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 ---------------------------------------------------- (Exact Name of Registrant as specified in its charter) MARYLAND 22-3305147 - ------------------------------- ----------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 11 COMMERCE DRIVE, CRANFORD, NEW JERSEY 07016-3599 - --------------------------------------- ---------- (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 TABLE OF CONTENTS FORM 10-K
PAGE NO. -------- 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
2 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. 3 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. 4 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 5 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. 6 OPERATING PROPERTY ACQUISITIONS The Company acquired the following operating properties during the year ended December 31, 1999:
- ------------------------------------------------------------------------------------------------------------------------ Acquisition # of Rentable Investment by Date Property/Portfolio Name Location Bldgs. Square Feet Company (a) - ------------------------------------------------------------------------------------------------------------------------ OFFICE - ------ 3/05/99 Pacifica Portfolio - Phase III (b)Colorado Springs, El Paso County, CO 2 94,737 $ 5,709 7/21/99 1201 Connecticut Avenue, NW Washington, D.C. 1 169,549 32,799 - ------------------------------------------------------------------------------------------------------------------------ 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 ========================================================================================================================
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:
- ------------------------------------------------------------------------------------------------------------------------ Date Placed # of Rentable Investment by in Service Property Name Location Bldgs. Square Feet Company (a) - ------------------------------------------------------------------------------------------------------------------------ OFFICE - ------ 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 ========================================================================================================================
(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. 7 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:
COMPANY'S NET INVESTMENTS --------------- (IN THOUSANDS) - ------------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------ Total $ 89,134 ==================================================================================================================
8 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 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 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 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 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 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 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 PROPERTY LISTING OFFICE PROPERTIES
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) ($000'S)(3)(6) BASE RENT(%) - -------------------------------------------------------------------------------------------------------------------- ATLANTIC COUNTY, NEW JERSEY EGG HARBOR 100 Decadon Drive................ 1987 40,422 100.0 783 783 0.17 200 Decadon Drive................ 1991 39,922 94.9 747 715 0.16 BERGEN COUNTY, NEW JERSEY FAIR LAWN 17-17 Route 208 North............ 1987 143,000 94.5 3,349 3,229 0.72 FORT LEE One Bridge Plaza................. 1981 200,000 99.3 4,691 4,547 1.01 2115 Linwood Avenue (7).......... 1981 68,000 61.3 103 97 0.02 LITTLE FERRY 200 Riser Road................... 1974 286,628 100.0 1,876 1,876 0.40 MONTVALE 95 Chestnut Ridge Road........... 1975 47,700 100.0 568 568 0.12 135 Chestnut Ridge Road.......... 1981 66,150 100.0 1,023 1,023 0.22 PARAMUS 140 Ridgewood Avenue ............ 1981 239,680 100.0 5,098 5,067 1.10 15 East Midland Avenue........... 1988 259,823 100.0 6,647 6,647 1.43 461 From Road.................... 1988 253,554 99.8 6,020 6,015 1.30 650 From Road.................... 1978 348,510 100.0 7,480 7,472 1.61 61 South Paramus Avenue.......... 1985 269,191 96.2 5,345 5,241 1.15 ROCHELLE PARK 120 Passaic Street............... 1972 52,000 100.0 576 576 0.12 365 West Passaic Street.......... 1976 212,578 84.9 3,506 3,419 0.76 SADDLE RIVER 1 Lake Street....................1973/94 474,801 100.0 7,466 7,466 1.61 UPPER SADDLE RIVER 10 Mountainview Road............. 1986 192,000 100.0 3,663 3,505 0.79
1999 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6) - ----------------------------------------------------------------------------------------------------------------------------- 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%)
16 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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) ($000'S)(3)(6) BASE RENT(%) - -------------------------------------------------------------------------------------------------------------------- WOODCLIFF LAKE 400 Chestnut Ridge Road.......... 1982 89,200 100.0 2,119 2,119 0.46 470 Chestnut Ridge Road.......... 1987 52,500 100.0 1,192 1,192 0.26 530 Chestnut Ridge Road.......... 1986 57,204 100.0 1,166 1,166 0.25 50 Tice Boulevard................ 1984 235,000 100.0 4,721 4,098 1.02 300 Tice Boulevard............... 1991 230,000 100.0 4,980 4,862 1.07 BURLINGTON COUNTY, NEW JERSEY MOORESTOWN 224 Strawbridge Drive............ 1984 74,000 95.2 985 735 0.21 228 Strawbridge Drive............ 1984 74,000 100.0 1,434 1,067 0.31 ESSEX COUNTY, NEW JERSEY MILLBURN 150 J.F. Kennedy Parkway......... 1980 247,476 95.0 5,859 5,846 1.26 ROSELAND 101 Eisenhower Parkway........... 1980 237,000 92.0 4,139 3,835 0.89 103 Eisenhower Parkway........... 1985 151,545 96.6 3,003 2,756 0.65 HUDSON COUNTY, NEW JERSEY JERSEY CITY 95 Christopher Columbus Drive.... 1989 621,900 100.0 12,900 11,788 2.78 Harborside Financial Center Plaza I.... 1983 400,000 98.8 3,294 3,292 0.71 Harborside Financial Center Plaza II... 1990 761,200 100.0 17,508 17,297 3.78 Harborside Financial Center Plaza III... 1990 725,600 100.0 16,687 16,486 3.61
