SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 31, 1996
Cali Realty Corporation
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(Exact name of registrant as specified in its charter)
Maryland 1-13274 22-3305147
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(state or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016
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Registrant's telephone number, including area code (908) 272-8000
N/A
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(Former name or former address, if changed since last report)
Item 5, Other Events
From November 4, 1996 through December 30, 1996, Cali Realty Corporation and
subsidiaries (the "Company") acquired through five individual transactions with
separate, unrelated sellers two three-building office complexes, a two-building
office complex and two individual office buildings (the "Acquisitions").
The aggregate initial acquisition cost of the Acquisitions was approximately
$403.9 million. The Company funded the aggregate initial acquisition cost with
cash, which was made available primarily from proceeds of a public common stock
offering of 17,537,500 shares on November 22, 1996, (the "November 1996
Offering") and with the assumption of mortgage debt.
The following summarizes the Company's Acquisitions:
On November 4, 1996, the Company acquired the property known as the Harborside
Financial Center ("Harborside"), a 1.9 million square foot office complex
located in Jersey City, New Jersey for an initial acquisition cost of
approximately $286.7 million. The purchase price included the assumption of
existing and seller-provided financing aggregating $150.0 million. The existing
financing of approximately $107.9 million bears interest at a fixed rate of 7.32
percent for a term of approximately nine years. The seller-provided financing of
approximately $42.1 million also has a term of nine years and initially bears
interest at a rate of 6.99 percent. The interest rate on the seller-provided
financing will be reset at the end of the third and sixth loan years based on
the yield of the three year treasury obligation at that time, with spreads of
110 basis points in years four through six and 130 basis points in years seven
through maturity. The balance of the initial acquisition cost, totaling
approximately $136.7 million, was paid in cash and was financed substantially
through drawings on the Company's credit facilities. The borrowings on the
Company's credit facilities for the acquisition of Harborside were subsequently
repaid from the net proceeds received from the November 1996 Offering. As part
of the purchase, the Company also acquired 11.3 acres of land fully zoned and
permitted for an additional 4.1 million square feet of development and the water
rights associated with 27.4 acres of land extending into the Hudson River
immediately east of Harborside, including two piers with an area of 5.8 acres.
The terms of the acquisition of the vacant parcels provide for payments (with an
estimated net present value of approximately $5.3 million) to be made to the
seller for development rights ("Development Rights Contingent Obligation") if
and when the Company commences construction on the site during the next several
years. However, the agreement provides, among other things, that even if the
Company does not commence construction, the seller may nevertheless require the
Company to acquire these rights during the six-month period after the end of the
sixth year. After such period, the seller's option lapses, but any development
in years 7 through 30 will require a payment, on an increasing scale, for the
development rights.
On November 7, 1996, the Company acquired Five Sentry Parkway East & West ("Five
Sentry"), a two-building office complex comprised of approximately 131,000 net
rentable square feet located in Plymouth Meeting, Montgomery County,
Pennsylvania for approximately $12.4 million in cash, which was drawn from one
of the Company's credit facilities. The borrowing on the credit facility
for the acquisition of Five Sentry was subsequently repaid from the net proceeds
received from the November 1996 Offering.
On December 10, 1996, the Company acquired 300 Tice Boulevard ("Whiteweld"), a
230,000 net rentable square foot office building located in Woodcliff Lake,
Bergen County, New Jersey, for approximately $35.0 million in cash, made
available from the net proceeds received from the November 1996 Offering.
On December 16, 1996, the Company acquired One Bridge Plaza ("One Bridge"), a
200,000 net rentable square foot office building located in Fort Lee, Bergen
County, New Jersey, for approximately $26.8 million in cash, made available from
the net proceeds received from the November 1996 Offering.
On December 17, 1996, the Company acquired the International Court at Airport
Business Center ("Airport Center"), a three-building office complex comprised of
approximately 370,000 net rentable square feet located in Lester, Delaware
County, Pennsylvania for approximately $43.0 million in cash, made available
from the net proceeds received from the November 1996 Offering.
Each of the Acquisitions were pursuant to individual agreements for the sale and
purchase of each property between each selling entity and the Company. The
factors considered by the Company in determining the price to be paid included
their historical and expected cash flow, nature of the tenants and terms of
leases in place, occupancy rates, opportunities for alternative and new
tenancies, current operating costs and real estate taxes on the properties and
anticipated changes therein under Company ownership, the physical condition and
locations of the properties, the anticipated effect on the Company's financial
results (including particularly funds from operations) and the ability to
sustain and potentially increase its distributions to Company stockholders, and
other factors. The Company took into consideration capitalization rates at which
it believes other comparable office buildings had recently sold, but determined
the price it was willing to pay primarily on the factors discussed above
relating to the properties themselves and their fit with the Company's
operations. No separate independent appraisals were obtained in connection with
the acquisition of the properties by the Company. The Company, after
investigation of the properties, is not aware of any material factors, other
than those enumerated above, that would cause the financial information reported
not to be necessarily indicative of future operating results.
