Basking Ridge
222 Mt. Airy Road............... 14.08 13.18 Lucent Technologies Inc. (100%)
233 Mt. Airy Road............... 11.55 10.92 AT&T Corp. (100%)
Bridgewater
721 Route 202/206............... 20.70 20.70 Allstate Insurance Company (37%), Norris, McLaugin & Marcus,
PA (30%), AT&T Corp. (20%)
UNION COUNTY, NEW JERSEY
Clark
100 Walnut Avenue............... 24.71 21.68 CAP Gemini America Inc. (41%), Allstate Insurance Company
(13%), Equitable Life Assurance (10%)
Cranford
6 Commerce Drive................ 19.28 18.94 Kendle International Inc. (50%), Columbia National, Inc. (13%)
11 Commerce Drive............... 13.46 11.85 Northeast Administrators (10%)
12 Commerce Drive............... 9.47 9.46 Dames & Moore (40%), Registrar & Transfer Co. (24%)
20 Commerce Drive............... 21.56 19.24 Public Service Electric & Gas Company (26%), Quintiles (21%)
65 Jackson Drive................ 20.64 15.62 Kraft General Foods, Inc. (35%), Allstate Insurance Co. (27%),
Procter & Gamble Distribution Co., Inc. (18%), Unum Life
Insurance Co. (14%)
New Providence
890 Mountain Road............... 25.58 25.55 Allstate Insurance Co. (58%), Dun & Bradstreet (26%), K Line
America, Inc. (16%)
- -----------------------------------------------------------------------------------------------------------------------------
Total New Jersey Office 19.60 18.96
- -----------------------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
Fishkill
300 South Lake Drive............ 17.67 17.55 Allstate Insurance Company (16%)
NASSAU COUNTY, NEW YORK
North Hempstead
111 East Shore Road............. 27.26 27.26 Administrations For The Professions, Inc. (100%)
600 Community Drive............. 23.94 23.94 CMP Media, Inc. (100%)
</TABLE>
22
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard.............. 1988 180,000 98.2 3,495 3,364 0.75
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
100 Clearbrook Road.............. 1975 60,000 100.0 935 880 0.20
101 Executive Boulevard.......... 1971 50,000 88.8 802 784 0.17
570 Taxter Road.................. 1972 75,000 85.5 1,386 1,360 0.30
HAWTHORNE
1 Skyline Drive.................. 1980 20,400 99.0 269 262 0.06
2 Skyline Drive.................. 1987 30,000 98.9 486 442 0.10
17 Skyline Drive................. 1989 85,000 100.0 1,234 1,234 0.27
30 Saw Mill River Road........... 1982 248,400 100.0 5,218 4,520 1.13
7 Skyline Drive.................. 1987 109,000 100.0 2,159 2,159 0.47
TARRYTOWN
200 White Plains Road............ 1982 89,000 90.5 1,815 1,691 0.39
220 White Plains Road............ 1984 89,000 97.1 1,647 1,582 0.36
WHITE PLAINS
1 Barker Avenue.................. 1975 68,000 99.0 1,550 1,530 0.33
3 Barker Avenue.................. 1983 65,300 97.5 1,382 1,356 0.30
1 Water Street................... 1979 45,700 97.8 939 926 0.20
11 Martine Avenue................ 1987 180,000 100.0 3,954 3,788 0.85
50 Main Street................... 1985 309,000 98.8 7,646 7,371 1.65
YONKERS
1 Executive Boulevard............ 1982 112,000 100.0 2,335 2,265 0.50
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard.............. 19.77 19.03 The Prudential Insurance Co. (21%), Provident Savings F.A.
(20%), Allstate Insurance Co. (19%),
John Alden Life Insurance Co. (11%)
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
100 Clearbrook Road.............. 15.58 14.67 MIM Corporation (18%), Amerihealth Inc. (13%)
101 Executive Boulevard.......... 18.06 17.66 Pennysaver Group Inc. (23%), MCS Business Solutions Inc. (11%)
570 Taxter Road.................. 21.61 21.21 New York State United Teachers Association (11%)
HAWTHORNE
1 Skyline Drive.................. 13.32 12.97 Boxx International Corp. (50%), Childtime Childcare Inc. (49%)
2 Skyline Drive.................. 16.38 14.90 MW Samara (55%), Perini Construction (43%)
17 Skyline Drive................. 14.52 14.52 IBM Corp. (100%)
30 Saw Mill River Road........... 21.01 18.20 IBM Corp. (100%)
7 Skyline Drive.................. 19.81 19.81 E.M. Industries Inc. (42%), Cortlandt Group Inc. (14%)
TARRYTOWN
200 White Plains Road............ 22.53 20.99 Independent Health Associates (28%), Allmerica Financial (17%),
NYS Dept. of Environmental Services (13%)
220 White Plains Road............ 19.06 18.31 Eagle Family Foods Inc. (15%)
WHITE PLAINS
1 Barker Avenue.................. 23.02 22.73 O'Connor McGuinn Conte (19%), United Skys Realty Corp. (18%)
3 Barker Avenue.................. 21.71 21.30 Bernard C. Harris Publishing Co. Inc. (56%)
1 Water Street................... 21.01 20.72 Trigen Energy Co. (44%), Stewart Title Insurance Co. (16%)
11 Martine Avenue................ 21.97 21.04 Salomon Smith Barney (12%), McCarthy Fingar Donovan (11%),
David Worby (11%), Dean Witter Reynolds (11%),
50 Main Street................... 25.04 24.14 National Economic Research (10%)
YONKERS
1 Executive Boulevard............ 20.85 20.22 Wise Contact US Optical (12%), Pedal Holdings Inc. (12%),
Protective Tech International (11%), York, International Agency (11%)
</TABLE>
23
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
3 Executive Plaza.................... 1987 58,000 100.0 896 883 0.19
- -------------------------------------------------------------------------------------------------------------------------------
Total New York Office 2,254,376 98.3 46,696 44,930 10.06
- -------------------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
Berwyn
1000 Westlakes Drive................. 1989 60,696 96.2 1,398 1,394 0.30
1055 Westlakes Drive................. 1990 118,487 100.0 2,298 2,298 0.50
1205 Westlakes Drive................. 1988 130,265 99.8 2,826 2,731 0.61
1235 Westlakes Drive................. 1986 134,902 98.6 2,913 2,864 0.63
DELAWARE COUNTY, PENNSYLVANIA
Lester
100 Stevens Drive.................... 1986 95,000 100.0 1,371 1,337 0.30
200 Stevens Drive.................... 1987 208,000 100.0 4,173 4,125 0.90
300 Stevens Drive.................... 1992 68,000 82.5 1,172 1,155 0.25
Media
1400 Providence Road - Center I...... 1986 100,000 89.1 1,860 1,784 0.40
1400 Providence Road - Center II..... 1990 160,000 96.6 3,154 2,990 0.68
MONTGOMERY COUNTY, PENNSYLVANIA
Lower Providence
1000 Madison Avenue.................. 1990 100,700 100.0 1,686 1,686 0.36
Plymouth Meeting
Five Sentry Parkway East............. 1984 91,600 100.0 1,497 1,494 0.32
Five Sentry Parkway West............. 1984 38,400 100.0 640 640 0.14
1150 Plymouth Meeting Mall........... 1970 167,748 93.0 3,131 3,110 0.68
- -------------------------------------------------------------------------------------------------------------------------------
Total Pennsylvania Office 1,473,798 97.0 28,119 27,608 6.07
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3 Executive Plaza.................... 15.45 15.22 MonteFiore Medical Center (43%), Metropolitan Life Insurance
(22%), Allstate Insurance Company (20%),
City & Suburban Federal Savings Bank (15%)
- -----------------------------------------------------------------------------------------------------------------------------------
Total New York Office 21.07 20.28
- -----------------------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
Berwyn
1000 Westlakes Drive................. 23.94 23.87 PNC Bank, NA (38%), Drinker Biddle & Reath (24%),
Manchester, Inc (14%)
1055 Westlakes Drive................. 19.39 19.39 Tokai Financial Services Inc. (92%)
1205 Westlakes Drive................. 21.74 21.01 Provident Mutual Life Insurance Co. (35%), Oracle Corp. (30%)
1235 Westlakes Drive................. 21.90 21.53 Pepper Hamilton & Scheetz (20%), Ratner & Prestia (16%)
DELAWARE COUNTY, PENNSYLVANIA
Lester
100 Stevens Drive.................... 14.43 14.07 Keystone Mercy Health Plan (82%)
200 Stevens Drive.................... 20.06 19.83 PNC Bank NA (52%), Keystone Mercy Health Plan (45%)
300 Stevens Drive.................... 20.89 20.59 Keystone Mercy Health Plan (47%), Bluestone Software Inc.
(35%)
Media
1400 Providence Road - Center I...... 20.88 20.02 General Services Admin (13%), Erie Insurance Company (11%)
1400 Providence Road - Center II..... 20.41 19.35 Barnett International (36%)
MONTGOMERY COUNTY, PENNSYLVANIA
Lower Providence
1000 Madison Avenue.................. 16.74 16.74 Reality Online Inc. (37%), First Chicago Nat'l Proc. (21%),
Danka Corp. (14%), Seton Company (12%)
Plymouth Meeting
Five Sentry Parkway East............. 16.34 16.31 Merck & Co. Inc. (77%), Selas Fuild Processing Corp. (23%)
Five Sentry Parkway West............. 16.67 16.67 Merck & Co. Inc. (70%), David Cutler Group (30%)
1150 Plymouth Meeting Mall........... 20.07 19.94 Computer Learning Centers, Inc. (18%), Ken Crest Services
(18%), ATC Group Services (14%), ECC Management Services
(13%)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Pennsylvania Office 19.67 19.31
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FAIRFIELD COUNTY, CONNECTICUT
Greenwich
500 West Putnam....................... 1973 121,250 92.0 2,702 2,688 0.58
Norwalk
40 Richards Avenue.................... 1985 145,487 98.4 2,854 2,789 0.62
Shelton
1000 Bridgeport Avenue................ 1986 133,000 87.3 2,520 2,498 0.54
- ------------------------------------------------------------------------------------------------------------------------------
Total Connecticut Office 399,737 92.8 8,076 7,975 1.74
- ------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA
Washington
1400 L Street, NW..................... 1987 159,000 95.4 5,795 5,730 1.25
1709 New York Avenue, NW.............. 1972 166,000 100.0 6,138 6,075 1.32
1201 Connecticut Avenue, NW (7)....... 1940 169,549 86.3 2,006 2,006 0.43
- ------------------------------------------------------------------------------------------------------------------------------
Total District of Columbia Office 494,549 93.8 13,939 13,811 3.00
- ------------------------------------------------------------------------------------------------------------------------------
PRINCE GEORGE'S COUNTY, MARYLAND
Lanham
4200 Parliament Place................. 1989 122,000 93.9 2,126 2,108 0.46
- ------------------------------------------------------------------------------------------------------------------------------
Total Maryland Office 122,000 93.9 2,126 2,108 0.46
- ------------------------------------------------------------------------------------------------------------------------------
BEXAR COUNTY, TEXAS
San Antonio
111 Soledad........................... 1918 248,153 91.2 2,256 2,218 0.49
1777 N.E. Loop 410.................... 1986 256,137 92.5 3,502 3,379 0.76
84 N.E. Loop 410...................... 1971 187,312 89.9 2,475 2,468 0.53
200 Concord Plaza Drive............... 1986 248,700 95.2 4,529 4,510 0.98
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FAIRFIELD COUNTY, CONNECTICUT
Greenwich
500 West Putnam....................... 24.22 24.10 Hachette Filipacchi Magazines (27%), Great Brands of Europe
Inc. (12%) Winklevoss Consultants Inc. (12%)
Norwalk
40 Richards Avenue.................... 19.94 19.48 Media Horizons Inc. (10%)
Shelton
1000 Bridgeport Avenue................ 21.70 21.51 William Carter Company (23%), Weseley Software Development
(22%), Toyota Motor Credit Corporation (11%),
LandStar Gemini Inc. (11%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Connecticut Office 21.78 21.51
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA
Washington
1400 L Street, NW..................... 38.20 37.78 Winston & Strawn (68%)
1709 New York Avenue, NW.............. 36.98 36.60 Board of Gov/Federal Reserve (70%), United States of America
-GSA (25%)
1201 Connecticut Avenue, NW (7)....... 30.51 30.51 Zuckerman Spaeder Goldstein (30%), Leo A. Daly (17%),
RFE/RL Inc. (16%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total District of Columbia Office 35.34 35.06
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCE GEORGE'S COUNTY, MARYLAND
Lanham
4200 Parliament Place................. 18.56 18.40 Group I Software (43%), State Farm Mutual Auto Ins. Co. (11%)
Infinity Broadcasting Company (16%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Maryland Office 18.56 18.40
- ------------------------------------------------------------------------------------------------------------------------------------
BEXAR COUNTY, TEXAS
San Antonio
111 Soledad........................... 9.97 9.80 SBC Communications, Inc. (34%)
1777 N.E. Loop 410.................... 14.78 14.26 --
84 N.E. Loop 410...................... 14.70 14.66 Pacificare of Texas, Inc. (30%), KBL Cable, Inc. (26%), Kraft
General Foods Inc. (25%)
200 Concord Plaza Drive............... 19.13 19.05 Merrill Lynch Pierce Fenner & Smith (12%)
</TABLE>
25
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COLLIN COUNTY, TEXAS
Plano
555 Republic Place........... 1986 97,889 93.0 1,370 1,353 0.30
DALLAS COUNTY,TEXAS
Dallas
3030 LBJ Freeway............. 1984 367,018 93.0 6,131 5,948 1.31
3100 Monticello.............. 1984 173,837 93.1 2,789 2,758 0.60
8214 Westchester............. 1983 95,509 87.8 1,320 1,298 0.28
Irving
2300 Valley View............. 1985 142,634 68.8 2,704 2,607 0.58
Richardson
1122 Alma Road............... 1977 82,576 100.0 607 607 0.13
HARRIS COUNTY, TEXAS
Houston
10497 Town & Country Way..... 1981 148,434 91.0 1,938 1,876 0.42
14511 Falling Creek.......... 1982 70,999 97.9 673 643 0.15
1717 St. James Place......... 1975 109,574 100.0 1,328 1,285 0.29
1770 St. James Place......... 1973 103,689 98.4 1,446 1,388 0.31
5225 Katy Freeway............ 1983 112,213 95.1 1,367 1,309 0.29
5300 Memorial................ 1982 155,099 98.7 2,034 2,016 0.44
POTTER COUNTY, TEXAS
Amarillo
6900 IH - 40 West............ 1986 71,771 77.5 526 503 0.11
TARRANT COUNTY, TEXAS
Euless
150 West Parkway............. 1984 74,429 95.9 1,046 1,021 0.23
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COLLIN COUNTY, TEXAS
Plano
555 Republic Place........... 15.05 14.86 William Smith Enterprises (22%), Kaiser Foundation Health Plan
of Texas (17%), Dayton Hudson Corporation (14%)
DALLAS COUNTY,TEXAS
Dallas
3030 LBJ Freeway............. 17.96 17.43 Club Corporation of America (34%)
3100 Monticello.............. 17.23 17.04 Insignia Commercial, Inc. (23%), Time Marketing Corporation
(12%), Heath Insurance Brokers, Inc. (10%)
8214 Westchester............. 15.74 15.48 Preston Business Center, Inc. (16%), Malone Mortgage Company
America, Inc. (12%), State Bank & Trust (11%)
Irving
2300 Valley View............. 27.55 26.57 Alltel Information Services, Inc. (18%), Computer Task Group,
Inc. (12%), Tricon Restaurant Services (12%)
Richardson
1122 Alma Road............... 7.35 7.35 MCI Telecommunications Corp. (100%)
HARRIS COUNTY, TEXAS
Houston
10497 Town & Country Way..... 14.35 13.89 Vastar Resources, Inc. (23%), Texas Ohio Gas, Inc. (11%)
14511 Falling Creek.......... 9.68 9.25 Nationwide Mutual Insurance Company (17%)
1717 St. James Place......... 12.12 11.73 MCX Corp (14%)
1770 St. James Place......... 14.17 13.60 --
5225 Katy Freeway............ 12.81 12.27 State of Texas (17%)
5300 Memorial................ 13.29 13.17 Drypers Corporation (20%), Datavox, Inc. (20%), HCI Chemicals
USA, Inc. (17%)
POTTER COUNTY, TEXAS
Amarillo
6900 IH - 40 West............ 9.46 9.04 Sitel Corporation (16%)
TARRANT COUNTY, TEXAS
Euless
150 West Parkway............. 14.65 14.30 Warrantech Automotive, Inc. (34%), Landmark Bank-Mid Cities
(16%), Mike Bowman Realtors/Century 21 (17%)
</TABLE>
26
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TRAVIS COUNTY, TEXAS
Austin
1250 Capital of Texas Hwy. South..... 1985 270,703 98.8 5,500 5,451 1.19
- --------------------------------------------------------------------------------------------------------------------------------
Total Texas Office 3,016,676 92.7 43,541 42,638 9.39
- --------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY, ARIZONA
Glendale
5551 West Talavi Boulevard........... 1991 181,596 100.0 1,616 1,608 0.35
Phoenix
19640 North 31st Street.............. 1990 124,171 100.0 1,272 1,256 0.27
20002 North 19th Avenue (8).......... 1986 n/a n/a 647 647 0.14
Scottsdale
9060 E. Via Linda Boulevard.......... 1984 111,200 100.0 2,406 2,406 0.52
- --------------------------------------------------------------------------------------------------------------------------------
Total Arizona Office 416,967 100.0 5,941 5,917 1.28
- --------------------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
Aurora
750 South Richfield Street........... 1997 108,240 100.0 2,911 2,911 0.63
Denver
400 South Colorado Boulevard......... 1983 125,415 99.1 1,905 1,881 0.41
Englewood
5350 South Roslyn Street............. 1982 63,754 100.0 1,060 1,050 0.23
9359 East Nichols Avenue............. 1997 72,610 100.0 903 903 0.19
BOULDER COUNTY, COLORADO
Broomfield
105 South Technology Court........... 1997 37,574 100.0 535 535 0.12
303 South Technology Court-A......... 1997 34,454 100.0 387 387 0.08
303 South Technology Court-B......... 1997 40,416 100.0 454 454 0.10
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRAVIS COUNTY, TEXAS
Austin
1250 Capital of Texas Hwy. South..... 20.56 20.38 Intelliquest Inc. (14%), Globeset Inc. (10%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Texas Office 15.56 15.24
- ------------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY, ARIZONA
Glendale
5551 West Talavi Boulevard........... 8.90 8.85 Honeywell, Inc. (100%)
Phoenix
19640 North 31st Street.............. 10.24 10.12 American Express Travel Related Services Co., Inc. (100%)
20002 North 19th Avenue (8).......... n/a n/a n/a
Scottsdale
9060 E. Via Linda Boulevard.......... 21.64 21.64 Sentry Insurance A Mutual Company (63%), Rite Aid
Corporation (37%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Arizona Office 14.25 14.19
- ------------------------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
Aurora
750 South Richfield Street........... 26.89 26.89 T.R.W. Inc. (100%)
Denver
400 South Colorado Boulevard......... 15.33 15.13 Community Health Plan (12%), Department of Revenue (12%),
Norwest Bank Colorado N.A. (11%), Senter GoldFarb & Rice
(10%)
Englewood
5350 South Roslyn Street............. 16.63 16.47 Westland Enterprises (17%), Business World Inc. (17%)
9359 East Nichols Avenue............. 12.44 12.44 First Tennessee Bank NA (100%)
BOULDER COUNTY, COLORADO
Broomfield
105 South Technology Court........... 14.24 14.24 Sun Microsystems Inc. (100%)
303 South Technology Court-A......... 11.23 11.23 Sun Microsystems Inc. (100%)
303 South Technology Court-B......... 11.23 11.23 Sun Microsystems Inc. (100%)
</TABLE>
27
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Louisville
1172 Century Drive............. 1996 49,566 100.0 617 617 0.13
248 Centennial Parkway......... 1996 39,266 100.0 488 488 0.11
285 Century Place.............. 1997 69,145 100.0 1,121 1,121 0.24
DENVER COUNTY, COLORADO
Denver
3600 South Yosemite............ 1974 133,743 100.0 1,287 1,287 0.28
DOUGLAS COUNTY, COLORADO
Englewood
384 Inverness Drive South...... 1985 51,523 100.0 810 789 0.17
400 Inverness Drive............ 1997 111,608 99.9 2,729 2,727 0.59
5975 South Quebec Street....... 1996 102,877 99.8 2,359 2,341 0.51
67 Inverness Drive East........ 1996 54,280 100.0 644 644 0.14
Parker
9777 Pyramid Court............. 1995 120,281 100.0 1,323 1,323 0.29
EL PASO COUNTY, COLORADO
Colorado Springs
1975 Research Parkway.......... 1997 115,250 100.0 1,682 1,635 0.36
2375 Telstar Drive (7)......... 1998 47,369 100.0 410 409 0.09
8415 Explorer (7).............. 1998 47,368 100.0 410 409 0.09
JEFFERSON COUNTY, COLORADO
Lakewood
141 Union Boulevard............ 1985 63,600 95.2 1,053 1,014 0.23
- --------------------------------------------------------------------------------------------------------------------------
Total Colorado Office 1,488,339 99.7 23,088 22,925 4.99
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Louisville
1172 Century Drive............. 12.45 12.45 Skyconnect Inc. (40%), Evolving Systems Inc. (22%),
MCI Systemhouse Corp. (22%), RX Kinetix Inc. (16%)
248 Centennial Parkway......... 12.43 12.43 Walnut Brewery Inc. (59%), Aircell Inc. (28%)
285 Century Place.............. 16.21 16.21 HBO & Company of Georgia (100%)
DENVER COUNTY, COLORADO
Denver
3600 South Yosemite............ 9.62 9.62 MDC Holding Inc. (100%)
DOUGLAS COUNTY, COLORADO
Englewood
384 Inverness Drive South...... 15.72 15.31 Quickpen International Corp. (37%), United States of America -
GSA (19%)
400 Inverness Drive............ 24.48 24.46 Convergent Communications Inc. (26%), Ciber Inc. (22%),
Compuware Corp. (19%), Ani Colorado Inc./Alliance Int'l (16%)
5975 South Quebec Street....... 22.98 22.80 Northern Telecom Inc. (43%), Silicon Graphics Inc. (28%)
67 Inverness Drive East........ 11.86 11.86 T-Netix Inc. (69%), Convergent Communications Inc. (31%)
Parker
9777 Pyramid Court............. 11.00 11.00 Evolving System Inc. (100%)
EL PASO COUNTY, COLORADO
Colorado Springs
1975 Research Parkway.......... 14.59 14.19 Bombardier Capital Florida Inc. (69%), Concert Management
Services (18%)
2375 Telstar Drive (7)......... 10.46 10.44 Narwhal Corporation (45%), Memorial Hospital (39%),
Aerotek Inc. (14%)
8415 Explorer (7).............. 10.46 10.44 Enterprise Systems Group Inc. (57%), URS Greiner
Consultants Inc. (22%), McLeod USA Telecom Service
Inc. (17%)
JEFFERSON COUNTY, COLORADO
Lakewood
141 Union Boulevard............ 17.39 16.75 Arbitration Forums Inc. (18%)
- ------------------------------------------------------------------------------------------------------------------------------
Total Colorado Office 15.67 15.56
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
Property Listing
Office Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SAN FRANCISCO COUNTY, CALIFORNIA
San Francisco
760 Market Street.................... 1908 267,446 93.6 7,442 7,311 1.60
795 Folsom Street (7)................ 1977 183,445 86.2 1,277 1,178 0.28
- --------------------------------------------------------------------------------------------------------------------------------
Total California Office 450,891 90.6 8,719 8,489 1.88
- --------------------------------------------------------------------------------------------------------------------------------
HILLSBOROUGH COUNTY, FLORIDA
Tampa
501 Kennedy Boulevard................ 1982 297,429 91.8 3,651 3,583 0.79
- --------------------------------------------------------------------------------------------------------------------------------
Total Florida Office 297,429 91.8 3,651 3,583 0.79
- --------------------------------------------------------------------------------------------------------------------------------
POLK COUNTY, IOWA
West Des Moines
2600 Westown Parkway................. 1988 72,265 97.5 1,126 1,063 0.24
- --------------------------------------------------------------------------------------------------------------------------------
Total Iowa Office 72,265 97.5 1,126 1,063 0.24
- --------------------------------------------------------------------------------------------------------------------------------
DOUGLAS COUNTY, NEBRASKA
Omaha
210 South 16th Street................ 1894 319,535 96.8 3,238 3,177 0.70
- --------------------------------------------------------------------------------------------------------------------------------
Total Nebraska Office 319,535 96.8 3,238 3,177 0.70
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES 22,746,211 96.9 417,245 405,730 89.96
================================================================================================================================
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SAN FRANCISCO COUNTY, CALIFORNIA
San Francisco
760 Market Street.................... 29.73 29.21 R.H. Macy & Company, Inc. (19%)
795 Folsom Street (7)................ 19.27 17.77 Move.com (52%), AT&T Corp. (34%)
- --------------------------------------------------------------------------------------------------------------------------------
Total California Office 25.68 24.78
- --------------------------------------------------------------------------------------------------------------------------------
HILLSBOROUGH COUNTY, FLORIDA
Tampa
501 Kennedy Boulevard................ 13.37 13.12 Fowler, White, Gillen, Boggs, Villareal & Banker, PA (33%),
Raytheon Engineers & Constructors, Inc. (17%),
Sykes Enterprises Inc. (12%)
- --------------------------------------------------------------------------------------------------------------------------------
Total Florida Office 13.37 13.12
- --------------------------------------------------------------------------------------------------------------------------------
POLK COUNTY, IOWA
West Des Moines
2600 Westown Parkway................. 15.98 15.09 St. Paul Fire and Marine Insurance Company (19%), MCI
Telecommunications Corp. (14%), New England Mutual Life
Insurance Company (15%), American Express Financial
Advisors, Inc. (15%)
- --------------------------------------------------------------------------------------------------------------------------------
Total Iowa Office 15.98 15.09
- --------------------------------------------------------------------------------------------------------------------------------
DOUGLAS COUNTY, NEBRASKA
Omaha
210 South 16th Street................ 10.47 10.27 Union Pacific Railroad Company (70%)
- --------------------------------------------------------------------------------------------------------------------------------
Total Nebraska Office 10.47 10.27
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES 19.13 18.61
================================================================================================================================
</TABLE>
29
<PAGE>
Property Listing
Office/Flex Properties
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BURLINGTON COUNTY, NEW JERSEY
Burlington
3 Terri Lane...................... 1991 64,500 77.7 437 436 0.09
5 Terri Lane...................... 1992 74,555 100.0 497 495 0.11
Moorestown
1 Executive Drive................. 1989 20,570 43.0 74 72 0.02
101 Commerce Drive................ 1988 64,700 100.0 336 296 0.07
101 Executive Drive............... 1990 29,355 45.8 146 145 0.03
102 Executive Drive............... 1990 64,000 90.0 399 371 0.09
1256 North Church................. 1984 63,495 49.9 401 366 0.09
1507 Lancer Drive................. 1995 32,700 100.0 119 112 0.03
1510 Lancer Drive................. 1998 88,000 100.0 370 370 0.08
201 Commerce Drive................ 1986 38,400 100.0 195 192 0.04
225 Executive Drive............... 1990 50,600 100.0 304 280 0.07
30 Twosome Drive.................. 1997 39,675 100.0 223 223 0.05
40 Twosome Drive.................. 1996 40,265 63.1 243 243 0.05
50 Twosome Drive.................. 1997 34,075 100.0 269 269 0.06
840 North Lenola.................. 1995 38,300 100.0 271 271 0.06
844 North Lenola.................. 1995 28,670 100.0 213 213 0.05
97 Foster Road.................... 1982 43,200 100.0 187 187 0.04
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BURLINGTON COUNTY, NEW JERSEY
Burlington
3 Terri Lane...................... 8.72 8.70 Tempel Steel Company (18%), Signature Home Care (16%),
General Service Administrators (10%)
5 Terri Lane...................... 6.67 6.64 Actimed Laboratories Inc. (38%), Lykes Dispensing Systems Inc.
(20%), West Electronics Inc. (12%)
Moorestown
1 Executive Drive................. 8.37 8.14 T.T.I. (18%)
101 Commerce Drive................ 5.19 4.57 Beckett Corporation (100%)
101 Executive Drive............... 10.86 10.79 Bavada Nurses Inc. (36%)
102 Executive Drive............... 6.93 6.44 Comtrex Systems Corp. (29%), Commonwealth Scientific Corp.
(21%), AOP Solutions (20%), Schermerhorn (20%)
1256 North Church................. 12.66 11.55 James C. Anderson Associates (30%), Ketec Inc. (20%)
1507 Lancer Drive................. 3.64 3.43 Tad's Delivery Service Inc. (100%)
1510 Lancer Drive................. 4.20 4.20 Tad's Delivery Service Inc. (100%)
201 Commerce Drive................ 5.08 5.00 Flow Thru Metals Inc. (25%), Franchise Stores Realty Corp.
(25%), RE/Com Group (25%), Tropicana Products Inc. (25%)
225 Executive Drive............... 6.01 5.53 Eastern Research Inc. (66%), Bioclimatic Inc. (14%),
Band-It Index Inc. (11%)
30 Twosome Drive.................. 5.62 5.62 Hartman Cards Inc. (28%), Sagot Office Interiors Inc. (24%),
Aramark Sports Entertainment (14%), The Closet Factory (12%),
C&L Packaging Inc. (12%), Mosler Inc. (10%)
40 Twosome Drive.................. 9.56 9.56 Neighborcare - TCI Inc. (49%), Bellstar Inc. (14%)
50 Twosome Drive.................. 7.89 7.89 Wells Fargo (44%), Sussex Wine Merchants (30%), McCarthy
Associates Inc. (14%), Inacomp Financial Services (12%)
840 North Lenola.................. 7.08 7.08 Millar Elevator Service Co. (31%), Twin Pines Construction Co.
(31%), Technology Service Solutions (25%), Computer
Integration Services (13%)
844 North Lenola.................. 7.43 7.43 First Union National Bank (41%), Curbell Inc. (33%), James J.
Martin Inc. (25%)
97 Foster Road.................... 4.33 4.33 Consumer Response Company Inc. (50%), Pioneer and Company
Inc. (33%), Colornet Inc. (17%)
</TABLE>
30
<PAGE>
Property Listing
Office/Flex Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2 Commerce Drive (7)............ 1986 49,000 100.0 11 11 0.00
102 Commerce Drive (7).......... 1987 38,400 87.5 4 4 0.00
202 Commerce Drive (7).......... 1988 51,200 100.0 8 8 0.00
West Deptford
1451 Metropolitan Drive......... 1996 21,600 100.0 148 148 0.03
MERCER COUNTY, NEW JERSEY
Hamilton Township
100 Horizon Drive............... 1989 13,275 0.0 50 50 0.01
200 Horizon Drive............... 1991 45,770 85.3 446 432 0.10
300 Horizon Drive............... 1989 69,780 100.0 912 902 0.20
500 Horizon Drive............... 1990 41,205 81.9 394 363 0.08
MONMOUTH COUNTY, NEW JERSEY
Wall Township
1320 Wykoff Avenue.............. 1986 20,336 0.0 38 38 0.01
1324 Wykoff Avenue.............. 1987 21,168 75.0 213 181 0.05
1325 Campus Parkway............. 1988 35,000 18.4 290 281 0.06
1340 Campus Parkway............. 1992 72,502 94.6 779 676 0.17
1345 Campus Parkway............. 1995 76,300 100.0 704 702 0.15
1433 Highway 34................. 1985 69,020 65.3 442 360 0.10
PASSAIC COUNTY, NEW JERSEY
Totowa
11 Commerce Way................. 1989 47,025 100.0 412 380 0.09
1 Center Court (7).............. 1999 38,961 100.0 129 119 0.03
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2 Commerce Drive (7)............ 7.45 7.45 Computer Sciences Corporation (100%)
102 Commerce Drive (7).......... 3.95 3.95 Nelson Associates (25%), American Banknote Card Svcs. (13%),
D&A Eastern Fasteners Inc. (13%), Moorestown Weightlifting
Club (13%), Opex Corporation (13%), RGP Impressions Inc.
(13%)
202 Commerce Drive (7).......... 5.18 5.18 Standard Register Co. (100%)
West Deptford
1451 Metropolitan Drive......... 6.85 6.85 Garlock Bearings Inc. (100%)
MERCER COUNTY, NEW JERSEY
Hamilton Township
100 Horizon Drive............... 0.00 0.00 --
200 Horizon Drive............... 11.42 11.07 O.H.M. Remediation Services Corp. (85%)
300 Horizon Drive............... 13.07 12.93 State of NJ/DEP (50%), McFaul & Lyons (26%), Fluor Daniel
GTI (24%)
500 Horizon Drive............... 11.68 10.76 Anacomp Inc. (30%), Lakeview Child Center (19%), NJ Builders
Assoc. (14%), Diedre Moire Corp. (11%)
MONMOUTH COUNTY, NEW JERSEY
Wall Township
1320 Wykoff Avenue.............. 0.00 0.00 --
1324 Wykoff Avenue.............. 13.42 11.40 Collectors Alliance (53%), Supply Saver, Inc. (22%)
1325 Campus Parkway............. 45.03 43.63 Centennial Cellular Corp. (14%)
1340 Campus Parkway............. 11.36 9.86 Groundwater & Environmental Services (33%), GEAC Comp
(22%), State Farm (17%), Association For Retarded Citizens
(11%), Digital Lightwave, Inc. (11%)
1345 Campus Parkway............. 9.23 9.20 Depot America, Inc. (37%), Quadramed Corp. (23%), De Vine
Corp. (10%)
1433 Highway 34................. 9.81 7.99 State Farm Mutual Insurance Co. (30%), New Jersey Natural Gas
Co (11%)
PASSAIC COUNTY, NEW JERSEY
Totowa
11 Commerce Way................. 8.76 8.08 Coram Alternative Site Services (56%), D.A. Kopp & Associates
Inc. (22%), Olsten Health Services (11%), Ericsson Inc. (11%)
1 Center Court (7).............. 3.95 3.64 Ethnic American Broadcasting (62%), Eizo Nanao Technologies
Inc. (38%)
</TABLE>
31
<PAGE>
Property Listing
Office/Flex Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2 Center Court................... 1998 30,600 99.3 350 280 0.08
20 Commerce Way.................. 1992 42,540 85.9 388 388 0.08
29 Commerce Way.................. 1990 48,930 100.0 472 424 0.10
40 Commerce Way.................. 1987 50,576 100.0 561 467 0.12
45 Commerce Way.................. 1992 51,207 100.0 480 436 0.10
60 Commerce Way.................. 1988 50,333 84.3 309 255 0.07
80 Commerce Way.................. 1996 22,500 89.2 272 173 0.06
100 Commerce Way................. 1996 24,600 100.0 297 160 0.06
120 Commerce Way................. 1994 9,024 100.0 89 87 0.02
140 Commerce Way................. 1994 26,881 99.5 264 257 0.06
- ----------------------------------------------------------------------------------------------------------------------------
Total New Jersey Office/Flex 1,882,793 88.0 13,146 12,123 2.86
- ----------------------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
Elmsford
1 Westchester Plaza.............. 1967 25,000 100.0 293 285 0.06
2 Westchester Plaza.............. 1968 25,000 100.0 431 425 0.09
3 Westchester Plaza.............. 1969 93,500 98.5 1,116 1,112 0.24
4 Westchester Plaza.............. 1969 44,700 99.8 614 595 0.13
5 Westchester Plaza.............. 1969 20,000 100.0 277 273 0.06
6 Westchester Plaza.............. 1968 20,000 100.0 263 254 0.06
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
2 Center Court................... 11.52 9.21 Nomadic Display (36%), Electro Rent Corp. (33%), Alpine
Electronic of America (30%)
20 Commerce Way.................. 10.62 10.62 Motorola Inc. (44%), Siemens Fiber Optics (41%)
29 Commerce Way.................. 9.65 8.67 Sandvik Sorting Systems, Inc. (44%), Paterson Dental Supply Inc.
(23%), Fujitec America Inc. (22%), Williams Communications
(11%)
40 Commerce Way.................. 11.09 9.23 Thomson Electronics (43%), Intertek Testing Services (29%),
Snap-On, Inc. (14%), System 3R USA (14%)
45 Commerce Way.................. 9.37 8.51 Ericsson Radio Systems Inc. (52%), Woodward Clyde
Consultants (27%), Oakwood Corporate Housing (21%)
60 Commerce Way.................. 7.28 6.01 Ericsson Inc. (29%), Jen Mar Graphics (27%), Maxlite (14%),
HW Exhibits (14%)
80 Commerce Way.................. 13.55 8.62 Hey Diddle Diddle Inc. (40%), Idexx Veterinary Services (37%),
Inter-American Safety Council (11%)
100 Commerce Way................. 12.07 6.50 Pharmerica Inc. (34%), Minolta Business Systems Inc. (34%),
CCH Incorporated (32%)
120 Commerce Way................. 9.86 9.64 Deerfield Healthcare Corp. (100%)
140 Commerce Way................. 9.87 9.61 Advanced Image Systems Inc. (20%), MSR Publications Inc.
(19%), Holder Group Inc. (11%), Alpha Testing (10%), Showa
Tool USA Inc. (10%), Telsource Corporation (10%), Universal
Hospital Services (10%)
- --------------------------------------------------------------------------------------------------------------------------------
Total New Jersey Office/Flex 8.40 7.78
- --------------------------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
Elmsford
1 Westchester Plaza.............. 11.72 11.40 British Apparel (40%), American Greeting (20%), RS
Knapp (20%), Thin Film Concepts (20%)
2 Westchester Plaza.............. 17.24 17.00 Board of Cooperative Education (80%), Kin-Tronics (10%),
Squires Productions (10%)
3 Westchester Plaza.............. 12.12 12.07 Apria Healthcare (32%), Kangol Headwear (28%), V-Band
Corp. (16%), Dental Concepts (12%)
4 Westchester Plaza.............. 13.76 13.34 Metropolitan Life (38%), EEV Inc. (34%), Arsys Innotech Corp.
(13%)
5 Westchester Plaza.............. 13.85 13.65 Fujitsu (38%), Rokonet Industries (25%), UA Plumbers
Education (25%), Furniture Etc. (12%)
6 Westchester Plaza.............. 13.15 12.70 Signacon Controls (28%), Xerox Corp. (28%), Game Parts
(24%), Girard Rubber Co. (13%)
</TABLE>
32
<PAGE>
Property Listing
Office/Flex Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7 Westchester Plaza......... 1972 46,200 100.0 643 637 0.14
8 Westchester Plaza......... 1971 67,200 100.0 871 778 0.19
11 Clearbrook Road.......... 1974 31,800 100.0 327 326 0.07
75 Clearbrook Road.......... 1990 32,720 100.0 816 816 0.18
150 Clearbrook Road......... 1975 74,900 100.0 1,046 1,018 0.23
175 Clearbrook Road......... 1973 98,900 98.5 1,340 1,306 0.29
200 Clearbrook Road......... 1974 94,000 99.8 1,113 1,063 0.24
250 Clearbrook Road......... 1973 155,000 94.5 1,177 1,152 0.25
50 Executive Boulevard...... 1969 45,200 97.2 384 375 0.08
77 Executive Boulevard...... 1977 13,000 100.0 180 179 0.04
85 Executive Boulevard...... 1968 31,000 83.3 380 371 0.08
300 Executive Boulevard..... 1970 60,000 99.7 576 576 0.12
350 Executive Boulevard..... 1970 15,400 98.8 243 243 0.05
399 Executive Boulevard..... 1962 80,000 100.0 934 921 0.20
400 Executive Boulevard..... 1970 42,200 100.0 611 558 0.13
500 Executive Boulevard..... 1970 41,600 100.0 552 542 0.12
525 Executive Boulevard..... 1972 61,700 99.8 846 830 0.18
Hawthorne
4 Skyline Drive............. 1987 80,600 100.0 1,199 1,102 0.26
8 Skyline Drive............. 1985 50,000 98.9 673 653 0.15
10 Skyline Drive............ 1985 20,000 100.0 282 262 0.06
11 Skyline Drive............ 1989 45,000 100.0 675 660 0.15
12 Skyline Drive (7)........ 1999 46,850 100.0 174 150 0.04
15 Skyline Drive............ 1989 55,000 100.0 877 804 0.19
200 Saw Mill River Road..... 1965 51,100 100.0 633 612 0.14
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7 Westchester Plaza......... 13.92 13.79 Emigrant Savings Bank (69%), Fire End Croker (22%)
8 Westchester Plaza......... 12.96 11.58 Mamiya America (24%), Ciba Specialty (19%), Kubra Data
(15%)
11 Clearbrook Road.......... 10.28 10.25 Eastern Jungle Gym (27%), MCS Marketing (24%), Treetops Inc.
(21%), Creative Medical Supplies (14%), Westchester Party
Rental (14%)
75 Clearbrook Road.......... 24.94 24.94 Evening Out Inc. (100%)
150 Clearbrook Road......... 13.97 13.59 Court Sports I (24%), Philips Medical (18%), Transwestern
Publications (12%)
175 Clearbrook Road......... 13.76 13.41 Nextel of New York Inc. (35%), Hypres Inc. (15%)
200 Clearbrook Road......... 11.86 11.33 Brunschwig & Fils Inc. (39%), Proftech Corp (20%)
250 Clearbrook Road......... 8.04 7.86 AFP Imaging Corp (31%), Prints Plus Inc. (13%),
The Artina Group (14%), Conri Services (10%)
50 Executive Boulevard...... 8.74 8.54 MMO Music Group (71%), Medcon Financial (22%)
77 Executive Boulevard...... 13.85 13.77 Bright Horizons Children (55%), WNN Corp. (45%)
85 Executive Boulevard...... 14.72 14.37 VREX Inc (49%), Westhab Inc. (18%), Saturn II Systems (11%)
300 Executive Boulevard..... 9.63 9.63 Varta Batteries (44%), Princeton Ski Outlet (43%), LMG
International Inc. (12%)
350 Executive Boulevard..... 15.97 15.97 Copytex Corp. (99%)
399 Executive Boulevard..... 11.68 11.51 American Banknote (73%), Wine Enthusiast Inc. (15%)
Brandon of Westchester (12%)
