<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) SEPTEMBER 19, 1997
---------------------
CALI REALTY CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MARYLAND 1-13274 22-3305147
(state or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification
Number)
</TABLE>
11 COMMERCE DRIVE, CRANFORD, NEW JERSEY 07016
Registrant's telephone number, including area code (908) 272-8000
N/A
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro Forma Financial Information (unaudited)
The pro forma financial information for the Company previously presented as Item
5(b) of the Current Report on Form 8-K dated September 19, 1997 is hereby
amended to reflect the actual pricing of, the number of shares issued in and the
expected use of proceeds from the public offering priced on October 9, 1997:
- Condensed consolidated balance sheet as of June 30, 1997.
- Condensed consolidated statement of operations for the six month period
ended June 30, 1997 and the year ended December 31, 1996.
This current report on Form 8-K/A should be read in conjunction with the current
report on Form 8-K dated September 19, 1997 which contains, among other things,
Audited Combined Financial Statements of the Mack Group as of December 31, 1996
and 1995 and for the three years in the period ended December 31, 1996 and
Unaudited Financial Information as of June 30, 1997 and for the six months ended
June 30, 1997 and 1996.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Cali
Realty Corporation has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALI REALTY CORPORATION
October 10, 1997 By: /s/ THOMAS A. RIZK
------------------------------------------
Thomas A. Rizk
PRESIDENT AND CHIEF EXECUTIVE OFFICER
October 10, 1997 By: /s/ BARRY LEFKOWITZ
------------------------------------------
Barry Lefkowitz
CHIEF FINANCIAL OFFICER
3
<PAGE>
CALI REALTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997 (DOLLARS IN THOUSANDS)
(UNAUDITED)
The following unaudited pro forma condensed consolidated balance sheet is
presented as if the acquisition by the Company of the Moorestown Buildings,
Shelton Place, 200 Corporate, Three Independence (collectively, the "Pre-Mack
Events," which are discussed more fully in the Company's Current Report on Form
8-K, dated September 18, 1997), the Transaction (which is discussed more fully
in the Company's Current Report on Form 8-K, dated September 19, 1997), and the
Company's issuance of 13 million shares of its Common Stock at $39.8125 per
share (the "1997 Offering") had occurred on June 30, 1997. This unaudited pro
forma condensed consolidated balance sheet should be read in conjunction with
the pro forma condensed consolidated statement of operations of the Company and
the historical financial statements and notes thereto of the Company included in
the Company's Form 10-K for the year ended December 31, 1996 and the Company's
Form 10-Q for the six month period ended June 30, 1997, respectively.
The pro forma condensed consolidated balance sheet is unaudited and is not
necessarily indicative of what the actual financial position of the Company
would have been had the aforementioned acquisition actually occurred on June 30,
1997, nor does it purport to represent the future financial position of the
Company.
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA ADJ. FOR THE
ADJUSTMENTS TRANSACTION
COMPANY FOR PRE-MACK PRE-MACK EVENTS AND 1997 COMPANY
ASSETS HISTORICAL EVENTS PRO FORMA OFFERING PRO FORMA (L)
------------ ------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Rental property, net............................ $ 1,307,365 $ 46,850(a) $ 1,354,215 $ 1,205,573(d) $ 2,559,788
Cash and cash equivalents....................... 6,090 -- 6,090 -- (e) 6,090
Unbilled rents receivable....................... 23,648 -- 23,648 -- 23,648
Deferred charges and other assets, net.......... 13,224 -- 13,224 -- 13,224
Restricted cash................................. 8,218 -- 8,218 -- 8,218
Accounts receivable, net........................ 3,547 -- 3,547 -- 3,547
Mortgage note receivable........................ 11,600 (4,350)(b) 7,250 -- 7,250
------------ ------------ ---------------- ------------ --------------
Total assets.................................... $ 1,373,692 $ 42,500 $ 1,416,192 1,205,573 $ 2,621,765
------------ ------------ ---------------- ------------ --------------
------------ ------------ ---------------- ------------ --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages and loans payable..................... $ 553,961 $ 42,500(c) $ 596,461 $ 340,301(f) $ 936,762
Dividends and distributions payable............. 18,334 -- 18,334 -- 18,334
Accounts payable and accrued expenses........... 10,582 -- 10,582 (422 (g) 10,160
Accrued interest payable........................ 1,916 -- 1,916 -- 1,916
Rents received in advance and security
deposits...................................... 16,280 -- 16,280 10,465(h) 26,745
------------ ------------ ---------------- ------------ --------------
Total liabilities............................... 601,073 42,500 643,573 350,344 993,917
------------ ------------ ---------------- ------------ --------------
Minority interest of unitholders in
Operating Partnership......................... 70,911 -- 70,911 391,523(i) 462,434
------------ ------------ ---------------- ------------ --------------
Stockholders' equity
Common stock, $.01 par value.................. 366 -- 366 130(j) 496
Other stockholders' equity...................... 701,342 -- 701,342 463,576(k) 1,164,918
------------ ------------ ---------------- ------------ --------------
Total stockholders' equity...................... 701,708 -- 701,708 463,706 1,165,414
------------ ------------ ---------------- ------------ --------------
Total liabilities and stockholders' equity...... $ 1,373,692 $ 42,500 $ 1,416,192 $ 1,205,573 $ 2,621,765
------------ ------------ ---------------- ------------ --------------
------------ ------------ ---------------- ------------ --------------
</TABLE>
See accompanying footnotes on subsequent pages.