Pursuant to the Company's Registration Statement on Form S-3 (File No.
333-09081), on November 22, 1996, the Company completed an underwritten public
offering and sale of 17,537,500 shares of its common stock using several
different underwriters to underwrite such public offer and sale (which included
an exercise of the underwriters' over-allotment option of 2,287,500 shares). The
Company received approximately $441.0 million in net proceeds (after offering
costs) from the November 1996 Offering, and has used such funds to acquire
certain of the Acquisitions, pay down outstanding borrowings on its revolving
credit facilities, and invest the excess funds in short-term investments.
Item 7, Financial Statements, Pro Forma Financial Information and Exhibits
As of December 30, 1996, the Company has purchased twenty office buildings and
three portfolios of office buildings and office/flex space since its formation
in 1994; one office building in 1994, four office buildings and three portfolios
in 1995, and fifteen office buildings in 1996.
(a) Financial Statements
The following summarizes the financial information included in this
report:
(1) Interim Statement of Revenue and Certain Operating Expenses for
Harborside for the nine months ended September 30, 1996 (unaudited),
(2) Interim Statement of Revenue and Certain Expenses for Five Sentry
for the nine months ended September 30, 1996 (unaudited),
(3) Interim Statement of Revenue and Certain Expenses for Whiteweld for
the nine months ended September 30, 1996 (unaudited),
(4) Audited Statement of Revenue and Certain Expenses for the year ended
December 31, 1995 and interim financial information for the nine
months ended September 30, 1996 (unaudited) for One Bridge, and an
(5) Interim Combined Statement of Revenue and Certain Expenses for
Airport Center for the nine months ended September 30, 1996
(unaudited).
Note: Audited Statements for the year ended December 31, 1995 for Harborside,
Five Sentry, Whiteweld and Airport Center were previously included in the
Company's two Current Reports on Form 8-K, both filed on October 29, 1996 (both
file no. 1-13274).
(b) Pro Forma Financial Information (unaudited)
Unaudited pro forma financial information for the Company is presented as
follows:
o Condensed consolidated balance sheet as of September 30, 1996.
o Condensed consolidated statements of operations for the nine
months ended September 30, 1996 and the year ended December 31,
1995.
(c) Exhibits
Exhib. No. 10.57:
Sale Agreement between Metropolitan Life Insurance Company, a New York
corporation, as Seller, and Cali Realty Acquisition Corp., a Delaware
corporation, as Purchaser, as of November 26, 1996.
Exhib. No. 10.58:
Amendment to Sale Agreement as of December 4, 1996, by and between
Metropolitan Life Insurance Company, a New York corporation, and Cali
Realty Acquisition Corp., a Delaware corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Cali Realty
Corporation has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALI REALTY CORPORATION
December 31, 1996 By: /s/ Thomas A. Rizk
------------------
Thomas A. Rizk
President and Chief Executive Officer
December 31, 1996 By: /s/ Barry Lefkowitz
-------------------
Barry Lefkowitz
Vice President - Finance and
Chief Financial Officer
CALI REALTY CORPORATION
Index to Financial Statements
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THE ACQUISITIONS
Harborside:
Statement of Revenue and Certain Operating Expenses for
the Nine Months Ended September 30, 1996 (unaudited)...................
Notes to Statement of Revenue and Certain Expenses........................
Five Sentry:
Statement of Revenue and Certain Expenses for
the Nine Months Ended September 30, 1996 (unaudited)...................
Notes to Statement of Revenue and Certain Expenses........................
Whiteweld:
Statement of Revenue and Certain Expenses for
the Nine Months Ended September 30, 1996 (unaudited)...................
Notes to Statement of Revenue and Certain Expenses........................
One Bridge:
Report of Independent Accountants..........................................
Statements of Revenue and Certain Expenses for:
The Year Ended December 31, 1995 (audited)...........................
The Nine Months Ended September 30, 1996 (unaudited)................
Notes to Statements of Revenue and Certain Expenses.......................
Airport Center:
Combined Statement of Revenue and Certain Expenses for
the Nine Months Ended September 30, 1996 (unaudited)...................
Notes to Statement of Revenue and Certain Expenses........................
CALI REALTY CORPORATION
Pro Forma (unaudited):
Condensed Consolidated Balance Sheet as of September 30, 1996..............
Condensed Consolidated Statements of Operations for the Nine
Months Ended September 30, 1996 and for the Year Ended
December 31, 1995......................................................