400 Executive Boulevard..... 14.48 13.22 Baker Engineering (39%), Ultra Fabrics (25%)
500 Executive Boulevard..... 13.27 13.03 Original Consume (36%), Dover Elevator (16%), Angelica Corp.
(16%), Olympia Sports (13%), Philips Medical Systems (13%)
525 Executive Boulevard..... 13.74 13.48 Vie De France (59%), New York Blood Center (21%)
Hawthorne
4 Skyline Drive............. 14.88 13.67 GEC Alsthom Int'l. (60%)
8 Skyline Drive............. 13.61 13.21 Clientsoft (69%), Reveo Inc (29%)
10 Skyline Drive............ 14.10 13.10 Bi-Tronic Inc/LCA (52%), Phoenix Systems Int'l (32%), Galson
Corp. (16%)
11 Skyline Drive............ 15.00 14.67 Cube Computer (41%), Bowthorpe Holdings (19%), Agathon
Machine (12%), Planned Parenthood (11%)
12 Skyline Drive (7)........ 12.79 11.02 Creative Visual Enterprises (38%), Medelec Inc. (32%), Savin
Corporation (30%)
15 Skyline Drive............ 15.95 14.62 Tellabs (47%), Emisphere Technology (23%), Minolta Copier
(16%), Acorda Therapeutics Inc. (14%)
200 Saw Mill River Road..... 12.39 11.98 ABSCOA (18%), Walter Degruyter (21%), Monahans Plumbing
(17%), Argents Air Express (12%)
</TABLE>
33
<PAGE>
Property Listing
Office/Flex Properties
(Continued)
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Yonkers
1 Odell Plaza..................... 1980 106,000 100.0 1,260 1,241 0.27
5 Odell Plaza..................... 1983 38,400 99.6 490 486 0.11
7 Odell Plaza..................... 1984 42,600 99.6 667 649 0.14
4 Executive Plaza................. 1986 80,000 99.9 1,049 1,000 0.23
6 Executive Plaza................. 1987 80,000 88.6 991 986 0.21
100 Corporate Boulevard........... 1987 78,000 98.2 1,087 1,060 0.23
200 Corporate Boulevard South..... 1990 84,000 99.8 1,378 1,350 0.30
- ---------------------------------------------------------------------------------------------------------------------------------
Total New York Office/Flex 2,076,570 98.5 26,468 25,650 5.71
- ---------------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
Stamford
419 West Avenue................... 1986 88,000 99.7 1,430 1,423 0.31
500 West Avenue................... 1988 25,000 82.3 334 315 0.07
550 West Avenue................... 1990 54,000 100.0 809 745 0.17
600 West Avenue (7)............... 1999 66,000 100.0 37 33 0.01
650 West Avenue................... 1998 40,000 100.0 635 522 0.14
- ---------------------------------------------------------------------------------------------------------------------------------
Total Connecticut Office/Flex 273,000 98.3 3,245 3,038 0.70
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES 4,232,363 93.8 42,859 40,811 9.27
=================================================================================================================================
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Yonkers
1 Odell Plaza..................... 11.89 11.71 Court Sports II (19%), Gannet Satellite (11%)
5 Odell Plaza..................... 12.81 12.71 Voyetra Technologies (43%), Photo File Inc. (34%), Pharmerica
Inc. (22%)
7 Odell Plaza..................... 15.72 15.30 US Postal Service (41%), TT Systems Co. (24%), Bright
Horizons (16%)
4 Executive Plaza................. 13.13 12.51 O.K. Industries (42%), E&B Giftware (22%), Universal Outdoor
Advertising (10%)
6 Executive Plaza................. 13.98 13.91 Cablevision Systems Corp. (40%), Yonkers Savings & Loan
Assoc. (11%)
100 Corporate Boulevard........... 14.19 13.84 MonteFiore Medical Center (28%), Sempra Energy Trading Corp.
(13%), Minami International Corp. (12%), Otis Elevator (11%)
Genzyme Genetics Corp. (11%)
200 Corporate Boulevard South..... 16.44 16.10 Belmay (32%), Montefiore Medical (23%) Advanced Viral
Research (20%)
- ---------------------------------------------------------------------------------------------------------------------------------
Total New York Office/Flex 13.14 12.71
- ---------------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
Stamford
419 West Avenue................... 16.30 16.22 Fuji Medical Systems USA Inc. (80%)
500 West Avenue................... 16.23 15.31 Lead Trackers (28%), Convergent Communications (26%),
Seneca Media Group Inc. (17%), M Cohen and Sons Inc. (11%)
550 West Avenue................... 14.98 13.80 Lifecodes Corp. (44%), Davidoff of Geneva (33%)
600 West Avenue (7)............... 9.30 8.30 Clarence House Imports, Ltd (100%)
650 West Avenue................... 15.88 13.05 Davidoff of Geneva (CT) Inc. (100%)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Connecticut Office/Flex 14.24 13.24
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES 11.24 10.69
=================================================================================================================================
</TABLE>
34
<PAGE>
Property Listing
Industrial/Warehouse Properties
<TABLE>
<CAPTION>
Percentage
of Total 1999
Percentage Office,
Net Leased 1999 1999 Office/Flex,
Rentable as of Base Effective and Industrial/
Property Year Area 12/31/99 Rent Rent Warehouse
Location Built (Sq. Ft.) (%) (1) ($000's) (2) (6) ($000's) (3) (6) Base Rent (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WESTCHESTER COUNTY, NEW YORK
Elmsford
1 Warehouse Lane......................... 1957 6,600 100.0 57 56 0.01
2 Warehouse Lane......................... 1957 10,900 100.0 128 126 0.03
3 Warehouse Lane......................... 1957 77,200 100.0 290 279 0.06
4 Warehouse Lane......................... 1957 195,500 97.4 1,906 1,869 0.41
5 Warehouse Lane......................... 1957 75,100 97.1 690 671 0.15
6 Warehouse Lane......................... 1982 22,100 100.0 513 513 0.11
- ------------------------------------------------------------------------------------------------------------------------------------
Total Industrial/Warehouse Properties 387,400 98.1 3,584 3,514 0.77
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX,
AND INDUSTRIAL/WAREHOUSE
PROPERTIES 27,365,974 96.5 463,688 450,055 100.0
====================================================================================================================================
<CAPTION>
1999 Average Tenants Leasing 10%
Average Effective or More of Net
Base Rent Rent Rentable Area Per
Property Per Sq. Ft. Per Sq. Ft. Property as of
Location ($) (4) (6) ($) (5) (6) 12/31/99 (6)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WESTCHESTER COUNTY, NEW YORK
Elmsford
1 Warehouse Lane.......................... 8.64 8.48 JP Trucking Service (100%)
2 Warehouse Lane.......................... 11.74 11.56 RJ Bruno Roofing Inc. (55%), Savin Engineers PC (41%)
3 Warehouse Lane.......................... 3.76 3.61 United Parcel Service (100%)
4 Warehouse Lane.......................... 10.01 9.82 San Mar Laboratory (63%), Westinghouse Air Brake (14%)
5 Warehouse Lane.......................... 9.46 9.20 Great Spring Waters of America (48%), E & H Tire Boxing
(19%), Chamart Exclusives Inc. (16%)
6 Warehouse Lane.......................... 23.21 23.21 Conway Central Express (100%)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Industrial/Warehouse Properties 9.43 9.24
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX,
AND INDUSTRIAL/WAREHOUSE
PROPERTIES 17.81 17.28
====================================================================================================================================
</TABLE>
(1) Based on all leases in effect as of December 31, 1999.
(2) Total base rent for 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.
(3) Total base rent for 1999 minus total 1999 amortization of tenant
improvements, leasing commissions and other concessions and costs,
determined in accordance with GAAP.
(4) Base rent for 1999 divided by net rentable square feet leased at December
31, 1999. For those properties acquired or placed in service during 1999,
amounts are annualized, as per Note 7.
(5) Effective rent for 1999 divided by net rentable square feet leased at
December 31, 1999. For those properties acquired or placed in service
during 1999, amounts are annualized, as per Note 7.
(6) Excludes space leased by the Operating Partnership aggregating 122,149
square feet.
(7) As this property was acquired or placed in service by the Operating
Partnership during 1999, the amounts represented in 1999 base rent and
1999 effective rent reflect only that portion of the year during which the
Operating Partnership owned or placed the property in service.
Accordingly, these amounts may not be indicative of the property's full
year results. For comparison purposes, the amounts represented in 1999
average base rent per sq. ft. and 1999 average effective rent per sq. ft.
for this property have been calculated by taking 1999 base rent and 1999
effective rent for such property and annualizing these partial-year
results, dividing such annualized amounts by the net rentable square feet
leased at December 31, 1999. These annualized per square foot amounts may
not be indicative of the property's results had the Operating Partnership
owned or placed such property in service for the entirety of 1999.
(8) The property was sold by the Operating Partnership in 1999.
- ----------
35
<PAGE>
Retail Properties
The Operating Partnership owned two stand-alone retail properties as of December
31, 1999, described below:
The Operating Partnership owns an 8,000 square-foot restaurant, constructed in
1986, located at 2 Executive Plaza in the South Westchester Executive Park in
Yonkers, Westchester County, New York. The restaurant is 100 percent leased to
Magic at Yonkers, Inc. for use as a Red Robin restaurant under a 25-year lease.
The lease currently provides for fixed annual base rent of $265,000, with
fully-reimbursed real estate taxes, and operating expenses escalated based on
the consumer price index ("CPI") over a base year CPI. The lease, which expires
in June 2012, includes scheduled rent increases in July 2002 to approximately
$300,000 annually, and in July 2007 to approximately $345,000 annually. The
lease also provides for additional rent calculated as a percentage of sales over
a specified sales amount, as well as for two five-year renewal options. 1999
total base rent for the property, calculated in accordance with GAAP, was
approximately $257,488.
The Operating Partnership also owns a 9,300 square-foot restaurant, constructed
in 1984, located at 230 White Plains Road, Tarrytown, Westchester County, New
York. The restaurant is 100 percent leased to TGI Fridays under a 10-year lease
which provides for fixed annual base rent of approximately $195,000, with
fully-reimbursed real estate taxes, and operating expenses escalated based on
CPI over a base year CPI. The lease, which expires in August 2004, also provides
for additional rent calculated as a percentage of sales over a specified sales
amount, as well as for four five-year renewal options. 1999 total base rent for
the property, calculated in accordance with GAAP, was approximately $195,294.
Land Leases
The Operating Partnership owned three land leases as of December 31, 1999,
described below:
The Operating Partnership leases land to Star Enterprises, on which a 2,264
square-foot Texaco gas station was constructed, located at 1 Enterprise
Boulevard in Yonkers, Westchester County, New York. The 15-year, triple-net land
lease provides for annual rent of approximately $145,000 and expires in April
2005. The lease also provides for two five-year renewal options. 1999 total base
rent under this lease, calculated in accordance with GAAP, was approximately
$144,023.
The Operating Partnership also leases five acres of land to Rake Realty, on
which a 103,500 square-foot office building exists, located at 700 Executive
Boulevard, Elmsford, Westchester County, New York. The 22-year, triple-net land
lease provides for fixed annual rent plus a CPI adjustment every five years, and
expires in November 2000. 1999 total base rent under this lease, calculated in
accordance with GAAP, was approximately $96,653. The lease also provides for
several renewal options which could extend the lease term for an additional 30
years.
The Operating Partnership also leases 27.7 acres of land to Home Depot, on which
a 134,000 square-foot retail store was constructed, located at the Operating
Partnership's Horizon Center Business Park, Hamilton Township, Mercer County,
New Jersey. The net lease, which began on February 1, 1999, provides for annual
rent of approximately $298,000 through the fifth year of the lease and fixed
annual rent plus a CPI adjustment every five years for the years thereafter and
expires in January 2094. The lease also provides an option for Home Depot to
purchase the land in 2002. 1999 total base rent under this lease, calculated in
accordance with GAAP, was approximately $239,021.
Multi-family Residential Properties
The Operating Partnership owned two multi-family residential properties, as of
December 31, 1999, described below:
Tenby Chase Apartments, Delran, Burlington County, New Jersey: The Operating
Partnership's multi-family residential property, known as the Tenby Chase
Apartments, was built in 1970. The property contains 327 units, comprised of 196
one-bedroom units and 131 two-bedroom units, with an average size of
approximately 1,235 square feet per unit. The property had an average monthly
rental rate of approximately $765 per unit during 1999 and was approximately
96.0 percent leased as of December 31, 1999. The property had 1999 total base
rent of approximately $2.9 million, which represented approximately 0.6 percent
of the Operating Partnership's 1999 total base rent. The average occupancy rate
for the property in each of 1999, 1998 and 1997 was 97.1 percent, 96.0 percent,
and 95.5 percent, respectively.
36
<PAGE>
25 Martine Avenue, White Plains, Westchester County, New York: The Operating
Partnership's multi-family residential property, known as 25 Martine Avenue, was
built in 1987. The property contains 124 residential units, comprised of 18
studio units, 71 one-bedroom units and 35 two-bedroom units, with an average
size of approximately 722 square feet per unit. The property had an average
monthly rental rate of approximately $1,547 per unit during 1999 and was 96.0
percent leased as of December 31, 1999. The property also has retail space. The
property had 1999 total base rent of approximately $2.4 million, which
represented approximately 0.5 percent of the Operating Partnership's 1999 total
base rent. The average occupancy rate for the property in each of 1999, 1998 and
1997 was 96.8 percent, 96.4 percent and 97.6 percent, respectively.
OCCUPANCY
The table below sets forth the year-end percentages of rentable square feet
leased in the Operating Partnership's in-service Consolidated Properties for the
last five years:
Percentage of
Year Ended December 31, Square Feet Leased (%)
-------------------------------------------------------
1999 96.5
1998 96.6
1997 95.8
1996 96.4
1995 92.5
37
<PAGE>
SIGNIFICANT TENANTS
The following table sets forth a schedule of the Operating Partnership's 20
largest tenants for the Consolidated Properties as of December 31, 1999, based
upon annualized base rents:
<TABLE>
<CAPTION>
Percentage of Percentage of
Annualized Operating Partnership Square Total Year of
Number of Base Rental Annualized Base Feet Operating Partnership Lease
Properties Revenue ($) (1) Rental Revenue (%) Leased Leased Sq.Ft. (%) Expiration
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AT&T Corporation 6 15,433,135 3.3 1,034,779 4.0 2009 (2)
Donaldson, Lufkin &
Jenrette Securities Corp. 2 14,358,974 3.1 589,368 2.3 2010 (3)
AT&T Wireless Services 2 8,199,959 1.8 382,030 1.5 2007 (4)
IBM Corporation 5 7,553,299 1.6 391,910 1.5 2007 (5)
Prentice-Hall Inc. 1 6,744,495 1.4 474,801 1.8 2014
Allstate Insurance Company 10 6,377,507 1.4 293,820 1.1 2009 (6)
Nabisco Inc. 2 5,467,178 1.2 300,378 1.2 2005
Toys 'R' US - NJ, Inc. 1 5,342,672 1.1 242,518 0.9 2012
American Institute of Certified
Public Accountants 1 4,981,357 1.1 249,768 1.0 2012
Keystone Mercy Health Plan 3 4,636,015 1.0 203,334 0.8 2015 (7)
Board of Gov./Federal Reserve 1 4,605,090 1.0 117,008 0.4 2009 (8)
Dean Witter Trust Company 1 4,319,508 0.9 221,019 0.8 2008
Winston & Strawn 1 4,293,026 0.9 108,100 0.4 2003
CMP Media Inc. 1 4,206,598 0.9 206,274 0.8 2014
KPMG Peat Marwick, LLP 2 3,824,080 0.8 161,760 0.6 2007 (9)
Move.com 1 3,701,763 0.8 94,917 0.4 2006
Bank of Tokyo - Mitsubishi Ltd. 1 3,378,923 0.7 137,076 0.5 2009
Bankers Trust Harborside Inc. 1 3,272,500 0.7 385,000 1.5 2003
PNC Bank N.A. 4 3,207,902 0.7 149,930 0.6 2004(10)
Cendant Operations Inc. 1 3,117,051 0.7 148,431 0.6 2008
- ------------------------------------------------------------------------------------------------------------------------------------
Totals 117,021,032 25.1 5,892,221 22.7
====================================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000,
annualized base rental revenue is based on the first full 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; 3,950 square feet expire August
2000; 66,268 square feet expire December 2000; 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; 162,677 square feet expire September
2010.
(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; 28,289 square feet expire January
2002; 1,065 square feet expire November 2002; 85,000 square feet expire
December 2005; 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 November 2005; 6,108 square feet
expire August 2006; 31,143 square feet expire April 2008; 11,500 square
feet expire April 2009.
(7) 32,171 square feet expire January 2003; 171,163 square feet expire April
2015.
(8) 94,719 square feet expire May 2005; 22,289 square feet expire July 2009.
(9) 104,556 square feet expire September 2002; 57,204 square feet expire July
2007.
(10) 107,320 square feet expire February 2000; 15,802 square feet expire August
2003; 26,808 square feet expire October 2004.
38
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS
The following table sets forth a schedule of the lease expirations for the total
of the Operating Partnership's office, office/flex, industrial/warehouse and
stand-alone retail properties, included in the Consolidated Properties,
beginning January 1, 2000, assuming that none of the tenants exercise 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>
2000.......... 548 2,998,702 11.5 51,235,987 17.09 11.0
2001.......... 504 3,052,745 11.8 49,449,363 16.20 10.6
2002.......... 525 3,505,201 13.5 61,682,311 17.60 13.3
2003.......... 396 3,624,579 14.0 63,261,015 17.45 13.6
2004.......... 304 2,162,726 8.3 40,731,720 18.83 8.7
2005.......... 144 2,243,557 8.6 42,629,493 19.00 9.2
2006.......... 70 1,074,250 4.1 22,939,184 21.35 4.9
2007.......... 49 1,318,491 5.1 26,917,633 20.42 5.8
2008.......... 39 1,545,752 6.0 24,575,681 15.90 5.3
2009.......... 42 1,522,241 5.9 30,025,843 19.72 6.4
2010.......... 36 756,819 2.9 16,200,363 21.41 3.5
2011 and thereafter 29 2,146,879 8.3 35,904,699 16.72 7.7
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,686 25,951,942 100.0(4) 465,553,292 17.94 100.0
====================================================================================================================================
</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 unleased space as of December 31, 1999.
(3) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000,
annualized base rental revenue is based on the first full 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 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 25,951,942 94.8%
Square footage used for corporate offices, management offices,
building use, retail tenants, food services, other ancillary
service tenants and occupancy adjustments 459,529 1.7
Square footage unleased 971,803 3.5
---------- -----
Total net rentable square footage (does not include
residential, land lease, retail or not-in-service properties) 27,383,274 100.0%
========== =====
</TABLE>
39
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office properties beginning January 1, 2000, assuming that none of the tenants
exercise 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>
2000.......... 462 2,441,089 11.3 45,084,047 18.47 10.8
2001.......... 418 2,366,837 11.0 42,048,690 17.77 10.1
2002.......... 433 2,717,232 12.6 53,518,196 19.70 12.9
2003.......... 329 3,016,261 14.0 57,168,583 18.95 13.7
2004.......... 259 1,706,502 7.9 35,597,604 20.86 8.6
2005.......... 113 1,932,315 8.9 38,865,317 20.11 9.3
2006.......... 58 841,925 3.9 19,021,919 22.59 4.6
2007.......... 41 1,183,060 5.5 24,984,398 21.12 6.0
2008.......... 36 1,396,157 6.5 23,633,823 16.93 5.7
2009.......... 30 1,361,491 6.3 27,943,453 20.52 6.7
2010.......... 32 674,908 3.1 15,062,093 22.32 3.6
2011 and thereafter 23 1,946,191 9.0 33,432,650 17.18 8.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total/Weighted
Average 2,234 21,583,968 100.0 416,360,773 19.29 100.0
====================================================================================================================================
</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 unleased space as of December 31, 1999.
(3) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000,
annualized base rental revenue is based on the first full 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.
40
<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 January 1, 2000, assuming that none of the
tenants exercise 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>
2000.......... 79 532,124 13.4 5,862,366 11.02 13.0
2001.......... 81 654,361 16.5 6,796,646 10.39 15.1
2002.......... 90 741,529 18.7 7,666,408 10.34 17.0
2003.......... 64 516,844 13.0 5,660,683 10.95 12.5
2004.......... 37 273,404 6.9 3,234,111 11.83 7.2
2005.......... 31 311,242 7.8 3,764,176 12.09 8.3
2006.......... 12 232,325 5.8 3,917,265 16.86 8.7
2007.......... 8 135,431 3.4 1,933,235 14.27 4.3
2008.......... 3 149,595 3.8 941,858 6.30 2.1
2009.......... 11 148,950 3.8 1,976,190 13.27 4.4
2010.......... 4 81,911 2.1 1,138,270 13.90 2.5
2011 and thereafter 5 192,688 4.8 2,207,049 11.45 4.9
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 425 3,970,404 100.0 45,098,257 11.36 100.0
====================================================================================================================================
</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 unleased space as of December 31, 1999.
(3) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000,
annualized base rental revenue is based on the first full 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: INDUSTRIAL/WAREHOUSE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
industrial/warehouse properties beginning January 1, 2000, assuming that none of
the tenants exercise 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>
2000.......... 7 25,489 6.7 289,574 11.36 8.0
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 24.1 431,749 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 3,634,262 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 unleased space as of December 31, 1999.
(3) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000,
annualized base rent revenue is based on the first full 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 January 1, 2000, assuming that none of
the tenants exercise 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 December 1999 billings
times 12. For leases whose rent commences after January 1, 2000,
annualized base rental revenue is based on the first full 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>
INDUSTRY DIVERSIFICATION
The following table lists the Operating Partnership's 30 largest industry
classifications based on annualized contractual base rent of the Consolidated
Properties for the month of December 1999:
<TABLE>
<CAPTION>
Percentage of
Annualized Percentage of Total
Base Rental Operating Partnership Square Operating Partnership
Revenue Annualized Base Feet Leased
Industry Classification ($) (1) (2) Rental Revenue (%) Leased Sq. Ft. (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities, Commodity Contracts & Other Financial 52,018,118 11.2 2,391,790 9.2
Manufacturing 44,518,089 9.6 2,740,177 10.6
Telecommunications 35,452,100 7.6 2,242,479 8.6
Computer System Design Svcs. 31,650,631 6.8 1,728,631 6.7
Insurance Carriers & Related Assistance 31,485,722 6.8 1,662,248 6.4
Legal Services 26,549,719 5.7 1,218,223 4.7
Credit Intermediation & Related Activities 22,226,073 4.8 1,325,045 5.1
Health Care & Social Assistance 19,484,478 4.2 1,041,366 4.0
Wholesale Trade 17,707,823 3.8 1,278,771 4.9
Accounting/Tax Prep. 15,642,255 3.3 747,054 2.9
Other Professional 14,327,844 3.1 881,399 3.4
Information Services 14,266,296 3.1 687,066 2.6
Retail Trade 13,380,782 2.9 817,756 3.1
Publishing Industries 12,459,014 2.7 560,583 2.2
Arts, Entertainment & Recreation 11,484,674 2.5 792,278 3.1
Public Administration 9,939,273 2.1 331,504 1.3
Transportation 9,616,619 2.1 712,852 2.7
Other Services (except Public Administration) 9,006,173 1.9 748,671 2.9
Advertising/Related Services 7,557,329 1.6 370,725 1.4
Data Processing Services 7,500,019 1.6 339,407 1.3
Scientific Research/Development 7,294,935 1.6 424,503 1.6
Management of Companies & Finance 6,607,582 1.4 361,209 1.4
Architectural/Engineering 6,306,890 1.3 350,949 1.3
Management/Scientific 5,777,511 1.2 303,486 1.2
Real Estate & Rental & Leasing 5,407,226 1.2 306,110 1.2
Monetary Authorities - Central Banks 4,817,648 1.0 275,899 1.1
Construction 4,354,039 0.9 258,203 1.0
Utilities 3,715,592 0.8 182,912 0.7
Educational Services 3,216,491 0.7 189,602 0.7
Admin. & Support, Waste Mgt. & Remediation Svc. 2,936,111 0.6 222,539 0.9
Other 8,846,236 1.9 458,505 1.8
- ------------------------------------------------------------------------------------------------------------------------------------
Totals 465,553,292 100.0 25,951,942 100.0
====================================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000,
annualized base rental revenue is based on the first full 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, industrial/warehouse and stand-alone retail
tenants only. Excludes leases for amenity, retail, parking and
month-to-month office tenants. Some tenants have multiple leases.
(3) The Operating Partnership's tenants are classified according to the U.S.
Government's new North American Industrial Classification System (NAICS)
which is replacing the Standard Industrial Code (SIC) system.
43
<PAGE>
MARKET DIVERSIFICATION
The following table lists the Operating Partnership's 25 largest markets (MSAs),
based on annualized contractual base rent of the Consolidated Properties for the
month of December 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 80,505,681 17.3 4,530,091 16.5
New York, NY (Westchester-Rockland Counties) 71,202,243 15.3 4,355,070 15.9
Newark, NJ (Essex-Morris-Union Counties) 68,909,133 14.8 3,671,218 13.4
Jersey City, NJ 49,717,878 10.7 2,508,700 9.2
Philadelphia, PA-NJ 36,771,791 7.9 2,597,058 9.5
Washington, DC-MD-VA 18,112,798 3.9 616,549 2.2
Denver, CO 16,795,658 3.6 1,007,931 3.7
Dallas, TX 13,669,100 2.9 959,463 3.5
Trenton, NJ (Mercer County) 13,272,301 2.9 672,365 2.5
Middlesex-Somerset-Hunterdon, NJ 12,248,874 2.6 659,041 2.4
San Antonio, TX 11,392,112 2.4 940,302 3.4
San Francisco, CA 9,983,451 2.1 450,891 1.6
Houston, TX 8,724,516 1.9 700,008 2.6
Stamford-Norwalk, CT 8,545,912 1.8 527,250 1.9
Monmouth-Ocean, NJ 6,414,352 1.4 577,423 2.1
Nassau-Suffolk, NY 5,762,698 1.2 261,849 1.0
Austin-San Marcos, TX 5,500,942 1.2 270,703 1.0
Phoenix-Mesa, AZ 5,411,031 1.2 416,967 1.5
Tampa-St. Petersburg-Clearwater, FL 3,803,349 0.8 297,429 1.1
Boulder-Longmont, CO 3,543,931 0.8 270,421 1.0
Omaha, NE-IA 3,082,228 0.7 319,535 1.2
Bridgeport, CT 2,985,077 0.6 145,487 0.5
Colorado Springs, CO 2,832,524 0.6 209,987 0.8
Dutchess County, NY 2,180,658 0.5 118,727 0.4
Atlantic-Cape May, NJ 1,467,725 0.3 80,344 0.3
Other 2,717,329 0.6 218,465 0.8
- -------------------------------------------------------------------------------------------------------------------------------
Totals 465,553,292 100.0 27,383,274 100.0
===============================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000,
annualized base rental revenue is based on the first full 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, industrial/warehouse and stand-alone retail
tenants only. Excludes leases for amenity, retail, parking and
month-to-month office tenants. Some tenants have multiple leases.
44
<PAGE>
THE OPERATING PARTNERSHIP'S REAL ESTATE MARKETS
The Operating Partnership's Properties are located primarily in the Northeast,
including a predominant presence in New Jersey, New York and Pennsylvania. The
following is a discussion of the markets within which substantially all of the
Operating Partnership's properties are located:
Northern New Jersey
The Northern New Jersey market consists of Bergen, Essex, Hudson, Morris and
Passaic Counties. Northern New Jersey's five counties are part of the greater
New York metropolitan area, are less than a 45 minute drive from Manhattan, and
are widely regarded as major centers for corporate and international business.
The region has direct access to New York City by public transportation and
extensive road networks. In addition to being home to the two largest cities in
New Jersey, Newark and Jersey City, Newark International Airport and the New
York/New Jersey Harbor are also located within the five-county boundary. Overall
vacancy rates have declined in the Northern New Jersey market for six out of the
last seven years as a direct result of an increase in leasing activity and net
absorption levels. Build-to-suit activity is present, and selective speculative
construction exists. The Operating Partnership owns or has an interest in
approximately 10.1 million square feet of office and office/flex space in
Northern New Jersey.
Central New Jersey
The Central New Jersey market consists of Union, Somerset, Hunterdon, Middlesex,
Mercer and Monmouth Counties. Encompassing approximately 2,000 square miles in
six counties, Central New Jersey is notable for its proximity to major highway
arteries, including Interstates 78 and 287, Route 1, the Garden State Parkway
and the New Jersey Turnpike. This market continues to be a prime location for
Fortune 500 headquarters, research & development operations and information
businesses. Central New Jersey vacancy rates are decreasing while average asking
rents are increasing. This is, in part, attributable to the increase in demand,
measured by leasing activity, which rose predominantly due to corporate
expansions. The Operating Partnership owns and operates approximately 2.6
million square feet of office and office/flex space in the Central New Jersey
counties of Union, Middlesex, Somerset, Mercer and Monmouth.
Suburban Philadelphia, Pennsylvania
The Suburban Philadelphia market consists of six counties in Pennsylvania on the
west side of the Delaware River and eight counties in New Jersey on the east
side of the Delaware River. The Pennsylvania counties consist of Bucks, Chester,
Delaware, Montgomery, Lehigh and Northampton Counties. These six counties
surround the city of Philadelphia, are home to many affluent communities, and
are regarded as major centers for corporate and international business. The
areas are served by an extensive highway network allowing easy access to
Philadelphia International Airport and the Port of Philadelphia. Over the last
few years, the overall vacancy rate in this region has declined as a result of
strong leasing activity and moderate new construction. The New Jersey counties
consist of Burlington, Camden, Atlantic, Ocean, Gloucester, Salem, Cumberland
and Cape May Counties. This market has extensive geographic boundaries,
stretching from the Delaware River to the Atlantic Ocean and Atlantic City. This
region is mainly suburban and is home to many affluent communities, and Atlantic
City, one of the nation's largest centers for gaming/tourism. The Operating
Partnership owns and operates approximately 2.7 million square feet of office
and office/flex space and a 327-unit multi-family residential complex in
Suburban Philadelphia.
Westchester County, New York
Westchester County, New York, is located immediately north of New York City and
is accessible to New York City by public transportation and through an extensive
road network. Westchester County has a population of almost 900,000 and is
considered to be one of the most prestigious counties surrounding New York City.
The Operating Partnership owns and operates approximately 3.8 million square
feet of office and office/flex space, 387,400 square feet of
industrial/warehouse space, a 124-unit multi-family residential property, two
stand-alone retail properties, and two land leases in Westchester County, New
York.
Rockland County, New York
Rockland County, New York is located north of the New Jersey/New York border
directly adjacent to Bergen County. Rockland County has excellent highway access
to both New York City via Interstate 87 and to New Jersey via Interstate 287.
The Operating Partnership owns or has an interest in approximately 412,000
square feet of office and office/flex space in Rockland County.
45
<PAGE>
Fairfield County, Connecticut
Fairfield County, Connecticut is the county in Connecticut closest in proximity
with New York City. It has direct access to New York City via public
transportation and through an extensive road network. The county is home to 10
Fortune 500 headquarters and there has been a substantial decline in vacancy
during the past three years. The Operating Partnership owns and operates
approximately 673,000 square feet of office and office/flex space in Fairfield
County.
Washington, District of Columbia
Washington D.C. is bordered by the state of Maryland, on its northern and
eastern borders and the state of Virginia on its western and southern borders.
Washington, D.C. is served by an extensive highway network. Most notable is
Interstate 495, the "Beltway" which surrounds Washington and affords access to
all of the surrounding suburbs in both Maryland and Virginia. The Operating
Partnership owns and operates approximately 495,000 square feet of office space
in the District of Columbia.
Dallas-Fort Worth, Texas
The Dallas-Fort Worth market includes Dallas, Tarrant and portions of Collin and
Denton Counties. The market includes the central business districts of both
Dallas and Fort Worth and the suburban areas primarily to the north of those
cities. Dallas-Forth Worth International Airport is one of the busiest airports
in the nation and is important to the growth of the area. This area is home to
the headquarters of numerous Fortune 500 high-technology and telecommunications
companies. The Operating Partnership owns and operates approximately 1.0 million
square feet of office space in Dallas, Tarrant and Collin Counties.
Houston, Texas
The Houston office market is comprised primarily of the city of Houston and its
surrounding suburbs. Houston is a major location of Fortune 500 companies'
headquarters. Houston is also a major port serving the southern portion of the
United States. The Operating Partnership owns or has an interest in
approximately 1.0 million square feet of office space in the Houston market.
San Antonio, Texas
The San Antonio market consists primarily of Bexar County. San Antonio is
located at the cross roads of two major arteries, Interstate 35 and Interstate
10, and is a primary location of military facilities. San Antonio is the third
largest metropolitan area in Texas, behind Dallas and Houston. The Operating
Partnership owns and operates approximately 940,000 square feet of office space
in Bexar County.
Phoenix, Arizona
The Phoenix market is comprised primarily of the city of Phoenix and several
suburbs to the north and west, including Scottsdale. Phoenix is the focal point
of Arizona, in addition to being the state capital. It is the location of
numerous corporate headquarters and regional headquarter facilities. The Phoenix
market has been considered one of the most rapidly growing markets in the
country. The Operating Partnership owns and operates approximately 417,000
square feet of office space in the Phoenix market.
Denver, Colorado
The Denver market is comprised primarily of the city of Denver and several
suburbs to the north, east, and south. Denver is the focal point of Colorado, in
addition to being the state capital. It is the location of numerous corporate
headquarters, with a large emergence of high-technology and telecommunications
industries. Its new airport could become a major transportation artery for the
near-western states. The Operating Partnership owns and operates approximately
1.3 million square feet of office space in the Denver market.
San Francisco, California
The San Francisco market is comprised primarily of the city of San Francisco and
its surrounding suburbs. San Francisco is the second largest financial center in
the nation, after New York, and is home to the booming
high-technology/e-commerce industry. The Operating Partnership owns or has an
interest in approximately 757,000 square feet of office space in the city of San
Francisco.
46
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary routine
litigation incidental to its business, to which the Operating Partnership is a
party or to which any of its Properties is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Operating Partnership currently has no securities listed on any securities
exchange.
MARKET INFORMATION
Not applicable.
HOLDERS
On March 1, 2000, the Operating Partnership had 140 owners of limited
partnership units.
RECENT SALES OF UNREGISTERED SECURITIES
Reference is made to Notes 3 (1997 Transactions) and 12 of the Consolidated
Financial Statements contained in Item 14 of this Form 10-K for a description of
equity issuances of common and preferred units in the Operating Partnership (and
warrants exercisable for Units) which are redeemable, under certain
circumstances, for shares of Common Stock in the Corporation. All of such equity
issuances were issued to the holders directly by the Corporation without the use
of an underwriter or placement agent and without registration under the
Securities Act of 1933, as amended, pursuant to the private placement exemption
contained in Section 4(2) of such Act.
DIVIDENDS AND DISTRIBUTIONS
The distributions payable at December 31, 1999 represent distributions payable
to common unitholders of record on January 4, 2000 (66,604,262 common units),
and preferred distributions to preferred unitholders (229,304 preferred units)
for the fourth quarter 1999. The fourth quarter 1999 common unit distribution of
$0.58 per common unit (pro-rated for units issued during the quarter), as well
as the fourth quarter preferred unit distribution of $16.875 per preferred unit,
were approved by the Board of Directors of the General Partner on December 17,
1999 and paid on January 21, 2000.
The distributions payable at December 31, 1998 represent distributions payable
to common unitholders of record on January 6, 1999 (66,353,322 common units),
and preferred distributions to preferred unitholders (250,256 preferred units)
for the fourth quarter 1998. The fourth quarter 1998 common unit distribution of
$0.55 per common unit (pro-rated for units issued during the quarter), as well
as the fourth quarter preferred unit distribution of $16.875 per preferred unit,
were approved by the Board of Directors of the General Partner on December 15,
1998 and paid on January 26, 1999.
47
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data on a consolidated basis
for the Operating Partnership. The consolidated selected operating, balance
sheet and cash flow data of the Operating Partnership as of December 31, 1999,
1998, 1997, 1996 and 1995, and for the periods then ended have been derived from
financial statements audited by PricewaterhouseCoopers LLP, independent
accountants.
<TABLE>
<CAPTION>
Operating Data
In thousands, except per share data 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 551,484 $ 493,699 $ 23,135 $ 13,180 $ 11,060
Operating and other expenses $ 168,651 $ 150,448 $ 1,870 $ 251 $ 74
General and administrative $ 25,480 $ 24,828 $ 15,061 $ 5,637 $ 3,343
Depreciation and amortization $ 87,209 $ 78,916 $ 279 $ 52 $ 81
Interest expense $ 102,960 $ 88,043 $ 9,670 $ 4,672 $ 1,175
Non-recurring charges $ 16,458 -- $ 46,519 -- --
Equity in net income of Majority- Owned
Unconsolidated Property Partnerships -- -- $ 89,846 $ 34,611 $ 10,759
Income before minority interest and
extraordinary item $ 152,683 $ 151,464 $ 39,582 $ 37,179 $ 17,146
Income before extraordinary item $ 152,604 $ 151,464 $ 39,582 $ 37,179 $ 17,146
Basic earnings per unit - before
extraordinary item $ 2.05 $ 2.13 $ 0.22 $ 1.76 $ 1.23
Diluted earnings per unit - before
extraordinary item $ 2.04 $ 2.11 $ 0.21 $ 1.72 $ 1.20
Distributions declared per common unit $ 2.26 $ 2.10 $ 1.90 $ 1.75 $ 1.66
Basic weighted average units
outstanding 66,885 63,438 43,356 21,171 13,986
Diluted weighted average units
outstanding 67,133 63,893 44,409 21,651 14,254
<CAPTION>
Balance Sheet Data December 31,
In thousands 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental property, before accumulated
depreciation and amortization $3,654,845 $3,467,799 $ 65,592 $ 712 $ 570
Investments in Unconsolidated Majority-Owned
Property Partnerships -- -- $1,821,614 $488,585 $ 182,724
Total assets $3,629,601 $3,452,194 $1,901,174 $776,220 $ 268,918
Mortgages and loans payable $1,490,175 $1,420,931 $ 322,100 $ 29,805 $ 46,700
Total liabilities $1,648,844 $1,526,974 $ 364,489 $ 47,877 $ 55,027
Minority interest $ 83,600 -- -- -- --
Redeemable Partnership Units -- -- $ 522,812 $ 83,052 $ 61,045
Partners' capital $1,897,157 $1,925,220 $1,013,873 $645,291 $ 152,846
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
Other Data
In thousands 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash flows provided by
operating activities $ 243,638 $ 208,761 $ 66,661 $ 39,382 $ 21,056
Cash flows used in investing activities $ (195,178) $ (749,067) $ (975,574) $(305,891) $(126,216)
Cash flows (used in) provided by
financing activities $ (45,598) $ 543,411 $ 706,368 $ 470,893 $ 99,863
Funds from operations (1), before
distributions to preferred unitholders $ 244,240 $ 216,949 $ 111,752 $ 45,220 $ 27,397
Funds from operations (1), after
distributions to preferred unitholders $ 228,764 $ 200,636 $ 110,864 $ 45,220 $ 27,397
</TABLE>
- ----------
(1) The Operating Partnership considers funds from operations (after
adjustment for straight-lining of rents) one measure of REIT performance.
Funds from operations ("FFO") is defined as net income (loss) before
distributions 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 for net income as an indication of the
Operating Parntership'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. Refer to "Management's Discussion and Analysis of Financial
Condition and Results of Operations," contained elsewhere in this Report,
for the calculation of FFO for the periods presented.
49
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 year ended December 31, 1999 ("1999"), as
compared to the year ended December 31, 1998 ("1998") and for 1998, as compared
to the year ended December 31, 1997 ("1997") 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 December 31, 1997 (for the 1999
versus 1998 comparison) and which represents all in-service properties owned by
the Operating Partnership at December 31, 1996 (for the 1998 versus 1997
comparison), (ii) the effect of the acquisition of the RM Properties on January
31, 1997, (iii) the effect of the acquisition of the Mack Properties on December
11, 1997, (iv) the effect of the "Acquired Properties," which represents all
properties acquired or placed in service by the Operating Partnership from
January 1, 1998 through December 31, 1999 (for the 1999 versus 1998 comparison)
and which represents all properties acquired or placed in service by the
Operating Partnership from January 1, 1997 through December 31, 1998 excluding
RM Properties and Mack Properties (for the 1998 versus 1997 comparison) and (v)
the effect of the "Dispositions", which refers to the Operating Partnership's
sale of its property at 400 Alexander Road, Princeton, New Jersey on November
15, 1999 and its property at 20002 North 19th Avenue, Phoenix, Arizona on
December 15, 1999.
For 1999 and 1998, the results of operations of the Operating Partnership and
the Property Partnerships are included in the Operating Partnership on a
consolidated basis. Prior to January 1, 1998, such results of operations were
accounted for by the Operating Partnership under the equity method of accounting
and reflected in its consolidated financial statements as Equity in Net Income
of Unconsolidated Majority-Owned Property Partnerships. Accordingly, to present
meaningful comparisons, the following discussion compares consolidated 1999
results to consolidated 1998 results and such consolidated 1998 results to the
1997 results of the Operating Partnership and Property Partnerships on a
combined basis (such combining financial schedule is presented in the table
below).