4
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997 (IN THOUSANDS)
(UNAUDITED)
(a) Represents the approximate aggregate cost of the acquisitions completed
subsequent to June 30, 1997, consisting of the Moorestown Buildings on July
21, 1997 for $10,200; Shelton Place on August 1, 1997 for $15,500; 200
Corporate on August 15, 1997 for $8,000; and Three Independence on September
3, 1997 for $13,150. (See the Company's Current Report on Form 8-K, dated
September 18, 1997 for additional information.)
(b) Represents the partial prepayment of the RM Mortgage Note Receivable
received from the sellers of 200 Corporate, certain RM principals, in
conjunction with the Company's acquisition of such property. (See the
Company's Current Report on Form 8-K, dated September 18, 1997 for
additional information.)
(c) Represents the approximate aggregate pro forma drawings on the Company's
credit facilities, which were used as the primary means in funding the
acquisitions subsequent to June 30, 1997, as listed in note (a) above. (See
the Company's Current Report on Form 8-K, dated September 18, 1997 for
additional information.)
(d) Represents the estimated aggregate acquisition cost to be incurred by the
Company to acquire the Mack Properties based upon the estimated market price
of the consideration to be paid as of the time the Transaction was agreed to
and announced. The total costs approximate the fair value of the rental
property to be acquired and include the following:
<TABLE>
<S> <C>
Cash............................................................ $ 476,106
Mack Assumed Debt............................................... 302,147
Common Units.................................................... 132,721
Preferred Units................................................. 256,075
Warrants........................................................ 8,524
Estimated Transaction-related costs............................. 30,000
---------
$1,205,573
---------
---------
</TABLE>
(e) The following schedule summarizes the pro forma sources and uses of funds in
connection with the Transaction:
<TABLE>
<S> <C>
Net proceeds to be received from the 1997 Offering after estimated
underwriting discount and issuance costs of $28,020............. $ 489,542
Pro forma drawing on the Company's credit facilities.............. 38,154
Cash consideration paid (including estimated Transaction-related
costs of $30,000)............................................... (506,106)
Cash paid for executive compensation, bonuses and related tax
obligation payments............................................. (32,055)
Net cash from estimated closing adjustments at completion of
Transaction..................................................... 10,465
---------
$ 0
---------
---------
</TABLE>
5
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
AS OF JUNE 30, 1997 (IN THOUSANDS)
(UNAUDITED)
(f) Represents the Mack Assumed Debt expected to be assumed by the Company and
additional drawings on the Company's credit facilities in connection with
the consummation of the Transaction, as follows:
<TABLE>
<S> <C>
Expected assumed debt with an estimated weighted average interest
rate of 7.23 percent............................................ $ 302,147
Additional drawings on the Company's credit facilities............ 38,154
---------
$ 340,301
---------
---------
</TABLE>
(g) Represents amounts that were accrued in the Company's historical accounts as
of June 30, 1997 for tax obligation payments in connection with the
Company's executive compensation agreements, which are to be paid in
connection with completion of the Transaction (see Note (l) below).
(h) Represents adjustments for rents received in advance ($7,278) and security
deposits ($3,187) to be received by the Company at the closing of the
Transaction.
(i) Reflects the adjustment to minority interest of the unitholders in the
Operating Partnership computed as follows:
<TABLE>
<S> <C>
Common Units...................................................... $ 132,721
Preferred Units................................................... 256,075
Warrants.......................................................... 8,524
Minority interest share of non-recurring charges [see Note (k)
below].......................................................... (5,797)
---------
$ 391,523
---------
---------
</TABLE>
(j) Reflects the issuance of 13 million shares of the Company's Common Stock
with a par value of $.01 per share.