1999 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6) - ----------------------------------------------------------------------------------------------------------------------------- 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%)
17 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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) ($000'S)(3)(6) BASE RENT(%) - -------------------------------------------------------------------------------------------------------------------- MERCER COUNTY, NEW JERSEY PRINCETON 5 Vaughn Drive................... 1987 98,500 100.0 2,217 2,045 0.48 400 Alexander Road (8)........... 1987 n/a n/a 1,101 929 0.24 103 Carnegie Center.............. 1984 96,000 96.4 2,119 1,972 0.46 100 Overlook Center ............. 1988 149,600 100.0 3,792 3,777 0.82 MIDDLESEX COUNTY, NEW JERSEY EAST BRUNSWICK 377 Summerhill Road.............. 1977 40,000 100.0 373 373 0.08 PLAINSBORO 500 College Road East............ 1984 158,235 100.0 3,398 3,373 0.73 SOUTH BRUNSWICK 3 Independence Way............... 1983 111,300 99.9 1,911 1,895 0.41 WOODBRIDGE 581 Main Street.................. 1991 200,000 100.0 4,420 4,393 0.95 MONMOUTH COUNTY, NEW JERSEY NEPTUNE 3600 Route 66.................... 1989 180,000 100.0 2,414 2,414 0.52 WALL TOWNSHIP 1305 Campus Parkway.............. 1988 23,350 92.3 406 388 0.09 1350 Campus Parkway.............. 1990 79,747 94.7 1,334 1,250 0.29 MORRIS COUNTY, NEW JERSEY FLORHAM PARK 325 Columbia Parkway............. 1987 168,144 100.0 3,869 3,473 0.83
1999 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6) - ----------------------------------------------------------------------------------------------------------------------------- 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%)
18 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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) ($000'S)(3)(6) BASE RENT(%) - -------------------------------------------------------------------------------------------------------------------- MORRIS PLAINS 201 Littleton Road............... 1979 88,369 100.0 1,706 1,705 0.37 250 Johnson Road................. 1977 75,000 100.0 1,090 1,090 0.24 MORRIS TOWNSHIP 340 Mt. Kemble Avenue............ 1985 387,000 100.0 5,530 5,530 1.19 412 Mt. Kemble Avenue............ 1986 475,100 100.0 6,902 6,902 1.49 PARSIPPANY 1 Sylvan Way..................... 1989 150,557 100.0 3,484 3,136 0.75 2 Dryden Way..................... 1990 6,216 100.0 67 67 0.01 2 Hilton Court................... 1991 181,592 100.0 4,470 4,455 0.95 5 Sylvan Way..................... 1989 151,383 96.7 3,432 3,429 0.74 7 Campus Drive................... 1982 154,395 100.0 2,548 2,548 0.55 7 Sylvan Way..................... 1987 145,983 100.0 2,919 2,919 0.63 8 Campus Drive .................. 1987 215,265 92.8 4,730 4,651 1.02 600 Parsippany Road.............. 1978 96,000 57.6 1,527 1,475 0.33 PASSAIC COUNTY, NEW JERSEY CLIFTON 777 Passaic Avenue............... 1983 75,000 77.4 1,028 865 0.22 TOTOWA 999 Riverview Drive.............. 1988 56,066 100.0 918 894 0.20 WAYNE 201 Willowbrook Boulevard........ 1970 178,329 99.0 2,446 2,432 0.53
1999 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6) - ----------------------------------------------------------------------------------------------------------------------------- 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%)
19 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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) ($000'S)(3)(6) BASE RENT(%) - -------------------------------------------------------------------------------------------------------------------- SOMERSET COUNTY, NEW JERSEY BASKING RIDGE 222 Mt. Airy Road................ 1986 49,000 100.0 690 646 0.15 233 Mt. Airy Road................ 1987 66,000 100.0 762 721 0.16 BRIDGEWATER 721 Route 202/206................ 1989 192,741 100.0 3,990 3,990 0.86 UNION COUNTY, NEW JERSEY CLARK 100 Walnut Avenue................ 1985 182,555 100.0 4,511 3,957 0.97 CRANFORD 6 Commerce Drive................. 1973 56,000 96.9 1,046 1,028 0.23 11 Commerce Drive................ 1981 90,000 90.8 1,100 968 0.24 12 Commerce Drive................ 1967 72,260 89.4 612 611 0.13 20 Commerce Drive................ 1990 176,600 92.7 3,529 3,150 0.76 65 Jackson Drive................. 1984 82,778 94.8 1,620 1,226 0.35 NEW PROVIDENCE 890 Mountain Road................ 1977 80,000 100.0 2,046 2,044 0.44 - ----------------------------------------------------------------------------------------------------------------- TOTAL NEW JERSEY OFFICE 11,939,649 97.9 228,985 221,506 49.36 - ----------------------------------------------------------------------------------------------------------------- DUTCHESS COUNTY, NEW YORK FISHKILL 300 South Lake Drive............. 1987 118,727 99.8 2,094 2,079 0.45 NASSAU COUNTY, NEW YORK NORTH HEMPSTEAD 111 East Shore Road.............. 1980 55,575 100.0 1,515 1,515 0.33 600 Community Drive.............. 1983 206,274 100.0 4,939 4,939 1.06
1999 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6) - ----------------------------------------------------------------------------------------------------------------------------- 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%)