50
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
----------------------------
Mack-Cali
Mack-Cali Property
(in thousands) Realty, L.P. Partnerships Eliminations Combined
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Base rents $ 524 $ 205,903 $ (212) $206,215
Escalations and recoveries from tenants 84 31,600 (14) 31,130
Management fees from Property Partnerships 6,532 -- (6,532) --
Parking and other 2,268 4,642 -- 6,910
Interest income 13,727 6 (8,187) 5,546
- -----------------------------------------------------------------------------------------------------------------
Total revenues 23,135 241,611 (14,945) 249,801
- -----------------------------------------------------------------------------------------------------------------
EXPENSES
Real estate taxes 68 25,924 -- 25,992
Utilities 57 18,203 (14) 18,246
Operating services 1,745 29,370 -- 31,115
Management fees to Operating Partnership -- 6,532 (6,532) --
General and administrative 15,061 810 (212) 15,659
Depreciation and amortization 279 36,546 -- 36,825
Interest expense 9,670 34,380 (4,972) 39,078
Non-recurring charges 46,519 -- -- 46,519
- -----------------------------------------------------------------------------------------------------------------
Total expenses 73,399 151,765 (11,730) 213,434
- -----------------------------------------------------------------------------------------------------------------
(Loss) income before equity in net income of
unconsolidated majority-owned Property
Partnerships and extraordinary item (50,264) 89,846 (3,215) 36,367
Equity in net income of unconsolidated
majority-owned Property Partnerships 89,846 -- (89,846) --
- -----------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary item 39,582 89,846 (93,061) 36,367
Extraordinary item - loss on early
retirement of debt (7,200) (6,746) 9,961 (3,985)
- -----------------------------------------------------------------------------------------------------------------
Net income 32,382 83,100 (83,100) 32,382
Preferred unit distribution (888) -- -- (888)
Beneficial conversion feature (29,361) -- -- (29,361)
- -----------------------------------------------------------------------------------------------------------------
Net income (loss) available to common
unitholders $ 2,133 $ 83,100 $(83,100) $ 2,133
=================================================================================================================
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Year Ended
December 31, Dollar Percent
(in thousands) 1999 1998 Change Change
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from rental operations:
Base rents $469,853 $427,528 $42,325 9.9%
Escalations and recoveries from tenants 62,182 51,981 10,201 19.6
Parking and other 15,915 10,712 5,203 48.6
- -----------------------------------------------------------------------------------------------------------
Sub-total 547,950 490,221 57,729 11.8
Equity in earnings of
unconsolidated joint ventures 2,593 1,055 1,538 145.8
Interest income 941 2,423 (1,482) (61.2)
- -----------------------------------------------------------------------------------------------------------
Total revenues 551,484 493,699 57,785 11.7
- -----------------------------------------------------------------------------------------------------------
Property expenses:
Real estate taxes 57,382 48,297 9,085 18.8
Utilities 41,580 38,440 3,140 8.2
Operating services 69,689 63,711 5,978 9.4
- -----------------------------------------------------------------------------------------------------------
Sub-total 168,651 150,448 18,203 12.1
General and administrative 25,480 24,828 652 2.6
Depreciation and amortization 87,209 78,916 8,293 10.5
Interest expense 102,960 88,043 14,917 16.9
Non-recurring charges 16,458 -- 16,458 --
- -----------------------------------------------------------------------------------------------------------
Total expenses 400,758 342,235 58,523 17.1
- -----------------------------------------------------------------------------------------------------------
Income before gain on sale of
rental property, minority
interest and extraordinary item 150,726 151,464 (738) (0.5)
Gain on sale of rental property 1,957 -- 1,957 --
- -----------------------------------------------------------------------------------------------------------
Income before minority interest and
extraordinary item 152,683 151,464 1,219 0.8
Minority interest in consolidated
partially-owned properties 79 -- 79 --
- -----------------------------------------------------------------------------------------------------------
Income before extraordinary item 152,604 151,464 1,140 0.8
Extraordinary item - loss on early
retirement of debt -- (2,670) 2,670 (100.0)
- -----------------------------------------------------------------------------------------------------------
Net income 152,604 148,794 3,810 2.6
Preferred unit distributions (15,476) (16,313) 837 (5.1)
- -----------------------------------------------------------------------------------------------------------
Net income available to
common unitholders $137,128 $132,481 $ 4,647 3.5%
===========================================================================================================
</TABLE>
52
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties, Same-Store Properties and
Dispositions (in thousands):
<TABLE>
<CAPTION>
Total Acquired Same-Store
Operating Partnership Properties Properties Dispositions
--------------------- ---------- ---------- ------------
Dollar Percent Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change Change Change
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from rental operations:
Base rents $ 42,325 9.9% $ 32,519 7.6% $ 10,007 2.4% $ (201) (0.1)%
Escalations and recoveries
from tenants 10,201 19.6 5,404 10.4 4,800 9.2 (3) 0.0
Parking and other 5,203 48.6 2,601 24.3 2,585 24.1 17 0.2
- -------------------------------------------------------------------------------------------------------------------
Total $ 57,729 11.8% $ 40,524 3.6% $ 17,392 8.3% $ (187) (0.1)%
===================================================================================================================
Property expenses:
Real estate taxes $ 9,085 18.8% $ 5,817 12.1% $ 3,300 6.8% $ (32) (0.1)%
Utilities 3,140 8.2 2,738 7.2 400 1.0 2 0.0
Operating services 5,978 9.4 6,210 9.8 (165) (0.3) (67) (0.1)
- -------------------------------------------------------------------------------------------------------------------
Total $ 18,203 12.1% $ 14,765 9.8% $ 3,535 2.4% $ (97) (0.1)%
===================================================================================================================
OTHER DATA:
Number of Consolidated Properties 253 66 187 2
Square feet (in thousands) 27,383 5,608 21,775 190
</TABLE>
Base rents for the Same-Store Properties increased $10.0 million, or 2.4
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 $4.8 million, or 9.2 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 $2.6 million, or 24.1 percent, due primarily to lease
termination fees received in 1999.
Real estate taxes on the Same-Store Properties increased $3.3 million, or 6.8
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 $3.1 million, or 8.2 percent, for 1999 as compared to
1998, due substantially to the Acquired Properties. Operating services for the
Same-Store Properties decreased $0.2 million, or 0.3 percent, due primarily to a
reduction in maintenance costs incurred.
Equity in earnings of unconsolidated joint ventures increased $1.5 million in
1999 as compared to 1998. This is due primarily to additional joint venture
investments made by the Operating Partnership (see Note 4 to the Financial
Statements).
Interest income decreased by approximately $1.5 million, or 61.2 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998.
General and administrative increased by $0.7 million, or 2.6 percent, for 1999
as compared to 1998. This increase is due primarily to increased payroll and
related costs in 1999.
Depreciation and amortization increased by $8.3 million, or 10.5 percent, for
1999 over 1998. Of this increase, $4.8 million or 6.1 percent, is attributable
to the Acquired Properties, and $3.5 million, or 4.4 percent, is due to the
Same-Store Properties.
53
<PAGE>
Interest expense increased $14.9 million, or 16.9 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.
Non-recurring charges of $16.5 million were incurred in 1999, as a result of the
resignation of Thomas A. Rizk (see Note 16 to the Financial Statements).
Income before gain on sale of rental property, minority interest and
extraordinary item decreased to $150.7 million in 1999 from $151.5 million in
1998. The decrease of approximately $0.8 million is due to the factors discussed
above.
Net income available to common unitholders increased by $4.6 million, from
$132.5 million in 1998 to $137.1 million in 1999. This increase was a result of
an extraordinary item of $2.7 million due to early retirement of debt in 1998, a
gain on sale of rental property of $2.0 million in 1999 and a decrease in
preferred dividends of $0.8 million. These were partially offset by a decrease
in income before gain on sale of rental property, minority interest and
extraordinary item of $0.8 million and an increase in minority interest in
consolidated partially-owned properties of $0.1 million.
54
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Year Ended
December 31, Dollar Percent
(in thousands) 1998 1997 Change Change
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from rental operations:
Base rents $ 427,528 $ 206,215 $ 221,313 107.3%
Escalations and recoveries from tenants 51,981 31,130 20,851 67.0
Parking and other 10,712 6,910 3,802 55.0
- -----------------------------------------------------------------------------------------------------------
Sub-total 490,221 244,255 245,966 100.7
Equity in earnings of
unconsolidated joint ventures 1,055 -- 1,055 --
Interest income 2,423 5,546 (3,123) (56.3)
- -----------------------------------------------------------------------------------------------------------
Total revenues 493,699 249,801 243,898 97.6
- -----------------------------------------------------------------------------------------------------------
Property expenses:
Real estate taxes 48,297 25,992 22,305 85.8
Utilities 38,440 18,246 20,194 110.7
Operating services 63,711 31,115 32,596 104.8
- -----------------------------------------------------------------------------------------------------------
Sub-total 150,448 75,353 75,095 99.7
General and administrative 24,828 15,659 9,169 58.6
Depreciation and amortization 78,916 36,825 42,091 114.3
Interest expense 88,043 39,078 48,965 125.3
Non-recurring charges -- 46,519 (46,519) (100.0)
- -----------------------------------------------------------------------------------------------------------
Total expenses 342,235 213,434 128,801 60.3
- -----------------------------------------------------------------------------------------------------------
Income before extraordinary item 151,464 36,367 115,097 316.5
Extraordinary item - loss on early
retirement of debt (2,670) (3,985) 1,315 (33.0)
- -----------------------------------------------------------------------------------------------------------
Net income 148,794 32,382 116,412 359.5
Preferred unit distributions (16,313) (888) (15,425) (1,737.0)
Beneficial conversion feature -- (29,361) 29,361 100.0
- -----------------------------------------------------------------------------------------------------------
Net income available to
common unitholders $ 132,481 $ 2,133 $ 130,348 6,111.0%
===========================================================================================================
</TABLE>
55
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties, Same-Store Properties, RM
Properties and Mack Properties (in thousands):
<TABLE>
<CAPTION>
Total
Operating Acquired Same-Store
Partnership Properties Properties RM Properties Mack Properties
----------- ---------- ---------- ------------- ---------------
Dollar Percent Dollar Percent Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change Change Change Change Change
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from rental
operations:
Base rents $221,313 107.3% $75,052 36.4% $1,834 0.9% $5,539 2.7% $138,888 67.3%
Escalations and
recoveries
from tenants 20,851 67.0 9,070 29.1 403 1.3 222 0.7 11,156 35.9
Parking and other 3,802 55.0 -- -- 3,341 48.3 461 6.7 -- --
- ----------------------------------------------------------------------------------------------------------------------
Total $245,966 100.7% $84,122 34.5% $5,578 2.3% $6,222 2.5% $150,044 61.4%
======================================================================================================================
Property expenses:
Real estate taxes $ 22,305 85.8% $ 8,796 33.8% $ 835 3.2% $1,013 3.9% $ 11,661 44.9%
Utilities 20,194 110.7 6,184 33.9 355 1.9 (212) (1.2) 13,867 76.1
Operating services 32,596 104.8 12,241 39.3 (1,327) (4.3) 1,080 3.5 20,602 66.3
- ----------------------------------------------------------------------------------------------------------------------
Total $ 75,095 99.7% $27,221 36.2% $ (137) (0.2)% $1,881 2.5% $ 46,130 61.2%
======================================================================================================================
OTHER DATA:
Number of Consolidated
Properties 244 68 57 65 54
Square feet
(in thousands) 26,835 6,365 7,135 4,102 9,233
</TABLE>
Base rents for the Same-Store Properties increased $1.8 million, or 0.9 percent,
for 1998 as compared to 1997, due primarily to rental rate increases in 1998.
Escalations and recoveries from tenants for the Same-Store Properties increased
$0.4 million, or 1.3 percent, for 1998 over 1997, due to the recovery of an
increased amount of total property expenses, as well as additional settle-up
billings in 1998. Parking and other income for the Same-Store Properties
increased $3.3 million, or 48.3 percent, which is primarily attributable to
lease termination fees received in 1998.
Real estate taxes on the Same-Store Properties increased $0.8 million, or 3.2
percent, for 1998 as compared to 1997, due primarily to property tax rate
increases in certain municipalities in 1998. Utilities for the Same-Store
Properties increased $0.4 million, or 1.9 percent, for 1998 as compared to 1997,
due primarily to increased electric rates and usage in early 1998. Operating
services for the Same-Store Properties decreased $1.3 million, or 4.3 percent,
due primarily to decreased snow removal costs incurred at the Same-Store
Properties in 1998.
The Operating Partnership recognized $1.1 million from equity in earnings of
unconsolidated joint ventures in 1998 (see Note 4 to the Financial Statements).
Interest income decreased by $3.1 million, or 56.3 percent, due primarily to
investment of the funds held from the Corporation's October 1997 common stock
offering in 1997.
General and administrative expense increased $9.2 million or 58.6 percent , of
which $6.6 million, or 42.2 percent, was due primarily to an increase in payroll
and related costs as a result of the Operating Partnership's expansion in late
1997 and 1998 and $2.6 million, or 16.4 percent, is attributable to additional
costs related to the Mack Properties.
Depreciation and amortization increased by $42.1 million, or 114.3 percent, for
1998 over 1997, of which $22.6 million, or 61.1 percent, was due to Mack
Properties; an increase of $16.2 million, or 44.0 percent, relates to
depreciation on the Acquired Properties; an increase of $1.8 million, or 5.0
percent, due to the RM Properties; and an increase of $1.5 million or 4.2
percent, due to the Same-Store Properties.
56
<PAGE>
Interest expense increased by $48.9 million, or 125.3 percent, for 1998 over
1997, of which $23.4 million, or 60.0 percent, was due to assumed mortgages from
the Mack Properties, an increase of $23.2 million, or 59.5 percent, due to net
additional drawings from the Operating Partnership's credit facilities as a
result of Operating Partnership acquisitions and the $200 million term loan with
Prudential Securities Corp. obtained in December 1997, as well as changes in
LIBOR, $1.2 million, or 3.0 percent, was attributable to assumed mortgages on
Acquired Properties, and an increase of $1.1 million, or 2.8 percent, due to the
TIAA Mortgage.
Non-recurring charges of $46.5 million were incurred in 1997, as a result of the
Mack Transaction.
Income before extraordinary item increased to $151.5 million in 1998 from $36.4
million in 1997. The increase of $115.1 million was due to the factors discussed
above.
Net income available to common unitholders increased by $130.4 million for 1998,
from $2.1 million in 1997 to $132.5 million in 1998. This increase was a result
of an increase in income before extraordinary item of $115.1 million, an
extraordinary item of $4.0 million, related to early retirement of debt in 1997
and a beneficial conversion feature of $29.4 million in 1997, offset by an
extraordinary item of $2.7 million, related to early retirement of debt in 1998
and an increase in preferred dividends of $15.4 million.
Liquidity and Capital Resources
Statement of Cash Flows
During the year ended December 31, 1999, the Operating Partnership generated
$243.6 million in cash flows from operating activities, and together with $1.2
billion in borrowings from the Operating Partnership's revolving credit
facilities, the issuance of unsecured notes and funds from additional mortgage
debt, $83.6 million in proceeds from minority interest of consolidated
partially-owned properties, $20.6 million in distributions received from
unconsolidated joint ventures, $17.4 million in proceeds from sales of rental
property and $1.0 million in proceeds from stock options exercised, used an
aggregate of approximately $1.6 billion to acquire properties and land parcels
and pay for other tenant and building improvements totaling $191.5 million,
repay outstanding borrowings on its revolving credit facilities and other
mortgage debt of $1.1 billion, pay quarterly distributions of $164.7 million,
invest $40.6 million in unconsolidated joint ventures, repurchase 1,014,500
shares of the Corporation's outstanding common stock for $27.5 million, pay
deferred financing costs of $7.0 million, add $1.1 million to restricted cash
and increase the Operating Partnership's cash and cash equivalents by $2.9
million.
Capitalization
During the year ended December 31, 1999, in conjunction with the redemption of
certain of the contingent units issued in the Mack Transaction, the Operating
Partnership issued a total of 275,046 common units with a total value of
approximately $8.1 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 December 31,
1999, the Corporation purchased for constructive retirement, 1,869,200 shares of
its outstanding common stock for an aggregate cost of approximately $52.6
million. Concurrent with these purchases, the Corporation sold to the Operating
Partnership 1,869,200 common units for approximately $52.6 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 which were 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.
57
<PAGE>
The Rights are attached to each share of common stock. The Rights are generally
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 December 31, 1999, the Operating Partnership's total indebtedness of $1.5
billion (weighted average interest rate of 7.27 percent) was comprised of $249.2
million of revolving credit facility borrowings and other variable rate mortgage
debt (weighted average rate of 7.42 percent) and fixed rate debt of $1.2 billion
(weighted average rate of 7.24 percent).
As of December 31, 1999, the Operating Partnership had outstanding borrowings of
$177.0 million under its revolving credit facilities (with aggregate borrowing
capacity of $1.1 billion). The total outstanding borrowings were from the 1998
Unsecured Facility, with no outstanding borrowings on its 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 December 2000.
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. Standard &
Poor's Rating Services ("S&P") and Duff & Phelps Credit Rating Co. ("DCR") have
each assigned their BBB rating to existing and prospective senior unsecured debt
of the Operating Partnership. S&P and DCR 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 existing and prospective senior
unsecured debt of the Operating Partnership 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.
As of December 31, 1999, the Operating Partnership had 223 unencumbered
properties, totaling 20.5 million square feet, representing 74.7 percent of the
Operating Partnership's total portfolio on a square footage basis.
The Operating Partnership and Corporation have 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 revolving credit facilities and other
debt and equity financing.
58
<PAGE>
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, proceeds from property sales, 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 December 31, 1999, the Operating Partnership's total debt had a weighted
average term to maturity of 5.4 years. The Operating Partnership does not intend
to reserve funds to retire the unsecured corporate debt, Harborside mortgages,
$150.0 Million Prudential Mortgage Loan, its other property mortgages or other
long-term mortgages and loans payable upon maturity. Instead, the Operating
Partnership will seek to refinance such debt at maturity or retire such debt
through the issuance of additional equity or debt 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 2000. 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 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 $135.6 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.
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.
59
<PAGE>
Funds from operations for the years ended December 31, 1999, 1998 and 1997, 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>
Year Ended December 31,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before non-recurring charges,
gain on sale of rental property,
distributions to preferred unitholders,
minority interest and extraordinary item $ 167,184 $ 151,464 $ 82,886
Add: Real estate-related depreciation and
amortization (1) 89,731 79,169 36,599
Deduct: Rental income adjustment for
straight-lining of rents (1) (12,596) (13,684) (7,733)
Minority interest: partially-owned properties (79) -- --
- -----------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment
for straight-lining of rents, before
distributions to preferred unitholders $ 244,240 $ 216,949 $ 111,752
Deduct: Distributions to preferred unitholders (15,476) (16,313) (888)
- -----------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for
straight-lining of rents, after distributions
to preferred unitholders $ 228,764 $ 200,636 $ 110,864
=================================================================================================================
Cash flows provided by operating activities $ 243,638 $ 208,761 $ 66,661
Cash flows used in investing activities $ (195,178) $ (749,067) $ (975,574)
Cash flows (used in) provided by financing activities $ (45,598) $ 543,411 $ 706,368
- -----------------------------------------------------------------------------------------------------------------
Basic weighted average units
outstanding (2) 66,885 63,438 43,356
- -----------------------------------------------------------------------------------------------------------------
Diluted weighted average units
outstanding (2) 73,769 70,867 44,604
- -----------------------------------------------------------------------------------------------------------------
</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.
The following schedule reconciles the Operating Partnership's basic weighted
average units to the diluted weighted average units presented above:
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic weighted average units: 66,885 63,438 43,356
Add: Weighted average preferred units 6,636 6,974 383
(after conversion to common units)
Stock options 241 411 579
Restricted Stock Awards 7 -- --
Redeemable partnership units -- -- 253
Stock Warrants -- 44 33
- ------------------------------------------------------------------------------------------------
Diluted weighted average units: 73,769 70,867 44,604
================================================================================================
</TABLE>
60
<PAGE>
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
The Year 2000 issue was 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 have been unable to interpret dates beyond the year 1999,
which could have caused a system failure or other computer errors, leading to
disruptions in operations.
We developed a three-phase Year 2000 project (the "Project") to identify, remedy
and test our Year 2000 systems compliance, including, but not limited to,
central accounting and operating systems, tenant compliance and property
compliance. In addition, we prepared contingency plans in the event of Year 2000
failures associated with critical building support systems and our accounting
system.
Our Project was completed on schedule during the fourth quarter of 1999.
Approximately $1.0 million was incurred to modify, upgrade and/or replace
non-compliant systems.
We experienced no system failures or computer errors associated with Year 2000
compliance. We have concluded the Project and anticipate no further Year 2000
compliance issues or expenditures.
61
<PAGE>
ITEM 7A. 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
December 31, 1999 ranged from LIBOR plus 65 basis points to LIBOR plus 90 basis
points.
December 31, 1999
<TABLE>
<CAPTION>
Long-term
debt, including Fair
current portion 2000 2001 2002 2003 2004 Thereafter Total Value
- ---------------- ---- ---- ---- ---- ---- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate........... $8,727 $ 7,468 $ 3,458 $195,611 $312,195 $713,512 $1,240,971 $1,180,901
Average Interest
Rate............. 6.93% 7.44% 8.20% 7.30% 7.34% 7.17% 7.24%
Variable Rate........ $177,000 $ 72,204 $ 249,204 $ 249,204
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this Form 10-K.
See Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference from the
Corporation's definitive proxy statement for its annual meeting of shareholders
to be held on May 16, 2000.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the
Corporation's definitive proxy statement for its annual meeting of shareholders
to be held on May 16, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from the
Corporation's definitive proxy statement for its annual meeting of shareholders
to be held on May 16, 2000.
62
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from the
Corporation's definitive proxy statement for its annual meeting of shareholders
to be held on May 16, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
REPORTS ON FORM 8-K
(a) 1. Financial Statements and Report of PricewaterhouseCoopers LLP,
Independent Accountants
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Operations for the Years Ended December 31,
1999, 1998 and 1997
Consolidated Statement of Changes in Partners' Capital for the Years
Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules
Schedule III - Real Estate Investments and Accumulated Depreciation as of
December 31, 1999
All other schedules are omitted because they are not required or the
required information is shown in the financial statements or notes
thereto.
(a) 3. 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 2, 1999,
together with Articles Supplementary thereto (filed as Exhibit 3.1 to
the Corporation'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 Corporation'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 Corporation's Form 8-K dated December 11, 1997 and incorporated
herein by reference).
63
<PAGE>
Exhibit
Number Exhibit Title
- ------ -------------
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 Corporation'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).
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).
64
<PAGE>
Exhibit
Number Exhibit Title
- ------ -------------
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).
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 Corporation'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 Corporation'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 Corporation's Form 8-K dated December 11, 1997
and incorporated herein by reference).
10.18 Agreement of Sale and Purchase, dated December 28, 1999, by and
between Mack-Cali Realty, L.P. and Parsippany Office Associates L.L.C.
10.19 Operating Agreement of Parsippany Office Associates L.L.C.
65
<PAGE>
Exhibit
Number Exhibit Title
- ------ -------------
12 Computation of Ratio of Earnings to Fixed Charges
21 Subsidiaries of the Operating Partnership
23 Consent of PricewaterhouseCoopers LLP, independent accountants
27 Financial Data Schedule
(b) Report on Form 8-K
The Operating Partnership did not file any current reports on Form 8-K
during the quarter ended December 31, 1999.
66
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of Mack-Cali Realty, L.P.:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 63 present fairly, in all material
respects, the financial position of Mack-Cali Realty, L.P. and its subsidiaries
at December 31, 1999 and 1998, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 14(a)(2) on page 63 presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Operating
Partnership's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
New York, New York
February 22, 2000
67
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per unit amounts)
================================================================================
<TABLE>
<CAPTION>
December 31,
ASSETS 1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rental property
Land and leasehold interests $ 549,096 $ 510,534
Buildings and improvements 3,014,532 2,887,115
Tenant improvements 85,057 64,464
Furniture, fixtures and equipment 6,160 5,686
- --------------------------------------------------------------------------------------------------------------
3,654,845 3,467,799
Less - accumulated depreciation and amortization (256,629) (177,934)
- --------------------------------------------------------------------------------------------------------------
Total rental property 3,398,216 3,289,865
Cash and cash equivalents 8,671 5,809
Investments in unconsolidated joint ventures 89,134 66,508
Unbilled rents receivable 53,253 41,038
Deferred charges and other assets, net 66,436 39,020
Restricted cash 7,081 6,026
Accounts receivable, net of allowance for doubtful accounts
of $672 and $670 6,810 3,928
- --------------------------------------------------------------------------------------------------------------
Total assets $ 3,629,601 $ 3,452,194
==============================================================================================================
LIABILITIES AND PARTNERS' CAPITAL
- --------------------------------------------------------------------------------------------------------------
Senior unsecured notes $ 782,785 $ --
Revolving credit facilities 177,000 671,600
Mortgages and loans payable 530,390 749,331
Distributions payable 42,499 40,564
Accounts payable and accrued expenses 63,394 33,253
Rents received in advance and security deposits 36,150 29,980
Accrued interest payable 16,626 2,246
- --------------------------------------------------------------------------------------------------------------
Total liabilities 1,648,844 1,526,974
- --------------------------------------------------------------------------------------------------------------
Minority interest in consolidated partially-owned properties 83,600 --
Commitments and contingencies
Partners' Capital:
Preferred units, 229,304 and 250,256 units outstanding 235,200 223,330
General partner, 58,446,552 and 57,266,137 common units outstanding 1,441,882 1,387,674
Limited partners, 8,153,710 and 9,086,585 common units outstanding 211,551 305,692
Unit warrants, 2,000,000 and 2,000,000 outstanding 8,524 8,524
- --------------------------------------------------------------------------------------------------------------
Total partners' capital 1,897,157 1,925,220
- --------------------------------------------------------------------------------------------------------------
Total liabilities and partners' capital $ 3,629,601 $ 3,452,194
==============================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
68
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit amounts)
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31,
REVENUES 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Base rents $ 469,853 $ 427,528 $ 524
Escalations and recoveries from tenants 62,182 51,981 84
Management fees from Property Partnerships -- -- 6,532
Parking and other 15,915 10,712 2,268
Equity in earnings of unconsolidated joint ventures 2,593 1,055 --
Interest income 941 2,423 13,727
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 551,484 493,699 23,135
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------
Real estate taxes 57,382 48,297 68
Utilities 41,580 38,440 57
Operating services 69,689 63,711 1,745
General and administrative 25,480 24,828 15,061
Depreciation and amortization 87,209 78,916 279
Interest expense 102,960 88,043 9,670
Non-recurring charges 16,458 -- 46,519
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 400,758 342,235 73,399
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before equity in net income of unconsolidated majority-owned
Property Partnerships, gain on sale of rental
property, minority interest and extraordinary item 150,726 151,464 (50,264)
Equity in net income of unconsolidated majority-owned
Property Partnerships -- -- 89,846
- ------------------------------------------------------------------------------------------------------------------------------------
Income before gain on sale of rental property,
minority interest and extraordinary item 150,726 151,464 39,582
Gain on sale of rental property 1,957 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Income before minority interest and extradordinary item 152,683 151,464 39,582
Minority interest in consolidated partially-owned properties 79 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 152,604 151,464 39,582
Extraordinary item - loss on early retirement of debt -- (2,670) (7,200)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income 152,604 148,794 32,382
Preferred unit distributions (15,476) (16,313) (888)
Beneficial conversion feature -- -- (29,361)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $ 137,128 $ 132,481 $ 2,133
====================================================================================================================================
Basic earnings per unit:
Income before extraordinary item $ 2.05 $ 2.13 $ 0.22
Extraordinary item - loss on early retirement of debt -- (0.04) (0.17)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.05 $ 2.09 $ 0.05
====================================================================================================================================
Diluted earnings per unit:
Income before extraordinary item $ 2.04 $ 2.11 $ 0.21
Extraordinary item - loss on early retirement of debt -- (0.04) (0.16)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.04 $ 2.07 $ 0.05
====================================================================================================================================
Distributions declared per common unit $ 2.26 $ 2.10 $ 1.90
- ------------------------------------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding 66,885 63,438 43,356
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted weighted average units outstanding 67,133 63,893 44,409
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
69
<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, 1997 -- 36,319 -- $ -- $ 645,291 $ -- $ -- $ 645,291
Net income -- -- -- 1,405 -- -- 1,405
Distributions -- -- -- -- (76,311) -- -- (76,311)
Contributions - net proceeds from
common stock offerings -- 13,000 -- -- 489,116 -- -- 489,116
Redemption of limited partner
units for shares of common stock -- 1 -- -- 17 -- -- 17
Contributions - proceed from stock
options exercised -- 337 -- -- 7,187 -- -- 7,187
Issuance of Stock Awards Rights
and Stock Purchase Rights -- 351 -- -- 12,526 -- -- 12,526
Beneficial conversion feature -- -- -- -- 26,801 -- -- 26,801
Issuance of 2,000 Unit Warrants -- -- -- -- -- -- 8,524 8,524
Repurchase of common stock -- (152) -- -- (4,680) -- -- (4,680)
Adjustment to reflect preferred
unitholders' and limited partners'
capital at redemption value -- -- -- -- (96,003) -- -- (96,003)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 -- 49,856 -- -- 1,005,349 -- 8,524 1,013,873
Net income -- -- -- 6,046 116,578 6,643 -- 129,267
Distributions -- -- -- (8,417) (119,950) (9,204) -- (137,571)
Contributions - net proceeds from
common stock offerings -- 7,968 -- -- 288,393 -- -- 288,393
Redemption of limited partner
units for shares of common stock -- 29 (7) -- 1,029 (181) -- 848
Contributions - proceeds from
stock options exercised -- 268 -- -- 5,475 -- -- 5,475
Issuance of units in connection with
acquisitions -- -- 1,367 -- -- 41,559 -- 41,559
Issuance of Preferred Units 2 -- -- 2,258 -- -- -- 2,258
Repurchase of common stock -- (855) -- -- (25,058) -- -- (25,058)
Adjustment to reflect preferred
unitholders'and limited partners'
capital at redemption value -- -- -- -- 115,858 -- -- 115,858
Reclassification of previously
redeemable partnership units 248 -- 7,727 223,443 -- 266,875 -- 490,318
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 250 57,266 9,087 223,330 1,387,674 305,692 8,524 1,925,220
Net income -- -- -- 15,476 119,739 17,389 -- 152,604
Distributions -- -- -- (15,476) (132,327) (18,865) -- (166,668)
Conversion of preferred units
to limited partner units (21) -- 605 (21,491) -- 21,491 -- --
Redemption of limited partner
units for shares of common stock -- 1,935 (1,935) -- 56,065 (56,065) -- --
Issuance of limited partner units -- -- 397 -- -- 11,503 -- 11,503
Contributions - proceeds from
stock options exercised -- 48 -- -- 1,049 -- -- 1,049
Repurchase of general partner units -- (1,015) -- -- (27,500) -- -- (27,500)
Deferred compensation plan for directors -- -- -- -- 90 -- -- 90
Contributions - proceeds from dividend
reinvestment and stock purchase plan -- 1 -- -- 32 -- -- 32
Issuance of Restricted Stock Awards -- 212 -- -- -- -- -- --
Amortization of stock compensation -- -- -- -- 827 -- -- 827
Allocation of net equity -- -- -- 33,361 36,233 (69,594) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 229 58,447 8,154 $235,200 $1,441,882 $211,551 $ 8,524 $1,897,157
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
70
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 152,604 $ 148,794 $ 32,382
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 87,209 78,916 279
Amortization of stock compensation 827 -- 12,526
Amortization of deferred financing costs and debt discount 3,570 1,580 585
Amortization of premium on loans receivable -- -- 924
Equity in earnings of unconsolidated joint ventures (2,593) (1,055) --
Gain on sales of rental property (1,957) -- --
Minority interest in consolidated partially-owned properties 79 -- --
Extraordinary item - loss on early retirement of debt -- 2,670 7,200
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (12,412) (13,600) (6)
Increase in deferred charges and other assets, net (28,893) (17,811) (1,035)
(Increase) decrease in accounts receivable, net (2,882) (192) 24
Increase in accounts payable and accrued expenses 27,536 2,117 11,414
Increase in rents received in advance and security deposits 6,170 8,585 1,115
Increase (decrease) in accrued interest payable 14,380 (1,243) 1,253
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 243,638 $ 208,761 $ 66,661
====================================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Additions to rental property $ (191,507) $ (692,766) $ (46,100)
Issuance of mortgage note receivable -- (20,000) (11,600)
Repayment of mortgage note receivable -- 20,000 --
Decrease in loans receivable from Property Partnerships -- -- 77,802
Distributions in excess of equity in net income of majority-
owned Property Partnerships -- -- 136,144
Contributions to Property Partnerships -- -- (1,131,820)
Investments in unconsolidated joint ventures (40,567) (58,844) --
Distributions from unconsolidated joint ventures 20,551 1,725 --
Proceeds from sales of rental property 17,400 -- --
(Increase) decrease in restricted cash (1,055) 818 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (195,178) $ (749,067) $ (975,574)
====================================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Proceeds from senior unsecured notes $ 782,535 $ -- $ --
Proceeds from revolving credit facilities 372,248 1,375,758 669,180
Proceeds from mortgages and loans payable 45,500 150,000 --
Repayments of revolving credit facilities (866,848) (826,258) (376,885)
Repayments of mortgages and loans payable (264,431) (271,807) --
Proceeds from minority interest of consolidated
partially-owned properties 83,600 -- --
Repurchase of general partner units (27,500) (25,058) (4,680)
Redemption of common units -- (3,163) --
Payment of financing costs (7,048) (10,110) (3,095)
Net proceeds from common stock offerings -- 288,393 489,116
Proceeds from stock options exercised 1,049 5,475 7,187
Proceeds from dividend reinvestment and stock purchase plan 32 -- --
Payment of distributions (164,735) (139,819) (74,455)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities $ (45,598) $ 543,411 $ 706,368
====================================================================================================================================
Net increase (decrease) in cash and cash equivalents $ 2,862 $ 3,105 $ (202,545)
Cash and cash equivalents, beginning of period $ 5,809 $ 2,704 $ 204,721
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 8,671 $ 5,809 $ 2,176
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
71
<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 87.8 percent and 86.3
percent common unit interest in the Operating Partnership as of December 31,
1999 and 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 December 31, 1999, the Operating Partnership owned or had interests in 259
properties plus developable land (collectively, the "Properties"). The
Properties aggregate approximately 28.6 million square feet, and are comprised
of 160 office buildings and 86 office/flex buildings totaling approximately 28.2
million square feet (which includes five office buildings and one office/flex
building, aggregating 1.2 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 451 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 controlled 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.
See Investments in Unconsolidated Joint Ventures in Note 2 for the Operating
Partnership's accounting treatment of unconsolidated joint venture interests.
All significant intercompany accounts and transactions have been eliminated
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.
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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 development. Included in total rental property is
construction-in-progress of $103,977 and $57,052 as of December 31, 1999 and
1998, respectively. 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.
When assets are identified by management as held for sale, the Operating
Partnership discontinues depreciating the assets and estimates the sales price,
net of selling costs, of such assets. If, in management's opinion, the net sales
price of the assets which have been identified for sale is less than the net
book value of the assets, a valuation allowance is established.
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 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 $3,320, $1,580 and $585 for the years ended December
31, 1999, 1998 and 1997, respectively.
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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 $3,704 and $3,509 for the years ended December 31, 1999
and 1998, respectively, and $1,859 for the Property Partnerships for the year
ended December 31, 1997.
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 17.
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.
As of December 31, 1999, the net basis of the rental property for Federal income
tax purposes was lower than the net assets as reported in the Operating
Partnership's financial statements by approximately $1,048,152. The Operating
Partnership's taxable income for the years ended December 31, 1999, 1998 and
1997 was approximately $174,214, $154,245 and $68,800, respectively. The
differences between book income and taxable income primarily result from
differences in depreciation expense, the recording of rental income, the
nondeductibility of certain expenses for tax purposes, differences in revenue
recognition and the rules for tax purposes of a property exchange and issuance
of preferred convertible partnership units.
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.
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<PAGE>
Distributions Payable
The distributions payable at December 31, 1999 represent distributions payable
to common unitholders of record on January 4, 2000 (66,604,262 common units),
and preferred distributions to preferred unitholders (229,304 preferred units)
for the fourth quarter 1999. The fourth quarter 1999 common unit distribution of
$0.58 per common unit (pro-rated for units issued during the quarter), as well
as the fourth quarter preferred unit distribution of $16.875 per preferred unit,
were approved by the Board of Directors of the General Partner on December 17,
1999 and paid on January 21, 2000.
The distributions payable at December 31, 1998 represent distributions payable
to common unitholders of record on January 6, 1999 (66,353,322 common units),
and preferred distributions to preferred unitholders (250,256 preferred units)
for the fourth quarter 1998. The fourth quarter 1998 common unit distribution of
$0.55 per common unit (pro-rated for units issued during the quarter), as well
as the fourth quarter preferred unit distribution of $16.875 per preferred unit,
were approved by the Board of Directors of the General Partner on December 15,
1998 and paid on January 26, 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.
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. The Operating Partnership provides additional pro forma
disclosures as required under Statement of Financial Accounting Standards No.
123, "Accounting for Stock Based Compensation" ("FASB No. 123"). See Note 11.
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.
Reclassification
Certain reclassifications have been made to prior period amounts in order to
conform with current period presentation.
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<PAGE>
3. ACQUISITIONS/TRANSACTIONS
1999 TRANSACTIONS
Operating Property Acquisitions
The Operating Partnership acquired the following operating properties during the
year ended December 31, 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 32,799
- ---------------------------------------------------------------------------------------------------------------------------------
Total Office Property Acquisitions: 3 264,286 $ 38,508
- ---------------------------------------------------------------------------------------------------------------------------------
Office/Flex
12/21/99 McGarvey Portfolio - Phase III (c) Moorestown, Burlington County, NJ 3 138,600 $ 8,012
- ---------------------------------------------------------------------------------------------------------------------------------
Total Office/Flex Property Acquisition: 3 138,600 $ 8,012
- ---------------------------------------------------------------------------------------------------------------------------------
Total Operating Property Acquisitions: 6 402,886 $ 46,520
=================================================================================================================================
</TABLE>
Properties Placed In Service
The Operating Partnership placed in service the following properties through the
completion of development or redevelopment during the year ended December 31,
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
8/09/99 2115 Linwood Avenue Fort Lee, Bergen County, NJ 1 68,000 $ 8,147
11/01/99 795 Folsom Street (d) San Francisco, San Francisco
County, CA 1 183,445 37,337
- ---------------------------------------------------------------------------------------------------------------------------------
Total Office Properties Placed in Service: 2 251,445 $ 45,484
- ---------------------------------------------------------------------------------------------------------------------------------
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 46,850 5,023
12/10/99 600 West Avenue (e) Stamford, Fairfield County, CT 1 66,000 5,429
- ---------------------------------------------------------------------------------------------------------------------------------
Total Office/Flex Properties Placed in Service: 3 151,811 $ 12,592
- ---------------------------------------------------------------------------------------------------------------------------------
Land Lease
2/01/99 Horizon Center Business Park (f) 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: 5 403,256 $ 59,083
=================================================================================================================================
</TABLE>
(a) Unless otherwise noted, transactions were funded by the Operating
Partnership with funds primarily made available through draws on the
Operating Partnership's credit facilities.
(b) William L. Mack, a current member of the Board of Directors of the
Corporation 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 properties were acquired through the exercise of a purchase option
obtained in the initial acquisition of the McGarvey portfolio in January
1998.
(d) On June 1, 1999, the building was acquired for redevelopment for
approximately $34,282.
(e) 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, respectively, 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.
(f) 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 constructed a 134,000
square-foot retail store.
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<PAGE>
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 2, 1999, the Operating Partnership entered into a joint venture
agreement with SJP Vaughn Drive, L.L.C. Under the agreement, the Operating
Partnership has agreed to contribute its vacant land at Three Vaughn Drive,
Princeton, Mercer County, New Jersey, subject to satisfaction of certain
conditions, for an equity interest in the venture.
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 130,000 square-foot office building on this site.
The Operating Partnership accounts for the joint venture on a consolidated
basis.
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 members 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 121,624 common
units to the seller (see Note 12 to the Financial Statements). The Operating
Partnership has commenced construction of a 220,000 square-foot office building
on the acquired land.
In August 1999, the Operating Partnership entered into an agreement with SJP
Properties Company ("SJP Properties") which provides for a cooperative effort in
seeking approvals to develop up to approximately 1.8 million square feet of
office development on certain vacant land owned or controlled, respectively, by
the Operating Partnership and SJP Properties, in Hanover and Parsippany, Morris
County, New Jersey. The agreement provides that the parties shall share equally
in the costs associated with seeking such requisite approvals. Subsequent to
obtaining the requisite approvals, upon mutual consent, the Operating
Partnership and SJP Properties may enter into one or more joint ventures to
construct on the vacant land, or seek to dispose of their respective vacant land
parcels subject to the agreement.
Dispositions
On November 15, 1999, the Operating Partnership sold its 70,550 square-foot
office building located at 400 Alexander Road in Princeton, Mercer County, New
Jersey for net proceeds, after selling costs, of approximately $8,628.
On December 15, 1999, the Operating Partnership sold its 119,301 square-foot
office building located at 20002 North 19th Avenue in Phoenix, Maricopa County,
Arizona for net proceeds, after selling costs, of approximately $8,772.
1998 TRANSACTIONS
Operating Property Acquisitions
During 1998, the Operating Partnership acquired 52 office and office/flex
operating properties, aggregating 4.7 million square feet in 16 separate
transactions, for an aggregate cost of approximately $663,641. Such acquisitions
were funded primarily from drawings on the Operating Partnership's credit
facilities, the issuance of common units (see Note 12) and proceeds from the
issuance of common stock (see Note 11). In conjunction with the Operating
Partnership's acquisition during 1998 of office properties and vacant land in
Denver and Colorado Springs, Colorado, from the Pacifica Holding Company, the
Operating Partnership was subsequently required to pay additional consideration
due to earn-out provisions in the purchase agreement. William L. Mack, a current
member of the Board of Directors of the Corporation and equity holder of the
Operating Partnership, was an indirect owner of an interest in certain of the
buildings contained in the Pacifica portfolio.
Properties Placed In Service
In 1998, the Operating Partnership placed in service four office and office/flex
properties, aggregating 218,600 square feet, for an aggregate cost of
approximately $22,965.
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<PAGE>
Land and Redevelopment Transactions
In 1998, the Operating Partnership acquired six developable land parcels for an
aggregate cost of approximately $36,231. Also, in 1998, the Operating
Partnership acquired a 68,000 square-foot office building for redevelopment for
approximately $5,164. Such acquisitions were funded primarily from drawings on
the Operating Partnership's credit facilities, the Operating Partnership's cash
reserves, the issuance of common units (see Note 12) and proceeds from the
issuance of common stock (see Note 11). Certain of the acquired land parcels
were 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,
respectively. The Operating Partnership subsequently completed construction and
placed in service two office/flex buildings aggregating 87,000 square feet, as
well as signed a ground lease to Home Depot for the construction of a retail
facility, on the acquired land parcels. During the year, the Operating
Partnership completed redevelopment and placed the 68,000 square-foot office
building in service. In addition, in 1999, the Operating Partnership commenced
construction of a 183,000 square-foot office property on one of the acquired
land parcels.
1997 TRANSACTIONS
On January 31, 1997, the Operating Partnership acquired 65 properties,
aggregating approximately 4.1 million square feet, ("RM Properties") from Robert
Martin Operating Partnership, LLC and affiliates ("RM") for a total cost of
approximately $450,000. The cost of the transaction ("RM Transaction") was
financed through the assumption of $185,283 of mortgage indebtedness, the
payment of approximately $220,000 in cash, substantially all of which was
obtained from the Operating Partnership's cash reserves, and the issuance of
1,401,225 common units, valued at $43,788. Additionally, the Operating
Partnership provided an $11,600 mortgage loan to RM principals in connection
with the RM transaction, secured by two properties under purchase options. In
conjunction with the Operating Partnership's acquisition of the option
properties in 1997 and 1998, the sellers of the properties, the RM principals,
prepaid in full the mortgage note receivable.
On December 11, 1997, the Operating Partnership acquired 54 office properties,
aggregating approximately 9.2 million square feet, ("Mack Properties") from the
Mack Company and Patriot American Office Group, pursuant to a Contribution and
Exchange Agreement ("Mack Agreement"), for a total cost of approximately
$1,102,024 ("Mack Transaction").
With the completion of the Mack Transaction, the Cali Realty Corporation name
was changed to Mack-Cali Realty Corporation, and the name of the Operating
Partnership was changed from Cali Realty, L.P. to Mack-Cali Realty, L.P.
The total cost of the Mack Transaction was financed as follows: (i) $498,757 in
cash made available from the Operating Partnership's cash reserves and from the
$200,000 term loan with Prudential Securities Corp., (ii) $291,879 in debt
assumed by the Property Partnerships ("Mack Mortgages"), (iii) the issuance of
1,965,886 common units, valued at approximately $66,373, (iv) the issuance of
15,237 Series A preferred units and 215,325 Series B preferred units, valued at
approximately $236,491 (collectively, the "Preferred Units"), (v) warrants to
purchase 2,000,000 common units ("Unit Warrants"), valued at approximately
$8,524, and (vi) the issuance of Contingent Units (see Note 12).
