<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from........................to........................
Commission file number 333-57103
Mack-Cali Realty, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3315804
- ------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016-3501
- --------------------------------------------------------------------------------
(Address or principal executive office)
(Zip Code)
(908) 272-8000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or such shorter period that the
Registrant was required to file such report) YES /X/ NO / / and (2) has been
subject to such filing requirements for the past ninety (90) days YES /X/
NO / /.
<PAGE>
MACK-CALI REALTY, L.P.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
<S> <C>
Consolidated Balance Sheets as of March 31, 2000
and December 31, 1999 ................................. 4
Consolidated Statements of Operations for the three months
ended March 31, 2000 and 1999 ......................... 5
Consolidated Statement of Changes in Partners' Capital
for the three months ended March 31, 2000 ............. 6
Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 and 1999 ......................... 7
Notes to Consolidated Financial Statements ................ 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................. 30
Item 3. Quantitative and Qualitative Disclosures about Market Risk 55
PART II OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings ......................................... 56
Item 2. Changes in Securities and Use of Proceeds ................. 56
Item 3. Defaults Upon Senior Securities ........................... 56
Item 4. Submission of Matters to a Vote of Security Holders ....... 56
Item 5. Other Information ......................................... 56
Item 6. Exhibits .................................................. 57
Signatures ................................................ 60
</TABLE>
2
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MACK-CALI REALTY, L.P.
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The accompanying unaudited consolidated balance sheets, statements of
operations, of changes in partners' capital, and of cash flows and
related notes, have been prepared in accordance with generally accepted
accounting principles ("GAAP") for interim financial information and in
conjunction with the rules and regulations of the Securities and
Exchange Commission ("SEC"). Accordingly, they do not include all of
the disclosures required by GAAP for complete financial statements. The
financial statements reflect all adjustments consisting only of normal,
recurring adjustments, which are in the opinion of management,
necessary for a fair presentation for the interim periods.
The aforementioned financial statements should be read in conjunction
with the notes to the aforementioned financial statements and
Management's Discussion and Analysis of Financial Condition and Results
of Operations and the financial statements and notes thereto included
in the Operating Partnership's Annual Report on Form 10-K and Form
10-K/A for the fiscal year ended December 31, 1999.
The results of operations for the three months ended March 31, 2000 are
not necessarily indicative of the results to be expected for the entire
fiscal year or any other period.
3
<PAGE>
<TABLE>
<CAPTION>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT UNIT AMOUNTS)
=======================================================================================================
March 31, December 31,
ASSETS 2000 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rental property
Land and leasehold interests $ 552,893 $ 549,096
Buildings and improvements 3,041,833 3,014,532
Tenant improvements 91,788 85,057
Furniture, fixtures and equipment 6,200 6,160
- -------------------------------------------------------------------------------------------------------
3,692,714 3,654,845
Less - accumulated depreciation and amortization (277,065) (256,629)
- -------------------------------------------------------------------------------------------------------
Total rental property 3,415,649 3,398,216
Cash and cash equivalents 6,174 8,671
Investments in unconsolidated joint ventures 91,497 89,134
Unbilled rents receivable 55,386 53,253
Deferred charges and other assets, net 66,805 66,436
Restricted cash 6,390 7,081
Accounts receivable, net of allowance for doubtful accounts
of $679 and $672 8,855 6,810
- -------------------------------------------------------------------------------------------------------
Total assets $ 3,650,756 $ 3,629,601
=======================================================================================================
LIABILITIES AND PARTNERS' CAPITAL
- -------------------------------------------------------------------------------------------------------
Senior unsecured notes $ 782,863 $ 782,785
Revolving credit facilities 216,208 177,000
Mortgages and loans payable 529,432 530,390
Distributions payable 42,501 42,499
Accounts payable and accrued expenses 50,674 63,394
Rents received in advance and security deposits 38,395 36,150
Accrued interest payable 5,630 16,626
- -------------------------------------------------------------------------------------------------------
Total liabilities 1,665,703 1,648,844
- -------------------------------------------------------------------------------------------------------
Minority interest in consolidated partially-owned properties 84,497 83,600
Commitments and contingencies
PARTNERS CAPITAL:
Preferred units, 229,304 and 229,304 units outstanding 235,200 235,200
General partner, 58,489,135 and 58,446,552 common units outstanding 1,445,839 1,441,882
Limited partners, 8,116,827 and 8,153,710 common units outstanding 210,993 211,551
Unit warrants, 2,000,000 and 2,000,000 outstanding 8,524 8,524
- -------------------------------------------------------------------------------------------------------
Total partners' capital 1,900,556 1,897,157
- -------------------------------------------------------------------------------------------------------
Total liabilities and partners' capital $ 3,650,756 $ 3,629,601
=======================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
============================================================================================
Three Months Ended March 31,
REVENUES 2000 1999
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Base rents $ 121,598 $ 116,080
Escalations and recoveries from tenants 16,668 14,860
Parking and other 3,322 3,900
Equity in earnings (loss) of unconsolidated joint ventures 1,137 (206)
Interest income 254 255
- --------------------------------------------------------------------------------------------
Total revenues 142,979 134,889
- --------------------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------------------
Real estate taxes 14,704 13,843
Utilities 10,379 9,592
Operating services 17,742 17,087
General and administrative 6,113 7,963
Depreciation and amortization 22,182 21,969
Interest expense 26,426 23,622
- --------------------------------------------------------------------------------------------
Total expenses 97,546 94,076
- --------------------------------------------------------------------------------------------
Income before gain on sale of land and minority interest 45,433 40,813
Gain on sale of land 2,248 --
- --------------------------------------------------------------------------------------------
Income before minority interest 47,681 40,813
Minority interest in consolidated partially-owned properties 2,090 --
- --------------------------------------------------------------------------------------------
Net income 45,591 40,813
Preferred unit distributions (3,869) (3,869)
- --------------------------------------------------------------------------------------------
Net income available to common unitholders $ 41,722 $ 36,944
============================================================================================
Basic earnings per unit $ 0.63 $ 0.55
Diluted earnings per unit $ 0.62 $ 0.55
- --------------------------------------------------------------------------------------------
Distributions declared per common unit $ 0.58 $ 0.55
- --------------------------------------------------------------------------------------------
Basic weighted average units outstanding 66,428 67,011
Diluted weighted average units outstanding 73,191 67,283
- --------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
<TABLE>
<CAPTION>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (IN THOUSANDS)
====================================================================================================================================
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, 2000 229 58,447 8,154 $235,200 $1,441,882 $211,551 $8,524 $1,897,157
Net income -- -- 3,869 36,615 5,107 -- 45,591
Distributions -- -- -- (3,869) (33,924) (4,708) -- (42,501)
Redemption of limited partner
units for shares of common stock -- 37 (37) -- 957 (957) -- --
Contributions - proceeds from
stock options exercised -- 5 -- -- 117 -- -- 117
Deferred compensation plan
for directors -- -- -- -- 27 -- -- 27
Amortization of stock compensation -- -- -- -- 165 -- -- 165
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2000 229 58,489 8,117 $235,200 $1,445,839 $210,993 $8,524 $1,900,556
====================================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
6
<PAGE>
<TABLE>
<CAPTION>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
==============================================================================================
Three Months Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES 2000 1999
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ 45,591 $ 40,813
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22,182 21,969
Amortization of stock compensation 165 --
Amortization of deferred financing costs and debt discount 901 601
Equity in (earnings) loss of unconsolidated joint ventures (1,137) 206
Gain on sale of land (2,248) --
Minority interest in consolidated partially-owned properties 2,090 --
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (2,133) (3,538)
Increase in deferred charges and other assets, net (2,857) (1,866)
Increase in accounts receivable, net (2,045) (2,846)
(Decrease) increase in accounts payable and accrued expenses (12,720) 148
Increase in rents received in advance and security deposits 2,245 2,575
(Decrease) increase in accrued interest payable (10,996) 1,592
- ----------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 39,038 $ 59,654
==============================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
- ----------------------------------------------------------------------------------------------
Additions to rental property $ (39,801) $ (21,673)
Investments in unconsolidated joint ventures (2,625) (22,474)
Distributions from unconsolidated joint ventures 1,299 1,040
Proceeds from sale of land 4,179 --
Decrease (increase) in restricted cash 691 (352)
- ----------------------------------------------------------------------------------------------
Net cash used in investing activities $ (36,257) $ (43,459)
==============================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
- ----------------------------------------------------------------------------------------------
Proceeds from senior unsecured notes $ -- $ 597,252
Proceeds from revolving credit facilities 67,876 40,900
Proceeds from mortgages and loans payable -- 45,500
Repayments of revolving credit facilities (28,668) (601,900)
Repayments of mortgages and loans payable (869) (44,932)
Distributions from consolidated partially-owned properties (1,193) --
Repurchase of general partner units -- (713)
Payment of financing costs (42) (5,574)
Proceeds from stock options exercised 117 433
Payment of distributions (42,499) (40,564)
- ----------------------------------------------------------------------------------------------
Net cash used in financing activities $ (5,278) $ (9,598)
==============================================================================================
Net (decrease) increase in cash and cash equivalents $ (2,497) $ 6,597
Cash and cash equivalents, beginning of period $ 8,671 $ 5,809
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 6,174 $ 12,406
==============================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
7
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
================================================================================
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Mack-Cali Realty, L.P., a Delaware limited partnership, and its subsidiaries
(the "Operating Partnership") was formed on August 31, 1994 to conduct the
business of leasing, management, acquisition, development, construction and
tenant-related services for its sole general partner, Mack-Cali Realty
Corporation and its subsidiaries (the "Corporation" or "General Partner"). The
Operating Partnership, through its operating divisions and subsidiaries,
including the Mack-Cali property-owning partnerships and limited liability
companies, (collectively, the "Property Partnerships"), is the entity through
which all of the General Partner's operations are conducted.
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 87.8
percent common unit interest in the Operating Partnership as of March 31, 2000
and December 31, 1999, 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 March 31, 2000, the Operating Partnership owned or had interests in 266
properties plus developable land (collectively, the "Properties"). The
Properties aggregate approximately 29.0 million square feet, and are comprised
of 163 office buildings and 90 office/flex buildings totaling approximately 28.6
million square feet (which includes eight office buildings and four office/flex
buildings, aggregating 1.5 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. 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.
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 $131,488 and $103,977
as of March 31, 2000 and December 31, 1999, 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.
8
<PAGE>
Properties are depreciated using the straight-line method
over the estimated useful lives of the assets. The estimated
useful lives are as follows:
<TABLE>
<CAPTION>
<S> <C>
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
------------------------------------------------------------------------------------
</TABLE>
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 $901 and $601 for the three months
ended March 31, 2000 and 1999, respectively.
DEFERRED
LEASING COSTS Costs incurred in connection with leases are capitalized and
amortized on a straight-line basis over the terms of the
related leases and included in depreciation and amortization.
Unamortized deferred leasing costs are charged to
amortization expense upon early termination of the lease.
Certain employees provide leasing services to the Properties
and receive compensation based on space leased. The portion
of such compensation, which is capitalized and amortized,
approximated $693 and $658 for the three months ended March
31, 2000 and 1999, respectively.
9
<PAGE>
REVENUE
RECOGNITION Base rental revenue is recognized on a straight-line basis
over the terms of the respective leases. Unbilled rents
receivable represents the amount by which straight-line
rental revenue exceeds rents currently billed in accordance
with the lease agreements. Parking revenue includes income
from parking spaces leased to tenants. Rental income on
residential property under operating leases having terms
generally of one year or less is recognized when earned.
Reimbursements are received from tenants for certain costs as
provided in the lease agreements. These costs generally
include real estate taxes, utilities, insurance, common area
maintenance and other recoverable costs. See Note 16.
INCOME AND
OTHER TAXES The Operating Partnership is a partnership and, as a
result, all income and losses of the partnership are
allocated to the partners for inclusion in their respective
income tax returns. Accordingly, no provision or benefit for
income taxes has been made in the accompanying financial
statements.
INTEREST RATE
CONTRACTS Interest rate contracts are utilized by the Operating
Partnership to reduce interest rate risks. The Operating
Partnership does not hold or issue derivative financial
instruments for trading purposes. The differentials to be
received or paid under contracts designated as hedges are
recognized over the life of the contracts as adjustments to
interest expense.
In certain situations, the Operating Partnership uses forward
treasury lock agreements to mitigate the potential effects of
changes in interest rates for prospective transactions. Gains
and losses are deferred and amortized as adjustments to
interest expense over the remaining life of the associated
debt to the extent that such debt remains outstanding.
EARNINGS
PER UNIT In accordance with the Statement of Financial Accounting
Standards No. 128 ("FASB No. 128"), the Operating Partnership
presents both basic and diluted earnings per unit ("EPU").
Basic EPU excludes dilution and is computed by dividing net
income available to common unitholders by the weighted
average number of units outstanding for the period. Diluted
EPU reflects the potential dilution that could occur if
securities or other contracts to issue common units were
exercised or converted into common units, where such exercise
or conversion would result in a lower EPU amount.
DISTRIBUTIONS
PAYABLE The distributions payable at March 31, 2000 represent
distributions payable to common unitholders of record as of
April 5, 2000 (66,605,962 common units), and preferred
distributions payable to preferred unitholders (229,304
preferred units) for the first quarter 2000. The first
quarter 2000 common unit distribution of $0.58 per common
unit as well as the first quarter preferred unit distribution
of $16.875 per preferred unit, were approved by the Board of
Directors of the General Partner on March 20, 2000 and paid
on April 24, 2000.
The distributions payable at December 31, 1999 represent
distributions payable to common unitholders of record as of
January 4, 2000 (66,604,262 common units), and preferred
distributions payable 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.
10
<PAGE>
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. See Note
11.
RECLASSIFICATION Certain reclassifications have been made to prior period
amounts in order to conform with current period presentation.
3. ACQUISITIONS/TRANSACTIONS
2000 TRANSACTIONS
ACQUISITIONS
On January 13, 2000, the Operating Partnership acquired approximately 12.7 acres
of developable land located at the Operating Partnership's Airport Business
Center, Lester, Delaware County, Pennsylvania. The land was acquired for
approximately $2,069.
On March 24, 2000, the Operating Partnership acquired 2 Executive Drive, a
60,800 square-foot office/flex building located in Moorestown, Burlington
County, New Jersey, through the exercise of a purchase option obtained in the
initial acquisition of the McGarvey portfolio in January 1998. The building was
acquired for approximately $3,985.
DISPOSITIONS
On February 25, 2000, the Operating Partnership sold 39.1 acres of vacant land
located at the Operating Partnership's Horizon Center Business Park in Hamilton
Township, Mercer County, New Jersey for net proceeds, after selling costs, of
approximately $4,179.
On April 17, 2000, the Operating Partnership sold its property at 95 Christopher
Columbus Drive, located in Jersey City, Hudson County, New Jersey, for
approximately $152,500.
On April 20, 2000, the Operating Partnership sold Atrium at Coulter Ridge,
located in Amarillo, Potter County, Texas, for approximately $1,600.
11
<PAGE>
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)
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE
<S> <C> <C> <C> <C> <C>
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)
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE
<S> <C> <C> <C> <C> <C>
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>
SEE FOOTNOTES ON SUBSEQUENT PAGE.
12
<PAGE>
(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 an 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.
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). 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 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.
13
<PAGE>
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.
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 $37 and $38
in fees for such services in the three months ended March 31, 2000 and 1999,
respectively.
HPMC
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. 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. 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.
CONTINENTAL GRAND II
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
Summit Ridge is a 7.3 acre site located in San Diego, San Diego County,
California, acquired by the venture upon which it has constructed and placed
in service three one-story buildings aggregating 133,750 square feet of
office/flex space.
LAVA RIDGE
Lava Ridge is a 12.1 acre site located in Roseville, Placer County,
California, acquired by the venture upon which it has constructed and placed
in service three two-story buildings aggregating 183,200 square feet of office
space.
PENINSULA GATEWAY
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
Stadium Gateway is a 1.5 acre site located in Anaheim, Orange County,
California, acquired by the venture to develop a six-story office building
aggregating 261,554 square feet.
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, 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 $52 and $12 in fees for such services in the three months ended March
31, 2000 and 1999, respectively.
14
<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 $123 and $0
in fees for such services in the three months ended March 31, 2000 and 1999,
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. Subsequently, through March 31, 2000, the venture paid $16,519
($3,304 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 $30 and $30 in fees for such services in the three months
ended March 31, 2000 and 1999, 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 current member of the Board of Directors of the Corporation and an equity
holder of the Operating Partnership, is a principal of the managing member of
the venture. At March 31, 2000, the venture held approximately $302,000 face
value of CMBS bonds at an aggregate cost of $133,000.
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.
15
<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 March
31, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
March 31, 2000
--------------------------------------------------------------------------------------------------
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 $21,563 $86,840 $13,377 $10,786 $19,385 $34,593 $ -- $186,544
Other assets 3,306 3,989 2,940 943 4,740 1,555 240,152 257,625
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $24,869 $90,829 $16,317 $11,729 $24,125 $36,148 $240,152 $444,169
====================================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $51,251 $44,000 $ -- $17,185 $ -- $104,693 $217,129
Other liabilities 470 4,681 1,372 -- 834 383 36,072 43,812
Partners'/members' capital 24,399 34,897 (29,055) 11,729 6,106 35,765 99,387 183,228
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $24,869 $90,829 $16,317 $11,729 $24,125 $36,148 $240,152 $444,169
====================================================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $16,757 $24,669 $ 8,292 $11,777 $ 2,610 $ 7,498 $ 19,894 $ 91,497
- -----------------------------------------------------------------------------------------------------------------------------------
<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
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
The following is a summary of the results of operations of the unconsolidated
joint ventures for the period in which the Operating Partnership had investment
interests during the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000
--------------------------------------------------------------------------------------------------
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 $ 1,234 $ 1,056 $ 2,712 $ 250 $ 978 $ 1,363 $ 6,544 $ 14,137
Operating and other expenses (418) (174) (760) (31) (317) (630) (571) (2,901)
Depreciation and amortization (306) (341) (426) (13) (241) (193) -- (1,520)
Interest expense -- (327) (875) -- (369) -- (769) (2,340)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 510 $ 214 $ 651 $ 206 $ 51 $ 540 $ 5,204 $ 7,376
====================================================================================================================================
Operating Partnership's equity in
earnings of unconsolidated
joint ventures $ 216 -- $ 169 $ 206 $ 25 $ 121 $ 400 $ 1,137
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, 1999
--------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 1,231 -- $ 1,990 $ 188 -- $ 917 $ 247 $ 4,573
Operating and other expenses (374) -- (691) (69) -- (473) (390) (1,997)
Depreciation and amortization (318) -- (233) (23) -- (108) -- (682)
Interest expense -- -- (710) -- -- -- (25) (735)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 539 -- $ 356 $ 96 -- $ 336 $ (168) $ 1,159
====================================================================================================================================
Operating Partnership's equity in
earnings (loss) of unconsolidated
joint ventures $ 114 -- $ (366) $ 46 -- $ 56 $ (56) $ (206)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. DEFERRED CHARGES AND OTHER ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred leasing costs $ 67,848 $ 61,623
Deferred financing costs 17,174 17,143
- ---------------------------------------------------------------------------------------------
85,022 78,766
Accumulated amortization (22,610) (20,197)
- ---------------------------------------------------------------------------------------------
Deferred charges, net 62,412 58,569
Prepaid expenses and other assets 4,393 7,867
- ---------------------------------------------------------------------------------------------
Total deferred charges and other assets, net $ 66,805 $ 66,436
=============================================================================================
</TABLE>
6. RESTRICTED CASH
Restricted cash includes security deposits for the Operating Partnership's
residential properties and certain commercial properties, and escrow and reserve
funds for debt service, real estate taxes, property insurance, capital
improvements, tenant improvements, and leasing costs established pursuant to
certain mortgage financing arrangements, and is comprised of the following:
17
<PAGE>
March 31, December 31,
2000 1999
- --------------------------------------------------------------------------------
Security deposits $6,255 $6,021
Escrow and other reserve funds 135 1,060
- --------------------------------------------------------------------------------
Total restricted cash $6,390 $7,081
================================================================================
7. RENTAL PROPERTY HELD FOR SALE
As of March 31, 2000 and December 31, 1999, included in total rental property
are three office properties that the Operating Partnership had identified as
held for sale. The three office properties have an aggregate carrying value of
$77,829 and $77,783 as of March 31, 2000 and December 31, 1999, respectively,
and are located in Omaha, Douglas County, Nebraska; Amarillo, Potter County,
Texas; and Jersey City, Hudson County, New Jersey.
The following is a summary of the condensed results of operations of the rental
properties held for sale at March 31, 2000 for the three months ended March 31,
2000 and 1999:
Three Months Ended March 31,
2000 1999
- --------------------------------------------------------------------------------
Total revenues $6,110 $5,955
Operating and other expenses (2,105) (2,127)
Depreciation and amortization (5) (854)
- --------------------------------------------------------------------------------
Net income $4,000 $2,974
================================================================================
The Hudson County, New Jersey and Potter County, Texas properties were sold in
April 2000 (see Note 3). There can be no assurance if and when the Douglas
County, Nebraska rental property sale 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
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.
A summary of the terms of the Senior Unsecured Notes outstanding as of March 31,
2000 and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
March 31, December 31, Effective
2000 1999 Rate (1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7.18% Senior Unsecured Notes, due December 31, 2003 $185,283 $185,283 7.23%
7.00% Senior Unsecured Notes, due March 15, 2004 299,684 299,665 7.27%
7.25% Senior Unsecured Notes, due March 15, 2009 297,896 297,837 7.49%
- ----------------------------------------------------------------------------------------------
Total Senior Unsecured Notes $782,863 $782,785 7.34%
==============================================================================================
</TABLE>
18
<PAGE>
(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
UNSECURED FACILITY
The Operating Partnership has an unsecured revolving credit facility ("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 (6.13
percent at March 31, 2000) plus 90 basis points. The Unsecured Facility matures
in April 2001.
The terms of the 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 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 March 30, 2001. The Prudential Facility is a recourse liability
of the Operating Partnership and is secured by the Operating Partnership's
equity interest in Harborside. The Prudential Facility limits the ability of the
Operating Partnership to make any distributions during any fiscal quarter in an
amount in excess of 100 percent of the Operating Partnership's available funds
from operations for the immediately preceding fiscal quarter (except to the
extent such excess distributions or dividends are attributable to gains from the
sale of the Operating Partnership's assets or are required for the Corporation
to maintain its status as a REIT under the Code); provided, however, that the
Operating Partnership may make distributions and pay dividends in excess of 100
percent of available funds from operations for the preceding fiscal quarter for
not more than three consecutive quarters. In addition to the foregoing, the
Prudential Facility limits the liens placed upon the subject property and
certain collateral, the use of proceeds from the Prudential Facility, and the
maintenance of ownership of the subject property and assets derived from said
ownership.
SUMMARY
As of March 31, 2000 and December 31, 1999, the Operating Partnership had
outstanding borrowings of $216,208 and $177,000, respectively, under its
revolving credit facilities (with aggregate borrowing capacity of $1,100,000).
The total outstanding borrowings were from the Unsecured Facility, with no
outstanding borrowings under the Prudential Facility.
19
<PAGE>
10. MORTGAGES AND LOANS PAYABLE
March 31, December 31,
2000 1999
- --------------------------------------------------------------------------------
Portfolio Mortgages $150,000 $150,000
Property Mortgages 379,432 380,390
- --------------------------------------------------------------------------------
Total mortgages and loans payable $529,432 $530,390
================================================================================
PORTFOLIO MORTGAGES
TIAA MORTGAGE
The Operating Partnership 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 Operating Partnership repaid in full and
retired the TIAA Mortgage.
$150,000 PRUDENTIAL MORTGAGE LOAN
The Operating Partnership has 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.
PROPERTY MORTGAGES
Property mortgages are comprised of various non-recourse loans which are
collateralized by certain of the Operating Partnership's rental properties.
Payments on property mortgages are generally due in monthly installments of
principal and interest, or interest only.