6
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
AS OF JUNE 30, 1997 (IN THOUSANDS)
(UNAUDITED)
(k) Reflects the issuance of 13 million shares of the Company's Common Stock
with a par value of $.01 per share, at $39.8125 per share. The following
table sets forth the adjustments to Other stockholders' equity:
<TABLE>
<S> <C>
Net proceeds to be received from the 1997 Offering after estimated
underwriting discount and issuance costs of $28,020, (net of
$130 for par value)............................................. $ 489,412
Recording of the financial accounting value ascribed to the
beneficial conversion feature inherent in the Preferred Units
upon issuance. The Preferred Units are immediately convertible
into Common Units at $34.65 per Common Unit, which is an amount
that is expected to be less than the market price of the Common
Stock (assumed to be $39.8125 per share for purposes of this pro
forma information) as of the date the Preferred Units are
issued.......................................................... 37,196
Recording of amortization for the beneficial conversion feature
inherent in the Preferred Units as they are immediately
convertible into Common Units upon consummation of the
Transaction (1)................................................. (37,196)
Expensing of previously unamortized stock compensation recorded in
connection with the Company's executive compensation agreements,
which will fully vest on an accelerated basis as a result of the
consummation of the Transaction (1)............................. (10,063)
Tax obligation payments related to stock compensation (net of $422
previously accrued) (1)......................................... (4,648)
Elimination of unamortized stock compensation previously recorded
in equity....................................................... 10,063
Additional executive compensation and bonuses to be paid only upon
consummation of the Transaction (1)............................. (26,985)
Allocation to minority interest based upon post-Transaction
ownership....................................................... 5,797
---------
$ 463,576
---------
---------
</TABLE>
(l) See following Estimated Pro Forma Results for Permitted Transaction
Alternatives.
- ------------------------
(1) Reflects the adjustments to historical net earnings for non-recurring
charges, which will be incurred in connection with the Transaction and will
be recorded in the Company's statement of operations for the period in which
they are incurred.
7
<PAGE>
CALI REALTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
The unaudited pro forma condensed consolidated statements of operations for
the six months ended June 30, 1997 and for the year ended December 31, 1996 are
presented as if each of the following had occurred on January 1, 1996: (i) the
partial prepayment by the Company of its Mortgage Financing ("Partial
Prepayment") in 1996, (ii) the disposition by the Company of its property at 15
Essex Road in Paramus, New Jersey ("Essex Road") in 1996, (iii) the acquisition
by the Company of the properties known as 103 Carnegie, Rose Tree, the Mount
Airy Road Buildings, Five Sentry Parkway, Harborside, Whiteweld Centre, One
Bridge Plaza and Airport Center in 1996, (iv) the net proceeds received by the
Company as a result of its common stock offering of 3,450,000 shares on August
13, 1996 (the "August Offering"), (v) the net proceeds received by the Company
as a result of the Company common stock offering of 17,537,500 shares on
November 22, 1996 (the "November Offering"), (vi) completion by the Company of
the Pre-Mack Events, (which are more fully discussed in the Company's Current
Report on Form 8-K, dated September 18, 1997), (vii) completion by the Company
of the Transaction (which is more fully discussed in the Company's Current
Report on Form 8-K, dated September 19, 1997), and (viii) the 1997 Offering.
Items (i) through (v) above are to be collectively referred to as the "1996
Events."
Such pro forma information is based upon the historical consolidated results
of operations of the Company for the six months ended June 30, 1997 and for the
year ended December 31, 1996, after giving effect to the transactions described
above. The pro forma condensed consolidated statements of operations should be
read in conjunction with the pro forma condensed consolidated balance sheet of
the Company and the historical financial statements and notes thereto of the
Company included in the Company's Form 10-Q for the six months ended June 30,
1997 and in the Company's Form 10-K for the year ended December 31, 1996.
The unaudited pro forma condensed consolidated statements of operations are
not necessarily indicative of what the actual results of operations of the
Company would have been assuming the transactions had been completed as set
forth above, nor does it purport to represent the Company's results of
operations for future periods.
8
<PAGE>
CALI REALTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ADJ. FOR
THE TRANS-
ACTION AND
PRO FORMA ADJ. PRE-MACK HISTORICAL 1997
COMPANY FOR PRE-MACK EVENTS THE MACK OFFERING COMPANY
REVENUES HISTORICAL EVENTS PRO FORMA GROUP (G) PRO FORMA(M)
----------- -------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Base rents....................... $ 93,180 $ 10,734(a) $ 103,914 $ 64,521 $ 3,963(e) $ 172,398
Escalations and recoveries from
tenants........................ 14,279 1,198(a) 15,477 7,774 -- 23,251
Parking and other................ 3,598 524(a) 4,122 5,587 -- 9,709
(956) (350)
Interest income.................. 1,640 (b) 684 350 (f) 684
----------- ------- ----------- ----------- ----------- -------------
Total revenues................... 112,697 11,500 124,197 78,232 3,613 206,042
----------- ------- ----------- ----------- ----------- -------------
EXPENSES
Real estate taxes................ 11,929 1,339(a) 13,268 7,833 -- 21,101
