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) January 31, 1997
Cali Realty Corporation
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(Exact name of registrant as specified in its charter)
Maryland 1-13274 22-3305147
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(state or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification Number)
11 Commerce Drive, Cranford , New Jersey 07016
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Registrant's telephone number, including area code (908) 272-8000
N/A
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(Former name or former address, if changed since last report)
<PAGE>
Item 2 - Acquisition or Disposition of Assets
Item 2 is amended and restated in its entirety as follows.
On January 31, 1997, Cali Realty Corporation and subsidiaries (the "Company")
acquired 65 properties (the "RM Properties") of the Robert Martin Company LLC
and affiliates ("RM"), for a total cost of approximately $450.0 million. The
cost of the transaction (the "RM Acquisition") was financed through the
assumption of $185.3 million in mortgage indebtedness, approximately $220.0
million in cash, substantially all of which was obtained from the Company's cash
reserves, and the issuance of 1,401,225 units (the "Units") in Cali Realty LP,
(the "Operating Partnership").
In connection with the RM Acquisition, the Company assumed a $185.3 million
non-recourse mortgage held by Teachers Insurance and Annuity Association of
America ("TIAA"), with interest only payable monthly at a fixed annual rate of
7.18 percent (the "TIAA Mortgage"). The TIAA Mortgage is secured and cross-
collateralized by 43 of the RM Properties and matures on December 31, 2003. The
Company, at its option, may convert the TIAA Mortgage to unsecured debt upon
achievement by the Company of an investment credit rating of Baa3/BBB- or
better. The TIAA Mortgage is prepayable in whole or in part subject to certain
provisions, including yield maintenance.
The RM Properties consist of 16 office properties (the "RM Office Properties"),
38 office/flex properties (the "RM Office/Flex Properties"), six
industrial/warehouse properties (the "RM Industrial/Warehouse Properties"), two
stand-alone retail properties, two land leases, and a multi-family residential
property. The RM Properties are located primarily in established business parks
in Westchester County, New York and Fairfield County, Connecticut. The Company
has agreed not to sell certain of the RM Properties for a period of seven years
without the consent of the RM principals, except for sales made under certain
circumstance and/or conditions.
In connection with the RM Acquisition, the Company was granted a three-year
option to acquire a 115,000 square foot office property and an 84,000 square
foot office/flex property (the "Option Properties") for an aggregate minimum
price of $19 million and has granted RM the right to put such properties to the
Company between a range of an aggregate purchase price of $11.6 to $21.3
million, under certain conditions. The purchase prices, under the agreement, are
subject to adjustment based on different formulas and are payable in cash or
Units.
In addition, the Company provided an $11.6 million non-recourse mortgage loan
("Mortgage Receivable") to entities controlled by the RM principals, bearing
interest at an annual rate of 450 basis points over the one-month London
Inter-bank Offered Rate (LIBOR). The Mortgage Receivable, which is secured by
the Option Properties and guaranteed by certain of the RM principals, matures on
February 1, 2000. In addition, the Company received a three percent origination
fee in connection with the Mortgage Receivable.
Additionally, RM has made certain customary representations and warranties to
the Company, most of which survive the closing for a period of one year. RM has
agreed to maintain a minimum net worth of $25 million during such period.
As part of the transaction, Brad W. Berger, President and Chief Executive
Officer of RM, and Timothy M. Jones, Chief Operating Officer of RM, joined the
Company as Executive Vice Presidents under three-year employment agreements.
Berger and Jones were each issued warrants to purchase 170,000 shares of the
Company's common stock at a stock price of $33 per share, which vest equally
over a three-year period and expire on January 31, 2007.
<PAGE>
Robert F. Weinberg, co-founder of RM, and Mr. Berger will serve on the Company's
Board of Directors for an initial term of three years. The Company will also
appoint two additional independent Board members, thereby increasing the size of
the Board from nine to thirteen members.
Following the transaction, the Company's portfolio consists of 123 properties,
aggregating appoximately 11.4 million square feet of office, office/flex,
industrial/warehouse and retail properties, including two multi-family
residential properties and two land leases, located in New Jersey, New York,
Pennsylvania and Connecticut.
The RM Acquisition was pursuant to an agreement for the sale and purchase of the
RM Properties between the selling entity and the Company. The factors considered
by the Company in determining the price to be paid included their historical and
expected cash flow, nature of the tenants and terms of leases in place,
occupancy rates, opportunities for alternative and new tenancies, current
operating costs and real estate taxes on the properties and anticipated changes
therein under Company ownership, the physical condition and locations of the
properties, the anticipated effect on the Company's financial results (including
particularly funds from operations) and the ability to sustain and potentially
increase its distributions to Company stockholders, and other factors. The
Company took into consideration capitalization rates at which it believes other
comparable properties had recently sold, but determined the price it was willing
to pay primarily on the factors discussed above relating to the properties
themselves and their fit with the Company's operations. No separate independent
appraisals were obtained in connection with the RM Acquisition by the Company.
The Company, after investigation of the RM Properties, is not aware of any
material factors, other than those enumerated above, that would cause the
financial information reported not to be necessarily indicative of future
operating results.
Item 7, Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements
Audited Combined Financial Statements of the Robert Martin Group for the
three years in the period ended December 31, 1996.
(b) Pro Forma Financial Information (unaudited)
Unaudited pro forma financial information for the Company is presented as
follows:
o Condensed consolidated balance sheet as of December 31, 1996.
o Condensed consolidated statement of operations for the year ended
December 31, 1996.
<PAGE>
RM Properties: Property Tables
The following tables set forth certain historical information relating to each
of the RM Office Properties, the RM Office/Flex Properties and the
Industrial/Warehouse properties which were owned 100 percent by RM as of
December 31, 1996.
<TABLE>
<CAPTION>
Percentage
of 1996
Total Office,
Percentage Office/Flex
Net Leased 1996 and
Rentable as of Base Industrial/Warehouse
Property Year Area 12/31/96 Rent Base Rent
Location Built (Sq. Ft.) (%)(1) ($000)(2) (%)
- -------- ----- --------- ---------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
RM Office Properties
ELMSFORD,
WESTCHESTER COUNTY, NY
100 Clearbrook Road(6) .... 1975 60,000 93.8 776 1.32
101 Executive Boulevard ... 1971 50,000 94.3 893 1.52
570 Taxter Road ........... 1972 75,000 94.2 1,483 2.52
HAWTHORNE,
WESTCHESTER COUNTY, NY
1 Skyline Drive ........... 1980 20,400 50.0 134 0.23
2 Skyline Drive ........... 1987 30,000 100.0 420 0.71
17 Skyline Drive .......... 1989 85,000 100.0 1,130 1.92
30 Saw Mill River Road .... 1982 248,400 100.0 4,471 7.59
<PAGE>
<CAPTION>
1996 Tenants Leasing
Average 10% or More
Base Rent of Net
per Rentable Area
Property Sq. Ft. per Property
Location ($)(3) as of 12/31/96(4)
- -------- --------- -----------------
<S> <C> <C>
RM Office Properties
ELMSFORD,
WESTCHESTER COUNTY, NY
100 Clearbrook Road(6) .... 13.79 ANS (34%)
101 Executive Boulevard ... 18.92 Pennysaver Group (18%),
MCS Business Machines(11%),
Alcone Sim's O'Brien (12%)
570 Taxter Road ........... 20.99 Connecticut General (15%)
HAWTHORNE,
WESTCHESTER COUNTY, NY
1 Skyline Drive ........... 13.11 Childtime Childcare (50%)
2 Skyline Drive ........... 13.99 MW Samara (41%),
Perinin Construction (30%),
Boykoff & Bell (13%)
17 Skyline Drive .......... 13.29 International Business
Machines ("IBM") (100%)
30 Saw Mill River Road .... 18.00 IBM (100%)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of 1996
Total Office,
Percentage Office/Flex
Net Leased 1996 and
Rentable as of Base Industrial/Warehouse
Property Year Area 12/31/96 Rent Base Rent
Location Built (Sq. Ft.) (%)(1) ($000)(2) (%)
- -------- ----- --------- ---------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
RM Office Properties(cont.)
YONKERS,
WESTCHESTER COUNTY, NY
1 Executive Boulevard ..... 1982 112,000 82.5 1,958 3.32
3 Executive Boulevard ..... 1987 58,000 95.0 1,100 1.87
TARRYTOWN,
WESTCHESTER COUNTY, NY
200 White Plains Road ..... 1982 89,000 91.3 1,588 2.69
220 White Plains Road...... 1984 89,000 96.2 1,772 3.01
WHITE PLAINS,
WESTCHESTER COUNTY, NY
1 Barker Avenue ........... 1975 68,000 100.0 1,461 2.48
3 Barker Avenue ........... 1983 65,300 98.9 1,216 2.06
1 Water Street ............ 1979 45,700 100.0 874 1.48
11 Martine Avenue ......... 1987 180,000 100.0 4,224 7.17
50 Main Street ............. 1985 309,000 96.7 7,039 11.95
--------- ----- ------- ------
Total RM Office Properties 1,584,800 95.9 $30,539 51.84
--------- ----- ------- ------
<PAGE>
<CAPTION>
1996 Tenants Leasing
Average 10% or More
Base Rent of Net
per Rentable Area
Property Sq. Ft. per Property
Location ($)(3) as of 12/31/96(4)
- -------- --------- -----------------
<S> <C> <C>
RM Office Properties(cont.)