In accordance with the Mack Agreement, Thomas A. Rizk remained Chief Executive
Officer and resigned as President of the Corporation, and Mitchell E. Hersh was
appointed as President and Chief Operating Officer. The Corporation's other
officers retained their existing positions and responsibilities, except that
Brant Cali resigned as Chief Operating Officer and John R. Cali resigned as
Chief Administrative Officer. Brant Cali and John R. Cali remained as officers
of the Corporation as Executive Vice Presidents.
Entering into new employment agreements with the Corporation after the Mack
Transaction were Thomas A. Rizk, Mitchell E. Hersh, Brant Cali and John R. Cali.
Entering into amended and restated employment agreements were Roger W. Thomas,
as Executive Vice President, General Counsel and Secretary, Barry Lefkowitz, as
Executive Vice President and Chief Financial Officer and Timothy M. Jones, as
Executive Vice President.
In connection with the Mack Transaction, under each of the Corporation's
executive officer's then existing employment agreements, due to a change of
control of the Corporation (as defined in each employment agreement), each of
the aforementioned officers received the benefit of the acceleration of (i) the
immediate vesting and issuance of his restricted stock, including tax gross-up
payments associated therewith, (ii) the forgiveness of his Stock Purchase Rights
loan, including tax gross-up payments associated therewith, and (iii) the
vesting of his unvested employee stock options and
78
<PAGE>
warrants. Additionally, under each of Thomas Rizk's, Brant Cali's and John R.
Cali's employment agreements with the Corporation, each of these officers became
entitled to receive certain severance-type payments, as a result of certain
provisions in each of their agreements, triggered as a result of the Mack
Transaction. Finally, certain officers and employees of the Corporation were
given transaction-based payments as a reward for their efforts and performance
in connection with the Mack Transaction. The total expense associated with the
acceleration of vesting of restricted stock, the forgiveness of Stock Purchase
Rights loans, and the payment of certain severance-type payments, as well as
performance payments and related tax-obligation payments, which were approved by
the Corporation's Board of Directors and which took place simultaneous with
completion of the Mack Transaction, totaled $45,769. Such expenses are included
in non-recurring charges for the year ended December 31, 1997, (see Note 11).
In 1997, the Operating Partnership also acquired 13 additional office and
office/flex properties, aggregating approximately 1.5 million square feet, in
nine separate transactions with separate sellers, for an aggregate cost of
approximately $204,446. Such acquisitions were funded primarily from drawings on
the Operating Partnership's credit facilities.
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 Mack-Cali Business Campus
(formerly Prudential Business Campus) office complex in Parsippany, Morris
County, New Jersey. The Operating Partnership performs management and leasing
services for the property owned by the joint venture and recognized $149 and
$114 in fees for such services in the years ended December 31, 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 constructed a 237,360 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 three
one-story buildings aggregating 133,750 square feet of office/flex space. HPMC
Development Partners II, L.P.'s efforts have focused on three development
projects, commonly referred to as Lava Ridge, Peninsula Gateway and Stadium
Gateway. Lava Ridge is a 12.1 acre site located in Roseville, Placer County,
California acquired by the venture upon which it has commenced construction of
three two-story buildings aggregating 183,200 square feet of office space.
Peninsula Gateway is a parcel of land purchased from the City of Daly City,
California, for future development into office space, a hotel and other retail
establishments. Stadium Gateway is a 1.5 acre site located in Anaheim, Orange
County, California, to be acquired by the venture to develop a six-story office
building aggregating 261,554 square feet. 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 12) 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 12). The Operating Partnership performs
management and leasing services for the property owned by the joint venture and
recognized $225 and $20 in fees for such services in the years ended December
31, 1999 and 1998, respectively.
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<PAGE>
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, leasing and other
services for the property owned by the joint venture and recognized $628 and
none in fees for such services in the years ended December 31, 1999 and 1998,
respectively.
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 year ended December 31, 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 $117 and $30 in fees for such services in the years ended
December 31, 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 December 31, 1999, the venture held
approximately $298,642 face value of CMBS bonds at an aggregate cost of
$132,240.
NORTH PIER AT HARBORSIDE RESIDENTIAL DEVELOPMENT
On August 5, 1999, the Operating Partnership entered into an agreement which,
upon satisfaction of certain conditions, provides for the contribution of its
North Pier at Harborside Financial Center, Jersey City, Hudson County, New
Jersey to a joint venture with Lincoln Property Company Southwest, Inc., in
exchange for cash and an equity interest in the venture. The venture intends to
develop residential housing on the property.
SOUTH PIER AT HARBORSIDE HOTEL DEVELOPMENT
On November 17, 1999, the Operating Partnership entered into an agreement with
Hyatt Corporation to develop a 350-room hotel on the Operating Partnership's
South Pier at Harborside Financial Center, Jersey City, Hudson County, New
Jersey, subject to the satisfaction of certain conditions.
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<PAGE>
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
December 31, 1999 and 1998:
<TABLE>
<CAPTION>
December 31, 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> <C>
Assets:
Rental property, net $ 21,817 $ 70,823 $ 13,672 $ 10,752 $ 19,549 $ 28,755 $ -- $165,368
Other assets 3,319 3,260 2,467 773 5,069 704 239,441 255,033
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 25,136 $ 74,083 $ 16,139 $ 11,525 $ 24,618 $ 29,459 $239,441 $420,401
====================================================================================================================================
Liabilities and partners'/
members' capital:
Mortgages and loans payable $ -- $ 41,274 $ 43,081 $ -- $ 17,300 $ -- $108,407 $210,062
Other liabilities 186 4,769 1,383 2 1,263 815 36,109 44,527
Partners'/members' capital 24,950 28,040 (28,325) 11,523 6,055 28,644 94,925 165,812
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $ 25,136 $ 74,083 $ 16,139 $ 11,525 $ 24,618 $ 29,459 $239,441 $420,401
====================================================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $ 17,072 $ 23,337 $ 8,352 $ 11,571 $ 2,697 $ 6,073 $ 20,032 $ 89,134
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998
---------------------------------------------------------------------------------------
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> <C>
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>
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<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 years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
Year Ended December 31, 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> <C>
Total revenues $ 4,938 $ 271 $ 9,165 $ 917 $ 1,426 $ 4,097 $ 10,093 $ 30,907
Operating and other expenses (1,505) (111) (3,238) (231) (352) (2,327) (3,774) (11,538)
Depreciation and amortization (1,234) (114) (1,512) (95) (439) (550) -- (3,944)
Interest expense -- (105) (3,115) -- (45) -- (2,185) (5,450)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2,199 $ (59) $ 1,300 $ 591 $ 590 $ 1,220 $ 4,134 $ 9,975
====================================================================================================================================
Operating Partnership's equity in
earnings (loss) of unconsolidated
joint ventures $ 827 -- $ (366) $ 541 $ 298 $ 233 $ 1,060 $ 2,593
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended December 31, 1998
-----------------------------------------------------------------------------------------------
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> <C>
Total revenues $ 3,544 -- $ 4,103 $ 490 -- $ 659 -- $ 8,796
Operating and other expenses (1,124) -- (1,704) (35) -- (286) -- (3,149)
Depreciation and amortization (1,000) -- (604) -- -- (76) -- (1,680)
Interest expense -- -- (2,097) -- -- -- -- (2,097)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1,420 -- $ (302) $ 455 -- $ 297 -- $ 1,870
====================================================================================================================================
Operating Partnership's equity in
earnings (loss) of unconsolidated
joint ventures $ 723 -- $ (182) $ 455 -- $ 59 -- $ 1,055
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. DEFERRED CHARGES AND OTHER ASSETS
December 31,
1999 1998
- -------------------------------------------------------------------------------
Deferred leasing costs $ 61,623 $ 35,151
Deferred financing costs 17,143 9,962
- -------------------------------------------------------------------------------
78,766 45,113
Accumulated amortization (20,197) (13,527)
- -------------------------------------------------------------------------------
Deferred charges, net 58,569 31,586
Prepaid expenses and other assets 7,867 7,434
- -------------------------------------------------------------------------------
Total deferred charges and other assets, net $ 66,436 $ 39,020
===============================================================================
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:
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<PAGE>
December 31,
1999 1998
- --------------------------------------------------------------------------------
Security deposits $6,021 $5,696
Escrow and other reserve funds 1,060 330
- --------------------------------------------------------------------------------
Total restricted cash $7,081 $6,026
================================================================================
7. RENTAL PROPERTY HELD FOR SALE
As of December 31, 1999, included in total rental property are three office
properties that the Operating Partnership has identified as held for sale. The
three office properties have an aggregate carrying value of $77,783 and $78,989
as of December 31, 1999 and 1998, respectively, and are located in Omaha,
Douglas County, Nebraska; Amarillo, Potter County, Texas; and Jersey City,
Hudson County, New Jersey. There were no properties held for sale at December
31, 1998.
The following is a summary of the condensed results of operations of the rental
properties held for sale at December 31, 1999 for the years ended December 31,
1999, 1998 and 1997. As some of the properties held for sale were acquired
during the periods presented, the amounts presented below may not be comparable
from period to period.
Year Ended December 31,
1999 1998 1997
- -------------------------------------------------------------------------------
Total revenues $ 24,412 $ 23,360 $ 19,463
Operating and other expenses (8,808) (8,466) (4,121)
Depreciation and amortization (2,915) (3,145) (2,890)
- -------------------------------------------------------------------------------
Income before extraordinary item $ 12,689 $ 11,749 $ 12,452
================================================================================
On February 15, 2000, the Operating Partnership entered into a contract to sell
95 Christopher Columbus Drive, located in Jersey City, Hudson County, New
Jersey, for approximately $152,500, pending certain contingencies. Such rental
property was identified as held for sale at December 31, 1999.
There can be no assurance if and when any of these potential rental property
sales will occur.
8. SENIOR UNSECURED NOTES
On March 16, 1999, the Operating Partnership issued $600,000, face amount, of
senior unsecured notes 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 9, and to pay off certain mortgage
loans. The senior unsecured notes were 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
senior unsecured notes with interest payable monthly. The Operating Partnership
used the proceeds to retire the TIAA Mortgage, as defined in Note 10.
The Operating Partnership's total senior unsecured notes (collectively "Senior
Unsecured Notes") are redeemable at any time at the option of the Operating
Partnership, subject to certain conditions including yield maintenance.
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<PAGE>
A summary of the terms of the Senior Unsecured Notes outstanding as of December
31, 1999 is presented below:
Effective
Amount Rate (1)
- --------------------------------------------------------------------------------
7.18% Senior Unsecured Notes, due December 31, 2003 $185,283 7.23%
7.00% Senior Unsecured Notes, due March 15, 2004 299,665 7.27%
7.25% Senior Unsecured Notes, due March 15, 2009 297,837 7.49%
- --------------------------------------------------------------------------------
Total Senior Unsecured Notes $782,785 7.34%
================================================================================
(1) Includes the cost of terminated treasury lock agreements (if any),
offering and other transaction costs and the discount on the notes, as
applicable.
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.
9. 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 (5.82 percent at December 31, 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 December 29, 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
84
<PAGE>
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 December 31, 1999 and 1998, the Operating Partnership had outstanding
borrowings of $177,000 and $671,600, respectively, under its revolving credit
facilities (with aggregate borrowing capacity of $1,100,000). The total
outstanding borrowings were from the 1998 Unsecured Facility, with no
outstanding borrowings on its Prudential Facility.
10. MORTGAGES AND LOANS PAYABLE
December 31,
1999 1998
- --------------------------------------------------------------------------------
Portfolio Mortgages $150,000 $335,283
Property Mortgages 380,390 414,048
- --------------------------------------------------------------------------------
Total Mortgages and Loans Payable $530,390 $749,331
================================================================================
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 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 senior unsecured notes on
August 2, 1999 (see Note 8), 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 11 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.
85
<PAGE>
A summary of the Operating Partnership's and Property Partnerships' property
mortgages as of December 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
Principal Balance at
--------------------
Interest 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 12/01/99
Harborside Financial Center(1) Contingent Obligation(1) 6.764% -- 6,150 11/04/02
1717 Route 208, Fair Lawn Prudential Insurance Co. 8.250% -- 17,586 10/01/03
201 Commerce Drive Sun Life Assurance Co. 6.240% 1,059 1,121 09/01/00
3 & 5 Terri Lane First Union National Bank 6.220% 4,434 4,476 10/31/00
101 & 225 Executive Drive Sun Life Assurance Co. 6.270% 2,375 2,553 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.510% 2,235 2,292 12/31/01
Mack-Cali Willowbrook CIGNA 8.670% 10,250 10,918 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.440% 14,446 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% 26,604 27,696 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.520% 10,784 11,471 10/10/05
Harborside - Plaza I U.S. West Pension Trust 5.610% 51,276 48,148 01/01/06
Harborside - Plaza II and III Northwestern Mutual Life Ins. 7.320% 98,724 101,852 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 $380,390 $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") when the Property Partnership commenced
construction on the acquired site. On November 2, 1999, the Operating
Partnership paid $6,475 to pay 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 November 20, 1997, the Operating Partnership entered into a forward treasury
rate lock agreement with a commercial bank. The agreement locked an interest
rate of 5.88 percent per annum for the interpolated seven-year U.S. Treasury
Note effective March 1, 1998, on a notional amount of $150,000. The agreement
was used to fix the interest rate on the $150,000 Prudential Mortgage Loan. On
March 2, 1998, the Operating Partnership received $2,035 in settlement of the
agreement, which is being amortized to interest expense over the term of the
$150,000 Prudential Mortgage Loan.
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 was used to fix
the Index Rate on $50,000 of the Harborside-Plaza I mortgage, for which the
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"). The Operating Partnership received $2,208 in settlement of
the agreement, which is being amortized to interest expense over the three-year
period.
86
<PAGE>
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.
SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates
for the Operating Partnership's Senior Unsecured Notes, revolving credit
facilities and mortgages and loans payable as of December 31, 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>
2000 $ 3,308 $ 5,419 $ 8,727 6.93%
2001 3,257 181,211 184,468 7.43%
2002 3,458 -- 3,458 8.20%
2003 3,518 192,093 195,611 7.30%
2004 2,332 309,863 312,195 7.34%
Thereafter 970 784,746 785,716 7.20%
- -------------------------------------------------------------------------------------------------------
Totals/Weighted Average $ 16,843 $ 1,473,332 $ 1,490,175 7.27%
=======================================================================================================
</TABLE>
(a) Assumes a weighted average LIBOR rate at December 31, 1999 of 6.53 percent
in calculating revolving credit facility and other variable rate debt
interest rates.
Scheduled principal payments during the years ended December 31, 1999, 1998 and
1997 amounted to $3,222, $5,151 and $412, respectively.
CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the years ended December 31, 1999, 1998 and 1997 was
$91,883, $92,441 and $8,417, respectively. Interest capitalized by the Operating
Partnership for the years ended December 31, 1999, 1998 and 1997 was $6,840,
$3,547 and $820, respectively.
SUMMARY OF INDEBTEDNESS
As of December 31, 1999, the Operating Partnership's total indebtedness of
$1,490,175, (weighted average interest rate of 7.27 percent) was comprised of
$249,204 of revolving credit facility borrowings and other variable rate
mortgage debt (weighted average rate of 7.42 percent) and fixed rate debt of
$1,240,971 (weighted average rate of 7.24 percent).
As of December 31, 1998, the Operating Partnership's total indebtedness of
$1,420,931 (weighted average interest rate of 6.93 percent) was comprised of
$751,804 of revolving credit facility borrowings and other variable rate
mortgage debt (weighted average rate of 6.61 percent), fixed rate debt of
$662,977 (weighted average rate of 7.32 percent) and a Contingent Obligation of
$6,150.
11. 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 Unit Warrants in the
Operating Partnership issued in connection with the Mack Transaction. Subsequent
to August 21, 1998, partners' capital also includes common units held by the
limited partners and 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 12).
87
<PAGE>
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.
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.
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, under the Repurchase
Program, 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 year ended December 31, 1999, the Corporation, under the Repurchase
Program, purchased for constructive retirement, 1,014,500 shares of its
outstanding common stock for an aggregate cost of approximately $27,500.
Concurrent with these purchases, the Corporation sold to the Operating
Partnership 1,014,500 common units for approximately $27,500.
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 year ended December 31, 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.
88
<PAGE>
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.
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, 1998 and 1999 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 December 31, 1999 and 1998, the stock
options outstanding had a weighted average remaining contractual life of
approximately 7.4 and 8.5 years, respectively.
As a result of certain provisions contained in certain of the Corporation's
executive officers' employment agreements, on December 11, 1997, the Mack
Transaction triggered the accelerated vesting of unvested stock options held by
such officers on that date.
Information regarding the Corporation's stock option plans is summarized below:
Weighted
Shares Average
Under Exercise
Options Price
- --------------------------------------------------------------------------------
Outstanding at January 1, 1997 1,528,107 $20.86
Granted 2,126,538 $37.35
Exercised (337,282) $21.33
Lapsed or canceled (30,073) $22.62
- --------------------------------------------------------------------------------
Outstanding at December 31, 1997 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 426,400 $25.23
Exercised (47,583) $22.31
Lapsed or canceled (591,648) $36.92
- --------------------------------------------------------------------------------
Outstanding at December 31, 1999 3,727,151 $31.86
================================================================================
Options exercisable at December 31, 1998 1,334,137 $27.84
Options exercisable at December 31, 1999 1,724,920 $29.78
- --------------------------------------------------------------------------------
Available for grant at December 31, 1998 709,223
Available for grant at December 31, 1999 662,878
- --------------------------------------------------------------------------------
89
<PAGE>
The weighted average fair value of options granted during 1999, 1998 and 1997
were $2.74, $5.59 and $6.66 per option, respectively. The fair value of each
significant option grant is estimated on the date of grant using the
Black-Scholes model. The following weighted average assumptions are included in
the Corporation's fair value calculations of stock options:
1999 1998 1997
- --------------------------------------------------------------------------------
Expected life (in years) 6 6 6
Risk-free interest rate 6.12% 5.41% 5.84%
Volatility 24.72% 23.37% 23.76%
Dividend yield 9.15% 5.78% 5.29%
- --------------------------------------------------------------------------------
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 December 31, 1999 and 1998, there were 914,976 Stock Warrants outstanding.
As of December 31, 1999 and 1998, there were 585,989 and 565,991 Stock Warrants
exercisable, respectively. No Stock Warrants have been exercised or canceled.
The weighted-average fair value of warrants granted during 1997 were $6.27 per
warrant. No warrants were granted in 1999 or 1998. The fair value of each
warrant grant is estimated on the date of grant using the Black-Scholes model.
The following weighted average assumptions are included in the Corporation's
fair value calculation of warrants granted during 1997:
- --------------------------------------------------------------------------------
Expected life (in years) 6
Risk-free interest rate 5.96%
Volatility 22.77%
Dividend yield 5.29%
- --------------------------------------------------------------------------------
FASB No. 123
Under the above models, the value of stock options and warrants granted during
1999, 1998 and 1997 totaled approximately $1,167, $5,281 and $19,750,
respectively, which would be amortized ratably on a pro forma basis over the
appropriate vesting period. Had the Operating Partnership determined
compensation cost for these granted securities in accordance with FASB No. 123,
the Operating Partnership's pro forma net income (loss), basic earnings (loss)
per unit and diluted earnings (loss) per unit would have been $131,243, $1.96
and $1.95 in 1999, $125,964, $1.99 and $1.97 in 1998, and ($2,425), ($0.06) and
($0.06) in 1997, respectively.
STOCK COMPENSATION
In January 1997, the Corporation entered into employment contracts with seven of
its key executives which provided for, among other things, compensation in the
form of stock awards ("Restricted Stock Awards") and Corporation-financed stock
purchase rights ("Stock Purchase Rights"), and associated tax obligation
payments. In connection with the Restricted Stock Awards, the executives were to
receive 199,070 shares of the Corporation's common stock vesting over a
five-year period contingent on the Corporation meeting certain performance
objectives. Additionally, pursuant to the terms of the Stock Purchase Rights,
the Corporation provided fixed rate, non-recourse loans, aggregating $4,750, to
such executives to finance their purchase of 152,000 shares of the Corporation's
common stock, which the Corporation agreed to forgive ratably over five years,
subject to continued employment. Such loans were for amounts equal to the fair
market value of the associated shares at the date of grant. Subsequently, from
April 18, 1997 through April 24, 1997, the Corporation purchased, for
constructive retirement, 152,000 shares of its outstanding common stock for
$4,680. The excess of the purchase price over par value was recorded as a
reduction to additional paid-in capital. Concurrent with this purchase, the
Corporation sold to the Operating Partnership 152,000 common units for $4,680.
90
<PAGE>
The value of the Restricted Stock Awards and the balance of the loans related to
the Stock Purchase Rights at the grant date were recorded as unamortized stock
compensation in stockholders' equity. As a result of provisions contained in
certain of the Corporation's executive officers' employment agreements, which
were triggered by the Mack Transaction on December 11, 1997, the loans provided
by the Corporation under the Stock Purchase Rights were forgiven by the
Corporation, and the vesting and issuance of the restricted stock issued under
the Restricted Stock Awards was accelerated, and related tax obligation payments
were made. As a result, the accelerated cost of $16,788 affecting the stock
compensation described above was included in non-recurring merger-related
charges for the year ended December 31, 1997. With such accelerated vestings,
there was no remaining balance in unamortized stock compensation as of December
31, 1997.
Included in general and administrative expense for the year ended December 31,
1997 was $2,257 relating to the normal cost of Restricted Stock Awards and Stock
Purchase Rights.
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 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.
The Restricted Stock Awards provided to the executive officers were granted
under the Employee Plan.
In addition, on December 6, 1999, the Corporation granted Restricted Stock
Awards, which also provided for associated tax obligation payments, to certain
officers of the Corporation. In connection with the Restricted Stock Awards, the
officers are to receive up to a total of 18,000 shares of the Corporation's
common stock vesting over a five-year period contingent upon the Corporation
meeting certain performance and/or stock price appreciation objectives. The
Restricted Stock Awards provided to the officers were also granted under the
Employee Plan.
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 year ended December 31, 1999, 3,319 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
years ended December 31, 1999, 1998 and 1997 in accordance with FASB No. 128.
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
---- ---- ----
Basic EPU Diluted EPU Basic EPU Diluted EPU Basic EPU Diluted EPU
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 137,128 $ 137,128 $ 132,481 $ 132,481 $ 2,133 $ 2,133
Weighted average units 66,885 67,133 63,438 63,893 43,356 44,409
- -----------------------------------------------------------------------------------------------------------------
Per Unit $ 2.05 $ 2.04 $ 2.09 $ 2.07 $ 0.05 $ 0.05
=================================================================================================================
</TABLE>
91
<PAGE>
The following schedule reconciles the units used in the basic EPU calculation to
the units used in the diluted EPU calculation.
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic EPU Units: 66,885 63,438 43,356
Add: Stock options 241 411 579
Restricted Stock Awards 7 -- 188
Stock Warrants -- 44 33
Redeemable Partnership Units -- -- 253
- ----------------------------------------------------------------------------------------------------------
Diluted EPU Units: 67,133 63,893 44,409
==========================================================================================================
</TABLE>
Preferred Units and Contingent Units (see Note 12) outstanding in 1999, 1998 and
1997 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 1999, the Corporation purchased for
constructive retirement, 1,014,500 shares of its outstanding common stock for
approximately $27,500. Concurrent with these purchases, the Corporation sold an
equivalent number of common units to the Operating Partnership.
12. 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.
92
<PAGE>
The Preferred Units, issued in the Mack Transaction, are convertible into common
units at $34.65 per common unit, which is an amount less than the $39.0625
closing stock price on the date of closing of the Mack Transaction. Accordingly,
the Operating Partnership recorded, on December 11, 1997, the financial value
ascribed to the beneficial conversion feature inherent in the Preferred Units
upon issuance, which totaled $29,361, and was recorded as beneficial conversion
feature in partners' capital. The beneficial conversion feature was amortized in
full as the Preferred Units were immediately convertible upon issuance; such
amortization was included in the Statement of Operations for the year ended
December 31, 1997.
During the year ended December 31, 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 year ended December 31, 1999, 20,952 Series A Preferred Units were
converted into 604,675 common units.
As of December 31, 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 the year ended December 31, 1997, the Operating Partnership issued an
aggregate of 3,408,532 common units in connection with the completion of the RM
Transaction, the Mack Transaction and a single-property acquisition.
During the year ended December 31, 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.
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 the year ended December 31, 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.
93
<PAGE>
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 year ended December 31, 1999, the Operating Partnership redeemed an
aggregate of 1,934,657 common units for an equivalent number of shares of common
stock in the Corporation.
During the year ended December 31, 1999, the Operating Partnership also issued
275,046 common units, valued at approximately $8,141, 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 December 31, 1999, there were 8,153,710 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 the year ended December 31, 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 year ended December 31, 1999, the Operating Partnership
redeemed 275,046 contingent common units and issued an equivalent number of
common units, as indicated above. There were no Contingent Units outstanding as
of December 31, 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.
94
<PAGE>
CHANGES IN REDEEMABLE PARTNERSHIP UNITS
The following table sets forth the changes in redeemable partnership units for
the years presented:
<TABLE>
<CAPTION>
Limited
Preferred Partner Preferred Limited
Units Units Unitholders Partners Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 -- 2,690 $ -- $ 83,052 $ 83,052
Net income -- -- 30,249 728 30,977
Distributions -- -- (888) (7,790) (8,678)
Beneficial conversion feature -- -- (29,361) 2,560 (26,801)
Issuance of units in connection with acquisitions -- 3,408 -- 111,785 111,785
Redemption of units for shares of common stock -- (1) -- (17) (17)
Issuance of Preferred Units 231 -- 236,491 -- 236,491
Adjustment to reflect preferred unitholders' and
limited partners' capital at redemption value -- -- 36,234 59,679 96,003
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 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>
13. MINORITY INTEREST IN CONSOLIDATED PARTIALLY-OWNED PROPERTIES
On December 28, 1999, the Operating Partnership sold an interest in six office
properties located in Parsippany, Morris County, New Jersey for $83,600. Among
other things, the operating agreements provide for a preferred return to the
minority interest members.
The Operating Partnership controls these operations and has consolidated the
financial position and results of operations of the partially-owned properties
in the financial statements of the Operating Partnership. The equity interests
of the other members, if any, are reflected as minority interest in the
consolidated financial statements of the Operating Partnership.
14. 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, subject to certain
limitations imposed by federal law. The amounts contributed by employees are
immediately vested and non-forfeitable. The Corporation, at management's
discretion, may match employee contributions and/or make discretionary
contributions. Total expense recognized by the Operating Partnership for the
years ended December 31, 1999, 1998 and 1997 was $400, $0 and $0, respectively.
95
<PAGE>
15. DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of estimated fair value was determined by management
using available market information and appropriate valuation methodologies.
However, considerable judgement is necessary to interpret market data and
develop estimated fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts the Operating Partnership and the
Property Partnerships could realize on disposition of the financial instruments
at December 31, 1999 and 1998. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Cash equivalents, receivables, accounts payable, and accrued expenses and other
liabilities are carried at amounts which reasonably approximate their fair
values.
The estimated fair value (excluding prepayment penalties) of the Senior
Unsecured Notes and mortgages and loans payable as of December 31, 1999 was
approximately $741,824 and $511,281, respectively, based upon then current
interest rates for debt with similar terms and remaining maturities. The
estimated fair value of the mortgages and loans payable as of December 31, 1998
approximated the carrying value of $749,331. There were no Senior Unsecured
Notes outstanding as of December 31, 1998. Revolving credit facility borrowings
as of December 31, 1999 and 1998 approximated the carrying values of $177,000
and $671,600, respectively.
The estimated amount to be received to settle the Operating Partnership's
interest rate contracts outstanding at December 31, 1998, based on quoted market
prices of comparable contracts, was $339. There were no interest rate contracts
outstanding at December 31, 1999.
Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 1999 and 1998. Although
management is not aware of any factors that would significantly affect the fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since December 31, 1999, and current estimates of
fair value may differ significantly from the amounts presented herein.
16. 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, was $1,267 per annum through May 31, 1999 and is $1,584
per annum through May 31, 2004. Such PILOT totaled $1,459, $1,267 and $1,218
for the years ended December 31, 1999, 1998 and 1997, 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 $2,620,
$2,570 and $2,502 for the years ended December 31, 1999, 1998 and 1997,
respectively.
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<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 December 31, 1999, are as follows:
Year Amount
- ---------------------------------------------------------------------------
2000 $531
2001 531
2002 531
2003 531
2004 534
Thereafter 22,532
- ---------------------------------------------------------------------------
Total $25,190
===========================================================================
Ground lease expense incurred during the years ended December 31, 1999, 1998 and
1997 amounted to $561, $419 and $87, 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. Rizk'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 year ended December 31, 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.
17. 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.
Future minimum rentals to be received under non-cancelable operating leases at
December 31, 1999, are as follows:
Year Amount
2000 $ 457,800
2001 423,657
2002 373,551
2003 310,225
2004 262,393
Thereafter 1,063,658
- -------------------------------------------------------------------------------
Total $2,891,284
===============================================================================
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<PAGE>
18. 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.
Selected results of operations for the years ended December 31, 1999, 1998 and
1997 and selected asset information as of December 31, 1999, 1998 and 1997
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):
1999 $ 534,984 $ 3,903 $ 538,887 (f)
1998 475,096 4,919 480,015 (g)
1997 234,434 7,634 242,068 (h)
Total operating and interest expenses (b):
1999 $ 183,293 $ 113,798 $ 297,091
1998 162,612 100,707 263,319
1997 81,058 49,032 130,090
Net operating income (c):
1999 $ 351,691 $ (109,895) $ 241,796 (f)
1998 312,484 (95,788) 216,696 (g)
1997 153,376 (41,398) 111,978 (h)
Total assets:
1999 $3,576,806 $ 52,795 $3,629,601
1998 3,430,865 21,329 3,452,194
1997 2,583,738 9,706 2,593,444
Total long-lived assets (d):
1999 $3,510,285 $ 30,318 $3,540,603
1998 3,393,313 4,098 3,397,411
1997 2,550,961 2,960 2,553,921
=======================================================================================================================
</TABLE>
(a) Total contract revenues represent 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 represent 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. Amounts presented exclude
depreciation and amortization of $87,209, $78,916 and $36,825 for 1999,
1998 and 1997, respectively, and non-recurring charges of $16,458 and
$46,519 in 1999 and 1997, respectively.
(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 $12,438 of adjustments for straight lining of rents and $159 for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(g) Excludes $13,575 of adjustments for straight lining of rents and $109 for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(h) Excludes $7,733 of adjustments for straight lining of rents.
98
<PAGE>
19. 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.
20. PRO FORMA FINANCIAL INFORMATION (unaudited)
The following pro forma financial information for the year ended December 31,
1998 is presented as if all acquisitions and common stock offerings (if any)
completed in 1998 had occurred on January 1, 1998. In management's opinion, all
adjustments necessary to reflect the effects of these transactions have been
made. As there were no material transactions that occurred in 1999, no pro forma
financial information is presented for the year ended December 31, 1999.
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.
1998
- ---------------------------------------------------------------------------
Total revenues $ 522,661
Operating and other expenses 157,698
General and administrative 26,901
Depreciation and amortization 83,410
Interest expense 102,828
- ---------------------------------------------------------------------------
Income before preferred unit distributions 151,824
Preferred units distributions (16,313)
- ---------------------------------------------------------------------------
Income available to common unitholders $ 135,511
===========================================================================
Basic earnings per common unit $ 2.06
Diluted earnings per common unit $ 2.04
- ---------------------------------------------------------------------------
Basic weighted average units outstanding 65,884
Diluted weighted average units outstanding 66,338
- ---------------------------------------------------------------------------
99
<PAGE>
21. CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited)
The following summarizes the condensed quarterly financial information for the
Operating Partnership:
<TABLE>
<CAPTION>
Quarter Ended 1999 December 31 September 30 June 30 March 31
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $ 140,600 $ 139,020 $ 136,975 $ 134,889
Equity in net income of unconsolidated majority-owned
Property Partnerships -- -- -- --
Operating and other expenses 43,716 42,947 41,466 40,522
General and administrative 6,258 5,691 5,568 7,963
Depreciation and amortization 19,808 22,967 22,465 21,969
Interest expense 27,167 26,474 25,697 23,622
Non-recurring charges -- -- 16,458 --
- ------------------------------------------------------------------------------------------------------------------------------------
Income before gain on sale of rental property and
extraordinary item 43,651 40,941 25,321 40,813
Gain on sale of rental property 1,957 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 45,608 40,941 25,321 40,813
Extraordinary item -- loss on early retirement of debt -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 45,608 $ 40,941 $ 25,321 $ 40,813
====================================================================================================================================
Basic earnings per unit:
Income before extraordinary item $ 0.63 $ 0.55 $ 0.32 $ 0.55
Extraordinary item -- loss on early retirement of debt -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.63 $ 0.55 $ 0.32 $ 0.55
====================================================================================================================================
Diluted earnings per unit:
Income before extraordinary item $ 0.62 $ 0.55 $ 0.32 $ 0.55
Extraordinary item -- loss on early retirement of debt -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.62 $ 0.55 $ 0.32 $ 0.55
====================================================================================================================================
Distributions declared per common unit $ 0.58 $ 0.58 $ 0.55 $ 0.55
====================================================================================================================================
<CAPTION>
Quarter Ended 1998 December 31 September 30 June 30 March 31
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $ 134,941 $ 130,894 $ 122,041 $ 105,823
Equity in net income of unconsolidated majority-owned
Property Partnerships -- -- -- --
Operating and other expenses 41,753 40,746 36,724 31,226
General and administrative 6,555 5,967 6,268 6,037
Depreciation and amortization 22,379 21,213 19,093 16,231
Interest expense 23,896 23,881 21,786 18,480
- ------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 40,358 39,087 38,170 33,849
Extraordinary item - loss on early retirement of debt -- -- (2,670) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 40,358 $ 39,087 $ 35,500 $ 33,849
====================================================================================================================================
Basic earnings per unit:
Income before extraordinary item $ 0.55 $ 0.53 $ 0.53 $ 0.52
Extraordinary item -- loss on early retirement of debt -- -- (0.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.55 $ 0.53 $ 0.49 $ 0.52
====================================================================================================================================
Diluted earnings per unit:
Income before extraordinary item $ 0.55 $ 0.53 $ 0.53 $ 0.51
Extraordinary item -- loss on early retirement of debt -- -- (0.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.55 $ 0.53 $ 0.49 $ 0.51
====================================================================================================================================
Distributions declared per common unit $ 0.55 $ 0.55 $ 0.50 $ 0.50
====================================================================================================================================
</TABLE>
100
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Title
- ------ -------------
3.1 Restated Charter of Mack-Cali Realty Corporation dated June 2, 1999,
together with Articles Supplementary thereto (filed as Exhibit 3.1 to
the Corporation'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 Corporation'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 Corporation'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 Corporation'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).
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).
101
<PAGE>
Exhibit
Number Exhibit Title
- ------ -------------
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).
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 Corporation'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).
102
<PAGE>
Exhibit
Number Exhibit Title
- ------ -------------
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 Corporation'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 Corporation's Form 8-K dated December 11, 1997
and incorporated herein by reference).
10.18 Agreement of Sale and Purchase, dated December 28, 1999, by and
between Mack-Cali Realty, L.P. and Parsippany Office Associates L.L.C.
10.19 Operating Agreement of Parsippany Office Associates L.L.C.
12 Computation of Ratio of Earnings to Fixed Charges
21 Subsidiaries of the Operating Partnership
23 Consent of PricewaterhouseCoopers LLP, independent accountants
27 Financial Data Schedule
103
<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,
its General Partner
Date: March 15, 2000 By: /s/ BARRY LEFKOWITZ
-------------------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
Name Title Date
---- ----- ----
/S/ JOHN J. CALI Chairman of the Board March 15, 2000
- ----------------------------
John J. Cali
/S/ MITCHELL E. HERSH Chief Executive Officer March 15, 2000
- ---------------------------- and Director
Mitchell E. Hersh
/S/ TIMOTHY M. JONES President March 15, 2000
- ----------------------------
Timothy M. Jones
/S/ BARRY LEFKOWITZ Executive Vice President and March 15, 2000
- ---------------------------- Chief Financial Officer
Barry Lefkowitz
/S/ BRANT B. CALI Executive Vice President, March 15, 2000
- ---------------------------- Chief Operating Officer,
Brant B. Cali Assistant Secretary and
Director
/S/ BRENDAN T. BYRNE, ESQ. Director March 15, 2000
- ----------------------------
Brendan T. Byrne, Esq.
/S/ MARTIN D. GRUSS Director March 15, 2000
- ----------------------------
Martin D. Gruss
104
<PAGE>
Name Title Date
---- ----- ----
/S/ NATHAN GANTCHER Director March 15, 2000
- ----------------------------
Nathan Gantcher
/S/ EARLE I. MACK Director March 15, 2000
- ----------------------------
Earle I. Mack
/S/ WILLIAM L. MACK Director March 15, 2000
- ----------------------------
William L. Mack
/S/ ROY J. ZUCKERBERG Director March 15, 2000
- ----------------------------
Roy J. Zuckerberg
/S/ ALAN G. PHILIBOSIAN Director March 15, 2000
- ----------------------------
Alan G. Philibosian
/S/ DR. IRVIN D. REID Director March 15, 2000
- ----------------------------
Dr. Irvin D. Reid
/S/ VINCENT TESE Director March 15, 2000
- ----------------------------
Vincent Tese
/S/ MARTIN S. BERGER Director March 15, 2000
- ----------------------------
Martin S. Berger
105
<PAGE>
MACK-CALI REALTY, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
SCHEDULE III
Gross Amount at Which
Costs Carried at Close of
Initial Costs Capitalized Period (1)
----------------- Subsequent -------------------
Year Related Building and to Building and Accumulated
Property Location (2) Built Acquired Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------------- ----- -------- ------------ ---- ------------ ----------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY...
Egg Harbor
100 Decadon Drive (O)......... 1987 1995 $ -- $300 $3,282 $119 $300 $3,401 $3,701 $351
200 Decadon Drive (O)......... 1991 1995 -- 369 3,241 158 369 3,399 3,768 374
BERGEN COUNTY, NEW JERSEY
Fair Lawn
17-17 Rte 208 North (O)....... 1987 1995 -- 3,067 19,415 441 3,067 19,856 22,923 2,442
Fort Lee
2115 Linwood Avenue (O)....... 1981 1998 -- 474 4,419 3,724 474 8,143 8,617 79
One Bridge Plaza (O).......... 1981 1996 -- 2,439 24,462 1,488 2,439 25,950 28,389 2,112
Little Ferry
200 Riser Road (O)............ 1974 1997 10,500 3,888 15,551 236 3,888 15,787 19,675 802
Montvale
135 Chestnut Ridge Road (O)... 1981 1997 -- 2,587 10,350 85 2,588 10,434 13,022 530
95 Chestnut Ridge Road (O).... 1975 1997 2,135 1,227 4,907 44 1,227 4,951 6,178 252
Paramus
140 Ridgewood Avenue (O)...... 1981 1997 15,392 7,932 31,463 269 7,932 31,732 39,664 1,317
15 East Midland Avenue (O).... 1988 1997 24,790 10,375 41,497 56 10,374 41,554 51,928 2,122
461 From Road (O)............. 1988 1997 35,000 13,194 52,778 81 13,194 52,859 66,053 2,699
61 South Paramus Avenue (O)... 1985 1997 15,776 9,005 36,018 4,046 9,005 40,064 49,069 1,921
650 From Road (O)............. 1978 1997 23,316 10,487 41,949 430 10,487 42,379 52,866 2,149
Rochelle Park
120 Passaic Street (O)........ 1972 1997 -- 1,354 5,415 35 1,357 5,447 6,804 277
365 West Passaic Street (O)... 1976 1997 7,468 4,148 16,592 859 4,148 17,451 21,599 900
Saddle River
1 Lake Street (O)............. 1994 1997 35,789 13,952 55,812 6 13,953 55,817 69,770 2,853
Upper Saddle River
10 Mountainview Road (O)...... 1986 1998 -- 4,240 20,485 911 4,240 21,396 25,636 1,297
Woodcliff Lake
300 Tice Boulevard (O)........ 1991 1996 -- 5,424 29,688 449 5,424 30,137 35,561 2,338
400 Chestnut Ridge Road (O)... 1982 1997 14,446 4,201 16,802 -- 4,201 16,802 21,003 856
470 Chestnut Ridge Road (O)... 1987 1997 4,087 2,346 9,385 2 2,346 9,387 11,733 480
50 Tice Boulevard (O)......... 1984 1994 -- 4,500 -- 26,030 4,500 26,030 30,530 11,338
530 Chestnut Ridge Road (O)... 1986 1997 4,032 1,860 7,441 3 1,860 7,444 9,304 380
BURLINGTON COUNTY, NEW JERSEY
Burlington
3 Terri Lane (F).............. 1991 1998 2,084 652 3,433 904 658 4,331 4,989 258
5 Terri Lane (F).............. 1992 1998 2,350 564 3,792 1,279 569 5,066 5,635 325
Delran
Tenby Chase Apartments (M).... 1970 1994 -- 396 -- 5,370 396 5,370 5,766 3,439
Moorestown
1 Executive Drive (F)......... 1989 1998 -- 226 1,453 118 228 1,569 1,797 100
101 Commerce Drive (F)........ 1988 1998 -- 422 3,528 240 426 3,764 4,190 262
101 Executive Drive (F)....... 1990 1998 1,116 241 2,262 148 244 2,407 2,651 140
102 Executive Drive (F)....... 1990 1998 -- 353 3,607 231 356 3,835 4,191 228
1256 North Church (F)......... 1984 1998 -- 354 3,098 232 356 3,328 3,684 224
1507 Lancer Drive (F)......... 1995 1998 -- 119 1,106 40 120 1,145 1,265 66
1510 Lancer Drive (F)......... 1998 1998 -- 732 2,928 38 735 2,963 3,698 111
201 Commerce Drive (F)........ 1986 1998 1,059 254 1,694 83 258 1,773 2,031 115
102 Commerce Drive (F)........ 1987 1999 -- 389 1,554 -- 389 1,554 1,943 --
202 Commerce Drive (F)........ 1988 1999 -- 490 1,963 -- 490 1,963 2,453 --
2 Commerce Drive (F).......... 1986 1999 -- 723 2,893 -- 723 2,893 3,616 --
224 Strawbridge Drive (O)..... 1984 1997 -- 766 4,335 2,786 766 7,121 7,887 468
</TABLE>
106
<PAGE>
MACK-CALI REALTY, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
SCHEDULE III
Gross Amount at Which
Costs Carried at Close of
Initial Costs Capitalized Period (1)
----------------- Subsequent -------------------
Year Related Building and to Building and Accumulated
Property Location (2) Built Acquired Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------------- ----- -------- ------------ ---- ------------ ----------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
225 Executive Drive (F)....... 1990 1998 1,259 323 2,477 96 326 2,570 2,896 172
228 Strawbridge Drive (O)..... 1984 1997 -- 767 4,334 2,888 766 7,223 7,989 578
30 Twosome Drive (F).......... 1997 1998 -- 234 1,954 45 235 1,998 2,233 139
40 Twosome Drive (F).......... 1996 1998 -- 297 2,393 55 300 2,445 2,745 150
50 Twosome Drive (F).......... 1997 1998 -- 301 2,330 43 304 2,370 2,674 158
Moorestown
840 North Lenola Road (F)..... 1995 1998 -- 329 2,366 45 333 2,407 2,740 155
844 North Lenola Road (F)..... 1995 1998 -- 239 1,714 35 241 1,747 1,988 112
97 Foster Road (F)............ 1982 1998 -- 208 1,382 46 211 1,425 1,636 82
West Deptford
1451 Metropolitan Drive (F)... 1996 1998 -- 203 1,189 23 206 1,209 1,415 81
ESSEX COUNTY, NEW JERSEY
Millburn
150 J.F. Kennedy Parkway (O).. 1980 1997 26,604 12,606 50,425 182 12,606 50,607 63,213 2,580
Roseland
101 Eisenhower Parkway (O).... 1980 1994 -- 228 -- 14,348 228 14,348 14,576 7,887
103 Eisenhower Parkway (O).... 1985 1994 -- -- -- 13,208 2,300 10,908 13,208 4,011
HUDSON COUNTY, NEW JERSEY.....
