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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER: 1-13274
MACK-CALI REALTY CORPORATION
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(Exact Name of Registrant as specified in its charter)
MARYLAND 22-3305147
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11 COMMERCE DRIVE, CRANFORD, NEW JERSEY 07016-3599
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(Address of principal executive offices) (Zip code)
(908) 272-8000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
(Title of Each Class) (Name of Each Exchange on Which Registered)
COMMON STOCK, $0.01 PAR VALUE NEW YORK STOCK EXCHANGE
PACIFIC EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. /X/
As of February 18, 2000, the aggregate market value of the voting stock
held by non-affiliates of the registrant was $1,393,729,891. The aggregate
market value was computed with references to the closing price on the New
York Stock Exchange on such date. This calculation does not reflect a
determination that persons are affiliates for any other purpose.
As of February 18, 2000, 58,467,635 shares of common stock, $0.01 par value,
of the Company ("Common Stock") were outstanding.
LOCATION OF EXHIBIT INDEX: The index of exhibits is contained in Part IV
herein on page number 61.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's definitive
proxy statement to be issued in conjunction with the registrant's annual meeting
of shareholders to be held on May 16, 2000 are incorporated by reference in Part
III of this Form 10-K
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TABLE OF CONTENTS
FORM 10-K
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PAGE NO.
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PART I
Item 1 Business ........................................................................ 3
Item 2 Properties....................................................................... 15
Item 3 Legal Proceedings................................................................ 45
Item 4 Submission of Matters to a Vote of Security Holders.............................. 45
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder Matters............. 46
Item 6 Selected Financial Data.......................................................... 48
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................... 49
Item 7a Quantitative and Qualitative Disclosures About Market Risk....................... 60
Item 8 Financial Statements and Supplementary Data...................................... 61
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................................... 61
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 61
Item 11 Executive Compensation........................................................... 61
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 61
Item 13 Certain Relationships and Related Transactions................................... 61
PART IV
Item 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K................ 61
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PART I
ITEM 1. BUSINESS
GENERAL
Mack-Cali Realty Corporation (together with its subsidiaries, the "Company") is
a fully-integrated, self-administered and self-managed real estate investment
trust ("REIT") that owns and operates a portfolio comprised predominantly of
Class A office and office/flex properties located primarily in the Northeast, as
well as commercial real estate leasing, management, acquisition, development and
construction businesses. As of December 31, 1999, the Company owned or had
interests in 259 properties, aggregating approximately 28.6 million square feet,
plus developable land (collectively, the "Properties"). The Properties are
comprised of: (a) 253 wholly-owned or Company-controlled properties consisting
of 155 office buildings and 85 office/flex buildings totaling approximately 27.0
million square feet, six industrial/warehouse buildings totaling approximately
387,400 square feet, two multi-family residential complexes consisting of 451
units, two stand-alone retail properties and three land leases (collectively,
the "Consolidated Properties"); and (b) five office buildings and one
office/flex building aggregating 1.2 million square feet, owned by
unconsolidated joint ventures in which the Company has investment interests (see
"Investments in Unconsolidated Joint Ventures"). Unless otherwise indicated, all
references to square feet represent net rentable area. As of December 31, 1999,
the office, office/flex and industrial/warehouse properties, included in the
Consolidated Properties, were approximately 96.5 percent leased to over 2,400
tenants. The Properties are located in 12 states, primarily in the Northeast,
plus the District of Columbia.
The Company's strategy has been to focus its acquisition, operation and
development of office properties in markets and sub-markets where it is, or can
become, a significant and preferred owner and operator. The Company believes
that its Properties have excellent locations and access and are well-maintained
and professionally managed. As a result, the Company believes that its
Properties attract high quality tenants and achieve among the highest rental,
occupancy and tenant retention rates within their markets. The Company will
continue this strategy by expanding, through acquisitions or development, in
markets and sub-markets where it has, or can achieve, similar status. Consistent
with its growth strategy, during 1999, the Company, directly or through joint
ventures in which it has ownership interests, acquired or placed in service 11
office and office/flex properties, aggregating approximately 806,142 square
feet, for an aggregate cost to the Company of approximately $105.6 million.
Management believes that the recent trend towards increasing rental and
occupancy rates in the Company's sub-markets continues to present significant
opportunities for internal growth. The Company, directly or through joint
ventures, is underway with the construction of 11 office and office/flex
buildings. The Company may also develop additional properties in such
sub-markets, particularly with a view towards development of the Company's
vacant land holdings, which principally are located adjacent to the Company's
existing properties. Management believes that its extensive market knowledge
provides the Company with a significant competitive advantage which is further
enhanced by its strong reputation for, and emphasis on, delivering highly
responsive, professional management services. See "Business Strategies --
Growth".
The principals of Cali Associates, the entity to whose business the Company
succeeded in 1994, have been involved in the development, leasing, management,
operation and disposition of commercial and residential properties in Northern
and Central New Jersey for over 50 years and have been primarily focusing on
office building development for the past 20 years. In January 1997, the Company
acquired 65 Class A properties located in Westchester County, New York and
Fairfield County, Connecticut, aggregating approximately 4.1 million square feet
from the Robert Martin Company, LLC and affiliates for a total cost of
approximately $450.0 million ("RM Transaction"). In December 1997, the Company
acquired 54 Class A office properties, primarily in New Jersey and Texas,
aggregating approximately 9.2 million square feet, from The Mack Company and
Patriot American Office Group for a total cost of approximately $1.1 billion
("Mack Transaction"). Upon the completion of the Mack Transaction, the Company
changed its name from Cali Realty Corporation to Mack-Cali Realty Corporation.
The Company's executive officers have been employed by the Company and/or its
predecessor companies for an average of approximately 10 years. The Company and
its predecessors have extensive development experience, having developed 12.5
million square feet or 43.7 percent of the Company's portfolio.
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As of December 31, 1999, executive officers and directors of the Company owned
approximately 10.8 percent of the Company's outstanding shares of Common Stock
(including Units redeemable or convertible into shares of Common Stock). As used
herein, the term "Units" refers to limited partnership interests in Mack-Cali
Realty, L.P., a Delaware limited partnership, ("Operating Partnership") through
which the Company conducts its real estate activities.
The Company performs substantially all construction, development, leasing,
management and tenant improvements on an "in-house" basis and is
self-administered and self-managed. The Company was incorporated on May 24,
1994. The Company's executive offices are located at 11 Commerce Drive,
Cranford, New Jersey 07016, and its telephone number is (908) 272-8000.
The Company has an internet website at "www.mack-cali.com".
BUSINESS STRATEGIES
OPERATIONS
REPUTATION: The Company has established a reputation as a highly-regarded
landlord with an emphasis on delivering professional quality tenant services in
buildings it owns or manages. The Company believes that its continued success
depends in part on enhancing its reputation as an operator of choice, which will
facilitate the retention of current tenants and the attraction of new tenants.
The Company believes it provides a superior level of service to its tenants,
which in turn creates higher than average occupancy rates, as well as lower than
average turnover.
COMMUNICATION WITH TENANTS: The Company emphasizes frequent communication with
tenants to ensure first-class service to the Properties. Property managers
generally are located on site at the Properties to provide convenient access to
management and to ensure that the Properties are well-maintained. Property
management's primary responsibility is to ensure that buildings are operated at
peak efficiency in order to meet both the Company's and tenants' needs and
expectations. The property managers additionally budget and oversee capital
improvements and building system upgrades to enhance the Properties' competitive
advantages in their markets.
Additionally, the Company's in-house leasing representatives develop and
maintain long-term relationships with the Company's diverse tenant base and
coordinate leasing, expansion, relocation and build-to-suit opportunities within
the Company's portfolio. This approach allows the Company to offer office space
in the appropriate size and location to current or prospective tenants in any of
its sub-markets.
GROWTH
The Company's objectives are to maximize growth in funds from operations and to
enhance the value of its portfolio through effective management, acquisition and
development strategies, as follows:
INTERNAL GROWTH: The Company seeks to maximize the value of its existing
portfolio through implementing operating strategies to produce increased
effective rental and occupancy rates and decreased concession and tenant
installation costs. The Company believes that it has a unique opportunity for
internal growth through re-leasing space at higher effective rents with
contractual rent increases and developing or redeveloping space for its diverse
base of high credit tenants, including AT&T Corporation, Arthur Anderson and IBM
Corporation. In addition, the Company's management seeks volume discounts to
take advantage of the Company's size and dominance in particular sub-markets,
and operating efficiencies through the use of in-house management, leasing,
marketing, financing, accounting, legal, development and construction functions.
The Company believes that these factors combined should allow the Company
internal growth over the next several years.
ACQUISITIONS: The Company also believes that growth opportunities exist through
acquiring operating or redevelopment properties with attractive returns in
sub-markets where, based on its expertise in leasing, managing and operating
properties, it is or can become, a significant and preferred owner and operator.
The Company will acquire, invest in or redevelop additional properties that: (i)
provide attractive initial yields with significant potential for growth in cash
flow from operations; (ii) are well-located, of high quality and competitive in
their respective sub-markets; (iii) are located in its existing sub-markets or
in sub-markets in which the Company can become a significant and preferred owner
or operator; and (iv) have been under-managed or are otherwise capable of
improved performance through intensive management, capital improvements and/or
leasing that will result in increased occupancy and rental revenues.
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DEVELOPMENT: The Company owns 368 acres of land held for development on which
it can build up to approximately 10.4 million square feet of office and other
space. The Company may selectively develop buildings where such development
will result in a favorable risk-adjusted return on investment in coordination
with the above operating strategies. Such development will primarily occur
only when leases have been executed prior to construction, in stable
sub-markets where the demand for such space exceeds available supply, and
where the Company is, or can become, a significant and preferred owner and
operator.
FINANCIAL
The Company currently intends to maintain a ratio of debt-to-total market
capitalization (total debt of the Company as a percentage of the total market
value of issued and outstanding shares of Common Stock, including interests
redeemable therefor, plus total debt) of approximately 50 percent or less. The
Company has three investment grade credit ratings. Standard & Poor's Rating
Services ("S&P") and Duff & Phelps Credit Rating Co. ("DCR") have each assigned
their BBB rating to existing and prospective senior unsecured debt of the
Operating Partnership. S&P and DCR have also assigned their BBB- rating to
prospective preferred stock offerings of the Company. Moody's Investors Service
has assigned its Baa3 rating to existing and prospective senior unsecured debt
of the Operating Partnership and its Ba1 rating to prospective preferred stock
offerings of the Company. Although there is no limit in the Company's
organizational documents on the amount of indebtedness that the Company may
incur or the requirement for maintenance of investment grade credit ratings, the
Company has entered into certain financial agreements which contain covenants
that limit the Company's ability to incur indebtedness under certain
circumstances. The Company also intends to conduct its operations and resulting
financial position in order to maintain its investment grade rated status. As of
December 31, 1999, the Company's total debt constituted approximately 42.8
percent of the total market capitalization of the Company. The Company will
utilize the most appropriate sources of capital for future acquisitions,
development, capital improvements and other investments, which may include funds
from operating activities, proceeds from property sales, short-term and
long-term borrowings (including draws on the Company's revolving credit
facilities), and the issuance of additional debt or equity securities.
EMPLOYEES
As of December 31, 1999, the Company had over 400 employees.
COMPETITION
The leasing of real estate is highly competitive. The Properties compete for
tenants with lessors and developers of similar properties located in its
respective markets primarily on the basis of location, rent charged, services
provided, and the design and condition of the Properties. The Company also
experiences competition when attempting to acquire desirable real estate,
including competition from domestic and foreign financial institutions, other
REITs, life insurance companies, pension trusts, trust funds, partnerships and
individual investors.
REGULATIONS
Many laws and governmental regulations are applicable to the Properties and
changes in these laws and regulations, or their interpretation by agencies and
the courts, occur frequently.
Under various laws and regulations relating to the protection of the
environment, an owner of real estate may be held liable for the costs of removal
or remediation of certain hazardous or toxic substances located on or in the
property. These laws often impose liability without regard to whether the owner
was responsible for, or even knew of, the presence of such substances. The
presence of such substances may adversely affect the owner's ability to rent or
sell the property or to borrow using such property as collateral and may expose
it to liability resulting from any release of, or exposure to, such substances.
Persons who arrange for the disposal or treatment
of hazardous or toxic substances at another location may also be liable for the
costs of removal or remediation of such substances at the disposal or treatment
facility, whether or not such facility is owned or operated by such person.
Certain environmental laws impose liability for release of asbestos-containing
materials into the air, and third parties may also seek recovery from owners or
operators of real properties for personal injury associated with
asbestos-containing materials and other hazardous or toxic substances. In
connection with the ownership (direct or indirect), operation, management and
development of real properties, the Company may be considered an owner or
operator of such properties or as having arranged for the disposal or treatment
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of hazardous or toxic substances and, therefore, potentially liable for removal
or remediation costs, as well as certain other related costs, including
governmental penalties and injuries to persons and property.
There can be no assurance that (i) future laws, ordinances or regulations will
not impose any material environmental liability, (ii) the current environmental
condition of the Properties will not be affected by tenants, by the condition of
land or operations in the vicinity of the Properties (such as the presence of
underground storage tanks), or by third parties unrelated to the Company, or
(iii) the Company's assessments reveal all environmental liabilities and that
there are no material environmental liabilities of which the Company is aware.
If compliance with the various laws and regulations, now existing or hereafter
adopted, exceeds the Company's budgets for such items, the Company's ability to
make expected distributions to stockholders could be adversely affected.
There are no other laws or regulations which have a material effect on the
Company's operations, other than typical federal, state and local laws affecting
the development and operation of real property, such as zoning laws.
INDUSTRY SEGMENTS
The Company operates in only one industry segment - real estate. The Company
does not have any foreign operations and its business is not seasonal.
RECENT DEVELOPMENTS
The Company's funds from operations (after adjustment for straight-lining of
rents) for the year ended December 31, 1999 was $244.2 million as compared to
$216.9 million for the year ended December 31, 1998. As a result of the
Company's improved operating performance, the Company announced, in September
1999, a 5.5 percent increase in its regular quarterly dividend, commencing with
the Company's dividend with respect to the third quarter of 1999, from $0.55 per
share of Common Stock ($2.20 per share of Common Stock on an annualized basis)
to $0.58 per share of Common Stock ($2.32 per share of Common Stock on an
annualized basis). The Company declared a cash dividend of $0.58 per share on
December 17, 1999 to shareholders of record as of January 4, 2000. The dividend
was paid on January 21, 2000. The Company has increased its regular quarterly
dividend for six consecutive years for an increase of 43.6 percent over the
period.
In 1999, the Company:
- acquired six operating properties aggregating 402,886 square feet at
a total cost of approximately $46.5 million,
- placed in service five properties aggregating 403,256 square feet at
a total cost of approximately $59.1 million,
- acquired three developable land parcels at a total cost of
approximately $20.3 million (with construction of office properties
having been commenced on two of the acquired parcels), and
- sold two office properties aggregating 189,851 square feet for an
aggregate sales price of approximately $18.0 million.
The completion of these transactions had a net increase to the total square
footage of the Company's portfolio of 2.3 percent.
The Company, together with seven other public and private real estate
companies and venture capital firm Kleiner Perkins Caufield & Byers, formed
BroadBand Office, Inc. to provide telecommunication and internet services
primarily to office building users nationwide. As part of the agreement, the
Company agreed to allow access for the provision of telecommunication and
internet services to tenants at a portion of the Company's properties. The
Company owns approximately 8 percent of BroadBand Office, Inc.
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OPERATING PROPERTY ACQUISITIONS
The Company acquired the following operating properties during the year ended
December 31, 1999:
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Acquisition # of Rentable Investment by
Date Property/Portfolio Name Location Bldgs. Square Feet Company (a)
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OFFICE
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3/05/99 Pacifica Portfolio - Phase III (b)Colorado Springs, El Paso County, CO 2 94,737 $ 5,709
7/21/99 1201 Connecticut Avenue, NW Washington, D.C. 1 169,549 32,799
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TOTAL OFFICE PROPERTY ACQUISITIONS: 3 264,286 $ 38,508
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OFFICE/FLEX
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12/21/99 McGarvey Portfolio - Phase III (c)Moorestown, Burlington County, NJ 3 138,600 $ 8,012
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TOTAL OFFICE/FLEX PROPERTY ACQUISITION: 3 138,600 $ 8,012
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TOTAL OPERATING PROPERTY ACQUISITIONS: 6 402,886 $ 46,520
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PROPERTIES PLACED IN SERVICE
The Company placed in service the following properties through the completion of
development or redevelopment during the year ended December 31, 1999:
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Date Placed # of Rentable Investment by
in Service Property Name Location Bldgs. Square Feet Company (a)
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OFFICE
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8/09/99 2115 Linwood Avenue Fort Lee, Bergen County, NJ 1 68,000 $ 8,147
11/01/99 795 Folsom Street (d) San Francisco, San Francisco County, CA 1 183,445 37,337
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TOTAL OFFICE PROPERTIES PLACED IN SERVICE: 2 251,445 $ 45,484
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OFFICE/FLEX
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3/01/99 One Center Court Totowa, Passaic County, NJ 1 38,961 $ 2,140
9/17/99 12 Skyline Drive Hawthorne, Westchester County, NY 1 46,850 5,023
12/10/99 600 West Avenue (e) Stamford, Fairfield County, CT 1 66,000 5,429
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TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE: 3 151,811 $ 12,592
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LAND LEASE
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2/01/99 Horizon Center Business Park (f) Hamilton Township, Mercer County, NJ N/A 27.7 acres $ 1,007
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TOTAL LAND LEASE TRANSACTIONS: 27.7 acres $ 1,007
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TOTAL PROPERTIES PLACED IN SERVICE: 5 403,256 $ 59,083
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(a) Unless otherwise noted, transactions were funded by the Company with funds
primarily made available through draws on the Company's credit facilities.
(b) 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 properties were acquired through the exercise of a purchase option
obtained in the initial acquisition of the McGarvey portfolio in January
1998.
(d) On June 1, 1999, the building was acquired for redevelopment for
approximately $34.3 million.
(e) On May 4, 1999, the 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, respectively, 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 $2.2
million.
(f) 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 constructed a 134,000 square-foot retail store.
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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 $1.5 million, 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 130,000 square-foot office building on this site. The Company
accounts for the joint venture on a consolidated basis.
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 members 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 $6.1 million. The acquisition was funded with cash and the
issuance of 121,624 common units to the seller (see Note 11 to the Financial
Statements). The Company has commenced construction of a 220,000 square-foot
office building on the acquired land.
In August 1999, the Company entered into an agreement with SJP Properties
Company ("SJP Properties") which provides for a cooperative effort in seeking
approvals to construct up to approximately 1.8 million square feet of office
development on certain vacant land owned or controlled, respectively, by the
Company and SJP Properties, in Hanover and Parsippany, Morris County, New
Jersey. The agreement provides that the parties shall share equally in the
costs associated with seeking such requisite approvals. Subsequent to
obtaining the requisite approvals, upon mutual consent, the Company and SJP
Properties may enter into one or more joint ventures to construct on the
vacant land, or seek to dispose of their respective vacant land parcels
subject to the agreement.
DISPOSITIONS
On November 15, 1999, the Company sold its 70,550 square-foot office building
located at 400 Alexander Road in Princeton, Mercer County, New Jersey for net
proceeds, after selling costs, of approximately $8.6 million.
On December 15, 1999, the Company sold its 119,301 square-foot office building
located at 20002 North 19th Avenue in Phoenix, Maricopa County, Arizona for net
proceeds, after selling costs, of approximately $8.8 million.
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
The following is a summary of the Company's net investments in unconsolidated
joint ventures as of December 31, 1999:
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COMPANY'S
NET INVESTMENTS
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(IN THOUSANDS)
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Pru-Beta 3 $ 17,072
HPMC 23,337
G&G Martco 8,352
American Financial Exchange L.L.C. 11,571
Ramland Realty Associates L.L.C. 2,697
Ashford Loop Associates L.P. 6,073
ARCap Investors, L.L.C. 20,032
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Total $ 89,134
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</TABLE>
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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
Mack-Cali Business Campus (formerly Prudential Business Campus) office complex
in Parsippany, Morris County, New Jersey. The Company performs management and
leasing services for the property owned by the joint venture.
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 named HPMC Development Partners
II, L.P. (formerly known as HPMC Lava Ridge Partners, L.P.) with these same
parties. HPMC Development Partners, L.P.'s efforts have focused on two
development projects, commonly referred to as Continental Grand II and Summit
Ridge. Continental Grand II is a 4.2 acre site located in El Segundo, Los
Angeles County, California, acquired by the venture upon which it has
constructed and placed in service a 237,360 square-foot office property. Summit
Ridge is a 7.3 acre site located in San Diego, San Diego County, California,
acquired by the venture upon which it has commenced construction of three
one-story buildings aggregating 133,750 square feet of office/flex space. HPMC
Development Partners II, L.P.'s efforts have focused on three development
projects, commonly referred to as Lava Ridge, Peninsula Gateway and Stadium
Gateway. Lava Ridge is a 12.1 acre site located in Roseville, Placer County,
California, acquired by the venture upon which it has commenced construction of
three two-story buildings aggregating 183,200 square feet of office space.
Peninsula Gateway is a parcel of land purchased from the City of Daly City,
California, for future development into office space, a hotel and other retail
establishments. Stadium Gateway is a 1.5 acre site located in Anaheim, Orange
County, California, to be acquired by the venture to develop a six-story office
building aggregating 261,554 square feet. Among other things, the partnership
agreements provide for a preferred return on the Company's invested capital in
each venture, in addition to 50 percent of such venture's profit above such
preferred returns, as defined in each agreement.
G&G MARTCO (CONVENTION PLAZA): On April 30, 1998, the 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 11 to the Financial
Statements), 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 11 to the
Financial Statements). The Company performs management and leasing services for
the property owned by the joint venture.
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 has acquired land on which it has constructed a parking facility,
which is currently leased to a parking operator under a 10-year agreement. Such
parking facility serves a ferry service between the Company's Harborside
Financial Center 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, leasing and
other services for the property owned by the joint venture.
ASHFORD LOOP ASSOCIATES L.P. (1001 SOUTH DAIRY ASHFORD/2100 WEST LOOP SOUTH): On
September 18, 1998, the 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. The Company performs
management and leasing services for the properties owned by the joint venture.
9
<PAGE>
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 $20.0 million in the venture.
William L. Mack, a director and equity holder of the Company, is a principal of
the managing member of the venture.
NORTH PIER AT HARBORSIDE RESIDENTIAL DEVELOPMENT: On August 5, 1999, the Company
entered into an agreement which, upon satisfaction of certain conditions,
provides for the contribution of its North Pier at Harborside Financial Center,
Jersey City, Hudson County, New Jersey to a joint venture with Lincoln Property
Company Southwest, Inc., in exchange for cash and an equity interest in the
venture. The venture intends to develop residential housing on the property.
SOUTH PIER AT HARBORSIDE HOTEL DEVELOPMENT: On November 17, 1999, the Company
entered into an agreement with Hyatt Corporation to develop a 350-room hotel on
the Company's South Pier at Harborside Financial Center, Jersey City, Hudson
County, New Jersey, subject to the satisfaction of certain conditions.
FINANCING ACTIVITY
During 1999, in conjunction with the funding of certain acquisitions as well as
redemption of the remaining contingent units issued in the Mack Transaction, the
Company issued a total of 397,107 common operating partnership units ("Common
Units") with a total value of approximately $11.5 million at time of issuance.
During 1999, pursuant to a share repurchase program approved by the Board of
Directors in August 1998, the Company purchased in the open market, for
constructive retirement, 1,014,500 shares of its outstanding Common Stock for an
aggregate cost of approximately $27.5 million. Concurrent with these purchases,
the Company sold to the Operating Partnership 1,014,500 Common Units for
approximately $27.5 million.
On March 16, 1999, the Operating Partnership issued $600.0 million, face amount,
of senior unsecured notes with interest payable semi-annually in arrears. The
total proceeds from the issuance (net of selling commissions and discount) of
approximately $593.5 million were used to pay down outstanding borrowings under
the 1998 Unsecured Facility, as defined in Note 9 to the financial statements,
and to pay off certain mortgage loans. The senior unsecured notes were issued at
a discount of approximately $2.7 million, which is being amortized over the
terms of the respective tranches as an adjustment to interest expense.
On August 2, 1999, the Operating Partnership issued an additional $185.3 million
of senior unsecured notes with interest payable monthly. The Company used the
proceeds to retire the TIAA Mortgage, as defined in Note 10 to the financial
statements.
The Operating Partnership's total senior unsecured notes (collectively "Senior
Unsecured Notes") are redeemable at any time at the option of the Company,
subject to certain conditions including yield maintenance.
In November 1999, the Company received $2.2 million in settlement of a forward
treasury rate lock agreement entered into in 1998, which is being amortized to
interest expense over the three-year period.
RISK FACTORS
Our results from operations and ability to pay dividends on our equity and debt
service on our indebtedness may be affected by the risk factors set forth below.
All investors should consider the following risk factors before deciding to
purchase securities of the Company. The Company refers to itself as "we" or
"our" in the following risk factors and in "Item 7--Management's Discussion
and Analysis of Financial Condition and Results of Operations--Disruption in
Operations Due to Year 2000 Problems."
WE ARE DEPENDENT UPON THE ECONOMICS OF THE NORTHEASTERN OFFICE MARKETS.
A majority of our revenues are derived from our properties located in the
Northeast, particularly in New Jersey, New York, Pennsylvania and Connecticut.
Adverse economic developments in these states could adversely impact the
operations of our properties and, therefore, our profitability. Because our
portfolio consists primarily of office and office/flex buildings (as compared to
a more diversified real estate portfolio), a decline in the economy and/or a
decline in the demand for office space may adversely affect our ability to make
distributions or payments to our investors.
10
<PAGE>
OUR PERFORMANCE IS SUBJECT TO RISKS ASSOCIATED WITH THE REAL ESTATE INDUSTRY.
GENERAL: Our ability to make distributions or payments to our investors depends
on the ability of our properties to generate funds in excess of operating
expenses (including scheduled principal payments on debt and capital expenditure
requirements). Events or conditions that are beyond our control may adversely
affect our operations and the value of our properties. Such events or conditions
could include:
- changes in the general economic climate;
- changes in local conditions such as oversupply of office space or a
reduction in demand for office space;
- decreased attractiveness of our properties to potential tenants;
- competition from other office and office/flex buildings;
- our inability to provide adequate maintenance;
- increased operating costs, including insurance premiums and real
estate taxes, due to inflation and other factors which may not
necessarily be offset by increased rents;
- changes in laws and regulations (including tax, environmental and
housing laws and regulations) and agency or court interpretations of
such laws and regulations and the related costs of compliance;
- changes in interest rate levels and the availability of financing;
- the inability of a significant number of tenants to pay rent;
- our inability to rent office space on favorable terms; and
- civil unrest, earthquakes and other natural disasters or acts of God
that may result in uninsured losses.
FINANCIALLY DISTRESSED TENANTS MAY BE UNABLE TO PAY RENT: If a tenant defaults,
we may experience delays and incur substantial costs in enforcing our rights as
landlord and protecting our investments. If a tenant files for bankruptcy, a
potential court judgment rejecting and terminating such tenant's lease could
adversely affect our ability to make distributions or payments to our investors.
ILLIQUIDITY OF REAL ESTATE LIMITS OUR ABILITY TO ACT QUICKLY: Real estate
investments are relatively illiquid. Such illiquidity may limit our ability to
react quickly in response to changes in economic and other conditions. If we
want to sell an investment, we might not be able to dispose of that investment
in the time period we desire, and the sales price of that investment might not
recoup or exceed the amount of our investment. The prohibition in the Internal
Revenue Code of 1986, as amended, and related regulations on a real estate
investment trust holding property for sale also may restrict our ability to sell
property. In addition, we acquired a significant number of our properties from
individuals to whom we issued limited partnership units as part of the purchase
price. In connection with the acquisition of these properties, in order to
preserve such individual's tax deferral, we contractually agreed not to sell or
otherwise transfer the properties for a specified period of time, subject to
certain exceptions. The above limitations on our ability to sell our investments
could adversely affect our ability to make distributions or payments to our
investors.
AMERICANS WITH DISABILITIES ACT COMPLIANCE COULD BE COSTLY: Under the Americans
with Disabilities Act of 1990, all public accommodations and commercial
facilities must meet certain federal requirements related to access and use by
disabled persons. Compliance with the ADA requirements could involve removal of
structural barriers from certain disabled persons' entrances. Other federal,
state and local laws may require modifications to or restrict further
renovations of our properties with respect to such accesses. Although we believe
that our properties are substantially in compliance with present requirements,
noncompliance with the ADA or related laws or regulations could result in the
United States government imposing fines or private litigants being awarded
damages against us. Such costs may adversely affect our ability to make
distributions or payments to our investors.
ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND MAY BE COSTLY: Various federal, state
and local laws and regulations subject property owners or operators to liability
for the costs of removal or remediation of certain hazardous or toxic substances
located on or in the property. These laws often impose liability without regard
to whether the owner or operator was responsible for or even knew of the
presence of such substances. The presence of or failure to properly remediate
hazardous or toxic substances may adversely affect our ability to rent, sell or
borrow against contaminated property. Various laws and regulations also impose
liability on persons who arrange for the disposal or treatment of hazardous or
toxic substances at another location for the costs of removal or remediation of
such substances at the disposal or treatment facility. These laws often impose
liability whether or not the person arranging for such disposal ever owned or
operated the disposal facility. Certain other environmental laws and regulations
impose liability on owners or
11
<PAGE>
operators of property for injuries relating to the release of
asbestos-containing materials into the air. As owners and operators of property
and as potential arrangers for hazardous substance disposal, we may be liable
under such laws and regulations for removal or remediation costs, governmental
penalties, property damage, personal injuries and related expenses. Payment of
such costs and expenses could adversely affect our ability to make distributions
or payments to our investors.
COMPETITION FOR ACQUISITIONS MAY RESULT IN INCREASED PRICES FOR PROPERTIES: We
plan to acquire additional properties in New Jersey, New York and Pennsylvania
and in the Northeast generally. We may be competing for investment opportunities
with entities that have greater financial resources and more experienced
managers. Several office building developers and real estate companies may
compete with us in seeking properties for acquisition, land for development and
prospective tenants. Such competition may adversely affect our ability to make
distributions or payments to our investors by:
- reducing the number of suitable investment opportunities offered to
us;
- increasing the bargaining power of property owners;
- interfering with our ability to attract and retain tenants;
- increasing vacancies which lowers market rental rates and limits our
ability to negotiate rental rates; and/or
- adversely affecting our ability to minimize expenses of operation.
DEVELOPMENT OF REAL ESTATE COULD BE COSTLY: As part of our operating strategy,
we may acquire land for development under certain conditions. Included among the
risks of the real estate development business are the following, which may
adversely affect our ability to make distributions or payments to our investors:
- financing for development projects may not be available on favorable
terms;
- long-term financing may not be available upon completion of
construction; and
- failure to complete construction on schedule or within budget may
increase debt service expense and construction costs.
DEBT FINANCING COULD ADVERSELY AFFECT OUR ECONOMIC PERFORMANCE.
SCHEDULED DEBT PAYMENTS AND REFINANCING COULD ADVERSELY AFFECT OUR FINANCIAL
CONDITION: We are subject to the risks normally associated with debt financing.
These risks, including the following, may adversely affect our ability to make
distributions or payments to our investors:
- our cash flow may be insufficient to meet required payments of
principal and interest;
- payments of principal and interest on borrowings may leave us with
insufficient cash resources to pay operating expenses;
- we may not be able to refinance indebtedness on our properties at
maturity; and
- if refinanced, the terms of refinancing may not be as favorable as
the original terms of the related indebtedness.
As of December 31, 1999, we had total outstanding indebtedness of $1.5 billion
comprised of $782.8 million of senior unsecured notes, outstanding borrowings of
$177.0 million under our unsecured $1.0 billion revolving credit facility and
approximately $530.4 million of mortgage indebtedness. We may have to refinance
the principal due on our indebtedness at maturity, and we may not be able to
refinance any indebtedness we incur in the future.
12
<PAGE>
If we are unable to refinance our indebtedness on acceptable terms, or at all,
events or conditions that may adversely affect our ability to make distributions
or payments to our investors include the following:
- we may need to dispose of one or more of our properties upon
disadvantageous terms;
- prevailing interest rates or other factors at the time of refinancing
could increase interest rates and, therefore, our interest expense;
- if we mortgage property to secure payment of indebtedness and are
unable to meet mortgage payments, the mortgagee could foreclose upon
such property or appoint a receiver to receive an assignment of our
rents and leases; and
- foreclosures upon mortgaged property could create taxable income
without accompanying cash proceeds and, therefore, hinder our ability
to meet the real estate investment trust distribution requirements of
the Internal Revenue Code.
RISING INTEREST RATES MAY ADVERSELY AFFECT OUR CASH FLOW: Outstanding borrowings
of approximately $177.0 million (as of December 31, 1999) under our revolving
credit facilities and approximately $72.2 million (as of December 31, 1999) of
our mortgage indebtedness bear interest at variable rates. We may incur
additional indebtedness in the future that also bears interest at variable
rates. Variable rate debt creates higher debt service requirements if market
interest rates increase. Higher debt service requirements could adversely affect
our ability to make distributions or payments to our investors or cause us to
default under certain debt covenants.
OUR DEGREE OF LEVERAGE COULD ADVERSELY AFFECT OUR CASH FLOW: We fund acquisition
opportunities and development partially through short-term borrowings (including
our revolving credit facilities), as well as out of undistributed cash. We
expect to refinance projects purchased with short-term debt either with
long-term indebtedness or equity financing depending upon the economic
conditions at the time of refinancing. Our Board of Directors has a general
policy of limiting the ratio of our indebtedness to total market capitalization
(total debt as a percentage of the total market value of the issued and
outstanding shares of our Common Stock, including interests redeemable therefor,
plus total debt) to 50 percent or less, although there is no limit in Mack-Cali
Realty, L.P.'s or our organizational documents on the amount of indebtedness
that we may incur. However, we have entered into certain financial agreements
which contain financial and operating covenants that limit our ability under
certain circumstances to incur additional secured and unsecured indebtedness.
The Board of Directors could alter or eliminate its current policy on borrowing
at any time in its discretion. If this policy were changed, we could become more
highly leveraged, resulting in an increase in debt service that could adversely
affect our cash flow and our ability to make distributions or payments to our
investors and could cause an increased risk of default on our obligations.
WE ARE DEPENDENT ON OUR KEY PERSONNEL WHOSE CONTINUED SERVICE IS NOT GUARANTEED.
We are dependent upon our executive officers for strategic business direction
and real estate experience. While we believe that we could find replacements for
these key personnel, loss of their services could adversely affect our
operations. We have entered into an employment agreement (including
non-competition provisions) which provides for a continuous four-year employment
term with each of Mitchell E. Hersh, Brant B. Cali, John R. Cali, Timothy M.
Jones, Barry Lefkowitz and Roger W. Thomas. We do not have key man life
insurance for our executive officers.
CONSEQUENCES OF FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION.
FAILURE TO MAINTAIN OWNERSHIP LIMITS COULD CAUSE US TO LOSE OUR QUALIFICATION
AS A REAL ESTATE INVESTMENT TRUST: In order for us to maintain our
qualification as a real estate investment trust, not more than 50 percent in
value of our outstanding stock may be actually and/or constructively owned by
five or fewer individuals (as defined in the Internal Revenue Code to include
certain entities). We have limited ownership of our outstanding shares of our
common stock by any single stockholder to 9.8 percent of the outstanding
shares of our common stock. Our Board of Directors could waive this
restriction if they were satisfied, based upon the advice of tax counsel or
otherwise, that such action would be in our best interests and would not
affect our qualifications as a real estate investment trust. Common stock
acquired or transferred in breach of the limitation may be redeemed by us for
the lesser of the price paid and the average closing price for the 10 trading
days immediately preceding redemption or sold at the direction of us. We may
elect to redeem such shares of common stock for limited partnership units,
which are nontransferable except in very limited circumstances. Any transfer
of shares of common stock which, as a result of such transfer, causes us to
be in violation of any ownership limit will be deemed void. Although we
currently intend to continue to operate in a manner which will
13
<PAGE>
enable us to continue to qualify as a real estate investment trust, it is
possible that future economic, market, legal, tax or other considerations may
cause our Board of Directors to revoke the election for us to qualify as a real
estate investment trust. Under our organizational documents, our Board of
Directors can make such revocation without the consent of our stockholders.
In addition, the consent of the holders of at least 85 percent of Mack-Cali
Realty, L.P.'s partnership units is required: (i) to merge (or permit the merger
of) us with another unrelated person, pursuant to a transaction in which
Mack-Cali Realty, L.P. is not the surviving entity; (ii) to dissolve, liquidate
or wind up Mack-Cali Realty, L.P.; or (iii) to convey or otherwise transfer all
or substantially all of Mack-Cali Realty, L.P.'s assets. As general partner, we
own approximately 79.8 percent of Mack-Cali Realty, L.P.'s outstanding
partnership units (assuming conversion of all preferred limited partnership
units).
TAX LIABILITIES AS A CONSEQUENCE OF FAILURE TO QUALIFY AS A REAL ESTATE
INVESTMENT TRUST: We have elected to be treated and have operated so as to
qualify as a real estate investment trust for federal income tax purposes since
our taxable year ended December 31, 1994. Although we believe we will continue
to operate in such manner, we cannot guarantee that we will do so. Qualification
as a real estate investment trust involves the satisfaction of various
requirements (some on an annual and quarterly basis) established under highly
technical and complex tax provisions of the Internal Revenue Code. Because few
judicial or administrative interpretations of such provisions exist and
qualification determinations are fact sensitive, we cannot assure you that we
will qualify as a real estate investment trust for any taxable year.
If we fail to qualify as a real estate investment trust in any taxable year, we
will be subject to the following:
- we will not be allowed a deduction for dividends to shareholders;
- we will be subject to federal income tax at regular corporate rates,
including any alternative minimum tax, if applicable; and
- unless we are entitled to relief under certain statutory provisions,
we will not be permitted to qualify as a real estate investment trust
for the four taxable years following the year during which we were
disqualified.
A loss of our status as a real estate investment trust could have an adverse
effect on us. Failure to qualify as a real estate investment trust also would
eliminate the requirement that we pay dividends to our stockholders.
OTHER TAX LIABILITIES: Even if we qualify as a real estate investment trust, we
are subject to certain federal, state and local taxes on our income and property
and, in some circumstances, certain other state taxes. Our net income from third
party management and tenant improvements, if any, also may be subject to federal
income tax.
RISK OF CHANGES IN THE TAX LAW APPLICABLE TO REAL ESTATE INVESTMENT TRUSTS:
Since the Internal Revenue Service, the United States Treasury Department and
Congress frequently review federal income tax legislation, we cannot predict
whether, when or to what extent new federal tax laws, regulations,
interpretations or rulings will be adopted. Any of such legislative action may
prospectively or retroactively modify our and Mack-Cali Realty, L.P.'s tax
treatment and, therefore, may adversely affect taxation of us, Mack-Cali Realty,
L.P., and/or investors.
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.
14
<PAGE>
ITEM 2. PROPERTIES
PROPERTY LIST
As of December 31, 1999, the Company's Consolidated Properties consisted of 246
in-service office, office/flex and industrial/warehouse properties, ranging from
one to 19 stories, as well as two multi-family residential properties, two
stand-alone retail properties and three land leases. The Consolidated Properties
are located primarily in the Northeast. The Consolidated Properties are easily
accessible from major thoroughfares and are in close proximity to numerous
amenities. The Consolidated Properties contain a total of approximately 27.4
million square feet, with the individual properties ranging from approximately
6,600 to 761,200 square feet. The Consolidated Properties, managed by on-site
employees, generally have attractively landscaped sites, atriums and covered
parking in addition to quality design and construction. The Company's tenants
include many service sector employers, including a large number of professional
firms and national and international businesses. The Company believes that all
of its properties are well-maintained and do not require significant capital
improvements.
15
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive................ 1987 40,422 100.0 783 783 0.17
200 Decadon Drive................ 1991 39,922 94.9 747 715 0.16
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Route 208 North............ 1987 143,000 94.5 3,349 3,229 0.72
FORT LEE
One Bridge Plaza................. 1981 200,000 99.3 4,691 4,547 1.01
2115 Linwood Avenue (7).......... 1981 68,000 61.3 103 97 0.02
LITTLE FERRY
200 Riser Road................... 1974 286,628 100.0 1,876 1,876 0.40
MONTVALE
95 Chestnut Ridge Road........... 1975 47,700 100.0 568 568 0.12
135 Chestnut Ridge Road.......... 1981 66,150 100.0 1,023 1,023 0.22
PARAMUS
140 Ridgewood Avenue ............ 1981 239,680 100.0 5,098 5,067 1.10
15 East Midland Avenue........... 1988 259,823 100.0 6,647 6,647 1.43
461 From Road.................... 1988 253,554 99.8 6,020 6,015 1.30
650 From Road.................... 1978 348,510 100.0 7,480 7,472 1.61
61 South Paramus Avenue.......... 1985 269,191 96.2 5,345 5,241 1.15
ROCHELLE PARK
120 Passaic Street............... 1972 52,000 100.0 576 576 0.12
365 West Passaic Street.......... 1976 212,578 84.9 3,506 3,419 0.76
SADDLE RIVER
1 Lake Street....................1973/94 474,801 100.0 7,466 7,466 1.61
UPPER SADDLE RIVER
10 Mountainview Road............. 1986 192,000 100.0 3,663 3,505 0.79
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive................ 19.37 19.37 Computer Sciences Corp. (80%), United States of America (20%)
200 Decadon Drive................ 19.72 18.87 Computer Sciences Corp. (45%), Advanced Casino Systems
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Route 208 North............ 24.78 23.89 Lonza, Inc. (63%), Boron-Lepore Assoc., Inc.(16%)
FORT LEE
One Bridge Plaza................. 23.62 22.90 PricewaterhouseCoopers (35%), Broadview Associates LLP
(16%), Bozell Worldwide, Inc. (16%)
2115 Linwood Avenue (7).......... 6.22 5.86 Ameribrom Inc. (14%), Morgan Stanley Dean Witter(10%)
LITTLE FERRY
200 Riser Road................... 6.55 6.55 Ford Motor Company (34%), Dassault Falcon Jet Corp.(33%),
Sanyo Fischer Services Corp. (33%)
MONTVALE
95 Chestnut Ridge Road........... 11.91 11.91 Roussel-UCLAF Holding Corp. (100%)
135 Chestnut Ridge Road.......... 15.46 15.46 Ramland Realty (74%), Automated Resources Group (26%)
PARAMUS
140 Ridgewood Avenue ............ 21.27 21.14 AT&T Wireless Services (51%), Smith Barney Shearson(19%)
15 East Midland Avenue........... 25.58 25.58 AT&T Wireless Services (100%)
461 From Road.................... 23.79 23.77 Toys `R' Us, Inc. (96%)
650 From Road.................... 21.46 21.44 Western Union Financial Services, Inc. (38%)
61 South Paramus Avenue.......... 20.64 20.24 --
ROCHELLE PARK
120 Passaic Street............... 11.08 11.08 Electronic Data Systems Corp. (100%)
365 West Passaic Street.......... 19.43 18.94 United Retail Inc. (31%), Catalina Marketing Corp.(10%),
Regulus LLC (10%)
SADDLE RIVER
1 Lake Street.................... 15.72 15.72 Prentice-Hall Inc. (100%)
UPPER SADDLE RIVER
10 Mountainview Road............. 19.08 18.26 Thomson Minwax Company (23%), Professional Detailing Inc.
(19%), Corning Life Sciences (15%), ITT Fluid Technology (14%),
Pearson Education (14%)
</TABLE>
16
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WOODCLIFF LAKE
400 Chestnut Ridge Road.......... 1982 89,200 100.0 2,119 2,119 0.46
470 Chestnut Ridge Road.......... 1987 52,500 100.0 1,192 1,192 0.26
530 Chestnut Ridge Road.......... 1986 57,204 100.0 1,166 1,166 0.25
50 Tice Boulevard................ 1984 235,000 100.0 4,721 4,098 1.02
300 Tice Boulevard............... 1991 230,000 100.0 4,980 4,862 1.07
BURLINGTON COUNTY, NEW JERSEY
MOORESTOWN
224 Strawbridge Drive............ 1984 74,000 95.2 985 735 0.21
228 Strawbridge Drive............ 1984 74,000 100.0 1,434 1,067 0.31
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway......... 1980 247,476 95.0 5,859 5,846 1.26
ROSELAND
101 Eisenhower Parkway........... 1980 237,000 92.0 4,139 3,835 0.89
103 Eisenhower Parkway........... 1985 151,545 96.6 3,003 2,756 0.65
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
95 Christopher Columbus Drive.... 1989 621,900 100.0 12,900 11,788 2.78
Harborside Financial Center Plaza I.... 1983 400,000 98.8 3,294 3,292 0.71
Harborside Financial Center Plaza II... 1990 761,200 100.0 17,508 17,297 3.78
Harborside Financial Center Plaza III... 1990 725,600 100.0 16,687 16,486 3.61
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WOODCLIFF LAKE
400 Chestnut Ridge Road.......... 23.76 23.76 Timeplex, Inc. (100%)
470 Chestnut Ridge Road.......... 22.70 22.70 Andermatt LP (100%)
530 Chestnut Ridge Road.......... 20.38 20.38 KPMG Peat Marwick, LLP (100%)
50 Tice Boulevard................ 20.09 17.44 Syncsort, Inc (22%)
300 Tice Boulevard............... 21.65 21.14 Merck-Medco Managed Care LLC (20%), Xerox Corp.(14%),
Chase Home Mortgage Corp. (12%), Comdisco, Inc.(13%),
NYCE, Corp. (11%)
BURLINGTON COUNTY, NEW JERSEY
MOORESTOWN
224 Strawbridge Drive............ 13.98 10.43 Allstate Insurance Co. (49%), Harleysville Mutual Insurance(27%)
228 Strawbridge Drive............ 19.38 14.42 Cendant Mortgage Corp. (100%)
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway......... 24.92 24.87 KPMG Peat Marwick, LLP (42%), Budd Larner Gross (23%)
ROSELAND
101 Eisenhower Parkway........... 18.98 17.59 Arthur Andersen, LLP (31%), Brach, Eichler,
Rosenberg, Silver, Bernstein & Hammer (13%)
103 Eisenhower Parkway........... 20.51 18.83 Ravin, Sarasohn, Cook, Baumgarten (21%),
Chelsea GCA Realty (18%), Lum, Danzis, Drasco (15%),
Salomon Smith Barney, Inc. (11%)
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
95 Christopher Columbus Drive.... 20.74 18.95 Donaldson, Lufkin & Jenrette Securities Corp. (69%),
NTT Data Corp. (22%)
Harborside Financial Center Plaza I.... 8.34 8.33 Bankers Trust Harborside, Inc. (96%)
Harborside Financial Center Plaza II... 23.00 22.72 Morgan Stanley Dean Witter (35%),
Dow Jones Telerate Systems, Inc.(24%),
DLJ Securities Corp. (15%), Lewco Securities (11%)
Harborside Financial Center Plaza III.. 23.00 22.72 AICPA (34%), BTM Information Services, Inc. (19%)
</TABLE>
17
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MERCER COUNTY, NEW JERSEY
PRINCETON
5 Vaughn Drive................... 1987 98,500 100.0 2,217 2,045 0.48
400 Alexander Road (8)........... 1987 n/a n/a 1,101 929 0.24
103 Carnegie Center.............. 1984 96,000 96.4 2,119 1,972 0.46
100 Overlook Center ............. 1988 149,600 100.0 3,792 3,777 0.82
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road.............. 1977 40,000 100.0 373 373 0.08
PLAINSBORO
500 College Road East............ 1984 158,235 100.0 3,398 3,373 0.73
SOUTH BRUNSWICK
3 Independence Way............... 1983 111,300 99.9 1,911 1,895 0.41
WOODBRIDGE
581 Main Street.................. 1991 200,000 100.0 4,420 4,393 0.95
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66.................... 1989 180,000 100.0 2,414 2,414 0.52
WALL TOWNSHIP
1305 Campus Parkway.............. 1988 23,350 92.3 406 388 0.09
1350 Campus Parkway.............. 1990 79,747 94.7 1,334 1,250 0.29
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway............. 1987 168,144 100.0 3,869 3,473 0.83
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MERCER COUNTY, NEW JERSEY
PRINCETON
5 Vaughn Drive................... 22.51 20.76 U.S. Trust of NJ (19%), Woodrow Wilson National Fellowship
Foundation(14%), Princeton Venture Research Corp.(14%),
Villeroy & Boch Tableware Ltd. (14%)
400 Alexander Road (8)........... n/a n/a n/a (8)
103 Carnegie Center.............. 22.90 21.31 Ronin Development Corp. (15%), R.G. Vanderweil Engineers (14%),
Kurt Salmon Assoc. (11%)
25.35 25.25 Novo-Nordisk Pharmaceuticals (24%), Xerox Corp.(23%),
100 Overlook Center ............. IFP North America (14%)
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road.............. 9.33 9.33 Greater New York Mutual Insurance Company (100%)
PLAINSBORO
500 College Road East............ 21.47 21.32 Merrill Lynch Asset Mgmt (72%), Buchanan Ingersoll P.C. (17%)
SOUTH BRUNSWICK
3 Independence Way............... 17.19 17.04 Merrill Lynch Pierce Fenner & Smith (84%)
WOODBRIDGE
581 Main Street.................. 22.10 21.97 First Investors Management Company, Inc. (38%),
Cast North America (11%)
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66.................... 13.41 13.41 The United States Life Insurance Company (100%)
WALL TOWNSHIP
1305 Campus Parkway.............. 18.84 18.00 Centennial Cellular Corp. (41%), McLaughlin, Bennet, Gelson
(35%), NJ Natural Energy Co. (10%)
1350 Campus Parkway.............. 17.66 16.55 Meridan Health Realty Corp. (22%), New Jersey National Bank
(17%), Stephen E. Gertler (17%), Milestone Material Inc. (14%),
Health Care Software (11%)
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway............. 23.01 20.65 Bressler Amery & Ross (24%), Atlantic Health Systems (12%),
Dun & Bradstreet Inc. (12%), Qwest Communications (11%)
</TABLE>
18
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MORRIS PLAINS
201 Littleton Road............... 1979 88,369 100.0 1,706 1,705 0.37
250 Johnson Road................. 1977 75,000 100.0 1,090 1,090 0.24
MORRIS TOWNSHIP
340 Mt. Kemble Avenue............ 1985 387,000 100.0 5,530 5,530 1.19
412 Mt. Kemble Avenue............ 1986 475,100 100.0 6,902 6,902 1.49
PARSIPPANY
1 Sylvan Way..................... 1989 150,557 100.0 3,484 3,136 0.75
2 Dryden Way..................... 1990 6,216 100.0 67 67 0.01
2 Hilton Court................... 1991 181,592 100.0 4,470 4,455 0.95
5 Sylvan Way..................... 1989 151,383 96.7 3,432 3,429 0.74
7 Campus Drive................... 1982 154,395 100.0 2,548 2,548 0.55
7 Sylvan Way..................... 1987 145,983 100.0 2,919 2,919 0.63
8 Campus Drive .................. 1987 215,265 92.8 4,730 4,651 1.02
600 Parsippany Road.............. 1978 96,000 57.6 1,527 1,475 0.33
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue............... 1983 75,000 77.4 1,028 865 0.22
TOTOWA
999 Riverview Drive.............. 1988 56,066 100.0 918 894 0.20
WAYNE
201 Willowbrook Boulevard........ 1970 178,329 99.0 2,446 2,432 0.53
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MORRIS PLAINS
201 Littleton Road............... 19.31 19.29 Xerox Corp. (35%), Bozell Worldwide Inc. (34%),
Willis Corroon Corp. of New Jersey (20%), CHEP USA (11%)
250 Johnson Road................. 14.53 14.53 Electronic Data Systems Corp. (100%)
MORRIS TOWNSHIP
340 Mt. Kemble Avenue............ 14.29 14.29 AT&T Corp. (100%)
412 Mt. Kemble Avenue............ 14.53 14.53 AT&T Corp. (100%)
PARSIPPANY
1 Sylvan Way..................... 23.14 20.83 Cendant Operations Inc. (99%)
2 Dryden Way..................... 10.78 10.78 Bright Horizons Childrens Center (100%)
2 Hilton Court................... 24.62 24.53 Deloitte & Touche USA LLP (64%), Northern Telecom Inc.(16%)
5 Sylvan Way..................... 23.44 23.42 Integrated Communications (49%), Experian Information Solution
(15%), DRS Technologies (12%)
7 Campus Drive................... 16.50 16.50 Nabisco Inc. (100%)
7 Sylvan Way..................... 20.00 20.00 Nabisco Inc. (100%)
8 Campus Drive .................. 23.68 23.28 Prudential Insurance Co. (31%), Bay Networks Inc. (27%),
MCI Telecommunications Corp. (18%)
600 Parsippany Road.............. 27.62 26.67 IBM Corporation (30%)
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue............... 17.71 14.90 Motorola Inc. (19%)
TOTOWA
999 Riverview Drive.............. 16.37 15.95 Medical Logistics Inc. (22%), Telesources Corp.(19%),
Humana Press (15%), Medical Logistics Inc. (14%),
Bankers Financial Corp. (10%)
WAYNE
201 Willowbrook Boulevard........ 13.85 13.78 The Grand Union Co. (76%), Woodward-Clyde Consultants(23%)
</TABLE>
19
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road................ 1986 49,000 100.0 690 646 0.15
233 Mt. Airy Road................ 1987 66,000 100.0 762 721 0.16
BRIDGEWATER
721 Route 202/206................ 1989 192,741 100.0 3,990 3,990 0.86
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue................ 1985 182,555 100.0 4,511 3,957 0.97
CRANFORD
6 Commerce Drive................. 1973 56,000 96.9 1,046 1,028 0.23
11 Commerce Drive................ 1981 90,000 90.8 1,100 968 0.24
12 Commerce Drive................ 1967 72,260 89.4 612 611 0.13
20 Commerce Drive................ 1990 176,600 92.7 3,529 3,150 0.76
65 Jackson Drive................. 1984 82,778 94.8 1,620 1,226 0.35
NEW PROVIDENCE
890 Mountain Road................ 1977 80,000 100.0 2,046 2,044 0.44
- -----------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE 11,939,649 97.9 228,985 221,506 49.36
- -----------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive............. 1987 118,727 99.8 2,094 2,079 0.45
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
111 East Shore Road.............. 1980 55,575 100.0 1,515 1,515 0.33
600 Community Drive.............. 1983 206,274 100.0 4,939 4,939 1.06
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road................ 14.08 13.18 Lucent Technologies Inc. (100%)
233 Mt. Airy Road................ 11.55 10.92 AT&T Corp. (100%)
BRIDGEWATER
721 Route 202/206................ 20.70 20.70 Allstate Insurance Company (37%), Norris, McLaugin & Marcus,
PA (30%), AT&T Corp. (20%)
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue................ 24.71 21.68 CAP Gemini America Inc. (41%), Allstate Insurance Company (13%),
Equitable Life Assurance (10%)
CRANFORD
6 Commerce Drive................. 19.28 18.94 Kendle International Inc. (50%), Columbia National, Inc. (13%)
11 Commerce Drive................ 13.46 11.85 Northeast Administrators (10%)
12 Commerce Drive................ 9.47 9.46 Dames & Moore (40%), Registrar & Transfer Co. (24%)
20 Commerce Drive................ 21.56 19.24 Public Service Electric & Gas Company (26%), Quintiles (21%)
65 Jackson Drive................. 20.64 15.62 Kraft General Foods, Inc. (35%), Allstate Insurance Co. (27%),
Procter & Gamble Distribution Co., Inc. (18%),
Unum Life Insurance Co. (14%)
NEW PROVIDENCE
890 Mountain Road................ 25.58 25.55 Allstate Insurance Co. (58%), Dun & Bradstreet (26%),
K Line America, Inc. (16%)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE 19.60 18.96
- -----------------------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive............. 17.67 17.55 Allstate Insurance Company (16%)
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
111 East Shore Road.............. 27.26 27.26 Administrations For The Professions, Inc. (100%)
600 Community Drive.............. 23.94 23.94 CMP Media, Inc. (100%)
</TABLE>
20
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard.............. 1988 180,000 98.2 3,495 3,364 0.75
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
100 Clearbrook Road.............. 1975 60,000 100.0 935 880 0.20
101 Executive Boulevard.......... 1971 50,000 88.8 802 784 0.17
570 Taxter Road.................. 1972 75,000 85.5 1,386 1,360 0.30
HAWTHORNE
1 Skyline Drive.................. 1980 20,400 99.0 269 262 0.06
2 Skyline Drive.................. 1987 30,000 98.9 486 442 0.10
17 Skyline Drive................. 1989 85,000 100.0 1,234 1,234 0.27
30 Saw Mill River Road........... 1982 248,400 100.0 5,218 4,520 1.13
7 Skyline Drive.................. 1987 109,000 100.0 2,159 2,159 0.47
TARRYTOWN
200 White Plains Road............ 1982 89,000 90.5 1,815 1,691 0.39
220 White Plains Road............ 1984 89,000 97.1 1,647 1,582 0.36
WHITE PLAINS
1 Barker Avenue.................. 1975 68,000 99.0 1,550 1,530 0.33
3 Barker Avenue.................. 1983 65,300 97.5 1,382 1,356 0.30
1 Water Street................... 1979 45,700 97.8 939 926 0.20
11 Martine Avenue................ 1987 180,000 100.0 3,954 3,788 0.85
50 Main Street................... 1985 309,000 98.8 7,646 7,371 1.65
YONKERS
1 Executive Boulevard............ 1982 112,000 100.0 2,335 2,265 0.50
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard.............. 19.77 19.03 The Prudential Insurance Co. (21%), Provident Savings F.A.