YONKERS,
WESTCHESTER COUNTY, NY
1 Executive Boulevard ..... 21.19 Wise/Contact US (14%)
3 Executive Boulevard ..... 19.97 GMAC/MIC (47%),
Metropolitan Life (22%)
TARRYTOWN,
WESTCHESTER COUNTY, NY
200 White Plains Road ..... 19.53 Independent Health (28%),
Allmerica Finance (17%),
NYS Dept. of
Environmental Services(13%)
220 White Plains Road...... 20.70 Stellare Management (11%)
WHITE PLAINS,
WESTCHESTER COUNTY, NY
1 Barker Avenue ........... 21.49 O'Connor, McGuinn (19%),
United Skys
Realty Corp. (19%)
3 Barker Avenue ........... 18.82 Bernard C. Harris (56%)
1 Water Street ............ 19.13 Trigen Energy (37%),
Stewart Title (15%)
11 Martine Avenue ......... 23.47 KPMG Peat Marwick (14%),
McCarthy Fingar (11%),
David Worby (11%)
50 Main Street ............. 23.57 National Economic
----- Research Assoc. (10%)
Total RM Office Properties 20.10
-----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of 1996
Total Office,
Percentage Office/Flex
Net Leased 1996 and
Rentable as of Base Industrial/Warehouse
Property Year Area 12/31/96 Rent Base Rent
Location Built (Sq. Ft.) (%)(1) ($000)(2) (%)
- -------- ----- --------- ---------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
RM Office/Flex Properties
ELMSFORD,
WESTCHESTER COUNTY, NY
1 Westchester Plaza ..... 1967 25,000 100.0 282 0.48
2 Westchester Plaza ..... 1968 25,000 100.0 387 0.66
3 Westchester Plaza ..... 1969 93,500 100.0 1,088 1.85
4 Westchester Plaza ...... 1969 44,700 86.6 520 0.88
5 Westchester Plaza ...... 1969 20,000 100.0 229 0.39
6 Westchester Plaza ...... 1968 20,000 76.5 196 0.33
7 Westchester Plaza ...... 1972 46,200 100.0 619 1.05
8 Westchester Plaza ...... 1971 67,200 68.5 711 1.21
<PAGE>
<CAPTION>
1996 Tenants Leasing
Average 10% or More
Base Rent of Net
per Rentable Area
Property Sq. Ft. per Property
Location ($)(3) as of 12/31/96(4)
- -------- --------- -----------------
<S> <C> <C>
RM Office/Flex Properties
ELMSFORD,
WESTCHESTER COUNTY, NY
1 Westchester Plaza ..... 11.30 KCI Therapeutic (40%),
Thin Film Concepts (20%),
RS Knapp(20%),
American Greeting (20%)
2 Westchester Plaza ..... 15.50 Board of Cooperation (78%),
Kin-Tronics (12%),
Squires Production (10%)
3 Westchester Plaza ..... 11.63 Apria Healthcare (32%),
Kangol Headware (27%),
V-Band Corp. (16%),
Dental Concepts (12%)
4 Westchester Plaza ...... 13.43 Metropolitan Life (38%),
EEV Inc. (34%)
5 Westchester Plaza ...... 11.45 Kramer Scientific (26%),
Rokonet Industries (25%),
UA Plumbers Education
(25%), Furniture
Etc. (13%), Fujitsu (13%)
6 Westchester Plaza ...... 12.80 Xerox (27%), Signacon
Control (27%), PC Technical
(23%), Girard Rubber
Co. (12%)
7 Westchester Plaza ...... 13.41 Emigrant Savings (56%),
Fire-End Croker (22%),
Health Maintenance (10%)
8 Westchester Plaza ...... 15.46 Westchester Library (19%),
Mamiya America (16%),
Self Powered
Lighting (13%)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of 1996
Total Office,
Percentage Office/Flex
Net Leased 1996 and
Rentable as of Base Industrial/Warehouse
Property Year Area 12/31/96 Rent Base Rent
Location Built (Sq. Ft.) (%)(1) ($000)(2) (%)
- -------- ----- --------- ---------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
RM Office/Flex Properties(cont.)
ELMSFORD,
WESTCHESTER COUNTY, NY(cont.)
11 Clearbrook Road ....... 1974 31,800 100.0 267 0.45
75 Clearbrook Road ....... 1990 32,720 100.0 665 1.13
150 Clearbrook Road ...... 1975 74,900 100.0 939 1.59
175 Clearbrook Road ...... 1973 98,900 97.6 1,191 2.02
200 Clearbrook Road ...... 1974 94,000 100.0 946 1.61
250 Clearbrook Road ...... 1973 155,000 84.1 1,206 2.05
50 Executive Boulevard ... 1969 45,200 98.1 386 0.66
77 Executive Boulevard ... 1977 13,000 100.0 169 0.29
85 Executive Boulevard ... 1968 31,000 100.0 287 0.49
<PAGE>
<CAPTION>
1996 Tenants Leasing
Average 10% or More
Base Rent of Net
per Rentable Area
Property Sq. Ft. per Property
Location ($)(3) as of 12/31/96(4)
- -------- --------- -----------------
<S> <C> <C>
RM Office/Flex Properties(cont.)
ELMSFORD,
WESTCHESTER COUNTY, NY(cont.)
11 Clearbrook Road ....... 8.41 Eastern Jungle (27%),
Treetops Inc. (21%)
MCS Marketing (18%),
Creative Medical (14%),
Puig Perfumes (14%)
75 Clearbrook Road ....... 20.33 Evening Out (100%)
150 Clearbrook Road ...... 12.54 Court Sports I(24%),
Philips Medical (18%),
Transwestern Pub (12%)
175 Clearbrook Road ...... 12.34 Midland Avenue (35%),
Hypres (12%)
200 Clearbrook Road ...... 10.06 Midland Avenue (22%),
Proftech Corp. (20%),
IR Industries (18%),
Wyse Technology (14%)
250 Clearbrook Road ...... 9.25 AFP Imaging (42%),
The Artina Group (14%)
50 Executive Boulevard ... 8.71 MMO Music Group (69%),
Medical Billing (22%)
77 Executive Boulevard ... 13.03 Bright Horizons (55%),
WNN Corporation (35%)
85 Executive Boulevard ... 9.25 Vrex Inc. (49%), Westhab
Inc,. (18%), Saturn II
Systems (11%), John
Caulfields (13%)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of 1996
Total Office,
Percentage Office/Flex
Net Leased 1996 and
Rentable as of Base Industrial/Warehouse
Property Year Area 12/31/96 Rent Base Rent
Location Built (Sq. Ft.) (%)(1) ($000)(2) (%)
- -------- ----- --------- ---------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
RM Office/Flex Properties(cont.)
ELMSFORD,
WESTCHESTER COUNTY, NY(cont.)
300 Executive Blvd ....... 1970 60,000 100.0 514 0.87
350 Executive Blvd ....... 1970 15,400 100.0 238 0.40
399 Executive Blvd ....... 1962 80,000 100.0 926 1.57
400 Executive Blvd ....... 1970 42,200 100.0 550 0.93
500 Executive Blvd ....... 1970 41,600 100.0 566 0.96
525 Executive Blvd ....... 1972 61,700 100.0 752 1.28
HAWTHORNE,
WESTCHESTER COUNTY, NY
4 Skyline Drive ........... 1987 80,600 100.0 1,082 1.84
8 Skyline Drive ........... 1985 50,000 100.0 487 0.83
10 Skyline Drive .......... 1985 20,000 81.0 215 0.36
<PAGE>
<CAPTION>
1996 Tenants Leasing
Average 10% or More
Base Rent of Net
per Rentable Area
Property Sq. Ft. per Property
Location ($)(3) as of 12/31/96(4)
- -------- --------- -----------------
<S> <C> <C>
RM Office/Flex Properties(cont.)
ELMSFORD,
WESTCHESTER COUNTY, NY(cont.)
300 Executive Blvd ....... 8.57 Varta Batteries (44%),
Princeton Ski Outlet (43%),
LMG International (12%)
350 Executive Blvd ....... 15.45 Ikon Office (100%)
399 Executive Blvd ....... 11.57 American Banknote (72%),
Kaminstein Imports (28%)
400 Executive Blvd ....... 13.03 Singer Holding Corp. (38%),
North American Van
Lines (24%)
500 Executive Blvd ....... 13.61 Original Consurmer (36%),
Dover Elevator (16%),
CommerceOverseas(16%),
Charles Martine (13%),
Olsten Home Health (13%)
525 Executive Blvd ....... 12.18 Vie de France (57%),
New York Blood Center
(21%)
HAWTHORNE,
WESTCHESTER COUNTY, NY
4 Skyline Drive ........... 13.43 GEC Alsthom (50%),
RMI Direct Marketing (10%)
8 Skyline Drive ........... 9.75 Cityscape (34%),
Reveco Inc. (29%),
Stratasys Inc. (12%)
10 Skyline Drive .......... 13.27 DX Communications (65%),
Galson Corp. (17%)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of 1996
Total Office,
Percentage Office/Flex
Net Leased 1996 and
Rentable as of Base Industrial/Warehouse
Property Year Area 12/31/96 Rent Base Rent
Location Built (Sq. Ft.) (%)(1) ($000)(2) (%)
- -------- ----- --------- ---------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
RM Office/Flex Properties(cont.)
HAWTHORNE,
WESTCHESTER COUNTY, NY(cont.)