A summary of the Operating Partnership's property mortgages as of March 31, 2000
and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
PRINCIPAL BALANCE AT
INTEREST MARCH 31, DECEMBER 31,
PROPERTY NAME LENDER RATE 2000 1999 MATURITY
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
201 Commerce Drive Sun Life Assurance Co. 6.240% $ 1,043 $ 1,059 09/01/00
3 & 5 Terri Lane First Union National Bank 6.220% 4,424 4,434 10/31/00
101 & 225 Executive Drive Sun Life Assurance Co. 6.270% 2,328 2,375 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.510% 2,213 2,235 12/31/01
Mack-Cali Willowbrook CIGNA 8.670% 9,994 10,250 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.440% 14,239 14,446 07/01/04
Mack-Cali Centre VI Principal Life Insurance Co. 6.865% 35,000 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% 26,397 26,604 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.520% 10,591 10,784 10/10/05
Harborside - Plaza I U.S. West Pension Trust 5.610% 51,831 51,015 01/01/06
Harborside - Plaza II
and III Northwestern Mutual Life Ins. 7.320% 98,169 98,985 01/01/06
Mack-Cali Airport Allstate Life Insurance Co. 7.050% 10,500 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 $379,432 $380,390
==================================================================================================
</TABLE>
20
<PAGE>
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 paid $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.
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 (Note 8), revolving
credit facilities (Note 9) and mortgages and loans payable as of March 31, 2000
are as follows:
<TABLE>
<CAPTION>
WEIGHTED AVG.
SCHEDULED PRINCIPAL INTEREST RATE OF
YEAR AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (A)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
April through December 2000 $ 2,428 $ 5,419 $ 7,847 6.93%
2001 3,257 220,419 223,676 7.06%
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 7.13%
- -----------------------------------------------------------------------------------------------
Totals/Weighted Average $15,963 $1,512,540 $1,528,503 7.19%
===============================================================================================
</TABLE>
(a) Assumes a weighted average LIBOR rate at March 31, 2000 of 6.15 percent in
calculating revolving credit facility and other variable rate debt interest
rates.
Scheduled principal payments during the three months ended March 31, 2000 and
1999 amounted to $880 and $1,022, respectively.
CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the three months ended March 31, 2000 and 1999 was
$38,387 and $22,646, respectively. Interest capitalized by the Operating
Partnership for the three months ended March 31, 2000 and 1999 was $1,854 and
$1,245, respectively.
21
<PAGE>
SUMMARY OF INDEBTEDNESS
As of March 31, 2000, the Operating Partnership's total indebtedness of
$1,528,503 (weighted average interest rate of 7.19 percent) was comprised of
$288,412 of revolving credit facility borrowings and other variable rate
mortgage debt (weighted average rate of 6.93 percent) and fixed rate debt of
$1,240,091 (weighted average rate of 7.24 percent).
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).
11. PARTNERS CAPITAL
Partners' capital in the accompanying financial statements of the Operating
Partnership relates to common units held by the Corporation in the Operating
Partnership, common units held by the limited partners, preferred units
("Preferred Units") held by the preferred unitholders of the Operating
Partnership, and warrants to purchase common units ("Units Warrants") in the
Operating Partnership issued in connection with the Operating Partnership's
December 1997 acquisition of 54 office properties ("Mack Properties") from the
Mack Company and Patriot American Office Group ("Mack Transaction").
Net income allocated to the preferred unitholders and limited partners reflects
their pro-rata share of net income and distributions.
COMMON STOCK
On August 6, 1998, the Board of Directors of the Corporation authorized a share
repurchase program ("Repurchase Program") under which the Corporation is
permitted to purchase up to $100,000 of the Corporation's outstanding common
stock. Purchases can be made from time to time in open market transactions at
prevailing prices or through privately negotiated transactions.
Through March 31, 2000, the Corporation, under the Repurchase Program, purchased
for constructive retirement, 1,869,200 shares of its outstanding common stock
for an aggregate cost of approximately $52,558. Concurrent with these purchases,
the Corporation sold to the Operating Partnership 1,869,200 common units for
approximately $52,558.
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.
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 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 ("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.
22
<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 ("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 have
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 March 31, 2000 and December 31, 1999,
the stock options outstanding had a weighted average remaining contractual life
of approximately 7.3 and 7.4 years, respectively.
Information regarding the Corporation's stock option plans is summarized below:
<TABLE>
<CAPTION>
Weighted
Shares Average
Under Exercise
Options Price
- ------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at January 1, 1999 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
Granted -- --
Exercised (5,700) $21.50
Lapsed or canceled (97,214) $35.66
- ------------------------------------------------------------------------------------
Outstanding at March 31, 2000 3,624,237 $31.78
====================================================================================
Options exercisable at December 31, 1999 1,724,920 $29.78
Options exercisable at March 31, 2000 2,243,980 $30.76
- ------------------------------------------------------------------------------------
Available for grant at December 31, 1999 662,878
Available for grant at March 31, 2000 760,092
- ------------------------------------------------------------------------------------
</TABLE>
STOCK WARRANTS
The Corporation has outstanding 393,333 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 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
31, 2001 and expire on December 12, 2007.
As of March 31, 2000 and December 31, 1999, there were a total of 908,309 and
914,976 Stock Warrants outstanding, respectively. As of March 31, 2000 and
December 31, 1999 there were 702,318 and 585,989 Stock Warrants exercisable,
respectively. During the three months ended March 31, 2000 and 1999, 6,667 and
no Stock Warrants were canceled, respectively. No Stock Warrants have been
exercised.
23
<PAGE>
STOCK COMPENSATION
In July 1999, the Corporation entered into amended and restated employment
contracts with six of its key executive officers which provided for, among other
things, compensation in the form of stock awards and associated tax obligation
payments. In addition, in December 1999, the Corporation granted stock awards to
certain other officers of the Corporation. In connection with the stock awards
(collectively, "Restricted Stock Awards"), the executive officers and certain
other officers are to receive up to a total of 211,593 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 executive officers and
certain other officers were granted under the Employee Plan. Effective January
1, 2000, 31,740 shares of the Corporation's common stock were issued to the
executive officers and certain other officers upon meeting the required
objectives.
DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS
The Deferred Compensation Plan for Directors ("Deferred Compensation Plan"),
which commenced January 1, 1999, 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 1999, 3,319 deferred stock units were earned.
During the three months ended March 31, 2000, 1,083 deferred stock units were
earned.
EARNINGS PER UNIT
FASB No. 128 requires a dual presentation of basic and diluted EPU on the face
of the income statement for all companies with complex capital structures even
where the effect of such dilution is not material. Basic EPU excludes dilution
and is computed by dividing net income available to common unitholders by the
weighted average number of units outstanding for the period. Diluted EPU
reflects the potential dilution that could occur if securities or other
contracts to issue common units were exercised or converted into common units.
The following information presents the Operating Partnership's results for the
three months ended March 31, 2000 and 1999 in accordance with FASB No. 128:
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
- -----------------------------------------------------------------------------------------------
Basic EPU Diluted EPU Basic EPU Diluted EPU
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income available to common unitholders $41,722 $41,722 $36,944 $36,944
Add: Net income attributable to
Operating Partnership - preferred units -- 3,869 -- --
- -----------------------------------------------------------------------------------------------
Adjusted net income $41,722 $45,591 $36,944 $36,944
===============================================================================================
Weighted average units 66,428 73,191 67,011 67,283
- -----------------------------------------------------------------------------------------------
Per Unit $ 0.63 $ 0.62 $ 0.55 $ 0.55
===============================================================================================
</TABLE>
24
<PAGE>
The following schedule reconciles the units used in the basic EPU calculation to
the units used in the diluted EPU calculation:
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
- --------------------------------------------------------------------------------------
<S> <C> <C>
Basic EPU Units: 66,428 67,011
Add: Operating Partnership - preferred units 6,618 --
(after conversion to common units)
Stock options 145 272
- --------------------------------------------------------------------------------------
Diluted EPU Units: 73,191 67,283
======================================================================================
</TABLE>
Contingent Units and Restricted Stock Awards outstanding in 2000 and 1999, if
any, were not included in the computation of diluted EPU as such units were
anti-dilutive during the period. Preferred Units outstanding in 1999 were not
included in the 1999 computation of diluted EPU as such units were anti-dilutive
during the period.
Pursuant to the Repurchase Program, 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
PREFERRED UNITS
In connection with the Mack Transaction in December 1997, the Operating
Partnership issued 15,237 Series A Preferred Units and 215,325 Series B
Preferred Units, with an aggregate value of $236,491. The Preferred Units have a
stated value of $1,000 per unit and are preferred as to assets over any class of
common units or other class of preferred units of the Operating Partnership,
based on circumstances per the applicable unit certificates.
The quarterly distribution on each Preferred Unit (representing 6.75 percent of
the Preferred Unit stated value of $1,000 on an annualized basis) is an amount
equal to the greater of (i) $16.875 or (ii) the quarterly distribution
attributable to a Preferred Unit determined as if such unit had been converted
into common units, subject to adjustment for customary anti-dilution rights.
Each of the Series A Preferred Units may be converted at any time into common
units at a conversion price of $34.65 per unit, and, after the one year
anniversary of the date of the Series A Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the Series B Preferred Units may be converted at any time into
common units at a conversion price of $34.65 per unit, and, after the three year
anniversary of the date of the Series B Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the common units are redeemable for an equal number of shares of
common stock.
During the year ended December 31, 1999, 20,952 Series A Preferred Units were
converted into 604,675 common units.
As of March 31, 2000, 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.
25
<PAGE>
Common units are redeemable by the common unitholders 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
partners' 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.
On June 4, 1999, in connection with the acquisition of a 0.1 percent interest in
the 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 1999, an aggregate of 1,934,657 common units were redeemed for an
equivalent number of shares of common stock in the Corporation.
During 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.
During the three months ended March 31, 2000, an aggregate of 36,883 common
units were redeemed for an equivalent number of shares of common stock in the
Corporation.
As of March 31, 2000, there were 8,116,827 common units outstanding.
CONTINGENT COMMON & PREFERRED UNITS
In connection 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"). Redemption of such Contingent Units occurred 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 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.
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 are reflected as minority interests: partially-owned
properties in the consolidated financial statements of the Operating
Partnership.
26
<PAGE>
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
three months ended March 31, 2000 and 1999 was $100 and $0, respectively.
15. 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, the Operating Partnership 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. The PILOT totaled $396 and $317 for the three months ended March 31,
2000 and 1999, respectively. In April 2000, the Operating Partnership sold its
property at 95 Christopher Columbus Drive (see Note 3).
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 the
Operating Partnership as part of the acquisition of the property in November
1996, the Operating Partnership is 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. The PILOT totaled $668 and $651
for the three months ended March 31, 2000 and 1999, respectively.
GROUND LEASE AGREEMENTS
Future minimum rental payments under the terms of all non-cancelable ground
leases, under which the Operating Partnership is the lessee as of March 31,
2000, are as follows:
YEAR AMOUNT
- -------------------------------------------------------------------------
April 1 to December 31, 2000 $ 398
2001 531
2002 531
2003 531
2004 534
Thereafter 22,532
- -------------------------------------------------------------------------
Total $25,057
=========================================================================
Ground lease expense incurred during the three months ended March 31, 2000 and
1999 amounted to $142 and $132, respectively.
27
<PAGE>
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, $500 in April 2000 and $500 annually over the next two
years. All costs associated with Mr. Rizk's resignation are included in
non-recurring charges in the second quarter 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.
16. 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.
17. 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
segments 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.
28
<PAGE>
Selected results of operations for the three months ended March 31, 2000 and
1999 and selected asset information as of March 31, 2000 and December 31, 1999
regarding the Operating Partnership's operating segment are as follows:
<TABLE>
<CAPTION>
Total Corporate & Total
Segment Other (e) Operating Partnership
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL CONTRACT REVENUES (a):
Three months ended:
March 31, 2000 $ 140,141 $ 648 $ 140,789 (f)
March 31, 1999 131,769 (425) 131,344 (g)
TOTAL OPERATING AND INTEREST EXPENSES (b):
Three months ended:
March 31, 2000 $ 46,730 $ 28,634 $ 75,364
March 31, 1999 43,155 28,952 72,107
NET OPERATING INCOME (c):
Three months ended:
March 31, 2000 $ 93,411 $(27,986) $ 65,425 (f)
March 31, 1999 88,614 (29,377) 59,237 (g)
TOTAL ASSETS:
March 31, 2000 $3,609,643 $ 41,113 $3,650,756
December 31, 1999 3,576,806 52,795 3,629,601
TOTAL LONG-LIVED ASSETS (d):
March 31, 2000 $3,529,008 $ 33,524 $3,562,532
December 31, 1999 3,510,285 30,318 3,540,603
- --------------------------------------------------------------------------------------------------
</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 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 segment amounts and is classified in Corporate
and Other for all periods. Amounts presented exclude depreciation and
amortization of $22,182 and $21,969 in 2000 and 1999, 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 $2,133 of adjustments for straight-lining of rents and $57 for the
Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(g) Excludes $3,563 of adjustments for straight-lining of rents and ($18) for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
18. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
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.
29
<PAGE>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
ITEM 2:
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 the notes thereto. Certain
defined terms used herein have the meaning ascribed to them in the Consolidated
Financial Statements.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
The following comparisons for the three months ended March 31, 2000 ("2000"), as
compared to the three months ended March 31, 1999 ("1999") 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, 1998,
(ii) the effect of the "Acquired Properties," which represents all properties
acquired or placed in service by the Operating Partnership from January 1, 1999
through March 31, 2000, and (iii) 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.
30
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended
March 31, Dollar Percent
(IN THOUSANDS) 2000 1999 Change Change
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 121,598 $ 116,080 $ 5,518 4.8%
Escalations and recoveries from tenants 16,668 14,860 1,808 12.2
Parking and other 3,322 3,900 (578) (14.8)
- --------------------------------------------------------------------------------------------------
Sub-total 141,588 134,840 6,748 5.0
Equity in earnings (loss) of
unconsolidated joint ventures 1,137 (206) 1,343 651.9
Interest income 254 255 (1) (0.4)
- --------------------------------------------------------------------------------------------------
Total revenues 142,979 134,889 8,090 6.0
- --------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 14,704 13,843 861 6.2
Utilities 10,379 9,592 787 8.2
Operating services 17,742 17,087 655 3.8
- --------------------------------------------------------------------------------------------------
Sub-total 42,825 40,522 2,303 5.7
General and administrative 6,113 7,963 (1,850) (23.2)
Depreciation and amortization 22,182 21,969 213 1.0
Interest expense 26,426 23,622 2,804 11.9
- --------------------------------------------------------------------------------------------------
Total expenses 97,546 94,076 3,470 3.7
- --------------------------------------------------------------------------------------------------
Income before gain on sale of land
and minority interest 45,433 40,813 4,620 11.3
Gain on sale of land 2,248 -- 2,248 --
- --------------------------------------------------------------------------------------------------
Income before minority interest 47,681 40,813 6,868 16.8
Minority interest in consolidated
partially-owned properties 2,090 -- 2,090 --
- --------------------------------------------------------------------------------------------------
Net income 45,591 40,813 4,778 11.7
Preferred unit distribution (3,869) (3,869) -- --
- --------------------------------------------------------------------------------------------------
Net income available to
common unitholders $ 41,722 $ 36,944 $ 4,778 12.9%
==================================================================================================
</TABLE>
31
<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 $ 5,518 4.8% $ 3,678 3.2% $ 2,328 2.0% $ (488) (0.4)%
Escalations and recoveries
from tenants 1,808 12.2 229 1.5 1,675 11.3 (96) (0.6)
Parking and other (578) (14.8) 24 0.6 (595) (15.2) (7) (0.2)
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 6,748 5.0% $ 3,931 2.9% $ 3,408 2.5% $ (591) (0.4)%
====================================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $ 861 6.2% $ 378 2.7% $ 580 4.2% $ (97) (0.7)%
Utilities 787 8.2 216 2.3 574 6.0 (3) (0.1)
Operating services 655 3.8 576 3.4 155 0.8 (76) (0.4)
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,303 5.7% $ 1,170 2.9% $ 1,309 3.3% $ (176) (0.5)%
====================================================================================================================================
OTHER DATA:
Number of wholly-owned properties 254 12 242 2
Square feet (in thousands) 27,444 799 26,645 190
</TABLE>
Base rents for the Same-Store Properties increased $2.3 million, or 2.0 percent,
for 2000 as compared to 1999, due primarily to rental rate increases in 2000.
Escalations and recoveries from tenants for the Same-Store Properties increased
$1.7 million, or 11.3 percent, for 2000 over 1999, due to the recovery of an
increased amount of total property expenses, as well as additional settle-up
billings in 2000. Parking and other income for the Same-Store Properties
decreased $0.6 million, or 15.2 percent, due primarily to lease termination fees
received in 1999.
Real estate taxes on the Same-Store Properties increased $0.6 million, or 4.2
percent, for 2000 as compared to 1999, due primarily to property tax rate
increases in certain municipalities in 2000. Utilities for the Same-Store
Properties increased $0.6 million, or 6.0 percent, for 2000 as compared to 1999,
due primarily to increased usage in 2000. Operating services for the Operating
Partnership increased $0.7 million, or 3.8 percent, due substantially to the
Acquired Properties.
Equity in earnings of unconsolidated joint ventures increased $1.3 million in
2000 as compared to 1999. This is due primarily to additional joint venture
investments made by the Operating Partnership (see Note 4 to the Financial
Statements).
Interest income was substantially the same in 2000 as compared to 1999.
General and administrative expense decreased by $1.9 million, or 23.2 percent,
for 2000 as compared to 1999. This decrease is due primarily to decreased
payroll and related costs in 2000.
Depreciation and amortization increased by $0.2 million, or 1.0 percent, for
2000 over 1999. Of this increase, $0.6 million or 2.8 percent, is attributable
to the Acquired Properties, partially offset by a decrease of $0.3 million, or
1.3 percent, due to the Same-Store Properties and a decrease of $0.1 million, or
0.5 percent, due to the Dispositions.
Interest expense increased $2.8 million, or 11.9 percent, for 2000 as compared
to 1999. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt.
Income before gain on sale of land and minority interest increased to $45.4
million in 2000 from $40.8 million in 1999. The increase of approximately $4.6
million is due to the factors discussed above.
32
<PAGE>
Net income available to common unitholders increased by $4.8 million, from $36.9
million in 1999 to $41.7 million in 2000. This increase was a result of an
increase in income before gain on sale of land and minority interest of $4.6
million, and a gain on sale of land of $2.3 million in 2000. These were
partially offset by an increase in minority interest of $2.1 million.
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the three months ended March 31, 2000, the Operating Partnership
generated $39.0 million in cash flows from operating activities, and together
with $67.9 million in borrowings from the Operating Partnership's revolving
credit facilities, $1.3 million in distributions received from unconsolidated
joint ventures, $4.2 million in proceeds from a sale of land, $0.7 million from
restricted cash and $2.5 million from the Operating Partnership's cash reserves,
used an aggregate of approximately $115.6 million to acquire properties and land
parcels and pay for other tenant and building improvements totaling $39.8
million, repay outstanding borrowings on its revolving credit facilities and
other mortgage debt of $29.5 million, pay quarterly distributions of $42.5
million, invest $2.6 million in unconsolidated joint ventures, and distribute
$1.2 million to consolidated partially-owned properties.
CAPITALIZATION
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 March 31, 2000,
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.
As of March 31, 2000, the Operating Partnership's total indebtedness of $1.5
billion (weighted average interest rate of 7.19 percent) was comprised of $288.4
million of revolving credit facility borrowings and other variable rate mortgage
debt (weighted average rate of 6.93 percent) and fixed rate debt of $1.2 billion
(weighted average rate of 7.24 percent).
As of March 31, 2000, the Operating Partnership had outstanding borrowings of
$216.2 million under its revolving credit facilities (with aggregate borrowing
capacity of $1.1 billion). The total outstanding borrowings were from the
Unsecured Facility, with no outstanding borrowings under the Prudential
Facility. The 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 March 2001.
The terms of the 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 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.
33
<PAGE>
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 March 31, 2000, the Operating Partnership had 224 unencumbered properties,
totaling 20.5 million square feet, representing 74.8 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.
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 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 Unsecured Facility
and the Prudential Facility primarily to fund property acquisitions and
construction projects.
As of March 31, 2000, the Operating Partnership's total debt had a weighted
average term to maturity of 5.1 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 $154.9 million on an
annualized basis. However, any such distribution, would only be paid out of
available cash after meeting operating requirements, scheduled debt service on
mortgages and loans payable, and preferred unit distributions.
34
<PAGE>
SIGNIFICANT TENANTS
The following table sets forth a schedule of the Operating Partnership's 20
largest tenants for the Consolidated Properties as of March 31, 2000, based upon
annualized base rents:
<TABLE>
<CAPTION>
Percentage of Percentage of
Annualized Operating Partnership Square Total Year of
Number of Base Rental Annualized Base Feet Operating Partnership Lease
Properties Revenue ($) (1) Rental Revenue (%) Leased Leased Sq.Ft. (%) Expiration
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Donaldson, Lufkin &
Jenrette Securities Corp. (2) 2 18,067,060 3.8 713,582 2.7 2011 (3)
AT&T Corporation 5 14,649,475 3.1 995,596 3.8 2009 (4)
AT&T Wireless Services 2 8,199,959 1.7 382,030 1.5 2007 (5)
IBM Corporation 5 7,553,299 1.6 391,910 1.5 2007 (6)
Keystone Mercy Health Plan 3 7,188,931 1.5 315,304 1.2 2015 (7)
Prentice-Hall Inc. 1 6,744,495 1.4 474,801 1.8 2014
Allstate Insurance Company 10 6,388,017 1.4 293,820 1.1 2009 (8)
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
Board of Gov./Federal Reserve 1 4,627,379 1.0 117,008 0.4 2009 (9)
Dean Witter Trust Company 1 4,319,508 0.9 221,019 0.8 2008
Winston & Strawn 1 4,302,007 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(10)
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
Cendant Operations Inc. 1 3,117,051 0.7 148,431 0.6 2008
Deloitte & Touche USA, LLP 1 3,073,126 0.6 115,967 0.4 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Totals 122,405,378 25.9 6,055,259 23.1
====================================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual March 2000 billings
times 12. For leases whose rent commences after April 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) The Operating Partnership sold its property at 95 Christopher Columbus
Drive in which this tenant leased 441,629 square feet representing
$9,750,963 annualized base rental revenue. Such leases were scheduled to
expire July 2009.
(3) 441,629 square feet expire July 2009; 271,953 square feet expire October
2011.
(4) 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.
(5) 12,150 square feet expire September 2004; 345,799 square feet expire March
2007; 24,081 square feet expire June 2007.
(6) 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.
(7) 32,171 square feet expire January 2003; 283,133 square feet expire April
2015.
(8) 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.
(9) 94,719 square feet expire May 2005; 22,289 square feet expire July 2009.
(10) 104,556 square feet expire September 2002; 57,204 square feet expire July
2007.
35
<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 April 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....... 413 2,218,813 8.5 38,021,274 17.14 8.0
2001....... 528 3,018,411 11.6 48,714,135 16.14 10.3
2002....... 540 3,573,378 13.7 62,999,403 17.63 13.3
2003....... 414 3,664,073 14.0 63,949,839 17.45 13.5
2004....... 325 2,258,440 8.6 42,551,267 18.84 9.0
2005....... 213 2,575,989 9.9 49,473,325 19.21 10.5
2006....... 87 1,212,928 4.6 25,515,833 21.04 5.4
2007....... 51 1,352,539 5.2 27,754,228 20.52 5.9
2008....... 39 1,548,490 5.9 24,621,164 15.90 5.2
2009....... 41 1,507,489 5.8 30,083,143 19.96 6.4
2010....... 41 657,119 2.5 12,533,034 19.07 2.6
2011 and thereafter 38 2,530,802 9.7 46,773,711 18.48 9.9
- -----------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,730 26,118,471 100.0(4) 472,990,356 18.11 100.0
===========================================================================================================
</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 March 31, 2000.