(20%), Allstate Insurance Co. (19%),
John Alden Life Insurance Co. (11%)
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
100 Clearbrook Road.............. 15.58 14.67 MIM Corporation (18%), Amerihealth Inc. (13%)
101 Executive Boulevard.......... 18.06 17.66 Pennysaver Group Inc. (23%), MCS Business Solutions Inc. (11%)
570 Taxter Road.................. 21.61 21.21 New York State United Teachers Association (11%)
HAWTHORNE
1 Skyline Drive.................. 13.32 12.97 Boxx International Corp. (50%), Childtime Childcare Inc. (49%)
2 Skyline Drive.................. 16.38 14.90 MW Samara (55%), Perini Construction (43%)
17 Skyline Drive................. 14.52 14.52 IBM Corp. (100%)
30 Saw Mill River Road........... 21.01 18.20 IBM Corp. (100%)
7 Skyline Drive.................. 19.81 19.81 E.M. Industries Inc. (42%), Cortlandt Group Inc. (14%)
TARRYTOWN
200 White Plains Road............ 22.53 20.99 Independent Health Associates (28%), Allmerica Financial (17%),
NYS Dept. of Environmental Services (13%)
220 White Plains Road............ 19.06 18.31 Eagle Family Foods Inc. (15%)
WHITE PLAINS
1 Barker Avenue.................. 23.02 22.73 O'Connor McGuinn Conte (19%), United Skys Realty Corp. (18%)
3 Barker Avenue.................. 21.71 21.30 Bernard C. Harris Publishing Co. Inc. (56%)
1 Water Street................... 21.01 20.72 Trigen Energy Co. (44%), Stewart Title Insurance Co. (16%)
11 Martine Avenue................ 21.97 21.04 Salomon Smith Barney (12%), McCarthy Fingar Donovan (11%),
David Worby (11%), Dean Witter Reynolds (11%),
50 Main Street................... 25.04 24.14 National Economic Research (10%)
YONKERS
1 Executive Boulevard............ 20.85 20.22 Wise Contact US Optical (12%), Pedal Holdings Inc. (12%),
Protective Tech International (11%), York, International Agency (11%)
</TABLE>
21
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
3 Executive Plaza................ 1987 58,000 100.0 896 883 0.19
- --------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE 2,254,376 98.3 46,696 44,930 10.06
- --------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive............. 1989 60,696 96.2 1,398 1,394 0.30
1055 Westlakes Drive............. 1990 118,487 100.0 2,298 2,298 0.50
1205 Westlakes Drive............. 1988 130,265 99.8 2,826 2,731 0.61
1235 Westlakes Drive............. 1986 134,902 98.6 2,913 2,864 0.63
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive................ 1986 95,000 100.0 1,371 1,337 0.30
200 Stevens Drive................ 1987 208,000 100.0 4,173 4,125 0.90
300 Stevens Drive................ 1992 68,000 82.5 1,172 1,155 0.25
MEDIA
1400 Providence Road - Center I.. 1986 100,000 89.1 1,860 1,784 0.40
1400 Providence Road - Center II. 1990 160,000 96.6 3,154 2,990 0.68
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue.............. 1990 100,700 100.0 1,686 1,686 0.36
PLYMOUTH MEETING
Five Sentry Parkway East......... 1984 91,600 100.0 1,497 1,494 0.32
Five Sentry Parkway West......... 1984 38,400 100.0 640 640 0.14
1150 Plymouth Meeting Mall....... 1970 167,748 93.0 3,131 3,110 0.68
- --------------------------------------------------------------------------------------------------------------------
TOTAL PENNSYLVANIA OFFICE 1,473,798 97.0 28,119 27,608 6.07
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3 Executive Plaza................ 15.45 15.22 MonteFiore Medical Center (43%),
Metropolitan Life Insurance (22%),
Allstate Insurance Company (20%),
City & Suburban Federal Savings Bank (15%)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE 21.07 20.28
- -----------------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive............. 23.94 23.87 PNC Bank, NA (38%), Drinker Biddle & Reath (24%),
Manchester, Inc (14%)
1055 Westlakes Drive............. 19.39 19.39 Tokai Financial Services Inc. (92%)
1205 Westlakes Drive............. 21.74 21.01 Provident Mutual Life Insurance Co. (35%), Oracle Corp. (30%)
1235 Westlakes Drive............. 21.90 21.53 Pepper Hamilton & Scheetz (20%), Ratner & Prestia (16%)
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive................ 14.43 14.07 Keystone Mercy Health Plan (82%)
200 Stevens Drive................ 20.06 19.83 PNC Bank NA (52%), Keystone Mercy Health Plan (45%)
300 Stevens Drive................ 20.89 20.59 Keystone Mercy Health Plan (47%), Bluestone Software Inc. (35%)
MEDIA
1400 Providence Road - Center I.. 20.88 20.02 General Services Admin (13%), Erie Insurance Company (11%)
1400 Providence Road - Center II. 20.41 19.35 Barnett International (36%)
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue.............. 16.74 16.74 Reality Online Inc. (37%), First Chicago Nat'l Proc. (21%),
Danka Corp. (14%), Seton Company (12%)
PLYMOUTH MEETING
Five Sentry Parkway East......... 16.34 16.31 Merck & Co. Inc. (77%), Selas Fuild Processing Corp. (23%)
Five Sentry Parkway West......... 16.67 16.67 Merck & Co. Inc. (70%), David Cutler Group (30%)
1150 Plymouth Meeting Mall....... 20.07 19.94 Computer Learning Centers, Inc. (18%), Ken Crest Services
(18%), ATC Group Services (14%), ECC Management Services (13%)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL PENNSYLVANIA OFFICE 19.67 19.31
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam.................. 1973 121,250 92.0 2,702 2,688 0.58
NORWALK
40 Richards Avenue............... 1985 145,487 98.4 2,854 2,789 0.62
SHELTON
1000 Bridgeport Avenue........... 1986 133,000 87.3 2,520 2,498 0.54
- ------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE 399,737 92.8 8,076 7,975 1.74
- ------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA
WASHINGTON
1400 L Street, NW................ 1987 159,000 95.4 5,795 5,730 1.25
1709 New York Avenue, NW......... 1972 166,000 100.0 6,138 6,075 1.32
1201 Connecticut Avenue, NW (7).. 1940 169,549 86.3 2,006 2,006 0.43
- ------------------------------------------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA OFFICE 494,549 93.8 13,939 13,811 3.00
- ------------------------------------------------------------------------------------------------------------------
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place............ 1989 122,000 93.9 2,126 2,108 0.46
- ------------------------------------------------------------------------------------------------------------------
TOTAL MARYLAND OFFICE 122,000 93.9 2,126 2,108 0.46
- ------------------------------------------------------------------------------------------------------------------
BEXAR COUNTY, TEXAS
SAN ANTONIO
111 Soledad...................... 1918 248,153 91.2 2,256 2,218 0.49
1777 N.E. Loop 410............... 1986 256,137 92.5 3,502 3,379 0.76
84 N.E. Loop 410................. 1971 187,312 89.9 2,475 2,468 0.53
200 Concord Plaza Drive.......... 1986 248,700 95.2 4,529 4,510 0.98
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam.................. 24.22 24.10 Hachette Filipacchi Magazines (27%),
Great Brands of Europe Inc. (12%) Winklevoss Consultants Inc. (12%)
NORWALK
40 Richards Avenue............... 19.94 19.48 Media Horizons Inc. (10%)
SHELTON
1000 Bridgeport Avenue........... 21.70 21.51 William Carter Company (23%), Weseley Software Development (22%),
Toyota Motor Credit Corporation (11%), LandStar Gemini Inc. (11%)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE 21.78 21.51
- -----------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA
WASHINGTON
1400 L Street, NW................ 38.20 37.78 Winston & Strawn (68%)
1709 New York Avenue, NW......... 36.98 36.60 Board of Gov/Federal Reservce (70%), United States of America-GSA (25%)
1201 Connecticut Avenue, NW (7).. 30.51 30.51 Zuckerman Spaeder Goldstein (30%), Leo A. Daly (17%),
RFE/RL Inc. (16%)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA OFFICE 35.34 35.06
- -----------------------------------------------------------------------------------------------------------------------------
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place............ 18.56 18.40 Group I Software (43%), State Farm Mutual Auto Ins. Co. (11%)
Infinity Broadcasting Company (16%)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL MARYLAND OFFICE 18.56 18.40
- -----------------------------------------------------------------------------------------------------------------------------
BEXAR COUNTY, TEXAS
SAN ANTONIO
111 Soledad...................... 9.97 9.80 SBC Communications, Inc. (34%)
1777 N.E. Loop 410............... 14.78 14.26 --
84 N.E. Loop 410................. 14.70 14.66 Pacificare of Texas, Inc. (30%), KBL Cable, Inc. (26%),
Kraft General Foods Inc. (25%)
200 Concord Plaza Drive.......... 19.13 19.05 Merrill Lynch Pierce Fenner & Smith (12%)
</TABLE>
23
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place............... 1986 97,889 93.0 1,370 1,353 0.30
DALLAS COUNTY,TEXAS
DALLAS
3030 LBJ Freeway................. 1984 367,018 93.0 6,131 5,948 1.31
3100 Monticello.................. 1984 173,837 93.1 2,789 2,758 0.60
8214 Westchester................. 1983 95,509 87.8 1,320 1,298 0.28
IRVING
2300 Valley View................. 1985 142,634 68.8 2,704 2,607 0.58
RICHARDSON
1122 Alma Road................... 1977 82,576 100.0 607 607 0.13
HARRIS COUNTY, TEXAS
HOUSTON
10497 Town & Country Way......... 1981 148,434 91.0 1,938 1,876 0.42
14511 Falling Creek.............. 1982 70,999 97.9 673 643 0.15
1717 St. James Place............. 1975 109,574 100.0 1,328 1,285 0.29
1770 St. James Place ............ 1973 103,689 98.4 1,446 1,388 0.31
5225 Katy Freeway................ 1983 112,213 95.1 1,367 1,309 0.29
5300 Memorial.................... 1982 155,099 98.7 2,034 2,016 0.44
POTTER COUNTY, TEXAS
AMARILLO
6900 IH - 40 West................ 1986 71,771 77.5 526 503 0.11
TARRANT COUNTY, TEXAS
EULESS
150 West Parkway................. 1984 74,429 95.9 1,046 1,021 0.23
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place............... 15.05 14.86 William Smith Enterprises (22%), Kaiser Foundation Health Plan
of Texas (17%), Dayton Hudson Corporation (14%)
DALLAS COUNTY,TEXAS
DALLAS
3030 LBJ Freeway................. 17.96 17.43 Club Corporation of America (34%)
3100 Monticello.................. 17.23 17.04 Insignia Commercial, Inc. (23%), Time Marketing Corporation (12%),
Heath Insurance Brokers, Inc. (10%)
8214 Westchester................. 15.74 15.48 Preston Business Center, Inc. (16%),
Malone Mortgage Company America, Inc. (12%),
State Bank & Trust (11%)
IRVING
2300 Valley View................. 27.55 26.57 Alltel Information Services, Inc. (18%),
Computer Task Group, Inc. (12%),
Tricon Restaurant Services (12%)
RICHARDSON
1122 Alma Road................... 7.35 7.35 MCI Telecommunications Corp. (100%)
HARRIS COUNTY, TEXAS
HOUSTON
10497 Town & Country Way......... 14.35 13.89 Vastar Resources, Inc. (23%), Texas Ohio Gas, Inc. (11%)
14511 Falling Creek.............. 9.68 9.25 Nationwide Mutual Insurance Company (17%)
1717 St. James Place............. 12.12 11.73 MCX Corp (14%)
1770 St. James Place ............ 14.17 13.60 --
5225 Katy Freeway................ 12.81 12.27 State of Texas (17%)
5300 Memorial.................... 13.29 13.17 Drypers Corporation (20%), Datavox, Inc. (20%),
HCI Chemicals USA, Inc. (17%)
POTTER COUNTY, TEXAS
AMARILLO
6900 IH - 40 West................ 9.46 9.04 Sitel Corporation (16%)
TARRANT COUNTY, TEXAS
EULESS
150 West Parkway................. 14.65 14.30 Warrantech Automotive, Inc. (34%), Landmark Bank-Mid Cities (16%),
Mike Bowman Realtors/Century 21 (17%)
</TABLE>
24
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE,
NET LEASED 1999 1999 OFFICE/FLEX,
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TRAVIS COUNTY, TEXAS
AUSTIN
1250 Capital of Texas Hwy. South. 1985 270,703 98.8 5,500 5,451 1.19
- ---------------------------------------------------------------------------------------------------------------
TOTAL TEXAS OFFICE 3,016,676 92.7 43,541 42,638 9.39
- ---------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard....... 1991 181,596 100.0 1,616 1,608 0.35
PHOENIX
19640 North 31st Street.......... 1990 124,171 100.0 1,272 1,256 0.27
20002 North 19th Avenue (8)...... 1986 n/a n/a 647 647 0.14
SCOTTSDALE
9060 E. Via Linda Boulevard...... 1984 111,200 100.0 2,406 2,406 0.52
- ---------------------------------------------------------------------------------------------------------------
TOTAL ARIZONA OFFICE 416,967 100.0 5,941 5,917 1.28
- ---------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street....... 1997 108,240 100.0 2,911 2,911 0.63
DENVER
400 South Colorado Boulevard..... 1983 125,415 99.1 1,905 1,881 0.41
ENGLEWOOD
5350 South Roslyn Street......... 1982 63,754 100.0 1,060 1,050 0.23
9359 East Nichols Avenue......... 1997 72,610 100.0 903 903 0.19
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court....... 1997 37,574 100.0 535 535 0.12
303 South Technology Court-A..... 1997 34,454 100.0 387 387 0.08
303 South Technology Court-B..... 1997 40,416 100.0 454 454 0.10
LOUISVILLE
1172 Century Drive............... 1996 49,566 100.0 617 617 0.13
248 Centennial Parkway........... 1996 39,266 100.0 488 488 0.11
285 Century Place................ 1997 69,145 100.0 1,121 1,121 0.24
</TABLE>
<TABLE>
<CAPTION>
1999 AVERAGE TENANTS LEASING 10%
AVERAGE EFFECTIVE OR MORE OF NET
BASE RENT RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF
LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRAVIS COUNTY, TEXAS
AUSTIN
1250 Capital of Texas Hwy. South. 20.56 20.38 Intelliquest Inc. (14%), Globeset Inc. (10%)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL TEXAS OFFICE 15.56 15.24
- --------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard....... 8.90 8.85 Honeywell, Inc. (100%)
PHOENIX
19640 North 31st Street.......... 10.24 10.12 American Express Travel Related Services Co., Inc. (100%)
20002 North 19th Avenue (8)...... n/a n/a n/a
SCOTTSDALE
9060 E. Via Linda Boulevard...... 21.64 21.64 Sentry Insurance A Mutual Company (63%), Rite Aid Corporation (37%)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ARIZONA OFFICE 14.25 14.19
- --------------------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street....... 26.89 26.89 T.R.W. Inc. (100%)
DENVER
400 South Colorado Boulevard..... 15.33 15.13 Community Health Plan (12%), Department of Revenue (12%),
Norwest Bank Colorado N.A. (11%), Senter GoldFarb & Rice (10%)
ENGLEWOOD
5350 South Roslyn Street......... 16.63 16.47 Westland Enterprises (17%), Business World Inc. (17%)
9359 East Nichols Avenue......... 12.44 12.44 First Tennessee Bank NA (100%)
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court....... 14.24 14.24 Sun Microsystems Inc. (100%)
303 South Technology Court-A..... 11.23 11.23 Sun Microsystems Inc. (100%)
303 South Technology Court-B..... 11.23 11.23 Sun Microsystems Inc. (100%)
LOUISVILLE
1172 Century Drive............... 12.45 12.45 Skyconnect Inc. (40%), Evolving Systems Inc. (22%),
MCI Systemhouse Corp. (22%), RX Kinetix Inc. (16%)
248 Centennial Parkway........... 12.43 12.43 Walnut Brewery Inc. (59%), Aircell Inc. (28%)
285 Century Place................ 16.21 16.21 HBO & Company of Georgia (100%)
</TABLE>
25
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE, 1999 AVERAGE
NET LEASED 1999 1999 OFFICE/FLEX, AVERAGE EFFECTIVE
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT RENT
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE PER SQ. FT. PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S) ($000'S) BASE RENT(%) ($) ($)
(2)(6) (3)(6) (4)(6) (4)(6)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DENVER COUNTY, COLORADO
DENVER
3600 South Yosemite.............. 1974 133,743 100.0 1,287 1,287 0.28 9.62 9.62
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
384 Inverness Drive South........ 1985 51,523 100.0 810 789 0.17 15.72 15.31
400 Inverness Drive.............. 1997 111,608 99.9 2,729 2,727 0.59 24.48 24.46
5975 South Quebec Street......... 1996 102,877 99.8 2,359 2,341 0.51 22.98 22.80
67 Inverness Drive East ......... 1996 54,280 100.0 644 644 0.14 11.86 11.86
PARKER
9777 Pyramid Court............... 1995 120,281 100.0 1,323 1,323 0.29 11.00 11.00
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
1975 Research Parkway............ 1997 115,250 100.0 1,682 1,635 0.36 14.59 14.19
2375 Telstar Drive (7)........... 1998 47,369 100.0 410 409 0.09 10.46 10.44
8415 Explorer (7)................ 1998 47,368 100.0 410 409 0.09 10.46 10.44
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard.............. 1985 63,600 95.2 1,053 1,014 0.23 17.39 16.75
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL COLORADO OFFICE 1,488,339 99.7 23,088 22,925 4.99 15.67 15.56
- ----------------------------------------------------------------------------------------------------------------------------------
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
760 Market Street................ 1908 267,446 93.6 7,442 7,311 1.60 29.73 29.21
795 Folsom Street (7)............ 1977 183,445 86.2 1,277 1,178 0.28 19.27 17.77
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CALIFORNIA OFFICE 450,891 90.6 8,719 8,489 1.88 25.68 24.78
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TENANTS LEASING 10%
OR MORE OF NET
RENTABLE AREA PER
PROPERTY PROPERTY AS OF
LOCATION 12/31/99 (6)
- ----------------------------------------------------------------------------------------
DENVER COUNTY, COLORADO
DENVER
<S> <C>
3600 South Yosemite.............. MDC Holding Inc. (100%)
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
384 Inverness Drive South........ Quickpen International Corp. (37%), United States of America -
GSA (19%)
400 Inverness Drive.............. Convergent Communications Inc. (26%), Ciber Inc. (22%),
Compuware Corp. (19%), Ani Colorado Inc./Alliance Int'l (16%)
5975 South Quebec Street......... Northern Telecom Inc. (43%), Silicon Graphics Inc. (28%)
67 Inverness Drive East ......... T-Netix Inc. (69%), Convergent Communications Inc. (31%)
PARKER
9777 Pyramid Court............... Evolving System Inc. (100%)
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
1975 Research Parkway............ Bombardier Capital Florida Inc. (69%), Concert Management
Services (18%)
2375 Telstar Drive (7)........... Narwhal Corporation (45%), Memorial Hospital (39%),
Aerotek Inc. (14%)
8415 Explorer (7)................ Enterprise Systems Group Inc. (57%), URS Greiner
Consultants Inc. (22%), McLeod USA Telecom Service
Inc. (17%)
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard.............. Arbitration Forums Inc. (18%)
- ----------------------------------------------------------------------------------------
TOTAL COLORADO OFFICE
- ----------------------------------------------------------------------------------------
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
760 Market Street................ R.H. Macy & Company, Inc. (19%)
795 Folsom Street (7)............ Move.com (52%), AT&T Corp. (34%)
- ----------------------------------------------------------------------------------------
TOTAL CALIFORNIA OFFICE
- ----------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE, 1999 AVERAGE
NET LEASED 1999 1999 OFFICE/FLEX, AVERAGE EFFECTIVE
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT RENT
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE PER SQ. FT. PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S) ($000'S) BASE RENT(%) ($)(4)(6) ($)(5)(6)
(2)(6) (3)(6)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard............ 1982 297,429 91.8 3,651 3,583 0.79 13.37 13.12
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL FLORIDA OFFICE 297,429 91.8 3,651 3,583 0.79 13.37 13.12
- ----------------------------------------------------------------------------------------------------------------------------------
POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway............. 1988 72,265 97.5 1,126 1,063 0.24 15.98 15.09
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL IOWA OFFICE 72,265 97.5 1,126 1,063 0.24 15.98 15.09
- ----------------------------------------------------------------------------------------------------------------------------------
DOUGLAS COUNTY, NEBRASKA
OMAHA
210 South 16th Street............ 1894 319,535 96.8 3,238 3,177 0.70 10.47 10.27
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL NEBRASKA OFFICE 319,535 96.8 3,238 3,177 0.70 10.47 10.27
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES 22,746,211 96.9 417,245 405,730 89.96 19.13 18.61
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
TENANTS LEASING 10%
OR MORE OF NET
RENTABLE AREA PER
PROPERTY PROPERTY AS OF
LOCATION 12/31/99 (6)
- ----------------------------------------------------------------------------------------
<S> <C>
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard............ Fowler, White, Gillen, Boggs, Villareal & Banker, PA (33%),
Raytheon Engineers & Constructors, Inc. (17%),
Sykes Enterprises Inc. (12%)
- ----------------------------------------------------------------------------------------
TOTAL FLORIDA OFFICE
- ----------------------------------------------------------------------------------------
POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway............. St. Paul Fire and Marine Insurance Company (19%), MCI
Telecommunications Corp. (14%), New England Mutual Life
Insurance Company (15%), American Express Financial
Advisors, Inc. (15%)
- ----------------------------------------------------------------------------------------
TOTAL IOWA OFFICE
- ----------------------------------------------------------------------------------------
DOUGLAS COUNTY, NEBRASKA
OMAHA
210 South 16th Street............ Union Pacific Railroad Company (70%)
- ----------------------------------------------------------------------------------------
TOTAL NEBRASKA OFFICE
- ----------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES
========================================================================================
</TABLE>
27
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE, 1999 AVERAGE
NET LEASED 1999 1999 OFFICE/FLEX, AVERAGE EFFECTIVE
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT RENT
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE PER SQ. FT. PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S) ($000'S) BASE RENT(%) ($)(4)(6) ($)(5)(6)
(2)(6) (3)(6)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane..................... 1991 64,500 77.7 437 436 0.09 8.72 8.70
5 Terri Lane..................... 1992 74,555 100.0 497 495 0.11 6.67 6.64
MOORESTOWN
1 Executive Drive................ 1989 20,570 43.0 74 72 0.02 8.37 8.14
101 Commerce Drive............... 1988 64,700 100.0 336 296 0.07 5.19 4.57
101 Executive Drive.............. 1990 29,355 45.8 146 145 0.03 10.86 10.79
102 Executive Drive.............. 1990 64,000 90.0 399 371 0.09 6.93 6.44
1256 North Church................ 1984 63,495 49.9 401 366 0.09 12.66 11.55
1507 Lancer Drive................ 1995 32,700 100.0 119 112 0.03 3.64 3.43
1510 Lancer Drive................ 1998 88,000 100.0 370 370 0.08 4.20 4.20
201 Commerce Drive............... 1986 38,400 100.0 195 192 0.04 5.08 5.00
225 Executive Drive.............. 1990 50,600 100.0 304 280 0.07 6.01 5.53
30 Twosome Drive................. 1997 39,675 100.0 223 223 0.05 5.62 5.62
40 Twosome Drive................. 1996 40,265 63.1 243 243 0.05 9.56 9.56
50 Twosome Drive................. 1997 34,075 100.0 269 269 0.06 7.89 7.89
840 North Lenola................. 1995 38,300 100.0 271 271 0.06 7.08 7.08
844 North Lenola................. 1995 28,670 100.0 213 213 0.05 7.43 7.43
97 Foster Road................... 1982 43,200 100.0 187 187 0.04 4.33 4.33
</TABLE>
<TABLE>
<CAPTION>
TENANTS LEASING 10%
OR MORE OF NET
RENTABLE AREA PER
PROPERTY PROPERTY AS OF
LOCATION 12/31/99 (6)
- ----------------------------------------------------------------------------------------
<S> <C>
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane..................... Tempel Steel Company (18%), Signature Home Care (16%),
General Service Administrators (10%)
5 Terri Lane..................... Actimed Laboratories Inc. (38%), Lykes Dispensing Systems Inc.
(20%), West Electronics Inc. (12%)
MOORESTOWN
1 Executive Drive................ T.T.I. (18%)
101 Commerce Drive............... Beckett Corporation (100%)
101 Executive Drive.............. Bavada Nurses Inc. (36%)
102 Executive Drive.............. Comtrex Systems Corp. (29%), Commonwealth Scientific Corp.
(21%), AOP Solutions (20%), Schermerhorn (20%)
1256 North Church................ James C. Anderson Associates (30%), Ketec Inc. (20%)
1507 Lancer Drive................ Tad's Delivery Service Inc. (100%)
1510 Lancer Drive................ Tad's Delivery Service Inc. (100%)
201 Commerce Drive............... Flow Thru Metals Inc. (25%), Franchise Stores Realty Corp.
(25%), RE/Com Group (25%), Tropicana Products Inc. (25%)
225 Executive Drive.............. Eastern Research Inc. (66%), Bioclimatic Inc. (14%),
Band-It Index Inc. (11%)
30 Twosome Drive................. Hartman Cards Inc. (28%), Sagot Office Interiors Inc. (24%),
Aramark Sports Entertainment (14%), The Closet Factory (12%),
C&L Packaging Inc. (12%), Mosler Inc. (10%)
40 Twosome Drive................. Neighborcare - TCI Inc. (49%), Bellstar Inc. (14%)
50 Twosome Drive................. Wells Fargo (44%), Sussex Wine Merchants (30%), McCarthy
Associates Inc. (14%), Inacomp Financial Services (12%)
840 North Lenola................. Millar Elevator Service Co. (31%), Twin Pines Construction Co.
(31%), Technology Service Solutions (25%), Computer
Integration Services (13%)
844 North Lenola................. First Union National Bank (41%), Curbell Inc. (33%), James J.
Martin Inc. (25%)
97 Foster Road................... Consumer Response Company Inc. (50%), Pioneer and Company
Inc. (33%), Colornet Inc. (17%)
</TABLE>
28
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE, 1999 AVERAGE
NET LEASED 1999 1999 OFFICE/FLEX, AVERAGE EFFECTIVE
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT RENT
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE PER SQ. FT. PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S) ($000'S) BASE RENT(%) ($)(4)(6) ($)(5)(6)
(2)(6) (3)(6)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2 Commerce Drive (7)............. 1986 49,000 100.0 11 11 0.00 7.45 7.45
102 Commerce Drive (7)........... 1987 38,400 87.5 4 4 0.00 3.95 3.95
202 Commerce Drive (7)........... 1988 51,200 100.0 8 8 0.00 5.18 5.18
WEST DEPTFORD
1451 Metropolitan Drive.......... 1996 21,600 100.0 148 148 0.03 6.85 6.85
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive................ 1989 13,275 0.0 50 50 0.01 0.00 0.00
200 Horizon Drive................ 1991 45,770 85.3 446 432 0.10 11.42 11.07
300 Horizon Drive................ 1989 69,780 100.0 912 902 0.20 13.07 12.93
500 Horizon Drive................ 1990 41,205 81.9 394 363 0.08 11.68 10.76
MONMOUTH COUNTY, NEW JERSEY
WALL TOWNSHIP
1320 Wykoff Avenue............... 1986 20,336 0.0 38 38 0.01 0.00 0.00
1324 Wykoff Avenue............... 1987 21,168 75.0 213 181 0.05 13.42 11.40
1325 Campus Parkway.............. 1988 35,000 18.4 290 281 0.06 45.03 43.63
1340 Campus Parkway.............. 1992 72,502 94.6 779 676 0.17 11.36 9.86
1345 Campus Parkway.............. 1995 76,300 100.0 704 702 0.15 9.23 9.20
1433 Highway 34.................. 1985 69,020 65.3 442 360 0.10 9.81 7.99
PASSAIC COUNTY, NEW JERSEY
TOTOWA
11 Commerce Way.................. 1989 47,025 100.0 412 380 0.09 8.76 8.08
1 Center Court (7)............... 1999 38,961 100.0 129 119 0.03 3.95 3.64
</TABLE>
<TABLE>
<CAPTION>
TENANTS LEASING 10%
OR MORE OF NET
RENTABLE AREA PER
PROPERTY PROPERTY AS OF
LOCATION 12/31/99 (6)
- ----------------------------------------------------------------------------------------
<S> <C>
2 Commerce Drive (7)............. Computer Sciences Corporation (100%)
102 Commerce Drive (7)........... Nelson Associates (25%), American Banknote Card Svcs. (13%),
D&A Eastern Fasteners Inc. (13%), Moorestown Weightlifting
Club (13%), Opex Corporation (13%), RGP Impressions Inc.
(13%)
202 Commerce Drive (7)........... Standard Register Co. (100%)
WEST DEPTFORD
1451 Metropolitan Drive.......... Garlock Bearings Inc. (100%)
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive................ --
200 Horizon Drive................ O.H.M. Remediation Services Corp. (85%)
300 Horizon Drive................ State of NJ/DEP (50%), McFaul & Lyons (26%), Fluor Daniel
GTI (24%)
500 Horizon Drive................ Anacomp Inc. (30%), Lakeview Child Center (19%), NJ Builders
Assoc. (14%), Diedre Moire Corp. (11%)
MONMOUTH COUNTY, NEW JERSEY
WALL TOWNSHIP
1320 Wykoff Avenue............... --
1324 Wykoff Avenue............... Collectors Alliance (53%), Supply Saver, Inc. (22%)
1325 Campus Parkway.............. Centennial Cellular Corp. (14%)
1340 Campus Parkway.............. Groundwater & Environmental Services (33%), GEAC Comp
(22%), State Farm (17%), Association For Retarded Citizens
(11%), Digital Lightwave, Inc. (11%)
1345 Campus Parkway.............. Depot America, Inc. (37%), Quadramed Corp. (23%), De Vine
Corp. (10%)
1433 Highway 34.................. State Farm Mutual Insurance Co. (30%), New Jersey Natural Gas
Co (11%)
PASSAIC COUNTY, NEW JERSEY
TOTOWA
11 Commerce Way.................. Coram Alternative Site Services (56%), D.A. Kopp & Associates
Inc. (22%), Olsten Health Services (11%), Ericsson Inc. (11%)
1 Center Court (7)............... Ethnic American Broadcasting (62%), Eizo Nanao Technologies
Inc. (38%)
</TABLE>
29
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE, 1999
NET LEASED 1999 1999 OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S) ($000'S) BASE RENT(%) ($)(4)(6)
(2)(6) (3)(6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 Center Court................... 1998 30,600 99.3 350 280 0.08 11.52
20 Commerce Way.................. 1992 42,540 85.9 388 388 0.08 10.62
29 Commerce Way.................. 1990 48,930 100.0 472 424 0.10 9.65
40 Commerce Way.................. 1987 50,576 100.0 561 467 0.12 11.09
45 Commerce Way.................. 1992 51,207 100.0 480 436 0.10 9.37
60 Commerce Way.................. 1988 50,333 84.3 309 255 0.07 7.28
80 Commerce Way.................. 1996 22,500 89.2 272 173 0.06 13.55
100 Commerce Way................. 1996 24,600 100.0 297 160 0.06 12.07
120 Commerce Way................. 1994 9,024 100.0 89 87 0.02 9.86
140 Commerce Way................. 1994 26,881 99.5 264 257 0.06 9.87
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE/FLEX 1,882,793 88.0 13,146 12,123 2.86 8.40
- -----------------------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Westchester Plaza.............. 1967 25,000 100.0 293 285 0.06 11.72
2 Westchester Plaza.............. 1968 25,000 100.0 431 425 0.09 17.24
3 Westchester Plaza.............. 1969 93,500 98.5 1,116 1,112 0.24 12.12
4 Westchester Plaza.............. 1969 44,700 99.8 614 595 0.13 13.76
5 Westchester Plaza.............. 1969 20,000 100.0 277 273 0.06 13.85
6 Westchester Plaza.............. 1968 20,000 100.0 263 254 0.06 13.15
</TABLE>
<TABLE>
<CAPTION>
AVERAGE TENANTS LEASING 10%
EFFECTIVE OR MORE OF NET
RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PROPERTY AS OF
LOCATION ($)(5)(6) 12/31/99 (6)
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
2 Center Court................... 9.21 Nomadic Display (36%), Electro Rent Corp. (33%), Alpine
Electronic of America (30%)
20 Commerce Way.................. 10.62 Motorola Inc. (44%), Siemens Fiber Optics (41%)
29 Commerce Way.................. 8.67 Sandvik Sorting Systems, Inc. (44%), Paterson Dental Supply Inc.
(23%), Fujitec America Inc. (22%), Williams Communications
(11%)
40 Commerce Way.................. 9.23 Thomson Electronics (43%), Intertek Testing Services (29%),
Snap-On, Inc. (14%), System 3R USA (14%)
45 Commerce Way.................. 8.51 Ericsson Radio Systems Inc. (52%), Woodward Clyde
Consultants (27%), Oakwood Corporate Housing (21%)
60 Commerce Way.................. 6.01 Ericsson Inc. (29%), Jen Mar Graphics (27%), Maxlite (14%),
HW Exhibits (14%)
80 Commerce Way.................. 8.62 Hey Diddle Diddle Inc. (40%), Idexx Veterinary Services (37%),
Inter-American Safety Council (11%)
100 Commerce Way................. 6.50 Pharmerica Inc. (34%), Minolta Business Systems Inc. (34%),
CCH Incorporated (32%)
120 Commerce Way................. 9.64 Deerfield Healthcare Corp. (100%)
140 Commerce Way................. 9.61 Advanced Image Systems Inc. (20%), MSR Publications Inc.
(19%), Holder Group Inc. (11%), Alpha Testing (10%), Showa
Tool USA Inc. (10%), Telsource Corporation (10%), Universal
Hospital Services (10%)
- -----------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE/FLEX 7.78
- -----------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Westchester Plaza.............. 11.40 British Apparel (40%), American Greeting (20%), RS
Knapp (20%), Thin Film Concepts (20%)
2 Westchester Plaza.............. 17.00 Board of Cooperative Education (80%), Kin-Tronics (10%),
Squires Productions (10%)
3 Westchester Plaza.............. 12.07 Apria Healthcare (32%), Kangol Headwear (28%), V-Band
Corp. (16%), Dental Concepts (12%)
4 Westchester Plaza.............. 13.34 Metropolitan Life (38%), EEV Inc. (34%), Arsys Innotech Corp.
(13%)
5 Westchester Plaza.............. 13.65 Fujitsu (38%), Rokonet Industries (25%), UA Plumbers
Education (25%), Furniture Etc. (12%)
6 Westchester Plaza.............. 12.70 Signacon Controls (28%), Xerox Corp. (28%), Game Parts
(24%), Girard Rubber Co. (13%)
</TABLE>
30
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE, 1999
NET LEASED 1999 1999 OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S) ($000'S) BASE RENT(%) ($)(4)(6)
(2)(6) (3)(6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
7 Westchester Plaza.............. 1972 46,200 100.0 643 637 0.14 13.92
8 Westchester Plaza.............. 1971 67,200 100.0 871 778 0.19 12.96
11 Clearbrook Road............... 1974 31,800 100.0 327 326 0.07 10.28
75 Clearbrook Road............... 1990 32,720 100.0 816 816 0.18 24.94
150 Clearbrook Road.............. 1975 74,900 100.0 1,046 1,018 0.23 13.97
175 Clearbrook Road.............. 1973 98,900 98.5 1,340 1,306 0.29 13.76
200 Clearbrook Road.............. 1974 94,000 99.8 1,113 1,063 0.24 11.86
250 Clearbrook Road.............. 1973 155,000 94.5 1,177 1,152 0.25 8.04
50 Executive Boulevard........... 1969 45,200 97.2 384 375 0.08 8.74
77 Executive Boulevard........... 1977 13,000 100.0 180 179 0.04 13.85
85 Executive Boulevard........... 1968 31,000 83.3 380 371 0.08 14.72
300 Executive Boulevard.......... 1970 60,000 99.7 576 576 0.12 9.63
350 Executive Boulevard.......... 1970 15,400 98.8 243 243 0.05 15.97
399 Executive Boulevard.......... 1962 80,000 100.0 934 921 0.20 11.68
400 Executive Boulevard.......... 1970 42,200 100.0 611 558 0.13 14.48
500 Executive Boulevard.......... 1970 41,600 100.0 552 542 0.12 13.27
525 Executive Boulevard.......... 1972 61,700 99.8 846 830 0.18 13.74
HAWTHORNE
4 Skyline Drive.................. 1987 80,600 100.0 1,199 1,102 0.26 14.88
8 Skyline Drive.................. 1985 50,000 98.9 673 653 0.15 13.61
10 Skyline Drive................. 1985 20,000 100.0 282 262 0.06 14.10
11 Skyline Drive................. 1989 45,000 100.0 675 660 0.15 15.00
12 Skyline Drive (7)............. 1999 46,850 100.0 174 150 0.04 12.79
15 Skyline Drive................. 1989 55,000 100.0 877 804 0.19 15.95
200 Saw Mill River Road.......... 1965 51,100 100.0 633 612 0.14 12.39
</TABLE>
<TABLE>
<CAPTION>
AVERAGE TENANTS LEASING 10%
EFFECTIVE OR MORE OF NET
RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PROPERTY AS OF
LOCATION ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
7 Westchester Plaza.............. 13.79 Emigrant Savings Bank (69%), Fire End Croker (22%)
8 Westchester Plaza.............. 11.58 Mamiya America (24%), Ciba Specialty (19%), Kubra Data
(15%)
11 Clearbrook Road............... 10.25 Eastern Jungle Gym (27%), MCS Marketing (24%), Treetops Inc.
(21%), Creative Medical Supplies (14%), Westchester Party
Rental (14%)
75 Clearbrook Road............... 24.94 Evening Out Inc. (100%)
150 Clearbrook Road.............. 13.59 Court Sports I (24%), Philips Medical (18%), Transwestern
Publications (12%)
175 Clearbrook Road.............. 13.41 Nextel of New York Inc. (35%), Hypres Inc. (15%)
200 Clearbrook Road.............. 11.33 Brunschwig & Fils Inc. (39%), Proftech Corp (20%)
250 Clearbrook Road.............. 7.86 AFP Imaging Corp (31%), Prints Plus Inc. (13%),
The Artina Group (14%), Conri Services (10%)
50 Executive Boulevard........... 8.54 MMO Music Group (71%), Medcon Financial (22%)
77 Executive Boulevard........... 13.77 Bright Horizons Children (55%), WNN Corp. (45%)
85 Executive Boulevard........... 14.37 VREX Inc (49%), Westhab Inc. (18%), Saturn II Systems (11%)
300 Executive Boulevard.......... 9.63 Varta Batteries (44%), Princeton Ski Outlet (43%), LMG
International Inc. (12%)
350 Executive Boulevard.......... 15.97 Copytex Corp. (99%)
399 Executive Boulevard.......... 11.51 American Banknote (73%), Wine Enthusiast Inc. (15%)
Brandon of Westchester (12%)
400 Executive Boulevard.......... 13.22 Baker Engineering (39%), Ultra Fabrics (25%)
500 Executive Boulevard.......... 13.03 Original Consume (36%), Dover Elevator (16%), Angelica Corp.
(16%), Olympia Sports (13%), Philips Medical Systems (13%)
525 Executive Boulevard.......... 13.48 Vie De France (59%), New York Blood Center (21%)
HAWTHORNE
4 Skyline Drive.................. 13.67 GEC Alsthom Int'l. (60%)
8 Skyline Drive.................. 13.21 Clientsoft (69%), Reveo Inc (29%)
10 Skyline Drive................. 13.10 Bi-Tronic Inc/LCA (52%), Phoenix Systems Int'l (32%), Galson
Corp. (16%)
11 Skyline Drive................. 14.67 Cube Computer (41%), Bowthorpe Holdings (19%), Agathon
Machine (12%), Planned Parenthood (11%)
12 Skyline Drive (7)............. 11.02 Creative Visual Enterprises (38%), Medelec Inc. (32%), Savin
Corporation (30%)
15 Skyline Drive................. 14.62 Tellabs (47%), Emisphere Technology (23%), Minolta Copier
(16%), Acorda Therapeutics Inc. (14%)
200 Saw Mill River Road.......... 11.98 ABSCOA (18%), Walter Degruyter (21%), Monahans Plumbing
(17%), Argents Air Express (12%)
</TABLE>
31
<PAGE>
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE, 1999
NET LEASED 1999 1999 OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S) ($000'S) BASE RENT(%) ($)(4)(6)
(2)(6) (3)(6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
YONKERS
1 Odell Plaza.................... 1980 106,000 100.0 1,260 1,241 0.27 11.89
5 Odell Plaza.................... 1983 38,400 99.6 490 486 0.11 12.81
7 Odell Plaza.................... 1984 42,600 99.6 667 649 0.14 15.72
4 Executive Plaza................ 1986 80,000 99.9 1,049 1,000 0.23 13.13
6 Executive Plaza................ 1987 80,000 88.6 991 986 0.21 13.98
100 Corporate Boulevard.......... 1987 78,000 98.2 1,087 1,060 0.23 14.19
200 Corporate Boulevard South.... 1990 84,000 99.8 1,378 1,350 0.30 16.44
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE/FLEX 2,076,570 98.5 26,468 25,650 5.71 13.14
- ---------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
419 West Avenue.................. 1986 88,000 99.7 1,430 1,423 0.31 16.30
500 West Avenue.................. 1988 25,000 82.3 334 315 0.07 16.23
550 West Avenue.................. 1990 54,000 100.0 809 745 0.17 14.98
600 West Avenue (7).............. 1999 66,000 100.0 37 33 0.01 9.30
650 West Avenue ................. 1998 40,000 100.0 635 522 0.14 15.88
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE/FLEX 273,000 98.3 3,245 3,038 0.70 14.24
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES..... 4,232,363 93.8 42,859 40,811 9.27 11.24
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
AVERAGE TENANTS LEASING 10%
EFFECTIVE OR MORE OF NET
RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PROPERTY AS OF
LOCATION ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
YONKERS
1 Odell Plaza.................... 11.71 Court Sports II (19%), Gannet Satellite (11%)
5 Odell Plaza.................... 12.71 Voyetra Technologies (43%), Photo File Inc. (34%), Pharmerica
Inc. (22%)
7 Odell Plaza.................... 15.30 US Postal Service (41%), TT Systems Co. (24%), Bright
Horizons (16%)
4 Executive Plaza................ 12.51 O.K. Industries (42%), E&B Giftware (22%), Universal Outdoor
Advertising (10%)
6 Executive Plaza................ 13.91 Cablevision Systems Corp. (40%), Yonkers Savings & Loan
Assoc. (11%)
100 Corporate Boulevard.......... 13.84 MonteFiore Medical Center (28%), Sempra Energy Trading Corp.
(13%), Minami International Corp. (12%), Otis Elevator (11%)
Genzyme Genetics Corp. (11%)
200 Corporate Boulevard South.... 16.10 Belmay (32%), Montefiore Medical (23%) Advanced Viral
Research (20%)
- ------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE/FLEX 12.71
- ------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
419 West Avenue.................. 16.22 Fuji Medical Systems USA Inc. (80%)
500 West Avenue.................. 15.31 Lead Trackers (28%), Convergent Communications (26%),
Seneca Media Group Inc. (17%), M Cohen and Sons Inc. (11%)
550 West Avenue.................. 13.80 Lifecodes Corp. (44%), Davidoff of Geneva (33%)
600 West Avenue (7).............. 8.30 Clarence House Imports, Ltd (100%)
650 West Avenue ................. 13.05 Davidoff of Geneva (CT) Inc. (100%)
- ------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE/FLEX 13.24
- ------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES..... 10.69
======================================================================================================
</TABLE>
32
<PAGE>
PROPERTY LISTING
INDUSTRIAL/WAREHOUSE PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL 1999
PERCENTAGE OFFICE, 1999
NET LEASED 1999 1999 OFFICE/FLEX, AVERAGE
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT
PROPERTY YEAR AREA 12/31/99 RENT RENT WAREHOUSE PER SQ. FT.