11 Skyline Drive .......... 1989 45,000 100.0 679 1.15
15 Skyline Drive .......... 1989 55,000 100.0 902 1.53
200 Saw Mill River Road ... 1965 51,100 100.0 611 1.04
YONKERS,
WESTCHESTER COUNTY, NY
100 Corporate Boulevard ... 1987 78,000 100.0 1,260 2.14
4 Executive Plaza ......... 1986 80,000 83.6 704 1.19
6 Executive Plaza ......... 1987 80,000 100.0 962 1.63
1 Odell Plaza ............. 1980 106,000 98.2 1,099 1.87
5 Odell Plaza ............. 1983 38,400 100.0 439 0.74
7 Odell Plaza............. 1984 42,600 100.0 587 1.00
<PAGE>
<CAPTION>
1996 Tenants Leasing
Average 10% or More
Base Rent of Net
per Rentable Area
Property Sq. Ft. per Property
Location ($)(3) as of 12/31/96(4)
- -------- --------- -----------------
<S> <C> <C>
RM Office/Flex Properties(cont.)
HAWTHORNE,
WESTCHESTER COUNTY, NY(cont.)
11 Skyline Drive .......... 15.09 Cube Computer (40%), Steri
Pharmacy (19%), Bowthorpe
Holdings (18%), Planned
Parenthood (11%)
15 Skyline Drive .......... 16.40 U.P.S. (61%), Emisphere
Technology (23%), Minolta
Copier (16%)
200 Saw Mill River Road ... 11.96 Walter Degruyter (21%),
Xerox (17%), Argents Air
Express(12%), SI Industrial
(10%), AAR Hardware (10%)
YONKERS,
WESTCHESTER COUNTY, NY
100 Corporate Boulevard ... 16.15 Bank of New York (28%),
Montefore (19%), Xerox
(13%), Quality Lifestyle
(12%), Medigene (11%)
4 Executive Plaza ......... 10.52 O K Industries (43%),
Minami International (11%)
6 Executive Plaza ......... 12.02 Cablevision System (39%),
KVL Audio Visual (12%),
Empire Managed (10%)
1 Odell Plaza ............. 10.55 Court Sports II (19%),
Gannett Satellite (11%),
Crown Trophy (10%)
5 Odell Plaza ............. 11.42 Voyetra Technology (45%),
Photo Fili Inc. (34%),
Premier Pharmacy (22%)
7 Odell Plaza............. 13.78 US Post Office (41%),
Bright Horizons (16%),
TT Systems Corp. (12%),
CP Bourg (12%)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of 1996
Total Office,
Percentage Office/Flex
Net Leased 1996 and
Rentable as of Base Industrial/Warehouse
Property Year Area 12/31/96 Rent Base Rent
Location Built (Sq. Ft.) (%)(1) ($000)(2) (%)
- -------- ----- --------- ---------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
RM Office/Flex Properties(cont.)
STAMFORD,
FAIRFIELD COUNTY, CT
419 West Avenue ........... 1986 88,000 100.0 1,333 2.26
500 West Avenue ........... 1988 25,000 100.0 320 0.54
550 West Avenue ........... 1990 54,000 100.0 721 1.22
--------- ----- ------ -----
Total RM Office/Flex Properties 2,112,720 96.3 25,035 42.49
--------- ----- ------ -----
<PAGE>
<CAPTION>
1996 Tenants Leasing
Average 10% or More
Base Rent of Net
per Rentable Area
Property Sq. Ft. per Property
Location ($)(3) as of 12/31/96(4)
- -------- --------- -----------------
<S> <C> <C>
RM Office/Flex Properties(cont.)
STAMFORD,
FAIRFIELD COUNTY, CT
419 West Avenue ........... 15.15 Smith Industries (81%)
500 West Avenue ........... 12.80 TNT Skypac (26%), Stamford
Associates (26%), Lead
Trackers(21%), Delecor USA
(17%), M. Cohen & Sons (11%)
550 West Avenue ........... 13.35 Lifecodes Corp. (44%),
----- Davidoff of Geneva (39%)
Total RM Office/Flex Properties 12.31
-----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percentage
of 1996
Total Office,
Percentage Office/Flex
Net Leased 1996 and
Rentable as of Base Industrial/Warehouse
Property Year Area 12/31/96 Rent Base Rent
Location Built (Sq. Ft.) (%)(1) ($000)(2) (%)
- -------- ----- --------- ---------- --------- --------------------
<S> <C> <C> <C> <C> <C>
Industrial/Warehouse Properties
ELMSFORD,
WESTCHESTER COUNTY, NY
1 Warehouse Lane .......... 1957 6,600 100.0 42 0.07
2 Warehouse Lane .......... 1957 10,900 95.9 109 0.19
3 Warehouse Lane .......... 1957 77,200 100.0 249 0.42
4 Warehouse Lane .......... 1957 195,500 80.0 1,758 2.99
5 Warehouse Lane .......... 1957 75,100 100.0 737 1.25
6 Warehouse Lane .......... 1982 22,100 100.0 445 0.75
------- ----- ----- ----
Total Industrial/Warehouse Prop. 387,400 89.8 3,340 5.67
------- ----- ----- ----
Total RM Office, Office/Flex
and Industrial/Warehouse
Properties 4,084,920 95.5 58,914 100.00
========= ===== ====== ======
<PAGE>
<CAPTION>
1996 Tenants Leasing
Average 10% or More
Base Rent of Net
per Rentable Area
Property Sq. Ft. per Property
Location ($)(3) as of 12/31/96(4)
- -------- --------- -----------------
<S> <C> <C>
Industrial/Warehouse Properties
ELMSFORD,
WESTCHESTER COUNTY, NY
1 Warehouse Lane .......... 6.38 JP Trucking Service(100%)
2 Warehouse Lane .......... 10.48 RJ Bruno Roofing (55%),
Savin Engineering (41%)
3 Warehouse Lane .......... 3.23 United Parcel Service, Inc. (100%)
4 Warehouse Lane .......... 11.24 San Mar Laboratory (55%),
Marcraft Clothes (18%),
2 Westchester Medical
(11%)
5 Warehouse Lane .......... 9.82 Metbev Inc. (42%), E&H
Tire Buying (19%),
Backstage Exclusive Knitwear
(16%), Conway Import Co.(10%)
6 Warehouse Lane .......... 20.12 Conway General (96%)
-----
Total RM Industrial/
Warehouse Properties .... 9.60
----
Total RM Office, Office/Flex
and Industrial/Warehouse
Properties .............. 15.10
-----
See footnotes on subsequent page.
</TABLE>
<PAGE>
- -------------------------
(1) Based on all leases in effect as of December 31, 1996.
(2) Total base rent for RM, as recorded in 1996, determined in accordance with
Generally Accepted Accounting Principles ("GAAP"). Substantially all of the
leases provide for annual base rents plus recoveries and escalation charges
based upon the tenant's proportionate share of and/or increases in real
estate taxes and certain operating costs, as defined, and the pass through
of charges for electrical usage.
(3) Base rent for 1996 divided by net rentable square feet leased at December
31, 1996.
(4) Excludes office space leased by RM as of December 31, 1996.
<PAGE>
Retail Properties.
The Company obtained two stand-alone retail properties in the RM Acquisition,
described as follows:
The Company acquired an 8,000 square foot restaurant, constructed in 1986,
located in the South Westchester Executive Park in Yonkers, Westchester County,
New York. The restaurant is 100 percent leased to Magic at Yonkers, Inc. for use
as a Red Robin restaurant under a 25-year lease. The lease currently provides
for fixed annual rent of $230,000, with fully-reimbursed real estate taxes, and
operating expenses escalated based on CPI over a base year CPI. The lease, which
expires on June 30, 2012, includes scheduled rent increases in July 1997 to
approximately $265,000 annually, and in July 2002 to approximately $300,000
annually. The lease also provides for additional rent calculated as a percentage
of sales over a specified sales amount, as well as for two five-year renewal
options. 1996 base rental revenue, calculated in accordance with GAAP, to RM was
approximately $198,000.
The Company also acquired a 9,300 square foot restaurant, constructed in 1984,
located at 230 White Plains Road, Tarrytown, Westchester County, New York. The
restaurant is 100 percent leased to TGI Fridays under a 10-year lease which
provides for fixed annual rent of approximately $195,000, with fully-reimbursed
real estate taxes, and operating expenses escalated based on CPI over a base
year CPI. The lease, which expires on August 31, 2004, also provides for
additional rent calculated as a percentage of sales over a specified sales
amount, as well as for four five-year renewal options. 1996 base rental revenue,
calculated in accordance with GAAP, to RM was approximately $195,000.
Land Leases.
The Company obtained two land leases in the RM Acquisition, described as
follows:
The Company has land leased to Star Enterprises, where a 2,264 square foot
Texaco Gas Station was constructed, located at 1 Enterprise Boulevard in
Yonkers, Westchester County, New York. The 15-year, triple-net land lease
provides for annual rent of approximately $125,000 through January 1998, with an
increase to approximately $145,000 annual rent through April 30, 2005. The lease
also provides for two five-year renewal options. 1996 base rental revenue,
calculated in accordance with GAAP, to RM was approximately $135,000.
The Company also leases five acres of land to Rake Realty, where a 103,500
office building exists, located at 700 Executive Boulevard, Elmsford,
Westchester County, New York. The 22-year, triple-net land lease provides for
fixed annual rent plus a CPI adjustment every five years, and expires on
November 30, 2000. RM's 1996 base rent, calculated in accordance with GAAP,
under this lease was approximately $97,000. The lease also provides for several
renewal options which could extend the lease term for an additional 30 years.
Multi-family Residential Property.