(3) Annualized base rental revenue is based on actual March 2000 billings
times 12. For leases whose rent commences after April 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 26,118,471 95.2%
Square footage used for corporate offices, management offices,
building use, retail tenants, food services, other ancillary
service tenants and occupancy adjustments 433,150 1.5
Square footage unleased 892,453 3.3
---------- -----
Total net rentable square footage (does not include
residential, land lease, retail or not-in-service properties) 27,444,074 100.0%
========== =====
</TABLE>
36
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office properties beginning April 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....... 347 1,826,454 8.4 33,524,896 18.36 7.9
2001....... 439 2,327,468 10.7 41,577,906 17.86 9.8
2002....... 442 2,742,228 12.6 54,319,812 19.81 12.8
2003....... 343 3,035,257 14.0 57,694,966 19.01 13.6
2004....... 275 1,750,016 8.1 36,654,024 20.94 8.7
2005....... 174 2,218,605 10.2 45,127,206 20.34 10.7
2006....... 71 951,044 4.4 21,235,448 22.33 5.0
2007....... 43 1,217,108 5.6 25,820,994 21.22 6.1
2008....... 36 1,398,895 6.4 23,679,306 16.93 5.6
2009....... 31 1,376,429 6.3 28,285,533 20.55 6.7
2010....... 33 561,258 2.6 11,197,889 19.95 2.6
2011 and thereafter 32 2,330,114 10.7 44,301,662 19.01 10.5
- -------------------------------------------------------------------------------------------------------------
Total/Weighted
Average 2,266 21,734,876 100.0 423,419,642 19.48 100.0
=============================================================================================================
</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 March 31, 2000.
(3) Annualized base rental revenue is based on actual March 2000 billings
times 12. For leases whose rent commences after April 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.
37
<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 April 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....... 63 391,024 9.8 4,479,483 11.46 9.9
2001....... 86 681,496 17.1 7,043,952 10.34 15.5
2002....... 96 784,710 19.7 8,181,884 10.43 18.0
2003....... 67 530,842 13.3 5,759,750 10.85 12.7
2004....... 39 299,004 7.5 3,418,751 11.43 7.5
2005....... 36 344,230 8.6 4,177,610 12.14 9.2
2006....... 16 261,884 6.6 4,280,385 16.34 9.4
2007....... 8 135,431 3.4 1,933,234 14.27 4.3
2008....... 3 149,595 3.8 941,858 6.30 2.1
2009....... 9 119,260 3.0 1,691,410 14.18 3.7
2010....... 8 95,861 2.4 1,335,145 13.93 2.9
2011 and thereafter 5 192,688 4.8 2,207,049 11.45 4.8
- -------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 436 3,986,025 100.0 45,450,511 11.40 100.0
=============================================================================================================
</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 March 31, 2000.
(3) Annualized base rental revenue is based on actual March 2000 billings
times 12. For leases whose rent commences after April 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.
38
<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 April 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 ($) Leases (%)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2000....... 3 1,335 0.4 16,895 12.66 0.5
2001....... 3 9,447 2.5 92,277 9.77 2.5
2002....... 2 46,440 12.2 497,707 10.72 13.6
2003....... 4 97,974 25.8 495,123 5.05 13.5
2004....... 10 200,120 52.6 2,283,492 11.41 62.4
2005....... 3 13,154 3.5 168,509 12.81 4.6
2009....... 1 11,800 3.0 106,200 9.00 2.9
- -------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 26 380,270 100.0 3,660,203 9.63 100.0
=============================================================================================================
</TABLE>
(1) Includes industrial/warehouse tenants only. Excludes leases for amenity,
retail, parking and month-to-month industrial/warehouse tenants. Some
tenants have multiple leases.
(2) Excludes all unleased space as of March 31, 2000.
(3) Annualized base rental revenue is based on actual March 2000 billings
times 12. For leases whose rent commences after April 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12.
As annualized base rental revenue is not derived from historical GAAP
results, the historical results may differ from those set forth above.
SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES
The following table sets forth a schedule of the lease expirations for the
stand-alone retail properties beginning April 1, 2000, assuming that none of the
tenants exercise renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) Leases ($) (2) Leases ($) Leases (%)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2004....... 1 9,300 53.8 195,000 20.97 42.4
2012 ...... 1 8,000 46.2 265,000 33.12 57.6
- -------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2 17,300 100.0 460,000 26.59 100.0
=============================================================================================================
</TABLE>
(1) Includes stand-alone retail property tenants only.
(2) Annualized base rental revenue is based on actual March 2000 billings
times 12. For leases whose rent commences after April 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12.
As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
39
<PAGE>
INDUSTRY DIVERSIFICATION
The following table lists the Operating Partnership's 30 largest industry
classifications based on annualized contractual base rent of the Consolidated
Properties:
<TABLE>
<CAPTION>
Annualized Percentage of Percentage of Total
Base Rental Operating Partnership Square Operating
Revenue Annualized Base Feet Partnership
Industry Classification (3) ($) (1) (2) Rental Revenue (%) Leased Leased Sq. Ft. (%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities, Commodity Contracts & Other Financial 56,562,395 12.0 2,544,664 9.7
Manufacturing 44,927,743 9.5 2,747,078 10.5
Telecommunications 35,772,853 7.6 2,253,695 8.6
Computer System Design Svcs. 32,919,498 7.0 1,800,119 6.9
Insurance Carriers & Related Assistance 31,176,587 6.6 1,636,238 6.3
Legal Services 27,500,898 5.8 1,268,663 4.9
Credit Intermediation & Related Activities 22,157,662 4.7 1,307,731 5.0
Health Care & Social Assistance 21,972,051 4.6 1,146,936 4.4
Wholesale Trade 17,690,542 3.7 1,282,107 4.9
Accounting/Tax Prep. 15,814,039 3.3 752,432 2.9
Other Professional 14,923,692 3.2 899,248 3.4
Retail Trade 13,846,891 2.9 830,476 3.2
Information Services 13,256,829 2.8 622,624 2.4
Publishing Industries 12,570,982 2.7 568,864 2.2
Arts, Entertainment & Recreation 11,522,255 2.4 793,248 3.0
Public Administration 9,961,562 2.1 331,504 1.3
Other Services (except Public Administration) 9,187,245 1.9 730,781 2.8
Transportation 8,219,907 1.7 659,445 2.5
Data Processing Services 7,878,985 1.7 357,975 1.4
Advertising/Related Services 7,532,985 1.6 372,339 1.4
Scientific Research/Development 7,300,312 1.5 408,000 1.6
Management of Companies & Finance 7,135,509 1.5 383,128 1.5
Architectural/Engineering 5,971,767 1.3 350,949 1.3
Real Estate & Rental & Leasing 5,855,815 1.2 326,782 1.3
Management/Scientific 5,526,713 1.2 281,918 1.1
Construction 4,391,752 0.9 257,847 1.0
Utilities 3,597,564 0.8 172,734 0.7
Educational Services 3,395,885 0.7 200,252 0.8
Admin. & Support, Waste Mgt. & Remediation Svc. 3,169,925 0.7 232,209 0.9
Monetary Authorities - Central Banks 2,770,958 0.6 168,579 0.6
Other 8,478,555 1.8 429,906 1.5
- -------------------------------------------------------------------------------------------------------------------------
Totals 472,990,356 100.0 26,118,471 100.0
=========================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual March 2000 billings
times 12. For leases whose rent commences after April 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.
40
<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:
<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 81,667,982 17.3 4,530,091 16.5
New York, NY (Westchester-Rockland Counties) 71,823,516 15.2 4,355,070 15.9
Newark, NJ (Essex-Morris-Union Counties) 70,744,496 15.0 3,671,218 13.4
Jersey City, NJ 50,747,629 10.7 2,508,700 9.1
Philadelphia, PA-NJ 37,993,831 8.0 2,657,858 9.7
Washington, DC-MD-VA 18,105,468 3.8 616,549 2.2
Denver, CO 16,891,099 3.6 1,007,931 3.7
Dallas, TX 14,505,036 3.1 959,463 3.5
Trenton, NJ (Mercer County) 13,219,761 2.8 672,365 2.4
Middlesex-Somerset-Hunterdon, NJ 12,510,931 2.6 659,041 2.4
San Antonio, TX 11,684,709 2.5 940,302 3.4
San Francisco, CA 10,088,755 2.1 450,891 1.6
Stamford-Norwalk, CT 8,744,573 1.8 527,250 1.9
Houston, TX 8,602,083 1.8 700,008 2.6
Monmouth-Ocean, NJ 6,562,968 1.4 577,423 2.1
Nassau-Suffolk, NY 5,762,698 1.2 261,849 1.0
Austin-San Marcos, TX 5,627,516 1.2 270,703 1.0
Phoenix-Mesa, AZ 5,411,031 1.1 416,967 1.5
Tampa-St. Petersburg-Clearwater, FL 3,583,925 0.8 297,429 1.1
Boulder-Longmont, CO 3,543,931 0.7 270,421 1.0
Omaha, NE-IA 3,066,925 0.6 319,535 1.2
Bridgeport, CT 2,898,435 0.6 145,487 0.5
Colorado Springs, CO 2,832,524 0.6 209,987 0.8
Dutchess County, NY 2,185,858 0.5 118,727 0.4
Atlantic-Cape May, NJ 1,467,726 0.3 80,344 0.3
Other 2,716,950 0.7 218,465 0.8
=========================================================================================================================
Totals 472,990,356 100.0 27,444,074 100.0
=========================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual March 2000 billings times
12. For leases whose rent commences after April 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.
41
<PAGE>
PROPERTY LISTING
----------------
OFFICE PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive ..................... 1987 40,422 100.0 784 0.17 19.40
200 Decadon Drive ..................... 1991 39,922 94.9 737 0.16 19.45
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Route 208 North ................. 1987 143,000 96.0 3,387 0.71 24.67
FORT LEE
One Bridge Plaza ...................... 1981 200,000 98.8 4,636 0.98 23.46
2115 Linwood Avenue (4) ............... 1981 68,000 85.0 453 0.10 7.83
LITTLE FERRY
200 Riser Road ........................ 1974 286,628 100.0 1,879 0.40 6.56
MONTVALE
95 Chestnut Ridge Road ................ 1975 47,700 100.0 569 0.12 11.93
135 Chestnut Ridge Road ............... 1981 66,150 100.0 971 0.20 14.68
PARAMUS
15 East Midland Avenue ................ 1988 259,823 100.0 6,643 1.40 25.57
461 From Road ......................... 1988 253,554 99.8 6,021 1.27 23.79
650 From Road ......................... 1978 348,510 100.0 7,532 1.59 21.61
140 Ridgewood Avenue .................. 1981 239,680 100.0 5,115 1.08 21.34
61 South Paramus Avenue ............... 1985 269,191 100.0 5,451 1.15 20.25
ROCHELLE PARK
120 Passaic Street .................... 1972 52,000 100.0 576 0.12 11.08
365 West Passaic Street ............... 1976 212,578 93.6 3,546 0.75 17.82
SADDLE RIVER
1 Lake Street ......................... 1973/94 474,801 100.0 7,469 1.58 15.73
UPPER SADDLE RIVER
10 Mountainview Road .................. 1986 192,000 100.0 3,716 0.78 19.35
WOODCLIFF LAKE
400 Chestnut Ridge Road ............... 1982 89,200 100.0 2,128 0.45 23.86
470 Chestnut Ridge Road ............... 1987 52,500 100.0 1,192 0.25 22.70
530 Chestnut Ridge Road ............... 1986 57,204 100.0 1,166 0.25 20.38
50 Tice Boulevard ..................... 1984 235,000 98.1 4,856 1.03 21.06
300 Tice Boulevard .................... 1991 230,000 100.0 4,942 1.04 21.49
BURLINGTON COUNTY, NEW JERSEY
MOORESTOWN
224 Strawbridge Drive ................. 1984 74,000 95.2 1,053 0.22 14.95
228 Strawbridge Drive ................. 1984 74,000 100.0 1,434 0.30 19.38
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway .............. 1980 247,476 95.0 5,772 1.22 24.55
ROSELAND
101 Eisenhower Parkway ................ 1980 237,000 94.3 4,105 0.87 18.37
103 Eisenhower Parkway ................ 1985 151,545 99.2 3,077 0.65 20.47
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
95 Christopher Columbus Drive (7) ..... 1989 621,900 100.0 12,870 2.72 20.69
Harborside Financial Center Plaza I ... 1983 400,000 99.0 3,303 0.70 8.34
Harborside Financial Center Plaza II... 1990 761,200 100.0 17,617 3.73 23.14
Harborside Financial Center Plaza III.. 1990 725,600 100.0 16,793 3.54 23.14
</TABLE>
42
<PAGE>
PROPERTY LISTING
----------------
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MERCER COUNTY, NEW JERSEY
PRINCETON
400 Alexander Road (6) ..... 1987 n/a n/a 783 0.17 n/a
103 Carnegie Center ........ 1984 96,000 100.0 2,169 0.46 22.59
100 Overlook Center ........ 1988 149,600 100.0 3,792 0.80 25.35
5 Vaughn Drive ............. 1987 98,500 100.0 2,240 0.47 22.74
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road ........ 1977 40,000 100.0 373 0.08 9.33
PLAINSBORO
500 College Road East ...... 1984 158,235 100.0 3,402 0.72 21.50
SOUTH BRUNSWICK
3 Independence Way ......... 1983 111,300 99.9 1,999 0.42 17.98
WOODBRIDGE
581 Main Street ............ 1991 200,000 100.0 4,552 0.96 22.76
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66 .............. 1989 180,000 100.0 2,413 0.51 13.41
WALL TOWNSHIP
1305 Campus Parkway ........ 1988 23,350 92.4 419 0.09 19.42
1350 Campus Parkway ........ 1990 79,747 94.7 1,337 0.28 16.78
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Turnpike ...... 1987 168,144 100.0 3,895 0.82 23.16
MORRIS PLAINS
201 Littleton Road ......... 1979 88,369 100.0 1,710 0.36 19.35
250 Johnson Road ........... 1977 75,000 100.0 1,090 0.23 14.53
MORRIS TOWNSHIP
340 Mt. Kemble Avenue ...... 1985 387,000 100.0 5,529 1.17 14.29
412 Mt. Kemble Avenue ...... 1986 475,100 100.0 6,902 1.46 14.53
PARSIPPANY
7 Campus Drive ............. 1982 154,395 100.0 2,550 0.54 16.50
8 Campus Drive ............. 1987 215,265 92.8 4,964 1.05 23.06
2 Dryden Way ............... 1990 6,216 100.0 68 0.01 10.94
2 Hilton Court ............. 1991 181,592 100.0 4,495 0.95 24.75
600 Parsippany Road ........ 1978 96,000 100.0 1,393 0.29 14.51
1 Sylvan Way ............... 1989 150,557 100.0 3,503 0.74 23.27
5 Sylvan Way ............... 1989 151,383 96.8 3,473 0.73 23.70
7 Sylvan Way ............... 1987 145,983 100.0 2,920 0.62 20.00
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue ......... 1983 75,000 65.1 986 0.21 20.19
TOTOWA
999 Riverview Drive ........ 1988 56,066 100.0 934 0.20 16.66
WAYNE
201 Willowbrook Boulevard .. 1970 178,329 99.0 2,440 0.52 13.82
</TABLE>
43
<PAGE>
PROPERTY LISTING
----------------
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road .......... 1986 49,000 100.0 742 0.16 15.14
233 Mt. Airy Road .......... 1987 66,000 100.0 762 0.16 11.55
BRIDGEWATER
721 Route 202/206 .......... 1989 192,741 100.0 3,989 0.84 20.70
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue .......... 1985 182,555 100.0 4,528 0.96 24.80
CRANFORD
6 Commerce Drive ........... 1973 56,000 100.0 1,063 0.22 18.98
11 Commerce Drive .......... 1981 90,000 90.8 1,079 0.23 13.20
12 Commerce Drive .......... 1967 72,260 89.4 613 0.13 9.49
20 Commerce Drive .......... 1990 176,600 92.7 3,660 0.77 22.36
65 Jackson Drive ........... 1984 82,778 100.0 1,593 0.34 19.24
NEW PROVIDENCE
890 Mountain Road .......... 1977 80,000 100.0 2,049 0.43 25.61
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE 11,939,649 98.9 230,202 48.63 19.50
- ---------------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive ....... 1987 118,727 99.8 2,132 0.45 17.99
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
111 East Shore Road ........ 1980 55,575 100.0 1,515 0.32 27.26
600 Community Drive ........ 1983 206,274 100.0 4,900 1.03 23.75
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard ........ 1988 180,000 98.2 3,545 0.75 20.06
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
100 Clearbrook Road ........ 1975 60,000 100.0 912 0.19 15.20
101 Executive Boulevard .... 1971 50,000 79.5 802 0.17 20.18
570 Taxter Road ............ 1972 75,000 89.4 1,392 0.29 20.76
HAWTHORNE
30 Saw Mill River Road ..... 1982 248,400 100.0 5,220 1.10 21.01
1 Skyline Drive ............ 1980 20,400 99.0 249 0.05 12.33
2 Skyline Drive ............ 1987 30,000 98.9 504 0.11 16.99
17 Skyline Drive ........... 1989 85,000 100.0 1,235 0.26 14.53
7 Skyline Drive ............ 1987 109,000 100.0 2,154 0.45 19.76
TARRYTOWN
200 White Plains Road ...... 1982 89,000 86.3 1,814 0.38 23.62
220 White Plains Road ...... 1984 89,000 99.4 1,741 0.37 19.68
WHITE PLAINS
1 Barker Avenue ............ 1975 68,000 99.0 1,567 0.33 23.28
3 Barker Avenue ............ 1983 65,300 100.0 1,372 0.29 21.01
50 Main Street ............. 1985 309,000 98.8 7,642 1.61 25.04
11 Martine Avenue .......... 1987 180,000 100.0 4,186 0.88 21.97
1 Water Street ............. 1979 45,700 97.8 956 0.20 21.39
</TABLE>
44
<PAGE>
PROPERTY LISTING
----------------
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YONKERS
1 Executive Boulevard ............ 1982 112,000 100.0 2,383 0.50 21.28
3 Executive Plaza ................ 1987 58,000 100.0 1,110 0.23 19.14
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE 2,254,376 98.2 47,331 9.96 21.38
- ---------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive ............. 1989 60,696 96.2 1,423 0.30 24.37
1055 Westlakes Drive ............. 1990 118,487 100.0 2,298 0.49 19.39
1205 Westlakes Drive ............. 1988 130,265 99.8 2,840 0.60 21.85
1235 Westlakes Drive ............. 1986 134,902 98.6 2,981 0.63 22.41
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive ................ 1986 95,000 100.0 926 0.20 9.75
200 Stevens Drive ................ 1987 208,000 100.0 4,150 0.88 19.95
300 Stevens Drive ................ 1992 68,000 82.5 1,167 0.25 20.80
MEDIA
1400 Providence Road - Center I .. 1986 100,000 89.1 1,834 0.39 20.58
1400 Providence Road - Center II.. 1990 160,000 91.0 3,124 0.66 21.46
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue .............. 1990 100,700 100.0 1,723 0.36 17.11
PLYMOUTH MEETING
1150 Plymouth Meeting Mall........ 1970 167,748 98.5 3,095 0.65 18.73
Five Sentry Parkway East ......... 1984 91,600 100.0 1,498 0.32 16.35
Five Sentry Parkway West ......... 1984 38,400 100.0 652 0.14 16.98
- ---------------------------------------------------------------------------------------------------------------------
TOTAL PENNSYLVANIA OFFICE 1,473,798 97.0 27,711 5.87 19.38
- ---------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam .................. 1973 121,250 96.9 2,672 0.56 22.74
NORWALK
40 Richards Avenue ............... 1985 145,487 95.5 2,856 0.60 20.56
SHELTON
1000 Bridgeport Avenue ........... 1986 133,000 87.3 2,418 0.51 20.83
- ---------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE 399,737 93.2 7,946 1.67 21.33
- ---------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA
WASHINGTON
1201 Connecticut Avenue, NW (4) .. 1940 169,549 86.1 4,553 0.96 31.19
1400 L Street, NW ................ 1987 159,000 95.4 5,870 1.24 38.70
1709 New York Avenue, NW ......... 1972 166,000 100.0 6,425 1.36 38.70
- ---------------------------------------------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA OFFICE 494,549 93.8 16,848 3.56 36.34
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
PROPERTY LISTING
----------------
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place ............ 1989 122,000 91.3 2,232 0.47 20.04
- ---------------------------------------------------------------------------------------------------------------------
TOTAL MARYLAND OFFICE 122,000 91.3 2,232 0.47 20.04
- ---------------------------------------------------------------------------------------------------------------------
BEXAR COUNTY, TEXAS
SAN ANTONIO
200 Concord Plaza Drive .......... 1986 248,700 96.4 4,523 0.95 18.87
1777 N.E. Loop 410 ............... 1986 256,137 92.5 3,464 0.73 14.62
84 N.E. Loop 410 ................. 1971 187,312 89.2 2,459 0.52 14.72
111 Soledad ...................... 1918 248,153 92.4 2,313 0.49 10.09
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place ............... 1986 97,889 96.1 1,393 0.29 14.81
DALLAS COUNTY,TEXAS
DALLAS
3030 LBJ Freeway ................. 1984 367,018 96.5 6,228 1.31 17.58
3100 Monticello .................. 1984 173,837 92.5 2,788 0.59 17.34
8214 Westchester ................. 1983 95,509 87.8 1,270 0.27 15.14
IRVING
2300 Valley View ................. 1985 142,634 78.5 2,427 0.51 21.68
RICHARDSON
1122 Alma Road ................... 1977 82,576 100.0 607 0.13 7.35
HARRIS COUNTY, TEXAS
HOUSTON
14511 Falling Creek .............. 1982 70,999 96.3 825 0.17 12.07
5225 Katy Freeway ................ 1983 112,213 97.6 1,330 0.28 12.14
5300 Memorial .................... 1982 155,099 100.0 2,028 0.43 13.08
1717 St. James Place ............. 1975 109,574 97.8 1,327 0.28 12.38
1770 St. James Place ............. 1973 103,689 90.1 1,362 0.29 14.58
10497 Town & Country Way ......... 1981 148,434 82.4 1,948 0.41 15.93
POTTER COUNTY, TEXAS
AMARILLO
6900 IH - 40 West (7) ............ 1986 71,771 77.2 556 0.12 10.03
TARRANT COUNTY, TEXAS
EULESS
150 West Parkway ................. 1984 74,429 95.9 1,042 0.22 14.60
TRAVIS COUNTY, TEXAS
AUSTIN
1250 Capital of Texas Hwy. South.. 1985 270,703 98.8 5,533 1.17 20.69
- ---------------------------------------------------------------------------------------------------------------------
TOTAL TEXAS OFFICE 3,016,676 93.2 43,423 9.16 15.45
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
PROPERTY LISTING
----------------
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard .. 1991 181,596 100.0 1,615 0.34 8.89
PHOENIX
19640 North 31st Street ..... 1990 124,171 100.0 1,235 0.26 9.95
20002 North 19th Avenue (6) . 1986 n/a n/a 476 0.10 n/a
SCOTTSDALE
9060 E. Via Linda Boulevard . 1984 111,200 100.0 2,406 0.51 21.64
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ARIZONA OFFICE 416,967 100.0 5,732 1.21 13.75
- ---------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street .. 1997 108,240 100.0 2,911 0.61 26.89
DENVER
400 South Colorado Boulevard. 1983 125,415 99.4 1,974 0.42 15.83
ENGLEWOOD
9359 East Nichols Avenue .... 1997 72,610 100.0 903 0.19 12.44
5350 South Roslyn Street .... 1982 63,754 96.2 1,065 0.22 17.36
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court .. 1997 37,574 100.0 537 0.11 14.29
303 South Technology Court-A. 1997 34,454 100.0 388 0.08 11.27
303 South Technology Court-B. 1997 40,416 100.0 456 0.10 11.28
LOUISVILLE
1172 Century Drive .......... 1996 49,566 100.0 623 0.13 12.57
248 Centennial Parkway ...... 1996 39,266 100.0 490 0.10 12.47
285 Century Place ........... 1997 69,145 100.0 1,119 0.24 16.18
DENVER COUNTY, COLORADO
DENVER
3600 South Yosemite ......... 1974 133,743 100.0 1,288 0.27 9.63
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
384 Inverness Drive South ... 1985 51,523 100.0 808 0.17 15.68
400 Inverness Drive ......... 1997 111,608 99.9 2,734 0.58 24.52
67 Inverness Drive East ..... 1996 54,280 100.0 653 0.14 12.03
5975 South Quebec Street .... 1996 102,877 99.8 2,362 0.50 23.01
PARKER
9777 Pyramid Court .......... 1995 120,281 100.0 1,323 0.28 11.00
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
8415 Explorer ............... 1998 47,368 100.0 528 0.11 11.15
1975 Research Parkway ....... 1997 115,250 100.0 1,701 0.36 14.76
2375 Telstar Drive .......... 1998 47,369 100.0 528 0.11 11.15
</TABLE>
47
<PAGE>
PROPERTY LISTING
----------------
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard ............ 1985 63,600 98.9 1,101 0.23 17.50
- ---------------------------------------------------------------------------------------------------------------------
TOTAL COLORADO OFFICE 1,488,339 99.7 23,492 4.95 15.83
- ---------------------------------------------------------------------------------------------------------------------
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
795 Folsom Street (4) .......... 1977 183,445 86.2 4,184 0.88 26.46
760 Market Street .............. 1908 267,446 93.6 7,586 1.60 30.30
- ---------------------------------------------------------------------------------------------------------------------
TOTAL CALIFORNIA OFFICE 450,891 90.6 11,770 2.48 28.81
- ---------------------------------------------------------------------------------------------------------------------
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard .......... 1982 297,429 95.4 3,648 0.77 12.86