HARBORSIDE FINANCIAL CENTER
Statement of Revenue and Certain Operating Expenses
For the nine-month period ended September 30, 1996 (Unaudited)
Revenue:
Base rent ...................................................... $24,474,056
Escalations .................................................... 6,277,834
Other income ................................................... 199,643
-----------
Total revenue ................................... 30,951,533
-----------
Certain operating expenses:
Real estate taxes .............................................. 2,722,888
Utilities ...................................................... 812,106
Operating services ............................................. 3,016,131
Other property ................................................. 1,675,351
-----------
Total operating expenses ........................ 8,226,476
-----------
Excess of revenue over certain operating expenses $22,725,057
===========
The accompanying notes are an integral part of this summary.
HARBORSIDE FINANCIAL CENTER
Notes to Statement of Revenue
and Certain Operating Expenses
1. Organization and Nature of Business:
The property known as Harborside Financial Center ("Harborside") is a
three building office complex (Plazas I, II, and III) located in Jersey
City, New Jersey. At September 30, 1996 Harborside consists of
undeveloped land and three operating office buildings which are
approximately 95 percent leased.
Harborside was owned by several partnerships, which were directly or
indirectly owned by a Pension Trust which is managed by Jones Lang
Wootton Realty Advisors under an investment advisory contract. On
November 4, 1996, Harborside was sold to subsidiaries of Cali Realty
Corporation.
2. Basis of Presentation:
The Statement of Revenue and Certain Operating Expenses (the "Historical
Summary") has been prepared for the purpose of complying with the
provisions of Article 3.14 of Regulation S-X promulgated by the
Securities and Exchange Commission. This historical summary includes the
historical revenue and certain operating expenses of Harborside,
exclusive of interest income, mortgage interest expense and depreciation
and amortization, which may not be comparable to the corresponding
amounts reflected in the future operations of Harborside.
The preparation of financial statements in conformity with generally
accepted accounting principles requires Harborside's 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 revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
Harborside's operations consist of rental income earned from tenants
under leasing arrangements which generally provide for minimum rents,
escalations and charges to tenants for their pro rata share of real
estate taxes and operating expenses. All leases have been accounted for
as operating leases. Rental income is recognized by amortizing the
aggregate lease payments on the straight-line basis over the entire terms
of the leases.
HARBORSIDE FINANCIAL CENTER
Notes to Statement of Revenue
and Certain Operating Expenses, Continued
3. Leases:
Harborside is leased to tenants under various noncancelable operating
leases with unexpired terms ranging from 1 to 17 years. Minimum future
rentals on noncancelable leases which extend for more than one year at
September 30, 1996 are as follows:
Three months ended December 31, 1996 $ 7,420,000
Year ended December 31, 1997 29,609,000
1998 31,098,000
1999 30,755,000
2000 26,900,000
Thereafter 178,549,000
------------
$304,331,000
============
Certain leases have provisions for additional rent based on operating
expenses and real estate taxes. Such amounts are reflected in the
Historical Summary as escalation revenue. Minimum rentals above do not
include recovery of operating expenses and real estate taxes.
Included in minimum future rentals are approximately $91 million from the
American Institute of Certified Public Accountants, $41 million from Bank
of Tokyo, $39 million from Dean Witter Trust Company, $32 million from
Telerate Systems Incorporated, and $20 million from BT Harborside Inc.,
five major tenants who paid approximately $4.8 million, $2.7 million,
$3.8 million, $7.6 million, and $2.2 million, respectively, in base and
additional rent during 1996 and who occupy approximately 13 percent, 7
percent, 10 percent, 20 percent and 21 percent of the leasable space,
respectively.
Also included in future minimum rentals is approximately $28 million from
Kinney Parking Systems, which operates the parking facility, and paid
approximately $2.2 million in base rent for the nine months ended
September 30, 1996.
4. Related Parties:
Institutional Realty Management, LLC ("IRM"), which replaced Jones Lang
Wootton USA ("JLW-USA") during April 1996, provides property management
services to Harborside. For its services IRM and JLW-USA received a
management fee up to 5% of gross income collected, as defined in the
management agreements. For the nine-month period ended September 30,
1996, fees incurred under these agreements amounted to $1,127,799, which
is included in other property costs in the Historical Summary.
HARBORSIDE FINANCIAL CENTER
Notes to Statement of Revenue
and Certain Operating Expenses, Continued
5. Tax Abatements:
On May 12, 1988, tax abatements for Harborside were obtained from the
Municipal Council of the City of Jersey City. The abatements, which
commenced in 1990, are for a term of 15 years and have been granted in
consideration for annual service charges in lieu of real estate taxes on
the building. The service charges for the buildings are equal to 2
percent of Total Project Costs, as defined, in year one and increase by
$75,000 per annum through year fifteen. Total Project Costs, as defined,
for Plaza II and III are $148,712,000. The service charges for the
remaining undeveloped parcels will be equal to 2 percent of Total Project
Costs for each unit in year one and increase to 3 percent by year
fifteen. In addition, BT Harborside Inc., a tenant which occupies space
in Plaza I, obtained its own tax abatement.