Utilities........................ 7,940 939(a) 8,879 6,782 -- 15,661
Operating services............... 13,773 1,634(a) 15,407 9,960 -- 25,367
General and administrative....... 6,927 730(a) 7,657 3,531 -- 11,188
(1,661)
Depreciation and amortization.... 16,844 1,873(a) 18,717 13,717 (h) 30,773
(17,746)
Interest expense................. 17,152 2,058(c) 19,210(c) 29,975 (i) 31,439
----------- ------- ----------- ----------- ----------- -------------
Total expenses................... 74,565 8,573 83,138 71,798 (19,407) 135,529
----------- ------- ----------- ----------- ----------- -------------
Income before minority
interest....................... 38,132 2,927 41,059 6,434 23,020 70,513
Minority interest................ 3,648 491(d) 4,139 -- 12,919(j) 17,058
----------- ------- ----------- ----------- ----------- -------------
Net income....................... $ 34,484 $ 2,436 $ 36,920 $ 6,434 $ 10,101 $ 53,455
----------- ------- ----------- ----------- ----------- -------------
----------- ------- ----------- ----------- ----------- -------------
Weighted average common shares
outstanding (k)................ 36,475 49,674
----------- -------------
Net income per common share
(l)............................ $ 0.95 $ 1.08
----------- -------------
</TABLE>
9
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
(a) Reflects:
Revenues and expenses for the properties acquired in 1997 by the Company (as
reported by the Company on previously-filed Current Reports on Form 8-K and
8-K/A) for the period January 1, 1997 through the earlier of the date of
acquisition/completion or June 30, 1997, as follows:
<TABLE>
<CAPTION>
REAL
ACQUISITION/ BASE ESCALATIONS/ OTHER ESTATE OPERATING
PROPERTY/TRANSACTION (1) COMPLETION DATE RENTS (2) RECOVERIES INCOME TAXES UTILITIES SERVICES
- ---------------------------- ----------------- ----------- ------------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1345 Campus Parkway......... January 28, 1997 $ 58 $ 19 -- $ 7 $ 1 $ 4
RM Transaction.............. January 31, 1997 5,209 195 $ 524 817 379 858
Westlakes................... May 8, 1997 3,126 866 -- 258 362 449
Shelton Place (4)........... July 31, 1997 982 105 -- 80 138 141
200 Corporate............... August 15, 1997 386 12 -- 55 5 73
Three Independence.......... September 3, 1997 973 1 -- 122 54 109
----------- ------ ----- --------- ----- -----------
Total Pro Forma Adj. for
1997 Events............... $ 10,734 $ 1,198 $ 524 $ 1,339 $ 939 $ 1,634
----------- ------ ----- --------- ----- -----------
----------- ------ ----- --------- ----- -----------
<CAPTION>
GENERAL AND
PROPERTY/TRANSACTION (1) ADMINISTRATIVE DEPRECIATION (3)
- ---------------------------- ----------------- -----------------
<S> <C> <C>
1345 Campus Parkway......... $ 1 $ 12
RM Transaction.............. 410 864
Westlakes................... 246 607
Shelton Place (4)........... 51 165
200 Corporate............... 1 85
Three Independence.......... 21 140
----- ------
Total Pro Forma Adj. for
1997 Events............... $ 730 $ 1,873
----- ------
----- ------
</TABLE>
- ------------------------
(1) The Moorestown Buildings were vacant during 1996 and for the six months
ended June 30, 1997.
(2) Pro forma base rents are presented on a straight-line basis calculated from
January 1, 1996 forward.
(3) Depreciation is based on the building-related portion of the purchase price
and associated costs depreciated using the straight-line method over a
40-year life.
(4) Total revenues of $444 and Revenue in excess of certain expenses of $234 for
the three months ended March 31, 1997 have been included in both the Pro
Forma Condensed Consolidated Statements of Operations for the six months
ended June 30, 1997 and year ended December 31, 1996.
10
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
(b) Represents reduction for (i) interest income earned on investments of
proceeds from the November 1996 offering ($835) and (ii) interest income
earned on the RM Mortgage Receivable as a result of the prepayment in
connection with the 200 Corporate acquisition ($121).
(c) The Pre-Mack Events pro forma adjustment to interest expense for the six
months ended June 30, 1997 reflects interest on mortgage debt assumed with
certain acquisitions and additional borrowings from the Company's credit
facilities to fund certain acquisitions. Pre-Mack Events pro forma interest
expense for the six months ended June 30, 1997 is computed as follows:
<TABLE>
<S> <C>
Interest expense on the Initial Mortgage Financing, after the
Partial Prepayment (fixed interest rate of 8.02 percent on $44,313;
and variable rate of 30-day LIBOR plus 100 basis points on
$20,195--weighted average interest rate used is 6.60 percent)...... $ 2,443
Interest expense on loan assumed with Fair Lawn acquisition on
March 3, 1995 (fixed interest rate of 8.25 percent on average
outstanding principal balance of approximately $18,605)............ 767
Interest expense on mortgages in connection with the Harborside
acquisition in 1996 (fixed interest rate of 7.32 percent on
$107,912 and initial rate of 6.99 percent on $42,088).............. 5,421
Interest expense on outstanding borrowings on the Company's credit
lines (a variable rate of 30-day LIBOR plus 125 basis points during
the period on $114,655; weighted average interest rate used is 6.85
percent)........................................................... 3,927
Interest expense on the Teachers Mortgage assumed with the RM
Transaction on January 31, 1997 (fixed interest rate of 7.18
percent on $185,283)............................................... 6,652
---------
Total Pre-Mack Events pro forma interest expense for the six months
ended June 30, 1997:............................................... $ 19,210
---------
---------
</TABLE>
(d) Represents Pre-Mack Events pro forma income allocated to the pro forma
weighted average minority interest (Units) in Cali Realty L.P. (the
Operating Partnership) for the period of 10.08 percent.