- ---------------------------------------------------------------------------------------------------------------------
TOTAL FLORIDA OFFICE 297,429 95.4 3,648 0.77 12.86
- ---------------------------------------------------------------------------------------------------------------------
POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway ........... 1988 72,265 97.5 1,125 0.24 15.97
- ---------------------------------------------------------------------------------------------------------------------
TOTAL IOWA OFFICE 72,265 97.5 1,125 0.24 15.97
- ---------------------------------------------------------------------------------------------------------------------
DOUGLAS COUNTY, NEBRASKA
OMAHA
210 South 16th Street .......... 1894 319,535 93.4 3,252 0.69 10.90
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NEBRASKA OFFICE 319,535 93.4 3,252 0.69 10.90
- ---------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES 22,746,211 97.4 424,712 89.66 19.16
=====================================================================================================================
</TABLE>
48
<PAGE>
PROPERTY LISTING
----------------
OFFICE/FLEX PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane ................ 1991 64,500 77.7 425 0.09 8.48
5 Terri Lane ................ 1992 74,555 62.2 464 0.10 10.01
MOORESTOWN
2 Commerce Drive (4) ........ 1986 49,000 100.0 362 0.08 7.40
101 Commerce Drive .......... 1988 64,700 100.0 336 0.07 5.19
102 Commerce Drive (4) ...... 1987 38,400 87.5 176 0.04 5.23
201 Commerce Drive .......... 1986 38,400 100.0 197 0.04 5.13
202 Commerce Drive (4) ...... 1988 51,200 100.0 269 0.06 5.26
1 Executive Drive ........... 1989 20,570 91.2 85 0.02 4.53
2 Executive Drive (4) ....... 1988 60,800 100.0 458 0.10 5.23
101 Executive Drive ......... 1990 29,355 45.8 134 0.03 9.97
102 Executive Drive ......... 1990 64,000 90.0 414 0.09 7.19
225 Executive Drive ......... 1990 50,600 100.0 314 0.07 6.21
97 Foster Road .............. 1982 43,200 100.0 187 0.04 4.33
1507 Lancer Drive ........... 1995 32,700 100.0 139 0.03 4.25
1510 Lancer Drive ........... 1998 88,000 100.0 370 0.08 4.20
1256 North Church ........... 1984 63,495 49.9 360 0.08 11.36
840 North Lenola ............ 1995 38,300 100.0 271 0.06 7.08
844 North Lenola ............ 1995 28,670 100.0 213 0.04 7.43
30 Twosome Drive ............ 1997 39,675 100.0 223 0.05 5.62
40 Twosome Drive ............ 1996 40,265 63.1 220 0.05 8.66
50 Twosome Drive ............ 1997 34,075 100.0 269 0.06 7.89
WEST DEPTFORD
1451 Metropolitan Drive ..... 1996 21,600 100.0 148 0.03 6.85
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive ........... 1989 13,275 0.0 13 0.00 0.00
200 Horizon Drive ........... 1991 45,770 85.3 446 0.09 11.42
300 Horizon Drive ........... 1989 69,780 73.8 876 0.18 17.01
500 Horizon Drive ........... 1990 41,205 51.7 356 0.08 16.71
MONMOUTH COUNTY, NEW JERSEY
WALL TOWNSHIP
1325 Campus Parkway ......... 1988 35,000 18.4 253 0.05 39.29
1340 Campus Parkway ......... 1992 72,502 94.6 786 0.17 11.46
1345 Campus Parkway ......... 1995 76,300 100.0 705 0.15 9.24
1433 Highway 34 ............. 1985 69,020 65.3 451 0.10 10.01
1320 Wykoff Avenue .......... 1986 20,336 0.0 20 0.00 0.00
1324 Wykoff Avenue .......... 1987 21,168 100.0 192 0.04 9.07
PASSAIC COUNTY, NEW JERSEY
TOTOWA
1 Center Court .............. 1999 38,961 100.0 143 0.03 9.71
2 Center Court .............. 1998 30,600 99.3 350 0.07 11.52
11 Commerce Way ............. 1989 47,025 100.0 441 0.09 9.38
20 Commerce Way ............. 1992 42,540 100.0 392 0.08 9.21
29 Commerce Way ............. 1990 48,930 100.0 475 0.10 9.71
40 Commerce Way ............. 1987 50,576 100.0 561 0.12 11.09
45 Commerce Way ............. 1992 51,207 100.0 481 0.10 9.39
60 Commerce Way ............. 1988 50,333 84.3 317 0.07 7.47
80 Commerce Way ............. 1996 22,500 93.3 266 0.06 12.67
</TABLE>
49
<PAGE>
PROPERTY LISTING
----------------
OFFICE/FLEX PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
100 Commerce Way ................. 1996 24,600 96.2 301 0.06 12.72
120 Commerce Way ................. 1994 9,024 100.0 91 0.02 10.08
140 Commerce Way ................. 1994 26,881 99.5 273 0.06 10.21
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE/FLEX 1,943,593 85.2 14,223 3.03 8.59
- ---------------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
11 Clearbrook Road ............... 1974 31,800 100.0 331 0.07 10.41
75 Clearbrook Road ............... 1990 32,720 100.0 816 0.17 24.94
150 Clearbrook Road .............. 1975 74,900 100.0 1,048 0.22 13.99
175 Clearbrook Road .............. 1973 98,900 98.5 1,435 0.30 14.73
200 Clearbrook Road .............. 1974 94,000 99.8 1,170 0.25 12.47
250 Clearbrook Road .............. 1973 155,000 94.5 1,228 0.26 8.38
50 Executive Boulevard ........... 1969 45,200 97.2 384 0.08 8.74
77 Executive Boulevard ........... 1977 13,000 100.0 167 0.04 12.85
85 Executive Boulevard ........... 1968 31,000 96.5 392 0.08 13.10
300 Executive Boulevard .......... 1970 60,000 99.7 577 0.12 9.65
350 Executive Boulevard .......... 1970 15,400 98.8 243 0.05 15.97
399 Executive Boulevard .......... 1962 80,000 100.0 958 0.20 11.98
400 Executive Boulevard .......... 1970 42,200 100.0 627 0.13 14.86
500 Executive Boulevard .......... 1970 41,600 100.0 571 0.12 13.73
525 Executive Boulevard .......... 1972 61,700 99.8 840 0.18 13.64
1 Westchester Plaza .............. 1967 25,000 100.0 294 0.06 11.76
2 Westchester Plaza .............. 1968 25,000 100.0 439 0.09 17.56
3 Westchester Plaza .............. 1969 93,500 98.5 1,106 0.23 12.01
4 Westchester Plaza .............. 1969 44,700 99.8 626 0.13 14.03
5 Westchester Plaza .............. 1969 20,000 100.0 284 0.06 14.20
6 Westchester Plaza .............. 1968 20,000 100.0 285 0.06 14.25
7 Westchester Plaza .............. 1972 46,200 100.0 649 0.14 14.05
8 Westchester Plaza .............. 1971 67,200 100.0 860 0.18 12.80
HAWTHORNE
200 Saw Mill River Road .......... 1965 51,100 100.0 638 0.13 12.49
4 Skyline Drive .................. 1987 80,600 100.0 1,230 0.26 15.26
8 Skyline Drive .................. 1985 50,000 98.9 741 0.16 14.98
10 Skyline Drive ................. 1985 20,000 100.0 283 0.06 14.15
11 Skyline Drive ................. 1989 45,000 100.0 679 0.14 15.09
12 Skyline Drive (4) ............. 1999 46,850 100.0 699 0.15 14.91
15 Skyline Drive ................. 1989 55,000 100.0 860 0.18 15.64
YONKERS
100 Corporate Boulevard .......... 1987 78,000 98.2 1,177 0.25 15.37
200 Corporate Boulevard South..... 1990 84,000 99.8 1,392 0.29 16.60
4 Executive Plaza ................ 1986 80,000 99.9 1,028 0.22 12.86
6 Executive Plaza ................ 1987 80,000 88.6 987 0.21 12.34
1 Odell Plaza .................... 1980 106,000 100.0 1,294 0.27 12.21
5 Odell Plaza .................... 1983 38,400 99.6 497 0.10 12.99
7 Odell Plaza .................... 1984 42,600 99.6 666 0.14 15.70
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE/FLEX 2,076,570 99.2 27,501 5.78 13.35
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE>
PROPERTY LISTING
----------------
OFFICE/FLEX PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
419 West Avenue ............. 1986 88,000 99.7 1,430 0.30 16.30
500 West Avenue ............. 1988 25,000 100.0 340 0.07 13.60
550 West Avenue ............. 1990 54,000 100.0 816 0.17 15.11
600 West Avenue (4) ......... 1999 66,000 100.0 453 0.10 6.87
650 West Avenue ............. 1998 40,000 100.0 633 0.13 15.83
- ---------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE/FLEX 273,000 99.9 3,672 0.77 13.47
- ---------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES 4,293,163 92.9 45,396 9.58 11.38
=====================================================================================================================
</TABLE>
51
<PAGE>
PROPERTY LISTING
----------------
INDUSTRIAL/WAREHOUSE PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 3/31/00 RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) BASE RENT (%) ($) (3) (5)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane .................... 1957 6,600 100.0 57 0.01 8.64
2 Warehouse Lane .................... 1957 10,900 100.0 113 0.02 10.37
3 Warehouse Lane .................... 1957 77,200 100.0 290 0.06 3.76
4 Warehouse Lane .................... 1957 195,500 97.4 1,921 0.41 10.09
5 Warehouse Lane .................... 1957 75,100 97.1 708 0.15 9.71
6 Warehouse Lane .................... 1982 22,100 100.0 513 0.11 23.21
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INDUSTRIAL/WAREHOUSE PROPERTIES 387,400 98.1 3,602 0.76 9.48
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX,
AND INDUSTRIAL/WAREHOUSE
PROPERTIES 27,426,774 96.7 473,710 100.00 17.85
============================================================================================================================
</TABLE>
(1) Based on all leases in effect as of March 31, 2000.
(2) Total base rent for 12 months ended March 31, 2000, determined in
accordance with generally accepted accounting principles ("GAAP").
Substantially all of the leases provide for annual base rents plus
recoveries and escalation charges based upon the tenant's proportionate
share of and/or increases in real estate taxes and certain operating
costs, as defined, and the pass through of charges for electrical usage.
For those properties acquired or placed in service during the 12 months
ended March 31, 2000, amounts are annualized, as per Note 4.
(3) Base rent for the 12 months ended March 31, 2000 divided by net rentable
square feet leased at March 31, 2000. For those properties acquired or
placed in service during 12 months ended March 31, 2000, amounts are
annualized, as per Note 4.
(4) As this property was acquired or placed in service during the 12 months
ended March 31, 2000, the amounts represented for base rent are
annualized. These annualized amounts may not be indicative of the
property's results had the Operating Partnership owned or placed such
property in service for the entire 12 months ended March 31, 2000.
(5) Excludes office space leased by the Operating Partnership.
(6) The property was sold by the Operating Partnership in 1999.
(7) The property was sold by the Operating Partnership in April 2000.
- --------------------
52
<PAGE>
FUNDS FROM OPERATIONS
The Operating Partnership considers funds from operations ("FFO"), after
adjustment for straight-lining of rents, one measure of REIT performance. Funds
from operations is defined as net income (loss) before distributions to
preferred unitholders, computed in accordance with GAAP, excluding gains (or
losses) from debt restructuring, other extraordinary and significant
non-recurring items, and sales of rental property, plus real estate-related
depreciation and amortization. Funds from operations should not be considered as
an alternative to net income as an indication of the Operating Partnership's
performance or to cash flows as a measure of liquidity. Funds from operations
presented herein is not necessarily comparable to funds from operations
presented by other real estate companies due to the fact that not all real
estate companies use the same definition. However, the Operating Partnership's
funds from operations is comparable to the funds from operations of real estate
companies that use the current definition of the National Association of Real
Estate Investment Trusts ("NAREIT"), after the adjustment for straight-lining of
rents.
NAREIT's definition of funds from operations indicates that the calculation
should be made before any extraordinary item (determined in accordance with
GAAP), and before any deduction of significant non-recurring events that
materially distort the comparative measurement of the Operating Partnership's
performance.
Funds from operations for the three months ended March 31, 2000 and 1999 as
calculated in accordance with NAREIT's definition as published in October 1999,
after adjustment for straight-lining of rents, are summarized in the following
table (IN THOUSANDS):
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Income before non-recurring charges,
gain on sale of rental property,
distributions to preferred unitholders,
minority interest and extraordinary item $ 47,681 $ 40,813
Add: Real estate-related depreciation and
amortization (1) 22,718 22,951
Deduct: Rental income adjustment for
straight-lining of rents (2) (2,190) (3,545)
Minority interests: partially-owned properties (2,090) --
- ------------------------------------------------------------------------------------------
Funds from operations, after adjustment
for straight-lining of rents, before
distributions to preferred unitholders $ 66,119 $ 60,219
Deduct: Distributions to preferred unitholders (3,869) (3,869)
- ------------------------------------------------------------------------------------------
Funds from operations, after adjustment for
straight-lining of rents, after distributions
to preferred unitholders $ 62,250 $ 56,350
==========================================================================================
Cash flows provided by operating activities $ 39,038 $ 59,654
Cash flows used in investing activities $(36,257) $(43,459)
Cash flows used in financing activities $ (5,278) $ (9,598)
- ------------------------------------------------------------------------------------------
Basic weighted average units outstanding (3) 66,428 67,011
- ------------------------------------------------------------------------------------------
Diluted weighted average units outstanding (3) 73,191 73,975
- ------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the Operating Partnership's share from unconsolidated joint
ventures of $734 and $1,101 for 2000 and 1999, respectively.
(2) Includes the Operating Partnership's share from unconsolidated joint
ventures of $57 and $(18) for 2000 and 1999, respectively.
(3) See calculations for the amounts presented in the following
reconciliation.
53
<PAGE>
The following schedule reconciles the Operating Partnership's basic weighted
average units to the diluted weighted average units presented above:
Three Months Ended March 31,
2000 1999
- --------------------------------------------------------------------------------
Basic weighted average units: 66,428 67,011
Add: Weighted average preferred units 6,618 6,692
(after conversion to common units)
Stock options 145 272
- --------------------------------------------------------------------------------
Diluted weighted average units: 73,191 73,975
================================================================================
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.
54
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Approximately $1.2 billion of the Operating Partnership's long-term debt bears
interest at fixed rates, and therefore the fair value of these instruments is
affected by changes in the market interest rates. The following table presents
principal cash flows (in thousands) based upon maturity dates of the debt
obligations and the related weighted-average interest rates by expected maturity
dates for the fixed rate debt. The interest rate on the variable rate debt as of
March 31, 2000 ranged from LIBOR plus 65 basis points to LIBOR plus 90 basis
points.
<TABLE>
<CAPTION>
MARCH 31, 2000
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...... $7,847 $ 7,468 $3,458 $195,611 $312,195 $713,512 $1,240,091 $1,181,360
Average Interest
Rate......... 6.93% 7.44% 8.20% 7.30% 7.34% 7.19% 7.24%
Variable Rate $216,208 $ 72,204 $ 288,412 $ 288,412
</TABLE>
55
<PAGE>
MACK-CALI REALTY, L.P.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Reference is made to "Other" in Note 15 (Commitments and
Contingencies) to the Consolidated Financial Statements, which is
specifically incorporated by reference herein.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Item 5. OTHER INFORMATION
Not Applicable.
56
<PAGE>
MACK-CALI REALTY, L.P.
PART II - OTHER INFORMATION (CONTINUED)
ITEM 6 - EXHIBITS
(a) Exhibits
The following exhibits are filed herewith or are incorporated by
reference to exhibits previously filed:
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
3.1 Restated Charter of Mack-Cali Realty Corporation dated June 2,
1999, together with Articles Supplementary thereto (filed as
Exhibit 3.1 to the General Partner's Form 8-K dated June 10, 1999
and as Exhibit 4.2 to the Operating Partnership's Form 8-K dated
July 6, 1999 and each incorporated herein by reference).
3.2 Amended and Restated Bylaws of Mack-Cali Realty Corporation dated
June 10, 1999 (filed as Exhibit 3.2 to the General Partner's Form
8-K dated June 10, 1999 and incorporated herein by reference).
3.3 Second Amended and Restated Agreement of Limited Partnership
dated December 11, 1997, for Mack-Cali Realty, L.P. (filed as
Exhibit 10.110 to the General Partner's Form 8-K dated December
11, 1997 and incorporated herein by reference).
3.4 Amendment No. 1 to the Second Amended and Restated Agreement of
Limited Partnership of Mack-Cali Realty, L.P. (filed as Exhibit
3.1 to the General Partner's and the Operating Partnership's
Registration Statement on Form S-3, Registration No. 333-57103,
and incorporated herein by reference).
3.5 Second Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Mack-Cali Realty, L.P. (filed as Exhibit
10.2 to the Operating Partnership's Form 8-K dated July 6, 1999
and incorporated herein by reference).
4.1 Shareholder Rights Agreement, dated as of July 6, 1999, between
Mack-Cali Realty Corporation and ChaseMellon Shareholder
Services, LLC, as Rights Agent (filed as Exhibit 4.1 to the
Operating Partnership's Form 8-K dated July 6, 1999 and
incorporated herein by reference).
4.2 Indenture dated as of March 16, 1999, by and among Mack-Cali
Realty, L.P., as issuer, Mack-Cali Realty Corporation, as
guarantor, and Wilmington Trust Company, as trustee (filed as
Exhibit 4.1 to the Operating Partnership's Form 8-K dated March
16, 1999 and incorporated herein by reference).
4.3 Supplemental Indenture No. 1 dated as of March 16, 1999, by and
among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust
Company, as trustee (filed as Exhibit 4.2 to the Operating
Partnership's Form 8-K dated March 16, 1999 and incorporated
herein by reference).
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).
57
<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 General Partner's Form 8-K dated December
11, 1997 and incorporated herein by reference).
10.14 Amendment No. 1 to Revolving Credit Agreement dated July 20,
1998, by and among Mack-Cali Realty, L.P. and The Chase Manhattan
Bank, Fleet National Bank and Other Lenders Which May Become
Parties Thereto (filed as Exhibit 10.5 to the Operating
Partnership's Form 10-K dated December 31, 1998 and incorporated
herein by reference).
58
<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 General Partner's Form 8-K dated September
19, 1997 and incorporated herein by reference).
10.17 First Amendment to Contribution and Exchange Agreement, dated as
of December 11, 1997, by and among the Company and the Mack Group
(filed as Exhibit 10.99 to the General Partner's Form 8-K dated
December 11, 1997 and incorporated herein by reference).
*10.18 Agreement of Sale and Purchase, dated as of January 31, 2000, by
and between Grove Street Associates of Jersey City Limited
Partnership and Cal-Grove Street Urban Renewal Associates L.P.
and Commerzleasing und Immobilien GmbH and Germania of America,
Inc.
*27 Financial Data Schedule
(b) Reports on Form 8-K
During the first quarter of 2000, the Operating Partnership filed a
report on Form 8-K dated March 7, 2000, reporting under Item 5 that the General
Partner amended and restated its Shareholder Rights Agreement dated as of July
6, 1999, among the General Partner and ChaseMellon Shareholder Services, LLC
("Chase Mellon") to reflect, among other things, the replacement by the General
Partner of ChaseMellon with EquiServe as the Rights Agent.
- --------------
*filed herewith
59
<PAGE>
MACK-CALI REALTY, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MACK-CALI REALTY, L.P.
(Registrant)
By: Mack-Cali Realty Corporation,
as its General Partner
Date: May 12, 2000 /s/ Mitchell E. Hersh
----------------------------------------
Mitchell E. Hersh
Chief Executive Officer
Date: May 12, 2000 /s/ Barry Lefkowitz
----------------------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
60
<PAGE>
EXHIBIT 10.18
AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE ("AGREEMENT") made this 31st day of
January, 2000 by and between GROVE STREET ASSOCIATES OF JERSEY CITY LIMITED
PARTNERSHIP and CALI-GROVE STREET URBAN RENEWAL ASSOCIATES L.P., each a limited
partnership organized under the laws of the State of New Jersey, both having an
address c/o Mack-Cali Realty Corporation, 11 Commerce Drive, Cranford, New
Jersey 07016 (collectively, "SELLER") and COMMERZLEASING UND IMMOBILIEN GmbH,
("CLI"), a corporation organized under the laws of the Federal Republic of
Germany, having an address at Ludwig-Erhard-Allee-9, D-40227 Dusseldorf,
Germany, and GERMANIA OF AMERICA, INC. ("GERMANIA"), a corporation organized
under the laws of the State of Georgia, having an address at Tower Place, Suite
2995, 3340 Peachtree Road, N.E., Atlanta, Georgia 30325 (collectively,
"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:
"ASSIGNMENT" has the meaning ascribed to such term in Section 10.3(d), in
the form attached hereto as EXHIBIT A.
"ASSIGNMENT OF LEASES" has the meaning ascribed to such term in Section
10.3(c), in the form attached hereto as EXHIBIT B.
"AUTHORITIES" means the various governmental and quasi-governmental bodies
or agencies having jurisdiction over the Real Property and Improvements, or any
portion thereof.
"BILL OF SALE" has the meaning ascribed to such term in Section 10.3(b),
in the form attached hereto as EXHIBIT C.
"BROKERAGE COMMISSION AGREEMENTS" means the agreements set forth on
EXHIBIT N.
"BROKERS" has the meaning ascribed to such term in Section 16.1.
<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).
"CERTIFYING PERSON" has the meaning ascribed to such term in Section
4.3.
"CITY" means the City of Jersey City, a municipal corporation of the State
of New Jersey.
"CITY CONSENT" has the meaning ascribed to such term in Section 7.1(f).
"CLOSING" means the consummation of the purchase and sale of the Property
contemplated by this Agreement, as provided for in Article X.
"CLOSING DATE" means the earlier to occur of (i) March 15, 2000 or (ii)
the date which is thirty (30) days following the date that Purchaser waives its
right to terminate this Agreement pursuant to Section 5.3; PROVIDED, HOWEVER,
that the Closing Date may also be extended by mutual written agreement of Seller
and Purchaser. Notwithstanding anything to the contrary contained herein, (a)
Seller shall have the right to extend the Scheduled Closing Date for up to sixty
(60) days upon notice to Purchaser if as of such date, the City shall not have
given the City Consent, Seller shall not have obtained the ISRA letter, Seller
shall not have obtained the estoppel letters required from the Major Tenants as
provided herein, title to the Real Property shall not be as provided for in
Section 6.3(a), or any of the foregoing; and (b) Purchaser shall have the right
to extend the Scheduled Closing Date for up to sixty (60) days upon notice to
Seller if as of such date, the City shall not have given the City Consent,
Seller shall not have obtained the estoppel letters required from the Major
Tenants as provided herein, or both. If Purchaser extends the Scheduled Closing
Date due to the fact that Seller did not obtain the estoppel letters from the
Major Tenants, Purchaser may contact the Major Tenants, with Seller's
representatives present, in order to discuss the status of the estoppel letters.
"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 Sections 3.2, 5.4, 8.1(d) [to the extent set forth in
Section 8.3], 8.2, 8.3, 10.4, 10.6, 11.1, 11.2, Article XIV, 16.1, 18.2, 18.8
and Article XXI, and any other provisions which pursuant to their terms survives
the Closing hereunder.
