<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from........................to........................
Commission file number 1-13274
Mack-Cali Realty Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 22-3305147
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016-3501
- --------------------------------------------------------------------------------
(Address or principal executive office)
(Zip Code)
(908) 272-8000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or such shorter period that the
Registrant was required to file such report) YES |X| NO |_| and (2) has been
subject to such filing requirements for the past ninety (90) days YES |X| NO
|_|.
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of October 31, 1999, there were 58,394,948 shares of $0.01 par value common
stock outstanding.
<PAGE>
MACK-CALI REALTY CORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998 4
Consolidated Statements of Operations for the three and nine month
periods ended September 30, 1999 and 1998 5
Consolidated Statement of Changes in Stockholders' Equity
for the nine months ended September 30, 1999 6
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998 7
Notes to Consolidated Financial Statements 8-30
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 31-58
Item 3. Quantitative and Qualitative Disclosures about Market Risk 58
PART II OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings 59
Item 2. Changes in Securities and Use of Proceeds 59
Item 3. Default Upon Senior Securities 59
Item 4. Submission of Matters to a Vote of Security Holders 59
Item 5. Other Information 59
Item 6. Exhibits 60-62
Signatures 63
</TABLE>
2
<PAGE>
MACK-CALI REALTY CORPORATION
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The accompanying unaudited consolidated balance sheets, statements of
operations, of changes in stockholders' equity, and of cash flows and
related notes, have been prepared in accordance with generally
accepted accounting principles ("GAAP") for interim financial
information and in conjunction with the rules and regulations of the
Securities and Exchange Commission ("SEC"). Accordingly, they do not
include all of the disclosures required by GAAP for complete
financial statements. The financial statements reflect all
adjustments consisting only of normal, recurring adjustments, which
are in the opinion of management, necessary for a fair presentation
for the interim periods.
The aforementioned financial statements should be read in conjunction
with the notes to the aforementioned financial statements and
Management's Discussion and Analysis of Financial Condition and
Results of Operations and the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
The results of operations for the three and nine month periods ended
September 30, 1999 are not necessarily indicative of the results to
be expected for the entire fiscal year or any other period.
3
<PAGE>
<TABLE>
<CAPTION>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
===================================================================================================================
September 30, December 31,
ASSETS 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rental property
Land and leasehold interests $ 548,572 $ 510,534
Buildings and improvements 2,966,769 2,887,115
Tenant improvements 98,577 64,464
Furniture, fixtures and equipment 5,865 5,686
- -------------------------------------------------------------------------------------------------------------------
3,619,783 3,467,799
Less - accumulated depreciation and amortization (241,746) (177,934)
- -------------------------------------------------------------------------------------------------------------------
Total rental property 3,378,037 3,289,865
Cash and cash equivalents 1,068 5,809
Investments in unconsolidated joint ventures 95,457 66,508
Unbilled rents receivable 51,356 41,038
Deferred charges and other assets, net 60,700 39,020
Restricted cash 6,184 6,026
Accounts receivable, net of allowance for doubtful accounts
of $918 and $670 5,328 3,928
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 3,598,130 $ 3,452,194
===================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
Senior Unsecured Notes $ 782,706 --
Revolving credit facilities 249,956 $ 671,600
Mortgages and loans payable 545,567 749,331
Dividends and distributions payable 42,488 40,564
Accounts payable and accrued expenses 46,359 33,253
Rents received in advance and security deposits 31,838 29,980
Accrued interest payable 3,238 2,246
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 1,702,152 1,526,974
- -------------------------------------------------------------------------------------------------------------------
Minority interest of unitholders in Operating Partnership 458,253 501,313
- -------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, 5,000,000 shares authorized, none issued -- --
Common stock, $0.01 par value, 190,000,000 shares authorized,
58,390,984 and 57,266,137 shares outstanding 584 573
Additional paid-in capital 1,548,413 1,514,648
Dividends in excess of net earnings (106,470) (91,314)
Unamortized stock compensation (4,802) --
- -------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,437,725 1,423,907
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 3,598,130 $ 3,452,194
===================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
===============================================================================================================================
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Base rents $ 118,086 $ 112,976 $ 350,665 $ 311,753
Escalations and recoveries from tenants 14,829 14,182 46,055 36,897
Parking and other 5,112 2,684 12,073 7,502
Equity in earnings of unconsolidated joint ventures 834 324 1,462 419
Interest income 159 728 629 2,187
- -------------------------------------------------------------------------------------------------------------------------------
Total revenues 139,020 130,894 410,884 358,758
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
Real estate taxes 14,849 13,488 42,900 35,415
Utilities 11,634 11,300 31,055 28,717
Operating services 16,258 15,807 50,401 44,128
General and administrative 5,897 6,118 19,801 18,708
Depreciation and amortization 22,967 21,213 67,401 56,537
Interest expense 26,474 23,881 75,793 64,146
Non-recurring charges -- -- 16,458 --
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses 98,079 91,807 303,809 247,651
- -------------------------------------------------------------------------------------------------------------------------------
Income before minority interest and extraordinary item 40,941 39,087 107,075 111,107
Minority interest 8,421 8,375 23,805 23,464
- -------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 32,520 30,712 83,270 87,643
Extraordinary item - loss on early retirement of debt
(net of minority interest's share of $297 in 1998) -- -- -- (2,373)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 32,520 $ 30,712 $ 83,270 $ 85,270
===============================================================================================================================
BASIC EARNINGS PER SHARE:
Income before extraordinary item $ 0.55 $ 0.53 $ 1.42 $ 1.58
Extraordinary item - loss on early retirement of debt -- -- -- (0.04)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.55 $ 0.53 $1.42 $ 1.54
===============================================================================================================================
DILUTED EARNINGS PER SHARE:
Income before extraordinary item $ 0.55 $ 0.53 $ 1.42 $ 1.57
Extraordinary item - loss on early retirement of debt -- -- -- (0.04)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.55 $ 0.53 $ 1.42 $ 1.53
===============================================================================================================================
Dividends declared per common share $ 0.58 $ 0.55 $ 1.68 $ 1.55
- -------------------------------------------------------------------------------------------------------------------------------
Basic weighted average shares outstanding 58,679 57,720 58,452 55,391
Diluted weighted average shares outstanding 67,113 65,884 67,294 63,093
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
<TABLE>
<CAPTION>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS)
===================================================================================================================================
Additional Dividends in Unamortized Total
Common Stock Paid-In Excess of Stock Stockholders'
Shares Par Value Capital Net Earnings Compensation Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 57,266 $573 $ 1,514,648 $ (91,314) -- $ 1,423,907
Net income -- -- -- 83,270 -- 83,270
Dividends -- -- -- (98,426) -- (98,426)
Redemption of common units
for shares of common stock 1,795 18 52,439 -- -- 52,457
Proceeds from stock options exercised 47 -- 1,032 -- -- 1,032
Proceeds from dividend reinvestment
and stock purchase plan 1 -- 32 -- -- 32
Deferred compensation plan for directors -- -- 64 -- -- 64
Issuance of Restricted Stock Awards 194 2 5,189 -- $ (5,191) --
Amortization of stock compensation -- -- -- -- 389 389
Repurchase of common stock (912) (9) (24,991) -- -- (25,000)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1999 58,391 $584 $ 1,548,413 $ (106,470) $ (4,802) $ 1,437,725
===================================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
6
<PAGE>
<TABLE>
<CAPTION>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
===================================================================================================================
Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ 83,270 $ 85,270
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 67,401 56,537
Amortization of deferred financing costs 2,413 1,122
Amortization of stock compensation 389 --
Equity in earnings of unconsolidated joint ventures (1,462) (419)
Minority interest 23,805 23,464
Extraordinary item - loss on early retirement of debt -- 2,373
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (10,318) (9,603)
Increase in deferred charges and other assets, net (17,682) (15,098)
Increase in accounts receivable, net (1,400) (2,584)
Increase in accounts payable and accrued expenses 13,106 4,187
Increase in rents received in advance and security deposits 1,858 7,705
Increase (decrease) in accrued interest payable 992 (1,162)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 162,372 $ 151,792
===================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
- -------------------------------------------------------------------------------------------------------------------
Additions to rental property $ (143,198) $ (666,513)
Issuance of mortgage note receivable -- (20,000)
Repayment of mortgage note receivable -- 20,000
Investments in unconsolidated joint ventures (39,626) (53,908)
Distributions from unconsolidated joint ventures 12,008 1,000
(Increase) decrease in restricted cash (158) 1,167
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (170,974) $ (718,254)
===================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
- -------------------------------------------------------------------------------------------------------------------
Proceeds from Senior Unsecured Notes $ 782,535 --
Proceeds from revolving credit facilities 303,256 $1,339,746
Proceeds from mortgages and loans payable 45,500 150,000
Repayments of revolving credit facilities (724,900) (806,258)
Repayments of mortgages and loans payable (249,308) (270,912)
Repurchase of common stock (25,000) (20,525)
Redemption of common units -- (3,163)
Payment of financing costs (7,039) (8,347)
Net proceeds from common stock offerings -- 284,453
Proceeds from stock options exercised 1,032 5,378
Proceeds from dividend reinvestment and stock purchase plan 32 --
Payment of dividends and distributions (122,247) (99,760)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities $ 3,861 $ 570,612
===================================================================================================================
Net (decrease) increase in cash and cash equivalents $ (4,741) $ 4,150
Cash and cash equivalents, beginning of period $ 5,809 $ 2,704
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 1,068 $ 6,854
===================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
7
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER
SHARE/UNIT AMOUNTS)
================================================================================
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Mack-Cali Realty Corporation, a Maryland corporation, and subsidiaries (the
"Company"), is a fully-integrated, self-administered, self-managed real estate
investment trust ("REIT") providing leasing, management, acquisition,
development, construction and tenant-related services for its properties. As of
September 30, 1999, the Company owned or had interests in 256 properties plus
developable land (collectively, the "Properties"). The Properties aggregate
approximately 28.4 million square feet, and are comprised of 161 office
buildings and 82 office/flex buildings totaling approximately 28.0 million
square feet (which includes four office buildings and one office/flex building,
aggregating 1.0 million square feet, owned by unconsolidated joint ventures in
which the Company has investment interests), six industrial/warehouse buildings
totaling approximately 387,400 square feet, two multi-family residential
complexes consisting of 453 units, two stand-alone retail properties and three
land leases. The Properties are located in 12 states, primarily in the
Northeast, plus the District of Columbia.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include all accounts of the
Company and its majority-owned subsidiaries, which consist principally of
Mack-Cali Realty, L.P. (the "Operating Partnership"). See Investments in
Unconsolidated Joint Ventures in Note 2 for the Company`s treatment of
unconsolidated joint venture interests. All significant intercompany accounts
and transactions have been eliminated.
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
RENTAL
PROPERTY Rental properties are stated at cost less accumulated
depreciation and amortization. Costs directly related to
the acquisition and development of rental properties are
capitalized. Capitalized development costs include
interest, property taxes, insurance and other project
costs incurred during the period of construction.
Ordinary repairs and maintenance are expensed as
incurred; major replacements and betterments, which
improve or extend the life of the asset, are capitalized
and depreciated over their estimated useful lives.
Fully-depreciated assets are removed from the accounts.
Properties are depreciated using the straight-line
method over the estimated useful lives of the assets.
The estimated useful lives are as follows:
Leasehold interests Remaining lease term
--------------------------------------------------------
Buildings and improvements 5 to 40 years
--------------------------------------------------------
Tenant improvements The shorter of the term of
the related lease or useful life
--------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
--------------------------------------------------------
On a periodic basis, management assesses whether there
are any indicators that the value of the real estate
properties may be impaired. A property's value is
impaired only if management's estimate of the aggregate
future cash flows (undiscounted and without interest
charges) to be generated by the property are less than
the carrying value of the property. To the extent
impairment has occurred, the loss shall be measured as
the excess of the carrying amount of the property over
the fair value of the property. Management does not
believe that the value of any of its rental properties
is impaired.
8
<PAGE>
INVESTMENTS IN
UNCONSOLIDATED
JOINT VENTURES The Company accounts for its investments in
unconsolidated joint ventures under the equity method of
accounting as the Company exercises significant
influence, but does not control these entities. These
investments are recorded initially at cost, as
Investments in Unconsolidated Joint Ventures, and
subsequently adjusted for equity in earnings (loss) and
cash contributions and distributions. Any difference
between the carrying amount of these investments on the
balance sheet of the Company and the underlying equity
in net assets is amortized as an adjustment to equity in
earnings (loss) of unconsolidated joint ventures over 40
years. See Note 4.
CASH AND CASH
EQUIVALENTS All highly liquid investments with a maturity of three
months or less when purchased are considered to be cash
equivalents.
DEFERRED
FINANCING COSTS Costs incurred in obtaining financing are
capitalized and amortized on a straight-line basis,
which approximates the effective interest method, over
the term of the related indebtedness. Amortization of
such costs is included in interest expense and was $895
and $468 for the three months ended September 30, 1999
and 1998, respectively, and $2,413 and $1,122 for the
nine months ended September 30, 1999 and 1998,
respectively.
DEFERRED
LEASING COSTS Costs incurred in connection with leases are capitalized
and amortized on a straight-line basis over the terms of
the related leases and included in depreciation and
amortization. Unamortized deferred leasing costs are
charged to amortization expense upon early termination
of the lease. Certain employees of the Operating
Partnership provide leasing services to the Properties
and receive compensation based on space leased. The
portion of such compensation which is capitalized and
amortized, approximated $690 and $589 for the three
months ended September 30, 1999 and 1998, respectively,
and $2,091 and $1,825 for the nine months ended
September 30, 1999 and 1998, respectively.
REVENUE
RECOGNITION Base rental revenue is recognized on a straight-line
basis over the terms of the respective leases. Unbilled
rents receivable represents the amount by which
straight-line rental revenue exceeds rents currently
billed in accordance with the lease agreements. Parking
revenue includes income from parking spaces leased to
tenants. Rental income on residential property under
operating leases having terms generally of one year or
less is recognized when earned.
Reimbursements are received from tenants for certain
costs as provided in the lease agreements. These costs
generally include real estate taxes, utilities,
insurance, common area maintenance and other recoverable
costs. See Note 13.
INCOME AND
OTHER TAXES The Company has elected to be taxed as a REIT under
Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"). As a REIT, the Company
generally will not be subject to federal income tax to
the extent it distributes at least 95 percent of its
REIT taxable income to its shareholders and satisfies
certain other requirements. REITs are subject to a
number of organizational and operational requirements.
If the Company fails to qualify as a REIT in any taxable
year, the Company will be subject to federal income tax
(including any applicable alternative minimum tax) on
its taxable income at regular corporate tax rates. The
Company is subject to certain state and local taxes.
INTEREST RATE
CONTRACTS Interest rate contracts are utilized by the Company to
reduce interest rate risks. The Company does not hold or
issue derivative financial instruments for trading
purposes. The differentials to be received or paid under
contracts designated as hedges are recognized over the
life of the contracts as adjustments to interest
expense.
9
<PAGE>
In certain situations, the Company uses forward treasury
lock agreements to mitigate the potential effects of
changes in interest rates for prospective transactions.
Gains and losses are deferred and amortized as
adjustments to interest expense over the remaining life
of the associated debt to the extent that such debt
remains outstanding.
EARNINGS
PER SHARE In accordance with the Statement of Financial Accounting
Standards No. 128 ("FASB No. 128"), the Company presents
both basic and diluted earnings per share ("EPS"). Basic
EPS excludes dilution and is computed by dividing net
income available to common stockholders by the weighted
average number of shares outstanding for the period.
Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common
stock were exercised or converted into common stock,
where such exercise or conversion would result in a
lower EPS amount.
DIVIDENDS AND
DISTRIBUTIONS
PAYABLE The dividends and distributions payable at September 30,
1999 represents dividends payable to shareholders of
record on October 5, 1999 (58,390,984 shares),
distributions payable to minority interest common
unitholders (8,286,464 common units) on that same date
and preferred distributions to preferred unitholders
(229,304 preferred units) for the third quarter 1999.
The third quarter 1999 dividends and common unit
distributions of $0.58 per share and per common unit
(pro-rated for units issued during the quarter), as well
as the third quarter preferred unit distribution of
$16.875 per preferred unit, were approved by the Board
of Directors on September 22, 1999 and paid on October
22, 1999.
UNDERWRITING
COMMISSIONS
AND COSTS Underwriting commissions and costs incurred in
connection with the Company's stock offerings are
reflected as a reduction of additional paid-in-capital.
STOCK OPTIONS The Company accounts for stock-based compensation using
the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations ("APB
No. 25"). Under APB No. 25, compensation cost is
measured as the excess, if any, of the quoted market
price of the Company's stock at the date of grant over
the exercise price of the option granted. Compensation
cost for stock options, if any, is recognized ratably
over the vesting period. The Company's policy is to
grant options with an exercise price equal to the quoted
closing market price of the Company's stock on the
business day preceding the grant date. Accordingly, no
compensation cost has been recognized for the Company's
stock option plans. See Note 14.
EXTRAORDINARY
ITEM Extraordinary item represents the effect resulting from
the early settlement of certain debt obligations,
including related deferred financing costs, prepayment
penalties, yield maintenance payments and other related
items.
NON-RECURRING
CHARGES The Company considers non-recurring charges as costs
incurred specific to significant non-recurring events
that impact the comparative measurement of the Company's
performance.
10
<PAGE>
3. ACQUISITIONS/TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
The Company acquired the following operating properties during the nine months
ended September 30, 1999:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Acquisition # of Rentable Investment by
Date Property/Portfolio Name Location Bldgs. Square Feet Company (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OFFICE
3/05/99 Pacifica Portfolio - Phase III (b) Colorado Springs, El Paso County, CO 2 94,737 $ 5,709
7/21/99 1201 Connecticut Avenue, NW Washington, D.C. 1 169,549 32,781
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTY ACQUISITIONS: 3 264,286 $ 38,490
====================================================================================================================================
</TABLE>
The Company acquired the following operating properties during the year ended
December 31, 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Acquisition # of Rentable Investment by
Date Property/Portfolio Name Location Bldgs. Square Feet Company (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OFFICE
2/05/98 500 West Putnam Avenue (c) Greenwich, Fairfield County, CT 1 121,250 $ 20,125
2/25/98 10 Mountainview Road Upper Saddle River, Bergen County, NJ 1 192,000 24,754
3/12/98 1250 Capital of Texas Highway South Austin, Travis County, TX 1 270,703 37,266
3/27/98 Prudential Business Campus (d) Parsippany, Morris County, NJ 5 703,451 130,437
3/27/98 Pacifica Portfolio- Phase I (b) (e) Denver & Colorado Springs, CO 10 620,017 74,966
3/30/98 Morris County Financial Center Parsippany, Morris County, NJ 2 301,940 52,763
5/13/98 3600 South Yosemite Denver, Denver County, CO 1 133,743 13,555
5/22/98 500 College Road East (f) Princeton, Mercer County, NJ 1 158,235 21,334
6/01/98 1709 New York Ave./1400 L Street N.W. Washington, D.C. 2 325,000 90,385
6/03/98 400 South Colorado Boulevard Denver, Denver County, CO 1 125,415 12,147
6/08/98 Pacifica Portfolio - Phase II (b)(e)(g) Denver & Colorado Springs, CO 6 514,427 85,910
7/16/98 4200 Parliament Drive (h) Lanham, Prince George's County, MD 1 122,000 15,807
9/10/98 40 Richards Avenue (e) Norwalk, Fairfield County, CT 1 145,487 19,587
9/15/98 Seven Skyline Drive (i) Hawthorne, Westchester County, NY 1 109,000 13,379
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTY ACQUISITIONS: 34 3,842,668 $ 612,415
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
1/30/98 McGarvey Portfolio (j) Moorestown, Burlington County, NJ 17 748,660 $ 47,526
7/14/98 1510 Lancer Road (k) Moorestown, Burlington County, NJ 1 88,000 3,700
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTY ACQUISITIONS: 18 836,660 $ 51,226
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING PROPERTY ACQUISITIONS: 52 4,679,328 $ 663,641
====================================================================================================================================
</TABLE>
PROPERTIES PLACED IN SERVICE
The Company placed in service the following properties through the completion of
development or redevelopment during the nine months ended September 30, 1999:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Date Placed # of Rentable Investment by
in Service Property Name Location Bldgs. Square Feet Company (a)
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE
<S> <C> <C> <C> <C> <C>
8/01/99 795 Folsom Street San Francisco, San Francisco County, CA 1 183,445 $ 37,321
8/09/99 2115 Linwood Avenue Fort Lee, Bergen County, NJ 1 68,000 8,147
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES PLACED IN SERVICE: 2 251,445 $ 45,468
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
3/01/99 One Center Court Totowa, Passaic County, NJ 1 38,961 $ 2,140
9/17/99 12 Skyline Drive Hawthorne, Westchester County, NY 1 47,000 5,023
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE: 2 85,961 $ 7,163
- ------------------------------------------------------------------------------------------------------------------------------------
LAND LEASE
2/01/99 Horizon Center Business Park (l) Hamilton Township, Mercer County, NJ N/A 27.7 acres $ 1,007
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LAND LEASE TRANSACTIONS: 27.7 acres $ 1,007
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 4 337,406 $ 53,638
====================================================================================================================================
</TABLE>
SEE FOOTNOTES TO THESE SCHEDULES ON SUBSEQUENT PAGE.