(e) Represents adjustment necessary to reflect rental income for the Mack
Properties on a straight-lined basis assuming that the Transaction was
consummated as of January 1, 1996.
(f) Represents reduction of interest income, which was recorded in the Mack
Group Historical Financial Statements.
(g) In connection with the consummation of the Transaction, the Company
estimates that it will also recognize the following non-recurring charges,
before minority interest, in the Company's Statements
11
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
of Operations for the period in which the Transaction is completed, which
have been excluded from the Company's pro forma operating results:
<TABLE>
<S> <C>
Expensing of previously unamortized stock compensation recorded in
connection with the Company's executive compensation plans which
will vest on an accelerated basis as a result of the consummation
of the Transaction................................................. $ 10,063
Related tax obligation payments (net of $422 previously accrued)... 4,648
Additional executive compensation and bonuses to be paid only upon
consummation of the Transaction.................................... 26,985
Amortization of the beneficial conversion feature inherent in the
Preferred Units (as an allocation to minority interest) as they are
immediately convertible into Common Units upon consummation of the
Transaction........................................................ 37,196
---------
$ 78,892
---------
---------
</TABLE>
(h) Represents adjustment to reflect depreciation expense related to the Mack
Properties to be acquired by the Company based on estimated relative fair
value of buildings and improvements ($964,458) as of the date of
acquisition, as follows:
<TABLE>
<CAPTION>
<S> <C>
Pro forma depreciation expense..................................................... $ 12,056
Mack Group Historical.............................................................. 13,717
---------
$ 1,661
---------
---------
</TABLE>
(i) Reflects reduction of interest expense relating to the Transaction. Proforma
interest expense is computed as follows:
<TABLE>
<CAPTION>
<S> <C>
Interest on expected assumed debt ($302,147) with a weighted average interest rate
of 7.23 percent.................................................................... $ 10,923
Interest on drawings on the Company's credit facilities of $38,154 at a weighted
average interest rate of 6.85 percent.............................................. 1,306
---------
$ 12,229
Mack Group Historical.............................................................. $ 29,975
---------
$ 17,746
---------
---------
</TABLE>
12
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
(j) Represents minority interest computed as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Income before extraordinary item and minority interest.................. $ 70,513
Dividend yield of 6.75 percent on the Preferred Units with a par value
of $249,656............................................................. $ 8,426
Income allocable to common stockholders in the Company and unitholders
in the Operating Partnership............................................ $ 62,087
---------
Allocation to minority interest based upon weighted average percentage
of Common Units outstanding of 13.90 percent............................ 8,632
---------
Total minority interest................................................. 17,058
---------
Pre-Mack Events pro forma............................................... 4,139
---------
$ 12,919
---------
---------
</TABLE>
(k) The following is a reconciliation of the historical weighted average shares
outstanding to the pro forma primary weighted average shares outstanding
(shares in thousands):
<TABLE>
<CAPTION>
<S> <C>
Historical weighted average shares outstanding....................................... 36,475
Shares issued in connection with the 1997 Offering................................... 13,000
Vesting of 199 shares on an accelerated basis as a result of the Transaction......... 199
---------
Pro forma weighted average shares outstanding........................................ 49,674
---------
---------
</TABLE>
(l) Fully-diluted pro forma net income per share is not presented since common
stock equivalents and the Preferred Units are not dilutive.
(m) See following Estimated Pro Forma Results for Permitted Transaction
Alternatives.