LOCATION BUILT (SQ. FT.) (%)(1) ($000'S) ($000'S) BASE RENT(%) ($)(4)(6)
(2)(6) (3)(6)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane................. 1957 6,600 100.0 57 56 0.01 8.64
2 Warehouse Lane................. 1957 10,900 100.0 128 126 0.03 11.74
3 Warehouse Lane................. 1957 77,200 100.0 290 279 0.06 3.76
4 Warehouse Lane................. 1957 195,500 97.4 1,906 1,869 0.41 10.01
5 Warehouse Lane................. 1957 75,100 97.1 690 671 0.15 9.46
6 Warehouse Lane ................ 1982 22,100 100.0 513 513 0.11 23.21
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INDUSTRIAL/WAREHOUSE PROPERTIES 387,400 98.1 3,584 3,514 0.77 9.43
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX,
AND INDUSTRIAL/WAREHOUSE
PROPERTIES 27,365,974 96.5 463,688 450,055 100.0 17.81
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
AVERAGE TENANTS LEASING 10%
EFFECTIVE OR MORE OF NET
RENT RENTABLE AREA PER
PROPERTY PER SQ. FT. PROPERTY AS OF
LOCATION ($)(5)(6) 12/31/99 (6)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane................. 8.48 JP Trucking Service (100%)
2 Warehouse Lane................. 11.56 RJ Bruno Roofing Inc. (55%), Savin Engineers PC (41%)
3 Warehouse Lane................. 3.61 United Parcel Service (100%)
4 Warehouse Lane................. 9.82 San Mar Laboratory (63%), Westinghouse Air Brake (14%)
5 Warehouse Lane................. 9.20 Great Spring Waters of America (48%), E & H Tire Boxing
(19%), Chamart Exclusives Inc. (16%)
6 Warehouse Lane ................ 23.21 Conway Central Express (100%)
- ---------------------------------------------------------------------------------------------------------
TOTAL INDUSTRIAL/WAREHOUSE PROPERTIES 9.24
- ---------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX,
AND INDUSTRIAL/WAREHOUSE
PROPERTIES 17.28
=========================================================================================================
</TABLE>
(1) Based on all leases in effect as of December 31, 1999.
(2) Total base rent for 1999, determined in accordance with generally accepted
accounting principles ("GAAP"). Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the
tenant's proportionate share of and/or increases in real estate taxes and
certain operating costs, as defined, and the pass through of charges for
electrical usage.
(3) Total base rent for 1999 minus total 1999 amortization of tenant
improvements, leasing commissions and other concessions and costs,
determined in accordance with GAAP.
(4) Base rent for 1999 divided by net rentable square feet leased at December
31, 1999. For those properties acquired or placed in service during 1999,
amounts are annualized, as per Note 7.
(5) Effective rent for 1999 divided by net rentable square feet leased at
December 31, 1999. For those properties acquired or placed in service
during 1999, amounts are annualized, as per Note 7.
(6) Excludes space leased by the Company aggregating 122,149 square feet.
(7) As this property was acquired or placed in service by the Company during
1999, the amounts represented in 1999 base rent and 1999 effective rent
reflect only that portion of the year during which the Company owned or
placed the property in service. Accordingly, these amounts may not be
indicative of the property's full year results. For comparison purposes,
the amounts represented in 1999 average base rent per sq. ft. and 1999
average effective rent per sq. ft. for this property have been calculated
by taking 1999 base rent and 1999 effective rent for such property and
annualizing these partial-year results, dividing such annualized amounts by
the net rentable square feet leased at December 31, 1999. These annualized
per square foot amounts may not be indicative of the property's results had
the Company owned or placed such property in service for the entirety of
1999.
(8) The property was sold by the Company in 1999.
33
<PAGE>
RETAIL PROPERTIES
The Company owned two stand-alone retail properties as of December 31, 1999,
described below:
The Company owns an 8,000 square foot restaurant, constructed in 1986, located
at 2 Executive Plaza in the South Westchester Executive Park in Yonkers,
Westchester County, New York. The restaurant is 100 percent leased to Magic at
Yonkers, Inc. for use as a Red Robin restaurant under a 25-year lease. The lease
currently provides for fixed annual base rent of $265,000, with fully-reimbursed
real estate taxes, and operating expenses escalated based on the consumer price
index ("CPI") over a base year CPI. The lease, which expires in June 2012,
includes scheduled rent increases in July 2002 to approximately $300,000
annually, and in July 2007 to approximately $345,000 annually. The lease also
provides for additional rent calculated as a percentage of sales over a
specified sales amount, as well as for two five-year renewal options. 1999 total
base rent for the property, calculated in accordance with GAAP, was
approximately $257,488.
The Company also owns a 9,300 square foot restaurant, constructed in 1984,
located at 230 White Plains Road, Tarrytown, Westchester County, New York. The
restaurant is 100 percent leased to TGI Fridays under a 10-year lease which
provides for fixed annual base rent of approximately $195,000, with
fully-reimbursed real estate taxes, and operating expenses escalated based on
CPI over a base year CPI. The lease, which expires in August 2004, also provides
for additional rent calculated as a percentage of sales over a specified sales
amount, as well as for four five-year renewal options. 1999 total base rent for
the property, calculated in accordance with GAAP, was approximately $195,294.
LAND LEASES
The Company owned three land leases as of December 31, 1999, described below:
The Company leases land to Star Enterprises, on which a 2,264 square-foot
Texaco gas station was constructed, located at 1 Enterprise Boulevard in
Yonkers, Westchester County, New York. The 15-year, triple-net land lease
provides for annual rent of approximately $145,000 and expires in April 2005.
The lease also provides for two five-year renewal options. 1999 total base
rent under this lease, calculated in accordance with GAAP, was approximately
$144,023.
The Company also leases five acres of land to Rake Realty, on which a 103,500
square-foot office building exists, located at 700 Executive Boulevard,
Elmsford, Westchester County, New York. The 22-year, triple-net land lease
provides for fixed annual rent plus a CPI adjustment every five years, and
expires in November 2000. 1999 total base rent under this lease, calculated in
accordance with GAAP, was approximately $96,653. The lease also provides for
several renewal options which could extend the lease term for an additional 30
years.
The Company also leases 27.7 acres of land to Home Depot, on which a 134,000
square-foot retail store was constructed, located at the Company's Horizon
Center Business Park, Hamilton Township, Mercer County, New Jersey. The net
lease, which began on February 1, 1999, provides for annual rent of
approximately $298,000 through the fifth year of the lease and fixed annual rent
plus a CPI adjustment every five years for the years thereafter and expires in
January 2094. The lease also provides an option for Home Depot to purchase the
land in 2002. 1999 total base rent under this lease, calculated in accordance
with GAAP, was approximately $239,021.
MULTI-FAMILY RESIDENTIAL PROPERTIES
The Company owned two multi-family residential properties, as of December 31,
1999, described below:
TENBY CHASE APARTMENTS, DELRAN, BURLINGTON COUNTY, NEW JERSEY: The Company's
multi-family residential property, known as the Tenby Chase Apartments, was
built in 1970. The property contains 327 units, comprised of 196 one-bedroom
units and 131 two-bedroom units, with an average size of approximately 1,235
square feet per unit. The property had an average monthly rental rate of
approximately $765 per unit during 1999 and was approximately 96.0 percent
leased as of December 31, 1999. The property had 1999 total base rent of
approximately $2.9 million, which represented approximately 0.6 percent of the
Company's 1999 total base rent. The average occupancy rate for the property in
each of 1999, 1998 and 1997 was 97.1 percent, 96.0 percent, and 95.5 percent,
respectively.
25 MARTINE AVENUE, WHITE PLAINS, WESTCHESTER COUNTY, NEW YORK: The Company's
multi-family residential property, known as 25 Martine Avenue, was built in
1987. The property contains 124 residential units, comprised of 18 studio units,
71 one-bedroom units and 35 two-bedroom units, with an average size of
approximately 722 square feet per unit.
34
<PAGE>
The property had an average monthly rental rate of approximately $1,547 per unit
during 1999 and was 96.0 percent leased as of December 31, 1999. The property
also has retail space. The property had 1999 total base rent of approximately
$2.4 million, which represented approximately 0.5 percent of the Company's 1999
total base rent. The average occupancy rate for the property in each of 1999,
1998 and 1997 was 96.8 percent, 96.4 percent, and 97.6 percent, respectively.
OCCUPANCY
The table below sets forth the year-end percentages of rentable square feet
leased in the Company's in-service Consolidated Properties for the last five
years:
<TABLE>
<CAPTION>
Percentage of
Year ended December 31, Square Feet Leased (%)
---------------------------------------------------------------
<S> <C>
1999 96.5
1998 96.6
1997 95.8
1996 96.4
1995 92.5
</TABLE>
35
<PAGE>
SIGNIFICANT TENANTS
The following table sets forth a schedule of the Company's 20 largest tenants
for the Consolidated Properties as of December 31, 1999, based upon annualized
base rents:
<TABLE>
<CAPTION>
Percentage of
Annualized Company Square Percentage of Year of
Number of Base Rental Annualized Base Feet Total Company Lease
Properties Revenue ($) (1) Rental Revenue (%) Leased Leased Sq.Ft. (%) Expiration
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AT&T Corporation 6 15,433,135 3.3 1,034,779 4.0 2009 (2)
Donaldson, Lufkin &
Jenrette Securities Corp. 2 14,358,974 3.1 589,368 2.3 2010 (3)
AT&T Wireless Services 2 8,199,959 1.8 382,030 1.5 2007 (4)
IBM Corporation 5 7,553,299 1.6 391,910 1.5 2007 (5)
Prentice-Hall Inc. 1 6,744,495 1.4 474,801 1.8 2014
Allstate Insurance Company 10 6,377,507 1.4 293,820 1.1 2009 (6)
Nabisco Inc. 2 5,467,178 1.2 300,378 1.2 2005
Toys `R' US - NJ, Inc. 1 5,342,672 1.1 242,518 0.9 2012
American Institute of Certified
Public Accountants 1 4,981,357 1.1 249,768 1.0 2012
Keystone Mercy Health Plan 3 4,636,015 1.0 203,334 0.8 2015 (7)
Board of Gov./Federal Reserve 1 4,605,090 1.0 117,008 0.4 2009 (8)
Dean Witter Trust Company 1 4,319,508 0.9 221,019 0.8 2008
Winston & Strawn 1 4,293,026 0.9 108,100 0.4 2003
CMP Media Inc. 1 4,206,598 0.9 206,274 0.8 2014
KPMG Peat Marwick, LLP 2 3,824,080 0.8 161,760 0.6 2007 (9)
Move.com 1 3,701,763 0.8 94,917 0.4 2006
Bank of Tokyo - Mitsubishi Ltd. 1 3,378,923 0.7 137,076 0.5 2009
Bankers Trust Harborside Inc. 1 3,272,500 0.7 385,000 1.5 2003
PNC Bank N.A. 4 3,207,902 0.7 149,930 0.6 2004(10)
Cendant Operations Inc. 1 3,117,051 0.7 148,431 0.6 2008
- ----------------------------------------------------------------------------------------------------------------------------------
Totals 117,021,032 25.1 5,892,221 22.7
==================================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
(2) 39,183 square feet expire February 2000; 3,950 square feet expire August
2000; 66,268 square feet expire December 2000; 63,278 square feet expire
May 2004; 475,100 square feet expire January 2008; 387,000 square feet
expire January 2009.
(3) 426,691 square feet expire July 2009; 162,677 square feet expire September
2010.
(4) 12,150 square feet expire September 2004; 345,799 square feet expire March
2007; 24,081 square feet expire June 2007.
(5) 29,157 square feet expire October 2000; 28,289 square feet expire January
2002; 1,065 square feet expire November 2002; 85,000 square feet expire
December 2005; 248,399 square feet expire December 2007.
(6) 22,444 square feet expire July 2001; 70,517 square feet expire June 2002;
71,030 square feet expire September 2002; 18,882 square feet expire April
2003; 2,867 square feet expire January 2004; 36,305 square feet expire
January 2005; 23,024 square feet expire November 2005; 6,108 square feet
expire August 2006; 31,143 square feet expire April 2008; 11,500 square
feet expire April 2009.
(7) 32,171 square feet expire January 2003; 171,163 square feet expire April
2015.
(8) 94,719 square feet expire May 2005; 22,289 square feet expire July 2009.
(9) 104,556 square feet expire September 2002; 57,204 square feet expire July
2007.
(10) 107,320 square feet expire February 2000; 15,802 square feet expire August
2003; 26,808 square feet expire October 2004.
36
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS
The following table sets forth a schedule of the lease expirations for the total
of the Company's office, office/flex, industrial/warehouse and stand-alone
retail properties, included in the Consolidated Properties, beginning January 1,
2000, assuming that none of the tenants exercise renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2000.......... 548 2,998,702 11.5 51,235,987 17.09 11.0
2001.......... 504 3,052,745 11.8 49,449,363 16.20 10.6
2002.......... 525 3,505,201 13.5 61,682,311 17.60 13.3
2003.......... 396 3,624,579 14.0 63,261,015 17.45 13.6
2004.......... 304 2,162,726 8.3 40,731,720 18.83 8.7
2005.......... 144 2,243,557 8.6 42,629,493 19.00 9.2
2006.......... 70 1,074,250 4.1 22,939,184 21.35 4.9
2007.......... 49 1,318,491 5.1 26,917,633 20.42 5.8
2008.......... 39 1,545,752 6.0 24,575,681 15.90 5.3
2009.......... 42 1,522,241 5.9 30,025,843 19.72 6.4
2010.......... 36 756,819 2.9 16,200,363 21.41 3.5
2011 and thereafter 29 2,146,879 8.3 35,904,699 16.72 7.7
- -----------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,686 25,951,942 100.0(4) 465,553,292 17.94 100.0
===================================================================================================================================
</TABLE>
(1) Includes office, office/flex, industrial/warehouse and stand-alone retail
property tenants only. Excludes leases for amenity, retail, parking and
month-to-month tenants. Some tenants have multiple leases.
(2) Excludes all unleased space as of December 31, 1999.
(3) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
(4) Reconciliation to 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 25,951,942 94.8%
Square footage used for corporate offices, management offices,
building use, retail tenants, food services, other ancillary
service tenants and occupancy adjustments 459,529 1.7
Square footage unleased 971,803 3.5
----------- ---
Total net rentable square footage (does not include
residential, land lease, retail or not-in-service properties) 27,383,274 100.0%
=========== ======
</TABLE>
37
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office properties beginning January 1, 2000, assuming that none of the tenants
exercise renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2000.......... 462 2,441,089 11.3 45,084,047 18.47 10.8
2001.......... 418 2,366,837 11.0 42,048,690 17.77 10.1
2002.......... 433 2,717,232 12.6 53,518,196 19.70 12.9
2003.......... 329 3,016,261 14.0 57,168,583 18.95 13.7
2004.......... 259 1,706,502 7.9 35,597,604 20.86 8.6
2005.......... 113 1,932,315 8.9 38,865,317 20.11 9.3
2006.......... 58 841,925 3.9 19,021,919 22.59 4.6
2007.......... 41 1,183,060 5.5 24,984,398 21.12 6.0
2008.......... 36 1,396,157 6.5 23,633,823 16.93 5.7
2009.......... 30 1,361,491 6.3 27,943,453 20.52 6.7
2010.......... 32 674,908 3.1 15,062,093 22.32 3.6
2011 and thereafter 23 1,946,191 9.0 33,432,650 17.18 8.0
- -----------------------------------------------------------------------------------------------------------------------------------
Total/Weighted
Average 2,234 21,583,968 100.0 416,360,773 19.29 100.0
===================================================================================================================================
</TABLE>
(1) Includes office tenants only. Excludes leases for amenity, retail, parking
and month-to-month office tenants. Some tenants have multiple leases.
(2) Excludes all unleased space as of December 31, 1999.
(3) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
38
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES
The following table sets forth a schedule of the lease expirations for the
office/flex properties beginning January 1, 2000, assuming that none of the
tenants exercise renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2000.......... 79 532,124 13.4 5,862,366 11.02 13.0
2001.......... 81 654,361 16.5 6,796,646 10.39 15.1
2002.......... 90 741,529 18.7 7,666,408 10.34 17.0
2003.......... 64 516,844 13.0 5,660,683 10.95 12.5
2004.......... 37 273,404 6.9 3,234,111 11.83 7.2
2005.......... 31 311,242 7.8 3,764,176 12.09 8.3
2006.......... 12 232,325 5.8 3,917,265 16.86 8.7
2007.......... 8 135,431 3.4 1,933,235 14.27 4.3
2008.......... 3 149,595 3.8 941,858 6.30 2.1
2009.......... 11 148,950 3.8 1,976,190 13.27 4.4
2010.......... 4 81,911 2.1 1,138,270 13.90 2.5
2011 and thereafter 5 192,688 4.8 2,207,049 11.45 4.9
- -----------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 425 3,970,404 100.0 45,098,257 11.36 100.0
===================================================================================================================================
</TABLE>
(1) Includes office/flex tenants only. Excludes leases for amenity, retail,
parking and month-to-month office/flex tenants. Some tenants have multiple
leases.
(2) Excludes all unleased space as of December 31, 1999.
(3) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
39
<PAGE>
SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES
The following table sets forth a schedule of the lease expirations for the
industrial/warehouse properties beginning January 1, 2000, assuming that none of
the tenants exercise renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) (2) Leases ($) (3) Leases ($) Leases (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2000.......... 7 25,489 6.7 289,574 11.36 8.0
2001.......... 5 31,547 8.3 604,027 19.15 16.6
2002.......... 2 46,440 12.2 497,707 10.72 13.7
2003.......... 3 91,474 24.1 431,749 4.72 11.9
2004.......... 7 173,520 45.6 1,705,005 9.83 46.9
2009.......... 1 11,800 3.1 106,200 9.00 2.9
- -----------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 25 380,270 100.0 3,634,262 9.56 100.0
===================================================================================================================================
</TABLE>
(1) Includes industrial/warehouse tenants only. Excludes leases for amenity,
retail, parking and month-to-month industrial/warehouse tenants. Some
tenants have multiple leases.
(2) Excludes all unleased space as of December 31, 1999.
(3) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000, annualized
base rent revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
the historical results may differ from those set forth above.
SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES
The following table sets forth a schedule of the lease expirations for the
stand-alone retail properties beginning January 1, 2000, assuming that none of
the tenants exercise renewal options:
<TABLE>
<CAPTION>
Average Annual
Percentage Of Rent Per Net
Net Rentable Total Leased Annualized Rentable Percentage Of
Area Subject Square Feet Base Rental Square Foot Annual Base
Number Of To Expiring Represented By Revenue Under Represented Rent Under
Year Of Leases Leases Expiring Expiring By Expiring Expiring
Expiration Expiring (1) (Sq. Ft.) Leases (%) Leases ($) (2) Leases ($) Leases (%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2004.......... 1 9,300 53.8 195,000 20.97 42.4
2012 ......... 1 8,000 46.2 265,000 33.12 57.6
- ----------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2 17,300 100.0 460,000 26.59 100.0
==================================================================================================================================
</TABLE>
(1) Includes stand-alone retail property tenants only.
(2) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
40
<PAGE>
INDUSTRY DIVERSIFICATION
The following table lists the Company's 30 largest industry classifications
based on annualized contractual base rent of the Consolidated Properties for the
month of December 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 52,018,118 11.2 2,391,790 9.2
Manufacturing 44,518,089 9.6 2,740,177 10.6
Telecommunications 35,452,100 7.6 2,242,479 8.6
Computer System Design Svcs. 31,650,631 6.8 1,728,631 6.7
Insurance Carriers & Related Assistance 31,485,722 6.8 1,662,248 6.4
Legal Services 26,549,719 5.7 1,218,223 4.7
Credit Intermediation & Related Activities 22,226,073 4.8 1,325,045 5.1
Health Care & Social Assistance 19,484,478 4.2 1,041,366 4.0
Wholesale Trade 17,707,823 3.8 1,278,771 4.9
Accounting/Tax Prep. 15,642,255 3.3 747,054 2.9
Other Professional 14,327,844 3.1 881,399 3.4
Information Services 14,266,296 3.1 687,066 2.6
Retail Trade 13,380,782 2.9 817,756 3.1
Publishing Industries 12,459,014 2.7 560,583 2.2
Arts, Entertainment & Recreation 11,484,674 2.5 792,278 3.1
Public Administration 9,939,273 2.1 331,504 1.3
Transportation 9,616,619 2.1 712,852 2.7
Other Services (except Public Administration) 9,006,173 1.9 748,671 2.9
Advertising/Related Services 7,557,329 1.6 370,725 1.4
Data Processing Services 7,500,019 1.6 339,407 1.3
Scientific Research/Development 7,294,935 1.6 424,503 1.6
Management of Companies & Finance 6,607,582 1.4 361,209 1.4
Architectural/Engineering 6,306,890 1.3 350,949 1.3
Management/Scientific 5,777,511 1.2 303,486 1.2
Real Estate & Rental & Leasing 5,407,226 1.2 306,110 1.2
Monetary Authorities - Central Banks 4,817,648 1.0 275,899 1.1
Construction 4,354,039 0.9 258,203 1.0
Utilities 3,715,592 0.8 182,912 0.7
Educational Services 3,216,491 0.7 189,602 0.7
Admin. & Support, Waste Mgt. & Remediation Svc. 2,936,111 0.6 222,539 0.9
Other 8,846,236 1.9 458,505 1.8
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 465,553,292 100.0 25,951,942 100.0
===================================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
(2) Includes office, office/flex, industrial/warehouse and stand-alone retail
tenants only. Excludes leases for amenity, retail, parking and
month-to-month office tenants. Some tenants have multiple leases.
(3) The Company's tenants are classified according to the U.S. Government's new
North American Industrial Classification System (NAICS) which is replacing
the Standard Industrial Code (SIC) system.
41
<PAGE>
MARKET DIVERSIFICATION
The following table lists the Company's 25 largest markets (MSAs), based on
annualized contractual base rent of the Consolidated Properties for the month of
December 1999:
<TABLE>
<CAPTION>
Annualized Percentage of
Base Rental 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 80,505,681 17.3 4,530,091 16.5
New York, NY (Westchester-Rockland Counties) 71,202,243 15.3 4,355,070 15.9
Newark, NJ (Essex-Morris-Union Counties) 68,909,133 14.8 3,671,218 13.4
Jersey City, NJ 49,717,878 10.7 2,508,700 9.2
Philadelphia, PA-NJ 36,771,791 7.9 2,597,058 9.5
Washington, DC-MD-VA 18,112,798 3.9 616,549 2.2
Denver, CO 16,795,658 3.6 1,007,931 3.7
Dallas, TX 13,669,100 2.9 959,463 3.5
Trenton, NJ (Mercer County) 13,272,301 2.9 672,365 2.5
Middlesex-Somerset-Hunterdon, NJ 12,248,874 2.6 659,041 2.4
San Antonio, TX 11,392,112 2.4 940,302 3.4
San Francisco, CA 9,983,451 2.1 450,891 1.6
Houston, TX 8,724,516 1.9 700,008 2.6
Stamford-Norwalk, CT 8,545,912 1.8 527,250 1.9
Monmouth-Ocean, NJ 6,414,352 1.4 577,423 2.1
Nassau-Suffolk, NY 5,762,698 1.2 261,849 1.0
Austin-San Marcos, TX 5,500,942 1.2 270,703 1.0
Phoenix-Mesa, AZ 5,411,031 1.2 416,967 1.5
Tampa-St. Petersburg-Clearwater, FL 3,803,349 0.8 297,429 1.1
Boulder-Longmont, CO 3,543,931 0.8 270,421 1.0
Omaha, NE-IA 3,082,228 0.7 319,535 1.2
Bridgeport, CT 2,985,077 0.6 145,487 0.5
Colorado Springs, CO 2,832,524 0.6 209,987 0.8
Dutchess County, NY 2,180,658 0.5 118,727 0.4
Atlantic-Cape May, NJ 1,467,725 0.3 80,344 0.3
Other 2,717,329 0.6 218,465 0.8
- -----------------------------------------------------------------------------------------------------------------------------------
Totals 465,553,292 100.0 27,383,274 100.0
===================================================================================================================================
</TABLE>
(1) Annualized base rental revenue is based on actual December 1999 billings
times 12. For leases whose rent commences after January 1, 2000, annualized
base rental revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP results,
historical results may differ from those set forth above.
(2) Includes office, office/flex, industrial/warehouse and stand-alone retail
tenants only. Excludes leases for amenity, retail, parking and
month-to-month office tenants. Some tenants have multiple leases.
42
<PAGE>
THE COMPANY'S REAL ESTATE MARKETS
The Company's Properties are located primarily in the Northeast, including a
predominant presence in New Jersey, New York and Pennsylvania. The following is
a discussion of the markets within which substantially all of the Company's
properties are located:
NORTHERN NEW JERSEY
The Northern New Jersey market consists of Bergen, Essex, Hudson, Morris and
Passaic Counties. Northern New Jersey's five counties are part of the greater
New York metropolitan area, are less than a 45 minute drive from Manhattan, and
are widely regarded as major centers for corporate and international business.
The region has direct access to New York City by public transportation and
extensive road networks. In addition to being home to the two largest cities in
New Jersey, Newark and Jersey City, Newark International Airport and the New
York/New Jersey Harbor are also located within the five-county boundary. Overall
vacancy rates have declined in the Northern New Jersey market for six out of the
last seven years as a direct result of an increase in leasing activity and net
absorption levels. Build-to-suit activity is present, and selective speculative
construction exists. The Company owns or has an interest in approximately 10.1
million square feet of office and office/flex space in Northern New Jersey.
CENTRAL NEW JERSEY
The Central New Jersey market consists of Union, Somerset, Hunterdon, Middlesex,
Mercer and Monmouth Counties. Encompassing approximately 2,000 square miles in
six counties, Central New Jersey is notable for its proximity to major highway
arteries, including Interstates 78 and 287, Route 1, the Garden State Parkway
and the New Jersey Turnpike. This market continues to be a prime location for
Fortune 500 headquarters, research & development operations and information
businesses. Central New Jersey vacancy rates are decreasing while average asking
rents are increasing. This is, in part, attributable to the increase in demand,
measured by leasing activity, which rose predominantly due to corporate
expansions. The Company owns and operates approximately 2.6 million square feet
of office and office/flex space in the Central New Jersey counties of Union,
Middlesex, Somerset, Mercer and Monmouth.
SUBURBAN PHILADELPHIA, PENNSYLVANIA
The Suburban Philadelphia market consists of six counties in Pennsylvania on the
west side of the Delaware River and eight counties in New Jersey on the east
side of the Delaware River. The Pennsylvania counties consist of Bucks, Chester,
Delaware, Montgomery, Lehigh and Northampton Counties. These six counties
surround the city of Philadelphia, are home to many affluent communities, and
are regarded as major centers for corporate and international business. The
areas are served by an extensive highway network allowing easy access to
Philadelphia International Airport and the Port of Philadelphia. Over the last
few years, the overall vacancy rate in this region has declined as a result of
strong leasing activity and moderate new construction. The New Jersey counties
consist of Burlington, Camden, Atlantic, Ocean, Gloucester, Salem, Cumberland
and Cape May Counties. This market has extensive geographic boundaries,
stretching from the Delaware River to the Atlantic Ocean and Atlantic City. This
region is mainly suburban and is home to many affluent communities, and Atlantic
City, one of the nation's largest centers for gaming/tourism. The Company owns
and operates approximately 2.7 million square feet of office and office/flex
space and a 327-unit multi-family residential complex in Suburban Philadelphia.
WESTCHESTER COUNTY, NEW YORK
Westchester County, New York, is located immediately north of New York City and
is accessible to New York City by public transportation and through an extensive
road network. Westchester County has a population of almost 900,000 and is
considered to be one of the most prestigious counties surrounding New York City.
The Company owns and operates approximately 3.8 million square feet of office
and office/flex space, 387,400 square feet of industrial/warehouse space, a
124-unit multi-family residential property, two stand-alone retail properties,
and two land leases in Westchester County, New York.
ROCKLAND COUNTY, NEW YORK
Rockland County, New York is located north of the New Jersey/New York border
directly adjacent to Bergen County. Rockland County has excellent highway access
to both New York City via Interstate 87 and to New Jersey via Interstate 287.
The Company owns or has an interest in approximately 412,000 square feet of
office and office/flex space in Rockland County.
43
<PAGE>
FAIRFIELD COUNTY, CONNECTICUT
Fairfield County, Connecticut is the county in Connecticut closest in proximity
to New York City. It has direct access to New York City via public
transportation and through an extensive road network. The county is home to 10
Fortune 500 headquarters and there has been a substantial decline in vacancy
during the past three years. The Company owns and operates approximately 673,000
square feet of office and office/flex space in Fairfield County.
WASHINGTON, DISTRICT OF COLUMBIA
Washington, D.C. is bordered by the state of Maryland on its northern and
eastern borders and the state of Virginia on its western and southern
borders. Washington, D.C. is served by an extensive highway network. Most
notable is Interstate 495, the "Beltway" which surrounds Washington and
affords access to all of the surrounding suburbs in both Maryland and
Virginia. The Company owns and operates approximately 495,000 square feet of
office space in the District of Columbia.
DALLAS-FORT WORTH, TEXAS
The Dallas-Fort Worth market includes Dallas, Tarrant and portions of Collin and
Denton Counties. The market includes the central business districts of both
Dallas and Fort Worth and the suburban areas primarily to the north of those
cities. Dallas-Forth Worth International Airport is one of the busiest airports
in the nation and is important to the growth of the area. This area is home to
the headquarters of numerous Fortune 500 high-technology and telecommunications
companies. The Company owns and operates approximately 1.0 million square feet
of office space in Dallas, Tarrant and Collin Counties.
HOUSTON, TEXAS
The Houston office market is comprised primarily of the city of Houston and its
surrounding suburbs. Houston is a major location of Fortune 500 companies'
headquarters. Houston is also a major port serving the southern portion of the
United States. The Company owns or has an interest in approximately 1.0 million
square feet of office space in the Houston market.
SAN ANTONIO, TEXAS
The San Antonio market consists primarily of Bexar County. San Antonio is
located at the cross roads of two major arteries, Interstate 35 and Interstate
10, and is a primary location of military facilities. San Antonio is the third
largest metropolitan area in Texas, behind Dallas and Houston. The Company owns
and operates approximately 940,000 square feet of office space in Bexar County.
PHOENIX, ARIZONA
The Phoenix market is comprised primarily of the city of Phoenix and several
suburbs to the north and west, including Scottsdale. Phoenix is the focal point
of Arizona, in addition to being the state capital. It is the location of
numerous corporate headquarters and regional headquarter facilities. The Phoenix
market has been considered one of the most rapidly growing markets in the
country. The Company owns and operates approximately 417,000 square feet of
office space in the Phoenix market.
DENVER, COLORADO
The Denver Market is comprised primarily of the city of Denver and several
suburbs to the north, east, and south. Denver is the focal point of Colorado, in
addition to being the state capital. It is the location of numerous corporate
headquarters, with a large emergence of high-technology and telecommunications
industries. Its new airport could become a major transportation artery for the
near-western states. The Company owns and operates approximately 1.3 million
square feet of office space in the Denver market.
SAN FRANCISCO, CALIFORNIA
The San Francisco market is comprised primarily of the city of San Francisco
and its surrounding suburbs. San Francisco is the second largest financial
center in the nation, after New York, and is home to the booming
high-technology/e-commerce industry. The Company owns or has an interest in
approximately 757,000 square feet of office space in the city of San
Francisco.
44
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary routine
litigation incidental to its business, to which the Company is a party or to
which any of its Properties is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
45
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The shares of the Company's common stock are traded on the New York Stock
Exchange ("NYSE") and the Pacific Exchange under the symbol "CLI".
MARKET INFORMATION
The following table sets forth the quarterly high, low, and closing price per
share of Common Stock reported on the NYSE for the years ended December 31, 1999
and 1998, respectively:
For the Year Ended December 31, 1999:
<TABLE>
<CAPTION>
HIGH LOW CLOSE
---- --- -----
<S> <C> <C> <C>
First Quarter $31.8750 $27.0000 $29.3750
Second Quarter $33.6250 $27.1875 $30.9375
Third Quarter $30.8125 $25.7500 $26.8215
Fourth Quarter $26.8125 $23.1250 $26.0625
For the Year Ended December 31, 1998:
HIGH LOW CLOSE
---- --- -----
First Quarter $41.2500 $36.7500 $39.0625
Second Quarter $39.3125 $31.5000 $34.3750
Third Quarter $35.6250 $26.1250 $30.0000
Fourth Quarter $32.1250 $26.8750 $30.8750
</TABLE>
On February 18, 2000, the closing Common Stock sales price on the NYSE was
$23.9375 per share.
HOLDERS
On February 18, 2000, the Company had 396 common shareholders of record.
RECENT SALES OF UNREGISTERED SECURITIES
Reference is made to Notes 3 (1997 Transactions) and 11 of the Consolidated
Financial Statements contained in Item 14 of this Form 10-K for a description of
equity issuances of common and preferred Units in the Operating Partnership (and
warrants exercisable for common units) which are redeemable under certain
circumstances for shares of Common Stock in the Company. All of such equity
issuances were issued to the holders directly by the Company without the use of
an underwriter or placement agent and without registration under the Securities
Act of 1933, as amended, pursuant to the private placement exemption contained
in Section 4(2) of such Act. Reference also is made to Note 16 (Stock Warrants)
contained in Item 14 of this Form 10-K for a description of equity issuances of
warrants to purchase Common Stock of the Company. All of such warrants were
issued to the holders (who are executives of the Company) directly by the
Company without the use of an underwriter or placement agent and without
registration under the Securities Act pursuant to the private placement
exemption contained in Section 4(2) of such Act.
DIVIDENDS AND DISTRIBUTIONS
The dividends and distributions payable at December 31, 1999 represents
dividends payable to shareholders of record as of January 4, 2000 (58,450,552
shares), distributions payable to minority interest common unitholders
(8,153,710 common units) on that same date and preferred distributions to
preferred unitholders (229,304 preferred units) for the
46
<PAGE>
fourth quarter 1999. The fourth 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 fourth quarter preferred unit distribution
of $16.875 per preferred unit, were approved by the Board of Directors on
December 17, 1999 and paid on January 21, 2000.
The dividends and distributions payable at December 31, 1998 represents
dividends payable to shareholders of record as of January 6, 1999 (57,266,737
shares), distributions payable to minority interest common unitholders
(9,086,585 common units) on that same date and preferred distributions to
preferred unitholders (250,256 preferred units) for the fourth quarter 1998. The
fourth quarter 1998 dividends and common unit distributions of $0.55 per share
and per common unit (pro-rated for units issued during the quarter), as well as
fourth quarter preferred unit distribution of $16.875 per preferred unit, were
approved by the Board of Directors on December 15, 1998 and paid on January 26,
1999.
47
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data on a consolidated basis
for the Company. The consolidated selected operating, balance sheet and cash
flow data of the Company as of December 31, 1999, 1998, 1997, 1996 and 1995, and
for the periods then ended have been derived from financial statements audited
by PricewaterhouseCoopers LLP, independent accountants.
<TABLE>
<CAPTION>
OPERATING DATA Year Ended December 31,
IN THOUSANDS, EXCEPT PER SHARE DATA 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 551,484 $ 493,699 $249,801 $ 95,472 $ 62,335
Operating and other expenses $ 168,651 $ 150,448 $ 75,353 $ 29,662 $ 20,705
General and administrative $ 25,480 $ 24,828 $ 15,659 $ 5,800 $ 3,712
Depreciation and amortization $ 87,209 $ 78,916 $ 36,825 $ 14,731 $ 10,655
Interest expense $ 102,960 $ 88,043 $ 39,078 $ 13,758 $ 10,117
Non-recurring charges $ 16,458 $ -- $ 46,519 -- --
Income before minority interests and
extraordinary item $ 150,726 $ 151,464 $ 36,367 $ 37,179 $ 17,146
Income before extraordinary item $ 119,739 $ 118,951 $ 4,988 $ 32,419 $ 13,638
Basic earnings per share - before extraordinary
item $ 2.05 $ 2.13 $ 0.13 $ 1.76 $ 1.23
Diluted earnings per share - before extraordinary
item $ 2.04 $ 2.11 $ 0.12 $ 1.73 $ 1.22
Dividends declared per common share $ 2.26 $ 2.10 $ 1.90 $ 1.75 $ 1.66
Basic weighted average shares outstanding 58,385 55,840 39,266 18,461 11,122
Diluted weighted average shares outstanding 67,133 63,893 44,156 21,436 14,041
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA December 31,
IN THOUSANDS 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental property, before accumulated depreciation
and amortization $ 3,654,845 $ 3,467,799 $ 2,629,616 $ 853,352 $ 387,675
Total assets $ 3,629,601 $ 3,452,194 $ 2,593,444 $ 1,026,328 $ 363,949
Mortgages and loans payable $ 1,490,175 $ 1,420,931 $ 972,650 $ 268,010 $ 135,464
Total liabilities $ 1,648,844 $ 1,526,974 $ 1,056,759 $ 297,985 $ 150,058
Minority interests $ 538,875 $ 501,313 $ 379,245 $ 26,964 $ 28,083
Stockholders' equity $ 1,441,882 $ 1,423,907 $ 1,157,440 $ 701,379 $ 185,808
</TABLE>
<TABLE>
<CAPTION>
OTHER DATA Year Ended December 31,
IN THOUSANDS 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash flows provided by operating activities $ 243,638 $ 208,761 $ 98,142 $ 46,823 $ 28,446
Cash flows used in investing activities $ (195,178) $ (749,067) $ (939,501) $ (307,752) $ (133,736)
Cash flows (used in) provided by financing
activities $ (45,598) $ 543,411 $ 639,256 $ 464,769 $ 99,863
Funds from operations (1), before distributions to
preferred unitholders $ 244,240 $ 216,949 $ 111,752 $ 45,220 $ 27,397
Funds from operations (1), after distributions to
preferred unitholders $ 228,764 $ 200,636 $ 110,864 $ 45,220 $ 27,397
</TABLE>
- ------------------------
(1) The Company considers funds from operations (after adjustment for
straight-lining of rents) one measure of REIT performance. Funds from
operations ("FFO") is defined as net income (loss) before minority interest
of unitholders (preferred and common) computed in accordance with generally
accepted accounting principles ("GAAP"), excluding gains (or losses) from
debt restructuring, other extraordinary and significant non-recurring items
and sales of property, plus real estate-related depreciation and
amortization. Funds from operations should not be considered as an
alternative for net income as an indication of the 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. Refer to "Management's Discussion and Analysis of
Financial Condition and Results of Operations," contained elsewhere in this
Report, for the calculation of FFO for the periods presented.
48
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Mack-Cali Realty 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 year ended December 31, 1999 ("1999"), as
compared to the year ended December 31, 1998 ("1998") and for 1998, as
compared to the year ended December 31, 1997 ("1997") make reference to the
following: (i) the effect of the "Same-Store Properties," which represents
all in-service properties owned by the Company at December 31, 1997 (for the
1999 versus 1998 comparison) and which represents all in-service properties
owned by the Company at December 31, 1996 (for the 1998 versus 1997
comparison), (ii) the effect of the acquisition of the RM Properties on
January 31, 1997, (iii) the effect of the acquisition of the Mack Properties
on December 11, 1997, (iv) the effect of the "Acquired Properties," which
represents all properties acquired or placed in service by the Company from
January 1, 1998 through December 31, 1999 (for the 1999 versus 1998
comparison) and which represents all properties acquired or placed in service
by the Company from January 1, 1997 through December 31, 1998 excluding RM
Properties and Mack Properties (for the 1998 versus 1997 comparison) and (v)
the effect of the "Dispositions", which refers to the Company's sale of its
property at 400 Alexander Road, Princeton, New Jersey on November 15, 1999
and its property at 20002 North 19th Avenue, Phoenix, Arizona on December 15,
1999.
49
<PAGE>
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Year Ended
December 31, Dollar Percent
(IN THOUSANDS) 1999 1998 Change Change
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 469,853 $ 427,528 $42,325 9.9%
Escalations and recoveries from tenants 62,182 51,981 10,201 19.6
Parking and other 15,915 10,712 5,203 48.6
- --------------------------------------------------------------------------------------------------------------
Sub-total 547,950 490,221 57,729 11.8
Equity in earnings of
unconsolidated joint ventures 2,593 1,055 1,538 145.8
Interest income 941 2,423 (1,482) (61.2)
- --------------------------------------------------------------------------------------------------------------
Total revenues 551,484 493,699 57,785 11.7
- --------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 57,382 48,297 9,085 18.8
Utilities 41,580 38,440 3,140 8.2
Operating services 69,689 63,711 5,978 9.4
- --------------------------------------------------------------------------------------------------------------
Sub-total 168,651 150,448 18,203 12.1
General and administrative 25,480 24,828 652 2.6
Depreciation and amortization 87,209 78,916 8,293 10.5
Interest expense 102,960 88,043 14,917 16.9
Non-recurring charges 16,458 -- 16,458 --
- --------------------------------------------------------------------------------------------------------------
Total expenses 400,758 342,235 58,523 17.1
- --------------------------------------------------------------------------------------------------------------
Income before gain on sale of
rental property, minority
interests and extraordinary item 150,726 151,464 (738) (0.5)
Gain on sale of rental property 1,957 -- 1,957 --
- --------------------------------------------------------------------------------------------------------------
Income before minority interests and
extraordinary item 152,683 151,464 1,219 0.8
Minority interests:
Operating partnership 32,865 32,513 352 1.1
Partially-owned properties 79 -- 79 --
- --------------------------------------------------------------------------------------------------------------
Income before extraordinary item 119,739 118,951 788 0.7
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 $ 119,739 $ 116,578 $ 3,161 2.7%
==============================================================================================================
</TABLE>
50
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties, Same-Store Properties and
Dispositions (in thousands).
<TABLE>
<CAPTION>
Acquired Same-Store
Total Company Properties Properties Dispositions
-------------- --------------- -------------- ---------------
Dollar Percent Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change Change Change
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 42,325 9.9% $ 32,519 7.6% $ 10,007 2.4% $ (201) (0.1)%
Escalations and recoveries
from tenants 10,201 19.6 5,404 10.4 4,800 9.2 (3) 0.0
Parking and other 5,203 48.6 2,601 24.3 2,585 24.1 17 0.2
- ----------------------------------------------------------------------------------------------------------------------
Total $ 57,729 11.8% $ 40,524 3.6% $ 17,392 8.3% $ (187) (0.1)%
======================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $ 9,085 18.8% $ 5,817 12.1% $ 3,300 6.8% $ (32) (0.1)%
Utilities 3,140 8.2 2,738 7.2 400 1.0 2 0.0
Operating services 5,978 9.4 6,210 9.8 (165) (0.3) (67) (0.1)
- ----------------------------------------------------------------------------------------------------------------------
Total $ 18,203 12.1% $ 14,765 9.8% $ 3,535 2.4% $ (97) (0.1)%
======================================================================================================================
OTHER DATA:
Number of Consolidated Properties 253 66 187 2
Square feet (in thousands) 27,383,274 5,607,666 21,775,608 189,851
</TABLE>
Base rents for the Same-Store Properties increased $10.0 million, or 2.4
percent, for 1999 as compared to 1998, due primarily to rental rate increases in
1999. Escalations and recoveries from tenants for the Same-Store Properties
increased $4.8 million, or 9.2 percent, for 1999 over 1998, due to the recovery
of an increased amount of total property expenses, as well as additional
settle-up billings in 1999. Parking and other income for the Same-Store
Properties increased $2.6 million, or 24.1 percent, due primarily to lease
termination fees received in 1999.
Real estate taxes on the Same-Store Properties increased $3.3 million, or 6.8
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Company increased
$3.1 million, or 8.2 percent, for 1999 as compared to 1998, due substantially to
the Acquired Properties. Operating services for the Same-Store Properties
decreased $0.2 million, or 0.3 percent, due primarily to a reduction in
maintenance costs incurred.
Equity in earnings of unconsolidated joint ventures increased $1.5 million in
1999 as compared to 1998. This is due primarily to additional joint venture
investments made by the Company (see Note 4 to the Financial Statements).
Interest income decreased by approximately $1.5 million, or 61.2 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998.
General and administrative increased by $0.7 million, or 2.6 percent, for 1999
as compared to 1998. This increase is due primarily to increased payroll and
related costs in 1999.
Depreciation and amortization increased by $8.3 million, or 10.5 percent, for
1999 over 1998. Of this increase, $4.8 million or 6.1 percent, is attributable
to the Acquired Properties, and $3.5 million, or 4.4 percent, is due to the
Same-Store Properties.
51
<PAGE>
Interest expense increased $14.9 million, or 16.9 percent, for 1999 as compared
to 1998. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt and net
additional drawings from the 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.
Non-recurring charges of $16.5 million were incurred in 1999, as a result of the
resignation of Thomas A. Rizk (see Note 14 to the Financial Statements).
Income before gain on sale of rental property, minority interests and
extraordinary item decreased to $150.7 million in 1999 from $151.5 million in
1998. The decrease of approximately $0.8 million is due to the factors discussed
above.
Net income increased by $3.1 million, from $116.6 million in 1998 to $119.7
million in 1999. This increase was a result of an extraordinary item of $2.4
million (net of minority interest) due to early retirement of debt in 1998, and
a gain on sale of rental property of $1.9 million in 1999. These were partially
offset by a decrease in income before gain on sale of rental property, minority
interests and extraordinary item of $0.8 million and an increase in minority
interests of $0.4 million.
52
<PAGE>
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Years Ended
December 31, Dollar Percent
(IN THOUSANDS) 1998 1997 Change Change
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 427,528 $ 206,215 $221,313 107.3%
Escalations and recoveries from tenants 51,981 31,130 20,851 67.0
Parking and other 10,712 6,910 3,802 55.0
- ----------------------------------------------------------------------------------------------------------------
Sub-total 490,221 244,255 245,966 100.7
Equity in earnings of
unconsolidated joint ventures 1,055 -- 1,055 --
Interest income 2,423 5,546 (3,123) (56.3)
- ----------------------------------------------------------------------------------------------------------------
Total revenues 493,699 249,801 243,898 97.6
- ----------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 48,297 25,992 22,305 85.8
Utilities 38,440 18,246 20,194 110.7
Operating services 63,711 31,115 32,596 104.8
- ----------------------------------------------------------------------------------------------------------------
Sub-total 150,448 75,353 75,095 99.7
General and administrative 24,828 15,659 9,169 58.6
Depreciation and amortization 78,916 36,825 42,091 114.3
Interest expense 88,043 39,078 48,965 125.3
Non-recurring charges -- 46,519 (46,519) (100.0)
- ----------------------------------------------------------------------------------------------------------------
Total expenses 342,235 213,434 128,801 60.3
- ----------------------------------------------------------------------------------------------------------------
Income before minority interest and
extraordinary item 151,464 36,367 115,097 316.5
Minority interest 32,513 31,379 1,134 3.6
- ----------------------------------------------------------------------------------------------------------------
Income before extraordinary item 118,951 4,988 113,963 2,284.7
- ----------------------------------------------------------------------------------------------------------------
Extraordinary item - loss on early
retirement of debt (net of minority
interest's share of $297 and $402) (2,373) (3,583) 1,210 (33.8)
- ----------------------------------------------------------------------------------------------------------------
Net income $ 116,578 $ 1,405 $115,173 8,197.4%
================================================================================================================
</TABLE>
53
<PAGE>
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties, Same-Store Properties, RM
Properties and Mack Properties (in thousands):
<TABLE>
<CAPTION>
Acquired Same-Store
Total Company Properties Properties RM Properties Mack Properties
---------------- ---------------- --------------- --------------- ---------------
Dollar Percent Dollar Percent Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change Change Change Change Change
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE FROM RENTAL
OPERATIONS:
Base rents $221,313 107.3% $75,052 36.4% $1,834 0.9% $5,539 2.7% $138,888 67.3%
Escalations and
recoveries
from tenants 20,851 67.0 9,070 29.1 403 1.3 222 0.7 11,156 35.9
Parking and other 3,802 55.0 0 0.0 3,341 48.3 461 6.7 0 0.0
- -------------------------------------------------------------------------------------------------------------------
Total $245,966 100.7% $84,122 34.5% $5,578 2.3% $6,222 2.5% $150,044 61.4%
===================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $22,305 85.8% $8,796 33.8% $835 3.2% $1,013 3.9% $11,661 44.9%
Utilities 20,194 110.7 6,184 33.9 355 1.9 (212) (1.2) 13,867 76.1
Operating services 32,596 104.8 12,241 39.3 (1,327) (4.3) 1,080 3.5 20,602 66.3
- -------------------------------------------------------------------------------------------------------------------
Total $75,095 99.7% $27,221 36.2% $(137) (0.2)% $1,881 2.5% $46,130 61.2%
===================================================================================================================
OTHER DATA:
Number of Consolidated
Properties 244 68 57 65 54
Square feet
(in thousands) 26,834,983 6,365,474 7,134,551 4,102,220 9,232,738
</TABLE>
Base rents for the Same-Store Properties increased $1.8 million, or 0.9 percent,
for 1998 as compared to 1997, due primarily to rental rate increases in 1998.
Escalations and recoveries from tenants for the Same-Store Properties increased
$0.4 million, or 1.3 percent, for 1998 over 1997, due to the recovery of an
increased amount of total property expenses, as well as additional settle-up
billings in 1998. Parking and other income for the Same-Store Properties
increased $3.3 million, or 48.3 percent, which is primarily attributable to
lease termination fees received in 1998.
Real estate taxes on the Same-Store Properties increased $0.8 million, or 3.2
percent, for 1998 as compared to 1997, due primarily to property tax rate
increases in certain municipalities in 1998. Utilities for the Same-Store
Properties increased $0.4 million, or 1.9 percent, for 1998 as compared to 1997,
due primarily to increased electric rates and usage in early 1998. Operating
services for the Same-Store Properties decreased $1.3 million, or 4.3 percent,
due primarily to decreased snow removal costs incurred at the Same-Store
Properties in 1998.
The Company recognized $1.1 million from equity in earnings of unconsolidated
joint ventures in 1998 (see Note 4 to the Financial Statements).
Interest income decreased by $3.1 million, or 56.3 percent, due primarily to
investment of the funds held from the Company's October 1997 common stock
offering in 1997.
General and administrative expense increased $9.2 million or 58.6 percent , of
which $6.6 million, or 42.2 percent, was due primarily to an increase in payroll
and related costs as a result of the Company's expansion in late 1997 and 1998
and $2.6 million, or 16.4 percent, is attributable to additional costs related
to the Mack Properties.
Depreciation and amortization increased by $42.1 million, or 114.3 percent, for
1998 over 1997, of which $22.6 million, or 61.1 percent, was due to Mack
Properties; an increase of $16.2 million, or 44.0 percent, relates to
depreciation on the Acquired Properties; an increase of $1.8 million, or 5.0
percent, due to the RM Properties; and an increase of $1.5 million or 4.2
percent, due to the Same-Store Properties.