The Company acquired a multi-family residential property, located at 25 Martine
Avenue, Yonkers, Westchester County, New York, which was completed in 1987. The
property contains 124 units, comprised of 18 studio units, 71 one-bedroom units
and 35 two-bedroom units, with an average size of approximately 722 square feet
per unit. The property had an average monthly rental rate of approximately
$1,488 per unit during 1996 and was 100.0 percent leased as of December 31,
1996. The property had 1996 total base rent of approximately $2.1 million which
represented approximately 3.5 percent of the RM Properties' 1996 total base
rent. The average occupancy rate for the property in each of 1996, 1995 and 1994
was 96.0 percent, 93.5 percent and 94.8 percent, respectively.
<PAGE>
The following table sets forth a schedule of RM's ten largest tenants as of
December 31, 1996, based upon contractual base rents for the month of December
1996 annualized.
<TABLE>
<CAPTION>
Tenant Average Percentage Lease
Tenant Leased Annualized Base Rent per of RM's Total Expir.
Name Sq.Ft. Rent Revenue($)(1) Sq.Ft.($)(2) Base Rent(%) Date
------- ------------------ ------------ ------------- --------
<S> <C> <C> <C> <C> <C>
IBM 333,399 5,703,682 17.11 8.46 12/31/00
San Mar Laboratories, Inc. 108,600 1,168,536 10.76 1.73 3/31/04
Lear Siegler Inc. 70,750 1,271,777 17.98 1.89 6/30/01
Evening Out Inc. 32,720 734,640 22.45 1.09 2/28/06
American Banknote
Holographics Inc. 58,934 729,827 12.38 1.08 12/31/07
Bernard C. Harris
Publishing Company Inc. 36,789 717,386 19.50 1.06 7/31/01
National Economic
Research Associates Inc. 31,514 677,551 21.50 1.00 4/30/01
The Conrand Stores Inc. 22,500 618,000 27.47 0.92 7/31/01
United Parcel Service Inc. 34,360 611,608 17.80 0.91 10/31/00
AFP Imaging Corp. 64,837 552,487 8.52 0.82 12/31/00
</TABLE>
- -------------------------
(1) Annual base rental revenue is based on actual December 1996 billings
annualized and is not derived from historical GAAP results. The historical
results for the 12 months ended December 31, 1996 may differ from those set
forth above.
(2) Represents tenants' annualized base rent divided by the respective tenant's
leased square feet.
<PAGE>
RM Office Properties: Schedule of Lease Expirations
The following table sets forth a schedule of the lease expirations for the RM
Office Properties beginning with 1997, assuming that none of the tenants
exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage of Rent per Net
Net Rentable Total Leased Annual Base Rentable
Area Subject Square Feet Rent Under Square Foot
Number of to Expiring Represented by Expiring Represented
Year of Leases Leases Expiring Leases By Expiring
Expiration Expiring(1) (Sq. Ft.) Leases(%)(2) ($000)(3) Leases($)
- ---------- ----------- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
1997 76 262,279 17.77 5,422 20.67
1998 51 204,357 13.85 4,473 21.89
1999 61 185,156 12.55 3,840 20.74
2000 29 468,778 31.77 8,282 17.67
2001 28 193,965 13.14 4,237 21.85
2002 10 49,716 3.37 1,034 20.79
2003 6 61,267 4.15 1,349 22.02
2004 2 5,470 0.37 124 22.62
2005 4 37,015 2.51 840 22.71
2006 1 6,108 0.41 153 25.00
2007 & Thereafter 1 1,667 0.11 31 18.50
--- --------- ------ ------ -----
Total/Weighted
Average 269 1,475,778 100.00 29,785 20.18
=== ========= ====== ====== -----
</TABLE>
- -------------------------
(1) Includes office tenants only. Excludes leases for amenity, retail, parking
and month-to-month office tenants. Some tenants have multiple leases.
(2) Excludes all space vacant as of December 31, 1996.
(3) Based upon aggregate base rent to RM, determined in accordance with GAAP,
including all leases dated on or before December 31, 1996.
<PAGE>
RM Office/Flex Properties: Schedule of Lease Expirations
The following table sets forth a schedule of the lease expirations for the RM
Office/Flex Properties, beginning with 1997, assuming that none of the tenants
exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage of Rent per Net
Net Rentable Total Leased Annual Base Rentable
Area Subject Square Feet Rent Under Square Foot
Number of to Expiring Represented by Expiring Represented
Year of Leases Leases Expiring Leases By Expiring
Expiration Expiring(1) (Sq. Ft.) Leases(%)(2) ($000)(3) Leases($)
- ---------- ----------- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
1997 37 215,598 10.70 2,528 11.73
1998 61 349,817 17.37 4,319 12.35
1999 45 290,765 14.44 3,329 11.45
2000 34 344,358 17.10 4,190 12.17
2001 41 450,701 22.38 5,481 12.16
2002 15 168,364 8.36 2,038 12.10
2003 2 31,871 1.58 422 13.23
2006 4 88,699 4.40 1,351 15.23
2007 & Thereafter 2 73,934 3.67 1,080 14.61
--- --------- ------ ------ -----
Total/Weighted
Average 241 2,014,107 100.00 24,738 12.28
=== ========= ====== ====== -----
</TABLE>
- -------------------------
(1) Includes office/flex tenants only. Excludes leases for amenity, retail,
parking and month-to-month office tenants. Some tenants have multiple
leases.
(2) Excludes all space vacant as of December 31, 1996.
(3) Based upon aggregate base rent to RM, determined in accordance with GAAP,
including all leases dated on or before December 31, 1996.
<PAGE>
RM Industrial/Warehouse Properties: Schedule of Lease Expirations
The following table sets forth a schedule of the lease expirations for the RM
Industrial/Warehouse Properties, beginning with 1997, assuming that none of the
tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage of Rent per Net
Net Rentable Total Leased Annual Base Rentable
Area Subject Square Feet Rent Under Square Foot
Number of to Expiring Represented by Expiring Represented
Year of Leases Leases Expiring Leases By Expiring
Expiration Expiring(1) (Sq. Ft.) Leases(%)(2) ($000)(3) Leases($)
- ---------- ----------- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
1997 4 31,500 9.18 272 8.65
1998 5 150,803 43.94 923 6.12
2000 2 18,504 5.39 207 11.18
2001 3 33,778 9.84 592 17.52
2004 1 108,600 31.65 1,112 10.24
--- ------- ------ ----- -----
Total/Weighted
Average 15 343,185 100.00 3,106 9.05
=== ======= ====== ===== -----
</TABLE>
- -------------------------
(1) Includes industrial/warehouse tenants only. Excludes leases for amenity,
retail, parking and month-to-month office tenants. Some tenants have
multiple leases.
(2) Excludes all space vacant as of December 31, 1996.
(3) Based upon aggregate base rent to RM, determined in accordance with GAAP,
including all leases dated on or before December 31, 1996.
<PAGE>
50 Main Street, White Plains, Westchester County, New York
As the book value of 50 Main Street, White Plains, Westchester County, New York
("50 Main") was in excess of 10 percent of RM's combined total assets at
December 31, 1996, the Company has elected to present the following additional
information regarding 50 Main.
50 Main is located in the Central Business District of White Plains in
Westchester County, New York. Built in 1985, it contains 309,000 net rentable
square feet; 20,000 square feet on the ground floor and mezzanine levels that
have been set aside for convenience shops, service businesses and restaurants,
in addition to approximately 4,000 square feet of retail store fronts. The
remaining 13 floors each contain approximately 22,000 square feet of office
space.
50 Main is adjacent to a network of transportation facilities unmatched anywhere
else in Westchester County. The White Plains Railroad Station, and both regional
and local bus terminals are located across the street. Grand Central Station is
reached in approximately 35 minutes via frequent express train service.
Automobile travel is facilitated by 1,000 on-site parking spaces and the
adjacent 3,000 car municipal garage. The building is in close proximity to the
Bronx River Parkway and Cross Westchester Expressway.
50 Main's exterior is faced with precast panels with decorative stone aggregate,
double-glazed solar bronze, butt-glazed windows and duranodic metal framing. The
lobby has two-tone granite walls with thermal granite floors. A two-story atrium
features a mezzanine served by a floating stairway from the main floor. It
houses the Robert Martin Gallery, an art gallery open to the public. There are
six 3,500 pound, 450 feet-per-minute, gearless variable voltage elevators. Two
supplementary elevators serve below ground parking areas. There are independent
self-contained HVAC units on each floor, with variable volume ducted
distribution systems. The heating system is a perimeter hot water baseboard
heating system served by central hot water boilers.
The following table sets forth certain information (on a per net rentable square
foot basis unless otherwise indicated) about 50 Main since January 1, 1992
(based upon an average of all lease transactions during the respective periods):
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1992 1993 1994 1995 1996
------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Number of leases signed during period(1) ......... 17 5 13 15 14
Rentable square footage leased during period(1) .. 60,296 19,455 40,588 55,843 88,551
Base rent($)(1)(2) ............................... 22.55 25.05 21.54 24.99 25.61
Tenant improvements($)(3) ........................ 11.91 17.95 8.34 10.89 6.65
Leasing commissions($)(4) ........................ 3.44 2.37 2.52 3.52 1.90
Other concessions($)(5) .......................... -- -- 0.60 0.07 --
Effective rent($)(6) ............................. 20.15 20.81 18.58 22.73 23.96
Expense stop($)(7) ............................... 5.84 5.91 6.33 6.46 6.46
Effective equivalent triple net rent($)(8) ....... 14.31 14.90 12.25 16.27 17.50
Occupancy rate at end of period(%)(1) ............ 78.18 87.48 99.00 99.14 98.33
</TABLE>
See footnotes on subsequent page.