13
<PAGE>
CALI REALTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA PRO FORMA THE MACK ADJ. FOR THE
ADJ. FOR ADJ. FOR PRE-MACK GROUP TRANSACTION AND COMPANY
COMPANY 1996 PRE-MACK EVENTS HISTORICAL 1997 OFFERING PRO FORMA
HISTORICAL EVENTS (A) EVENTS (B) PRO FORMA (C) (H) (N)
----------- ----------- ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Base rents..................... $ 76,922 $ 49,087 $ 76,655 $ 202,664 $ 128,066 $ 7,559(f) $ 338,289
Escalations and recoveries from
tenants...................... 14,429 8,870 8,230 31,529 16,984 -- 48,513
Parking and other.............. 2,204 190 4,428 6,822 3,233 -- 10,055
Interest income................ 1,917 -- (738)(c) 1,179 469 (469)(g) 1,179
----------- ----------- ----------- ----------- ------------ --------------- -----------
Total revenues................. 95,472 58,147 88,575 242,194 148,752 7,090 398,036
----------- ----------- ----------- ----------- ------------ --------------- -----------
EXPENSES
Real estate taxes.............. 9,395 5,144 11,039 25,578 15,367 -- 40,945
Utilities...................... 8,138 3,313 6,619 18,070 14,143 -- 32,213
Operating Services............. 12,129 6,452 12,277 30,858 19,507 -- 50,365
General and administrative..... 5,800 3,020 4,965 13,785 7,309 -- 21,094
Depreciation and
amortization................. 15,812 8,133 13,021 36,966 28,069 (3,958)(i) 61,077
Interest expense............... 12,677 -- 25,608(d) 38,285(d) 58,621 (34,206)(j) 62,700
----------- ----------- ----------- ----------- ------------ --------------- -----------
Total expenses........... 63,951 26,062 73,529 163,542 143,016 (38,164) 268,394
----------- ----------- ----------- ----------- ------------ --------------- -----------
Income before gain on sale of
rental property, minority
interest and extraordinary
item......................... 31,521 32,085 15,046 78,652 5,736 45,254 129,642
Gain on sale of rental
property..................... 5,658 (5,658) -- -- -- -- --
----------- ----------- ----------- ----------- ------------ --------------- -----------
Income before minority interest
and extraordinary item....... 37,179 26,427 15,046 78,652 5,736 45,254 129,642
Minority interest.............. 4,760 -- 3,263(e) 8,023(e) -- 24,622(k) 32,644
----------- ----------- ----------- ----------- ------------ --------------- -----------
Income before extraordinary
item......................... $ 32,419 $ 26,427 $ 11,783 $ 70,629 $ 5,736 $ 20,632 $ 96,998
----------- ----------- ----------- ----------- ------------ --------------- -----------
----------- ----------- ----------- ----------- ------------ --------------- -----------
Weighted average common shares
outstanding (l).............. 18,461 49,400
----------- -----------
Income before extraordinary
item per common share (m).... $ 1.76 $ 1.96
----------- -----------
</TABLE>
14
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
(a) Reflects:
Revenues and expenses of the properties acquired in 1996 for the period
January 1, 1996 through the date of acquisition, (as reported by the Company on
previously-filed Current Reports on Form 8-K) as follows:
<TABLE>
<CAPTION>
REAL
ACQUIS./COMPLETION BASE ESCALATIONS/ OTHER ESTATE
PROPERTY/TRANSACTION DATE RENTS (2) RECOVERIES INCOME TAXES
- -------------------------------------------------- ----------------- ----------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Carnegie.......................................... March 20, 1996 $ 386 $ 31 -- $ 54
Rose Tree......................................... May 2, 1996 1,312 115 -- 165
Mt. Airy Bldgs. .................................. July 23, 1996 665 101 -- 101
Harborside........................................ November 4, 1996 30,884 7,037 $ 166 3,096
Five Sentry....................................... November 7, 1996 1,663 -- -- 148
December 10,
Whiteweld......................................... 1996 3,890 326 -- 430
December 16,
One Bridge Plaza.................................. 1996 3,597 293 -- 420
December 17,
Airport Center.................................... 1996 6,953 1,004 24 780
----------- ------ ----- ---------
Total Pro Forma Adj. for 1996 acquisitions........ $ 49,350 $ 8,907 $ 190 $ 5,194
----------- ------ ----- ---------
Revenues and expenses of the property disposed of in 1996 for the period January 1, 1996 through the date of disposition,
as follows:
Essex Road........................................ March 20, 1996 (263) (37) -- (50)
----------- ------ ----- ---------
Reduction of expense as a result of the Partial Prepayment in 1996, for the period January 1, 1996 through the Partial
Payment date, as follows:
Partial Prepayment................................ March 12, 1996 -- -- -- --
----------- ------ ----- ---------
Total Pro Forma Adj. for 1996 Events.............. $ 49,087 $ 8,870 $ 190 $ 5,144
----------- ------ ----- ---------
----------- ------ ----- ---------
<CAPTION>
OPERATING GENERAL AND
PROPERTY/TRANSACTION UTILITIES SERVICES ADMINISTRATIVE DEPRECIATION (3)
- -------------------------------------------------- ----------- ----------- --------------- -----------------
<S> <C> <C> <C> <C>
Carnegie.......................................... $ 56 $ 58 $ 11 $ 49
Rose Tree......................................... 180 179 43 215
Mt. Airy Bldgs. .................................. -- 4 51 107
Harborside........................................ 906 3,633 2,048 5,332
Five Sentry....................................... 32 325 88 246
Whiteweld......................................... 748 543 158 733
One Bridge Plaza.................................. 412 659 237 585
Airport Center.................................... 1,035 1,129 395 953
----------- ----------- ------ ------
Total Pro Forma Adj. for 1996 acquisitions........ $ 3,369 $ 6,530 $ 3,031 $ 8,220