11
<PAGE>
The Company placed in service the following properties through the completion of
development or redevelopment during the year ended December 31, 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Date Placed # of Rentable Investment by
in Service Property Name Location Bldgs Square Feet Company (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OFFICE
1/15/98 224 Strawbridge Drive Moorestown, Burlington County, NJ 1 74,000 $ 7,796
8/01/98 228 Strawbridge Drive Moorestown, Burlington County, NJ 1 74,000 7,986
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES PLACED IN SERVICE: 2 148,000 $ 15,782
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
6/08/98 Two Center Court Totowa, Passaic County, NJ 1 30,600 $ 2,231
10/23/98 650 West Avenue Stamford, Fairfield County, CT 1 40,000 4,952
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE: 2 70,600 $ 7,183
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 4 218,600 $ 22,965
====================================================================================================================================
</TABLE>
(a) Unless otherwise noted, transactions were funded by the Company
primarily with funds made available through draws on the Company's
credit facilities.
(b) The Company may be required to pay additional consideration due to
earn-out provisions in the agreement. William L. Mack, a director
and equity holder of the Company, was an indirect owner of an
interest in certain of the buildings contained in the Pacifica
portfolio.
(c) The acquisition was funded with cash as well as the assumption of
mortgage debt (estimated fair value of approximately $12,104, with
annual effective interest rate of 6.52 percent).
(d) The acquisition was funded primarily from proceeds received from the
sale of 2,705,628 shares of common stock (see Note 14). Also
included in the acquisition, but excluded from this schedule, is (i)
Nine Campus Drive, which the Company has a 50 percent interest
through an unconsolidated joint venture (see Note 4), and (ii)
developable land adjacent to the acquired portfolio (see "1998
Redevelopment Properties/Developable Land Acquisitions").
(e) The acquisition was funded with cash and the issuance of common
units to the seller (see Note 10).
(f) The property was acquired subject to a ground lease, which is
prepaid through 2031, and has two 10-year renewal options, at rent
levels as defined in the lease agreement.
(g) Also included in the acquisition, but excluded from this schedule,
is developable land adjacent to the acquired portfolio (see "1998
Redevelopment Properties/Developable Land Acquisitions").
(h) Includes land adjacent to the operating property, which may be
sub-divided for future development.
(i) The property was acquired through the exercise of a purchase option
obtained in connection with the Company's acquisition of 65
properties from Robert Martin Company, LLC in January 1997. The
acquisition was funded with cash, net of the repayment by the seller
of the remaining balance of a note receivable.
(j) The acquisition was funded with cash as well as the assumption of
mortgage debt (aggregate estimated fair value of approximately
$8,354, with a weighted average annual effective interest rate of
6.24 percent). The Company is under contract to acquire an
additional four office/flex properties and has a right of first
refusal to acquire six additional office/flex properties.
(k) The property was acquired through the exercise of a purchase option
obtained in the acquisition of the McGarvey portfolio in January
1998.
(l) On February 1, 1999, the Company entered into a ground lease
agreement to lease 27.7 acres of developable land located at the
Company's Horizon Center Business Park, located in Hamilton
Township, Mercer County, New Jersey on which Home Depot is
developing a 134,000 square-foot retail store.
- ----------
1999 REDEVELOPMENT PROPERTIES/DEVELOPABLE LAND TRANSACTIONS
On February 26, 1999, the Company acquired approximately 2.3 acres of vacant
land adjacent to one of the Company's operating properties located in San
Antonio, Bexar County, Texas for approximately $1,524, which was made available
from the Company's cash reserves.
On March 15, 1999, the Company entered into a joint venture with SJP 106 Allen
Road to form MC-SJP Pinson Development, LLC, which acquired vacant land located
in Bernards Township, Somerset County, New Jersey. The venture has commenced
construction of a 135,000 square-foot office building on this site. The Company
provided a construction loan with a total commitment of $22,859 (aggregate
borrowings of $10,613 as of September 30, 1999) to the venture. Upon completion
of the building, the Company's construction loan will convert to an equity
interest in the venture. The Company accounts for its investment in the joint
venture on a consolidated basis.
On May 4, 1999, the Company acquired, from an entity whose principals include
Timothy M. Jones, Martin S. Berger and Robert F. Weinberg, each of whom are
affiliated with the Company as the President of the Company, a current member of
the Board of Directors and a former member of the Board of Directors of the
Company, approximately 2.5 acres of vacant land in the Stamford Executive Park,
located in Stamford, Fairfield County, Connecticut. The Company acquired the
land for approximately $2,181. $1,681 of the purchase price was funded from the
Company's cash reserves with an additional $500 due three years from the closing
date contingent upon certain conditions per the acquisition contract and subject
to interest over the term.
12
<PAGE>
On June 1, 1999, the Company acquired 795 Folsom Street, a 183,445 square-foot
office building located in San Francisco, San Francisco County, California. The
building was acquired for approximately $34,282, which was made available from
drawing on one of the Company's credit facilities. In August 1999, the Company
completed redevelopment of the property and placed the office building in
service (see "Properties Placed in Service").
On August 31, 1999, the Company acquired, from an entity whose principals
include Brant Cali, Executive Vice President and Chief Operating Officer of the
Company and a member of the Board of Directors of the Company and certain
immediate family of John J. Cali, Chairman of the Board of Directors of the
Company, approximately 28.1 acres of developable land adjacent to two of the
Company's operating properties located in Roseland, Essex County, New Jersey for
approximately $6,097. The acquisition was funded with cash and the issuance of
common units to the seller (see Note 10).
1998 REDEVELOPMENT PROPERTIES/DEVELOPABLE LAND TRANSACTIONS
On January 23, 1998, the Company acquired, from an entity whose principals
include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg, each of whom
are affiliated with the Company as the President of the Company, a current
member of the Board of Directors and a former member of the Board of Directors
of the Company, approximately 10 acres of vacant land in the Stamford Executive
Park, located in Stamford, Fairfield County, Connecticut for approximately
$1,341, which was funded from the Company's cash reserves. In October 1998, the
Company completed and placed in service a 40,000 square-foot office/flex
property on the acquired land (see "Properties Placed in Service").
On February 2, 1998, the Company acquired 2115 Linwood Avenue, a 68,000
square-foot vacant office building located in Fort Lee, Bergen County, New
Jersey. The building was acquired for approximately $5,164, which was made
available from drawing on one of the Company's credit facilities. In August
1999, the Company completed redevelopment of the property and placed the office
building in service (see "Properties Placed in Service").
On March 27, 1998, as part of the purchase of the Prudential Business Campus
(see "Operating Property Acquisitions"), the Company acquired approximately 95
acres of vacant land adjacent to the operating properties for approximately
$27,500.
On June 8, 1998, as part of the Pacifica portfolio-phase II acquisition (see
"Operating Property Acquisitions"), the Company acquired vacant land adjacent to
the operating properties for approximately $2,006.
On September 4, 1998, the Company acquired approximately 128 acres of vacant
land located at the Company's Horizon Center Business Park, Hamilton Township,
Mercer County, New Jersey, through the exercise of a purchase option obtained in
the Company's acquisition of the Horizon Center Business Park in November 1995.
The land was acquired for approximately $1,698, which was funded from the
Company's cash reserves. Subsequently in February 1999, the Company leased 27.7
acres of the acquired land to Home Depot (see "Properties Placed in Service").
On November 10, 1998, the Company acquired approximately 10.1 acres of land
located at Three Vaughn Drive, Princeton, Mercer County, New Jersey. The Company
acquired the land for approximately $2,146, which was funded from the Company's
cash reserves.
On December 3, 1998, the Company acquired, from an entity whose principals
include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg, each of whom
are affiliated with the Company as the President of the Company, a current
member of the Board of Directors and a former member of the Board of Directors
in the Company, approximately 2.7 acres of land located at 12 Skyline Drive,
Hawthorne, Westchester County, New York. The Company acquired the land for
approximately $1,540, which was funded from the Company's cash reserves. In
September 1999, the Company completed and placed in service a 47,000 square-foot
office/flex property on the acquired land (see "Properties Placed in Service").
13
<PAGE>
4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
PRU-BETA 3 (NINE CAMPUS DRIVE)
On March 27, 1998, the Company acquired a 50 percent interest in an existing
joint venture with The Prudential Insurance Company of America ("Prudential"),
known as Pru-Beta 3, which owns and operates Nine Campus Drive, a 156,495
square-foot office building, located in the Prudential Business Campus office
complex in Parsippany, Morris County, New Jersey (see Note 3). The Company
performs management and leasing services for the property owned by the joint
venture and recognized $112 and $50 in fees for such services in the nine months
ended September 30, 1999 and 1998, respectively.
HPMC (CONTINENTAL GRAND II/SUMMIT RIDGE/LAVA RIDGE)
On April 23, 1998, the Company entered into a joint venture agreement with HCG
Development, L.L.C. and Summit Partners I, L.L.C. to form HPMC Development
Partners, L.P. and, on July 21, 1998, entered into a second joint venture HPMC
Development Partners II, L.P. (formerly known as HPMC Lava Ridge Partners,
L.P.), with these same parties. HPMC Development Partners, L.P.'s efforts have
focused on two development projects, commonly referred to as Continental Grand
II and Summit Ridge. Continental Grand II is a 4.2 acre site located in El
Segundo, Los Angeles County, California, acquired by the venture upon which it
has commenced construction of a 237,000 square-foot office property. Summit
Ridge is a 7.3 acre site located in San Diego, San Diego County, California,
acquired by the venture upon which it has commenced construction of a 132,000
square-foot office/flex property. HPMC Development Partners II, L.P. has
commenced construction of three two-story buildings aggregating 183,200
square-feet of office space on a 12.1 acre site located in Roseville, Placer
County, California and purchased a parcel of land from the City of Daly City,
California, for future development into office space, a hotel and other retail
establishments. Among other things, the partnership agreements provide for a
preferred return on the Company's invested capital in each venture, in addition
to 50 percent of such venture's profit above the preferred returns, as defined
in each agreement.
G&G MARTCO (CONVENTION PLAZA)
On April 30, 1998, the Company acquired a 49.9 percent interest in an existing
joint venture, known as G&G Martco, which owns Convention Plaza, a 305,618
square-foot office building, located in San Francisco, San Francisco County,
California. A portion of its initial investment was financed through the
issuance of common units (see Note 10), as well as funds drawn from the
Company's credit facilities. Subsequently, on June 4, 1999, the Company acquired
an additional 0.1 percent interest in G&G Martco through the issuance of common
units (see Note 10). The Company performs management and leasing services for
the property owned by the joint venture and recognized $176 and $8 in fees for
such services in the nine months ended September 30, 1999 and 1998,
respectively.
AMERICAN FINANCIAL EXCHANGE L.L.C.
On May 20, 1998, the Company entered into a joint venture agreement with
Columbia Development Corp. to form American Financial Exchange L.L.C. The
venture was initially formed to acquire land for future development, located on
the Hudson River waterfront in Jersey City, Hudson County, New Jersey, adjacent
to the Company's Harborside Financial Center office complex. The Company holds a
50 percent interest in the joint venture. Among other things, the partnership
agreement provides for a preferred return on the Company's invested capital in
the venture, in addition to the Company's proportionate share of the venture's
profit, as defined in the agreement. The joint venture acquired land on which it
constructed a parking facility, which is currently leased to a parking operator
under a 10-year agreement. Such parking facility serves a ferry service between
the Company's Harborside property and Manhattan.
RAMLAND REALTY ASSOCIATES L.L.C. (ONE RAMLAND ROAD)
On August 20, 1998, the Company entered into a joint venture agreement with S.B.
New York Realty Corp. to form Ramland Realty Associates L.L.C. The venture was
formed to own, manage and operate One Ramland Road, a 232,000 square-foot
office/flex building plus adjacent developable land, located in Orangeburg,
Rockland County, New York. In August 1999, the joint venture completed
redevelopment of the property and placed the office/flex building in service.
The Company holds a 50 percent interest in the joint venture. The Company
performs management and leasing services for the property owned by the joint
venture and recognized $7 and none in fees for such services in the nine months
ended September 30, 1999 and 1998, respectively.
ASHFORD LOOP ASSOCIATES L.P. (1001 SOUTH DAIRY ASHFORD/2100 WEST LOOP SOUTH)
On September 18, 1998, the Company entered into a joint venture agreement with
Prudential to form Ashford Loop Associates L.P. The venture was formed to own,
manage and operate 1001 South Dairy Ashford, a 130,000 square-foot office
building acquired on September 18, 1998 and 2100 West Loop South, a 168,000
square-foot office building acquired on November 25, 1998, both located in
Houston, Harris County, Texas. The Company holds a 20 percent interest in the
joint venture. The joint venture may be required to pay additional consideration
due to earn-out provisions in the acquisition contracts. During the nine months
ended September 30, 1999, the venture paid $9,991 ($1,998
14
<PAGE>
representing the Company's share) in accordance with the earn-out provisions in
the acquisition contracts. The Company performs management and leasing services
for the properties owned by the joint venture and recognized $96 and none in
fees for such services in the nine months ended September 30, 1999 and 1998,
respectively.
ARCAP INVESTORS, L.L.C.
On March 18, 1999, the Company invested in ARCap Investors, L.L.C., a joint
venture with several participants, which was formed to invest in sub-investment
grade tranches of commercial mortgage-backed securities ("CMBS"). The Company
has invested $20,000 in the venture. William L. Mack, a director and equity
holder of the Company, is a principal of the managing member of the venture. At
September 30, 1999, the venture held approximately $232,400 face value of CMBS
bonds at an aggregate cost of $132,847.
SUMMARIES OF UNCONSOLIDATED JOINT VENTURES
The following is a summary of the financial position of the unconsolidated joint
ventures in which the Company had investment interests as of September 30, 1999
and December 31, 1998:
<TABLE>
<CAPTION>
September 30, 1999
----------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Rental property, net $22,051 $ 56,671 $ 13,063 $ 10,768 $ 17,590 $ 28,879 -- $ 149,022
Other assets 3,193 4,694 3,148 598 2,130 818 $ 226,677 241,258
- -------------------------------------------------------------------------------------------------------------------------
Total assets $25,244 $ 61,365 $ 16,211 $ 11,366 $ 19,720 $ 29,697 $ 226,677 $ 390,280
=========================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable -- $ 31,615 $ 42,963 -- $ -- -- $ 106,510 $ 181,088
Other liabilities $ 218 2,841 1,012 $ 1 606 $ 537 24,688 29,903
Partners'/members' capital 25,026 26,909 (27,764) 11,365 19,114 29,160 95,479 179,289
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $25,244 $ 61,365 $ 16,211 $ 11,366 $ 19,720 $ 29,697 $ 226,677 $ 390,280
=========================================================================================================================
Company's net investment
in unconsolidated
joint ventures $17,148 $ 22,217 $ 8,790 $ 11,414 $ 9,931 $ 6,176 $ 19,781 $ 95,457
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998
----------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Rental property, net $22,711 $ 30,278 $ 11,099 $ 10,621 $8,467 $ 19,166 -- $ 102,342
Other assets 3,995 1,097 4,058 389 1,101 378 -- 11,018
- -------------------------------------------------------------------------------------------------------------------------
Total assets $26,706 $ 31,375 $ 15,157 $ 11,010 $9,568 $ 19,544 -- $ 113,360
=========================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable -- $ 632 $ 39,762 -- -- -- -- $ 40,394
Other liabilities $ 484 3,522 2,096 $ 79 $ 6 $ 509 -- 6,696
Partners'/members' capital 26,222 27,221 (26,701) 10,931 9,562 19,035 -- 66,270
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $26,706 $ 31,375 $ 15,157 $ 11,010 $9,568 $ 19,544 -- $ 113,360
=========================================================================================================================
Company's net investment
in unconsolidated
joint ventures $17,980 $ 17,578 $ 10,964 $ 10,983 $4,851 $ 4,152 -- $ 66,508
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
The following is a summary of the results of operations of the unconsolidated
joint ventures for the period in which the Company had investment interests
during the three and nine month periods ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999
----------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 1,227 -- $ 2,422 $ 250 $ 580 $ 971 $ 3,223 $ 8,673
Operating and other expenses (389) -- (814) (33) (103) (597) (1,201) (3,137)
Depreciation and amortization (304) -- (233) (24) (178) (163) -- (902)
Interest expense -- -- (813) -- -- -- (1,014) (1,827)
- -------------------------------------------------------------------------------------------------------------------------
Net income $ 534 -- $ 562 $ 193 $ 299 $ 211 $ 1,008 $ 2,807
=========================================================================================================================
Company's equity
in earnings of unconsolidated
joint ventures $ 228 -- $ 124 $ 193 $ 150 $ 42 $ 97 $ 834
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended September 30, 1998
----------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 1,159 -- $1,438 $ 265 -- $ 50 -- $ 2,912
Operating and other expenses (377) -- (680) (31) -- (24) -- (1,112)
Depreciation and amortization (330) -- (252) -- -- (9) -- (591)
Interest expense -- -- (787) -- -- -- -- (787)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 452 -- $ (281) $ 234 -- $ 17 -- $ 422
=========================================================================================================================
Company's equity in earnings
(loss) of unconsolidated
joint ventures $ 226 -- $ (140) $ 234 -- $ 4 -- $ 324
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Nine Months Ended September 30, 1999
----------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 3,697 -- $6,572 $ 667 $ 580 $ 2,959 $5,998 $20,473
Operating and other expenses (1,134) -- (2,204) (163) (103) (1,645) (3,213) (8,462)
Depreciation and amortization (929) -- (696) (70) (178) (379) -- (2,252)
Interest expense -- -- (2,261) -- -- -- (1,558) (3,819)
- -------------------------------------------------------------------------------------------------------------------------
Net income $ 1,634 -- $1,411 $ 434 $ 299 $ 935 $1,227 $ 5,940
=========================================================================================================================
Company's equity in earnings
(loss) of unconsolidated
joint ventures $ 584 -- $ (153) $ 384 $ 150 $ 176 $ 321 $ 1,462
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Nine Months Ended September 30, 1998
----------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 2,294 -- $2,109 $ 265 -- $ 50 -- $ 4,718
Operating and other expenses (729) -- (986) (31) -- (24) -- (1,770)
Depreciation and amortization (674) -- (387) -- -- (9) -- (1,070)
Interest expense -- -- (1,292) -- -- -- -- (1,292)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 891 -- $ (556) $ 234 -- $ 17 -- $ 586
=========================================================================================================================
Company's equity in earnings
(loss) of unconsolidated
joint ventures $ 458 -- $ (277) $ 234 -- $ 4 -- $ 419
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
5. DEFERRED CHARGES AND OTHER ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred leasing costs $ 50,836 $ 35,151
Deferred financing costs 17,177 9,962
- -------------------------------------------------------------------------------------------------------------------
68,013 45,113
Accumulated amortization (18,009) (13,527)
- -------------------------------------------------------------------------------------------------------------------
Deferred charges, net 50,004 31,586
Prepaid expenses and other assets 10,696 7,434
- -------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets, net $ 60,700 $ 39,020
===================================================================================================================
</TABLE>
6. RESTRICTED CASH
Restricted cash includes security deposits for the Company's residential
properties and certain commercial properties, and escrow and reserve funds for
debt service, real estate taxes, property insurance, capital improvements,
tenant improvements, and leasing costs established pursuant to certain mortgage
financing arrangements, and is comprised of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Security deposits $ 6,017 $ 5,696
Escrow and other reserve funds 167 330
- -------------------------------------------------------------------------------------------------------------------
Total restricted cash $ 6,184 $ 6,026
===================================================================================================================
</TABLE>
7. SENIOR UNSECURED NOTES
On March 16, 1999, the Operating Partnership issued $600,000 of unsecured
corporate debt with interest payable semi-annually in arrears. The total
proceeds from the issuance (net of selling commissions and discount) of
approximately $593,500 were used to pay down outstanding borrowings under the
1998 Unsecured Facility, as defined in Note 8, and to pay off certain mortgage
loans. The unsecured corporate debt was issued at a discount of approximately
$2,748, which is being amortized over the terms of the respective tranches as an
adjustment to interest expense.
