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, 2000 [ ] 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 15, 2001, the aggregate market value of the voting stock held by non-affiliates of the registrant was $1,546,641,953. 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 15, 2001, 56,924,613 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 57. 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 15, 2001 are incorporated by reference in Part III of this Form 10-K. 3 TABLE OF CONTENTS FORM 10-K
Page No. -------- PART I Item 1 Business ................................................................ 3 Item 2 Properties............................................................... 15 Item 3 Legal Proceedings........................................................ 44 Item 4 Submission of Matters to a Vote of Security Holders...................... 44 PART II Item 5 Market for Registrant's Common Equity and Related Stockholder Matters.... 45 Item 6 Selected Financial Data.................................................. 46 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................... 47 Item 7a Quantitative and Qualitative Disclosures About Market Risk............... 56 Item 8 Financial Statements and Supplementary Data.............................. 56 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............................................ 56 PART III Item 10 Directors and Executive Officers of the Registrant....................... 57 Item 11 Executive Compensation................................................... 57 Item 12 Security Ownership of Certain Beneficial Owners and Management........... 57 Item 13 Certain Relationships and Related Transactions........................... 57 PART IV Item 14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K........ 57
2 PART I ITEM 1. BUSINESS GENERAL Mack-Cali Realty Corporation, a Maryland 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 real estate portfolio comprised predominantly of Class A office and office/flex properties located primarily in the Northeast. The Company performs substantially all commercial real estate leasing, management, acquisition, development and construction services on an in-house basis. Mack-Cali Realty Corporation 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. As of December 31, 2000, the Company owned or had interests in 267 properties, aggregating approximately 28.2 million square feet (collectively, the "Properties"), plus developable land. The Properties are comprised of: (a) 255 wholly-owned or Company-controlled properties consisting of 155 office buildings and 87 office/flex buildings totaling approximately 26.3 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) eight office buildings and four office/flex buildings aggregating 1.5 million square feet, owned by unconsolidated joint ventures in which the Company has investment interests. Unless otherwise indicated, all references to square feet represent net rentable area. As of December 31, 2000, the office, office/flex and industrial/warehouse properties included in the Consolidated Properties were approximately 96.8 percent leased to over 2,400 tenants. The Properties are located in 11 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 believes it is, or can become, a significant and preferred owner and operator. The Company will continue this strategy by expanding, through acquisitions and/or development, in Northeast markets and sub-markets where it has, or can achieve, similar status. 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. Management believes that the recent trend towards increasing rental rates in the Company's sub-markets continues to present opportunities for internal growth. Management also 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". As of December 31, 2000, executive officers and directors of the Company and their affiliates owned approximately 10.9 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's executive officers have been employed by the Company and/or its predecessor companies for an average of approximately 13 years. 3 BUSINESS STRATEGIES OPERATIONS REPUTATION: The Company has established a reputation as a highly-regarded landlord with an emphasis on delivering quality tenant services in buildings it owns and/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 should in turn create 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. 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 plans to continue to own and operate a portfolio of properties in high-barrier-to-entry markets, with a primary focus in the Northeast and a presence in California. The Company's primary objectives are to maximize funds from operations and to enhance the value of its portfolio through effective management, acquisition, development and property sales strategies, as follows: INTERNAL GROWTH: The Company seeks to maximize the value of its existing portfolio through implementing operating strategies designed to produce increased effective rental and occupancy rates and decreased tenant installation costs. The Company believes that it has 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, Allstate Insurance Company 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 the combination of these factors should allow the Company continued internal growth over the next several years. ACQUISITIONS: The Company also believes that growth opportunities exist through acquiring operating properties or properties for redevelopment with attractive returns in its core Northeast sub-markets where, based on its expertise in leasing, managing and operating properties, it believes it is, or can become, a significant and preferred owner and operator. The Company intends to acquire, invest in or redevelop additional properties that: (i) provide attractive initial yields with 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, directly or through joint ventures, is underway on the construction of eight office and office/flex buildings. The most significant development activity is currently at the Company's Harborside Financial Center office complex in Jersey City, New Jersey. Three of the eight properties currently under construction are located at the complex and consist of two office towers, aggregating approximately 1.6 million square feet, and a 350-room Hyatt Regency hotel. The Company also recently completed and placed in service a 185,000 square-foot office/ 1,100 space parking garage project at Harborside. See "Liquidity and Capital Resources - Capitalization." Additionally, the Company may selectively develop additional properties where it believes such development will result in a favorable risk-adjusted return on investment in coordination with the above operating strategies. Such development primarily will occur: (i) when leases have been executed prior to construction; (ii) in stable core Northeast sub-markets where the demand for such space exceeds available supply; and (iii) where the Company is, or can become, a significant and preferred owner and operator. PROPERTY SALES: As part of its focused strategy, the Company plans to sell substantially all of its properties located in the Southwestern and Western regions, using such proceeds primarily to invest in property acquisitions and development projects in its core Northeast markets. Additionally, while management's principal intention is to own and operate its properties on a long-term basis, it is constantly assessing the attributes of each of its properties, with a particular focus on the supply and demand fundamentals of the sub-markets in which they are located. Based on these ongoing assessments, the Company may, from time to time, decide to sell any of its properties. FINANCIAL The Company currently intends to maintain a ratio of debt-to-undepreciated assets (total debt of the Company as a percentage of total undepreciated assets) of approximately 50 percent or less. As of December 31, 2000, the Company's total debt constituted approximately 40.9 percent of total undepreciated assets of the Company. The Company has three investment grade credit ratings. Standard & Poor's Rating Services ("S&P") and Fitch, Inc. ("Fitch") have each assigned their BBB rating to existing and prospective senior unsecured debt of the Operating Partnership. S&P and Fitch 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 intends to conduct its operations in order to maintain its investment grade rated status. The Company intends to 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, 2000, 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. 5 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 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 and non-recurring charges) for the year ended December 31, 2000 was $262.1 million as compared to $244.2 million for the year ended December 31, 1999. As a result of the Company's improved operating performance, the Company announced, in September 2000, a 5.2 percent increase in its quarterly dividend, commencing with the Company's dividend with respect to the third quarter of 2000, from $0.58 per share of Common Stock ($2.32 per share of Common Stock on an annualized basis) to $0.61 per share of Common Stock ($2.44 per share of Common Stock on an annualized basis). The Company declared a cash dividend of $0.61 per share on December 20, 2000 to shareholders of record as of January 4, 2001, with respect to the fourth quarter of 2000. The dividend was paid on January 22, 2001. The Company has increased its quarterly dividend for six consecutive years representing an increase of 51.1 percent over the period. In 2000, the Company: - acquired five operating properties aggregating 702,876 square feet at a total cost of approximately $91.9 million; - placed in service two properties aggregating 339,680 square feet at a total cost of approximately $78.9 million; - acquired two developable land parcels at a total cost of approximately $18.3 million; and - sold five properties, aggregating 1,759,009 square feet, and a vacant land parcel for aggregate net sales proceeds of approximately $293.6 million. Additionally, the Company, through unconsolidated joint ventures, placed in service six office and office/flex buildings aggregating 317,041 square feet. 6 OPERATING PROPERTY ACQUISITIONS The Company acquired the following operating properties during the year ended December 31, 2000:
- ---------------------------------------------------------------------------------------------------------------------- Investment by Acquisition # of Rentable Company (a) Date Property/Portfolio Name Location Bldgs. Square Feet (IN THOUSANDS) - ---------------------------------------------------------------------------------------------------------------------- OFFICE 5/23/00 555 & 565 Taxter Road Elmsford, Westchester County, NY 2 341,108 $ 42,980 6/14/00 Four Gatehall Drive Parsippany, Morris County, NJ 1 248,480 42,381 - ---------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE PROPERTY ACQUISITIONS: 3 589,588 $ 85,361 - ---------------------------------------------------------------------------------------------------------------------- OFFICE/FLEX 3/24/00 Two Executive Drive (b) Moorestown, Burlington County, NJ 1 60,800 $ 4,007 7/14/00 915 North Lenola Road (b) Moorestown, Burlington County, NJ 1 52,488 2,542 - ---------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE/FLEX PROPERTY ACQUISITION: 2 113,288 $ 6,549 - ---------------------------------------------------------------------------------------------------------------------- TOTAL OPERATING PROPERTY ACQUISITIONS: 5 702,876 $ 91,910 ======================================================================================================================
PROPERTIES PLACED IN SERVICE The Company placed in service the following properties through the completion of development during the year ended December 31, 2000:
- ---------------------------------------------------------------------------------------------------------------------- Investment by Date Placed # of Rentable Company (d) in Service Property Name Location Bldgs. Square Feet (IN THOUSANDS) - ------------------------------------------------------------------------------------------------------------------------ OFFICE 9/01/00 Harborside Plaza 4-A (c) Jersey City, Hudson County, NJ 1 207,670 $ 61,459 9/15/00 Liberty Corner Corp. Center Bernards Township, Somerset County, NJ 1 132,010 17,430 - ---------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTIES PLACED IN SERVICE: 2 339,680 $ 78,889 ======================================================================================================================
(a) Transactions were funded primarily from net proceeds received in the sale or sales of rental property. (b) The properties were acquired through the exercise of a purchase option obtained in the initial acquisition of the McGarvey portfolio in January 1998. (c) Project includes seven-story, 1,100-car parking garage. (d) Unless otherwise noted, transactions were funded primarily through draws on the Company's credit facilities, and amounts presented are as of December 31, 2000. LAND ACQUISITIONS On January 13, 2000, the Company acquired approximately 12.7 acres of developable land located at the Company's Airport Business Center, Lester, Delaware County, Pennsylvania. The land was acquired for approximately $2.1 million. On August 24, 2000, the Company entered into a joint venture with SJP Properties Company ("SJP Properties") to form MC-SJP Morris V Realty, LLC and MC-SJP Morris VI Realty, LLC, which acquired approximately 47.5 acres of developable land located in Parsippany, Morris County, New Jersey. The land was acquired for approximately $16.2 million. The Company accounts for the joint venture on a consolidated basis. 7 PROPERTY SALES The Company sold the following properties during the year ended December 31, 2000: Caption - ---------------------------------------------------------------------------------------------------------------------------------- NET SALES NET BOOK GAIN/ SALE # OF RENTABLE PROCEEDS VALUE (LOSS) DATE PROPERTY NAME LOCATION BLDGS. SQUARE FEET (IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS) - ------------------------------------------------------------------------------------------------------------------------------------ LAND: 02/25/00 Horizon Center Land Hamilton Township, Mercer County, NJ -- 39.1 acres $ 4,180 $ 1,932 $ 2,248 OFFICE: 04/17/00 95 Christopher Columbus Dr Jersey City, Hudson County, NJ 1 621,900 148,222 80,583 67,639 04/20/00 6900 IH-40 West Amarillo, Potter County, TX 1 71,771 1,467 1,727 (260) 06/09/00 412 Mt. Kemble Avenue Morris Twp., Morris County, NJ 1 475,100 81,981 75,439 6,542 09/21/00 Cielo Center Austin, Travis County, TX 1 270,703 45,785 35,749 10,036 11/15/00 210 South 16th Street (1) Omaha, Douglas County, NE 1 319,535 11,976 12,828 (852) - ----------------------------------------------------------------------------------------------------------------------------------- TOTALS: 5 1,759,009 $293,611 $208,258 $85,353 ==============================================================================================================================
(1) In connection with the sale of the Omaha, Nebraska property, the Company provided to the purchaser an $8.8 million mortgage loan bearing interest payable monthly at an annual rate of 9.50 percent. The loan is secured by the Omaha, Nebraska property and will mature on November 14, 2003. OTHER EVENTS On June 27, 2000, William L. Mack was appointed Chairman of the Board of Directors and John J. Cali was named Chairman Emeritus of the Board of Directors. Brant Cali resigned as Executive Vice President, Chief Operating Officer and Assistant Secretary of the Company and as a member of the Board of Directors, and John R. Cali resigned as Executive Vice President, Development of the Company. John R. Cali was appointed to the Board of Directors of the Company to take the seat previously held by Brant Cali. See Note 3 to the Financial Statements. On September 21, 2000, the Company and Prentiss Properties Trust, a Maryland REIT ("Prentiss"), mutually agreed to terminate the agreement and plan of merger ("Merger Agreement") dated as of June 27, 2000, among the Company, the Operating Partnership, Prentiss and Prentiss Properties Acquisition Partners, L.P., a Delaware limited partnership of which Prentiss (through a wholly-owned direct subsidiary) is the sole general partner ("Prentiss Partnership"). In connection with such termination, the Company deposited $25.0 million into escrow for the benefit of Prentiss and Prentiss Partnership. Simultaneous with the termination, the Company sold to Prentiss its 270,703 square-foot Cielo Center property located in Austin, Travis County, Texas, and recognized a gain on the sale of approximately $10.0 million. FINANCING ACTIVITY ISSUANCES OF SENIOR UNSECURED NOTES On December 21, 2000, the Operating Partnership issued $15.0 million of 7.835 percent senior unsecured notes due December 15, 2010 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions) of approximately $14.9 million were used primarily to pay down outstanding borrowings under the Prudential Facility, as defined in Note 9 to the Financial Statements. In January 2001, the Operating Partnership issued $300.0 million face amount of 7.75 percent senior unsecured notes due February 15, 2011 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions and discount) of approximately $296.3 million were used to pay down outstanding borrowings under the 2000 Unsecured Facility, as defined below. The senior unsecured notes were issued at a discount of approximately $1.7 million. 8 REVOLVING CREDIT FACILITY On June 22, 2000, the Company obtained an unsecured revolving credit facility ("2000 Unsecured Facility") with a current borrowing capacity of $800.0 million from a group of 24 lenders. The interest rate on outstanding borrowings under the credit line is currently the London Inter-Bank Offered Rate ("LIBOR") plus 80 basis points. The Company may instead elect an interest rate representing the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. The 2000 Unsecured Facility also requires a 20 basis point facility fee on the current borrowing capacity payable quarterly in arrears. In the event of a change in the Company's unsecured debt rating, the interest rate and facility fee will be changed on a sliding scale. Subject to certain conditions, the Company has the ability to increase the borrowing capacity of the credit line up to $1.0 billion. The 2000 Unsecured Facility matures in June 2003, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the credit line upon exercise. STOCK REPURCHASES On August 6, 1998, the Board of Directors of the Company authorized a share repurchase program ("Repurchase Program") under which the Company was permitted to purchase up to $100.0 million of the Company's outstanding common stock. Under the Repurchase Program, the Company purchased for constructive retirement 1,869,200 shares of its outstanding common stock for an aggregate cost of approximately $52.6 million through September 12, 2000. On September 13, 2000, the Board of Directors authorized an increase to the Repurchase Program under which the Company is permitted to purchase up to an additional $150.0 million of the Company's outstanding common stock above the $52.6 million that had previously been purchased. From that date through February 15, 2001 the Company purchased for constructive retirement 2,098,300 shares of its outstanding common stock for an aggregate cost of approximately $57.5 million under the Repurchase Program. The Company has authorization to repurchase up to an additional $92.5 million of its outstanding common stock which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. RISK FACTORS Our results from operations and ability to make distributions 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 this region 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. 9 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. 10 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 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. PROPERTY OWNERSHIP THROUGH JOINT VENTURES COULD SUBJECT US TO THE CONTRARY BUSINESS OBJECTIVES OF OUR CO-VENTURERS: We, from time to time, invest in joint ventures or partnerships in which we do not hold a controlling interest. These investments involve risks that do not exist with properties in which we own a controlling interest, including the possibility that our co-venturers or partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives. Because we lack a controlling interest, our co-venturers or partners may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. Our organizational documents do not limit the amount of available funds that we may invest in joint ventures or partnerships. If the objectives of our co-venturers or partners are inconsistent with ours, it may adversely affect our ability to make distributions or payments to our investors. 11 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, 2000, we had total outstanding indebtedness of $1.6 billion comprised of $798.1 million of senior unsecured notes, outstanding borrowings of $348.8 million under our unsecured $800.0 million revolving credit facility and approximately $481.6 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. 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 $348.8 million (as of December 31, 2000) under our revolving credit facilities and approximately $32.2 million (as of December 31, 2000) 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 from proceeds from property sales and 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 undepreciated assets (total debt as a percentage of total undepreciated assets) 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. 12 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, Timothy M. Jones, Barry Lefkowitz and Roger W. Thomas. We also have entered into an employment agreement (including non-competition provisions) with Michael A. Grossman which provides for an initial three year employment term and a continuous one-year term from and after the two-year anniversary of the execution of the agreement. 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 the 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 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. 13 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. Such forward-looking statements relate to, without limitation, the Company's future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "anticipate," "estimate" or "continue" or comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. 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. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. See "Risk Factors" for a discussion of important factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from those presented in the forward-looking statements. 14 ITEM 2. PROPERTIES PROPERTY LIST As of December 31, 2000, the Company's Consolidated Properties consisted of 248 in-service office, office/flex and industrial/warehouse properties, ranging from one to 20 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 26.7 million square feet, with the individual properties ranging from approximately 6,200 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 2000 2000 PERCENTAGE 2000 2000 OFFICE, 2000 AVERAGE TENANTS LEASING 10% NET LEASED BASE EFFECTIVE OFFICE/FLEX, AVERAGE EFFECTIVE OR MORE OF NET RENTABLE AS OF RENT RENT AND INDUSTRIAL/ BASE RENT RENT RENTABLE AREA PER PROPERTY YEAR AREA 12/31/00 ($000'S) ($000'S) WAREHOUSE PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION BUILT (SQ. FT.) (%) (1) (2) (6) (3) (6) BASE RENT (%) ($) (4) (6) ($) (5) (6) 12/31/00 (6) - ----------------------------------------------------------------------------------------------------------------------------------- ATLANTIC COUNTY, NEW JERSEY EGG HARBOR 100 Decadon Drive........... 1987 40,422 82.1 770 755 0.16 23.20 22.75 Computer Sciences Corp. (81%) 200 Decadon Drive........... 1991 39,922 95.3 728 687 0.15 19.13 18.06 Computer Sciences Corp. (45%), Advanced Casino Systems Corp. (33%), Dimensions International Inc. (15%) BERGEN COUNTY, NEW JERSEY FAIR LAWN 17-17 Route 208 North....... 1987 143,000 98.3 3,498 3,381 0.72 24.88 24.05 Lonza, Inc. (63%), Boron-Lepore Assoc., Inc. (16%) FORT LEE One Bridge Plaza........... 1981 200,000 93.5 4,853 4,591 1.00 25.95 24.55 PricewaterhouseCoopers, LLP (35%), Broadview Associates LLP (16%), Bozell Worldwide, Inc. (16%) 2115 Linwood Avenue.......... 1981 68,000 99.7 1,255 1,132 0.26 18.51 16.70 US Depot Inc. (23%), Ameribrom Inc. (14%), Mack Management & Construction (11%), Morgan Stanley Dean Witter (10%) LITTLE FERRY 200 Riser Road.. 1974 286,628 100.0 1,869 1,869 0.39 6.52 6.52 Ford Motor Company (34%), Dassault Falcon Jet Corp. (33%), Sanyo Fischer Services Corp. (33%) MONTVALE 95 Chestnut Ridge Road...... 1975 47,700 100.0 569 569 0.12 11.93 11.93 Aventis Environmental Science (100%) 135 Chestnut Ridge Road...... 1981 66,150 99.7 915 843 0.19 13.87 12.78 Paychex Inc. (45%), Automated Resources Group Inc. (26%), Sys-Con Publications Inc. (11%), Lexmark International (10%) PARAMUS 15 East Midland Avenue.......... 1988 259,823 100.0 6,731 6,727 1.39 25.91 25.89 Cellular Telephone Company (100%) 461 From Road... 1988 253,554 99.8 6,036 6,027 1.25 23.85 23.82 Toys `R' Us, Inc. (96%) 650 From Road... 1978 348,510 87.5 7,290 7,261 1.50 23.91 23.81 Movado Group Inc. (17%), Long Beach Acceptance Corp. (10%) 140 Ridgewood Avenue ......... 1981 239,680 100.0 5,266 5,211 1.09 21.97 21.74 Cellular Telephone Company (57%), Smith Barney Shearson Inc. (19%) 61 South Paramus Avenue.. 1985 269,191 100.0 6,124 5,683 1.26 22.75 21.11 -- ROCHELLE PARK 120 Passaic Street.......... 1972 52,000 99.6 954 933 0.20 18.42 18.01 SBC Telecom Inc. (53%), Cantor Fitzgerald LP (46%) 365 West Passaic Street.. 1976 212,578 95.7 3,907 3,636 0.81 19.20 17.87 United Retail Inc. (31%), Catalina Marketing Corp. (10%), Regulus LLC (10%) SADDLE RIVER 1 Lake Street... 1973/94 474,801 100.0 7,465 7,465 1.54 15.72 15.72 Prentice-Hall Inc. (100%) UPPER SADDLE RIVER 10 Mountainview Road............ 1986 192,000 100.0 3,972 3,909 0.82 20.69 20.36 Thomson Minwax Company (23%), Professional Detailing Inc. (20%), Corning Life Sciences Inc. (15%), ITT Fluid Technology (14%), Pearson Education (14%)
16 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 2000 PERCENTAGE 2000 2000 OFFICE, 2000 AVERAGE TENANTS LEASING 10% NET LEASED BASE EFFECTIVE OFFICE/FLEX, AVERAGE EFFECTIVE OR MORE OF NET RENTABLE AS OF RENT RENT AND INDUSTRIAL/ BASE RENT RENT RENTABLE AREA PER PROPERTY YEAR AREA 12/31/00 ($000'S) ($000'S) WAREHOUSE PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION BUILT (SQ. FT.) (%) (1) (2) (6) (3) (6) BASE RENT (%) ($) (4) (6) ($) (5) (6) 12/31/00 (6) - ----------------------------------------------------------------------------------------------------------------------------------- WOODCLIFF LAKE 400 Chestnut Ridge Road...... 1982 89,200 100.0 2,131 2,131 0.44 23.89 23.89 Timeplex, Inc. (100%) 470 Chestnut Ridge Road...... 1987 52,500 100.0 1,192 1,192 0.25 22.70 22.70 Andermatt LP (100%) 530 Chestnut Ridge Road...... 1986 57,204 100.0 1,166 1,166 0.24 20.38 20.38 KPMG Peat Marwick, LLP (100%) 50 Tice Boulevard....... 1984 235,000 95.5 4,881 4,291 1.01 21.75 19.12 Syncsort, Inc (25%) 300 Tice Boulevard....... 1991 230,000 100.0 4,967 4,920 1.02 21.60 21.39 Chase Home Mortgage Corp. (25%), Medco Containment Services (20%), Comdisco, Inc. (13%), NYCE Corp. (11%) BURLINGTON COUNTY, NEW JERSEY MOORESTOWN 224 Strawbridge Drive........... 1984 74,000 98.1 1,368 1,094 0.28 18.84 15.07 Allstate Insurance Company (49%), Harleysville Mutual Insurance (27%) 228 Strawbridge Drive........... 1984 74,000 100.0 1,434 1,081 0.30 19.38 14.61 Cendant Mortgage Corporation (100%) ESSEX COUNTY, NEW JERSEY MILLBURN 150 J.F. Kennedy Parkway......... 1980 247,476 100.0 6,182 6,127 1.28 24.98 24.76 KPMG Peat Marwick, LLP (42%), Budd Larner Gross Et Al (23%) ROSELAND 101 Eisenhower Parkway......... 1980 237,000 97.5 4,200 3,899 0.87 18.18 16.87 Arthur Andersen, LLP (31%), Brach, Eichler, Rosenberg, Silver, Bernstein & Hammer (13%) 103 Eisenhower Parkway......... 1985 151,545 100.0 3,350 3,059 0.69 22.11 20.19 Chelsea GCA Realty Corp. (18%), Lum, Danzis, Drasco Positan & Kleinberg (15%), Netplex Group Inc. (12%), Salomon Smith Barney, Inc. (11%) HUDSON COUNTY, NEW JERSEY JERSEY CITY 95 Christopher Columbus Drive (8)....... 1989 -- -- 3,850 3,844 0.79 -- -- -- Harborside Financial Center Plaza 1.. 1983 400,000 99.0 3,336 3,333 0.69 8.42 8.42 Bankers Trust Harborside, Inc. (96%) Harborside Financial Center Plaza 2.. 1990 761,200 100.0 18,523 17,908 3.82 24.33 23.53 Morgan Stanley Dean Witter (35%), Dow Jones Telerate Systems, Inc. (24%), DLJ Securities Corp. (15%), Lewco Securities (11%) Harborside Financial Center Plaza 3.. 1990 725,600 100.0 17,654 17,067 3.64 24.33 23.52 AICPA (34%), BTM Information Services, Inc. (19%) Harborside Financial Center Plaza 4-A (7)... 2000 207,670 88.7 1,279 1,225 0.26 36.44(9) 34.90(9) Waterhouse Securities Inc. (89%)
17 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 2000 PERCENTAGE 2000 2000 OFFICE, 2000 AVERAGE TENANTS LEASING 10% NET LEASED BASE EFFECTIVE OFFICE/FLEX, AVERAGE EFFECTIVE OR MORE OF NET RENTABLE AS OF RENT RENT AND INDUSTRIAL/ BASE RENT RENT RENTABLE AREA PER PROPERTY YEAR AREA 12/31/00 ($000'S) ($000'S) WAREHOUSE PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION BUILT (SQ. FT.) (%) (1) (2) (6) (3) (6) BASE RENT (%) ($) (4) (6) ($) (5) (6) 12/31/00 (6) - ----------------------------------------------------------------------------------------------------------------------------------- MERCER COUNTY, NEW JERSEY PRINCETON 103 Carnegie Center.......... 1984 96,000 100.0 2,302 2,124 0.47 23.98 22.13 Ronin Development Corp. (15%), R.G. Vanderweil Engineers (14%), Kurt Salmon Assoc. Inc. (11%) 100 Overlook Center ......... 1988 149,600 88.9 3,338 3,285 0.69 25.10 24.70 Regus Business Centre Corp. (26%), Xerox Corporation (23%), Paine Webber Inc. (14%) 5 Vaughn Drive........... 1987 98,500 100.0 2,312 2,163 0.48 23.47 21.96 U.S. Trust Company of NJ (19%), Princeton Venture Research Corp. (14%), Villeroy & Boch Tableware Ltd. (14%), Woodrow Wilson National Fellowship Foundation (14%) MIDDLESEX COUNTY, NEW JERSEY EAST BRUNSWICK 377 Summerhill Road............ 1977 40,000 100.0 373 370 0.08 9.33 9.25 Greater New York Mutual Insurance Company (100%) PLAINSBORO 500 College Road East....... 1984 158,235 100.0 3,404 3,374 0.70 21.51 21.32 SSB Realty, LLC (72%), Buchanan Ingersoll P.C. (17%), PNC Bank, N.A. (10%) SOUTH BRUNSWICK 3 Independence Way............. 1983 111,300 100.0 2,166 2,116 0.45 19.46 19.01 Merrill Lynch Pierce Fenner & Smith (84%) WOODBRIDGE 581 Main Street.......... 1991 200,000 100.0 4,699 4,617 0.97 23.50 23.09 First Investors Management Company, Inc. (38%), Cast North America Ltd. (11%) MONMOUTH COUNTY, NEW JERSEY NEPTUNE 3600 Route 66... 1989 180,000 100.0 2,410 2,410 0.50 13.39 13.39 United States Life Insurance Company (100%) WALL TOWNSHIP 1305 Campus Parkway......... 1988 23,350 82.3 472 460 0.10 24.56 23.94 Waterford Wedgewood USA Inc. (41%), McLaughlin, Bennett, Gelson (35%) 1350 Campus Parkway......... 1990 79,747 99.9 1,393 1,295 0.29 17.49 16.26 Meridan Health Realty Corp. (22%), Milestone Material Inc. (18%), Stephen E. Gertler Law Office (17%), Amper Politzner & Mattia PA (11%), Health Care Software (11%), Sportsgolf L.L.C. (11%) MORRIS COUNTY, NEW JERSEY FLORHAM PARK 325 Columbia Turnpike........ 1987 168,144 100.0 4,107 3,684 0.85 24.43 21.91 Bressler Amery & Ross (24%), Salomon Smith Barney Inc. (13%), Atlantic Health Systems (12%), Dun & Bradstreet Inc. (12%)