20 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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) ($000'S)(3)(6) BASE RENT(%) - -------------------------------------------------------------------------------------------------------------------- ROCKLAND COUNTY, NEW YORK SUFFERN 400 Rella Boulevard.............. 1988 180,000 98.2 3,495 3,364 0.75 WESTCHESTER COUNTY, NEW YORK ELMSFORD 100 Clearbrook Road.............. 1975 60,000 100.0 935 880 0.20 101 Executive Boulevard.......... 1971 50,000 88.8 802 784 0.17 570 Taxter Road.................. 1972 75,000 85.5 1,386 1,360 0.30 HAWTHORNE 1 Skyline Drive.................. 1980 20,400 99.0 269 262 0.06 2 Skyline Drive.................. 1987 30,000 98.9 486 442 0.10 17 Skyline Drive................. 1989 85,000 100.0 1,234 1,234 0.27 30 Saw Mill River Road........... 1982 248,400 100.0 5,218 4,520 1.13 7 Skyline Drive.................. 1987 109,000 100.0 2,159 2,159 0.47 TARRYTOWN 200 White Plains Road............ 1982 89,000 90.5 1,815 1,691 0.39 220 White Plains Road............ 1984 89,000 97.1 1,647 1,582 0.36 WHITE PLAINS 1 Barker Avenue.................. 1975 68,000 99.0 1,550 1,530 0.33 3 Barker Avenue.................. 1983 65,300 97.5 1,382 1,356 0.30 1 Water Street................... 1979 45,700 97.8 939 926 0.20 11 Martine Avenue................ 1987 180,000 100.0 3,954 3,788 0.85 50 Main Street................... 1985 309,000 98.8 7,646 7,371 1.65 YONKERS 1 Executive Boulevard............ 1982 112,000 100.0 2,335 2,265 0.50
1999 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6) - ----------------------------------------------------------------------------------------------------------------------------- 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%)
21 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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(%) - -------------------------------------------------------------------------------------------------------------------- 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 - --------------------------------------------------------------------------------------------------------------------
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) - ----------------------------------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------------------------------
22 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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(%) - -------------------------------------------------------------------------------------------------------------------- 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
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) - ----------------------------------------------------------------------------------------------------------------------------- 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%)
23 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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) ($000'S)(3)(6) BASE RENT(%) - -------------------------------------------------------------------------------------------------------------------- COLLIN COUNTY, TEXAS PLANO 555 Republic Place............... 1986 97,889 93.0 1,370 1,353 0.30 DALLAS COUNTY,TEXAS DALLAS 3030 LBJ Freeway................. 1984 367,018 93.0 6,131 5,948 1.31 3100 Monticello.................. 1984 173,837 93.1 2,789 2,758 0.60 8214 Westchester................. 1983 95,509 87.8 1,320 1,298 0.28 IRVING 2300 Valley View................. 1985 142,634 68.8 2,704 2,607 0.58 RICHARDSON 1122 Alma Road................... 1977 82,576 100.0 607 607 0.13 HARRIS COUNTY, TEXAS HOUSTON 10497 Town & Country Way......... 1981 148,434 91.0 1,938 1,876 0.42 14511 Falling Creek.............. 1982 70,999 97.9 673 643 0.15 1717 St. James Place............. 1975 109,574 100.0 1,328 1,285 0.29 1770 St. James Place ............ 1973 103,689 98.4 1,446 1,388 0.31 5225 Katy Freeway................ 1983 112,213 95.1 1,367 1,309 0.29 5300 Memorial.................... 1982 155,099 98.7 2,034 2,016 0.44 POTTER COUNTY, TEXAS AMARILLO 6900 IH - 40 West................ 1986 71,771 77.5 526 503 0.11 TARRANT COUNTY, TEXAS EULESS 150 West Parkway................. 1984 74,429 95.9 1,046 1,021 0.23
1999 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/99 (6) - ----------------------------------------------------------------------------------------------------------------------------- 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%)
24 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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(%) - -------------------------------------------------------------------------------------------------------------------- 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
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) - -------------------------------------------------------------------------------------------------------------------------------- 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%)
25 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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) - ---------------------------------------------------------------------------------------------------------------------------------- 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 - ----------------------------------------------------------------------------------------------------------------------------------
TENANTS LEASING 10% OR MORE OF NET RENTABLE AREA PER PROPERTY PROPERTY AS OF LOCATION 12/31/99 (6) - ---------------------------------------------------------------------------------------- DENVER COUNTY, COLORADO DENVER 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 - ----------------------------------------------------------------------------------------
26 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