On August 2, 1999, the Operating Partnership issued an additional $185,283 of
unsecured corporate debt with interest payable monthly. The Company used the
proceeds to retire the TIAA Mortgage, as defined in Note 9.
The Operating Partnership issued the $785,283 of total unsecured corporate debt
("Senior Unsecured Notes") under a shelf registration statement which was
declared effective by the SEC in September 1998. The Senior Unsecured Notes are
redeemable at any time at the option of the Company, subject to certain
conditions including yield maintenance.
A summary of the terms of the Senior Unsecured Notes outstanding as of September
30, 1999 is presented below:
<TABLE>
<CAPTION>
EFFECTIVE
AMOUNT RATE (1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
7.18% Senior Unsecured Notes, due December 31, 2003 $185,283 7.23%
7.00% Senior Unsecured Notes, due March 15, 2004 $299,644 7.27%
7.25% Senior Unsecured Notes, due March 15, 2009 $297,779 7.49%
- -------------------------------------------------------------------------------------------------------------------
Total Senior Unsecured Notes $782,706 7.34%
===================================================================================================================
</TABLE>
(1) Includes the cost of terminated treasury lock agreements (if any), offering
and other transaction costs and the discount on the notes, as applicable.
17
<PAGE>
The terms of the Senior Unsecured Notes include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.
8. REVOLVING CREDIT FACILITIES
ORIGINAL UNSECURED FACILITY
The Original Unsecured Facility ("Original Unsecured Facility") was repaid in
full and retired in connection with the Company obtaining the 1998 Unsecured
Facility in April 1998, as defined below. On account of prepayment fees, loan
origination fees, legal fees, and other costs incurred in the retirement of the
Original Unsecured Facility, an extraordinary loss of $2,203, net of minority
interest's share of the loss ($275), was recorded for the year ended December
31, 1998.
1998 UNSECURED FACILITY
In April 1998, the Company repaid in full and terminated the Original Unsecured
Facility and obtained a new unsecured revolving credit facility ("1998 Unsecured
Facility") with a current borrowing capacity of $1,000,000 from a group of 28
lenders. The interest rate is based on the Company's achievement of investment
grade unsecured debt ratings and at the Company's election, bears interest at
either 90 basis points over London Inter-Bank Offered Rate ("LIBOR") or the
higher of the lender's prime rate or the Federal Funds rate plus 50 basis
points. The interest rate is currently LIBOR (5.40 percent at September 30,
1999) plus 90 basis points. The 1998 Unsecured Facility matures in April 2001.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common stock
or other equity interests in an aggregate amount in excess of 90 percent of
funds from operations for such period, subject to certain other adjustments. The
1998 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.
PRUDENTIAL FACILITY
The Company has a revolving credit facility ("Prudential Facility") from
Prudential Securities Corp. ("PSC") in the amount of $100,000, which currently
bears interest at 110 basis points over one-month LIBOR, with a maturity date of
September 30, 2000. The Prudential Facility is a recourse liability of the
Operating Partnership and is secured by the Company's equity interest in
Harborside. The Prudential Facility limits the ability of the Operating
Partnership to make any distributions during any fiscal quarter in an amount in
excess of 100 percent of the Operating Partnership's available funds from
operations for the immediately preceding fiscal quarter (except to the extent
such excess distributions or dividends are attributable to gains from the sale
of the Operating Partnership's assets or are required for the Company to
maintain its status as a REIT under the Code); provided, however, that the
Operating Partnership may make distributions and pay dividends in excess of 100
percent of available funds from operations for the preceding fiscal quarter for
not more than three consecutive quarters. In addition to the foregoing, the
Prudential Facility limits the liens placed upon the subject property and
certain collateral, the use of proceeds from the Prudential Facility, and the
maintenance of ownership of the subject property and assets derived from said
ownership.
SUMMARY
As of September 30, 1999, the Company had outstanding borrowings of $249,956
under its revolving credit facilities (with aggregate borrowing capacity of
$1,100,000). The outstanding borrowings were comprised of $249,956 from the 1998
Unsecured Facility, with no outstanding borrowings on its Prudential Facility.
18
<PAGE>
9. MORTGAGES AND LOANS PAYABLE
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Portfolio Mortgages $ 150,000 $ 335,283
Property Mortgages 395,567 414,048
- -------------------------------------------------------------------------------------------------------------------
Total Mortgages and Loans Payable $ 545,567 $ 749,331
===================================================================================================================
</TABLE>
PORTFOLIO MORTGAGES
TIAA MORTGAGE
The Company had a $185,283 non-recourse mortgage loan with Teachers Insurance
and Annuity Association of America, with interest only payable monthly at a
fixed annual rate of 7.18 percent ("TIAA Mortgage"). The TIAA Mortgage was
secured and cross collateralized by 43 properties. The Company had the option to
convert, without any yield maintenance obligation or prepayment premium, the
TIAA Mortgage to unsecured public debt as a result of the achievement of an
investment grade credit rating. The TIAA Mortgage was prepayable in whole or in
part subject to certain provisions, including yield maintenance.
Using the proceeds from the issuance of $185,283 of unsecured corporate debt on
August 2, 1999 (see Note 7), the Company repaid in full and retired the TIAA
Mortgage.
$150,000 PRUDENTIAL MORTGAGE LOAN
On April 30, 1998, the Company obtained a $150,000, interest-only, non-recourse
mortgage loan from Prudential ("$150,000 Prudential Mortgage Loan"). The loan,
which is secured by 12 properties, has an effective annual interest rate of 7.10
percent and a seven-year term. The Company has the option to convert the
mortgage loan to unsecured debt as a result of the achievement of an investment
grade credit rating. The mortgage loan is prepayable in whole or in part subject
to certain provisions, including yield maintenance.
Certain mortgages and loans payable were repaid and retired in connection with
the Company obtaining the $150,000 Prudential Mortgage Loan. On account of
prepayment fees, loan origination fees, legal fees, and other costs incurred in
the retirement of certain mortgages and loans payable in April 1998, an
extraordinary loss of $170, net of minority interest's share of the loss ($22),
was recorded in the year ended December 31, 1998.
PROPERTY MORTGAGES
Property mortgages are comprised of various non-recourse loans which are
collateralized by certain of the Company's rental properties. Payments on
property mortgages are generally due in monthly installments of principal and
interest, or interest only.
19
<PAGE>
A summary of the Company's property mortgages as of September 30, 1999 and
December 31, 1998 is as follows:
<TABLE>
<CAPTION>
PRINCIPAL BALANCE AT
--------------------
INTEREST SEPTEMBER 30, DECEMBER 31, DATE OF
PROPERTY NAME LENDER RATE 1999 1998 MATURITY
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mack-Cali Centre VI CIGNA 7.600% $ -- $29,223 03/31/99
Mack-Cali Airport CIGNA 7.600% -- 6,849 03/31/99
Mack-Cali Murray Hill Horace Mann 7.850% -- 8,027 05/01/99
Mack-Cali Manhasset IDA Financing TENR 8,000 8,000 12/01/99
201 Commerce Drive Sun Life Assurance Co. 6.240% 1,075 1,121 09/01/00
3 & 5 Terri Lane First Union National Bank 6.220% 4,445 4,476 10/31/00
101 & 225 Executive Drive Sun Life Assurance Co. 6.270% 2,420 2,553 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.510% 2,245 2,292 12/31/01
Harborside Financial Center (1) Contingent Obligation (1) 6.764% 6,462 6,150 11/04/02
Mack-Cali Willowbrook CIGNA 8.670% 10,376 10,918 10/01/03
1717 Route 208, Fair Lawn Prudential Insurance Co. 8.250% -- 17,586 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.440% 14,581 14,983 07/01/04
Mack-Cali Centre VI Principal Life Insurance Co. 6.865% 35,000 -- 04/01/05
Mack-Cali Bridgewater I New York Life Ins. Co. 7.000% 23,000 23,000 09/10/05
Mack-Cali Woodbridge II New York Life Ins. Co. 7.500% 17,500 17,500 09/10/05
Mack-Cali Short Hills Prudential Insurance Co. 7.740% 26,808 27,696 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.520% 10,952 11,471 10/10/05
Harborside - Plaza I U.S. West Pension Trust 6.990% 50,740 48,148 01/01/06
Harborside - Plaza II and III Northwestern Mutual Life Ins. 7.320% 99,260 101,852 01/01/06
Mack-Cali Airport Allstate Life Insurance Co. 7.050% 10,500 -- 04/01/07
Kemble Plaza II Mitsubishi Tr & Bk Co. LIBOR+0.65% 40,025 40,025 01/31/08
Kemble Plaza I Mitsubishi Tr & Bk Co. LIBOR+0.65% 32,178 32,178 01/31/09
- ----------------------------------------------------------------------------------------------------------------------
Total Property Mortgages $395,567 $414,048
======================================================================================================================
</TABLE>
(1) As part of the Harborside acquisition in November 1996, the Company agreed
to make payments (with an estimated net present value of approximately
$5,252 at acquisition date) to the seller for development rights
("Contingent Obligation") if and when the Company commences construction on
the acquired site during the next several years. However, the agreement
provides, among other things, that even if the Company does not commence
construction, the seller may nevertheless require the Company to acquire
these rights during the six-month period after the end of the sixth year.
After such period, the seller's option lapses, but any development in years
7 through 30 will require a payment, on an increasing scale, for the
development rights. The Company is currently in the pre-development phase
of a long-range plan to develop the Harborside site on a multi-property,
multi-use basis. On November 2, 1999, the Company paid off the Contingent
Obligation in full to the seller for the development rights.
INTEREST RATE CONTRACTS
On May 24, 1995, the Company entered into an interest rate swap agreement with a
commercial bank. The swap agreement fixes the Company's one-month LIBOR base to
6.285 percent per annum on a notional amount of $24,000.
The swap agreement expired in August 1999.
On January 23, 1996, the Company entered into an interest rate swap agreement
with a commercial bank. The swap agreement fixed the Company's one-month LIBOR
base to 5.265 percent per annum on a notional amount of $26,000.
The swap agreement expired in January 1999.
On October 1, 1998, the Company entered into a forward treasury rate lock
agreement with a commercial bank. The agreement locked an interest rate of 4.089
percent per annum for the three-year U.S. Treasury Note effective November 4,
1999, on a notional amount of $50,000. The agreement will be used to fix the
Index Rate on $50,000 of the Harborside- Plaza I mortgage, for which the
Company's interest rate re-sets for three years beginning November 4, 1999 to
the three-year U.S. Treasury Note plus 110 basis points (see "Property
Mortgages: Harborside-Plaza I").
In connection with the issuance of the Senior Unsecured Notes in March 1999, the
Company entered into and settled forward treasury rate lock agreements. These
agreements were settled at a cost of approximately $517, which is being
amortized to interest expense over the terms of the respective tranches.
20
<PAGE>
The Company is exposed to credit loss in the event of non-performance by the
other parties to the interest rate contracts. However, the Company does not
anticipate non-performance by any of the counterparties. The Company is also
exposed to market risk from the movement in interest rates pertaining to the
forward treasury rate lock agreement.
SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates
for the Company's Senior Unsecured Notes, revolving credit facilities and
mortgages and loans payable as of September 30, 1999 are as follows:
<TABLE>
<CAPTION>
WEIGHTED AVG.
SCHEDULED PRINCIPAL INTEREST RATE OF
YEAR AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (A)
===================================================================================================================
<S> <C> <C> <C> <C>
October through December 1999 $ 490 $ 8,000 $ 8,490 6.22%
2000 2,808 5,419 8,227 6.67%
2001 3,010 254,168 257,178 6.31%
2002 3,201 7,814 11,015 7.02%
2003 3,680 192,093 195,773 7.28%
Thereafter 4,721 1,092,825 1,097,546 7.22%
- -------------------------------------------------------------------------------------------------------------------
Totals/Weighted Average $ 17,910 $ 1,560,319 $ 1,578,229 7.07%
===================================================================================================================
</TABLE>
Scheduled principal payments during the three and nine month periods ended
September 30, 1999 amounted to $805 and $2,621, respectively.
(a) Assumes a weighted average LIBOR rate at September 30, 1999 of 5.38
percent in calculating revolving credit facility and other variable rate
debt interest rates.
CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the nine months ended September 30, 1999 and 1998 was
$76,902 and $67,550, respectively. Interest capitalized by the Company for the
nine months ended September 30, 1999 and 1998 was $4,726 and $2,308,
respectively.
SUMMARY OF INDEBTEDNESS
As of September 30, 1999, the Company's total indebtedness of $1,578,229
(weighted average interest rate of 7.07 percent) was comprised of $330,160 of
credit facility borrowings and other variable rate mortgage debt (weighted
average rate of 6.21 percent), fixed rate debt of $1,241,607 (weighted average
rate of 7.31 percent), and a Contingent Obligation of $6,462.
10. MINORITY INTEREST
Minority interest in the accompanying consolidated financial statements relates
to common units in the Operating Partnership, in addition to preferred units
("Preferred Units") and warrants to purchase common units ("Unit Warrants")
issued in connection with the Company's December 1997 acquisition of 54 office
properties ("Mack Properties") from the Mack Company and Patriot American Office
Group ("Mack Transaction"), held by parties other than the Company.
PREFERRED UNITS
In connection with the Mack Transaction in December 1997, the Company issued
15,237 Series A Preferred Units and 215,325 Series B Preferred Units, with an
aggregate value of $236,491. The Preferred Units have a stated value of $1,000
per unit and are preferred as to assets over any class of common units or other
class of preferred units of the Company, based on circumstances per the
applicable unit certificates.
The quarterly distribution on each Preferred Unit (representing 6.75 percent of
the Preferred Unit stated value of $1,000 on an annualized basis) is an amount
equal to the greater of (i) $16.875 or (ii) the quarterly distribution
attributable to a Preferred Unit determined as if such unit had been converted
into common units, subject to adjustment for customary anti-dilution rights.
Each of the Series A Preferred Units may be converted at any time into common
units at a conversion price of $34.65 per unit, and, after the one year
anniversary of the date of the Series A Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the Series B Preferred Units may be converted at any time into
common units at a conversion price of $34.65 per unit, and, after the three year
anniversary of the date of the Series B Preferred Units' initial issuance,
common units received pursuant
21
<PAGE>
to such conversion may be redeemed into common stock. Each of the common units
are redeemable for an equal number of shares of common stock.
During 1998, the Company issued 19,694 additional Preferred Units (11,895 of
Series A and 7,799 of Series B), convertible into 568,369 common units and
valued at approximately $20,200, in connection with the achievement of certain
performance goals at the Mack Properties in redemption of an equivalent number
of contingent Preferred Units.
During the nine months ended September 30, 1999, 20,952 Series A Preferred Units
were converted into 604,675 common units.
As of September 30, 1999, there was 229,304 Preferred Units outstanding
(convertible into 6,617,721 common units).
COMMON UNITS
Certain individuals and entities own common units in the Operating Partnership.
A common unit and a share of common stock of the Company have substantially the
same economic characteristics in as much as they effectively share equally in
the net income or loss of the Operating Partnership.
Common units are redeemable by the common unitholders at their option, subject
to certain restrictions, on the basis of one common unit for either one share of
common stock or cash equal to the fair market value of a share at the time of
the redemption. The Company has the option to deliver shares of common stock in
exchange for all or any portion of the cash requested. When a unitholder redeems
a common unit, minority interest is reduced and the Company's investment in the
Operating Partnership is increased.
During 1998, the Operating Partnership redeemed a total of 82,880 common units
in exchange for an aggregate of $3,163 in cash. Additionally, the Operating
Partnership redeemed an aggregate of 29,300 common units for an equivalent
number of shares of common stock in the Company.
On March 26, 1998, in connection with the Pacifica portfolio-phase I
acquisition, the Company issued 100,175 common units, valued at approximately
$3,779.
On April 30, 1998, in connection with the acquisition of a 49.9 percent interest
in the G&G Martco joint venture (see Note 4), the Company issued 218,105 common
units, valued at approximately $8,334.
On June 8, 1998, in connection with the Pacifica portfolio-phase II acquisition,
the Company issued 585,263 common units, valued at approximately $20,753.
On July 20, 1998, in connection with the expansion of one of the Mack
Properties, the Company issued 52,245 common units, valued at approximately
$1,632.
On September 10, 1998, in connection with the acquisition of 40 Richards Avenue,
the Company issued 414,114 common units, valued at approximately $12,615.
During 1998, the Company also issued 1,731,386 common units, valued at
approximately $58,936, in connection with the achievement of certain performance
goals at the Mack Properties in redemption of an equivalent number of contingent
common units.
On June 4, 1999, in connection with the acquisition of a 0.1 percent interest in
G&G Martco joint venture (see Note 4), the Company issued 437 common units,
valued at approximately $17.
On August 31, 1999, in connection with the acquisition of 28.1 acres of vacant
land located in Roseland, New Jersey, the Company issued 121,624 common units,
valued at approximately $3,345.
During the nine months ended September 30, 1999, the Operating Partnership
redeemed an aggregate of 1,795,289 common units for an equivalent number of
shares of common stock in the Company.
During the nine months ended September 30, 1999, the Company also issued 268,432
common units, valued at approximately $7,974, in connection with the achievement
of certain performance goals at the Mack Properties in redemption of an
equivalent number of contingent common units.
As of September 30, 1999, there were 8,286,464 common units outstanding.
22
<PAGE>
CONTINGENT COMMON & PREFERRED UNITS
In connection with the Mack Transaction in December 1997, 2,006,432 contingent
common units, 11,895 Series A contingent Preferred Units and 7,799 Series B
contingent Preferred Units were issued as contingent non-participating units
("Contingent Units"). Such Contingent Units have no voting, distribution or
other rights until such time as they are redeemed into common units, Series A
Preferred Units, and Series B Preferred Units, respectively. Redemption of such
Contingent Units shall occur upon the achievement of certain performance goals
relating to certain of the Mack Properties, specifically the achievement of
certain leasing activity. When Contingent Units are redeemed for common and
Preferred Units, an adjustment to the purchase price of certain of the Mack
Properties is recorded, based on the value of the units issued.
On account of certain of the performance goals at the Mack Properties having
been achieved during 1998, the Company redeemed 1,731,386 contingent common
units and 19,694 contingent Preferred Units and issued an equivalent number of
common and Preferred Units, as indicated above.
On account of certain of the performance goals at the Mack Properties having
been achieved during the nine months ended September 30, 1999, the Company
redeemed 268,432 contingent common units and issued an equivalent number of
common units, as indicated above. There were no contingent Preferred Units
outstanding and 6,614 contingent common units outstanding as of September 30,
1999.
UNIT WARRANTS
The Company has 2,000,000 Unit Warrants outstanding. The Unit Warrants are
exercisable at $37.80 per common unit and expire on December 11, 2002.
MINORITY INTEREST OWNERSHIP
As of September 30, 1999 and December 31, 1998, the minority interest common
unitholders owned 12.4 percent (20.3 percent, including the effect of the
conversion of Preferred Units into common units) and 13.7 percent (22.2 percent
including the effect of the conversion of Preferred Units into common units) of
the Operating Partnership, respectively (excluding any effect for the exercise
of Unit Warrants).
11. EMPLOYEE BENEFIT PLAN
All employees of the Company who meet certain minimum age and period of service
requirements are eligible to participate in a 401(k) defined contribution plan
(the "401(k) Plan"). The 401(k) Plan allows eligible employees to defer up to 15
percent of their annual compensation. The amounts contributed by employees are
immediately vested and non-forfeitable. The Company, at management's discretion,
may match employee contributions, although no employer contributions have been
made to date.
12. COMMITMENTS AND CONTINGENCIES
TAX ABATEMENT AGREEMENTS
GROVE STREET PROPERTY
Pursuant to an agreement with the City of Jersey City, New Jersey, as
amended, expiring in 2004, the Company is required to make payments in lieu
of property taxes ("PILOT") on its property at 95 Christopher Columbus Drive,
Jersey City, Hudson County, New Jersey. Such PILOT, as defined, is $1,267 per
annum through May 31, 1999 and $1,584 per annum through May 31, 2004. Such
PILOT totaled $1,063 and $950 for the nine months ended September 30, 1999
and 1998, respectively.