Pursuant to Section 7 of the Financial Agreement Urban Renewal
Corporations or Association Annual Service Charge in Lieu of Taxes, dated
September 28, 1988 between the owners of Harborside and the City of
Jersey City in the State of New Jersey, Harborside is required to pay
Jersey City Excess Profits, as defined. No payments for Excess Profits
were due to Jersey City for the nine-month period ended September 30,
1996.
FIVE SENTRY PARKWAY EAST AND WEST
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
Revenue
Base rents .............................................. $1,467,522
----------
Certain expenses
Real estate taxes ...................................... 130,742
Utilities .............................................. 27,718
Operating services ..................................... 288,611
General and administrative ............................. 78,198
----------
525,269
----------
Revenue in excess of certain expenses .................... $ 942,253
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
FIVE SENTRY PARKWAY EAST AND WEST
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying statements of revenues and certain
expenses, Five Sentry Parkway East and West (the "Properties") are two
office buildings located in Plymouth Meeting, Montgomery County,
Pennsylvania in an office park known as Sentry Parkway which were
acquired by a subsidiary of Cali Realty Corporation (the "Company") on
November 7, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying statement of revenue and certain expenses has
been prepared on the accrual basis of accounting.
The accompanying financial statement is not representative of
the actual operations for the period presented, as certain
revenues and expenses, which may not be comparable to the
revenues and expenses to be earned or incurred by the Company in
the future operations of the Properties have been excluded.
Revenues excluded consist of interest and other revenues
unrelated to the continuing operations of the Properties.
Expenses excluded consist of depreciation of the building and
improvements, and amortization of organization and other
intangible costs and other expenses not directly related to the
future operations of the Properties.
b. Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the period.
Actual results could differ from these estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the
terms of the respective leases.
FIVE SENTRY PARKWAY EAST AND WEST
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
(continued)
3. LEASES
Leases for the Properties have various remaining lease terms of up to
six years with options to certain tenants for renewal. Minimum rental
amounts for certain leases increase as set forth under the terms of
each lease. Future minimum rents to be received over the next five
years and thereafter from tenants as of September 30, 1996 are as
follows:
Three months ended December 31, 1996 $ 516,561
Year ended December 31, 1997 2,054,709
Year ended December 31, 1998 1,911,808
Year ended December 31, 1999 1,692,182
Year ended December 31, 2000 1,503,396
Thereafter 523,824
-----------
$ 8,202,480
===========
For the nine months ended September 30, 1996, two tenants contributed
88.9 percent of base rents. Merck & Co. contributed 73.7 percent and
Selas Fluid Processing Corp. contributed 15.2 percent of the base rents
for the nine months ended September 30, 1996.
4. GENERAL AND ADMINISTRATIVE EXPENSES
The Properties incurred management fees based on three and one-quarter
percent of revenues received which totaled $49,807 for the nine months
ended September 30, 1996.
5. INTERIM STATEMENTS
The interim financial data for the nine months ended September 30, 1996 is
unaudited; however, in the opinion of management, the interim data includes all
adjustments, consisting only of normally recurring adjustments, necessary for a
fair statement of the results for the interim period. The results for the period
presented are not necessarily indicative of the results to be expected for the
entire fiscal year or any other period.
WHITEWELD CENTRE
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
Revenue
Base rents ............................................. $2,986,058
Recoveries from tenants ................................ 249,616
----------
3,235,674
----------
Certain Expenses
Real estate taxes ...................................... 342,563
Utilities .............................................. 560,345
Operating services ..................................... 465,299
General and administrative ............................. 153,158
----------
1,521,365
----------
Revenue in excess of certain expenses .................... $1,714,309
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
WHITEWELD CENTRE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying statements of revenue and certain
expenses, Whiteweld Centre (the "Property") is an office building
located in Woodcliff Lake, New Jersey acquired by a subsidiary of Cali
Realty Corporation (the "Company") on December 10, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying statements of revenue and certain expenses have
been prepared on the accrual basis of accounting.
The accompanying financial statements are not representative of
the actual operations or the period presented, as certain
revenues and expenses, which may not be comparable to the
revenues and expenses to be earned or incurred by the Company in
the future operations of the Property have been excluded.
Revenues excluded consist of interest unrelated to the continuing
operations of the Property. Expenses excluded consist of
depreciation of the building and improvements, and amortization
of organization and other intangible costs and other expenses not
directly related to the future operations of the Property.
b. Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the period.
Actual results could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-lined basis over the
terms of the lease. Certain lease agreements contain provisions
which provide for reimbursements by tenants of real estate taxes,
utility and other operating costs, generally over established
base year amounts, as defined in the tenant lease.