54
<PAGE>
Interest expense increased by $48.9 million, or 125.3 percent, for 1998 over
1997, of which $23.4 million, or 60.0 percent, was due to assumed mortgages from
the Mack Properties, an increase of $23.2 million, or 59.5 percent, due to net
additional drawings from the Company's credit facilities as a result of Company
acquisitions and the $200 million term loan with Prudential Securities Corp.
obtained in December 1997, as well as changes in LIBOR, $1.2 million, or 3.0
percent, was attributable to assumed mortgages on Acquired Properties, and an
increase of $1.1 million, or 2.8 percent, due to the TIAA Mortgage.
Non-recurring charges of $46.5 million were incurred in 1997, as a result of the
Mack Transaction.
Income before minority interest and extraordinary item increased to $151.5
million in 1998 from $36.4 million in 1997. The increase of $115.1 million was
due to the factors discussed above.
Net income increased by $115.2 million for 1998, from $1.4 million in 1997 to
$116.6 million in 1998. This increase was a result of an increase in income
before minority interest and extraordinary item of $115.1 million, and an
extraordinary item of $3.6 million (net of minority interest), related to early
retirement of debt in 1997, offset by an extraordinary item of $2.4 million (net
of minority interest), related to early retirement of debt in 1998, and an
increase of $1.1 million in minority interest.
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the year ended December 31, 1999, the Company generated $243.6 million
in cash flows from operating activities, and together with $1.2 billion in
borrowings from the Company's revolving credit facilities, the issuance of
unsecured notes and funds from additional mortgage debt, $83.6 million in
proceeds from minority interest of consolidated partially-owned properties,
$20.6 million in distributions received from unconsolidated joint ventures,
$17.4 million in proceeds from sales of rental property and $1.0 million in
proceeds from stock options exercised, used an aggregate of approximately
$1.6 billion to acquire properties and land parcels and pay for other tenant
and building improvements totaling $191.5 million, repay outstanding
borrowings on its revolving credit facilities and other mortgage debt of $1.1
billion, pay quarterly dividends and distributions of $164.7 million, invest
$40.6 million in unconsolidated joint ventures, repurchase 1,014,500 shares
of its common stock for $27.5 million, pay deferred financing costs of $7.0
million, add $1.1 million to restricted cash and increase the Company's cash
and cash equivalents by $2.9 million.
CAPITALIZATION
During the year ended December 31, 1999, in conjunction with the redemption of
certain of the contingent units issued in the Mack Transaction, the Company
issued a total of 275,046 common units with a total value of approximately $8.1
million at time of issuance.
In August 1998, the Board of Directors of the 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 December 31,
1999, the Company purchased for constructive retirement, 1,869,200 shares of its
outstanding common stock for an aggregate cost of approximately $52.6 million.
Concurrent with these purchases, the Company sold to the Operating Partnership
1,869,200 common units for approximately $52.6 million.
On June 10, 1999, the Board of Directors of the Company authorized a dividend
distribution of one preferred share purchase right for each outstanding share
of common stock which were distributed to all holders of record of the common
stock on July 6, 1999. Each Right entitles the registered holder to purchase
from the 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 are attached to each share of common stock. The Rights are
generally exercisable only if a person or group becomes the beneficial owner
of 15 percent or more of the outstanding common stock or announces a tender
offer for 15 percent or more of the outstanding common stock. In the event
that a person or group becomes an Acquiring Person, each holder of a Right
will have the right to receive, upon exercise, common stock having a market
value equal
55
<PAGE>
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 December 31, 1999, the Company's total indebtedness of $1.5 billion
(weighted average interest rate of 7.27 percent) was comprised of $249.2 million
of revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 7.42 percent) and fixed rate debt of $1.2 billion
(weighted average rate of 7.24 percent).
As of December 31, 1999, the Company had outstanding borrowings of $177.0
million under its revolving credit facilities (with aggregate borrowing capacity
of $1.1 billion). The total outstanding borrowings were from the 1998 Unsecured
Facility, with no outstanding borrowings on its Prudential Facility. The 1998
Unsecured Facility, with 28 lender banks, carries an interest rate, at the
Company's election, of either 90 basis points over LIBOR or the higher of the
lender's prime rate or the Federal Funds rate plus 50 basis points and matures
in April 2001. The interest rate is currently LIBOR plus 90 basis points. The
Prudential Facility carries an interest rate of 110 basis points over LIBOR and
matures in December 2000.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the 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. Standard & Poor's Rating
Services ("S&P") and Duff & Phelps Credit Rating Co. ("DCR") have each assigned
their BBB rating to existing and prospective senior unsecured debt of the
Operating Partnership. S&P and DCR have also assigned their BBB- rating to
prospective preferred stock offerings of the Company. Moody's Investors Service
has assigned its Baa3 rating to the existing and prospective senior unsecured
debt of the Operating Partnership and its Ba1 rating to prospective preferred
stock offerings of the 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.
As of December 31, 1999, the Company had 223 unencumbered properties, totaling
20.5 million square feet, representing 74.7 percent of the Company's total
portfolio on a square footage basis.
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.
56
<PAGE>
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
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, proceeds from property sales,
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 December 31, 1999, the Company's total debt had a weighted average term to
maturity of 5.4 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 2000. 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 $135.6 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.
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.
57
<PAGE>
Funds from operations for the years ended December 31, 1999, 1998 and 1997, as
calculated in accordance with NAREIT's definition as published in March 1995,
after adjustment for straight-lining of rents, are summarized in the following
table (IN THOUSANDS):
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before non-recurring charges,
gain on sale of rental property,
distributions to preferred unitholders,
minority interests and extraordinary item $ 167,184 $ 151,464 $ 82,886
Add: Real estate-related depreciation and
amortization (1) 89,731 79,169 36,599
Deduct: Rental income adjustment for
straight-lining of rents (1) (12,596) (13,684) (7,733)
Minority interests: partially-owned properties (79) -- --
- -------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment
for straight-lining of rents, before
distributions to preferred unitholders $ 244,240 $ 216,949 $ 111,752
Deduct: Distributions to preferred unitholders (15,476) (16,313) (888)
- -------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for
straight-lining of rents, after distributions
to preferred unitholders $ 228,764 $ 200,636 $ 110,864
===================================================================================================================
Cash flows provided by operating activities $ 243,638 $ 208,761 $ 98,142
Cash flows used in investing activities $ (195,178) $ (749,067) $ (939,501)
Cash flows (used in) provided by financing activities $ (45,598) $ 543,411 $ 639,256
- -------------------------------------------------------------------------------------------------------------------
Basic weighted average shares/units
outstanding (2) 66,885 63,438 43,356
- -------------------------------------------------------------------------------------------------------------------
Diluted weighted average shares/units
outstanding (2) 73,769 70,867 44,351
- -------------------------------------------------------------------------------------------------------------------
</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.
The following schedule reconciles the Company's basic weighted average shares to
the basic and diluted weighted average shares/units presented above:
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic weighted average shares: 58,385 55,840 39,266
Add: Weighted average common units 8,500 7,598 4,090
- ------------------------------------------------------------------------------------------------------------------
Basic weighted average shares/units: 66,885 63,438 43,356
Add: Weighted average preferred units 6,636 6,974 383
(after conversion to common units)
Stock options 241 411 579
Restricted Stock Awards 7 -- --
Stock Warrants -- 44 33
- ------------------------------------------------------------------------------------------------------------------
Diluted weighted average shares/units: 73,769 70,867 44,351
==================================================================================================================
</TABLE>
58
<PAGE>
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
The Year 2000 issue was the result of computer programs and embedded chips
using a two-digit format, as opposed to four digits, to indicate the year.
Such computer systems may have been unable to interpret dates beyond the year
1999, which could have caused a system failure or other computer errors,
leading to disruptions in operations.
We developed a three-phase Year 2000 project (the "Project") to identify, remedy
and test our Year 2000 systems compliance, including, but not limited to,
central accounting and operating systems, tenant compliance and property
compliance. In addition, we prepared contingency plans in the event of Year 2000
failures associated with critical building support systems and our accounting
system.
Our Project was completed on schedule during the fourth quarter of 1999.
Approximately $1.0 million was incurred to modify, upgrade and/or replace
non-compliant systems.
We experienced no system failures or computer errors associated with Year 2000
compliance. We have concluded the Project and anticipate no further Year 2000
compliance issues or expenditures.
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.
59
<PAGE>
ITEM 7A. 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 December 31,
1999 ranged from LIBOR plus 65 basis points to LIBOR plus 90 basis points.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
LONG-TERM
DEBT, INCLUDING FAIR
CURRENT PORTION 2000 2001 2002 2003 2004 THEREAFTER TOTAL VALUE
- --------------- ------- ------- ------- -------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate ..... $8,727 $7,468 $3,458 $195,611 $312,195 $713,512 $1,240,971 $1,180,901
Average Interest
Rate ....... 6.93% 7.44% 8.20% 7.30% 7.34% 7.17% 7.24%
Variable Rate .. $ 177,000 $ 72,204 $ 249,204 $ 249,204
</TABLE>
60
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this Form 10-K.
See Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference from the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on May 16, 2000.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on May 16, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on May 16, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on May 16, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a)1. Financial Statements and Report of PricewaterhouseCoopers LLP,
Independent Accountants
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Operations for the Years Ended December 31,
1999, 1998 and 1997
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements
61
<PAGE>
(a)2. FINANCIAL STATEMENT SCHEDULES
Schedule III - Real Estate Investments and Accumulated Depreciation as of
December 31, 1999
All other schedules are omitted because they are not required or the
required information is shown in the financial statements or notes
thereto.
(a)3. EXHIBITS
The following exhibits are filed herewith or are incorporated by
reference to exhibits previously filed:
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
3.1 Restated Charter of Mack-Cali Realty Corporation dated June 2, 1999,
together with Articles Supplementary thereto (filed as Exhibit 3.1 to
the 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).
62
<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).
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).
63
<PAGE>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
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).
10.18 Agreement of Sale and Purchase, dated December 28, 1999, by and
between Mack-Cali Realty, L.P. and Parsippany Office Associates L.L.C.
10.19 Operating Agreement of Parsippany Office Associates L.L.C.
21 Subsidiaries of the Company
23 Consent of PricewaterhouseCoopers LLP, independent accountants
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
The Company did not file any current reports on Form 8-K during the quarter
ended December 31, 1999.
64
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 61 present fairly, in all material
respects, the financial position of Mack-Cali Realty Corporation and its
subsidiaries at December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States. In addition, in our opinion, the financial
statement schedule listed in the index appearing under Item 14(a)(2) on
page 62 presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements and financial statement schedule are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
New York, New York
February 22, 2000
65
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
==================================================================================================================
December 31,
ASSETS 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rental property
Land and leasehold interests $ 549,096 $ 510,534
Buildings and improvements 3,014,532 2,887,115
Tenant improvements 85,057 64,464
Furniture, fixtures and equipment 6,160 5,686
- ------------------------------------------------------------------------------------------------------------------
3,654,845 3,467,799
Less - accumulated depreciation and amortization (256,629) (177,934)
- ------------------------------------------------------------------------------------------------------------------
Total rental property 3,398,216 3,289,865
Cash and cash equivalents 8,671 5,809
Investments in unconsolidated joint ventures 89,134 66,508
Unbilled rents receivable 53,253 41,038
Deferred charges and other assets, net 66,436 39,020
Restricted cash 7,081 6,026
Accounts receivable, net of allowance for doubtful accounts
of $672 and $670 6,810 3,928
- ------------------------------------------------------------------------------------------------------------------
Total assets $ 3,629,601 $ 3,452,194
==================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------
Senior unsecured notes $ 782,785 $ --
Revolving credit facilities 177,000 671,600
Mortgages and loans payable 530,390 749,331
Dividends and distributions payable 42,499 40,564
Accounts payable and accrued expenses 63,394 33,253
Rents received in advance and security deposits 36,150 29,980
Accrued interest payable 16,626 2,246
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 1,648,844 1,526,974
- ------------------------------------------------------------------------------------------------------------------
MINORITY INTERESTS:
Operating Partnership 455,275 501,313
Partially-owned properties 83,600 --
- ------------------------------------------------------------------------------------------------------------------
Total minority interests 538,875 501,313
- ------------------------------------------------------------------------------------------------------------------
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,
58,446,552 and 57,266,137 shares outstanding 584 573
Additional paid-in capital 1,549,888 1,514,648
Dividends in excess of net earnings (103,902) (91,314)
Unamortized stock compensation (4,688) --
- ------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,441,882 1,423,907
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 3,629,601 $ 3,452,194
==================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
66
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
===============================================================================================================================
Years Ended December 31,
REVENUES 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Base rents $ 469,853 $ 427,528 $ 206,215
Escalations and recoveries from tenants 62,182 51,981 31,130
Parking and other 15,915 10,712 6,910
Equity in earnings of unconsolidated joint ventures 2,593 1,055 --
Interest income 941 2,423 5,546
- -------------------------------------------------------------------------------------------------------------------------------
Total revenues 551,484 493,699 249,801
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
Real estate taxes 57,382 48,297 25,992
Utilities 41,580 38,440 18,246
Operating services 69,689 63,711 31,115
General and administrative 25,480 24,828 15,659
Depreciation and amortization 87,209 78,916 36,825
Interest expense 102,960 88,043 39,078
Non-recurring charges 16,458 -- 46,519
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses 400,758 342,235 213,434
- -------------------------------------------------------------------------------------------------------------------------------
Income before gain on sale of rental property,
minority interests and extraordinary item 150,726 151,464 36,367
Gain on sale of rental property 1,957 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Income before minority interests and extraordinary item 152,683 151,464 36,367
Minority interests:
Operating partnership 32,865 32,513 31,379
Partially-owned properties 79 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 119,739 118,951 4,988
Extraordinary item - loss on early retirement of debt
(net of minority interest's share of $0, $297 and $402) -- (2,373) (3,583)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 119,739 $ 116,578 $ 1,405
===============================================================================================================================
BASIC EARNINGS PER SHARE:
Income before extraordinary item $ 2.05 $ 2.13 $ 0.13
Extraordinary item - loss on early retirement of debt -- (0.04) (0.09)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.05 $ 2.09 $ 0.04
===============================================================================================================================
DILUTED EARNINGS PER SHARE:
Income before extraordinary item $ 2.04 $ 2.11 $ 0.12
Extraordinary item - loss on early retirement of debt -- (0.04) (0.08)
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.04 $ 2.07 $ 0.04
===============================================================================================================================
Dividends declared per common share $ 2.26 $ 2.10 $ 1.90
- -------------------------------------------------------------------------------------------------------------------------------
Basic weighted average shares outstanding 58,385 55,840 39,266
- -------------------------------------------------------------------------------------------------------------------------------
Diluted weighted average shares outstanding 67,133 63,893 44,156
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
67
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS)
<TABLE>
<CAPTION>
===================================================================================================================================
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, 1997 36,319 $ 363 $ 714,052 $ (13,036) $ -- $ 701,379
Net income -- -- -- 1,405 -- 1,405
Dividends -- -- -- (76,311) -- (76,311)
Net proceeds from common
stock offerings 13,000 130 488,986 -- -- 489,116
Beneficial conversion feature -- -- 26,801 -- -- 26,801
Redemption of common units for
shares of common stock 1 -- 17 -- -- 17
Proceeds from stock options exercised 337 4 7,183 -- -- 7,187
Issuance of Restricted Stock Awards
and Stock Purchase Rights 351 4 12,522 -- (12,526) --
Amortization of stock compensation -- -- -- -- 12,526 12,526
Repurchase of common stock (152) (2) (4,678) -- -- (4,680)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 49,856 499 1,244,883 (87,942) -- 1,157,440
Net income -- -- -- 116,578 -- 116,578
Dividends -- -- -- (119,950) -- (119,950)
Net proceeds from common
stock offerings 7,968 80 288,313 -- -- 288,393
Redemption of common units for
shares of common stock 29 -- 1,029 -- -- 1,029
Proceeds from stock options exercised 268 3 5,472 -- -- 5,475
Repurchase of common stock (855) (9) (25,049) -- -- (25,058)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 57,266 573 1,514,648 (91,314) -- 1,423,907
Net income -- -- -- 119,739 -- 119,739
Dividends -- -- -- (132,327) -- (132,327)
Redemption of common units for
shares of common stock 1,935 19 56,046 -- -- 56,065
Proceeds from stock options exercised 48 -- 1,049 -- -- 1,049
Proceeds from dividend reinvestment
and stock purchase plan 1 -- 32 -- -- 32
Deferred compensation plan for directors -- -- 90 -- -- 90
Issuance of Restricted Stock Awards 212 2 5,513 -- (5,515) --
Amortization of stock compensation -- -- -- -- 827 827
Repurchase of common stock (1,015) (10) (27,490) -- -- (27,500)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 58,447 $584 $ 1,549,888 $ (103,902) $ (4,688) $ 1,441,882
===================================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
68
<PAGE>
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
<TABLE>
<CAPTION>
================================================================================================================
Years Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 119,739 $ 116,578 $ 1,405
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 87,209 78,916 36,825
Amortization of stock compensation 827 -- 12,526
Amortization of deferred financing costs and debt discount 3,570 1,580 983
Equity in earnings of unconsolidated joint ventures (2,593) (1,055) --
Gain on sales of rental property (1,957) -- --
Minority interests 32,944 32,513 31,379
Extraordinary item - loss on early retirement of debt -- 2,373 3,583
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (12,412) (13,600) (7,733)
Increase in deferred charges and other assets, net (28,893) (17,811) (9,507)
Increase in accounts receivable, net (2,882) (192) (1,663)
Increase in accounts payable and accrued expenses 27,536 2,117 17,569
Increase in rents received in advance and security deposits 6,170 8,585 10,614
Increase (decrease) in accrued interest payable 14,380 (1,243) 2,161
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 243,638 $ 208,761 $ 98,142
================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
- ----------------------------------------------------------------------------------------------------------------
Additions to rental property $ (191,507) $ (692,766) $ (928,974)
Issuance of mortgage note receivable -- (20,000) (11,600)
Repayment of mortgage note receivable -- 20,000 --
Investments in unconsolidated joint ventures (40,567) (58,844) --
Distributions from unconsolidated joint ventures 20,551 1,725 --
Proceeds from sales of rental property 17,400 -- --
(Increase) decrease in restricted cash (1,055) 818 1,073
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (195,178) $ (749,067) $ (939,501)
================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
- ----------------------------------------------------------------------------------------------------------------
Proceeds from senior unsecured notes $ 782,535 $ -- $ --
Proceeds from revolving credit facilities 372,248 1,375,758 669,180
Proceeds from mortgages and loans payable 45,500 150,000 --
Repayments of revolving credit facilities (866,848) (826,258) (376,885)
Repayments of mortgages and loans payable (264,431) (271,807) (65,300)
Debt prepayment premiums and other costs -- -- (1,812)
Proceeds from minority interest of consolidated
partially-owned properties 83,600 -- --
Repurchase of common stock (27,500) (25,058) (4,680)
Redemption of common units -- (3,163) --
Payment of financing costs (7,048) (10,110) (3,095)
Net proceeds from common stock offerings -- 288,393 489,116
Proceeds from stock options exercised 1,049 5,475 7,187
Proceeds from dividend reinvestment and stock purchase plan 32 -- --
Payment of dividends and distributions (164,735) (139,819) (74,455)
- ----------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities $ (45,598) $ 543,411 $ 639,256
================================================================================================================
Net increase (decrease) in cash and cash equivalents $ 2,862 $ 3,105 $ (202,103)
Cash and cash equivalents, beginning of period 5,809 2,704 204,807
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 8,671 $ 5,809 $ 2,704
================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<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
December 31, 1999, the Company owned or had interests in 259 properties plus
developable land (collectively, the "Properties"). The Properties aggregate
approximately 28.6 million square feet, and are comprised of 160 office
buildings and 86 office/flex buildings totaling approximately 28.2 million
square feet (which includes five office buildings and one office/flex building,
aggregating 1.2 million square feet, owned by unconsolidated joint ventures in
which the Company has investment interests), six industrial/warehouse buildings
totaling approximately 387,400 square feet, two multi-family residential
complexes consisting of 451 units, two stand-alone retail properties and three
land leases. The Properties are located in 12 states, primarily in the
Northeast, plus the District of Columbia.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include all accounts of the
Company, its majority-owned and/or controlled 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
development. Included in total rental property is
construction-in-progress of $103,977 and $57,052 as of
December 31, 1999 and 1998, respectively. Ordinary repairs and
maintenance are expensed as incurred; major replacements and
betterments, which improve or extend the life of the asset, are
capitalized and depreciated over their estimated useful lives.
Fully-depreciated assets are removed from the accounts.
Properties are depreciated using the straight-line method over
the estimated useful lives of the assets. The estimated useful
lives are as follows:
<TABLE>
<CAPTION>
<S> <C>
Leasehold interests Remaining lease term
------------------------------------------------------------------------
Buildings and improvements 5 to 40 years
------------------------------------------------------------------------
Tenant improvements The shorter of the term of the
related lease or useful life
------------------------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
------------------------------------------------------------------------
</TABLE>
On a periodic basis, management assesses whether there are any
indicators that the value of the real estate properties may be
impaired. A property's value is impaired only if management's
estimate of the aggregate future cash flows (undiscounted and
without interest charges) to be
70
<PAGE>
generated by the property are less than the carrying value of the
property. To the extent impairment has occurred, the loss shall
be measured as the excess of the carrying amount of the property
over the fair value of the property. Management does not believe
that the value of any of its rental properties is impaired.
When assets are identified by management as held for the sale,
the Company discontinues depreciating the assets and estimates
the sales price, net of selling costs, of such assets. If, in
management's opinion, the net sales price of the assets which
have been identified for sale is less than the net book value of
the assets, a valuation allowance is established.
INVESTMENTS IN
UNCONSOLIDATED
JOINT VENTURES The 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 $3,320, $1,580 and $983 for the years ended
December 31, 1999, 1998 and 1997, 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
Company provide leasing services to the Properties and receive
compensation based on space leased. The portion of
such compensation which is capitalized and amortized,
approximated $3,704, $3,509 and $1,859 for the years ended
December 31, 1999, 1998 and 1997, 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 15.
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<PAGE>
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.
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 December 31, 1999
represents dividends payable to shareholders of record as of
January 4, 2000 (58,450,552 shares), distributions payable to
minority interest common unitholders (8,153,710 common units) on
that same date and preferred distributions to preferred
unitholders (229,304 preferred units) for the fourth quarter
1999. The fourth 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 fourth
quarter preferred unit distribution of $16.875 per preferred
unit, were approved by the Board of Directors on December 17,
1999 and paid on January 21, 2000.
The dividends and distributions payable at December 31, 1998
represents dividends payable to shareholders of record as of
January 6, 1999 (57,266,737 shares), distributions payable to
minority interest common unitholders (9,086,585 common units) on
that same date and preferred distributions to preferred
unitholders (250,256 preferred units) for the fourth quarter
1998. The fourth quarter 1998 dividends and common unit
distributions of $0.55 per share and per common unit (pro-rated
for units issued during the quarter), as well as the fourth
quarter preferred unit distribution of $16.875 per preferred
unit, were approved by the Board of Directors on December 15,
1998 and paid on January 26, 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.
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<PAGE>
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. The Company provides additional pro forma
disclosures as required under Statement of Financial Accounting
Standards No. 123, "Accounting for Stock Based Compensation"
("FASB No. 123") . See Note 16.
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.
RECLASSIFICATIONS Certain reclassifications have been made to prior period
amounts in order to conform with current period presentation.
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<PAGE>
3. ACQUISITIONS/TRANSACTIONS
1999 TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
The Company acquired the following operating properties during the year ended
December 31, 1999:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Acquisition # of Rentable Investment by
Date Property/Portfolio Name Location Bldgs. Square Feet Company (a)
- -----------------------------------------------------------------------------------------------------------------------------------
OFFICE
- ------
<S> <C> <C> <C> <C> <C>
3/05/99 Pacifica Portfolio - Phase III (b) Colorado Springs, El Paso County, CO 2 94,737 $ 5,709
7/21/99 1201 Connecticut Avenue, NW Washington, D.C. 1 169,549 32,799
- -----------------------------------------------------------------------------------------------------------------------------------
Total Office Property Acquisitions: 3 264,286 $ 38,508
- -----------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
- -----------
12/21/99 McGarvey Portfolio - Phase III (c) Moorestown, Burlington County, NJ 3 138,600 $ 8,012
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTY ACQUISITION: 3 138,600 $ 8,012
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING PROPERTY ACQUISITIONS: 6 402,886 $ 46,520
===================================================================================================================================
</TABLE>
PROPERTIES PLACED IN SERVICE
The Company placed in service the following properties through the completion of
development or redevelopment during the year ended December 31, 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>
8/09/99 2115 Linwood Avenue Fort Lee, Bergen County, NJ 1 68,000 $ 8,147
11/01/99 795 Folsom Street (d) San Francisco, San Francisco County, CA 1 183,445 37,337
- -----------------------------------------------------------------------------------------------------------------------------------
Total Office Properties Placed in Service: 2 251,445 $ 45,484
- -----------------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
- -----------
3/01/99 One Center Court Totowa, Passaic County, NJ 1 38,961 $ 2,140
9/17/99 12 Skyline Drive Hawthorne, Westchester County, NY 1 46,850 5,023
12/10/99 600 West Avenue (e) Stamford, Fairfield County, CT 1 66,000 5,429
- -----------------------------------------------------------------------------------------------------------------------------------
Total Office/Flex Properties Placed in Service: 3 151,811 $ 12,592
- -----------------------------------------------------------------------------------------------------------------------------------
LAND LEASE
- ----------
2/01/99 Horizon Center Business Park (f) Hamilton Township, Mercer County, NJ N/A 27.7 acres $ 1,007
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LAND LEASE TRANSACTIONS: 27.7 acres $ 1,007
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 5 403,256 $ 59,083
===================================================================================================================================
</TABLE>
(a) Unless otherwise noted, transactions were funded by the Company with funds
primarily made available through draws on the Company's credit facilities.
(b) 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 properties were acquired through the exercise of a purchase option
obtained in the initial acquisition of the McGarvey portfolio in January
1998.
(d) On June 1, 1999, the building was acquired for redevelopment for
approximately $34,282.
(e) On May 4, 1999, the 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, respectively, 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.
(f) 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 constructed a 134,000 square-foot retail store.
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<PAGE>
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 2, 1999, the Company entered into a joint venture agreement with SJP
Vaughn Drive, L.L.C. Under the agreement, the Company has agreed to
contribute its vacant land at Three Vaughn Drive, Princeton, Mercer County,
New Jersey, subject to satisfaction of certain conditions, for an equity
interest in the venture.
On March 15, 1999, the 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 130,000 square-foot office building on this site.
The Company accounts for the joint venture on a consolidated basis.
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 members 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 121,624 common units to the seller (see Note
11). The Company has commenced construction of a 220,000 square-foot office
building on the acquired land.
In August 1999, the Company entered into an agreement with SJP Properties
Company ("SJP Properties") which provides a cooperative effort in seeking
approvals to develop up to approximately 1.8 million square feet of office
development on certain vacant land owned or controlled, respectively, by the
Company and SJP Properties, in Hanover and Parsippany, Morris County, New
Jersey. The agreement provides that the parties shall jointly share equally in
the costs associated with seeking such requisite approvals. Subsequent to
obtaining the requisite approvals, upon mutual consent, the Company and SJP
Properties may enter into one or more joint ventures to construct on the vacant
land, or seek to dispose of their respective vacant land subject to this
agreement.
DISPOSITIONS
On November 15, 1999, the Company sold its 70,550 square-foot office building
located at 400 Alexander Road in Princeton, Mercer County, New Jersey for net
proceeds, after selling costs, of approximately $8,628.
On December 15, 1999, the Company sold its 119,301 square-foot office building
located at 20002 North 19th Avenue in Phoenix, Maricopa County, Arizona for
net proceeds, after selling costs, of approximately $8,772.
1998 TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
During 1998, the Company acquired 52 office and office/flex operating
properties, aggregating 4.7 million square feet in 16 separate transactions, for
an aggregate cost of approximately $663,641. Such acquisitions were funded
primarily from drawings on the Company's credit facilities, the issuance of
common units (see Note 11) and proceeds from the issuance of common stock (see
Note 16). In conjunction with the Company's acquisition during 1998 of office
properties and vacant land in Denver and Colorado Springs, Colorado, from the
Pacifica Holding Company, the Company was subsequently required to pay
additional consideration due to earn-out provisions in the purchase 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.
PROPERTIES PLACED IN SERVICE
In 1998, the Company placed in service four office and office/flex properties,
aggregating 218,600 square feet, for an aggregate cost of approximately $22,965.
75
<PAGE>
LAND AND REDEVELOPMENT TRANSACTIONS
In 1998, the Company acquired six developable land parcels for an aggregate
cost of approximately $36,231. Also, in 1998, the Company acquired a 68,000
square-foot office building for redevelopment for approximately $5,164. Such
acquisitions were funded primarily from drawings on the Company's credit
facilities, the Company's cash reserves, the issuance of common units (see
Note 11) and proceeds from the issuance of common stock (see Note 16).
Certain of the acquired land parcels were acquired from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the 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, respectively. The Company subsequently completed
construction and placed in service two office/flex buildings aggregating
87,000 square feet, as well as signed a ground lease to Home Depot for the
construction of a retail facility, on the acquired land parcels. During the
year, the Company completed redevelopment and placed the 68,000 square-foot
office building in service. In addition, in 1999, the Company commenced
construction of a 183,000 square-foot office property on one of the acquired
land parcels.
1997 TRANSACTIONS
On January 31, 1997, the Company acquired 65 properties, aggregating
approximately 4.1 million square feet, ("RM Properties") from Robert Martin
Company, LLC and affiliates ("RM") for a total cost of approximately $450,000.
The cost of the transaction ("RM Transaction") was financed through the
assumption of $185,283 of mortgage indebtedness, the payment of approximately
$220,000 in cash, substantially all of which was obtained from the Company's
cash reserves, and the issuance of 1,401,225 common units, valued at $43,788.
Additionally, the Company provided a $11,600 mortgage loan to RM principals in
connection with the RM transaction, secured by two properties under purchase
options. In conjunction with the Company's acquisition of the option properties
in 1997 and 1998, the sellers of the properties, the RM principals, prepaid in
full the mortgage note receivable.
On December 11, 1997, the Company acquired 54 office properties, aggregating
approximately 9.2 million square feet, ("Mack Properties") from the Mack Company
and Patriot American Office Group, pursuant to a Contribution and Exchange
Agreement ("Mack Agreement"), for a total cost of approximately $1,102,024
("Mack Transaction"). With the completion of the Mack Transaction, the Cali
Realty Corporation name was changed to Mack-Cali Realty Corporation, and the
name of the Operating Partnership was changed from Cali Realty, L.P. to
Mack-Cali Realty, L.P.
The total cost of the Mack Transaction was financed as follows: (i) $498,757 in
cash made available from the Company's cash reserves and from the $200,000 term
loan with Prudential Securities Corp., (ii) $291,879 in debt assumed by the
Company ("Mack Mortgages"), (iii) the issuance of 1,965,886 common units, valued
at approximately $66,373, (iv) the issuance of 15,237 Series A preferred units
and 215,325 Series B preferred units, valued at approximately $236,491
(collectively, the "Preferred Units"), (v) warrants to purchase 2,000,000 common
units ("Unit Warrants"), valued at approximately $8,524, and (vi) the issuance
of Contingent Units (see Note 11).
In accordance with the Mack Agreement, Thomas A. Rizk remained Chief Executive
Officer and resigned as President of the Company, and Mitchell E. Hersh was
appointed as President and Chief Operating Officer. The Company's other officers
retained their existing positions and responsibilities, except that Brant Cali
resigned as Chief Operating Officer and John R. Cali resigned as Chief
Administrative Officer. Brant Cali and John R. Cali remained as officers of the
Company as Executive Vice Presidents.
Entering into new employment agreements with the Company after the Mack
Transaction were Thomas A. Rizk, Mitchell E. Hersh, Brant Cali and John R. Cali.
Entering into amended and restated employment agreements were Roger W. Thomas,
as Executive Vice President, General Counsel and Secretary, Barry Lefkowitz, as
Executive Vice President and Chief Financial Officer and Timothy M. Jones, as
Executive Vice President.
In connection with the Mack Transaction, under each of the Company's executive
officer's then existing employment agreements, due to a change of control of the
Company (as defined in each employment agreement), each of the aforementioned
officers received the benefit of the acceleration of (i) the immediate vesting
and issuance of his restricted stock, including tax gross-up payments associated
therewith, (ii) the forgiveness of his Stock Purchase Rights loan, including tax
gross-up payments associated therewith, and (iii) the vesting of his unvested
employee stock options and warrants. Additionally, under each of Thomas Rizk's,
Brant Cali's and John R. Cali's employment agreements with the Company, each of
these officers became entitled to receive certain severance-type payments, as a
result of certain
76
<PAGE>
provisions in each of their agreements, triggered as result of the Mack
Transaction. Finally, certain officers and employees of the Company were given
transaction-based payments as a reward for their efforts and performance in
connection with the Mack Transaction. The total expense associated with the
acceleration of vesting of restricted stock, the forgiveness of Stock Purchase
Rights loans, and the payment of certain severance-type payments, as well as
performance payments and related tax-obligation payments, which were approved by
the Company's Board of Directors and which took place simultaneous with
completion of the Mack Transaction, totaled $45,769. Such expenses are included
in non-recurring charges for the year ended December 31, 1997, (see Note 16).
In 1997, the Company also acquired 13 additional office and office/flex
properties, aggregating approximately 1.5 million square feet, in nine separate
transactions with separate sellers, for an aggregate cost of approximately
$204,446. Such acquisitions were funded primarily from drawings on the Company's
credit facilities.
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 Mack-Cali Business Campus (formerly
Prudential Business Campus) office complex in Parsippany, Morris County, New
Jersey. The Company performs management and leasing services for the property
owned by the joint venture and recognized $149 and $114 in fees for such
services in the years ended December 31, 1999 and 1998, respectively.
HPMC (CONTINENTAL GRAND II/SUMMIT RIDGE/LAVA RIDGE)
On April 23, 1998, the 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 constructed and placed in service a 237,360 square-foot office property.
Summit Ridge is a 7.3 acre site located in San Diego, San Diego County,
California, acquired by the venture upon which it has commenced construction of
three one-story buildings aggregating 133,750 square feet of office/flex space.
HPMC Development Partners II, L.P.'s efforts have focused on three development
projects, commonly referred to as Lava Ridge, Peninsula Gateway and Stadium
Gateway. Lava Ridge is a 12.1 acre site located in Roseville, Placer County,
California, acquired by the venture upon which it has commenced construction of
three two-story buildings aggregating 183,200 square feet of office space.
Peninsula Gateway is a parcel of land purchased from the City of Daly City,
California, for future development into office space, a hotel and other retail
establishments. Stadium Gateway is a 1.5 acre site located in Anaheim, Orange
County, California, to be acquired by the venture to develop a six-story office
building aggregating 261,554 square feet. Among other things, the partnership
agreements provide for a preferred return on the 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 11), 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 11). The Company performs management and leasing services for
the property owned by the joint venture and recognized $225 and $20 in fees for
such services in the years ended December 31, 1999 and 1998, respectively.
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<PAGE>
AMERICAN FINANCIAL EXCHANGE L.L.C.
On May 20, 1998, the 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, leasing and other services for the property owned by the
joint venture and recognized $628 and none in fees for such services in the
years ended December 31, 1999 and 1998, respectively.
ASHFORD LOOP ASSOCIATES L.P. (1001 SOUTH DAIRY ASHFORD/2100 WEST LOOP SOUTH)
On September 18, 1998, the 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 year ended
December 31, 1999, the venture paid $9,991 ($1,998 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 $117 and $30 in fees for such services in the
years ended December 31, 1999 and 1998, respectively.
ARCAP INVESTORS, L.L.C.
On March 18, 1999, the 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
December 31, 1999, the venture held approximately $298,642 face value of CMBS
bonds at an aggregate cost of $132,240.
NORTH PIER AT HARBORSIDE RESIDENTIAL DEVELOPMENT
On August 5, 1999, the Company entered into an agreement which, upon
satisfaction of certain conditions, provides for the contribution of its North
Pier at Harborside Financial Center, Jersey City, Hudson County, New Jersey to a
joint venture with Lincoln Property Company Southwest, Inc., in exchange for
cash and an equity interest in the venture. The venture intends to develop
residential housing on the property.
SOUTH PIER AT HARBORSIDE HOTEL DEVELOPMENT
On November 17, 1999, the Company entered into an agreement with Hyatt
Corporation to develop a 350-room hotel on the Company's South Pier at
Harborside Financial Center, Jersey City, Hudson County, New Jersey, subject to
the satisfaction of certain conditions.
78
<PAGE>
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 December 31, 1999
and 1998:
<TABLE>
<CAPTION>
December 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Rental property, net $21,817 $ 70,823 $ 13,672 $ 10,752 $ 19,549 $ 28,755 $ -- $ 165,368
Other assets 3,319 3,260 2,467 773 5,069 704 239,441 255,033
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $25,136 $ 74,083 $ 16,139 $ 11,525 $ 24,618 $ 29,459 $ 239,441 $ 420,401
===================================================================================================================================
LIABILITIES AND PARTNERS'/ MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $ 41,274 $ 43,081 $ -- $ 17,300 $ -- $ 108,407 $ 210,062
Other liabilities 186 4,769 1,383 2 1,263 815 36,109 44,527
Partners'/members' capital 24,950 28,040 (28,325) 11,523 6,055 28,644 94,925 165,812
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $25,136 $ 74,083 $ 16,139 $ 11,525 $ 24,618 $ 29,459 $ 239,441 $ 420,401
===================================================================================================================================
Company's net investment
in unconsolidated
joint ventures $17,072 $ 23,337 $ 8,352 $ 11,571 $ 2,697 $ 6,073 $ 20,032 $ 89,134
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<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>
79
<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 years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
Year Ended December 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 4,938 $ 271 $ 9,165 $ 917 $1,426 $ 4,097 $ 10,093 $ 30,907
Operating and other expenses (1,505) (111) (3,238) (231) (352) (2,327) (3,774) (11,538)
Depreciation and amortization (1,234) (114) (1,512) (95) (439) (550) -- (3,944)
Interest expense -- (105) (3,115) -- (45) -- (2,185) (5,450)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2,199 $ (59) $ 1,300 $ 591 $ 590 $ 1,220 $ 4,134 $ 9,975
===================================================================================================================================
Company's equity in earnings
(loss) of unconsolidated
joint ventures $ 827 -- $ (366) $ 541 $ 298 $ 233 $ 1,060 $ 2,593
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 3,544 -- $4,103 $ 490 -- $ 659 -- $ 8,796
Operating and other expenses (1,124) -- (1,704) (35) -- (286) -- (3,149)
Depreciation and amortization (1,000) -- (604) -- -- (76) -- (1,680)
Interest expense -- -- (2,097) -- -- -- -- (2,097)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1,420 -- $ (302) $ 455 -- $ 297 -- $ 1,870
===================================================================================================================================
Company's equity in earnings
(loss) of unconsolidated
joint ventures $ 723 -- $ (182) $ 455 -- $ 59 -- $ 1,055
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. DEFERRED CHARGES AND OTHER ASSETS
<TABLE>
<CAPTION>
December 31,
1999 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
Deferred leasing costs $61,623 $ 35,151
Deferred financing costs 17,143 9,962
- --------------------------------------------------------------------------------------
78,766 45,113
Accumulated amortization (20,197) (13,527)
- --------------------------------------------------------------------------------------
Deferred charges, net 58,569 31,586
Prepaid expenses and other assets 7,867 7,434
- --------------------------------------------------------------------------------------
Total deferred charges and other assets, net $66,436 $ 39,020
======================================================================================
</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:
80
<PAGE>
<TABLE>
<CAPTION>
December 31,
1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Security deposits $ 6,021 $ 5,696
Escrow and other reserve funds 1,060 330
- ---------------------------------------------------------------------------------------
Total restricted cash $ 7,081 $ 6,026
=======================================================================================
</TABLE>
7. RENTAL PROPERTY HELD FOR SALE
As of December 31, 1999, included in total rental property are three office
properties that the Company has identified as held for sale. The three office
properties have an aggregate carrying value of $77,783 and $78,989 as of
December 31, 1999 and 1998, respectively, and are located in Omaha, Douglas
County, Nebraska; Amarillo, Potter County, Texas; and Jersey City, Hudson
County, New Jersey. There were no properties held for sale at December 31, 1998.
The following is a summary of the condensed results of operations of the rental
properties held for sale at December 31, 1999 for the years ended December 31,
1999, 1998 and 1997. As some of the properties held for sale were acquired
during the periods presented, the amounts presented below may not be comparable
from period to period.
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues $24,412 $23,360 $19,463
Operating and other expenses (8,808) (8,466) (4,121)
Depreciation and amortization (2,915) (3,145) (2,890)
- --------------------------------------------------------------------------------------------------
Income before extraordinary item $12,689 $11,749 $12,452
==================================================================================================
</TABLE>
On February 15, 2000, the Company entered into a contract to sell 95
Christopher Columbus Drive, located in Jersey City, Hudson County, New
Jersey, for approximately $152,500, pending certain contingencies. Such
rental property was identified as held for sale at December 31, 1999.
There can be no assurance, if and when, any of these potential rental property
sales will occur.
8. SENIOR UNSECURED NOTES
On March 16, 1999, the Operating Partnership issued $600,000, face amount, of
senior unsecured notes with interest payable semi-annually in arrears. The total
proceeds from the issuance (net of selling commissions and discount) of
approximately $593,500 were used to pay down outstanding borrowings under the
1998 Unsecured Facility, as defined in Note 9, and to pay off certain mortgage
loans. The senior unsecured notes were issued at a discount of approximately
$2,748, which is being amortized over the terms of the respective tranches as an
adjustment to interest expense.
On August 2, 1999, the Operating Partnership issued an additional $185,283 of
senior unsecured notes with interest payable monthly. The Company used the
proceeds to retire the TIAA Mortgage, as defined in Note 10.
The Operating Partnership's total senior unsecured notes (collectively "Senior
Unsecured Notes") are redeemable at any time at the option of the Company,
subject to certain conditions including yield maintenance.
81
<PAGE>
A summary of the terms of the Senior Unsecured Notes outstanding as of
December 31, 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 299,665 7.27%
7.25% Senior Unsecured Notes, due March 15, 2009 297,837 7.49%
- ---------------------------------------------------------------------------------------------------
Total Senior Unsecured Notes $782,785 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.
The terms of the Senior Unsecured Notes include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.
9. REVOLVING CREDIT FACILITIES
ORIGINAL UNSECURED FACILITY
The Original Unsecured Facility ("Original Unsecured Facility") was repaid in
full and retired in connection with the 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 (5.82 percent at December 31, 1999)
plus 90 basis points. The 1998 Unsecured Facility matures in April 2001.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the 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
December 29, 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
82
<PAGE>
to maintain its status as a REIT under the Code); provided, however, that the
Operating Partnership may make distributions and pay dividends in excess of 100
percent of available funds from operations for the preceding fiscal quarter for
not more than three consecutive quarters. In addition to the foregoing, the
Prudential Facility limits the liens placed upon the subject property and
certain collateral, the use of proceeds from the Prudential Facility, and the
maintenance of ownership of the subject property and assets derived from said
ownership.
SUMMARY
As of December 31, 1999 and 1998, the Company had outstanding borrowings of
$177,000 and $671,600, respectively, under its revolving credit facilities (with
aggregate borrowing capacity of $1,100,000). The total outstanding borrowings
were from the 1998 Unsecured Facility, with no outstanding borrowings on its
Prudential Facility.
10. MORTGAGES AND LOANS PAYABLE
<TABLE>
<CAPTION>
December 31,
1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
Portfolio Mortgages $150,000 $335,283
Property Mortgages 380,390 414,048
- ------------------------------------------------------------------------------------
Total Mortgages and Loans Payable $530,390 $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 TIAA Mortgage was
prepayable in whole or in part subject to certain provisions, including yield
maintenance.
Using the proceeds from the issuance of $185,283 of senior unsecured notes on
August 2, 1999 (see Note 8), the 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 11 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.
83
<PAGE>
A summary of the Company's property mortgages as of December 31, 1999 and 1998
is as follows:
<TABLE>
<CAPTION>
PRINCIPAL BALANCE AT
--------------------
INTEREST DECEMBER 31, DATE OF
PROPERTY NAME LENDER RATE 1999 1998 MATURITY
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mack-Cali Centre VI CIGNA 7.600% $ -- $29,223 03/31/99
Mack-Cali Airport CIGNA 7.600% -- 6,849 03/31/99
Mack-Cali Murray Hill Horace Mann 7.850% -- 8,027 05/01/99
Mack-Cali Manhasset IDA Financing TENR -- 8,000 12/01/99
Harborside Financial Center (1) Contingent Obligation (1) 6.764% -- 6,150 11/04/02
1717 Route 208, Fair Lawn Prudential Insurance Co. 8.250% -- 17,586 10/01/03
201 Commerce Drive Sun Life Assurance Co. 6.240% 1,059 1,121 09/01/00
3 & 5 Terri Lane First Union National Bank 6.220% 4,434 4,476 10/31/00
101 & 225 Executive Drive Sun Life Assurance Co. 6.270% 2,375 2,553 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.510% 2,235 2,292 12/31/01
Mack-Cali Willowbrook CIGNA 8.670% 10,250 10,918 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.440% 14,446 14,983 07/01/04
Mack-Cali Centre VI Principal Life Insurance Co. 6.865% 35,000 -- 04/01/05
Mack-Cali Bridgewater I New York Life Ins. Co. 7.000% 23,000 23,000 09/10/05
Mack-Cali Woodbridge II New York Life Ins. Co. 7.500% 17,500 17,500 09/10/05
Mack-Cali Short Hills Prudential Insurance Co. 7.740% 26,604 27,696 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.520% 10,784 11,471 10/10/05
Harborside - Plaza I U.S. West Pension Trust 5.610% 51,276 48,148 01/01/06
Harborside - Plaza II and III Northwestern Mutual Life Ins. 7.320% 98,724 101,852 01/01/06
Mack-Cali Airport Allstate Life Insurance Co. 7.050% 10,500 -- 04/01/07
Kemble Plaza II Mitsubishi Tr & Bk Co. LIBOR+0.65% 40,025 40,025 01/31/08
Kemble Plaza I Mitsubishi Tr & Bk Co. LIBOR+0.65% 32,178 32,178 01/31/09
- ---------------------------------------------------------------------------------------------------------------------
Total Property Mortgages $380,390 $414,048
=====================================================================================================================
</TABLE>
(1) As part of the Harborside acquisition in November 1996, 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") when the Company commenced construction on the
acquired site. On November 2, 1999, the Company paid $6,475 to pay off
the Contingent Obligation in full to the seller for the development rights.
INTEREST RATE CONTRACTS
On May 24, 1995, the 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 November 20, 1997, the Company entered into a forward treasury rate lock
agreement with a commercial bank. The agreement locked an interest rate of 5.88
percent per annum for the interpolated seven-year U.S. Treasury Note effective
March 1, 1998, on a notional amount of $150,000. The agreement was used to fix
the interest rate on the $150,000 Prudential Mortgage Loan. On March 2, 1998,
the Company received $2,035 in settlement of the agreement, which is being
amortized to interest expense over the term of the $150,000 Prudential Mortgage
Loan.
84
<PAGE>
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 was used to fix the Index
Rate on $50,000 of the Harborside-Plaza I mortgage, for which the interest rate
re-sets for three years beginning November 4, 1999 to the three-year U.S.
Treasury Note plus 110 basis points (see "Property Mortgages: Harborside-Plaza
I"). The Company received $2,208 in settlement of the agreement, which is being
amortized to interest expense over the three year-period.
In connection with the issuance of the Senior Unsecured Notes in March 1999, the
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.
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 December 31, 1999 are as follows:
<TABLE>
<CAPTION>
WEIGHTED AVG.
SCHEDULED PRINCIPAL INTEREST RATE OF
YEAR AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000 $ 3,308 $ 5,419 $ 8,727 6.93%
2001 3,257 181,211 184,468 7.43%
2002 3,458 -- 3,458 8.20%
2003 3,518 192,093 195,611 7.30%
2004 2,332 309,863 312,195 7.34%
Thereafter 970 784,746 785,716 7.20%
- ------------------------------------------------------------------------------------------------------------------
Totals/Weighted Average $ 16,843 $ 1,473,332 $ 1,490,175 7.27%
==================================================================================================================
</TABLE>
(a) Assumes a weighted average LIBOR rate at December 31, 1999 of 6.53 percent
in calculating revolving credit facility and other variable rate debt
interest rates.
Scheduled principal payments during the years ended December 31, 1999, 1998 and
1997 amounted to $3,222, $5,151 and $412, respectively.
CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the years ended December 31, 1999, 1998 and 1997 was
$91,883, $92,441 and $36,917, respectively. Interest capitalized by the Company
for the years ended December 31, 1999, 1998 and 1997 was $6,840, $3,547 and
$820, respectively.
SUMMARY OF INDEBTEDNESS
As of December 31, 1999, the Company's total indebtedness of $1,490,175
(weighted average interest rate of 7.27 percent) was comprised of $249,204 of
revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 7.42 percent) and fixed rate debt of $1,240,971
(weighted average rate of 7.24 percent).
As of December 31, 1998, the Company's total indebtedness of $1,420,931
(weighted average interest rate of 6.93 percent) was comprised of $751,804 of
revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 6.61 percent), fixed rate debt of $662,977
(weighted average rate of 7.32 percent) and a Contingent Obligation of $6,150.
85
<PAGE>
11. MINORITY INTEREST
Minority interest in the accompanying consolidated financial statements relates
to (i) common units in the Operating Partnership, in addition to Preferred Units
and Unit Warrants issued in connection with the Mack Transaction, held by
parties other than the Company and (ii) interests in consolidated
partially-owned properties for the portion of such properties not owned by the
Company.
OPERATING PARTNERSHIP
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 to such conversion may be redeemed into common
stock. Each of the common units are redeemable for an equal number of shares of
common stock.
During the year ended December 31, 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 year ended December 31, 1999, 20,952 Series A Preferred Units were
converted into 604,675 common units.
As of December 31, 1999, there were 229,304 Preferred Units outstanding
(convertible into 6,617,721 common units).
COMMON UNITS
Certain individuals and entities own common units in the Operating
Partnership. A common unit and a share of common stock of the 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 the year ended December 31, 1998, the Operating Partnership redeemed a
total of 82,880 common units in exchange for an aggregate of $3,163 in cash.
Additionally, the Operating Partnership redeemed an aggregate of 29,300 common
units for an equivalent number of shares of common stock in the 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.
86
<PAGE>
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 the year ended December 31, 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
the 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 year ended December 31, 1999, the Operating Partnership redeemed an
aggregate of 1,934,657 common units for an equivalent number of shares of common
stock in the Company.