23
<PAGE>
HARBORSIDE FINANCIAL CENTER PROPERTY
Pursuant to an agreement with the City of Jersey City, New Jersey obtained by
the former owner of the Harborside property in 1988 and assumed by the
Company as part of the acquisition of the property in November 1996, the
Company is required to make PILOT payments on its Harborside property. The
agreement, which commenced in 1990, is for a term of 15 years. Such PILOT is
equal to two percent of Total Project Costs, as defined, in year one and
increases by $75 per annum through year fifteen. Total Project Costs, as
defined, are $145,644. Such PILOT totaled $1,955 and $1,920 for the nine
months ended September 30, 1999 and 1998, respectively.
GROUND LEASE AGREEMENTS
Future minimum rental payments under the terms of all non-cancelable ground
leases, under which the Company is the lessee as of September 30, 1999, are as
follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
October 1, 1999 to December 31, 1999 $ 106
2000 425
2001 427
2002 427
2003 427
Thereafter 21,934
- --------------------------------------------------------------------------------
Total $23,746
================================================================================
</TABLE>
Ground lease payments incurred during the three and nine month periods ended
September 30, 1999 amounted to $106 and $316, respectively.
OTHER
On April 19, 1999, the Company announced the following changes in the membership
of its Board of Directors and the identities, titles and responsibilities of its
executive officers: (i) Thomas A. Rizk resigned from the Board of Directors, the
Executive Committee of the Board of Directors, his position as Chief Executive
Officer and as an employee of the Company; (ii) Mitchell E. Hersh was appointed
Chief Executive Officer of the Company simultaneous with his resignation from
his positions as President and Chief Operating Officer of the Company; (iii)
Timothy M. Jones was appointed President of the Company simultaneous with his
resignation from his positions as Executive Vice President and Chief Investment
Officer of the Company; and (iv) Brant Cali was appointed to the Board of
Directors of the Company to fill the remainder of Thomas A. Rizk's term as a
Class III Director and was appointed Chief Operating Officer of the Company,
also remaining as an Executive Vice President and Assistant Secretary of the
Company.
Pursuant to the terms of Mr. Rizk's employment agreement entered into with the
Company in December 1997 and an agreement entered into simultaneous with his
resigning from the Company, Mr. Rizk received a payment of approximately $14,490
in April 1999 and will receive $500 annually over the next three years. All
costs associated with Mr. Rizk's resignation are included in non-recurring
charges for the nine months ended September 30, 1999.
The Company is a defendant in certain litigation arising in the normal course of
business activities. Management does not believe that the resolution of these
matters will have a materially adverse effect upon the Company.
13. TENANT LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2016. Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the tenant's
proportionate share of and/or increases in real estate taxes and certain
operating costs, as defined, and the pass through of charges for electrical
usage.
24
<PAGE>
14. STOCKHOLDERS' EQUITY
To maintain its qualification as a REIT, not more than 50 percent in value of
the outstanding shares of the Company may be owned, directly or indirectly, by
five or fewer individuals at any time during the last half of any taxable year
of the Company, other than its initial taxable year (defined to include certain
entities), applying certain constructive ownership rules. To help ensure that
the Company will not fail this test, the Company's Articles of Incorporation
provide for, among other things, certain restrictions on the transfer of the
common stock to prevent further concentration of stock ownership. Moreover, to
evidence compliance with these requirements, the Company must maintain records
that disclose the actual ownership of its outstanding common stock and will
demand written statements each year from the holders of record of designated
percentages of its common stock requesting the disclosure of the beneficial
owners of such common stock.
COMMON STOCK
On February 25, 1998, the Company completed an underwritten public offer and
sale of 2,500,000 shares of its common stock and used the net proceeds, which
totaled approximately $92,194 (after offering costs) to pay down a portion of
its outstanding borrowings under the Company's credit facilities and fund the
acquisition of 10 Mountainview Road (see Note 3).
On March 18, 1998, in connection with the acquisition of Prudential Business
Campus, the Company completed an offer and sale of 2,705,628 shares of its
common stock using the net proceeds of approximately $99,899 (after offering
costs) in the funding of such acquisition (see Note 3).
On March 27, 1998, the Company completed an underwritten public offer and sale
of 650,407 shares of its common stock and used the net proceeds, which totaled
approximately $23,690 (after offering costs) to pay down a portion of its
outstanding borrowings under the Company's credit facilities.
On April 29, 1998, the Company completed an underwritten offer and sale of
994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34,570 (after offering costs), primarily to pay down a portion of
its outstanding borrowings under the Company's credit facilities.
On May 29, 1998, the Company completed an underwritten offer and sale of 984,615
shares of its common stock and used the net proceeds, which totaled
approximately $34,100 (after offering costs), primarily to pay down a portion of
its outstanding borrowings under the Company's credit facilities.
On December 31, 1998, the Company completed an offer and sale of 132,710 shares
of its common stock, using the net proceeds of approximately $3,940 for general
corporate purposes.
On August 6, 1998, the Board of Directors of the Company authorized a share
repurchase program ("Repurchase Program") under which the Company was permitted
to purchase up to $100,000 of the Company's outstanding common stock. Purchases
could be made from time to time in open market transactions at prevailing prices
or through privately negotiated transactions.
For the year ended December 31, 1998, the Company purchased for constructive
retirement, 854,700 shares of its outstanding common stock for an aggregate cost
of approximately $25,058. Concurrent with these purchases, the Company sold to
the Operating Partnership 854,700 common units for approximately $25,058.
For the nine months ended September 30, 1999, the Company purchased for
constructive retirement, 911,700 shares of its outstanding common stock for an
aggregate cost of approximately $25,000. Concurrent with these purchases, the
Company sold to the Operating Partnership 911,700 common units for approximately
$25,000.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Company filed a registration statement with the SEC for the Company's
dividend reinvestment and stock purchase plan ("Plan") which was declared
effective in February 1999. The Plan commenced on March 1, 1999.
During the nine months ended September 30, 1999, 1,082 shares were issued and
proceeds of approximately $32 were received from stock purchases and/or dividend
reinvestments under the Plan.
25
<PAGE>
SHAREHOLDER RIGHTS PLAN
On June 10, 1999, the Board of Directors of the Company authorized a dividend
distribution of one preferred share purchase right ("Right") for each
outstanding share of common stock to be distributed to all holders of record of
the common stock on July 6, 1999. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A junior
participating preferred stock, par value $0.01 per share ("the Preferred
Shares"), at a price of $100.00 per one one-thousandth of a Preferred Share
("Purchase Price"), subject to adjustment as provided in the rights agreement.
The Rights expire on July 6, 2009, unless the expiration date is extended or the
Right is redeemed or exchanged earlier by the Company.
The Rights will be attached to each share of common stock. The Rights will
generally be exercisable only if a person or group becomes the beneficial owner
of 15 percent or more of the outstanding common stock or announces a tender
offer for 15 percent or more of the outstanding common stock ("Acquiring
Person"). In the event that a person or group becomes an Acquiring Person, each
holder of a Right will have the right to receive, upon exercise, common stock
having a market value equal to two times the Purchase Price of the Right.
STOCK OPTION PLANS
In 1994, and as subsequently amended, the Company established the Mack-Cali
Employee Stock Option Plan ("Employee Plan") and the Mack-Cali Director Stock
Option Plan ("Director Plan") under which a total of 5,380,188 shares (subject
to adjustment) of the Company's common stock have been reserved for issuance
(4,980,188 shares under the Employee Plan and 400,000 shares under the Director
Plan). Stock options granted under the Employee Plan in 1994 and 1995 become
exercisable over a three-year period and those options granted under the
Employee Plan in 1996, 1997 and 1998 become exercisable over a five-year period.
All stock options granted under the Director Plan become exercisable in one
year. All options were granted at the fair market value at the dates of grant
and have terms of ten years. As of September 30, 1999 and December 31, 1998, the
stock options outstanding had a weighted average remaining contractual life of
approximately 7.6 and 8.5 years, respectively.
Information regarding the Company's stock option plans is summarized below:
<TABLE>
<CAPTION>
Weighted
Shares Average
Under Exercise
Options Price
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at January 1, 1998 3,287,290 $31.47
Granted 1,048,620 $35.90
Exercised (267,660) $20.47
Lapsed or canceled (128,268) $36.61
- -------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1998 3,939,982 $33.22
Granted 37,000 $31.63
Exercised (46,583) $22.42
Lapsed or canceled (517,717) $37.10
- -------------------------------------------------------------------------------------------------------------------
Outstanding at September 30, 1999 3,412,682 $32.77
===================================================================================================================
Options exercisable at December 31, 1998 1,334,137 $27.84
Options exercisable at September 30, 1999 1,749,379 $29.83
- -------------------------------------------------------------------------------------------------------------------
Available for grant at December 31, 1998 709,223
Available for grant at September 30, 1999 996,347
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
STOCK WARRANTS
The Company has outstanding a total of 400,000 warrants to purchase an equal
number of shares of common stock ("Stock Warrants") at $33 per share (the market
price at date of grant). Such warrants generally vest equally over a three-year
period through January 31, 2000 and expire on January 31, 2007.
The Company also has outstanding a total of 514,976 Stock Warrants to purchase
an equal number of shares of common stock at $38.75 per share (the market price
at date of grant). Such warrants vest equally over a five-year period through
December 12, 2002 and expire on December 12, 2007.
As of September 30, 1999 and December 31, 1998, there were 914,976 Stock
Warrants outstanding. As of September 30, 1999 and December 31, 1998, there were
585,989 and 565,991 Stock Warrants exercisable, respectively. No Stock Warrants
have been exercised or canceled.
26
<PAGE>
EXECUTIVE STOCK COMPENSATION
Effective July 1, 1999, the Company entered into amended and restated employment
contracts with six of its key executive officers which provided for, among other
things, compensation in the form of stock awards ("Restricted Stock Awards") and
associated tax obligation payments. In connection with the Restricted Stock
Awards, the executive officers are to receive up to a total of 193,593 shares of
the Company's common stock vesting over a five-year period contingent upon the
Company meeting certain performance and/or stock price appreciation objectives.
DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS
The Deferred Compensation Plan for Directors ("Deferred Compensation Plan")
commenced January 1, 1999 and is a plan which allows non-employee directors of
the Company to elect to defer up to 100 percent of their annual retainer fee
into deferred stock units. The deferred stock units are convertible into an
equal number of shares of common stock upon the directors' termination of
service from the Board of Directors or a change in control of the Company, as
defined in the plan. Deferred stock units are credited to each director
quarterly using the closing price of the Company's common stock on the
applicable dividend record date for the respective quarter. Each participating
director's account is also credited for an equivalent amount of deferred stock
units based on the dividend rate for each quarter.
During the nine months ended September 30, 1999, 2,284 deferred stock units were
earned.
EARNINGS PER SHARE
FASB No. 128 requires a dual presentation of basic and diluted EPS on the face
of the income statement for all companies with complex capital structures even
where the effect of such dilution is not material. Basic EPS excludes dilution
and is computed by dividing net income available to common stockholders by the
weighted average number of shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
The following information presents the Company's results for the three and nine
month periods ended September 30, 1999 and 1998 in accordance with FASB No. 128.
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998
---- ----
Basic EPS Diluted EPS Basic EPS Diluted EPS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 32,520 $ 32,520 $ 30,712 $ 30,712
Add: Net income attributable
to potentially dilutive
securities 4,552 -- 4,181
- -------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 32,520 $ 37,072 $ 30,712 $ 34,893
===================================================================================================================
Weighted average shares 58,679 67,113 57,720 65,884
- -------------------------------------------------------------------------------------------------------------------
Per Share $ 0.55 $ 0.55 $ 0.53 $ 0.53
===================================================================================================================
<CAPTION>
Nine Months Ended September 30,
1999 1998
---- ----
Basic EPS Diluted EPS Basic EPS Diluted EPS
- -------------------------------------------------------------------------------------------------------------------
Net income $ 83,270 $ 83,270 $ 85,270 $ 85,270
Add: Net income attributable
to potentially dilutive
securities -- 12,199 -- 11,077
- -------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 83,270 $ 95,469 $ 85,270 $ 96,347
===================================================================================================================
Weighted average shares 58,452 67,294 55,391 63,093
- -------------------------------------------------------------------------------------------------------------------
Per Share $ 1.42 $ 1.42 $ 1.54 $ 1.53
===================================================================================================================
</TABLE>
27
<PAGE>
The following schedule reconciles the shares used in the basic EPS calculation
to the shares used in the diluted EPS calculation.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic EPS Shares: 58,679 57,720 58,452 55,391
Add: Operating Partnership units 8,214 7,857 8,573 7,189
Stock options 220 307 269 455
Stock Warrants -- -- -- 58
- -------------------------------------------------------------------------------------------------------------------
Diluted EPS Shares: 67,113 65,884 67,294 63,093
===================================================================================================================
</TABLE>
Preferred Units, Contingent Units and Restricted Stock Awards outstanding in
1999 and 1998 were not included in the computation of diluted EPS as such units
were anti-dilutive during the period.
Pursuant to the Repurchase Program, during 1998, the Company purchased for
constructive retirement, 854,700 shares of its outstanding common stock for
approximately $25,058. Additionally, during the nine months ended September
30, 1999, the Company purchased for constructive retirement, 911,700 shares
of its outstanding common stock for approximately $25,000.
15. SEGMENT REPORTING
The Company operates in one business segment - real estate. The Company provides
leasing, management, acquisition, development, construction and tenant-related
services for its portfolio. The Company does not have any foreign operations.
The accounting policies of the segments are the same as those described in Note
2, excluding straight-line rent adjustments and depreciation and amortization.
The Company evaluates performance based upon net operating income from the
combined properties in the segment.
28
<PAGE>
Selected results of operations for the three and nine month periods ended
September 30, 1999 and 1998 and selected asset information as of September 30,
1999 and December 31, 1998 regarding the Company's operating segment are as
follows:
<TABLE>
<CAPTION>
Total Corporate & Total
Segment Other (e) Company
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL CONTRACT REVENUES (a):
Three months ended:
September 30, 1999 $ 135,350 $ 595 $ 135,945 (f)
September 30, 1998 126,355 1,185 127,540 (g)
Nine months ended:
September 30, 1999 $ 399,469 $ 961 $ 400,430 (h)
September 30, 1998 344,834 4,224 349,058 (i)
TOTAL OPERATING AND INTEREST EXPENSES (b):
Three months ended:
September 30, 1999 $ 46,130 $ 28,982 $ 75,112
September 30, 1998 43,857 26,737 70,594
Nine months ended:
September 30, 1999 $ 117,395 $ 119,013 $ 236,408
September 30, 1998 115,554 75,560 191,114
NET OPERATING INCOME (c):
Three months ended:
September 30, 1999 $ 89,220 $ (28,387) $ 60,833 (f)
September 30, 1998 82,498 (25,552) 56,946 (g)
Nine months ended:
September 30, 1999 $ 282,074 $ (118,052) $ 164,022 (h)
September 30, 1998 229,280 (71,336) 157,944 (i)
TOTAL ASSETS:
September 30, 1999 $ 3,562,356 $ 35,774 $ 3,598,130
December 31, 1998 3,430,865 21,329 3,452,194
TOTAL LONG-LIVED ASSETS (d):
September 30, 1999 $ 3,501,184 $ 23,666 $ 3,524,850
December 31, 1998 3,393,313 4,098 3,397,411
</TABLE>
- --------------------------------------------------------------------------------
(a) Total contract revenues represents all revenues during the period
(including the Company's share of net income from unconsolidated joint
ventures), excluding adjustments for straight-lining of rents and the
Company's share of straight-line rent adjustments from unconsolidated joint
ventures. All interest income is excluded from segment amounts and is
classified in Corporate and Other for all periods.
(b) Total operating and interest expenses represents the sum of real estate
taxes, utilities, operating services, general and administrative and
interest expense. All interest expense (including for property-level
mortgages) is excluded from segment amounts and is classified in Corporate
and Other for all periods.
(c) Net operating income represents total contract revenues [as defined in Note
(a)] less total operating and interest expenses [as defined in Note (b)]
for the period.
(d) Long-lived assets is comprised of total rental property, unbilled rents
receivable and investments in unconsolidated joint ventures.
(e) Corporate & Other represents all corporate-level items (including interest
and other investment income, interest expense and non-property general and
administrative expense) as well as intercompany eliminations necessary to
reconcile to consolidated Company totals.
(f) Excludes $2,920 of adjustments for straight-lining of rents and $155 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures.
(g) Excludes $3,264 of adjustments for straight-lining of rents and $90 for the
Company's share of straight-line rent adjustments from unconsolidated joint
ventures.
(h) Excludes $10,343 of adjustments for straight-lining of rents and $111 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures.
(i) Excludes $9,604 of adjustments for straight-lining of rents and $96 for the
Company's share of straight-line rent adjustments from unconsolidated joint
ventures.
29
<PAGE>
16. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Cost of Start-Up Activities" ("SOP 98-5"), which is effective
for fiscal years beginning after December 15, 1998. SOP 98-5 requires costs of
start-up and organizational activities be expensed as incurred. The adoption of
SOP 98-5 did not have a material effect on the Company's financial statements.
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("FASB No.
133"). FASB No. 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. In June 1999, the FASB delayed the implementation
date of FASB No. 133 by one year (January 1, 2001 for the Company). FASB No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. Management of the Company anticipates that, due to its
limited use of derivative instruments, the adoption of FASB No. 133 will not
have a significant effect on the Company's results of operations or its
financial position.
17. PRO FORMA FINANCIAL INFORMATION
The following pro forma financial information for the nine months ended
September 30, 1999 and 1998 are presented as if all acquisitions and common
stock offerings (if any) completed during the nine months ended September 30,
1999 and the year ended December 31, 1998 had occurred on January 1, 1998. In
management's opinion, all adjustments necessary to reflect the effects of
these transactions have been made.
This pro forma financial information is not necessarily indicative of what the
actual results of operations of the Company would have been assuming such
transactions had been completed as of January 1, 1998, nor do they represent the
results of operations of future periods.
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total revenues $ 413,439 $ 390,737
Operating and other expenses 125,093 117,079
General and administrative 19,855 20,129
Depreciation and amortization 67,745 61,373
Interest expense 77,391 79,732
Non-recurring charges 16,458 --
- -------------------------------------------------------------------------------------------------------------------
Income before minority interest 106,897 112,424
Minority interest 23,796 24,333
- -------------------------------------------------------------------------------------------------------------------
Net income $ 83,101 $ 88,091
===================================================================================================================
Basic earnings per common share $ 1.42 $ 1.52
Diluted earnings per common share $ 1.42 $ 1.51
- -------------------------------------------------------------------------------------------------------------------
Basic weighted average shares outstanding 58,452 57,814
Diluted weighted average shares outstanding 67,294 66,363
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
ITEM 2:
M A N A G E M E N T ' S D I S C U S S I O N A N D A N A L Y S I S O F
F I N A N C I A L C O N D I T I O N A N D R E S U L T S O F
O P E R A T I O N S
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Mack-Cali Realty Corporation and the notes thereto.
Certain defined terms used herein have the meaning ascribed to them in the
Consolidated Financial Statements.
The following comparisons for the three and nine month periods ended September
30, 1999 ("1999"), as compared to the three and nine month periods ended
September 30, 1998 ("1998") make reference to the following: (i) the effect of
the "Same-Store Properties," which represents all in-service properties owned by
the Company at June 30, 1998 (for the three-month period comparisons), and which
represents all in-service properties owned by the Company at December 31, 1997
(for the nine-month period comparisons) and (ii) the effect of the "Acquired
Properties," which represents all properties acquired or placed in service by
the Company from July 1, 1998 through September 30, 1999 (for the three-month
period comparisons) and which represents all properties acquired or placed in
service by the Company from January 1, 1998 through September 30, 1999 (for the
nine-month period comparisons).
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1998
Quarter Ended
September 30, Dollar Percent
(IN THOUSANDS) 1999 1998 Change Change (%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $118,086 $112,976 $5,110 4.5%
Escalations and recoveries from tenants 14,829 14,182 647 4.6
Parking and other 5,112 2,684 2,428 90.5
- -------------------------------------------------------------------------------------------------------------------
Sub-total 138,027 129,842 8,185 6.3
Interest income 159 728 (569) (78.2)
Equity in earnings of
unconsolidated joint ventures 834 324 510 157.4
- -------------------------------------------------------------------------------------------------------------------
Total revenues 139,020 130,894 8,126 6.2
- -------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 14,849 13,488 1,361 10.1
Utilities 11,634 11,300 334 3.0
Operating services 16,258 15,807 451 2.9
- -------------------------------------------------------------------------------------------------------------------
Sub-total 42,741 40,595 2,146 5.3
General and administrative 5,897 6,118 (221) (3.6)
Depreciation and amortization 22,967 21,213 1,754 8.3
Interest expense 26,474 23,881 2,593 10.9
- -------------------------------------------------------------------------------------------------------------------
Total expenses 98,079 91,807 6,272 6.8
- -------------------------------------------------------------------------------------------------------------------
Income before minority interest and
extraordinary item 40,941 39,087 1,854 4.7
Minority interest (8,421) (8,375) (46) 0.5
- -------------------------------------------------------------------------------------------------------------------
Net income $32,520 $30,712 $1,808 5.9%
===================================================================================================================
</TABLE>
31
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties and Same-Store Properties (in
thousands).