3. LEASES
Leases for the Property have various lease terms up to twelve years
with options to certain tenants for renewal. Minimum rental amounts for
certain leases increase as set forth under the terms of each lease.
WHITEWELD CENTRE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
3. LEASES (continued)
Future minimum rents to be received over the next five years and
thereafter from tenants as of December 31, 1995 are as follows:
Year ended December 31, 1996 $ 3,959,970
Year ended December 31, 1997 4,097,187
Year ended December 31, 1998 3,416,332
Year ended December 31, 1999 3,032,853
Year ended December 31, 2000 2,796,151
Thereafter 3,705,724
------------
$ 21,008,217
============
For the nine months ended September 30, 1996, four tenants contributed
63.4 percent of base rents as follows:
Xerox Corp. 19.5%
Medco Containment Services, Inc. 17.9
Chase Manhattan Mortgage Corp. 13.7
Comdisco, Inc. 12.3
----
63.4%
====
4. GENERAL AND ADMINISTRATIVE EXPENSES
During the period covered by this statement, the Property was
owner-managed and in lieu of management fees, incurred payroll and
related costs, which are included in general and administrative
expenses of $98,480 for the nine months ended September 30, 1996.
5. INTERIM STATEMENT
The interim financial data for the nine months ended September 30, 1996
is unaudited; however, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the
interim period. The results for the period presented are not
necessarily indicative of the results to be expected for the entire
fiscal year or any other period.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
Cali Realty Corporation
Cranford, New Jersey
We have audited the accompanying Statement of Revenue and Certain Expenses
for the property known as One Bridge Plaza for the year ended December 31, 1995.
This financial statement is the responsibility of management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses was prepared as
described in Note 2, for the purpose of complying with the rules and regulations
of the Securities and Exchange Commission (for inclusion in the Form 8-K of Cali
Realty Corporation) and is not intended to be a complete presentation of One
Bridge Plaza revenues and expenses.
In our opinion the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses for One Bridge Plaza,
on the basis described in Note 2, for the year ended December 31, 1995, in
conformity with generally accepted accounting principles ("GAAP").
/s/ Schonbraun Safris Sternlieb & Co., L.L.C.
---------------------------------------------
SCHONBRAUN SAFRIS STERNLIEB & CO., L.L.C.
Certified Public Accountants
Roseland, New Jersey
December 16, 1996
ONE BRIDGE PLAZA
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
Revenue
Base rents ............................................. $3,274,888
Recoveries from tenants ................................ 288,203
----------
3,563,091
----------
Certain Expenses
Real estate taxes ...................................... 467,654
Utilities .............................................. 416,766
Operating services ..................................... 553,990
General and administrative ............................. 258,721
----------
1,697,131
----------
Revenue in excess of certain expenses .................... $1,865,960
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
ONE BRIDGE PLAZA
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. Organization and Operation of Property
For the purpose of the accompanying statements of revenue and certain
expenses, One Bridge Plaza (the "Property") is an office building
located in Fort Lee, New Jersey acquired by a subsidiary of Cali Realty
Corporation (the "Company") on December 16, 1996.
2. Summary of Significant Accounting Policies
a. Basis of Presentation
The accompanying statements of revenue and certain expenses have
been prepared on the accrual basis of accounting.
The accompanying financial statements are not representative of
the actual operation for the periods presented, as certain
revenues and expenses, which may not be comparable to the
revenues and expenses to be earned or incurred by the Company in
the future operations of the Property, have been excluded.
Revenues excluded consist of interest unrelated to the continuing
operations of the Property. Expenses excluded consist of
depreciation of the building and improvements, and amortization
of organization and other intangible costs and other expenses not
directly related to the future operations of the Property.
b. Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the period.
Actual results could differ from those estimates.
c. Revenue Recognition
Base rents are recognized on a straight-line basis over the terms
of the lease. Certain lease agreements contain provisions which
provide for reimbursements by tenants of real estate taxes,
utility and other operating costs, generally over established
base year amounts, as defined in the tenant lease.
3. LEASES
Leases for the Property have various lease terms up to twelve years
with options to certain tenants for renewal. Minimum rental amounts for
certain leases increase as set forth under the terms of each lease.