"CODE" has the meaning ascribed to such term in Section 4.3.
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality Agreement
annexed hereto as EXHIBIT M.
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"DEED" has the meaning ascribed to such term in Section 10.3(a).
"DELINQUENT RENTAL" has the meaning ascribed to such term in Section
10.4(b).
"DOCUMENTS" has the meaning ascribed to such term in Section 5.2(a).
"EARNEST MONEY DEPOSIT" has the meaning ascribed to such term in
Section 4.1.
"EFFECTIVE DATE" means the latest date on which this Agreement has been
executed by Seller or Purchaser, as set forth opposite such party's signature
and the Earnest Money Deposit shall have been received by the Escrow Agent.
"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 Real Property or the Improvements, or any portion thereof, the
use, ownership, occupancy or operation of the Real Property or the
Improvements, or any portion thereof, or Purchaser, 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. Section 9601 et seq.), the
Hazardous Substances Transportation Act (49 U.S.C. Section 1802 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), as
amended by the Hazardous and Solid Wastes Amendments of 1984, the Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Safe Drinking
Water Act (42 U.S.C. Section 300f et seq.), the Clean Water Act (33 U.S.C.
Section 1321 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.),
the Solid Waste Disposal Act (42 U.S.C. Section 6901 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Emergency
Planning and Community Right-to-Know Act of 1986 (42 U.S.C. Section 11001 et
seq.), the Radon and Indoor Air Quality Research Act (42 U.S.C. Section 7401
note, et seq.), the National Environmental Policy Act (42 U.S.C. Section 4321
et seq.), the Superfund Amendment Reauthorization Act of 1986 (42 U.S.C.
Section 9601 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), the New Jersey Environmental Rights Act (N.J.S.A.
2A:35A-1 et seq.), 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 date of this Agreement under any and all of the Environmental
Statutes.
"ENVIRONMENTAL REPORT " means that certain Phase I Environmental Site
Assessment prepared by Environmental Waste Management Associates and addressed
Cali Associates, dated August 3, 1994, a copy of which has been
provided to Purchaser.
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"ESCROW AGENT" means Titleserv Agency of New York, Inc., as agent for
Fidelity National Title Insurance Company of New York.
"EXISTING SURVEY" means Seller's existing survey of the Real Property
dated September 12, 1989 prepared by Donald J. McCutcheon and last revised
August 17, 1994.
"EVALUATION PERIOD" means the period commencing on the Effective Date and
terminating on February 14, 2000.
"FINANCING AGREEMENT" has the meaning ascribed to such term in Section
7.1(f).
"GROUND LEASE" means that certain ground lease dated April 17, 1997
between Grove Street Associates of Jersey City Limited Partnership and
Cali-Grove Street Urban Renewal Associates L.P.
"GOVERNMENTAL REGULATIONS" means all statutes, ordinances, rules and
regulations of the Authorities applicable to Seller or the use or operation of
the Real Property or the Improvements 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 Property.
"ISRA LETTER" has the meaning ascribed to such term in Section 19.1.
"KEY INDIVIDUALS" means Brant Cali, James Nugent, Barry Lefkowitz, Roger
Thomas and Rob Vicci, in their corporate capacity as officers of Mack-Cali
Realty Corporation, and not in any individual or other capacity whatsoever.
"LEASE SCHEDULE" has the meaning ascribed to such term in Section
5.2(a).
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"LEASES" means all of the leases and other agreements with Tenants with
respect to the use and occupancy of the Real Property, together with all
renewals and modifications thereof, if any, and any new leases entered into
after the Effective Date.
"LICENSEE PARTIES" has the meaning ascribed to such term in Section 5.1.
"LICENSES AND PERMITS" means, collectively, all of Seller's 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 Real Property and the Improvements, together with all
renewals and modifications thereof.
"MAJOR TENANTS" means DLJ Securities Corporation and NTT Data
Communications Systems Corporation.
"NEW TENANT COSTS" has the meaning ascribed to such term in Section
10.4(e).
"NTT LEASE EXTENSION" has the meaning ascribed to such term in Section
7.1(e).
"OPERATING EXPENSES" has the meaning ascribed to such term in Section
10.4(c).
"PERMITTED EXCEPTIONS" has the meaning ascribed to such term in Section
6.2(a).
"PERMITTED OUTSIDE PARTIES" has the meaning ascribed to such term in
Section 5.2(b).
"PERSONAL PROPERTY" means all of Seller's 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 Property on the date hereof, subject to
Seller's right to replace such personal property with personal property of
comparable value and utility as it elects in the normal course of business.
"PROPERTY" has the meaning ascribed to such term in Section 2.1.
"PRORATION ITEMS" has the meaning ascribed to such term in Section
10.4(a).
"PURCHASE PRICE" has the meaning ascribed to such term in Section 3.1.
"PURCHASER'S INFORMATION" has the meaning ascribed to such term in
Section 5.3(c).
"REAL PROPERTY" means that certain parcel or parcels of real property
located at 95 Christopher Columbus Drive, Jersey City, New Jersey, as more
particularly described
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on the legal description attached hereto and made a part hereof as EXHIBIT D,
together with all of Seller's right, title and interest, if any, in and to the
appurtenances pertaining thereto, including but not limited to Seller's 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.
"RENTAL" has the meaning ascribed to such term in Section 10.4(b), and
same are "Delinquent" in accordance with the meaning ascribed to such term in
Section 10.4(b).
"ROCKWOOD" has the meaning ascribed to such term in Section 10.5(a).
"SCHEDULED CLOSING DATE" means March 15, 2000, or such earlier or later
date to which both Purchaser and Seller may hereafter agree in writing.
"SECAUCUS LITIGATION" has the meaning ascribed to such term in Section
8.1 (d).
"SECURITY DEPOSITS" means all security deposits paid to Seller, 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).
"SERVICE CONTRACTS" means all of Seller's right, title and interest, to
the extent assignable, in 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 Real Property, Improvements or Personal Property
and which are currently in effect, including those listed and described on
EXHIBIT E attached hereto, together with all renewals, supplements, amendments
and modifications thereof, and any new such agreements entered into after the
Effective Date, to the extent permitted by Section 7.1. Service Contracts shall
not include Brokerage Commission Agreements.
"SIGNIFICANT PORTION" means, for purposes of the casualty provisions set
forth in Article XI hereof, damage by fire or other casualty to the Real
Property and the Improvements or a portion thereof, the cost of which to repair
would exceed Five Million Dollars ($5,000,000) in the aggregate.
"SURVEY OBJECTION" has the meaning ascribed to such term in Section 6.1.
"TENANTS" means the tenants or users who are parties to the Leases.
"TENANT NOTICE LETTERS" has the meaning ascribed to such term in Section
10.2(e), and are to be delivered by Purchaser to Tenants pursuant to Section
10.6.
"TERMINATION SURVIVING OBLIGATIONS" means the rights, liabilities and
obligations set forth in Sections 5.2, 5.3, 12.1, Articles XIII and XIV, 16.1,
18.2 and 18.8,
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and any other provisions which pursuant to their terms survive any termination
of this Agreement.
"TITLE COMMITMENT" has the meaning ascribed to such term in Section 6.2.
"TITLE COMPANY" means Fidelity National Title Insurance Company of New
York.
"TITLE OBJECTIONS" has the meaning ascribed to such term in Section 6.2.
"TITLE POLICY" has the meaning ascribed to such term in Section 6.2.
"TO SELLER'S KNOWLEDGE" means the actual (as opposed to constructive or
imputed) knowledge of the Key Individuals, without any independent investigation
or inquiry whatsoever.
"TRAMMELL" has the meaning ascribed to such term in Section 10.5(b).
"UPDATED SURVEY" has the meaning ascribed to such term in Section 6.1.
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. Grove Street Associates of Jersey City Limited
Partnership is the owner in fee of the Real Property. Cali-Grove Street Urban
Renewal Associates L.P. is the holder of the leasehold interest under the Ground
Lease. Seller hereby agrees to sell, convey and assign to Purchaser, and
Purchaser hereby agrees to purchase and accept from Seller, on the Closing Date
and subject to the terms and conditions of this Agreement, all of the following
(collectively, the "PROPERTY"):
(a) the Real Property including both such fee and such
leasehold interests;
(b) the Improvements;
(c) the Personal Property;
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(d) all of Seller's right, title and interest as lessor in and to
the Leases and, subject to the terms of the respective applicable Leases, the
Security Deposits;
(e) all of Seller's right, title and interest in, to and under the
Service Contracts and the Licenses and Permits; and
(f) all of Seller's right, title and interest, to the extent
assignable or transferable, in and to all other intangible rights, titles,
interests, privileges and appurtenances owned by Seller and related to or used
exclusively in connection with the ownership, use or operation of the Real
Property or the Improvements.
SECTION 2.2 INDIVISIBLE ECONOMIC PACKAGE. Purchaser has no right to
purchase, and Seller has no obligation to sell, less than all of the Property,
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
Property, subject to and in accordance with the terms and conditions hereof.
ARTICLE III
CONSIDERATION
SECTION 3.1 PURCHASE PRICE. The purchase price for the Property (the
"PURCHASE PRICE") shall be One Hundred Fifty Five Million Dollars ($155,000,000)
in lawful currency of the United States of America, payable as provided in
Section 3.3, and subject to adjustment as provided in Section 3.4. No portion of
the Purchase Price shall be allocated to the Personal Property.
SECTION 3.2 ASSUMPTION OF OBLIGATIONS. As additional consideration for the
purchase and sale of the Property, at Closing Purchaser will assume the Leases,
Security Deposits, Service Contracts (to the extent not terminated as provided
in Section 7.4(c)) and Licenses and Permits in accordance with the Assignment of
Leases and the Assignment.
SECTION 3.3 METHOD OF PAYMENT OF PURCHASE PRICE. No later than 12:00 p.m.
Eastern time on the Closing Date, Purchaser shall pay to Seller the Purchase
Price (less the Earnest Money Deposit), together with all other costs and
amounts to be paid by Purchaser at the Closing pursuant to the terms of this
Agreement ("PURCHASER'S COSTS"), by Federal Reserve wire transfer of immediately
available funds to the account of Escrow Agent. Escrow Agent, following
authorization by the parties at Closing, shall (i) pay to Seller by Federal
Reserve wire transfer of immediately available funds to an account designated by
Seller, the Purchase Price, less any costs or other amounts to be paid by Seller
at Closing pursuant to the terms of this Agreement, (ii) pay to the appropriate
payees out of the proceeds of Closing payable to Seller all costs and amounts to
be paid by Seller at Closing pursuant to the terms of this Agreement, and (iii)
pay Purchaser's Costs to the appropriate payees at Closing pursuant to the terms
of this Agreement.
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SECTION 3.4 ADJUSTMENT OF PURCHASE PRICE/ADDITIONAL CONSIDERATION
(a) If, three (3) Business Days prior to the Closing Date, Seller has
not obtained the NTT Lease Extension in accordance with the terms and conditions
set forth in Section 7.4(a) hereof, then the Purchase Price shall be reduced by
an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000).
(b) If, during the first ninety (90) days after the Closing, Seller
obtains the NTT Lease Extension in accordance with the terms and conditions set
forth in Section 7.4(a) hereof, then Purchaser shall pay to Seller additional
consideration in the amount of Two Million Five Hundred Thousand Dollars
($2,500,000). If, during the one hundred and eighty (180) days after the
expiration of said ninety (90) day period, Seller obtains the NTT Lease
Extension, then the additional consideration due from Purchaser to Seller shall
be Five Hundred Thousand Dollars ($500,000).
(c) Any payment of additional consideration pursuant to Section 3.4(b)
shall be made by Federal Reserve wire transfer of immediately available funds to
an account designated by Seller, within five (5) Business Days of the date such
amount becomes due. The provisions of this Section 3.4 shall survive the
Closing.
ARTICLE IV
EARNEST MONEY DEPOSIT
AND ESCROW INSTRUCTIONS
SECTION 4.1 THE EARNEST MONEY DEPOSIT. Within two (2) Business Days
following the execution and delivery of this Agreement by Purchaser, Purchaser
shall deposit with the Escrow Agent, by Federal Reserve wire transfer of
immediately available funds, the sum of Two Million Five Hundred Thousand
Dollars ($2,500,000) as the earnest money deposit on account of the Purchase
Price (the "EARNEST MONEY DEPOSIT"). In the event that Purchaser shall fail to
deliver to Escrow Agent the Earnest Money Deposit within the aforesaid two (2)
Business Day period, then this Agreement shall automatically terminate and be
void AB INITIO. TIME IS OF THE ESSENCE with respect to the deposit of the
Earnest Money Deposit.
SECTION 4.2 ESCROW INSTRUCTIONS. The Earnest Money Deposit shall be held
in escrow by the Escrow Agent in an interest-bearing account, in accordance with
the provisions of Article XVII. In the event this Agreement is terminated by
Purchaser prior to the expiration of the Evaluation Period or in the event
Purchaser fails to advise Seller in writing that Purchaser is proceeding under
this Agreement by notice to Seller given prior to the expiration of the
Evaluation Period, the Earnest Money Deposit, together with all interest earned
thereon, shall be refunded to Purchaser. In the event this Agreement is not
terminated by Purchaser pursuant to the terms hereof by the end of the
Evaluation Period in accordance with the provisions of Section 5.3(c) herein,
the Earnest Money Deposit shall become non-refundable to Purchaser. Any interest
earned on the Earnest
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Money Deposit shall be paid to Purchaser promptly following the Closing Date or
the earlier termination of this Agreement.
SECTION 4.3 DESIGNATION OF CERTIFYING PERSON. In order to assure
compliance with the requirements of Section 6045 of the Internal Revenue Code of
1986, as amended (the "CODE"), and any related reporting requirements of the
Code, the parties hereto agree as follows:
(a) Provided the Escrow Agent shall execute a statement in writing
(in form and substance reasonably acceptable to the parties hereunder) pursuant
to which it agrees to assume all responsibilities for information reporting
required under Section 6045(e) of the Code, Seller and Purchaser shall designate
the Escrow Agent as the person to be responsible for all information reporting
under Section 6045(e) of the Code (the "CERTIFYING PERSON"). If the Escrow Agent
refuses to execute a statement pursuant to which it agrees to be the Certifying
Person, Seller and Purchaser shall agree to appoint another third party as the
Certifying Person.
(b) Seller and Purchaser each hereby agree:
(i) to provide to the Certifying Person all information and
certifications regarding such party, as reasonably requested by the
Certifying Person or otherwise required to be provided by a party to
the transaction described herein under Section 6045 of the Code; and
(ii) to provide to the Certifying Person such party's taxpayer
identification number and a statement (on Internal Revenue Service
Form W-9 or an acceptable substitute form, or on any other form the
applicable current or future Code sections and regulations might
require and/or any form requested by the Certifying Person), signed
under penalties of perjury, stating that the taxpayer identification
number supplied by such party to the Certifying Person is correct.
ARTICLE V
INSPECTION OF PROPERTY
SECTION 5.1 EVALUATION PERIOD. For the period ending at 5:00 p.m. Eastern
time on February 14, 2000 (the "EVALUATION PERIOD"), Purchaser and its
authorized agents and representatives (for purposes of this Article V, the
"LICENSEE PARTIES") shall have the right, subject to the right of any Tenants,
to enter upon the Property at all reasonable times during normal business hours
to perform an inspection of the Property. Purchaser will provide to Seller
notice (for purposes of this Section 5.1(a), an "ENTRY NOTICE") of the intention
of Purchaser or the other Licensee Parties to enter the Property at least 24
hours prior to such intended entry and specify the intended purpose therefor and
the inspections and examinations contemplated to be made and with whom any
Licensee Party will communicate. At Seller's option, Seller may be present for
any such entry and
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inspection. Purchaser shall not communicate with or contact any of the Tenants
without the prior written consent of Seller, unless a representative of Seller
is present. If Purchaser elects to meet with any of the Authorities regarding
the condition of the Property or to obtain the City Consent, it shall give
Seller prior notice thereof, and Seller and Seller's representatives shall have
the right, but not the obligation, to attend, and participate in, all such
meetings. Notwithstanding anything to the contrary contained herein, no physical
testing or sampling shall be conducted during any such entry by Purchaser or any
Licensee Party upon the Property without Seller's specific prior written
consent, which consent shall not be unreasonably withheld or delayed. TIME IS OF
THE ESSENCE with respect to the provisions of this Section 5.1.
SECTION 5.2 DOCUMENT REVIEW.
(a) During the Evaluation Period, Purchaser and the Licensee
Parties shall have the right to review and inspect, at Purchaser's sole cost and
expense, all of the following which are in Seller's possession or control
(collectively, the "DOCUMENTS"): all existing environmental, engineering or
consulting reports and studies of the Property (which Purchaser shall have the
right to have updated at Purchaser's sole cost and expense), architectural,
mechanical and structural plans, specifications or drawings related to the
property, real estate tax bills, together with assessments (special or
otherwise), ad valorem and personal property tax bills, covering the period of
Seller's ownership of the Property; its most current lease schedule in the form
attached hereto as EXHIBIT F (the "LEASE SCHEDULE"); current operating
statements; the Leases, lease files, Service Contracts, and Licenses and
Permits. To the extent Seller has not, prior to the date hereof, delivered
copies of the Documents to Purchaser or the Licensee Parties, Seller shall do so
unless it shall be impractical or unreasonably prohibitive to do so. To the
extent Seller does not possess a set of any architectural, mechanical and
structural plans, specifications or drawings relating to the Property which are
in the possession of a third party, Seller shall reasonably cooperate with
Purchaser in obtaining such plans from the third party, if requested by
Purchaser. Inspections of any Documents for which Seller has not provided
Purchaser and the Licensee Parties a copy shall occur at a location selected by
Seller, which may be at the office of Seller, Seller's counsel, Seller's
property manager, at the Real Property or any of them. Purchaser shall not have
the right to review or inspect materials not directly related to the leasing,
maintenance and/or management of the Property, including, without limitation,
all of Seller's internal memoranda, financial projections, budgets, appraisals,
proposals for work not actually undertaken, accounting and income tax records
and similar proprietary, elective or confidential information.
(b) Purchaser acknowledges that any and all of the Documents may
be proprietary and confidential in nature and have been provided to Purchaser
solely to assist Purchaser in determining the desirability of purchasing the
Property. Subject only to the provisions of Article XII, Purchaser agrees not to
disclose the contents of the Documents or any of the provisions, terms or
conditions contained therein, to any party outside of Purchaser's organization
other than its attorneys, partners, accountants, lenders or
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investors (collectively, for purposes of this Section 5.2(b), the "PERMITTED
OUTSIDE PARTIES"). Purchaser further agrees that within its organization, or as
to the Permitted Outside Parties, the Documents will be disclosed and exhibited
only to those persons within Purchaser's organization or to those Permitted
Outside Parties who are responsible for determining the desirability of
Purchaser's acquisition of the Property. Purchaser further acknowledges that the
Documents and other information relating to the leasing arrangements between
Seller and Tenants are proprietary and confidential in nature. Purchaser agrees
not to divulge the contents of such Documents and other information except in
strict accordance with the confidentiality standards set forth in this Section
5.2 and Article XII. In permitting Purchaser and the Permitted Outside Parties
to review the Documents and other information to assist Purchaser, Seller has
not waived any privilege or claim of confidentiality with respect thereto, and
no third party benefits or relationships of any kind, either express or implied,
have been offered, intended or created by Seller, and any such claims are
expressly rejected by Seller and waived by Purchaser and the Permitted Outside
Parties.
(c) Purchaser acknowledges that some of the Documents may have
been prepared by third parties and may have been prepared prior to Seller's
ownership of the Property. PURCHASER HEREBY ACKNOWLEDGES THAT EXCEPT AS SET
FORTH IN SECTION 8.1, SELLER HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATION
OR WARRANTY REGARDING THE TRUTH, ACCURACY OR COMPLETENESS OF THE DOCUMENTS OR
THE SOURCES THEREOF OR THAT SELLER HAS DELIVERED ALL OF THE DOCUMENTS. EXCEPT AS
SET FORTH IN SECTION 8.1, SELLER HAS NOT UNDERTAKEN ANY INDEPENDENT
INVESTIGATION AS TO THE TRUTH, ACCURACY OR COMPLETENESS OF THE DOCUMENTS AND IS
PROVIDING THE DOCUMENTS SOLELY AS AN ACCOMMODATION TO PURCHASER.
SECTION 5.3 ENTRY AND INSPECTION OBLIGATIONS; TERMINATION OF AGREEMENT.
(a) Purchaser agrees that in entering upon and inspecting or
examining the Property, Purchaser and the other Licensee Parties will not:
disturb the Tenants or interfere with the use of the Property pursuant to the
Leases; interfere with the operation and maintenance of the Real Property or
Improvements; damage any part of the Property or any personal property owned or
held by Tenants or any other person or entity; injure or otherwise cause bodily
harm to Seller or any Tenant, or to any of their respective agents, guests,
invitees, contractors and employees, or to any other person or entity; permit
any liens to attach to the Real Property by reason of the exercise of
Purchaser's rights under this Article V; and reveal or disclose any information
obtained concerning the Property and the Documents to anyone outside Purchaser's
organization, except in accordance with the confidentiality standards set forth
in Section 5.2(b) and Article XII. Purchaser will: (i) cause all of Purchaser's
consultants which are to perform physical inspections and/or testing on the Real
Property or Improvements to maintain comprehensive general liability
(occurrence) insurance, and in the event of invasive testing, contractor's
pollution liability insurance, in amounts which reasonably prudent consultants
in their field
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customarily maintain insuring Seller, Purchaser and such other parties as Seller
shall reasonably request, covering any accident or event arising in connection
with the presence of Purchaser or the other Licensee Parties on the Real
Property or Improvements, and deliver evidence of insurance verifying such
coverage to Seller prior to entry upon the Real Property or Improvements; (ii)
promptly pay when due the costs of all entry and inspections and examinations
done with regard to the Property by or on behalf of Purchaser or the Licensee
Parties; (iii) cause any inspection to be conducted in accordance with standards
customarily employed in the industry and in compliance with all Governmental
Regulations; (iv) at Seller's written request, furnish to Seller copies of any
studies, reports or test results received by Purchaser regarding the Property,
promptly after such receipt, in connection with such inspection; and (v) restore
the Real Property and Improvements to the condition in which the same were found
before any such entry upon the Real Property and inspection or examination was
undertaken.
(b) Purchaser hereby indemnifies, defends and holds Seller and its
partners, agents, directors, officers, employees, successors and assigns
harmless from and against any and all liens, claims, causes of action, damages,
liabilities, demands, suits, obligations to third parties, together with all
losses, penalties, costs and expenses relating to any of the foregoing
(including but not limited to court costs and reasonable attorneys' fees)
arising out of any inspections, investigations, examinations, sampling or tests
conducted by Purchaser or any of the Licensee Parties, whether prior to or after
the date hereof, with respect to the Property or any violation of the provisions
of this Article V.
(c) In the event that Purchaser determines in its sole and
absolute discretion, after its inspection of the Documents and Real Property and
Improvements, that for any reason, or for no reason, Purchaser does not elect to
purchase the Property Purchaser shall have the right to terminate this Agreement
by providing written notice to Seller prior to the expiration of the Evaluation
Period, WITH TIME BEING OF THE ESSENCE WITH RESPECT THERETO. In the event
Purchaser terminates this Agreement in accordance with this Section 5.3(c), or
under any other right of termination as set forth herein, Purchaser shall have
the right to receive a refund of the Earnest Money Deposit, together with all
interest which has accrued thereon, and except with respect to the Termination
Surviving Obligations, this Agreement shall be null and void and the parties
shall have no further obligation to each other. In the event this Agreement is
terminated pursuant to this Section 5.3(c), Purchaser shall return to Seller all
copies Purchaser has made of the Documents and all copies of any studies,
reports or test results regarding any part of the Property obtained by
Purchaser, before or after the execution of this Agreement, in connection with
Purchaser's inspection of the Property (collectively, "PURCHASER'S INFORMATION")
promptly following the time this Agreement is terminated for any reason unless
Purchaser reasonably believes that it is prudent to retain one (1) copy of each
such document to establish any facts which might be the subject of a
post-termination dispute. If Purchaser so elects to retain one (1) such copy, it
shall so advise Seller, and Purchaser shall be responsible for maintaining the
confidentiality of such copy pursuant to the terms of this Agreement and the
Confidentiality Agreement.