<PAGE>
- -------------------------
(1) Includes only office tenants with lease terms of 12 months or longer.
Excludes leases for amenity, parking, retail and month-to-month office
tenants.
(2) Equals aggregate base rent received over their respective terms from all
lease transactions during the period, divided by the terms in months for
such leases during the period, multiplied by 12, divided by the total net
rentable square feet leased under all lease transactions during the period.
(3) Equals work letter cost net of estimated provision for profit and overhead,
or costs incurred by the Company in connection with tenant improvements
allowances per the respective lease agreement. Actual cost tenant
improvements may differ from estimated work letter costs.
(4) Equals an aggregate of leasing commissions payable to employees and third
parties based on standard commission rates and excludes negotiated
commission discounts obtained from time to time.
(5) Includes moving expenses, furniture allowances and other concessions.
(6) Equals aggregate base rent to be received over their respective terms from
all lease transactions during the period minus all tenant improvements,
leasing commissions and other concessions from all lease transactions
during the period, divided by the terms in months for such leases,
multiplied by 12, divided by the total net rentable square feet leased
under all lease transactions during the period.
(7) Equals the aggregate of each base year tax and common area maintenance
expense pool multiplied by the respective pro rata share for all lease
transactions during the period, divided by the total net rentable square
feet leased under all lease transactions during the period.
(8) Equals effective rent minus expense stop.
<PAGE>
The following table sets forth the average percentage leased and average annual
rental per leased square foot (excluding storage space) for the past five years
for 50 Main.
<TABLE>
<CAPTION>
Average Average Annual
Percentage Rental per Leased
Year Leased(%)(1) Square Foot($)(2)
---- ------------ ------------------
<S> <C> <C>
1996 98.7 23.07
1995 99.1 22.04
1994 93.5 21.42
1993 83.6 21.41
1992 88.1 25.21
</TABLE>
- -------------------------
(1) Average of beginning and end of year aggregate percentage leased.
(2) Total base rents for the year, determined in accordance with GAAP, divided
by average of beginning and end of year aggregate net rentable area leased.
A tenant at 50 Main occupied approximately 10 percent of the net rentable square
feet in the aggregate at December 31, 1996. As of December 31, 1996, National
Economic Research Assoc. ("NER"), an economics consulting firm, occupied 31,514
square feet, pursuant to a lease which expires April 2001, with a five-year
renewal option. Total rental income to RM (including escalations and recoveries
from tenants) from NER in 1996 was approximately $787,000 (excluding lobby and
storage space). NER also has options to expand its square feet leased at 50 Main
by up to 12,900 square feet.
<PAGE>
The following table sets forth a schedule of the lease expirations for 50 Main,
assuming that none of the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average
Annual Rent
Percentage of Per Net
Total Leased Annual Base Rentable
Net Rentable Square Feet Rent Under Square Foot
Number of Area Subject Represented Expiring Represented
Year of Leases to Expiring By Expiring Leases By Expiring
Expiration Expiring(1) Leases (Sq. Ft.) Leases(%)(2) ($000)(3) Leases($)
- ----------------- ----------- ---------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1997 ............. 16 57,602 19.47 1,311 22.76
1998 ............. 9 31,358 10.60 706 22.52
1999 ............. 12 44,278 14.96 1,048 23.66
2000 ............. 3 6,670 2.25 163 24.43
2001 ............. 7 91,570 30.94 2,178 23.79
2002 ............. 1 1,500 0.51 22 14.67
2003 ............. 4 37,957 12.83 798 21.02
2005 ............. 3 17,215 5.82 394 22.91
2006 ............. 1 6,108 2.06 153 25.00
2007 and Thereafter 1 1,667 0.56 31 18.50
-- ------- ----- ------ -----
Total/Weighted
Average....... 57 295,925 100.00 6,804 22.99
== ======= ====== ===== -----
</TABLE>
- -------------------------
(1) Includes office tenants only. Excludes leases for amenity, retail, parking
and month-to-month office tenants. Some tenants have multiple leases.
(2) Excludes all space vacant as of December 31, 1996.
(3) Based upon aggregate base rent, determined in accordance with GAAP,
including all leases dated on or before December 31, 1996.
The aggregate tax basis of depreciable real property at 50 Main for federal
income tax purposes was approximately $11.4 million as of December 31, 1996.
Depreciation and amortization is computed using the allowable straight-line
methods over the estimated useful life of the real property which range from 19
to 40 years.
<PAGE>
CALI REALTY CORPORATION
Index to Financial Statements
- --------------------------------------------------------------------------------
ROBERT MARTIN GROUP:
Audited Combined Financial Statements
for the three years ended December 31, 1996
Notes to Combined Financial Statements
CALI REALTY CORPORATION:
Pro Forma (unaudited):
Condensed Consolidated Balance Sheet as of December 31, 1996
Condensed Consolidated Statement of Operations for the
year ended December 31, 1996
<PAGE>
Robert Martin Group
Combined Financial Statements
December 31, 1996, 1995 and 1994
<PAGE>
Robert Martin Group
Combined Financial Statements
Years Ended December 31, 1996, 1995, and 1994
Contents
Report of Independent Auditors
Audited Financial Statements
Combined Balance Sheets
Combined Statements of Operations
Combined Statements of Owners' Deficit
Combined Statements of Cash Flows
Notes to Financial Statements
<PAGE>
Report of Independent Auditors
To the Owners of
Robert Martin Group
We have audited the accompanying combined balance sheets of Robert Martin Group
(the "Company"), a non-legal entity more fully described in note 2 as of
December 31, 1996 and 1995, and the related combined statements of operations,
owners' deficit and cash flows for the three years ended December 31, 1996.
These combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Robert Martin Group
as of December 31, 1996 and 1995, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
--------------------
Ernst & Young LLP
New York, New York
February 21, 1997
<PAGE>
<TABLE>
<CAPTION>
Robert Martin Group
Combined Balance Sheets
(amounts in thousands)
December 31,
1996 1995
--------- ---------
<S> <C> <C>
Assets
Rental property (Notes 3 and 4)
Land and improvements ............................ $ 33,749 $ 33,749
Building and improvements ........................ 267,112 266,942
Tenant improvements .............................. 99,768 95,737
Furniture, fixtures and equipment ................ 14 44
--------- ---------
400,643 396,472
Less - accumulated depreciation and amortization ..... (162,459) (150,716)
--------- ---------
Total rental property ................................ 238,184 245,756
Cash and cash equivalents ............................ 5,801 3,871
Unbilled rents receivable (Note 5) ................... 7,119 8,319
Deferred charges, net and other assets (Note 6) ...... 6,395 6,252
Restricted cash ...................................... 15,554 12,936
Receivables, net of allowance for doubtful accounts of
$566 and $926, respectively (Note 5) .............. 285 1,671
Related party receivable (Notes 4 and 8) ............. 5,691 4,600
--------- ---------
Total assets ......................................... $ 279,029 $ 283,405
========= =========
Liabilities and owners' deficit
Mortgage loans payable (Note 4) ...................... $ 389,684 $ 390,554
Deferred interest (Note 4) ........................... 27,747 24,940
Accounts payable and accrued expenses ................ 4,082 4,358
Rents in advance and security deposits ............... 6,360 6,426
Accrued interest payable ............................. 2,330 2,392
Other liabilities .................................... 2,151 80
--------- ---------
Total liabilities .................................... 432,354 428,750
Commitments and contingencies (Notes 4, 5, 7, and 9) . -- --
Owners' deficit ...................................... (153,325) (145,345)
--------- ---------
Total liabilities and owners' deficit ................ $ 279,029 $ 283,405
========= =========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Robert Martin Group
Combined Statements of Operations
(amounts in thousands)
Years Ended December 31,
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Revenues
Base rent .............................. $ 61,673 $ 59,188 $ 60,505
Escalations and recoveries from tenants 5,483 5,810 4,369
Parking and other income ............... 4,393 5,251 5,243
Interest income (Note 4) ............... 734 504 405
-------- -------- --------
Total revenues ............................. 72,283 70,753 70,522
-------- -------- --------
Expenses
Real estate taxes .................... 9,870 10,335 10,518
Utilities ............................ 4,943 4,478 4,780
Operating services ................... 9,876 8,686 8,846
General and administrative expenses .. 3,910 4,176 2,987
Depreciation and Amortization ........ 15,079 16,641 18,011
Interest expense (Note 4) ............ 32,772 28,278 34,133
Ground rent .......................... 87 116 116
-------- -------- --------
Total expenses ............................. 76,537 72,710 79,391
-------- -------- --------
Net loss ................................... $ (4,254) $ (1,957) $ (8,869)
======== ======== ========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Robert Martin Group
Combined Statements of Owners' Deficit
Years Ended December 31, 1996, 1995 and 1994
(amounts in thousands)
<S> <C>
Balance at January 1, 1994 ............................... $(137,426)
Owners' contributions .................................... 8,504
Owners' distributions .................................... (1,382)
Net loss ................................................. (8,869)
---------
Balance at December 31, 1994 ............................. (139,173)
Owners' contributions .................................... 243
Owners' distributions .................................... (4,458)
Net loss ................................................. (1,957)
---------
Balance at December 31, 1995 ............................. (145,345)
Owners' contributions .................................... 4,956
Owners' distributions .................................... (8,682)
Net loss ................................................. (4,254)
---------
Balance at December 31, 1996 ............................. $(153,325)
=========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Robert Martin Group
Combined Statements of Cash Flows
(amounts in thousands)
Years Ended December 31,
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Operating activities
Net loss ................................................................... $ (4,254) $ (1,957) $ (8,869)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization .......................................... 15,079 16,641 18,011
Bad debt expense ....................................................... 566 926 556
Changes in assets and liabilities:
Accounts receivable ................................................. 819 (747) (1,592)
Related party receivable ............................................ (1,090) -- --
Unbilled receivable ................................................. 76 (47) (1,060)
Rents received in advance and security deposits ..................... (66) (177) (467)
Deferred charges and other assets ................................... (2,353) (1,733) (1,862)
Accounts payable and accrued expenses ............................... (276) (2,228) (2,446)
Other liabilities ................................................... 2,071 (22) 21
Accrued interest payable ............................................ (61) 862 (356)
Deferred interest ................................................... 2,806 3,215 4,493
-------- -------- --------
Net cash flows provided by operating activities .............................. 13,317 14,733 6,429
======== ======== ========
Investing activities
Additions to rental properties ............................................. (4,173) (5,358) (6,836)
Restricted cash ............................................................ (2,619) (2,875) (2,424)
-------- -------- --------
Net cash flows used in investing activities .................................. (6,792) (8,233) (9,260)
======== ======== ========
Financing activities
Repayment of mortgage notes payable ........................................ (869) (2,509) (2,611)
Owners' contributions ...................................................... 4,956 243 8,504
Owners' distributions ...................................................... (8,682) (4,458) (1,382)
-------- -------- --------
Net cash flows (used in) provided by financing activities (4,595) (6,724) 4,511
======== ======== ========
Increase (decrease) in cash .................................................. 1,930 (224) 1,680
Cash and cash equivalents, beginning of year ................................. 3,871 4,095 2,415
-------- -------- --------
Cash and cash equivalents, end of year ....................................... $ 5,801 $ 3,871 $ 4,095
======== ======== ========
</TABLE>
See accompanying notes.