ONE BRIDGE PLAZA
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
3. LEASES (continued)
Future minimum rents to be received over the next five years and
thereafter from tenants as of December 31, 1995 are as follows:
1996 $ 3,481,190
1997 3,683,213
1998 3,706,315
1999 3,558,219
2000 3,033,475
Thereafter 8,269,675
-----------
$25,732,087
===========
For the year ended December 31, 1995 and the nine months ended
September 30, 1996, three tenants contributed an aggregate of 41.0
percent and 48.2 percent of base rents, respectively, as follows:
Year Ended Nine Months Ended
December 31, September 30,
1995 1996
---- ----
Bozell Worldwide 16.9% 19.0%
Complete Executive Offices 10.4 13.6
Broadview Associates 13.7 15.6
---- ----
41.0% 48.2%
==== ====
4. GENERAL AND ADMINISTRATIVE EXPENSES
During the periods covered by these statements, the Property incurred
management fees based on 1.5 percent of rent collections through
November 14, 1995 and one percent thereafter. These fees amounted to
$53,478 and $34,116 for the year ended December 31, 1995 and nine
months ended September 30, 1996, respectively. In addition to
management
4. GENERAL AND ADMINISTRATIVE EXPENSES (continued)
fees, general and administrative expenses includes salaries and related
costs amounting to $69,649 and $51,378 for the year ended December 31,
1995 and nine months ended September 30, 1996, respectively.
5. INTERIM STATEMENT
The interim financial data for the nine months ended September 30, 1996
is unaudited; however, in the opinion of management, the interim data
includes all adjustments, consisting only of normally recurring
adjustments, necessary for a fair statement of the results for the
interim period. The results for the period presented are not
necessarily indicative of the results to be expected for the entire
fiscal year or any other period.
ONE BRIDGE PLAZA
STATEMENT OF REVENUE AND CERTAIN EXPENSES
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
Revenue
Base rents ............................................. $2,625,711
Recoveries from tenants ................................ 250,454
----------
2,876,165
----------
Certain expenses
Real estate taxes ...................................... 329,175
Utilities .............................................. 331,614
Operating services ..................................... 489,009
General and administrative ............................. 155,676
----------
1,305,474
----------
Revenue in excess of certain expenses .................... $1,570,691
==========
The accompanying notes are an integral part of this Statement of Revenue and
Certain Expenses.
International Court at Airport Business Center
Combined Statement of Revenue and Certain Expenses (Unaudited)
The period from January 1, 1996 to September 30, 1996
Revenue:
Base rents ............................................. $5,399,886
Escalations and recoveries from tenants ................ 757,984
Other .................................................. 30,454
----------
6,188,324
Certain expenses:
Real estate taxes ...................................... 603,513
Utilities .............................................. 814,725
Operating services ..................................... 948,613
General and administrative ............................. 287,248
----------
2,654,099
----------
Revenue in excess of certain expenses ...................... $3,534,225
==========
See accompanying notes.
International Court at Airport Business Center
Notes to Combined Statement of Revenue and Certain Expenses
(Unaudited)
The period from January 1, 1996 to September 30, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The International Court at Airport Business Center (the "Airport Center")
consists of three individual multi-tenant office buildings in the Airport
Business Center located in Lester, Pennsylvania. The Airport Center properties
have been acquired by a subsidiary of Cali Realty Corporation, who will
subsequently file a Current Report on Form 8-K with the Securities and Exchange
Commission.
Basis of Presentation
The accompanying unaudited interim statement has been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. The accounts of
each of the properties comprising the Airport Center are combined in the
statement of revenue and certain expenses. There are no inter-property accounts
to be eliminated. The financial statement is not representative of the actual
operations for the period presented as certain expenses that may not be
comparable to the expenses expected to be incurred in the proposed future
operations of the Airport Center have been excluded. Expenses excluded consist
of interest, amortization, professional fees, and other costs not directly
related to the future operations of the Airport Center.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Revenue Recognition
Base rents are recognized on a straight-line basis over the term of the lease.
International Court at Airport Business Center
Notes to Combined Statement of Revenue and Certain Expenses
(Unaudited) (continued)
1. Organization and Summary of Significant Accounting Policies (continued)
Unaudited Interim Financial Statement
In the opinion of the management of the Airport Center, all adjustments and
eliminations, consisting only of normal recurring adjustments, necessary to
present fairly the combined statement of revenue and certain expenses of the
Airport Center for the period from January 1, 1996 to September 30, 1996, have
been included. The results of operations for such interim period are not
necessarily indicative of the results for the full year.
2. Properties
The three multi-tenant office properties comprising the Airport Center are as
follows:
Property Name Location
------------- --------
International Court I Lester, PA
International Court II Lester, PA
International Court III Lester, PA
3. Related Party Transactions
The Airport Center is managed by The Henderson Group and are related by way of
common ownership (the Henderson Family). The Airport Center has engaged in
transactions with affiliates of the Henderson Group as follows:
The period from
January 1, 1996 to
September 30, 1996
------------------
Base rents .................................................... $178,262
Escalations and recoveries from tenants ....................... $ 32,346
Repair and maintenance expense (operating services) ........... $167,805
Management fees (general and administrative) .................. $185,906
Marketing fee expense (general and administrative) ............ $ 33,192
Management fees are charged based upon 3% of rents collected.