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) - ---------------------------------------------------------------------------------------------------------------------------------- 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 ==================================================================================================================================
TENANTS LEASING 10% OR MORE OF NET RENTABLE AREA PER PROPERTY PROPERTY AS OF LOCATION 12/31/99 (6) - ---------------------------------------------------------------------------------------- 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 ========================================================================================
27 PROPERTY LISTING OFFICE/FLEX PROPERTIES
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) - ---------------------------------------------------------------------------------------------------------------------------------- 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
TENANTS LEASING 10% OR MORE OF NET RENTABLE AREA PER PROPERTY PROPERTY AS OF LOCATION 12/31/99 (6) - ---------------------------------------------------------------------------------------- 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%)
28 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
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) - ---------------------------------------------------------------------------------------------------------------------------------- 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
TENANTS LEASING 10% OR MORE OF NET RENTABLE AREA PER PROPERTY PROPERTY AS OF LOCATION 12/31/99 (6) - ---------------------------------------------------------------------------------------- 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%)
29 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
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) - ----------------------------------------------------------------------------------------------------------------------------- 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
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) - ----------------------------------------------------------------------------------------------------------------- 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%)
30 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
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) - ----------------------------------------------------------------------------------------------------------------------------- 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
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) - ----------------------------------------------------------------------------------------------------------------- 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%)
31 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
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) - ----------------------------------------------------------------------------------------------------------------------------- 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 ===========================================================================================================================
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) - ----------------------------------------------------------------------------------------------------------------- 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 ======================================================================================================
32 PROPERTY LISTING INDUSTRIAL/WAREHOUSE PROPERTIES
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) - ----------------------------------------------------------------------------------------------------------------------------- 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 ===========================================================================================================================
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) - ----------------------------------------------------------------------------------------------------------------- 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 =========================================================================================================
(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 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 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 $2.4 million, which represented approximately 0.5 percent of the Company's 1999 total base rent. The average occupancy rate for the property in each of 1999, 1998 and 1997 was 96.8 percent, 96.4 percent, and 97.6 percent, respectively. OCCUPANCY The table below sets forth the year-end percentages of rentable square feet leased in the Company's in-service Consolidated Properties for the last five years:
Percentage of Year ended December 31, Square Feet Leased (%) --------------------------------------------------------------- 1999 96.5 1998 96.6 1997 95.8 1996 96.4 1995 92.5
35 SIGNIFICANT TENANTS The following table sets forth a schedule of the Company's 20 largest tenants for the Consolidated Properties as of December 31, 1999, based upon annualized base rents:
Percentage of Annualized Company Square Percentage of Year of Number of Base Rental Annualized Base Feet Total Company Lease Properties Revenue ($) (1) Rental Revenue (%) Leased Leased Sq.Ft. (%) Expiration - ----------------------------------------------------------------------------------------------------------------------------------- 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 ==================================================================================================================================
(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 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:
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 (%) - ----------------------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================================