During the year ended December 31, 1999, the Company also issued 275,046 common
units, valued at approximately $8,141, in connection with the achievement of
certain performance goals at the Mack Properties in redemption of an equivalent
number of contingent common units.
As of December 31, 1999, there were 8,153,710 common units outstanding.
CONTINGENT COMMON & PREFERRED UNITS
In 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 the year ended December 31, 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 year ended December 31, 1999, the Company redeemed
275,046 contingent common units and issued an equivalent number of common units,
as indicated above. There were no Contingent Units outstanding as of December
31, 1999.
UNIT WARRANTS
The 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 December 31, 1999 and 1998, the minority interest common unitholders owned
12.2 percent (20.2 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).
87
<PAGE>
PARTIALLY-OWNED PROPERTIES
On December 28, 1999, the Company sold an interest in six office properties
located in Parsippany, Morris County, New Jersey for $83,600. Among other
things, the operating agreements provide for a preferred return to the minority
interest members.
The Company controls these operations and has consolidated the financial
position and results of operations of the partially-owned properties in the
financial statements of the Company. The equity interests of the other members,
if any, are reflected as minority interests in the consolidated financial
statements of the Company.
12. 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, subject to certain limitations imposed by
federal law. The amounts contributed by employees are immediately vested and
non-forfeitable. The Company, at management's discretion, may match employee
contributions and/or make discretionary contributions. Total expense recognized
by the Company for the years ended December 31, 1999, 1998 and 1997 was $400, $0
and $0, respectively.
13. DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of estimated fair value was determined by management
using available market information and appropriate valuation methodologies.
However, considerable judgement is necessary to interpret market data and
develop estimated fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts the Company could realize on
disposition of the financial instruments at December 31, 1999 and 1998. The use
of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
Cash equivalents, receivables, accounts payable, and accrued expenses and other
liabilities are carried at amounts which reasonably approximate their fair
values.
The estimated fair value (excluding prepayment penalties) of the Senior
Unsecured Notes and mortgages and loans payable as of December 31, 1999 was
approximately $741,824 and $511,281, respectively, based upon then current
interest rates for debt with similar terms and remaining maturities. The
estimated fair value of the mortgages and loans payable as of December 31, 1998
approximated the carrying value of $749,331. There were no Senior Unsecured
Notes outstanding as of December 31, 1998. Revolving credit facility borrowings
as of December 31, 1999 and 1998 approximated the carrying values of $177,000
and $671,600, respectively.
The estimated amount to be received to settle the Company's interest rate
contracts outstanding at December 31, 1998, based on quoted market prices of
comparable contracts, was $339. There were no interest rate contracts
outstanding at December 31, 1999.
Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 1999 and 1998. Although
management is not aware of any factors that would significantly affect the fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since December 31, 1999 and current estimates of
fair value may differ significantly from the amounts presented herein.
88
<PAGE>
14. 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, was $1,267
per annum through May 31, 1999 and is $1,584 per annum through May 31, 2004.
The PILOT totaled $1,459, $1,267 and $1,218 for the years ended December 31,
1999, 1998 and 1997, respectively.
HARBORSIDE FINANCIAL CENTER PROPERTY
Pursuant to an agreement with the City of Jersey City, New Jersey obtained by
the former owner of the Harborside property in 1988 and assumed by 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. The PILOT totaled $2,620, $2,570 and $2,502 for the
years ended December 31, 1999, 1998 and 1997, 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 December 31, 1999, are as
follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- --------------------------------------------
<S> <C>
2000 $ 531
2001 531
2002 531
2003 531
2004 534
Thereafter 22,532
- --------------------------------------------
Total $25,190
============================================
</TABLE>
Ground lease expense incurred during the years ended December 31, 1999, 1998
and 1997 amounted to $561, $419 and $192, 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 year ended December 31, 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.
89
<PAGE>
15. TENANT LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2016. Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the tenant's
proportionate share of and/or increases in real estate taxes and certain
operating costs, as defined, and the pass through of charges for electrical
usage.
Future minimum rentals to be received under non-cancelable operating leases at
December 31, 1999, are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---------------------------------------------
<S> <C>
2000 $ 457,800
2001 423,657
2002 373,551
2003 310,225
2004 262,393
Thereafter 1,063,658
- ---------------------------------------------
Total $ 2,891,284
=============================================
</TABLE>
16. 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.
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.
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.
90
<PAGE>
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 is permitted
to purchase up to $100,000 of the Company's outstanding common stock. Purchases
can 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, under the Repurchase
Program, purchased for constructive retirement, 854,700 shares of its
outstanding common stock for an aggregate cost of approximately $25,058.
Concurrent with these purchases, the Company sold to the Operating
Partnership 854,700 common units for approximately $25,058.
For the year ended December 31, 1999, the Company, under the Repurchase
Program, purchased for constructive retirement, 1,014,500 shares of its
outstanding common stock for an aggregate cost of approximately $27,500.
Concurrent with these purchases, the Company sold to the Operating
Partnership 1,014,500 common units for approximately $27,500.
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 year ended December 31, 1999, 1,082 shares were issued and proceeds
of approximately $32 were received from stock purchases and/or dividend
reinvestments under the Plan.
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 which were distributed to all holders of
record of the common stock on July 6, 1999. Each Right entitles the registered
holder to purchase from the Company one one-thousandth of a share of Series A
junior participating preferred stock, par value $0.01 per share ("Preferred
Shares"), at a price of $100.00 per one one-thousandth of a Preferred Share
("Purchase Price"), subject to adjustment as provided in the rights agreement.
The Rights expire on July 6, 2009, unless the expiration date is extended or the
Right is redeemed or exchanged earlier by the Company.
The Rights are attached to each share of common stock. The Rights are generally
exercisable only if a person or group becomes the beneficial owner of 15 percent
or more of the outstanding common stock or announces a tender offer for 15
percent or more of the outstanding common stock ("Acquiring Person"). In the
event that a person or group becomes an Acquiring Person, each holder of a Right
will have the right to receive, upon exercise, common stock having a market
value equal to two times the Purchase Price of the Right.
STOCK OPTION PLANS In 1994, and as subsequently amended, the 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 have become exercisable over a three-year
period and those options granted under the Employee Plan in 1996, 1997, 1998
and 1999 become exercisable over a five-year period. All stock options
granted under the Director Plan become exercisable in one year. All options
were granted at the fair market value at the dates of grant and have terms of
ten years. As of December 31, 1999 and 1998, the stock options outstanding
had a weighted average remaining contractual life of approximately 7.4 and
8.5 years, respectively.
91
<PAGE>
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, 1997 1,528,107 $20.86
Granted 2,126,538 $37.35
Exercised (337,282) $21.33
Lapsed or canceled (30,073) $22.62
- ------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1997 3,287,290 $31.47
Granted 1,048,620 $35.90
Exercised (267,660) $20.47
Lapsed or canceled (128,268) $36.61
- ------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1998 3,939,982 $33.22
Granted 426,400 $25.23
Exercised (47,583) $22.31
Lapsed or canceled (591,648) $36.92
- ------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1999 3,727,151 $31.86
======================================================================================================
Options exercisable at December 31, 1998 1,334,137 $27.84
Options exercisable at December 31, 1999 1,724,920 $29.78
- ------------------------------------------------------------------------------------------------------
Available for grant at December 31, 1998 709,223
Available for grant at December 31, 1999 662,878
- ------------------------------------------------------------------------------------------------------
</TABLE>
The weighted average fair value of options granted during 1999, 1998 and 1997
were $2.74, $5.59 and $6.66 per option, respectively. The fair value of each
significant option grant is estimated on the date of grant using the
Black-Scholes model. The following weighted average assumptions are included in
the Company's fair value calculations of stock options:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected life (in years) 6 6 6
Risk-free interest rate 6.12% 5.41% 5.84%
Volatility 24.72% 23.37% 23.76%
Dividend yield 9.15% 5.78% 5.29%
- --------------------------------------------------------------------------------------------------------------
</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 December 31, 1999 and 1998, there were 914,976 Stock Warrants outstanding.
As of December 31, 1999 and 1998, there were 585,989 and 565,991 Stock Warrants
exercisable, respectively. No Stock Warrants have been exercised or canceled.
The weighted average fair value of warrants granted during 1997 were $6.27 per
warrant. No warrants were granted in 1999 or 1998. The fair value of each
warrant grant is estimated on the date of grant using the Black-Scholes model.
The following weighted average assumptions are included in the Company's fair
value calculation of warrants granted during 1997:
92
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
<S> <C>
Expected life (in years) 6
Risk-free interest rate 5.96%
Volatility 22.77%
Dividend yield 5.29%
- ---------------------------------------------------------------------------------------------
</TABLE>
FASB NO. 123
Under the above models, the value of stock options and warrants granted during
1999, 1998 and 1997 totaled approximately $626, $5,281 and $19,750,
respectively, which would be amortized ratably on a pro forma basis over the
appropriate vesting period. Had the Company determined compensation cost for
these granted securities in accordance with FASB No. 123, the Company's pro
forma net income (loss), basic earnings (loss) per share and diluted earnings
(loss) per share would have been $113,854, $1.95 and $1.94 in 1999, $110,061,
$1.97 and $1.96 in 1998, and ($3,153), ($0.08) and ($0.08) in 1997,
respectively.
STOCK COMPENSATION
In January 1997, the Company entered into employment contracts with seven of its
key executives which provided for, among other things, compensation in the form
of stock awards ("Restricted Stock Awards") and Company-financed stock purchase
rights ("Stock Purchase Rights"), and associated tax obligation payments. In
connection with the Restricted Stock Awards, the executives were to receive
199,070 shares of the Company's common stock vesting over a five-year period
contingent on the Company meeting certain performance objectives. Additionally,
pursuant to the terms of the Stock Purchase Rights, the Company provided fixed
rate, non-recourse loans, aggregating $4,750, to such executives to finance
their purchase of 152,000 shares of the Company's common stock, which the
Company agreed to forgive ratably over five years, subject to continued
employment. Such loans were for amounts equal to the fair market value of the
associated shares at the date of grant. Subsequently, from April 18, 1997
through April 24, 1997, the Company purchased, for constructive retirement,
152,000 shares of its outstanding common stock for $4,680. The excess of the
purchase price over par value was recorded as a reduction to additional paid-in
capital. Concurrent with this purchase, the Company sold to the Operating
Partnership 152,000 common units for $4,680.
The value of the Restricted Stock Awards and the balance of the loans related to
the Stock Purchase Rights at the grant date were recorded as unamortized stock
compensation in stockholders' equity. As a result of provisions contained in
certain of the Company's executive officers' employment agreements, which were
triggered by the Mack Transaction on December 11, 1997, the loans provided by
the Company under the Stock Purchase Rights were forgiven by the Company, and
the vesting and issuance of the restricted stock issued under the Restricted
Stock Awards was accelerated, and related tax obligation payments were made. As
a result, the accelerated cost of $16,788 affecting the stock compensation
described above was included in non-recurring charges for the year ended
December 31, 1997. With such accelerated vestings, there was no remaining
balance in unamortized stock compensation as of December 31, 1997.
Included in general and administrative expense for the year ended December 31,
1997 was $2,257 relating to the normal cost of Restricted Stock Awards and Stock
Purchase Rights.
Effective July 1, 1999, the Company entered into amended and restated employment
contracts with six of its key executive officers which provided for, among other
things, compensation in Restricted Stock Awards and associated tax obligation
payments. In connection with the Restricted Stock Awards, the executive officers
are to receive up to a total of 193,593 shares of the Company's common stock
vesting over a five-year period contingent upon the Company meeting certain
performance and/or stock price appreciation objectives. The Restricted Stock
Awards provided to the executive officers were granted under the Employee Plan.
In addition, on December 6, 1999, the Company granted Restricted Stock
Awards, which also provided for associated tax obligation payments, to certain
officers of the Company. In connection with the Restricted Stock Awards, the
officers are to receive up to a total of 18,000 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. The Restricted
Stock Awards provided to the officers were also granted under the Employee Plan.
93
<PAGE>
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 year ended December 31, 1999, 3,319 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 years ended
December 31, 1999, 1998 and 1997 in accordance with FASB No. 128.
<TABLE>
<CAPTION>
For the Year Ended December 31,
1999 1998 1997
---- ---- ----
Basic EPS Diluted EPS Basic EPS Diluted EPS Basic EPS Diluted EPS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 119,739 $ 119,739 $ 116,578 $ 116,578 $ 1,405 $ 1,405
Add: Net income attributable
to potentially dilutive
securities -- 17,389 -- 15,903 -- 143
- -----------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 119,739 $ 137,128 $ 116,578 $ 132,481 $ 1,405 $ 1,548
=======================================================================================================================
Weighted average shares 58,385 67,133 55,840 63,893 39,266 44,156
- -----------------------------------------------------------------------------------------------------------------------
Per Share $ 2.05 $ 2.04 $ 2.09 $ 2.07 $ 0.04 $ 0.04
=======================================================================================================================
</TABLE>
The following schedule reconciles the shares used in the basic EPS calculation
to the shares used in the diluted EPS calculation.
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic EPS Shares: 58,385 55,840 39,266
Add: Operating Partnership units 8,500 7,598 4,090
Stock options 241 411 579
Restricted Stock Awards 7 -- 188
Stock Warrants -- 44 33
- -----------------------------------------------------------------------------------------------------
Diluted EPS Shares: 67,133 63,893 44,156
=====================================================================================================
</TABLE>
Preferred Units and Contingent Units outstanding in 1999, 1998 and 1997 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 1999, the Company purchased for
constructive retirement, 1,014,500 shares of its outstanding common stock for
approximately $27,500.
94
<PAGE>
17. 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.
Selected results of operations for the years ended December 31, 1999, 1998 and
1997 and selected asset information as of December 31, 1999, 1998 and 1997
regarding the Company's operating segment are as follows:
<TABLE>
<CAPTION>
Total Corporate & Total
Segment Other (e) Company
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL CONTRACT REVENUES (a):
1999 $ 534,984 $ 3,903 $ 538,887 (f)
1998 475,096 4,919 480,015 (g)
1997 234,434 7,634 242,068 (h)
TOTAL OPERATING AND INTEREST EXPENSES (b):
1999 $ 183,293 $ 113,798 $ 297,091
1998 162,612 100,707 263,319
1997 81,058 49,032 130,090
NET OPERATING INCOME (c):
1999 $ 351,691 $ (109,895) $ 241,796 (f)
1998 312,484 (95,788) 216,696 (g)
1997 153,376 (41,398) 111,978 (h)
TOTAL ASSETS:
1999 $ 3,576,806 $ 52,795 $3,629,601
1998 3,430,865 21,329 3,452,194
1997 2,583,738 9,706 2,593,444
TOTAL LONG-LIVED ASSETS (d):
1999 $ 3,510,285 $ 30,318 $3,540,603
1998 3,393,313 4,098 3,397,411
1997 2,550,961 2,960 2,553,921
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total contract revenues 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, interest
expense and non-recurring charges. All interest expense (including for
property-level mortgages) is excluded from segment amounts and classified
in Corporate and Other for all periods. Amounts presented exclude
depreciation and amortization of $87,209, $78,916 and $36,825 in 1999, 1998
and 1997, respectively, and non-recurring charges of $16,458 and $46,519 in
1999 and 1997, respectively.
(c) Net operating income represents total contract revenues [as defined in Note
(a)] less total operating and interest expenses [as defined in Note (b)]
for the period.
(d) Long-lived assets 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 $12,438 of adjustments for straight-lining of rents and $159 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures.
(g) Excludes $13,575 of adjustments for straight-lining of rents and $109 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures.
(h) Excludes $7,733 of adjustments for straight-lining of rents.
95
<PAGE>
18. 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.
19. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following pro forma financial information for the year ended December 31,
1998 is presented as if all acquisitions and common stock offerings (if any)
completed in 1998 had occurred on January 1, 1998. In management's opinion,
all adjustments necessary to reflect the effects of these transactions have
been made. As there were no material transactions that occurred in 1999, no
pro forma financial information is presented for the year ended December 31,
1999.
This pro forma financial information is not necessarily indicative of what the
actual results of operations of the 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>
1998
- ----------------------------------------------------------------------------
<S> <C>
Total revenues $ 522,661
Operating and other expenses 157,698
General and administrative 26,901
Depreciation and amortization 83,410
Interest expense 102,828
- ----------------------------------------------------------------------------
Income before minority interest 151,824
Minority interest 33,244
- ----------------------------------------------------------------------------
Net income $ 118,580
============================================================================
Basic earnings per common share $ 2.06
Diluted earnings per common share $ 2.04
- ----------------------------------------------------------------------------
Basic weighted average shares outstanding 57,652
Diluted weighted average shares outstanding 66,338
- ----------------------------------------------------------------------------
</TABLE>
96
<PAGE>
20. CONDENSED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following summarizes the condensed quarterly financial information for the
Company:
<TABLE>
<CAPTION>
QUARTER ENDED 1999: December 31 September 30 June 30 March 31
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $ 140,600 $ 139,020 $ 136,975 $ 134,889
Operating and other expenses 43,716 42,947 41,466 40,522
General and administrative 6,258 5,691 5,568 7,963
Depreciation and amortization 19,808 22,967 22,465 21,969
Interest expense 27,167 26,474 25,697 23,622
Non-recurring charges -- -- 16,458 --
- ------------------------------------------------------------------------------------------------------------------
Income before gain on sale of
rental property, minority interests and
extraordinary item 43,651 40,941 25,321 40,813
Gain on sale of rental property 1,957 -- -- --
- ------------------------------------------------------------------------------------------------------------------
Income before minority interests and
extraordinary item 45,608 40,941 25,321 40,813
Minority interests 9,139 8,421 6,635 8,749
- ------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 36,469 32,520 18,686 32,064
Extraordinary item - loss on early retirement debt -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Net income $ 36,469 $ 32,520 $ 18,686 $ 32,064
==================================================================================================================
BASIC EARNINGS PER SHARE:
Income before extraordinary item $ 0.63 $ 0.55 $ 0.32 $ 0.55
Extraordinary item -- loss on early retirement of debt -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Net income $ 0.63 $ 0.55 $ 0.32 $ 0.55
==================================================================================================================
DILUTED EARNINGS PER SHARE:
Income before extraordinary item $ 0.62 $ 0.55 $ 0.32 $ 0.55
Extraordinary item -- loss on early retirement of debt -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Net income $ 0.62 $ 0.55 $ 0.32 $ 0.55
==================================================================================================================
Dividends declared per common share $ 0.58 $ 0.58 $ 0.55 $ 0.55
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED 1998: December 31 September 30 June 30 March 31
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $ 134,941 $ 130,894 $ 122,041 $ 105,823
Operating and other expenses 41,753 40,746 36,724 31,226
General and administrative 6,555 5,967 6,268 6,037
Depreciation and amortization 22,379 21,213 19,093 16,231
Interest expense 23,896 23,881 21,786 18,480
- ------------------------------------------------------------------------------------------------------------------
Income before minority interest and extraordinary item 40,358 39,087 38,170 33,849
Minority interest 9,050 8,375 7,782 7,306
- ------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 31,308 30,712 30,388 26,543
Extraordinary item - loss on early retirement debt
(Net of minority interest's share of $297) -- -- (2,373) --
- ------------------------------------------------------------------------------------------------------------------
Net income $ 31,308 $ 30,712 $ 28,015 $ 26,543
==================================================================================================================
BASIC EARNINGS PER SHARE:
Income before extraordinary item $ 0.55 $ 0.53 $ 0.53 $ 0.52
Extraordinary item -- loss on early retirement of debt -- -- (0.04) --
- ------------------------------------------------------------------------------------------------------------------
Net income $ 0.55 $ 0.53 $ 0.49 $ 0.52
==================================================================================================================
DILUTED EARNINGS PER SHARE:
Income before extraordinary item $ 0.55 $ 0.53 $ 0.53 $ 0.51
Extraordinary item -- loss on early retirement of debt -- -- (0.04) --
- ------------------------------------------------------------------------------------------------------------------
Net income $ 0.55 $ 0.53 $ 0.49 $ 0.51
==================================================================================================================
Dividends declared per common share $ 0.55 $ 0.55 $ 0.50 $ 0.50
==================================================================================================================
</TABLE>
97
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
3.1 Restated Charter of Mack-Cali Realty Corporation dated June 2, 1999,
together with Articles Supplementary thereto (filed as Exhibit 3.1 to
the 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).
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).
98
<PAGE>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
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).
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).
99
<PAGE>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
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).
10.18 Agreement of Sale and Purchase, dated December 28, 1999, by and
between Mack-Cali Realty, L.P. and Parsippany Office Associates
L.L.C.
10.19 Operating Agreement of Parsippany Office Associates L.L.C.
21 Subsidiaries of the Company
23 Consent of PricewaterhouseCoopers LLP, independent accountants
27 Financial Data Schedule
100
<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: February 23, 2000 By: /S/ BARRY LEFKOWITZ
-------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
/S/ JOHN J. CALI Chairman of the Board February 23, 2000
- --------------------------
John J. Cali
/S/ MITCHELL E. HERSH Chief Executive Officer February 23, 2000
- -------------------------- and Director
Mitchell E. Hersh
/S/ TIMOTHY M. JONES President February 23, 2000
- --------------------------
Timothy M. Jones
/S/ BARRY LEFKOWITZ Executive Vice President and February 23, 2000
- -------------------------- Chief Financial Officer
Barry Lefkowitz
/S/ BRANT B. CALI Executive Vice President, February 23, 2000
- -------------------------- Chief Operating Officer,
Brant B. Cali Assistant Secretary and
Director
/S/ BRENDAN T. BYRNE, ESQ. Director February 23, 2000
- --------------------------
Brendan T. Byrne, Esq.
/S/ MARTIN D. GRUSS Director February 23, 2000
- --------------------------
Martin D. Gruss
101
<PAGE>
NAME TITLE DATE
---- ----- ----
/S/ NATHAN GANTCHER Director February 23, 2000
- --------------------------
Nathan Gantcher
/S/ EARLE I. MACK Director February 23, 2000
- --------------------------
Earle I. Mack
/S/ WILLIAM L. MACK Director February 23, 2000
- --------------------------
William L. Mack
/S/ ROY J. ZUCKERBERG Director February 23, 2000
- --------------------------
Roy J. Zuckerberg
/S/ ALAN G. PHILIBOSIAN Director February 23, 2000
- --------------------------
Alan G. Philibosian
/S/ DR. IRVIN D. REID Director February 23, 2000
- --------------------------
Dr. Irvin D. Reid
/S/ VINCENT TESE Director February 23, 2000
- --------------------------
Vincent Tese
/S/ MARTIN S. BERGER Director February 23, 2000
- --------------------------
Martin S. Berger
102
<PAGE>
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
COSTS
INITIAL COSTS CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- --------------------- ----- -------- ------------ ---- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY...
EGG HARBOR
100 Decadon Drive (O)......... 1987 1995 $ -- $300 $3,282 $119
200 Decadon Drive (O)......... 1991 1995 -- 369 3,241 158
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Rte 208 North (O)....... 1987 1995 -- 3,067 19,415 441
FORT LEE
2115 Linwood Avenue (O)....... 1981 1998 -- 474 4,419 3,724
One Bridge Plaza (O).......... 1981 1996 -- 2,439 24,462 1,488
LITTLE FERRY
200 Riser Road (O)............ 1974 1997 10,500 3,888 15,551 236
MONTVALE
135 Chestnut Ridge Road (O)... 1981 1997 -- 2,587 10,350 85
95 Chestnut Ridge Road (O).... 1975 1997 2,135 1,227 4,907 44
PARAMUS
140 Ridgewood Avenue (O)...... 1981 1997 15,392 7,932 31,463 269
15 East Midland Avenue (O).... 1988 1997 24,790 10,375 41,497 56
461 From Road (O)............. 1988 1997 35,000 13,194 52,778 81
61 South Paramus Avenue (O)... 1985 1997 15,776 9,005 36,018 4,046
650 From Road (O)............. 1978 1997 23,316 10,487 41,949 430
ROCHELLE PARK
120 Passaic Street (O)........ 1972 1997 -- 1,354 5,415 35
365 West Passaic Street (O)... 1976 1997 7,468 4,148 16,592 859
SADDLE RIVER
1 Lake Street (O)............. 1994 1997 35,789 13,952 55,812 6
UPPER SADDLE RIVER
10 Mountainview Road (O)...... 1986 1998 -- 4,240 20,485 911
WOODCLIFF LAKE
300 Tice Boulevard (O)........ 1991 1996 -- 5,424 29,688 449
400 Chestnut Ridge Road (O)... 1982 1997 14,446 4,201 16,802 --
470 Chestnut Ridge Road (O)... 1987 1997 4,087 2,346 9,385 2
50 Tice Boulevard (O)......... 1984 1994 -- 4,500 -- 26,030
530 Chestnut Ridge Road (O)... 1986 1997 4,032 1,860 7,441 3
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane (F).............. 1991 1998 2,084 652 3,433 904
5 Terri Lane (F).............. 1992 1998 2,350 564 3,792 1,279
DELRAN
Tenby Chase Apartments (M).... 1970 1994 -- 396 -- 5,370
MOORESTOWN
1 Executive Drive (F)......... 1989 1998 -- 226 1,453 118
101 Commerce Drive (F)........ 1988 1998 -- 422 3,528 240
101 Executive Drive (F)....... 1990 1998 1,116 241 2,262 148
102 Executive Drive (F)....... 1990 1998 -- 353 3,607 231
1256 North Church (F)......... 1984 1998 -- 354 3,098 232
1507 Lancer Drive (F)......... 1995 1998 -- 119 1,106 40
1510 Lancer Drive (F)......... 1998 1998 -- 732 2,928 38
201 Commerce Drive (F)........ 1986 1998 1,059 254 1,694 83
102 Commerce Drive (F)........ 1987 1999 -- 389 1,554 --
202 Commerce Drive (F)........ 1988 1999 -- 490 1,963 --
2 Commerce Drive (F).......... 1986 1999 -- 723 2,893 --
224 Strawbridge Drive (O)..... 1984 1997 -- 766 4,335 2,786
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD (1)
----------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- --------------------- ---- ------------ ------- ------------
<S> <C> <C> <C> <C>
ATLANTIC COUNTY, NEW JERSEY...
EGG HARBOR
100 Decadon Drive (O)......... $300 $3,401 $3,701 $351
200 Decadon Drive (O)......... 369 3,399 3,768 374
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Rte 208 North (O)....... 3,067 19,856 22,923 2,442
FORT LEE
2115 Linwood Avenue (O)....... 474 8,143 8,617 79
One Bridge Plaza (O).......... 2,439 25,950 28,389 2,112
LITTLE FERRY
200 Riser Road (O)............ 3,888 15,787 19,675 802
MONTVALE
135 Chestnut Ridge Road (O)... 2,588 10,434 13,022 530
95 Chestnut Ridge Road (O).... 1,227 4,951 6,178 252
PARAMUS
140 Ridgewood Avenue (O)...... 7,932 31,732 39,664 1,317
15 East Midland Avenue (O)....10,374 41,554 51,928 2,122
461 From Road (O).............13,194 52,859 66,053 2,699
61 South Paramus Avenue (O)... 9,005 40,064 49,069 1,921
650 From Road (O).............10,487 42,379 52,866 2,149
ROCHELLE PARK
120 Passaic Street (O)........ 1,357 5,447 6,804 277
365 West Passaic Street (O)... 4,148 17,451 21,599 900
SADDLE RIVER
1 Lake Street (O).............13,953 55,817 69,770 2,853
UPPER SADDLE RIVER
10 Mountainview Road (O)...... 4,240 21,396 25,636 1,297
WOODCLIFF LAKE
300 Tice Boulevard (O)........ 5,424 30,137 35,561 2,338
400 Chestnut Ridge Road (O)... 4,201 16,802 21,003 856
470 Chestnut Ridge Road (O)... 2,346 9,387 11,733 480
50 Tice Boulevard (O)......... 4,500 26,030 30,530 11,338
530 Chestnut Ridge Road (O)... 1,860 7,444 9,304 380
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane (F).............. 658 4,331 4,989 258
5 Terri Lane (F).............. 569 5,066 5,635 325
DELRAN
Tenby Chase Apartments (M).... 396 5,370 5,766 3,439
MOORESTOWN
1 Executive Drive (F)......... 228 1,569 1,797 100
101 Commerce Drive (F)........ 426 3,764 4,190 262
101 Executive Drive (F)....... 244 2,407 2,651 140
102 Executive Drive (F)....... 356 3,835 4,191 228
1256 North Church (F)......... 356 3,328 3,684 224
1507 Lancer Drive (F)......... 120 1,145 1,265 66
1510 Lancer Drive (F)......... 735 2,963 3,698 111
201 Commerce Drive (F)........ 258 1,773 2,031 115
102 Commerce Drive (F)........ 389 1,554 1,943 --
202 Commerce Drive (F)........ 490 1,963 2,453 --
2 Commerce Drive (F).......... 723 2,893 3,616 --
224 Strawbridge Drive (O)..... 766 7,121 7,887 468
</TABLE>
103
<PAGE>
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
COSTS
INITIAL COSTS CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- --------------------- ----- --------- ------------ ----- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
225 Executive Drive (F) ................. 1990 1998 1,259 323 2,477 96
228 Strawbridge Drive (O) ............... 1984 1997 -- 767 4,334 2,888
30 Twosome Drive (F) .................... 1997 1998 -- 234 1,954 45
40 Twosome Drive (F) .................... 1996 1998 -- 297 2,393 55
50 Twosome Drive (F) .................... 1997 1998 -- 301 2,330 43
MOORESTOWN
840 North Lenola Road (F) ............... 1995 1998 -- 329 2,366 45
844 North Lenola Road (F) ............... 1995 1998 -- 239 1,714 35
97 Foster Road (F) ...................... 1982 1998 -- 208 1,382 46
WEST DEPTFORD
1451 Metropolitan Drive (F) ............. 1996 1998 -- 203 1,189 23
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway (O) ............ 1980 1997 26,604 12,606 50,425 182
ROSELAND
101 Eisenhower Parkway (O) .............. 1980 1994 -- 228 -- 14,348
103 Eisenhower Parkway (O) .............. 1985 1994 -- -- -- 13,208
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
95 Christopher Columbus Drive (O) ....... 1989 1994 -- 6,205 -- 81,394
Harborside Financial Center Plaza I (O) . 1983 1996 51,276 3,923 51,013 --
Harborside Financial Center Plaza II (O) 1990 1996 49,362 17,655 101,546 3,563
Harborside Financial Center Plaza III (O) 1990 1996 49,362 17,655 101,878 3,569
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive (F) ................... 1989 1995 -- 205 1,676 --
200 Horizon Drive (F) ................... 1991 1995 -- 205 3,027 --
300 Horizon Drive (F) ................... 1989 1995 -- 379 4,355 55
500 Horizon Drive (F) ................... 1990 1995 -- 379 3,395 100
Zero Horizon Drive (L) .................. n/a 1999 -- 498 -- --
PRINCETON
5 Vaughn Drive (O) ...................... 1987 1995 -- 657 9,800 404
103 Carnegie Center (O) ................. 1984 1996 -- 2,566 7,868 579
100 Overlook Center (O) ................. 1988 1997 -- 2,378 21,754 143
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road (O) ................. 1977 1997 -- 649 2,594 149
PLAINSBORO
500 College Road East (O) ............... 1984 1998 -- 614 20,626 261
SOUTH BRUNSWICK
3 Independence Way (O) .................. 1983 1997 -- 1,997 11,391 102
WOODBRIDGE
581 Main Street (O) ..................... 1991 1997 17,500 3,237 12,949 19,342
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66 (O) ....................... 1989 1995 -- 1,098 18,146 39
WALL TOWNSHIP
1305 Campus Parkway (O) ................. 1988 1995 -- 335 2,560 67
1320 Wykoff Avenue (F) .................. 1986 1995 -- 255 1,285 --
1324 Wykoff Avenue (F) .................. 1987 1995 -- 230 1,439 92
1325 Campus Parkway (F) ................. 1988 1995 -- 270 2,928 41
1340 Campus Parkway (F) ................. 1992 1995 -- 489 4,621 310
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD (1)
-------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- --------------------- ---- ------------ ------ ------------
<S> <C> <C> <C> <C>
225 Executive Drive (F) ................. 326 2,570 2,896 172
228 Strawbridge Drive (O) ............... 766 7,223 7,989 578
30 Twosome Drive (F) .................... 235 1,998 2,233 139
40 Twosome Drive (F) .................... 300 2,445 2,745 150
50 Twosome Drive (F) .................... 304 2,370 2,674 158
MOORESTOWN
840 North Lenola Road (F) ............... 333 2,407 2,740 155
844 North Lenola Road (F) ............... 241 1,747 1,988 112
97 Foster Road (F) ...................... 211 1,425 1,636 82
WEST DEPTFORD
1451 Metropolitan Drive (F) ............. 206 1,209 1,415 81
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway (O) ............ 12,606 50,607 63,213 2,580
ROSELAND
101 Eisenhower Parkway (O) .............. 228 14,348 14,576 7,887
103 Eisenhower Parkway (O) .............. 2,300 10,908 13,208 4,011
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
95 Christopher Columbus Drive (O) ....... 6,205 81,394 87,599 23,922
Harborside Financial Center Plaza I (O) . 3,923 51,013 54,936 4,039
Harborside Financial Center Plaza II (O) 18,315 104,449 122,764 8,168
Harborside Financial Center Plaza III (O) 18,295 104,807 123,102 8,169
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive (F) ................... 205 1,676 1,881 175
200 Horizon Drive (F) ................... 205 3,027 3,232 315
300 Horizon Drive (F) ................... 379 4,410 4,789 464
500 Horizon Drive (F) ................... 379 3,495 3,874 412
Zero Horizon Drive (L) .................. 498 -- 498 --
PRINCETON
5 Vaughn Drive (O) ...................... 657 10,204 10,861 1,179
103 Carnegie Center (O) ................. 2,566 8,447 11,013 924
100 Overlook Center (O) ................. 2,378 21,897 24,275 1,183
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road (O) ................. 649 2,743 3,392 138
PLAINSBORO
500 College Road East (O) ............... 614 20,887 21,501 915
SOUTH BRUNSWICK
3 Independence Way (O) .................. 1,997 11,493 13,490 672
WOODBRIDGE
581 Main Street (O) ..................... 8,115 27,413 35,528 1,043
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66 (O) ....................... 1,098 18,185 19,283 1,900
WALL TOWNSHIP
1305 Campus Parkway (O) ................. 335 2,627 2,962 315
1320 Wykoff Avenue (F) .................. 255 1,285 1,540 134
1324 Wykoff Avenue (F) .................. 230 1,531 1,761 202
1325 Campus Parkway (F) ................. 270 2,969 3,239 328
1340 Campus Parkway (F) ................. 489 4,931 5,420 581
</TABLE>
104
<PAGE>
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
COSTS
INITIAL COSTS CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- --------------------- ----- -------- ------------ ---- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
1350 Campus Parkway (O)....... 1990 1995 -- 454 7,134 544
1433 Highway 34 (F)........... 1985 1995 -- 889 4,321 338
1345 Campus Parkway (F)....... 1995 1997 -- 1,023 5,703 55
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway (O)...... 1987 1994 -- 1,564 -- 15,860
MORRIS PLAINS
201 Littleton Road (O)........ 1979 1997 -- 2,407 9,627 100
250 Johnson Road (O).......... 1977 1997 2,235 2,004 8,016 221
MORRIS TOWNSHIP
340 Mt. Kemble Avenue (O)..... 1985 1997 32,178 13,624 54,496 40
412 Mt. Kemble Avenue (O)..... 1986 1997 40,025 15,737 62,954 32
PARSIPPANY
2 Dryden Way (O).............. 1990 1998 -- 778 420 13
2 Hilton Court (O)............ 1991 1998 -- 1,971 32,007 115
600 Parsippany Road (O)....... 1978 1994 -- 1,257 5,594 614
7 Campus Drive (O)............ 1982 1998 -- 1,932 27,788 107
7 Sylvan Way (O).............. 1987 1998 -- 2,084 26,083 35
8 Campus Drive (O)............ 1987 1998 -- 1,865 35,456 690
5 Sylvan Way (O).............. 1989 1998 -- 1,160 25,214 346
1 Sylvan Way (O).............. 1989 1998 -- 1,689 24,699 2,215
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue (O)........ 1983 1994 -- -- -- 7,181
TOTOWA
11 Commerce Way (F)........... 1989 1995 -- 586 2,986 232
120 Commerce Way (F).......... 1994 1995 -- 228 -- 1,200
140 Commerce Way (F).......... 1994 1995 -- 229 -- 1,200
2 Center Court (F)............ 1998 1998 -- 191 -- 2,563
20 Commerce Way (F)........... 1992 1995 -- 516 3,108 26
29 Commerce Way (F)........... 1990 1995 -- 586 3,092 229
40 Commerce Way (F)........... 1987 1995 -- 516 3,260 375
45 Commerce Way (F)........... 1992 1995 -- 536 3,379 137
60 Commerce Way (F)........... 1988 1995 -- 526 3,257 261
80 Commerce Way (F)........... 1996 1996 -- 227 -- 1,631
100 Commerce Way (F).......... 1996 1996 -- 226 -- 1,631
999 Riverview Drive (O)....... 1988 1995 -- 476 6,024 416
1 Center Court (F)............ 1999 1999 -- 270 1,824 87
WAYNE
201 Willowbrook Boulevard (O). 1970 1997 10,250 3,103 12,410 475
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road (O)......... 1986 1996 -- 775 3,636 31
233 Mt. Airy Road (O)......... 1987 1996 -- 1,034 5,033 16
BRIDGEWATER
721 Route 202/206 (O)......... 1989 1997 23,000 6,730 26,919 205
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD (1)
--------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- --------------------- ---- ------------ ----- -------------
<S> <C> <C> <C> <C>
1350 Campus Parkway (O)....... 454 7,678 8,132 893
1433 Highway 34 (F)........... 889 4,659 5,548 635
1345 Campus Parkway (F)....... 1,024 5,757 6,781 420
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway (O)...... 1,564 15,860 17,424 6,116
MORRIS PLAINS
201 Littleton Road (O)........ 2,407 9,727 12,134 495
250 Johnson Road (O).......... 2,004 8,237 10,241 415
MORRIS TOWNSHIP
340 Mt. Kemble Avenue (O)..... 13,624 54,536 68,160 2,786
412 Mt. Kemble Avenue (O)..... 15,738 62,985 78,723 3,218
PARSIPPANY
2 Dryden Way (O).............. 778 433 1,211 29
2 Hilton Court (O)............ 1,971 32,122 34,093 1,545
600 Parsippany Road (O)....... 1,257 6,208 7,465 870
7 Campus Drive (O)............ 1,932 27,895 29,827 1,314
7 Sylvan Way (O).............. 2,084 26,118 28,202 1,269
8 Campus Drive (O)............ 1,865 36,146 38,011 1,709
5 Sylvan Way (O).............. 1,160 25,560 26,720 1,174
1 Sylvan Way (O).............. 1,689 26,914 28,603 1,462
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue (O)........ 1,100 6,081 7,181 2,654
TOTOWA
11 Commerce Way (F)........... 586 3,218 3,804 327
120 Commerce Way (F).......... 228 1,200 1,428 127
140 Commerce Way (F).......... 229 1,200 1,429 128
2 Center Court (F)............ 191 2,563 2,754 161
20 Commerce Way (F)........... 516 3,134 3,650 326
29 Commerce Way (F)........... 586 3,321 3,907 434
40 Commerce Way (F)........... 516 3,635 4,151 515
45 Commerce Way (F)........... 536 3,516 4,052 434
60 Commerce Way (F)........... 526 3,518 4,044 469
80 Commerce Way (F)........... 227 1,631 1,858 317
100 Commerce Way (F).......... 226 1,631 1,857 317
999 Riverview Drive (O)....... 476 6,440 6,916 687
1 Center Court (F)............ 270 1,911 2,181 38
WAYNE
201 Willowbrook Boulevard (O). 3,103 12,885 15,988 647
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road (O)......... 775 3,667 4,442 312
233 Mt. Airy Road (O)......... 1,034 5,049 6,083 431
BRIDGEWATER
721 Route 202/206 (O)......... 6,730 27,124 33,854 1,379
</TABLE>
105
<PAGE>
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
COSTS
INITIAL COSTS CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- --------------------- ----- -------- ------------ ---- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue (O)......... 1985 1994 -- -- -- 17,658
CRANFORD
11 Commerce Drive (O)......... 1981 1994 -- 470 -- 6,230
12 Commerce Drive (O)......... 1967 1997 -- 887 3,549 151
20 Commerce Drive (O)......... 1990 1994 -- 2,346 -- 22,154
6 Commerce Drive (O).......... 1973 1994 -- 250 -- 2,732
65 Jackson Drive (O).......... 1984 1994 -- 541 -- 7,015
NEW PROVIDENCE
890 Mountain Road (O)......... 1977 1997 -- 2,796 11,185 4,224
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive (O)...... 1987 1997 -- 2,258 9,031 120
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
111 East Shore Road (O)....... 1980 1997 -- 2,093 8,370 218
600 Community Drive (O)....... 1983 1997 -- 11,018 44,070 180
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard (O)....... 1988 1995 -- 1,090 13,412 1,302
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane (I).......... 1957 1997 -- 3 268 190
1 Westchester Plaza (F)....... 1967 1997 -- 199 2,023 31
100 Clearbrook Road (O)....... 1975 1997 -- 220 5,366 445
101 Executive Boulevard (O)... 1971 1997 -- 267 5,838 132
11 Clearbrook Road (F)........ 1974 1997 -- 149 2,159 5
150 Clearbrook Road (F)....... 1975 1997 -- 497 7,030 81
175 Clearbrook Road (F)....... 1973 1997 -- 655 7,473 280
2 Warehouse Lane (I).......... 1957 1997 -- 4 672 26
2 Westchester Plaza (F)....... 1968 1997 -- 234 2,726 --
200 Clearbrook Road (F)....... 1974 1997 -- 579 6,620 488
250 Clearbrook Road (F)....... 1973 1997 -- 867 8,647 442
3 Warehouse Lane (I).......... 1957 1997 -- 21 1,948 166
3 Westchester Plaza (F)....... 1969 1997 -- 655 7,936 --
300 Executive Boulevard (F)... 1970 1997 -- 460 3,609 --
350 Executive Boulevard (F)... 1970 1997 -- 100 1,793 --
399 Executive Boulevard (F)... 1962 1997 -- 531 7,191 105
4 Warehouse Lane (I)......... 1957 1997 -- 84 13,393 185
4 Westchester Plaza (F)....... 1969 1997 -- 320 3,729 70
400 Executive Boulevard (F)... 1970 1997 -- 2,202 1,846 273
5 Warehouse Lane (I).......... 1957 1997 -- 19 4,804 204
5 Westchester Plaza (F)....... 1969 1997 -- 118 1,949 --
50 Executive Boulevard (F).... 1969 1997 -- 237 2,617 --
500 Executive Boulevard (F)... 1970 1997 -- 258 4,183 272
525 Executive Boulevard (F)... 1972 1997 -- 345 5,499 30
570 Taxter Road (O)........... 1972 1997 -- 438 6,078 198
6 Warehouse Lane (I).......... 1982 1997 -- 10 4,419 25
6 Westchester Plaza (F)....... 1968 1997 -- 164 1,998 133
7 Westchester Plaza (F)....... 1972 1997 -- 286 4,321 24
700 Executive Boulevard (L)... N/A 1997 -- 970 -- --
75 Clearbrook Road (F)........ 1990 1997 -- 2,314 4,716 --
77 Executive Boulevard (F).... 1977 1997 -- 34 1,104 6
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD (1)
--------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- --------------------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C>
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue (O)......... 1,822 15,836 17,658 7,045
CRANFORD
11 Commerce Drive (O)......... 470 6,230 6,700 3,220
12 Commerce Drive (O)......... 887 3,700 4,587 183
20 Commerce Drive (O)......... 2,346 22,154 24,500 6,484
6 Commerce Drive (O).......... 250 2,732 2,982 1,623
65 Jackson Drive (O).......... 542 7,014 7,556 3,352
NEW PROVIDENCE
890 Mountain Road (O)......... 3,764 14,441 18,205 722
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive (O)...... 2,258 9,151 11,409 478
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
111 East Shore Road (O)....... 2,093 8,588 10,681 439
600 Community Drive (O)....... 11,018 44,250 55,268 2,296
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard (O)....... 1,090 14,714 15,804 1,801
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane (I).......... 3 458 461 24
1 Westchester Plaza (F)....... 199 2,054 2,253 154
100 Clearbrook Road (O)....... 220 5,811 6,031 454
101 Executive Boulevard (O)... 267 5,970 6,237 446
11 Clearbrook Road (F)........ 149 2,164 2,313 160
150 Clearbrook Road (F)....... 497 7,111 7,608 529
175 Clearbrook Road (F)....... 655 7,753 8,408 600
2 Warehouse Lane (I).......... 4 698 702 51
2 Westchester Plaza (F)....... 234 2,726 2,960 199
200 Clearbrook Road (F)....... 579 7,108 7,687 518
250 Clearbrook Road (F)....... 867 9,089 9,956 647
3 Warehouse Lane (I).......... 21 2,114 2,135 150
3 Westchester Plaza (F)....... 655 7,936 8,591 579
300 Executive Boulevard (F)... 460 3,609 4,069 263
350 Executive Boulevard (F)... 100 1,793 1,893 131
399 Executive Boulevard (F)... 531 7,296 7,827 534
4 Warehouse Lane (I)......... 85 13,577 13,662 999
4 Westchester Plaza (F)....... 320 3,799 4,119 292
400 Executive Boulevard (F)... 2,202 2,119 4,321 172
5 Warehouse Lane (I).......... 19 5,008 5,027 357
5 Westchester Plaza (F)....... 118 1,949 2,067 142
50 Executive Boulevard (F).... 237 2,617 2,854 191
500 Executive Boulevard (F)... 258 4,455 4,713 314
525 Executive Boulevard (F)... 345 5,529 5,874 410
570 Taxter Road (O)........... 438 6,276 6,714 461
6 Warehouse Lane (I).......... 10 4,444 4,454 323
6 Westchester Plaza (F)....... 164 2,131 2,295 157
7 Westchester Plaza (F)....... 286 4,345 4,631 322
700 Executive Boulevard (L)... 970 -- 970 --
75 Clearbrook Road (F)........ 2,314 4,716 7,030 344
77 Executive Boulevard (F).... 34 1,110 1,144 82
</TABLE>
106
<PAGE>
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
COSTS
INITIAL COSTS CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- --------------------- ----- -------- ------------ ---- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
8 Westchester Plaza (F)....... 1971 1997 -- 447 5,262 546
85 Executive Boulevard (F).... 1968 1997 -- 155 2,507 19
HAWTHORNE
1 Skyline Drive (O)........... 1980 1997 -- 66 1,711 35
10 Skyline Drive (F).......... 1985 1997 -- 134 2,799 78
11 Skyline Drive (F).......... 1989 1997 -- -- 4,788 66
12 Skyline Drive (F).......... 1999 1999 -- 1,562 3,254 1,573
15 Skyline Drive (F).......... 1989 1997 -- -- 7,449 349
17 Skyline Drive (O).......... 1989 1997 -- -- 7,269 136
2 Skyline Drive (O)........... 1987 1997 -- 109 3,128 254
200 Saw Mill River Road (F)... 1965 1997 -- 353 3,353 125
30 Saw Mill River Road (O).... 1982 1997 -- 2,355 34,254 3,634
4 Skyline Drive (F)........... 1987 1997 -- 363 7,513 389
7 Skyline Drive (O)........... 1987 1998 -- 330 13,013 35
8 Skyline Drive (F)........... 1985 1997 -- 212 4,410 792
TARRYTOWN
200 White Plains Road (O)..... 1982 1997 -- 378 8,367 606
220 White Plains Road (O)..... 1984 1997 -- 367 8,112 352
230 White Plains Road (R)..... 1984 1997 -- 124 1,845 --
WHITE PLAINS
1 Barker Avenue (O)........... 1975 1997 -- 208 9,629 426
1 Water Street (O)............ 1979 1997 -- 211 5,382 262
11 Martine Avenue (O)......... 1987 1997 -- 127 26,833 2,870
25 Martine Avenue (M)......... 1987 1997 -- 120 11,366 250
3 Barker Avenue (O)........... 1983 1997 -- 122 7,864 432
50 Main Street (O)............ 1985 1997 -- 564 48,105 1,946
YONKERS
1 Enterprise Boulevard (L).... N/A 1997 -- 1,380 -- --
1 Executive Boulevard (O)..... 1982 1997 -- 1,104 11,904 573
1 Odell Plaza (F)............. 1980 1997 -- 1,206 6,815 235
100 Corporate Boulevard (F)... 1987 1997 -- 602 9,910 349
2 Executive Plaza (R)......... 1986 1997 -- 89 2,439 --
200 Corporate Boulevard South (F) 1990 1997 -- 502 7,575 63
3 Executive Plaza (O)......... 1987 1997 -- 385 6,256 307
4 Executive Plaza (F)......... 1986 1997 -- 584 6,134 284
5 Odell Plaza (F)............. 1983 1997 -- 331 2,988 29
6 Executive Plaza (F)......... 1987 1997 -- 546 7,246 28
7 Odell Plaza (F)............. 1984 1997 -- 419 4,418 86
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive (O)...... 1989 1997 -- 619 9,016 101
1055 Westlakes Drive (O)...... 1990 1997 -- 1,951 19,046 206
1205 Westlakes Drive (O)...... 1988 1997 -- 1,323 20,098 393
1235 Westlakes Drive (O)...... 1986 1997 -- 1,417 21,215 545
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive (O)......... 1986 1996 -- 1,349 10,018 161
200 Stevens Drive (O)......... 1987 1996 -- 1,644 20,186 335
300 Stevens Drive (O)......... 1992 1996 -- 491 9,490 358
MEDIA
1400 Providence Rd -
Center I (O)................ 1986 1996 -- 1,042 9,054 644
1400 Providence Rd. -
Center II(O)................ 1990 1996 -- 1,543 16,464 895
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD (1)
--------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- --------------------- ---- ------------ ----- -------------
<S> <C> <C> <C> <C>
8 Westchester Plaza (F)....... 447 5,808 6,255 523
85 Executive Boulevard (F).... 155 2,526 2,681 185
HAWTHORNE
1 Skyline Drive (O)........... 66 1,746 1,812 126
10 Skyline Drive (F).......... 134 2,877 3,011 228
11 Skyline Drive (F).......... -- 4,854 4,854 370
12 Skyline Drive (F).......... 1,562 4,827 6,389 33
15 Skyline Drive (F).......... -- 7,798 7,798 701
17 Skyline Drive (O).......... -- 7,405 7,405 533
2 Skyline Drive (O)........... 109 3,382 3,491 258
200 Saw Mill River Road (F)... 353 3,478 3,831 263
30 Saw Mill River Road (O).... 2,356 37,887 40,243 3,458
4 Skyline Drive (F)........... 363 7,902 8,265 733
7 Skyline Drive (O)........... 330 13,048 13,378 435
8 Skyline Drive (F)........... 212 5,202 5,414 357
TARRYTOWN
200 White Plains Road (O)..... 378 8,973 9,351 796
220 White Plains Road (O)..... 367 8,464 8,831 645
230 White Plains Road (R)..... 124 1,845 1,969 134
WHITE PLAINS
1 Barker Avenue (O)........... 207 10,056 10,263 739
1 Water Street (O)............ 211 5,644 5,855 406
11 Martine Avenue (O)......... 127 29,703 29,830 2,091
25 Martine Avenue (M)......... 120 11,616 11,736 839
3 Barker Avenue (O)........... 122 8,296 8,418 638
50 Main Street (O)............ 564 50,051 50,615 3,865
YONKERS
1 Enterprise Boulevard (L).... 1,380 -- 1,380 --
1 Executive Boulevard (O)..... 1,105 12,476 13,581 989
1 Odell Plaza (F)............. 1,206 7,050 8,256 512
100 Corporate Boulevard (F)... 602 10,259 10,861 740
2 Executive Plaza (R)......... 89 2,439 2,528 178
200 Corporate Boulevard South (F) 502 7,638 8,140 492
3 Executive Plaza (O)......... 385 6,563 6,948 461
4 Executive Plaza (F)......... 584 6,418 7,002 521
5 Odell Plaza (F)............. 331 3,017 3,348 218
6 Executive Plaza (F)......... 546 7,274 7,820 531
7 Odell Plaza (F)............. 419 4,504 4,923 364
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive (O)...... 619 9,117 9,736 654
1055 Westlakes Drive (O)...... 1,951 19,252 21,203 1,386
1205 Westlakes Drive (O)...... 1,323 20,491 21,814 1,546
1235 Westlakes Drive (O)...... 1,418 21,759 23,177 1,543
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive (O)......... 1,349 10,179 11,528 763
200 Stevens Drive (O)......... 1,644 20,521 22,165 1,532
300 Stevens Drive (O)......... 491 9,848 10,339 718
MEDIA
1400 Providence Rd -
Center I (O)................ 1,042 9,698 10,740 925
1400 Providence Rd. -
Center II(O)................ 1,544 17,358 18,902 1,742
</TABLE>
107
<PAGE>
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
COSTS
INITIAL COSTS CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- --------------------- ----- -------- ------------ ---- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue (O)....... 1990 1997 -- 1,713 12,559 130
PLYMOUTH MEETING
Five Sentry East (O).......... 1984 1996 -- 642 7,992 464
Five Sentry West (O).......... 1984 1996 -- 268 3,334 51
1150 Plymouth Meeting Mall (O) 1970 1997 -- 125 499 20,463
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam Avenue (O).... 1973 1998 10,784 3,300 16,734 540
NORWARK
40 Richards Avenue (O)........ 1985 1998 -- 1,087 18,399 1,077
SHELTON
1000 Bridgeport Avenue (O).... 1986 1997 -- 773 14,934 159
STAMFORD
419 West Avenue (F)........... 1986 1997 -- 4,538 9,246 39
500 West Avenue (F)........... 1988 1997 -- 415 1,679 62
550 West Avenue (F)........... 1990 1997 -- 1,975 3,856 322
600 West Avenue (F)........... 1999 1999 -- 2,305 2,863 261
650 West Avenue (F)........... 1998 1998 -- 1,328 -- 3,787
DISTRICT OF COLUMBIA
WASHINGTON
1400 L Street, NW (O)......... 1987 1998 -- 13,054 27,423 416
1709 New York Avenue, NW (O).. 1972 1998 -- 19,898 29,686 1,291
1201 Connecticut Avenue, NW (O) 1940 1999 -- 14,228 18,571 65
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place (O)..... 1989 1998 -- 2,114 13,546 461
BEXAR COUNTY, TEXAS
SAN ANTONIO
111 Soledad (O)............... 1918 1997 -- 2,004 8,017 322
1777 N.E. Loop 410 (O)........ 1986 1997 -- 3,119 12,477 817
84 N.E. Loop 410 (O).......... 1971 1997 -- 2,295 10,382 289
200 Concord Plaza Drive (O)... 1986 1997 -- 2,387 31,825 556
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place (O)........ 1986 1997 -- 942 3,767 56
DALLAS COUNTY, TEXAS
DALLAS
3030 LBJ Freeway (O).......... 1984 1997 -- 6,098 24,366 937
3100 Monticello (O)........... 1984 1997 -- 1,940 7,762 4,594
8214 Westchester (O).......... 1983 1997 -- 1,705 6,819 200
IRVING
2300 Valley View (O).......... 1985 1997 -- 1,913 7,651 325
RICHARDSON
1122 Alma Road (O)............ 1977 1997 -- 754 3,015 169
HARRIS COUNTY, TEXAS
HOUSTON
10497 Town & Country Way (O).. 1981 1997 -- 1,619 6,476 418
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD (1)
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- --------------------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C>
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue (O)....... 1,714 12,688 14,402 733
PLYMOUTH MEETING
Five Sentry East (O).......... 642 8,456 9,098 659
Five Sentry West (O).......... 268 3,385 3,653 269
1150 Plymouth Meeting Mall (O) 125 20,962 21,087 934
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam Avenue (O).... 3,300 17,274 20,574 926
NORWARK
40 Richards Avenue (O)........ 1,087 19,476 20,563 647
SHELTON
1000 Bridgeport Avenue (O).... 773 15,093 15,866 997
STAMFORD
419 West Avenue (F)........... 4,538 9,285 13,823 679
500 West Avenue (F)........... 415 1,741 2,156 127
550 West Avenue (F)........... 1,975 4,178 6,153 334
600 West Avenue (F)........... 2,305 3,124 5,429 7
650 West Avenue (F)........... 1,328 3,787 5,115 211
DISTRICT OF COLUMBIA
WASHINGTON
1400 L Street, NW (O)......... 13,054 27,839 40,893 1,138
1709 New York Avenue, NW (O).. 19,898 30,977 50,875 1,229
1201 Connecticut Avenue, NW (O) 14,228 18,636 32,864 193
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place (O)..... 1,393 14,728 16,121 514
BEXAR COUNTY, TEXAS
SAN ANTONIO
111 Soledad (O)............... 2,004 8,339 10,343 423
1777 N.E. Loop 410 (O)........ 3,119 13,294 16,413 738
84 N.E. Loop 410 (O).......... 2,296 10,670 12,966 538
200 Concord Plaza Drive (O)... 2,393 32,375 34,768 1,649
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place (O)........ 942 3,823 4,765 200
DALLAS COUNTY, TEXAS
DALLAS
3030 LBJ Freeway (O).......... 6,098 25,303 31,401 1,443
3100 Monticello (O)........... 2,511 11,785 14,296 563
8214 Westchester (O).......... 1,705 7,019 8,724 358
IRVING
2300 Valley View (O).......... 1,913 7,976 9,889 443
RICHARDSON
1122 Alma Road (O)............ 754 3,184 3,938 161
HARRIS COUNTY, TEXAS
HOUSTON
10497 Town & Country Way (O).. 1,619 6,894 8,513 372
</TABLE>
108
<PAGE>
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
COSTS
INITIAL COSTS CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
- --------------------- ----- -------- ------------ ---- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