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements
(amounts in thousands)
Years Ended December 31, 1996, 1995 and 1994
1. Organization
Robert Martin Group ("RMG" or "Company") was engaged in the ownership,
operation, leasing, development and management of flex, industrial, and office
properties. RMG owned and operated 65 buildings located in Westchester County,
New York and Fairfield, Connecticut.
2. Summary of Significant Accounting Policies
Principles of Combination and Basis of Presentation
RMG was not a legal entity but rather a combination of commercial real estate
properties and affiliated development and management companies under common
control. All material intercompany transactions and balances have been
eliminated. Certain assets and liabilities included herein have been conveyed to
Cali Realty L.P. (See Note 10)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates.
Real Estate Assets
During 1996, the Company adopted Statement of Financial Accounting Standards No.
121 ("FASB 121"), Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of. FASB 121 requires that the Company review
real estate assets for impairment wherever events or changes in circumstances
indicate that the carrying value of assets to be held and used may not be
recoverable. Impaired assets are reported at the lower of cost or fair value.
Management has determined that none of the properties have experienced
impairment. Assets to be disposed of are reported at the lower of cost or fair
value less cost to sell.
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements (continued)
(amounts in thousands)
2. Summary Of Significant Accounting Policies (continued)
Real Estate Assets (continued)
Prior to the adoption of FAS 121, real estate assets were stated at the lower of
cost or net realizable value. All expenditures related to the improvement or
replacement of commercial real estate properties are capitalized. In addition,
interest and real estate taxes incurred during the construction period are
capitalized.
Ordinary repairs and maintenance are expensed as incurred; major replacements
and betterments are capitalized and depreciated over their estimated useful
lives. Depreciation is computed by the straight-line method over the estimated
useful life of 40 years for buildings and five to seven years for furniture and
equipment. Tenant improvements are amortized by the straight-line method over
the average life of respective leases which range from five to ten years.
Rental Income
Rental income includes the base rent that each tenant is required to pay in
accordance with the terms of their respective lease reported on a straight line
basis over the life of the non cancelable lease term. Additionally, the leases
generally require the tenants to reimburse the Company for increases in real
estate taxes and various other operating expenses applicable to their leased
premises over a base-year amount defined in each tenant's lease. These
reimbursements and applicable costs have been reflected in the combined
statements of operations as escalations and recoveries from tenants and
expenses.
Income Taxes
No provision has been made for income taxes because the commercial real estate
properties and development and management companies are owned by limited
liability companies ("LLC") and partnerships whose members and partners are
required to include their respective share of the LLCs' and partnerships'
profits or loss in their individual tax returns.
Deferred Leasing and Financing Costs
Costs incurred to obtain initial tenant leases and long-term financing are
included in deferred charges in the accompanying balance sheets and are
amortized on a straight-line basis over the terms of the related leases and debt
agreements, as applicable.
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements (continued)
(amounts in thousands)
Summary Of Significant Accounting Policies (continued)
Cash and Cash Equivalents
For purposes of the combined statements of cash flows, the Company considers all
highly liquid instruments purchased with a remaining term of three months or
less to be cash equivalents. Restricted cash represents tenant security deposit
and escrow accounts required by certain mortgage agreements (See Note 4).
Owners' Contributions and Distributions
A portion of the owners' contributions and distributions represent the transfer
of cash to and from affiliates of RMG, which have the same ownership as RMG. In
1996, 1995 and 1994 the cash transfers to affiliates classified as
(distribution) contribution amounted to $(6,542), $(3,455), and $7,217,
respectively.
Cost Allocation
Certain executive and administrative salaries and related payroll costs have
been allocated between the Company and its affiliates. The allocation was based
on management's estimate of the time the individual employees incurred in
managing and operating the Company.
Concentration of Revenue and Credit Risk
Approximately 12%, 13% and 12% of RMG's revenues for the years ended December
31, 1996, 1995 and 1994, respectively, were derived from one building, 50 Main
Street. The loss of this building or a decrease in revenue from this building
for any reason may have a material adverse effect on RMG.
Management of RMG performs ongoing credit evaluations of their tenants and
requires certain tenants to provide security deposits. Although RMG properties
are primarily located in Westchester County, New York the tenants operate in
diverse industries. There is no dependence upon any single tenant.
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements (continued)
(amounts in thousands)
2. Summary Of Significant Accounting Policies (continued)
Financial Instruments
The carrying amount of RMG's financial instruments which consist of cash, cash
equivalents, restricted cash, accounts receivable, security deposits, accounts
payable, and mortgage loans payable approximates their fair-value.
3. Real Estate Assets
At December 31, 1996 and 1995, RMG owned and operated the following types of
commercial properties which are recorded at cost:
<TABLE>
<CAPTION>
Building & Furniture,
Land & Tenant Fixtures and Accumulated Net Rental
Improvements Improvements Equipment Total Depreciation Property
------------ ------------ ----------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996
Office & Office/Flex $ 31,834 $ 339,114 $ - $ 370,948 $ 150,955 $ 219,993
Properties
Industrial/Warehouse
Properties 59 10,524 - 10,583 6,504 4,079
Retail Properties 165 3,392 - 3,557 1,609 1,948
Residential Property 146 13,850 - 13,996 3,055 10,941
Land 1,545 - - 1,545 333 1,212
Other - - 14 14 3 11
-------- --------- ---- --------- --------- ---------
Total $ 33,749 $ 366,880 $ 14 $ 400,643 $ 162,459 $ 238,184
======== ========= ==== ========= ========= =========
December 31, 1995
Office & Office/Flex $ 31,834 $ 335,512 $ - $ 367,346 $ 139,729 $ 227,617
Properties
Industrial/Warehouse
Properties 59 9,945 - 10,004 6,077 3,927
Retail Properties 165 3,393 - 3,558 1,530 2,028
Residential Property 146 13,829 - 13,975 3,047 10,928
Land 1,545 - - 1,545 300 1,245
Other - - 44 44 33 11
-------- --------- ---- --------- --------- ---------
Total $ 33,749 $ 362,679 $ 44 $ 396,472 $ 150,716 $ 245,756
======== ========= ==== ========= ========= =========
</TABLE>
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements (continued)
(amounts in thousands)
4. Mortgage Loans Payable
Mortgage loans payable, which are collateralized by substantially all assets,
are summarized as follows:
<TABLE>
<CAPTION>
December 31,
1996 1995
-------- --------
<S> <C> <C>
Teachers Insurance and Annuity Association ......... $285,247 $285,574
The Prudential Insurance Company of America ........ 80,000 80,000
Others ............................................. 24,437 24,980
-------- --------
$389,684 $390,554
======== ========
</TABLE>
Teachers Insurance and Annuity Association Debt
The Company has a series of mortgage loans payable to Teachers Insurance and
Annuity Association ("TIAA"). These mortgage loans are non-recourse and
cross-collateralized by certain property located in Westchester County, New York
and mature on December 31, 2003.
Mortgage loans amounting to $267,742 require interest only payments through
January 31, 1999, after which the principal balance will be amortized on a
thirty-year schedule. Mortgage loans amounting to $16,155 are due in monthly
installments of principal and interest amortized on a thirty year schedule. A
second mortgage loan that amounts to $1,350 and is collateralized by the
properties securing the first mortgages mentioned above is due in monthly
installments of principal and interest. Fixed Interest, as defined, under these
loans was paid at various interest rates ranging from 7.0% to 8.0% during 1996,
1995 and 1994.
In addition to Fixed Interest as defined, these loans required the Company to
pay Yield Maintenance Interest ("YMI") or Final Additional Interest ("FAI"). YMI
and FAI have been structured to result in TIAA receiving an internal rate of
return of 8% to 9% and 9.5% per annum, respectively, compounded monthly, for the
period from inception of the loan through the repayment date. As of December 31,
1996 and 1995, deferred interest, representing the excess of YMI and FAI over
the Fixed Interest amounted to $19,190 and $14,595, respectively.