<TABLE>
<CAPTION>
Acquired Same-Store
Total Company Properties Properties
------------- ---------- ----------
Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $5,110 4.5% $3,124 2.8% $1,986 1.7%
Escalations and recoveries from tenants 647 4.6 208 1.5 439 3.1
Parking and other 2,428 90.5 65 2.4 2,363 88.1
- -------------------------------------------------------------------------------------------------------------------
Total $8,185 6.3% $3,397 2.6% $4,788 3.7%
===================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $1,361 10.1% $430 3.2% $931 6.9%
Utilities 334 3.0 337 3.0 (3) 0.0
Operating services 451 2.9 600 3.8 (149) (0.9)
- -------------------------------------------------------------------------------------------------------------------
Total $2,146 5.3% $1,367 3.4% $779 1.9%
===================================================================================================================
OTHER DATA:
Number of wholly-owned properties 251 12 239
Square feet (in thousands) 27,369 1,090 26,279
</TABLE>
Base rents for the Same-Store Properties increased $2.0 million, or 1.7 percent,
for 1999 as compared to 1998, due primarily to rental rate increases in 1999.
Escalations and recoveries from tenants for the Same-Store Properties increased
$0.4 million, or 3.1 percent, for 1999 over 1998, due to the recovery of an
increased amount of total property expenses, as well as additional settle-up
billings in 1999. Parking and other income for the Same-Store Properties
increased $2.4 million, or 88.1 percent, due primarily to lease termination
fees received in 1999.
Real estate taxes on the Same-Store Properties increased $0.9 million, or 6.9
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Company increased
$0.3 million, or 3.0 percent, for 1999 as compared to 1998, due substantially
to the Acquired Properties. Operating services for the Same-Store Properties
decreased $0.1 million, or 0.9 percent, due primarily to a reduction in
maintenance costs incurred.
Equity in earnings of unconsolidated joint ventures increased $0.5 million in
1999 as compared to 1998. This is due to additional joint ventures being entered
into by the Company (see Note 4 to the Financial Statements).
Interest income decreased by approximately $0.6 million, or 78.2 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998 with no interest income from
mortgage note receivables in 1999.
General and administrative decreased by $0.2 million, or 3.6 percent for 1999 as
compared to 1998. This decrease is due primarily to decreased payroll and
related costs in 1999.
Depreciation and amortization increased by $1.8 million, or 8.3 percent, for
1999 over 1998. Of this increase, $0.7 million or 3.1 percent, is attributable
to the Acquired Properties, and $1.1 million, or 5.2 percent, is due to the
Same-Store Properties.
Interest expense increased $2.6 million, or 10.9 percent, for 1999 as compared
to 1998. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt and net
additional drawings from the Company's revolving credit facilities generally as
a result of Company acquisitions in 1998. These increases were partially offset
by the reduction in spread over LIBOR due to the 1998 Unsecured Facility signed
in April 1998 and the achievement by the Company of investment grade credit
ratings in November 1998.
32
<PAGE>
Income before minority interest and extraordinary item increased to $40.9
million in 1999 from $39.1 million in 1998. The increase of $1.8 million is due
to the factors discussed above.
Net income increased by $1.8 million for 1999, from $30.7 million in 1998 to
$32.5 million in 1999. This increase is a result of increase in income before
minority interest and extraordinary item of $1.8 million (as discussed above).
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1998
Nine Months Ended
September 30, Dollar Percent
(IN THOUSANDS) 1999 1998 Change Change (%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 350,665 $ 311,753 $ 38,912 12.5%
Escalations and recoveries from tenants 46,055 36,897 9,158 24.8
Parking and other 12,073 7,502 4,571 60.9
- -------------------------------------------------------------------------------------------------------------------
Sub-total 408,793 356,152 52,641 14.8
Interest income 629 2,187 (1,558) (71.2)
Equity in earnings of
unconsolidated joint ventures 1,462 419 1,043 248.9
- -------------------------------------------------------------------------------------------------------------------
Total revenues 410,884 358,758 52,126 14.5
- -------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 42,900 35,415 7,485 21.1
Utilities 31,055 28,717 2,338 8.1
Operating services 50,401 44,128 6,273 14.2
- -------------------------------------------------------------------------------------------------------------------
Sub-total 124,356 108,260 16,096 14.9
General and administrative 19,801 18,708 1,093 5.8
Depreciation and amortization 67,401 56,537 10,864 19.2
Interest expense 75,793 64,146 11,647 18.2
Non-recurring charges 16,458 -- 16,458 --
- -------------------------------------------------------------------------------------------------------------------
Total expenses 303,809 247,651 56,158 22.7
- -------------------------------------------------------------------------------------------------------------------
Income before minority interest and
extraordinary item 107,075 111,107 (4,032) (3.6)
Minority interest (23,805) (23,464) (341) 1.5
- -------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 83,270 87,643 (4,373) (5.0)
- -------------------------------------------------------------------------------------------------------------------
Extraordinary item - loss on early
retirement of debt (net of minority
interest's share of $297 in 1998) -- (2,373) 2,373 (100.0)
- -------------------------------------------------------------------------------------------------------------------
Net income $ 83,270 $ 85,270 $ (2,000) (2.3)%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties and Same-Store Properties (in
thousands).
<TABLE>
<CAPTION>
Acquired Same-Store
Total Company Properties Properties
------------- ---------- ----------
Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $38,912 12.5% $29,395 9.4% $9,517 3.1%
Escalations and recoveries from tenants 9,158 24.8 5,042 13.7 4,116 11.1
Parking and other 4,571 60.9 2,074 27.6 2,497 33.3
- -------------------------------------------------------------------------------------------------------------------
Total $52,641 14.8% $36,511 10.3% $16,130 4.5%
===================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $7,485 21.1% $5,580 15.7% $1,905 5.4%
Utilities 2,338 8.1 2,415 8.4 (77) (0.3)
Operating services 6,273 14.2 5,742 13.0 531 1.2
- -------------------------------------------------------------------------------------------------------------------
Total $16,096 14.9% $13,737 12.7% $2,359 2.2%
===================================================================================================================
OTHER DATA:
Number of wholly-owned properties 251 62 189
Square feet (in thousands) 27,369 5,404 21,965
</TABLE>
Base rents for the Same-Store Properties increased $9.5 million, or 3.1 percent,
for 1999 as compared to 1998, due primarily to rental rate increases in 1999.
Escalations and recoveries from tenants for the Same-Store Properties increased
$4.1 million, or 11.1 percent, for 1999 over 1998, due to the recovery of an
increased amount of total property expenses, as well as additional settle-up
billings in 1999. Parking and other income for the Same-Store Properties
increased $2.5 million, or 33.3 percent, which is primarily attributable to
lease termination fees received in 1999.
Real estate taxes on the Same-Store Properties increased $1.9 million, or 5.4
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Same-Store
Properties decreased $0.1 million, or 0.3 percent, for 1999 as compared to 1998,
due primarily to decreased electric rates and usage in early 1999. Operating
services for the Same-Store Properties increased $0.5 million, or 1.2 percent,
due primarily to increased snow removal costs incurred at the Same-Store
Properties in 1999.
Equity in earnings of unconsolidated joint ventures increased $1.0 million in
1999 as compared to 1998. This is due to additional joint ventures being entered
into by the Company (see Note 4 to the Financial Statements).
Interest income decreased by approximately $1.6 million, or 71.2 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998 with no interest income from
mortgage note receivables in 1999.
General and administrative increased by $1.1 million, or 5.8 percent for 1999 as
compared to 1998. This increase is due primarily to an increase in payroll and
related costs and professional fees as a result of the Company's expansion in
1998.
Depreciation and amortization increased by $10.9 million, or 19.2 percent, for
1999 over 1998. Of this increase, $7.1 million or 12.5 percent, is attributable
to the Acquired Properties, and $3.8 million, or 6.7 percent, is due to the
Same-Store Properties.
Interest expense increased $11.6 million, or 18.2 percent, for 1999 as compared
to 1998. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt and net
additional drawings from the Company's revolving credit facilities generally as
a result of Company acquisitions in 1998. These increases were partially offset
by a reduction in LIBOR in 1999, the reduction in spread over LIBOR due to the
1998 Unsecured Facility signed in April 1998 and the achievement by the Company
of investment grade credit ratings in November 1998.
Non-recurring charges of $16.5 million were incurred in 1999, as a result of the
resignation of Thomas A. Rizk (see Note 12 to the Financial Statements).
34
<PAGE>
Income before minority interest and extraordinary item decreased to $107.1
million in 1999 from $111.1 million in 1998. The decrease of $4.0 million is due
to the factors discussed above.
Net income decreased by $2.0 million for 1999, from $85.3 million in 1998 to
$83.3 million in 1999. This decrease is a result of a decrease in income before
minority interest and extraordinary item of $4.0 million (as discussed above),
and an increase of $0.4 million in minority interest, offset by an extraordinary
item of $2.4 million (net of minority interest) in 1998.
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the nine months ended September 30, 1999, the Company generated $162.4
million in cash flows from operating activities, and together with $1.1 billion
in borrowings from the Company's revolving credit facilities, the issuance of
unsecured notes and funds from additional mortgage debt, $12.0 million in
distributions received from unconsolidated joint ventures, $1.0 million in
proceeds from stock options exercised and $4.7 million from cash and cash
equivalents, used an aggregate of approximately $1.3 billion to acquire
properties and land parcels and pay for other tenant and building improvements
totaling $143.2 million, repay outstanding borrowings on its revolving credit
facilities and other mortgage debt of $974.2 million, pay quarterly dividends
and distributions of $122.2 million, invest $39.6 million in unconsolidated
joint ventures, repurchase 911,700 shares of its outstanding common stock for
$25.0 million, pay deferred financing costs of $7.0 million and add $0.2 million
to restricted cash.
CAPITALIZATION
During the nine months ended September 30, 1999, in conjunction with the
redemption of certain of the contingent units issued in the Mack Transaction,
the Company issued a total of 268,432 common units with a total value of
approximately $8.0 million at time of issuance.
In August 1998, the Board of Directors of the Company authorized a share
repurchase program under which the Company was permitted to purchase up to
$100.0 million of the Company's outstanding common stock. Purchases could be
made from time to time in open market transactions at prevailing prices or
through privately negotiated transactions. Subsequently, through September 30,
1999, the Company purchased for constructive retirement, 1,766,400 shares of its
outstanding common stock for an aggregate cost of approximately $50.1 million.
Concurrent with these purchases, the Company sold to the Operating Partnership
1,766,400 common units for approximately $50.1 million.
On June 10, 1999, the Board of Directors of the Company authorized a dividend
distribution of one preferred share purchase right for each outstanding share of
common stock to be distributed to all holders of record of the common stock on
July 6, 1999. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A junior participating preferred
stock, par value $0.01 per share, at a price of $100.00 per one one-thousandth
of a Preferred Share, subject to adjustment as provided in the rights agreement.
The Rights expire on July 6, 2009, unless the expiration date is extended or the
Right is redeemed or exchanged earlier by the Company.
The Rights will be attached to each share of common stock. The Rights will
generally be exercisable only if a person or group becomes the beneficial owner
of 15 percent or more of the outstanding common stock or announces a tender
offer for 15 percent or more of the outstanding common stock. In the event that
a person or group becomes an Acquiring Person, each holder of a Right will have
the right to receive, upon exercise, common stock having a market value equal to
two times the Purchase Price of the Right. The Company's adoption of the
shareholder rights plan was not taken in response to any known effort to acquire
control of the Company.
As of September 30, 1999, the Company's total indebtedness of $1.6 billion
(weighted average interest rate of 7.07 percent) was comprised of $330.2 million
of revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 6.21 percent), fixed rate debt of $1.2 billion
(weighted average rate of 7.31 percent), and a Contingent Obligation of $6.5
million.
As of September 30, 1999, the Company had outstanding borrowings of $250.0
million under its revolving credit facilities (with aggregate borrowing capacity
of $1.1 billion). The total outstanding borrowings were from the 1998 Unsecured
Facility, with no outstanding borrowings on its Prudential Facility. The 1998
Unsecured Facility, with 28 lender banks, carries an interest rate, at the
Company's election, of either 90 basis points over LIBOR or the higher of
35
<PAGE>
the lender's prime rate or the Federal Funds rate plus 50 basis points and
matures in April 2001. The interest rate is currently LIBOR plus 90 basis
points. The Prudential Facility carries an interest rate of 110 basis points
over LIBOR and matures in September 2000.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common stock
or other equity interests in an aggregate amount in excess of 90 percent of
funds from operations for such period, subject to certain other adjustments. The
1998 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.
The Company has three investment grade credit ratings. Duff & Phelps Credit
Rating Co. ("DCR") and Standard & Poors Rating Services ("S&P") have each
assigned their BBB rating to the $785.3 million of total unsecured corporate
debt of the Operating Partnership. DCR and S&P have also assigned their BBB-
rating to prospective preferred stock offerings of the Company. Moody's
Investors Service has assigned its Baa3 rating to the unsecured corporate debt
and its Ba1 rating to prospective preferred stock offerings of the Company.
The terms of the unsecured corporate debt include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.
In October 1998, the Company entered into a forward treasury rate lock agreement
with a commercial bank. The agreement locked an interest rate of 4.089 percent
per annum for the three-year U.S. Treasury Note effective November 4, 1999, on a
notional amount of $50.0 million. The agreement will be used to fix the Index
Rate on $50.0 million of the Harborside-Plaza I mortgage, for which the
Company's interest rate re-sets for three years beginning November 4, 1999 to
the interpolated three-year U.S. Treasury Note plus 110 basis points (see Note 9
to the Financial Statements - "Property Mortgages: Harborside-Plaza I").
As of September 30, 1999, the Company had 218 unencumbered properties, totaling
20.2 million square feet, representing 74.0 percent of the Company's total
portfolio on a square footage basis. The Company is currently reviewing its
option to convert the $150.0 Million Prudential Mortgage Loan, encumbering 12
properties aggregating 2.4 million square feet, to unsecured corporate debt.
The Company has an effective shelf registration statement with the SEC for an
aggregate amount of $2.0 billion in equity securities of the Company. The
Company and Operating Partnership also have an effective shelf registration
statement with the SEC for an aggregate of $2.0 billion in debt securities,
preferred stock and preferred stock represented by depositary shares, under
which the Operating Partnership has issued an aggregate of $785.3 million of
unsecured corporate debt. The Company also has an effective registration
statement with the SEC for a dividend reinvestment and stock purchase plan,
which commenced on March 1, 1999.
Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures. Management believes that the Company will
have access to the capital resources necessary to expand and develop its
business. To the extent that the Company's cash flow from operating activities
is insufficient to finance its non-recurring capital expenditures such as
property acquisition and construction project costs and other capital
expenditures, the Company expects to finance such activities through borrowings
under its credit facilities and other debt and equity financing.
The Company expects to meet its short-term liquidity requirements generally
through its working capital and net cash provided by operating activities, along
with the 1998 Unsecured Facility and the Prudential Facility. The Company is
frequently examining potential property acquisitions and construction projects
and, at any given time, one or more of such acquisitions or construction
projects may be under consideration. Accordingly, the ability to fund property
36
<PAGE>
acquisitions and construction projects is a major part of the Company's
financing requirements. The Company expects to meet its financing requirements
through funds generated from operating activities, long-term or short-term
borrowings (including draws on the Company's revolving credit facilities) and
the issuance of additional debt or equity securities. In addition, the Company
anticipates utilizing the 1998 Unsecured Facility and the Prudential Facility
primarily to fund property acquisitions and construction projects.
As of quarter end, the Company's total debt had a weighted average term to
maturity of 5.5 years. The Company does not intend to reserve funds to retire
the unsecured corporate debt, Harborside mortgages, $150.0 Million Prudential
Mortgage Loan, its other property mortgages or other long-term mortgages and
loans payable upon maturity. Instead, the Company will seek to refinance such
debt at maturity or retire such debt through the issuance of additional equity
or debt securities. The Company is reviewing various refinancing options,
including the issuance of additional unsecured corporate debt, preferred stock,
and/or obtaining additional mortgage debt, some or all of which may be completed
during 1999. The Company anticipates that its available cash and cash
equivalents and cash flows from operating activities, together with cash
available from borrowings and other sources, will be adequate to meet the
Company's capital and liquidity needs both in the short and long-term. However,
if these sources of funds are insufficient or unavailable, the Company's ability
to make the expected distributions discussed below may be adversely affected.
To maintain its qualification as a REIT, the Company must make annual
distributions to its stockholders of at least 95 percent of its REIT taxable
income, determined without regard to the dividends paid deduction and by
excluding net capital gains. Moreover, the Company intends to continue to make
regular quarterly distributions to its stockholders which, based upon current
policy, in the aggregate would equal approximately $135.5 million on an
annualized basis. However, any such distribution, whether for federal income tax
purposes or otherwise, would only be paid out of available cash after meeting
both operating requirements and scheduled debt service on mortgages and loans
payable.
37
<PAGE>
SIGNIFICANT TENANTS
The following table sets out a schedule of the Company's 20 largest tenants, for
the Company's wholly-owned properties as of September 30, 1999, based upon
annualized base rents:
<TABLE>
<CAPTION>
Percentage of
Annualized Company Square Percentage of Year of
Number of Base Rental Annualized Base Feet Total Company Lease
Properties Revenue ($)(1) Rental Revenue (%) Leased Leased Sq.Ft. (%) Expiration
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AT&T Corporation 6 15,433,136 3.4 1,034,779 4.0 2009 (2)
Donaldson, Lufkin &
Jenrette Securities Corp. 2 11,713,357 2.6 543,282 2.1 2009 (3)
AT&T Wireless Services 2 8,199,960 1.8 382,030 1.5 2007 (4)
International Business
Machines Corporation 5 7,522,499 1.7 390,370 1.5 2007 (5)
Allstate Insurance Company 10 6,377,507 1.4 293,820 1.1 2009 (6)
Prentice-Hall Inc. 1 5,794,893 1.3 474,801 1.8 2014
Nabisco Inc. 2 5,467,178 1.2 300,378 1.2 2000
Toys 'R' US - NJ, Inc. 1 5,342,672 1.2 242,518 0.9 2012
American Institute of Certified
Public Accountants 1 4,981,357 1.1 249,768 1.0 2012
CMP Media Inc. 1 4,826,107 1.1 206,274 0.8 2014
Board of Gov./Federal Reserve 1 4,605,091 1.0 117,008 0.5 2009 (7)
Dean Witter Trust Company 1 4,319,507 0.9 221,019 0.9 2008
Winston & Strawn 1 4,214,885 0.9 108,100 0.4 2003
KPMG Peat Marwick, LLP 2 3,824,080 0.8 161,760 0.6 2007 (8)
Rent Net Inc. 1 3,701,763 0.8 94,917 0.4 2006
Bank of Tokyo - Mitsubishi Ltd. 1 3,378,924 0.7 137,076 0.5 2009
Telerate Systems, Inc. 1 3,340,823 0.7 179,286 0.7 2006 (9)
Bankers Trust Harborside Inc. 1 3,272,500 0.7 385,000 1.5 2003
Dean Witter Reynolds Inc. 4 3,185,372 0.7 137,181 0.5 2008 (10)
Deloitte & Touche USA LLP 1 3,162,933 0.7 118,864 0.5 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Totals 45 112,664,544 24.7 5,778,231 22.4
====================================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
(2) 39,183 square feet expire February 2000; 66,268 square feet expire
December 2000; 3,950 square feet expire August 2002; 63,278 square feet
expire May 2004; 475,100 square feet expire January 2008; 387,000 square
feet expire January 2009.
(3) 426,691 square feet expire July 2009; 15,776 square feet expire September
2009; 100,815 square feet expire November 2009.
(4) 12,150 square feet expire September 2004; 345,799 square feet expire March
2007; 24,081 square feet expire June 2007.