18 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 2000 PERCENTAGE 2000 2000 OFFICE, 2000 AVERAGE TENANTS LEASING 10% NET LEASED BASE EFFECTIVE OFFICE/FLEX, AVERAGE EFFECTIVE OR MORE OF NET RENTABLE AS OF RENT RENT AND INDUSTRIAL/ BASE RENT RENT RENTABLE AREA PER PROPERTY YEAR AREA 12/31/00 ($000'S) ($000'S) WAREHOUSE PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION BUILT (SQ. FT.) (%) (1) (2) (6) (3) (6) BASE RENT (%) ($) (4) (6) ($) (5) (6) 12/31/00 (6) - ----------------------------------------------------------------------------------------------------------------------------------- MORRIS PLAINS 250 Johnson Road............ 1977 75,000 100.0 1,300 1,264 0.27 17.33 16.85 Electronic Data Systems Corp. (100%) 201 Littleton Road............ 1979 88,369 100.0 1,880 1,860 0.39 21.27 21.05 Xerox Corporation (50%), Willis Corroon Corp. of New Jersey (20%), Bozell Worldwide Inc. (19%), CHEP USA (11%) MORRIS TOWNSHIP 340 Mt. Kemble Avenue.......... 1985 387,000 100.0 5,530 5,530 1.14 14.29 14.29 AT&T Corporation (100%) 412 Mt. Kemble Avenue (8)...... 1986 -- -- 3,030 3,030 0.63 -- -- -- PARSIPPANY 7 Campus Drive.. 1982 154,395 100.0 2,552 2,551 0.53 16.53 16.52 Nabisco Inc. (100%) 8 Campus Drive.. 1987 215,265 100.0 5,517 5,324 1.14 25.63 24.73 Prudential Insurance Co. (31%), Bay Networks Inc. (27%), MCI Telecommunications Corp. (18%), Ayco Company L.P.(13%) 2 Dryden Way.... 1990 6,216 100.0 67 67 0.01 10.78 10.78 Bright Horizons Childrens Center (100%) 4 Gatehall Drive (7)....... 1988 248,480 90.8 3,170 3,170 0.65 25.51 25.51 J.B. Hanauer & Company (20%), Royal Indemnity Company (13%), Toyota Motor Credit Corp. (12%) 2 Hilton Court.. 1991 181,592 100.0 4,693 4,656 0.97 25.84 25.64 Deloitte & Touche USA LLP (64%), Northern Telecom Inc. (16%), Sankyo Parke Davis (11%) 600 Parsippany Road............ 1978 96,000 100.0 1,583 1,499 0.33 16.49 15.61 Exario Networks Inc. (36%), Sharemax.com (32%) 1 Sylvan Way.... 1989 150,557 100.0 3,507 3,103 0.72 23.29 20.61 Cendant Operations Inc. (99%) 5 Sylvan Way.... 1989 151,383 100.0 3,519 3,459 0.73 23.25 22.85 Integrated Communications (41%), Experian Information Solution (15%), DRS Technologies Inc. (12%) 7 Sylvan Way.... 1987 145,983 100.0 2,919 2,919 0.60 20.00 20.00 Nabisco Inc. (100%) PASSAIC COUNTY, NEW JERSEY CLIFTON 777 Passaic Avenue.......... 1983 75,000 89.1 954 857 0.20 14.28 12.82 Grosvenor Marketing Ltd (10%) TOTOWA 999 Riverview Drive........... 1988 56,066 100.0 1,014 946 0.21 18.09 16.87 Medical Logistics Inc. (36%), Telsource Corporation (19%), Humana Press (15%), Bankers Financial Corp. (10%) WAYNE 201 Willowbrook Boulevard....... 1970 178,329 99.0 2,407 2,392 0.50 13.63 13.55 The Grand Union Company (76%), Woodward-Clyde Consultants (23%)
19 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, NET LEASED 2000 2000 OFFICE/FLEX, RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT (%) - -------------------------------------------------------------------------------------------------------------- SOMERSET COUNTY, NEW JERSEY BASKING RIDGE 222 Mt. Airy Road................ 1986 49,000 100.0 745 692 0.15 233 Mt. Airy Road................ 1987 66,000 100.0 762 712 0.16 BERNARDS 106 Allen Road (7)............... 2000 132,010 72.5 279 234 0.06 BRIDGEWATER 721 Route 202/206................ 1989 192,741 100.0 4,286 4,142 0.88 UNION COUNTY, NEW JERSEY CLARK 100 Walnut Avenue................ 1985 182,555 97.5 4,568 4,001 0.94 CRANFORD 6 Commerce Drive................. 1973 56,000 93.0 1,029 964 0.21 11 Commerce Drive (6)............ 1981 90,000 93.2 1,023 908 0.21 12 Commerce Drive................ 1967 72,260 96.3 604 603 0.12 20 Commerce Drive................ 1990 176,600 100.0 4,065 3,674 0.84 65 Jackson Drive................. 1984 82,778 100.0 1,600 1,213 0.33 NEW PROVIDENCE 890 Mountain Road................ 1977 80,000 100.0 2,250 2,238 0.46 - ------------------------------------------------------------------------------------------------------------- TOTAL NEW JERSEY OFFICE 11,430,809 98.0 229,544 220,922 47.39 - ------------------------------------------------------------------------------------------------------------- DUTCHESS COUNTY, NEW YORK FISHKILL 300 South Lake Drive............. 1987 118,727 97.3 2,184 2,157 0.45 NASSAU COUNTY, NEW YORK NORTH HEMPSTEAD 600 Community Drive.............. 1983 206,274 100.0 4,808 4,808 0.99 111 East Shore Road.............. 1980 55,575 100.0 1,518 1,514 0.31 2000 2000 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/00(6) - -------------------------------------------------------------------------------------------------------------------------------- SOMERSET COUNTY, NEW JERSEY BASKING RIDGE 222 Mt. Airy Road................ 15.20 14.12 Avaya Inc. (100%) 233 Mt. Airy Road................ 11.55 10.79 Avaya Inc. (100%) BERNARDS 106 Allen Road (7)............... 24.84(9) 20.83(9) KPMG Consulting LLC (59%) BRIDGEWATER 721 Route 202/206................ 22.24 21.49 Allstate Insurance Company (37%), Norris, McLaughlin & Marcus, PA (30%) UNION COUNTY, NEW JERSEY CLARK 100 Walnut Avenue................ 25.66 22.48 CAP Gemini America Inc. (54%), Equitable Life Assurance (10%), Mastercare Companies Inc. (10%) CRANFORD 6 Commerce Drive................. 19.76 18.51 Kendle International Inc. (50%) 11 Commerce Drive (6)............ 12.20 10.82 Northeast Administrators (10%) 12 Commerce Drive................ 8.68 8.67 Dames & Moore (40%), Registrar & Transfer Company (36%) 20 Commerce Drive................ 23.02 20.80 Public Service Electric & Gas Company (26%), Quintiles Inc. (21%) 65 Jackson Drive................. 19.33 14.65 Kraft General Foods, Inc. (35%), Allstate Insurance Company (27%), Procter & Gamble Distribution Co., Inc. (18%), Provident Companies Inc. (14%) NEW PROVIDENCE 890 Mountain Road................ 28.13 27.98 Aspen Technology Inc. (52%), Dun & Bradstreet (27%), K Line America, Inc. (16%) - -------------------------------------------------------------------------------------------------------------------------------- TOTAL NEW JERSEY OFFICE 21.01 20.22 - -------------------------------------------------------------------------------------------------------------------------------- DUTCHESS COUNTY, NEW YORK FISHKILL 300 South Lake Drive............. 18.91 18.67 Allstate Insurance Company (16%) NASSAU COUNTY, NEW YORK NORTH HEMPSTEAD 600 Community Drive.............. 23.31 23.31 CMP Media, Inc. (100%) 111 East Shore Road.............. 27.31 27.24 Administrators For The Professions, Inc. (100%)
20 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, NET LEASED 2000 2000 OFFICE/FLEX, RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT (%) - --------------------------------------------------------------------------------------------------------------- ROCKLAND COUNTY, NEW YORK SUFFERN 400 Rella Boulevard.............. 1988 180,000 99.8 3,631 3,463 0.75 WESTCHESTER COUNTY, NEW YORK ELMSFORD 100 Clearbrook Road (6).......... 1975 60,000 91.7 938 869 0.19 101 Executive Boulevard.......... 1971 50,000 79.3 801 772 0.17 555 Taxter Road (7).............. 1986 170,554 100.0 2,457 2,457 0.51 565 Taxter Road (7).............. 1988 170,554 86.6 2,052 2,047 0.42 570 Taxter Road.................. 1972 75,000 96.5 1,456 1,398 0.30 HAWTHORNE 30 Saw Mill River Road........... 1982 248,400 100.0 5,215 4,301 1.07 1 Skyline Drive.................. 1980 20,400 99.0 300 289 0.06 2 Skyline Drive.................. 1987 30,000 98.9 479 435 0.10 7 Skyline Drive.................. 1987 109,000 100.0 2,196 2,193 0.45 17 Skyline Drive................. 1989 85,000 100.0 1,233 1,233 0.25 TARRYTOWN 200 White Plains Road............ 1982 89,000 88.1 1,734 1,581 0.36 220 White Plains Road............ 1984 89,000 95.4 2,117 2,020 0.44 WHITE PLAINS 1 Barker Avenue.................. 1975 68,000 99.0 1,605 1,568 0.33 3 Barker Avenue.................. 1983 65,300 93.3 1,251 1,217 0.26 50 Main Street................... 1985 309,000 99.6 7,641 7,216 1.58 11 Martine Avenue................ 1987 180,000 100.0 4,529 4,192 0.93 1 Water Street................... 1979 45,700 99.8 1,048 1,014 0.22 2000 2000 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ. FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/00(6) - -------------------------------------------------------------------------------------------------------------------------------- ROCKLAND COUNTY, NEW YORK SUFFERN 400 Rella Boulevard.............. 20.21 19.28 The Prudential Insurance Co. (21%), Provident Savings Bank F.A. (20%), Allstate Insurance Company (19%) WESTCHESTER COUNTY, NEW YORK ELMSFORD 100 Clearbrook Road (6).......... 17.05 15.79 MIM Corporation (18%), Amerihealth Inc. (13%) 101 Executive Boulevard.......... 20.20 19.47 Pennysaver Group Inc. (23%), MCS Business Solutions Inc. (11%) 555 Taxter Road (7).............. 23.58 23.58 Fuji Photo Film USA Inc. (64%), Royal Indemnity Company (12%) 565 Taxter Road (7).............. 22.74 22.68 Nextel of New York Inc. (29%), KLM Royal Dutch Airlines (10%), Nationwide Mutual Insurance (10%) 570 Taxter Road.................. 20.12 19.32 New York State United Teachers Association (11%), Wilder Balter Partners LLC (11%) HAWTHORNE 30 Saw Mill River Road........... 20.99 17.31 IBM Corporation (100%) 1 Skyline Drive.................. 14.85 14.31 Boxx International Corp. (50%), Childtime Childcare Inc. (49%) 2 Skyline Drive.................. 16.14 14.66 MW Samara (56%), Perini Construction (43%) 7 Skyline Drive.................. 20.15 20.12 E.M. Industries Inc. (42%), Cortlandt Group Inc. (14%) 17 Skyline Drive................. 14.51 14.51 IBM Corporation (100%) TARRYTOWN 200 White Plains Road............ 22.11 20.16 Allmerica Financial (17%), Independent Health Associates Inc., (17%), NYS Dept. of Environmental Services (13%) 220 White Plains Road............ 24.93 23.79 Eagle Family Foods Inc. (17%), ATM Services Inc. (10%) WHITE PLAINS 1 Barker Avenue.................. 23.84 23.29 O'Connor McGuinn Conte (19%), United Skys Realty Corp. (18%) 3 Barker Avenue.................. 20.53 19.98 Bernard C. Harris Publishing Co. Inc. (56%), TNS Intersearch Corporation (10%) 50 Main Street................... 24.83 23.45 TMP Worldwide Inc. (15%), National Economic Research (10%) 11 Martine Avenue................ 25.16 23.29 Salomon Smith Barney Inc. (12%), McCarthy Fingar Donovan Et Al (11%), David Worby (11%), Dean Witter Reynolds Inc. (11%) 1 Water Street................... 22.98 22.23 Trigen Energy Company (48%), Stewart Title Insurance Co. (16%)
21 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, NET LEASED 2000 2000 OFFICE/FLEX, RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE LOCATION BUILT SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) - ------------------------------------------------------------------------------------------------------------ YONKERS 1 Executive Boulevard......... 1982 112,000 100.0 2,380 2,252 0.49 3 Executive Plaza.............. 1987 58,000 100.0 1,418 1,371 0.29 - ------------------------------------------------------------------------------------------------------------ TOTAL NEW YORK OFFICE 2,595,484 97.5 52,991 50,367 10.92 - ------------------------------------------------------------------------------------------------------------ CHESTER COUNTY, PENNSYLVANIA BERWYN 1000 Westlakes Drive........... 1989 60,696 93.6 1,485 1,476 0.31 1055 Westlakes Drive........... 1990 118,487 42.9 2,305 2,305 0.48 1205 Westlakes Drive........... 1988 130,265 99.8 2,875 2,836 0.59 1235 Westlakes Drive........... 1986 134,902 100.0 3,229 3,130 0.67 DELAWARE COUNTY, PENNSYLVANIA LESTER 100 Stevens Drive.............. 1986 95,000 100.0 1,703 1,593 0.35 200 Stevens Drive.............. 1987 208,000 100.0 4,227 4,011 0.87 300 Stevens Drive.............. 1992 68,000 92.3 1,414 1,359 0.29 MEDIA 1400 Providence Road - Center I 1986 100,000 86.4 1,797 1,713 0.37 1400 Providence Road - Center II 1990 160,000 80.3 2,923 2,752 0.60 MONTGOMERY COUNTY, PENNSYLVANIA LOWER PROVIDENCE 1000 Madison Avenue............ 1990 100,700 100.0 1,803 1,769 0.37 PLYMOUTH MEETING 1150 Plymouth Meeting Mall..... 1970 167,748 91.8 2,766 2,718 0.57 2000 2000 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PER SQ.FT. PROPERTY AS OF LOCATION ($)(4)(6) ($)(5)(6) 12/31/00 (6) - --------------------------------------------------------------------------------------------------------------------------- YONKERS 1 Executive Boulevard......... 21.25 20.11 Wise Contact US Optical Corp. (12%), AVR Realty Company (11%), Protective Tech International (11%), York, International Agency Inc.(11%) 3 Executive Plaza............. 24.45 23.64 Montefiore Medical Center (45%), Metropolitan Life Insurance (21%), Allstate Insurance Company (20%), City & Suburban Federal Savings Bank (14%) - ----------------------------------------------------------------------------------------------------------------------------- TOTAL NEW YORK OFFICE 22.08 21.05 - ----------------------------------------------------------------------------------------------------------------------------- CHESTER COUNTY, PENNSYLVANIA BERWYN 1000 Westlakes Drive.......... 26.14 25.98 Drinker Biddle & Reath (42%), PNC Bank, NA (38%) 1055 Westlakes Drive.......... 45.35 45.35 Regus Business Centre Corp. (34%) 1205 Westlakes Drive.......... 22.11 21.81 Provident Mutual Life Insurance Co. (35%), Oracle Corporation 30%), International Rehab Assoc. (10%) 1235 Westlakes Drive.......... 23.94 23.20 Pepper Hamilton & Scheetz L.L.P. (22%), Ratner & Prestia (16%), Turner Investment Partners (10%) DELAWARE COUNTY, PENNSYLVANIA LESTER 100 Stevens Drive............. 17.93 16.77 Keystone Mercy Health Plan (100%) 200 Stevens Drive............. 20.32 19.28 Keystone Mercy Health Plan (100%) 300 Stevens Drive............. 22.53 21.65 Bluestone Software Inc. (39%), Keystone Mercy Health Plan (33%) MEDIA 1400 Providence Road - Center I 20.80 19.83 General Services Admin. (13%), Erie Insurance Company (11%) 1400 Providence Road - Center II 22.75 21.42 Barnett International (36%) MONTGOMERY COUNTY, PENNSYLVANIA LOWER PROVIDENCE 1000 Madison Avenue........... 17.90 17.57 Reality Online Inc. (42%), Banc One National Processing (21%), Danka Corporation (14%), Seton Company (12%) PLYMOUTH MEETING 1150 Plymouth Meeting Mall.... 17.96 17.65 Computer Learning Centers, Inc. (18%), Ken-Crest Services (18%), Ikea US General Partners Inc. (14%), ECC Management Services (13%)
22 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, NET LEASED 2000 2000 OFFICE/FLEX, RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) - --------------------------------------------------------------------------------------------------------------- Five Sentry Parkway East......... 1984 91,600 100.0 1,499 1,494 0.31 Five Sentry Parkway West......... 1984 38,400 100.0 689 688 0.14 - -------------------------------------------------------------------------------------------------------------- TOTAL PENNSYLVANIA OFFICE 1,473,798 90.8 28,715 27,844 5.92 - -------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CONNECTICUT GREENWICH 500 West Putnam Avenue........... 1973 121,250 97.5 2,941 2,845 0.61 NORWALK 40 Richards Avenue............... 1985 145,487 96.8 3,077 2,927 0.63 SHELTON 1000 Bridgeport Avenue........... 1986 133,000 100.0 2,266 2,221 0.47 - -------------------------------------------------------------------------------------------------------------- TOTAL CONNECTICUT OFFICE 399,737 98.1 8,284 7,993 1.71 - -------------------------------------------------------------------------------------------------------------- WASHINGTON, D.C. 1201 Connecticut Avenue, NW...... 1940 169,549 100.0 5,129 5,100 1.06 1400 L Street, NW................ 1987 159,000 100.0 5,990 5,896 1.24 1709 New York Avenue, NW......... 1972 166,000 100.0 7,227 7,076 1.49 - -------------------------------------------------------------------------------------------------------------- TOTAL DISTRICT OF COLUMBIA OFFICE 494,549 100.0 18,346 18,072 3.79 - -------------------------------------------------------------------------------------------------------------- PRINCE GEORGE'S COUNTY, MARYLAND LANHAM 4200 Parliament Place............ 1989 122,000 92.9 2,543 2,442 0.52 - -------------------------------------------------------------------------------------------------------------- TOTAL MARYLAND OFFICE 122,000 92.9 2,543 2,442 0.52 - -------------------------------------------------------------------------------------------------------------- 2000 2000 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) 12/31/00(6) - --------------------------------------------------------------------------------------------------------------------------- Five Sentry Parkway East......... 16.36 16.31 Merck & Co. Inc. (77%), Selas Fluid Processing Corp. (23%) Five Sentry Parkway West......... 17.94 17.92 Merck & Co. Inc. (70%), David Cutler Group (30%) - ---------------------------------------------------------------------------------------------------------------------------- TOTAL PENNSYLVANIA OFFICE 21.46 20.81 - ---------------------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CONNECTICUT GREENWICH 500 West Putnam Avenue........... 24.88 24.07 Hachette Filipacchi Magazines (27%), McMahan Securities Co. LP (15%) Winklevoss Consultants Inc. (12%) NORWALK 40 Richards Avenue............... 21.85 20.78 South Beach Beverage Co., LLC (14%), Media Horizons Inc. (11%), Programmed Solutions Inc. (10%) SHELTON 1000 Bridgeport Avenue........... 17.04 16.70 William Carter Company (23%), Weseley Software Development (22%), Toyota Motor Credit Corporation (11%), LandStar Gemini Inc. (11%) - ---------------------------------------------------------------------------------------------------------------------------- TOTAL CONNECTICUT OFFICE 21.13 20.39 - ---------------------------------------------------------------------------------------------------------------------------- WASHINGTON, D.C. 1201 Connecticut Avenue, NW...... 30.25 30.08 Zuckerman Spaeder Goldstein (29%), Leo A. Daly Company (17%), RFE/RL Inc. (16%) 1400 L Street, NW................ 37.67 37.08 Winston & Strawn (68%) 1709 New York Avenue, NW......... 43.54 42.63 Board of Gov/Federal Reserve (70%), United States of America -GSA (25%) - ---------------------------------------------------------------------------------------------------------------------------- TOTAL DISTRICT OF COLUMBIA OFFICE 37.10 36.54 - ---------------------------------------------------------------------------------------------------------------------------- PRINCE GEORGE'S COUNTY, MARYLAND LANHAM 4200 Parliament Place............ 22.44 21.55 Group I Software Inc. (45%), Infinity Broadcasting Company (16%), State Farm Mutual Auto Ins. Co. (11%) - ---------------------------------------------------------------------------------------------------------------------------- TOTAL MARYLAND OFFICE 22.44 21.55 - ----------------------------------------------------------------------------------------------------------------------------
23 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE NET LEASED 2000 2000 RENTABLE AS OF BASE EFFECTIVE PROPERTY YEAR AREA 12/31/00 RENT RENT LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2)(6) ($000'S) (3)(6) - ----------------------------------------------------------------------------------------------- BEXAR COUNTY, TEXAS SAN ANTONIO 200 Concord Plaza Drive.......... 1986 248,700 97.4 4,371 4,324 84 N.E. Loop 410................. 1971 187,312 89.9 2,545 2,528 1777 N.E. Loop 410............... 1986 256,137 83.0 3,718 3,631 111 Soledad...................... 1918 248,153 93.0 2,621 2,532 COLLIN COUNTY, TEXAS PLANO 555 Republic Place............... 1986 97,889 85.0 1,421 1,346 DALLAS COUNTY,TEXAS DALLAS 3030 LBJ Freeway (6)............. 1984 367,018 96.8 6,543 6,278 3100 Monticello.................. 1984 173,837 94.6 2,752 2,682 8214 Westchester................. 1983 95,509 81.4 1,242 1,192 IRVING 2300 Valley View................. 1985 142,634 97.4 1,903 1,786 RICHARDSON 1122 Alma Road................... 1977 82,576 100.0 607 607 HARRIS COUNTY, TEXAS HOUSTON 14511 Falling Creek.............. 1982 70,999 98.8 924 886 5225 Katy Freeway................ 1983 112,213 97.1 1,468 1,338 5300 Memorial.................... 1982 155,099 98.8 2,298 2,257 1717 St. James Place............. 1975 109,574 93.2 1,348 1,298 1770 St. James Place............. 1973 103,689 84.2 1,263 1,205 10497 Town & Country Way......... 1981 148,434 78.4 1,766 1,666 POTTER COUNTY, TEXAS AMARILLO 6900 IH - 40 West (8)............ 1986 -- -- 190 190 PERCENTAGE OF TOTAL 2000 2000 OFFICE, 2000 AVERAGE TENANTS LEASING 10% OFFICE/FLEX, AVERAGE EFFECTIVE OR MORE OF NET AND INDUSTRIAL/ BASE RENT RENT RENTABLE AREA PER WAREHOUSE PER SQ. FT. PER SQ. FT. PROPERTY AS OF BASE RENT (%) ($)(4)(6) ($)(5)(6) 12/31/00 (6) - --------------------------------------------------------------------------------------------------------------------------------- BEXAR COUNTY, TEXAS SAN ANTONIO 200 Concord Plaza Drive.......... 0.90 18.04 17.85 Merrill Lynch Pierce Fenner & Smith (12%) 84 N.E. Loop 410................. 0.53 15.11 15.01 Pacificare of Texas, Inc. (30%), KBL Cable, Inc. (26%), Kraft General Foods Inc. (25%) 1777 N.E. Loop 410............... 0.76 17.49 17.08 -- 111 Soledad...................... 0.54 11.36 10.97 SBC Communications, Inc. (38%) COLLIN COUNTY, TEXAS PLANO 555 Republic Place............... 0.29 17.08 16.18 William F. Smith Enterprises (22%), Target Corporation (14%) DALLAS COUNTY,TEXAS DALLAS 3030 LBJ Freeway (6)............. 1.35 18.42 17.67 Club Corporation of America (39%) 3100 Monticello.................. 0.57 16.73 16.31 Insignia Commercial, Inc. (23%), Time Marketing Corporation/Evans Group (12%), Heath Insurance Brokers, Inc. (11%), Tarragon Realty Adv. Inc. (11%), Summit Global Partners Texas (10%) 8214 Westchester................. 0.26 15.98 15.33 Preston Business Center, Inc. (16%), Malone Mortgage Company America, Inc. (14%), State Bank & Trust Co. (11%) IRVING 2300 Valley View................. 0.39 13.70 12.86 Alltel Information Services, Inc. (18%), Computer Task Group, Inc. (12%), Tricon Restaurant Services (12%), US Personnel Inc. (12%) RICHARDSON 1122 Alma Road................... 0.13 7.35 7.35 MCI Telecommunications Corp. (100%) HARRIS COUNTY, TEXAS HOUSTON 14511 Falling Creek.............. 0.19 13.17 12.63 Nationwide Mutual Insurance Company (17%) 5225 Katy Freeway................ 0.30 13.47 12.28 State of Texas (17%) 5300 Memorial.................... 0.47 15.00 14.73 Drypers Corporation (20%), Datavox, Inc. (20%), HCI Chemicals USA, Inc. (19%) 1717 St. James Place............. 0.28 13.20 12.71 MCX Corp (14%) 1770 St. James Place............. 0.26 14.47 13.80 Neosoft Inc. (10%), Houston Interweb Design Inc. (10%) 10497 Town & Country Way......... 0.36 15.18 14.32 Vastar Resources, Inc. (23%) POTTER COUNTY, TEXAS AMARILLO 6900 IH - 40 West (8)............ 0.04 -- -- --
24 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE NET LEASED 2000 2000 RENTABLE AS OF BASE EFFECTIVE PROPERTY YEAR AREA 12/31/00 RENT RENT LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2)(6) ($000'S) (3)(6) - ------------------------------------------------------------------------------------------------ TARRANT COUNTY, TEXAS EULESS 150 West Parkway................. 1984 74,429 91.0 1,062 1,030 TRAVIS COUNTY, TEXAS AUSTIN 1250 Capital of Texas Hwy. South (8)1985 -- -- 4,164 4,106 - ------------------------------------------------------------------------------------------------ TOTAL TEXAS OFFICE 2,674,202 92.1 42,206 40,882 - ------------------------------------------------------------------------------------------------ MARICOPA COUNTY, ARIZONA GLENDALE 5551 West Talavi Boulevard....... 1991 181,596 100.0 1,730 1,722 PHOENIX 19640 North 31st Street.......... 1990 124,171 100.0 1,506 1,453 SCOTTSDALE 9060 E. Via Linda Boulevard...... 1984 111,200 100.0 2,404 2,404 - ------------------------------------------------------------------------------------------------ TOTAL ARIZONA OFFICE 416,967 100.0 5,640 5,579 - ------------------------------------------------------------------------------------------------ ARAPAHOE COUNTY, COLORADO AURORA 750 South Richfield Street....... 1997 108,240 100.0 2,911 2,911 DENVER 400 South Colorado Boulevard..... 1983 125,415 97.8 2,182 2,108 ENGLEWOOD 9359 East Nichols Avenue......... 1997 72,610 100.0 903 903 5350 South Roslyn Street......... 1982 63,754 100.0 1,054 1,033 BOULDER COUNTY, COLORADO BROOMFIELD 105 South Technology Court....... 1997 37,574 100.0 541 541 303 South Technology Court-A..... 1997 34,454 100.0 396 396 303 South Technology Court-B..... 1997 40,416 100.0 464 464 PERCENTAGE OF TOTAL 2000 2000 OFFICE, 2000 AVERAGE TENANTS LEASING 10% OFFICE/FLEX, AVERAGE EFFECTIVE OR MORE OF NET AND INDUSTRIAL/ BASE RENT RENT RENTABLE AREA PER WAREHOUSE PER SQ. FT. PER SQ. FT. PROPERTY AS OF BASE RENT (%) ($) (4)(6) ($) (5)(6) 12/31/00 (6) - -------------------------------------------------------------------------------------------------------------------------------- TARRANT COUNTY, TEXAS EULESS 150 West Parkway................. 0.22 15.68 15.21 Warrantech Automotive, Inc. (40%), Mike Bowman Realtors/Century 21 Inc. (17%), Landmark Bank-Mid Cities (16%) TRAVIS COUNTY, TEXAS AUSTIN 1250 Capital of Texas Hwy. South (8) 0.86 -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL TEXAS OFFICE 8.70 17.14 16.60 - ----------------------------------------------------------------------------------------------------------------------------------- MARICOPA COUNTY, ARIZONA GLENDALE 5551 West Talavi Boulevard....... 0.36 9.53 9.48 Honeywell, Inc. (100%) PHOENIX 19640 North 31st Street.......... 0.31 12.13 11.70 American Express Travel Related Services Co., Inc. (100%) SCOTTSDALE 9060 E. Via Linda Boulevard...... 0.50 21.62 21.62 Sentry Insurance (63%), PCS Health Systems Inc. (37%) - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL ARIZONA OFFICE 1.17 13.53 13.38 - ----------------------------------------------------------------------------------------------------------------------------------- ARAPAHOE COUNTY, COLORADO AURORA 750 South Richfield Street....... 0.60 26.89 26.89 T.R.W. Inc. (100%) DENVER 400 South Colorado Boulevard..... 0.45 17.79 17.19 Community Health Plan (32%), State of Colorado (12%), Wells Fargo Bank West NA (11%), Senter Goldfarb & Rice LLC (11%) ENGLEWOOD 9359 East Nichols Avenue......... 0.19 12.44 12.44 First Tennessee Bank NA (100%) 5350 South Roslyn Street......... 0.22 16.53 16.20 Alliance Metro Real Estate (19%), Business Word Inc. (17%) BOULDER COUNTY, COLORADO BROOMFIELD 105 South Technology Court....... 0.11 14.40 14.40 Sun Microsystems Inc. (100%) 303 South Technology Court-A..... 0.08 11.49 11.49 Sun Microsystems Inc. (100%) 303 South Technology Court-B..... 0.10 11.48 11.48 Sun Microsystems Inc. (100%)
25 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, 2000 NET LEASED 2000 2000 OFFICE/FLEX, AVERAGE RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE PER SQ. FT. LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) ($)(4)(6) - ---------------------------------------------------------------------------------------------------------------------------- LOUISVILLE 248 Centennial Parkway........... 1996 39,266 100.0 508 507 0.10 12.94 1172 Century Drive............... 1996 49,566 100.0 641 639 0.13 12.93 285 Century Place................ 1997 69,145 100.0 1,087 1,087 0.22 15.72 DENVER COUNTY, COLORADO DENVER 3600 South Yosemite.............. 1974 133,743 100.0 1,287 1,287 0.27 9.62 DOUGLAS COUNTY, COLORADO ENGLEWOOD 400 Inverness Drive.............. 1997 111,608 99.9 2,777 2,759 0.57 24.91 67 Inverness Drive East.......... 1996 54,280 100.0 680 677 0.14 12.53 384 Inverness Drive South........ 1985 51,523 100.0 833 809 0.17 16.17 5975 South Quebec Street......... 1996 102,877 99.8 2,373 2,336 0.49 23.11 PARKER 9777 Pyramid Court............... 1995 120,281 100.0 1,323 1,323 0.27 11.00 EL PASO COUNTY, COLORADO COLORADO SPRINGS 8415 Explorer.................... 1998 47,368 100.0 611 605 0.13 12.90 1975 Research Parkway............ 1997 115,250 100.0 1,683 1,604 0.35 14.60 2375 Telstar Drive............... 1998 47,369 100.0 612 605 0.13 12.92 JEFFERSON COUNTY, COLORADO LAKEWOOD 141 Union Boulevard.............. 1985 63,600 98.9 1,111 1,047 0.23 17.66 - ----------------------------------------------------------------------------------------------------------------------------- TOTAL COLORADO OFFICE 1,488,339 99.7 23,977 23,641 4.95 16.15 - ----------------------------------------------------------------------------------------------------------------------------- 2000 AVERAGE TENANTS LEASING 10% EFFECTIVE OR MORE OF NET RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PROPERTY AS OF LOCATION ($) (5) (6) 12/31/00 (6) - --------------------------------- ------------ ---------------------------------------------------- LOUISVILLE 248 Centennial Parkway........... 12.91 Walnut Brewery Inc. (59%), Aircell Inc. (28%) 1172 Century Drive............... 12.89 Skyconnect Inc. (40%), Evolving Systems Inc. (22%), MCI Systemhouse Corp. (22%), RX Kinetix Inc. (16%) 285 Century Place................ 15.72 HBO & Company of Georgia (100%) DENVER COUNTY, COLORADO DENVER 3600 South Yosemite.............. 9.62 MDC Holding Inc. (100%) DOUGLAS COUNTY, COLORADO ENGLEWOOD 400 Inverness Drive.............. 24.75 Convergent Communications Inc. (26%), Ciber Inc. (22%), Compuware Corp. (19%), Ani Colorado Inc./Alliance Int'l (16%) 67 Inverness Drive East.......... 12.47 T-Netix Inc. (69%), Convergent Communications Inc. (31%) 384 Inverness Drive South........ 15.70 Quickpen International Corp. (37%), United States of America - GSA (19%), Worth Group Architects (10%) 5975 South Quebec Street......... 22.75 Northern Telecom Inc. (43%), Silicon Graphics Inc. (28%), Qwest Communications Corp. (15%) PARKER 9777 Pyramid Court............... 11.00 Evolving System Inc. (100%) EL PASO COUNTY, COLORADO COLORADO SPRINGS 8415 Explorer.................... 12.77 Enterprise Systems Group Inc. (52%), URS Greiner Consultants Inc. (39%) 1975 Research Parkway............ 13.92 Bombardier Capital Florida Inc. (52%), Concert Management Services (18%), General Dynamics Govt Systems (17%) 2375 Telstar Drive............... 12.77 Narwhal Corporation (45%), Memorial Hospital (39%), Aerotek Inc. (14%) JEFFERSON COUNTY, COLORADO LAKEWOOD 141 Union Boulevard.............. 16.65 Arbitration Forums Inc. (18%), Frontier Real Estate - BH&G (15%) - ------------------------------------------------------------------------------------------------------------------ TOTAL COLORADO OFFICE 15.92 - ------------------------------------------------------------------------------------------------------------------