14511 Falling Creek (O)....... 1982 1997 -- 434 1,738 223
1717 St. James Place (O)...... 1975 1997 -- 909 3,636 155
1770 St. James Place (O)...... 1973 1997 -- 730 2,920 289
5225 Katy Freeway (O)......... 1983 1997 -- 1,403 5,610 695
5300 Memorial (O)............. 1982 1997 -- 1,283 7,269 103
POTTER COUNTY, TEXAS
AMARILLO
6900 IH - 40 West (O)......... 1986 1997 -- 287 1,147 256
TARRANT COUNTY, TEXAS
EULESS
150 West Park Way (O)......... 1984 1997 -- 852 3,410 78
TRAVIS COUNTY, TEXAS
AUSTIN
1250 Capital of Texas Hwy.
South (O)................... 1985 1998 -- 4,121 32,935 401
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard (O) 1991 1997 6,717 2,732 10,927 5,743
PHOENIX
19640 North 31st Street (O)... 1990 1997 7,112 3,437 13,747 4
SCOTTSDALE
9060 E. Via Linda Boulevard (O) 1984 1997 -- 3,720 14,879 --
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street (O) 1997 1998 -- 2,680 23,125 27
DENVER
400 South Colorado Boulevard (O) 1983 1998 -- 1,461 10,620 402
ENGLEWOOD
5350 South Roslyn Street (O).. 1982 1998 -- 862 6,831 129
9359 East Nichols Avenue (O).. 1997 1998 -- 1,155 8,171 (444)
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court (O) 1997 1998 -- 653 4,936 14
303 South Technology Court-A (O) 1997 1998 -- 623 3,892 4
303 South Technology Court-B (O) 1997 1998 -- 623 3,892 5
LOUISVILLE
1172 Century Drive (O)........ 1996 1998 -- 707 4,647 37
248 Centennial Parkway (O).... 1996 1998 -- 708 4,647 37
285 Century Place (O)......... 1997 1998 -- 889 10,133 13
DENVER COUNTY, COLORADO
DENVER
3600 South Yosemite (O)....... 1974 1998 -- 556 12,980 27
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
384 Inverness Drive South (O). 1985 1998 -- 703 5,653 150
400 Inverness Drive (O)....... 1997 1998 -- 1,584 19,878 (895)
5975 South Quebec Street (O).. 1996 1998 -- 855 11,551 201
67 Inverness Drive East (O)... 1996 1998 -- 1,034 5,516 10
PARKER
9777 Pyramid Court (O)........ 1995 1998 -- 1,304 13,189 26
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF
PERIOD (1)
--------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
- --------------------- ---- ------------ ----- ------------
<S> <C> <C> <C> <C>
14511 Falling Creek (O)....... 434 1,961 2,395 100
1717 St. James Place (O)...... 909 3,791 4,700 227
1770 St. James Place (O)...... 730 3,209 3,939 190
5225 Katy Freeway (O)......... 1,403 6,305 7,708 321
5300 Memorial (O)............. 1,710 6,945 8,655 355
POTTER COUNTY, TEXAS
AMARILLO
6900 IH - 40 West (O)......... 287 1,403 1,690 66
TARRANT COUNTY, TEXAS
EULESS
150 West Park Way (O)......... 852 3,488 4,340 192
TRAVIS COUNTY, TEXAS
AUSTIN
1250 Capital of Texas Hwy.
South (O)................... 4,121 33,336 37,457 1,620
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard (O) 3,593 15,809 19,402 731
PHOENIX
19640 North 31st Street (O)... 3,437 13,751 17,188 703
SCOTTSDALE
9060 E. Via Linda Boulevard (O) 3,720 14,879 18,599 760
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street (O) 2,682 23,150 25,832 1,022
DENVER
400 South Colorado Boulevard (O) 1,461 11,022 12,483 458
ENGLEWOOD
5350 South Roslyn Street (O).. 862 6,960 7,822 346
9359 East Nichols Avenue (O).. 1,155 7,727 8,882 358
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court (O) 653 4,950 5,603 225
303 South Technology Court-A (O) 623 3,896 4,519 195
303 South Technology Court-B (O) 623 3,897 4,520 196
LOUISVILLE
1172 Century Drive (O)........ 707 4,684 5,391 238
248 Centennial Parkway (O).... 708 4,684 5,392 239
285 Century Place (O)......... 891 10,144 11,035 430
DENVER COUNTY, COLORADO
DENVER
3600 South Yosemite (O)....... 556 13,007 13,563 550
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
384 Inverness Drive South (O). 703 5,803 6,506 277
400 Inverness Drive (O)....... 1,584 18,983 20,567 848
5975 South Quebec Street (O).. 856 11,751 12,607 548
67 Inverness Drive East (O)... 1,035 5,525 6,560 276
PARKER
9777 Pyramid Court (O)........ 1,306 13,213 14,519 650
</TABLE>
109
<PAGE>
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
SCHEDULE III
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
COSTS CARRIED AT CLOSE OF
INITIAL COSTS CAPITALIZED PERIOD (1)
YEAR RELATED BUILDING AND SUBSEQUENT BUILDING AND
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL
- --------------------- ----- -------- ------------ ---- ------------ -------------- ---- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
1975 Research Parkway (O)..... 1997 1998 -- 1,397 13,221 2,455 1,611 15,462 17,073
2375 Telstar Drive (O)........ 1998 1999 -- 348 2,507 2,791 348 5,298 5,646
8415 Explorer (O)............. 1998 1999 -- 347 2,507 2,790 347 5,297 5,644
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard (O)....... 1985 1998 -- 774 6,891 403 775 7,293 8,068
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
760 Market Street (O)......... 1908 1997 -- 5,588 22,352 38,306 13,499 52,747 66,246
795 Folsom Street (O)......... 1977 1999 -- 9,348 24,934 3,836 9,348 28,770 38,118
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard (O)..... 1982 1997 -- 3,959 15,837 394 3,959 16,231 20,190
POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway (O)...... 1988 1997 -- 1,708 6,833 181 1,708 7,014 8,722
DOUGLAS COUNTY, NEBRASKA
OMAHA
210 South 16th Street (O)..... 1894 1997 -- 2,559 10,236 110 2,559 10,346 12,905
PROJECTS UNDER DEVELOPMENT.... -- 49,831 -- 50,542 49,831 50,542 100,373
FURNITURE, FIXTURES & EQUIPMENT -- -- -- 6,160 -- 6,160 6,160
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS $527,004 $527,383 $2,655,585 $471,877 $549,096 $3,105,749 $3,654,845
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACCUMULATED
PROPERTY LOCATION (2) DEPRECIATION
- --------------------- ------------
<S> <C>
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
1975 Research Parkway (O)..... 630
2375 Telstar Drive (O)........ 58
8415 Explorer (O)............. 58
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard (O)....... 367
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
760 Market Street (O)......... 2,232
795 Folsom Street (O)......... 329
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard (O)..... 822
POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway (O)...... 384
DOUGLAS COUNTY, NEBRASKA
OMAHA
210 South 16th Street (O)..... 428
PROJECTS UNDER DEVELOPMENT.... --
FURNITURE, FIXTURES & EQUIPMENT 1,955
- -------------------------------------------------------------------
TOTALS $256,629
===================================================================
</TABLE>
(1) The aggregate cost for federal income tax purposes at December 31, 1999 was
approximately $2.65 billion.
(2) LEGEND OF PROPERTY CODES:
(O)=Office Property (M)=Multi-family Residential Property
(F)=Office/Flex Property (R)=Stand-alone Retail Property
(I)=Industrial/Warehouse Property (L)=Land Lease
110
<PAGE>
MACK-CALI REALTY CORPORATION
NOTE TO SCHEDULE III
Changes in rental properties and accumulated depreciation for the periods ended
December 31, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
RENTAL PROPERTIES
Balance at beginning of year $ 3,467,799 $ 2,629,616 $ 853,352
Additions 204,565 838,183 1,776,264
Retirements/Disposals (17,519) -- --
----------- ----------- -----------
Balance at end of year $ 3,654,845 $ 3,467,799 $ 2,629,616
=========== =========== ===========
ACCUMULATED DEPRECIATION
Balance at beginning of year $ 177,934 $ 103,133 $ 68,610
Depreciation expense 81,730 74,801 34,523
Retirements/Disposals (3,035) -- --
----------- ----------- -----------
Balance at end of year $ 256,629 $ 177,934 $ 103,133
=========== =========== ===========
</TABLE>
111
<PAGE>
Exhibit 10.18
EXECUTION COPY
AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE (this "AGREEMENT") made this 28th
day of December, 1999 by and between MACK-CALI REALTY, L.P., a Delaware limited
partnership having an address at c/o Mack-Cali Realty Corporation, 11 Commerce
Drive, Cranford, New Jersey 07016 ("SELLER") and PARSIPPANY OFFICE ASSOCIATES
L.L.C., a New Jersey limited liability company having an address at c/o
Mack-Cali Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016
("PURCHASER").
In consideration of the mutual promises, covenants, and agreements set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. For purposes of this Agreement, the
following capitalized terms have the meanings set forth in this Section 1.1:
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For
purposes of this definition, the term "control" (including the correlative
meanings of the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise; PROVIDED (but without limiting the foregoing) that no
pledge of voting securities of any Person without the current right to exercise
voting rights with respect thereto shall by itself be deemed to constitute
control over such Person; PROVIDED, FURTHER, that Purchaser and the Companies
shall not be deemed to be an Affiliate of Seller or Seller's Affiliates
immediately following the Closing.
"ASSIGNMENT" has the meaning ascribed to such term in Section 10.3(a),
in the form attached hereto as EXHIBIT A.
"AUTHORITIES" means the various governmental and quasi-governmental
bodies or agencies having jurisdiction over the Properties, or any applicable
portion thereof.
<PAGE>
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which national banking associations are authorized or required to close.
"CERTIFICATE AS TO FOREIGN STATUS" has the meaning ascribed to such term
in Section 10.3(g).
"CLOSING" means the consummation of the purchase and sale of the
Membership Interests contemplated by this Agreement, as provided for in Article
X.
"CLOSING DATE" means December 28, 1999.
"CLOSING STATEMENT" has the meaning ascribed to such term in Section
10.4(a).
"CLOSING SURVIVING OBLIGATIONS" means the rights, liabilities and
obligations set forth in Article VIII and 10.4, Articles XII and XVI, and
Sections 18.2, 18.5, 18.7, 18.9, 18.11 and 18.12, and any other provisions which
pursuant to their terms survive the Closing hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANIES" means Mack-Cali Campus Realty L.L.C., a New Jersey limited
liability company, and Mack-Cali Morris Realty L.L.C., a New Jersey limited
liability company.
"DOCUMENTS" has the meaning ascribed to such term in Section 8.1(z).
"EFFECTIVE DATE" means the date first written above.
"ENVIRONMENTAL LAWS" means each and every federal, state, county and
municipal statute, ordinance, rule, regulation, code, order, requirement,
directive, binding written interpretation and binding written policy
pertaining to Hazardous Substances issued by any Authorities and in effect as
of the date of this Agreement with respect to or which otherwise pertain to
or affect the Properties, or any portion thereof, the use, ownership,
occupancy or operation of the Properties, or any portion thereof, or the
Companies, and as same have been amended, modified or supplemented from time
to time prior to the Effective Date, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. SECTIONS 9601 et seq.), the Hazardous Substances Transportation
Act (49 U.S.C. SECTIONS 1802 et seq.), the Resource Conservation and Recovery
Act (42 U.S.C. SECTIONS 6901 et seq.), as amended by the Hazardous and Solid
Wastes Amendments of 1984, the Water Pollution Control Act (33 U.S.C.
SECTIONS 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. SECTIONS 300f
et seq.), the Clean Water Act (33 U.S.C. SECTIONS 1321 et seq.), the Clean
Air Act (42 U.S.C. SECTIONS 7401 et seq.), the Solid Waste Disposal Act (42
U.S.C. SECTIONS 6901 et seq.), the Toxic Substances Control Act (15 U.S.C.
SECTIONS 2601 et seq.), the Emergency Planning and Community Right-to-Know
Act of 1986 (42 U.S.C. SECTIONS 11001 et seq.), the Radon and Indoor Air
Quality Research Act (42 U.S.C. SECTIONS 7401 note, et seq.), the National
Environmental Policy Act (42 U.S.C. SECTIONS 4321 et seq.), the Superfund
Amendment Reauthorization Act of 1986 (42 U.S.C. SECTIONS 9601 et seq.), the
Occupational Safety and Health Act (29 U.S.C. SECTIONS 651 et seq.), the New
Jersey Environmental Rights Act (N.J.S.A. 2A:35A-1 et seq.),
<PAGE>
the New Jersey Spill Compensation and Control Act (N.J.S.A. 58:10-23.11 et
seq.), the New Jersey Air Pollution Control Act (N.J.S.A. 26:2C-1 et seq.), the
Hazardous Substances Discharge: Reports and Notices Act (N.J.S.A. 13:1K-15 et
seq.), the Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq.), the New
Jersey Underground Storage of Hazardous Substances Act (N.J.S.A. 58:10A-21 et
seq.) (collectively, the "ENVIRONMENTAL STATUTES"), and any and all rules and
regulations which have become effective prior to the Effective Date under any
and all of the Environmental Statutes.
"FINANCIAL INFORMATION has the meaning ascribed to such term in Section
8.1(z).
"GOVERNMENTAL REGULATIONS" means all statutes, ordinances (including
without limitation, zoning ordinances), rules and regulations of the Authorities
applicable to Seller or the Companies or the use or operation of the Properties
or any portion thereof.
"HAZARDOUS SUBSTANCES" means (a) asbestos, radon gas and urea
formaldehyde foam insulation, (b) any solid, liquid, gaseous or thermal
contaminant, including smoke vapor, soot, fumes, acids, alkalis, chemicals,
petroleum products or byproducts, PCBs, phosphates, lead or other heavy metals
and chlorine, (c) any solid or liquid waste (including, without limitation,
hazardous waste), hazardous air pollutant, hazardous substance, hazardous
chemical substance and mixture, toxic substance, pollutant, pollution, regulated
substance and contaminant, as such terms are defined in any of the Environmental
Statutes as such Environmental Statutes have been amended and/or supplemented
from time to time prior to the date of this Agreement, and any and all rules and
regulations promulgated under any of the above, and (d) any other chemical,
material or substance, the use or presence of which, or exposure to the use or
presence of which, is prohibited, limited or regulated by any Environmental
Statutes.
"IMPROVEMENTS" means all buildings, structures, fixtures, parking areas
and other improvements located on the Real Properties.
"KNOWLEDGE," "TO ITS KNOWLEDGE," "TO THE BEST OF ITS KNOWLEDGE," "KNOWN
TO IT" means the current actual knowledge of any employee or officer of the
party hereto to which the term applies or of the Companies who have actively and
directly participated in the negotiation and closing of the matters described
herein or who have actively and directly participated in the management or
operation of the Real Properties and who devoted substantive attention
"LEASE SCHEDULES" has the meaning ascribed to such term in Section
8.1(z).
"LEASES" means all of the leases and other agreements with Tenants with
respect to the use and occupancy of the Real Properties, together with all
renewals and modifications thereof, if any, and any new leases entered into
after the Effective Date and prior to the Closing.
"LICENSES AND PERMITS" means, collectively, all of the Companies' right,
title and interest, to the extent assignable, in and to licenses, permits,
certificates of occupancy, approvals, dedications, subdivision maps and
entitlements now or hereafter issued, approved or granted by the Authorities in
connection with the Properties, together with all renewals and modifications
<PAGE>
thereof.
"MANAGEMENT AGREEMENT" means, collectively, that certain Leasing and
Management Agreement (in form and substance satisfactory to both Seller and
SLAB) dated as of the date hereof between each of the Companies and an Affiliate
of Seller for the management of the Properties.
"MEMBERSHIP INTERESTS" means 100% of the membership interests owned by
Seller with respect to the Companies.
"PERSON" means any individual, corporation, limited liability company,
partnership, association, trust or other entity or organization.
"PERSONAL PROPERTY" means all of the Companies' right, title and
interest in and to all equipment, appliances, tools, supplies, machinery,
artwork, furnishings and other tangible personal property attached to,
appurtenant to, located in and used exclusively in connection with the ownership
or operation of the Improvements and situated at the Properties at the time of
Closing.
"PHASE I UPDATE" means an updated Phase I environmental report for the
benefit of the Companies from the environmental consultants who prepared the
existing Phase I environmental report on the Properties.
"PROPERTIES" means the Real Properties, the Improvements and the
Personal Property.
"PURCHASE PRICE" has the meaning ascribed to such term in Section 3.1.
"PURCHASER" means Parsippany Office Associates L.L.C., a New Jersey
limited liability company.
"REAL PROPERTIES" means those certain real properties located at 2
Hilton Court, 7 Campus Drive, 8 Campus Drive, 5 Sylvan Way, 7 Sylvan Way and 2
Dryden Way, all in Parsippany, New Jersey and certain leasehold interests
related thereto, all as more particularly described on the legal description
attached hereto and made a part hereof as EXHIBIT B, together with all of the
Companies' right, title and interest, if any, in and to the appurtenances
pertaining thereto, including but not limited to the Companies' right, title and
interest in and to the adjacent streets, alleys and right-of-ways, and any
easement rights, air rights, subsurface development rights and water rights.
"RENTALS" has the meaning ascribed to such term in Section 10.4(b).
"SERVICE CONTRACTS" means all of the Companies' right, title and
interest, to the extent assignable, in and to all service agreements,
maintenance contracts, equipment leasing agreements, warranties, guarantees,
bonds, open purchase orders and other contracts for the provision of labor,
services, materials or supplies relating solely to the Properties, as listed and
<PAGE>
described on EXHIBIT C attached hereto, together with all renewals, supplements,
amendments and modifications thereof, and any new such agreements entered into
after the Effective Date, all to the extent they survive the Closing.
"SECURITY DEPOSITS" means all security deposits paid to the Companies,
as landlord (together with any interest which has accrued thereon, but only to
the extent such interest has accrued for the account of the Tenant), and not
previously applied to Rental or other charges.
"SELLER" means Mack-Cali Realty, L.P., a Delaware limited partnership.
"SLAB" means SLAB Investments Holding, Inc., a Delaware corporation, a
member of the Purchaser.
"TENANTS" means the tenants or users who are parties to the Leases.
"TITLE ENDORSEMENTS" means the endorsements to the Title Policies
described in Section 10.3(d).
"TITLE POLICIES" means those certain owner's title policies in respect
of the Real Properties listed on EXHIBIT G attached thereto.
SECTION 1.2 REFERENCES: EXHIBITS AND SCHEDULES. Except as
otherwise specifically indicated, all references in this Agreement to Articles
or Sections refer to Articles or Sections of this Agreement, and all references
to Exhibits or Schedules refer to Exhibits or Schedules attached hereto, all of
which Exhibits and Schedules are incorporated into, and made a part of, this
Agreement by reference. The words "herein," "hereof," "hereinafter" and words
and phrases of similar import refer to this Agreement as a whole and not to any
particular Section or Article.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
SECTION 2.1 AGREEMENT. Seller hereby agrees to sell, convey,
transfer and assign to Purchaser, and Purchaser hereby agrees to purchase,
acquire, assume and accept from Seller, on the Closing Date and subject to the
terms and conditions of this Agreement, all of the Membership Interests.
SECTION 2.2 INDIVISIBLE ECONOMIC PACKAGE. Purchaser has no right
to purchase, and Seller has no obligation to sell, less than all of the
Membership Interests, it being the express agreement and understanding of
Purchaser and Seller that, as a material inducement to Seller and Purchaser to
enter into this Agreement, Purchaser has agreed to purchase, and Seller has
agreed to sell, all of the Membership Interests, subject to and in accordance
with the terms and conditions hereof.
<PAGE>
ARTICLE III
PURCHASE PRICE
SECTION 3.1 PURCHASE PRICE. The purchase price for the Membership
Interests (the "PURCHASE PRICE") shall be One Hundred Fifty Two Million and/100
Dollars ($152,000,000) in lawful currency of the United States of America,
payable as provided in Section 3.2.
SECTION 3.2 METHOD OF PAYMENT OF PURCHASE PRICE. On or before
11:00 a.m. Eastern time on the Closing Date, Purchaser shall pay to Seller the
Purchase Price, as adjusted pursuant to the terms of this Agreement, by Federal
Reserve wire transfer of immediately available funds to the account of Seller.
ARTICLE IV
[INTENTIONALLY OMITTED.]
ARTICLE V
[INTENTIONALLY OMITTED.]
ARTICLE VI
[INTENTIONALLY OMITTED.]
ARTICLE VII
[INTENTIONALLY OMITTED.]
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.1 SELLER'S REPRESENTATIONS AND WARRANTIES. The
following constitute the sole representations and warranties of Seller, which
representations and warranties shall be true as of the Effective Date and as of
the Closing Date. Seller represents and warrants to Purchaser the following:
(a) STATUS. Seller is a limited partnership, duly organized and
validly existing under the laws of the State of Delaware with all requisite
power and authority to carry on the business in which it is engaged and to own
the properties it owns. Mack-Cali Campus Realty L.L.C. is a limited liability
company, duly organized and validly existing under the laws of the State of New
Jersey with all
<PAGE>
requisite power and authority to carry on the business in which it is engaged
and to own the properties it owns. Mack-Cali Morris Realty L.L.C. is a limited
liability company, duly organized and validly existing under the laws of the
State of New Jersey with all requisite power and authority to carry on the
business in which it is engaged and to own the properties it owns. Each of the
Companies and Seller is not in violation or breach of its organizational
documents including, without limitation, its Certificate of Formation or LLC
Agreement. Each of Seller and the Companies is duly qualified and licensed to do
business and is in good standing in all jurisdictions where the nature of their
business makes such qualification necessary and has the requisite power and
authority to conduct its business as now being conducted and to own, lease and
sell all of the Properties. Companies possess all franchises, patents,
copyrights, trademarks, trade names, licenses and permits adequate for the
conduct of their businesses substantially as now conducted. Companies do not
have any direct or indirect subsidiaries or any equity interests in any other
entity. Each of Seller and the Companies are not an "investment company," or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended. No election is in effect whereby the
Seller or the Companies are treated as a corporation for tax purposes. Neither
of the Companies owns, nor have they ever owned, any asset or property other
than the Real Properties (and 1 Sylvan Way, Parsippany, New Jersey, in the case
of Mack-Cali Morris Realty LLC which that Company no longer owns or has any
rights or obligations in respect of) and incidental personal property necessary
for the ownership and operation of the Real Properties. The Companies do not now
engage in, nor have they ever engaged in, any business other than that permitted
by their respective LLC operating agreements. The Companies have no obligations,
liabilities or commitments other than those related to the Real Properties and
disclosed to Purchasers. The Companies have not entered into any contract or
agreement with any member, manager, general partner, principal or affiliate of
Seller or any affiliate thereof, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arm's length basis with third parties other than an affiliate. The Companies
have not incurred any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than trade payables or accrued
expenses incurred in the ordinary course of business of operating the Real
Properties. The Companies have not made any loans or advances to any third party
(including any member, manager, general partner, principal or affiliate of
Seller, or any guarantor). The Companies have done or caused to be done all
things necessary to preserve their existence and limited liability company
formalities.
(b) AUTHORITY. This Agreement has been duly executed and
delivered by Seller and the execution and delivery of this Agreement and the
performance of Seller's obligations hereunder have been or will, on or prior to
the Closing, be duly authorized by all necessary action on the part of Seller
and the Companies, and no other procedures on the part of Seller or either of
the Companies are necessary in order to permit them to consummate the
transactions contemplated hereby, and this Agreement constitutes the legal,
valid and binding obligation of Seller. Neither Seller nor the Companies is
required to obtain the consent or any other authorization of a person or entity
in connection with execution and delivery of this Agreement and performance of
its obligations under this Agreement.
(c) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Seller and the consummation by Seller or either of the Companies of
the transactions contemplated hereby will not (i) violate any judgment, order,
statute, writ, injunction, decree, regulation or ruling of any court or
Authority or arbitrator or conflict with, result in a breach of,
<PAGE>
or constitute a default under the organizational documents of Seller or the
Companies, any note or other evidence of indebtedness, any mortgage, deed of
trust or indenture, or any lease or other agreement or instrument to which
Seller or either of the Companies is a party or by which they are bound; (ii)
result in the creation of any lien, charge, claim or encumbrance upon the
Properties by virtue of any of those items set forth in (i) above; or (iii)
require any order, authorization or consent of any Authority or other person or
entity which has not been obtained.
(d) OWNERSHIP OF MEMBERSHIP INTERESTS. The Membership Interest in
each of the Companies is duly authorized, validly issued, fully paid and
nonassessable, and has not been issued in violation of any preemptive or similar
rights. Seller is the owner of record and beneficially of the Membership
Interests, free and clear of all mortgages, pledges, encumbrances, security
interests, charges, agreements or claims of any kind (collectively, "Liens").
There are no authorized or outstanding options, warrants, calls, subscriptions
or rights, commitments or other agreements of any kind to purchase any
membership interest or capital stock of the Companies or to cause the Companies
to issue any membership interest or shares of capital stock or securities
convertible into or exchangeable or exercisable for any membership interest or
capital stock of any Company. There are no agreements or understandings to which
either of the Companies is a party or by which it is bound with respect to the
voting, sale or transfer of its Membership Interest, other than the limited
liability company agreements. Upon delivery of the Membership Interests against
payment thereof in accordance with this Agreement, Purchaser will acquire good
and marketable title to the Membership Interests, free and clear of any and all
Liens. No Person, other than Purchaser, has any right to acquire any of the
Membership Interests. The Membership Interests constitute all of the membership
interests in each of the Companies.
(e) FINANCIAL INFORMATION; LIABILITIES AND OBLIGATIONS. There are
no material inaccuracies or omissions in the Financial Information. Except for
those incurred in the ordinary course of business since the date of the
Financial Information, the Financial Information reflects all liabilities of
each of the Companies, accrued, contingent or otherwise, arising out of
transactions effected or events occurring on or prior to the Effective Date of
this Agreement. As of the Closing, each of the Companies will not be liable upon
or with respect to, or obligated in any other way to provide funds in respect of
or to guarantee or assume in any manner, any debt, obligation, dividend or
distribution of any other Person, and there is no basis for the assertion of any
other claims or liabilities of any nature or in any amount against the
Companies.
(f) ORGANIZATIONAL DOCUMENTS AND RECORDS OF COMPANIES. The copies
of the operating agreement, other organizational documents and the minute books
of the Companies which have been or are delivered to Purchaser hereunder are
true, correct and complete copies thereof.
(g) TAXES. Each of the Companies has duly and timely filed all
income, excise, corporate, franchise, property, sales, payroll, withholding and
other tax returns and reports required to be filed by it as of the date hereof
and has paid or established adequate reserves for all taxes (including penalties
and interest) which have or may become due pursuant to such returns and any
assessments which have been received by it or otherwise. Except as disclosed in
the Financial Information, no tax audit of the Companies is pending or
threatened,
<PAGE>
and the results of any completed audits are properly reflected in the Financial
Information. Neither of the Companies has granted any extension to any taxing
authority of the limitation period during which any tax liability may be
asserted. No transfer taxes are or shall be due as a result of transfer of the
Membership Interests or the transactions contemplated hereunder or related
hereto.
(h) SUITS AND PROCEEDINGS. Except as listed in EXHIBIT D, there
are no:
(i) legal actions, claims, charges, complaints,
petitions, suits or similar proceedings or unsatisfied orders
pending and served, or threatened against the Companies, the
Seller or the Properties which if adversely determined, might
adversely affect the value of the Companies or the Properties,
the continued ownership, occupancy, or operations thereof, or
Seller's ability to consummate the transactions contemplated
hereby;
(ii) pending or threatened grievances or arbitration
proceedings or unsatisfied arbitration awards, or judicial
proceedings or orders respecting awards, relating to any of the
Properties or their ownership, operation or occupancy;
(iii) pending or threatened unfair labor practice orders
or judicial proceedings or orders with respect thereto relating
to any of the Properties or their ownership, operation or
occupancy; or
(iv) any other action, proceeding or investigation
pending or threatened against or involving Seller or either of
the Companies or any of the Properties that might adversely
affect the ownership, operation or occupancy of any of the
Properties or such person so acquiring ownership, operation or
occupancy.
To the best knowledge of Seller and the Companies, there are no facts which, if
known by a potential claimant or Authority, would give rise to a claim or
proceeding which, if asserted or conducted with results unfavorable to Seller,
would have a material adverse effect on the ownership or operation of the
Properties, the financial condition or prospects of the Properties or the
consummation of the transactions contemplated by this Agreement. For the purpose
of this Section 8.1(a) any of the terms set forth in subsections (i) through
(iv) above which are adequately insured against shall not be considered subject
to disclosure hereunder.
(i) NON-FOREIGN ENTITY. Seller is not a "foreign person" or
"foreign corporation" as those terms are defined in the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder.
(j) TENANTS. As of the Closing, the only tenants of the
Properties are the Tenants set forth in the Lease Schedules. The information set
forth on each of the Lease Schedules are accurate and complete as of the date
thereon. The Lease Schedules, attached hereto as EXHIBIT E, accurately and
completely set forth in all material respects for each Lease, the following: the
name of the Tenant, the lease expiration date, extension and renewal provisions,
<PAGE>
the base rent payable and the security deposits held thereunder. Seller and the
Companies are in compliance with all legal requirements relating to such
security deposits. The Documents made available to Purchaser pursuant to Section
8.1(z) hereof include true, correct and complete copies of all of the Leases.
The Leases are in full force and effect. Except as shown on the Lease Schedules,
neither the Companies nor the Tenants are in default of any monetary or, to the
best of Sellers' and the Companies' knowledge, non-monetary obligations under
the Leases. No event or omission has occurred which but for the passing of time
or giving of notice or both would be a monetary or non-monetary default, on the
part of either landlord or tenant under any Lease, and there is no outstanding
defense, counterclaim or offset against the payment of any rent or other amount
payable thereunder or against the performance of any obligation thereunder.
Neither Seller nor the Companies have received notice or has knowledge of any
pending or threatened rent strikes, tenant organizations, tenant unions or
tenant interpleader actions. All work and materials, if any, required to be
performed or furnished, as applicable, prior to the date hereof by landlord
under each of the Leases has been performed and furnished in accordance with the
terms of such Leases and fully paid for. All tenant allowances and concessions
(including all rent-free periods) will be paid for and furnished, as applicable,
by Seller by Closing to the extent required by agreement or otherwise so to be
paid for and furnished, as applicable, by Closing. No commission, compensation
or other amount is now or hereafter shall become payable to any broker or other
agent under any written or oral agreement or understanding with any broker or
other agent in connection with any Leases or renewals thereof, or any other
options thereunder. Each such Lease is a bona fide Lease with a Tenant totally
unrelated to and independent of Seller, the Companies or their Affiliates. To
the best knowledge of Seller and the Companies, there are no circumstances or
events affecting the financial condition of any Tenant or otherwise which might
prevent or seriously hinder such Tenant from fulfilling its obligations under
its Lease. Seller and the Companies have no knowledge of any intention or
indication of intention by any Tenant to terminate its Lease or to limit or
alter its Lease in any material respect. No Tenant under a Lease has paid rent
more than thirty (30) days in advance, and the rents under such Leases have not
been waived, released, or otherwise discharged or compromised. Each Lease
constitutes the legal , valid and binding obligation of the Company constituting
the lessor thereof and is enforceable against the tenant thereof. Each tenant
under the Lease has entered into occupancy of the demised premises. Except as
disclosed to Purchaser in writing, there are no management fees payable by any
Company with respect to the management of the Real Properties. Each Tenant has
accepted and is occupying the entire demised premises. No rent has agreed to be
paid more than one month in advance. Rent has been paid in respect of each Lease
through to the date shown on the Lease Schedules attached. No Tenant has
advanced any funds for or on behalf of Landlord for which it has a right to
deduct or offset from rent. All amendments, supplements and modifications to the
Leases are listed on the Lease Schedule. No Tenant has a purchase option or
right of first refusal on the Real Properties or any part thereof or has any
right to additional space.
(k) SERVICE CONTRACTS. The Service Contracts are legal, valid and
in full force and effect. None of the parties thereto are in default under any
Service Contract. The Documents made available to Purchaser pursuant to Section
5.2 hereof include true, correct and complete copies of all Service Contracts
under which the Companies are currently paying for services rendered in
connection with the Properties. Other than the Leases, the Service Contracts and
the
<PAGE>
Management Agreement, the Companies, as of the Closing, will not be a party
to any other agreements, contracts or commitments.
(l) COMPLIANCE WITH LAWS. Neither Seller nor any of the Companies
has received any written notice of any violations of Governmental Regulations
with respect to the Companies or the Properties. Neither the Companies nor the
Properties are in material violation of any Governmental Regulations and, to the
knowledge of Seller and the Companies, neither the Companies nor the Properties
are in any other violation of Governmental Regulations. The Real Properties and
Improvements do not require any rights over, or restrictions against, other
property in order to comply with any Governmental Regulations.
(m) ZONING. The Improvements and the continuation of the present
location, use, occupancy, operation, maintenance, repair and replacement of the
Real Properties or any part thereof, including the present location, use,
occupancy, operation, maintenance, repair and replacement by the Tenants, comply
in full with all zoning requirements and do not depend on or require to any
extent any further ordinance, variance, special exception or other special
governmental approval for their continuing legality. Without limiting the
foregoing, such Improvements and such location, use, occupancy, operation,
maintenance, repair and replacement are not nonconforming uses in respect of
zoning and other governmental requirements. There is no violation of any
recorded restriction, condition or agreement affecting any of the Real
Properties or, to the best knowledge of Seller and the Companies, of any other
restriction, condition or agreement affecting any of the Real Properties; and
neither Seller nor either Company has received notice of, and to the best
knowledge of Seller and the Companies, there does not exist any violation of,
and continuation of the present locations, uses, occupancies and operations will
not result in a violation of, any building, health, safety, disability,
environmental, pollution control, fire or similar law, ordinance, order,
directive or regulation respecting the Real Properties or any part thereof. To
the best knowledge of Seller and the Companies, all Improvements (including all
roads, parking areas, curbs, curb cuts, sidewalks and sewers and other
utilities) in, on or about the Real Properties have been completed and installed
in accordance with the drawings, plans and specifications approved by the
governmental authorities having jurisdiction or as otherwise required by such
governmental authorities. To the best knowledge of Seller and the Companies, all
impact and other similar fees and charges have been paid and no additional
and/or new impact and other similar fees and charges are pending or
contemplated.
(n) ENVIRONMENTAL LAWS. To the best knowledge of Seller and the
Companies:
1. the Real Properties are and at all times have been in compliance with
all Environmental Laws:
2. no notice, demand, claim or other communication has been given to or
served on Seller or either of the Companies or on previous owners or tenants of
the Real Properties from any entity, governmental body or individual claiming
any violation of any of the Environmental Laws or demanding payment,
contribution, indemnification, remedial action, removal action or
<PAGE>
any other action or inaction with respect to any actual or alleged environmental
damage or injury to persons, property or natural resources, and no basis for any
of the foregoing exists;
3. no above-ground or underground storage tanks, vessels and related
equipment and containers are or ever were located on the Real Properties;
4. the soil, surface water and ground water of, under, on or around the
Real Properties are free from any Hazardous Substance;
5. the Real Properties have never been used for or in connection with
the manufacture, refinement, treatment, storage, generation, transport or
hauling of any Hazardous Substance in excess of levels permitted by applicable
Environmental Laws or the disposal of any such material;
6. no asbestos, asbestos-containing materials or presumed
asbestos-containing materials have been installed, used, incorporated into or
disposed of on the Real Properties;
7. no PCBs are or ever have been located on, in, or used in connection
with the Real Properties; and
8. no investigation, administrative order, administrative order by
consent, consent order, agreement, litigation or settlement is proposed or in
existence or threatened or anticipated, with respect to or arising from the
presence of any Hazardous Substance or the transport of Hazardous Substances
with respect to the Real Properties.
(o) CC&RS. The current use and occupancy of the Real Property and
the Improvements are not in violation of any recorded or unrecorded covenants,
conditions, restrictions, reservations, easements or agreements affecting the
Real Property and the Improvements.
(p) LICENSES AND PERMITS. The Companies possess all licenses,
permits, certificates of occupancy, entitlements, approvals and other
governmental authorizations to own, operate, occupy, use and lease the
Properties. All certificates, permits, licenses, franchises, authorizations and
approvals which are necessary to permit the lawful access, use, occupancy and
operation of the Properties for their present and intended accesses, uses,
occupancies and operations have been duly and validly obtained, are in full
force and effect, and Seller and the Companies have no knowledge of any pending
threat or contemplation of modification, cancellation or non-renewal of any such
certificate, permit, license, franchise, authorization or approval.
(q) TITLE. Each of the Companies is the sole owner of good
insurable and marketable title to such Company's respective Real Properties and
Improvements and Personal Property, free and clear of all liens, mortgages,
deeds of trust and other encumbrances and title defects and claims, charges,
obligations, liabilities or rights in favor of third parties except as otherwise
provided in the Title Policies and the Title Endorsements and Purchaser shall
receive
<PAGE>
such title at Closing. To the best knowledge of Seller and the Companies, all
Personal Property is in good working order and condition. The Real Properties
are free and clear of any mechanics; or materialsmen's liens or liens in the
nature thereof, and no rights are outstanding that under law would give rise to
any such liens, except those which are insured against by the Title Policies and
the Title Endorsements. There are no outstanding options or rights of first
offer or refusal to purchase all or any portion of the Real Properties,
Companies' interests therein or ownership thereof.
(r) HVAC ETC. All water, sewer, electric, heating, ventilating,
air conditioning, drainage facilities, telephone and other utilities required
for ownership, operation or occupancy of the Real Properties or required by
applicable law or currently on, under or at the Real Property or the
Improvements have been installed in accordance with applicable Governmental
Regulations and are in good working order. To the best knowledge of Seller and
the Companies. Said utilities either enter the Real Properties through adjoining
public streets or if they pass through adjoining private land, do so in
accordance with legal, valid and enforceable permanent public or private
easements which will inure to the benefit of Purchaser, its successors and
assigns.
(s) BANKRUPTCY. Neither Seller nor any of the Companies has
received any notice of attachments, executions, assignments for the benefit of
creditors, or voluntary or involuntary proceedings in bankruptcy, or under any
other debtor relief laws involving Seller and/or the Companies, or pending
against Seller and/or the Companies, or threatened against Seller, the Companies
or the Properties, or contemplated by Seller or the Companies.
(t) CONDEMNATION. Neither Seller nor any of the Companies has
received any notice of any pending condemnation action with respect to the
Properties, or any part thereof (including any proceeding for widening, change
of grade or limitation on use of streets abutting the Real Properties) and, to
the best knowledge of Seller and the Companies, no such proceeding has been
threatened or is contemplated by any Authority.
(u) INSURANCE. Neither Seller nor any of the Companies has
received, and neither Seller nor any of the Companies has any other knowledge or
information of, any notice from any insurance company or board of fire
underwriters requesting the performance of any work or alteration with respect
to the Properties, or requiring an increase in the insurance rates applicable to
the Properties. Every policy of insurance relating to any of the Real Properties
has been disclosed to Purchaser in writing and is in full force and effect at
Closing, indicating name of insurer, premium, and coverage.
(v) CONDITION OF REAL PROPERTIES. To the best knowledge of Seller
and the Companies, there has been no damage or loss to any of the Real
Properties by any fire or other casualty, any act of God or any hazard prior to
the date hereof; and there has been no material change (adverse or otherwise) in
the physical condition of the Improvements since the date of Purchaser's
inspection. No improvements on adjoining properties encroach on the Real
Properties.
<PAGE>
(w) LATENT DEFECTS. To the best knowledge of Seller and the
Companies, there are no latent defects in any of the Improvements, and the
structural components, exteriors, electrical, gas, plumbing, water, sewer, air
conditioning, heating, ventilating, exhaust, mechanical, security, disability,
life/safety, communication, telephone, cable and other building systems,
equipment and improvements are in good working order, condition and repair, the
roofs, foundations, structures, doors and windows thereof are free from leaks
and the Improvements are free from termite or other infestation. To the best
knowledge of Seller and the Companies, there are no defects or inadequacies in
the Real Properties or any part thereof which might adversely affect the
insurability of the same or which might cause the imposition of extraordinary
insurance premiums therefor or which might create a hazard or a material
operating deficiency.
(x) TENANT PROPERTY. To the best knowledge of seller and the
Companies, no equipment, fixture or article of personal property owned by
Tenants and removable by them is material to the ownership, operation or
occupancy of any of the Real Properties.
(y) REAL ESTATE TAXES. Complete and accurate copies of the most
recent real estate and personal property tax bills covering the Properties have
been provided by Seller to Purchaser. Neither Seller nor either of the Companies
has received any notice, or has any knowledge of any increase in any of the
factors comprising such tax bills or any other matters which might increase such
taxes above such amount for any subsequent year. Neither Seller nor either of
the Companies has received any assessment or other notice with respect to any
governmental improvements prior to the date hereof for which the Real Properties
can be assessed; and no such governmental improvements are threatened,
contemplated, proposed or planned or in progress. To the best knowledge of
Seller and the Companies, neither of the Companies has received any notice of
any pending, threatened or contemplated assessments. The Real Properties and
Improvements constitute separate tax parcels for purposes of ad valorem
taxation.
(z) DOCUMENT REVIEW. Seller heretofore has provided to Purchaser
for inspection true, accurate and complete copies of all of the following
(collectively, the "DOCUMENTS") with respect to the Properties or the Companies:
all existing environmental, engineering or consulting reports and studies of the
Real Properties (including without limitation, the Phase I Update), real estate
tax bills, together with assessments (special or otherwise), ad valorem and
personal property tax bills, covering the period of the Companies' ownership of
the Properties; the most current lease schedules (the "LEASE SCHEDULES");
current operating statements; the Leases, lease files, Service Contracts, and
Licenses and Permits; the Title Policies and the existing surveys; the
organizational documents, such as the operating agreement and amendments
thereto, the minutes and other similar documents of the Companies; and the most
current financial statements and balance sheets of the Companies (the "FINANCIAL
INFORMATION").
(aa) COPIES AND SCHEDULES. Copies of all the documents listed on
Schedules and Exhibits attached hereto have been delivered to Purchaser. The
copies of all documents delivered by Seller to Purchaser pursuant to the terms
of this Agreement are complete and accurate. The information contained in
attached Schedules is complete and accurate. The representations and warranties
of Seller contained in this Agreement do not omit to state any
<PAGE>
material fact necessary in order to make such representations and warranties not
misleading.
(bb) ISRA COMPLIANCE. The transactions contemplated by this
Agreement and the Real Properties are not subject to the requirements of the
Industrial Site Recovery Act of New Jersey.
(cc) SINGLE-MEMBER LLC. Each of the Companies has been properly
treated as a disregarded entity for income tax purposes.
(dd) 3 SYLVAN WAY. With respect to 3 Sylvan Way, no tenants has
rights to lease or acquire the Real Property known as 5 Sylvan Way.
(ee) COOPERS & LYBRAND. With respect to 5 Sylvan Way, the former
tenant, Coopers & Lybrand and its successors in title and assigns have no rights
of lease, renewal, extension or any others rights relating to the Real Property
known as 5 Sylvan Way.
(ff) ERISA. (i) the Companies are not "employee benefit plans" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a
"governmental plan" within the meaning of Secton 3(3) of ERISA; (ii) the
Companies are not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of the
following circumstances is true with respect to each of the Companies:
(i) Equity interests in the Company are publicly offered
securities, within the meaning of 29 C.F.R. SECTIONS
2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each
outstanding class of equity interests in the Company are held by
"benefit plan investors" within the meaning of 29 C.F.R. SECTIONS
2510.3-101(f)(2); or
(iii) The Company qualifies as an "operating company" or
a "real estate operating company" within the meaning of 29
C.F.R. SECTIONS 2510.3-101(c) or (e) or an investment company
registered under The Investment Company Act of 1940.
SECTION 8.2 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants to Seller the following as of the Effective Date and as
of the Closing Date:
(a) STATUS. Purchaser is a limited liability company duly
organized and validly existing under the laws of the State of New Jersey.