----------- ----------- ------ ------
Revenues and expenses of the property disposed of
as follows:
Essex Road........................................ (56) (78) (11) (81)
----------- ----------- ------ ------
Reduction of expense as a result of the Partial Pr
Payment date, as follows:
Partial Prepayment................................ -- -- -- (6)
----------- ----------- ------ ------
Total Pro Forma Adj. for 1996 Events.............. $ 3,313 $ 6,452 $ 3,020 $ 8,133
----------- ----------- ------ ------
----------- ----------- ------ ------
</TABLE>
15
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
(b) Reflects:
Revenues and expenses for the properties acquired in 1997 by the Company (as
reported by the Company on previously-filed Current Reports on Form 8-K and
8-K/A), for the year ended December 31, 1996, as follows:
<TABLE>
<CAPTION>
REAL
AQUIS./COMPLETION BASE ESCALATIONS/ OTHER ESTATE
PROPERTY/TRANSACTION (1) DATE RENTS (2) RECOVERIES INCOME TAXES
- ----------------------------------- -------------------------------- ----------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1345 Campus Parkway................ January 28, 1997 $ 698 $ 165 -- $ 90
RM Transaction..................... January 31, 1997 63,083 5,483 $ 4,393 9,870
Westlakes.......................... May 8, 1997 8,659 2,347 -- 610
Shelton Place (4).................. July 31, 1997 2,180 193 -- 161
200 Corporate...................... August 15, 1997 850 38 35 85
Three Independence................. September 3, 1997 1,185 4 -- 223
----------- ------ ----------- ---------
Total Pro Forma Adj. for Pre-Mack
Events........................... $ 76,655 $ 8,230 $ 4,428 $ 11,039
----------- ------ ----------- ---------
----------- ------ ----------- ---------
<CAPTION>
OPERATING GENERAL AND DEPRECIATION
PROPERTY/TRANSACTION (1) UTILITIES SERVICES ADMINISTRATIVE (3)
- ----------------------------------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
1345 Campus Parkway................ $ 25 $ 103 $ 20 $ 143
RM Transaction..................... 4,944 9,876 3,997 10,364
Westlakes.......................... 1,216 1,627 772 1,734
Shelton Place (4).................. 320 292 93 329
200 Corporate...................... -- 146 36 170
Three Independence................. 114 233 47 281
----------- ----------- ------ -------
Total Pro Forma Adj. for Pre-Mack
Events........................... $ 6,619 $ 12,277 $ 4,965 $ 13,021
----------- ----------- ------ -------
----------- ----------- ------ -------
</TABLE>
- ------------------------
(1) The Moorestown Buildings were vacant during 1996.
(2) Pro Forma base rents are presented on a straight-line basis calculated from
January 1, 1996 forward.
(3) Depreciation is based on the building-related portion of the purchase price
and associated costs depreciated using the straight-line method over a
40-year life.
(4) Revenues and certain expenses for Shelton Place reasonably reflect the
operations of the property for the period April 1, 1996 through March 31,
1997. Total revenues of $444 and Revenue in excess of certain expenses of
$234 for the three months ended March 31, 1997 have been included in both
the Pro Forma Condensed Consolidated Statements of Operations for the six
months ended June 30, 1997 and year ended December 31, 1996.
16
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(c) Represents reduction for interest income earned on investments of proceeds
from the November 1996 Offering ($1,463), net of additional interest income
earned on the RM Mortgage Receivable ($725).
(d) The pro forma adjustment to interest expense for the year ended December 31,
1996 (for the Pre-Mack Events) reflects interest on mortgage debt assumed
with certain acquisitions and additional borrowings from the Company's
credit facilities to fund acquisitions. Pro forma interest expense for the
year ended December 31, 1996 is computed as follows:
<TABLE>
<S> <C>
Interest expense on the Initial Mortgage Financing, after the
Partial Prepayment (fixed interest rate of 8.02 percent on
$44,313 and variable rate of 30-day LIBOR plus 100 basis points
on $20,195; weighted average interest rate used is 6.46
percent)......................................................... $ 4,867
Interest expense on loan assumed with Fair Lawn acquisition on
March 3, 1995 (fixed interest rate of 8.25 percent on average
outstanding principal balance of approximately $18,605).......... 1,535
Interest expense on mortgages in connection with the Harborside
acquisition on November 4, 1996 (fixed interest rate of 7.32
percent on $107,912 and initial rate of 6.99 percent on
$42,088)......................................................... 10,841
Interest expense on outstanding borrowings on the Company's credit
lines (a variable rate of 30-day LIBOR plus 125 basis points
during the period on $114,655; weighted average interest rate
used is 6.75 percent)............................................ 7,739
Interest expense on Teachers Mortgage assumed with the RM
Transaction on January 31, 1997 (fixed interest rate of 7.18
percent on $185,283)............................................. 13,303
---------
Pre-Mack Events pro forma interest expense for the year ended
December 31, 1996................................................ $ 38,285
---------
---------
</TABLE>
(e) Represents pro forma income for 1996 Events and Pre-Mack Events allocated to
the pro forma weighted average minority interest (Units) in Cali Realty L.P.
(the Operating Partnership) of 10.20 percent.
(f) Represents adjustment necessary to reflect rental income on a straight line
basis assuming that the Transaction was consummated as of January 1, 1996.
(g) Represents reduction of interest income, which was recorded in the Mack
Group Historical Financial Statements.