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements (continued)
(amounts in thousands)
4. Mortgage Loans Payable (continued)
The Prudential Insurance Company of America
On August 24, 1995, mortgage loans payable aggregating $92,841 due to Prudential
Insurance Company of America ("Prudential") were modified. These mortgage loans
payable comprise three separate nonrecourse mortgage loans which are secured by
certain properties located in Westchester, New York. Prudential agreed to reduce
the aggregate principal balance to $80,000, extend the final maturity date to
December 31, 2000 and reduce the interest rate on the new amount. The interest
for 1996 and 1995 was paid at rates ranging between 6.25% and 6.14%.
The principal secured by the RMG properties ($12,070) that Prudential has
forgiven has been included in deferred interest and has been amortized as a
reduction of interest cost on an effective yield basis over the remaining term
of the modified Prudential Mortgages. At December 31, 1996 and 1995 the net
balance of the deferred interest was $8,557 and $10,345, respectively.
A portion of the related party receivable represents the amount of the
Prudential debt ($4,600) which is collateralized by a property not included in
the RMG combined financial statements. Included in interest income is $283 for
the portion of the interest expense attributed to the non RMG asset.
Others
The other mortgage loans payable to various lenders aggregated $24,437 and
$24,980 at December 31, 1996 and 1995 respectively. The loans are secured by
properties located in New York and Connecticut and are principally nonrecourse.
The notes bear interest at rates ranging from prime plus 2% to 10.25% and mature
from 1997 to 1999.
Interest paid on mortgage notes payable amounted to $29,968, $27,547 and $29,996
for the years ended December 31, 1996, 1995 and 1994, respectively.
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements (continued)
(amounts in thousands)
4. Mortgage Loans Payable (continued)
Deferred Interest
The deferred interest is summarized as follows:
<TABLE>
<CAPTION>
December 31,
1996 1995
------- -------
<S> <C> <C>
Teachers Insurance and Annuity Association ........... $19,190 $14,595
The Prudential Insurance Company of America ......... 8,557 10,345
------- -------
$27,747 $24,940
======= =======
</TABLE>
On January 31, 1997 in connection with the contribution of certain assets and
liabilities of RMG to Cali Realty L.P. (See Note 10) the Prudential and other
mortgages were paid in full. In addition, $100,000 of the TIAA mortgage was paid
and the remaining $185,000 was assumed by Cali Realty L.P. The deferred interest
amounts are no longer obligations of the Company.
5. Operating Leases
The spaces leased to tenants in the buildings expire from 1997 to 2018. The
leases generally provide for minimum lease payments and for operating and tax
escalations to cover increases in the operating expenses or to reflect increases
in the Consumer Price Index based on the terms of the lease agreements.
At December 31, 1996 and 1995, deferred receivables aggregating $7,119 and
$8,319 respectively, represent rents reported on a straight line basis in excess
of rental payments required under these leases, including rent concessions of
$1,767 and $2,602, respectively. The minimum future rentals presented below
include amounts applicable to the repayment of these deferred receivables.
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements (continued)
(amounts in thousands)
5. Operating Leases (continued)
At December 31, 1996, minimum future rentals on non-cancelable leases, which
include payments against the deferred receivables referred to above, are as
follows:
1997 $ 57,784
1998 47,148
1999 37,181
2000 29,948
2001 13,942
Thereafter 10,602
--------
$196,605
========
6. Deferred Charges and Other Assets
Deferred charges are summarized as follows:
<TABLE>
<CAPTION>
December 31,
1996 1995
-------- --------
<S> <C> <C>
Deferred lease costs ............................. $ 17,292 $ 15,524
Deferred financing costs ......................... 223 146
-------- --------
Total deferred charges ......................... 17,515 15,670
Less accumulated amortization .................... (11,796) (9,594)
-------- --------
Total deferred charges, net .................... 5,719 6,076
Other assets ..................................... 676 176
-------- --------
Total deferred changes, net and other
assets ..................................... $ 6,395 $ 6,252
======== ========
</TABLE>
Included in the deferred lease cost are internal leasing costs which are
comprised of salaries and related payroll costs. For the years ended December
31, 1996 and December 31, 1995, such costs capitalized and amortized
approximated $1,111 and $1,013, respectively.
<PAGE>
Robert Martin Group
Notes to Combined Financial Statements (continued)
(amounts in thousands)
7. Environmental Matters
Management believes that the Company's properties are in compliance in all
material respects with applicable Federal, State and Local ordinances and
regulations regarding environmental issues. Management is not aware of any
environmental liability that management believes would have a material adverse
impact on the Company's financial position or results of operations or cash
flows. Management is unaware of any instances in which it would incur
significant environmental cost if any of the properties were sold, disposed of
or abandoned.
8. Related Party Transactions
RMG performs management and construction services for affiliates. The management
and construction fees were received from non combined affiliates and joint
ventures which are related by means of common ownership and amounted to $1,170,
$303 and $198 for the years ended December 31, 1996, 1995 and 1994. At December
31, 1996 $1,091 of such fees are included in related party receivable.
9. Contingencies
RMG is not presently involved in any material litigation nor, to its knowledge,
is any material litigation threatened against RMG on its properties, other than
routine litigation arising in the ordinary course of business. Management
believes the costs, if any, incurred by the Company related to this litigation
will not materially affect the financial position, operating results or
liquidity of the Company.
10. Conveyance of Assets
On January 31, 1997, the owners of RMG conveyed the rental properties and
certain other assets and liabilities of RMG to Cali Realty, L.P. as outlined in
the Contribution and Exchange Agreement dated January 24, 1997 between Robert
Martin Company, LLC and Cali Realty, L.P. In exchange for the conveyed assets
and liabilities Cali Realty, L.P. assumed $185,000 of the TIAA mortgage loans
and paid the owners of RMG cash of $210,000 and issued operating partnership
units of Cali Realty, L.P. which had a market value of $43,800. The majority of
the cash received by RMG was used to retire the Prudential and other mortgages
and a portion of the TIAA mortgages. (See Note 4.)
<PAGE>
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
As of December 31, 1996 (in thousands)
- --------------------------------------------------------------------------------
The following unaudited pro forma condensed consolidated balance sheet is
presented as if the RM Acquisition occurred on December 31, 1996. 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.
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 transactions actually occurred on
December 31, 1996, nor does it purport to represent the future financial
position of the Company.
<TABLE>
<CAPTION>
Company
Company Pro Forma Pro Forma
ASSETS Historical Adjustments (unaudited)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental property, net $ 784,742 $450,000(a) $1,234,742
Cash and cash equivalents 204,807 (204,807)(b) --
Unbilled rents receivable 19,705 -- 19,705
Restricted cash 3,160 4,631(c) 7,791
Other assets 13,914 11,600(d) 25,514
- -------------------------------------------------------------------------------------------------------------------
Total assets $1,026,328 $261,424 $1,287,752
===================================================================================================================
<PAGE>
<CAPTION>
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
As of December 31, 1996 (in thousands)
- -------------------------------------------------------------------------------------------------------------------
Company
Company Pro Forma Pro Forma
LIABILITIES AND STOCKHOLDERS' EQUITY Historical Adjustments (unaudited)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mortgages and loans payable $ 268,010 $211,801(e) $ 479,811
Dividends and distributions payable 17,554 -- 17,554
Accounts payable and accrued expenses 5,068 -- 5,068
Rents received in advance
and security deposits 6,025 5,835(f) 11,860
Accrued interest payable 1,328 -- 1,328
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 297,985 217,636 515,621
- -------------------------------------------------------------------------------------------------------------------
Minority interest of unitholders in
Operating Partnership 26,964 43,788(g) 70,752
- -------------------------------------------------------------------------------------------------------------------
Common stock, $.01 a value 363 -- 363
Additional paid in capital 701,016 -- 701,016
Retained earnings -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 701,379 -- 701,379
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,026,328 $261,424 $1,287,752
===================================================================================================================
</TABLE>
See footnotes on subsequent page.
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 1996
- --------------------------------------------------------------------------------
(a) Represents the approximate aggregate cost of the RM Acquisition.
(b) Represents pro forma cash reserves used as a component of the RM
Acquisition.
(c) Represents cash received with the RM closing for the assumption of the RM
tenant security deposits.
(d) Represents the Mortgage Receivable provided to entities controlled by the
principals of RM.
(e) Represents the assumption of the TIAA Mortgage ($185,283) and the pro forma
drawing on the Company's credit facility ($26,518) as components of the RM
Acquisition.
(f) Represents the issuance of 1,401,225 Units at a price of $31.25 per Unit as
a component of the RM Acquisition.
(g) Represents rents received in advance and tenant security deposits liability
assumed with the RM closing.
<PAGE>
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
The unaudited pro forma condensed consolidated statements of operations for the
year ended December 31, 1996 is 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 103 Carnegie, Rose Tree and the
Mount Airy Road Buildings 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 acquisition by the Company of the properties
known as Five Sentry Parkway, Harborside, Whiteweld Centre, One Bridge Plaza and
Airport Center during November and December 1996, (vi) 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"), and (vii) the occurrence
of the RM Acquisition. Items (i) through (vi) above are to be collectively
referred to as the "1996 Events" and items (iv) and (vi) are to be collectively
referred to as the "1996 Offerings".
Such pro forma information is based upon the historical consolidated results of
operations of the Company 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-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.
<PAGE>
<TABLE>
<CAPTION>
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1996
(in thousands, except per share amount)
- ------------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Pro Forma Adj. Pro Forma Adj.