Jersey City
95 Christopher Columbus Drive. 1989 1994 -- 6,205 -- 81,394 6,205 81,394 87,599 23,922
Harborside Financial Center
Plaza I (O) ................. 1983 1996 51,276 3,923 51,013 -- 3,923 51,013 54,936 4,039
Harborside Financial Center
Plaza II (O) ................ 1990 1996 49,362 17,655 101,546 3,563 18,315 104,449 122,764 8,168
Harborside Financial Center
Plaza III (O) ............... 1990 1996 49,362 17,655 101,878 3,569 18,295 104,807 123,102 8,169
MERCER COUNTY, NEW JERSEY
Hamilton Township
100 Horizon Drive (F)......... 1989 1995 -- 205 1,676 -- 205 1,676 1,881 175
200 Horizon Drive (F)......... 1991 1995 -- 205 3,027 -- 205 3,027 3,232 315
300 Horizon Drive (F)......... 1989 1995 -- 379 4,355 55 379 4,410 4,789 464
500 Horizon Drive (F)......... 1990 1995 -- 379 3,395 100 379 3,495 3,874 412
Zero Horizon Drive (L)........ n/a 1999 -- 498 -- -- 498 -- 498 --
Princeton
5 Vaughn Drive (O)............ 1987 1995 -- 657 9,800 404 657 10,204 10,861 1,179
103 Carnegie Center (O)....... 1984 1996 -- 2,566 7,868 579 2,566 8,447 11,013 924
100 Overlook Center (O)....... 1988 1997 -- 2,378 21,754 143 2,378 21,897 24,275 1,183
MIDDLESEX COUNTY, NEW JERSEY
East Brunswick
377 Summerhill Road (O)....... 1977 1997 -- 649 2,594 149 649 2,743 3,392 138
Plainsboro
500 College Road East (O)..... 1984 1998 -- 614 20,626 261 614 20,887 21,501 915
South Brunswick
3 Independence Way (O)........ 1983 1997 -- 1,997 11,391 102 1,997 11,493 13,490 672
Woodbridge
581 Main Street (O)........... 1991 1997 17,500 3,237 12,949 19,342 8,115 27,413 35,528 1,043
MONMOUTH COUNTY, NEW JERSEY
Neptune
3600 Route 66 (O)............. 1989 1995 -- 1,098 18,146 39 1,098 18,185 19,283 1,900
Wall Township
1305 Campus Parkway (O)....... 1988 1995 -- 335 2,560 67 335 2,627 2,962 315
1320 Wykoff Avenue (F)........ 1986 1995 -- 255 1,285 -- 255 1,285 1,540 134
1324 Wykoff Avenue (F)........ 1987 1995 -- 230 1,439 92 230 1,531 1,761 202
1325 Campus Parkway (F)....... 1988 1995 -- 270 2,928 41 270 2,969 3,239 328
1340 Campus Parkway (F)....... 1992 1995 -- 489 4,621 310 489 4,931 5,420 581
</TABLE>
107
<PAGE>
MACK-CALI REALTY, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
SCHEDULE III
Gross Amount at Which
Costs Carried at Close of
Initial Costs Capitalized Period (1)
----------------- Subsequent -------------------
Year Related Building and to Building and Accumulated
Property Location (2) Built Acquired Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------------- ----- -------- ------------ ---- ------------ ----------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1350 Campus Parkway (O)....... 1990 1995 -- 454 7,134 544 454 7,678 8,132 893
1433 Highway 34 (F)........... 1985 1995 -- 889 4,321 338 889 4,659 5,548 635
1345 Campus Parkway (F)....... 1995 1997 -- 1,023 5,703 55 1,024 5,757 6,781 420
MORRIS COUNTY, NEW JERSEY
Florham Park
325 Columbia Parkway (O)...... 1987 1994 -- 1,564 -- 15,860 1,564 15,860 17,424 6,116
Morris Plains
201 Littleton Road (O)........ 1979 1997 -- 2,407 9,627 100 2,407 9,727 12,134 495
250 Johnson Road (O).......... 1977 1997 2,235 2,004 8,016 221 2,004 8,237 10,241 415
Morris Township
340 Mt. Kemble Avenue (O)..... 1985 1997 32,178 13,624 54,496 40 13,624 54,536 68,160 2,786
412 Mt. Kemble Avenue (O)..... 1986 1997 40,025 15,737 62,954 32 15,738 62,985 78,723 3,218
Parsippany
2 Dryden Way (O).............. 1990 1998 -- 778 420 13 778 433 1,211 29
2 Hilton Court (O)............ 1991 1998 -- 1,971 32,007 115 1,971 32,122 34,093 1,545
600 Parsippany Road (O)....... 1978 1994 -- 1,257 5,594 614 1,257 6,208 7,465 870
7 Campus Drive (O)............ 1982 1998 -- 1,932 27,788 107 1,932 27,895 29,827 1,314
7 Sylvan Way (O).............. 1987 1998 -- 2,084 26,083 35 2,084 26,118 28,202 1,269
8 Campus Drive (O)............ 1987 1998 -- 1,865 35,456 690 1,865 36,146 38,011 1,709
5 Sylvan Way (O).............. 1989 1998 -- 1,160 25,214 346 1,160 25,560 26,720 1,174
1 Sylvan Way (O).............. 1989 1998 -- 1,689 24,699 2,215 1,689 26,914 28,603 1,462
PASSAIC COUNTY, NEW JERSEY
Clifton
777 Passaic Avenue (O)........ 1983 1994 -- -- -- 7,181 1,100 6,081 7,181 2,654
Totowa
11 Commerce Way (F)........... 1989 1995 -- 586 2,986 232 586 3,218 3,804 327
120 Commerce Way (F).......... 1994 1995 -- 228 -- 1,200 228 1,200 1,428 127
140 Commerce Way (F).......... 1994 1995 -- 229 -- 1,200 229 1,200 1,429 128
2 Center Court (F)............ 1998 1998 -- 191 -- 2,563 191 2,563 2,754 161
20 Commerce Way (F)........... 1992 1995 -- 516 3,108 26 516 3,134 3,650 326
29 Commerce Way (F)........... 1990 1995 -- 586 3,092 229 586 3,321 3,907 434
40 Commerce Way (F)........... 1987 1995 -- 516 3,260 375 516 3,635 4,151 515
45 Commerce Way (F)........... 1992 1995 -- 536 3,379 137 536 3,516 4,052 434
60 Commerce Way (F)........... 1988 1995 -- 526 3,257 261 526 3,518 4,044 469
80 Commerce Way (F)........... 1996 1996 -- 227 -- 1,631 227 1,631 1,858 317
100 Commerce Way (F).......... 1996 1996 -- 226 -- 1,631 226 1,631 1,857 317
999 Riverview Drive (O)....... 1988 1995 -- 476 6,024 416 476 6,440 6,916 687
1 Center Court (F)............ 1999 1999 -- 270 1,824 87 270 1,911 2,181 38
Wayne
201 Willowbrook Boulevard (O). 1970 1997 10,250 3,103 12,410 475 3,103 12,885 15,988 647
SOMERSET COUNTY, NEW JERSEY
Basking Ridge
222 Mt. Airy Road (O)......... 1986 1996 -- 775 3,636 31 775 3,667 4,442 312
233 Mt. Airy Road (O)......... 1987 1996 -- 1,034 5,033 16 1,034 5,049 6,083 431
Bridgewater
721 Route 202/206 (O)......... 1989 1997 23,000 6,730 26,919 205 6,730 27,124 33,854 1,379
</TABLE>
108
<PAGE>
MACK-CALI REALTY, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
SCHEDULE III
Gross Amount at Which
Costs Carried at Close of
Initial Costs Capitalized Period (1)
----------------- Subsequent -------------------
Year Related Building and to Building and Accumulated
Property Location (2) Built Acquired Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------------- ----- -------- ------------ ---- ------------ ----------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UNION COUNTY, NEW JERSEY
Clark
100 Walnut Avenue (O)......... 1985 1994 -- -- -- 17,658 1,822 15,836 17,658 7,045
Cranford
11 Commerce Drive (O)......... 1981 1994 -- 470 -- 6,230 470 6,230 6,700 3,220
12 Commerce Drive (O)......... 1967 1997 -- 887 3,549 151 887 3,700 4,587 183
20 Commerce Drive (O)......... 1990 1994 -- 2,346 -- 22,154 2,346 22,154 24,500 6,484
6 Commerce Drive (O).......... 1973 1994 -- 250 -- 2,732 250 2,732 2,982 1,623
65 Jackson Drive (O).......... 1984 1994 -- 541 -- 7,015 542 7,014 7,556 3,352
New Providence
890 Mountain Road (O)......... 1977 1997 -- 2,796 11,185 4,224 3,764 14,441 18,205 722
DUTCHESS COUNTY, NEW YORK
Fishkill
300 South Lake Drive (O)...... 1987 1997 -- 2,258 9,031 120 2,258 9,151 11,409 478
NASSAU COUNTY, NEW YORK
North Hempstead
111 East Shore Road (O)....... 1980 1997 -- 2,093 8,370 218 2,093 8,588 10,681 439
600 Community Drive (O)....... 1983 1997 -- 11,018 44,070 180 11,018 44,250 55,268 2,296
ROCKLAND COUNTY, NEW YORK
Suffern
400 Rella Boulevard (O)....... 1988 1995 -- 1,090 13,412 1,302 1,090 14,714 15,804 1,801
WESTCHESTER COUNTY, NEW YORK
Elmsford
1 Warehouse Lane (I).......... 1957 1997 -- 3 268 190 3 458 461 24
1 Westchester Plaza (F)....... 1967 1997 -- 199 2,023 31 199 2,054 2,253 154
100 Clearbrook Road (O)....... 1975 1997 -- 220 5,366 445 220 5,811 6,031 454
101 Executive Boulevard (O)... 1971 1997 -- 267 5,838 132 267 5,970 6,237 446
11 Clearbrook Road (F)........ 1974 1997 -- 149 2,159 5 149 2,164 2,313 160
150 Clearbrook Road (F)....... 1975 1997 -- 497 7,030 81 497 7,111 7,608 529
175 Clearbrook Road (F)....... 1973 1997 -- 655 7,473 280 655 7,753 8,408 600
2 Warehouse Lane (I).......... 1957 1997 -- 4 672 26 4 698 702 51
2 Westchester Plaza (F)....... 1968 1997 -- 234 2,726 -- 234 2,726 2,960 199
200 Clearbrook Road (F)....... 1974 1997 -- 579 6,620 488 579 7,108 7,687 518
250 Clearbrook Road (F)....... 1973 1997 -- 867 8,647 442 867 9,089 9,956 647
3 Warehouse Lane (I).......... 1957 1997 -- 21 1,948 166 21 2,114 2,135 150
3 Westchester Plaza (F)....... 1969 1997 -- 655 7,936 -- 655 7,936 8,591 579
300 Executive Boulevard (F)... 1970 1997 -- 460 3,609 -- 460 3,609 4,069 263
350 Executive Boulevard (F)... 1970 1997 -- 100 1,793 -- 100 1,793 1,893 131
399 Executive Boulevard (F)... 1962 1997 -- 531 7,191 105 531 7,296 7,827 534
4 Warehouse Lane (I)......... 1957 1997 -- 84 13,393 185 85 13,577 13,662 999
4 Westchester Plaza (F)....... 1969 1997 -- 320 3,729 70 320 3,799 4,119 292
400 Executive Boulevard (F)... 1970 1997 -- 2,202 1,846 273 2,202 2,119 4,321 172
5 Warehouse Lane (I).......... 1957 1997 -- 19 4,804 204 19 5,008 5,027 357
5 Westchester Plaza (F)....... 1969 1997 -- 118 1,949 -- 118 1,949 2,067 142
50 Executive Boulevard (F).... 1969 1997 -- 237 2,617 -- 237 2,617 2,854 191
500 Executive Boulevard (F)... 1970 1997 -- 258 4,183 272 258 4,455 4,713 314
525 Executive Boulevard (F)... 1972 1997 -- 345 5,499 30 345 5,529 5,874 410
570 Taxter Road (O)........... 1972 1997 -- 438 6,078 198 438 6,276 6,714 461
6 Warehouse Lane (I).......... 1982 1997 -- 10 4,419 25 10 4,444 4,454 323
6 Westchester Plaza (F)....... 1968 1997 -- 164 1,998 133 164 2,131 2,295 157
7 Westchester Plaza (F)....... 1972 1997 -- 286 4,321 24 286 4,345 4,631 322
700 Executive Boulevard (L)... n/a 1997 -- 970 -- -- 970 -- 970 --
75 Clearbrook Road (F)........ 1990 1997 -- 2,314 4,716 -- 2,314 4,716 7,030 344
77 Executive Boulevard (F).... 1977 1997 -- 34 1,104 6 34 1,110 1,144 82
</TABLE>
109
<PAGE>
MACK-CALI REALTY, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
SCHEDULE III
Gross Amount at Which
Costs Carried at Close of
Initial Costs Capitalized Period (1)
----------------- Subsequent -------------------
Year Related Building and to Building and Accumulated
Property Location (2) Built Acquired Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------------- ----- -------- ------------ ---- ------------ ----------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8 Westchester Plaza (F)....... 1971 1997 -- 447 5,262 546 447 5,808 6,255 523
85 Executive Boulevard (F).... 1968 1997 -- 155 2,507 19 155 2,526 2,681 185
Hawthorne
1 Skyline Drive (O)........... 1980 1997 -- 66 1,711 35 66 1,746 1,812 126
10 Skyline Drive (F).......... 1985 1997 -- 134 2,799 78 134 2,877 3,011 228
11 Skyline Drive (F).......... 1989 1997 -- -- 4,788 66 -- 4,854 4,854 370
12 Skyline Drive (F).......... 1999 1999 -- 1,562 3,254 1,573 1,562 4,827 6,389 33
15 Skyline Drive (F).......... 1989 1997 -- -- 7,449 349 -- 7,798 7,798 701
17 Skyline Drive (O).......... 1989 1997 -- -- 7,269 136 -- 7,405 7,405 533
2 Skyline Drive (O)........... 1987 1997 -- 109 3,128 254 109 3,382 3,491 258
200 Saw Mill River Road (F)... 1965 1997 -- 353 3,353 125 353 3,478 3,831 263
30 Saw Mill River Road (O).... 1982 1997 -- 2,355 34,254 3,634 2,356 37,887 40,243 3,458
4 Skyline Drive (F)........... 1987 1997 -- 363 7,513 389 363 7,902 8,265 733
7 Skyline Drive (O)........... 1987 1998 -- 330 13,013 35 330 13,048 13,378 435
8 Skyline Drive (F)........... 1985 1997 -- 212 4,410 792 212 5,202 5,414 357
Tarrytown
200 White Plains Road (O)..... 1982 1997 -- 378 8,367 606 378 8,973 9,351 796
220 White Plains Road (O)..... 1984 1997 -- 367 8,112 352 367 8,464 8,831 645
230 White Plains Road (R)..... 1984 1997 -- 124 1,845 -- 124 1,845 1,969 134
White Plains
1 Barker Avenue (O)........... 1975 1997 -- 208 9,629 426 207 10,056 10,263 739
1 Water Street (O)............ 1979 1997 -- 211 5,382 262 211 5,644 5,855 406
11 Martine Avenue (O)......... 1987 1997 -- 127 26,833 2,870 127 29,703 29,830 2,091
25 Martine Avenue (M)......... 1987 1997 -- 120 11,366 250 120 11,616 11,736 839
3 Barker Avenue (O)........... 1983 1997 -- 122 7,864 432 122 8,296 8,418 638
50 Main Street (O)............ 1985 1997 -- 564 48,105 1,946 564 50,051 50,615 3,865
Yonkers
1 Enterprise Boulevard (L).... n/a 1997 -- 1,380 -- -- 1,380 -- 1,380 --
1 Executive Boulevard (O)..... 1982 1997 -- 1,104 11,904 573 1,105 12,476 13,581 989
1 Odell Plaza (F)............. 1980 1997 -- 1,206 6,815 235 1,206 7,050 8,256 512
100 Corporate Boulevard (F)... 1987 1997 -- 602 9,910 349 602 10,259 10,861 740
2 Executive Plaza (R)......... 1986 1997 -- 89 2,439 -- 89 2,439 2,528 178
200 Corporate Boulevard
South (F) .................. 1990 1997 -- 502 7,575 63 502 7,638 8,140 492
3 Executive Plaza (O)......... 1987 1997 -- 385 6,256 307 385 6,563 6,948 461
4 Executive Plaza (F)......... 1986 1997 -- 584 6,134 284 584 6,418 7,002 521
5 Odell Plaza (F)............. 1983 1997 -- 331 2,988 29 331 3,017 3,348 218
6 Executive Plaza (F)......... 1987 1997 -- 546 7,246 28 546 7,274 7,820 531
7 Odell Plaza (F)............. 1984 1997 -- 419 4,418 86 419 4,504 4,923 364
CHESTER COUNTY, PENNSYLVANIA
Berwyn
1000 Westlakes Drive (O)...... 1989 1997 -- 619 9,016 101 619 9,117 9,736 654
1055 Westlakes Drive (O)...... 1990 1997 -- 1,951 19,046 206 1,951 19,252 21,203 1,386
1205 Westlakes Drive (O)...... 1988 1997 -- 1,323 20,098 393 1,323 20,491 21,814 1,546
1235 Westlakes Drive (O)...... 1986 1997 -- 1,417 21,215 545 1,418 21,759 23,177 1,543
DELAWARE COUNTY, PENNSYLVANIA
Lester
100 Stevens Drive (O)......... 1986 1996 -- 1,349 10,018 161 1,349 10,179 11,528 763
200 Stevens Drive (O)......... 1987 1996 -- 1,644 20,186 335 1,644 20,521 22,165 1,532
300 Stevens Drive (O)......... 1992 1996 -- 491 9,490 358 491 9,848 10,339 718
Media
1400 Providence Rd -
Center I (O) ............... 1986 1996 -- 1,042 9,054 644 1,042 9,698 10,740 925
1400 Providence Rd -
Center II(O) ............... 1990 1996 -- 1,543 16,464 895 1,544 17,358 18,902 1,742
</TABLE>
110
<PAGE>
MACK-CALI REALTY, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
SCHEDULE III
Gross Amount at Which
Costs Carried at Close of
Initial Costs Capitalized Period (1)
----------------- Subsequent -------------------
Year Related Building and to Building and Accumulated
Property Location (2) Built Acquired Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------------- ----- -------- ------------ ---- ------------ ----------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTGOMERY COUNTY, PENNSYLVANIA
Lower Providence
1000 Madison Avenue (O)....... 1990 1997 -- 1,713 12,559 130 1,714 12,688 14,402 733
Plymouth Meeting
Five Sentry East (O).......... 1984 1996 -- 642 7,992 464 642 8,456 9,098 659
Five Sentry West (O).......... 1984 1996 -- 268 3,334 51 268 3,385 3,653 269
1150 Plymouth Meeting Mall (O) 1970 1997 -- 125 499 20,463 125 20,962 21,087 934
FAIRFIELD COUNTY, CONNECTICUT
Greenwich
500 West Putnam Avenue (O).... 1973 1998 10,784 3,300 16,734 540 3,300 17,274 20,574 926
Norwalk
40 Richards Avenue (O)........ 1985 1998 -- 1,087 18,399 1,077 1,087 19,476 20,563 647
Shelton
1000 Bridgeport Avenue (O).... 1986 1997 -- 773 14,934 159 773 15,093 15,866 997
Stamford
419 West Avenue (F)........... 1986 1997 -- 4,538 9,246 39 4,538 9,285 13,823 679
500 West Avenue (F)........... 1988 1997 -- 415 1,679 62 415 1,741 2,156 127
550 West Avenue (F)........... 1990 1997 -- 1,975 3,856 322 1,975 4,178 6,153 334
600 West Avenue (F)........... 1999 1999 -- 2,305 2,863 261 2,305 3,124 5,429 7
650 West Avenue (F)........... 1998 1998 -- 1,328 -- 3,787 1,328 3,787 5,115 211
DISTRICT OF COLUMBIA
Washington
1400 L Street, NW (O)......... 1987 1998 -- 13,054 27,423 416 13,054 27,839 40,893 1,138
1709 New York Avenue, NW (O).. 1972 1998 -- 19,898 29,686 1,291 19,898 30,977 50,875 1,229
1201 Connecticut Avenue, NW (O) 1940 1999 -- 14,228 18,571 65 14,228 18,636 32,864 193
PRINCE GEORGE'S COUNTY, MARYLAND
Lanham
4200 Parliament Place (O)..... 1989 1998 -- 2,114 13,546 461 1,393 14,728 16,121 514
BEXAR COUNTY, TEXAS
San Antonio
111 Soledad (O)............... 1918 1997 -- 2,004 8,017 322 2,004 8,339 10,343 423
1777 N.E. Loop 410 (O)........ 1986 1997 -- 3,119 12,477 817 3,119 13,294 16,413 738
84 N.E. Loop 410 (O).......... 1971 1997 -- 2,295 10,382 289 2,296 10,670 12,966 538
200 Concord Plaza Drive (O)... 1986 1997 -- 2,387 31,825 556 2,393 32,375 34,768 1,649
COLLIN COUNTY, TEXAS
Plano
555 Republic Place (O)........ 1986 1997 -- 942 3,767 56 942 3,823 4,765 200
DALLAS COUNTY, TEXAS
Dallas
3030 LBJ Freeway (O).......... 1984 1997 -- 6,098 24,366 937 6,098 25,303 31,401 1,443
3100 Monticello (O)........... 1984 1997 -- 1,940 7,762 4,594 2,511 11,785 14,296 563
8214 Westchester (O).......... 1983 1997 -- 1,705 6,819 200 1,705 7,019 8,724 358
Irving
2300 Valley View (O).......... 1985 1997 -- 1,913 7,651 325 1,913 7,976 9,889 443
Richardson
1122 Alma Road (O)............ 1977 1997 -- 754 3,015 169 754 3,184 3,938 161
HARRIS COUNTY, TEXAS
Houston
10497 Town & Country Way (O).. 1981 1997 -- 1,619 6,476 418 1,619 6,894 8,513 372
</TABLE>
111
<PAGE>
MACK-CALI REALTY, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1999
(dollars in thousands)
<TABLE>
<CAPTION>
SCHEDULE III
Gross Amount at Which
Costs Carried at Close of
Initial Costs Capitalized Period (1)
----------------- Subsequent -------------------
Year Related Building and to Building and Accumulated
Property Location (2) Built Acquired Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------------- ----- -------- ------------ ---- ------------ ----------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
14511 Falling Creek (O)....... 1982 1997 -- 434 1,738 223 434 1,961 2,395 100
1717 St. James Place (O)...... 1975 1997 -- 909 3,636 155 909 3,791 4,700 227
1770 St. James Place (O)...... 1973 1997 -- 730 2,920 289 730 3,209 3,939 190
5225 Katy Freeway (O)......... 1983 1997 -- 1,403 5,610 695 1,403 6,305 7,708 321
5300 Memorial (O)............. 1982 1997 -- 1,283 7,269 103 1,710 6,945 8,655 355
POTTER COUNTY, TEXAS
Amarillo
6900 IH - 40 West (O)......... 1986 1997 -- 287 1,147 256 287 1,403 1,690 66
TARRANT COUNTY, TEXAS
Euless
150 West Park Way (O)......... 1984 1997 -- 852 3,410 78 852 3,488 4,340 192
TRAVIS COUNTY, TEXAS
Austin
1250 Capital of Texas Hwy.
South (O) .................. 1985 1998 -- 4,121 32,935 401 4,121 33,336 37,457 1,620
MARICOPA COUNTY, ARIZONA
Glendale
5551 West Talavi Boulevard (O) 1991 1997 6,717 2,732 10,927 5,743 3,593 15,809 19,402 731
Phoenix
19640 North 31st Street (O)... 1990 1997 7,112 3,437 13,747 4 3,437 13,751 17,188 703
Scottsdale
9060 E. Via Linda Boulevard (O) 1984 1997 -- 3,720 14,879 -- 3,720 14,879 18,599 760
ARAPAHOE COUNTY, COLORADO
Aurora
750 South Richfield Street (O) 1997 1998 -- 2,680 23,125 27 2,682 23,150 25,832 1,022
Denver
400 South Colorado Boulevard 1983 1998 -- 1,461 10,620 402 1,461 11,022 12,483 458
Englewood
5350 South Roslyn Street (O).. 1982 1998 -- 862 6,831 129 862 6,960 7,822 346
9359 East Nichols Avenue (O).. 1997 1998 -- 1,155 8,171 (444) 1,155 7,727 8,882 358
BOULDER COUNTY, COLORADO
Broomfield
105 South Technology
Court (O) .................. 1997 1998 -- 653 4,936 14 653 4,950 5,603 225
303 South Technology
Court-A (O) ................ 1997 1998 -- 623 3,892 4 623 3,896 4,519 195
303 South Technology
Court-B (O) ................ 1997 1998 -- 623 3,892 5 623 3,897 4,520 196
Louisville
1172 Century Drive (O)........ 1996 1998 -- 707 4,647 37 707 4,684 5,391 238
248 Centennial Parkway (O).... 1996 1998 -- 708 4,647 37 708 4,684 5,392 239
285 Century Place (O)......... 1997 1998 -- 889 10,133 13 891 10,144 11,035 430
DENVER COUNTY, COLORADO
Denver
3600 South Yosemite (O)....... 1974 1998 -- 556 12,980 27 556 13,007 13,563 550
DOUGLAS COUNTY, COLORADO
Englewood
384 Inverness Drive South (O). 1985 1998 -- 703 5,653 150 703 5,803 6,506 277
400 Inverness Drive (O)....... 1997 1998 -- 1,584 19,878 (895) 1,584 18,983 20,567 848
5975 South Quebec Street (O).. 1996 1998 -- 855 11,551 201 856 11,751 12,607 548
67 Inverness Drive East (O)... 1996 1998 -- 1,034 5,516 10 1,035 5,525 6,560 276
Parker
9777 Pyramid Court (O)........ 1995 1998 -- 1,304 13,189 26 1,306 13,213 14,519 650
</TABLE>
112
<PAGE>
MACK-CALI REALTY, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1999
(dollars in thousands)
SCHEDULE III
<TABLE>
<CAPTION>
Costs
Initial Costs Capitalized
-------------------- Subsequent
Year Related Building and to
Property Location (2) Built Acquired Encumbrances Land Improvements Acquisition
- --------------------- ----- -------- ------------ ---- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
EL PASO COUNTY, COLORADO
Colorado Springs
1975 Research Parkway (O)..... 1997 1998 -- 1,397 13,221 2,455
2375 Telstar Drive (O)........ 1998 1999 -- 348 2,507 2,791
8415 Explorer (O)............. 1998 1999 -- 347 2,507 2,790
JEFFERSON COUNTY, COLORADO
Lakewood
141 Union Boulevard (O)....... 1985 1998 -- 774 6,891 403
SAN FRANCISCO COUNTY, CALIFORNIA
San Francisco
760 Market Street (O)......... 1908 1997 -- 5,588 22,352 38,306
795 Folsom Street (O)......... 1977 1999 -- 9,348 24,934 3,836
HILLSBOROUGH COUNTY, FLORIDA
Tampa
501 Kennedy Boulevard (O)..... 1982 1997 -- 3,959 15,837 394
POLK COUNTY, IOWA
West Des Moines
2600 Westown Parkway (O)...... 1988 1997 -- 1,708 6,833 181
DOUGLAS COUNTY, NEBRASKA
Omaha
210 South 16th Street (O)..... 1894 1997 -- 2,559 10,236 110
Projects Under Development.... -- 49,831 -- 50,542
Furniture, Fixtures & Equipment -- -- -- 6,160
- -----------------------------------------------------------------------------------------------------------
TOTALS $527,004 $527,383 $2,655,585 $471,877
===========================================================================================================
<CAPTION>
Gross Amount at Which
Carried at Close of
Period (1)
----------------------------
Building and Accumulated
Property Location (2) Land Improvements Total Depreciation
- --------------------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C>
EL PASO COUNTY, COLORADO
Colorado Springs
1975 Research Parkway (O)..... 1,611 15,462 17,073 630
2375 Telstar Drive (O)........ 348 5,298 5,646 58
8415 Explorer (O)............. 347 5,297 5,644 58
JEFFERSON COUNTY, COLORADO
Lakewood
141 Union Boulevard (O)....... 775 7,293 8,068 367
SAN FRANCISCO COUNTY, CALIFORNIA
San Francisco
760 Market Street (O)......... 13,499 52,747 66,246 2,232
795 Folsom Street (O)......... 9,348 28,770 38,118 329
HILLSBOROUGH COUNTY, FLORIDA
Tampa
501 Kennedy Boulevard (O)..... 3,959 16,231 20,190 822
POLK COUNTY, IOWA
West Des Moines
2600 Westown Parkway (O)...... 1,708 7,014 8,722 384
DOUGLAS COUNTY, NEBRASKA
Omaha
210 South 16th Street (O)..... 2,559 10,346 12,905 428
Projects Under Development.... 49,831 50,542 100,373 --
Furniture, Fixtures & Equipment -- 6,160 6,160 1,955
- ---------------------------------------------------------------------------------------
TOTALS $549,096 $3,105,749 $3,654,845 $256,629
=======================================================================================
</TABLE>
(1) The aggregate cost for federal income tax purposes at December 31, 1999
was approximately $2.65 billion.
(2) Legend of Property Codes:
(O)=Office Property (M)=Multi-family Residential Property
(F)=Office/Flex Property (R)=Stand-alone Retail Property
(I)=Industrial/Warehouse Property (L)=Land Lease
113
<PAGE>
MACK-CALI REALTY, L.P.
NOTE TO SCHEDULE III
Changes in rental properties and accumulated depreciation for the periods ended
December 31, 1999, 1998 and 1997 are as follows:
1999 1998 1997
---- ---- ----
Rental Properties
Balance at beginning of year $ 3,467,799 $ 2,629,616 $ 853,352
Additions 204,565 838,183 1,776,264
Retirements/Disposals (17,519) -- --
----------- ----------- -----------
Balance at end of year $ 3,654,845 $ 3,467,799 $ 2,629,616
=========== =========== ===========
Accumulated Depreciation
Balance at beginning of year $ 177,934 $ 103,133 $ 68,610
Depreciation expense 81,730 74,801 34,523
Retirements/Disposals (3,035) -- --
----------- ----------- -----------
Balance at end of year $ 256,629 $ 177,934 $ 103,133
=========== =========== ===========
114
<PAGE>
Exhibit 10.18
EXECUTION COPY
AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE (this "AGREEMENT") made this 28th
day of December, 1999 by and between MACK-CALI REALTY, L.P., a Delaware limited
partnership having an address at c/o Mack-Cali Realty Corporation, 11 Commerce
Drive, Cranford, New Jersey 07016 ("SELLER") and PARSIPPANY OFFICE ASSOCIATES
L.L.C., a New Jersey limited liability company having an address at c/o
Mack-Cali Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016
("PURCHASER").
In consideration of the mutual promises, covenants, and agreements set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. For purposes of this Agreement, the
following capitalized terms have the meanings set forth in this Section 1.1:
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For
purposes of this definition, the term "control" (including the correlative
meanings of the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise; PROVIDED (but without limiting the foregoing) that no
pledge of voting securities of any Person without the current right to exercise
voting rights with respect thereto shall by itself be deemed to constitute
control over such Person; PROVIDED, FURTHER, that Purchaser and the Companies
shall not be deemed to be an Affiliate of Seller or Seller's Affiliates
immediately following the Closing.
"ASSIGNMENT" has the meaning ascribed to such term in Section 10.3(a),
in the form attached hereto as EXHIBIT A.
"AUTHORITIES" means the various governmental and quasi-governmental
bodies or agencies having jurisdiction over the Properties, or any applicable
portion thereof.
<PAGE>
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which national banking associations are authorized or required to close.
"CERTIFICATE AS TO FOREIGN STATUS" has the meaning ascribed to such term
in Section 10.3(g).
"CLOSING" means the consummation of the purchase and sale of the
Membership Interests contemplated by this Agreement, as provided for in Article
X.
"CLOSING DATE" means December 28, 1999.
"CLOSING STATEMENT" has the meaning ascribed to such term in Section
10.4(a).
"CLOSING SURVIVING OBLIGATIONS" means the rights, liabilities and
obligations set forth in Article VIII and 10.4, Articles XII and XVI, and
Sections 18.2, 18.5, 18.7, 18.9, 18.11 and 18.12, and any other provisions which
pursuant to their terms survive the Closing hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANIES" means Mack-Cali Campus Realty L.L.C., a New Jersey limited
liability company, and Mack-Cali Morris Realty L.L.C., a New Jersey limited
liability company.
"DOCUMENTS" has the meaning ascribed to such term in Section 8.1(z).
"EFFECTIVE DATE" means the date first written above.
"ENVIRONMENTAL LAWS" means each and every federal, state, county and
municipal statute, ordinance, rule, regulation, code, order, requirement,
directive, binding written interpretation and binding written policy
pertaining to Hazardous Substances issued by any Authorities and in effect as
of the date of this Agreement with respect to or which otherwise pertain to
or affect the Properties, or any portion thereof, the use, ownership,
occupancy or operation of the Properties, or any portion thereof, or the
Companies, and as same have been amended, modified or supplemented from time
to time prior to the Effective Date, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. SECTIONS 9601 et seq.), the Hazardous Substances Transportation
Act (49 U.S.C. SECTIONS 1802 et seq.), the Resource Conservation and Recovery
Act (42 U.S.C. SECTIONS 6901 et seq.), as amended by the Hazardous and Solid
Wastes Amendments of 1984, the Water Pollution Control Act (33 U.S.C.
SECTIONS 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. SECTIONS 300f
et seq.), the Clean Water Act (33 U.S.C. SECTIONS 1321 et seq.), the Clean
Air Act (42 U.S.C. SECTIONS 7401 et seq.), the Solid Waste Disposal Act (42
U.S.C. SECTIONS 6901 et seq.), the Toxic Substances Control Act (15 U.S.C.
SECTIONS 2601 et seq.), the Emergency Planning and Community Right-to-Know
Act of 1986 (42 U.S.C. SECTIONS 11001 et seq.), the Radon and Indoor Air
Quality Research Act (42 U.S.C. SECTIONS 7401 note, et seq.), the National
Environmental Policy Act (42 U.S.C. SECTIONS 4321 et seq.), the Superfund
Amendment Reauthorization Act of 1986 (42 U.S.C. SECTIONS 9601 et seq.), the
Occupational Safety and Health Act (29 U.S.C. SECTIONS 651 et seq.), the New
Jersey Environmental Rights Act (N.J.S.A. 2A:35A-1 et seq.),
<PAGE>
the New Jersey Spill Compensation and Control Act (N.J.S.A. 58:10-23.11 et
seq.), the New Jersey Air Pollution Control Act (N.J.S.A. 26:2C-1 et seq.), the
Hazardous Substances Discharge: Reports and Notices Act (N.J.S.A. 13:1K-15 et
seq.), the Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq.), the New
Jersey Underground Storage of Hazardous Substances Act (N.J.S.A. 58:10A-21 et
seq.) (collectively, the "ENVIRONMENTAL STATUTES"), and any and all rules and
regulations which have become effective prior to the Effective Date under any
and all of the Environmental Statutes.
"FINANCIAL INFORMATION has the meaning ascribed to such term in Section
8.1(z).
"GOVERNMENTAL REGULATIONS" means all statutes, ordinances (including
without limitation, zoning ordinances), rules and regulations of the Authorities
applicable to Seller or the Companies or the use or operation of the Properties
or any portion thereof.
"HAZARDOUS SUBSTANCES" means (a) asbestos, radon gas and urea
formaldehyde foam insulation, (b) any solid, liquid, gaseous or thermal
contaminant, including smoke vapor, soot, fumes, acids, alkalis, chemicals,
petroleum products or byproducts, PCBs, phosphates, lead or other heavy metals
and chlorine, (c) any solid or liquid waste (including, without limitation,
hazardous waste), hazardous air pollutant, hazardous substance, hazardous
chemical substance and mixture, toxic substance, pollutant, pollution, regulated
substance and contaminant, as such terms are defined in any of the Environmental
Statutes as such Environmental Statutes have been amended and/or supplemented
from time to time prior to the date of this Agreement, and any and all rules and
regulations promulgated under any of the above, and (d) any other chemical,
material or substance, the use or presence of which, or exposure to the use or
presence of which, is prohibited, limited or regulated by any Environmental
Statutes.
"IMPROVEMENTS" means all buildings, structures, fixtures, parking areas
and other improvements located on the Real Properties.
"KNOWLEDGE," "TO ITS KNOWLEDGE," "TO THE BEST OF ITS KNOWLEDGE," "KNOWN
TO IT" means the current actual knowledge of any employee or officer of the
party hereto to which the term applies or of the Companies who have actively and
directly participated in the negotiation and closing of the matters described
herein or who have actively and directly participated in the management or
operation of the Real Properties and who devoted substantive attention
"LEASE SCHEDULES" has the meaning ascribed to such term in Section
8.1(z).
"LEASES" means all of the leases and other agreements with Tenants with
respect to the use and occupancy of the Real Properties, together with all
renewals and modifications thereof, if any, and any new leases entered into
after the Effective Date and prior to the Closing.
"LICENSES AND PERMITS" means, collectively, all of the Companies' right,
title and interest, to the extent assignable, in and to licenses, permits,
certificates of occupancy, approvals, dedications, subdivision maps and
entitlements now or hereafter issued, approved or granted by the Authorities in
connection with the Properties, together with all renewals and modifications
<PAGE>
thereof.
"MANAGEMENT AGREEMENT" means, collectively, that certain Leasing and
Management Agreement (in form and substance satisfactory to both Seller and
SLAB) dated as of the date hereof between each of the Companies and an Affiliate
of Seller for the management of the Properties.
"MEMBERSHIP INTERESTS" means 100% of the membership interests owned by
Seller with respect to the Companies.
"PERSON" means any individual, corporation, limited liability company,
partnership, association, trust or other entity or organization.
"PERSONAL PROPERTY" means all of the Companies' right, title and
interest in and to all equipment, appliances, tools, supplies, machinery,
artwork, furnishings and other tangible personal property attached to,
appurtenant to, located in and used exclusively in connection with the ownership
or operation of the Improvements and situated at the Properties at the time of
Closing.
"PHASE I UPDATE" means an updated Phase I environmental report for the
benefit of the Companies from the environmental consultants who prepared the
existing Phase I environmental report on the Properties.
"PROPERTIES" means the Real Properties, the Improvements and the
Personal Property.
"PURCHASE PRICE" has the meaning ascribed to such term in Section 3.1.
"PURCHASER" means Parsippany Office Associates L.L.C., a New Jersey
limited liability company.
"REAL PROPERTIES" means those certain real properties located at 2
Hilton Court, 7 Campus Drive, 8 Campus Drive, 5 Sylvan Way, 7 Sylvan Way and 2
Dryden Way, all in Parsippany, New Jersey and certain leasehold interests
related thereto, all as more particularly described on the legal description
attached hereto and made a part hereof as EXHIBIT B, together with all of the
Companies' right, title and interest, if any, in and to the appurtenances
pertaining thereto, including but not limited to the Companies' right, title and
interest in and to the adjacent streets, alleys and right-of-ways, and any
easement rights, air rights, subsurface development rights and water rights.
"RENTALS" has the meaning ascribed to such term in Section 10.4(b).
"SERVICE CONTRACTS" means all of the Companies' right, title and
interest, to the extent assignable, in and to all service agreements,
maintenance contracts, equipment leasing agreements, warranties, guarantees,
bonds, open purchase orders and other contracts for the provision of labor,
services, materials or supplies relating solely to the Properties, as listed and
<PAGE>
described on EXHIBIT C attached hereto, together with all renewals, supplements,
amendments and modifications thereof, and any new such agreements entered into
after the Effective Date, all to the extent they survive the Closing.
"SECURITY DEPOSITS" means all security deposits paid to the Companies,
as landlord (together with any interest which has accrued thereon, but only to
the extent such interest has accrued for the account of the Tenant), and not
previously applied to Rental or other charges.
"SELLER" means Mack-Cali Realty, L.P., a Delaware limited partnership.
"SLAB" means SLAB Investments Holding, Inc., a Delaware corporation, a
member of the Purchaser.
"TENANTS" means the tenants or users who are parties to the Leases.
"TITLE ENDORSEMENTS" means the endorsements to the Title Policies
described in Section 10.3(d).
"TITLE POLICIES" means those certain owner's title policies in respect
of the Real Properties listed on EXHIBIT G attached thereto.
SECTION 1.2 REFERENCES: EXHIBITS AND SCHEDULES. Except as
otherwise specifically indicated, all references in this Agreement to Articles
or Sections refer to Articles or Sections of this Agreement, and all references
to Exhibits or Schedules refer to Exhibits or Schedules attached hereto, all of
which Exhibits and Schedules are incorporated into, and made a part of, this
Agreement by reference. The words "herein," "hereof," "hereinafter" and words
and phrases of similar import refer to this Agreement as a whole and not to any
particular Section or Article.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
SECTION 2.1 AGREEMENT. Seller hereby agrees to sell, convey,
transfer and assign to Purchaser, and Purchaser hereby agrees to purchase,
acquire, assume and accept from Seller, on the Closing Date and subject to the
terms and conditions of this Agreement, all of the Membership Interests.
SECTION 2.2 INDIVISIBLE ECONOMIC PACKAGE. Purchaser has no right
to purchase, and Seller has no obligation to sell, less than all of the
Membership Interests, it being the express agreement and understanding of
Purchaser and Seller that, as a material inducement to Seller and Purchaser to
enter into this Agreement, Purchaser has agreed to purchase, and Seller has
agreed to sell, all of the Membership Interests, subject to and in accordance
with the terms and conditions hereof.
<PAGE>
ARTICLE III
PURCHASE PRICE
SECTION 3.1 PURCHASE PRICE. The purchase price for the Membership
Interests (the "PURCHASE PRICE") shall be One Hundred Fifty Two Million and/100
Dollars ($152,000,000) in lawful currency of the United States of America,
payable as provided in Section 3.2.