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
As of September 30, 1996 (in thousands)
The following unaudited pro forma condensed consolidated balance sheet is
presented as if the purchase of the Acquisitions by the Company and the November
1996 Offering of 17,537,500 shares of common stock had occurred on September 30,
1996. This unaudited pro forma condensed consolidated balance sheet should be
read in conjunction with the pro forma condensed consolidated statement of
operations of the Company and the historical financial statements and notes
thereto of the Company included in the Company's Form 10-K for the year ended
December 31, 1995 and the Company's Form 10-Q for the nine months ended
September 30, 1996, respectively.
The pro forma condensed consolidated balance sheet is unaudited and is not
necessarily indicative of what the actual financial position of the Company
would have been had the aforementioned transactions actually occurred on
September 30, 1996, nor does it purport to represent the future financial
position of the Company.
Company
Company Pro Forma Pro Forma
ASSETS Historical Adjustments(a) (unaudited)
- ------ ---------- -------------- -----------
Rental property, net ..................... $ 376,468 $ 409,135 $ 785,603
Cash and cash equivalent ................. 10,351 187,117 197,468
Unbilled rents receivable ................ 18,959 -- 18,959
Restricted cash .......................... 2,650 -- 2,650
Other assets ............................. 13,411 -- 13,411
---------- ---------- ----------
Total assets ............................. $ 421,839 $ 596,252 $1,018,091
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages and loans payable .............. $ 112,856 $ 155,252 $ 268,108
Dividends and distributions payable ...... 9,615 -- 9,615
Accounts payable and accrued expenses .... 3,492 -- 3,492
Rents received in advance
and security deposits .................. 3,819 -- 3,819
Accrued interest payable ................. 349 -- 349
---------- ---------- ----------
Total liabilities ........................ $ 130,131 $ 155,252 $ 285,383
---------- ---------- ----------
Minority interest of unitholders in
Operating Partnership .................. 27,375 -- 27,375
Common stock, $.01 a value ............... 187 175 362
Additional paid in capital ............... 263,690 440,825 704,515
Retained earnings ........................ 456 -- 456
---------- ---------- ----------
Total stockholders' equity ............... 264,333 441,000 705,333
---------- ---------- ----------
Total liabilities and stockholders' equity $ 421,839 $ 596,252 $1,018,091
========== ========== ==========
See accompanying footnote on subsequent page.
(a) Represents the purchase cost of the Acquisitions for $409,135. Included in
the cost of the Acquisitions and as a corresponding liability is the
Development Rights Contingent Obligation with a net present value of
approximately $5,252. The initial acquisition cost of Harborside was
financed with a combination of assumed mortgage debt of $107,912,
seller-provided mortgage debt of $42,088, and approximately $136,700 in
cash made available through the Company's revolving credit facilities. In
addition, adjustments reflect the net proceeds (after offering costs) from
the November 1996 Offering of $441,000. The net proceeds from the offering
are reflected as being used to reduce the outstanding borrowings under the
Company's revolving credit facilities and fund the Acquisitions, and the
balance is held in cash and cash equivalents.
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Nine Months Ended September 30, 1996
And the Year Ended December 31, 1995
The unaudited pro forma condensed consolidated statements of operations for the
nine months ended September 30, 1996 and the year ended December 31, 1995 are
presented as if each of the following had occurred on January 1, 1995 (i) the
partial prepayment by the Company of its Mortgage Financing ("Partial
Prepayment") in 1996, (ii) the disposition by the Company of its property at 15
Essex Road in Paramus, New Jersey ("Essex Road") in 1996, (iii) the acquisition
by the Company of 103 Carnegie, Rose Tree and the Mount Airy Road Buildings in
1996, (iv) the net proceeds received by the Company as a result of its common
stock offering of 3,450,000 shares on August 13, 1996 (the "August 1996
Offering"), (v) the purchase by the Company of the Acquisitions, (vi) the net
proceeds received by the Company as a result of the November 1996 Offering,
(vii) the acquisition by the Company of the properties purchased during 1995,
(viii) the net proceeds received by the Company as a result of its common stock
offering on November 17, 1995, and (ix) the purchase by the Company on March 8,
1995 of 100,000 shares of its common stock for constructive retirement. Items
(i) through (iv) above are to be collectively referred to as the "YTD Sept. 1996
Events," items (v) and (vi) are to be collectively referred to as the "Reported
Events", and items (iv), (vi) and (viii) are to be collectively referred to as
the "Offerings".
Such pro forma information is based upon the historical unaudited consolidated
results of operations of the Company for the nine months ended September 30,
1996 and the historical consolidated results of operations of the Company for
the year ended December 31, 1995, after giving effect to the transactions
described above. The pro forma condensed consolidated statements of operations
should be read in conjunction with the pro forma condensed consolidated balance
sheet of the Company and the historical financial statements and notes thereto
of the Company included in the Company's Form 10-K for the year ended December
31, 1995 and the Company's Form 10-Q for the nine months ended September 30,
1996, respectively.