Company for 1996 For RM Company
REVENUES Historical Events (a) Sub-total Acquisition (b) Pro Forma
---------- -------------- --------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Base rents ........................................ $ 76,922 $ 49,087 $126,009 $ 63,083 $189,092
Escalations and recoveries
from tenants ..................................... 14,429 8,870 23,299 5,483 28,782
Parking and other ................................. 2,204 190 2,394 4,393 6,787
Interest income ................................... 1,917 -- 1,917 -- 1,917
-------- -------- -------- -------- --------
Total revenues .................................... 95,472 58,147 153,619 72,959 226,578
-------- -------- -------- -------- --------
EXPENSES
Real estate taxes ................................. 9,395 5,144 14,539 9,870 24,409
Utilities ......................................... 8,138 3,313 11,451 4,944 16,395
Operating services ................................ 12,129 6,452 18,581 9,876 28,457
General and administrative ........................ 5,800 3,020 8,820 3,997 12,817
Depreciation and amortization ..................... 15,812 8,133 23,945 10,125 34,070
Interest expense (c) .............................. 12,677 6,623 19,300 14,963 34,263
-------- -------- -------- -------- --------
Total expense .................................... 63,951 32,685 96,636 53,775 150,411
-------- -------- -------- -------- --------
Income before gain on sale of rental
property, minority interest and
extraordinary item ............................ 31,521 25,462 56,983 19,184 76,167
Gain on sale of rental property ................... 5,658 (5,658) -- -- --
-------- -------- -------- -------- --------
Income before minority interest
and extraordinary item ........................ 37,179 19,804 56,983 19,184 76,167
Minority interest (d) ............................. 4,760 283 5,043 2,726 7,769
-------- -------- -------- -------- --------
Income before extraordinary item .................. $ 32,419 $ 19,521 $ 51,940 $ 16,458 $ 68,398
======== ======== ======== ======== ========
Pro forma weighted average common shares outstanding (e) 27,916 36,201
------ ------
Pro forma income before extraordinary item per common share $1.86 $1.89
----- -----
</TABLE>
<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 dates of acquisition, as follows:
<TABLE>
<CAPTION>
Base Escalations/ Other Real Estate Operating
Property Date Rents (1) Recoveries Income Taxes Utilities Services
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Carnegie March 20, 1996 $386 $31 $ -- $ 54 $ 56 $ 58
Rose Tree May 2, 1996 1,312 115 -- 165 180 179
Mount Airy Buildings July 23, 1996 665 101 -- 101 -- 4
Harborside November 4, 1996 30,884 7,037 166 3,096 906 3,633
Five Sentry November 7, 1996 1,663 -- -- 148 32 325
Whiteweld December 10, 1996 3,890 326 -- 430 748 543
One Bridge December 16, 1996 3,597 293 -- 420 412 659
Airport Center December 17, 1996 6,953 1,004 24 780 1,035 1,129
- ---------------------------------------------------------------------------------------------------------------------------
Total Pro Forma Adj.
for 1996 property acquis. $49,350 $8,907 $190 $5,194 $3,369 $6,530
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
General and
Property Date Administrative Depreciation (2)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Carnegie March 20, 1996 $ 11 $ 49
Rose Tree May 2, 1996 43 215
Mount Airy Buildings July 23, 1996 51 107
Harborside November 4, 1996 2,048 5,332
Five Sentry November 7, 1996 88 246
Whiteweld December 10, 1996 158 733
One Bridge December 16, 1996 237 585
Airport Center December 17, 1996 395 953
- --------------------------------------------------------------------------------------
Total Pro Forma Adj.
for 1996 property acquis. $3,031 $ 8,220
- --------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
(in thousands)
Revenues and expenses of the property disposed of in 1996, for the period
January 1, 1996 through the disposition date, as follows:
<TABLE>
<CAPTION>
Base Escalations/ Other Real Estate Operating
Property Date Rents (1) Recoveries Income Taxes Utilities Services
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Essex Road March 20, 1996 ($263) ($37) -- ($50) ($56) ($78)
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
General and
Property Date Administrative Depreciation (2)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Essex Road March 20, 1996 ($11) ($81)
- --------------------------------------------------------------------------------------------
</TABLE>
Reduction of expenses as a result of the Partial Prepayment in 1996 for the
period January 1, 1996 through March 12, 1996, as follows:
<TABLE>
<CAPTION>
Base Escalations/ Other Real Estate Operating
Property Date Rents (1) Recoveries Income Taxes Utilities Services
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Partial Prepayment March 12, 1996 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
TOTALS $49,087 $8,870 $190 $5,144 $3,313 $6,452
===========================================================================================================================
<CAPTION>
General and
Property Date Administrative Depreciation (2)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Partial Prepayment March 12, 1996 -- ($6)
- --------------------------------------------------------------------------------------------
TOTALS $3,020 $8,133
============================================================================================
</TABLE>
See accompanying footnotes on the subsequent page.
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
(in thousands)
(b) Reflects revenues and expenses of the RM Acquisition for the year ended
December 31, 1996, as follows:
<TABLE>
<CAPTION>
Acquisition Base Escalations/ Other Real Estate Operating
Date Rents (1) Recoveries Income Taxes Utilities Services
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RM Acquisition January 31, 1997 $63,083 $5,483 $4,393 $9,870 $4,944 $9,876
=============================================================================================================================
<CAPTION>
Acquisition General and
Date Administrative Depreciation (2)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
RM Acquisition January 31, 1997 $3,997 $10,125
===================================================================================
</TABLE>
(1) Pro forma base rents are presented on a straight-line basis.
(2) 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.
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
(in thousands)
(c) The pro forma adjustments to interest expense reflect interest on
mortgage debt assumed with certain acquisitions and the use of proceeds
from the 1996 Offerings to pay down outstanding borrowings on the
Company's credit facilities. Pro forma interest expense is computed as
follows:
<TABLE>
<CAPTION>
1996 Int Exp- 1996 Int Exp.-
1996 Events RM Acquis.
------------- ---------------
<S> <C> <C>
Interest expense on the Initial Mortgage Financing, after the Partial Pre- $ 4,867 $ 4,867
payment (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 6.50 percent)
Interest expense on loan assumed with Fair Lawn acquisition on March 3, 1995 1,538 1,538
(fixed interest rate of 8.25 percent on average outstanding principal balance
of approximately $18,605)
Interest expense on mortgages assumed with Harborside acquisition on November 10,840 10,840
4, 1996 (fixed interest rate of 7.32 percent on $107,912 and initial rate of
6.99 percent on $42,088)
Interest expense on outstanding borrowings on the Company's credit lines 2,055 3,715
(a variable rate of 30-day LIBOR plus 150 basis points during the
period on $29,805 (1996 Events) & $53,887 (RM Acquis.);
weighted average interest rate used is 6.87 percent)
Interest expense on Teachers Mortgage assumed with the RM Acquisition on
January 31, 1997 (fixed interest rate of 7.18 percent on $185,283) -- 13,303
------- -------
Total pro forma interest expense for year ended December 31, 1996: $19,300 $34,263
======= =======
</TABLE>
Interest expense can be effected by increases and decreases in the variable
interest rates under the Company's various floating rate debt. For example, a
one-eighth percent change in such variable interest rates will result in a $62
change (after 1996 Events) and $92 change (after RM Acquisitions) for the year
ended December 31, 1996.
<PAGE>
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
(in thousands)
(d) Represents pro forma income allocated to the pro forma weighted average
minority interest (Units) in Cali Realty L.P. (the Operating
Partnership) - 8.85 percent after the 1996 Events Adj. and 10.2 percent
after the RM Acquisition Adj.
(e) Pro forma weighted average shares outstanding is computed assuming that
the 1996 Offerings occurred as of January 1, 1996 and assuming that any
excess cash generated (i.e. cash not used for purchase of the 1996
acquisitions or to pay down the outstanding borrowings on the credit
facilities, in the case of the 1996 Events) was not raised, and the
corresponding shares not issued.
<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
March 28, 1997 By: /s/Thomas A. Rizk
-------------------------------------
Thomas A. Rizk
President & Chief Executive Officer
March 28, 1997 By: /s/Barry Lefkowitz
-------------------------------------
Barry Lefkowitz
Chief Financial Officer
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 33-96538) and related Prospectus of Cali Realty Corporation, as amended
on October 6, 1995, the Registration Statement (Form S-3 No. 33-96542) and
related Prospectus of Cali Realty Corporation, as amended on October 10, 1995,
the Registration Statement (Form S-3 No. 333-09081) and related Prospectus of
Cali Realty Corporation, as amended on August 9, 1996, the Registration
Statement (Form S-3 No. 333-09875) and related Prospectus of Cali Realty
Corporation dated August 9, 1996, and the Registration Statement (Form S-8 No.
33-91822) pertaining to the 1994 Employee and Director Stock Option Plans, as
amended on September 29, 1996, the Registration Statement (Form S-3 No.
333-19101) of Cali Realty Corporation dated December 31, 1996, the registration
statement (Form S-8 No. 333-19831) dated January 15, 1997, pertaining to the
Cali Realty Corporation Restricted Stock Award Plan for Senior Executives and
Officers in the Cali Realty Corporation Stock Purchase Program for Senior
Executives and Officers of our report dated February 21, 1997, with respect to
the Combined Financial Statements of the Robert Martin Group as of December 31,
1996 and 1995 and for the years ended December 31, 1996, 1995 and 1994 included
in the Current Report on Form 8-K of Cali Realty Corporation dated March 25,
1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
New York, New York
March 25, 1997