(5) 29,157 square feet expire October 2000; 85,000 square feet expire December
2000; 26,749 square feet expire January 2002; 1,065 square feet expire
November 2002; 248,399 square feet expire December 2007.
(6) 22,444 square feet expire July 2001; 70,517 square feet expire June 2002;
71,030 square feet expire September 2002; 18,882 square feet expire April
2003; 2,867 square feet expire January 2004; 36,305 square feet expire
January 2005; 23,024 square feet expire October 2005; 6,108 square feet
expire August 2006; 31,143 square feet expire April 2008; 11,500 square
feet expire April 2009.
(7) 94,719 square feet expire May 2005; 22,289 square feet expire July 2009.
(8) 104,556 square feet expire September 2002; 57,204 square feet expire July
2007.
(9) 129,399 square feet expire June 2000; 4,700 square feet expire March 2001;
45,187 square feet expire June 2006.
(10) 13,140 square feet expire April 2005; 19,390 square feet expire October
2007; 85,151 square feet expire February 2008; 19,500 square feet expire
June 2008.
38
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS
The following table sets forth a schedule of the lease expirations for the total
of the Company's wholly-owned office, office/flex, industrial/warehouse and
stand-alone retail properties beginning October 1, 1999, assuming that none of
the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/1/99-12/31/99... 148 707,437 2.7 12,390,441 17.51 2.7
2000............... 521 3,503,101 13.6 61,431,744 17.54 13.5
2001............... 494 2,882,291 11.1 47,835,702 16.60 10.5
2002............... 498 3,479,390 13.5 60,892,235 17.50 13.4
2003............... 383 3,847,104 14.9 66,256,428 17.22 14.5
2004............... 283 2,268,519 8.8 41,203,386 18.16 9.0
2005............... 111 1,648,840 6.4 31,771,923 19.27 7.0
2006............... 58 1,036,981 4.0 21,847,131 21.07 4.8
2007............... 44 1,237,123 4.8 23,989,253 19.39 5.3
2008............... 37 1,537,693 5.9 24,378,236 15.85 5.3
2009............... 39 1,471,920 5.7 27,987,138 19.01 6.1
2010 and thereafter 44 2,220,021 8.6 36,068,738 16.25 7.9
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,660 25,840,420 100.0(4) 456,052,355 17.65 100.0
====================================================================================================================================
</TABLE>
(1) Includes office, office/flex, industrial/warehouse and stand-alone retail
property tenants only. Excludes leases for amenity, retail, parking and
month-to-month tenants. Some tenants have multiple leases.
(2) Excludes all space vacant as of September 30, 1999.
(3) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
(4) Reconciliation to Company's total net rentable square footage is as
follows:
<TABLE>
<CAPTION>
SQUARE FEET PERCENTAGE OF TOTAL
<S> <C> <C>
Square footage leased to commercial tenants 25,840,420 94.4%
Square footage used for corporate offices, management offices,
building use, retail tenants, food services, other ancillary
service tenants and occupancy adjustments 471,518 1.7
Square footage vacant 1,056,587 3.9
---------- -----
Total net rentable square footage (does not include
residential, land lease, retail or not-in-service properties) 27,368,525 100.0%
========== =====
</TABLE>
39
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office properties beginning October 1, 1999, assuming that none of the tenants
exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/1/99-12/31/99..... 122 581,392 2.7 11,130,020 19.14 2.7
2000................. 444 2,979,579 13.7 55,380,906 18.59 13.6
2001................. 411 2,332,009 10.7 41,451,414 17.77 10.1
2002................. 409 2,657,865 12.3 52,331,688 19.69 12.8
2003................. 320 3,253,262 15.0 60,329,775 18.54 14.8
2004................. 241 1,823,349 8.4 36,194,913 19.85 8.9
2005................. 86 1,378,335 6.4 28,657,467 20.79 7.0
2006................. 47 805,306 3.7 17,938,641 22.28 4.4
2007................. 38 1,123,542 5.2 22,384,919 19.92 5.5
2008................. 34 1,388,098 6.4 23,436,378 16.88 5.7
2009................. 28 1,313,670 6.1 25,944,428 19.75 6.3
2010 and thereafter.. 35 2,030,555 9.4 33,514,482 16.51 8.2
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,215 21,666,962 100.0 408,695,031 18.86 100.0
====================================================================================================================================
</TABLE>
(1) Includes office tenants only. Excludes leases for amenity, retail, parking
and month-to-month office tenants. Some tenants have multiple leases.
(2) Excludes all space vacant as of September 30, 1999.
(3) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
40
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office/flex properties beginning October 1, 1999, assuming that none of the
tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/1/99-12/31/99.... 23 120,660 3.2 1,208,651 10.02 2.8
2000................ 73 503,418 13.3 5,813,259 11.55 13.4
2001................ 78 518,735 13.7 5,780,261 11.14 13.4
2002................ 87 775,085 20.5 8,062,840 10.40 18.6
2003................ 60 502,368 13.3 5,494,905 10.94 12.7
2004................ 34 262,350 7.0 3,108,468 11.85 7.2
2005................ 25 270,505 7.2 3,114,456 11.51 7.2
2006................ 11 231,675 6.1 3,908,490 16.87 9.0
2007................ 6 113,581 3.0 1,604,334 14.13 3.7
2008................ 3 149,595 4.0 941,858 6.30 2.2
2009................ 10 146,450 3.9 1,936,510 13.22 4.5
2010 and thereafter. 8 181,466 4.8 2,289,256 12.62 5.3
- -----------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 418 3,775,888 100.0 43,263,288 11.46 100.0
===================================================================================================================================
</TABLE>
(1) Includes office/flex tenants only. Excludes leases for amenity, retail,
parking and month-to-month office/flex tenants. Some tenants have multiple
leases.
(2) Excludes all space vacant as of September 30, 1999.
(3) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
41
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
industrial/warehouse properties beginning October 1, 1999, assuming that none of
the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10/1/99-12/31/99..... 3 5,385 1.4 51,770 9.61 1.4
2000................. 4 20,104 5.3 237,579 11.82 6.6
2001................. 5 31,547 8.3 604,027 19.15 16.6
2002................. 2 46,440 12.2 497,707 10.72 13.7
2003................. 3 91,474 24.1 431,748 4.72 11.9
2004................. 7 173,520 45.6 1,705,005 9.83 46.9
2009................. 1 11,800 3.1 106,200 9.00 2.9
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 25 380,270 100.0 3,634,036 9.56 100.0
====================================================================================================================================
</TABLE>
(1) Includes industrial/warehouse tenants only. Excludes leases for amenity,
retail, parking and month-to-month industrial/warehouse tenants. Some
tenants have multiple leases.
(2) Excludes all space vacant as of September 30, 1999.
(3) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rent revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, the historical results may differ from those set forth above.
SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES
The following table sets forth a schedule of the lease expirations for the
stand-alone retail properties beginning October 1, 1999, assuming that none of
the tenants exercises renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2004.......... 1 9,300 53.8 195,000 20.97 42.4
2012 ......... 1 8,000 46.2 265,000 33.12 57.6
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2 17,300 100.0 460,000 26.59 100.0
====================================================================================================================================
</TABLE>
(1) Includes stand-alone retail property tenants only.
(2) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
42
<PAGE>
INDUSTRY DIVERSIFICATION
The following table lists the Company's 30 largest industry classifications
based on annualized contractual base rent for the month of September 1999:
<TABLE>
<CAPTION>
Annualized Percentage of Percentage of
Base Rental Company Square Total Company
Revenue Annualized Base Feet Leased
Industry Classification ($) (1) (2) Rental Revenue (%) Leased Sq. Ft. (%)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities, Commodity Contracts & Other Financial 46,702,227 10.2 2,370,242 9.2
Manufacturing 44,274,194 9.7 2,731,460 10.6
Telecommunications 34,976,699 7.7 2,211,130 8.6
Insurance Carriers & Related Assistance 31,831,333 7.0 1,686,953 6.5
Computer System Design Svcs. 30,025,620 6.6 1,638,894 6.3
Legal Services 25,647,623 5.7 1,231,485 4.8
Credit Intermediation & Related Activities 22,870,659 5.0 1,358,786 5.3
Wholesale Trade 18,833,730 4.1 1,330,562 5.1
Health Care & Social Assistance 17,591,042 3.9 962,709 3.7
Information Services 16,888,979 3.7 828,099 3.2
Accounting/Tax Prep. 14,924,779 3.3 718,136 2.8
Other Professional 13,478,417 3.0 828,362 3.2
Publishing Industries 13,177,407 2.9 562,168 2.2
Retail Trade 12,751,401 2.8 784,426 3.0
Arts, Entertainment & Recreation 10,510,745 2.3 791,534 3.1
Transportation 9,806,177 2.2 728,660 2.8
Public Administration 8,874,718 1.9 312,030 1.2
Other Services (except Public Administration) 8,505,491 1.8 643,701 2.5
Advertising/Related Services 7,573,900 1.7 372,430 1.4
Data Processing Services 7,031,427 1.5 318,119 1.2
Management of Companies & Finance 6,462,814 1.4 366,311 1.4
Architectural/Engineering 6,439,680 1.4 385,446 1.5
Scientific Research/Development 6,421,898 1.4 375,569 1.4
Management/Scientific 5,727,197 1.3 302,081 1.2
Real Estate & Rental & Leasing 5,526,210 1.2 312,373 1.2
Monetary Authorities - Central Banks 4,617,017 1.0 273,024 1.1
Construction 4,346,551 0.9 258,203 1.0
Educational Services 4,288,213 0.9 255,045 1.0
Utilities 3,987,263 0.9 196,366 0.8
Admin & Support, Waste Mgt. & Remediation Svcs. 3,321,837 0.7 239,425 0.9
Other 8,637,107 1.9 466,691 1.8
- -----------------------------------------------------------------------------------------------------------------------------
Totals 456,052,355 100.0 25,840,420 100.0
=============================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
(2) Includes office, office/flex and industrial/warehouse tenants only.
Excludes leases for amenity, retail, parking and month-to-month office
tenants. Some tenants have multiple leases.
43
<PAGE>
MARKET DIVERSIFICATION
The following table lists the Company's 25 largest markets (MSAs), based on
annualized contractual base rent for the month of September 1999:
<TABLE>
<CAPTION>
Annualized Percentage of
Base Rental Company Total
Revenue Annualized Base Property Size Percentage of
Market (MSA) ($) (1) (2) Rental Revenue (%) Rentable Area Rentable Area (%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bergen-Passaic, NJ 78,314,803 17.2 4,530,091 16.5
New York, NY (Westchester-Rockland Counties) 70,380,162 15.3 4,355,070 15.9
Newark, NJ (Essex-Morris-Union Counties) 68,810,307 15.1 3,671,218 13.4
Jersey City, NJ 46,625,068 10.2 2,508,700 9.2
Philadelphia, PA-NJ 32,810,387 7.2 2,458,458 9.0
Washington, DC-MD-VA 17,155,936 3.8 616,549 2.2
Denver, CO 16,738,421 3.7 1,007,931 3.7
Dallas, TX 15,036,172 3.3 959,463 3.5
Trenton, NJ (Mercer County) 14,292,659 3.1 742,915 2.7
Middlesex-Somerset-Hunterdon, NJ 12,149,438 2.7 659,041 2.4
San Antonio, TX 11,415,427 2.5 940,302 3.4
San Francisco, CA 9,598,327 2.1 450,891 1.6
Houston, TX 8,516,811 1.9 700,008 2.5
Stamford-Norwalk, CT 8,492,240 1.9 461,250 1.7
Monmouth-Ocean, NJ 6,675,456 1.5 577,423 2.1
Nassau-Suffolk, NY 6,382,207 1.4 261,849 1.0
Phoenix-Mesa, AZ 6,126,837 1.3 536,268 2.0
Austin-San Marcos, TX 5,432,957 1.2 270,703 1.0
Boulder-Longmont, CO 3,502,029 0.8 270,421 1.0
Omaha, NE-IA 3,018,071 0.7 319,535 1.2
Bridgeport, CT 2,919,710 0.6 145,487 0.5
Tampa-St. Peters, FL 2,667,732 0.6 297,429 1.1
Colorado Springs, CO 2,624,878 0.6 209,987 0.8
Dutchess County, NY 2,136,199 0.5 118,727 0.4
Atlantic-Cape May, NJ 1,509,816 0.3 80,344 0.3
Other 2,720,305 0.5 218,465 0.9
- --------------------------------------------------------------------------------------------------------------------------
Totals 456,052,355 100.0 27,368,525 100.0
==========================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual September 1999 billings
times 12. For leases whose rent commences after September 30, 1999,
annualized base rental revenue is based on the first month's billing times
12. As annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
(2) Includes office, office/flex and industrial/warehouse tenants only.
Excludes leases for amenity, retail, parking and month-to-month office
tenants. Some tenants have multiple leases.
44
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
- ----------
100 Decadon Drive .................. 1987 40,422 100.0 780 0.17 19.30
200 Decadon Drive .................. 1991 39,922 99.8 708 0.15 17.77
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
- ---------
17-17 Route 208 North .............. 1987 143,000 94.5 3,327 0.71 24.62
FORT LEE
- --------
One Bridge Plaza ................... 1981 200,000 95.2 4,765 1.02 25.03
2115 Linwood Ave (4) ............... 1981 68,000 39.2 110 0.02 4.13
LITTLE FERRY
- ------------
200 Riser Road ..................... 1974 286,628 100.0 1,858 0.40 6.48
MONTVALE
- --------
95 Chestnut Ridge Road ............. 1975 47,700 100.0 565 0.12 11.84
135 Chestnut Ridge Road ............ 1981 66,150 100.0 1,217 0.26 18.40
PARAMUS
- -------
140 Ridgewood Avenue ............... 1981 239,680 100.0 5,090 1.09 21.24
15 East Midland Avenue ............. 1988 259,823 100.0 6,748 1.45 25.97
461 From Road ...................... 1988 253,554 99.8 6,011 1.29 23.75
650 From Road ...................... 1978 348,510 97.6 7,464 1.60 21.94
61 South Paramus Avenue ............ 1985 269,191 93.9 5,396 1.16 21.35
ROCHELLE PARK
- -------------
120 Passaic Street ................. 1972 52,000 100.0 575 0.12 11.06
365 West Passaic Street ............ 1976 212,578 88.0 3,499 0.75 18.70
SADDLE RIVER
- ------------
1 Lake Street ......................1973/94 474,801 100.0 7,465 1.60 15.72
UPPER SADDLE RIVER
- ------------------
10 Mountainview Road ............... 1986 192,000 99.0 3,699 0.79 19.46
WOODCLIFF LAKE
- --------------
400 Chestnut Ridge Road ............ 1982 89,200 100.0 2,120 0.45 23.77
470 Chestnut Ridge Road ............ 1987 52,500 100.0 1,192 0.26 22.70
530 Chestnut Ridge Road ............ 1986 57,204 100.0 1,166 0.25 20.38
50 Tice Boulevard .................. 1984 235,000 99.8 4,657 1.00 19.86
300 Tice Boulevard ................. 1991 230,000 100.0 5,012 1.08 21.79
BURLINGTON COUNTY, NEW JERSEY
MOORESTOWN
- ----------
224 Strawbridge Drive .............. 1984 74,000 67.7 952 0.20 19.00
228 Strawbridge Drive .............. 1984 74,000 100.0 1,434 0.31 19.38
ESSEX COUNTY, NEW JERSEY
MILLBURN
- --------
150 J.F. Kennedy Parkway ........... 1980 247,476 86.8 6,187 1.33 28.80
ROSELAND
- --------
101 Eisenhower Parkway ............. 1980 237,000 89.9 4,114 0.88 19.31
103 Eisenhower Parkway.............. 1985 151,545 93.7 3,053 0.66 21.50
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
- -----------
95 Christopher Columbus Drive ...... 1989 621,900 100.0 12,864 2.76 20.68
Harborside Financial Center Plaza I 1983 400,000 98.8 3,287 0.71 8.32
Harborside Financial Center Plaza II 1990 761,200 100.0 17,838 3.83 23.43
Harborside Financial Center Plaza III 1990 725,600 100.0 17,004 3.65 23.43
</TABLE>
45
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MERCER COUNTY, NEW JERSEY
PRINCETON
- ---------
5 Vaughn Drive ..................... 1987 98,500 100.0 2,187 0.47 22.20
400 Alexander Road ................. 1987 70,550 100.0 1,270 0.27 18.00
103 Carnegie Center ................ 1984 96,000 96.0 2,073 0.44 22.49
100 Overlook Center ................ 1988 149,600 100.0 3,801 0.82 25.41
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
- --------------
377 Summerhill Road ................ 1977 40,000 100.0 373 0.08 9.33
PLAINSBORO
- ----------
500 College Road East .............. 1984 158,235 100.0 3,393 0.73 21.44
SOUTH BRUNSWICK
- ---------------
3 Independence Way ................. 1983 111,300 99.9 1,792 0.38 16.12
WOODBRIDGE
- ----------
581 Main Street .................... 1991 200,000 100.0 4,150 0.89 20.75
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
- -------
3600 Route 66 ...................... 1989 180,000 100.0 2,411 0.52 13.39
WALL TOWNSHIP
- -------------
1305 Campus Parkway ................ 1988 23,350 92.3 403 0.09 18.70
1350 Campus Parkway ................ 1990 79,747 94.7 1,347 0.29 17.84
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
- ------------
325 Columbia Parkway ............... 1987 168,144 100.0 3,830 0.82 22.78
PARSIPPANY
- ----------
1 Sylvan Way ....................... 1989 150,557 100.0 3,241 0.70 21.53
2 Dryden Way ....................... 1990 6,216 100.0 67 0.01 10.78
2 Hilton Court ..................... 1991 181,592 100.0 4,397 0.94 24.21
5 Sylvan Way ....................... 1989 151,383 96.7 3,393 0.73 23.18
7 Campus Drive ..................... 1982 154,395 100.0 2,548 0.55 16.50
7 Sylvan Way ....................... 1987 145,983 100.0 2,920 0.63 20.00
8 Campus Drive ..................... 1987 215,265 92.8 4,597 0.99 23.01
600 Parsippany Road ................ 1978 96,000 94.0 1,568 0.34 17.38
MORRIS PLAINS
- -------------
201 Littleton Road ................. 1979 88,369 100.0 1,708 0.37 19.33
250 Johnson Road ................... 1977 75,000 100.0 1,090 0.23 14.53
MORRIS TOWNSHIP
- ---------------
340 Mt. Kemble Avenue .............. 1985 387,000 100.0 5,530 1.19 14.29
412 Mt. Kemble Avenue .............. 1986 475,100 100.0 6,902 1.48 14.53
PASSAIC COUNTY, NEW JERSEY
CLIFTON
- -------
777 Passaic Avenue ................. 1983 75,000 77.4 1,024 0.22 17.64
TOTOWA
- ------
999 Riverview Drive ................ 1988 56,066 92.0 968 0.21 18.77
WAYNE
- -----
201 Willowbrook Boulevard .......... 1970 178,329 99.0 2,446 0.52 13.85
</TABLE>
46
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
- -------------
222 Mt. Airy Road .................. 1986 49,000 100.0 613 0.13 12.51
233 Mt. Airy Road .................. 1987 66,000 100.0 762 0.16 11.55
BRIDGEWATER
- -----------
721 Route 202/206 .................. 1989 192,741 100.0 4,011 0.86 20.81
UNION COUNTY, NEW JERSEY
CLARK
- -----
100 Walnut Avenue .................. 1985 182,555 100.0 4,488 0.96 24.58
CRANFORD
- --------
6 Commerce Drive ................... 1973 56,000 96.9 1,115 0.24 20.55
11 Commerce Drive (5) .............. 1981 90,000 100.0 1,102 0.24 12.24
12 Commerce Drive .................. 1967 72,260 88.1 607 0.13 9.53
20 Commerce Drive .................. 1990 176,600 92.7 3,375 0.72 20.62
65 Jackson Drive ................... 1984 82,778 100.0 1,645 0.35 19.87
NEW PROVIDENCE
- --------------
890 Mountain Road 1977 80,000 100.0 2,044 0.44 25.55
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE 12,010,199 97.6 229,348 49.21 19.57