(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:
Square Feet Percentage of Total ------------ ------------------- 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% =========== ======
37 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:
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 (%) - ----------------------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================================
(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 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:
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 (%) - ----------------------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================================
(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 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:
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 (%) - ----------------------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================================
(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:
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 (%) - ---------------------------------------------------------------------------------------------------------------------------------- 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 ==================================================================================================================================
(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 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:
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. (%) - ----------------------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================================
(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 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:
Annualized Percentage of Base Rental Company Total Revenue Annualized Base Property Size Percentage of Market (MSA) ($) (1) (2) Rental Revenue (%) Rentable Area Rentable Area (%) - ----------------------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================================
(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 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 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 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 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:
HIGH LOW CLOSE ---- --- ----- 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
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 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 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.
OPERATING DATA Year Ended December 31, IN THOUSANDS, EXCEPT PER SHARE DATA 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- 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
BALANCE SHEET DATA December 31, IN THOUSANDS 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- 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
OTHER DATA Year Ended December 31, IN THOUSANDS 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------ 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
- ------------------------ (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 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 YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
Year Ended December 31, Dollar Percent (IN THOUSANDS) 1999 1998 Change Change - -------------------------------------------------------------------------------------------------------------- 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% ==============================================================================================================
50 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).
Acquired Same-Store Total Company Properties Properties Dispositions -------------- --------------- -------------- --------------- Dollar Percent Dollar Percent Dollar Percent Dollar Percent Change Change Change Change Change Change Change Change - ---------------------------------------------------------------------------------------------------------------------- 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
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 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 YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Years Ended December 31, Dollar Percent (IN THOUSANDS) 1998 1997 Change Change - ---------------------------------------------------------------------------------------------------------------- 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% ================================================================================================================
53 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):
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 - ------------------------------------------------------------------------------------------------------------------- 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
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 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 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 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 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):
Years Ended December 31, 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------------------------------------------
(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:
Year Ended December 31, 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------ 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 ==================================================================================================================
58 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 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.