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SECTION 5.4 SALE "AS IS". THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT HAS BEEN NEGOTIATED BETWEEN SELLER AND PURCHASER. THIS AGREEMENT
REFLECTS THE MUTUAL AGREEMENT OF SELLER AND PURCHASER, AND PURCHASER HAS THE
RIGHT TO CONDUCT ITS OWN INDEPENDENT EXAMINATION OF THE PROPERTY. OTHER THAN
THE MATTERS REPRESENTED IN SECTIONS 8.1 AND 8.3 HEREOF, BY WHICH ALL OF THE
FOLLOWING PROVISIONS OF THIS SECTION 5.4 ARE LIMITED, PURCHASER HAS NOT
RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY
REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF SELLER OR ANY OF SELLER'S
AGENTS OR REPRESENTATIVES, AND PURCHASER HEREBY ACKNOWLEDGES THAT NO SUCH
REPRESENTATIONS HAVE BEEN MADE.
SELLER SPECIFICALLY DISCLAIMS, AND NEITHER IT NOR ANY OF ITS AFFILIATES
NOR ANY OTHER PERSON IS MAKING, ANY REPRESENTATION, WARRANTY OR ASSURANCE
WHATSOEVER TO PURCHASER, AND NO WARRANTIES OR REPRESENTATIONS OF ANY KIND OR
CHARACTER, EITHER EXPRESS OR IMPLIED, ARE MADE BY SELLER OR RELIED UPON BY
PURCHASER WITH RESPECT TO THE STATUS OF TITLE TO OR THE MAINTENANCE, REPAIR,
CONDITION, DESIGN OR MARKETABILITY OF THE PROPERTY, OR ANY PORTION THEREOF,
INCLUDING BUT NOT LIMITED TO (a) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES
OF MATERIALS, (d) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM
DIMINUTION OF CONSIDERATION, (e) ANY CLAIM BY PURCHASER FOR DAMAGES BECAUSE OF
DEFECTS, WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO THE IMPROVEMENTS OR THE
PERSONAL PROPERTY, (f) THE FINANCIAL CONDITION OR PROSPECTS OF THE PROPERTY AND
(g) THE COMPLIANCE OR LACK THEREOF OF THE REAL PROPERTY OR THE IMPROVEMENTS WITH
GOVERNMENTAL REGULATIONS, IT BEING THE EXPRESS INTENTION OF SELLER AND PURCHASER
THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PROPERTY WILL BE
CONVEYED AND TRANSFERRED TO PURCHASER IN ITS PRESENT CONDITION AND STATE OF
REPAIR, "AS IS" AND "WHERE IS", WITH ALL FAULTS. PURCHASER REPRESENTS THAT IT IS
A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED PURCHASER OF REAL ESTATE, AND
THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF PURCHASER'S
CONSULTANTS IN PURCHASING THE PROPERTY. PURCHASER HAS BEEN GIVEN A SUFFICIENT
OPPORTUNITY HEREIN TO CONDUCT AND HAS CONDUCTED OR WILL CONDUCT SUCH
INSPECTIONS, INVESTIGATIONS AND OTHER INDEPENDENT
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EXAMINATIONS OF THE PROPERTY AND RELATED MATTERS AS PURCHASER DEEMED NECESSARY,
INCLUDING BUT NOT LIMITED TO THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF,
AND WILL RELY UPON SAME AND NOT UPON ANY STATEMENTS OF SELLER (EXCLUDING THE
LIMITED MATTERS REPRESENTED BY SELLER IN SECTION 8.1 HEREOF) NOR OF ANY OFFICER,
DIRECTOR, EMPLOYEE, AGENT OR ATTORNEY OF SELLER. PURCHASER ACKNOWLEDGES THAT ALL
INFORMATION OBTAINED BY PURCHASER WAS OBTAINED FROM A VARIETY OF SOURCES, AND
SELLER WILL NOT BE DEEMED TO HAVE REPRESENTED OR WARRANTED THE COMPLETENESS,
TRUTH OR ACCURACY OF ANY OF THE DOCUMENTS OR OTHER SUCH INFORMATION HERETOFORE
OR HEREAFTER FURNISHED TO PURCHASER. UPON CLOSING, PURCHASER WILL ASSUME THE
RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S INSPECTIONS
AND INVESTIGATIONS. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, SELLER
WILL SELL AND CONVEY TO PURCHASER, AND PURCHASER WILL ACCEPT THE PROPERTY, "AS
IS, WHERE IS," WITH ALL FAULTS. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR
AFFECTING THE PROPERTY, BY SELLER OR ANY AGENT OF SELLER, OR BY ANY THIRD PARTY
ON BEHALF OF SELLER. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR
WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY
FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN. PURCHASER
ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE "AS IS, WHERE IS" NATURE OF
THIS SALE AND ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY
BE ASSOCIATED WITH THE PROPERTY. PURCHASER, WITH PURCHASER'S COUNSEL, HAS FULLY
REVIEWED THE DISCLAIMERS AND WAIVERS SET FORTH IN THIS AGREEMENT AND UNDERSTANDS
THEIR SIGNIFICANCE AND AGREES THAT THE DISCLAIMERS AND OTHER AGREEMENTS SET
FORTH HEREIN ARE AN INTEGRAL PART OF THIS AGREEMENT, AND THAT SELLER WOULD NOT
HAVE AGREED TO SELL THE PROPERTY TO PURCHASER FOR THE PURCHASE PRICE WITHOUT THE
DISCLAIMERS AND OTHER AGREEMENTS SET FORTH IN THIS AGREEMENT. THE TERMS AND
CONDITIONS OF THIS SECTION 5.4 WILL EXPRESSLY SURVIVE THE CLOSING, WILL NOT
MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND ARE HEREBY DEEMED
INCORPORATED INTO THE DEED AS FULLY AS IF SET FORTH AT LENGTH THEREIN.
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SUBJECT TO THE PROVISIONS OF SECTIONS 8.1 AND 8.3 HEREOF, PURCHASER
FURTHER COVENANTS AND AGREES NOT TO SUE SELLER, AND RELEASES SELLER OF AND FROM
AND WAIVES ANY CLAIM OR CAUSE OF ACTION THAT PURCHASER MAY HAVE AGAINST THE
SELLER UNDER ANY ENVIRONMENTAL LAW, NOW EXISTING OR HEREAFTER ENACTED OR
PROMULGATED, RELATING TO ENVIRONMENTAL MATTERS OR ENVIRONMENTAL CONDITIONS IN,
ON, UNDER, ABOUT OR MIGRATING FROM OR ONTO THE PROPERTY, INCLUDING WITHOUT
LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY
ACT, OR BY VIRTUE OF ANY COMMON LAW RIGHT RELATED TO ENVIRONMENTAL CONDITIONS OR
ENVIRONMENTAL MATTERS IN, ON, UNDER, ABOUT OR MIGRATING FROM OR ONTO THE
PREMISES. THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE CLOSING OF TITLE TO
THE PROPERTY OR THE TERMINATION OF THIS AGREEMENT, AS THE CASE MAY BE.
ARTICLE VI
TITLE AND SURVEY MATTERS
SECTION 6.1 SURVEY. Purchaser acknowledges receipt of the Existing Survey,
and that Purchaser has reviewed and accepted all of the matters shown on the
Existing Survey. Any modification, update or recertification of the Existing
Survey shall be at Purchaser's election and sole cost and expense. The Existing
Survey together with any update Purchaser has elected to obtain, if any, is
herein referred to as the "UPDATED SURVEY". Purchaser agrees to provide Seller
with notice of any objection to the matters shown on the Existing Survey within
seven (7) Business Days following the Effective Date (the "SURVEY OBJECTIONS").
In the event that the Updated Survey sets forth any survey matters which are
objectionable to Purchaser and which were not shown on the Existing Survey, then
Purchaser agrees to provide Seller with notice of such objections within seven
(7) Business Days of the receipt of the Updated Survey, and such objections
shall also be deemed to be Survey Objections. Purchaser agrees to cause the
party preparing the Updated Survey to provide two (2) copies of same to Seller's
counsel simultaneous with the delivery of the Updated Survey to Purchaser.
SECTION 6.2 TITLE COMMITMENT.
(a) Purchaser acknowledges receipt of that certain title insurance
commitment issued by First American Title Insurance Company of New York under
Commitment No. 135-NJ-29480-1 together with copies of the title exceptions
listed thereon, that Purchaser has reviewed and accepted all matters shown
therein, other than the requirements set forth at Schedule B-Section I h. and n.
therein, and the items set forth at Schedule B-Section II items 1-7 and 9
therein, and that such matters constitute Permitted Exceptions. By the date (the
"NEW OBJECTION DATE") which is five (5)
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Business Days after Purchaser's counsel receives a new title commitment from the
Title Company (the "TITLE COMMITMENT"), Purchaser shall provide Seller with
written notice of any objections raised in such Title Commitment which are not
Permitted Exceptions and which Purchaser deems unacceptable ("TITLE
OBJECTIONS"). If Purchaser's counsel receives notice of any new objection or
exception with less than five (5) Business Days prior to the Scheduled Closing
Date, then (x) the Closing shall be postponed for a sufficient number of days in
order for Purchaser's counsel to have five (5) Business Days to review said new
objection or exception and to advise Seller if Purchaser deems same unacceptable
and (y) the balance of this Agreement shall apply with respect to Seller's right
to cure same. In the event Seller does not receive the Title Objections by the
New Objection Date, Purchaser will be deemed to have accepted as Permitted
Exceptions the exceptions to title set forth on the Title Commitment and any
updates thereto. Purchaser shall cause the Title Company to furnish to Purchaser
and Seller's counsel a preliminary title report or Title Commitment, by the
terms of which the Title Company agrees to issue to Purchaser at Closing, at
Purchaser's sole cost and expense an owner's policy of title insurance (the
"TITLE POLICY") in the amount of the Purchase Price on the then standard ALTA
owner's form insuring Purchaser's fee simple title to the Real Property, subject
to the terms of such policy and the exceptions described therein (including,
without limitation, the standard or general exceptions). Subject to this Section
6.2(a), all matters shown on the Existing Survey and the exceptions shown on
EXHIBIT G (collectively, the "PERMITTED EXCEPTIONS") are conclusively deemed to
be acceptable to Purchaser.
(b) All taxes, water rates or charges, sewer rents and
assessments, plus interest and penalties thereon, which on the Closing Date are
liens against the Real Property and which Seller is obligated to pay and
discharge will be credited against the Purchase Price (subject to the provision
for apportionment of taxes, water rates and sewer rents herein contained) and
shall not be deemed a Title Objection. If on the Closing Date there shall be
security interests filed against the Real Property, such items shall not be
Title Objections if (i) the personal property covered by such security interests
are no longer in or on the Real Property, or (ii) such personal property is the
property of a Tenant, or the security interest has expired under applicable law.
If the personal property is no longer in or on the Real Property or is the
property of a Tenant, Seller shall execute and deliver an affidavit to such
effect, which affidavit shall include an indemnification in favor of Purchaser
and the Title Company against any loss, cost or expense related thereto if
Seller's affidavit is incorrect.
(c) If on the Closing Date the Real Property shall be affected by
any lien which, pursuant to the provisions of this Agreement, is required to be
discharged or satisfied by Seller, Seller shall not be required to discharge or
satisfy the same of record provided the money necessary to satisfy the lien is
retained by the Title Company at Closing, and the Title Company omits the lien
as an exception from the title insurance commitment, and a credit is given to
Purchaser for the recording charges for a satisfaction or discharge of such
lien.
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(d) No franchise, transfer, inheritance, income, corporate or
other tax open, levied or imposed against Seller or any former owner of the
Property, that may be a lien against the Property on the Closing Date, shall be
an objection to title if the Title Company omits the lien as an exception from
the title insurance commitment and provided further that Seller deposits with
the Title Company a sum reasonably sufficient to secure a release of the
Property from the lien thereof. If a search of title discloses judgments,
bankruptcies, or other returns against other persons having names similar to
that of Seller, Seller will deliver to Purchaser an affidavit stating that such
judgments, bankruptcies or other returns do not apply to Seller, and such search
results shall not be deemed Title Objections.
(e) In the event that the Title Company is not prepared to insure
title to the Real Property in the manner provided in this Agreement and Seller
is able to obtain a commitment from one or more of First American Title
Insurance Company of New York, Chicago Title Insurance Company, Commonwealth
Land Title Insurance Company or Lawyer's Title Insurance Company to insure title
in the manner required in this Agreement, Seller shall be entitled to cause any
one or more of such companies to so insure Purchaser's title.
SECTION 6.3 TITLE DEFECT.
(a) In the event Seller receives any Survey Objection or Title
Objection (collectively and individually, a "TITLE DEFECT") within the time
periods required under Sections 6.1 and 6.2 above, Seller may elect (but shall
not be obligated) to attempt to remove, or cause to be removed at its expense,
any such Title Defect, and shall provide Purchaser with notice, within seven (7)
days of its receipt of any such objection, of its intention to cure such any
such Title Defect. If Seller elects to attempt to cure any Title Defect, it
shall do so in a prompt and diligent manner, and the Closing Date shall be
extended for one or more periods not to exceed in the aggregate sixty (60) days,
for the purpose of such removal. In the event that (i) Seller elects not to
attempt to cure any such Title Defect, or (ii) Seller is unable to cure any such
Title Defect for any period elected by Seller but not to exceed sixty (60) days
from the Closing Date, Seller shall so advise Purchaser and Purchaser shall have
the right to terminate this Agreement and receive a refund of the Earnest Money
Deposit, together with all interest which has accrued thereon, or to waive such
Title Defect and proceed to the Closing. Purchaser shall make such election
within ten (10) days of receipt of Seller's notice. If Purchaser elects to
proceed to the Closing, any Title Defects waived by Purchaser shall be deemed
Permitted Exceptions. In addition to the remedies provided in this Section
6.3(a), if a Title Defect is caused by a written document executed by Seller in
recordable form at any time on or after the effective date of the Title
Commitment, which document has not been approved or deemed approved by
Purchaser, then Seller shall also reimburse Purchaser for its title, survey,
consultants and attorneys' fees and expenses reasonably incurred by Purchaser
hereunder, as documented by Purchaser.
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(b) Notwithstanding any provision of this Article VI to the
contrary, Seller will be obligated to cure exceptions to title to the Property,
in the manner described above, relating to liens and security interests securing
any financings to Seller, and any mechanic's liens resulting from work at the
Property commissioned by Seller, and any other encumbrances placed of record by
Seller on or after the Effective Date which may be satisfied by the payment of a
sum certain.
ARTICLE VII
INTERIM OPERATING COVENANTS,
ESTOPPELS, BOARD APPROVAL
SECTION 7.1 INTERIM OPERATING COVENANTS. Seller covenants to Purchaser
that Seller will:
(a) OPERATIONS. From the Effective Date until Closing, continue to
operate, manage and maintain the Improvements in the ordinary course of Seller's
business and substantially in accordance with Seller's present practice, subject
to ordinary wear and tear and further subject to Article XI of this Agreement.
(b) COMPLIANCE WITH GOVERNMENTAL REGULATIONS. From the Effective
Date until Closing, not take any action that would result in a failure to comply
in all material respects with all Governmental Regulations applicable to the
Property, it being understood and agreed that prior to Closing, Seller will have
the right to contest any such Governmental Regulations.
(c) SERVICE CONTRACTS. From the expiration of the Evaluation
Period until Closing, not enter into any service contract other than in the
ordinary course of business, unless such service contract is terminable on
thirty (30) days notice without penalty or unless Purchaser consents thereto in
writing, which approval will not be unreasonably withheld, delayed or
conditioned.
(d) NOTICES. To the extent received by Seller, from the Effective
Date until Closing, promptly deliver to Purchaser copies of written default
notices, notices of lawsuits and notices of violations affecting the Property.
(e) NTT LEASE EXTENSION. Attempt to obtain an extension (the "NTT
LEASE EXTENSION") with NTT Data Communications Systems Corporation ("NTT") of
the current lease with NTT at the Property, providing for NTT to extend such
lease for a period of ten (10) years commencing October 1, 2005 and expiring
September 30, 2015, on the terms and conditions set forth on EXHIBIT K and such
other terms and conditions reasonably acceptable to Purchaser. Each party's
agreement with respect to obtaining the NTT Lease Extension is more particularly
set forth in Section 7.4(a) below.
(f) FINANCING AGREEMENT. Cooperate with Purchaser in preparing and
prosecuting all necessary applications to be submitted to the City in order to
obtain
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the consent of the City to the assignment and assumption of that certain
Amendment and Assignment of Financial Agreement (the "FINANCING AGREEMENT")
dated April 17, 1999 between Cali-Grove Street Urban Renewal Associates L.P. and
the City, to an affiliate of Purchaser which satisfies the requirements of
applicable law to be an assignee of the Financing Agreement, and to an
assignment or change in the ownership of the Project (as such term is defined in
the Financing Agreement) [collectively, the "CITY CONSENT"]. Such cooperation
shall include, at Purchaser's election, having a primary role in seeking to
obtain the City Consent.
SECTION 7.2 ESTOPPELS. It will be a condition to Closing that Seller
obtain from each Major Tenant an executed estoppel certificate in the form
prescribed by the Lease for each such Major Tenant. Notwithstanding the
foregoing, Seller agrees that promptly following Purchaser's waiver of its right
to terminate this Agreement pursuant to Section 5.3, Seller shall request that
each Tenant execute an estoppel certificate in the form reasonably requested by
Purchaser and annexed hereto as EXHIBIT H. Seller shall not be in default of its
obligations hereunder if any Tenant fails to deliver an estoppel certificate, or
delivers an estoppel certificate which is not in accordance with this Agreement.
In the event Seller is unable to obtain an executed estoppel certificate
in the form of Exhibit H for each Tenant, Seller may, but is not obligated to,
provide an estoppel certificate in the form prescribed by the Lease for each
such Tenant, which Purchaser agrees to accept as a valid and binding estoppel
certificate.
If Seller is unable to obtain an original copy or re-executed original
copy of the lease with DLJ Securities Corporation dated July 1, 1987, then
Seller shall request that such tenant attach said lease to its estoppel letter,
and that each page be initialed by such tenant; delivery of such estoppel
letter, with such attachment, shall be a condition precedent to Purchaser's
obligations hereunder. Similarly, if Seller is unable to obtain a copy of the
letter agreement with Combined Data Resource, Inc. dated July 18, 1991, then
Seller shall request that such tenant attach said letter to its estoppel letter
and initial same; delivery of such estoppel letter, with such attachment, shall
be a condition precedent to Purchaser's obligations hereunder.
SECTION 7.3 BOARD APPROVAL. (a) It will be a condition to Closing that
Seller obtain approval from its Board of Directors to proceed to Closing. Seller
shall make such solicitations from its Board of Directors so that within fifteen
(15) days following the Effective Date, Seller's Board of Directors shall have
approved or denied its approval to the transaction contemplated herein. Failure
by Seller to obtain said approval shall not be deemed a default hereunder. In
the event Seller's Board of Directors denies approval to proceed to Closing,
this Agreement shall be deemed terminated and of no further force and effect,
except for the Termination Surviving Obligations, which shall survive any such
termination. Seller will give Purchaser prompt notice, following the expiration
of the fifteen (15) day period provided above, as to the approval or denial by
the Board of Directors of Seller.
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(b) It will be a condition to Closing that Purchaser obtain
approval from its Board of Directors to proceed to Closing. Purchaser shall make
such solicitations from its Board of Directors so that within fifteen (15) days
following the Effective Date, Purchaser's Board of Directors shall have approved
or denied its approval to the transaction contemplated herein. Failure by
Purchaser to obtain said approval shall not be deemed a default hereunder. In
the event Purchaser's Board of Directors denies approval to proceed to Closing,
this Agreement shall be deemed terminated and of no further force and effect,
except for the Termination Surviving Obligations, which shall survive any such
termination. Purchaser will give Seller prompt notice, following the expiration
of the fifteen (15) day period provided above, as to the approval or denial by
the Board of Directors of Purchaser.
SECTION 7.4 PURCHASER'S OBLIGATIONS DURING CONTRACT PERIOD:
(a) NTT LEASE EXTENSION. Within five (5) Business Days following
Seller's delivery to Purchaser of a proposed NTT Lease Extension, Purchaser
agrees to provide Seller with all of its comments thereto. Purchaser agrees not
to unreasonably withhold or condition its approval of the NTT Lease Extension
proposed by Seller, provided the proposed NTT Lease Extension is in conformity
with Section 7.1(e). In the event that Purchaser does not advise Seller of any
comments thereto within the period specified, TIME BEING OF THE ESSENCE,
Purchaser shall be deemed to have approved of same, otherwise, Purchaser shall
be deemed to have rejected same. In the event Purchaser advises Seller of any
comments to the proposed NTT Lease Extension and Seller is unable to incorporate
Purchaser's comments thereto or Seller advises Purchaser that NTT shall not
agree to same, then the parties shall proceed to the Closing in accordance with
the terms and conditions of this Agreement and without any requirements to
obtain the NTT Lease Extension, and the Purchase Price due at Closing shall be
reduced as provided in Section 3.4. In the event that Seller obtains a NTT Lease
Extension executed by NTT, then as part of the Assignment of Leases, Purchaser
shall assume the NTT Lease Extension. In addition, Purchaser shall be obligated
to pay the Outside Brokers (as defined in Exhibit C of the Leasing and
Management Agreement), on account of the NTT Lease Extension, up to a maximum
amount of One Million Six Hundred Forty-Five Thousand Dollars ($1,645,000) in
leasing commissions, and any leasing commissions to Outside Brokers in excess of
such amount shall be paid by Seller (in the event of such excess, then Seller
shall also obtain an agreement from the brokers entitled to any excess
commission that Purchaser shall have no responsibility for same). Purchaser
shall also be obligated to pay a leasing commission to the Agent under the
Leasing and Management Agreement, on account of the NTT Lease Extension, as
follows: (i) if, during the first ninety (90) days after the Closing, Seller or
Agent is a procuring party in obtaining the NTT Lease Extension, then neither
Seller nor any of its affiliates shall be entitled to any brokerage commission
in connection with the NTT Lease Extension; (ii) if, during the one hundred and
eighty (180) days after the expiration of said ninety (90) day period, Seller or
Agent is a procuring party in obtaining the NTT Lease Extension, then the
percentage to be used in calculating the amount due Agent in accordance with
Section 2(b) of Exhibit C of the Leasing and Management Agreement
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shall be 1.60%; and (iii) if, after the expiration of said one hundred and
eighty (180) day period, Seller or Agent is a procuring party in obtaining the
NTT Lease Extension, then the percentage to be used in calculating the amount
due Agent in accordance with Section 2(b) of Exhibit C of the Leasing and
Management Agreement shall be 2.0%.
(b) FINANCING AGREEMENT. Purchaser shall cooperate with Seller in
preparing and prosecuting all necessary applications to be submitted to the City
in order to obtain the City Consent. In connection therewith, Purchaser agrees
that the entity to be the assignee of the Financing Agreement and the owner of
the Project shall be an entity satisfying the requirements of applicable law,
including without limitation, the New Jersey Long Term Tax Exemption Law,
N.J.S.A. 40A;20-1 ET SEQ., and that the applications shall be made in accordance
with applicable laws. Purchaser agrees to use commercially reasonable efforts to
complete such applications and form the necessary entities, prior to Purchaser's
waiver of its right to terminate this Agreement in accordance with Section 5.3
so that promptly following such waiver, Purchaser and Seller shall jointly
prosecute such applications.
(c) SERVICE CONTRACTS. During the Evaluation Period, Purchaser
shall have the right to cause Seller to terminate any Service Contracts which
are terminable either without payment of a fee, or with payment of a fee which
Purchaser shall pay to Seller at the Closing. Purchaser must make such election
prior to the expiration of the Evaluation Period, TIME BEING OF THE ESSENCE.
Purchaser acknowledges that it shall not have the right to elect to have
terminated any Service Contracts that are for a stated period longer than one
(1) year, such as by way of example and not limitation, any Service Contracts
providing for maintenance of the elevators at the Improvements.
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. Subject
to the limitations set forth in Section 8.3 of this Agreement, Seller represents
and warrants to Purchaser the following:
(a) STATUS. Each Seller is a limited partnership, duly organized
and validly existing under the laws of the State of New Jersey.