- ------------------------------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
FISHKILL
- --------
300 South Lake Drive ............... 1987 118,727 99.8 2,062 0.44 17.40
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
- ---------------
111 East Shore Road ................ 1980 55,575 100.0 1,518 0.33 27.31
600 Community Drive ................ 1983 206,274 100.0 4,966 1.07 24.07
ROCKLAND COUNTY, NEW YORK
SUFFERN
- -------
400 Rella Boulevard ................ 1988 180,000 98.2 3,445 0.74 19.49
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
- --------
100 Clearbrook Road (5) ............ 1975 60,000 98.3 938 0.20 15.90
101 Executive Boulevard ............ 1971 50,000 92.8 807 0.17 17.39
570 Taxter Road .................... 1972 75,000 86.2 1,382 0.30 21.38
HAWTHORNE
- ---------
1 Skyline Drive .................... 1980 20,400 99.0 269 0.06 13.32
2 Skyline Drive .................... 1987 30,000 98.9 437 0.09 14.73
17 Skyline Drive ................... 1989 85,000 100.0 1,233 0.26 14.51
30 Saw Mill River Road ............. 1982 248,400 100.0 5,216 1.12 21.00
7 Skyline Drive .................... 1987 109,000 100.0 2,165 0.46 19.86
TARRYTOWN
- ---------
200 White Plains Road .............. 1982 89,000 92.3 1,813 0.39 22.07
220 White Plains Road .............. 1984 89,000 95.2 1,567 0.34 18.49
WHITE PLAINS
- ------------
1 Barker Avenue .................... 1975 68,000 99.0 1,519 0.33 22.56
3 Barker Avenue .................... 1983 65,300 97.5 1,382 0.30 21.71
1 Water Street ..................... 1979 45,700 99.8 929 0.20 20.37
11 Martine Avenue .................. 1987 180,000 100.0 3,731 0.80 20.73
50 Main Street ..................... 1985 309,000 98.3 7,560 1.62 24.89
</TABLE>
47
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YONKERS
- -------
1 Executive Boulevard .............. 1982 112,000 100.0 2,273 0.49 20.29
3 Executive Plaza 1987 58,000 100.0 699 0.15 12.05
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE 2,254,376 98.3 45,911 9.86 20.71
- ------------------------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
BERWYN
- ------
1000 Westlakes Drive ............... 1989 60,696 100.0 1,372 0.29 22.60
1055 Westlakes Drive ............... 1990 118,487 100.0 2,298 0.49 19.39
1205 Westlakes Drive ............... 1988 130,265 99.8 2,802 0.60 21.55
1235 Westlakes Drive ............... 1986 134,902 96.6 2,869 0.62 22.02
DELAWARE COUNTY, PENNSYLVANIA
MEDIA
- -----
1400 Providence Road - Center I .... 1986 100,000 87.9 1,909 0.41 21.72
1400 Providence Road - Center II ... 1990 160,000 98.2 3,160 0.68 20.11
LESTER
- ------
100 Stevens Drive .................. 1986 95,000 16.1 1,822 0.39 119.12
200 Stevens Drive .................. 1987 208,000 99.7 4,168 0.89 20.10
300 Stevens Drive .................. 1992 68,000 50.9 1,350 0.29 39.00
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
- ----------------
1000 Madison Avenue ................ 1990 100,700 96.5 1,667 0.36 17.15
PLYMOUTH MEETING
- ----------------
Five Sentry Parkway East ........... 1984 91,600 100.0 1,497 0.32 16.34
Five Sentry Parkway West ........... 1984 38,400 100.0 640 0.14 16.67
1150 Plymouth Meeting Mall 1970 167,748 91.9 3,307 0.71 21.45
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL PENNSYLVANIA OFFICE 1,473,798 89.8 28,861 6.19 21.81
- ------------------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
- ---------
500 West Putnam .................... 1973 121,250 96.9 2,730 0.59 23.24
NORWALK
- -------
40 Richards Avenue ................. 1985 145,487 98.6 2,925 0.63 20.39
SHELTON
- -------
1000 Bridgeport Avenue 1986 133,000 100.0 2,593 0.56 19.50
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE 399,737 98.6 8,248 1.78 20.94
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA
WASHINGTON
- ----------
1201 Connecticut Ave, NW (4) ....... 1940 169,549 86.3 4,471 0.96 30.56
1400 L Street, NW .................. 1987 159,000 94.9 5,715 1.23 37.88
1709 New York Avenue, NW 1972 166,000 91.0 5,996 1.29 39.69
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA OFFICE 494,549 90.6 16,182 3.48 36.10
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
- ------
4200 Parliament Place 1989 122,000 95.8 2,139 0.46 18.30
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL MARYLAND OFFICE 122,000 95.8 2,139 0.46 18.30
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BEXAR COUNTY, TEXAS
SAN ANTONIO
- -----------
111 Soledad ........................ 1918 248,153 85.7 2,296 0.49 10.80
1777 N.E. Loop 410 ................. 1986 256,137 95.3 3,508 0.75 14.37
84 N.E. Loop 410 ................... 1971 187,312 88.3 2,480 0.53 14.99
200 Concord Plaza Drive ............ 1986 248,700 97.7 4,533 0.97 18.66
COLLIN COUNTY, TEXAS
PLANO
- -----
555 Republic Place ................. 1986 97,889 96.1 1,368 0.29 14.54
DALLAS COUNTY,TEXAS
DALLAS
- ------
3030 LBJ Freeway (5) ............... 1984 367,018 93.7 6,059 1.30 17.62
3100 Monticello .................... 1984 173,837 97.2 2,790 0.60 16.51
8214 Westchester ................... 1983 95,509 92.6 1,359 0.29 15.37
IRVING
- ------
2300 Valley View ................... 1985 142,634 99.7 2,667 0.57 18.75
RICHARDSON
- ----------
1122 Alma Road ..................... 1977 82,576 100.0 607 0.13 7.35
HARRIS COUNTY, TEXAS
HOUSTON
- -------
10497 Town & Country Way ........... 1981 148,434 88.0 1,904 0.41 14.58
14511 Falling Creek ................ 1982 70,999 93.1 656 0.14 9.92
1717 St. James Place ............... 1975 109,574 98.2 1,328 0.29 12.34
1770 St. James Place ............... 1973 103,689 98.4 1,340 0.29 13.13
5225 Katy Freeway .................. 1983 112,213 95.1 1,211 0.26 11.35
5300 Memorial ...................... 1982 155,099 100.0 2,022 0.43 13.04
POTTER COUNTY, TEXAS
AMARILLO
- --------
6900 IH - 40 West .................. 1986 71,771 79.9 528 0.11 9.21
TARRANT COUNTY, TEXAS
EULESS
- ------
150 West Parkway ................... 1984 74,429 95.9 1,061 0.23 14.86
TRAVIS COUNTY, TEXAS
AUSTIN
- ------
1250 Capital of Texas Hwy. South 1985 270,703 98.9 5,513 1.18 20.59
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL TEXAS OFFICE 3,016,676 94.5 43,230 9.26 15.17
- ------------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY, ARIZONA
GLENDALE
- --------
5551 West Talavi Boulevard ......... 1991 181,596 100.0 1,736 0.37 9.56
PHOENIX
- -------
19640 North 31st Street ............ 1990 124,171 100.0 1,575 0.34 12.68
20002 North 19th Avenue ............ 1986 119,301 100.0 661 0.14 5.54
SCOTTSDALE
- ----------
9060 E. Via Linda Boulevard 1984 111,200 100.0 2,402 0.52 21.60
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ARIZONA OFFICE 536,268 100.0 6,374 1.37 11.89
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
- -------------
760 Market Street .................. 1908 267,446 90.0 6,963 1.49 28.93
795 Folsom Street (4) 1977 183,445 86.2 2,094 0.45 13.24
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CALIFORNIA OFFICE 450,891 88.5 9,057 1.94 22.71
- ------------------------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
AURORA
- ------
750 South Richfield Street ......... 1997 108,240 100.0 2,911 0.62 26.89
DENVER
- ------
400 South Colorado Boulevard ....... 1983 125,415 100.0 1,840 0.39 14.67
ENGLEWOOD
- ---------
5350 South Roslyn Street (5) ....... 1982 63,754 98.3 1,058 0.23 16.88
9359 East Nichols Avenue ........... 1997 72,610 100.0 903 0.19 12.44
BOULDER COUNTY, COLORADO
BROOMFIELD
- ----------
105 South Technology Court ......... 1997 37,574 100.0 526 0.11 14.00
303 South Technology Court-A ....... 1997 34,454 100.0 384 0.08 11.15
303 South Technology Court-B ....... 1997 40,416 100.0 451 0.10 11.16
LOUISVILLE
- ----------
1172 Century Drive ................. 1996 49,566 100.0 613 0.13 12.37
248 Centennial Parkway ............. 1996 39,266 100.0 486 0.10 12.38
285 Century Place .................. 1997 69,145 100.0 1,094 0.23 15.82
DENVER COUNTY, COLORADO
DENVER
- ------
3600 South Yosemite ................ 1974 133,743 100.0 1,287 0.28 9.62
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
- ---------
384 Inverness Drive South .......... 1985 51,523 100.0 826 0.18 16.03
400 Inverness Drive ................ 1997 111,608 99.9 2,688 0.58 24.11
5975 South Quebec Street ........... 1996 102,877 99.8 2,306 0.49 22.46
67 Inverness Drive East ............ 1996 54,280 100.0 639 0.14 11.77
PARKER
- ------
9777 Pyramid Court ................. 1995 120,281 100.0 1,323 0.28 11.00
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
- ----------------
1975 Research Parkway .............. 1997 115,250 100.0 1,606 0.34 13.93
2375 Telstar Drive (4) ............. 1998 47,369 57.1 461 0.10 17.04
8415 Explorer (4) .................. 1998 47,368 100.0 459 0.10 9.69
JEFFERSON COUNTY, COLORADO
LAKEWOOD
- --------
141 Union Boulevard 1985 63,600 97.0 993 0.21 16.10
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL COLORADO OFFICE 1,488,339 98.4 22,854 4.88 15.60
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
- -----
501 Kennedy Boulevard 1982 297,429 91.3 3,423 0.73 12.61
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLORIDA OFFICE 297,429 91.3 3,423 0.73 12.61
- ------------------------------------------------------------------------------------------------------------------------------------
POLK COUNTY, IOWA
WEST DES MOINES
- ---------------
2600 Westown Parkway 1988 72,265 97.5 1,133 0.24 16.08
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL IOWA OFFICE 72,265 97.5 1,133 0.24 16.08
- ------------------------------------------------------------------------------------------------------------------------------------
DOUGLAS COUNTY, NEBRASKA
OMAHA
- -----
210 South 16th Street 1894 319,535 96.5 3,253 0.70 10.55
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NEBRASKA OFFICE 319,535 96.5 3,253 0.70 10.55
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES 22,936,062 96.4 420,013 90.10 18.99
====================================================================================================================================
</TABLE>
51
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
- ----------
3 Terri Lane ....................... 1991 64,500 77.7 450 0.10 8.98
5 Terri Lane ....................... 1992 74,555 100.0 550 0.12 7.38
MOORESTOWN
- ----------
1 Executive Drive .................. 1989 20,570 43.0 74 0.02 8.37
101 Commerce Drive ................. 1988 64,700 100.0 336 0.07 5.19
101 Executive Drive ................ 1990 29,355 45.8 172 0.04 12.79
102 Executive Drive ................ 1990 64,000 100.0 370 0.08 5.78
1256 North Church .................. 1984 63,495 49.9 380 0.08 11.99
1507 Lancer Drive .................. 1995 32,700 100.0 83 0.02 2.54
1510 Lancer Drive .................. 1998 88,000 100.0 370 0.08 4.20
201 Commerce Drive ................. 1986 38,400 100.0 194 0.04 5.05
225 Executive Drive ................ 1990 50,600 100.0 289 0.06 5.71
30 Twosome Drive ................... 1997 39,675 100.0 223 0.05 5.62
40 Twosome Drive ................... 1996 40,265 100.0 263 0.06 6.53
50 Twosome Drive ................... 1997 34,075 100.0 269 0.06 7.89
840 North Lenola ................... 1995 38,300 100.0 271 0.06 7.08
844 North Lenola ................... 1995 28,670 100.0 213 0.05 7.43
97 Foster Road ..................... 1982 43,200 100.0 186 0.04 4.31
WEST DEPTFORD
- -------------
1451 Metropolitan Drive ............ 1996 21,600 100.0 148 0.03 6.85
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
- -----------------
100 Horizon Drive .................. 1989 13,275 0.0 107 0.02 N/A
200 Horizon Drive .................. 1991 45,770 85.3 445 0.10 11.40
300 Horizon Drive .................. 1989 69,780 100.0 912 0.20 13.07
500 Horizon Drive .................. 1990 41,205 81.9 404 0.09 11.97
MONMOUTH COUNTY, NEW JERSEY
WALL TOWNSHIP
- -------------
1320 Wykoff Avenue ................. 1986 20,336 0.0 56 0.01 N/A
1324 Wykoff Avenue ................. 1987 21,168 75.0 227 0.05 14.30
1325 Campus Parkway ................ 1988 35,000 92.9 335 0.07 10.30
1340 Campus Parkway ................ 1992 72,502 94.6 774 0.17 11.28
1345 Campus Parkway ................ 1995 76,300 100.0 702 0.15 9.20
1433 Highway 34 .................... 1985 69,020 65.3 458 0.10 10.16
PASSAIC COUNTY, NEW JERSEY
TOTOWA
- ------
1 Center Court (4) ................. 1999 38,961 100.0 149 0.03 3.82
2 Center Court ..................... 1998 30,600 99.3 348 0.07 11.45
11 Commerce Way .................... 1989 47,025 100.0 352 0.08 7.49
20 Commerce Way .................... 1992 42,540 85.9 371 0.08 10.15
29 Commerce Way .................... 1990 48,930 100.0 470 0.10 9.61
40 Commerce Way .................... 1987 50,576 100.0 544 0.12 10.76
45 Commerce Way .................... 1992 51,207 100.0 470 0.10 9.18
60 Commerce Way .................... 1988 50,333 56.9 346 0.07 12.08
80 Commerce Way .................... 1996 22,500 89.1 274 0.06 13.67
100 Commerce Way ................... 1996 24,600 100.0 300 0.06 12.20
120 Commerce Way ................... 1994 9,024 100.0 89 0.02 9.86
140 Commerce Way 1994 26,881 99.5 264 0.06 9.87
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE/FLEX 1,744,193 89.2 13,238 2.87 8.51
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
- --------
1 Westchester Plaza ................ 1967 25,000 100.0 292 0.06 11.68
2 Westchester Plaza ................ 1968 25,000 100.0 448 0.10 17.92
3 Westchester Plaza ................ 1969 93,500 100.0 1,116 0.24 11.94
4 Westchester Plaza ................ 1969 44,700 99.8 598 0.13 13.40
5 Westchester Plaza ................ 1969 20,000 76.3 276 0.06 18.09
6 Westchester Plaza ................ 1968 20,000 100.0 238 0.05 11.90
7 Westchester Plaza ................ 1972 46,200 100.0 634 0.14 13.72
8 Westchester Plaza ................ 1971 67,200 100.0 921 0.20 13.71
11 Clearbrook Road ................. 1974 31,800 100.0 326 0.07 10.25
75 Clearbrook Road ................. 1990 32,720 100.0 816 0.18 24.94
150 Clearbrook Road ................ 1975 74,900 100.0 1,040 0.22 13.89
175 Clearbrook Road ................ 1973 98,900 98.5 1,202 0.26 12.34
200 Clearbrook Road ................ 1974 94,000 99.8 1,018 0.22 10.85
250 Clearbrook Road ................ 1973 155,000 94.5 1,141 0.24 7.79
50 Executive Boulevard ............. 1969 45,200 97.2 388 0.08 8.83
77 Executive Boulevard ............. 1977 13,000 100.0 180 0.04 13.85
85 Executive Boulevard ............. 1968 31,000 83.3 322 0.07 12.47
300 Executive Boulevard ............ 1970 60,000 99.7 575 0.12 9.61
350 Executive Boulevard ............ 1970 15,400 98.8 243 0.05 15.97
399 Executive Boulevard ............ 1962 80,000 100.0 892 0.19 11.15
400 Executive Boulevard ............ 1970 42,200 100.0 614 0.13 14.55
500 Executive Boulevard ............ 1970 41,600 100.0 546 0.12 13.13
525 Executive Boulevard ............ 1972 61,700 100.0 846 0.18 13.71
HAWTHORNE
- ---------
4 Skyline Drive .................... 1987 80,600 100.0 1,195 0.26 14.83
8 Skyline Drive .................... 1985 50,000 98.9 646 0.14 13.06
10 Skyline Drive ................... 1985 20,000 100.0 281 0.06 14.05
11 Skyline Drive ................... 1989 45,000 100.0 676 0.15 15.02
12 Skyline Drive (4) ............... 1999 46,850 100.0 228 0.05 4.87
15 Skyline Drive ................... 1989 55,000 100.0 915 0.20 16.64
200 Saw Mill River Road ............ 1965 51,100 100.0 628 0.13 12.29
YONKERS
- -------
1 Odell Plaza ...................... 1980 106,000 100.0 1,227 0.26 11.58
5 Odell Plaza ...................... 1983 38,400 99.6 489 0.10 12.79
7 Odell Plaza ...................... 1984 42,600 99.6 650 0.14 15.32
4 Executive Plaza .................. 1986 80,000 99.9 1,029 0.22 12.88
6 Executive Plaza .................. 1987 80,000 90.4 989 0.21 13.68
100 Corporate Boulevard ............ 1987 78,000 89.5 1,011 0.22 14.48
200 Corporate Boulevard South 1990 84,000 99.8 1,357 0.29 16.19
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE/FLEX 2,076,570 98.1 25,993 5.58 12.76
- ------------------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
- --------
419 West Avenue .................... 1986 88,000 97.5 1,516 0.33 17.67
500 West Avenue .................... 1988 25,000 82.3 338 0.07 16.43
550 West Avenue .................... 1990 54,000 100.0 778 0.17 14.41
650 West Avenue (4) 1998 40,000 100.0 559 0.12 13.98
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE/FLEX 207,000 96.8 3,191 0.69 15.93
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES 4,027,763 94.2 42,422 9.14 11.18
====================================================================================================================================
</TABLE>
53
<PAGE>
PROPERTY LISTING
THE INDUSTRIAL/WAREHOUSE PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE TOTAL OFFICE,
NET LEASED ANNUAL OFFICE/FLEX, AND AVERAGE
RENTABLE AS OF BASE INDUSTRIAL/ BASE RENT
YEAR AREA 09/30/99 RENT WAREHOUSE BASE PER SQ. FT.
PROPERTY LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) RENT (%) ($) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
- --------
1 Warehouse Lane ................... 1957 6,600 100.0 57 0.01 8.64
2 Warehouse Lane ................... 1957 10,900 100.0 122 0.03 11.19
3 Warehouse Lane ................... 1957 77,200 100.0 290 0.06 3.76
4 Warehouse Lane ................... 1957 195,500 97.4 1,871 0.40 9.83
5 Warehouse Lane ................... 1957 75,100 97.1 681 0.15 9.34
6 Warehouse Lane 1982 22,100 100.0 506 0.11 22.90
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INDUSTRIAL/WAREHOUSE
PROPERTIES 387,400 98.1 3,527 0.76 9.28
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX, AND
INDUSTRIAL/WAREHOUSE PROPERTIES..... 27,351,225 96.1 465,962 100.00 17.72
====================================================================================================================================
</TABLE>
(1) Based on all leases in effect as of September 30, 1999.
(2) Total base rent for the 12 months ended September 30, 1999, determined in
accordance with generally accepted accounting principles ("GAAP").
Substantially all of the leases provide for annual base rents plus
recoveries and escalation charges based upon the tenant's proportionate
share of and/or increases in real estate taxes and certain operating
costs, as defined, and the pass through of charges for electrical usage.
For those properties acquired or placed in service during the 12 months
ended September 30, 1999, amounts are annualized, as per Note 4.
(3) Base rent for the 12 months ended September 30, 1999 divided by net
rentable square feet leased at September 30, 1999. For those properties
acquired or placed in service during the 12 months ended September 30,
1999, amounts are annualized, as per Note 4.
(4) As this property was acquired or placed in service during the 12 months
ended September 30, 1999, the amounts represented for base rent are
annualized. These annualized amounts may not be indicative of the
property's results had the Company owned or placed such property in
service for the entire 12 months ended September 30, 1999.
(5) Excludes office space leased by the Company.