26 PROPERTY LISTING OFFICE PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, 2000 NET LEASED 2000 2000 OFFICE/FLEX, AVERAGE RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE PER SQ. FT. LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) ($)(4)(6) - -------------------------------- ----- --------- ---------- -------------- -------------- ---------------- ----------- SAN FRANCISCO COUNTY, CALIFORNIA SAN FRANCISCO 795 Folsom Street................ 1977 183,445 100.0 6,170 5,426 1.27 33.63 760 Market Street................ 1908 267,446 98.0 8,140 7,965 1.68 31.06 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL CALIFORNIA OFFICE 450,891 98.8 14,310 13,391 2.95 32.12 - ------------------------------------------------------------------------------------------------------------------------------- HILLSBOROUGH COUNTY, FLORIDA TAMPA 501 Kennedy Boulevard............ 1982 297,429 90.8 3,657 3,419 0.75 13.54 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL FLORIDA OFFICE 297,429 90.8 3,657 3,419 0.75 13.54 - ------------------------------------------------------------------------------------------------------------------------------- POLK COUNTY, IOWA WEST DES MOINES 2600 Westown Parkway............. 1988 72,265 100.0 1,101 1,014 0.23 15.24 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL IOWA OFFICE 72,265 100.0 1,101 1,014 0.23 15.24 - ------------------------------------------------------------------------------------------------------------------------------- DOUGLAS COUNTY, NEBRASKA OMAHA 210 South 16th Street (8)........ 1894 -- -- 2,876 2,875 0.59 -- - ------------------------------------------------------------------------------------------------------------------------------- TOTAL NEBRASKA OFFICE -- -- 2,876 2,875 0.59 -- - ------------------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE PROPERTIES 21,916,470 96.8 434,190 418,441 89.59 20.87 =============================================================================================================================== 2000 AVERAGE TENANTS LEASING 10% EFFECTIVE OR MORE OF NET RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PROPERTY AS OF LOCATION ($)(5)(6) 12/31/00 (6) - ----------------------------------------------------------------------------------------------------------------- SAN FRANCISCO COUNTY, CALIFORNIA SAN FRANCISCO 795 Folsom Street................ 29.58 Move.com Operations Inc. (51%), AT&T Corp. (34%), Regus Business Centre Corp. (15%) 760 Market Street................ 30.39 R.H. Macy & Company, Inc. (19%) - ----------------------------------------------------------------------------------------------------------------- TOTAL CALIFORNIA OFFICE 30.06 - ----------------------------------------------------------------------------------------------------------------- HILLSBOROUGH COUNTY, FLORIDA TAMPA 501 Kennedy Boulevard............ 12.66 Fowler, White, Gillen, Boggs, Villareal & Banker, PA (33%), Sykes Enterprises Inc. (22%) - ----------------------------------------------------------------------------------------------------------------- TOTAL FLORIDA OFFICE 12.66 - ----------------------------------------------------------------------------------------------------------------- POLK COUNTY, IOWA WEST DES MOINES 2600 Westown Parkway............. 14.03 Magellan Behavorial Health (28%), New England Mutual Life Insurance Company (15%), American Express Financial Advisors, Inc. (15%), MCI Worldcom Communications (14%) - ----------------------------------------------------------------------------------------------------------------- TOTAL IOWA OFFICE 14.03 - ----------------------------------------------------------------------------------------------------------------- DOUGLAS COUNTY, NEBRASKA OMAHA 210 South 16th Street (8)........ -- -- - ----------------------------------------------------------------------------------------------------------------- TOTAL NEBRASKA OFFICE -- -- - ----------------------------------------------------------------------------------------------------------------- TOTAL OFFICE PROPERTIES 20.12 =================================================================================================================
27 PROPERTY LISTING OFFICE/FLEX PROPERTIES
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, 2000 NET LEASED 2000 2000 OFFICE/FLEX, AVERAGE RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE PER SQ. FT. LOCATION BUILT (SQ. FT.) (%) (1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) ($)(4)(6) - -------------------------------------------------------------------------------------------------------------------------- BURLINGTON COUNTY, NEW JERSEY BURLINGTON 3 Terri Lane..................... 1991 64,500 68.8 355 343 0.07 8.00 5 Terri Lane..................... 1992 74,555 88.6 394 385 0.08 5.96 MOORESTOWN 2 Commerce Drive................. 1986 49,000 100.0 363 363 0.07 7.41 101 Commerce Drive............... 1988 64,700 100.0 336 296 0.07 5.19 102 Commerce Drive............... 1987 38,400 87.5 185 184 0.04 5.51 201 Commerce Drive............... 1986 38,400 100.0 196 191 0.04 5.10 202 Commerce Drive............... 1988 51,200 100.0 268 268 0.06 5.23 1 Executive Drive................ 1989 20,570 100.0 172 143 0.04 8.36 2 Executive Drive (7)............ 1988 60,800 100.0 352 343 0.07 7.47 101 Executive Drive.............. 1990 29,355 80.0 140 119 0.03 5.96 102 Executive Drive.............. 1990 64,000 90.0 351 308 0.07 6.09 225 Executive Drive.............. 1990 50,600 86.2 333 312 0.07 7.63 97 Foster Road................... 1982 43,200 100.0 186 186 0.04 4.31 1507 Lancer Drive................ 1995 32,700 100.0 139 130 0.03 4.25 1510 Lancer Drive................ 1998 88,000 100.0 370 370 0.08 4.20 1256 North Church Street......... 1984 63,495 49.9 194 165 0.04 6.12 840 North Lenola Road............ 1995 38,300 100.0 266 265 0.05 6.95 844 North Lenola Road............ 1995 28,670 100.0 213 213 0.04 7.43 915 North Lenola Road (7)........ 1998 52,488 100.0 131 131 0.03 5.33 2000 AVERAGE TENANTS LEASING 10% EFFECTIVE OR MORE OF NET RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PROPERTY AS OF LOCATION ($)(5)(6) 12/31/00 (6) - --------------------------------------------------------------------------------------------------------------- BURLINGTON COUNTY, NEW JERSEY BURLINGTON 3 Terri Lane..................... 7.73 Tempel Steel Company (18%), ATC Group Services Inc. (10%), General Service Administrators (10%) 5 Terri Lane..................... 5.83 United Rentals Inc. (22%), Lykes Dispensing Systems Inc. (20%), West Electronics Inc. (12%) MOORESTOWN 2 Commerce Drive................. 7.41 Computer Sciences Corporation (100%) 101 Commerce Drive............... 4.57 Beckett Corporation (100%) 102 Commerce Drive............... 5.48 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%) 201 Commerce Drive............... 4.97 Flow Thru Metals Inc. (25%), Franchise Stores Realty Corp. (25%), RE/Com Group (25%), Tropicana Products Inc. (25%) 202 Commerce Drive............... 5.23 Standard Register Co. (100%) 1 Executive Drive................ 6.95 Bechtel Infrastructure Corp. (48%), T.T.I. (18%) 2 Executive Drive (7)............ 7.28 CSI Computer Specialists Inc. (32%), Total Product Supply Inc. (18%), On-Campus Marketing Concepts (16%), Nia Zia D/B/A Alpha Academy (10%) 101 Executive Drive.............. 5.07 Bayada Nurses Inc. (36%), Foundations Inc. (15%), ABC Financial (10%), Bechtel Infrastructure Corp. (10%) 102 Executive Drive.............. 5.35 Comtrex Systems Corp. (29%), Kencom Communications & Svcs. (21%), PDLJB Corporation (20%), Schermerhorn Bros. Co. (20%) 225 Executive Drive.............. 7.15 Eastern Research Inc. (77%) 97 Foster Road................... 4.31 Consumer Response Company Inc. (50%), Pioneer and Company Inc. (33%), Colornet Inc. (17%) 1507 Lancer Drive................ 3.98 Tad's Delivery Service Inc. (100%) 1510 Lancer Drive................ 4.20 Tad's Delivery Service Inc. (100%) 1256 North Church Street......... 5.21 James C. Anderson Associates (30%), Ketec Inc. (20%) 840 North Lenola Road............ 6.92 Millar Elevator Service Co. (31%), Omega Storage Inc. (31%), Technology Service Solutions (25%), Computer Integration Services (13%) 844 North Lenola Road............ 7.43 Lockheed Martin Corp. (41%), Curbell Inc. (33%), James J. Martin Inc. (25%) 915 North Lenola Road (7)........ 5.33 Premier Percussion USA Inc. (37%), Don-Mar of Connecticut, LLC (23%), Riley Sales Inc. (18%), United States Postal Service (13%)
28 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, 2000 NET LEASED 2000 2000 OFFICE/FLEX, AVERAGE RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE PER SQ. FT. LOCATION BUILT (SQ. FT.) (%) (1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) ($)(4)(6) - ------------------------------------------------------------------------------------------------------------------------- 30 Twosome Drive................. 1997 39,675 100.0 224 224 0.05 5.65 40 Twosome Drive................. 1996 40,265 93.4 165 165 0.03 4.39 50 Twosome Drive................. 1997 34,075 100.0 262 262 0.05 7.69 WEST DEPTFORD 1451 Metropolitan Drive.......... 1996 21,600 100.0 148 148 0.03 6.85 MERCER COUNTY, NEW JERSEY HAMILTON TOWNSHIP 100 Horizon Drive................ 1989 13,275 100.0 46 43 0.01 3.47 200 Horizon Drive................ 1991 45,770 100.0 454 439 0.09 9.92 300 Horizon Drive................ 1989 69,780 100.0 703 690 0.15 10.07 500 Horizon Drive................ 1990 41,205 57.8 259 231 0.05 10.87 MONMOUTH COUNTY, NEW JERSEY WALL TOWNSHIP 1325 Campus Parkway.............. 1988 35,000 100.0 370 354 0.08 10.57 1340 Campus Parkway.............. 1992 72,502 100.0 813 709 0.17 11.21 1345 Campus Parkway.............. 1995 76,300 100.0 710 706 0.15 9.31 1433 Highway 34.................. 1985 69,020 100.0 557 479 0.11 8.07 1320 Wyckoff Avenue.............. 1986 20,336 100.0 132 125 0.03 6.49 1324 Wyckoff Avenue.............. 1987 21,168 100.0 183 147 0.04 8.65 2000 AVERAGE TENANTS LEASING 10% EFFECTIVE OR MORE OF NET RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PROPERTY AS OF LOCATION ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------- 30 Twosome Drive................. 5.65 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................. 4.39 Neighborcare - TCI Inc. (49%), Marconi Communications Inc. (30%), Bellstar Inc. (14%) 50 Twosome Drive................. 7.69 Wells Fargo Alarm Services (44%), Sussex Wine Merchants (42%), McCarthy Associates Inc. (14%) WEST DEPTFORD 1451 Metropolitan Drive.......... 6.85 Garlock Bearings Inc. (100%) MERCER COUNTY, NEW JERSEY HAMILTON TOWNSHIP 100 Horizon Drive................ 3.24 PSEG Energy Technologies Inc. (100%) 200 Horizon Drive................ 9.59 O.H.M. Remediation Services Corp. (100%) 300 Horizon Drive................ 9.89 State of New Jersey/DEP (50%), Lucent Technologies Inc. (26%), Ward North America (14%), Stephen Gould of Pennsylvania (10%) 500 Horizon Drive................ 9.70 Lakeview Child Center Inc. (19%), New Jersey Builders Assoc. (14%), Diedre Moire Corp. (11%) MONMOUTH COUNTY, NEW JERSEY WALL TOWNSHIP 1325 Campus Parkway.............. 10.11 Cisco Systems Inc. (100%) 1340 Campus Parkway.............. 9.78 Groundwater & Environmental Services Inc. (33%), GEAC Computers Inc. (22%), State Farm Mutual Insurance (17%), Association For Retarded Citizens (11%), Digital Lightwave, Inc. (11%) 1345 Campus Parkway.............. 9.25 Depot America, Inc. (37%), Quadramed Corp. (23%), De Vine Corp. (10%) 1433 Highway 34.................. 6.94 State Farm Mutual Insurance Co. (48%), CACI Technologies Inc. (18%), Depot America (12%), New Jersey Natural Gas Co (11%) 1320 Wyckoff Avenue.............. 6.15 The County of Monmouth (100%) 1324 Wyckoff Avenue.............. 6.94 Blackhawk Management Corp. (53%), Systems Fulfillment (25%), Supply Saver, Inc. (22%)
29 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, NET LEASED 2000 2000 OFFICE/FLEX, RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE LOCATION BUILT (SQ. FT.) (%) (1) ($000'S) (2) (6)($000'S)(3)(6) BASE RENT(%) - -------------------------------------------------------------------------------------------------------------- PASSAIC COUNTY, NEW JERSEY TOTOWA 1 Center Court................... 1999 38,961 84.0 136 111 0.03 2 Center Court................... 1998 30,600 99.3 348 237 0.07 11 Commerce Way.................. 1989 47,025 100.0 513 447 0.11 20 Commerce Way.................. 1992 42,540 100.0 446 442 0.09 29 Commerce Way.................. 1990 48,930 100.0 504 450 0.10 40 Commerce Way.................. 1987 50,576 85.7 534 439 0.11 45 Commerce Way.................. 1992 51,207 100.0 496 452 0.10 60 Commerce Way.................. 1988 50,333 100.0 457 387 0.09 80 Commerce Way.................. 1996 22,500 100.0 282 176 0.06 100 Commerce Way................. 1996 24,600 100.0 308 192 0.06 120 Commerce Way................. 1994 9,024 100.0 86 81 0.02 140 Commerce Way................. 1994 26,881 99.5 256 245 0.05 - -------------------------------------------------------------------------------------------------------------- TOTAL NEW JERSEY OFFICE/FLEX 1,996,081 94.1 14,336 13,096 2.95 - -------------------------------------------------------------------------------------------------------------- WESTCHESTER COUNTY, NEW YORK ELMSFORD 11 Clearbrook Road............... 1974 31,800 100.0 316 310 0.07 75 Clearbrook Road............... 1990 32,720 100.0 816 816 0.17 150 Clearbrook Road.............. 1975 74,900 93.8 1,029 998 0.21 2000 2000 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PER SQ. FT. PER SQ. FT. PROPERTY AS OF ($) (4) (6) ($) (5) (6) 12/31/00 (6) --------------------------------------------------------------- PASSAIC COUNTY, NEW JERSEY TOTOWA 1 Center Court................... 4.16 3.39 Rock-Tenn Converting Company (46%), Eizo Nanao Technologies Inc. (38%) 2 Center Court................... 11.45 7.80 Nomadic Display (36%), Electro Rent Corp. (33%), Alpine Electronics of America (30%) 11 Commerce Way.................. 10.91 9.51 Coram Alternative Site Services (56%), D.A. Kopp & Associates Inc. (22%), Olsten Health Services (11%), Ericsson Inc. (11%) 20 Commerce Way.................. 10.48 10.39 Emersub LXXXVII Inc. (41%), Lodan Totowa Inc. F/K/A Emersub (21%), Dish Network Service Corp. (14%) 29 Commerce Way.................. 10.30 9.20 Sandvik Sorting Systems, Inc. (44%), Patterson Dental Supply Inc. (23%), Fujitec America Inc. (22%), Williams Communications LLC (11%) 40 Commerce Way.................. 12.32 10.13 Thomson Electron Tubes (43%), Intertek Testing Services Inc. (29%), System 3R USA Inc. (14%) 45 Commerce Way.................. 9.69 8.83 Ericsson Inc. (52%), Woodward Clyde Consultants (27%), Oakwood Corporate Housing (21%) 60 Commerce Way.................. 9.08 7.69 Ericsson Inc. (29%), Jen Mar Graphics Inc. (27%), Dolan & Traynor Building Prod (16%), Prestige Telecom Ltd. (14%), HW Exhibits (14%) 80 Commerce Way.................. 12.53 7.82 Learning Stop LLC (40%), Idexx Veterinary Services (37%), Inter-American Safety Council (12%) 100 Commerce Way................. 12.52 7.80 Pharmerica Inc. (34%), Minolta Business Systems Inc. (34%), CCH Incorporated (32%) 120 Commerce Way................. 9.53 8.98 Senior Care Centers of America (100%) 140 Commerce Way................. 9.57 9.16 Universal Hospital Services (29%), Advanced Image Systems Inc. (20%), MSR Publications Inc. (19%), Holder Group Inc. (11%), Alpha Testing (10%), Showa Tool USA, Inc. (10%) - --------------------------------------------------------------------------------------------------------------------------------- TOTAL NEW JERSEY OFFICE/FLEX 7.77 7.11 - --------------------------------------------------------------------------------------------------------------------------------- WESTCHESTER COUNTY, NEW YORK ELMSFORD 11 Clearbrook Road............... 9.94 9.75 Creative Medical Supplies (28%), Eastern Jungle Gym Inc. (27%), MCS Marketing Group Inc. (24%), Treetops Inc. (21%) 75 Clearbrook Road............... 24.94 24.94 Evening Out Inc. (100%) 150 Clearbrook Road.............. 14.65 14.21 Sportive Ventures I LLC (24%), Philips Medical Systems N.A. (18%), Transwestern Publications (12%), ADT Security Services Inc. (11%)
30 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, NET LEASED 2000 2000 OFFICE/FLEX, RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE LOCATION BUILT (SQ. FT.) (%) (1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) - ------------------------------------------------------------------------------------------------------------ 175 Clearbrook Road.............. 1973 98,900 98.5 1,450 1,405 0.30 200 Clearbrook Road.............. 1974 94,000 99.8 1,208 1,139 0.25 250 Clearbrook Road.............. 1973 155,000 94.5 1,331 1,256 0.27 50 Executive Boulevard........... 1969 45,200 97.2 382 373 0.08 77 Executive Boulevard........... 1977 13,000 55.4 130 128 0.03 85 Executive Boulevard........... 1968 31,000 99.4 396 388 0.08 300 Executive Boulevard.......... 1970 60,000 99.7 597 577 0.12 350 Executive Boulevard.......... 1970 15,400 98.8 252 252 0.05 399 Executive Boulevard.......... 1962 80,000 100.0 968 931 0.20 400 Executive Boulevard.......... 1970 42,200 100.0 645 583 0.13 500 Executive Boulevard.......... 1970 41,600 100.0 614 587 0.13 525 Executive Boulevard.......... 1972 61,700 100.0 888 864 0.18 1 Westchester Plaza.............. 1967 25,000 100.0 301 286 0.06 2 Westchester Plaza.............. 1968 25,000 100.0 447 436 0.09 3 Westchester Plaza.............. 1969 93,500 100.0 1,142 1,126 0.24 4 Westchester Plaza.............. 1969 44,700 99.8 629 604 0.13 5 Westchester Plaza.............. 1969 20,000 100.0 304 295 0.06 6 Westchester Plaza.............. 1968 20,000 100.0 296 278 0.06 7 Westchester Plaza.............. 1972 46,200 100.0 649 641 0.13 8 Westchester Plaza.............. 1971 67,200 97.2 881 776 0.18 HAWTHORNE 200 Saw Mill River Road.......... 1965 51,100 100.0 626 599 0.13 2000 AVERAGE TENANTS LEASING 10% AVERAGE EFFECTIVE OR MORE OF NET BASE RENT RENT RENTABLE AREA PER PER SQ. FT. PER SQ. FT. PROPERTY AS OF ($)(4)(6) ($)(5)(6) 12/31/00 (6) ----------------------------------------------------------------------------------------- 175 Clearbrook Road.............. 14.88 14.42 Nextel of New York Inc. (35%), Hypres Inc. (15%), Perk-Up Inc. (10%) 200 Clearbrook Road.............. 12.88 12.14 Brunschwig & Fils Inc. (39%), Proftech Corp (20%) 250 Clearbrook Road.............. 9.09 8.57 AFP Imaging Corp (31%), The Artina Group Inc. (14%), Prints Plus Inc. (13%), Conri Services Inc. (10%), Merrill-Sharpe Ltd (10%) 50 Executive Boulevard........... 8.69 8.49 MMO Music Group (74%), Medcon Financial Services Inc. (22%) 77 Executive Boulevard........... 18.05 17.77 Bright Horizons Children Center (55%) 85 Executive Boulevard........... 12.85 12.59 VREX Inc (49%), Westhab Inc. (21%), Wald Optics Laboratory Inc. (13%), Saturn II Systems Inc. (11%) 300 Executive Boulevard.......... 9.98 9.65 Princeton Ski Outlet Corp. (57%), Varta Batteries Inc. (31%), LMG International Inc. (12%) 350 Executive Boulevard.......... 16.56 16.56 Copytex Corp. (99%) 399 Executive Boulevard.......... 12.10 11.64 American Banknote Holographic (73%), Wine Enthusiast Inc. (15%), Brandon of Westchester (12%) 400 Executive Boulevard.......... 15.28 13.82 Baker Engineering NY, Inc. (39%), Ultra Fabrics Inc. (25%) 500 Executive Boulevard.......... 14.76 14.11 Original Consume (36%), Dover Elevator Co. (16%), Angelica Corp. (16%), Olympia Sports Inc. (13%), Philips Medical Systems N.A. (13%) 525 Executive Boulevard.......... 14.39 14.00 Vie De France Yamazaki Inc. (59%), New York Blood Center Inc. (21%) 1 Westchester Plaza.............. 12.04 11.44 British Apparel (40%), Thin Film Concepts Inc. (20%), RS Knapp (20%), JT Lynne Representatives (20%) 2 Westchester Plaza.............. 17.88 17.44 Board of Cooperative Education (80%), Kin-Tronics (11%) 3 Westchester Plaza.............. 12.21 12.04 Reveo Inc. (51%), Kangol Headwear (28%), Esperya USA Inc. (12%) 4 Westchester Plaza.............. 14.10 13.54 Metropolitan Life Insurance (38%), EEV Inc. (34%), Arsys Innotech Corp. (13%) 5 Westchester Plaza.............. 15.20 14.75 Fujitsu Network Communications (38%), Rokonet Industries USA Inc. (25%), UA Plumbers Education Fund (25%), Furniture Etc. Inc. (12%) 6 Westchester Plaza.............. 14.80 13.90 Pinkerton Systems Integration (28%), Xerox Corporation (28%), Game Parts Inc. (24%), Girard Rubber Co. (12%) 7 Westchester Plaza.............. 14.05 13.87 Emigrant Savings Bank (69%), Fire End Croker Corp. (22%) 8 Westchester Plaza.............. 13.49 11.88 Mamiya America Corp. (24%), Ciba Specialty Chemicals Corp. (17%), Kubra Data Transfer Ltd. (15%) HAWTHORNE 200 Saw Mill River Road.......... 12.25 11.72 Walter DeGruyter Inc. (21%), Abscoa Industries Inc. (18%), TJ Quatroni Plumbing and Heat (17%), Cablevision Lightpath Inc. (12%), SI International Instruments Inc. (10%)
31 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, 2000 NET LEASED 2000 2000 OFFICE/FLEX, AVERAGE RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE PER SQ. FT. LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) ($)(4)(6) - ------------------------------------------------------------------------------------------------------------------------------- 4 Skyline Drive.................. 1987 80,600 99.6 1,267 1,155 0.26 15.78 8 Skyline Drive.................. 1985 50,000 98.9 854 717 0.18 17.27 10 Skyline Drive................. 1985 20,000 100.0 283 262 0.06 14.15 11 Skyline Drive................. 1989 45,000 100.0 689 641 0.14 15.31 12 Skyline Drive................. 1999 46,850 100.0 806 646 0.17 17.20 15 Skyline Drive................. 1989 55,000 100.0 1,005 912 0.21 18.27 YONKERS 100 Corporate Boulevard.......... 1987 78,000 98.2 1,399 1,338 0.29 18.26 200 Corporate Boulevard South.... 1990 84,000 99.8 1,380 1,350 0.28 16.46 4 Executive Plaza................ 1986 80,000 98.7 1,025 973 0.21 12.98 6 Executive Plaza................ 1987 80,000 100.0 1,110 1,093 0.23 13.88 1 Odell Plaza.................... 1980 106,000 93.7 1,256 1,221 0.26 12.65 5 Odell Plaza.................... 1983 38,400 99.6 536 528 0.11 14.01 7 Odell Plaza.................... 1984 42,600 99.6 648 634 0.13 15.27 - ------------------------------------------------------------------------------------------------------------------------------- TOTAL NEW YORK OFFICE/FLEX 2,076,570 98.3 28,555 27,118 5.88 13.99 - ------------------------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CONNECTICUT STAMFORD 419 West Avenue.................. 1986 88,000 94.0 1,486 1,460 0.31 17.96 500 West Avenue.................. 1988 25,000 100.0 422 384 0.09 16.88 550 West Avenue.................. 1990 54,000 100.0 785 663 0.16 14.54 600 West Avenue.................. 1999 66,000 100.0 722 685 0.15 10.94 2000 AVERAGE TENANTS LEASING 10% EFFECTIVE OR MORE OF NET RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PROPERTY AS OF LOCATION ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------- 4 Skyline Drive.................. 14.39 Alstom USA Inc. (27%), Evonyx Inc. (23%) 8 Skyline Drive.................. 14.50 Clientsoft Inc. (70%), Evonyx Inc. (29%) 10 Skyline Drive................. 13.10 Bi-Tronic Inc/LCA Sales Corp. (51%), Phoenix Systems Int'l (32%), ENSR Corp. (17%) 11 Skyline Drive................. 14.24 Cube Computer Corp. (76%), Agathon Machine Tools Inc. (12%) 12 Skyline Drive................. 13.79 Creative Visual Enterprises (38%), Medelec Inc. (32%), Savin Corporation (30%) 15 Skyline Drive................. 16.58 Tellabs Operations Inc. (47%), Emisphere Technology Assoc. (23%), Minolta Business Solutions (16%), Acorda Therapeutics Inc. (14%) YONKERS 100 Corporate Boulevard.......... 17.47 Montefiore Medical Center (28%), Sempra Energy Trading Corp. (13%), Minami International Corp. (12%), Otis Elevator Company (11%), Genzyme Genetics Corp. (11%) 200 Corporate Boulevard South.... 16.10 Belmay Inc. (32%), Montefiore Medical Center (23%), Advanced Viral Research Corp. (20%), Micromold Products Inc. (10%) 4 Executive Plaza................ 12.32 Wise Contact US Optical Corp. (32%), E&B Giftware Inc. (22%), TT Systems LLC (10%) 6 Executive Plaza................ 13.66 Cablevision Systems Corp. (40%), CSC Holdings Inc. (12%), Yonkers Savings & Loan Assoc. (11%) , Empire Managed Care Inc. (10%) 1 Odell Plaza.................... 12.29 Sportive Ventures 2 LLC (19%), Market Dynamics Group LLC (11%) 5 Odell Plaza.................... 13.81 Voyetra Technologies Inc. (44%), Photo File Inc. (34%), Pharmerica Inc. (22%) 7 Odell Plaza.................... 14.94 US Postal Service (41%), TT Systems Company (24%), Bright Horizons Childrens Center (16%) - ------------------------------------------------------------------------------------------------------------- TOTAL NEW YORK OFFICE/FLEX 13.28 - ------------------------------------------------------------------------------------------------------------- FAIRFIELD COUNTY, CONNECTICUT STAMFORD 419 West Avenue.................. 17.65 Fuji Medical Systems USA Inc. (80%) 500 West Avenue.................. 15.36 Peppers and Rogers Group/Mark (35%), Lead Trackers Inc. (28%), Convergent Communications Inc. (26%), M Cohen and Sons Inc. (11%) 550 West Avenue.................. 12.28 Lifecodes Corp. (68%), Davidoff of Geneva (CT) Inc. (32%) 600 West Avenue.................. 10.38 Clarence House Imports, Ltd (100%)
32 PROPERTY LISTING OFFICE/FLEX PROPERTIES (CONTINUED)
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, 2000 NET LEASED 2000 2000 OFFICE/FLEX, AVERAGE RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE PER SQ. FT. LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) ($)(4)(6) - ------------------------------------------------------------------------------------------------------------------------------ 650 West Avenue 1998 40,000 100.0 555 441 0.11 13.88 - ------------------------------------------------------------------------------------------------------------------------------ TOTAL CONNECTICUT OFFICE/FLEX 273,000 98.1 3,970 3,633 0.82 14.83 - ------------------------------------------------------------------------------------------------------------------------------ TOTAL OFFICE/FLEX PROPERTIES 4,345,651 96.4 46,861 43,847 9.65 11.25 ============================================================================================================================== 2000 AVERAGE TENANTS LEASING 10% EFFECTIVE OR MORE OF NET RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PROPERTY AS OF LOCATION ($)(5)(6) 12/31/00 (6) - ----------------------------------------------------------------------------------- 650 West Avenue 11.03 Davidoff of Geneva (CT) Inc. (100%) - ----------------------------------------------------------------------------------- TOTAL CONNECTICUT OFFICE/FLEX 13.57 - ----------------------------------------------------------------------------------- TOTAL OFFICE/FLEX PROPERTIES 10.53 ===================================================================================
33 PROPERTY LISTING INDUSTRIAL/WAREHOUSE PROPERTIES
PERCENTAGE OF TOTAL 2000 PERCENTAGE OFFICE, 2000 NET LEASED 2000 2000 OFFICE/FLEX, AVERAGE RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/ BASE RENT PROPERTY YEAR AREA 12/31/00 RENT RENT WAREHOUSE PER SQ. FT. LOCATION BUILT (SQ. FT.) (%)(1) ($000'S)(2)(6) ($000'S)(3)(6) BASE RENT(%) ($)(4)(6) - ------------------------------------------------------------------------------------------------------------------------------ WESTCHESTER COUNTY, NEW YORK ELMSFORD 1 Warehouse Lane................. 1957 6,600 100.0 57 56 0.01 8.64 2 Warehouse Lane................. 1957 10,900 100.0 119 113 0.02 10.92 3 Warehouse Lane................. 1957 77,200 100.0 290 279 0.06 3.76 4 Warehouse Lane................. 1957 195,500 97.4 1,936 1,890 0.40 10.17 5 Warehouse Lane................. 1957 75,100 97.1 774 706 0.16 10.61 6 Warehouse Lane................. 1982 22,100 100.0 513 511 0.11 23.21 - ------------------------------------------------------------------------------------------------------------------------------ TOTAL INDUSTRIAL/WAREHOUSE PROPERTIES 387,400 98.1 3,689 3,555 0.76 9.70 - ------------------------------------------------------------------------------------------------------------------------------ TOTAL OFFICE, OFFICE/FLEX, AND INDUSTRIAL/WAREHOUSE PROPERTIES 26,649,521 96.8 484,740 465,843 100.0 19.14 ============================================================================================================================== 2000 AVERAGE TENANTS LEASING 10% EFFECTIVE OR MORE OF NET RENT RENTABLE AREA PER PROPERTY PER SQ. FT. PROPERTY AS OF LOCATION ($)(5)(6) 12/31/00 (6) - ------------------------------------------------------------------------------------------------------------- WESTCHESTER COUNTY, NEW YORK ELMSFORD 1 Warehouse Lane................. 8.48 JP Trucking Service Center Inc. (100%) 2 Warehouse Lane................. 10.37 RJ Bruno Roofing Inc. (55%), Teleport Communications Group (41%) 3 Warehouse Lane................. 3.61 United Parcel Service (100%) 4 Warehouse Lane................. 9.93 San Mar Laboratories Inc. (63%), Westinghouse Air Brake Co. Inc. (14%) 5 Warehouse Lane................. 9.68 Great Spring Waters of America (48%), Chamart Exclusives Inc. (16%), E & H Tire Buying Service Inc. (11%) 6 Warehouse Lane................. 23.12 Conway Central Express (100%) - ------------------------------------------------------------------------------------------------------------- TOTAL INDUSTRIAL/WAREHOUSE PROPERTIES 9.35 - ------------------------------------------------------------------------------------------------------------- TOTAL OFFICE, OFFICE/FLEX, AND INDUSTRIAL/WAREHOUSE PROPERTIES 18.40 =============================================================================================================
(1) Based on all leases in effect as of December 31, 2000. (2) Total base rent for 2000, 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 2000 minus total 2000 amortization of tenant improvements, leasing commissions and other concessions and costs, determined in accordance with GAAP. (4) Base rent for 2000 divided by net rentable square feet leased at December 31, 2000. For those properties acquired or placed in service during 2000, amounts are annualized, as per Note 7. (5) Effective rent for 2000 divided by net rentable square feet leased at December 31, 2000. For those properties acquired or placed in service during 2000, amounts are annualized, as per Note 7. (6) Excludes space leased by the Company. (7) As this property was acquired or placed in service by the Company during 2000, the amounts represented in 2000 base rent and 2000 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 2000 average base rent per sq. ft. and 2000 average effective rent per sq. ft. for this property have been calculated by taking 2000 base rent and 2000 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, 2000. 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 2000. (8) The property was sold by the Company in 2000. (9) Calculation based on square feet in service as of December 31, 2000. ---------------------------------------------- 34 RETAIL PROPERTIES The Company owned two stand-alone retail properties as of December 31, 2000, as 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. 2000 total base rent for the property, calculated in accordance with GAAP, was approximately $345,558. 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 Friday's 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. 2000 total base rent for the property, calculated in accordance with GAAP, was approximately $186,241. LAND LEASES The Company owned three land parcels, which were leased as of December 31, 2000, as 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. 2000 total base rent under this lease, calculated in accordance with GAAP, was approximately $143,972. 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 2018. 2000 total base rent under this lease, calculated in accordance with GAAP, was approximately $97,744. 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. 2000 total base rent under this lease, calculated in accordance with GAAP, was approximately $260,750. MULTI-FAMILY RESIDENTIAL PROPERTIES The Company owned two multi-family residential properties, as of December 31, 2000, as 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 $753 per unit during 2000 and was approximately 97.5 percent leased as of December 31, 2000. The property had 2000 total base rent of approximately $2.9 million, which represented approximately 0.6 percent of the Company's 2000 total base rent. The average occupancy rate for the property in each of 2000, 1999 and 1998 was 96.8 percent, 97.1 percent and 96.0 percent, respectively. 35 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. The property had an average monthly rental rate of approximately $1,658 per unit during 2000 and was 97.0 percent leased as of December 31, 2000. The property also has retail space. The property had 2000 total base rent of approximately $2.5 million, which represented approximately 0.5 percent of the Company's 2000 total base rent. The average occupancy rate for the property in each of 2000, 1999 and 1998 was 96.5 percent, 96.8 percent and 96.4 percent, respectively. OCCUPANCY The table below sets forth the year-end percentages of rentable square feet leased in the Company's in-service Consolidated Properties for the last five years:
Percentage of Year ended December 31, Square Feet Leased (%) - ---------------------------------------------------------------------------------------------------- 2000 96.8 1999 96.5 1998 96.6 1997 95.8 1996 96.4
36 SIGNIFICANT TENANTS The following table sets forth a schedule of the Company's 20 largest tenants for the Consolidated Properties as of December 31, 2000, based upon annualized base rents:
Percentage of Annualized Company Square Percentage of Year of Number of Base Rental Annualized Base Feet Total Company Lease Properties Revenue ($) (1) Rental Revenue (%) Leased Leased Sq. Ft. (%) Expiration - ---------------------------------------------------------------------------------------------------------------------------------- AT&T Wireless Services 2 8,527,197 1.8 395,955 1.6 2007 (2) Donaldson, Lufkin & Jenrette Securities Corp. 1 8,316,096 1.7 271,953 1.1 2011 Keystone Mercy Health Plan 3 7,429,219 1.6 325,843 1.3 2015 (3) AT&T Corporation 2 7,268,746 1.5 450,278 1.8 2009 (4) Prentice-Hall Inc. 1 6,744,495 1.4 474,801 1.9 2014 IBM Corporation 3 6,390,275 1.3 361,688 1.4 2007 (5) Toys `R' Us - NJ, Inc. 1 5,342,672 1.1 242,518 1.0 2012 Waterhouse Securities, Inc. 1 5,253,555 1.1 184,222 0.7 2015 Nabisco Inc. 3 5,183,132 1.1 310,243 1.2 2005 (6) American Institute of Certified Public Accountants 1 4,981,357 1.0 249,768 1.0 2012 Allstate Insurance Company 9 4,727,383 1.0 224,321 0.9 2009 (7) Board of Gov./Federal Reserve 1 4,705,391 1.0 117,008 0.5 2009 (8) Winston & Strawn 1 4,381,770 0.9 108,100 0.4 2003 Dean Witter Trust Company 1 4,319,507 0.9 221,019 0.9 2008 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 Operations, Inc. 1 3,796,680 0.8 94,917 0.4 2006 Regus Business Centre Corp. 3 3,680,880 0.8 107,805 0.4 2011(10) Bank of Tokyo - Mitsubishi Ltd. 1 3,378,924 0.7 137,076 0.5 2009 Bankers Trust Harborside Inc. 1 3,272,500 0.7 385,000 1.5 2003 - ---------------------------------------------------------------------------------------------------------------------------------- Totals 105,730,457 22.1 5,030,549 19.9 ==================================================================================================================================
(1) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, 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) 12,150 square feet expire September 2004; 345,799 square feet expire March 2007; 38,006 square feet expire June 2007. (3) 22,694 square feet expire January 2003; 303,149 square feet expire April 2015. (4) 63,278 square feet expire May 2004; 387,000 square feet expire January 2009. (5) 28,289 square feet expire January 2002; 85,000 square feet expire December 2005; 248,399 square feet expire December 2007. (6) 9,865 square feet expire September 2001; 300,378 square feet expire December 2005. (7) 18,882 square feet expire April 2003; 4,398 square feet expire January 2004; 36,305 square feet expire January 2005; 23,024 square feet expire October 2005; 22,444 square feet expire July 2006; 6,108 square feet expire August 2006; 70,517 square feet expire June 2007; 31,143 square feet expire April 2008; 11,500 square feet expire April 2009. (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) 28,000 square feet expire August 2010; 38,930 square feet expire April 2011; 40,875 square feet expire August 2011. 37 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, 2001, 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 (%) - ------------------------------------------------------------------------------------------------------------------------------ 2001.......... 531 2,639,934 10.4 43,613,737 16.52 9.2 2002.......... 515 3,150,437 12.4 56,082,268 17.80 11.8 2003.......... 506 3,831,520 15.1 67,498,472 17.62 14.2 2004.......... 350 2,378,899 9.4 45,239,146 19.02 9.5 2005.......... 346 3,167,520 12.5 62,884,809 19.85 13.2 2006.......... 163 1,899,748 7.5 38,795,616 20.42 8.1 2007.......... 72 1,565,437 6.2 32,235,634 20.59 6.8 2008.......... 51 1,149,547 4.5 19,628,343 17.07 4.1 2009.......... 39 1,113,494 4.4 21,644,393 19.44 4.5 2010.......... 77 1,167,775 4.6 23,066,952 19.75 4.8 2011.......... 27 1,010,078 4.0 22,213,067 21.99 4.7 2012 and thereafter 40 2,301,556 9.0 43,724,798 19.00 9.1 - ------------------------------------------------------------------------------------------------------------------------------ Totals/Weighted Average 2,717 25,375,945 (4) 100.0 476,627,235 18.78 100.0 ==============================================================================================================================
(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, 2000. (3) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, 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 25,375,945 95.2% Square footage used for corporate offices, management offices, building use, retail tenants, food services, other ancillary service tenants and occupancy adjustments 426,862 1.6 Square footage unleased 864,014 3.2 ----------- -------- Total net rentable square footage (does not include residential, land lease, retail or not-in-service properties) 26,666,821 100.0% ========== ======
38 SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES The following table sets forth a schedule of the lease expirations for the office properties beginning January 1, 2001, 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 (%) - ------------------------------------------------------------------------------------------------------------------------------- 2001.......... 436 1,996,939 9.6 36,827,326 18.44 8.7 2002.......... 410 2,318,146 11.1 47,490,669 20.49 11.2 2003.......... 422 3,152,850 15.2 60,794,043 19.28 14.3 2004.......... 293 1,814,213 8.7 38,785,904 21.38 9.2 2005.......... 290 2,676,685 12.9 56,812,992 21.23 13.4 2006.......... 137 1,554,837 7.5 33,508,335 21.55 7.9 2007.......... 64 1,430,006 6.9 30,260,900 21.16 7.1 2008.......... 45 964,500 4.6 18,204,342 18.87 4.3 2009.......... 26 971,232 4.7 19,654,067 20.24 4.6 2010.......... 53 855,944 4.1 18,361,508 21.45 4.3 2011.......... 24 949,167 4.6 21,495,631 22.65 5.1 2012 and thereafter 35 2,115,868 10.1 41,494,249 19.61 9.9 - ------------------------------------------------------------------------------------------------------------------------------- Totals/Weighted Average 2,235 20,800,387 100.0 423,689,966 20.37 100.0 ===============================================================================================================================
(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, 2000. (3) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, 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: OFFICE/FLEX PROPERTIES The following table sets forth a schedule of the lease expirations for the office/flex properties beginning January 1, 2001, 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 (%) - ------------------------------------------------------------------------------------------------------------------------------- 2001.......... 89 632,213 15.1 6,677,238 10.56 13.7 2002.......... 103 785,851 18.8 8,090,847 10.30 16.6 2003.......... 80 580,696 13.9 6,203,311 10.68 12.7 2004.......... 46 355,266 8.5 3,957,742 11.14 8.1 2005.......... 53 477,681 11.4 5,889,941 12.33 12.1 2006.......... 26 344,911 8.3 5,287,281 15.33 10.8 2007.......... 8 135,431 3.2 1,974,734 14.58 4.0 2008.......... 6 185,047 4.4 1,424,001 7.70 2.9 2009.......... 12 130,462 3.1 1,884,126 14.44 3.9 2010.......... 24 311,831 7.5 4,705,444 15.09 9.6 2011.......... 3 60,911 1.5 717,436 11.78 1.5 2012 and thereafter 4 177,688 4.3 1,965,549 11.06 4.1 - ------------------------------------------------------------------------------------------------------------------------------- Totals/Weighted Average 454 4,177,988 100.0 48,777,650 11.67 100.0 ===============================================================================================================================
(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, 2000. (3) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, 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 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, 2001, 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 (%) - -------------------------------------------------------------------------------------------------------------------------------- 2001.......... 6 10,782 2.8 109,173 10.13 3.0 2002.......... 2 46,440 12.2 500,752 10.78 13.5 2003.......... 4 97,974 25.8 501,118 5.11 13.5 2004.......... 10 200,120 52.6 2,300,500 11.50 62.2 2005.......... 3 13,154 3.5 181,876 13.83 4.9 2009.......... 1 11,800 3.1 106,200 9.00 2.9 - -------------------------------------------------------------------------------------------------------------------------------- Totals/Weighted Average 26 380,270 100.0 3,699,619 9.73 100.0 ================================================================================================================================
(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, 2000. (3) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, 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, 2001, 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 ($) Leases ($) 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 2000 billings times 12. For leases whose rent commences after January 1, 2001, 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. 41 INDUSTRY DIVERSIFICATION The following table lists the Company's 30 largest industry classifications based on annualized contractual base rent of the Consolidated Properties:
Annualized Percentage of Percentage of Base Rental Company Square Total Company Revenue Annualized Base Feet Leased Industry Classification (3) ($) (1) (2) Rental Revenue (%) Leased Sq. Ft. (%) - --------------------------------------------------------------------------------------------------------------------------------- Securities, Commodity Contracts & Other Financial 54,293,717 11.4 2,333,149 9.2 Manufacturing 45,232,970 9.5 2,733,304 10.8 Computer System Design Svcs. 33,965,877 7.1 1,799,904 7.1 Telecommunications 32,056,149 6.7 1,863,008 7.3 Insurance Carriers & Related Activities 31,246,470 6.6 1,607,184 6.3 Legal Services 28,655,988 6.0 1,280,166 5.0 Health Care & Social Assistance 21,199,594 4.5 1,079,556 4.3 Credit Intermediation & Related Activities 19,966,062 4.2 1,173,198 4.6 Wholesale Trade 17,090,086 3.6 1,254,193 4.9 Accounting/Tax Prep. 16,191,496 3.4 762,021 3.0 Other Professional 15,709,854 3.3 897,542 3.5 Retail Trade 15,304,387 3.2 877,279 3.5 Information Services 13,485,944 2.8 637,787 2.5 Publishing Industries 12,780,221 2.7 560,880 2.2 Arts, Entertainment & Recreation 10,873,673 2.3 742,323 2.9 Real Estate & Rental & Leasing 10,441,206 2.2 481,484 1.9 Public Administration 10,196,985 2.1 353,072 1.4 Other Services (except Public Administration) 9,973,705 2.1 720,267 2.8 Advertising/Related Services 9,059,880 1.9 422,451 1.7 Scientific Research/Development 9,004,156 1.9 516,192 2.0 Management/Scientific 7,713,798 1.6 394,625 1.6 Management of Companies & Finance 6,846,791 1.4 351,868 1.4 Transportation 6,534,616 1.4 449,769 1.8 Data Processing Services 5,774,618 1.2 268,770 1.1 Architectural/Engineering 5,268,844 1.1 302,525 1.2 Construction 4,481,491 0.9 252,042 1.0 Educational Services 3,885,332 0.8 214,446 0.9 Utilities 3,621,901 0.8 177,871 0.7 Admin. & Support, Waste Mgt. & Remediation Svc. 3,556,598 0.8 239,164 0.9 Specialized Design Services 3,488,148 0.7 164,620 0.7 Other 8,726,678 1.8 465,285 1.8 - ------------------------------------------------------------------------------------------------------------------------------ Totals 476,627,235 100.0 25,375,945 100.0 ==============================================================================================================================
(1) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, 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 has replaced the Standard Industrial Code (SIC) system. 42 MARKET DIVERSIFICATION The following table lists the Company's 25 markets (MSAs), based on annualized contractual base rent of the Consolidated Properties:
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 82,717,384 17.4 4,530,091 17.0 New York, NY (Westchester-Rockland Counties) 80,086,544 16.8 4,696,178 17.6 Newark, NJ (Essex-Morris-Union Counties) 71,596,650 15.0 3,444,598 12.9 Jersey City, NJ 42,609,281 8.9 2,094,470 7.8 Philadelphia, PA-NJ 37,954,991 8.0 2,710,346 10.2 Washington, DC-MD-VA 19,253,047 4.0 616,549 2.3 Denver, CO 17,302,628 3.6 1,007,931 3.8 Dallas, TX 15,516,855 3.3 959,463 3.6 Middlesex-Somerset-Hunterdon, NJ 15,343,278 3.2 791,051 3.0 Trenton, NJ (Mercer County) 13,423,461 2.8 672,365 2.5 San Francisco, CA 12,594,371 2.6 450,891 1.7 San Antonio, TX 12,018,130 2.5 940,302 3.5 Stamford-Norwalk, CT 9,369,016 2.0 527,250 2.0 Houston, TX 8,888,789 1.9 700,008 2.6 Monmouth-Ocean, NJ 7,375,329 1.5 577,423 2.2 Nassau-Suffolk, NY 5,762,698 1.2 261,849 1.0 Phoenix-Mesa, AZ 5,535,201 1.2 416,967 1.6 Tampa-St. Petersburg-Clearwater, FL 3,869,760 0.8 297,429 1.1 Boulder-Longmont, CO 3,600,741 0.8 270,421 1.0 Bridgeport, CT 3,230,808 0.7 145,487 0.5 Colorado Springs, CO 2,832,002 0.6 209,987 0.8 Dutchess County, NY 2,201,156 0.5 118,727 0.4 Atlantic-Cape May, NJ 1,339,776 0.3 80,344 0.3 Des Moines, IA 1,163,019 0.2 72,265 0.3 Fort Worth-Arlington, TX 1,042,320 0.2 74,429 0.3 - ------------------------------------------------------------------------------------------------------------------------------ Totals 476,627,235 100.0 26,666,821 100.0 ==============================================================================================================================
(1) Annualized base rental revenue is based on actual December 2000 billings times 12. For leases whose rent commences after January 1, 2001, 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. 43 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 the Properties is subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 44 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY 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, 2000 and 1999, respectively:
For the Year Ended December 31, 2000: HIGH LOW CLOSE ---- --- ----- First Quarter $26.6250 $22.7500 $25.5000 Second Quarter $28.4375 $24.4375 $25.6875 Third Quarter $28.6250 $25.0625 $28.1875 Fourth Quarter $28.8750 $25.7500 $28.5625 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
On February 15, 2001, the closing Common Stock sales price on the NYSE was $27.35 per share. HOLDERS On February 15, 2001, the Company had 426 common shareholders of record. RECENT SALES OF UNREGISTERED SECURITIES The Company did not issue any unregistered securities in the year ended December 31, 2000. DIVIDENDS AND DISTRIBUTIONS During the year ended December 31, 2000, the Company declared four quarterly common stock dividends and common unit distributions in the amounts of $0.58, $0.58, $0.61 and $0.61 per share and common unit from the first to the fourth quarter, respectively. During the year ended December 31, 1999, the Company declared four quarterly common stock dividends and common unit distributions in the amounts of $0.55, $0.55, $0.58 and $0.58 per share and common unit from the first to the fourth quarter, respectively. The declaration and payment of dividends and distributions will continue to be determined by the Board of Directors in light of conditions then existing, including the Company's earnings, financial condition, capital requirements, applicable legal restrictions and other factors. 45 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, 2000, 1999, 1998, 1997 and 1996, 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 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ Total revenues $ 576,153 $ 551,484 $ 493,699 $ 249,801 $ 95,472 Operating and other expenses $ 172,146 $ 168,651 $ 150,448 $ 75,353 $ 29,662 General and administrative $ 23,276 $ 25,480 $ 24,828 $ 15,659 $ 5,800 Depreciation and amortization $ 92,088 $ 87,209 $ 78,916 $ 36,825 $ 14,731 Interest expense $ 105,394 $ 102,960 $ 88,043 $ 39,078 $ 13,758 Non-recurring charges $ 37,139 $ 16,458 $ -- $ 46,519 -- Income before minority interests and extraordinary item $ 231,463 $ 152,683 $ 151,464 $ 36,367 $ 37,179 Income before extraordinary item $ 185,338 $ 119,739 $ 118,951 $ 4,988 $ 32,419 Basic earnings per share - before extraordinary item $ 3.18 $ 2.05 $ 2.13 $ 0.13 $ 1.76 Diluted earnings per share - before extraordinary item $ 3.10 $ 2.04 $ 2.11 $ 0.12 $ 1.73 Dividends declared per common share $ 2.38 $ 2.26 $ 2.10 $ 1.90 $ 1.75 Basic weighted average shares outstanding 58,338 58,385 55,840 39,266 18,461 Diluted weighted average shares outstanding 73,070 67,133 63,893 44,156 21,436 BALANCE SHEET DATA December 31, IN THOUSANDS 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ Rental property, before accumulated depreciation and amortization $ 3,704,354 $ 3,654,845 $ 3,467,799 $ 2,629,616 $ 853,352 Total assets $ 3,676,977 $ 3,629,601 $ 3,452,194 $ 2,593,444 $ 1,026,328 Total debt $ 1,628,512 $ 1,490,175 $ 1,420,931 $ 972,650 $ 268,010 Total liabilities $ 1,774,239 $ 1,648,844 $ 1,526,974 $ 1,056,759 $ 297,985 Minority interests $ 449,448 $ 538,875 $ 501,313 $ 379,245 $ 26,964 Stockholders' equity $ 1,453,290 $ 1,441,882 $ 1,423,907 $ 1,157,440 $ 701,379 OTHER DATA Year Ended December 31, IN THOUSANDS 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ Cash flows provided by operating activities $ 180,529 $ 243,638 $ 208,761 $ 98,142 $ 46,823 Cash flows provided by (used in) investing activities $ 6,189 $ (195,178) $ (749,067) $(939,501) $ (307,752) Cash flows (used in) provided by financing activities $ (182,210) $ (45,598) $ 543,411 $ 639,256 $ 464,769 Funds from operations (1), before distributions to preferred unitholders $ 262,071 $ 244,240 $ 216,949 $ 111,752 $ 45,220 Funds from operations (1), after distributions to preferred unitholders $ 246,630 $ 228,764 $ 200,636 $ 110,864 $ 45,220
- ------------------------ (1) The Company considers funds from operations (after adjustment for straight-lining of rents and non-recurring charges) 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 items, and sales of depreciable rental 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 and non-recurring charges. 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. 46 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, 2000 ("2000"), as compared to the year ended December 31, 1999 ("1999"), and for 1999, as compared to the year ended December 31, 1998 ("1998"), make reference to the following: (i) the effect of the "Same-Store Properties," which represents all in-service properties owned by the Company at December 31, 1998, excluding Dispositions as defined below (for the 2000 versus 1999 comparison) and which represents all in-service properties owned by the Company at December 31, 1997, excluding Dispositions as defined below (for the 1999 versus 1998 comparison), (ii) the effect of the "Acquired Properties," which represents all properties acquired or placed in service by the Company from January 1, 1999 through December 31, 2000 (for the 2000 versus 1999 comparison) and 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 (iii) the effect of the "Dispositions", which represents results for each period for those rental properties sold by the Company during the respective periods. YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999
Year Ended December 31, Dollar Percent (DOLLARS IN THOUSANDS) 2000 1999 Change Change - ---------------------------------------------------------------------------------------------------------------------- REVENUE FROM RENTAL OPERATIONS: Base rents $491,193 $469,853 $21,340 4.5% Escalations and recoveries from tenants 58,488 62,182 (3,694) (5.9) Parking and other 15,325 15,915 (590) (3.7) - ---------------------------------------------------------------------------------------------------------------------- Sub-total 565,006 547,950 17,056 3.1 Equity in earnings of unconsolidated joint ventures 8,055 2,593 5,462 210.6 Interest income 3,092 941 2,151 228.6 - ---------------------------------------------------------------------------------------------------------------------- Total revenues 576,153 551,484 24,669 4.5 - ---------------------------------------------------------------------------------------------------------------------- PROPERTY EXPENSES: Real estate taxes 59,400 57,382 2,018 3.5 Utilities 42,035 41,580 455 1.1 Operating services 70,711 69,689 1,022 1.5 - ---------------------------------------------------------------------------------------------------------------------- Sub-total 172,146 168,651 3,495 2.1 General and administrative 23,276 25,480 (2,204) (8.6) Depreciation and amortization 92,088 87,209 4,879 5.6 Interest expense 105,394 102,960 2,434 2.4 Non-recurring charges 37,139 16,458 20,681 125.7 - ---------------------------------------------------------------------------------------------------------------------- Total expenses 430,043 400,758 29,285 7.3 - ---------------------------------------------------------------------------------------------------------------------- Income before gain on sales of rental property and minority interests 146,110 150,726 (4,616) (3.1) Gain on sales of rental property 85,353 1,957 83,396 4,261.4 - ---------------------------------------------------------------------------------------------------------------------- Income before minority interests 231,463 152,683 78,780 51.6 MINORITY INTERESTS: Operating partnership 41,053 32,865 8,188 24.9 Partially-owned properties 5,072 79 4,993 6,320.3 - ---------------------------------------------------------------------------------------------------------------------- Net income $185,338 $119,739 $65,599 54.8% ======================================================================================================================
47 The following is a summary of the changes in revenue from rental operations and property expenses divided into Same-Store Properties, Acquired Properties and Dispositions (dollars in thousands):
TOTAL COMPANY SAME-STORE PROPERTIES ACQUIRED PROPERTIES DISPOSITIONS ------------- --------------------- ------------------- ------------ Dollar Percent Dollar Percent Dollar Percent Dollar Percent Change Change Change Change Change Change Change Change - -------------------------------------------------------------------------------------------------------------------- REVENUE FROM RENTAL OPERATIONS: Base rents $21,340 4.5% $16,615 3.5% $21,429 4.6% $(16,704) (3.6)% Escalations and recoveries from from tenants (3,694) (5.9) (577) (0.9) 1,602 2.6 (4,719) (7.6) Parking and other (590) (3.7) (111) (0.7) 150 0.9 (629) (3.9) - -------------------------------------------------------------------------------------------------------------------- Total $17,056 3.1% $15,927 2.9% $23,181 4.2% $(22,052) (4.0)% ==================================================================================================================== PROPERTY EXPENSES: Real estate taxes $ 2,018 3.5% $ 1,267 2.2% $ 2,287 4.0% $ (1,536) (2.7)% Utilities 455 1.1 752 1.8 1,501 3.6 (1,798) (4.3) Operating services 1,022 1.5 664 1.0 3,359 4.8 (3,001) (4.3) - -------------------------------------------------------------------------------------------------------------------- Total $ 3,495 2.1% $ 2,683 1.6% $ 7,147 4.2% $ (6,335) (3.7)% ==================================================================================================================== OTHER DATA: Number of Consolidated Properties 255 237 18 7 Square feet (in thousands) 26,667 24,886 1,781 1,949
Base rents for the Same-Store Properties increased $16.6 million, or 3.5 percent, for 2000 as compared to 1999, due primarily to rental rate increases in 2000. Escalations and recoveries from tenants for the Same-Store Properties decreased $0.6 million, or 0.9 percent, for 2000 over 1999, due to the recovery of a decreased amount of total property expenses. Parking and other income for the Same-Store Properties decreased $0.1 million, or 0.7 percent, due primarily to fewer lease termination fees in 2000. Real estate taxes on the Same-Store Properties increased $1.3 million, or 2.2 percent, for 2000 as compared to 1999, due primarily to property tax rate increases in certain municipalities in 2000. Utilities for the Same-Store Properties increased $0.8 million, or 1.8 percent, for 2000 as compared to 1999, due primarily to increased rates. Operating services for the Same-Store Properties increased $0.7 million, or 1.0 percent, due primarily to an increase in maintenance costs in 2000. Equity in earnings of unconsolidated joint ventures increased $5.5 million, or 210.6 percent, for 2000 as compared to 1999. This is due primarily to properties developed by joint ventures being placed in service in 2000 and higher occupancies (see Note 4 to the Financial Statements). Interest income increased $2.2 million, or 228.6 percent, for 2000 as compared to 1999. This increase was due primarily to the effect of net proceeds from certain property sales being invested in cash and cash equivalents for the period of time prior to which such proceeds were reinvested, as well as income from mortgages receivable in 2000. General and administrative decreased by $2.2 million, or 8.6 percent, for 2000 as compared to 1999. This decrease is due primarily to decreased payroll and related costs in 2000. Depreciation and amortization increased by $4.9 million, or 5.6 percent, for 2000 over 1999. Of this increase, $5.4 million, or 6.2 percent, is attributable to the Same-Store Properties, and $3.8 million, or 4.4 percent, is due to the Acquired Properties, partially offset by a decrease of $4.3 million, or 5.0 percent, due to the Dispositions. Interest expense increased $2.4 million, or 2.4 percent, for 2000 as compared to 1999. This increase is due primarily to the replacement in March 1999 of short-term credit facility borrowings with long-term fixed rate unsecured notes and increase in LIBOR in 2000 over 1999. 48 Non-recurring charges of $37.1 million were incurred in 2000 as a result of costs associated with the termination of the Prentiss merger agreement (see Note 3 to the Financial Statements) in September 2000 and costs associated with the resignations of Brant Cali and John R. Cali (see Note 14 to the Financial Statements) in June 2000. 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 sales of rental property and minority interests decreased to $146.1 million in 2000 from $150.7 million in 1999. The decrease of approximately $4.6 million is due to the factors discussed above. Net income increased by $65.6 million, from $119.7 million in 1999 to $185.3 million in 2000. This increase was a result of a gain on sales of rental property of $85.4 million in 2000. This was partially offset by a decrease in income before gain on sales of rental property and minority interests of $4.6 million in 2000 as compared to 1999, a gain on sales of rental property of $2.0 million in 1999, and an increase in minority interests of $13.2 million in 2000. YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
Year Ended December 31, Dollar Percent (DOLLARS 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 sales of rental property, Minority interests and extraordinary item 150,726 151,464 (738) (0.5) Gain on sales 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% ======================================================================================================================
49 The following is a summary of changes in revenue from rental operations and property expenses divided into Same-Store Properties, Acquired Properties and Dispositions (dollars in thousands):
TOTAL COMPANY SAME-STORE PROPERTIES ACQUIRED 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% $10,007 2.4% $32,519 7.6% $(201) (0.1)% Escalations and recoveries from from tenants 10,201 19.6 4,800 9.2 5,404 10.4 (3) 0.0 Parking and other 5,203 48.6 2,585 24.1 2,601 24.3 17 0.2 - -------------------------------------------------------------------------------------------------------------------- Total $57,729 11.8% $17,392 3.6% $40,524 8.3% $(187) (0.1)% ==================================================================================================================== PROPERTY EXPENSES: Real estate taxes $ 9,085 18.8% $ 3,300 6.8% $ 5,817 12.1% $ (32) (0.1)% Utilities 3,140 8.2 400 1.0 2,738 7.2 2 0.0 Operating services 5,978 9.4 (165) (0.3) 6,210 9.8 (67) (0.1) - -------------------------------------------------------------------------------------------------------------------- Total $18,203 12.1% $ 3,535 2.4% $14,765 9.8% $ (97) (0.1)% ==================================================================================================================== OTHER DATA: Number of Consolidated Properties 253 187 66 2 Square feet (in thousands) 27,383 21,775 5,608 190