(b) AUTHORITY. Subject to Section 7.3(a) above, (i) the execution
and delivery of this Agreement and the performance of Seller's obligations
hereunder have been or will be duly authorized by all necessary action on the
part of Seller, and this Agreement constitutes the legal, valid and binding
obligation of Seller, and (ii) 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 Seller or the
performance by Seller of the transactions contemplated hereby.
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(c) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Seller and the consummation by Seller 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 Seller,
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
Seller is a party or by which it is bound.
(d) SUITS AND PROCEEDINGS. To Seller's Knowledge, except as listed
in EXHIBIT I (the "SECAUCUS LITIGATION"), there are no legal actions, suits or
similar proceedings pending and served, or threatened against Seller or the
Property which (i) are not adequately covered by existing insurance and (ii) if
adversely determined, would affect, in other than a DE MINIMIS manner, the value
of the Property, the continued operations thereof, or Seller's ability to
consummate the transactions contemplated hereby. MCRLP (as defined in Section
20.1) agrees to reimburse Purchaser for any amounts for which Purchaser is
liable, or which constitute a lien against the Property, in connection with the
Secaucus Litigation, to the extent same is on account of any period prior to the
Closing Date, but subject to the balance of this paragraph. Seller shall
continue to defend, at Seller's expense, the Secaucus Litigation from and after
the Closing (to the extent litigation arises with respect to any period
following the Closing, Purchaser will defend same at its sole cost). In the
event Purchaser incurs any expenses on account of the Secaucus Litigation for a
period prior to the Closing Date, then prior to it seeking reimbursement from
Seller, Purchaser shall use commercially reasonable efforts to collect such
payment, or an allocable portion, from those Tenants who are obligated for such
expenses, or a portion thereof, based upon their Lease and their date of
occupancy at the Property. In the event that any amounts are due with respect to
tenants which are no longer at the Property, MCRLP shall promptly pay over such
amounts to Purchaser; with respect to existing Tenants, MCRLP shall pay such
amounts to Purchaser if, within one hundred twenty (120) days of Purchaser
rendering a bill to such Tenant and pursuing collection thereof, such Tenant
shall fail to pay same. Seller shall have the right to bring suit, and take such
other action as is commercially reasonable, to collect any amounts owed from any
existing Tenants, or past tenants related to the Secaucus Litigation, and
Purchaser shall reasonably cooperate with Seller in such regard.
Seller hereby acknowledges that Purchaser may retain Waters,
McPherson, McNeill to represent Purchaser in any future legal actions or
proceedings similar to the Secaucus Litigation, and Purchaser acknowledges that
such firm may continue to represent Seller in the Secaucus Litigation or such
future litigation. Each party hereby waives any conflict which may arise from
such representation. This Section 8.1(d) shall survive closing.
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(e) 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.
(f) TENANTS. As of the date of this Agreement, the only tenants of
the Property are the tenants set forth in the Lease Schedule listed on EXHIBIT
F. In the event that any of the Leases sets forth terms which are contrary to
that which is contained in the Lease Schedule, the terms of the Lease shall
control. The Documents made available to Purchaser pursuant to Section 5.2
hereof include true and correct copies of all of the Leases listed on EXHIBIT F.
Seller has not received any notice from any Tenants which remain uncured,
alleging that Seller is in default of any Leases. In addition, Seller has not
sent any default notices to any of the Tenants which remain uncured.
(g) SERVICE CONTRACTS. Seller has paid, or will pay in the normal
course after Closing, all amounts due prior to Closing under the Service
Contracts, and to Seller's Knowledge, Seller is not in default under any Service
Contract. To Seller's Knowledge, none of the service providers listed on EXHIBIT
E is in default under any Service Contract and the Service Contracts are in full
force and effect. The Documents made available to Purchaser pursuant to Section
5.2 hereof include copies of all Service Contracts listed on EXHIBIT E under
which Seller is currently paying for services rendered in connection with the
Property, and there are no other contracts or agreements pursuant to which
service providers are providing services to the Property on a regular or
periodic basis.
(h) LEASES. The Leases initialed by representatives of Purchaser
and Seller on or prior to the Effective Date are true, correct, and complete
copies of the documents described on the Lease Schedule. Other than the
tenancies under the Leases, there are presently no tenancies affecting the
Property.
(i) ENVIRONMENTAL MATTERS. Except as set forth in the
Environmental Report, or as may otherwise be disclosed to Purchaser in writing,
to Seller's Knowledge, there is no Hazardous Substances at the Property except
those in compliance with all applicable Environmental Laws.
(j) GROUND LEASE. The Ground Lease is unmodified and in full force
and effect, and there is no default thereunder. Seller has delivered a true and
complete copy of the Ground Lease to Purchaser prior to the date hereof.
(k) KEY INDIVIDUALS. The Key Individuals are the officers and
employees of Mack-Cali Realty Corporation or Seller who have significant
responsibilities with respect to the Property. The Key Individuals (other than
Rob Vicci) have been officers of Mack-Cali Realty Corporation for at least the
past two (2) years.
(l) BROKERAGE COMMISSIONS. The only agreements with brokers for
whom leasing commissions are or may be due and payable with respect to any of
the
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Leases are set forth on EXHIBIT N. The parties' respective obligations with
respect to the Brokerage Commission Agreements are set forth in Section 10.4(e).
(m) CONDEMNATION. There are no condemnation proceedings either
instituted or, to Seller's Knowledge planned to be instituted, affecting the
Property, nor are there any special assessment proceedings pending, or, to
Seller's Knowledge, threatened, for the Property.
(n) EMPLOYEES. No person who is employed in connection with the
management, operation or maintenance of the Property and who will become the
obligation of Purchaser after the Closing is covered by an employment agreement
or a union contract, and none of the employment arrangements with respect to the
employees will be binding on Purchaser after Closing. Notwithstanding the
foregoing, Purchaser acknowledges that one of the Service Contracts includes a
contract with Larkin Service Corporation ("Larkin"), pursuant to which Larkin
employs employees holding the positions set forth on Exhibit Q or other
individuals, and that the contract with Larkin will remain as an obligation of
Purchaser after Closing.
(o) ERISA. The Property is not a "plan asset" within the meaning
of that term under any regulations promulgated under the Employee Retirement and
Income Security Act of 1974, as amended.
SECTION 8.2 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants to Seller the following:
(a) STATUS. CLI is a duly organized and validly existing
corporation under the laws of the Federal Republic of Germany and Germania is a
duly organized and validly existing corporation organized under the laws of the
State of Georgia.
(b) AUTHORITY. Subject to Section 7.3(b) above, 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.
(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
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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, and the
covenants of Seller set forth in Section 7.1, will survive the Closing for a
period of twelve (12) months provided, however, that all of the limitations set
forth in this Section 8.3 shall not apply to the Secaucus Litigation, as set
forth in Section 8.1(d), and the obligations and liabilities of MCRLP
thereunder, which obligations and liabilities shall be an independent Closing
Surviving Obligation. Purchaser will not have any right to bring any action
against Seller as a result of any untruth or inaccuracy of such representations
and warranties, or any such breach, unless and until the aggregate amount of all
liability and losses arising out of any such untruth or inaccuracy, or any such
breach, exceeds One Hundred Thousand Dollars ($100,000); and then only to the
extent of such excess. In addition, in no event will Seller's liability for all
such breaches exceed, in the aggregate, the sum of Two Million Five Hundred
Dollars ($2,500,000). Seller shall have no liability with respect to any of
Seller's representations, warranties and covenants herein if, prior to the
Closing, Purchaser has knowledge (from whatever source, including, without
limitation, any tenant estoppel certificates, as a result of Purchaser's due
diligence tests, investigations and inspections of the Property, or written
disclosure by Seller or Seller's agents and employees) of any breach of a
covenant of Seller herein, or if the officers and employees of Purchaser
primarily responsible for this transaction have actual knowledge (as opposed to
constructive or imputed knowledge) or obtain knowledge that contradicts any of
Seller's representations, warranties and covenants herein, and Purchaser
nevertheless consummates the transaction contemplated by this Agreement. For the
twelve (12) month period following Closing, Grove Street Associates of Jersey
City Limited Partnership agrees to maintain assets having a net worth of at
least $4,000,000; in the event that such entity does not maintain such assets,
then MCRLP shall guaranty the obligations of Seller pursuant to this Section
8.3. The Closing Surviving Obligations and the Termination 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 Deed and other Closing documents delivered at 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 on or before the Closing Date of all of the following
conditions, any or all of which may be waived by Purchaser in its sole
discretion:
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(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
Closing Date (with only appropriate modifications permitted under this
Agreement).
(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.
(d) The City shall have given the City Consent.
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 Closing Date 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 Closing Date (with any appropriate modifications permitted under this
Agreement).
(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 City shall have given the City Consent.
SECTION 9.3 FAILURE OF A CONDITION PRECEDENT. (a) In the event that all of
the conditions to Closing as set forth in Section 9.1 have not been either
satisfied, or waived by Purchaser, prior to the Closing Date, Purchaser may, at
any time thereafter while any such condition remains unsatisfied, terminate this
Agreement upon five (5) Business Days notice to Seller, whereupon Purchaser will
receive from the Escrow Agent the Earnest Money Deposit, together with all
interest accrued thereon, and thereafter Seller and Purchaser will have no
further rights or obligations under this Agreement, except with respect to the
Termination Surviving Obligations.
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(b) In the event that all of the conditions to Closing as set
forth in Section 9.2 have not been either satisfied, or waived by Seller, prior
to the Closing Date, Seller may, at any time thereafter while any such condition
remains unsatisfied, terminate this Agreement upon five (5) Business Days notice
to Purchaser, whereupon Purchaser will receive from the Escrow Agent the Earnest
Money Deposit, together with all interest accrued thereon, and thereafter Seller
and Purchaser will have no further rights or obligations under this Agreement,
except with respect to the Termination Surviving Obligations.
(c) The rights of Section 9.3(a) and (b) are not in limitation of
either party's rights set forth in Section 13 in the event of a default by
Seller or Purchaser, respectively.
ARTICLE X
CLOSING
SECTION 10.1 CLOSING. The consummation of the transaction contemplated by
this Agreement by delivery of documents and, except as set forth in the next
sentence, payments of money (subject to Section 3.3) shall take place at 10:00
a.m. Eastern Time on the Closing Date at the offices of Seller's counsel, Pryor
Cashman Sherman & Flynn LLP, 410 Park Avenue, New York, New York 10022. At
Purchaser's election given at least three (3) Business Days prior to the Closing
Date, Seller's counsel shall attend a closing of any purchase money financing
obtained by Purchaser in connection with the acquisition of the Property;
provided, however, neither the availability of such financing, nor any closing
with respect thereto, shall be a condition to Purchaser's obligation to close,
nor shall the Closing hereunder, but for the payment of money, be held at any
office other than Seller's counsel. 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 Deed by Purchaser shall be deemed to be full performance
and discharge of each and every representation and warranty made by Seller
herein, and every agreement and obligation on the part of the Seller to be
performed hereunder, except those which are specifically stated herein to
survive the Closing.
SECTION 10.2 PURCHASER'S CLOSING OBLIGATIONS. On the Closing Date,
Purchaser, at its sole cost and expense, will deliver the following items to
Seller at Closing 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 3.3;
(b) A counterpart original of the Assignment of Leases, duly
executed by Purchaser;
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(c) A counterpart original of the Assignment, duly executed by
Purchaser;
(d) Evidence reasonably satisfactory to Seller that the person
executing the Assignment of Leases, the Assignment, and the Tenant Notice
Letters on behalf of Purchaser has full right, power and authority to do so;
(e) Written notice, in the form of EXHIBIT O, executed by
Purchaser and to be addressed and delivered to the Tenants by Purchaser in
accordance with Section 10.6 herein, (i) acknowledging the sale of the Property
to Purchaser, (ii) acknowledging that Purchaser has received and that Purchaser
is responsible for the Security Deposit (specifying the exact amount of the
Security Deposit) and (iii) indicating that rent should thereafter be paid to
Purchaser and giving instructions therefor (the "TENANT NOTICE LETTERS");
(f) A counterpart original of the Closing Statement, duly executed
by Purchaser;
(g) Counterpart originals of the transfer tax declarations, each
duly executed by Purchaser;
(h) A certificate, dated as of the date of Closing, stating that
the representations and warranties of Purchaser contained in Section 8.2 are
true and correct in all material respects as of the Closing Date (with
appropriate modifications to reflect any changes therein) 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. In no event shall
Purchaser be liable to Seller for, or be deemed to be in default hereunder if
any representation or warranty is not true and correct in all material respects;
PROVIDED, HOWEVER, that such event shall constitute the non-fulfillment of the
condition set forth in Section 9.2(c). If, despite changes or other matters
described in such certificate, the Closing occurs, Purchaser's representations
and warranties set forth in this Agreement shall be deemed to have been modified
by all statements made in such certificate;
(i) A Leasing and Management Agreement substantially in the form
of Exhibit L annexed hereto;
(j) A mortgagor's affidavit in form and substance reasonably
acceptable to Purchaser if Purchaser obtains purchase money mortgage financing
to consummate the transaction contemplated by this Agreement, and such other
affidavits or instruments customarily required in order to remove the items set
forth on Schedule B-Section II, 1-8 on the title report referenced in the first
sentence of Section 6.2(a); and
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(k) Such other documents as may be reasonably necessary or
appropriate to effect the consummation of the transaction which is the subject
of this Agreement.
SECTION 10.3 SELLER'S CLOSING OBLIGATIONS. At the Closing, Seller, at its
sole cost and expense, will deliver to Purchaser the following documents:
(a) A bargain and sale deed with covenants against grantor's acts,
or the local equivalent, (the "DEED"), duly executed and acknowledged by Seller,
conveying to the Purchaser the Real Property and the Improvements subject only
to the Permitted Exceptions;
(b) A blanket assignment and bill of sale in the form attached
hereto as EXHIBIT C (the "BILL OF SALE"), duly executed by Seller, assigning and
conveying to Purchaser, without representation or warranty, title to the
Personal Property;
(c) A counterpart original of an assignment and assumption of the
Seller's interest, as lessor, in the Leases and Security Deposits in the form
attached hereto as EXHIBIT B (the "ASSIGNMENT OF LEASES"), duly executed by
Seller, conveying and assigning to Purchaser all of Seller's right, title and
interest, as sublessor, in the Leases and Security Deposits;
(d) A counterpart original of an assignment and assumption of
Seller's interest in the Service Contracts and the Licenses and Permits in the
form attached hereto as EXHIBIT A (the "ASSIGNMENT"), duly executed by Seller,
conveying and assigning to Purchaser all of Seller's right, title, and interest,
if any, in the Service Contracts and the Licenses and Permits;
(e) The Tenant Notice Letters, duly executed by Seller;
(f) Evidence reasonably satisfactory to Purchaser and Title
Company that the person executing the documents delivered by Seller pursuant to
this Section 10.3 on behalf of Seller has full right, power, and authority to do
so;
(g) A certificate in the form attached hereto as EXHIBIT J
("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;
(h) The Ground Lease, Leases, and all original Licenses and
Permits and Service Contracts in Seller's control bearing on the Property.
Seller shall deliver originals of the Ground Lease and those Leases which are
marked as originals on Exhibit F, and (i) if Seller is unable to obtain an
original copy, or re-executed original copy, of
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the Lease with DLJ Securities Corporation dated July 1, 1987, then the
provisions of Section 7.2 shall apply and (ii) if Seller is unable to obtain a
copy of the Letter Agreement dated July 18, 1991 with Combined Data Resources,
Inc., then the provisions of Section 7.2 shall apply. To the extent any other
originals are in Seller's possession, Seller shall also deliver same;
(i) 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 (with appropriate
modifications to reflect any changes therein) 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. In no event shall Seller be liable to
Purchaser for, or be deemed to be in default hereunder if any representation or
warranty is not true and correct in all material respects; PROVIDED, HOWEVER,
that such event shall constitute the non-fulfillment of the condition set forth
in Section 9.1(b). 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;
(j) The Lease Schedule, updated to show any changes dated as of no
more than five (5) Business Days prior to the Closing Date;
(k) Counterparts of the transfer tax declarations, duly executed
by Seller;
(l) A statement as to the last date through which rents have been
paid by Tenants;
(m) A counterpart original of the Closing Statement, duly executed
by Seller;
(n) The Leasing and Management Agreement, substantially in the
form of EXHIBIT L annexed hereto;
(o) An assignment, without representation, warranty or recourse,
of all Seller's right, title and interest in and to any trademarks, trade name,
fictitious name or other form of identification for or related to the property,
except that there shall be no assignment of the name Mack-Cali, Cali, or any
derivation thereof;
(p) The ISRA Letter;
(q) An assignment and assumption of the Ground Lease;
(r) A seller's title affidavit in form and substance reasonably
acceptable to Seller and the Title Company; and
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(s) Such other documents as may be reasonably necessary or
appropriate to effect the consummation of the transaction which is the subject
of this Agreement.
SECTION 10.4 PRORATIONS.
(a) Seller and Purchaser agree to adjust, as of 11:59 p.m. on the
day preceding the Closing Date (the "PRORATION TIME"), the following
(collectively, the "PRORATION ITEMS"):
(i) Rentals, in accordance with Subsection 10.4(b) below.
(ii) Security Deposits and any prepaid rents, together with
interest required to be paid thereon.
(iii) Utility charges payable by Seller, including, without
limitation, electricity, water charges and sewer charges. If there are meters on
the Real Property, Seller will cause readings of all said meters to be performed
not more than five (5) days prior to the Closing Date, and a per diem adjustment
shall be made for the days between the meter reading date and the Closing Date
based on the most recent meter reading.
(iv) Amounts payable under the Service Contracts other than
those Service Contracts which Purchaser has elected not to assume.
(v) Real estate taxes due and payable for the calendar year.
If the Closing Date shall occur before the tax rate is fixed, the apportionment
of real estate taxes shall be upon the basis of the tax rate for the preceding
year applied to the latest assessed valuation. If subsequent to the Closing
Date, real estate taxes (by reason of change in either assessment or rate or for
any other reason) for the Real Property should be determined to be higher or
lower than those that are apportioned, a new computation shall be made, and
Seller agrees to pay Purchaser any increase shown by such recomputation and vice
versa.
(vi) The value of fuel stored at the Real Property, at
Seller's most recent cost, including taxes, on the basis of a reading made
within five (5) days prior to the Closing by Seller's supplier.
No adjustments shall be made on account of the Ground Lease.
Seller will be charged and credited for the amounts of all of the
Proration Items relating to the period up to and including the Proration Time,
and Purchaser will be charged and credited for all of the Proration Items
relating to the period after the Proration Time. The estimated Closing
prorations shall be set forth on a preliminary closing statement to be prepared
by Seller and submitted to Purchaser prior to the Closing
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Date (the "CLOSING STATEMENT"). The Closing Statement, once agreed upon, shall
be signed by Purchaser and Seller. The proration shall be paid at Closing by
Purchaser to Seller (if the prorations result in a net credit to Seller) or by
Seller to Purchaser (if the prorations result in a net credit to Purchaser) by
increasing or reducing the cash to be delivered by Purchaser in payment of the
Purchase Price at the Closing. If the actual amounts of the Proration Items are
not known as of the Closing Date, the prorations will be made at Closing on the
basis of the best evidence then available; thereafter, when actual figures are
received, re-prorations will be made on the basis of the actual figures, and a
final cash settlement will be made between Seller and Purchaser. No prorations
will be made in relation to insurance premiums, and Seller's insurance policies
will not be assigned to Purchaser. Final readings and final billings for
utilities will be made if possible as of the Closing Date, in which event no
proration will be made at the Closing with respect to utility bills. Seller will
be entitled to all deposits presently in effect with the utility providers, and
Purchaser will be obligated to make its own arrangements for any deposits with
the utility providers. The provisions of this Section 10.4(a) will survive the
Closing for eighteen (18) months.
(b) Purchaser will receive a credit on the Closing Statement for
the prorated amount (as of the Proration Time) of all Rental previously paid to
or collected by Seller and attributable to any period following the Proration
Time. After the Closing, Seller will cause to be paid or turned over to
Purchaser all Rental, if any, received by Seller after Closing and attributable
to any period following the Proration Time. "RENTAL" as used herein includes
fixed monthly rentals, additional rentals, percentage rentals, escalation
rentals (which include each Tenant's proration share of building operation and
maintenance costs and expenses as provided for under the Lease, to the extent
the same exceeds any expense stop specified in such Lease), retroactive rentals,
all administrative charges, utility charges, tenant or real property association
dues, storage rentals, special event proceeds, temporary rents, telephone
receipts, locker rentals, vending machine receipts and other sums and charges
payable by Tenants under the Leases or from other occupants or users of the
Property. Rental is "DELINQUENT" when it was due prior to the Closing Date, and
payment thereof has not been made on or before the Proration Time. Delinquent
Rental will not be prorated. Purchaser agrees to use good faith collection
procedures with respect to the collection of any Delinquent Rental, but
Purchaser will have no liability for the failure to collect any such amounts and
will not be required to pursue legal action to enforce collection of any such
amounts owed to Seller by any Tenant. All sums collected by Purchaser from and
after Closing from each Tenant (excluding tenant specific billings for tenant
work orders and other specific services as described in and governed by Section
10.4(d) below and excluding payments on account of 1999 reconciliations of
operating expenses, utilities and real estate tax payments or payments in lieu
thereof) will be applied first to current amounts owed by such Tenant to
Purchaser and then to delinquencies owed by such Tenant to Seller. Any sums due
Seller will be promptly remitted to Seller.
(c) At the Closing, Seller shall deliver to Purchaser a list of
additional rent, however characterized, under each Lease, including without
limitation, real estate
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taxes, electrical charges, utility costs and operating expenses (collectively,
"OPERATING EXPENSES") billed to Tenants for the calendar year in which the
Closing occurs (both on a monthly basis and in the aggregate), the basis on
which the monthly amounts are being billed and the amounts incurred by Seller on
account of the components of Operating Expenses for such calendar year. Upon the
reconciliation by Purchaser of the Operating Expenses billed to Tenants, and the
amounts actually incurred for such calendar year, Seller and Purchaser shall be
liable for overpayments of Operating Expenses, and shall be entitled to payments
from Tenants, as the case may be, on a PRO-RATA basis based upon each party's
period of ownership during such calendar year.
(d) With respect to specific tenant billings for work orders,
special items performed or provided at the request of a Tenant or other specific
services, which are collected by Purchaser after the Closing Date but relate to
the foregoing specific services rendered by Seller prior to the Proration Time,
and with respect to payments on account of 1999 reconciliations of operating
expenses, utilities and real estate tax payments or payments in lieu thereof,
then notwithstanding anything to the contrary contained herein, Purchaser shall
cause amounts specifically allocated for such purposes by such Tenant to be paid
to Seller on account thereof. To Seller's knowledge, any unpaid amounts through
January 21, 2000 are not material.
(e) Notwithstanding any provision of this Section 10.4 to the
contrary, Purchaser will be solely responsible for any leasing commissions due
pursuant to a Brokerage Commission Agreement, tenant improvement costs or other
expenditures due with respect to any amendments, renewals and/or expansions of
any Leases existing as of the Effective Date, and Seller shall be responsible
for any leasing commissions due on account of the initial term, or renewal
period of any Lease, if the initial term or the renewal period began prior to
the Effective Date. At Closing, Seller shall establish an escrow with the Escrow
Agent in the amount set forth on Exhibit P, and enter into an escrow agreement
on terms and conditions reasonably acceptable to Seller, Purchaser and Escrow
Agent, pursuant to which the Escrow Agent shall be obligated to disburse same
when due upon receipt of a proper and timely invoice. Purchaser further agrees
to be solely responsible for all leasing commissions, tenant improvement costs
and other expenditures (for purposes of this Section 10.4(e), "NEW TENANT
COSTS") incurred or to be incurred in connection with any new lease executed on
or after the Effective Date, and Purchaser will pay to Seller at Closing as an
addition to the Purchase Price an amount equal to the New Tenant Costs paid by
Seller.
(f) Notwithstanding any other provision of this Agreement to the
contrary, if Purchaser shall become liable after the Closing for payment of any
real estate taxes or other such charges assessed or imposed against the Property
for any period of time prior to the Closing Date or other charge or expense
which was subject to proration or a Purchase Price credit in Purchaser's favor
at Closing, which was not so adjusted or credited at Closing and which is not
the obligation of a Tenant to pay or to reimburse the landlord under a Tenant's
Lease, Seller shall pay to Purchaser, within thirty (30) days of
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demand accompanied by a calculation and reconciliation of the amount due, an
amount equal to such tax or credit due Purchaser.