SECTION 3.2 METHOD OF PAYMENT OF PURCHASE PRICE. On or before
11:00 a.m. Eastern time on the Closing Date, Purchaser shall pay to Seller the
Purchase Price, as adjusted pursuant to the terms of this Agreement, by Federal
Reserve wire transfer of immediately available funds to the account of Seller.
ARTICLE IV
[INTENTIONALLY OMITTED.]
ARTICLE V
[INTENTIONALLY OMITTED.]
ARTICLE VI
[INTENTIONALLY OMITTED.]
ARTICLE VII
[INTENTIONALLY OMITTED.]
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.1 SELLER'S REPRESENTATIONS AND WARRANTIES. The
following constitute the sole representations and warranties of Seller, which
representations and warranties shall be true as of the Effective Date and as of
the Closing Date. Seller represents and warrants to Purchaser the following:
(a) STATUS. Seller is a limited partnership, duly organized and
validly existing under the laws of the State of Delaware with all requisite
power and authority to carry on the business in which it is engaged and to own
the properties it owns. Mack-Cali Campus Realty L.L.C. is a limited liability
company, duly organized and validly existing under the laws of the State of New
Jersey with all
<PAGE>
requisite power and authority to carry on the business in which it is engaged
and to own the properties it owns. Mack-Cali Morris Realty L.L.C. is a limited
liability company, duly organized and validly existing under the laws of the
State of New Jersey with all requisite power and authority to carry on the
business in which it is engaged and to own the properties it owns. Each of the
Companies and Seller is not in violation or breach of its organizational
documents including, without limitation, its Certificate of Formation or LLC
Agreement. Each of Seller and the Companies is duly qualified and licensed to do
business and is in good standing in all jurisdictions where the nature of their
business makes such qualification necessary and has the requisite power and
authority to conduct its business as now being conducted and to own, lease and
sell all of the Properties. Companies possess all franchises, patents,
copyrights, trademarks, trade names, licenses and permits adequate for the
conduct of their businesses substantially as now conducted. Companies do not
have any direct or indirect subsidiaries or any equity interests in any other
entity. Each of Seller and the Companies are not an "investment company," or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended. No election is in effect whereby the
Seller or the Companies are treated as a corporation for tax purposes. Neither
of the Companies owns, nor have they ever owned, any asset or property other
than the Real Properties (and 1 Sylvan Way, Parsippany, New Jersey, in the case
of Mack-Cali Morris Realty LLC which that Company no longer owns or has any
rights or obligations in respect of) and incidental personal property necessary
for the ownership and operation of the Real Properties. The Companies do not now
engage in, nor have they ever engaged in, any business other than that permitted
by their respective LLC operating agreements. The Companies have no obligations,
liabilities or commitments other than those related to the Real Properties and
disclosed to Purchasers. The Companies have not entered into any contract or
agreement with any member, manager, general partner, principal or affiliate of
Seller or any affiliate thereof, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arm's length basis with third parties other than an affiliate. The Companies
have not incurred any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than trade payables or accrued
expenses incurred in the ordinary course of business of operating the Real
Properties. The Companies have not made any loans or advances to any third party
(including any member, manager, general partner, principal or affiliate of
Seller, or any guarantor). The Companies have done or caused to be done all
things necessary to preserve their existence and limited liability company
formalities.
(b) AUTHORITY. This Agreement has been duly executed and
delivered by Seller and the execution and delivery of this Agreement and the
performance of Seller's obligations hereunder have been or will, on or prior to
the Closing, be duly authorized by all necessary action on the part of Seller
and the Companies, and no other procedures on the part of Seller or either of
the Companies are necessary in order to permit them to consummate the
transactions contemplated hereby, and this Agreement constitutes the legal,
valid and binding obligation of Seller. Neither Seller nor the Companies is
required to obtain the consent or any other authorization of a person or entity
in connection with execution and delivery of this Agreement and performance of
its obligations under this Agreement.
(c) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Seller and the consummation by Seller or either of the Companies of
the transactions contemplated hereby will not (i) violate any judgment, order,
statute, writ, injunction, decree, regulation or ruling of any court or
Authority or arbitrator or conflict with, result in a breach of,
<PAGE>
or constitute a default under the organizational documents of Seller or the
Companies, any note or other evidence of indebtedness, any mortgage, deed of
trust or indenture, or any lease or other agreement or instrument to which
Seller or either of the Companies is a party or by which they are bound; (ii)
result in the creation of any lien, charge, claim or encumbrance upon the
Properties by virtue of any of those items set forth in (i) above; or (iii)
require any order, authorization or consent of any Authority or other person or
entity which has not been obtained.
(d) OWNERSHIP OF MEMBERSHIP INTERESTS. The Membership Interest in
each of the Companies is duly authorized, validly issued, fully paid and
nonassessable, and has not been issued in violation of any preemptive or similar
rights. Seller is the owner of record and beneficially of the Membership
Interests, free and clear of all mortgages, pledges, encumbrances, security
interests, charges, agreements or claims of any kind (collectively, "Liens").
There are no authorized or outstanding options, warrants, calls, subscriptions
or rights, commitments or other agreements of any kind to purchase any
membership interest or capital stock of the Companies or to cause the Companies
to issue any membership interest or shares of capital stock or securities
convertible into or exchangeable or exercisable for any membership interest or
capital stock of any Company. There are no agreements or understandings to which
either of the Companies is a party or by which it is bound with respect to the
voting, sale or transfer of its Membership Interest, other than the limited
liability company agreements. Upon delivery of the Membership Interests against
payment thereof in accordance with this Agreement, Purchaser will acquire good
and marketable title to the Membership Interests, free and clear of any and all
Liens. No Person, other than Purchaser, has any right to acquire any of the
Membership Interests. The Membership Interests constitute all of the membership
interests in each of the Companies.
(e) FINANCIAL INFORMATION; LIABILITIES AND OBLIGATIONS. There are
no material inaccuracies or omissions in the Financial Information. Except for
those incurred in the ordinary course of business since the date of the
Financial Information, the Financial Information reflects all liabilities of
each of the Companies, accrued, contingent or otherwise, arising out of
transactions effected or events occurring on or prior to the Effective Date of
this Agreement. As of the Closing, each of the Companies will not be liable upon
or with respect to, or obligated in any other way to provide funds in respect of
or to guarantee or assume in any manner, any debt, obligation, dividend or
distribution of any other Person, and there is no basis for the assertion of any
other claims or liabilities of any nature or in any amount against the
Companies.
(f) ORGANIZATIONAL DOCUMENTS AND RECORDS OF COMPANIES. The copies
of the operating agreement, other organizational documents and the minute books
of the Companies which have been or are delivered to Purchaser hereunder are
true, correct and complete copies thereof.
(g) TAXES. Each of the Companies has duly and timely filed all
income, excise, corporate, franchise, property, sales, payroll, withholding and
other tax returns and reports required to be filed by it as of the date hereof
and has paid or established adequate reserves for all taxes (including penalties
and interest) which have or may become due pursuant to such returns and any
assessments which have been received by it or otherwise. Except as disclosed in
the Financial Information, no tax audit of the Companies is pending or
threatened,
<PAGE>
and the results of any completed audits are properly reflected in the Financial
Information. Neither of the Companies has granted any extension to any taxing
authority of the limitation period during which any tax liability may be
asserted. No transfer taxes are or shall be due as a result of transfer of the
Membership Interests or the transactions contemplated hereunder or related
hereto.
(h) SUITS AND PROCEEDINGS. Except as listed in EXHIBIT D, there
are no:
(i) legal actions, claims, charges, complaints,
petitions, suits or similar proceedings or unsatisfied orders
pending and served, or threatened against the Companies, the
Seller or the Properties which if adversely determined, might
adversely affect the value of the Companies or the Properties,
the continued ownership, occupancy, or operations thereof, or
Seller's ability to consummate the transactions contemplated
hereby;
(ii) pending or threatened grievances or arbitration
proceedings or unsatisfied arbitration awards, or judicial
proceedings or orders respecting awards, relating to any of the
Properties or their ownership, operation or occupancy;
(iii) pending or threatened unfair labor practice orders
or judicial proceedings or orders with respect thereto relating
to any of the Properties or their ownership, operation or
occupancy; or
(iv) any other action, proceeding or investigation
pending or threatened against or involving Seller or either of
the Companies or any of the Properties that might adversely
affect the ownership, operation or occupancy of any of the
Properties or such person so acquiring ownership, operation or
occupancy.
To the best knowledge of Seller and the Companies, there are no facts which, if
known by a potential claimant or Authority, would give rise to a claim or
proceeding which, if asserted or conducted with results unfavorable to Seller,
would have a material adverse effect on the ownership or operation of the
Properties, the financial condition or prospects of the Properties or the
consummation of the transactions contemplated by this Agreement. For the purpose
of this Section 8.1(a) any of the terms set forth in subsections (i) through
(iv) above which are adequately insured against shall not be considered subject
to disclosure hereunder.
(i) NON-FOREIGN ENTITY. Seller is not a "foreign person" or
"foreign corporation" as those terms are defined in the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder.
(j) TENANTS. As of the Closing, the only tenants of the
Properties are the Tenants set forth in the Lease Schedules. The information set
forth on each of the Lease Schedules are accurate and complete as of the date
thereon. The Lease Schedules, attached hereto as EXHIBIT E, accurately and
completely set forth in all material respects for each Lease, the following: the
name of the Tenant, the lease expiration date, extension and renewal provisions,
<PAGE>
the base rent payable and the security deposits held thereunder. Seller and the
Companies are in compliance with all legal requirements relating to such
security deposits. The Documents made available to Purchaser pursuant to Section
8.1(z) hereof include true, correct and complete copies of all of the Leases.
The Leases are in full force and effect. Except as shown on the Lease Schedules,
neither the Companies nor the Tenants are in default of any monetary or, to the
best of Sellers' and the Companies' knowledge, non-monetary obligations under
the Leases. No event or omission has occurred which but for the passing of time
or giving of notice or both would be a monetary or non-monetary default, on the
part of either landlord or tenant under any Lease, and there is no outstanding
defense, counterclaim or offset against the payment of any rent or other amount
payable thereunder or against the performance of any obligation thereunder.
Neither Seller nor the Companies have received notice or has knowledge of any
pending or threatened rent strikes, tenant organizations, tenant unions or
tenant interpleader actions. All work and materials, if any, required to be
performed or furnished, as applicable, prior to the date hereof by landlord
under each of the Leases has been performed and furnished in accordance with the
terms of such Leases and fully paid for. All tenant allowances and concessions
(including all rent-free periods) will be paid for and furnished, as applicable,
by Seller by Closing to the extent required by agreement or otherwise so to be
paid for and furnished, as applicable, by Closing. No commission, compensation
or other amount is now or hereafter shall become payable to any broker or other
agent under any written or oral agreement or understanding with any broker or
other agent in connection with any Leases or renewals thereof, or any other
options thereunder. Each such Lease is a bona fide Lease with a Tenant totally
unrelated to and independent of Seller, the Companies or their Affiliates. To
the best knowledge of Seller and the Companies, there are no circumstances or
events affecting the financial condition of any Tenant or otherwise which might
prevent or seriously hinder such Tenant from fulfilling its obligations under
its Lease. Seller and the Companies have no knowledge of any intention or
indication of intention by any Tenant to terminate its Lease or to limit or
alter its Lease in any material respect. No Tenant under a Lease has paid rent
more than thirty (30) days in advance, and the rents under such Leases have not
been waived, released, or otherwise discharged or compromised. Each Lease
constitutes the legal , valid and binding obligation of the Company constituting
the lessor thereof and is enforceable against the tenant thereof. Each tenant
under the Lease has entered into occupancy of the demised premises. Except as
disclosed to Purchaser in writing, there are no management fees payable by any
Company with respect to the management of the Real Properties. Each Tenant has
accepted and is occupying the entire demised premises. No rent has agreed to be
paid more than one month in advance. Rent has been paid in respect of each Lease
through to the date shown on the Lease Schedules attached. No Tenant has
advanced any funds for or on behalf of Landlord for which it has a right to
deduct or offset from rent. All amendments, supplements and modifications to the
Leases are listed on the Lease Schedule. No Tenant has a purchase option or
right of first refusal on the Real Properties or any part thereof or has any
right to additional space.
(k) SERVICE CONTRACTS. The Service Contracts are legal, valid and
in full force and effect. None of the parties thereto are in default under any
Service Contract. The Documents made available to Purchaser pursuant to Section
5.2 hereof include true, correct and complete copies of all Service Contracts
under which the Companies are currently paying for services rendered in
connection with the Properties. Other than the Leases, the Service Contracts and
the
<PAGE>
Management Agreement, the Companies, as of the Closing, will not be a party
to any other agreements, contracts or commitments.
(l) COMPLIANCE WITH LAWS. Neither Seller nor any of the Companies
has received any written notice of any violations of Governmental Regulations
with respect to the Companies or the Properties. Neither the Companies nor the
Properties are in material violation of any Governmental Regulations and, to the
knowledge of Seller and the Companies, neither the Companies nor the Properties
are in any other violation of Governmental Regulations. The Real Properties and
Improvements do not require any rights over, or restrictions against, other
property in order to comply with any Governmental Regulations.
(m) ZONING. The Improvements and the continuation of the present
location, use, occupancy, operation, maintenance, repair and replacement of the
Real Properties or any part thereof, including the present location, use,
occupancy, operation, maintenance, repair and replacement by the Tenants, comply
in full with all zoning requirements and do not depend on or require to any
extent any further ordinance, variance, special exception or other special
governmental approval for their continuing legality. Without limiting the
foregoing, such Improvements and such location, use, occupancy, operation,
maintenance, repair and replacement are not nonconforming uses in respect of
zoning and other governmental requirements. There is no violation of any
recorded restriction, condition or agreement affecting any of the Real
Properties or, to the best knowledge of Seller and the Companies, of any other
restriction, condition or agreement affecting any of the Real Properties; and
neither Seller nor either Company has received notice of, and to the best
knowledge of Seller and the Companies, there does not exist any violation of,
and continuation of the present locations, uses, occupancies and operations will
not result in a violation of, any building, health, safety, disability,
environmental, pollution control, fire or similar law, ordinance, order,
directive or regulation respecting the Real Properties or any part thereof. To
the best knowledge of Seller and the Companies, all Improvements (including all
roads, parking areas, curbs, curb cuts, sidewalks and sewers and other
utilities) in, on or about the Real Properties have been completed and installed
in accordance with the drawings, plans and specifications approved by the
governmental authorities having jurisdiction or as otherwise required by such
governmental authorities. To the best knowledge of Seller and the Companies, all
impact and other similar fees and charges have been paid and no additional
and/or new impact and other similar fees and charges are pending or
contemplated.
(n) ENVIRONMENTAL LAWS. To the best knowledge of Seller and the
Companies:
1. the Real Properties are and at all times have been in compliance with
all Environmental Laws:
2. no notice, demand, claim or other communication has been given to or
served on Seller or either of the Companies or on previous owners or tenants of
the Real Properties from any entity, governmental body or individual claiming
any violation of any of the Environmental Laws or demanding payment,
contribution, indemnification, remedial action, removal action or
<PAGE>
any other action or inaction with respect to any actual or alleged environmental
damage or injury to persons, property or natural resources, and no basis for any
of the foregoing exists;
3. no above-ground or underground storage tanks, vessels and related
equipment and containers are or ever were located on the Real Properties;
4. the soil, surface water and ground water of, under, on or around the
Real Properties are free from any Hazardous Substance;
5. the Real Properties have never been used for or in connection with
the manufacture, refinement, treatment, storage, generation, transport or
hauling of any Hazardous Substance in excess of levels permitted by applicable
Environmental Laws or the disposal of any such material;
6. no asbestos, asbestos-containing materials or presumed
asbestos-containing materials have been installed, used, incorporated into or
disposed of on the Real Properties;
7. no PCBs are or ever have been located on, in, or used in connection
with the Real Properties; and
8. no investigation, administrative order, administrative order by
consent, consent order, agreement, litigation or settlement is proposed or in
existence or threatened or anticipated, with respect to or arising from the
presence of any Hazardous Substance or the transport of Hazardous Substances
with respect to the Real Properties.
(o) CC&RS. The current use and occupancy of the Real Property and
the Improvements are not in violation of any recorded or unrecorded covenants,
conditions, restrictions, reservations, easements or agreements affecting the
Real Property and the Improvements.
(p) LICENSES AND PERMITS. The Companies possess all licenses,
permits, certificates of occupancy, entitlements, approvals and other
governmental authorizations to own, operate, occupy, use and lease the
Properties. All certificates, permits, licenses, franchises, authorizations and
approvals which are necessary to permit the lawful access, use, occupancy and
operation of the Properties for their present and intended accesses, uses,
occupancies and operations have been duly and validly obtained, are in full
force and effect, and Seller and the Companies have no knowledge of any pending
threat or contemplation of modification, cancellation or non-renewal of any such
certificate, permit, license, franchise, authorization or approval.
(q) TITLE. Each of the Companies is the sole owner of good
insurable and marketable title to such Company's respective Real Properties and
Improvements and Personal Property, free and clear of all liens, mortgages,
deeds of trust and other encumbrances and title defects and claims, charges,
obligations, liabilities or rights in favor of third parties except as otherwise
provided in the Title Policies and the Title Endorsements and Purchaser shall
receive
<PAGE>
such title at Closing. To the best knowledge of Seller and the Companies, all
Personal Property is in good working order and condition. The Real Properties
are free and clear of any mechanics; or materialsmen's liens or liens in the
nature thereof, and no rights are outstanding that under law would give rise to
any such liens, except those which are insured against by the Title Policies and
the Title Endorsements. There are no outstanding options or rights of first
offer or refusal to purchase all or any portion of the Real Properties,
Companies' interests therein or ownership thereof.
(r) HVAC ETC. All water, sewer, electric, heating, ventilating,
air conditioning, drainage facilities, telephone and other utilities required
for ownership, operation or occupancy of the Real Properties or required by
applicable law or currently on, under or at the Real Property or the
Improvements have been installed in accordance with applicable Governmental
Regulations and are in good working order. To the best knowledge of Seller and
the Companies. Said utilities either enter the Real Properties through adjoining
public streets or if they pass through adjoining private land, do so in
accordance with legal, valid and enforceable permanent public or private
easements which will inure to the benefit of Purchaser, its successors and
assigns.
(s) BANKRUPTCY. Neither Seller nor any of the Companies has
received any notice of attachments, executions, assignments for the benefit of
creditors, or voluntary or involuntary proceedings in bankruptcy, or under any
other debtor relief laws involving Seller and/or the Companies, or pending
against Seller and/or the Companies, or threatened against Seller, the Companies
or the Properties, or contemplated by Seller or the Companies.
(t) CONDEMNATION. Neither Seller nor any of the Companies has
received any notice of any pending condemnation action with respect to the
Properties, or any part thereof (including any proceeding for widening, change
of grade or limitation on use of streets abutting the Real Properties) and, to
the best knowledge of Seller and the Companies, no such proceeding has been
threatened or is contemplated by any Authority.
(u) INSURANCE. Neither Seller nor any of the Companies has
received, and neither Seller nor any of the Companies has any other knowledge or
information of, any notice from any insurance company or board of fire
underwriters requesting the performance of any work or alteration with respect
to the Properties, or requiring an increase in the insurance rates applicable to
the Properties. Every policy of insurance relating to any of the Real Properties
has been disclosed to Purchaser in writing and is in full force and effect at
Closing, indicating name of insurer, premium, and coverage.
(v) CONDITION OF REAL PROPERTIES. To the best knowledge of Seller
and the Companies, there has been no damage or loss to any of the Real
Properties by any fire or other casualty, any act of God or any hazard prior to
the date hereof; and there has been no material change (adverse or otherwise) in
the physical condition of the Improvements since the date of Purchaser's
inspection. No improvements on adjoining properties encroach on the Real
Properties.
<PAGE>
(w) LATENT DEFECTS. To the best knowledge of Seller and the
Companies, there are no latent defects in any of the Improvements, and the
structural components, exteriors, electrical, gas, plumbing, water, sewer, air
conditioning, heating, ventilating, exhaust, mechanical, security, disability,
life/safety, communication, telephone, cable and other building systems,
equipment and improvements are in good working order, condition and repair, the
roofs, foundations, structures, doors and windows thereof are free from leaks
and the Improvements are free from termite or other infestation. To the best
knowledge of Seller and the Companies, there are no defects or inadequacies in
the Real Properties or any part thereof which might adversely affect the
insurability of the same or which might cause the imposition of extraordinary
insurance premiums therefor or which might create a hazard or a material
operating deficiency.
(x) TENANT PROPERTY. To the best knowledge of seller and the
Companies, no equipment, fixture or article of personal property owned by
Tenants and removable by them is material to the ownership, operation or
occupancy of any of the Real Properties.
(y) REAL ESTATE TAXES. Complete and accurate copies of the most
recent real estate and personal property tax bills covering the Properties have
been provided by Seller to Purchaser. Neither Seller nor either of the Companies
has received any notice, or has any knowledge of any increase in any of the
factors comprising such tax bills or any other matters which might increase such
taxes above such amount for any subsequent year. Neither Seller nor either of
the Companies has received any assessment or other notice with respect to any
governmental improvements prior to the date hereof for which the Real Properties
can be assessed; and no such governmental improvements are threatened,
contemplated, proposed or planned or in progress. To the best knowledge of
Seller and the Companies, neither of the Companies has received any notice of
any pending, threatened or contemplated assessments. The Real Properties and
Improvements constitute separate tax parcels for purposes of ad valorem
taxation.
(z) DOCUMENT REVIEW. Seller heretofore has provided to Purchaser
for inspection true, accurate and complete copies of all of the following
(collectively, the "DOCUMENTS") with respect to the Properties or the Companies:
all existing environmental, engineering or consulting reports and studies of the
Real Properties (including without limitation, the Phase I Update), real estate
tax bills, together with assessments (special or otherwise), ad valorem and
personal property tax bills, covering the period of the Companies' ownership of
the Properties; the most current lease schedules (the "LEASE SCHEDULES");
current operating statements; the Leases, lease files, Service Contracts, and
Licenses and Permits; the Title Policies and the existing surveys; the
organizational documents, such as the operating agreement and amendments
thereto, the minutes and other similar documents of the Companies; and the most
current financial statements and balance sheets of the Companies (the "FINANCIAL
INFORMATION").
(aa) COPIES AND SCHEDULES. Copies of all the documents listed on
Schedules and Exhibits attached hereto have been delivered to Purchaser. The
copies of all documents delivered by Seller to Purchaser pursuant to the terms
of this Agreement are complete and accurate. The information contained in
attached Schedules is complete and accurate. The representations and warranties
of Seller contained in this Agreement do not omit to state any
<PAGE>
material fact necessary in order to make such representations and warranties not
misleading.
(bb) ISRA COMPLIANCE. The transactions contemplated by this
Agreement and the Real Properties are not subject to the requirements of the
Industrial Site Recovery Act of New Jersey.
(cc) SINGLE-MEMBER LLC. Each of the Companies has been properly
treated as a disregarded entity for income tax purposes.
(dd) 3 SYLVAN WAY. With respect to 3 Sylvan Way, no tenants has
rights to lease or acquire the Real Property known as 5 Sylvan Way.
(ee) COOPERS & LYBRAND. With respect to 5 Sylvan Way, the former
tenant, Coopers & Lybrand and its successors in title and assigns have no rights
of lease, renewal, extension or any others rights relating to the Real Property
known as 5 Sylvan Way.
(ff) ERISA. (i) the Companies are not "employee benefit plans" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a
"governmental plan" within the meaning of Secton 3(3) of ERISA; (ii) the
Companies are not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of the
following circumstances is true with respect to each of the Companies:
(i) Equity interests in the Company are publicly offered
securities, within the meaning of 29 C.F.R. SECTIONS
2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each
outstanding class of equity interests in the Company are held by
"benefit plan investors" within the meaning of 29 C.F.R. SECTIONS
2510.3-101(f)(2); or
(iii) The Company qualifies as an "operating company" or
a "real estate operating company" within the meaning of 29
C.F.R. SECTIONS 2510.3-101(c) or (e) or an investment company
registered under The Investment Company Act of 1940.
SECTION 8.2 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants to Seller the following as of the Effective Date and as
of the Closing Date:
(a) STATUS. Purchaser is a limited liability company duly
organized and validly existing under the laws of the State of New Jersey.
(b) AUTHORITY. The execution and delivery of this Agreement and
the performance of Purchaser's obligations hereunder have been duly authorized
by all necessary action on the part of Purchaser and this Agreement constitutes
the legal, valid and binding obligation of Purchaser.
<PAGE>
(c) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Purchaser and the consummation by Purchaser of the transactions
contemplated hereby will not violate any judgment, order, injunction, decree,
regulation or ruling of any court or Authority or conflict with, result in a
breach of or constitute a default under the organizational documents of
Purchaser, any note or other evidence of indebtedness, any mortgage, deed of
trust or indenture, or any lease or other material agreement or instrument to
which Purchaser is a party or by which it is bound.
(d) CONSENTS. No consent, waiver, approval or authorization is
required from any person or entity (that has not already been obtained) in
connection with the execution and delivery of this Agreement by Purchaser or the
performance by Purchaser of the transactions contemplated hereby.
SECTION 8.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations and warranties of Seller set forth in Section 8.1
will survive the Closing. The Closing Surviving Obligations will survive Closing
without limitation unless a specified period is otherwise provided in this
Agreement. All other representations, warranties, covenants and agreements made
or undertaken by Seller under this Agreement, unless otherwise specifically
provided herein, will not survive the Closing Date but will be merged into the
Assignment and other Closing documents delivered at the Closing.
SECTION 8.4 INDEMNITY.
(a) Seller shall indemnify and hold harmless Purchaser and each
member of Purchaser individually, and its directors, officers, shareholders,
employees, successors, affiliates, trustees, partners, or principals from and
against, any actual damages, loss, cost, liability, damage, expense (including
reasonable attorneys' and other professionals' fees and disbursements), penalty
or fine incurred, but shall exclude any consequential, speculative, punitive or
special damages of Purchaser itself or its affiliates, in connection with or
arising from any breach of representation or warranty made in Section 8.1 above.
For the purposes of determining whether a breach of any representation or
warranty made in Section 8.1 above has occurred and of measuring damages arising
out of breaches of representations and warranties in this Agreement, any
qualifications relating to the 'knowledge' of the Seller and/or the Companies
contained in such representations and warranties shall be ignored.
(b) Seller shall indemnify and hold harmless Purchaser and each
member of Purchaser individually, and its directors, officers, shareholders,
employees, successors, affiliates, trustees, partners, or principals from and
against, any actual loss, cost, liability, damage, expense (including reasonable
attorneys' and other professionals' fees and disbursements), penalty or fine
incurred, but shall exclude any consequential, speculative, punitive or special
damages of Purchaser itself or its affiliates, in connection with or arising
from any claim relating to the Companies and the Real Properties attributable to
the period prior to the Closing.
(c) In the event that during the ownership of the Real Properties
by the Companies and of the Membership Interests by Purchaser, neither Standard
& Poor nor Moody's
<PAGE>
is rating Seller as investment grade and the book value, determined in
accordance with Generally Accepted Accounting Principles of Seller (excluding
goodwill and adding back all accumulated depreciation and amortization) falls
below $1,500,000,000, within thirty (30) days thereof, Seller shall, at Seller's
sole expense, provide to Purchaser:
(i) updated Phase I environmental reports for all of the
Real Properties reasonably satisfactory to Purchaser prepared by
the environmental consultant who prepared the most recent such
reports submitted by Seller to Purchaser prior to Closing; and
(ii) title policies in favor of Purchaser reasonably
satisfactory to Purchaser in the amount of at least $86,000,000
(but in no event less than an amount which would prevent
Purchaser from being a co-insurer) in the aggregate for all of
the Real Properties issued by the title company which issued the
most recent title policies in favor of Seller or other title
companies reasonably acceptable to Purchaser.
(d) If the Seller for any reason fails to comply with
subparagraphs (c)(i) and (ii) above within the above-mentioned thirty (30) day
period, within ten (10) business days from the date of expiration of such
period, Seller shall at the cost of Seller deliver at Seller's sole expense to
Purchaser an irrevocable standby letter of credit in the amount of $86,000,000
to secure Seller's obligations under this Section 8.4. in a form reasonably
acceptable to Purchaser, renewable annually for a period of no less than three
(3) years, and issued by a bank selected by Seller which is rated AA by all
agencies which have jurisdiction to rate the bank, or otherwise reasonably
acceptable to Purchaser. If the selected bank is downgraded below AA after
issuance of the letter of credit, a replacement letter of credit on all of the
same terms set forth herein must be obtained from a AA rated bank as soon as
reasonably possible. If the above-mentioned letter of credit is for any reason
not renewed during the term thereof within 30 days prior to any annual
expiration, the Purchaser shall be able to draw against the letter of credit
prior to its expiration in accordance with its terms.
(e) In the event that all of the Real Properties are sold by the
Companies or that all of the Membership Interests are sold by Purchaser, on or
prior to the closing of the sale of the Real Properties or the Membership
Interests, Seller shall deliver to Purchaser at Seller's sole expense an updated
Phase I environmental report for all of the Real Properties prepared by the
environmental consultant who prepared the most recent such report submitted by
Seller to Purchaser or such other environmental consultants reasonably
acceptable to Purchaser which are dated on or about the time Seller purchased
such Real Properties.
(i) If the above-mentioned updated Phase I environmental
reports for all of the Real Properties show no adverse change
from the most recent such reports submitted to and approved by
Seller prior to Closing, Seller shall have no further obligations
under this Section 8.4(c).
(ii) If the above-mentioned updated Phase I environmental
reports for
<PAGE>
any of the Real Properties show any adverse change from the most
recent such reports submitted to and approved by Seller prior to
Closing and Seller's investment rating falls or Seller is not
rated as set forth in subsection (c) above, within ten (10)
business days from the date of delivery of such reports by
Seller to Purchaser, Seller shall arrange at Seller's sole
expense an indemnity, in form and substance reasonably approved
by Purchaser by a person or entity with a book value determined
in accordance with GAAP (excluding goodwill and adding back
accumulated depreciation and amortization) of $100,000,000, as
verified by Purchaser to its reasonable satisfaction.
This Section 8.4 shall survive the Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING
SECTION 9.1 CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER. The
obligation of Purchaser to consummate the transaction hereunder shall be subject
to the fulfillment at or prior to the Closing of all of the following
conditions, any or all of which may be waived by Purchaser in its sole
discretion:
(a) Seller shall have delivered to Purchaser all of the items
required to be delivered to Purchaser pursuant to the terms of this Agreement,
including but not limited to, those provided for in Section 10.3.
(b) All of the representations and warranties of Seller contained
in this Agreement shall be true and correct in all material respects as of the
date of Closing.
(c) Seller shall have performed and observed, in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by Seller as of the Closing Date.
SECTION 9.2 CONDITIONS PRECEDENT TO OBLIGATION TO SELLER. The
obligation of Seller to consummate the transaction hereunder shall be subject to
the fulfillment on or before the date of Closing of all of the following
conditions, any or all of which may be waived by Seller in it sole discretion:
(a) Seller shall have received the Purchase Price as adjusted
pursuant to, and payable in the manner provided for, in this Agreement.
(b) Purchaser shall have delivered to Seller all of the items
required to be delivered to Seller pursuant to the terms of this Agreement,
including but not limited to, those provided for in Section 10.2.
(c) All of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material respects
as of the date of Closing (with
<PAGE>
appropriate modifications permitted under this Agreement or not materially
adverse to Seller).
(d) Purchaser shall have performed and observed, in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by Purchaser as of the Closing Date.
(e) The Companies and an Affiliate of Seller shall have entered
into the Management Agreement to become effective as of the Closing.
ARTICLE X
CLOSING
SECTION 10.1 CLOSING. The consummation of the transaction
contemplated by this Agreement by delivery of documents and payments of money
shall take place on the Closing Date at the office of Weil, Gotshal & Manges,
767 Fifth Avenue (GM Building), New York, New York, or such other place as the
parties agree. At Closing, the events set forth in this Article X will occur, it
being understood that the performance or tender of performance of all matters
set forth in this Article X are mutually concurrent conditions which may be
waived by the party for whose benefit they are intended. The acceptance of the
Assignment by Purchaser shall be deemed to be full performance and discharge of
each and every agreement and obligation on the part of the Seller to be
performed hereunder unless otherwise specifically provided herein.
SECTION 10.2 PURCHASER'S CLOSING OBLIGATIONS. At the Closing,
Purchaser will deliver the following items to Seller as provided herein:
(a) The Purchase Price, after all adjustments are made as herein
provided, by Federal Reserve wire transfer of immediately available funds, in
accordance with the timing and other requirements of Section 3.2;
(b) A counterpart original of the Assignment, duly executed by
Purchaser;
(c) An original ratification of the Companies' execution and
delivery of the Management Agreement, duly executed by the Purchaser as the new
sole member of the Companies; and
(d) Evidence reasonably satisfactory to Seller that the person
executing the Assignment and the other Closing documents on behalf of Purchaser
has full right, power and authority to do so.
SECTION 10.3 SELLER'S CLOSING OBLIGATIONS. At the Closing, Seller
will deliver to Purchaser the following documents:
(a) A counterpart original of the Assignment, duly executed by
Seller, assigning and transferring to the Purchaser the Membership Interests;
<PAGE>
(b) The original Management Agreements, duly executed by the
Companies and an Affiliate of Seller which will be the manager thereunder;
(c) The Phase I Update;
(d) Title endorsements commonly referred to as the Fairway
Endorsement and the Non-imputation Endorsement (the "TITLE ENDORSEMENTS") to the
Title Policy in a form satisfactory to Purchaser;
(e) Evidence reasonably satisfactory to Purchaser that the person
executing the documents delivered by Seller or its Affiliates pursuant to this
Section 10.3 has full right, power, and authority to do so;
(f) A certificate in the form attached hereto as EXHIBIT F
("CERTIFICATE AS TO FOREIGN STATUS") certifying that Seller is not a "foreign
person" as defined in Section 1445 of the Internal Revenue Code of 1986, as
amended, as well as any form or other document required under applicable laws to
be executed by Seller in connection with any transfer tax applicable to the
transaction contemplated by this Agreement;
(g) All original Leases, to the extent in Seller's or the
Companies' possession, and all original Licenses and Permits and Service
Contracts in Seller's or the Companies' control bearing on the Properties (to be
delivered to the property manager under the Management Agreement);
(h) A certificate, dated as of the date of Closing, stating that
the representations and warranties of Seller contained in Section 8.1 are true
and correct in all material respects as of the Closing Date or identifying any
representation or warranty which is not, or no longer is, true and correct and
explaining the state of facts giving rise to the change. If, despite changes or
other matters described in such certificate, the Closing occurs, Seller's
representations and warranties set forth in this Agreement shall be deemed to
have been modified by all statements made in such certificate;
(i) The Lease Schedules, updated to show any changes and dated as
of no more than five (5) Business Days prior to the Closing Date; and
(j) UCC Search in respect of Seller regarding assignment of
membership interests at Secretary of State's office
(k) UCC Searches for fixtures and Personal Property in respect of
the Companies at state, in county of property location and executive office, if
different, or county of residence if applicable
(l) Litigation searches for the Companies
<PAGE>
(m) Tax Lien searches for the Companies
(n) Amendments of the operating agreements for the Companies to
reflect changes in membership and, in the case of Mack-Cali Morris Realty
L.L.C., removal of reference to 1 Sylvan Way, Parsippany, New Jersey.
(o) FIRPTA requirements (Federal)
(p) Original executed Asset Management Agreement
(q) Approved Budgets for the Companies in form satisfactory to
Purchaser
(r) Certified Service Contracts List in form satisfactory to
Purchaser
(s) Certified Rent Roll in respect of the Real Properties in form
satisfactory to Purchaser
(t) Environmental reliance letter enabling Purchaser to rely on
the Phase I Update in form satisfactory to Purchaser
(u) Real estate tax bills and assessments and evidence of payment
for last three years in form satisfactory to Purchaser
(v) Legal opinion of Seller's counsel in form satisfactory to
Purchaser relating to (i) due authority of the Seller; and enforceability of
this Agreement and the Assignments for transfer of the Membership Interests
contemplated hereby and related hereto;
(w) Tax opinion in form satisfactory to Purchaser
(x) Surveys of the Real Properties
(y) The organizational documents in respect of Seller and the
Companies listed on EXHIBIT H annexed hereto
(z) Documents evidencing transfer of 1 Sylvan way, to a party
other than Purchaser.
(aa) Such other documents as may be reasonably necessary or
appropriate to effect the consummation of the transaction which is the subject
of this Agreement.
(bb) All certificates of occupancy in the possession of the
Companies with respect to the Real Properties.
SECTION 10.4 CLOSING STATEMENT; POST-CLOSING OBLIGATIONS.
<PAGE>
(a) CLOSING STATEMENT. Seller agrees that the Closing Statement
will reflect the following fair and accurate adjustments (as of 11:59 p.m. on
the day preceding the Closing Date):
(i) Seller will receive a credit in the amount of any
cash on hand or in any bank, savings or other deposit accounts
held in the name of or for the benefit of the Companies.
(ii) Seller will receive a credit for any prepaid amounts
for periods after the Closing Date under any agreement or
contracts (including insurance policies) to which the Companies
are a party and which will survive the Closing.
(iii) Seller will receive a credit equal to the value of
fuel stored at the Real Properties, at the Companies' most recent
cost, including taxes, on the basis of a reading made within ten
(10) days prior to the Closing by the Companies' supplier.
(iv) Purchaser will receive a credit in the amount of the
Security Deposits and any prepaid Rents, together with interest
required to be paid thereon.
(v) Purchaser will receive a credit in the amount of the
utility charges payable by the Companies for periods prior to the
Closing Date, including, without limitation, electricity, water
charges and sewer charges, based on the most current information.
(vi) Purchaser will receive a credit equal to the amounts
payable under the Service Contracts for services rendered prior
to the Closing Date.
(vii) Purchaser will receive a credit for any other
amounts payable under any other agreement or contracts (including
insurance policies) relating to the Companies or the Property for
periods prior to the Closing Date and for any other liability
whatsoever of the Companies incurred or arising prior to the
Closing Date.
(viii) Purchaser will receive a credit in the amount of
the real estate taxes due and payable for periods prior to the
Closing Date, based on the most current information.
Within fifteen (15) days following the Closing, Seller will deliver to Purchaser
the Closing Statement. Any amounts shown by the Closing Statement to be due by
any party to the other pursuant to this Section 10.4(a) will be paid within
fifteen (15) days following execution of the Closing Statement by Purchaser and
Seller. Section 10.4 (a) shall survive the Closing.
(b) POST-CLOSING RECEIPT OF RENTAL. All Rentals received by the
Companies
<PAGE>
or the Purchaser on or after the Closing Date shall first be applied by
Purchaser for payment of Rentals owing in respect of periods commencing on or
after the Closing Date then, to the extent any Rentals so received are
remaining, the remainder shall be paid or turned over to Seller to the extent
attributable to any period prior to the Closing Date. "RENTALS" as used herein
includes fixed monthly rentals, additional rentals, percentage rentals,
escalation rentals (which include each Tenant's proportionate share of building
operation and maintenance costs and expenses as provided for under the Lease, to
the extent the same exceeds any expense specified in such Lease), retroactive
rentals, all administrative charges, utility charges, other common area
maintenance charges, real and personal property taxes and assessments, tenant or
real property association dues, storage rentals, special event proceeds,
temporary rents, telephone receipts, locker rentals, vending machine receipts
and other sums, charges, fees or pass-through items payable by Tenants under the
Leases or from other occupants or users of the Properties. The provisions of
this Section 10.4(b) shall survive the Closing indefinitely.
(c) COST OF DUE DILIGENCE ITEMS IN EVENT OF SALE. In the event
that Purchaser sells or refinances the Membership Interests or the Companies
sell or refinance any of the Real Properties to or with any party other than an
affiliate of Seller, Seller shall bear at its sole expense, the cost of the
following due diligence items if required to be provided by Purchaser or any of
the Companies in connection with any such transaction: (i) engineering reports;
(ii) Phase I environmental reports; (iii) appraisal; (iv) title reports,
searches and endorsements; (v) surveys; (vi) certificates of occupancy.
ARTICLE XI
TERMINATION AND REMEDIES
(a) PURCHASER'S TERMINATION. Provided that Purchaser is not then
in material breach of this Agreement, this Agreement shall terminate, upon
receipt by Seller of Purchaser's written notice of termination without further
notice or action by Purchaser, if any condition to Closing contained in Section
10.2 has not been satisfied or waived by Seller in writing by the Closing Date;
(b) SELLER'S TERMINATION. Provided that Seller is not then in
material breach of this Agreement, this Agreement shall terminate, upon receipt
by Purchaser of Seller's written notice of termination without further notice or
action by Seller, if any condition to Closing contained in Section 10.3 has not
been satisfied or waived by Purchaser in writing by the Closing Date;
(c) PURCHASER'S REMEDIES. If Seller materially breaches this
Agreement, Purchaser shall be entitled to pursue the remedy of specific
performance and the return of any deposit (and any interest accrued thereon)
from Seller and Seller shall be liable to Purchaser for such actual costs and
expenses (which shall include, without limitation, reasonable attorneys' fees
and costs) of enforcing the rights of Purchaser under this Agreement. This
Article XI(c) shall survive the Closing.
<PAGE>
(d) SELLER'S REMEDIES. If Purchaser breaches this Agreement,
Seller shall be entitled to pursue all remedies permitted herein and by law,
including, without any limitation, the remedy of specific performance and the
retention of any deposit (and any interest accrued thereon) from Purchaser.
(e) INDEMNIFICATION PROCEDURES.
(i) If Purchaser (the"Indemnitee") becomes aware of any
matter for which it believes it is entitled to indemnification
under Section 8.4, hereof that involves (i) any claim made
against the Indemnitee or (ii) the commencement of any action,
suit, investigation, arbitration, or similar proceeding against
the Indemnitee, the Indemnitee will give Seller (the
"Indemnifying Party") prompt written notice of such claim or
commencement of such action, suit, investigation, arbitration, or
similar proceeding. Such notice will (A) provide (with reasonable
specificity) the basis on which indemnification is being
asserted, (B) set forth the actual or estimated amount of damages
for which indemnification is being asserted, if known, and (C) be
accompanied by copies of all relevant pleadings, demands and
other papers served on the Indemnitee.
(ii) The Indemnifying Party will have a period of 30-days
after the delivery of each notice required by Section 11.2(a)
hereof during which to respond to such notice. If the
Indemnifying Party elects to defend the claim described in such
notice or does not respond within such 30-day period, the
Indemnifying Party will be obligated to compromise or defend (and
will control the defense of) such claim, at is own expense and by
counsel chosen by the Indemnifying Party and reasonably
satisfactory to the Indemnitee. The Indemnitee will cooperate
fully with the Indemnifying Party and counsel for the
Indemnifying Party in the defense against any such claim and the
Indemnitee will have the right to participate at its own expense
in the defense of any such claim. If the Indemnifying party
responds within such 30-day period and elects not to defend such
claim, the Indemnitee will be free to compromise or defend (and
control the defense of) such claim and to pursue such remedies as
may be available to the Indemnitee under applicable law.