DECEMBER 31, 1999 LONG-TERM DEBT, INCLUDING FAIR CURRENT PORTION 2000 2001 2002 2003 2004 THEREAFTER TOTAL VALUE - --------------- ------- ------- ------- -------- -------- ---------- ----------- ---------- 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
60 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 (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 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 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 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 MACK-CALI REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
================================================================================================================== December 31, ASSETS 1999 1998 - ------------------------------------------------------------------------------------------------------------------ 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 ==================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 66 MACK-CALI REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
=============================================================================================================================== Years Ended December 31, REVENUES 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 67 MACK-CALI REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS)
=================================================================================================================================== Additional Dividends in Unamortized Total Common Stock Paid-In Excess of Stock Stockholders' Shares Par Value Capital Net Earnings Compensation Equity - ----------------------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 68 MACK-CALI REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
================================================================================================================ Years Ended December 31, CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------------- 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 ================================================================================================================
The accompanying notes are an integral part of these consolidated financial statements. 69 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:
Leasehold interests Remaining lease term ------------------------------------------------------------------------ Buildings and improvements 5 to 40 years ------------------------------------------------------------------------ Tenant improvements The shorter of the term of the related lease or useful life ------------------------------------------------------------------------ Furniture, fixtures and equipment 5 to 10 years ------------------------------------------------------------------------
On a periodic basis, management assesses whether there are any indicators that the value of the real estate properties may be impaired. A property's value is impaired only if management's estimate of the aggregate future cash flows (undiscounted and without interest charges) to be 70 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. 71 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. 72 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. 73 3. ACQUISITIONS/TRANSACTIONS 1999 TRANSACTIONS OPERATING PROPERTY ACQUISITIONS The Company acquired the following operating properties during the year ended December 31, 1999:
- ----------------------------------------------------------------------------------------------------------------------------------- Acquisition # of Rentable Investment by Date Property/Portfolio Name Location Bldgs. Square Feet Company (a) - ----------------------------------------------------------------------------------------------------------------------------------- OFFICE - ------ 3/05/99 Pacifica Portfolio - Phase III (b) Colorado Springs, El Paso County, CO 2 94,737 $ 5,709 7/21/99 1201 Connecticut Avenue, NW Washington, D.C. 1 169,549 32,799 - ----------------------------------------------------------------------------------------------------------------------------------- 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 ===================================================================================================================================
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:
- ----------------------------------------------------------------------------------------------------------------------------------- Date Placed # of Rentable Investment by in Service Property Name Location Bldgs. Square Feet Company (a) - ----------------------------------------------------------------------------------------------------------------------------------- OFFICE - ------ 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 ===================================================================================================================================
(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. 74 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 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 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. 77 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 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:
December 31, 1999 - ----------------------------------------------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ----------------------------------------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 - ----------------------------------------------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ----------------------------------------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------------------------------------
79 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:
Year Ended December 31, 1999 - ----------------------------------------------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ----------------------------------------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998 - ----------------------------------------------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ----------------------------------------------------------------------------------------------------------------------------------- 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 - -----------------------------------------------------------------------------------------------------------------------------------
5. DEFERRED CHARGES AND OTHER ASSETS
December 31, 1999 1998 - -------------------------------------------------------------------------------------- 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 ======================================================================================
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
December 31, 1999 1998 - --------------------------------------------------------------------------------------- Security deposits $ 6,021 $ 5,696 Escrow and other reserve funds 1,060 330 - --------------------------------------------------------------------------------------- Total restricted cash $ 7,081 $ 6,026 =======================================================================================
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.
Year Ended December 31, 1999 1998 1997 - -------------------------------------------------------------------------------------------------- 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 ==================================================================================================
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 A summary of the terms of the Senior Unsecured Notes outstanding as of December 31, 1999 is presented below:
Effective Amount Rate (1) - --------------------------------------------------------------------------------------------------- 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% ===================================================================================================
(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 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
December 31, 1999 1998 - ------------------------------------------------------------------------------------ Portfolio Mortgages $150,000 $335,283 Property Mortgages 380,390 414,048 - ------------------------------------------------------------------------------------ Total Mortgages and Loans Payable $530,390 $749,331 ====================================================================================
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 A summary of the Company's property mortgages as of December 31, 1999 and 1998 is as follows:
PRINCIPAL BALANCE AT -------------------- INTEREST DECEMBER 31, DATE OF PROPERTY NAME LENDER RATE 1999 1998 MATURITY - --------------------------------------------------------------------------------------------------------------------- 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 =====================================================================================================================
(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 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:
WEIGHTED AVG. SCHEDULED PRINCIPAL INTEREST RATE OF YEAR AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (a) - ------------------------------------------------------------------------------------------------------------------ 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% ==================================================================================================================
(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 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 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 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 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:
YEAR AMOUNT - -------------------------------------------- 2000 $ 531 2001 531 2002 531 2003 531 2004 534 Thereafter 22,532 - -------------------------------------------- Total $25,190 ============================================
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 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:
YEAR AMOUNT - --------------------------------------------- 2000 $ 457,800 2001 423,657 2002 373,551 2003 310,225 2004 262,393 Thereafter 1,063,658 - --------------------------------------------- Total $ 2,891,284 =============================================
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 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 Information regarding the Company's stock option plans is summarized below:
Weighted Shares Average Under Exercise Options Price - ------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------
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:
1999 1998 1997 - -------------------------------------------------------------------------------------------------------------- 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% - --------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------- Expected life (in years) 6 Risk-free interest rate 5.96% Volatility 22.77% Dividend yield 5.29% - ---------------------------------------------------------------------------------------------
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 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.