(b) AUTHORITY. The execution and delivery of this Agreement and
the performance of Purchaser's obligations hereunder have been duly authorized
by all necessary action on the part of Purchaser and this Agreement constitutes
the legal, valid and binding obligation of Purchaser.
<PAGE>
(c) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Purchaser and the consummation by Purchaser of the transactions
contemplated hereby will not violate any judgment, order, injunction, decree,
regulation or ruling of any court or Authority or conflict with, result in a
breach of or constitute a default under the organizational documents of
Purchaser, any note or other evidence of indebtedness, any mortgage, deed of
trust or indenture, or any lease or other material agreement or instrument to
which Purchaser is a party or by which it is bound.
(d) CONSENTS. No consent, waiver, approval or authorization is
required from any person or entity (that has not already been obtained) in
connection with the execution and delivery of this Agreement by Purchaser or the
performance by Purchaser of the transactions contemplated hereby.
SECTION 8.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations and warranties of Seller set forth in Section 8.1
will survive the Closing. The Closing Surviving Obligations will survive Closing
without limitation unless a specified period is otherwise provided in this
Agreement. All other representations, warranties, covenants and agreements made
or undertaken by Seller under this Agreement, unless otherwise specifically
provided herein, will not survive the Closing Date but will be merged into the
Assignment and other Closing documents delivered at the Closing.
SECTION 8.4 INDEMNITY.
(a) Seller shall indemnify and hold harmless Purchaser and each
member of Purchaser individually, and its directors, officers, shareholders,
employees, successors, affiliates, trustees, partners, or principals from and
against, any actual damages, loss, cost, liability, damage, expense (including
reasonable attorneys' and other professionals' fees and disbursements), penalty
or fine incurred, but shall exclude any consequential, speculative, punitive or
special damages of Purchaser itself or its affiliates, in connection with or
arising from any breach of representation or warranty made in Section 8.1 above.
For the purposes of determining whether a breach of any representation or
warranty made in Section 8.1 above has occurred and of measuring damages arising
out of breaches of representations and warranties in this Agreement, any
qualifications relating to the 'knowledge' of the Seller and/or the Companies
contained in such representations and warranties shall be ignored.
(b) Seller shall indemnify and hold harmless Purchaser and each
member of Purchaser individually, and its directors, officers, shareholders,
employees, successors, affiliates, trustees, partners, or principals from and
against, any actual loss, cost, liability, damage, expense (including reasonable
attorneys' and other professionals' fees and disbursements), penalty or fine
incurred, but shall exclude any consequential, speculative, punitive or special
damages of Purchaser itself or its affiliates, in connection with or arising
from any claim relating to the Companies and the Real Properties attributable to
the period prior to the Closing.
(c) In the event that during the ownership of the Real Properties
by the Companies and of the Membership Interests by Purchaser, neither Standard
& Poor nor Moody's
<PAGE>
is rating Seller as investment grade and the book value, determined in
accordance with Generally Accepted Accounting Principles of Seller (excluding
goodwill and adding back all accumulated depreciation and amortization) falls
below $1,500,000,000, within thirty (30) days thereof, Seller shall, at Seller's
sole expense, provide to Purchaser:
(i) updated Phase I environmental reports for all of the
Real Properties reasonably satisfactory to Purchaser prepared by
the environmental consultant who prepared the most recent such
reports submitted by Seller to Purchaser prior to Closing; and
(ii) title policies in favor of Purchaser reasonably
satisfactory to Purchaser in the amount of at least $86,000,000
(but in no event less than an amount which would prevent
Purchaser from being a co-insurer) in the aggregate for all of
the Real Properties issued by the title company which issued the
most recent title policies in favor of Seller or other title
companies reasonably acceptable to Purchaser.
(d) If the Seller for any reason fails to comply with
subparagraphs (c)(i) and (ii) above within the above-mentioned thirty (30) day
period, within ten (10) business days from the date of expiration of such
period, Seller shall at the cost of Seller deliver at Seller's sole expense to
Purchaser an irrevocable standby letter of credit in the amount of $86,000,000
to secure Seller's obligations under this Section 8.4. in a form reasonably
acceptable to Purchaser, renewable annually for a period of no less than three
(3) years, and issued by a bank selected by Seller which is rated AA by all
agencies which have jurisdiction to rate the bank, or otherwise reasonably
acceptable to Purchaser. If the selected bank is downgraded below AA after
issuance of the letter of credit, a replacement letter of credit on all of the
same terms set forth herein must be obtained from a AA rated bank as soon as
reasonably possible. If the above-mentioned letter of credit is for any reason
not renewed during the term thereof within 30 days prior to any annual
expiration, the Purchaser shall be able to draw against the letter of credit
prior to its expiration in accordance with its terms.
(e) In the event that all of the Real Properties are sold by the
Companies or that all of the Membership Interests are sold by Purchaser, on or
prior to the closing of the sale of the Real Properties or the Membership
Interests, Seller shall deliver to Purchaser at Seller's sole expense an updated
Phase I environmental report for all of the Real Properties prepared by the
environmental consultant who prepared the most recent such report submitted by
Seller to Purchaser or such other environmental consultants reasonably
acceptable to Purchaser which are dated on or about the time Seller purchased
such Real Properties.
(i) If the above-mentioned updated Phase I environmental
reports for all of the Real Properties show no adverse change
from the most recent such reports submitted to and approved by
Seller prior to Closing, Seller shall have no further obligations
under this Section 8.4(c).
(ii) If the above-mentioned updated Phase I environmental
reports for
<PAGE>
any of the Real Properties show any adverse change from the most
recent such reports submitted to and approved by Seller prior to
Closing and Seller's investment rating falls or Seller is not
rated as set forth in subsection (c) above, within ten (10)
business days from the date of delivery of such reports by
Seller to Purchaser, Seller shall arrange at Seller's sole
expense an indemnity, in form and substance reasonably approved
by Purchaser by a person or entity with a book value determined
in accordance with GAAP (excluding goodwill and adding back
accumulated depreciation and amortization) of $100,000,000, as
verified by Purchaser to its reasonable satisfaction.
This Section 8.4 shall survive the Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING
SECTION 9.1 CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER. The
obligation of Purchaser to consummate the transaction hereunder shall be subject
to the fulfillment at or prior to the Closing of all of the following
conditions, any or all of which may be waived by Purchaser in its sole
discretion:
(a) Seller shall have delivered to Purchaser all of the items
required to be delivered to Purchaser pursuant to the terms of this Agreement,
including but not limited to, those provided for in Section 10.3.
(b) All of the representations and warranties of Seller contained
in this Agreement shall be true and correct in all material respects as of the
date of Closing.
(c) Seller shall have performed and observed, in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by Seller as of the Closing Date.
SECTION 9.2 CONDITIONS PRECEDENT TO OBLIGATION TO SELLER. The
obligation of Seller to consummate the transaction hereunder shall be subject to
the fulfillment on or before the date of Closing of all of the following
conditions, any or all of which may be waived by Seller in it sole discretion:
(a) Seller shall have received the Purchase Price as adjusted
pursuant to, and payable in the manner provided for, in this Agreement.
(b) Purchaser shall have delivered to Seller all of the items
required to be delivered to Seller pursuant to the terms of this Agreement,
including but not limited to, those provided for in Section 10.2.
(c) All of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material respects
as of the date of Closing (with
<PAGE>
appropriate modifications permitted under this Agreement or not materially
adverse to Seller).
(d) Purchaser shall have performed and observed, in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by Purchaser as of the Closing Date.
(e) The Companies and an Affiliate of Seller shall have entered
into the Management Agreement to become effective as of the Closing.
ARTICLE X
CLOSING
SECTION 10.1 CLOSING. The consummation of the transaction
contemplated by this Agreement by delivery of documents and payments of money
shall take place on the Closing Date at the office of Weil, Gotshal & Manges,
767 Fifth Avenue (GM Building), New York, New York, or such other place as the
parties agree. At Closing, the events set forth in this Article X will occur, it
being understood that the performance or tender of performance of all matters
set forth in this Article X are mutually concurrent conditions which may be
waived by the party for whose benefit they are intended. The acceptance of the
Assignment by Purchaser shall be deemed to be full performance and discharge of
each and every agreement and obligation on the part of the Seller to be
performed hereunder unless otherwise specifically provided herein.
SECTION 10.2 PURCHASER'S CLOSING OBLIGATIONS. At the Closing,
Purchaser will deliver the following items to Seller as provided herein:
(a) The Purchase Price, after all adjustments are made as herein
provided, by Federal Reserve wire transfer of immediately available funds, in
accordance with the timing and other requirements of Section 3.2;
(b) A counterpart original of the Assignment, duly executed by
Purchaser;
(c) An original ratification of the Companies' execution and
delivery of the Management Agreement, duly executed by the Purchaser as the new
sole member of the Companies; and
(d) Evidence reasonably satisfactory to Seller that the person
executing the Assignment and the other Closing documents on behalf of Purchaser
has full right, power and authority to do so.
SECTION 10.3 SELLER'S CLOSING OBLIGATIONS. At the Closing, Seller
will deliver to Purchaser the following documents:
(a) A counterpart original of the Assignment, duly executed by
Seller, assigning and transferring to the Purchaser the Membership Interests;
<PAGE>
(b) The original Management Agreements, duly executed by the
Companies and an Affiliate of Seller which will be the manager thereunder;
(c) The Phase I Update;
(d) Title endorsements commonly referred to as the Fairway
Endorsement and the Non-imputation Endorsement (the "TITLE ENDORSEMENTS") to the
Title Policy in a form satisfactory to Purchaser;
(e) Evidence reasonably satisfactory to Purchaser that the person
executing the documents delivered by Seller or its Affiliates pursuant to this
Section 10.3 has full right, power, and authority to do so;
(f) A certificate in the form attached hereto as EXHIBIT F
("CERTIFICATE AS TO FOREIGN STATUS") certifying that Seller is not a "foreign
person" as defined in Section 1445 of the Internal Revenue Code of 1986, as
amended, as well as any form or other document required under applicable laws to
be executed by Seller in connection with any transfer tax applicable to the
transaction contemplated by this Agreement;
(g) All original Leases, to the extent in Seller's or the
Companies' possession, and all original Licenses and Permits and Service
Contracts in Seller's or the Companies' control bearing on the Properties (to be
delivered to the property manager under the Management Agreement);
(h) A certificate, dated as of the date of Closing, stating that
the representations and warranties of Seller contained in Section 8.1 are true
and correct in all material respects as of the Closing Date or identifying any
representation or warranty which is not, or no longer is, true and correct and
explaining the state of facts giving rise to the change. If, despite changes or
other matters described in such certificate, the Closing occurs, Seller's
representations and warranties set forth in this Agreement shall be deemed to
have been modified by all statements made in such certificate;
(i) The Lease Schedules, updated to show any changes and dated as
of no more than five (5) Business Days prior to the Closing Date; and
(j) UCC Search in respect of Seller regarding assignment of
membership interests at Secretary of State's office
(k) UCC Searches for fixtures and Personal Property in respect of
the Companies at state, in county of property location and executive office, if
different, or county of residence if applicable
(l) Litigation searches for the Companies
<PAGE>
(m) Tax Lien searches for the Companies
(n) Amendments of the operating agreements for the Companies to
reflect changes in membership and, in the case of Mack-Cali Morris Realty
L.L.C., removal of reference to 1 Sylvan Way, Parsippany, New Jersey.
(o) FIRPTA requirements (Federal)
(p) Original executed Asset Management Agreement
(q) Approved Budgets for the Companies in form satisfactory to
Purchaser
(r) Certified Service Contracts List in form satisfactory to
Purchaser
(s) Certified Rent Roll in respect of the Real Properties in form
satisfactory to Purchaser
(t) Environmental reliance letter enabling Purchaser to rely on
the Phase I Update in form satisfactory to Purchaser
(u) Real estate tax bills and assessments and evidence of payment
for last three years in form satisfactory to Purchaser
(v) Legal opinion of Seller's counsel in form satisfactory to
Purchaser relating to (i) due authority of the Seller; and enforceability of
this Agreement and the Assignments for transfer of the Membership Interests
contemplated hereby and related hereto;
(w) Tax opinion in form satisfactory to Purchaser
(x) Surveys of the Real Properties
(y) The organizational documents in respect of Seller and the
Companies listed on EXHIBIT H annexed hereto
(z) Documents evidencing transfer of 1 Sylvan way, to a party
other than Purchaser.
(aa) Such other documents as may be reasonably necessary or
appropriate to effect the consummation of the transaction which is the subject
of this Agreement.
(bb) All certificates of occupancy in the possession of the
Companies with respect to the Real Properties.
SECTION 10.4 CLOSING STATEMENT; POST-CLOSING OBLIGATIONS.
<PAGE>
(a) CLOSING STATEMENT. Seller agrees that the Closing Statement
will reflect the following fair and accurate adjustments (as of 11:59 p.m. on
the day preceding the Closing Date):
(i) Seller will receive a credit in the amount of any
cash on hand or in any bank, savings or other deposit accounts
held in the name of or for the benefit of the Companies.
(ii) Seller will receive a credit for any prepaid amounts
for periods after the Closing Date under any agreement or
contracts (including insurance policies) to which the Companies
are a party and which will survive the Closing.
(iii) Seller will receive a credit equal to the value of
fuel stored at the Real Properties, at the Companies' most recent
cost, including taxes, on the basis of a reading made within ten
(10) days prior to the Closing by the Companies' supplier.
(iv) Purchaser will receive a credit in the amount of the
Security Deposits and any prepaid Rents, together with interest
required to be paid thereon.
(v) Purchaser will receive a credit in the amount of the
utility charges payable by the Companies for periods prior to the
Closing Date, including, without limitation, electricity, water
charges and sewer charges, based on the most current information.
(vi) Purchaser will receive a credit equal to the amounts
payable under the Service Contracts for services rendered prior
to the Closing Date.
(vii) Purchaser will receive a credit for any other
amounts payable under any other agreement or contracts (including
insurance policies) relating to the Companies or the Property for
periods prior to the Closing Date and for any other liability
whatsoever of the Companies incurred or arising prior to the
Closing Date.
(viii) Purchaser will receive a credit in the amount of
the real estate taxes due and payable for periods prior to the
Closing Date, based on the most current information.
Within fifteen (15) days following the Closing, Seller will deliver to Purchaser
the Closing Statement. Any amounts shown by the Closing Statement to be due by
any party to the other pursuant to this Section 10.4(a) will be paid within
fifteen (15) days following execution of the Closing Statement by Purchaser and
Seller. Section 10.4 (a) shall survive the Closing.
(b) POST-CLOSING RECEIPT OF RENTAL. All Rentals received by the
Companies
<PAGE>
or the Purchaser on or after the Closing Date shall first be applied by
Purchaser for payment of Rentals owing in respect of periods commencing on or
after the Closing Date then, to the extent any Rentals so received are
remaining, the remainder shall be paid or turned over to Seller to the extent
attributable to any period prior to the Closing Date. "RENTALS" as used herein
includes fixed monthly rentals, additional rentals, percentage rentals,
escalation rentals (which include each Tenant's proportionate share of building
operation and maintenance costs and expenses as provided for under the Lease, to
the extent the same exceeds any expense specified in such Lease), retroactive
rentals, all administrative charges, utility charges, other common area
maintenance charges, real and personal property taxes and assessments, tenant or
real property association dues, storage rentals, special event proceeds,
temporary rents, telephone receipts, locker rentals, vending machine receipts
and other sums, charges, fees or pass-through items payable by Tenants under the
Leases or from other occupants or users of the Properties. The provisions of
this Section 10.4(b) shall survive the Closing indefinitely.
(c) COST OF DUE DILIGENCE ITEMS IN EVENT OF SALE. In the event
that Purchaser sells or refinances the Membership Interests or the Companies
sell or refinance any of the Real Properties to or with any party other than an
affiliate of Seller, Seller shall bear at its sole expense, the cost of the
following due diligence items if required to be provided by Purchaser or any of
the Companies in connection with any such transaction: (i) engineering reports;
(ii) Phase I environmental reports; (iii) appraisal; (iv) title reports,
searches and endorsements; (v) surveys; (vi) certificates of occupancy.
ARTICLE XI
TERMINATION AND REMEDIES
(a) PURCHASER'S TERMINATION. Provided that Purchaser is not then
in material breach of this Agreement, this Agreement shall terminate, upon
receipt by Seller of Purchaser's written notice of termination without further
notice or action by Purchaser, if any condition to Closing contained in Section
10.2 has not been satisfied or waived by Seller in writing by the Closing Date;
(b) SELLER'S TERMINATION. Provided that Seller is not then in
material breach of this Agreement, this Agreement shall terminate, upon receipt
by Purchaser of Seller's written notice of termination without further notice or
action by Seller, if any condition to Closing contained in Section 10.3 has not
been satisfied or waived by Purchaser in writing by the Closing Date;
(c) PURCHASER'S REMEDIES. If Seller materially breaches this
Agreement, Purchaser shall be entitled to pursue the remedy of specific
performance and the return of any deposit (and any interest accrued thereon)
from Seller and Seller shall be liable to Purchaser for such actual costs and
expenses (which shall include, without limitation, reasonable attorneys' fees
and costs) of enforcing the rights of Purchaser under this Agreement. This
Article XI(c) shall survive the Closing.
<PAGE>
(d) SELLER'S REMEDIES. If Purchaser breaches this Agreement,
Seller shall be entitled to pursue all remedies permitted herein and by law,
including, without any limitation, the remedy of specific performance and the
retention of any deposit (and any interest accrued thereon) from Purchaser.
(e) INDEMNIFICATION PROCEDURES.
(i) If Purchaser (the"Indemnitee") becomes aware of any
matter for which it believes it is entitled to indemnification
under Section 8.4, hereof that involves (i) any claim made
against the Indemnitee or (ii) the commencement of any action,
suit, investigation, arbitration, or similar proceeding against
the Indemnitee, the Indemnitee will give Seller (the
"Indemnifying Party") prompt written notice of such claim or
commencement of such action, suit, investigation, arbitration, or
similar proceeding. Such notice will (A) provide (with reasonable
specificity) the basis on which indemnification is being
asserted, (B) set forth the actual or estimated amount of damages
for which indemnification is being asserted, if known, and (C) be
accompanied by copies of all relevant pleadings, demands and
other papers served on the Indemnitee.
(ii) The Indemnifying Party will have a period of 30-days
after the delivery of each notice required by Section 11.2(a)
hereof during which to respond to such notice. If the
Indemnifying Party elects to defend the claim described in such
notice or does not respond within such 30-day period, the
Indemnifying Party will be obligated to compromise or defend (and
will control the defense of) such claim, at is own expense and by
counsel chosen by the Indemnifying Party and reasonably
satisfactory to the Indemnitee. The Indemnitee will cooperate
fully with the Indemnifying Party and counsel for the
Indemnifying Party in the defense against any such claim and the
Indemnitee will have the right to participate at its own expense
in the defense of any such claim. If the Indemnifying party
responds within such 30-day period and elects not to defend such
claim, the Indemnitee will be free to compromise or defend (and
control the defense of) such claim and to pursue such remedies as
may be available to the Indemnitee under applicable law.
(iii) Any compromise or settlement of any claim (whether
defended by the Indemnitee or by Indemnifying Party) will require
the prior written consent of the Indemnitee and the Indemnifying
Party.
(iv) Any reasonable costs or expenses incurred and paid
by the Indemnitee in connection with the exercise of any of its
rights under this Section 10.4 or with respect to a matter for
which it is indemnified under Section 8.4 of this Agreement shall
be paid by the Indemnifying Party on demand and if the
Indemnifying Party fails to pay such amounts demanded within five
(5) days of demand, the amounts demanded will bear interest at
the lower fifteen (15%) per annum or the maximum applicable
lawful rate; PROVIDED, HOWEVER, that the Indemnifying Party's
obligation to pay such costs, expenses and interest shall not
<PAGE>
apply for any period claimed in the event that Indemnifying Party
obtains a final judgement or order that the Indemnitee is not
entitled to indemnification or to payment of costs or expenses
under the provisions of Section 8.4 or 10.4 of this Agreement.
ARTICLE XII
CONFIDENTIALITY
SECTION 12.1 PRESS RELEASES. Before either of Seller or Purchaser
discloses in writing to any third party any of the terms and conditions of this
Agreement (or the transaction contemplated hereby), such party shall provide a
copy of such writing to the other party for its review and comment (but not its
approval). Either Seller or Purchaser may request a meeting to discuss any such
writing. The provisions of this Section 12.1 will survive the Closing.
ARTICLE XIII
[INTENTIONALLY OMITTED.]
ARTICLE XIV
[INTENTIONALLY OMITTED.]
ARTICLE XV
ASSIGNMENT
SECTION 15.1 ASSIGNMENT. No party shall have any right to assign
this Agreement or any portion thereof.
ARTICLE XVI
BROKERAGE
SECTION 16.1 BROKERS. Purchaser and Seller represent that they
have not dealt with any brokers, finders or salesmen, in connection with this
transaction, and agree to indemnify, defend and hold each other harmless from
and against any and all loss, cost, damage, liability or expense, including
reasonable attorneys' fees, which either party may sustain, incur or be exposed
to by reason of any claim for fees or commissions made through the other party.
The provisions of this Article XVI will survive any Closing.
ARTICLE XVII
[INTENTIONALLY OMITTED.]
<PAGE>
ARTICLE XVIII
MISCELLANEOUS
SECTION 18.1 WAIVERS. No waiver of any breach of any covenant or
provisions contained herein will be deemed a waiver of any preceding or
succeeding breach thereof, or of any other covenant or provision contained
herein. No extension of time for performance of any obligation or act will be
deemed an extension of the time for performance of any other obligation or act.
SECTION 18.2 RECOVERY OF CERTAIN FEES. In the event a party
hereto files any action or suit against another party hereto by reason of any
breach of any of the covenants, agreements or provisions contained in this
Agreement, then in that event the prevailing party will be entitled to have and
recover certain fees from the other party including all reasonable attorneys'
fees and costs resulting therefrom. For purposes of this Agreement, the term
"attorneys' fees" or "attorneys' fees and costs" shall mean the fees and
expenses of counsel to the parties hereto, which may include printing,
photostatting, duplicating and other expenses, air freight charges, and fees
billed for law clerks, paralegals and other persons not admitted to the bar but
performing services under the supervision of an attorney, and the costs and fees
incurred in connection with the enforcement or collection of any judgment
obtained in any such proceeding. The provisions of this Section 18.2 shall
survive the entry of any judgment, and shall not merge, or be deemed to have
merged, into any judgment.
SECTION 18.3 CONSTRUCTION. Headings at the beginning of each
article and section are solely for the convenience of the parties and are not a
part of this Agreement. Whenever required by the context of this Agreement, the
singular will include the plural and the masculine will include the feminine and
vice versa. This Agreement will not be construed as if it had been prepared by
one of the parties, but rather as if both parties had prepared the same. All
exhibits and schedules referred to in this Agreement are attached and
incorporated by this reference, and any capitalized term used in any exhibit or
schedule which is not defined in such exhibit or schedule will have the meaning
attributable to such term in the body of this Agreement. In the event the date
on which Purchaser or Seller is required to take any action under the terms of
this Agreement is not a Business Day, the action will be taken on the next
succeeding Business Day.
SECTION 18.4 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which, when assembled to include an original
signature for each party contemplated to sign this Agreement, will constitute a
complete and fully executed original. All such fully executed original
counterparts will collectively constitute a single agreement.
SECTION 18.5 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all of the other conditions and provisions of this Agreement
will nevertheless remain in full force and effect, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
adverse manner to either party. Upon such determination that any term or other
provision is
<PAGE>
invalid, illegal, or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to reflect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
SECTION 18.6 ENTIRE AGREEMENT. This Agreement is the final
expression of, and contains the entire agreement between, the parties with
respect to the subject matter hereof, and supersedes all prior understandings
with respect thereto. This Agreement may not be modified, changed, supplemented
or terminated, nor may any obligations hereunder be waived, except by written
instrument, signed by the party to be charged or by its agent duly authorized in
writing, or as otherwise expressly permitted herein.
SECTION 18.7 GOVERNING LAW. THIS AGREEMENT WILL BE CONSTRUED,
PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
EXCEPT TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF THE STATE OF NEW JERSEY
IS MANDATORY. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY
AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND
DETERMINED IN A STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK.
SECTION 18.8 NO RECORDING. The parties hereto agree that neither
this Agreement nor any affidavit or memorandum concerning it will be recorded
and any recording of this Agreement or any such affidavit or memorandum by
Purchaser will be deemed a default by Purchaser hereunder.
SECTION 18.9 FURTHER ACTIONS. The parties agree to execute such
documents and instruments and to do such further acts as may be reasonably
necessary to carry out the provisions of this Agreement.
SECTION 18.10 EXHIBITS. The following sets forth a list of
Exhibits to the Agreement:
Exhibit A - Assignment
Exhibit B - Legal Description of Real Properties
Exhibit C - List of Service Contracts
Exhibit D - Suits and Proceedings
Exhibit E - Lease Schedules
Exhibit F - Certificate of Foreign Status
Exhibit G - List of Title Policies
Exhibit H - List of Organizational Documents
SECTION 18.11 NO PARTNERSHIP. Notwithstanding anything to the
contrary
<PAGE>
contained herein, this Agreement shall not be deemed or construed to make the
parties hereto partners or joint venturers, it being the intention of the
parties to merely create the relationship of Seller and Purchaser with respect
to the Membership Interests to be conveyed as contemplated hereby.
SECTION 18.12 LIMITATIONS ON BENEFITS, ETC. It is the explicit
intention of Purchaser and Seller that no person or entity other than Purchaser,
the members of Purchaser individually, Seller and, to the extent applicable, the
Companies and the manager under the Management Agreement, and their respective
permitted successors and assigns is or shall be entitled to bring any action to
enforce any provision of this Agreement against any of the parties hereto, and
the covenants, undertakings and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, Purchaser, the
members of Purchaser individually, Seller and, to the extent applicable, the
Companies and said manager, or their respective successors and assigns as
permitted hereunder. Nothing contained in this Agreement shall under any
circumstances whatsoever be deemed or construed, or be interpreted, as making
any third party (other than the members of Purchaser individually) a beneficiary
of any term or provision of this Agreement or any instrument or document
delivered pursuant hereto, and Purchaser and Seller expressly reject any such
intent, construction or interpretation of this Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have respectively
executed this Agreement as of the Effective Date.
SELLER: MACK-CALI REALTY, L.P.,
a Delaware limited partnership
By: Mack-Cali Realty Corporation,
a Delaware corporation,
its general partner
By:
-----------------------------------
Roger W. Thomas,
Executive Vice President
PURCHASER: PARSIPPANY OFFICE ASSOCIATES L.L.C.
a New Jersey limited liability company
By: Mack-Cali Realty, L.P.,
a Delaware limited partnership,
its member
By: Mack-Cali Realty Corporation,
a Delaware corporation,
its general partner
By:
----------------------------
Roger W. Thomas,
Executive Vice President
By: Slab Investments Holding, Inc.,
a Delaware corporation
its member
By:
-----------------------------------
John Bricker
Assistant Secretary
[END OF SIGNATURES]
<PAGE>
00
EXHIBIT H
ORGANIZATIONAL DOCUMENTS FOR DELIVERY BY SELLER
KEY
MC Mack-Cali Realty L.P.
LLC1 Mack-Cali Campus Realty LLC
LLC2 Mack-Cali Morris Realty LLC
<TABLE>
<S> <C> <C>
1 For MC:
a. Partnership Agreement
b. Partnership Certificate
c. Certificate of Good Standing
d. Certificates of Good Standing for General Partner
e. Articles of Incorporation of General Partner (or other organizational documents, as applicable)
f. By-Laws of General Partner (or other organizational documents, as applicable)
g. Corporate Resolution and Incumbency Certificate of General Partner
h. Termination of Agreements
2 For LLC 1:
a. Articles of Organization
b. LLC Agreement
c. Certificates of Good Standing
d. Resignation from all offices of Company, including the board of managers, of MC dated the Closing Date
3 For LLC 2:
a. Articles of Organization
b. LLC Agreement
c. Certificates of Good Standing
d. Resignation from all offices of Company, including the board of managers, of MC dated the Closing Date
</TABLE>
<PAGE>
Exhibit 10.19
OPERATING AGREEMENT OF
PARSIPPANY OFFICE ASSOCIATES L.L.C.
A NEW JERSEY LIMITED LIABILITY COMPANY
This OPERATING AGREEMENT OF PARSIPPANY OFFICE
ASSOCIATES L.L.C., a New Jersey limited liability company, (this "Agreement") is
made and entered into as of December 28,1999, by and between MACK-CALI REALTY,
L.P., a Delaware limited partnership ("MC") as the Managing Member (as the
Managing Member may be changed or replaced from time to time hereunder, the
"Managing Member") and SLAB INVESTMENTS HOLDING, INC., a Delaware corporation
("SLAB") as a Member (each of MC and SLAB is sometimes referred to herein as a
"Member" and collectively as the "Members").
1. FORMATION/GOVERNING LAW. This limited liability company
("Company") shall be formed and established as a limited liability company as
of the date hereof, pursuant to the provisions of the New Jersey Limited
Liability Company Law, NJSA 42 ET SEQ. (the "Act"). This Agreement shall be
governed by New Jersey law.
2. NAME. The name of the Company shall be PARSIPPANY OFFICE
ASSOCIATES L.L.C.
3. CERTIFICATES. On December 17, 1999, a Certificate of
Formation (the "Certificate") was filed in the Office of the Secretary of State
of New Jersey.
4. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be at c/o Mack-Cali Realty Corporation, 11
Commerce Drive, Cranford, New Jersey 07016, or at such other place(s) in New
York or New Jersey as may be designated from time to time by the Managing
Member.
5. OFFICE AND AGENTS. The name and address of the registered
agent for service of process on the Company in the State of New Jersey shall be
Corporation Service Company, 830 Bear Tavern Road, West Trenton, New Jersey
08628. The Managing Member in its reasonable discretion and upon notice to the
other Member may change the agent specified in this Section 5 of this Agreement.
6. PURPOSES OF COMPANY. The purpose of the Company shall be to
acquire for investment purposes, and own, finance, refinance, sell, assign or
otherwise dispose of, the investment entities described in Section 9 below
(each, together with any other entity that is owned by the Company, an
"Investment Entity" and collectively, the "Investment Entities"), owning the
Properties (as
<PAGE>
defined in Section 9 below) and other assets related thereto. The purposes of
the Company shall include any and all other general business activities
incidental or reasonably related to the foregoing.
7. TERM. The term of the Company shall begin on the date the
Certificate is filed with the Secretary of State of New Jersey and shall
continue until December 31, 2029, unless the term of the Company is extended by
an amendment to this Agreement so stating and executed by each of the Members,
or unless the Company is sooner terminated or liquidated in accordance with the
provisions of the Act or this Agreement. The Company's business shall be
terminated, and the Company shall be liquidated, upon the bankruptcy of any
Member unless a majority in interest of the remaining Members elect in writing,
by notice to all Members given within ninety (90) days thereafter, to
reconstitute the Company and continue its business, which right of election is
hereby granted to them. Notwithstanding any provision to the contrary contained
herein, the Company's business shall be terminated, and the Company shall be
liquidated, in the event the Company no longer owns any interest in any
Investment Entity or all Investment Entities have disposed of the Properties and
no longer own any interest therein.
8. RELATIONSHIP OF PARTIES. This Agreement shall be construed
and deemed to create a limited liability company. Nothing herein contained shall
be considered to constitute any Member as the agent of any other Member, except
as may be specifically authorized and provided for herein.
9. CAPITAL CONTRIBUTIONS. At the closing ("Closing") under the
Purchase Agreement (as defined below in this Section 9), the Members shall
contribute, as their respective capital contributions ("Capital Contributions")
to the Company, the amounts set forth on Exhibit A (in the respective
proportions stated on Exhibit A) in connection with the Company's purchase of
100% of the membership interests in the following Investment Entities pursuant
to that certain Agreement of Sale and Purchase dated as of even date herewith
("Purchase Agreement"): Mack- Cali Campus Realty L.L.C, a New Jersey limited
liability company, and Mack-Cali Morris Realty L.L.C., a New Jersey limited
liability company. Such Investment Entities own the parcels of real property and
the leasehold interest described on Exhibit B attached hereto (each such real
property, together with any related leasehold interest, a "Property" and
collectively the "Properties", including all improvements thereon and the
personal property related thereto that is owned by the applicable Investment
Entity). Each Member hereby acknowledges and agrees that all costs and expenses
(including without limitation, attorneys' fees and costs) incurred by such
Member in connection with this Agreement and (solely as a Member of the Company)
the Purchase Agreement, the Management Agreement and the Asset Management
Agreement (as such terms are defined in Section 11) shall be borne by such
Member.
Except as specifically set forth in this Section 9 or elsewhere in this
Agreement or agreed to separately in writing by all of the Members or required
by law, (i) none of the Members shall be required or entitled to make any
additional capital contributions to the Company, to make loans to the Company,
to provide any financing to the Company, or to cause any financing to be made
available to
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the Company, (ii) the Members shall not have any further liability to contribute
money to or in respect of the liabilities or obligations of the Company, and
(iii) the Members shall not be liable for any liabilities of the Company. All
additional capital contributions will require the approval of both Members
(which approval may be withheld in each Member's sole and absolute discretion)
and shall be funded by the Members PARI PASSU in their respective Funding
Proportions shown on Exhibit A. In the event the Managing Member determines that
additional funds are necessary for ordinary and reasonable business purposes of
the Company, any Investment Entity or any Property but additional capital
contribution for such funds is not approved by both Members and the Managing
Member decides to lend such funds (which the Managing Member may but shall not
be required to do), the Managing Member shall provide notice to the other Member
that the Managing Member intends to lend such funds to the Company as a loan.
Within 5 days after receiving such notice from the Managing Member, the other
Member shall have the right to participate in such loan in an amount equal to
such member's respective Funding Proportion multiplied by the amount of such
funds by providing notice thereof (setting forth the percentage of such funds
the other Member elects to lend) to the Managing Member. Failure to provide such
notice by the other Member to the Managing Member shall be deemed an election by
the other Member not to participate, and the Managing Member shall fund the
entire loan within 5 days after the other Member's failure to provide such
notice. If such a notice is timely given by the other Member to the Managing
Member, within 5 days thereafter, the other Member shall fund the percentage of
the loan set forth in such notice and the Managing Member shall fund the
remainder of the loan. The loans made by the Members to the Company in
accordance with this paragraph shall accrue interest at LIBOR plus 200 basis
points per annum, compounded monthly, from the date such loans are made until
repaid by the Company.
As used in this Agreement, "LIBOR" shall mean, with respect to each
LIBOR Reference Period, the rate (expressed as a percentage per annum) for
deposits in U.S. dollars, for a one-month period, that appears on Telerate Page
3750 (or the successor thereto) as of 11:00 a.m., London, England time, on the
related LIBOR Determination Date. If such rate does not appear on Telerate Page
3750 as of 11:00 a.m., London, England time, on such LIBOR Determination Date,
LIBOR shall the arithmetic mean of the offered rates (expressed as a percentage
per annum) for deposits in U.S. dollars for a one-month period that appear on
the Reuters Screen LIBOR Page as of 11:00 a.m., London, England time, on such
LIBOR Determination Date, if at least two such offered rates so appear. If fewer
than two such offered rates appear on the Reuters Screen LIBOR Page as of 11:00
a.m., London, England time, on such LIBOR Determination Date, SLAB shall request
the principal London, England office of each of any four major reference banks
in the London interbank market selected by SLAB to provide such bank's offered
quotation (expressed as a percentage per annum) to prime banks in the London
interbank market for deposits in U.S. dollars for a one-month period as of 11:00
a.m., London, England time, on such LIBOR Determination Date for amounts
approximately equal to SLAB Return Amount. If at least two such offered
quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations. If fewer than two such offered quotations are so provided, SLAB
shall request each of any three major banks in New York City selected by SLAB to
provide such bank's rate (expressed as a percentage per annum) for loans in U.S.
dollars to leading European
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banks for a one-month period as of approximately 11:00 a.m., New York City time,
on the applicable LIBOR Determination Date for amounts approximately equal to
the SLAB Return Amount. If at least two such rates are so provided, LIBOR shall
be the arithmetic mean of such rates. If fewer than two such rates are so
provided, then LIBOR for the applicable LIBOR Reference Period shall be LIBOR as
in effect for the next preceding LIBOR Reference Period. LIBOR shall be
determined in accordance with this paragraph by SLAB or its designee.
Notwithstanding the foregoing, LIBOR for the period commencing on the date
hereof and ending January 5, 2000 shall be 6.49% per annum.
As used herein, the term "LIBOR Business Day" shall mean any Business
Day on which commercial banks in the City of London, England, are open for
interbank or foreign exchange transactions.
As used herein, the term "LIBOR Determination Date" shall mean, with
respect to any LIBOR Reference Period, the date that is two (2) LIBOR Business
Days prior to the first day of such LIBOR Reference Period.
As used herein, the term "LIBOR Reference Period" shall mean, (i)
initially, the period commencing on the date of this Agreement for the
Guaranteed Payments and the loan funding date for the Member loans and ending on
the first occurring fifth (5th) day of a calendar month thereafter, and (ii)
thereafter, a period commencing on the sixth (6th) day of such calendar month
and ending on the fifth (5th) day of the following calendar month.
10. CAPITAL ACCOUNTS. An individual capital account shall be
maintained for each Member, and tax allocations made pursuant to this Agreement
shall be made, in accordance with applicable Treasury Regulations under Section
704 of the Internal Revenue Code of 1986, as amended ("Code"). The Managing
Member shall be the "Tax Matters Partner" of the Company and shall be
responsible for filing the tax returns of the Company on a timely basis (but no
later than May 15 of each year). The Managing Member shall be responsible for
complying with any and all reporting requirements on behalf of the Company,
including those set forth on Exhibit D. All tax decisions, tax returns and
settlements with taxing authorities shall be subject to the reasonable approval
of both Members.
11. POWERS AND RESPONSIBILITIES OF THE MEMBERS; PROPERTY
MANAGEMENT; ASSET MANAGEMENT FEE; SALE RIGHTS; INDEMNITY.
(a) Subject to the approval rights of the Members under Sections 11(b)
and 11(c) and the sale and financing rights of the Members under Section 11(d),
and except as otherwise provided herein, the then Managing Member shall have all
of the rights, power and authority of a manager in a limited liability company
under the Act and the management and operation of the affairs, activities and
business of the Company shall be vested exclusively in the Managing Member. The
Members hereby authorize the Managing Member to execute all documents and to
take all actions as may be necessary or
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desirable on behalf of the Company which are consistent with the Company's
purposes, any major decisions approved by the Members under Section 11(b) or
11(c), and any sale or financing decisions made by the applicable Member under
Section 11(d). The Members hereby approve the budgets attached hereto as Exhibit
E with respect to the Properties (the "Current Budgets") and, subject to the
approval rights and the restrictions contained elsewhere in this Agreement, the
Managing Member may cause the Investment Entities to make the expenditures
described in the Current Budgets (as the same may be modified from time to time
by the Managing Member in the exercise of its commercially reasonable business
judgment, which modifications, in each instance and in the aggregate, shall not
increase the total expenses set forth in the Current Budgets by more than 10% to
pay expenditures reasonably required with respect to the Property and provided
that such increased expenditures do not prevent the Guaranteed Payments from
being made to SLAB under Section 13(c)(1)). The Members also hereby approve that
certain Leasing and Management Agreement dated as of December 28, 1999
(collectively, the "Management Agreement") with respect to the Properties and
that certain Asset Management Agreement dated as of December 28, 1999 ("Asset
Management Agreement") with respect to the Investment Entities and the
Properties.
MC shall be the Managing Member until the earlier to occur of the
following: (i) MC is removed as the Managing Member under Section 11(e); or (ii)
a majority in Residual Percentages (as set forth in Exhibit A) of the Members
elects to remove MC as the Managing Member by providing written notice thereof
to MC at any time after January 2, 2001.
(b) Subject to the provisions of Section 11(d) but notwithstanding any
other provision to the contrary herein, so long as MC is the Managing Member,
the following actions and matters are major decisions requiring the reasonable
(except as otherwise provided) written approval of the Members (whether in
advance in a business plan, budget, or other pre-approval, or at the time of the
action in question, as the case may be):
(i) Entering into, approving, terminating or modifying to any
material extent the Management Agreement or the Asset Management
Agreement (SLAB may withhold its approval to the foregoing actions and
matters in this clause (i) in its sole and absolute discretion), or
selecting any architect, engineer, broker, leasing agent, property
manager, marketing or other consultant, contractor or sales agent for
any Property, any Investment Entity or the Company who are not
currently providing services to the Investment Entities or the Company
or in connection with the Properties in the ordinary course of
business;
(ii) Terminating or modifying to any material extent the
insurance policies currently maintained by the Investment Entities with
respect to the Properties);
(iii) Terminating any leases at any Property (except by reason
of a material breach of a tenant thereunder), or entering into,
approving or modifying to any material extent any lease at any
Property, in each case which is for either more than 25% of the total
leaseable space of
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the building at issue or more than 40,000 square feet of leaseable
space. All new leases shall be on such terms and conditions which are
not less favorable to the landlord than those of similar leases entered
into at arm's length between unrelated parties for comparable leases of
space in the area where the Properties are located;
(iv) Causing or permitting the Company or any Investment
Entity to file for bankruptcy or other relief from creditors, including
without limitation, an assignment for the benefit of creditors, an
admission in writing by any such entity of its inability to pay its
debts generally as they become due, causing the Company, a Member's
membership interest in the Company, any Investment Entity, the
Company's membership interest in any Investment Entity, or any Property
or any part thereof or interest therein to be subject to the authority
of any trustee, custodian or receiver or to be subject to any
proceeding for bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution or liquidation or
similar proceedings (collectively and singly, "Bankruptcy Action")
(SLAB may withhold its approval to all actions and matters in this
clause (iv) in its sole and absolute discretion);
(v) Making any distributions except as permitted hereunder, or
establishing reserves with respect to a Property in excess of 10% of
the annual cash flow from such Property or releasing funds therefrom
except in accordance with this Agreement and the reasonable needs of
the Company's business (SLAB may withhold its approval to all actions
and matters in this clause (v) in its sole and absolute discretion);
(vi) Dissolving, terminating or liquidating the Company or any
Investment Entity, or redeeming any interest of any Member, except as
provided herein (SLAB may withhold its approval to all actions and
matters in this clause (vi) in its sole and absolute discretion);
(vii) Entering into, approving, terminating or modifying the
terms of any contracts, agreements, leases and other undertakings with
any Member or its affiliates (SLAB may withhold its approval to the
foregoing actions and matters in this clause (vii) in its sole and
absolute discretion); PROVIDED, HOWEVER, that entering into, approving,
terminating or modifying to any material extent any service contracts
and other contracts and agreements (not otherwise specifically
addressed herein) with non-affiliates shall be permitted without any
Member approval so long as such contracts are entered into for
reasonable business purposes of the Company or the Investment Entities
on bona fide market terms and conditions for comparable goods or
services and for the area where the Properties are located.
Notwithstanding anything to the contrary contained in this Agreement,
to the extent any affiliate of MC is now or hereafter becomes a party
to any contract, agreement, lease or other undertaking entered into
with the Company or any Investment Entity (including without
limitation, the Purchase Agreement, the post-closing agreements in
connection therewith, the Management Agreement and the Asset Management
Agreement), SLAB, acting alone, shall have the exclusive right and
authority on behalf of the Company (A) to exercise termination rights
in accordance with the terms of such
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document, (B) to enforce and defend the Company's or the applicable
Investment Entity's rights (including without limitation, right to seek
damages for breach of representations and warranties and enforce
indemnities) under such document (including by prosecution or defense
of any proceeding or action that it deems necessary or appropriate),
and (C) to retain Company or Investment Entity counsel of its choosing
in connection with the foregoing at MC's expense. MC shall disclose to
SLAB in writing whether any party to a proposed contract, agreement,
lease or other undertaking to be entered into with the Company or any
Investment Entity is an affiliate of MC promptly after MC becomes aware
of such relationship and such proposed contract, agreement, lease or
other undertaking, and, in any event (and without limiting the
foregoing), prior to the Company's or such Investment Entity's
execution of the same. As used in this Agreement, an "affiliate" of a
Member shall mean any other individual, corporation, limited liability
company, partnership, trust, association or other entity or
organization directly or indirectly controlling, controlled by or under
common control with such Member. The term "control" or derivatives of
same shall mean direct or indirect ownership of more than 50% and/or
possession of the power to direct the management policies;
(viii) Acquiring, selling, conveying, exchanging,
hypothecating, pledging, encumbering or otherwise transferring all or
any portion of or any interest in any Property or Investment Entity
(other than pursuant to Section 11(d)), or in any other real property
now or hereafter owned by the Company or any Investment Entity (SLAB
may withhold its approval to all actions and matters in this clause
(viii) in its sole and absolute discretion);
(ix) Performing, or causing to be performed, any construction,
repair or rebuilding of any improvements at the Properties (except in
an emergency to correct or alleviate any unsafe conditions or except as
may be required under any tenant leases); PROVIDED, HOWEVER, that SLAB
may withhold its approval in its sole and absolute discretion on
decisions to repair or rebuild after a casualty or partial condemnation
costing more than $250,000 or to construct any new buildings or
increase the size of any existing buildings. If the Members agree to
repair or rebuild, any insurance or condemnation proceeds of more than
$250,000 shall be placed in an escrow and the Members shall reasonably
agree upon the terms and conditions for the release of the proceeds
from the escrow in connection with such repair or rebuilding. Any
insurance or condemnation proceeds not used to repair or rebuild shall
be distributed to the Members pursuant to Section 13;
(x) Except as otherwise provided herein, incurring any
indebtedness on behalf of the Company or any Investment Entity (except
that the Members hereby approve any reasonable, ordinary and necessary
trade payables incurred in the ordinary course of business to
non-affiliates of the Managing Member, and payments made, pursuant to
non-affiliate contracts which are in effect at the Closing or which are
approved by the Members); making, executing or delivering on behalf of
the Company or any Investment Entity any indemnity bond or surety bond;
lending funds belonging to the Company or any Investment Entity to any
person
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or entity, or extending any person, firm or corporation credit on
behalf of the Company or any Investment Entity; obligating the Company,
another Member or any Investment Entity as a surety, guarantor or
accommodation party to any obligation, except by endorsing checks for
deposit to the Company's or an Investment Entity's accounts in the
ordinary course of business, or granting or permitting any lien or
encumbrance on any Property other than mechanics' liens for work
performed at the Properties (SLAB may withhold its approval to all
actions and matters in this clause (x) in its sole and absolute
discretion);
(xi) Confessing a judgment against the Company or any
Investment Entity; settling or adjusting any claims (including without
limitation, insurance claims) against or of the Company or any
Investment Entity; consenting to any condemnation awards or
settlements; or commencing, defending or discontinuing any legal
actions or proceedings involving the Company or any Investment Entity,
to the extent such judgment, claims, awards, settlements, actions or
proceedings have an aggregate amount in controversy exceeding $250,000
(SLAB may withhold its approval in its sole and absolute discretion
with respect to condemnation awards or settlements in excess of 10% of
the cost of the Property at issue and with respect to any other actions
or matters in this clause (xi) having an aggregate amount in
controversy exceeding $1,000,000);
(xii) Submitting binding proposals to, or entering into,
approving, terminating or modifying binding agreements with,
governmental officials relating to zoning, subdivision, environmental
or other land use or entitlement matters (SLAB may withhold its
approval to the foregoing actions and matters in this clause (xii) in
its sole and absolute discretion; PROVIDED, HOWEVER, that SLAB shall
have only reasonable approval rights with respect to binding agreements
regarding zoning and entitlement matters related to tenant improvements
at the Properties or to landscaping, utility easements, buffers and
other similar items and conditions required by the Towns of Hanover or
Parsippany, New Jersey, in connection with obtaining development
approvals for adjacent land so long as the Properties are not
materially adversely affected thereby; PROVIDED, FURTHER, that any
actions taken in order to comply with the applicable zoning and other
land use requirements shall not require any approval of SLAB);
(xiii) Possessing, assigning or using funds or other property
of the Company or any Investment Entity for other than a Company or
Investment Entity purpose (SLAB may withhold its approval to the
actions and matters in this clause (xiii) in its sole and absolute
discretion);
(xiv) Partitioning all or any portion of any Property, or
filing any complaint or instituting any proceeding at law or in equity
seeking such partition (SLAB may withhold its approval to the actions
and matters in this clause (xiv) in its sole and absolute discretion);
(xv) Purchasing any assets or equipment on behalf of or in the
name of the Company or any Investment Entity (except in connection with
transfers among Investment Entities under
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Section 11(d)) other than those required in the ordinary course of the
Company's or such Investment Entity's business (SLAB may withhold its
approval to the actions and matters in this clause (xv) in its sole and
absolute discretion);
(xvi) Except as otherwise provided in Section 11(d) of this
Agreement, entering into, approving, terminating or modifying to any
material extent any loan document or loan instrument to which the
Company or any Investment Entity is or will be a party or the Company,
any Investment Entity or any Property is or will be bound or subject
to, or giving any consent, approval or waiver, or making any
determination or stipulation, on behalf of the Company or any
Investment Entity under any such loan document or instrument (SLAB may
withhold its approval to the actions and matters in this clause (xvi)
in its sole and absolute discretion);
(xvii) Admitting any new Members or causing or permitting any
merger or restructuring of the Company or the Investment Entities
(other than pursuant to Section 11(d)) (SLAB may withhold its approval
to the actions and matters in this clause (xvii) in its sole and
absolute discretion);
(xviii) Modifying or terminating this Agreement or any other
Company organizational documents or any organizational documents of any
Investment Entity (SLAB may withhold its approval to the actions and
matters in this clause (xviii) in its sole and absolute discretion);
(xix) Changing the nature of business or business purpose of
the Company or any Investment Entity (SLAB may withhold its approval to
the actions and matters in this clause (xix) in its sole and absolute
discretion);
(xx) Making any expenditures not in compliance with the
Current Budgets, except as the Current Budgets may be modified pursuant
to Section 11(a) above (SLAB may withhold its approval to the actions
and matters in this clause (xx) in its sole and absolute discretion);
(xxi) Approving the acceptability of any post-closing
deliveries under the Purchase Agreement and post-closing adjustments
under the Purchase Agreement; and
(xxii) Any other matter that requires the approval of both
Members under this Agreement (SLAB may withhold its approval to all
such matters in its sole and absolute discretion unless indicated
otherwise).
No amount shall be expended by any Member for a major decision without
first obtaining the approval of the Members (to the extent such approval is
required hereunder at such time). However, the Managing Member may expend
reasonable amounts in response to an emergency (which amounts shall be
reimbursed by the Company or the Investment Entities, as applicable). Failure to
disapprove in writing by a Member within five (5) business days (unless another
time period is specified in this
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Agreement) after receiving a written request for approval from the other Member
under this Agreement shall be deemed an approval of the action or matter in the
request, provided that such request states conspicuously that failure to approve
within such time period constitutes such Member's approval. Any request for
approval herein shall describe the action or matter to be approved with
sufficient specificity to permit a reply, and any approval or disapproval
thereof shall set forth the reasons therefor with sufficient specificity to
permit a reply.