(iii) Any compromise or settlement of any claim (whether
defended by the Indemnitee or by Indemnifying Party) will require
the prior written consent of the Indemnitee and the Indemnifying
Party.
(iv) Any reasonable costs or expenses incurred and paid
by the Indemnitee in connection with the exercise of any of its
rights under this Section 10.4 or with respect to a matter for
which it is indemnified under Section 8.4 of this Agreement shall
be paid by the Indemnifying Party on demand and if the
Indemnifying Party fails to pay such amounts demanded within five
(5) days of demand, the amounts demanded will bear interest at
the lower fifteen (15%) per annum or the maximum applicable
lawful rate; PROVIDED, HOWEVER, that the Indemnifying Party's
obligation to pay such costs, expenses and interest shall not
<PAGE>
apply for any period claimed in the event that Indemnifying Party
obtains a final judgement or order that the Indemnitee is not
entitled to indemnification or to payment of costs or expenses
under the provisions of Section 8.4 or 10.4 of this Agreement.
ARTICLE XII
CONFIDENTIALITY
SECTION 12.1 PRESS RELEASES. Before either of Seller or Purchaser
discloses in writing to any third party any of the terms and conditions of this
Agreement (or the transaction contemplated hereby), such party shall provide a
copy of such writing to the other party for its review and comment (but not its
approval). Either Seller or Purchaser may request a meeting to discuss any such
writing. The provisions of this Section 12.1 will survive the Closing.
ARTICLE XIII
[INTENTIONALLY OMITTED.]
ARTICLE XIV
[INTENTIONALLY OMITTED.]
ARTICLE XV
ASSIGNMENT
SECTION 15.1 ASSIGNMENT. No party shall have any right to assign
this Agreement or any portion thereof.
ARTICLE XVI
BROKERAGE
SECTION 16.1 BROKERS. Purchaser and Seller represent that they
have not dealt with any brokers, finders or salesmen, in connection with this
transaction, and agree to indemnify, defend and hold each other harmless from
and against any and all loss, cost, damage, liability or expense, including
reasonable attorneys' fees, which either party may sustain, incur or be exposed
to by reason of any claim for fees or commissions made through the other party.
The provisions of this Article XVI will survive any Closing.
ARTICLE XVII
[INTENTIONALLY OMITTED.]
<PAGE>
ARTICLE XVIII
MISCELLANEOUS
SECTION 18.1 WAIVERS. No waiver of any breach of any covenant or
provisions contained herein will be deemed a waiver of any preceding or
succeeding breach thereof, or of any other covenant or provision contained
herein. No extension of time for performance of any obligation or act will be
deemed an extension of the time for performance of any other obligation or act.
SECTION 18.2 RECOVERY OF CERTAIN FEES. In the event a party
hereto files any action or suit against another party hereto by reason of any
breach of any of the covenants, agreements or provisions contained in this
Agreement, then in that event the prevailing party will be entitled to have and
recover certain fees from the other party including all reasonable attorneys'
fees and costs resulting therefrom. For purposes of this Agreement, the term
"attorneys' fees" or "attorneys' fees and costs" shall mean the fees and
expenses of counsel to the parties hereto, which may include printing,
photostatting, duplicating and other expenses, air freight charges, and fees
billed for law clerks, paralegals and other persons not admitted to the bar but
performing services under the supervision of an attorney, and the costs and fees
incurred in connection with the enforcement or collection of any judgment
obtained in any such proceeding. The provisions of this Section 18.2 shall
survive the entry of any judgment, and shall not merge, or be deemed to have
merged, into any judgment.
SECTION 18.3 CONSTRUCTION. Headings at the beginning of each
article and section are solely for the convenience of the parties and are not a
part of this Agreement. Whenever required by the context of this Agreement, the
singular will include the plural and the masculine will include the feminine and
vice versa. This Agreement will not be construed as if it had been prepared by
one of the parties, but rather as if both parties had prepared the same. All
exhibits and schedules referred to in this Agreement are attached and
incorporated by this reference, and any capitalized term used in any exhibit or
schedule which is not defined in such exhibit or schedule will have the meaning
attributable to such term in the body of this Agreement. In the event the date
on which Purchaser or Seller is required to take any action under the terms of
this Agreement is not a Business Day, the action will be taken on the next
succeeding Business Day.
SECTION 18.4 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which, when assembled to include an original
signature for each party contemplated to sign this Agreement, will constitute a
complete and fully executed original. All such fully executed original
counterparts will collectively constitute a single agreement.
SECTION 18.5 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all of the other conditions and provisions of this Agreement
will nevertheless remain in full force and effect, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
adverse manner to either party. Upon such determination that any term or other
provision is
<PAGE>
invalid, illegal, or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to reflect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
SECTION 18.6 ENTIRE AGREEMENT. This Agreement is the final
expression of, and contains the entire agreement between, the parties with
respect to the subject matter hereof, and supersedes all prior understandings
with respect thereto. This Agreement may not be modified, changed, supplemented
or terminated, nor may any obligations hereunder be waived, except by written
instrument, signed by the party to be charged or by its agent duly authorized in
writing, or as otherwise expressly permitted herein.
SECTION 18.7 GOVERNING LAW. THIS AGREEMENT WILL BE CONSTRUED,
PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
EXCEPT TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF THE STATE OF NEW JERSEY
IS MANDATORY. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY
AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND
DETERMINED IN A STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK.
SECTION 18.8 NO RECORDING. The parties hereto agree that neither
this Agreement nor any affidavit or memorandum concerning it will be recorded
and any recording of this Agreement or any such affidavit or memorandum by
Purchaser will be deemed a default by Purchaser hereunder.
SECTION 18.9 FURTHER ACTIONS. The parties agree to execute such
documents and instruments and to do such further acts as may be reasonably
necessary to carry out the provisions of this Agreement.
SECTION 18.10 EXHIBITS. The following sets forth a list of
Exhibits to the Agreement:
Exhibit A - Assignment
Exhibit B - Legal Description of Real Properties
Exhibit C - List of Service Contracts
Exhibit D - Suits and Proceedings
Exhibit E - Lease Schedules
Exhibit F - Certificate of Foreign Status
Exhibit G - List of Title Policies
Exhibit H - List of Organizational Documents
SECTION 18.11 NO PARTNERSHIP. Notwithstanding anything to the
contrary
<PAGE>
contained herein, this Agreement shall not be deemed or construed to make the
parties hereto partners or joint venturers, it being the intention of the
parties to merely create the relationship of Seller and Purchaser with respect
to the Membership Interests to be conveyed as contemplated hereby.
SECTION 18.12 LIMITATIONS ON BENEFITS, ETC. It is the explicit
intention of Purchaser and Seller that no person or entity other than Purchaser,
the members of Purchaser individually, Seller and, to the extent applicable, the
Companies and the manager under the Management Agreement, and their respective
permitted successors and assigns is or shall be entitled to bring any action to
enforce any provision of this Agreement against any of the parties hereto, and
the covenants, undertakings and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, Purchaser, the
members of Purchaser individually, Seller and, to the extent applicable, the
Companies and said manager, or their respective successors and assigns as
permitted hereunder. Nothing contained in this Agreement shall under any
circumstances whatsoever be deemed or construed, or be interpreted, as making
any third party (other than the members of Purchaser individually) a beneficiary
of any term or provision of this Agreement or any instrument or document
delivered pursuant hereto, and Purchaser and Seller expressly reject any such
intent, construction or interpretation of this Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have respectively
executed this Agreement as of the Effective Date.
SELLER: MACK-CALI REALTY, L.P.,
a Delaware limited partnership
By: Mack-Cali Realty Corporation,
a Delaware corporation,
its general partner
By:
-----------------------------------
Roger W. Thomas,
Executive Vice President
PURCHASER: PARSIPPANY OFFICE ASSOCIATES L.L.C.
a New Jersey limited liability company
By: Mack-Cali Realty, L.P.,
a Delaware limited partnership,
its member
By: Mack-Cali Realty Corporation,
a Delaware corporation,
its general partner
By:
----------------------------
Roger W. Thomas,
Executive Vice President
By: Slab Investments Holding, Inc.,
a Delaware corporation
its member
By:
-----------------------------------
John Bricker
Assistant Secretary
[END OF SIGNATURES]
<PAGE>
00
EXHIBIT H
ORGANIZATIONAL DOCUMENTS FOR DELIVERY BY SELLER
KEY
MC Mack-Cali Realty L.P.
LLC1 Mack-Cali Campus Realty LLC
LLC2 Mack-Cali Morris Realty LLC
<TABLE>
<S> <C> <C>
1 For MC:
a. Partnership Agreement
b. Partnership Certificate
c. Certificate of Good Standing
d. Certificates of Good Standing for General Partner
e. Articles of Incorporation of General Partner (or other organizational documents, as applicable)
f. By-Laws of General Partner (or other organizational documents, as applicable)
g. Corporate Resolution and Incumbency Certificate of General Partner
h. Termination of Agreements
2 For LLC 1:
a. Articles of Organization
b. LLC Agreement
c. Certificates of Good Standing
d. Resignation from all offices of Company, including the board of managers, of MC dated the Closing Date
3 For LLC 2:
a. Articles of Organization
b. LLC Agreement
c. Certificates of Good Standing
d. Resignation from all offices of Company, including the board of managers, of MC dated the Closing Date
</TABLE>
<PAGE>
Exhibit 10.19
OPERATING AGREEMENT OF
PARSIPPANY OFFICE ASSOCIATES L.L.C.
A NEW JERSEY LIMITED LIABILITY COMPANY
This OPERATING AGREEMENT OF PARSIPPANY OFFICE
ASSOCIATES L.L.C., a New Jersey limited liability company, (this "Agreement") is
made and entered into as of December 28,1999, by and between MACK-CALI REALTY,
L.P., a Delaware limited partnership ("MC") as the Managing Member (as the
Managing Member may be changed or replaced from time to time hereunder, the
"Managing Member") and SLAB INVESTMENTS HOLDING, INC., a Delaware corporation
("SLAB") as a Member (each of MC and SLAB is sometimes referred to herein as a
"Member" and collectively as the "Members").
1. FORMATION/GOVERNING LAW. This limited liability company
("Company") shall be formed and established as a limited liability company as
of the date hereof, pursuant to the provisions of the New Jersey Limited
Liability Company Law, NJSA 42 ET SEQ. (the "Act"). This Agreement shall be
governed by New Jersey law.
2. NAME. The name of the Company shall be PARSIPPANY OFFICE
ASSOCIATES L.L.C.
3. CERTIFICATES. On December 17, 1999, a Certificate of
Formation (the "Certificate") was filed in the Office of the Secretary of State
of New Jersey.
4. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be at c/o Mack-Cali Realty Corporation, 11
Commerce Drive, Cranford, New Jersey 07016, or at such other place(s) in New
York or New Jersey as may be designated from time to time by the Managing
Member.
5. OFFICE AND AGENTS. The name and address of the registered
agent for service of process on the Company in the State of New Jersey shall be
Corporation Service Company, 830 Bear Tavern Road, West Trenton, New Jersey
08628. The Managing Member in its reasonable discretion and upon notice to the
other Member may change the agent specified in this Section 5 of this Agreement.
6. PURPOSES OF COMPANY. The purpose of the Company shall be to
acquire for investment purposes, and own, finance, refinance, sell, assign or
otherwise dispose of, the investment entities described in Section 9 below
(each, together with any other entity that is owned by the Company, an
"Investment Entity" and collectively, the "Investment Entities"), owning the
Properties (as
<PAGE>
defined in Section 9 below) and other assets related thereto. The purposes of
the Company shall include any and all other general business activities
incidental or reasonably related to the foregoing.
7. TERM. The term of the Company shall begin on the date the
Certificate is filed with the Secretary of State of New Jersey and shall
continue until December 31, 2029, unless the term of the Company is extended by
an amendment to this Agreement so stating and executed by each of the Members,
or unless the Company is sooner terminated or liquidated in accordance with the
provisions of the Act or this Agreement. The Company's business shall be
terminated, and the Company shall be liquidated, upon the bankruptcy of any
Member unless a majority in interest of the remaining Members elect in writing,
by notice to all Members given within ninety (90) days thereafter, to
reconstitute the Company and continue its business, which right of election is
hereby granted to them. Notwithstanding any provision to the contrary contained
herein, the Company's business shall be terminated, and the Company shall be
liquidated, in the event the Company no longer owns any interest in any
Investment Entity or all Investment Entities have disposed of the Properties and
no longer own any interest therein.
8. RELATIONSHIP OF PARTIES. This Agreement shall be construed
and deemed to create a limited liability company. Nothing herein contained shall
be considered to constitute any Member as the agent of any other Member, except
as may be specifically authorized and provided for herein.
9. CAPITAL CONTRIBUTIONS. At the closing ("Closing") under the
Purchase Agreement (as defined below in this Section 9), the Members shall
contribute, as their respective capital contributions ("Capital Contributions")
to the Company, the amounts set forth on Exhibit A (in the respective
proportions stated on Exhibit A) in connection with the Company's purchase of
100% of the membership interests in the following Investment Entities pursuant
to that certain Agreement of Sale and Purchase dated as of even date herewith
("Purchase Agreement"): Mack- Cali Campus Realty L.L.C, a New Jersey limited
liability company, and Mack-Cali Morris Realty L.L.C., a New Jersey limited
liability company. Such Investment Entities own the parcels of real property and
the leasehold interest described on Exhibit B attached hereto (each such real
property, together with any related leasehold interest, a "Property" and
collectively the "Properties", including all improvements thereon and the
personal property related thereto that is owned by the applicable Investment
Entity). Each Member hereby acknowledges and agrees that all costs and expenses
(including without limitation, attorneys' fees and costs) incurred by such
Member in connection with this Agreement and (solely as a Member of the Company)
the Purchase Agreement, the Management Agreement and the Asset Management
Agreement (as such terms are defined in Section 11) shall be borne by such
Member.
Except as specifically set forth in this Section 9 or elsewhere in this
Agreement or agreed to separately in writing by all of the Members or required
by law, (i) none of the Members shall be required or entitled to make any
additional capital contributions to the Company, to make loans to the Company,
to provide any financing to the Company, or to cause any financing to be made
available to
2
<PAGE>
the Company, (ii) the Members shall not have any further liability to contribute
money to or in respect of the liabilities or obligations of the Company, and
(iii) the Members shall not be liable for any liabilities of the Company. All
additional capital contributions will require the approval of both Members
(which approval may be withheld in each Member's sole and absolute discretion)
and shall be funded by the Members PARI PASSU in their respective Funding
Proportions shown on Exhibit A. In the event the Managing Member determines that
additional funds are necessary for ordinary and reasonable business purposes of
the Company, any Investment Entity or any Property but additional capital
contribution for such funds is not approved by both Members and the Managing
Member decides to lend such funds (which the Managing Member may but shall not
be required to do), the Managing Member shall provide notice to the other Member
that the Managing Member intends to lend such funds to the Company as a loan.
Within 5 days after receiving such notice from the Managing Member, the other
Member shall have the right to participate in such loan in an amount equal to
such member's respective Funding Proportion multiplied by the amount of such
funds by providing notice thereof (setting forth the percentage of such funds
the other Member elects to lend) to the Managing Member. Failure to provide such
notice by the other Member to the Managing Member shall be deemed an election by
the other Member not to participate, and the Managing Member shall fund the
entire loan within 5 days after the other Member's failure to provide such
notice. If such a notice is timely given by the other Member to the Managing
Member, within 5 days thereafter, the other Member shall fund the percentage of
the loan set forth in such notice and the Managing Member shall fund the
remainder of the loan. The loans made by the Members to the Company in
accordance with this paragraph shall accrue interest at LIBOR plus 200 basis
points per annum, compounded monthly, from the date such loans are made until
repaid by the Company.
As used in this Agreement, "LIBOR" shall mean, with respect to each
LIBOR Reference Period, the rate (expressed as a percentage per annum) for
deposits in U.S. dollars, for a one-month period, that appears on Telerate Page
3750 (or the successor thereto) as of 11:00 a.m., London, England time, on the
related LIBOR Determination Date. If such rate does not appear on Telerate Page
3750 as of 11:00 a.m., London, England time, on such LIBOR Determination Date,
LIBOR shall the arithmetic mean of the offered rates (expressed as a percentage
per annum) for deposits in U.S. dollars for a one-month period that appear on
the Reuters Screen LIBOR Page as of 11:00 a.m., London, England time, on such
LIBOR Determination Date, if at least two such offered rates so appear. If fewer
than two such offered rates appear on the Reuters Screen LIBOR Page as of 11:00
a.m., London, England time, on such LIBOR Determination Date, SLAB shall request
the principal London, England office of each of any four major reference banks
in the London interbank market selected by SLAB to provide such bank's offered
quotation (expressed as a percentage per annum) to prime banks in the London
interbank market for deposits in U.S. dollars for a one-month period as of 11:00
a.m., London, England time, on such LIBOR Determination Date for amounts
approximately equal to SLAB Return Amount. If at least two such offered
quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations. If fewer than two such offered quotations are so provided, SLAB
shall request each of any three major banks in New York City selected by SLAB to
provide such bank's rate (expressed as a percentage per annum) for loans in U.S.
dollars to leading European
3
<PAGE>
banks for a one-month period as of approximately 11:00 a.m., New York City time,
on the applicable LIBOR Determination Date for amounts approximately equal to
the SLAB Return Amount. If at least two such rates are so provided, LIBOR shall
be the arithmetic mean of such rates. If fewer than two such rates are so
provided, then LIBOR for the applicable LIBOR Reference Period shall be LIBOR as
in effect for the next preceding LIBOR Reference Period. LIBOR shall be
determined in accordance with this paragraph by SLAB or its designee.
Notwithstanding the foregoing, LIBOR for the period commencing on the date
hereof and ending January 5, 2000 shall be 6.49% per annum.
As used herein, the term "LIBOR Business Day" shall mean any Business
Day on which commercial banks in the City of London, England, are open for
interbank or foreign exchange transactions.
As used herein, the term "LIBOR Determination Date" shall mean, with
respect to any LIBOR Reference Period, the date that is two (2) LIBOR Business
Days prior to the first day of such LIBOR Reference Period.
As used herein, the term "LIBOR Reference Period" shall mean, (i)
initially, the period commencing on the date of this Agreement for the
Guaranteed Payments and the loan funding date for the Member loans and ending on
the first occurring fifth (5th) day of a calendar month thereafter, and (ii)
thereafter, a period commencing on the sixth (6th) day of such calendar month
and ending on the fifth (5th) day of the following calendar month.
10. CAPITAL ACCOUNTS. An individual capital account shall be
maintained for each Member, and tax allocations made pursuant to this Agreement
shall be made, in accordance with applicable Treasury Regulations under Section
704 of the Internal Revenue Code of 1986, as amended ("Code"). The Managing
Member shall be the "Tax Matters Partner" of the Company and shall be
responsible for filing the tax returns of the Company on a timely basis (but no
later than May 15 of each year). The Managing Member shall be responsible for
complying with any and all reporting requirements on behalf of the Company,
including those set forth on Exhibit D. All tax decisions, tax returns and
settlements with taxing authorities shall be subject to the reasonable approval
of both Members.
11. POWERS AND RESPONSIBILITIES OF THE MEMBERS; PROPERTY
MANAGEMENT; ASSET MANAGEMENT FEE; SALE RIGHTS; INDEMNITY.
(a) Subject to the approval rights of the Members under Sections 11(b)
and 11(c) and the sale and financing rights of the Members under Section 11(d),
and except as otherwise provided herein, the then Managing Member shall have all
of the rights, power and authority of a manager in a limited liability company
under the Act and the management and operation of the affairs, activities and
business of the Company shall be vested exclusively in the Managing Member. The
Members hereby authorize the Managing Member to execute all documents and to
take all actions as may be necessary or
4
<PAGE>
desirable on behalf of the Company which are consistent with the Company's
purposes, any major decisions approved by the Members under Section 11(b) or
11(c), and any sale or financing decisions made by the applicable Member under
Section 11(d). The Members hereby approve the budgets attached hereto as Exhibit
E with respect to the Properties (the "Current Budgets") and, subject to the
approval rights and the restrictions contained elsewhere in this Agreement, the
Managing Member may cause the Investment Entities to make the expenditures
described in the Current Budgets (as the same may be modified from time to time
by the Managing Member in the exercise of its commercially reasonable business
judgment, which modifications, in each instance and in the aggregate, shall not
increase the total expenses set forth in the Current Budgets by more than 10% to
pay expenditures reasonably required with respect to the Property and provided
that such increased expenditures do not prevent the Guaranteed Payments from
being made to SLAB under Section 13(c)(1)). The Members also hereby approve that
certain Leasing and Management Agreement dated as of December 28, 1999
(collectively, the "Management Agreement") with respect to the Properties and
that certain Asset Management Agreement dated as of December 28, 1999 ("Asset
Management Agreement") with respect to the Investment Entities and the
Properties.
MC shall be the Managing Member until the earlier to occur of the
following: (i) MC is removed as the Managing Member under Section 11(e); or (ii)
a majority in Residual Percentages (as set forth in Exhibit A) of the Members
elects to remove MC as the Managing Member by providing written notice thereof
to MC at any time after January 2, 2001.
(b) Subject to the provisions of Section 11(d) but notwithstanding any
other provision to the contrary herein, so long as MC is the Managing Member,
the following actions and matters are major decisions requiring the reasonable
(except as otherwise provided) written approval of the Members (whether in
advance in a business plan, budget, or other pre-approval, or at the time of the
action in question, as the case may be):
(i) Entering into, approving, terminating or modifying to any
material extent the Management Agreement or the Asset Management
Agreement (SLAB may withhold its approval to the foregoing actions and
matters in this clause (i) in its sole and absolute discretion), or
selecting any architect, engineer, broker, leasing agent, property
manager, marketing or other consultant, contractor or sales agent for
any Property, any Investment Entity or the Company who are not
currently providing services to the Investment Entities or the Company
or in connection with the Properties in the ordinary course of
business;
(ii) Terminating or modifying to any material extent the
insurance policies currently maintained by the Investment Entities with
respect to the Properties);
(iii) Terminating any leases at any Property (except by reason
of a material breach of a tenant thereunder), or entering into,
approving or modifying to any material extent any lease at any
Property, in each case which is for either more than 25% of the total
leaseable space of
5
<PAGE>
the building at issue or more than 40,000 square feet of leaseable
space. All new leases shall be on such terms and conditions which are
not less favorable to the landlord than those of similar leases entered
into at arm's length between unrelated parties for comparable leases of
space in the area where the Properties are located;
(iv) Causing or permitting the Company or any Investment
Entity to file for bankruptcy or other relief from creditors, including
without limitation, an assignment for the benefit of creditors, an
admission in writing by any such entity of its inability to pay its
debts generally as they become due, causing the Company, a Member's
membership interest in the Company, any Investment Entity, the
Company's membership interest in any Investment Entity, or any Property
or any part thereof or interest therein to be subject to the authority
of any trustee, custodian or receiver or to be subject to any
proceeding for bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution or liquidation or
similar proceedings (collectively and singly, "Bankruptcy Action")
(SLAB may withhold its approval to all actions and matters in this
clause (iv) in its sole and absolute discretion);
(v) Making any distributions except as permitted hereunder, or
establishing reserves with respect to a Property in excess of 10% of
the annual cash flow from such Property or releasing funds therefrom
except in accordance with this Agreement and the reasonable needs of
the Company's business (SLAB may withhold its approval to all actions
and matters in this clause (v) in its sole and absolute discretion);
(vi) Dissolving, terminating or liquidating the Company or any
Investment Entity, or redeeming any interest of any Member, except as
provided herein (SLAB may withhold its approval to all actions and
matters in this clause (vi) in its sole and absolute discretion);
(vii) Entering into, approving, terminating or modifying the
terms of any contracts, agreements, leases and other undertakings with
any Member or its affiliates (SLAB may withhold its approval to the
foregoing actions and matters in this clause (vii) in its sole and
absolute discretion); PROVIDED, HOWEVER, that entering into, approving,
terminating or modifying to any material extent any service contracts
and other contracts and agreements (not otherwise specifically
addressed herein) with non-affiliates shall be permitted without any
Member approval so long as such contracts are entered into for
reasonable business purposes of the Company or the Investment Entities
on bona fide market terms and conditions for comparable goods or
services and for the area where the Properties are located.
Notwithstanding anything to the contrary contained in this Agreement,
to the extent any affiliate of MC is now or hereafter becomes a party
to any contract, agreement, lease or other undertaking entered into
with the Company or any Investment Entity (including without
limitation, the Purchase Agreement, the post-closing agreements in
connection therewith, the Management Agreement and the Asset Management
Agreement), SLAB, acting alone, shall have the exclusive right and
authority on behalf of the Company (A) to exercise termination rights
in accordance with the terms of such
6
<PAGE>
document, (B) to enforce and defend the Company's or the applicable
Investment Entity's rights (including without limitation, right to seek
damages for breach of representations and warranties and enforce
indemnities) under such document (including by prosecution or defense
of any proceeding or action that it deems necessary or appropriate),
and (C) to retain Company or Investment Entity counsel of its choosing
in connection with the foregoing at MC's expense. MC shall disclose to
SLAB in writing whether any party to a proposed contract, agreement,
lease or other undertaking to be entered into with the Company or any
Investment Entity is an affiliate of MC promptly after MC becomes aware
of such relationship and such proposed contract, agreement, lease or
other undertaking, and, in any event (and without limiting the
foregoing), prior to the Company's or such Investment Entity's
execution of the same. As used in this Agreement, an "affiliate" of a
Member shall mean any other individual, corporation, limited liability
company, partnership, trust, association or other entity or
organization directly or indirectly controlling, controlled by or under
common control with such Member. The term "control" or derivatives of
same shall mean direct or indirect ownership of more than 50% and/or
possession of the power to direct the management policies;
(viii) Acquiring, selling, conveying, exchanging,
hypothecating, pledging, encumbering or otherwise transferring all or
any portion of or any interest in any Property or Investment Entity
(other than pursuant to Section 11(d)), or in any other real property
now or hereafter owned by the Company or any Investment Entity (SLAB
may withhold its approval to all actions and matters in this clause
(viii) in its sole and absolute discretion);
(ix) Performing, or causing to be performed, any construction,
repair or rebuilding of any improvements at the Properties (except in
an emergency to correct or alleviate any unsafe conditions or except as
may be required under any tenant leases); PROVIDED, HOWEVER, that SLAB
may withhold its approval in its sole and absolute discretion on
decisions to repair or rebuild after a casualty or partial condemnation
costing more than $250,000 or to construct any new buildings or
increase the size of any existing buildings. If the Members agree to
repair or rebuild, any insurance or condemnation proceeds of more than
$250,000 shall be placed in an escrow and the Members shall reasonably
agree upon the terms and conditions for the release of the proceeds
from the escrow in connection with such repair or rebuilding. Any
insurance or condemnation proceeds not used to repair or rebuild shall
be distributed to the Members pursuant to Section 13;
(x) Except as otherwise provided herein, incurring any
indebtedness on behalf of the Company or any Investment Entity (except
that the Members hereby approve any reasonable, ordinary and necessary
trade payables incurred in the ordinary course of business to
non-affiliates of the Managing Member, and payments made, pursuant to
non-affiliate contracts which are in effect at the Closing or which are
approved by the Members); making, executing or delivering on behalf of
the Company or any Investment Entity any indemnity bond or surety bond;
lending funds belonging to the Company or any Investment Entity to any
person
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or entity, or extending any person, firm or corporation credit on
behalf of the Company or any Investment Entity; obligating the Company,
another Member or any Investment Entity as a surety, guarantor or
accommodation party to any obligation, except by endorsing checks for
deposit to the Company's or an Investment Entity's accounts in the
ordinary course of business, or granting or permitting any lien or
encumbrance on any Property other than mechanics' liens for work
performed at the Properties (SLAB may withhold its approval to all
actions and matters in this clause (x) in its sole and absolute
discretion);
(xi) Confessing a judgment against the Company or any
Investment Entity; settling or adjusting any claims (including without
limitation, insurance claims) against or of the Company or any
Investment Entity; consenting to any condemnation awards or
settlements; or commencing, defending or discontinuing any legal
actions or proceedings involving the Company or any Investment Entity,
to the extent such judgment, claims, awards, settlements, actions or
proceedings have an aggregate amount in controversy exceeding $250,000
(SLAB may withhold its approval in its sole and absolute discretion
with respect to condemnation awards or settlements in excess of 10% of
the cost of the Property at issue and with respect to any other actions
or matters in this clause (xi) having an aggregate amount in
controversy exceeding $1,000,000);
(xii) Submitting binding proposals to, or entering into,
approving, terminating or modifying binding agreements with,
governmental officials relating to zoning, subdivision, environmental
or other land use or entitlement matters (SLAB may withhold its
approval to the foregoing actions and matters in this clause (xii) in
its sole and absolute discretion; PROVIDED, HOWEVER, that SLAB shall
have only reasonable approval rights with respect to binding agreements
regarding zoning and entitlement matters related to tenant improvements
at the Properties or to landscaping, utility easements, buffers and
other similar items and conditions required by the Towns of Hanover or
Parsippany, New Jersey, in connection with obtaining development
approvals for adjacent land so long as the Properties are not
materially adversely affected thereby; PROVIDED, FURTHER, that any
actions taken in order to comply with the applicable zoning and other
land use requirements shall not require any approval of SLAB);
(xiii) Possessing, assigning or using funds or other property
of the Company or any Investment Entity for other than a Company or
Investment Entity purpose (SLAB may withhold its approval to the
actions and matters in this clause (xiii) in its sole and absolute
discretion);
(xiv) Partitioning all or any portion of any Property, or
filing any complaint or instituting any proceeding at law or in equity
seeking such partition (SLAB may withhold its approval to the actions
and matters in this clause (xiv) in its sole and absolute discretion);
(xv) Purchasing any assets or equipment on behalf of or in the
name of the Company or any Investment Entity (except in connection with
transfers among Investment Entities under
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Section 11(d)) other than those required in the ordinary course of the
Company's or such Investment Entity's business (SLAB may withhold its
approval to the actions and matters in this clause (xv) in its sole and
absolute discretion);
(xvi) Except as otherwise provided in Section 11(d) of this
Agreement, entering into, approving, terminating or modifying to any
material extent any loan document or loan instrument to which the
Company or any Investment Entity is or will be a party or the Company,
any Investment Entity or any Property is or will be bound or subject
to, or giving any consent, approval or waiver, or making any
determination or stipulation, on behalf of the Company or any
Investment Entity under any such loan document or instrument (SLAB may
withhold its approval to the actions and matters in this clause (xvi)
in its sole and absolute discretion);
(xvii) Admitting any new Members or causing or permitting any
merger or restructuring of the Company or the Investment Entities
(other than pursuant to Section 11(d)) (SLAB may withhold its approval
to the actions and matters in this clause (xvii) in its sole and
absolute discretion);
(xviii) Modifying or terminating this Agreement or any other
Company organizational documents or any organizational documents of any
Investment Entity (SLAB may withhold its approval to the actions and
matters in this clause (xviii) in its sole and absolute discretion);
(xix) Changing the nature of business or business purpose of
the Company or any Investment Entity (SLAB may withhold its approval to
the actions and matters in this clause (xix) in its sole and absolute
discretion);
(xx) Making any expenditures not in compliance with the
Current Budgets, except as the Current Budgets may be modified pursuant
to Section 11(a) above (SLAB may withhold its approval to the actions
and matters in this clause (xx) in its sole and absolute discretion);
(xxi) Approving the acceptability of any post-closing
deliveries under the Purchase Agreement and post-closing adjustments
under the Purchase Agreement; and
(xxii) Any other matter that requires the approval of both
Members under this Agreement (SLAB may withhold its approval to all
such matters in its sole and absolute discretion unless indicated
otherwise).
No amount shall be expended by any Member for a major decision without
first obtaining the approval of the Members (to the extent such approval is
required hereunder at such time). However, the Managing Member may expend
reasonable amounts in response to an emergency (which amounts shall be
reimbursed by the Company or the Investment Entities, as applicable). Failure to
disapprove in writing by a Member within five (5) business days (unless another
time period is specified in this
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Agreement) after receiving a written request for approval from the other Member
under this Agreement shall be deemed an approval of the action or matter in the
request, provided that such request states conspicuously that failure to approve
within such time period constitutes such Member's approval. Any request for
approval herein shall describe the action or matter to be approved with
sufficient specificity to permit a reply, and any approval or disapproval
thereof shall set forth the reasons therefor with sufficient specificity to
permit a reply.
(c) Subject to the provisions of Section 11(d) but notwithstanding any
other provision to the contrary herein, while MC is not the Managing Member, the
following actions and matters are major decisions requiring the written approval
of MC, which MC may withhold in its sole and absolute discretion:
(i) Causing or permitting the Company or any Investment Entity
to file for bankruptcy or other relief from creditors, including
without limitation, an assignment for the benefit of creditors, an
admission in writing by any such entity of its inability to pay its
debts generally as they become due, causing the Company, a Member's
membership interest in the Company, any Investment Entity, the
Company's membership interest in any Investment Entity, or any Property
or any part thereof or interest therein to be subject to the authority
of any trustee, custodian or receiver or to be subject to any
proceeding for bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution or liquidation or
similar proceedings;
(ii) Dissolving, terminating or liquidating the Company or any
Investment Entity, or redeeming any interest of any Member, except as
provided herein;
(iii) Entering into, approving, terminating or modifying to
any material extent the terms of contracts, agreements, leases or other
undertakings with any affiliates of SLAB. Notwithstanding anything to
the contrary contained in this Agreement, to the extent any affiliate
of SLAB is now or hereafter becomes a party to any contract, agreement,
lease or other undertaking entered into with the Company or any
Investment Entity, MC, acting alone, shall have the exclusive right and
authority on behalf of the Company (A) to exercise termination rights
in accordance with the terms of such document, (B) to enforce and
defend the Company's or the applicable Investment Entity's rights under
such document (including by prosecution or defense of any proceeding or
action that it deems necessary or appropriate), and (C) to retain
Company or Investment Entity counsel of its choosing in connection with
the foregoing at SLAB's expense. SLAB shall disclose to MC in writing
whether any party to a proposed contract, agreement, lease or other
undertaking to be entered into with the Company or any Investment
Entity is an affiliate of SLAB promptly after SLAB becomes aware of
such relationship and such proposed contract, agreement, lease or other
undertaking, and, in any event (and without limiting the foregoing),
prior to the Company's or such Investment Entity's execution of the
same;
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(iv) Possessing, assigning or using funds or other property of
the Company or any Investment Entity for other than a Company or
Investment Entity purpose;
(v) Admitting any new Members or causing or permitting any
merger or restructuring of the Company or the Investment Entities
(other than pursuant to Section 11(d));
(vi) Modifying or terminating this Agreement or any other
Company organizational documents or any organizational documents of any
Investment Entity; and
(vii) Changing the nature of business or business purpose of
the Company or any Investment Entity.
(d) Notwithstanding any provision to the contrary contained herein
(including without limitation, Section 11(b) hereof), the Members shall have the
following rights:
(i) From the date of this Agreement and until January 2, 2001
(the "Outside Closing Date"), MC shall have the right, in MC's sole and
absolute discretion without the other Member's approval being required,
to negotiate, enter into and perform under, on behalf of the Company
and/or the Investment Entities, one or more agreements with one or more
parties (including MC's affiliates) for the sale, financing or
refinancing of one or more Properties and/or Investment Entities (or
the ownership interests therein) on any terms and conditions, PROVIDED
that: (A) any such transaction closes on or prior to the Outside
Closing Date; (B) all accrued and unpaid Guaranteed Payments to SLAB
under Section 13(c)(1) must have been made; (C) in the case of sale, a
financing or refinancing of all of the Properties or interests therein
not previously sold, financed or refinanced under this Section 11(d)
(the "Remaining Properties"), the cash sale price received by the
Company and the Investment Entities at the closing thereunder or the
loan amount received by Company and the Investment Entities must at
least be equal to an amount that will result in SLAB receiving, from
proceeds of the transaction and previous transactions, the sum of the
amounts described in Sections 13(b)(2)(i), 13(b)(2)(ii), and 13(c)(1)
hereof (the "SLAB Return Amount"); (D) in the case of sale, a financing
or refinancing of less than all of the Remaining Properties, the cash
sale price received by the Company and the Investment Entities at the
closing thereunder or the loan amount received by Company and the
Investment Entities must at least be equal to an amount that will
result in SLAB receiving (in addition to all accrued and unpaid
Guaranteed Payments), from proceeds of the transaction and
distributions under Section 13(b)(i), 102% of the amount(s) set forth
for the Property(ies) at issue in Exhibit C; (E) in the case of sale, a
financing or refinancing of less than all of the Remaining Properties,
the Property(ies) to be sold, financed or refinanced must be owned by a
separate Investment Entity(ies) created and maintained as a limited
liability company, and the Company and the other Investment Entities
must not be subject to any personal liability under such sale,
financing or refinancing (and no other assets of the Company or any
Investment Entity except those that are the subject of such sale,
financing or refinancing
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shall be subject to the claims of the lender or purchaser in such
transaction, whether for debt service, damages or any other amounts),
and there must not then exist any monetary breach or any uncured
material non-monetary breach by MC hereunder; and (F) in the case of a
sale, financing or refinancing of less than all of the Remaining
Properties, there must not then exist any uncured monetary or material
non-monetary breach by MC hereunder (except that with respect to
Section 11(f)(xix) hereof (which shall be determined without regard to
whether MC used reasonable commercial efforts and without regard to
materiality), the seller under the Purchase Agreement must also have
failed to make the deliveries as required by Sections 8.4(c), 8.4(d)
and 8.4(e) of the Purchase Agreement) and there must not have been a
material adverse change with respect to any of the other Remaining
Properties (including without limitation, the value, cash flow or
tenancy at any such Property). In transactions described in the
immediately preceding clause (F), MC shall provide written notice of
same to SLAB at least fifteen (15) business days prior to entering into
a binding agreement with respect to such transaction and SLAB shall
have the right to determine, in its sole discretion, whether there has
been a material adverse change with respect to any of the other
Remaining Properties. SLAB's failure to provide written notice of such
determination within fifteen (15) business days after its receipt of
such notice from MC shall be deemed to be SLAB's determination that
there has been no such material adverse change. Except as otherwise
provided in this Section 11(d)(i), until the Outside Closing Date, MC
shall have the right to perform any act, or execute and deliver any
document or instrument, as may be reasonably necessary or appropriate
in connection with such transactions without any other Member's
approval being required. Notwithstanding the last sentence of Section
11(b)(ix), the purchaser of a Property or interests therein shall be
entitled to receive an assignment of any casualty or condemnation
proceeds allocable to such Property to the extent not theretofore used
to repair, rebuild or replace the Property (and for which the purchaser
is not otherwise receiving an appropriate reduction in the purchase
price).
(ii) At any time (A) after the Outside Closing Date, if SLAB
has not then received the SLAB Return Amount, or (B) MC is in breach of
Section 11(f)(xix) hereof (which shall be determined without regard to
whether MC used reasonable commercial efforts and without regard to
materiality) AND the seller under the Purchase Agreement has failed to
make the deliveries as required by Sections 8.4(c), 8.4(d) and 8.4(e)
of the Purchase Agreement, a majority in Residual Percentages of the
Members (which term, as used herein, shall mean the Members owning
greater than 50% of all Residual Percentages in the Company) shall have
the right, in its sole and absolute discretion without the approval of
any other Member being required, to negotiate, enter into and perform
under, on behalf of the Company and/or the Investment Entities one or
more agreements with one or more parties (including affiliates of the
electing Members) for the sale, financing, refinancing or
securitization of one or more Properties and/or Investment Entities (or
the ownership interests therein) on any terms and conditions; PROVIDED,
HOWEVER, that MC shall have the right to purchase the assets being sold
or provide such financing or refinancing (as applicable) on the same
terms and conditions, which right MC must exercise by providing written
notice thereof to SLAB within 20 days after receiving
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written notice from SLAB setting forth such terms and conditions. MC's
failure to provide such notice timely shall be deemed MC's election not
to exercise such right. If MC timely exercise such right, the closing
shall occur within 30 days thereafter. If MC has not been removed as
the Managing Member, MC shall cooperate in connection with the
transactions contemplated under this clause (ii). In connection with
the sale, financing, refinancing or securitization transactions under
this Section 11(d)(ii), a majority in Residual Percentages of the
Members shall (1) have the right to perform any act, or execute and
deliver any document or instrument, as may be reasonably necessary or
appropriate in connection with such transactions without any other
Member's approval being required and (2) cause all costs of the
foregoing, including without limitation the following due diligence
items, if required to be provided by the Company or the Investment
Entities in connection with any such transaction, to be paid at the
Company expense: engineering reports, Phase I environmental reports,
appraisal, title reports, searches and endorsements, surveys, and
certificates of occupancy.
(iii) The proceeds (net of transaction costs and expenses)
from any sale, condemnation, casualty, financing, refinancing or
securitization described in paragraphs (i) and (ii) of this Section
11(d) shall be distributed or paid by the Company as provided in this
Agreement.
(iv) In connection with the sale, financing, refinancing or
securitization transactions described in paragraphs (i) and (ii) of
this Section 11(d), the Member with the right to cause such
transactions to occur shall have the right, in such Member's sole and
absolute discretion without the other Member's approval being required,
to form one or more additional single-member Investment Entities owned
by the Company and to cause the existing Investment Entities to
transfer one or more Properties which are the subject of such sale,
financing, refinancing or securitization to such additional Investment
Entities and to transfer the Company's interest in such additional
Investment Entities or the Property(ies) owned thereby. Except as
otherwise provided in Section 11(d)(i), such Member shall give written
notice of any transaction described in this Section 11(d) to the other
Member at least ten (10) days prior to causing the Company to enter
into such transaction.
(e) No Member (including any Managing Member) shall be liable,
responsible or accountable in damages or otherwise to the other Member or the
Company or any Investment Entity for any act or omission of such Member on
behalf of the Company, except for fraud, gross negligence or material breach of
this Agreement. Except as provided in this Section 11(e), the Company shall
indemnify and hold harmless each Member (including any Managing Member) and its
affiliates from and against any obligations, damages, claims, liabilities,
losses, costs or expenses, including reasonable attorneys' fees and costs
(collectively, "Claims"), incurred in connection with or arising out of such
Member acting as a Member or on behalf of the Company in accordance with this
Agreement.
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Each Member shall be liable to the other Member for such other Member's
actual damages to the extent caused by any fraud, gross negligence or material
breach of this Agreement by the liable Member and not caused by any fraud, gross
negligence or material breach of this Agreement by the other Member. As used in
the immediately preceding sentence of this paragraph, the term "actual damages"
shall: (1) include, without limitation, the costs (including reasonable
attorneys' fees and costs) of enforcing the rights of a Member under this
Agreement and collecting such damages; and (2) include, without limitation, any
and all kinds of damages actually paid by such other Member to unaffiliated
third parties (including any consequential, speculative, punitive or special
damages actually paid by such other Member to unaffiliated third parties); but
(3) exclude any other consequential, speculative, punitive or special damages.