For the Year Ended December 31, 1999 1998 1997 ---- ---- ---- Basic EPS Diluted EPS Basic EPS Diluted EPS Basic EPS Diluted EPS - ----------------------------------------------------------------------------------------------------------------------- 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 =======================================================================================================================
The following schedule reconciles the shares used in the basic EPS calculation to the shares used in the diluted EPS calculation.
Year Ended December 31, 1999 1998 1997 - ----------------------------------------------------------------------------------------------------- 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 =====================================================================================================
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 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:
Total Corporate & Total Segment Other (e) Company - ------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------
(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 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.
1998 - ---------------------------------------------------------------------------- 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 - ----------------------------------------------------------------------------
96 20. CONDENSED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following summarizes the condensed quarterly financial information for the Company:
QUARTER ENDED 1999: December 31 September 30 June 30 March 31 - ------------------------------------------------------------------------------------------------------------------ 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 ==================================================================================================================
QUARTER ENDED 1998: December 31 September 30 June 30 March 31 - ------------------------------------------------------------------------------------------------------------------ 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 ==================================================================================================================
97 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 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 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 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 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 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III
COSTS INITIAL COSTS CAPITALIZED YEAR RELATED BUILDING AND SUBSEQUENT PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION - --------------------- ----- -------- ------------ ---- ------------ -------------- 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
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD (1) ---------------------------- BUILDING AND ACCUMULATED PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ---- ------------ ------- ------------ 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
103 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III
COSTS INITIAL COSTS CAPITALIZED YEAR RELATED BUILDING AND SUBSEQUENT PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION - --------------------- ----- --------- ------------ ----- ------------- -------------- 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
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD (1) ------------------------- BUILDING AND ACCUMULATED PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ---- ------------ ------ ------------ 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
104 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III
COSTS INITIAL COSTS CAPITALIZED YEAR RELATED BUILDING AND SUBSEQUENT PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION - --------------------- ----- -------- ------------ ---- ------------ -------------- 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
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD (1) -------------------------- BUILDING AND ACCUMULATED PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ---- ------------ ----- ------------- 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
105 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III
COSTS INITIAL COSTS CAPITALIZED YEAR RELATED BUILDING AND SUBSEQUENT PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION - --------------------- ----- -------- ------------ ---- ------------ -------------- 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
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD (1) -------------------------- BUILDING AND ACCUMULATED PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ---- ------------ ----- ------------ 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
106 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III
COSTS INITIAL COSTS CAPITALIZED YEAR RELATED BUILDING AND SUBSEQUENT PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION - --------------------- ----- -------- ------------ ---- ------------ -------------- 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
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD (1) -------------------------- BUILDING AND ACCUMULATED PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ---- ------------ ----- ------------- 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
107 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III
COSTS INITIAL COSTS CAPITALIZED YEAR RELATED BUILDING AND SUBSEQUENT PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION - --------------------- ----- -------- ------------ ---- ------------ -------------- 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
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD (1) BUILDING AND ACCUMULATED PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ---- ------------ ----- ------------ 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
108 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III
COSTS INITIAL COSTS CAPITALIZED YEAR RELATED BUILDING AND SUBSEQUENT PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION - --------------------- ----- -------- ------------ ---- ------------ -------------- 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
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF PERIOD (1) -------------------------- BUILDING AND ACCUMULATED PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ---- ------------ ----- ------------ 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
109 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III
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 - --------------------- ----- -------- ------------ ---- ------------ -------------- ---- ------------ ----- 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 ===================================================================================================================================
ACCUMULATED PROPERTY LOCATION (2) DEPRECIATION - --------------------- ------------ 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 ===================================================================
(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 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:
1999 1998 1997 ---- ---- ---- 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 =========== =========== ===========
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