(c) Subject to the provisions of Section 11(d) but notwithstanding any
other provision to the contrary herein, while MC is not the Managing Member, the
following actions and matters are major decisions requiring the written approval
of MC, which MC may withhold in its sole and absolute discretion:
(i) Causing or permitting the Company or any Investment Entity
to file for bankruptcy or other relief from creditors, including
without limitation, an assignment for the benefit of creditors, an
admission in writing by any such entity of its inability to pay its
debts generally as they become due, causing the Company, a Member's
membership interest in the Company, any Investment Entity, the
Company's membership interest in any Investment Entity, or any Property
or any part thereof or interest therein to be subject to the authority
of any trustee, custodian or receiver or to be subject to any
proceeding for bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution or liquidation or
similar proceedings;
(ii) Dissolving, terminating or liquidating the Company or any
Investment Entity, or redeeming any interest of any Member, except as
provided herein;
(iii) Entering into, approving, terminating or modifying to
any material extent the terms of contracts, agreements, leases or other
undertakings with any affiliates of SLAB. Notwithstanding anything to
the contrary contained in this Agreement, to the extent any affiliate
of SLAB is now or hereafter becomes a party to any contract, agreement,
lease or other undertaking entered into with the Company or any
Investment Entity, MC, acting alone, shall have the exclusive right and
authority on behalf of the Company (A) to exercise termination rights
in accordance with the terms of such document, (B) to enforce and
defend the Company's or the applicable Investment Entity's rights under
such document (including by prosecution or defense of any proceeding or
action that it deems necessary or appropriate), and (C) to retain
Company or Investment Entity counsel of its choosing in connection with
the foregoing at SLAB's expense. SLAB shall disclose to MC in writing
whether any party to a proposed contract, agreement, lease or other
undertaking to be entered into with the Company or any Investment
Entity is an affiliate of SLAB promptly after SLAB becomes aware of
such relationship and such proposed contract, agreement, lease or other
undertaking, and, in any event (and without limiting the foregoing),
prior to the Company's or such Investment Entity's execution of the
same;
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(iv) Possessing, assigning or using funds or other property of
the Company or any Investment Entity for other than a Company or
Investment Entity purpose;
(v) Admitting any new Members or causing or permitting any
merger or restructuring of the Company or the Investment Entities
(other than pursuant to Section 11(d));
(vi) Modifying or terminating this Agreement or any other
Company organizational documents or any organizational documents of any
Investment Entity; and
(vii) Changing the nature of business or business purpose of
the Company or any Investment Entity.
(d) Notwithstanding any provision to the contrary contained herein
(including without limitation, Section 11(b) hereof), the Members shall have the
following rights:
(i) From the date of this Agreement and until January 2, 2001
(the "Outside Closing Date"), MC shall have the right, in MC's sole and
absolute discretion without the other Member's approval being required,
to negotiate, enter into and perform under, on behalf of the Company
and/or the Investment Entities, one or more agreements with one or more
parties (including MC's affiliates) for the sale, financing or
refinancing of one or more Properties and/or Investment Entities (or
the ownership interests therein) on any terms and conditions, PROVIDED
that: (A) any such transaction closes on or prior to the Outside
Closing Date; (B) all accrued and unpaid Guaranteed Payments to SLAB
under Section 13(c)(1) must have been made; (C) in the case of sale, a
financing or refinancing of all of the Properties or interests therein
not previously sold, financed or refinanced under this Section 11(d)
(the "Remaining Properties"), the cash sale price received by the
Company and the Investment Entities at the closing thereunder or the
loan amount received by Company and the Investment Entities must at
least be equal to an amount that will result in SLAB receiving, from
proceeds of the transaction and previous transactions, the sum of the
amounts described in Sections 13(b)(2)(i), 13(b)(2)(ii), and 13(c)(1)
hereof (the "SLAB Return Amount"); (D) in the case of sale, a financing
or refinancing of less than all of the Remaining Properties, the cash
sale price received by the Company and the Investment Entities at the
closing thereunder or the loan amount received by Company and the
Investment Entities must at least be equal to an amount that will
result in SLAB receiving (in addition to all accrued and unpaid
Guaranteed Payments), from proceeds of the transaction and
distributions under Section 13(b)(i), 102% of the amount(s) set forth
for the Property(ies) at issue in Exhibit C; (E) in the case of sale, a
financing or refinancing of less than all of the Remaining Properties,
the Property(ies) to be sold, financed or refinanced must be owned by a
separate Investment Entity(ies) created and maintained as a limited
liability company, and the Company and the other Investment Entities
must not be subject to any personal liability under such sale,
financing or refinancing (and no other assets of the Company or any
Investment Entity except those that are the subject of such sale,
financing or refinancing
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shall be subject to the claims of the lender or purchaser in such
transaction, whether for debt service, damages or any other amounts),
and there must not then exist any monetary breach or any uncured
material non-monetary breach by MC hereunder; and (F) in the case of a
sale, financing or refinancing of less than all of the Remaining
Properties, there must not then exist any uncured monetary or material
non-monetary breach by MC hereunder (except that with respect to
Section 11(f)(xix) hereof (which shall be determined without regard to
whether MC used reasonable commercial efforts and without regard to
materiality), the seller under the Purchase Agreement must also have
failed to make the deliveries as required by Sections 8.4(c), 8.4(d)
and 8.4(e) of the Purchase Agreement) and there must not have been a
material adverse change with respect to any of the other Remaining
Properties (including without limitation, the value, cash flow or
tenancy at any such Property). In transactions described in the
immediately preceding clause (F), MC shall provide written notice of
same to SLAB at least fifteen (15) business days prior to entering into
a binding agreement with respect to such transaction and SLAB shall
have the right to determine, in its sole discretion, whether there has
been a material adverse change with respect to any of the other
Remaining Properties. SLAB's failure to provide written notice of such
determination within fifteen (15) business days after its receipt of
such notice from MC shall be deemed to be SLAB's determination that
there has been no such material adverse change. Except as otherwise
provided in this Section 11(d)(i), until the Outside Closing Date, MC
shall have the right to perform any act, or execute and deliver any
document or instrument, as may be reasonably necessary or appropriate
in connection with such transactions without any other Member's
approval being required. Notwithstanding the last sentence of Section
11(b)(ix), the purchaser of a Property or interests therein shall be
entitled to receive an assignment of any casualty or condemnation
proceeds allocable to such Property to the extent not theretofore used
to repair, rebuild or replace the Property (and for which the purchaser
is not otherwise receiving an appropriate reduction in the purchase
price).
(ii) At any time (A) after the Outside Closing Date, if SLAB
has not then received the SLAB Return Amount, or (B) MC is in breach of
Section 11(f)(xix) hereof (which shall be determined without regard to
whether MC used reasonable commercial efforts and without regard to
materiality) AND the seller under the Purchase Agreement has failed to
make the deliveries as required by Sections 8.4(c), 8.4(d) and 8.4(e)
of the Purchase Agreement, a majority in Residual Percentages of the
Members (which term, as used herein, shall mean the Members owning
greater than 50% of all Residual Percentages in the Company) shall have
the right, in its sole and absolute discretion without the approval of
any other Member being required, to negotiate, enter into and perform
under, on behalf of the Company and/or the Investment Entities one or
more agreements with one or more parties (including affiliates of the
electing Members) for the sale, financing, refinancing or
securitization of one or more Properties and/or Investment Entities (or
the ownership interests therein) on any terms and conditions; PROVIDED,
HOWEVER, that MC shall have the right to purchase the assets being sold
or provide such financing or refinancing (as applicable) on the same
terms and conditions, which right MC must exercise by providing written
notice thereof to SLAB within 20 days after receiving
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written notice from SLAB setting forth such terms and conditions. MC's
failure to provide such notice timely shall be deemed MC's election not
to exercise such right. If MC timely exercise such right, the closing
shall occur within 30 days thereafter. If MC has not been removed as
the Managing Member, MC shall cooperate in connection with the
transactions contemplated under this clause (ii). In connection with
the sale, financing, refinancing or securitization transactions under
this Section 11(d)(ii), a majority in Residual Percentages of the
Members shall (1) have the right to perform any act, or execute and
deliver any document or instrument, as may be reasonably necessary or
appropriate in connection with such transactions without any other
Member's approval being required and (2) cause all costs of the
foregoing, including without limitation the following due diligence
items, if required to be provided by the Company or the Investment
Entities in connection with any such transaction, to be paid at the
Company expense: engineering reports, Phase I environmental reports,
appraisal, title reports, searches and endorsements, surveys, and
certificates of occupancy.
(iii) The proceeds (net of transaction costs and expenses)
from any sale, condemnation, casualty, financing, refinancing or
securitization described in paragraphs (i) and (ii) of this Section
11(d) shall be distributed or paid by the Company as provided in this
Agreement.
(iv) In connection with the sale, financing, refinancing or
securitization transactions described in paragraphs (i) and (ii) of
this Section 11(d), the Member with the right to cause such
transactions to occur shall have the right, in such Member's sole and
absolute discretion without the other Member's approval being required,
to form one or more additional single-member Investment Entities owned
by the Company and to cause the existing Investment Entities to
transfer one or more Properties which are the subject of such sale,
financing, refinancing or securitization to such additional Investment
Entities and to transfer the Company's interest in such additional
Investment Entities or the Property(ies) owned thereby. Except as
otherwise provided in Section 11(d)(i), such Member shall give written
notice of any transaction described in this Section 11(d) to the other
Member at least ten (10) days prior to causing the Company to enter
into such transaction.
(e) No Member (including any Managing Member) shall be liable,
responsible or accountable in damages or otherwise to the other Member or the
Company or any Investment Entity for any act or omission of such Member on
behalf of the Company, except for fraud, gross negligence or material breach of
this Agreement. Except as provided in this Section 11(e), the Company shall
indemnify and hold harmless each Member (including any Managing Member) and its
affiliates from and against any obligations, damages, claims, liabilities,
losses, costs or expenses, including reasonable attorneys' fees and costs
(collectively, "Claims"), incurred in connection with or arising out of such
Member acting as a Member or on behalf of the Company in accordance with this
Agreement.
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Each Member shall be liable to the other Member for such other Member's
actual damages to the extent caused by any fraud, gross negligence or material
breach of this Agreement by the liable Member and not caused by any fraud, gross
negligence or material breach of this Agreement by the other Member. As used in
the immediately preceding sentence of this paragraph, the term "actual damages"
shall: (1) include, without limitation, the costs (including reasonable
attorneys' fees and costs) of enforcing the rights of a Member under this
Agreement and collecting such damages; and (2) include, without limitation, any
and all kinds of damages actually paid by such other Member to unaffiliated
third parties (including any consequential, speculative, punitive or special
damages actually paid by such other Member to unaffiliated third parties); but
(3) exclude any other consequential, speculative, punitive or special damages.
MC hereby agrees to indemnify and hold harmless SLAB and its affiliates from and
against any third-party Claims to the extent caused by MC's fraud, gross
negligence or material breach of this Agreement and not by SLAB's fraud, gross
negligence or material breach of this Agreement. Any amounts payable under this
paragraph shall be made immediately upon written demand therefor and shall
accrue interest from the date of such demand until paid at the lesser of fifteen
percent (15%) per annum or the highest rate permitted by applicable law.
Without limiting the foregoing, upon the occurrence of any of the
following, (A) SLAB shall have the right to remove MC as the Managing Member of
the Company, (B) any distributions to MC under Section 13(b)(2) (other than its
Guaranteed Payments) shall be subordinated to any and all distributions and
payments to SLAB hereunder, and (C) SLAB shall have the right to institute
reasonable cash management procedures pursuant to which tenants will make
payments under their leases directly to a lock box account and SLAB will control
all disbursements therefrom:
(i) fraud by MC with respect to the Company, any Investment
Entity or any Property or with respect to any transactions contemplated
hereunder;
(ii) any gross negligence on the part of MC with respect to
any of its duties and obligations hereunder which is not cured to
SLAB's reasonable satisfaction within 45 days after receiving written
notice of such gross negligence from SLAB;
(iii) failure by MC to use any available cash to make the
Guaranteed Payments under Section 13(c)(1) for three (3) consecutive
months;
(iv) any monetary default by MC under this Agreement at any
time;
(v) any representation or warranty made by seller in the
Purchase Agreement (or in any other documents delivered to the Company
thereunder) or made by MC in this Agreement shall have been false or
misleading in any material respect when made and MC fails to cure (to
SLAB's reasonable satisfaction) such breach of representation or
warranty within forty five (45) days after MC's receipt of written
notice of such breach from SLAB;
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(vi) except as provided in clause (ix) below of this Section,
material breach of any non-monetary covenants set forth Section 11(f)
(determined without regard to whether MC used its reasonable commercial
efforts in connection therewith) or a material breach of any other
non-monetary provisions hereof by MC and MC's failure to cure (to
SLAB's reasonable satisfaction) such breach within forty five (45) days
after MC's receipt of written notice of such breach from SLAB;
(vii) any monetary breach or material non-monetary breach of
the Management Agreement by the property manager or the Asset
Management Agreement by the asset manager;
(viii) any Bankruptcy Action with respect to MC; and
(ix) breach of Section 11(f)(xix) (determined without regard
to whether MC used its reasonable commercial efforts in connection
therewith).
Any notice alleging a breach or gross negligence referenced above shall
specify the breach or gross negligence with sufficient particularity to permit
the cure, and any such cure shall be at the breaching Member's expense. The
non-breaching Member may effect such cure at the breaching Member's expense if
the breaching Member shall fail to effect such cure timely. If MC is removed (or
if a majority in Residual Percentages of the Members is entitled to remove MC)
as the Managing Member hereunder, SLAB shall have the right to terminate all
agreements and contracts between the Company and any affiliates of MC (including
without limitation, the Asset Management Agreement and the Management
Agreement).
(f) So long as MC is the Managing Member hereunder, MC shall use
reasonable commercial efforts to:
(i) not take any actions that require SLAB's approval under
Section 11(b) without first obtaining such approval or otherwise in
accordance with Section 11(b);
(ii) not cause or permit any Bankruptcy Action;
(iii) not cause or permit the Company or the Investment
Entities to own any encumbered asset other than pursuant to Section
11(d) (financing right);
(iv) not cause or permit the Company or the Investment
Entities to engage in any business other than the ownership, management
and operation of the Properties and the Investment Entities;
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(v) do all things necessary to preserve the Company's and the
Investment Entities' existence and limited liability company
formalities;
(vi) conduct and operate the business of the Company and the
Investment Entities as presently conducted and operated in material
respects;
(vii) not cause or permit the Company or the Investment
Entities to be responsible for the debts or obligations of any person
or entity other than the Company or the Investment Entities;
(viii) provide prompt written notice to SLAB of any
litigation, bankruptcy, administrative or other court or governmental
proceedings pending or threatened (in writing) against the Company, any
Investment Entity or any Property which might have a material adverse
effect;
(ix) not cause or permit the Company to engage in any
transaction which would cause any obligation, or action taken or to be
taken, hereunder to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974 (or any successor
legislation thereto), as amended ("ERISA"). MC further covenants and
agrees to deliver to SLAB such certifications or other evidence from
time to time throughout the term of this Agreement, as requested by
SLAB in its sole discretion, that: (i) the Company is not an "employee
benefit plan" as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii) the Company is not subject to state
statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (iii) one or more of the following
circumstances is true:
(1) Equity interests in the Company are publicly
offered securities, within the meaning of 29
C.F.R. SECTIONS 2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of each
outstanding class of equity interests in the
Company are held by "benefit plan investors"
within the meaning of 29 C.F.R. SECTIONS
2510.3-101(f)(2); or
(3) The Company qualifies as an "operating
company" or a "real estate operating
company" within the meaning of 29 C.F.R.
SECTIONS 2510.3- 101(c) or (e) or an
investment company registered under The
Investment Company Act of 1940.
(x) cause the Company, the Investment Entities and the
Properties to comply at all times with all laws, statutes, ordinances,
regulations and other governmental or quasi-
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governmental requirements to which the Company or any Investment Entity
is subject and with private covenants now or hereafter relating to the
ownership, construction, use or operation of the Properties, including,
but not limited to, those concerning environmental or ecological
requirements;
(xi) keep the Properties free and clear of monetary liens
(except pursuant to Section 11(d) or with required approval under
Section 11(b));
(xii) cause the Company, the Investment Entities and the
property manager under the Management Agreement to take such
commercially reasonable actions as may be necessary or appropriate to
own and operate the Properties in a professional, diligent and
first-class manner;
(xiii) not commit or suffer any waste of the Properties or
make or permit to be made any change in the use of the Properties which
will in any way materially increase the risk of fire or other hazard
arising out of the operation of the Properties, or take or cause to be
taken any action that might invalidate or give cause for cancellation
of any insurance policy, or do or permit to be done thereon anything
that could in any material way impair the value of the Properties;
(xiv) cause the Company, the Investment Entities and the
property manager under the Management Agreement to keep and maintain
proper and accurate books, records and accounts (separate from those of
MC's affiliates or any other person or entity) reflecting all of the
financial affairs of the Company and the Investment Entities and all
items of income and expense in connection with the operation of the
Properties;
(xv) cause the property manager under the Management Agreement
and the asset manager under Asset Management Agreement to comply with
the terms and conditions of such agreements and not permit a breach
thereof by such managers;
(xvi) cause the Company and the Investment Entities to pay
promptly all taxes, assessments and other governmental impositions with
respect to the Company, the Investment Entities and the Properties;
(xvii) if the Company or the Investment Entities have
employees, cause the payment of the salaries and other compensation of
such employees (or the proportionate share of such salaries and
compensation allocable to the Company and the Investment Entities, as
applicable);
(xviii) provide prompt notice to SLAB of any material breach
hereunder by MC;
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(xix) maintain (with respect to MC) an "investment grade"
rating by Standard Poor's or Moody's or a book value determined in
accordance with generally accepted accounting principles (excluding
good will and adding back all accumulated depreciation and
amortization) of at least $1,500,000,000;
(xx) not cause or permit the Company and the Investment
Entities to commingle their funds and other assets with those of any
affiliate of MC or any other person or entity; and
(xxi) cause the Company and the Investment Entities to
maintain their assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify their individual assets
from those of any affiliate of MC or any other person or entity.
12. DETERMINATION OF PROFITS AND LOSSES. The net profits and net
losses of the Company shall be as determined for federal income tax purposes for
each calendar year. The Members intend that the Company be treated as a
partnership for tax purposes and each Investment Entity be treated as a
disregarded entity for income tax purposes. The Members hereby agree that they
will not cause or permit the Company or any Investment Entity to become a
taxable entity. No Member shall under any circumstances be required to pay or
restore any portion of the negative balance in its capital account or to repay
any portion thereof to the Company, any Company creditor or another Member. No
Member may demand the return of its capital contributions, it being intended
that all distributions be made pursuant to Section 13 below.
13. ALLOCATION OF INCOME AND LOSSES; DISTRIBUTIONS; GUARANTEED
PAYMENTS.
(a) TAX ALLOCATIONS.
(i) Tax losses of the Company for any fiscal period shall be
allocated (A) first to MC, until its capital account has been reduced to
zero, (B) then to SLAB, until its capital account has been reduced to
zero, and (C) then to the Members in accordance with their Residual
Percentages.
(ii) Taxable income of the Company for any fiscal period shall be
allocated (A) first to SLAB, until SLAB has been allocated an aggregate
amount of income under this clause (ii) equal to the amount
distributable to SLAB pursuant to Section 13(b)(2)(i) and (B) thereafter
to the Members in accordance with their Residual Percentages.
(iii) For purposes of this Section 13(a)(iii), Guaranteed
Payments shall not be treated as distributions. On or before April 15 of
each year, the Company shall, upon the written request of any Member
("Requesting Member"), pay (to the extent the Company has available
funds, determined prior to making distributions for the preceding
calendar year), as an advance against future distributions to the
Requesting Member under Section 13(b)(1) and
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13(b)(2)(iv), (a "Tax Payment Advance") to the Requesting Member an
amount equal to the excess of (A) 40% multiplied by the Requesting
Member's cumulative allocations of income pursuant to Section
13(a)(ii)(B), over (B) the sum of (x) the Requesting Member's
cumulative distributions from the Company under Sections 13(b)(1) and
13(b)(2)(iv) from the date hereof through the end of the preceding
calendar year (net of repayments thereof) and (y) the outstanding
balance(s) of all the unpaid Tax Payment Advances to such Requesting
Member. A copy of any request for a Tax Payment Advance shall be given
by the requesting Member to the other Member. Such advance shall not
bear interest, and shall be repayable both (A) out of future
distributions to the Requesting Member under Sections 13(b)(1) and
13(b)(2)(iv) (such payment to be made by withholding such
distributions, with such distributions being deemed to have been
distributed to the Requesting Member and then paid by the Requesting
Member to the Company), and (B) if earlier, upon the liquidation of the
Company or upon demand following the Requesting Member's ceasing for
any reason to be a Member hereunder, which payments shall be made from
the distributions otherwise payable to such Member in connection with
the liquidation. In no event shall the Company be required to borrow
money or to sell any asset in order to fund any Tax Payment Advance.
(b) DISTRIBUTIONS.
(1) CASH FLOW FROM OPERATIONS. Distributions of net available
cash from any source (other than distributions of sale, casualty, condemnation,
loan or securitization proceeds described in Section 11(d)) and proceeds of any
other capital transactions remaining after Guaranteed Payments (as defined in
and in accordance with Section 13(c) below), expenses, debt service, reserves
and capital improvements for any period shall be made as follows, after first
repaying any loans made by the Members to the Company and Investment Entities
pursuant to Section 9 (loans which have been outstanding the longest shall be
repaid first, with any loans that have been outstanding for an equal period
being repaid pro rata, in proportion to such loans' respective balances, and
with the accrued and unpaid interest being repaid first and then the principal
being repaid next) (such excess net available cash, the "Excess Cash Flow"): to
the Members, PARI PASSU, 55% to SLAB and 45% to MC; PROVIDED, HOWEVER, that the
Managing Member shall have the right to not make the distribution of such Excess
Cash Flow distributable to SLAB and hold it in Company reserve earmarked to make
the distribution under Section 13(b)(2)(i) (in which case, the amount
distributable to SLAB under Section 13(b)(2)(i) shall be reduced by the amount
so earmarked when distribution thereof is made to SLAB under Section
13(b)(2)(i)) and distribute such Excess Cash Flow to SLAB as a distribution
under Section 13(b)(2)(i) at such time as SLAB would otherwise be entitled to a
distribution under Section 13(b)(2)(i).
(2) SALE/REFINANCING PROCEEDS. Distributions of sale,
disposition, loan or securitization proceeds described in Section 11(d) (or any
insurance or condemnation proceeds not used to repair, rebuild or replace the
Properties) and proceeds of any other capital transactions remaining after
Guaranteed Payments (as defined in and in accordance with the subsection
entitled
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"Guaranteed Payments" below in this Section 13), and reasonable, ordinary and
necessary expenses being paid in connection therewith shall be made in the
following order of priority after first repaying any loans made by the Members
to the Company and Investment Entities (loans which have been outstanding the
longest shall be repaid first, with any loans that have been outstanding for an
equal period being repaid pro rata, in proportion to such loans' respective
balances, and with the accrued and unpaid interest being repaid first and then
the principal being repaid next):
(i) First, such amounts (including reserved amounts under Section
13(b)(1)) shall be distributed to SLAB until SLAB has received an amount
equal to (A) the product of two percent (2%) of SLAB's Capital
Contributions times (B) the number of years (commencing with January 1,
2000) during which such Capital Contributions were outstanding (with
each partial year treated as a full year) reduced by cash flow paid to
SLAB in the 55/45 ratio under Section 13(b)(1) and not held in reserves
described in Section 13(b)(1);
(ii) Second, the balance shall be distributed to SLAB to the
extent of its Capital Contributions attributable to the Properties as
set forth on Exhibit C for which a sale, loan or securitization has
occurred and which have not previously been repaid pursuant to this
section 13(b)(2)(ii);
(iii) Third, the balance shall be distributed to MC to the extent
of its Capital Contributions attributable to the Properties as set forth
on Exhibit F for which a sale, loan or securitization has occurred which
have not been repaid by distributions to it under this Section
13(b)(2)(iii); and
(iv) Next, the balance shall be distributed to the Members, PARI
PASSU, 55% to SLAB and 45% to MC.
(3) LIQUIDATING DISTRIBUTIONS. Upon liquidation of the Company,
after all of the Company's debts have been paid, distributions shall be made in
accordance with the Members' capital accounts.
(c) GUARANTEED PAYMENTS. The Company shall make guaranteed payments
under Code Section 707(c) ("Guaranteed Payments"), on the fifth (5th) day of
each calendar month (commencing with February 5, 2000) from available cash from
any source, to the Members for the use of their respective capital contributions
as follows (with amounts not paid currently being added to the unpaid principal
amount of the Guaranteed Payments then owing):
(1) First, to SLAB in an amount equal to SLAB's accrued and
unpaid Guaranteed Payments, which shall mean an amount equal to SLAB's
capital contributions which have not been repaid by distributions to it
under Section 13(b)(2)(ii) multiplied by LIBOR plus 200 basis
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<PAGE>
points per annum, compounded monthly (using the rate under Section 9
applicable that month applied to total outstanding balance), until the
date the payment is made; and
(2) After making the Guaranteed Payments described in Section
13(c)(1), to MC in an amount equal to MC's accrued and unpaid Guaranteed
Payments, which shall mean an amount equal to MC's capital contributions
which have not been repaid by distributions to it under Section
13(b)(2)(iii) multiplied by the rate in effect from time to time that is
122% of the rate used in Section 13(c)(1).
14. RESTRICTIONS ON TRANSFER. Neither of the Members shall
transfer, assign, pledge or hypothecate any of their respective right, title or
interest in the Company, or permit transfers of direct or indirect ownership in
such Member without the prior written approval of the other Member, which
approval may be granted or withheld in the other Member's sole and absolute
discretion, except as may be required by law or by reason of an individual's
death, incapacity or divorce, and except as necessary to effect the transactions
described in Section 11(d). Nothing in this Section 14 shall be construed to
prohibit or restrict any sale, transfer, assignment, pledge or hypothecation of
any stock (or any interests therein) of any publicly-traded entity which
directly, indirectly or ultimately owns any interest in any Member, or the
transfer of units or partnership interests in Mack-Cali Realty, L.P, or the
transfer of any direct or indirect interest in the Company by any Member to its
affiliates, or the transfer of any interest in DLJ Mortgage Capital, Inc. No
transfer herein shall affect the obligations and liabilities of the transferring
party hereunder.
15. WAIVER OF NON-COMPETITION. Each Member hereby acknowledges
and agrees that each Member and its affiliates may continue to pursue their
existing businesses, including without limitation, acquisition, financing,
development, operation, management, leasing of, and investments in, any
properties or projects, and the disposition thereof, regardless of whether the
same is competitive with the Properties. Each Member further acknowledges and
agrees that no Member or any of its affiliates shall be obligated to present any
particular investment or business opportunity to the Company or the other Member
or its affiliates, even if such opportunity is of a character which, if
presented to the Company or the other Member, could be undertaken by the Company
or the other Member, and each Member and each of its affiliates shall have the
right to acquire for its own account, or to recommend to others, any such
opportunity. Notwithstanding any provision to the contrary in this Agreement, MC
hereby agrees not to induce any existing tenant at the Properties (while owned
by the Company or the Investment Entities owned by the Company) to breach,
modify or terminate such tenant's lease at the Properties in favor of a lease at
another property owned by MC or its affiliates
16. ACCOUNTANTS AND ATTORNEYS; ENGINEERING REPORTS AND
APPRAISALS. PricewaterhouseCoopers shall be the Company's accountants, and the
Company may engage any of Battle Fowler LLP, Weil Gotshal & Manges LLP and Farer
Siegel & Fersko (with respect to environmental matters) as Company's attorneys.
Other accountants may be engaged so long as their engagement is not to perform
an audit of the Company's or any Investment Entity's books or to sign tax
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returns for the Company or any Investment Entity (all of which must be done by
PricewaterhouseCoopers). Any change of Company accountants, or additional
attorneys, shall be subject to the reasonable approval of both Members. The
Managing Member shall cause engineering reports and appraisals of the Properties
to be prepared at the Company expense within 30 days after the Outside Closing
Date.
17. REPRESENTATIONS AND WARRANTIES. Each Member hereby represents
and warrants to the other Member as follows:
i. Such Member is duly formed and validly existing under the
laws of the jurisdiction of its organization with full
power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this
Agreement;
ii. This Agreement has been duly authorized, executed and
delivered by such Member and constitutes the valid and
legally binding agreement of such Member, enforceable in
accordance with its terms against such Member, except as
such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar laws relating to
creditors' rights generally, by general equitable
principles and by any implied covenant of good faith and
fair dealing;
iii. The execution and delivery of this Agreement by such
Member and the performance of its duties and obligations
hereunder do not result in a breach of any of the terms,
conditions or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, credit
agreement, note or other evidence of indebtedness, or any
lease or other agreement, or any license, permit,
franchise or certificate to which such Member is a party
or by which it is bound or to which its properties are
subject or require any authorization or approval under or
pursuant to any of the foregoing, or violate any statute,
regulation, law, order, writ, injunction, judgment or
decree to which such Member is subject, or require any
governmental consent; and
iv. Such Member is relying on such Member's own tax, legal
and accounting professionals and consultants in
connection with such Member entering into this Agreement.
18. WAIVER OF RIGHT OF PARTITION. Each Member hereby waives all
rights to commence an action for the partition of the Company, the Investment
Entities or the Company's or the Investment Entities' property.
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19. MEETINGS. Meetings of the Members shall not be required
unless requested by any Member by written notice to the Company and the other
Member. All Members shall be given written notice of any meeting of the Company
at least twenty (20) days prior to any such meeting by the Member requesting
such meeting. Any meetings shall be held at the record-keeping office of the
Company or at any other reasonably convenient location within New York City or
New Jersey as the requesting Member may reasonably approve and specify in such
notice.
20. COUNTERPARTS. This Agreement may be executed in counterparts
and execution and delivery by facsimile transmission is authorized for all
purposes.
21. NOTICES. Any notices or solicitations of approval required or
permitted to be given under the terms of this Agreement shall be in writing and
shall be deemed to have been given when (i) personally delivered with signed
receipt obtained, (ii) when transmitted by facsimile machine, with printed
confirmation of successful transmission to the facsimile machine number set
forth in the appropriate address listed below being obtained by the sender from
the sender's facsimile machine or telephonically from the addressee, or (iii)
when deposited in the United States first class mail if sent postage prepaid by
registered or certified mail, return receipt requested, in each case addressed
as follows:
IF TO MC:
c/o Mack-Cali Realty Corporation
11 Commerce Drive
Cranford, New Jersey 07016
with separate notices to the attention of:
Mr. Mitchell E. Hersh
Tel: (908) 272-8000
Fax: (908) 272-6755
and
Roger W. Thomas, Esq.
Tel: (908) 272-2612
Fax: (908) 497-0485
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Richard L. O'Toole, Esq.
Leslie H. Loffman, Esq.
Tel: (212) 856-7000
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Fax: (212) 856-7810
and to:
Battle Fowler LLP
2049 Century Park East, Suite 2350
Los Angeles, California 90067
Attn: Sanford C. Presant, Esq.
Sung H. Shin, Esq.
Tel: (310) 788-3000
Fax: (310) 277-0336
IF TO SLAB:
SLAB Investments Holding, Inc.
c/o Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, New York 10172
with separate notices to the attention of:
Mr. John Bricker
Tel: (212) 892-2657
Fax: (212) 892-6101
and
Mr. Dante LaRocca
Tel: (212) 892-4964
Fax: (212) 892-6101
and
280 Park Avenue, 5th Floor
New York, New York 10172
Attn: Mr. Mark Competiello
Tel: (212) 892-4939
Fax: (212) 892-4955
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with a copy to:
Weil Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attn: J. Philip Rosen, Esq.
Larry Gelbfish, Esq.
Tel: (212) 310-8000
Fax: (212) 310-8007
The time to respond to any notice shall commence to run on the date of delivery
at the appropriate addresses (or attempted delivery if delivery is refused
during normal business hours).
22. ATTORNEYS' FEES. In the event a party hereto files any
action, lawsuit or other legal proceeding against another party hereto by reason
of any breach of any of the covenants, agreements or provisions contained in
this Agreement, the prevailing party in such proceeding will be entitled to have
and recover certain fees from the other party including all reasonable
attorneys' fees and costs resulting therefrom.
23. SET-OFF. In addition to any rights and remedies of the
Members provided by law, each Member shall have the right, without prior notice
to the Company (with such notice being expressly waived by the Company to the
extent permitted by law) upon any Bankruptcy Action with respect to the Company
or any Investment Entity, to set-off and apply against any amounts owed to such
Member, any amounts owing from such Member to the Company, at or at any time
after the occurrence of such Bankruptcy Action, and the aforesaid right of
set-off may be exercised by such Member against the Company or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor, or anyone
else claiming through or against the Company, notwithstanding that such right of
set-off shall not have been exercised by such Member prior to the making,
filing, issuance or service upon such Member of, or of notice of, any such
Bankruptcy Action.
24. CONSTRUCTION. Headings at the beginning of each section or
subsection are solely for the convenience of the parties and are not a part of
this Agreement. This Agreement shall not be construed as if it had been prepared
by one of the parties, but rather as if both parties had prepared the same. All
exhibits, schedules and other attachments hereto are incorporated as a part of
this Agreement by this reference. This Agreement shall be interpreted using New
Jersey law (without regard to conflict of law provisions). As used herein, the
words "lease," "tenant" and any derivatives thereof shall also include subleases
and subtenants, as the context permits or requires.
25. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all of the other conditions and
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provisions of this Agreement will nevertheless remain in full force and effect,
so as to cause the economic substance of the transactions contemplated hereby
not to be affected in any adverse manner to either party.
26. SOLE DISCRETION. In any instance in this Agreement in which a
Member (including the Managing Member) may act in its sole discretion, such sole
discretion means the sole, absolute and unfettered discretion of such Member,
without any express or implied obligation or duty of good faith.
27. PRESS RELEASES. Before either Member discloses in writing to
any third party any of the terms and conditions of this Agreement (or the
transaction contemplated hereby), such Member shall provide a copy of such
writing to the other Member for its review and comment (but not its approval).
Either Member may request a meeting to discuss any such writing.
[signatures follow]
26
<PAGE>
IN WITNESS WHEREOF, the undersigned Members have executed this
Agreement as of the date first written above.
SLAB INVESTMENTS HOLDING, INC.,
a Delaware corporation
By:
------------------------------------
John Bricker, its Vice President
MACK-CALI REALTY, L.P.,
a Delaware limited partnership
By: Mack-Cali Realty Corporation,
a Maryland corporation,
its general partner
By:
------------------------------
Roger W. Thomas,
its Executive Vice President
[END OF SIGNATURES]
27
<PAGE>
EXHIBIT A
---------
CAPITAL CONTRIBUTIONS; FUNDING PROPORTIONS;
AND RESIDUAL PERCENTAGES
<TABLE>
<CAPTION>
CAPITAL FUNDING RESIDUAL
MEMBER CONTRIBUTIONS PROPORTIONS PERCENTAGES
<S> <C> <C> <C>
MC $ 68,400,000 45% 45%
SLAB $ 83,600,000 55% 55%
------------- ---- ----
Total: $ 152,000,000 100% 100%
</TABLE>
A-1
<PAGE>
EXHIBIT B
---------
LEGAL DESCRIPTION
[see attached]
B-1
<PAGE>
EXHIBIT C
---------
SLAB ALLOCATION OF CAPITAL CONTRIBUTIONS
[see attached]
C-1
<PAGE>
EXHIBIT D
REPORTING REQUIREMENTS
1. GOVERNMENTAL REPORTS; MEETINGS. MC shall, at Company expense, use
reasonable efforts to cause to be prepared and timely filed with appropriate
federal, state and foreign regulatory and administrative bodies, all reports
required to be filed with such entities under then current applicable laws,
rules and regulations, subject to the reasonable approval of the Members. Such
reports shall be prepared on the accounting or reporting basis required by such
regulatory bodies. Each Member shall be provided with a copy of any such report.
2. ACCESS; AUDIT. Each Member shall permit any other Member to review
and copy, during normal business hours at the office of the Company, all Company
financial records and information. Each Member shall have the right to have such
records and information audited at Company expense; PROVIDED, HOWEVER, if such
audit reveals material errors or omissions in such records and information due
to actual fraud or misappropriation of funds by any Member, such Member shall
reimburse the Company for the expense of audit. MC shall maintain (at the office
of the Company) reports required or otherwise prepared and delivered hereunder,
copies of which shall be furnished to each Member when available, at the
Company's expense, together with (upon request from any Member) such
supplementary records and reports as are necessary to reflect the allocation
among the Members of the tax items and distributions of the Company shown on any
reports furnished (or required to be furnished) to the Members under this
Agreement. MC shall promptly provide any and all records, reports and
information regarding the Company, any Investment Entity or any Property
requested by SLAB from time to time to the extent such records, reports and
information are in MC's possession or control.
3. FINANCIAL AND STATUS REPORTS. (a) MC shall cause the following
reports to be issued at Company expense:
(i) MC shall use reasonable efforts to cause to be issued to the
Members, at Company expense, audited annual financial reports (except
for year 1999, which may be unaudited but certified by MC) within 90
days following the close of each year (including a balance sheet and
income and expense statements, showing sources and uses of funds, cash
on hand, distributions, changes in financial position, tax information,
unpaid Guaranteed Payments, fees under the Asset Management Agreement
and the Management Agreement, Capital Contributions, and unrepaid Member
loans on a Member-by-Member basis). Such financial reports shall be
prepared using GAAP; and
(ii) MC shall use reasonable efforts to cause to be issued to the
Members quarterly unaudited financial reports, in reasonable detail and
certified by the Managing Member, within 40 days after the close of each
calendar quarter other than the fourth quarter of each year
D-1
<PAGE>
(commencing with the calendar quarter ending on March 31, 2000),
internally prepared by MC and reviewed by the Company's accountants,
including a balance sheet and income and expense statements (showing
receipts on a tenant-by-tenant basis, and material defaults, to the
extent requested by either MC or SLAB upon reasonable notice), sources
and uses of funds, cash on hand, distributions, changes in financial
position, unpaid Guaranteed Payments, Asset Management Fees, Capital
Contributions, and unrepaid Member loans.
(b) In preparing reports required under this Agreement, MC may rely on
information furnished by third parties (including property managers and
accountants) to the extent that it is reasonable to do so.
D-2
<PAGE>
EXHIBIT E
---------
CURRENT BUDGETS
[MACK-CALI TO PROVIDE TO DLJ FOR APPROVAL]
E-1
<PAGE>
EXHIBIT F
---------
MC ALLOCATION OF CAPITAL CONTRIBUTIONS
[see attached]
F-1
<PAGE>
Exhibit 21
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
11 COMMERCE DRIVE ASSOCIATES L.L.C. NJ
12 SKYLINE ASSOCIATES L.L.C. NY
120 PASSAIC STREET LLC NJ
1717 REALTY ASSOCIATES L.P. NJ
20 COMMERCE DRIVE ASSOCIATES L.L.C. NJ
300 TICE REALTY ASSOCIATES L.L.C. NJ
300 TICE REALTY ASSOCIATES L.P. NJ
400 PRINCETON ASSOCIATES L.L.C. NJ
400 PRINCETON ASSOCIATES, L.P. NJ
400 RELLA REALTY ASSOCIATES L.L.C. NY
500 COLUMBIA TURNPIKE ASSOCIATES L.L.C. NJ
600 PARSIPPANY ASSOCIATES L.L.C. NJ
600 PARSIPPANY ASSOCIATES L.P. NJ
78 PINSON PARTNERS L.L.C. NJ
795 FOLSOM REALTY ASSOCIATES L.P. CA
9060 EAST VIA LINDA CO., LTD. AZ
AIRPORT PROPERTIES ASSOCIATES LLC NJ
BMP SOUTH REALTY L.L.C. NJ
BRANDEIS BUILDING INVESTORS L.L.C. NE
BRANDEIS BUILDING INVESTORS, L.P. DE
BRIDGE PLAZA ASSOCIATES L.L.C. NJ
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
BRIDGE PLAZA REALTY ASSOCIATES L.P. NJ
C.W. ASSOCIATES L.L.C. NJ
CAL-HARBOR II & III URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR IV URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR NO. PIER URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR SO. PIER URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR V URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR VI URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-HARBOR VII URBAN RENEWAL ASSOCIATES L.P. NJ
CAL-TREE REALTY ASSOCIATES L.P. PA
CALI AIRPORT REALTY ASSOCIATES L.P. PA
CALI HARBORSIDE (FEE) ASSOCIATES L.P. NJ
CALI HARBORSIDE PLAZA I (FEE) ASSOCIATES L.P. NJ
CALI PENNSYLVANIA REALTY ASSOCIATES L.P. PA
CALI PROPERTY HOLDINGS I, L.P. DE
CALI PROPERTY HOLDINGS II, L.P. DE
CALI PROPERTY HOLDINGS III, L.P. DE
CALI PROPERTY HOLDINGS IV, L.P. DE
CALI PROPERTY HOLDINGS IX, L.P. MD
CALI PROPERTY HOLDINGS V, L.P. DE
CALI PROPERTY HOLDINGS VI, L.P. DE
CALI PROPERTY HOLDINGS VII, L.P. DE
CALI PROPERTY HOLDINGS VIII, L.P. DE
CALI PROPERTY HOLDINGS X, L.P. DE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
CALI-GROVE STREET URBAN RENEWAL ASSOCIATES L.P. NJ
CENTURY PLAZA ASSOCIATES L.L.C. NJ
COLLEGE ROAD REALTY L.L.C. NJ
COMMERCENTER REALTY ASSOCIATES L.L.C. NJ
COMMERCENTER REALTY ASSOCIATES L.P. NJ
CROSS WESTCHESTER REALTY ASSOCIATES L.L.C. NY
D.B.C. REALTY L.L.C. NJ
ELMSFORD REALTY ASSOCIATES L.L.C. NY
FIVE SENTRY REALTY ASSOCIATES L.P. PA
GROVE STREET ASSOCIATES OF JERSEY CITY LIMITED PARTNERSHIP NJ
HORIZON CENTER REALTY ASSOCIATES L.L.C. NJ
HORIZON CENTER REALTY ASSOCIATES L.P. NJ
HORIZON CENTER REALTY L.L.C. NJ
JUMPING BROOK REALTY ASSOCIATES L.L.C. NJ
JUMPING BROOK REALTY ASSOCIATES L.P. NJ
KEMBLE-MORRIS, LLC NJ
LINWOOD REALTY L.L.C. NJ
M-C CALIFORNIA SERVICES, INC. DE
M-C CAPITOL ASSOCIATES L.L.C. DE
M-C HARSIMUS PARTNERS L.L.C. NJ
M-C HARSIMUS PARTNERS L.P. NJ
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
M-C PENN MANAGEMENT CORP. DE
M-C PROPERTIES CO. REALTY L.L.C. NJ
M-C ROCKLAND PARTNERS L.P. NY
M-C TEXAS MANAGEMENT L.P. TX
MACK-CALI ARIZONA CORPORATION DE
MACK-CALI B PROPERTIES, L.L.C. NJ
MACK-CALI BEARDSLEY LIMITED PARTNERSHIP AZ
MACK-CALI BRIDGEWATER CO., L.P. NJ
MACK-CALI BUILDING V ASSOCIATES L.L.C. NJ
MACK-CALI CALIFORNIA DEVELOPMENT ASSOCIATES L.P. CA
MACK-CALI CALIFORNIA PARTNERS L.P. CA
MACK-CALI CAMPUS REALTY L.L.C. NJ
MACK-CALI CENTURY III INVESTORS L.L.C. IA
MACK-CALI CENTURY III INVESTORS, L.P. DE
MACK-CALI CHESTNUT RIDGE, L.L.C. NJ
MACK-CALI CW REALTY ASSOCIATES L.L.C. NY
MACK-CALI D.C. MANAGEMENT CORP DE
MACK-CALI EAST LAKEMONT L.L.C. NJ
MACK-CALI F PROPERTIES L.P. NJ
MACK-CALI GLENDALE LIMITED PARTNERSHIP AZ
MACK-CALI METROPOLITAN, LTD. FL
MACK-CALI MID-WEST REALTY ASSOCIATES L.L.C. NY
MACK-CALI MORRIS REALTY L.L.C. NJ
MACK-CALI NORTH HILLS L.L.C. NY
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
MACK-CALI PROPERTIES CO. #3 L.P. NJ
MACK-CALI PROPERTIES CO. NO. 11, L.P. NY
MACK-CALI PROPERTY TRUST MD
MACK-CALI REALTY ACQUISITION CORP. DE
MACK-CALI REALTY CONSTRUCTION CORPORATION NJ
MACK-CALI REALTY L.P. DE
MACK-CALI SERVICES, INC. NJ
MACK-CALI SO. WEST REALTY ASSOCIATES L.L.C. NY
MACK-CALI STAMFORD REALTY ASSOCIATES, L.P. CT
MACK-CALI SUB I, INC. DE
MACK-CALI SUB II, INC. DE
MACK-CALI SUB III, INC. DE
MACK-CALI SUB IV, INC. DE
MACK-CALI SUB IX, INC. DE
MACK-CALI SUB V, INC. DE
MACK-CALI SUB VI, INC. DE
MACK-CALI SUB VII, INC. DE
MACK-CALI SUB VIII, INC. DE
MACK-CALI SUB X, INC. DE
MACK-CALI SUB XI, INC. DE
MACK-CALI SUB XII, INC. DE
MACK-CALI SUB XIII, INC. DE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
MACK-CALI SUB XIV, INC. DE
MACK-CALI SUB XIX, INC. DE
MACK-CALI SUB XV, INC. DE
MACK-CALI SUB XVI, INC. DE
MACK-CALI SUB XVII, INC. DE
MACK-CALI SUB XVIII, INC. DE
MACK-CALI SUB XX, INC. DE
MACK-CALI SUB XXI, INC. DE
MACK-CALI SUB XXII, INC. DE
MACK-CALI SUB XXIII, INC. DE
MACK-CALI TEXAS PROPERTY L.P. TX
MACK-CALI WILLOWBROOK COMPANY L.P. NJ
MACK-CALI WOODBRIDGE II L.P. NJ
MACK-CALI WP REALTY ASSOCIATES L.L.C. NY
MACK-CALI-B PROPERTIES L.P. NJ
MACK-CALI-R COMPANY NO. 1 L.P. NJ
MAIN-MARTINE MAINTENANCE CORP. NY
MANHASSET ASSOCIATES L.L.C. NY
MARTIN AVENUE REALTY ASSOCIATES L.L.C. NY
MC-CAP L.L.C. DE
MID-WEST MAINTENANCE CORP. NY
MID-WESTCHESTER REALTY ASSOCIATES L.L.C. NY
MONMOUTH/ATLANTIC REALTY ASSOCIATES L.L.C. NJ
MONMOUTH/ATLANTIC REALTY ASSOCIATES L.P. NJ
MOORESTOWN REALTY ASSOCIATES L.L.C. NJ
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
MOORESTOWN REALTY ASSOCIATES L.P. NJ
MORRISTOWN TEN NJ
MOUNT AIRY REALTY ASSOCIATES L.L.C. NJ
MOUNT AIRY REALTY ASSOCIATES L.P. NJ
MOUNTAINVIEW REALTY L.L.C. NJ
OFFICE ASSOCIATES L.L.C. NJ
OFFICE ASSOCIATES, LTD. NJ
ONE SYLVAN REALTY, L.L.C. NJ
PARSIPPANY CAMPUS REALTY ASSOCIATES L.L.C. NJ
PARSIPPANY CAMPUS REALTY ASSOCIATES L.P. NJ
PHELAN REALTY ASSOCIATES L.P. CA
PRINCETON CORPORATE CENTER REALTY ASSOCIATES L.L.C. NJ
PRINCETON CORPORATE CENTER REALTY ASSOCIATES L.P. NJ
PRINCETON OVERLOOK REALTY L.L.C. NJ
ROSELAND II L.L.C. NJ
ROSELAND II LIMITED PARTNERSHIP NJ
ROSELAND OWNERS ASSOCIATES L.L.C. NJ
SHELTON REALTY ASSOCIATES L.P. CT
SIX COMMERCE DRIVE ASSOCIATES L.L.C. NJ
SKYLINE REALTY L.L.C. NY
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION
SUBSIDIARY OR ORGANIZATION
<S> <C>
SO. WESTCHESTER REALTY ASSOCIATES L.L.C. NY
SOUTH-WEST MAINTENANCE CORP. NY
STEVENS AIRPORT REALTY ASSOCIATES L.P. PA
TALLEY MAINTENANCE CORP. NY
TALLEYRAND REALTY ASSOCIATES L.L.C. NY
TENBY CHASE APARTMENTS L.L.C. NJ
THE GROVE STREET URBAN RENEWAL CORP. NJ
THE HORIZON CENTER PROPERTY OWNERS ASSOCIATION, INC. NJ
U.S. UTILIPRO SOLUTIONS L.L.C. DE
UTILIPRO SOLUTIONS, INC. NJ
VAUGHN PARTNERS L.L.C. NJ
VAUGHN PRINCETON ASSOCIATES L.L.C. NJ
VAUGHN PRINCETON ASSOCIATES L.P. NJ
WEST-AVE. MAINTENANCE CORP. CT
WESTAGE REALTY L.L.C. NY
WHITE PLAINS REALTY ASSOCIATES L.L.C. NY
</TABLE>
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-3 (Nos. 333-19101, 33-96542, 333-09081, 333-09875,
333-25475, 333-44433, 333-44441, 333-57103, 333-69029, 333-71133 and
333-80077) and the Registration Statements on Form S-8 (Nos. 333-80081,
333-18275, 33-91822, 33-19831, 333-32661 and 333-44443) of Mack-Cali
Realty Corporation of our report dated February 22, 1999, appearing in this
Form 10-K.
PricewaterhouseCoopers LLP
New York, New York
February 23, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 15,752
<SECURITIES> 0
<RECEIVABLES> 7,482
<ALLOWANCES> 672
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,654,845
<DEPRECIATION> 256,629
<TOTAL-ASSETS> 3,629,601
<CURRENT-LIABILITIES> 0
<BONDS> 1,490,175
0
0
<COMMON> 584
<OTHER-SE> 1,441,298
<TOTAL-LIABILITY-AND-EQUITY> 3,629,601
<SALES> 0
<TOTAL-REVENUES> 551,484
<CGS> 0
<TOTAL-COSTS> 255,860
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,960
<INCOME-PRETAX> 150,726
<INCOME-TAX> 0
<INCOME-CONTINUING> 117,782
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119,739
<EPS-BASIC> 2.05
<EPS-DILUTED> 2.04
</TABLE>