(h) In connection with the consummation of the Transaction, the Company
estimates that it will also recognize the following non-recurring charges
before minority interest in the Company's Statement of
17
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Operations for the period in which the Transaction is completed, which have
been excluded from the Company's pro forma operating results:
<TABLE>
<S> <C>
Expensing of previously unamortized stock compensation recorded in
connection with the Company's executive compensation plans which
will vest on an accelerated basis as a result of the consummation
of the Transaction............................................... $ 10,063
Related tax obligation payments (net of $422 previously accrued)... 4,648
Additional executive compensation and bonuses to be paid only upon
consummation of the Transaction.................................. 26,985
Amortization of the beneficial conversion feature inherent in the
Preferred Units (as an allocation to minority interest) as they
are immediately convertible into Common Units upon consummation
of the Transaction............................................... 37,196
---------
$ 78,892
---------
---------
</TABLE>
(i) Represents adjustment to reflect depreciation expense related to the Mack
Properties to be acquired by the Company based on estimated relative fair
value of buildings and improvements ($964,458) as of the date of acquisition
as follows:
<TABLE>
<CAPTION>
<S> <C>
Pro forma depreciation expense..................................................... $ 24,111
Mack Group Historical.............................................................. 28,069
---------
$ 3,958
---------
---------
</TABLE>
(j) Reflects reduction of interest expense relating to the Transaction. Proforma
interest expense is computed as follows:
<TABLE>
<CAPTION>
<S> <C>
Interest on expected assumed debt ($302,147) with an estimated weighted average
interest rate of 7.23 percent.................................................... $ 21,845
Interest on drawings on the Company's credit facilities of $38,154 at a weighted
average interest rate of 6.75 percent............................................ 2,570
---------
24,415
Mack Group Historical.............................................................. 58,621
---------
$ 34,206
---------
---------
</TABLE>
18
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(k) Represents minority interest computed as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Income before extraordinary item and minority interest................. $ 129,642
Dividend yield of 6.75 percent on the preferred units with a par value
of $249,656............................................................ $ 16,852
Income allocable to common stockholders in the Company and unitholders
in the Operating Partnership........................................... $ 112,790
----------
Allocation to minority interest based upon weighted average percentage
of Common Units outstanding of 14.00 percent, respectively............. 15,792
---------
Minority interest...................................................... 32,644
Pre-Mack Events pro forma.............................................. 8,023
---------
$ 24,621
---------
---------
</TABLE>
(l) The following is a reconciliation of the historical primary weighted average
shares outstanding to the pro forma weighted average shares outstanding
(shares in thousands):
<TABLE>
<CAPTION>
<S> <C>
Historical weighted average shares outstanding..................................... 18,461
Shares issued in connection with the the November 1996 offering.................... 17,538
Issued in connection with the August 1996 offering................................. 3,450
Adjustment for period of year during which shares issued with the 1996 offerings
were outstanding................................................................... (3,248)
Shares issued in connection with the 1997 Offering................................. 13,000
Vesting of 199 shares on an accelerated basis as a result of the Transaction....... 199
---------
Pro forma weighted average shares outstanding...................................... 49,400
---------
---------
</TABLE>
(m) Fully-diluted pro forma income before extraordinary item per share is not
presented since common stock equivalents and the Preferred Units are not
dilutive.
(n) See following Estimated Pro Forma Results for Permited Transaction
Alternatives.
19
<PAGE>
CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ESTIMATED PRO FORMA RESULTS FOR PERMITTED TRANSACTION ALTERNATIVES
Consummation of the transaction is conditioned upon, among other things, the
receipt by Mack of certain partner, tenant and third party consents. To the
extent Mack cannot obtain such consents, Mack may eliminate certain properties
from the Transaction. Such eliminated properties are not to exceed 20 percent of
the aggregate value of the Mack properties.
If the maximum amount of such properties (20 percent) were excluded from the
Transaction, estimated pro forma total assets, total liabilities, minority
interest and stockholders' equity as of June 30, 1997 may approximate
$2,387,937, $806,404, $416,414 and $1,165,119, respectively. Under the
Agreement, a reduction in the purchase price due to exclusion of properties is
allocated to (1) reduce debt assumed by the greater of 26 percent of the
allocated purchase price for such property or the outstanding debt on such
property to be assumed (assumed to be 26 percent for this pro forma), (2) reduce
cash paid up to $79,904, subject to certain elections by Mack to lower the cash
reduction and take fewer Preferred and Common Units ($79,904 cash reduction
assumed for this pro forma) and (3) reduce cash paid, Preferred and Common Units
by 51.5 percent, 32.3 percent and 16.2 percent of the remaining price reduction.
In this situation, estimated total revenues, income before minority interest,
net income and net income per common share may be $189,673, $68,641, $53,138 and
$1.07, respectively for the six months ended June 30, 1997 and $366,867,
$127,361, $97,558 and $1.97, respectively for the year ended December 31, 1996.
Also, as described in the Agreement, Mack may elect to further reduce the
amount of cash consideration, in exchange for additional debt assumption, up to
$60,429. Such a situation would result in lower borrowings under the Company's
credit facility.
20