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 increased lease termination fees 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 $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. 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 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). 50 Income before gain on sales 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 sales of rental property of $1.9 million in 1999. These were partially offset by a decrease in income before gain on sales of rental property, minority interests and extraordinary item of $0.8 million in 2000 as compared to 1999 and an increase in minority interests of $0.4 million. LIQUIDITY AND CAPITAL RESOURCES STATEMENT OF CASH FLOWS During the year ended December 31, 2000, the Company generated $180.5 million in cash flows from operating activities, and together with $723.0 million in borrowings from the Company's senior unsecured notes and revolving credit facilities, $292.9 million in proceeds from sales of rental property, $13.3 million in distributions received from unconsolidated joint ventures, $2.5 million in proceeds from stock options exercised and $0.5 million from restricted cash, used an aggregate of approximately $1.2 billion to acquire properties and land parcels and pay for other tenant and building improvements totaling $268.2 million, repay outstanding borrowings on its revolving credit facilities and other mortgage debt of $585.0 million, pay quarterly dividends and distributions of $172.1 million, invest $17.6 million in unconsolidated joint ventures, distribute $88.7 million to minority interest in partially-owned properties, issue mortgage note receivables of $14.7 million, pay financing costs of $6.4 million, repurchase 2,026,300 shares of its outstanding common stock for $55.5 million and increase the Company's cash and cash equivalents by $4.5 million. CAPITALIZATION The Company has a focused strategy geared to attractive opportunities in high-barrier-to-entry markets, primarily predicated on the Company's strong presence in the Northeast region and, to a lesser extent, certain markets in California. The Company plans to sell substantially all of its properties located in the Southwestern and Western regions, using such proceeds to invest in property acquisitions and development projects in its core Northeast markets, as well as to repay debt and fund stock repurchases. During 2000, the Company sold three of its office properties located in the Southwest and Western regions for aggregate net proceeds of approximately $57.8 million (see Note 3 - "2000 Transactions - Property Sales" to the financial statements.) Currently, the Company is actively seeking to sell 10 office properties located in San Antonio and Houston, Texas. Consistent with its strategy, in the fourth quarter 2000, the Company started construction of a 980,000 square-foot office property, to be known as Plaza 5, at its Harborside Financial Center office complex in Jersey City, Hudson County, New Jersey. The total cost of the project is currently projected to be approximately $260 million and is anticipated to be completed in third quarter 2002. Additionally, in the fourth quarter 2000, the Company, through a joint venture, started construction of a 575,000 square-foot office property, to be known as Plaza 10, on land owned by the joint venture located adjacent to the Company's Harborside complex. The total cost of this project is currently projected to be approximately $140 million and is anticipated to be completed in third quarter 2002. Plaza 10 is 100 percent pre-leased to Charles Schwab for a 15-year term. The lease agreement obligates the Company, among other things, to deliver space to the tenant by required timelines and offers expansion options, at the tenant's election, to additional space in any adjacent Harborside projects. Such options may obligate the Company to construct an additional building at Harborside if vacant space is not available in any of its existing Harborside properties. Should the Company be unable to or choose not to provide such expansion space, the Company could be liable to Schwab for its actual damages, in no event to exceed $15.0 million. The Company expects to finance its funding requirements under both Plazas 5 and 10 projects through drawing on its revolving credit facilities, construction financing, or through joint venture arrangements. 51 On August 6, 1998, the Board of Directors of the Company authorized a Repurchase Program under which the Company was permitted to purchase up to $100.0 million of the Company's outstanding common stock. Under the Repurchase Program, the Company purchased for constructive retirement 1,869,200 shares of its outstanding common stock for an aggregate cost of approximately $52.6 million through September 12, 2000. On September 13, 2000, the Board of Directors authorized an increase to the Repurchase Program under which the Company is permitted to purchase up to an additional $150.0 million of the Company's outstanding common stock above the $52.6 million that had previously been purchased. From that date through February 15, 2001, the Company purchased for constructive retirement 2,098,300 shares of its outstanding common stock for an aggregate cost of approximately $57.5 million under the Repurchase Program. The Company has authorization to repurchase up to an additional $92.5 million of its outstanding common stock which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. As of December 31, 2000, the Company's total indebtedness of $1.6 billion (weighted average interest rate of 7.29 percent) was comprised of $381.0 million of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 7.53 percent) and fixed rate debt of $1.2 billion (weighted average rate of 7.25 percent). As of December 31, 2000, the Company had outstanding borrowings of $348.8 million under its revolving credit facilities (with aggregate borrowing capacity of $900.0 million). The total outstanding borrowings were from the 2000 Unsecured Facility, with no outstanding borrowings under the Prudential Facility. The interest rate on outstanding borrowings under the 2000 Unsecured Facility is currently LIBOR plus 80 basis points. The Company may instead elect an interest rate representing the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. The 2000 Unsecured Facility also requires a 20 basis point facility fee on the current borrowing capacity payable quarterly in arrears. In the event of a change in the Company's unsecured debt rating, the interest and facility fee rate will be changed on a sliding scale. Subject to certain conditions, the Company has the ability to increase the borrowing capacity of the 2000 Unsecured Facility up to $1.0 billion. The 2000 Unsecured Facility matures in June 2003, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the credit line upon exercise. The Company has been notified that the Prudential Facility, which carries an interest rate of 110 basis points over LIBOR and matures in June 2001, will not be renewed. The Company believes that the 2000 Unsecured Facility is sufficient to meet its revolving credit facility needs. The terms of the 2000 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 (as defined) for such period, subject to certain other adjustments. On December 21, 2000, the Operating Partnership issued $15.0 million of 7.835 percent senior unsecured notes due December 15, 2010 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions) of approximately $14.9 million were used primarily to pay down outstanding borrowings under the Prudential Facility, as defined in Note 9 to the Financial Statements. In January 2001, the Operating Partnership issued $300.0 million face amount of 7.75 percent senior unsecured notes due February 15, 2011 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions and discount) of approximately $296.3 million were used to pay down outstanding borrowings under the 2000 Unsecured Facility, as defined in Note 9 to the Financial Statements. The senior unsecured notes were issued at a discount of approximately $1.7 million. The terms of the Operating Partnership's 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. 52 The Company has three investment grade credit ratings. Standard & Poor's Rating Services ("S&P") and Fitch, Inc. ("Fitch") have each assigned their BBB rating to existing and prospective senior unsecured debt of the Operating Partnership. S&P and Fitch 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. As of December 31, 2000, the Company had 229 unencumbered properties, totaling 20.4 million square feet, representing 76.5 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 $1.1 billion 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 in March 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 revolving credit facilities and other debt and equity financing. The Company expects to meet its short-term liquidity requirements generally through its working capital, net cash provided by operating activities and from the 2000 Unsecured 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. Following the Operating Partnership's issuance of $300.0 million in senior unsecured notes in January 2001, the Company's total debt had a weighted average term to maturity of approximately 5.9 years. The Company does not intend to reserve funds to retire the Company's unsecured corporate debt or its 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 debt, preferred stock, and/or obtaining additional mortgage debt, some or all of which may be completed during 2001. 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 90 percent (for taxable years beginning after December 31, 2000) 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 $138.9 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. 53 FUNDS FROM OPERATIONS The Company considers funds from operations ("FFO"), after adjustment for straight-lining of rents and non-recurring charges, 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 items, and sales of depreciable rental 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 and non-recurring charges. Funds from operations for the years ended December 31, 2000, 1999 and 1998, as calculated in accordance with NAREIT's definition as published in October 1999, after adjustment for straight-lining of rents and non-recurring charges, are summarized in the following table (IN THOUSANDS):
Year Ended December 31, 2000 1999 1998 - --------------------------------------------------------------------- --------------- ---------------- --------------- Income before gain on sales of rental property, minority interests and extraordinary item $146,110 $ 150,726 $ 151,464 Add: Real estate-related depreciation and amortization (1) 94,250 89,731 79,169 Gain on sale of land 2,248 -- -- Non-recurring charges 37,139 16,458 -- Deduct: Rental income adjustment for straight-lining of rents (2) (12,604) (12,596) (13,684) Minority interests: partially-owned properties (5,072) (79) -- - --------------------------------------------------------------------- --------------- ---------------- --------------- Funds from operations, after adjustment for straight-lining of rents and non-recurring charges $262,071 $ 244,240 $ 216,949 Deduct: Distributions to preferred unitholders (15,441) (15,476) (16,313) - --------------------------------------------------------------------- --------------- ---------------- --------------- Funds from operations, after adjustment for straight-lining of rents and non-recurring charges, after distributions to preferred unitholders $246,630 $ 228,764 $ 200,636 ===================================================================== =============== ================ =============== Cash flows provided by operating activities $ 180,529 $ 243,638 $ 208,761 Cash flows provided by (used in) investing activities $ 6,189 $(195,178) $(749,067) Cash flows (used in) provided by financing activities $(182,210) $ (45,598) $ 543,411 - --------------------------------------------------------------------- --------------- ---------------- --------------- Basic weighted averages shares/units outstanding (3) 66,392 66,885 63,438 - --------------------------------------------------------------------- --------------- ---------------- --------------- Diluted weighted average shares/units outstanding (3) 73,070 73,769 70,867 - --------------------------------------------------------------------- --------------- ---------------- ---------------
(1) Includes the Company's share from unconsolidated joint ventures of $2,928, $3,166 and $817 for the years ended December 31, 2000, 1999 and 1998. (2) Includes the Company's share from unconsolidated joint ventures of $24, $158 and $109 for the years ended December 31, 2000, 1999 and 1998. (3) See calculations for the amounts presented in the following reconciliation. 54 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, 2000 1999 1998 - --------------------------------------------------------------------- --------------- ---------------- --------------- Basic weighted average shares: 58,338 58,385 55,840 Add: Weighted average common units 8,054 8,500 7,598 - --------------------------------------------------------------------- --------------- ---------------- --------------- Basic weighted average shares/units: 66,392 66,885 63,438 Add: Weighted average preferred units (after conversion to common units) 6,485 6,636 6,974 Stock options 188 241 411 Restricted Stock Awards 5 7 -- Stock Warrants -- -- 44 - --------------------------------------------------------------------- --------------- ---------------- --------------- Diluted weighted average shares/units: 73,070 73,769 70,867 ===================================================================== =============== ================ ===============
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. Such forward-looking statements relate to, without limitation, the Company's future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "anticipate," "estimate" or "continue" or comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate. 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. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. See "Risk Factors" for a discussion of important factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from those presented in the forward-looking statements. 55 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices. In pursuing its business plan, the primary market risk to which the Company is exposed is interest rate risk. Changes in the general level of interest rates prevailing in the financial markets may affect the spread between the Company's yield on invested assets and cost of funds and, in turn, our ability to make distributions or payments to our investors. 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 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, 2000 ranged from LIBOR plus 65 basis points to LIBOR plus 80 basis points. DECEMBER 31, 2000
DEBT, INCLUDING CURRENT PORTION 2001 2002 2003 2004 2005 THEREAFTER TOTAL FAIR VALUE - ------------------------- ---- ---- ---- ---- ---- ---------- ----- ---------- Fixed Rate $7,451 $3,433 $195,674 $312,283 $254,762 $473,891 $1,247,494 $1,240,139 Average Interest Rate 7.43% 8.20% 7.30% 7.34% 7.13% 7.47% 7.34% Variable Rate $348,840 $32,178 $ 381,018 $ 381,018
While the Company has not experienced any significant credit losses, in the event of a significant rising interest rate environment and/or economic downturn, defaults could increase and result in losses to the Company which adversely affect its operating results and liquidity. 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. 56 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 15, 2001. 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 15, 2001. 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 15, 2001. 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 15, 2001. 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, 2000 and 1999 Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements (a) 2. FINANCIAL STATEMENT SCHEDULES Schedule III - Real Estate Investments and Accumulated Depreciation as of December 31, 2000 All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto. 57 (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 Amended and Restated Shareholder Rights Agreement, dated as of March 7, 2000, between Mack-Cali Realty Corporation and EquiServe Trust Company, N.A., as Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K dated March 7, 2000 and incorporated herein by reference). 4.2 Amendment No. 1 to the Amended and Restated Shareholder Rights Agreement, dated as of June 27, 2000, by and among Mack-Cali Realty Corporation and Equiserve Trust Company, N.A. (filed as Exhibit 4.1 to the Company's Form 8-K dated June 27, 2000). 4.3 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). 4.4 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). 58 EXHIBIT NUMBER EXHIBIT TITLE ------ ------------- 4.5 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). 4.6 Supplemental Indenture No. 3 dated as of December 21, 2000, 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 December 21, 2000 and incorporated herein by reference). 4.7 Supplemental Indenture No. 4 dated as of January 29, 2001, 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 January 29, 2001 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 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). 10.4 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). *10.5 Employment Agreement dated as of December 5, 2000 between Michael Grossman and Mack-Cali Realty Corporation. 10.6 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). 10.7 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). 10.8 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). 10.9 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). 59 EXHIBIT NUMBER EXHIBIT TITLE ------ ------------- *10.10 Amendment No. 3 to and Restatement of Revolving Credit Agreement dated as of June 22, 2000, by and among Mack-Cali Realty, L.P. and The Chase Manhattan Bank, Fleet National Bank and Other Lenders Which May Become Parties Thereto with The Chase Manhattan Bank, as administrative agent, Fleet National Bank, as syndication agent, Bank of America, N.A., as documentation agent, Chase Securities Inc. and FleetBoston Robertson Stephens Inc., as arrangers, Bank One, N.A., First Union National Bank and Commerzbank Aktiengesellschaft, as senior managing agents, PNC Bank National Association, as managing agent, and Societe Generale, Dresdner Bank AG, Wells Fargo Bank, National Association, Bank Austria Creditanstalt Corporate Finance, Inc., Bayerische Hypo-und Vereinsbank and Summit Bank, as co-agents. 10.11 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). 10.12 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). 10.13 Termination and Release Agreement, dated September 21, 2000, by and among Mack-Cali Realty Corporation, Mack-Cali Realty, L.P., Prentiss Properties Trust and Prentiss Properties Acquisition Partners, L.P. (filed as Exhibit 10.1 to the Company's Form 8-K dated September 21, 2000 and incorporated herein by reference). 10.14 2000 Employee Stock Option Plan (filed as Exhibit B to the Company's Proxy Statement for its Annual Meeting of Stockholders held on September 11, 2000 and incorporated herein by reference). 10.15 2000 Director Stock Option Plan (filed as Exhibit C to the Company's Proxy Statement for its Annual Meeting of Stockholders held on September 11, 2000 and incorporated herein by reference). *21 Subsidiaries of the Company. *23 Consent of PricewaterhouseCoopers LLP, independent accountants.
(b) Reports on Form 8-K During the fourth quarter of 2000, the Company filed a report on Form 8-K dated November 7, 2000, furnishing under Item 9 certain supplemental data regarding its operations. - ---------------------- *filed herewith 60 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 57 present fairly, in all material respects, the financial position of Mack-Cali Realty Corporation and its subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 14(a)(2) on page 57 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 of America, 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 our opinion. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP New York, New York February 20, 2001 61 MACK-CALI REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) ================================================================================
December 31, ASSETS 2000 1999 - ------------------------------------------------------------------------------------------------------------------- Rental property Land and leasehold interests $ 561,210 $ 549,096 Buildings and improvements 3,026,561 3,014,532 Tenant improvements 110,123 85,057 Furniture, fixtures and equipment 6,460 6,160 - ------------------------------------------------------------------------------------------------------------------- 3,704,354 3,654,845 Less - accumulated depreciation and amortization (309,951) (256,629) - ------------------------------------------------------------------------------------------------------------------- Total rental property 3,394,403 3,398,216 Cash and cash equivalents 13,179 8,671 Investments in unconsolidated joint ventures 101,438 89,134 Unbilled rents receivable 50,499 53,253 Deferred charges and other assets, net 102,655 66,436 Restricted cash 6,557 7,081 Accounts receivable, net of allowance for doubtful accounts of $552 and $672 8,246 6,810 - ------------------------------------------------------------------------------------------------------------------- Total assets $ 3,676,977 $ 3,629,601 =================================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Senior unsecured notes $ 798,099 $ 782,785 Revolving credit facilities 348,840 177,000 Mortgages and loans payable 481,573 530,390 Dividends and distributions payable 43,496 42,499 Accounts payable and accrued expenses 53,608 63,394 Rents received in advance and security deposits 31,146 36,150 Accrued interest payable 17,477 16,626 - ------------------------------------------------------------------------------------------------------------------- Total liabilities 1,774,239 1,648,844 - ------------------------------------------------------------------------------------------------------------------- MINORITY INTERESTS: Operating Partnership 447,523 455,275 Partially-owned properties 1,925 83,600 - ------------------------------------------------------------------------------------------------------------------- Total minority interests 449,448 538,875 - ------------------------------------------------------------------------------------------------------------------- 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, 56,980,893 and 58,446,552 shares outstanding 570 584 Additional paid-in capital 1,513,037 1,549,888 Dividends in excess of net earnings (57,149) (103,902) Unamortized stock compensation (3,168) (4,688) - ------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 1,453,290 1,441,882 - ------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 3,676,977 $ 3,629,601 ===================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 62 MACK-CALI REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) ================================================================================
Years Ended December 31, REVENUES 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------ Base rents $ 491,193 $ 469,853 $ 427,528 Escalations and recoveries from tenants 58,488 62,182 51,981 Parking and other 15,325 15,915 10,712 Equity in earnings of unconsolidated joint ventures 8,055 2,593 1,055 Interest income 3,092 941 2,423 - ------------------------------------------------------------------------------------------------------------------------------ Total revenues 576,153 551,484 493,699 - ------------------------------------------------------------------------------------------------------------------------------ EXPENSES - ------------------------------------------------------------------------------------------------------------------------------ Real estate taxes 59,400 57,382 48,297 Utilities 42,035 41,580 38,440 Operating services 70,711 69,689 63,711 General and administrative 23,276 25,480 24,828 Depreciation and amortization 92,088 87,209 78,916 Interest expense 105,394 102,960 88,043 Non-recurring charges 37,139 16,458 -- - ------------------------------------------------------------------------------------------------------------------------------ Total expenses 430,043 400,758 342,235 - ------------------------------------------------------------------------------------------------------------------------------ Income before gain on sales of rental property, minority interests and extraordinary item 146,110 150,726 151,464 Gain on sales of rental property 85,353 1,957 -- - ------------------------------------------------------------------------------------------------------------------------------ Income before minority interests and extraordinary item 231,463 152,683 151,464 MINORITY INTERESTS: Operating partnership 41,053 32,865 32,513 Partially-owned properties 5,072 79 -- - ------------------------------------------------------------------------------------------------------------------------------ Income before extraordinary item 185,338 119,739 118,951 Extraordinary item - loss on early retirement of debt (net of minority interest's share of $297 in 1998) -- -- (2,373) - ------------------------------------------------------------------------------------------------------------------------------ Net income $ 185,338 $ 119,739 $ 116,578 ============================================================================================================================== BASIC EARNINGS PER SHARE: Income before extraordinary item $ 3.18 $ 2.05 $ 2.13 Extraordinary item - loss on early retirement of debt -- -- (0.04) - ------------------------------------------------------------------------------------------------------------------------------ Net income $ 3.18 $ 2.05 $ 2.09 ============================================================================================================================== DILUTED EARNINGS PER SHARE: Income before extraordinary item $ 3.10 $ 2.04 $ 2.11 Extraordinary item - loss on early retirement of debt -- -- (0.04) - ------------------------------------------------------------------------------------------------------------------------------ Net income $ 3.10 $ 2.04 $ 2.07 ============================================================================================================================== Dividends declared per common share $ 2.38 $ 2.26 $ 2.10 - ------------------------------------------------------------------------------------------------------------------------------ Basic weighted average shares outstanding 58,338 58,385 55,840 - ------------------------------------------------------------------------------------------------------------------------------ Diluted weighted average shares outstanding 73,070 67,133 63,893 - ------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 63 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, 1998 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 Net income -- -- -- 185,338 -- 185,338 Dividends -- -- -- (138,585) -- (138,585) Redemption of common units for shares of common stock 448 5 14,234 -- -- 14,239 Proceeds from stock options exercised 117 1 2,499 -- -- 2,500 Deferred compensation plan for directors -- -- 111 -- -- 111 Amortization of stock compensation -- -- -- -- 1,672 1,672 Adjustment to fair value of restricted stock -- -- 380 -- (283) 97 Cancellation of Restricted Stock Awards (5) -- (131) -- 131 -- Repurchase of common stock (2,026) (20) (55,494) -- -- (55,514) Stock options charge -- -- 1,550 -- -- 1,550 - --------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 2000 56,981 $570 $ 1,513,037 $ (57,149) $(3,168) $1,453,290 =================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 64 MACK-CALI REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) ================================================================================
Years Ended December 31, CASH FLOWS FROM OPERATING ACTIVITIES 2000 1999 1998 - -------------------------------------------------------------------------------------------------------------------------- Net income $ 185,338 $ 119,739 $ 116,578 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 92,088 87,209 78,916 Amortization of stock compensation 1,769 827 -- Amortization of deferred financing costs and debt discount 4,257 3,570 1,580 Stock options charge 1,550 -- -- Equity in earnings of unconsolidated joint ventures (8,055) (2,593) (1,055) Gain on sales of rental property (85,353) (1,957) -- Minority interests 46,125 32,944 32,513 Extraordinary item - loss on early retirement of debt -- -- 2,373 Changes in operating assets and liabilities: Increase in unbilled rents receivable (12,591) (12,412) (13,600) Increase in deferred charges and other assets, net (31,332) (28,893) (17,811) Increase in accounts receivable, net (1,436) (2,882) (192) (Decrease) increase in accounts payable and accrued expenses (9,786) 27,536 2,117 (Decrease) increase in rents received in advance and security deposits (2,896) 6,170 8,585 Increase (decrease) in accrued interest payable 851 14,380 (1,243) - -------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 180,529 $ 243,638 $ 208,761 ========================================================================================================================== CASH FLOWS FROM INVESTING ACTIVITIES - -------------------------------------------------------------------------------------------------------------------------- Additions to rental property $ (268,243) $ (191,507) $ (692,766) Issuance of mortgage note receivable (14,733) -- (20,000) Repayment of mortgage note receivable -- -- 20,000 Investments in unconsolidated joint ventures (17,587) (40,567) (58,844) Distributions from unconsolidated joint ventures 13,338 20,551 1,725 Proceeds from sales of rental property 292,890 17,400 -- Decrease (increase) in restricted cash 524 (1,055) 818 - -------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities $ 6,189 $ (195,178) $ (749,067) ========================================================================================================================== CASH FLOWS FROM FINANCING ACTIVITIES - -------------------------------------------------------------------------------------------------------------------------- Proceeds from senior unsecured notes $ 15,000 $ 782,535 $ -- Proceeds from revolving credit facilities 708,004 372,248 1,375,758 Proceeds from mortgages and loans payable -- 45,500 150,000 Repayments of revolving credit facilities (536,164) (866,848) (826,258) Repayments of mortgages and loans payable (48,817) (264,431) (271,807) Proceeds from minority interest of consolidated partially-owned properties -- 83,600 -- Distributions to minority interest in partially-owned properties (88,672) -- -- Repurchase of common stock (55,514) (27,500) (25,058) Redemption of common units -- -- (3,163) Payment of financing costs (6,394) (7,048) (10,110) Net proceeds from common stock offerings -- -- 288,393 Proceeds from stock options exercised 2,500 1,049 5,475 Proceeds from dividend reinvestment and stock purchase plan -- 32 -- Payment of dividends and distributions (172,153) (164,735) (139,819) - -------------------------------------------------------------------------------------------------------------------------- Net cash (used in) provided by financing activities $ (182,210) $ (45,598) $ 543,411 ========================================================================================================================== Net increase in cash and cash equivalents $ 4,508 $ 2,862 $ 3,105 Cash and cash equivalents, beginning of period $ 8,671 $ 5,809 $ 2,704 - -------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 13,179 $ 8,671 $ 5,809 ==========================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 65 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, 2000, the Company owned or had interests in 267 properties plus developable land (collectively, the "Properties"). The Properties aggregate approximately 28.2 million square feet, and are comprised of 163 office buildings and 91 office/flex buildings totaling approximately 27.8 million square feet (which includes eight office buildings and four office/flex buildings aggregating 1.5 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 11 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. ("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 $162,497 and $99,987 as of December 31, 2000 and 1999, 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 -----------------------------------------------------------------------------------
66 On a periodic basis, management assesses whether there are any indicators that the value of the real estate properties may be impaired. A property's value is impaired only if management's estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. Management does not believe that the value of any of its rental properties is impaired. When assets are identified by management as held for 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. See Note 7. 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 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 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 $3,943, $3,320 and $1,580 for the years ended December 31, 2000, 1999 and 1998, respectively. DEFERRED LEASING COSTS Costs incurred in connection with leases are capitalized and amortized on a straight-line basis over the terms of the related leases and included in depreciation and amortization. Unamortized deferred leasing costs are charged to amortization expense upon early termination of the lease. Certain employees of the 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, $3,704 and $3,509 for the years ended December 31, 2000, 1999 and 1998, respectively. REVENUE RECOGNITION Base rental revenue is recognized on a straight-line basis over the terms of the respective leases. Unbilled rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with the lease agreements. Parking and other revenue includes income from parking spaces leased to tenants, income from tenants for additional services provided by the Company, income from tenants for early lease terminations and income from managing properties for third parties. 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. 67 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 corporate federal income tax on net income that it currently distributes to its shareholders, provided that the Company, for its taxable years beginning prior to January 1, 2001, satisfies certain organizational and operational requirements including the requirement to distribute at least 95 percent of its REIT taxable income to its shareholders. For its taxable years beginning after December 31, 2000, as a result of recent amendments to the Code, the Company will be required to distribute at least 90 percent of its REIT taxable income to its shareholders. Effective January 1, 2001, the Company may elect to treat one or more of its existing or newly created corporate subsidiaries as a taxable REIT subsidiary ("TRS"). In general, a TRS of the Company may perform additional services for tenants of the Company and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the providing to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. The Company has elected to treat certain of its existing and newly created corporate subsidiaries as a TRS. 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, 2000 represents dividends payable to shareholders of record as of January 4, 2001 (56,982,893 shares), distributions payable to minority interest common unitholders (7,963,725 common units) on that same date and preferred distributions payable to preferred unitholders (220,340 preferred units) for the fourth quarter 2000. The fourth quarter 2000 dividends and common unit distributions of $0.61 per share and per common unit, as well as the fourth quarter preferred unit distribution of $17.6046 per preferred unit, were approved by the Board of Directors on December 20, 2000 and paid on January 22, 2001. 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 payable 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 68 per common unit (pro-rated for units issued during the quarter), as well as the fourth quarter preferred unit distribution of $16.8750 per preferred unit, were approved by the Board of Directors on December 17, 1999 and paid on January 21, 2000. UNDERWRITING COMMISSIONS AND COSTS Underwriting commissions and costs incurred in connection with the Company's stock offerings are reflected as a reduction of additional paid-in capital. STOCK OPTIONS The Company accounts for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations ("APB No. 25"). Under APB No. 25, compensation cost is measured as the excess, if any, of the quoted market price of the Company's stock at the date of grant over the exercise price of the option granted. Compensation cost for stock options, if any, is recognized ratably over the vesting period. The Company's policy is to grant options with an exercise price equal to the quoted closing market price of the Company's stock on the business day preceding the grant date. Accordingly, no compensation cost has been recognized under the Company's stock option plans for the granting of stock options. 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. 3. ACQUISITIONS, PROPERTY SALES AND OTHER TRANSACTIONS 2000 TRANSACTIONS OPERATING PROPERTY ACQUISITIONS The Company acquired the following operating properties during the year ended December 31, 2000:
- ----------------------------------------------------------------------------------------------------------------------- Acquisition # of Rentable Investment by Date Property/Portfolio Name Location Bldgs. Square Feet Company (a) - ----------------------------------------------------------------------------------------------------------------------- OFFICE 5/23/00 555 & 565 Taxter Road Elmsford, Westchester County, NY 2 341,108 $42,980 6/14/00 Four Gatehall Drive Parsippany, Morris County, NJ 1 248,480 42,381 - ----------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE PROPERTY ACQUISITIONS: 3 589,588 $85,361 - ----------------------------------------------------------------------------------------------------------------------- OFFICE/FLEX 3/24/00 Two Executive Drive (b) Moorestown, Burlington County, NJ 1 60,800 $ 4,007 7/14/00 915 North Lenola Road (b) Moorestown, Burlington County, NJ 1 52,488 2,542 - ----------------------------------------------------------------------------------------------------------------------- TOTAL OFFICE/FLEX PROPERTY ACQUISITION: 2 113,288 $ 6,549 - ----------------------------------------------------------------------------------------------------------------------- TOTAL OPERATING PROPERTY ACQUISITIONS: 5 702,876 $91,910 =======================================================================================================================
(a) Transactions were funded primarily from net proceeds received in the sale or sales of rental property. (b) The properties were acquired through the exercise of a purchase option obtained in the initial acquisition of the McGarvey portfolio in January 1998. 69 PROPERTIES PLACED IN SERVICE The Company placed in service the following properties through the completion of development during the year ended December 31, 2000:
- ----------------------------------------------------------------------------------------------------------------------- Date Placed # of Rentable Investment by in Service Property Name Location Bldgs. Square Feet Company (a) - ----------------------------------------------------------------------------------------------------------------------- OFFICE 9/01/00 Harborside Plaza 4-A (b) Jersey City, Hudson County, NJ 1 207,670 $61,459 9/15/00 Liberty Corner Corp. Center Bernards Township, Somerset County, NJ 1 132,010 17,430 - ----------------------------------------------------------------------------------------------------------------------- TOTAL PROPERTIES PLACED IN SERVICE: 2 339,680 $78,889 =======================================================================================================================
(a) Transactions were funded primarily through draws on the Company's revolving credit facilities and amounts presented are as of December 31, 2000. (b) Project includes seven-story, 1,100-car parking garage. LAND ACQUISITIONS On January 13, 2000, the Company acquired approximately 12.7 acres of developable land located at the Company's Airport Business Center, Lester, Delaware County, Pennsylvania. The land was acquired for approximately $2,069. On August 24, 2000, the Company entered into a joint venture with SJP Properties Company ("SJP Properties") to form MC-SJP Morris V Realty, LLC and MC-SJP Morris VI Realty, LLC, which acquired approximately 47.5 acres of developable land located in Parsippany, Morris County, New Jersey. The land was acquired for approximately $16,193. The Company accounts for the joint venture on a consolidated basis. PROPERTY SALES The Company sold the following properties during the year ended December 31, 2000:
- ------------------------------------------------------------------------------------------------------------------------------- SALE # OF RENTABLE NET SALES NET BOOK GAIN/ DATE PROPERTY NAME LOCATION BLDGS. SQUARE FEET PROCEEDS VALUE (LOSS) - ------------------------------------------------------------------------------------------------------------------------------- LAND: 02/25/00 Horizon Center Land Hamilton Township, Mercer County, NJ -- 39.1 acres $ 4,180 $ 1,932 $ 2,248 OFFICE: 04/17/00 95 Christopher Columbus Dr. Jersey City, Hudson County, NJ 1 621,900 148,222 80,583 67,639 04/20/00 6900 IH-40 West Amarillo, Potter County, TX 1 71,771 1,467 1,727 (260) 06/09/00 412 Mt. Kemble Avenue Morris Twp., Morris County, NJ 1 475,100 81,981 75,439 6,542 09/21/00 Cielo Center Austin, Travis County, TX 1 270,703 45,785 35,749 10,036 11/15/00 210 South 16th Street (a) Omaha, Douglas County, NE 1 319,535 11,976 12,828 (852) - ------------------------------------------------------------------------------------------------------------------------------- TOTALS: 5 1,759,009 $293,611 $208,258 $85,353 ===============================================================================================================================
(a) In connection with the sale of the Omaha, Nebraska property, the Company provided to the purchaser an $8,750 mortgage loan bearing interest payable monthly at an annual rate of 9.50 percent. The loan is secured by the Omaha, Nebraska property and will mature on November 14, 2003. OTHER EVENTS On June 27, 2000, William L. Mack was appointed Chairman of the Board of Directors and John J. Cali was named Chairman Emeritus of the Board of Directors. Brant Cali resigned as Executive Vice President, Chief Operating Officer and Assistant Secretary of the Company and as a member of the Board of Directors, and John R. Cali resigned as Executive Vice President, Development of the Company. John R. Cali was appointed to the Board of Directors of the Company to take the seat previously held by Brant Cali. See Note 14. On September 21, 2000, the Company and Prentiss Properties Trust, a Maryland REIT ("Prentiss"), mutually agreed to terminate the agreement and plan of merger ("Merger Agreement") dated as of June 27, 2000, among the Company, the Operating Partnership, Prentiss and Prentiss Properties Acquisition Partners, L.P., a Delaware limited partnership of which Prentiss (through a wholly-owned direct subsidiary) is the sole general partner ("Prentiss Partnership"). In connection with such termination, the Company deposited $25,000 into escrow for the benefit of Prentiss and Prentiss Partnership. This cost and approximately $2,911 of other costs associated with the termination of the Merger Agreement are included in non-recurring charges for the year ended December 31, 2000. Simultaneous with the termination, the Company sold to Prentiss its 270,703 square-foot Cielo Center property located in Austin, Travis County, Texas. See "2000 Transactions - Property Sales." 70 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 (e) 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) Transactions were funded primarily through draws on the Company's revolving credit facilities. (b) William L. Mack, Chairman of the Board of Directors of the Company and an equity holder in the Operating Partnership, 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) The Company purchased the land on which this property was constructed, 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. (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. 71 LAND ACQUISITIONS 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, L.L.C. to form MC-SJP Pinson Development, LLC, which acquired vacant land located in Bernards Township, Somerset County, New Jersey. The joint venture subsequently completed construction and placed in service a 132,010 square-foot office building on this site (see "2000 Transactions - Properties Placed in Service"). 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, a former executive officer of the Company and a former member of the Board of Directors of the Company, and certain immediate family members of John J. Cali, Chairman Emeritus 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. 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 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 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. PROPERTY SALES The Company sold the following properties during the year ended December 31, 1999:
- ------------ --------------------------- ---------------------------- -------- ------------ ---------- ---------- --------- SALE # OF RENTABLE NET SALES NET BOOK GAIN/ DATE PROPERTY NAME LOCATION BLDGS. SQUARE FEET PROCEEDS VALUE (LOSS) - ------------ --------------------------- ---------------------------- -------- ------------ ---------- ---------- --------- OFFICE: 11/15/99 400 Alexander Road Princeton, Mercer County, NJ 1 70,550 $8,628 $6,573 $2,055 12/15/99 Beardsley Corporate Center Phoenix, Maricopa County, AZ 1 119,301 8,772 8,870 (98) - ------------ --------------------------- ---------------------------- -------- ------------ ---------- ---------- --------- TOTALS: 2 189,851 $17,400 $15,443 $1,957 ===================================================================== ======== ============ ========== ========== =========
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 $140, $149 and $114 in fees for such services in the years ended December 31, 2000, 1999 and 1998, respectively. 72 HPMC 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. 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. 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. CONTINENTAL GRAND II Continental Grand II is a 239,085 square-foot office building located in El Segundo, Los Angeles County, California, which was constructed and placed in service by the venture. SUMMIT RIDGE Summit Ridge is an office complex of three one-story buildings aggregating 133,841 square feet located in San Diego, San Diego County, California, which was constructed and placed in service by the venture. In January 2001, the venture sold the office complex for approximately $17,450. LAVA RIDGE Lava Ridge is an office complex of three two-story buildings aggregating 183,200 square feet located in Roseville, Placer County, California, which was constructed and placed in service by the venture. PENINSULA GATEWAY Peninsula Gateway is a parcel of land purchased from the city of Daly City, located in San Mateo County, California, upon which the venture has commenced construction of an office building and theater and retail complex aggregating 471,379 square feet. STADIUM GATEWAY Stadium Gateway is a 1.5 acre site located in Anaheim, Orange County, California, acquired by the venture upon which it has commenced construction of a six-story 261,554 square-foot office building. 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, 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 $231, $225 and $20 in fees for such services in the years ended December 31, 2000, 1999 and 1998, respectively. AMERICAN FINANCIAL EXCHANGE L.L.C. On May 20, 1998, the Company entered into a joint venture agreement with Columbia Development Company, L.L.C. 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. In the fourth quarter 2000, the Company started construction of a 575,000 square-foot office building and terminated the parking agreement on certain of the land owned by the venture. The total costs of the project are currently projected to be approximately $140,000. The project, which is currently 100 percent pre-leased, is anticipated to be completed in third quarter 2002. 73 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 $198, $628 and $0 in fees for such services in the years ended December 31, 2000, 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. Subsequently, through December 31, 2000, the venture paid $19,714 ($3,943 representing the Company's share) in accordance with earn-out provisions in the acquisition contracts. The Company performs management and leasing services for the properties owned by the joint venture and recognized $172, $117 and $30 in fees for such services in the years ended December 31, 2000, 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, Chairman of the Board of Directors of the Company and an equity holder in the Operating Partnership, is a principal of the managing member of the venture. At December 31, 2000, the venture held approximately $575,621 face value of CMBS bonds at an aggregate cost of $280,982. 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. In July 2000, the joint venture began development of the hotel project. 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. 74 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, 2000 and 1999:
December 31, 2000 ---------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ------------------------------------------------------------------------------------------------------------------------------ ASSETS: Rental property, net $20,810 $ 78,119 $ 10,589 $13,309 $38,497 $37,777 $ -- $199,101 Other assets 2,690 27,082 2,418 11,851 9,729 900 310,342 365,012 - ------------------------------------------------------------------------------------------------------------------------------ Total assets $23,500 $105,201 $ 13,007 $25,160 $48,226 $38,677 $310,342 $564,113 ============================================================================================================================== LIABILITIES AND PARTNERS'/ MEMBERS' CAPITAL: Mortgages and loans payable $ -- $ 63,486 $ 50,000 $ -- $33,966 $ -- $129,562 $277,014 Other liabilities 160 5,035 1,392 9,400 1,785 1,027 3,750 22,549 Partners'/members' capital 23,340 36,680 (38,385) 15,760 12,475 37,650 177,030 264,550 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities and partners'/members' capital $23,500 $ 105,201 $ 13,007 $25,160 $48,226 $38,677 $310,342 $564,113 ============================================================================================================================== Company's net investment in unconsolidated joint ventures $16,110 $ 35,079 $ 3,973 $15,809 $ 2,782 $ 7,874 $ 19,811 $ 101,438 - ------------------------------------------------------------------------------------------------------------------------------
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 $72,148 $ 11,552 $10,695 $19,549 $31,476 $ -- $167,237 Other assets 3,319 6,427 2,571 773 5,069 768 239,441 258,368 - ------------------------------------------------------------------------------------------------------------------------------ Total assets $25,136 $78,575 $ 14,123 $11,468 $24,618 $32,244 $239,441 $425,605 ============================================================================================================================== LIABILITIES AND PARTNERS'/ MEMBERS' CAPITAL: Mortgages and loans payable $ -- $41,274 $ 43,081 $ -- $17,300 $ -- $108,407 $210,062 Other liabilities 186 7,254 1,383 2 1,263 3,536 36,109 49,733 Partners'/members' capital 24,950 30,047 (30,341) 11,466 6,055 28,708 94,925 165,810 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities and partners'/members' capital $25,136 $78,575 $ 14,123 $11,468 $24,618 $32,244 $239,441 $425,605 ============================================================================================================================== Company's net investment in unconsolidated joint ventures $17,072 $23,337 $ 8,352 $11,571 $ 2,697 $ 6,073 $ 20,032 $ 89,134 - ------------------------------------------------------------------------------------------------------------------------------
75 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, 2000, 1999 and 1998:
Year Ended December 31, 2000 ---------------------------------------------------------------------------------------------- American G&G Financial Ramland Ashford Combined Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Total - ------------------------------------------------------------------------------------------------------------------------------ Total revenues $ 5,028 $ 9,254 $10,695 $1,009 $ 3,917 $ 5,917 $19,931 $ 55,751 Operating and other expenses (1,619) (2,628) (3,312) (155) (1,030) (2,773) (3,060) (14,577) Depreciation and amortization (1,226) (5,908) (1,531) (62) (975) (839) -- (10,541) Interest expense -- (4,535) (4,084) -- (1,547) -- (5,045) (15,211) - ------------------------------------------------------------------------------------------------------------------------------ Net income (loss) $ 2,183 $ (3,817) $ 1,768 $ 792 $ 365 $ 2,305 $11,826 $ 15,422 ============================================================================================================================== Company's equity in earnings of unconsolidated joint ventures $ 935 $ 3,248 $ 483 $ 735 $ 180 $ 474 $ 2,000 $ 8,055 - ------------------------------------------------------------------------------------------------------------------------------
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 $ 459 $ 9,011 $ 917 $1,426 $ 4,162 $ 10,093 $ 31,006 Operating and other expenses (1,505) (104) (3,238) (287) (352) (2,327) (3,774) (11,587) Depreciation and amortization (1,234) (100) (1,422) (96) (439) (551) -- (3,842) Interest expense -- (119) (3,116) -- (45) -- (2,185) (5,465) - ------------------------------------------------------------------------------------------------------------------------------ Net income $ 2,199 $ 136 $ 1,235 $ 534 $ 590 $ 1,284 $ 4,134 $ 10,112 ============================================================================================================================== 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 -- $ 7,320 $490 -- $ 603 -- $ 11,957 Operating and other expenses (1,124) -- (2,955) (35) -- (287) -- (4,401) Depreciation and amortization (1,000) -- (759) (50) -- (76) -- (1,885) Interest expense -- -- (3,495) -- -- -- -- (3,495) - ------------------------------------------------------------------------------------------------------------------------------ Net income $ 1,420 -- $ 111 $405 -- $ 240 -- $ 2,176 ============================================================================================================================== Company's equity in earnings (loss) of unconsolidated joint ventures $ 723 -- $ (182) $455 -- $ 59 -- $ 1,055 - ------------------------------------------------------------------------------------------------------------------------------
5. DEFERRED CHARGES AND OTHER ASSETS
December 31, 2000 1999 - -------------------------------------------------------------------------------------------------------------- Deferred leasing costs $ 80,667 $62,076 Deferred financing costs 23,085 16,690 - -------------------------------------------------------------------------------------------------------------- 103,752 78,766 Accumulated amortization (26,303) (20,197) - -------------------------------------------------------------------------------------------------------------- Deferred charges, net 77,449 58,569 Prepaid expenses and other assets 25,206 7,867 - -------------------------------------------------------------------------------------------------------------- Total deferred charges and other assets, net $ 102,655 $66,436 ==============================================================================================================
76 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:
December 31, 2000 1999 - -------------------------------------------------------------------------------------------------------------- Security deposits $ 6,477 $ 6,021 Escrow and other reserve funds 80 1,060 - -------------------------------------------------------------------------------------------------------------- Total restricted cash $ 6,557 $ 7,081 ==============================================================================================================
7. RENTAL PROPERTY HELD FOR SALE As of December 31, 2000, included in total rental property are 10 office properties that the Company has identified as held for sale. These properties have an aggregate carrying value of $107,458 and $107,264 as of December 31, 2000 and 1999, respectively, and are located in San Antonio, Bexar County, Texas or Houston, Harris County, Texas. As of December 31, 1999, included in total rental property were three office properties that the Company had identified as held for sale. The three office properties have an aggregate carrying value of $77,783 as of December 31, 1999 and are located in Omaha, Douglas County, Nebraska; Jersey City, Hudson County, New Jersey or Amarillo, Potter County, Texas. The office properties located in Jersey City, Hudson County, New Jersey and Amarillo, Potter County, Texas were sold in April 2000 in two separate transactions and the property located in Omaha, Douglas County, Nebraska was sold in November 2000. See Note 3. The following is a summary of the condensed results of operations of the rental properties held for sale at December 31, 2000 for the years ended December 31, 2000, 1999 and 1998:
Years Ended December 31, 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------- Total revenues $ 26,069 $ 24,181 $ 23,856 Operating and other expenses (13,227) (12,589) (11,391) Depreciation and amortization (2,380) (2,732) (2,397) - ------------------------------------------------------------------------------------------------------------- Net income $ 10,462 $ 8,860 $ 10,068 =============================================================================================================
There can be no assurance if and when sales of the Company's rental properties held for sale 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 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 $185,283 of senior unsecured notes with interest payable monthly in arrears. The proceeds from the issuance were used to retire an equivalent amount of a non-recourse mortgage loan. 77 On December 21, 2000, the Operating Partnership issued $15,000 of senior unsecured notes with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions) of approximately $14,907 were used primarily to pay down outstanding borrowings under the Prudential Facility, as defined in Note 9. 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. A summary of the terms of the Senior Unsecured Notes outstanding as of December 31, 2000 and 1999 is as follows:
December 31, Effective 2000 1999 Rate (1) - ----------------------------------------------------------------------------------------------------------------- 7.180% Senior Unsecured Notes, due December 31, 2003 $185,283 $185,283 7.23% 7.000% Senior Unsecured Notes, due March 15, 2004 299,744 299,665 7.27% 7.250% Senior Unsecured Notes, due March 15, 2009 298,072 297,837 7.49% 7.835% Senior Unsecured Notes, due December 15, 2010 15,000 -- 7.92% - ----------------------------------------------------------------------------------------------------------------- Total Senior Unsecured Notes $798,099 $782,785 7.35% =================================================================================================================
(1) Includes the cost of terminated treasury lock agreements (if any), offering and other transaction costs and the discount on the notes, as applicable. In January 2001, the Operating Partnership issued $300,000 face amount of 7.75 percent senior unsecured notes due February 15, 2011 with interest payable semi-annually in arrears. The total proceeds from the issuance (net of selling commissions and discount) of approximately $296,300 were used to pay down outstanding borrowings under the 2000 Unsecured Facility, as defined in Note 9. The senior unsecured notes were issued at a discount of approximately $1,731, which will be amortized over the term as an adjustment to interest expense. 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 2000 UNSECURED FACILITY On June 22, 2000, the Company obtained an unsecured revolving credit facility ("2000 Unsecured Facility") with a current borrowing capacity of $800,000 from a group of 24 lenders. The interest rate on outstanding borrowings under the credit line is currently the London Inter-Bank Offered Rate ("LIBOR") (6.56 percent at December 31, 2000) plus 80 basis points. The Company may instead elect an interest rate representing the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. The 2000 Unsecured Facility also requires a 20 basis point facility fee on the current borrowing capacity payable quarterly in arrears. In the event of a change in the Company's unsecured debt rating, the interest rate and facility fee will be changed on a sliding scale. Subject to certain conditions, the Company has the ability to increase the borrowing capacity of the credit line up to $1,000,000. The 2000 Unsecured Facility matures in June 2003, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the credit line upon exercise. The terms of the 2000 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 (as defined) for such period, subject to certain other adjustments. 78 The lending group for the 2000 Unsecured Facility consists of: Chase Manhattan Bank, as administrative agent; Fleet National Bank, as syndication agent; Bank of America, N.A., as documentation agent; Bank One, NA, Commerzbank Aktiengesellschaft and First Union National Bank, as senior managing agents; PNC Bank, N.A., as managing agent; Bank Austria Creditanstalt Corporate Finance, Inc., Bayerische Hypo-und Vereinsbank AG, Dresdner Bank AG, Societe Generale, Summit Bank and Wells Fargo Bank, N.A., as co-agents; and Bayerische Landesbank Girozentrale; Citizens Bank of Massachusetts; European American Bank; Chevy Chase Bank; Citicorp Real Estate, Inc.; DG Bank Deutsche Genossenschaftsbank, AG; Erste Bank; KBC Bank N.V.; SunTrust Bank; Bank Leumi USA and Israel Discount Bank of New York. In conjunction with obtaining the 2000 Unsecured Facility, the Company drew funds on the new facility to repay in full and terminate the Unsecured Facility, as defined below. UNSECURED FACILITY The Company had an unsecured revolving credit facility ("Unsecured Facility") with a borrowing capacity of $1,000,000 from a group of 28 lenders. The interest rate was based on the Company's achievement of investment grade unsecured debt ratings and, at the Company's election, bore interest at either 90 basis points over LIBOR or the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. In conjunction with obtaining the 2000 Unsecured Facility, the Company repaid in full and terminated the Unsecured Facility on June 22, 2000. ORIGINAL UNSECURED FACILITY The Original Unsecured Facility ("Original Unsecured Facility") was repaid in full and retired in connection with the Company obtaining the Unsecured Facility in April 1998. 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. PRUDENTIAL FACILITY The Company has a revolving credit facility ("Prudential Facility") with 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 June 29, 2001. The Prudential Facility is a recourse liability of the Operating Partnership and is secured by the Company's equity interest in Harborside Plazas 2 and 3. 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 (as defined) for the immediately preceding fiscal quarter (except to the extent such excess distributions or dividends are attributable to gains from the sale of the Operating Partnership's assets or are required for the Company to maintain its status as a REIT under the Code); provided, however, that the Operating Partnership may make distributions and pay dividends in excess of 100 percent of available funds from operations (as defined) 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. The Company has been notified that the Prudential Facility will not be renewed. SUMMARY As of December 31, 2000 and 1999, the Company had outstanding borrowings of $348,840 and $177,000, respectively, under its revolving credit facilities (with aggregate borrowing capacity of $900,000 and $1,100,000, respectively). The total outstanding borrowings were from the 2000 Unsecured Facility at December 31, 2000 and from the Unsecured Facility at December 31, 1999, with no outstanding borrowings under the Prudential Facility. 79 10. MORTGAGES AND LOANS PAYABLE The Company has mortgages and loans payable which are comprised of various loans collateralized by certain of the Company's rental properties. Payments on mortgages and loans payable are generally due in monthly installments of principal and interest, or interest only. A summary of the Company's mortgages and loans payable as of December 31, 2000 and 1999 is as follows:
EFFECTIVE PRINCIPAL BALANCE AT INTEREST DECEMBER 31, PROPERTY NAME LENDER RATE 2000 1999 MATURITY - ------------------------------------------------------------------------------------------------------------------------ 201 Commerce Drive Sun Life Assurance Co. 6.240% $ -- $ 1,059 09/01/00 3 & 5 Terri Lane First Union National Bank 6.220% -- 4,434 10/31/00 101 & 225 Executive Drive Sun Life Assurance Co. 6.270% 2,198 2,375 06/01/01 Mack-Cali Morris Plains Corestates Bank 7.510% 2,169 2,235 12/31/01 Mack-Cali Willowbrook CIGNA 8.670% 9,460 10,250 10/01/03 400 Chestnut Ridge Prudential Insurance Co. 9.440% 13,588 14,446 07/01/04 Mack-Cali Centre VI Principal Life Insurance Co. 6.865% 35,000 35,000 04/01/05 Various (a) Prudential Insurance Co. 7.100% 150,000 150,000 05/15/05 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% 25,911 26,604 10/01/05 500 West Putnam Avenue New York Life Ins. Co. 6.520% 10,069 10,784 10/10/05 Harborside - Plaza 1 U.S. West Pension Trust 5.610% 54,370 51,015 01/01/06 Harborside - Plazas 2 and 3 Northwestern/Principal 7.320% 95,630 98,985 01/01/06 Mack-Cali Airport Allstate Life Insurance Co. 7.050% 10,500 10,500 04/01/07 Kemble Plaza II Mitsubishi Tr & Bk Co. LIBOR+0.65% -- 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 $481,573 $530,390 ========================================================================================================================
(a) The Company has the option to convert the mortgage loan, which is secured by 11 properties, to unsecured debt. INTEREST RATE CONTRACTS 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 paid $2,035 in settlement of the agreement, which is being amortized to interest expense over the term of the $150,000 Prudential Mortgage Loan. 80 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 1 mortgage, for which the interest rate was re-set to the three-year U.S. Treasury Note (5.82 percent) plus 110 basis points for the three years beginning November 4, 1999 (see "Property Mortgages: Harborside-Plaza 1"). The Company received $2,208 in settlement of the agreement, which is being amortized to interest expense over the three year-period. 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, 2000 are as follows:
WEIGHTED AVG. SCHEDULED PRINCIPAL INTEREST RATE OF YEAR AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (a) - ------------------------------------------------------------------------------------------------------------------- 2001 $ 3,239 $ 4,211 $ 7,450 7.43% 2002 3,433 -- 3,433 8.20% 2003 3,581 540,934 544,515 7.44% 2004 2,420 309,863 312,283 7.34% 2005 1,584 253,178 254,762 7.13% Thereafter (473) 506,542 506,069 7.38% - ------------------------------------------------------------------------------------------------------------------- Totals/Weighted Average $ 13,784 $ 1,614,728 $ 1,628,512 7.29% ===================================================================================================================
(a) Assumes weighted average LIBOR at December 31, 2000 of 6.73 percent in calculating revolving credit facility and other variable rate debt interest rates. CASH PAID FOR INTEREST AND INTEREST CAPITALIZED Cash paid for interest for the years ended December 31, 2000, 1999 and 1998 was $112,157, $91,883 and $92,441, respectively. Interest capitalized by the Company for the years ended December 31, 2000, 1999 and 1998 was $11,524, $6,840 and $3,547, respectively. SUMMARY OF INDEBTEDNESS As of December 31, 2000, the Company's total indebtedness of $1,628,512 (weighted average interest rate of 7.29 percent) was comprised of $381,018 of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 7.53 percent) and fixed rate debt of $1,247,494 (weighted average rate of 7.25 percent). 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). 11. MINORITY INTERESTS Minority interests in the accompanying consolidated financial statements relate to (i) preferred units in the Operating Partnership ("Preferred Units"), common units in the Operating Partnership and warrants to purchase common units ("Unit Warrants"), 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. 81 OPERATING PARTNERSHIP PREFERRED UNITS At January 1, 1999, the Company had 27,132 Series A Preferred Units and 223,124 Series B Preferred Units outstanding. 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 is an amount equal to the greater of (i) $16.875 (representing 6.75 percent of the Preferred Unit stated value of an annualized basis) 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 Preferred Units may be converted at any time into common units at a conversion price of $34.65 per unit. Common units received pursuant to such conversion may be redeemed for an equal number of shares of common stock. During the year ended December 31, 1999, 20,952 Series A Preferred Units were converted into 604,675 common units. During the year ended December 31, 2000, 6,180 Series A Preferred Units and 2,784 Series B Preferred Units were converted into 258,702 common units. As of December 31, 2000, there were 220,340 Series B Preferred Units outstanding (convertible into 6,359,019 common units). There were no Series A Preferred Units outstanding as of December 31, 2000. COMMON UNITS At January 1, 1999, the Company had 9,086,585 common units outstanding. 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 in the Operating Partnership is reduced and the Company's investment in the Operating Partnership is increased. During the year ended December 31, 1999, the Company issued an aggregate of 122,062 common units in connection with two separate transactions, valued at approximately $3,362. During the year ended December 31, 1999, the Company issued 604,675 common units in connection with the conversion of 20,952 Preferred Units. During the year ended December 31, 1999, an aggregate of 1,934,657 common units were redeemed 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, as defined below, in redemption of an equivalent number of contingent common units. During the year ended December 31, 2000, the Company issued 258,702 common units in connection with the conversion of 8,964 Preferred Units, and an aggregate of 448,688 common units were redeemed for an equivalent number of shares of common stock in the Company. As of December 31, 2000, there were 7,963,725 common units outstanding. 82 CONTINGENT COMMON AND 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"). Redemption of such Contingent Units occurred upon the achievement of certain performance goals relating to certain of the Mack properties ("Mack Properties"), specifically the achievement of certain leasing activity. When Contingent Units were redeemed for common and Preferred Units, an adjustment to the purchase price of certain of the Mack Properties was 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, 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 which enable the holders to purchase an equal number of common units at $37.80 per unit. The Unit Warrants are all currently exercisable and expire on December 11, 2002. MINORITY INTEREST OWNERSHIP As of December 31, 2000 and 1999, the minority interest common unitholders owned 12.3 percent (20.1 percent, including the effect of the conversion of Preferred Units into common units) and 12.2 percent (20.2 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). 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. Amongst other things, the operating agreements provided for a preferred return to the joint venture members. On June 29, 2000 the Company acquired a 100 percent interest in these properties and the Company paid an additional $836 to the minority interest member in excess of its investment. On August 24, 2000, MC-SJP Morris V Realty, LLC and MC-SJP Morris VI Realty, LLC acquired land in which SJP Properties has a minority interest amounting to $1,925. The Company controlled these operations and has consolidated the financial position and results of operations of partially-owned properties in the financial statements of the Company. The equity interests of the other members are reflected as minority interests: partially-owned properties 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. Management has approved, for the year ended December 31, 2001, a Company matching contribution to be paid under the 401(k) Plan equal to 50 percent of the first 3.5 percent of annual salary, as defined in the 401(k) Plan, contributed to the plan in 2001. Total expense recognized by the Company for the years ended December 31, 2000, 1999 and 1998 was $0, $400 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, 2000 and 1999. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. 83 Cash equivalents, receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2000 and 1999. The estimated fair value (excluding prepayment penalties) of the Senior Unsecured Notes and mortgages and loans payable as of December 31, 2000 approximated the carrying values of $798,099 and $481,573, respectively, and 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. Revolving credit facility borrowings as of December 31, 2000 and 1999 approximated the carrying values of $348,840 and $177,000, respectively. Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2000 and 1999. 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, 2000 and current estimates of fair value may differ significantly from the amounts presented herein. 14. COMMITMENTS AND CONTINGENCIES TAX ABATEMENT AGREEMENTS HARBORSIDE FINANCIAL CENTER Pursuant to an agreement with the City of Jersey City, New Jersey, the Company is required to make payments in lieu of property taxes ("PILOT") on its Harborside Plaza 2 and 3 properties. 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 15. Total Project Costs, as defined, are $145,644. The PILOT totaled $2,677, $2,620 and $2,570 for the years ended December 31, 2000, 1999 and 1998, respectively. The Company has entered into a similar agreement with the City of Jersey City, New Jersey on its Harborside Plaza 4-A property. Pursuant to the agreement, such PILOT is equal to two percent of Total Project Costs, as defined, which was estimated to be $45,497. The PILOT, based upon the estimated Total Project Costs, was $25 for the in-service period of the property during the year ended December 31, 2000. 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, 2000, are as follows:
YEAR AMOUNT - ------------------------------------------------------------------------------- 2001 $ 531 2002 531 2003 531 2004 534 2005 534 Thereafter 21,997 - ------------------------------------------------------------------------------- Total $24,658 ===============================================================================
Ground lease expense incurred during the years ended December 31, 2000, 1999 and 1998 amounted to $570, $561 and $419, respectively. 84 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 payments of approximately $14,490 in April 1999 and $500 in April 2000 and will receive $500 annually over the next two years. All costs associated with Mr. Rizk's resignation are included in non-recurring charges for the year ended December 31, 1999. On June 27, 2000, both Brant Cali and John R. Cali resigned their positions as officers of the Company and Brant Cali resigned as a director of the Company. John R. Cali was appointed to the Board of Directors of the Company to take the seat previously held by Brant Cali. As required by Brant Cali and John R. Cali's employment agreements with the Company: (i) the Company paid $2,820 and $2,806 (less applicable withholding) to Brant Cali and John R. Cali, respectively; (ii) all options to acquire shares of the Company's common stock and Restricted Stock Awards (as hereinafter defined) held by Brant Cali and John R. Cali became fully vested on the effective date of their resignations from the Company. All costs associated with Brant Cali and John R. Cali's resignations, which totaled approximately $9,228, are included in non-recurring charges for the year ended December 31, 2000. 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. 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, 2000, are as follows:
YEAR AMOUNT - ------------------------------------------------------------------------------- 2001 $ 475,043 2002 440,153 2003 379,721 2004 326,091 2005 276,779 Thereafter 997,529 - ------------------------------------------------------------------------------- Total $2,895,316 ===============================================================================
85 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 REPURCHASES On August 6, 1998, the Board of Directors of the Company authorized a share repurchase program ("Repurchase Program") under which the Company was permitted to purchase up to $100,000 of the Company's outstanding common stock. Purchases could be made from time to time in open market transactions at prevailing prices or through privately negotiated transactions. Under the Repurchase Program, the Company purchased for constructive retirement 1,869,200 shares of its outstanding common stock for an aggregate cost of approximately $52,562 from August 1998 through December 1999. On September 13, 2000, the Board of Directors authorized an increase to the Repurchase Program under which the Company is permitted to purchase up to an additional $150,000 of the Company's outstanding common stock above the $52,562 that had previously been purchased. The Company purchased for constructive retirement 2,026,300 shares of its outstanding common stock for an aggregate cost of approximately $55,514 from September 13, 2000 through December 31, 2000. Subsequent to year end through February 15, 2001, the Company purchased for constructive retirement 72,000 shares of its outstanding common stock for an aggregate cost of approximately $1,982 under the Repurchase Program. 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. The Company did not issue any shares under the Plan during the year ended December 31, 2000. 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. 86 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. On June 27, 2000, the Company amended its shareholder rights plan to prevent the triggering of such plan as a result of the Merger Agreement. STOCK OPTION PLANS In September 2000, the Company established the 2000 Employee Stock Option Plan ("2000 Employee Plan") and the 2000 Director Stock Option Plan ("2000 Director Plan") under which a total of 2,700,000 shares (subject to adjustment) of the Company's common stock have been reserved for issuance (2,500,000 shares under the 2000 Employee Plan and 200,000 shares under the 2000 Director Plan). 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 both the 2000 Employee Plan and Employee Plan in 1996, 1997, 1998, 1999 and 2000 become exercisable over a five-year period. All stock options granted under both the 2000 Director Plan and 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, 2000 and 1999, the stock options outstanding had a weighted average remaining contractual life of approximately 7.5 and 7.4 years, respectively. Information regarding the Company's stock option plans is summarized below:
Weighted Shares Average Under Exercise Options Price - ------------------------------------------------------------------------------------------------------------------- Outstanding at January 1, 1998 3,287,290 $31.47 Granted 1,048,620 $35.90 Exercised (267,660) $20.47 Lapsed or canceled (128,268) $36.61 - ------------------------------------------------------------------------------------------------------------------- Outstanding at December 31, 1998 3,939,982 $33.22 Granted 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 Granted 1,523,900 $26.75 Exercised (117,053) $21.45 Lapsed or canceled (500,679) $34.64 - ------------------------------------------------------------------------------------------------------------------- Outstanding at December 31, 2000 4,633,319 $30.14 =================================================================================================================== Options exercisable at December 31, 1999 1,724,920 $29.78 Options exercisable at December 31, 2000 2,049,041 $31.02 - ------------------------------------------------------------------------------------------------------------------- Available for grant at December 31, 1999 662,878 Available for grant at December 31, 2000 2,344,757 - -------------------------------------------------------------------------------------------------------------------
87 The weighted average fair value of options granted during 2000, 1999 and 1998 were $3.40, $2.74 and $5.59 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:
2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------- Expected life (in years) 6 6 6 Risk-free interest rate 5.67% 6.12% 5.41% Volatility 22.66% 24.72% 23.37% Dividend yield 8.82% 9.15% 5.78% - -------------------------------------------------------------------------------------------------------------------
FASB NO. 123 Under the above models, the value of stock options granted during 2000, 1999 and 1998 totaled approximately $5,181, $1,167 and $5,281, 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, basic earnings per share and diluted earnings per share would have been $179,131, $3.07 and $3.01 in 2000, $113,854, $1.95 and $1.94 in 1999 and $110,061, $1.97 and $1.96 in 1998, respectively. STOCK WARRANTS The Company has 360,000 warrants outstanding which enable the holders to purchase an equal number of shares of its common stock ("Stock Warrants") at $33 per share (the market price at date of grant). Such warrants are all currently exercisable and expire on January 31, 2007. The Company also has 389,976 Stock Warrants outstanding which enable the holders to purchase an equal number of its 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 31, 2001 and expire on December 12, 2007. As of December 31, 2000 and 1999, there were a total of 749,976 and 914,976 Stock Warrants outstanding, respectively. As of December 31, 2000 and 1999, there were 613,985 and 585,989 Stock Warrants exercisable, respectively. For the years ended December 31, 2000 and 1999, 165,000 and no Stock Warrants were canceled, respectively. No Stock Warrants have been exercised through December 31, 2000. STOCK COMPENSATION In July 1999, the Company entered into amended and restated employment contracts with six of its then key executive officers which provided for, among other things, compensation in the form of stock awards and associated tax obligation payments. In addition, in December 1999, the Company granted stock awards to certain other officers of the Company. In connection with the stock awards (collectively, "Restricted Stock Awards"), the executive officers and certain other officers are to receive up to a total of 211,593 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 and certain other officers were granted under the Employee Plan. Effective January 1, 2000, 31,737 shares of the Company's common stock were issued to the executive officers and certain other officers upon meeting the required objectives. In connection with the resignation of each of Brant Cali and John R. Cali from the Company, all of their respective remaining restricted stock, an aggregate of 38,649 shares, were issued to Brant Cali and John R. Cali upon the accelerated vesting of their remaining Restricted Stock Awards. For the years ended December 31, 2000 and 1999, 5,100 and no unvested Restricted Stock Awards were canceled, respectively. DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS The Deferred Compensation Plan for Directors ("Deferred Compensation Plan"), which commenced January 1, 1999, 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. 88 During the years ended December 31, 2000 and 1999, 4,227 and 3,319 deferred stock units were earned, respectively. 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, 2000, 1999 and 1998 in accordance with FASB No. 128:
For the Year Ended December 31, 2000 1999 1998 ---------------------------------------------------------------------------------- Basic EPS Diluted EPS Basic EPS Diluted EPS Basic EPS Diluted EPS - --------------------------------------------------------------------------------------------------------------------- Net income $185,338 $185,338 $119,739 $119,739 $116,578 $116,578 Add: Net income attributable to Operating Partnership - common units -- 25,612 -- 17,389 -- 15,903 Net income attributable to Operating Partnership - preferred units -- 15,441 -- -- -- -- - --------------------------------------------------------------------------------------------------------------------- Adjusted net income $185,338 $226,391 $119,739 $137,128 $116,578 $132,481 ===================================================================================================================== Weighted average shares 58,338 73,070 58,385 67,133 55,840 63,893 - --------------------------------------------------------------------------------------------------------------------- Per Share $ 3.18 $ 3.10 $ 2.05 $ 2.04 $ 2.09 $ 2.07 =====================================================================================================================
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, 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------- Basic EPS Shares: 58,338 58,385 55,840 Add: Operating Partnership - common units 8,054 8,500 7,598 Operating Partnership - preferred units (after conversion to common units) 6,485 -- -- Stock options 188 241 411 Restricted Stock Awards 5 7 -- Stock Warrants -- -- 44 - ------------------------------------------------------------------------------------------------------------- Diluted EPS Shares: 73,070 67,133 63,893 =============================================================================================================
Contingent Units outstanding in 1998 were not included in the 1998 computation of diluted EPS as such units were anti-dilutive during the period. Preferred Units outstanding in 1999 and 1998 were not included in the 1999 and 1998 computations of diluted EPS as such units were anti-dilutive during the periods. Through December 31, 2000, under the Repurchase Program, the Company purchased for constructive retirement, a total of 3,895,500 shares of its outstanding common stock for an aggregate cost of approximately $108,076. 89 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, depreciation and amortization and non-recurring charges. 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, 2000, 1999 and 1998 and selected asset information as of December 31, 2000 and 1999 regarding the Company's operating segment are as follows:
Total Corporate & Total Segment Other (e) Company - ------------------------------------------------------------------------------------------------------------------- TOTAL CONTRACT REVENUES (a): 2000 $ 557,926 $ 5,623 $ 563,549 (f) 1999 534,985 3,903 538,888 (g) 1998 475,096 4,919 480,015 (h) TOTAL OPERATING AND INTEREST EXPENSES (b): 2000 $ 174,116 $ 126,700 $ 300,816 (i) 1999 168,166 128,925 297,091 (j) 1998 149,791 113,528 263,319 (k) NET OPERATING INCOME (c): 2000 $ 383,810 $ (121,077) $ 262,733 (f) (i) 1999 366,819 (125,022) 241,797 (g) (j) 1998 325,305 (108,609) 216,696 (h) (k) TOTAL ASSETS: 2000 $3,623,107 $ 53,870 $3,676,977 1999 3,580,782 48,819 3,629,601 TOTAL LONG-LIVED ASSETS (d): 2000 $3,522,766 $ 23,574 $3,546,340 1999 3,515,669 24,934 3,540,603 ===================================================================================================================
(a) Total contract revenues represent 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 represent the sum of real estate taxes, utilities, operating services, general and administrative and interest expense. All interest expense (including for property-level mortgages) is excluded from segment amounts and classified in Corporate and Other for all periods. (c) Net operating income represents total contract revenues [as defined in Note (a)] less total operating and interest expenses [as defined in Note (b)] for the period. (d) Long-lived assets are 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. (g) Excludes $12,580 of adjustments for straight-lining of rents and $24 for the Company's share of straight-line rent adjustments from unconsolidated joint ventures. (g) Excludes $12,438 of adjustments for straight-lining of rents and $158 for the Company's share of straight-line rent adjustments from unconsolidated joint ventures. (h) 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. (i) Excludes $92,088 of depreciation and amortization and non-recurring charges of $37,139. (j) Excludes $87,209 of depreciation and amortization and non-recurring charges of $16,458. (k) Excludes $78,916 of depreciation and amortization. 90 18. RELATED PARTY TRANSACTIONS The son of a current director of the Company, who was also a former officer of the Company, serves as an officer of a company which provides cleaning and other related services to certain of the Company's properties. The Company has incurred costs from this company of approximately $3,164, $2,524 and $2,296 for the years ended December 31, 2000, 1999 and 1998, respectively. As of December 31, 2000 and 1999, respectively, the Company had accounts payable of approximately $108 and $307 to this company. The Company provides management, leasing and construction services to properties owned by third parties in which certain officers and directors of the Company hold an ownership interest. The Company recognized approximately $1,921, $1,960 and $2,476 in revenues from these properties for the years ended December 31, 2000, 1999 and 1998, respectively. As of December 31, 2000 and 1999, respectively, the Company had total receivables from these properties of approximately $1,000 and $96. The Company purchased land parcels in three separate transactions from affiliates of the Company. The Company also acquired a portfolio of properties from an affiliate of the Company. See Note 3. 19. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS 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 has determined 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 financial position at January 1, 2001, nor is it expected to materially impact future results of operations. 91 20. CONDENSED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following summarizes the condensed quarterly financial information for the Company:
QUARTER ENDED 2000: December 31 September 30 June 30 March 31 - ------------------------------------------------------------------------------------------------------------------- Total revenues $ 143,903 $ 143,382 $ 145,889 $142,979 Operating and other expenses 43,561 44,191 41,569 42,825 General and administrative 6,543 5,461 5,159 6,113 Depreciation and amortization 23,641 23,320 22,945 22,182 Interest expense 26,271 25,862 26,835 26,426 Non-recurring charges -- 27,911 9,228 -- - ------------------------------------------------------------------------------------------------------------------- Income before gain on sales of rental property, minority interests and extraordinary item 43,887 16,637 40,153 45,433 (Loss) gain on sales of rental property (852) 10,036 73,921 2,248 - ------------------------------------------------------------------------------------------------------------------- Income before minority interests and extraordinary item 43,035 26,673 114,074 47,681 Minority interests 8,632 6,661 19,766 11,066 - ------------------------------------------------------------------------------------------------------------------- Income before extraordinary item 34,403 20,012 94,308 36,615 Extraordinary item-loss on early retirement of debt -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Net income $ 34,403 $ 20,012 $ 94,308 $ 36,615 =================================================================================================================== BASIC EARNINGS PER SHARE: Income before extraordinary item $ 0.60 $ 0.34 $ 1.61 $ 0.63 Extraordinary item - loss on early retirement of debt -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Net income $ 0.60 $ 0.34 $ 1.61 $ 0.63 =================================================================================================================== DILUTED EARNINGS PER SHARE: Income before extraordinary item $ 0.59 $ 0.34 $ 1.52 $ 0.62 Extraordinary item - loss on early retirement of debt -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Net income $ 0.59 $ 0.34 $ 1.52 $ 0.62 =================================================================================================================== Dividends declared per common share $ 0.61 $ 0.61 $ 0.58 $ 0.58 - -------------------------------------------------------------------------------------------------------------------
92
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 of 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 - -------------------------------------------------------------------------------------------------------------------
93 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS) SCHEDULE III
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF INITIAL COSTS COSTS PERIOD (1) ------------------ CAPITALIZED -------------------------- PROPERTY YEAR RELATED BUILDING AND SUBSEQUENT BUILDING AND ACCUMULATED LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION - ------------ ----- -------- ------------ ---- ------------ -------------- ---- ------------ ----- ------------ ATLANTIC COUNTY, NEW JERSEY EGG HARBOR 100 Decadon Drive (O)......... 1987 1995 -- $300 $3,282 $160 $300 $3,442 $3,742 $437 200 Decadon Drive (O)......... 1991 1995 -- 369 3,241 169 369 3,410 3,779 480 BERGEN COUNTY, NEW JERSEY FAIR LAWN 17-17 Rte 208 North (O)......... 1987 1995 -- 3,067 19,415 941 3,067 20,356 23,423 2,980 FORT LEE One Bridge Plaza (O)......... 1981 1996 -- 2,439 24,462 1,560 2,439 26,022 28,461 2,862 2115 Linwood Avenue (O)........ 1981 1998 -- 474 4,419 4,454 474 8,873 9,347 326 LITTLE FERRY 200 Riser Road (O).......... 1974 1997 10,500 3,888 15,551 246 3,888 15,797 19,685 1,197 MONTVALE 95 Chestnut Ridge Road (O).... 1975 1997 2,135 1,227 4,907 523 1,227 5,430 6,657 376 135 Chestnut Ridge Road (O).... 1981 1997 -- 2,587 10,350 1,740 2,588 12,089 14,677 829 PARAMUS 15 East Midland Avenue (O)........ 1988 1997 24,790 10,375 41,497 70 10,374 41,568 51,942 3,161 461 From Road (O).......... 1988 1997 35,000 13,194 52,778 121 13,194 52,899 66,093 4,021 650 From Road (O)............... 1978 1997 23,316 10,487 41,949 593 10,487 42,542 53,029 3,216 140 Ridgewood Avenue (O)........ 1981 1997 15,392 7,932 31,463 578 7,932 32,041 39,973 2,122 61 South Paramus Avenue (O)........ 1985 1997 15,776 9,005 36,018 4,234 9,005 40,252 49,257 3,153 ROCHELLE PARK 120 Passaic Street (O)........ 1972 1997 -- 1,354 5,415 99 1,357 5,511 6,868 413 365 West Passaic Street (O)........ 1976 1997 7,468 4,148 16,592 1,615 4,148 18,207 22,355 1,430 SADDLE RIVER 1 Lake Street (O)........ 1994 1997 35,789 13,952 55,812 7 13,953 55,818 69,771 4,248 UPPER SADDLE RIVER 10 Mountainview Road (O).......... 1986 1998 -- 4,240 20,485 375 4,240 20,860 25,100 1,823 WOODCLIFF LAKE 400 Chestnut Ridge Road (O).... 1982 1997 13,588 4,201 16,802 9 4,200 16,812 21,012 1,276 470 Chestnut Ridge Road (O).... 1987 1997 4,087 2,346 9,385 2 2,346 9,387 11,733 714 530 Chestnut Ridge Road (O).... 1986 1997 4,032 1,860 7,441 3 1,860 7,444 9,304 566 300 Tice Boulevard (O)..... 1991 1996 -- 5,424 29,688 575 5,424 30,263 35,687 3,130 50 Tice Boulevard (O)............... 1984 1994 -- 4,500 -- 26,644 4,500 26,644 31,144 12,226 BURLINGTON COUNTY, NEW JERSEY BURLINGTON 3 Terri Lane (F).. 1991 1998 -- 652 3,433 906 658 4,333 4,991 374 5 Terri Lane (F).. 1992 1998 -- 564 3,792 1,662 569 5,449 6,018 451 DELRAN Tenby Chase Apartments (M).... 1970 1994 -- 396 -- 5,584 396 5,584 5,980 3,600 MOORESTOWN 2 Commerce Drive (F)......... 1986 1999 -- 723 2,893 59 723 2,952 3,675 73 101 Commerce Drive (F)......... 1988 1998 -- 422 3,528 253 426 3,777 4,203 385 102 Commerce Drive (F)......... 1987 1999 -- 389 1,554 34 389 1,588 1,977 39 201 Commerce Drive (F)......... 1986 1998 -- 254 1,694 90 257 1,781 2,038 159 202 Commerce Drive (F)......... 1988 1999 -- 490 1,963 21 490 1,984 2,474 49 1 Executive Drive (F)......... 1989 1998 -- 226 1,453 205 228 1,656 1,884 162 2 Executive Drive (F)......... 1988 2000 -- 801 3,206 73 801 3,279 4,080 61 101 Executive Drive (F)......... 1990 1998 807 241 2,262 208 244 2,467 2,711 214 102 Executive Drive (F)......... 1990 1998 -- 353 3,607 252 357 3,855 4,212 351 225 Executive Drive (F)......... 1990 1998 1,391 323 2,477 100 326 2,574 2,900 248 97 Foster Road (F).......... 1982 1998 -- 208 1,382 54 211 1,433 1,644 118 1507 Lancer Drive (F)......... 1995 1998 -- 119 1,106 44 120 1,149 1,269 94 1510 Lancer Drive (F)......... 1998 1998 -- 732 2,928 41 735 2,966 3,701 185
94 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS) SCHEDULE III