SECTION 10.5 COSTS OF TITLE COMPANY AND CLOSING COSTS. Costs of the Title
Company and other Closing costs incurred in connection with the Closing will be
allocated as follows:
(a) Seller shall pay (i) Seller's attorney's fees; (ii) the realty
transfer tax due by reason of the transfer of the Property; (iii) the charges to
record the Deed; and (iv) the brokerage commission due to Rockwood Associates,
L.L.C. ("ROCKWOOD") as more particularly provided in Section 16.1.
(b) Purchaser shall pay (i) the cost of the premium for the Title
Policy and all title searches; (ii) all costs of any additional coverage under
the Title Policy or endorsements or deletions to the Title Policy that are
desired by Purchaser; (iii) all premiums and other costs for any mortgagee
policy of title insurance, if any, including but not limited to any endorsements
or deletions; (iv) Purchaser's attorney's fees; (v) the brokerage commission due
to Trammell Crow Company ("TRAMMELL") as more particularly provided in Section
16.1; and (vi) the costs of the Updated Survey, as provided for in Section 6.1.
(c) Any other costs and expenses of Closing not provided for in
this Section 10.5 shall be allocated between Purchaser and Seller in accordance
with the custom in the area in which the Property is located.
SECTION 10.6 POST-CLOSING DELIVERY OF TENANT NOTICE LETTERS. Immediately
following Closing, Purchaser will deliver to each Tenant a Tenant Notice Letter,
as described in Section 10.2(e).
SECTION 10.7 LIKE-KIND EXCHANGE. In the event that Seller shall elect to
effectuate the Closing as a "like-kind" exchange under Section 1031 of the Code,
Purchaser agrees to cooperate and assist Seller in all reasonable respects (at
no cost to Purchaser other than de minimis attorneys' fees of Purchaser's
counsel) in order that the exchange so qualifies as a "like-kind" exchange under
Section 1031 of the Code and the Treasury Regulations promulgated, or to be
promulgated, thereunder.
ARTICLE XI
CONDEMNATION AND CASUALTY
SECTION 11.1 CASUALTY. If, prior to the Closing Date, all or any portion
of the Real Property and Improvements is destroyed or damaged by fire or other
casualty, Seller will notify Purchaser of such casualty. Purchaser will have the
option to terminate this Agreement upon notice to Seller given not later than
fifteen (15) days after receipt of Seller's notice if all or a Significant
Portion of the Real Property and Improvement are damaged or destroyed. If this
Agreement is terminated, the Earnest Money Deposit and
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all interest accrued thereon will be returned to Purchaser and thereafter
neither Seller nor Purchaser will have any further rights or obligations to the
other hereunder except with respect to the Termination Surviving Obligations. If
Purchaser does not elect to terminate this Agreement or less than a Significant
Portion of the Real Property and Improvements is destroyed or damaged as
aforesaid, Seller will not be obligated to repair such damage or destruction but
(a) Seller will assign and turn over to Purchaser the insurance proceeds net of
reasonable collection costs (or if such have not been awarded, all of its right,
title and interest therein) payable with respect to such fire or other casualty
up to the amount of the Purchase Price and (b) the parties will proceed to
Closing pursuant to the terms hereof without abatement of the Purchase Price,
except that Purchaser will receive credit for any insurance deductible amount.
In the event Seller elects to perform any repairs as a result of a casualty,
Seller will be entitled to deduct its costs and expenses from any amount to
which Purchaser is entitled under this Section 11.1, which right shall survive
the Closing.
SECTION 11.2 CONDEMNATION OF PROPERTY.
(a) In the event of (i) any condemnation or sale in lieu of
condemnation of all of the Property; or (ii) any condemnation or sale in lieu of
condemnation of greater than five percent (5%) of the fair market value of the
Property prior to the Closing, Purchaser will have the option, to be exercised
within fifteen (15) days after receipt of notice of such condemnation or sale,
of terminating Purchaser's obligations under this Agreement, or electing to have
this Agreement remain in full force and effect. In the event that either (i) any
condemnation or sale in lieu of condemnation of the Property is for less than
five percent (5%) of the fair market value of the Property, or (ii) Purchaser
does not terminate this Agreement pursuant to the preceding sentence, Seller
will assign to Purchaser any and all claims for the proceeds of such
condemnation or sale to the extent the same are applicable to the Property, and
Purchaser will take title to the Property with the assignment of such proceeds
and subject to such condemnation and without reduction of the Purchase Price.
Should Purchaser elect to terminate Purchaser's obligations under this Agreement
under the provisions of this Section 11.2, the Earnest Money Deposit and any
interest thereon will be returned to Purchaser and neither Seller nor Purchaser
will have any further obligation under this Agreement, except for the
Termination Surviving Obligations. Notwithstanding anything to the contrary
herein, if any eminent domain or condemnation proceeding is instituted (or
notice of same is given) solely for the taking of any subsurface rights for
utility easements or for any right-of-way easement, and the surface and the
Improvements may, after such taking, be used in substantially the same manner as
though such rights have not been taken, Purchaser will not be entitled to
terminate this Agreement as to any part of the Property, but any award resulting
therefrom will be assigned to Purchaser at Closing and will be the exclusive
property of Purchaser upon Closing.
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ARTICLE XII
CONFIDENTIALITY
SECTION 12.1 CONFIDENTIALITY. Seller and Purchaser each expressly
acknowledge and agree that the transactions contemplated by this Agreement and
the terms, conditions, and negotiations concerning the same will be held in the
strictest confidence by each of them and will not be disclosed by either of them
except to their respective legal counsel, accountants, consultants, officers,
employees, partners, directors, and shareholders, and except and only to the
extent that such disclosure may be necessary for their respective performances
hereunder. Purchaser further acknowledges and agrees that, unless and until the
Closing occurs, all information obtained by Purchaser in connection with the
Property will not be disclosed by Purchaser to any third persons without the
prior written consent of Seller, provided that no such consent shall be required
in respect of such information being disclosed to any of the persons mentioned
in the first sentence of this Section 12.1. Nothing contained in this Article
XII will preclude or limit either party to this Agreement from disclosing or
accessing any information otherwise deemed confidential under this Article XII
response to lawful process or subpoena or other valid or enforceable order of a
court of competent jurisdiction or any filings with governmental authorities
required by reason of the transactions provided for herein pursuant to an
opinion of counsel. Nothing in this Article XII will negate, supersede or
otherwise affect the obligations of the parties under the Confidentiality
Agreement. In addition, prior to or as a part of the Closing, any release to the
public of information with respect to the sale contemplated herein or any
matters set forth in this Agreement will be made only in the form approved by
Purchaser and Seller and their respective counsel, which approval shall not be
unreasonably withheld or delayed. The provisions of this Article XII will
survive the Closing or any termination of this Agreement.
ARTICLE XIII
REMEDIES
SECTION 13.1 DEFAULT BY SELLER. In the event the Closing and the
transactions contemplated hereby do not occur as herein provided by reason of
any default of Seller, Purchaser may, as Purchaser's sole and exclusive remedy,
elect by notice to Seller within ten (10) Business Days following the Scheduled
Closing Date, either of the following: (a) terminate this Agreement, in which
event Purchaser will receive from the Escrow Agent the Earnest Money Deposit,
together with all interest accrued thereon, and in the event that the Agreement
is terminated due to the willful or grossly negligent acts of Seller, Seller
shall reimburse Purchaser up to $400,000 for its title, survey, consultants and
reasonable attorneys fees and expenses, as documented by Purchaser, whereupon
Seller and Purchaser will have no further rights or obligations under this
Agreement, except with respect to the Termination Surviving Obligations; or (b)
seek to enforce specific performance of Seller's obligations hereunder, except
that Purchaser shall not have the right to seek to enforce specific performance
of those obligations of Seller which would require a subjective determination as
to whether Seller has used commercially reasonable efforts, reasonable efforts,
best efforts or similar standards in performing its obligations.
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Except as specifically provided in Section 13.1(a), Purchaser expressly waives
its rights to seek damages in the event of Seller's default hereunder. Purchaser
shall be deemed to have elected to terminate this Agreement and receive back the
Earnest Money Deposit if Purchaser fails to advise Seller, on or before sixty
(60) days following the Scheduled Closing Date or sixty (60) days following the
last date to which either party had exercised an extension of the Closing past
the Scheduled Closing Date as permitted in this Agreement, that it intends to
file suit for specific performance against Seller in a court having jurisdiction
in the county and state in which the Property is located, and if Purchaser fails
to actually file such suit within sixty (60) days after Purchaser advises Seller
that it intends to file suit. Notwithstanding the foregoing, nothing contained
in this Section 13.1 will limit Purchaser's remedies at law, in equity or as
herein provided in pursuing remedies of a breach by Seller of any of the
Termination Surviving Obligations.
SECTION 13.2 DEFAULT BY PURCHASER. In the event the Closing and the
consummation of the transactions contemplated herein do not occur as provided
herein by reason of any default of Purchaser, Purchaser and Seller agree it
would be impractical and extremely difficult to fix the damages which Seller may
suffer. Purchaser and Seller hereby agree that (a) an amount equal to the
Earnest Money Deposit is a reasonable estimate of the total net detriment Seller
would suffer in the event Purchaser defaults and fails to complete the purchase
of the Property, and (b) such amount will be the full, agreed and liquidated
damages for Purchaser's default and failure to complete the purchase of the
Property, and will be Seller's sole and exclusive remedy (whether at law or in
equity) for any default of Purchaser resulting in the failure of consummation of
the Closing, whereupon this Agreement will terminate and Seller and Purchaser
will have no further rights or obligations hereunder, except with respect to the
Termination Surviving Obligations. The payment of such amount as liquidated
damages is not intended as a forfeiture or penalty but is intended to constitute
liquidated damages to Seller. Notwithstanding the foregoing, nothing contained
herein will limit Seller's remedies at law, in equity or as herein provided in
the event of a breach by Purchaser of any of the Termination Surviving
Obligations.
ARTICLE XIV
NOTICES
SECTION 14.1 NOTICES.
(a) All notices or other communications required or permitted
hereunder shall be in writing, and shall be given by any nationally recognized
overnight delivery service with proof of delivery, or by facsimile transmission
(provided that such facsimile is confirmed by the sender by expedited delivery
service in the manner previously described), sent to the intended addressee at
the address set forth below, or to such other address or to the attention of
such other person as the addressee will have designated by written notice sent
in accordance herewith. Unless changed in accordance with the preceding
sentence, the addresses for notices given pursuant to this Agreement will be as
follows:
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If to Purchaser: Germania of America, Inc.
Tower Place, Suite 2995
3340 Peachtree Road, N.E.
Atlanta, Georgia 30326
Attention: Mr. Hugh B. Gage, Jr.
Telephone No. (404) 842-2583
Fax No. (404) 842-9595
and
Commerz Immobilien GmbH
Ludwig-Erhard-Allee-9
D-40227 Dusseldorf, Germany
Attention: General Management
Telephone No.: 011-49-211-7708-401
Fax No.: 011-49-211-7708-139
with a copy to: Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: George C. Weiss, Esq.
Telephone No. (212) 259-7320
Fax No. (212) 259-6333
If Seller: c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
with separate notices to the attention of:
Mr. Mitchell E. Hersh
(908) 272-8000 (tele.)
(908) 272-6755 (fax)
and
Roger W. Thomas, Esq.
(908) 272-2612 (tele.)
(908) 497-0485 (fax)
With a copy to: Andrew S. Levine, Esq.
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
(212)326-0414 (tele.)
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(212)326-0806 (fax)
If to Escrow
Agent: Titleserv Agency of New York, Inc., as agent for
Fidelity National Title Insurance Company of New York
9 West 57th Street
New York, New York 10019
Attention: Nicholas DeMartini, Esq.
(212)845-3100 (tele.)
(212)759-6696 (fax)
(b) Notices given by (i) overnight delivery service as aforesaid
shall be deemed received and effective on the second Business Day following such
dispatch and (ii) facsimile transmission as aforesaid shall be deemed given at
the time and on the date of machine transmittal provided same is sent prior to
4:00 p.m. on a Business Day in the country where such party is located (if sent
later, then notice shall be deemed given on the next Business Day). Notices may
be given by counsel for the parties described above, and such notices shall be
deemed given by said party, for all purposes hereunder.
ARTICLE XV
ASSIGNMENT AND BINDING EFFECT
SECTION 15.1 ASSIGNMENT: BINDING EFFECT. Purchaser will not have the right
to assign this Agreement, or to designate another party or two (2) separate
parties to be the grantee, transferee or assignee of the Deed and the Assignment
and Assumption of the Ground Lease, as the case may be, or to assign any of the
other Closing documents, without the prior written consent of Seller to be given
or withheld in Seller's sole discretion, except that Purchaser may assign this
Agreement, or designate another party or two (2) separate parties to be the
grantee, transferee or assignee, as the case may be, to an entity controlled by,
controlling, or under the common control of the originally named Purchaser. No
such assignment or designation shall be binding on Seller or effective unless
and until Seller shall receive a fully executed assignment and assumption
agreement, between Purchaser and its assignee, whereby among other things, such
assignee assumes all of the obligations and liabilities of Purchaser hereunder.
No such assignment and assumption shall relieve the originally named Purchaser
of any of the obligations and liabilities of Purchaser hereunder.
ARTICLE XVI
BROKERAGE
SECTION 16.1 BROKERS. Seller agrees to pay to Rockwood a brokerage
commission pursuant to a separate agreement by and between Seller and Rockwood.
Purchaser agrees to pay Trammell (together with Rockwood, the "BROKERS") a
brokerage commission pursuant to a separate agreement by and between Purchaser
and Trammell. Purchaser and Seller represent that they have not dealt with any
brokers, finders or salesmen, in connection with this transaction other than the
Brokers, and agree to
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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 or termination of this Agreement.
ARTICLE XVII
ESCROW AGENT
SECTION 17.1. ESCROW.
(a) Escrow Agent will hold the Earnest Money Deposit in escrow in
an interest bearing account of the type generally used by Escrow Agent for the
holding of escrow funds until the earlier of (i) the Closing, or (ii) the
termination of this Agreement in accordance with any right hereunder. In the
event Purchaser has not terminated this Agreement by the end of the Evaluation
Period or in the event Purchaser fails to advise Seller in writing that
Purchaser is proceeding under this Agreement by notice to Seller given prior to
the expiration of the Evaluation Period, the Earnest Money Deposit shall be
non-refundable to Purchaser, but shall be credited against the Purchase Price at
the Closing. In all events, all interest accrued on the Earnest Money Deposit
will be paid by the Escrow Agent to the Purchaser as provided in Section 4.2. In
the event the Closing occurs, the Earnest Money Deposit will be released to
Seller, and Purchaser shall receive a credit against the Purchase Price in the
amount of the Earnest Money Deposit. In all other instances, Escrow Agent shall
not release the Earnest Money Deposit to either party until Escrow Agent has
been requested by Seller or Purchaser to release the Earnest Money Deposit and
has given the other party five (5) Business Days to dispute, or consent to, the
release of the Earnest Money Deposit. Purchaser represents that the tax
identification number for Germania, for purposes of reporting the interest
earnings, is 58-1516988. Seller represents that its tax identification number,
for purposes of reporting the interest earnings, is 22-3366548.
(b) Escrow Agent shall not be liable to any party for any act or
omission, except for bad faith, gross negligence or willful misconduct, and the
parties agree to indemnify Escrow Agent and hold Escrow Agent harmless from any
and all claims, damages, losses or expenses arising in connection herewith. The
parties acknowledge that Escrow Agent is acting solely as stakeholder for their
mutual convenience. In the event Escrow Agent receives written notice of a
dispute between the parties with respect to the Earnest Money Deposit and the
interest earned thereon (the "ESCROWED FUNDS"), Escrow Agent shall not be
entitled to release and deliver the Escrowed Funds to either party but may
either (i) continue to hold the Escrowed Funds until otherwise directed in a
writing signed by all parties hereto or (ii) deposit the Escrowed Funds with the
clerk of any court of competent jurisdiction. Upon such deposit, Escrow Agent
will be released from all duties and responsibilities hereunder. Escrow Agent
shall have the right to consult with separate counsel of its own choosing (if it
deems such consultation advisable) and shall not be liable for any action taken,
suffered or omitted by it in accordance with the advice of such counsel.
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(c) Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it with respect to the Escrowed
Funds, the Property or the subject matter of this Agreement unless requested to
do so by Purchaser or Seller and is indemnified to its satisfaction against the
cost and expense of such defense. Escrow Agent shall not be required to
institute legal proceedings of any kind and shall have no responsibility for the
genuineness or validity of any document or other item deposited with it or the
collectibility of any check delivered in connection with this Agreement. Escrow
Agent shall be fully protected in acting in accordance with any written
instructions given to it hereunder and believed by it to have been signed by the
proper parties.
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 the costs
and expenses the prevailing party has incurred therein from the other party
including all reasonable attorneys' fees and costs resulting therefrom. In the
event that one party hereto has not prevailed entirely in any such suit or
action, only the party which has prevailed to a greater extent (as determined by
the court, agency or other authority before which such suit, action or
proceeding is commenced) shall be entitled to so recover its costs and expenses
but such prevailing party shall only be entitled to recover that portion of such
costs and expenses which is in proportion to the relative degree to which such
party prevailed in such suit or action (as determined by the court, agency or
other authority before which such suit, action or proceeding is commenced). 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, photostating, 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.
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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 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 IN WHICH THE PROPERTY IS
LOCATED. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT SITTING IN THE STATE IN WHICH THE PROPERTY IS LOCATED
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 STATE
IN WHICH THE PROPERTY IS LOCATED.
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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
instructions to the Title Company and such other 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 - Assignment of Leases
Exhibit C - Bill of Sale
Exhibit D - Legal Description of Real Property
Exhibit E - Service Contracts
Exhibit F - Lease Schedule
Exhibit G - Permitted Exceptions
Exhibit H - Tenant Estoppels
Exhibit I - Suits and Proceedings
Exhibit J - Certificate as to Foreign Status
Exhibit K - NTT Lease Extension - Agreed Terms
Exhibit L - Leasing and Management Agreement
Exhibit M - Confidentiality Agreement
Exhibit N - Brokerage Commission Agreements
Exhibit O - Notice to Tenants
Exhibit P - Seller's Tenant Improvement Cost Obligations
Exhibit Q - Larkin Employees
SECTION 18.11 NO PARTNERSHIP. Notwithstanding anything to the contrary
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 Property to be conveyed as contemplated hereby.
SECTION 18.12 LIMITATIONS ON BENEFITS. It is the explicit intention of
Purchaser and Seller that no person or entity other than Purchaser and Seller
and their 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 and Seller 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
(including, without limitation, Brokers) a beneficiary of any term or provision
of this
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Agreement or any instrument or document delivered pursuant hereto, and Purchaser
and Seller expressly reject any such intent, construction or interpretation of
this Agreement.
ARTICLE XIX
ISRA
SECTION 19.1 ISRA. As a condition precedent to Seller's obligation to sell
and Purchaser's obligation to purchase the Property pursuant to this Agreement,
Seller shall have received a non-applicability letter (the "ISRA LETTER") from
the Industrial Site Evaluation Element, or its successor, of the New Jersey
Department of Environmental Protection, or its successor ("DEP"), for which
Seller shall apply pursuant to the Industrial Site Recovery Act, N.J.S.A.
13:1K-6 ET SEQ., the regulations promulgated thereunder, and any successor
legislation and regulations. Seller agrees to use commercially reasonable
efforts to obtain the ISRA Letter. If this condition precedent is not met at
least twenty (20) days prior to Closing, then either party shall have the right
to void this Agreement on notice to the other, in which event, except as
otherwise provided in this Agreement, neither party shall be under any further
obligation to the other, with the exception that the Earnest Money Deposit,
together with interest thereon shall be returned to Purchaser.
Seller shall contemporaneously furnish Purchaser with all submissions,
documents and correspondence sent to or received from DEP relating to the
foregoing. Seller shall notify Purchaser in advance of all meetings scheduled
between Seller or Seller's representatives and DEP with respect to the Property
and Purchaser and Purchaser's representatives shall have the right, but not the
obligation, to attend and participate in all such meetings.
ARTICLE XX
NON-COMPETITION
SECTION 20.1 NON-COMPETITION. For so long as the Leasing and Management
Agreement shall be in effect, neither Seller nor Mack Cali Realty L.P.
("MCRLP"), nor any affiliate of MCRLP in which MCRLP has a majority ownership
interest and exercises voting control (collectively, the "Competitive Entities")
shall solicit any person or entity while they are a tenant in the Improvements
(all such persons and entities, collectively, the "Existing Tenants"), and/or
enter into any lease with any of the Existing Tenants, to move any of the
Existing Tenants from the Improvements and into office space in other buildings
in Jersey City, New Jersey at any time when comparable space is available for
leasing in the Improvements, without the prior written consent of Purchaser. So
long as the agent under the Leasing and Management Agreement shall have apprised
Existing Tenant who shall inquire as to available space in the Improvements of
the status of such space, then a determinative factor as to whether comparable
office space is available in
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the Improvements shall be a statement from the Existing Tenant that no space in
the Improvements meets the requirements or needs of the Existing Tenant.
Notwithstanding anything to the contrary contained in this Article XX, in no
event shall a Competitive Entity be precluded from responding to an unsolicited
"Request for Proposal" or other solicitation by an Existing Tenant with respect
to office space in Jersey City, New Jersey, nor shall a Competitive Entity be
precluded from entering into a lease with an Existing Tenant for space in Jersey
City, New Jersey pursuant to or as a result of such "Request for Proposal" or
other solicitation, provided that a Competitive Entity has provided notice to
Purchaser of such solicitation promptly after any Competitive Entity becomes
aware of such Request for Proposal" or other solicitation in order to allow
Purchaser a reasonable opportunity to respond thereto. The provisions of this
Article XX shall survive the Closing for the period set forth in the first
sentence of this Article. This Article shall inure solely to the benefit of the
grantee named in the deed from Seller for the Improvements and any Affiliate
which owns the Improvements, and shall not be for the benefit of any successor
or assignee of such grantee, nor any other third party. MCRLP has executed this
Agreement for the sole purpose of agreeing to the terms of this Article XX and
Section 8.3 hereof.
46
<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have respectively executed this
Agreement as of the Effective Date.
Date Executed: SELLER:
January 31, 2000 Grove Street Associates of Jersey City
Limited Partnership
By: Mack-Cali Sub IV, Inc.,
its general partner
By: /s/ Roger W. Thomas
------------------------------------
Name: Roger W. Thomas
Title: Executive Vice President,
General Counsel and Secretary
Cali-Grove Street Urban Renewal
Associates L.P.
By: Mack-Cali Sub IV, Inc.,
its general partner
By: /s/ Roger W. Thomas
------------------------------------
Name: Roger W. Thomas
Title: Executive Vice President,
General Counsel and Secretary
PURCHASER:
January 31, 2000 CommerzLeasing und Immobilien GmbH
By: /s/ Beckman
------------------------------------
Name: Beckman
Title: Assistant Vice President
Germania of America, Inc.
By: /s/ Andreas M. Rathke
------------------------------------
Name: Andreas M. Rathke
Title: Executive Vice President
47
<PAGE>
AS TO ARTICLE XVII ONLY:
ESCROW AGENT:
January 31, 2000 Titleserv Agency of New York, Inc. as
agent for Fidelity National Title
Insurance Company of New York
By: /s/ Nick DeMartini
------------------------------------
Name: Nick DeMartini
Title: Senior Counsel
AS TO SECTION 8.3 AND ARTICLE XX
ONLY:
Mack-Cali Realty L.P.
Mack-Cali Realty Corporation,
its general partner
By: /s/ Roger W. Thomas
------------------------------------
Name: Roger W. Thomas
Title: Executive Vice President,
General Counsel and Secretary
<TABLE> <S> <C>
<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
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<PP&E> 3,692,714
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<BONDS> 1,528,503
0
0
<COMMON> 0
<OTHER-SE> 1,900,556
<TOTAL-LIABILITY-AND-EQUITY> 3,650,756
<SALES> 0
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