54
<PAGE>
FUNDS FROM OPERATIONS
The Company considers funds from operations ("FFO"), after adjustment for
straight-lining of rents, one measure of REIT performance. Funds from operations
is defined as net income (loss) before minority interest of unitholders,
computed in accordance with generally accepted accounting principles ("GAAP"),
excluding gains (or losses) from debt restructuring, other extraordinary and
significant non-recurring items, and sales of property, plus real estate-related
depreciation and amortization. Funds from operations should not be considered as
an alternative to net income as an indication of the Company's performance or to
cash flows as a measure of liquidity. Funds from operations presented herein is
not necessarily comparable to funds from operations presented by other real
estate companies due to the fact that not all real estate companies use the same
definition. However, the Company's funds from operations is comparable to the
funds from operations of real estate companies that use the current definition
of the National Association of Real Estate Investment Trusts ("NAREIT"), after
the adjustment for straight-lining of rents.
NAREIT's definition of funds from operations indicates that the calculation
should be made before any extraordinary item (determined in accordance with
GAAP), and before any deduction of significant non-recurring events that
materially distort the comparative measurement of the Company's performance.
Funds from operations for the three and nine month periods ended September 30,
1999 and 1998, as calculated in accordance with NAREIT's definition as published
in March 1995, after adjustment for straight-lining of rents, are summarized in
the following table (IN THOUSANDS):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income before non-recurring charges,
distributions to preferred unitholders,
minority interest and extraordinary item $ 40,941 $ 39,087 $ 123,533 $ 111,107
Add: Real estate-related depreciation and
amortization (1) 23,419 21,520 69,139 56,850
Deduct: Rental income adjustment for
straight-lining of rents (1) (3,076) (3,355) (10,454) (9,700)
- ----------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment
for straight-lining of rents, before
distributions to preferred unitholders $ 61,284 $ 57,252 $ 182,218 $ 158,257
Deduct: Distributions to preferred unitholders (3,869) (4,194) (11,607) (12,090)
- ----------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for
straight-lining of rents, after distributions
to preferred unitholders $ 57,415 $ 53,058 $ 170,611 $ 146,167
======================================================================================================================
Cash flows provided by operating activities $ 162,372 $ 151,792
Cash flows used in investing activities $ (170,974) $ (718,254)
Cash flows provided by financing activities $ 3,861 $ 570,612
- ----------------------------------------------------------------------------------------------------------------------
Basic weighted average shares/units
outstanding (2) 66,893 65,577 67,025 62,580
- ----------------------------------------------------------------------------------------------------------------------
Diluted weighted average shares/units
outstanding (2) 73,731 73,044 73,936 69,983
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes FFO adjustments related to the Company's investments in
unconsolidated joint ventures.
(2) See calculations for the amounts presented in the following
reconciliation.
55
<PAGE>
The following schedule reconciles the Company's basic weighted average shares to
the basic and diluted weighted average shares/units presented above:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic weighted average shares: 58,679 57,720 58,452 55,391
Add: Weighted average common units 8,214 7,857 8,573 7,189
- ----------------------------------------------------------------------------------------------------------------------
Basic weighted average shares/units: 66,893 65,577 67,025 62,580
Add: Weighted average preferred units 6,618 7,160 6,642 6,890
(after conversion to common units)
Stock options 220 307 269 455
Stock Warrants -- -- -- 58
- ----------------------------------------------------------------------------------------------------------------------
Diluted weighted average shares/units: 73,731 73,044 73,936 69,983
======================================================================================================================
</TABLE>
INFLATION
The Company's leases with the majority of its tenants provide for recoveries and
escalation charges based upon the tenant's proportionate share of, and/or
increases in, real estate taxes and certain operating costs, which reduce the
Company's exposure to increases in operating costs resulting from inflation.
DISRUPTION IN OPERATIONS DUE TO YEAR 2000 PROBLEMS
GENERAL
The Year 2000 issue is the result of computer programs and embedded chips using
a two-digit format, as opposed to four digits, to indicate the year. Such
computer systems may be unable to interpret dates beyond the year 1999, which
could cause a system failure or other computer errors, leading to disruptions in
operations. We have developed a three-phase Year 2000 project (the "Project") to
determine our Year 2000 systems compliance. Phase I was to identify those
systems with which we have exposure to Year 2000 issues. Phase II was the
development and implementation of action plans to be Year 2000 compliant in all
areas. Phase III is the final testing of each major area of exposure to assure
compliance. We have identified three major areas critical for successful Year
2000 compliance: (i) our central accounting and operating computer system at our
Cranford, New Jersey headquarters and local networks and related systems in our
regional offices, (ii) inquiries of our tenants and key vendors as to their Year
2000 readiness and (iii) assessment of our individual buildings as to the Year
2000 readiness of their operating systems. We believe that progress in all such
areas is proceeding on schedule and that we will experience no material adverse
effect as a result of the Year 2000 issue. There can, however, be no assurance
that this will be the case. Set forth below is a more detailed analysis of the
Project and its anticipated impact on us.
CENTRAL ACCOUNTING AND OPERATING SYSTEMS
We have completed a review of key computer hardware and software and other
equipment, and have modified, upgraded or replaced all identified hardware and
equipment in our corporate and regional offices that we believe may be affected
by problems associated with Year 2000. Such hardware includes, but is not
limited to, desktop and laptop computers, servers, printers, telecopier machines
and telephones. We, as part of our routine modernization efforts, have completed
necessary upgrades to identified secondary software systems, such as word
processing, spreadsheet applications, telephone voicemail systems and computer
calendar programs. The software supplier of our accounting system completed its
Year 2000 upgrade and supplied us with Year 2000 compliant software at no cost
to us. We have substantially completed our internal testing of such software
with satisfactory results.
TENANT COMPLIANCE
We believe that the completion of the Project as scheduled will minimize Year
2000 related issues in our internal operations. However, we may still be
adversely impacted by Year 2000 related issues as a result of problems outside
our control, such as the inability of tenants to pay rent when due. In order to
gauge such risk, we sent questionnaires to each of our then existing tenants in
August 1998 to assess their Year 2000 compliance status. The responses to these
questionnaires have been received, reviewed and evaluated. Based on the
responses received, we do not anticipate any material adverse impact on the
orderly payment of monthly rent. Therefore, while there can be no assurance that
Year 2000 problems of tenants will
56
<PAGE>
not have a material adverse effect on our operating results or financial
condition, the information available to us indicates such an occurrence is not
likely.
PROPERTY COMPLIANCE
Our property managers have completed Phase I of the Project, a building by
building survey of all of our properties to determine whether building support
systems such as heat, power, light, security, garages and elevators will be
affected by the advent of the Year 2000. Most of such systems either are already
Year 2000 compliant or contain no computerized parts. Our property managers have
completed Phase II of the Project, the development and implementation of action
plans to modify, upgrade or replace non-compliant building systems. We have
successfully completed the implementation of these action plans and replaced or
upgraded identified non-compliant building systems. Our property managers have
also completed Phase III of the Project, the testing of these installed building
systems to assure Year 2000 Compliance. Our testing results have confirmed the
compliance of these installed building systems.
We have communicated with vendors of building systems or other services to our
buildings regarding their Year 2000 compliance. In many instances, we will rely
on the written representations from these vendors regarding the Year 2000
compliance of their product or service. We are also relying on assurances
requested from utility providers of their Year 2000 compliance and their
continued ability to provide uninterrupted service to our buildings.
Substantially all of the cost necessary to modify, upgrade and/or replace
identified building support systems for Year 2000 compliance have been incurred
and were not material.
WORST CASE EXPOSURE
We are aware that it is generally believed that the Year 2000 problem, if
uncorrected, may result in a worldwide economic crisis. We are unable to
determine whether such predictions are true or false. However, if such
predictions prove true, we assume that all companies (including ours) will
experience the effects in one way or another. The most reasonably likely worst
case scenario we anticipate in connection with the Year 2000 issue relates to
the failure of the upgrade to our accounting system to effectively become Year
2000 compliant. We believe that such an event is most unlikely, but an
occurrence of the foregoing might have a material adverse impact on our
operations. We cannot currently assess the financial impact of such a worst case
scenario.
CONTINGENCY PLANS
We have developed contingency plans to address the Year 2000 non-compliance of
(i) critical building support systems and (ii) our accounting system.
CRITICAL BUILDING SYSTEMS. We believe that the failure of any of the
following critical building support systems due to Year 2000 issues could have a
material adverse impact on the performance of an individual building: security
systems, elevator systems or fire/life safety systems. We believe that in the
event of a Year 2000 related failure in a building security system, we would be
able to maintain adequate security at the building through the use of security
guards. We believe that in the event of a Year 2000 related failure in a
building elevator system, adequate access would exist at most of our buildings
through existing stairways. We believe that in the event of a Year 2000 related
failure in a building fire/life safety system, our property management staff
would be able to manually operate such system.
ACCOUNTING SOFTWARE. We believe that failure of the Year 2000
compliance upgrade to our accounting software might have a material adverse
impact on our operations. However, we believe that financial data within any
given fiscal year will remain intact and retrievable. We believe that
alternative accounting software and/or manual bookkeeping would minimize the
impact of a Year 2000 related failure of our current accounting software.
RISKS
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect our results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of the
Year 2000 readiness of third-party vendors and tenants, we are unable to predict
whether the consequences of Year 2000 failures will have a material impact on
our results of operations, liquidity or financial condition. However, our
completion of the Project has significantly reduced our level of uncertainty
about the Year 2000 problem. We believe that we have taken prudent measures to
address possible Year 2000 failures and minimized the possibility of significant
interruptions to normal operations.
57
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The Company considers portions of this information to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of The Securities Exchange Act of 1934. Although the Company
believes that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, it can give no assurance that its
expectations will be achieved.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Approximately $1.2 billion of the Company's long-term debt bears interest at
fixed rates, and therefore the fair value of these instruments is affected by
changes in the market interest rates. The following table presents principal
cash flows (in thousands) based upon maturity dates of the debt obligations and
the related weighted-average interest rates by expected maturity dates for the
fixed rate debt. The interest rate on the variable rate debt as of September 30,
1999 ranged from LIBOR plus 65 basis points to LIBOR plus 90 basis points.
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
LONG-TERM DEBT, FAIR
INCLUDING CURRENT PORTION 1999 2000 2001 2002 2003 THEREAFTER TOTAL VALUE
- ------------------------- ---- ---- ---- ---- ---- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate............... $ 490 $8,227 $ 7,222 $11,015 $195,773 $1,025,342 $1,248,069 $1,204,128
Average Interest Rate.... 7.61% 6.67% 7.19% 7.02% 7.28% 7.27% 7.29%
Variable Rate............ $8,000 $249,956 $ 72,204 $ 330,160 $ 330,160
</TABLE>
58
<PAGE>
MACK-CALI REALTY CORPORATION
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Reference is made to "Other" in Note 12 (Commitments and
Contingencies) to the Consolidated Financial Statements, which
is specifically incorporated by reference herein.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Reference is made to the tenth and eleventh paragraphs under
"Common Units" in Note 10 (Minority Interest) to the
Consolidated Financial Statements, which are specifically
incorporated by reference herein.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Item 5. OTHER INFORMATION
Effective as of the close of business on November 21, 1999,
ChaseMellon Shareholder Services LLC will be terminated and
replaced by EquiServe Trust Company, N.A., as the Company's
transfer agent, registrar, and paying agent.
59
<PAGE>
MACK-CALI REALTY CORPORATION
PART II -- OTHER INFORMATION (CONTINUED)
ITEM 6 - EXHIBITS
(a) Exhibits
The following exhibits are filed herewith or are incorporated by
reference to exhibits previously filed:
EXHIBIT NUMBER EXHIBIT TITLE
-------------- -------------
3.1 Restated Charter of Mack-Cali Realty Corporation dated
June 10, 1999, together with Articles Supplementary
thereto (filed as Exhibit 3.1 to the Company's Form 8-K
dated June 10, 1999 and as Exhibit 4.2 to the Company's
Form 8-K dated July 6, 1999 and each incorporated herein
by reference).
3.2 Amended and Restated Bylaws of Mack-Cali Realty
Corporation dated June 10, 1999 (filed as Exhibit 3.2 to
the Company's Form 8-K dated June 10, 1999 and
incorporated herein by reference).
3.3 Second Amended and Restated Agreement of Limited
Partnership dated December 11, 1997, for Mack-Cali
Realty, L.P. (filed as Exhibit 10.110 to the Company's
Form 8-K dated December 11, 1997 and incorporated herein
by reference).
3.4 Amendment No. 1 to the Second Amended and Restated
Agreement of Limited Partnership of Mack-Cali Realty,
L.P. (filed as Exhibit 3.1 to the Company's Registration
Statement on Form S-3, Registration No. 333-57103, and
incorporated herein by reference).
3.5 Second Amendment to the Second Amended and Restated
Agreement of Limited Partnership of Mack-Cali Realty,
L.P. (filed as Exhibit 10.2 to the Company's Form 8-K
dated July 6, 1999 and incorporated herein by
reference).
4.1 Shareholder Rights Agreement, dated as of July 6, 1999,
between Mack-Cali Realty Corporation and ChaseMellon
Shareholder Services, LLC, as Rights Agent (filed as
Exhibit 4.1 to the Company's Form 8-K dated July 6, 1999
and incorporated herein by reference).
4.2 Indenture dated as of March 16, 1999, by and among
Mack-Cali Realty, L.P., as issuer, Mack-Cali Realty
Corporation, as guarantor, and Wilmington Trust Company,
as trustee (filed as Exhibit 4.1 to the Company's Form
8-K dated March 16, 1999 and incorporated herein by
reference).
4.3 Supplemental Indenture No. 1 dated as of March 16, 1999,
by and among Mack-Cali Realty, L.P., as issuer, and
Wilmington Trust Company, as trustee (filed as Exhibit
4.2 to the Company's Form 8-K dated March 16, 1999 and
incorporated herein by reference).
60
<PAGE>
EXHIBIT NUMBER EXHIBIT TITLE
-------------- -------------
4.4 Supplemental Indenture No. 2 dated as of August 2, 1999,
by and among Mack-Cali Realty, L.P., as issuer, and
Wilmington Trust Company, as trustee (filed as Exhibit
4.4 to the Company's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.1 Amended and Restated Employment Agreement dated as of
July 1, 1999 between Mitchell E. Hersh and Mack-Cali
Realty Corporation (filed as Exhibit 10.2 to the
Company's Form 10-Q dated June 30, 1999 and incorporated
herein by reference).
10.2 Second Amended and Restated Employment Agreement dated
as of July 1, 1999 between Timothy M. Jones and
Mack-Cali Realty Corporation (filed as Exhibit 10.3 to
the Company's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.3 Amended and Restated Employment Agreement dated as of
July 1, 1999 between John R. Cali and Mack-Cali Realty
Corporation (filed as Exhibit 10.4 to the Company's Form
10-Q dated June 30, 1999 and incorporated herein by
reference).
10.4 Amended and Restated Employment Agreement dated as of
July 1, 1999 between Brant Cali and Mack-Cali Realty
Corporation (filed as Exhibit 10.5 to the Company's Form
10-Q dated June 30, 1999 and incorporated herein by
reference).
10.5 Second Amended and Restated Employment Agreement dated
as of July 1, 1999 between Barry Lefkowitz and Mack-Cali
Realty Corporation (filed as Exhibit 10.6 to the
Company's Form 10-Q dated June 30, 1999 and incorporated
herein by reference).
10.6 Second Amended and Restated Employment Agreement dated
as of July 1, 1999 between Roger W. Thomas and Mack-Cali
Realty Corporation (filed as Exhibit 10.7 to the
Company's Form 10-Q dated June 30, 1999 and incorporated
herein by reference).
10.7 Restricted Share Award Agreement dated as of July 1,
1999 between Mitchell E. Hersh and Mack-Cali Realty
Corporation (filed as Exhibit 10.8 to the Company's Form
10-Q dated June 30, 1999 and incorporated herein by
reference).
10.8 Restricted Share Award Agreement dated as of July 1,
1999 between Timothy M. Jones and Mack-Cali Realty
Corporation (filed as Exhibit 10.9 to the Company's Form
10-Q dated June 30, 1999 and incorporated herein by
reference).
10.9 Restricted Share Award Agreement dated as of July 1,
1999 between John R. Cali and Mack-Cali Realty
Corporation (filed as Exhibit 10.10 to the Company's
Form 10-Q dated June 30, 1999 and incorporated herein by
reference).
10.10 Restricted Share Award Agreement dated as of July 1,
1999 between Brant Cali and Mack-Cali Realty Corporation
(filed as Exhibit 10.11 to the Company's Form 10-Q dated
June 30, 1999 and incorporated herein by reference).
10.11 Restricted Share Award Agreement dated as of July 1,
1999 between Barry Lefkowitz and Mack-Cali Realty
Corporation (filed as Exhibit 10.12 to the Company's
Form 10-Q dated June 30, 1999 and incorporated herein by
reference).
61
<PAGE>
EXHIBIT NUMBER EXHIBIT TITLE
-------------- -------------
10.12 Restricted Share Award Agreement dated as of July 1,
1999 between Roger W. Thomas and Mack-Cali Realty
Corporation (filed as Exhibit 10.13 to the Company's
Form 10-Q dated June 30, 1999 and incorporated herein by
reference).
10.13 Credit Agreement, dated as of December 10, 1997, by and
among Cali Realty, L.P. and the other signatories
thereto (filed as Exhibit 10.122 to the Company's Form
8-K dated December 11, 1997 and incorporated herein by
reference).
10.14 Amendment No. 1 to Revolving Credit Agreement dated July
20, 1998, by and among Mack-Cali Realty, L.P. and The
Chase Manhattan Bank, Fleet National Bank and Other
Lenders Which May Become Parties Thereto (filed as
Exhibit 10.5 to the Company's Form 10-K dated December
31, 1998 and incorporated herein by reference).
10.15 Amendment No. 2 to Revolving Credit Agreement dated
December 30, 1998, by and among Mack-Cali Realty, L.P.
and The Chase Manhattan Bank, Fleet National Bank and
Other Lenders Which May Become Parties Thereto (filed as
Exhibit 10.6 to the Company's Form 10-K dated December
31, 1998 and incorporated herein by reference).
10.16 Contribution and Exchange Agreement among The MK
Contributors, The MK Entities, The Patriot Contributors,
The Patriot Entities, Patriot American Management and
Leasing Corp., Cali Realty, L.P. and Cali Realty
Corporation, dated September 18, 1997 (filed as Exhibit
10.98 to the Company's Form 8-K dated September 19, 1997
and incorporated herein by reference).
10.17 First Amendment to Contribution and Exchange Agreement,
dated as of December 11, 1997, by and among the Company
and the Mack Group (filed as Exhibit 10.99 to the
Company's Form 8-K dated December 11, 1997 and
incorporated herein by reference).
27 Financial Data Schedule
(b) Reports on Form 8-K.
During the quarter ended September 30, 1999, the Company filed a
Current Report on Form 8-K dated July 6, 1999.
62
<PAGE>
MACK-CALI REALTY CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MACK-CALI REALTY CORPORATION
(Registrant)
Date: November 4, 1999 /s/ MITCHELL E. HERSH
-------------------------------------
Mitchell E. Hersh
Chief Executive Officer
Date: November 4, 1999 /s/ BARRY LEFKOWITZ
-------------------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
63
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,252
<SECURITIES> 0
<RECEIVABLES> 6,246
<ALLOWANCES> 918
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,619,783
<DEPRECIATION> 241,746
<TOTAL-ASSETS> 3,598,130
<CURRENT-LIABILITIES> 0
<BONDS> 1,578,229
0
0
<COMMON> 584
<OTHER-SE> 1,437,141
<TOTAL-LIABILITY-AND-EQUITY> 3,598,130
<SALES> 0
<TOTAL-REVENUES> 139,020
<CGS> 0
<TOTAL-COSTS> 65,708
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,474
<INCOME-PRETAX> 40,941
<INCOME-TAX> 0
<INCOME-CONTINUING> 32,520
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,520
<EPS-BASIC> 0.55
<EPS-DILUTED> 0.55
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,252
<SECURITIES> 0
<RECEIVABLES> 6,246
<ALLOWANCES> 918
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,619,783
<DEPRECIATION> 241,746
<TOTAL-ASSETS> 3,598,130
<CURRENT-LIABILITIES> 0
<BONDS> 1,578,229
0
0
<COMMON> 584
<OTHER-SE> 1,437,141
<TOTAL-LIABILITY-AND-EQUITY> 3,598,130
<SALES> 0
<TOTAL-REVENUES> 410,884
<CGS> 0
<TOTAL-COSTS> 191,757
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,793
<INCOME-PRETAX> 107,075
<INCOME-TAX> 0
<INCOME-CONTINUING> 83,270
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,270
<EPS-BASIC> 1.42
<EPS-DILUTED> 1.42
</TABLE>