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF INITIAL COSTS COSTS PERIOD (1) ------------------ CAPITALIZED -------------------------- PROPERTY YEAR RELATED BUILDING AND SUBSEQUENT BUILDING AND ACCUMULATED LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION - ------------ ----- -------- ------------ ---- ------------ -------------- ---- ------------ ----- ------------ 840 North Lenola Road (F)... 1995 1998 -- 329 2,366 50 333 2,412 2,745 215 844 North Lenola Road (F)... 1995 1998 -- 239 1,714 38 241 1,750 1,991 156 915 North Lenola Road (F)... 1998 2000 -- 508 2,034 2 508 2,036 2,544 25 1256 North Church (F)........ 1984 1998 -- 354 3,098 250 357 3,345 3,702 324 224 Strawbridge Drive (O)......... 1984 1997 -- 766 4,335 3,134 767 7,468 8,235 819 228 Strawbridge Drive (O)......... 1984 1997 -- 766 4,334 2,907 767 7,240 8,007 986 30 Twosome Drive (F)......... 1997 1998 -- 234 1,954 48 236 2,000 2,236 189 40 Twosome Drive (F)......... 1996 1998 -- 297 2,393 102 301 2,491 2,792 211 50 Twosome Drive (F)......... 1997 1998 -- 301 2,330 44 304 2,371 2,675 218 WEST DEPTFORD 1451 Metropolitan Drive (F)......... 1996 1998 -- 203 1,189 23 206 1,209 1,415 112 ESSEX COUNTY, NEW JERSEY MILLBURN 150 J.F. Kennedy Parkway (O)....... 1980 1997 25,911 12,606 50,425 1,478 12,606 51,903 64,509 3,851 ROSELAND 101 Eisenhower Parkway (O)....... 1980 1994 -- 228 -- 14,695 228 14,695 14,923 8,430 103 Eisenhower Parkway (O)....... 1985 1994 -- -- -- 13,254 2,300 10,954 13,254 4,408 HUDSON COUNTY, NEW JERSEY JERSEY CITY Harborside Financial Center Plaza 1 (O)....... 1983 1996 54,370 3,923 51,013 -- 3,923 51,013 54,936 5,314 Harborside Financial Center Plaza 2 (O)....... 1990 1996 47,815 17,655 101,546 2,769 15,238 106,732 121,970 10,911 Harborside Financial Center Plaza 3 (O)....... 1990 1996 47,815 17,655 101,878 2,046 15,189 106,390 121,579 10,867 Harborside Financial Center Plaza 4A (O)...... 2000 2000 -- 1,244 56,144 -- 1,244 56,144 57,388 354 MERCER COUNTY, NEW JERSEY HAMILTON TOWNSHIP 100 Horizon Drive (F)......... 1989 1995 -- 205 1,676 54 205 1,730 1,935 217 200 Horizon Drive (F)......... 1991 1995 -- 205 3,027 145 205 3,172 3,377 391 300 Horizon Drive (F)......... 1989 1995 -- 379 4,355 272 379 4,627 5,006 576 500 Horizon Drive (F)......... 1990 1995 -- 379 3,395 135 379 3,530 3,909 516 Zero Horizon Drive (L)......... n/a 1999 -- 498 -- 1,787 498 1,787 2,285 -- PRINCETON 103 Carnegie Center (O)........ 1984 1996 -- 2,566 7,868 687 2,566 8,555 11,121 1,212 100 Overlook Center (O)........ 1988 1997 -- 2,378 21,754 388 2,378 22,142 24,520 1,740 5 Vaughn Drive (O)......... 1987 1995 -- 657 9,800 449 657 10,249 10,906 1,511 MIDDLESEX COUNTY, NEW JERSEY EAST BRUNSWICK 377 Summerhill Road (O).......... 1977 1997 -- 649 2,594 252 649 2,846 3,495 213 PLAINSBORO 500 College Road East (O)..... 1984 1998 -- 614 20,626 293 614 20,919 21,533 1,456 SOUTH BRUNSWICK 3 Independence Way (O)........... 1983 1997 -- 1,997 11,391 222 1,997 11,613 13,610 995 WOODBRIDGE 581 Main Street (O)........ 1991 1997 17,500 3,237 12,949 19,613 8,115 27,684 35,799 1,757 MONMOUTH COUNTY, NEW JERSEY NEPTUNE 3600 Route 66 (O)............... 1989 1995 -- 1,098 18,146 41 1,098 18,187 19,285 2,356 WALL TOWNSHIP 1305 Campus Parkway (O)....... 1988 1995 -- 335 2,560 80 335 2,640 2,975 386 1325 Campus Parkway (F)....... 1988 1995 -- 270 2,928 381 270 3,309 3,579 404 1340 Campus Parkway (F)....... 1992 1995 -- 489 4,621 379 489 5,000 5,489 751 1345 Campus Parkway (F)....... 1995 1997 -- 1,023 5,703 56 1,024 5,758 6,782 565 1350 Campus Parkway (O)....... 1990 1995 -- 454 7,134 641 454 7,775 8,229 1,124 1433 Highway 34 (F)............ 1985 1995 -- 889 4,321 697 889 5,018 5,907 783
95 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)
SCHEDULE III GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF INITIAL COSTS COSTS PERIOD (1) ------------------ CAPITALIZED --------------------------- YEAR RELATED BUILDING AND SUBSEQUENT BUILDING AND ACCUMULATED PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ----- -------- ------------ ---- ------------ -------------- ---- ------------ ----- ------------ 1320 Wyckoff Avenue (F)....... 1986 1995 -- 255 1,285 1 255 1,286 1,541 166 1324 Wyckoff Avenue (F)....... 1987 1995 -- 230 1,439 196 230 1,635 1,865 267 MORRIS COUNTY, NEW JERSEY FLORHAM PARK 325 Columbia Parkway (O)...... 1987 1994 -- 1,564 -- 15,995 1,564 15,995 17,559 6,692 MORRIS PLAINS 250 Johnson Road (O).......... 1977 1997 2,169 2,004 8,016 313 2,004 8,329 10,333 621 201 Littleton Road (O)........ 1979 1997 -- 2,407 9,627 170 2,407 9,797 12,204 739 MORRIS TOWNSHIP 340 Mt. Kemble Avenue (O)..... 1985 1997 32,178 13,624 54,496 40 13,624 54,536 68,160 4,150 PARSIPPANY 7 Campus Drive (O)............ 1982 1998 -- 1,932 27,788 107 1,932 27,895 29,827 2,011 8 Campus Drive (O)............ 1987 1998 -- 1,865 35,456 845 1,865 36,301 38,166 2,724 2 Dryden Way (O).............. 1990 1998 -- 778 420 13 778 433 1,211 40 4 Gatehall Drive (O).......... 1988 2000 -- 8,452 33,929 63 8,452 33,992 42,444 495 2 Hilton Court (O)............ 1991 1998 -- 1,971 32,007 138 1,971 32,145 34,116 2,356 600 Parsippany Road (O)....... 1978 1994 -- 1,257 5,594 1,053 1,257 6,647 7,904 1,095 1 Sylvan Way (O).............. 1989 1998 -- 1,689 24,699 2,224 1,689 26,923 28,612 2,299 5 Sylvan Way (O).............. 1989 1998 -- 1,160 25,214 647 1,160 25,861 27,021 1,836 7 Sylvan Way (O).............. 1987 1998 -- 2,084 26,083 35 2,084 26,118 28,202 1,922 PASSAIC COUNTY, NEW JERSEY CLIFTON 777 Passaic Avenue (O)........ 1983 1994 -- -- -- 7,291 1,100 6,191 7,291 2,836 TOTOWA 1 Center Court (F)............ 1999 1999 -- 270 1,824 90 270 1,914 2,184 104 2 Center Court (F)............ 1998 1998 -- 191 -- 2,563 191 2,563 2,754 304 11 Commerce Way (F)........... 1989 1995 -- 586 2,986 230 586 3,216 3,802 434 20 Commerce Way (F)........... 1992 1995 -- 516 3,108 52 516 3,160 3,676 404 29 Commerce Way (F)........... 1990 1995 -- 586 3,092 230 586 3,322 3,908 544 40 Commerce Way (F)........... 1987 1995 -- 516 3,260 375 516 3,635 4,151 669 45 Commerce Way (F)........... 1992 1995 -- 536 3,379 142 536 3,521 4,057 542 60 Commerce Way (F)........... 1988 1995 -- 526 3,257 281 526 3,538 4,064 597 80 Commerce Way (F)........... 1996 1996 -- 227 -- 1,638 227 1,638 1,865 437 100 Commerce Way (F).......... 1996 1996 -- 226 -- 1,638 226 1,638 1,864 437 120 Commerce Way (F).......... 1994 1995 -- 228 -- 1,201 228 1,200 1,428 161 140 Commerce Way (F).......... 1994 1995 -- 229 -- 1,199 229 1,200 1,429 160 999 Riverview Drive (O)....... 1988 1995 -- 476 6,024 590 476 6,614 7,090 894 WAYNE 201 Willowbrook Boulevard (O). 1970 1997 9,460 3,103 12,410 2,954 3,103 15,364 18,467 969 SOMERSET COUNTY, NEW JERSEY BASKING RIDGE 106 Allen Road (O)............ 2000 2000 -- 3,853 14,465 -- 3,853 14,465 18,318 136 222 Mt. Airy Road (O)......... 1986 1996 -- 775 3,636 31 775 3,667 4,442 403 233 Mt. Airy Road (O)......... 1987 1996 -- 1,034 5,033 16 1,034 5,049 6,083 557 BRIDGEWATER 721 Route 202/206 (O)......... 1989 1997 23,000 6,730 26,919 488 6,730 27,407 34,137 2,056
96 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS)
SCHEDULE III GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF INITIAL COSTS COSTS PERIOD (1) ------------------ CAPITALIZED --------------------------- YEAR RELATED BUILDING AND SUBSEQUENT BUILDING AND ACCUMULATED PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION - --------------------- ----- -------- ------------ ---- ------------ -------------- ---- ------------ ----- ------------ UNION COUNTY, NEW JERSEY CLARK 100 Walnut Avenue (O)....... 1985 1994 -- -- -- 17,795 1,822 15,973 17,795 7,681 CRANFORD 6 Commerce Drive (O)........ 1973 1994 -- 250 -- 2,884 250 2,884 3,134 1,709 11 Commerce Drive (O)....... 1981 1994 -- 470 -- 6,618 470 6,618 7,088 3,417 12 Commerce Drive (O)....... 1967 1997 -- 887 3,549 422 887 3,971 4,858 275 20 Commerce Drive (O)....... 1990 1994 -- 2,346 -- 22,648 2,346 22,648 24,994 7,237 65 Jackson Drive (O)........ 1984 1994 -- 541 -- 7,124 541 7,124 7,665 3,780 NEW PROVIDENCE 890 Mountain Road (O)....... 1977 1997 -- 2,796 11,185 4,257 3,765 14,473 18,238 1,084 DUTCHESS COUNTY, NEW YORK FISHKILL 300 South Lake Drive (O).... 1987 1997 -- 2,258 9,031 143 2,258 9,174 11,432 717 NASSAU COUNTY, NEW YORK NORTH HEMPSTEAD 600 Community Drive (O)..... 1983 1997 -- 11,018 44,070 246 11,018 44,316 55,334 3,398 111 East Shore Road (O)..... 1980 1997 -- 2,093 8,370 363 2,093 8,733 10,826 654 ROCKLAND COUNTY, NEW YORK SUFFERN 400 Rella Boulevard (O)..... 1988 1995 -- 1,090 13,412 1,391 1,090 14,803 15,893 2,267 WESTCHESTER COUNTY, NEW YORK ELMSFORD 11 Clearbrook Road (F)...... 1974 1997 -- 149 2,159 23 149 2,182 2,331 215 75 Clearbrook Road (F)...... 1990 1997 -- 2,314 4,716 -- 2,314 4,716 7,030 462 100 Clearbrook Road (O)..... 1975 1997 -- 220 5,366 145 220 5,511 5,731 647 150 Clearbrook Road (F)..... 1975 1997 -- 497 7,030 88 497 7,118 7,615 720 175 Clearbrook Road (F)..... 1973 1997 -- 655 7,473 297 655 7,770 8,425 805 200 Clearbrook Road (F)..... 1974 1997 -- 579 6,620 520 579 7,140 7,719 724 250 Clearbrook Road (F)..... 1973 1997 -- 867 8,647 525 867 9,172 10,039 896 50 Executive Boulevard (F).. 1969 1997 -- 237 2,617 56 237 2,673 2,910 256 77 Executive Boulevard (F).. 1977 1997 -- 34 1,104 33 34 1,137 1,171 111 85 Executive Boulevard (F).. 1968 1997 -- 155 2,507 36 155 2,543 2,698 252 101 Executive Boulevard (O). 1971 1997 -- 267 5,838 278 267 6,116 6,383 609 300 Executive Boulevard (F). 1970 1997 -- 460 3,609 -- 460 3,609 4,069 353 350 Executive Boulevard (F). 1970 1997 -- 100 1,793 1 100 1,794 1,894 176 399 Executive Boulevard (F). 1962 1997 -- 531 7,191 111 531 7,302 7,833 746 400 Executive Boulevard (F). 1970 1997 -- 2,202 1,846 289 2,202 2,135 4,337 266 500 Executive Boulevard (F). 1970 1997 -- 258 4,183 550 258 4,733 4,991 444 525 Executive Boulevard (F). 1972 1997 -- 345 5,499 126 345 5,625 5,970 556 700 Executive Boulevard (L). n/a 1997 -- 970 -- -- 970 -- 970 -- 555 Taxter Road (O)......... 1986 2000 -- 4,285 17,205 280 4,285 17,485 21,770 250 565 Taxter Road (O)......... 1988 2000 -- 4,285 17,205 319 4,285 17,524 21,809 252 570 Taxter Road (O)......... 1972 1997 -- 438 6,078 468 438 6,546 6,984 654 1 Warehouse Lane (I)........ 1957 1997 -- 3 268 202 2 471 473 36 2 Warehouse Lane (I)........ 1957 1997 -- 4 672 47 4 719 723 74 3 Warehouse Lane (I)........ 1957 1997 -- 21 1,948 388 21 2,336 2,357 219 4 Warehouse Lane (I)........ 1957 1997 -- 84 13,393 216 85 13,608 13,693 1,356 5 Warehouse Lane (I)........ 1957 1997 -- 19 4,804 213 19 5,017 5,036 514 6 Warehouse Lane (I)........ 1982 1997 -- 10 4,419 38 10 4,457 4,467 434 1 Westchester Plaza (F)..... 1967 1997 -- 199 2,023 52 199 2,075 2,274 211 2 Westchester Plaza (F)..... 1968 1997 -- 234 2,726 77 234 2,803 3,037 269 3 Westchester Plaza (F)..... 1969 1997 -- 655 7,936 71 655 8,007 8,662 785 4 Westchester Plaza (F)..... 1969 1997 -- 320 3,729 83 320 3,812 4,132 401
97 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS) SCHEDULE III
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF INITIAL COSTS COSTS PERIOD (1) ------------------ CAPITALIZED --------------------------- YEAR RELATED BUILDING AND SUBSEQUENT BUILDING AND PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL - --------------------- ----- -------- ------------ ---- ------------ -------------- ---- ------------ ----- 5 Westchester Plaza (F)....... 1969 1997 -- 118 1,949 -- 118 1,949 2,067 6 Westchester Plaza (F)....... 1968 1997 -- 164 1,998 133 164 2,131 2,295 7 Westchester Plaza (F)....... 1972 1997 -- 286 4,321 24 286 4,345 4,631 8 Westchester Plaza (F)....... 1971 1997 -- 447 5,262 610 447 5,872 6,319 HAWTHORNE 30 Saw Mill River Road (O).... 1982 1997 -- 2,355 34,254 4,326 2,355 38,580 40,935 200 Saw Mill River Road (F)... 1965 1997 -- 353 3,353 156 353 3,509 3,862 1 Skyline Drive (O)........... 1980 1997 -- 66 1,711 100 66 1,811 1,877 2 Skyline Drive (O)........... 1987 1997 -- 109 3,128 283 109 3,411 3,520 4 Skyline Drive (F)........... 1987 1997 -- 363 7,513 450 363 7,963 8,326 7 Skyline Drive (O)........... 1987 1998 -- 330 13,013 101 330 13,114 13,444 8 Skyline Drive (F)........... 1985 1997 -- 212 4,410 814 212 5,224 5,436 10 Skyline Drive (F).......... 1985 1997 -- 134 2,799 96 134 2,895 3,029 11 Skyline Drive (F).......... 1989 1997 -- -- 4,788 340 -- 5,128 5,128 12 Skyline Drive (F).......... 1999 1999 -- 1,562 3,254 1,741 1,562 4,995 6,557 15 Skyline Drive (F).......... 1989 1997 -- -- 7,449 637 -- 8,086 8,086 17 Skyline Drive (O).......... 1989 1997 -- -- 7,269 128 -- 7,397 7,397 TARRYTOWN 200 White Plains Road (O)..... 1982 1997 -- 378 8,367 690 378 9,057 9,435 220 White Plains Road (O)..... 1984 1997 -- 367 8,112 498 367 8,610 8,977 230 White Plains Road (R)..... 1984 1997 -- 124 1,845 -- 124 1,845 1,969 WHITE PLAINS 1 Barker Avenue (O)........... 1975 1997 -- 208 9,629 500 207 10,130 10,337 3 Barker Avenue (O)........... 1983 1997 -- 122 7,864 566 122 8,430 8,552 50 Main Street (O)............ 1985 1997 -- 564 48,105 3,154 564 51,259 51,823 11 Martine Avenue (O)......... 1987 1997 -- 127 26,833 3,368 127 30,201 30,328 25 Martine Avenue (M)......... 1987 1997 -- 120 11,366 317 120 11,683 11,803 1 Water Street (O)............ 1979 1997 -- 211 5,382 270 211 5,652 5,863 YONKERS 100 Corporate Boulevard (F)... 1987 1997 -- 602 9,910 443 602 10,353 10,955 200 Corporate Boulevard South (F)................... 1990 1997 -- 502 7,575 191 502 7,766 8,268 1 Enterprise Boulevard (L).... n/a 1997 -- 1,379 -- -- 1,379 -- 1,379 1 Executive Boulevard (O)..... 1982 1997 -- 1,104 11,904 679 1,105 12,582 13,687 2 Executive Plaza (R)......... 1986 1997 -- 89 2,439 -- 89 2,439 2,528 3 Executive Plaza (O)......... 1987 1997 -- 385 6,256 320 385 6,576 6,961 4 Executive Plaza (F)......... 1986 1997 -- 584 6,134 334 584 6,468 7,052 6 Executive Plaza (F)......... 1987 1997 -- 546 7,246 45 546 7,291 7,837 1 Odell Plaza (F)............. 1980 1997 -- 1,206 6,815 370 1,206 7,185 8,391 5 Odell Plaza (F)............. 1983 1997 -- 331 2,988 34 331 3,022 3,353 7 Odell Plaza (F)............. 1984 1997 -- 419 4,418 106 419 4,524 4,943 CHESTER COUNTY, PENNSYLVANIA BERWYN 1000 Westlakes Drive (O)...... 1989 1997 -- 619 9,016 113 619 9,129 9,748 1055 Westlakes Drive (O)...... 1990 1997 -- 1,951 19,046 211 1,951 19,257 21,208 1205 Westlakes Drive (O)...... 1988 1997 -- 1,323 20,098 465 1,323 20,563 21,886 1235 Westlakes Drive (O)...... 1986 1997 -- 1,417 21,215 589 1,418 21,803 23,221 DELAWARE COUNTY, PENNSYLVANIA LESTER 100 Stevens Drive (O)......... 1986 1996 -- 1,349 10,018 2,544 1,349 12,562 13,911 200 Stevens Drive (O)......... 1987 1996 -- 1,644 20,186 4,260 1,644 24,446 26,090 300 Stevens Drive (O)......... 1992 1996 -- 491 9,490 748 491 10,238 10,729 MEDIA 1400 Providence Rd - Center I (O)................ 1986 1996 -- 1,042 9,054 832 1,042 9,886 10,928 1400 Providence Rd. - Center II(O)................ 1990 1996 -- 1,543 16,464 1,029 1,544 17,492 19,036 ACCUMULATED PROPERTY LOCATION (2) DEPRECIATION - --------------------- ------------ 5 Westchester Plaza (F)....... 191 6 Westchester Plaza (F)....... 225 7 Westchester Plaza (F)....... 434 8 Westchester Plaza (F)....... 729 HAWTHORNE 30 Saw Mill River Road (O).... 5,214 200 Saw Mill River Road (F)... 362 1 Skyline Drive (O)........... 172 2 Skyline Drive (O)........... 367 4 Skyline Drive (F)........... 1,015 7 Skyline Drive (O)........... 761 8 Skyline Drive (F)........... 600 10 Skyline Drive (F).......... 308 11 Skyline Drive (F).......... 526 12 Skyline Drive (F).......... 238 15 Skyline Drive (F).......... 951 17 Skyline Drive (O).......... 720 TARRYTOWN 200 White Plains Road (O)..... 1,108 220 White Plains Road (O)..... 878 230 White Plains Road (R)..... 181 WHITE PLAINS 1 Barker Avenue (O)........... 1,012 3 Barker Avenue (O)........... 871 50 Main Street (O)............ 5,437 11 Martine Avenue (O)......... 3,045 25 Martine Avenue (M)......... 1,136 1 Water Street (O)............ 565 YONKERS 100 Corporate Boulevard (F)... 1,027 200 Corporate Boulevard South (F)................... 701 1 Enterprise Boulevard (L).... -- 1 Executive Boulevard (O)..... 1,382 2 Executive Plaza (R)......... 239 3 Executive Plaza (O)......... 649 4 Executive Plaza (F)......... 706 6 Executive Plaza (F)......... 719 1 Odell Plaza (F)............. 713 5 Odell Plaza (F)............. 294 7 Odell Plaza (F)............. 488 CHESTER COUNTY, PENNSYLVANIA BERWYN 1000 Westlakes Drive (O)...... 887 1055 Westlakes Drive (O)...... 1,867 1205 Westlakes Drive (O)...... 2,068 1235 Westlakes Drive (O)...... 2,138 DELAWARE COUNTY, PENNSYLVANIA LESTER 100 Stevens Drive (O)......... 1,116 200 Stevens Drive (O)......... 2,168 300 Stevens Drive (O)......... 970 MEDIA 1400 Providence Rd - Center I (O)................ 1,202 1400 Providence Rd. - Center II(O)................ 2,272
98 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS) SCHEDULE III
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF INITIAL COSTS COSTS PERIOD (1) ------------------ CAPITALIZED --------------------------- YEAR RELATED BUILDING AND SUBSEQUENT BUILDING AND PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL - --------------------- ----- -------- ------------ ---- ------------ -------------- ---- ------------ ----- MONTGOMERY COUNTY, PENNSYLVANIA LOWER PROVIDENCE 1000 Madison Avenue (O)....... 1990 1997 -- 1,713 12,559 172 1,714 12,730 14,444 PLYMOUTH MEETING 1150 Plymouth Meeting Mall (O) 1970 1997 -- 125 499 20,757 125 21,256 21,381 Five Sentry Parkway East (O).. 1984 1996 -- 642 7,992 475 642 8,467 9,109 Five Sentry Parkway West (O).. 1984 1996 -- 268 3,334 53 268 3,387 3,655 FAIRFIELD COUNTY, CONNECTICUT GREENWICH 500 West Putnam Avenue (O).... 1973 1998 10,069 3,300 16,734 936 3,300 17,670 20,970 NORWALK 40 Richards Avenue (O)........ 1985 1998 -- 1,087 18,399 1,538 1,087 19,937 21,024 SHELTON 1000 Bridgeport Avenue (O).... 1986 1997 -- 773 14,934 337 744 15,300 16,044 STAMFORD 419 West Avenue (F)........... 1986 1997 -- 4,538 9,246 49 4,538 9,295 13,833 500 West Avenue (F)........... 1988 1997 -- 415 1,679 180 415 1,859 2,274 550 West Avenue (F)........... 1990 1997 -- 1,975 3,856 322 1,975 4,178 6,153 600 West Avenue (F)........... 1999 1999 -- 2,305 2,863 795 2,305 3,658 5,963 650 West Avenue (F)........... 1998 1998 -- 1,328 -- 3,891 1,328 3,891 5,219 WASHINGTON, D.C. 1201 Connecticut Avenue, NW (O) 1940 1999 -- 14,228 18,571 773 14,228 19,344 33,572 1400 L Street, NW (O)......... 1987 1998 -- 13,054 27,423 724 13,054 28,147 41,201 1709 New York Avenue, NW (O).. 1972 1998 -- 19,898 29,686 2,829 19,898 32,515 52,413 PRINCE GEORGE'S COUNTY, MARYLAND LANHAM 4200 Parliament Place (O)..... 1989 1998 -- 2,114 13,546 467 1,393 14,734 16,127 BEXAR COUNTY, TEXAS SAN ANTONIO 200 Concord Plaza Drive (O)... 1986 1997 -- 2,387 31,825 844 2,393 32,663 35,056 84 N.E. Loop 410 (O).......... 1971 1997 -- 2,295 10,382 505 2,295 10,887 13,182 1777 N.E. Loop 410 (O)........ 1986 1997 -- 3,119 12,477 1,101 3,119 13,578 16,697 111 Soledad (O)............... 1918 1997 -- 2,004 8,017 593 2,004 8,610 10,614 COLLIN COUNTY, TEXAS PLANO 555 Republic Place (O)........ 1986 1997 -- 942 3,767 197 942 3,964 4,906 DALLAS COUNTY, TEXAS DALLAS 3030 LBJ Freeway (O).......... 1984 1997 -- 6,098 24,366 1,353 6,098 25,719 31,817 3100 Monticello (O)........... 1984 1997 -- 1,940 7,762 4,816 2,511 12,007 14,518 8214 Westchester (O).......... 1983 1997 -- 1,705 6,819 350 1,705 7,169 8,874 IRVING 2300 Valley View (O).......... 1985 1997 -- 1,913 7,651 745 1,913 8,396 10,309 RICHARDSON 1122 Alma Road (O)............ 1977 1997 -- 754 3,015 169 754 3,184 3,938 HARRIS COUNTY, TEXAS HOUSTON 10497 Town & Country Way (O).. 1981 1997 -- 1,619 6,476 918 1,619 7,394 9,013 ACCUMULATED PROPERTY LOCATION (2) DEPRECIATION - --------------------- ------------ MONTGOMERY COUNTY, PENNSYLVANIA LOWER PROVIDENCE 1000 Madison Avenue (O)....... 1,065 PLYMOUTH MEETING 1150 Plymouth Meeting Mall (O) 1,471 Five Sentry Parkway East (O).. 873 Five Sentry Parkway West (O).. 354 FAIRFIELD COUNTY, CONNECTICUT GREENWICH 500 West Putnam Avenue (O).... 1,403 NORWALK 40 Richards Avenue (O)........ 1,204 SHELTON 1000 Bridgeport Avenue (O).... 1,379 STAMFORD 419 West Avenue (F)........... 921 500 West Avenue (F)........... 196 550 West Avenue (F)........... 542 600 West Avenue (F)........... 92 650 West Avenue (F)........... 393 WASHINGTON, D.C. 1201 Connecticut Avenue, NW (O) 658 1400 L Street, NW (O)......... 1,878 1709 New York Avenue, NW (O).. 2,067 PRINCE GEORGE'S COUNTY, MARYLAND LANHAM 4200 Parliament Place (O)..... 913 BEXAR COUNTY, TEXAS SAN ANTONIO 200 Concord Plaza Drive (O)... 2,284 84 N.E. Loop 410 (O).......... 750 1777 N.E. Loop 410 (O)........ 1,030 111 Soledad (O)............... 633 COLLIN COUNTY, TEXAS PLANO 555 Republic Place (O)........ 339 DALLAS COUNTY, TEXAS DALLAS 3030 LBJ Freeway (O).......... 2,228 3100 Monticello (O)........... 899 8214 Westchester (O).......... 558 IRVING 2300 Valley View (O).......... 694 RICHARDSON 1122 Alma Road (O)............ 242 HARRIS COUNTY, TEXAS HOUSTON 10497 Town & Country Way (O).. 549
99 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS) SCHEDULE III
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF INITIAL COSTS COSTS PERIOD (1) ------------------ CAPITALIZED --------------------------- YEAR RELATED BUILDING AND SUBSEQUENT BUILDING AND PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL - --------------------- ----- -------- ------------ ---- ------------ -------------- ---- ------------ ----- 14511 Falling Creek (O)....... 1982 1997 -- 434 1,738 341 434 2,079 2,513 5225 Katy Freeway (O)......... 1983 1997 -- 1,403 5,610 831 1,403 6,441 7,844 5300 Memorial (O)............. 1982 1997 -- 1,283 7,269 279 1,710 7,121 8,831 1717 St. James Place (O)...... 1975 1997 -- 909 3,636 346 909 3,982 4,891 1770 St. James Place (O)...... 1973 1997 -- 730 2,920 412 730 3,332 4,062 TARRANT COUNTY, TEXAS EULESS 150 West Park Way (O)......... 1984 1997 -- 852 3,410 139 852 3,549 4,401 MARICOPA COUNTY, ARIZONA GLENDALE 5551 West Talavi Boulevard (O) 1991 1997 6,717 2,732 10,927 5,744 3,593 15,810 19,403 PHOENIX 19640 North 31st Street (O)... 1990 1997 7,112 3,437 13,747 4 3,437 13,751 17,188 SCOTTSDALE 9060 E. Via Linda Boulevard (O) 1984 1997 -- 3,720 14,879 -- 3,720 14,879 18,599 ARAPAHOE COUNTY, COLORADO AURORA 750 South Richfield Street (O) 1997 1998 -- 2,680 23,125 27 2,682 23,150 25,832 DENVER 400 South Colorado Boulevard (O) 1983 1998 -- 1,461 10,620 480 1,461 11,100 12,561 ENGLEWOOD 9359 East Nichols Avenue (O).. 1997 1998 -- 1,155 8,171 (444) 1,155 7,727 8,882 5350 South Roslyn Street (O).. 1982 1998 -- 862 6,831 193 862 7,024 7,886 BOULDER COUNTY, COLORADO BROOMFIELD 105 South Technology Court (O) 1997 1998 653 4,936 14 653 4,950 5,603 303 South Technology Court-A (O) 1997 1998 -- 623 3,892 5 623 3,896 4,520 303 South Technology Court-B (O) 1997 1998 -- 623 3,892 4 623 3,897 4,519 LOUISVILLE 1172 Century Drive (O)........ 1996 1998 -- 707 4,647 101 707 4,748 5,455 248 Centennial Parkway (O).... 1996 1998 -- 708 4,647 102 708 4,749 5,457 285 Century Place (O)......... 1997 1998 -- 889 10,133 23 891 10,154 11,045 DENVER COUNTY, COLORADO DENVER 3600 South Yosemite (O)....... 1974 1998 -- 556 12,980 28 556 13,008 13,564 DOUGLAS COUNTY, COLORADO ENGLEWOOD 67 Inverness Drive East (O)... 1996 1998 -- 1,034 5,516 18 1,035 5,533 6,568 384 Inverness Drive South (O). 1985 1998 -- 703 5,653 162 703 5,815 6,518 400 Inverness Drive (O)....... 1997 1998 -- 1,584 19,878 (896) 1,584 18,982 20,566 5975 South Quebec Street (O).. 1996 1998 -- 855 11,551 146 857 11,695 12,552 PARKER 9777 Pyramid Court (O)........ 1995 1998 -- 1,304 13,189 26 1,306 13,213 14,519 ACCUMULATED PROPERTY LOCATION (2) DEPRECIATION - --------------------- ------------ 14511 Falling Creek (O)....... 153 5225 Katy Freeway (O)......... 524 5300 Memorial (O)............. 494 1717 St. James Place (O)...... 319 1770 St. James Place (O)...... 276 TARRANT COUNTY, TEXAS EULESS 150 West Park Way (O)......... 299 MARICOPA COUNTY, ARIZONA GLENDALE 5551 West Talavi Boulevard (O) 1,127 PHOENIX 19640 North 31st Street (O)... 1,047 SCOTTSDALE 9060 E. Via Linda Boulevard (O) 1,132 ARAPAHOE COUNTY, COLORADO AURORA 750 South Richfield Street (O) 1,601 DENVER 400 South Colorado Boulevard (O) 764 ENGLEWOOD 9359 East Nichols Avenue (O).. 551 5350 South Roslyn Street (O).. 532 BOULDER COUNTY, COLORADO BROOMFIELD 105 South Technology Court (O) 349 303 South Technology Court-A (O) 293 303 South Technology Court-B (O) 293 LOUISVILLE 1172 Century Drive (O)........ 356 248 Centennial Parkway (O).... 355 285 Century Place (O)......... 684 DENVER COUNTY, COLORADO DENVER 3600 South Yosemite (O)....... 876 DOUGLAS COUNTY, COLORADO ENGLEWOOD 67 Inverness Drive East (O)... 415 384 Inverness Drive South (O). 428 400 Inverness Drive (O)....... 1,323 5975 South Quebec Street (O).. 856 PARKER 9777 Pyramid Court (O)........ 980
100 MACK-CALI REALTY CORPORATION REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000 (DOLLARS IN THOUSANDS) SCHEDULE III
GROSS AMOUNT AT WHICH CARRIED AT CLOSE OF INITIAL COSTS COSTS PERIOD (1) ------------------ CAPITALIZED --------------------------- 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 8415 Explorer (O)............. 1998 1999 -- 347 2,507 3,015 348 5,521 5,869 1975 Research Parkway (O)..... 1997 1998 -- 1,397 13,221 2,887 1,611 15,894 17,505 2375 Telstar Drive (O)........ 1998 1999 -- 348 2,507 3,014 348 5,521 5,869 JEFFERSON COUNTY, COLORADO LAKEWOOD 141 Union Boulevard (O)....... 1985 1998 -- 774 6,891 558 775 7,448 8,223 SAN FRANCISCO COUNTY, CALIFORNIA SAN FRANCISCO 795 Folsom Street (O)......... 1977 1999 -- 9,348 24,934 5,692 9,348 30,626 39,974 760 Market Street (O)......... 1908 1997 -- 5,588 22,352 38,717 13,499 53,158 66,657 HILLSBOROUGH COUNTY, FLORIDA TAMPA 501 Kennedy Boulevard (O)..... 1982 1997 -- 3,959 15,837 1,516 3,959 17,353 21,312 POLK COUNTY, IOWA WEST DES MOINES 2600 Westown Parkway (O)...... 1988 1997 -- 1,708 6,833 236 1,708 7,069 8,777 PROJECTS UNDER DEVELOPMENT.... -- 73,637 -- 83,475 73,637 83,475 157,112 FURNITURE, FIXTURES & EQUIPMENT -- -- -- 6,460 -- 6,460 6,460 - -------------------------------------------------------------------------------------------------------------------------------- TOTALS $478,187 $545,706 $2,692,501 $466,147 $561,210 $3,143,144 $3,704,354 ================================================================================================================================ ACCUMULATED PROPERTY LOCATION (2) DEPRECIATION - --------------------- ------------ EL PASO COUNTY, COLORADO COLORADO SPRINGS 8415 Explorer (O)............. 194 1975 Research Parkway (O)..... 1,047 2375 Telstar Drive (O)........ 194 JEFFERSON COUNTY, COLORADO LAKEWOOD 141 Union Boulevard (O)....... 590 SAN FRANCISCO COUNTY, CALIFORNIA SAN FRANCISCO 795 Folsom Street (O)......... 1,528 760 Market Street (O)......... 3,654 HILLSBOROUGH COUNTY, FLORIDA TAMPA 501 Kennedy Boulevard (O)..... 1,312 POLK COUNTY, IOWA WEST DES MOINES 2600 Westown Parkway (O)...... 604 PROJECTS UNDER DEVELOPMENT.... -- FURNITURE, FIXTURES & EQUIPMENT 2,673 - ----------------------------------------------- TOTALS $309,951 ===============================================
(1) The aggregate cost for federal income tax purposes at December 31, 2000 was approximately $2.78 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 101 MACK-CALI REALTY CORPORATION NOTE TO SCHEDULE III Changes in rental properties and accumulated depreciation for the periods ended December 31, 2000, 1999 and 1998 are as follows:
2000 1999 1998 ---- ---- ---- RENTAL PROPERTIES Balance at beginning of year $3,654,845 $3,467,799 $2,629,616 Additions 268,900 204,565 838,183 Retirements/Disposals (219,391) (17,519) -- ---------- ---------- ---------- Balance at end of year $3,704,354 $3,654,845 $3,467,799 ========== ========== ========== ACCUMULATED DEPRECIATION Balance at beginning of year $ 256,629 $ 177,934 $ 103,133 Depreciation expense 82,574 81,730 74,801 Retirements/Disposals (29,252) (3,035) -- ---------- ---------- ---------- Balance at end of year $ 309,951 $ 256,629 $ 177,934 ========== ========== ==========
102 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 22, 2001 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/ WILLIAM L. MACK Chairman of the Board February 22, 2001 - ---------------------------------- William L. Mack /s/ MITCHELL E. HERSH Chief Executive Officer February 22, 2001 - ---------------------------------- and Director Mitchell E. Hersh /s/ BARRY LEFKOWITZ Executive Vice President and February 22, 2001 - ---------------------------------- Chief Financial Officer Barry Lefkowitz /s/ JOHN J. CALI Director February 22, 2001 - ---------------------------------- John J. Cali /s/ MARTIN S. BERGER Director February 22, 2001 - ---------------------------------- Martin S. Berger /s/ BRENDAN T. BYRNE Director February 22, 2001 - ---------------------------------- Brendan T. Byrne /s/ JOHN R. CALI Director February 22, 2001 - ---------------------------------- John R. Cali /s/ NATHAN GANTCHER Director February 22, 2001 - ---------------------------------- Nathan Gantcher
103
NAME TITLE DATE ---- ----- ---- /s/ MARTIN D. GRUSS Director February 22, 2001 - ---------------------------------- Martin D. Gruss /s/ EARLE I. MACK Director February 22, 2001 - ---------------------------------- Earle I. Mack /s/ ALAN G. PHILIBOSIAN Director February 22, 2001 - ---------------------------------- Alan G. Philibosian /s/ IRVIN D. REID Director February 22, 2001 - ---------------------------------- Irvin D. Reid /s/ VINCENT TESE Director February 22, 2001 - ---------------------------------- Vincent Tese /s/ ROY J. ZUCKERBERG Director February 22, 2001 - ---------------------------------- Roy J. Zuckerberg
104 MACK-CALI REALTY CORPORATION 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 Amended and Restated Shareholder Rights Agreement, dated as of March 7, 2000, between Mack-Cali Realty Corporation and EquiServe Trust Company, N.A., as Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K dated March 7, 2000 and incorporated herein by reference). 4.2 Amendment No. 1 to the Amended and Restated Shareholder Rights Agreement, dated as of June 27, 2000, by and among Mack-Cali Realty Corporation and Equiserve Trust Company, N.A. (filed as Exhibit 4.1 to the Company's Form 8-K dated June 27, 2000). 4.3 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). 4.4 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). 105 EXHIBIT NUMBER EXHIBIT TITLE - ------ ------------- 4.5 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). 4.6 Supplemental Indenture No. 3 dated as of December 21, 2000, 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 December 21, 2000 and incorporated herein by reference). 4.7 Supplemental Indenture No. 4 dated as of January 29, 2001, 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 January 29, 2001 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 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). 10.4 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). *10.5 Employment Agreement dated as of December 5, 2000 between Michael Grossman and Mack-Cali Realty Corporation. 10.6 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). 10.7 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). 10.8 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). 10.9 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). 106 EXHIBIT NUMBER EXHIBIT TITLE - ------ ------------- *10.10 Amendment No. 3 to and Restatement of Revolving Credit Agreement dated as of June 22, 2000, by and among Mack-Cali Realty, L.P. and The Chase Manhattan Bank, Fleet National Bank and Other Lenders Which May Become Parties Thereto with The Chase Manhattan Bank, as administrative agent, Fleet National Bank, as syndication agent, Bank of America, N.A., as documentation agent, Chase Securities Inc. and FleetBoston Robertson Stephens Inc., as arrangers, Bank One, N.A., First Union National Bank and Commerzbank Aktiengesellschaft, as senior managing agents, PNC Bank National Association, as managing agent, and Societe Generale, Dresdner Bank AG, Wells Fargo Bank, National Association, Bank Austria Creditanstalt Corporate Finance, Inc., Bayerische Hypo-und Vereinsbank and Summit Bank, as co-agents. 10.11 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). 10.12 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). 10.13 Termination and Release Agreement, dated September 21, 2000, by and among Mack-Cali Realty Corporation, Mack-Cali Realty, L.P., Prentiss Properties Trust and Prentiss Properties Acquisition Partners, L.P. (filed as Exhibit 10.1 to the Company's Form 8-K dated September 21, 2000 and incorporated herein by reference). 10.14 2000 Employee Stock Option Plan (filed as Exhibit B to the Company's Proxy Statement for its Annual Meeting of Stockholders held on September 11, 2000 and incorporated herein by reference). 10.15 2000 Director Stock Option Plan (filed as Exhibit C to the Company's Proxy Statement for its Annual Meeting of Stockholders held on September 11, 2000 and incorporated herein by reference). *21 Subsidiaries of the Company. *23 Consent of PricewaterhouseCoopers LLP, independent accountants.
- ---------------------- *filed herewith 107