MC hereby agrees to indemnify and hold harmless SLAB and its affiliates from and
against any third-party Claims to the extent caused by MC's fraud, gross
negligence or material breach of this Agreement and not by SLAB's fraud, gross
negligence or material breach of this Agreement. Any amounts payable under this
paragraph shall be made immediately upon written demand therefor and shall
accrue interest from the date of such demand until paid at the lesser of fifteen
percent (15%) per annum or the highest rate permitted by applicable law.
Without limiting the foregoing, upon the occurrence of any of the
following, (A) SLAB shall have the right to remove MC as the Managing Member of
the Company, (B) any distributions to MC under Section 13(b)(2) (other than its
Guaranteed Payments) shall be subordinated to any and all distributions and
payments to SLAB hereunder, and (C) SLAB shall have the right to institute
reasonable cash management procedures pursuant to which tenants will make
payments under their leases directly to a lock box account and SLAB will control
all disbursements therefrom:
(i) fraud by MC with respect to the Company, any Investment
Entity or any Property or with respect to any transactions contemplated
hereunder;
(ii) any gross negligence on the part of MC with respect to
any of its duties and obligations hereunder which is not cured to
SLAB's reasonable satisfaction within 45 days after receiving written
notice of such gross negligence from SLAB;
(iii) failure by MC to use any available cash to make the
Guaranteed Payments under Section 13(c)(1) for three (3) consecutive
months;
(iv) any monetary default by MC under this Agreement at any
time;
(v) any representation or warranty made by seller in the
Purchase Agreement (or in any other documents delivered to the Company
thereunder) or made by MC in this Agreement shall have been false or
misleading in any material respect when made and MC fails to cure (to
SLAB's reasonable satisfaction) such breach of representation or
warranty within forty five (45) days after MC's receipt of written
notice of such breach from SLAB;
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(vi) except as provided in clause (ix) below of this Section,
material breach of any non-monetary covenants set forth Section 11(f)
(determined without regard to whether MC used its reasonable commercial
efforts in connection therewith) or a material breach of any other
non-monetary provisions hereof by MC and MC's failure to cure (to
SLAB's reasonable satisfaction) such breach within forty five (45) days
after MC's receipt of written notice of such breach from SLAB;
(vii) any monetary breach or material non-monetary breach of
the Management Agreement by the property manager or the Asset
Management Agreement by the asset manager;
(viii) any Bankruptcy Action with respect to MC; and
(ix) breach of Section 11(f)(xix) (determined without regard
to whether MC used its reasonable commercial efforts in connection
therewith).
Any notice alleging a breach or gross negligence referenced above shall
specify the breach or gross negligence with sufficient particularity to permit
the cure, and any such cure shall be at the breaching Member's expense. The
non-breaching Member may effect such cure at the breaching Member's expense if
the breaching Member shall fail to effect such cure timely. If MC is removed (or
if a majority in Residual Percentages of the Members is entitled to remove MC)
as the Managing Member hereunder, SLAB shall have the right to terminate all
agreements and contracts between the Company and any affiliates of MC (including
without limitation, the Asset Management Agreement and the Management
Agreement).
(f) So long as MC is the Managing Member hereunder, MC shall use
reasonable commercial efforts to:
(i) not take any actions that require SLAB's approval under
Section 11(b) without first obtaining such approval or otherwise in
accordance with Section 11(b);
(ii) not cause or permit any Bankruptcy Action;
(iii) not cause or permit the Company or the Investment
Entities to own any encumbered asset other than pursuant to Section
11(d) (financing right);
(iv) not cause or permit the Company or the Investment
Entities to engage in any business other than the ownership, management
and operation of the Properties and the Investment Entities;
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(v) do all things necessary to preserve the Company's and the
Investment Entities' existence and limited liability company
formalities;
(vi) conduct and operate the business of the Company and the
Investment Entities as presently conducted and operated in material
respects;
(vii) not cause or permit the Company or the Investment
Entities to be responsible for the debts or obligations of any person
or entity other than the Company or the Investment Entities;
(viii) provide prompt written notice to SLAB of any
litigation, bankruptcy, administrative or other court or governmental
proceedings pending or threatened (in writing) against the Company, any
Investment Entity or any Property which might have a material adverse
effect;
(ix) not cause or permit the Company to engage in any
transaction which would cause any obligation, or action taken or to be
taken, hereunder to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974 (or any successor
legislation thereto), as amended ("ERISA"). MC further covenants and
agrees to deliver to SLAB such certifications or other evidence from
time to time throughout the term of this Agreement, as requested by
SLAB in its sole discretion, that: (i) the Company is not an "employee
benefit plan" as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii) the Company is not subject to state
statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (iii) one or more of the following
circumstances is true:
(1) Equity interests in the Company are publicly
offered securities, within the meaning of 29
C.F.R. SECTIONS 2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of each
outstanding class of equity interests in the
Company are held by "benefit plan investors"
within the meaning of 29 C.F.R. SECTIONS
2510.3-101(f)(2); or
(3) The Company qualifies as an "operating
company" or a "real estate operating
company" within the meaning of 29 C.F.R.
SECTIONS 2510.3- 101(c) or (e) or an
investment company registered under The
Investment Company Act of 1940.
(x) cause the Company, the Investment Entities and the
Properties to comply at all times with all laws, statutes, ordinances,
regulations and other governmental or quasi-
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governmental requirements to which the Company or any Investment Entity
is subject and with private covenants now or hereafter relating to the
ownership, construction, use or operation of the Properties, including,
but not limited to, those concerning environmental or ecological
requirements;
(xi) keep the Properties free and clear of monetary liens
(except pursuant to Section 11(d) or with required approval under
Section 11(b));
(xii) cause the Company, the Investment Entities and the
property manager under the Management Agreement to take such
commercially reasonable actions as may be necessary or appropriate to
own and operate the Properties in a professional, diligent and
first-class manner;
(xiii) not commit or suffer any waste of the Properties or
make or permit to be made any change in the use of the Properties which
will in any way materially increase the risk of fire or other hazard
arising out of the operation of the Properties, or take or cause to be
taken any action that might invalidate or give cause for cancellation
of any insurance policy, or do or permit to be done thereon anything
that could in any material way impair the value of the Properties;
(xiv) cause the Company, the Investment Entities and the
property manager under the Management Agreement to keep and maintain
proper and accurate books, records and accounts (separate from those of
MC's affiliates or any other person or entity) reflecting all of the
financial affairs of the Company and the Investment Entities and all
items of income and expense in connection with the operation of the
Properties;
(xv) cause the property manager under the Management Agreement
and the asset manager under Asset Management Agreement to comply with
the terms and conditions of such agreements and not permit a breach
thereof by such managers;
(xvi) cause the Company and the Investment Entities to pay
promptly all taxes, assessments and other governmental impositions with
respect to the Company, the Investment Entities and the Properties;
(xvii) if the Company or the Investment Entities have
employees, cause the payment of the salaries and other compensation of
such employees (or the proportionate share of such salaries and
compensation allocable to the Company and the Investment Entities, as
applicable);
(xviii) provide prompt notice to SLAB of any material breach
hereunder by MC;
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(xix) maintain (with respect to MC) an "investment grade"
rating by Standard Poor's or Moody's or a book value determined in
accordance with generally accepted accounting principles (excluding
good will and adding back all accumulated depreciation and
amortization) of at least $1,500,000,000;
(xx) not cause or permit the Company and the Investment
Entities to commingle their funds and other assets with those of any
affiliate of MC or any other person or entity; and
(xxi) cause the Company and the Investment Entities to
maintain their assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify their individual assets
from those of any affiliate of MC or any other person or entity.
12. DETERMINATION OF PROFITS AND LOSSES. The net profits and net
losses of the Company shall be as determined for federal income tax purposes for
each calendar year. The Members intend that the Company be treated as a
partnership for tax purposes and each Investment Entity be treated as a
disregarded entity for income tax purposes. The Members hereby agree that they
will not cause or permit the Company or any Investment Entity to become a
taxable entity. No Member shall under any circumstances be required to pay or
restore any portion of the negative balance in its capital account or to repay
any portion thereof to the Company, any Company creditor or another Member. No
Member may demand the return of its capital contributions, it being intended
that all distributions be made pursuant to Section 13 below.
13. ALLOCATION OF INCOME AND LOSSES; DISTRIBUTIONS; GUARANTEED
PAYMENTS.
(a) TAX ALLOCATIONS.
(i) Tax losses of the Company for any fiscal period shall be
allocated (A) first to MC, until its capital account has been reduced to
zero, (B) then to SLAB, until its capital account has been reduced to
zero, and (C) then to the Members in accordance with their Residual
Percentages.
(ii) Taxable income of the Company for any fiscal period shall be
allocated (A) first to SLAB, until SLAB has been allocated an aggregate
amount of income under this clause (ii) equal to the amount
distributable to SLAB pursuant to Section 13(b)(2)(i) and (B) thereafter
to the Members in accordance with their Residual Percentages.
(iii) For purposes of this Section 13(a)(iii), Guaranteed
Payments shall not be treated as distributions. On or before April 15 of
each year, the Company shall, upon the written request of any Member
("Requesting Member"), pay (to the extent the Company has available
funds, determined prior to making distributions for the preceding
calendar year), as an advance against future distributions to the
Requesting Member under Section 13(b)(1) and
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13(b)(2)(iv), (a "Tax Payment Advance") to the Requesting Member an
amount equal to the excess of (A) 40% multiplied by the Requesting
Member's cumulative allocations of income pursuant to Section
13(a)(ii)(B), over (B) the sum of (x) the Requesting Member's
cumulative distributions from the Company under Sections 13(b)(1) and
13(b)(2)(iv) from the date hereof through the end of the preceding
calendar year (net of repayments thereof) and (y) the outstanding
balance(s) of all the unpaid Tax Payment Advances to such Requesting
Member. A copy of any request for a Tax Payment Advance shall be given
by the requesting Member to the other Member. Such advance shall not
bear interest, and shall be repayable both (A) out of future
distributions to the Requesting Member under Sections 13(b)(1) and
13(b)(2)(iv) (such payment to be made by withholding such
distributions, with such distributions being deemed to have been
distributed to the Requesting Member and then paid by the Requesting
Member to the Company), and (B) if earlier, upon the liquidation of the
Company or upon demand following the Requesting Member's ceasing for
any reason to be a Member hereunder, which payments shall be made from
the distributions otherwise payable to such Member in connection with
the liquidation. In no event shall the Company be required to borrow
money or to sell any asset in order to fund any Tax Payment Advance.
(b) DISTRIBUTIONS.
(1) CASH FLOW FROM OPERATIONS. Distributions of net available
cash from any source (other than distributions of sale, casualty, condemnation,
loan or securitization proceeds described in Section 11(d)) and proceeds of any
other capital transactions remaining after Guaranteed Payments (as defined in
and in accordance with Section 13(c) below), expenses, debt service, reserves
and capital improvements for any period shall be made as follows, after first
repaying any loans made by the Members to the Company and Investment Entities
pursuant to Section 9 (loans which have been outstanding the longest shall be
repaid first, with any loans that have been outstanding for an equal period
being repaid pro rata, in proportion to such loans' respective balances, and
with the accrued and unpaid interest being repaid first and then the principal
being repaid next) (such excess net available cash, the "Excess Cash Flow"): to
the Members, PARI PASSU, 55% to SLAB and 45% to MC; PROVIDED, HOWEVER, that the
Managing Member shall have the right to not make the distribution of such Excess
Cash Flow distributable to SLAB and hold it in Company reserve earmarked to make
the distribution under Section 13(b)(2)(i) (in which case, the amount
distributable to SLAB under Section 13(b)(2)(i) shall be reduced by the amount
so earmarked when distribution thereof is made to SLAB under Section
13(b)(2)(i)) and distribute such Excess Cash Flow to SLAB as a distribution
under Section 13(b)(2)(i) at such time as SLAB would otherwise be entitled to a
distribution under Section 13(b)(2)(i).
(2) SALE/REFINANCING PROCEEDS. Distributions of sale,
disposition, loan or securitization proceeds described in Section 11(d) (or any
insurance or condemnation proceeds not used to repair, rebuild or replace the
Properties) and proceeds of any other capital transactions remaining after
Guaranteed Payments (as defined in and in accordance with the subsection
entitled
19
<PAGE>
"Guaranteed Payments" below in this Section 13), and reasonable, ordinary and
necessary expenses being paid in connection therewith shall be made in the
following order of priority after first repaying any loans made by the Members
to the Company and Investment Entities (loans which have been outstanding the
longest shall be repaid first, with any loans that have been outstanding for an
equal period being repaid pro rata, in proportion to such loans' respective
balances, and with the accrued and unpaid interest being repaid first and then
the principal being repaid next):
(i) First, such amounts (including reserved amounts under Section
13(b)(1)) shall be distributed to SLAB until SLAB has received an amount
equal to (A) the product of two percent (2%) of SLAB's Capital
Contributions times (B) the number of years (commencing with January 1,
2000) during which such Capital Contributions were outstanding (with
each partial year treated as a full year) reduced by cash flow paid to
SLAB in the 55/45 ratio under Section 13(b)(1) and not held in reserves
described in Section 13(b)(1);
(ii) Second, the balance shall be distributed to SLAB to the
extent of its Capital Contributions attributable to the Properties as
set forth on Exhibit C for which a sale, loan or securitization has
occurred and which have not previously been repaid pursuant to this
section 13(b)(2)(ii);
(iii) Third, the balance shall be distributed to MC to the extent
of its Capital Contributions attributable to the Properties as set forth
on Exhibit F for which a sale, loan or securitization has occurred which
have not been repaid by distributions to it under this Section
13(b)(2)(iii); and
(iv) Next, the balance shall be distributed to the Members, PARI
PASSU, 55% to SLAB and 45% to MC.
(3) LIQUIDATING DISTRIBUTIONS. Upon liquidation of the Company,
after all of the Company's debts have been paid, distributions shall be made in
accordance with the Members' capital accounts.
(c) GUARANTEED PAYMENTS. The Company shall make guaranteed payments
under Code Section 707(c) ("Guaranteed Payments"), on the fifth (5th) day of
each calendar month (commencing with February 5, 2000) from available cash from
any source, to the Members for the use of their respective capital contributions
as follows (with amounts not paid currently being added to the unpaid principal
amount of the Guaranteed Payments then owing):
(1) First, to SLAB in an amount equal to SLAB's accrued and
unpaid Guaranteed Payments, which shall mean an amount equal to SLAB's
capital contributions which have not been repaid by distributions to it
under Section 13(b)(2)(ii) multiplied by LIBOR plus 200 basis
20
<PAGE>
points per annum, compounded monthly (using the rate under Section 9
applicable that month applied to total outstanding balance), until the
date the payment is made; and
(2) After making the Guaranteed Payments described in Section
13(c)(1), to MC in an amount equal to MC's accrued and unpaid Guaranteed
Payments, which shall mean an amount equal to MC's capital contributions
which have not been repaid by distributions to it under Section
13(b)(2)(iii) multiplied by the rate in effect from time to time that is
122% of the rate used in Section 13(c)(1).
14. RESTRICTIONS ON TRANSFER. Neither of the Members shall
transfer, assign, pledge or hypothecate any of their respective right, title or
interest in the Company, or permit transfers of direct or indirect ownership in
such Member without the prior written approval of the other Member, which
approval may be granted or withheld in the other Member's sole and absolute
discretion, except as may be required by law or by reason of an individual's
death, incapacity or divorce, and except as necessary to effect the transactions
described in Section 11(d). Nothing in this Section 14 shall be construed to
prohibit or restrict any sale, transfer, assignment, pledge or hypothecation of
any stock (or any interests therein) of any publicly-traded entity which
directly, indirectly or ultimately owns any interest in any Member, or the
transfer of units or partnership interests in Mack-Cali Realty, L.P, or the
transfer of any direct or indirect interest in the Company by any Member to its
affiliates, or the transfer of any interest in DLJ Mortgage Capital, Inc. No
transfer herein shall affect the obligations and liabilities of the transferring
party hereunder.
15. WAIVER OF NON-COMPETITION. Each Member hereby acknowledges
and agrees that each Member and its affiliates may continue to pursue their
existing businesses, including without limitation, acquisition, financing,
development, operation, management, leasing of, and investments in, any
properties or projects, and the disposition thereof, regardless of whether the
same is competitive with the Properties. Each Member further acknowledges and
agrees that no Member or any of its affiliates shall be obligated to present any
particular investment or business opportunity to the Company or the other Member
or its affiliates, even if such opportunity is of a character which, if
presented to the Company or the other Member, could be undertaken by the Company
or the other Member, and each Member and each of its affiliates shall have the
right to acquire for its own account, or to recommend to others, any such
opportunity. Notwithstanding any provision to the contrary in this Agreement, MC
hereby agrees not to induce any existing tenant at the Properties (while owned
by the Company or the Investment Entities owned by the Company) to breach,
modify or terminate such tenant's lease at the Properties in favor of a lease at
another property owned by MC or its affiliates
16. ACCOUNTANTS AND ATTORNEYS; ENGINEERING REPORTS AND
APPRAISALS. PricewaterhouseCoopers shall be the Company's accountants, and the
Company may engage any of Battle Fowler LLP, Weil Gotshal & Manges LLP and Farer
Siegel & Fersko (with respect to environmental matters) as Company's attorneys.
Other accountants may be engaged so long as their engagement is not to perform
an audit of the Company's or any Investment Entity's books or to sign tax
21
<PAGE>
returns for the Company or any Investment Entity (all of which must be done by
PricewaterhouseCoopers). Any change of Company accountants, or additional
attorneys, shall be subject to the reasonable approval of both Members. The
Managing Member shall cause engineering reports and appraisals of the Properties
to be prepared at the Company expense within 30 days after the Outside Closing
Date.
17. REPRESENTATIONS AND WARRANTIES. Each Member hereby represents
and warrants to the other Member as follows:
i. Such Member is duly formed and validly existing under the
laws of the jurisdiction of its organization with full
power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this
Agreement;
ii. This Agreement has been duly authorized, executed and
delivered by such Member and constitutes the valid and
legally binding agreement of such Member, enforceable in
accordance with its terms against such Member, except as
such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar laws relating to
creditors' rights generally, by general equitable
principles and by any implied covenant of good faith and
fair dealing;
iii. The execution and delivery of this Agreement by such
Member and the performance of its duties and obligations
hereunder do not result in a breach of any of the terms,
conditions or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, credit
agreement, note or other evidence of indebtedness, or any
lease or other agreement, or any license, permit,
franchise or certificate to which such Member is a party
or by which it is bound or to which its properties are
subject or require any authorization or approval under or
pursuant to any of the foregoing, or violate any statute,
regulation, law, order, writ, injunction, judgment or
decree to which such Member is subject, or require any
governmental consent; and
iv. Such Member is relying on such Member's own tax, legal
and accounting professionals and consultants in
connection with such Member entering into this Agreement.
18. WAIVER OF RIGHT OF PARTITION. Each Member hereby waives all
rights to commence an action for the partition of the Company, the Investment
Entities or the Company's or the Investment Entities' property.
22
<PAGE>
19. MEETINGS. Meetings of the Members shall not be required
unless requested by any Member by written notice to the Company and the other
Member. All Members shall be given written notice of any meeting of the Company
at least twenty (20) days prior to any such meeting by the Member requesting
such meeting. Any meetings shall be held at the record-keeping office of the
Company or at any other reasonably convenient location within New York City or
New Jersey as the requesting Member may reasonably approve and specify in such
notice.
20. COUNTERPARTS. This Agreement may be executed in counterparts
and execution and delivery by facsimile transmission is authorized for all
purposes.
21. NOTICES. Any notices or solicitations of approval required or
permitted to be given under the terms of this Agreement shall be in writing and
shall be deemed to have been given when (i) personally delivered with signed
receipt obtained, (ii) when transmitted by facsimile machine, with printed
confirmation of successful transmission to the facsimile machine number set
forth in the appropriate address listed below being obtained by the sender from
the sender's facsimile machine or telephonically from the addressee, or (iii)
when deposited in the United States first class mail if sent postage prepaid by
registered or certified mail, return receipt requested, in each case addressed
as follows:
IF TO MC:
c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
with separate notices to the attention of:
Mr. Mitchell E. Hersh
Tel: (908) 272-8000
Fax: (908) 272-6755
and
Roger W. Thomas, Esq.
Tel: (908) 272-2612
Fax: (908) 497-0485
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Richard L. O'Toole, Esq.
Leslie H. Loffman, Esq.
Tel: (212) 856-7000
23
<PAGE>
Fax: (212) 856-7810
and to:
Battle Fowler LLP
2049 Century Park East, Suite 2350
Los Angeles, California 90067
Attn: Sanford C. Presant, Esq.
Sung H. Shin, Esq.
Tel: (310) 788-3000
Fax: (310) 277-0336
IF TO SLAB:
SLAB Investments Holding, Inc.
c/o Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, New York 10172
with separate notices to the attention of:
Mr. John Bricker
Tel: (212) 892-2657
Fax: (212) 892-6101
and
Mr. Dante LaRocca
Tel: (212) 892-4964
Fax: (212) 892-6101
and
280 Park Avenue, 5th Floor
New York, New York 10172
Attn: Mr. Mark Competiello
Tel: (212) 892-4939
Fax: (212) 892-4955
24
<PAGE>
with a copy to:
Weil Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attn: J. Philip Rosen, Esq.
Larry Gelbfish, Esq.
Tel: (212) 310-8000
Fax: (212) 310-8007
The time to respond to any notice shall commence to run on the date of delivery
at the appropriate addresses (or attempted delivery if delivery is refused
during normal business hours).
22. ATTORNEYS' FEES. In the event a party hereto files any
action, lawsuit or other legal proceeding against another party hereto by reason
of any breach of any of the covenants, agreements or provisions contained in
this Agreement, the prevailing party in such proceeding will be entitled to have
and recover certain fees from the other party including all reasonable
attorneys' fees and costs resulting therefrom.
23. SET-OFF. In addition to any rights and remedies of the
Members provided by law, each Member shall have the right, without prior notice
to the Company (with such notice being expressly waived by the Company to the
extent permitted by law) upon any Bankruptcy Action with respect to the Company
or any Investment Entity, to set-off and apply against any amounts owed to such
Member, any amounts owing from such Member to the Company, at or at any time
after the occurrence of such Bankruptcy Action, and the aforesaid right of
set-off may be exercised by such Member against the Company or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor, or anyone
else claiming through or against the Company, notwithstanding that such right of
set-off shall not have been exercised by such Member prior to the making,
filing, issuance or service upon such Member of, or of notice of, any such
Bankruptcy Action.
24. CONSTRUCTION. Headings at the beginning of each section or
subsection are solely for the convenience of the parties and are not a part of
this Agreement. This Agreement shall not be construed as if it had been prepared
by one of the parties, but rather as if both parties had prepared the same. All
exhibits, schedules and other attachments hereto are incorporated as a part of
this Agreement by this reference. This Agreement shall be interpreted using New
Jersey law (without regard to conflict of law provisions). As used herein, the
words "lease," "tenant" and any derivatives thereof shall also include subleases
and subtenants, as the context permits or requires.
25. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all of the other conditions and
25
<PAGE>
provisions of this Agreement will nevertheless remain in full force and effect,
so as to cause the economic substance of the transactions contemplated hereby
not to be affected in any adverse manner to either party.
26. SOLE DISCRETION. In any instance in this Agreement in which a
Member (including the Managing Member) may act in its sole discretion, such sole
discretion means the sole, absolute and unfettered discretion of such Member,
without any express or implied obligation or duty of good faith.
27. PRESS RELEASES. Before either Member discloses in writing to
any third party any of the terms and conditions of this Agreement (or the
transaction contemplated hereby), such Member shall provide a copy of such
writing to the other Member for its review and comment (but not its approval).
Either Member may request a meeting to discuss any such writing.
[signatures follow]
26
<PAGE>
IN WITNESS WHEREOF, the undersigned Members have executed this
Agreement as of the date first written above.
SLAB INVESTMENTS HOLDING, INC.,
a Delaware corporation
By:
------------------------------------
John Bricker, its Vice President
MACK-CALI REALTY, L.P.,
a Delaware limited partnership
By: Mack-Cali Realty Corporation,
a Maryland corporation,
its general partner
By:
------------------------------
Roger W. Thomas,
its Executive Vice President
[END OF SIGNATURES]
27
<PAGE>
EXHIBIT A
---------
CAPITAL CONTRIBUTIONS; FUNDING PROPORTIONS;
AND RESIDUAL PERCENTAGES
<TABLE>
<CAPTION>
CAPITAL FUNDING RESIDUAL
MEMBER CONTRIBUTIONS PROPORTIONS PERCENTAGES
<S> <C> <C> <C>
MC $ 68,400,000 45% 45%
SLAB $ 83,600,000 55% 55%
------------- ---- ----
Total: $ 152,000,000 100% 100%
</TABLE>
A-1
<PAGE>
EXHIBIT B
---------
LEGAL DESCRIPTION
[see attached]
B-1
<PAGE>
EXHIBIT C
---------
SLAB ALLOCATION OF CAPITAL CONTRIBUTIONS
[see attached]
C-1
<PAGE>
EXHIBIT D
REPORTING REQUIREMENTS
1. GOVERNMENTAL REPORTS; MEETINGS. MC shall, at Company expense, use
reasonable efforts to cause to be prepared and timely filed with appropriate
federal, state and foreign regulatory and administrative bodies, all reports
required to be filed with such entities under then current applicable laws,
rules and regulations, subject to the reasonable approval of the Members. Such
reports shall be prepared on the accounting or reporting basis required by such
regulatory bodies. Each Member shall be provided with a copy of any such report.
2. ACCESS; AUDIT. Each Member shall permit any other Member to review
and copy, during normal business hours at the office of the Company, all Company
financial records and information. Each Member shall have the right to have such
records and information audited at Company expense; PROVIDED, HOWEVER, if such
audit reveals material errors or omissions in such records and information due
to actual fraud or misappropriation of funds by any Member, such Member shall
reimburse the Company for the expense of audit. MC shall maintain (at the office
of the Company) reports required or otherwise prepared and delivered hereunder,
copies of which shall be furnished to each Member when available, at the
Company's expense, together with (upon request from any Member) such
supplementary records and reports as are necessary to reflect the allocation
among the Members of the tax items and distributions of the Company shown on any
reports furnished (or required to be furnished) to the Members under this
Agreement. MC shall promptly provide any and all records, reports and
information regarding the Company, any Investment Entity or any Property
requested by SLAB from time to time to the extent such records, reports and
information are in MC's possession or control.
3. FINANCIAL AND STATUS REPORTS. (a) MC shall cause the following
reports to be issued at Company expense:
(i) MC shall use reasonable efforts to cause to be issued to the
Members, at Company expense, audited annual financial reports (except
for year 1999, which may be unaudited but certified by MC) within 90
days following the close of each year (including a balance sheet and
income and expense statements, showing sources and uses of funds, cash
on hand, distributions, changes in financial position, tax information,
unpaid Guaranteed Payments, fees under the Asset Management Agreement
and the Management Agreement, Capital Contributions, and unrepaid Member
loans on a Member-by-Member basis). Such financial reports shall be
prepared using GAAP; and
(ii) MC shall use reasonable efforts to cause to be issued to the
Members quarterly unaudited financial reports, in reasonable detail and
certified by the Managing Member, within 40 days after the close of each
calendar quarter other than the fourth quarter of each year
D-1
<PAGE>
(commencing with the calendar quarter ending on March 31, 2000),
internally prepared by MC and reviewed by the Company's accountants,
including a balance sheet and income and expense statements (showing
receipts on a tenant-by-tenant basis, and material defaults, to the
extent requested by either MC or SLAB upon reasonable notice), sources
and uses of funds, cash on hand, distributions, changes in financial
position, unpaid Guaranteed Payments, Asset Management Fees, Capital
Contributions, and unrepaid Member loans.
(b) In preparing reports required under this Agreement, MC may rely on
information furnished by third parties (including property managers and
accountants) to the extent that it is reasonable to do so.
D-2
<PAGE>
EXHIBIT E
---------
CURRENT BUDGETS
[MACK-CALI TO PROVIDE TO DLJ FOR APPROVAL]
E-1
<PAGE>
EXHIBIT F
---------
MC ALLOCATION OF CAPITAL CONTRIBUTIONS
[see attached]
F-1
<PAGE>
Exhibit 12
Mack-Cali Realty, L.P. and Subsidiaries
Computation of Ratios of Earnings to Combined Fixed Charges and
Preferred Unit Distribution Requirement
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Income before gain on sale
of property, minority interest
and extraordinary item(A) $150,726 $151,464 $39,582 $37,179 $17,146
Add:
Interest expense attributable to the
Operating Partnership 102,960 88,043 9,670 4,672 1,175
Interest expense attributable to the
unconsolidated Property Partnerships -- -- 29,408 9,086 8,942
Interest portion (33 percent) of ground
rents on land leases attributable to
the Property Partnerships 187 140 29 -- --
Less:
Gain on sale of rental property
attributable to unconsolidated
Property Partnerships -- -- -- (5,658) --
Intercompany interest income
recorded by unconsolidated
Property Partnerships -- -- (3,215) -- --
---------- ---------- ---------- ---------- ------------
Income before gain on sale of property,
minority interest and extraordinary
item, as adjusted(B) $253,873 $239,647 $75,474 $45,279 $27,263
========== ========== ========== ========== ============
Fixed Charges:
Interest expense attributable to the
Operating Partnership $102,960 $88,043 $9,670 $4,672 $1,175
Interest expense attributable to
unconsolidated majority-owned
Property Partnerships -- -- 29,408 9,086 8,942
Interest portion (33 percent) of ground
rents on land leases attributable to
the Property Partnerships 187 140 29 -- --
Capitalized interest costs attributable to
the Property Partnerships 6,840 3,547 820 118 27
---------- ---------- ---------- ---------- ------------
Total fixed charges $109,987 $91,730 $39,927 $13,876 $10,144
========== ========== ========== ========== ============
Preferred unit distribution requirement $15,476 $16,313 $ 888 $ -- $ --
Beneficial conversion feature(C) -- -- 29,361 -- --
Ratio of pre-tax income to net income 1.00 1.00 1.00 -- --
---------- ---------- ---------- ---------- ------------
Preferred unit distribution factor 15,476 16,313 30,249 -- --
Total fixed charges 109,987 91,730 39,927 13,876 10,144
---------- ---------- ---------- ---------- ------------
Total fixed charges and preferred
unit distribution requirement $125,463 $108,043 $70,176 $13,876 $10,144
========== ========== ========== ========== ============
Ratio of earnings to combined fixed
charges and preferred unit
distribution requirement 2.02(D) 2.22 1.08 3.26(E) 2.69
</TABLE>
- ------------
(A) Represents pre-tax income before gain on sale of property,
minority interest and extraordinary item.
(B) Represents earnings before fixed charges.
(C) In connection with the funding of the Mack Transaction, the Operating
Partnership issued certain Preferred Units with a conversion rate of
$34.65 per common unit, an amount less than the $39.0626 closing stock
price on the date of closing. Accordingly, the Operating Partnership
recorded, on December 11, 1997, the financial value ascribed to this
beneficial conversion feature.
(D) Represents the ratio of earnings to fixed charges, excluding gain on sale
of rental property of $1,957. The ratio of earnings to fixed charges,
including gain on sale of rental property, was 2.04.
(E) Represents the ratio of earnings to fixed charges, excluding gain on sale
of rental property of $5,658. The ratio of earnings to fixed charges,
including gain on sale of rental property, was 3.67.
<PAGE>
Exhibit 21
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
11 COMMERCE DRIVE ASSOCIATES L.L.C. NJ
12 SKYLINE ASSOCIATES L.L.C. NY
120 PASSAIC STREET LLC NJ
1717 REALTY ASSOCIATES L.P. NJ
20 COMMERCE DRIVE ASSOCIATES L.L.C. NJ
300 TICE REALTY ASSOCIATES L.L.C. NJ
300 TICE REALTY ASSOCIATES L.P. NJ
400 PRINCETON ASSOCIATES L.L.C. NJ
400 PRINCETON ASSOCIATES, L.P. NJ
400 RELLA REALTY ASSOCIATES L.L.C. NY
500 COLUMBIA TURNPIKE ASSOCIATES L.L.C. NJ
600 PARSIPPANY ASSOCIATES L.L.C. NJ
600 PARSIPPANY ASSOCIATES L.P. NJ
78 PINSON PARTNERS L.L.C. NJ
795 FOLSOM REALTY ASSOCIATES L.P. CA
9060 EAST VIA LINDA CO., LTD. AZ
AIRPORT PROPERTIES ASSOCIATES LLC NJ
BMP SOUTH REALTY L.L.C. NJ
BRANDEIS BUILDING INVESTORS L.L.C. NE
BRANDEIS BUILDING INVESTORS, L.P. DE
BRIDGE PLAZA ASSOCIATES L.L.C. NJ
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
BRIDGE PLAZA REALTY ASSOCIATES L.P. NJ
C.W. ASSOCIATES L.L.C. NJ
CAL-HARBOR II & III URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR IV URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR NO. PIER URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR SO. PIER URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR V URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR VI URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR VII URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-TREE REALTY ASSOCIATES L.P. PA
CALI AIRPORT REALTY ASSOCIATES L.P. PA
CALI HARBORSIDE (FEE) ASSOCIATES L.P. NJ
CALI HARBORSIDE PLAZA I (FEE) ASSOCIATES L.P. NJ
CALI PENNSYLVANIA REALTY ASSOCIATES L.P. PA
CALI PROPERTY HOLDINGS I, L.P. DE
CALI PROPERTY HOLDINGS II, L.P. DE
CALI PROPERTY HOLDINGS III, L.P. DE
CALI PROPERTY HOLDINGS IV, L.P. DE
CALI PROPERTY HOLDINGS IX, L.P. MD
CALI PROPERTY HOLDINGS V, L.P. DE
CALI PROPERTY HOLDINGS VI, L.P. DE
CALI PROPERTY HOLDINGS VII, L.P. DE
CALI PROPERTY HOLDINGS VIII, L.P. DE
CALI PROPERTY HOLDINGS X, L.P. DE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
CALI-GROVE STREET URBAN RENEWAL ASSOCIATES L.P. NJ
CENTURY PLAZA ASSOCIATES L.L.C. NJ
COLLEGE ROAD REALTY L.L.C. NJ
COMMERCENTER REALTY ASSOCIATES L.L.C. NJ
COMMERCENTER REALTY ASSOCIATES L.P. NJ
CROSS WESTCHESTER REALTY ASSOCIATES L.L.C. NY
D.B.C. REALTY L.L.C. NJ
ELMSFORD REALTY ASSOCIATES L.L.C. NY
FIVE SENTRY REALTY ASSOCIATES L.P. PA
GROVE STREET ASSOCIATES OF JERSEY CITY LIMITED PARTNERSHIP NJ
HORIZON CENTER REALTY ASSOCIATES L.L.C. NJ
HORIZON CENTER REALTY ASSOCIATES L.P. NJ
HORIZON CENTER REALTY L.L.C. NJ
JUMPING BROOK REALTY ASSOCIATES L.L.C. NJ
JUMPING BROOK REALTY ASSOCIATES L.P. NJ
KEMBLE-MORRIS, LLC NJ
LINWOOD REALTY L.L.C. NJ
M-C CALIFORNIA SERVICES, INC. DE
M-C CAPITOL ASSOCIATES L.L.C. DE
M-C HARSIMUS PARTNERS L.L.C. NJ
M-C HARSIMUS PARTNERS L.P. NJ
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
M-C PENN MANAGEMENT CORP. DE
M-C PROPERTIES CO. REALTY L.L.C. NJ
M-C ROCKLAND PARTNERS L.P. NY
M-C TEXAS MANAGEMENT L.P. TX
MACK-CALI ARIZONA CORPORATION DE
MACK-CALI B PROPERTIES, L.L.C. NJ
MACK-CALI BEARDSLEY LIMITED PARTNERSHIP AZ
MACK-CALI BRIDGEWATER CO., L.P. NJ
MACK-CALI BUILDING V ASSOCIATES L.L.C. NJ
MACK-CALI CALIFORNIA DEVELOPMENT ASSOCIATES L.P. CA
MACK-CALI CALIFORNIA PARTNERS L.P. CA
MACK-CALI CAMPUS REALTY L.L.C. NJ
MACK-CALI CENTURY III INVESTORS L.L.C. IA
MACK-CALI CENTURY III INVESTORS, L.P. DE
MACK-CALI CHESTNUT RIDGE, L.L.C. NJ
MACK-CALI CW REALTY ASSOCIATES L.L.C. NY
MACK-CALI D.C. MANAGEMENT CORP DE
MACK-CALI EAST LAKEMONT L.L.C. NJ
MACK-CALI F PROPERTIES L.P. NJ
MACK-CALI GLENDALE LIMITED PARTNERSHIP AZ
MACK-CALI METROPOLITAN, LTD. FL
MACK-CALI MID-WEST REALTY ASSOCIATES L.L.C. NY
MACK-CALI MORRIS REALTY L.L.C. NJ
MACK-CALI NORTH HILLS L.L.C. NY
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
MACK-CALI PROPERTIES CO. #3 L.P. NJ
MACK-CALI PROPERTIES CO. NO. 11, L.P. NY
MACK-CALI PROPERTY TRUST MD
MACK-CALI REALTY ACQUISITION CORP. DE
MACK-CALI REALTY CONSTRUCTION CORPORATION NJ
MACK-CALI SERVICES, INC. NJ
MACK-CALI SO. WEST REALTY ASSOCIATES L.L.C. NY
MACK-CALI STAMFORD REALTY ASSOCIATES, L.P. CT
MACK-CALI SUB I, INC. DE
MACK-CALI SUB II, INC. DE
MACK-CALI SUB III, INC. DE
MACK-CALI SUB IV, INC. DE
MACK-CALI SUB IX, INC. DE
MACK-CALI SUB V, INC. DE
MACK-CALI SUB VI, INC. DE
MACK-CALI SUB VII, INC. DE
MACK-CALI SUB VIII, INC. DE
MACK-CALI SUB X, INC. DE
MACK-CALI SUB XI, INC. DE
MACK-CALI SUB XII, INC. DE
MACK-CALI SUB XIII, INC. DE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
MACK-CALI SUB XIV, INC. DE
MACK-CALI SUB XIX, INC. DE
MACK-CALI SUB XV, INC. DE
MACK-CALI SUB XVI, INC. DE
MACK-CALI SUB XVII, INC. DE
MACK-CALI SUB XVIII, INC. DE
MACK-CALI SUB XX, INC. DE
MACK-CALI SUB XXI, INC. DE
MACK-CALI SUB XXII, INC. DE
MACK-CALI SUB XXIII, INC. DE
MACK-CALI TEXAS PROPERTY L.P. TX
MACK-CALI WILLOWBROOK COMPANY L.P. NJ
MACK-CALI WOODBRIDGE II L.P. NJ
MACK-CALI WP REALTY ASSOCIATES L.L.C. NY
MACK-CALI-B PROPERTIES L.P. NJ
MACK-CALI-R COMPANY NO. 1 L.P. NJ
MAIN-MARTINE MAINTENANCE CORP. NY
MANHASSET ASSOCIATES L.L.C. NY
MARTIN AVENUE REALTY ASSOCIATES L.L.C. NY
MC-CAP L.L.C. DE
MID-WEST MAINTENANCE CORP. NY
MID-WESTCHESTER REALTY ASSOCIATES L.L.C. NY
MONMOUTH/ATLANTIC REALTY ASSOCIATES L.L.C. NJ
MONMOUTH/ATLANTIC REALTY ASSOCIATES L.P. NJ
MOORESTOWN REALTY ASSOCIATES L.L.C. NJ
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
MOORESTOWN REALTY ASSOCIATES L.P. NJ
MORRISTOWN TEN NJ
MOUNT AIRY REALTY ASSOCIATES L.L.C. NJ
MOUNT AIRY REALTY ASSOCIATES L.P. NJ
MOUNTAINVIEW REALTY L.L.C. NJ
OFFICE ASSOCIATES L.L.C. NJ
OFFICE ASSOCIATES, LTD. NJ
ONE SYLVAN REALTY, L.L.C. NJ
PARSIPPANY CAMPUS REALTY ASSOCIATES L.L.C. NJ
PARSIPPANY CAMPUS REALTY ASSOCIATES L.P. NJ
PHELAN REALTY ASSOCIATES L.P. CA
PRINCETON CORPORATE CENTER REALTY ASSOCIATES L.L.C. NJ
PRINCETON CORPORATE CENTER REALTY ASSOCIATES L.P. NJ
PRINCETON OVERLOOK REALTY L.L.C. NJ
ROSELAND II L.L.C. NJ
ROSELAND II LIMITED PARTNERSHIP NJ
ROSELAND OWNERS ASSOCIATES L.L.C. NJ
SHELTON REALTY ASSOCIATES L.P. CT
SIX COMMERCE DRIVE ASSOCIATES L.L.C. NJ
SKYLINE REALTY L.L.C. NY
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
SO. WESTCHESTER REALTY ASSOCIATES L.L.C. NY
SOUTH-WEST MAINTENANCE CORP. NY
STEVENS AIRPORT REALTY ASSOCIATES L.P. PA
TALLEY MAINTENANCE CORP. NY
TALLEYRAND REALTY ASSOCIATES L.L.C. NY
TENBY CHASE APARTMENTS L.L.C. NJ
THE GROVE STREET URBAN RENEWAL CORP. NJ
THE HORIZON CENTER PROPERTY OWNERS ASSOCIATION, INC. NJ
U.S. UTILIPRO SOLUTIONS L.L.C. DE
UTILIPRO SOLUTIONS, INC. NJ
VAUGHN PARTNERS L.L.C. NJ
VAUGHN PRINCETON ASSOCIATES L.L.C. NJ
VAUGHN PRINCETON ASSOCIATES L.P. NJ
WEST-AVE. MAINTENANCE CORP. CT
WESTAGE REALTY L.L.C. NY
WHITE PLAINS REALTY ASSOCIATES L.L.C. NY
</TABLE>
<PAGE>
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-57103) of Mack-Cali Realty, L.P. of our report
dated February 22, 2000, relating to the financial statements and financial
statement schedule, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
- ----------------------------------------
PricewaterhouseCoopers LLP
New York, New York
March 15, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 15,752
<SECURITIES> 0
<RECEIVABLES> 7,482
<ALLOWANCES> 672
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,654,845
<DEPRECIATION> 256,629
<TOTAL-ASSETS> 3,629,601
<CURRENT-LIABILITIES> 0
<BONDS> 1,490,175
0
0
<COMMON> 0
<OTHER-SE> 1,897,157
<TOTAL-LIABILITY-AND-EQUITY> 3,629,601
<SALES> 0
<TOTAL-REVENUES> 551,484
<CGS> 0
<TOTAL-COSTS> 255,860
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,960
<INCOME-PRETAX> 150,726
<INCOME-TAX> 0
<INCOME-CONTINUING> 150,647
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152,604
<EPS-BASIC> 2.05
<EPS-DILUTED> 2.04
</TABLE>