The unaudited pro forma condensed consolidated statements of operations are not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the transactions had been completed as set forth above,
nor does it purport to represent the Company's results of operations for future
periods.
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands, except per share amount)
(unaudited)
Pro Forma Adj.
for YTD Pro Forma Adj.
Company Sept. 1996 for Reported Company
REVENUES Historical Events (a) Sub-total Events (b) Pro Forma
- -------- ---------- ---------- --------- ---------- ---------
Base rents ....................................... $ 51,713 $ 2,100 $ 53,813 $ 40,605 $ 94,418
Escalations and recoveries from tenants .......... 9,646 210 9,856 7,536 17,392
Parking and other ................................ 1,453 -- 1,453 230 1,683
Interest income .................................. 282 -- 282 -- 282
-------- -------- -------- -------- --------
Total revenues ................................... 63,094 2,310 65,404 48,371 113,775
-------- -------- -------- -------- --------
EXPENSES
Real estate taxes ................................ 6,342 270 6,612 4,130 10,742
Utilities ........................................ 5,965 180 6,145 2,547 8,692
Operating services ............................... 7,952 163 8,115 5,208 13,323
General and administrative ....................... 3,427 94 3,521 2,349 5,870
Depreciation and amortization .................... 10,655 284 10,939 6,605 17,544
Interest expense (c) ............................. 8,288 n/a 8,288 6,177 14,465
-------- -------- -------- -------- --------
Total expense ................................... 42,629 991 43,620 27,016 70,636
-------- -------- -------- -------- --------
Income before gain on sale of rental
property, minority interest and
extraordinary item ........................... 20,465 1,319 21,784 21,355 43,139
Gain on sale of rental property .................. 5,658 (5,658) -- -- --
Minority interest (d) ............................ 3,866 n/a 3,866 (38) 3,828(d)
-------- -------- -------- -------- --------
Income before extraordinary item ................. $ 22,257 ($ 4,339) $ 17,918 $ 21,393 $ 39,311
======== ======== ======== ======== ========
Pro forma weighted average common shares outstanding (e) 27,892(e)
======
Pro forma income before extraordinary item per common share $1.41
=====
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands)
(a) Reflects:
Revenues and expenses of the properties acquired from January 1, 1996 through
July 23, 1996 for the period January 1, 1996 through the dates of acquisition,
as follows:
Base Escalations/ Real Estate Operating General and
Property Date Rents(1) Recoveries Taxes Utilities Services Administrative Depreciation(2)
- -------- ---- -------- ---------- ----- --------- -------- -------------- ---------------
Carnegie March 20, 1996 $ 386 $ 31 $ 54 $ 56 $ 58 $ 11 $ 49
Rose Tree May 2, 1996 1,312 115 165 180 179 43 215
Mount Airy Buildings July 23, 1996 665 101 101 -- 4 51 107
------ ---- ---- ---- ---- ---- ----
$2,363 $247 $320 $236 $241 $105 $371
------ ---- ---- ---- ---- ---- ----
Revenues and expenses of the property disposed of in 1996 for the period January
1, 1996 through the disposition date, as follows:
Base Escalations/ Real Estate Operating General and
Event Date Rents(1) Recoveries Taxes Utilities Services Administrative Depreciation(2)
- ----- ---- -------- ---------- ----- --------- -------- -------------- ---------------
Essex Road March 20, 1996 ($263) ($37) ($50) ($56) ($78) ($11) ($81)
----- ---- ---- ---- ---- ---- ----
Reduction of expenses as a result of the Partial Prepayment in 1996 for the
period January 1, 1996 through March 12, 1996, as follows:
Base Escalations/ Real Estate Operating General and
Event Date Rents(1) Recoveries Taxes Utilities Services Administrative Depreciation(2)
- ----- ---- -------- ---------- ----- --------- -------- -------------- ---------------
Partial Prepayment March 12, 1996 -- -- -- -- -- -- ($6)
------ ---- ---- ---- ---- --- ----
Total Pro Forma Adj. for
YTD Sept. 1996 Events $2,100 $210 $270 $180 $163 $94 $284
====== ==== ==== ==== ==== === ====
See accompanying footnotes on the subsequent page.
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands)
(b) Reflects:
Revenues and expenses of the Acquisitions for the nine months ended September
30, 1996, as follows:
Acquisition Base Escalations/ Other Real Estate
Property Date Rents (1) Recoveries Income Taxes Utilities
- -------- ---- --------- ---------- ------ ----- ---------
Harborside November 4, 1996 $27,780 $6,278 $200 $2,723 $ 812
Five Sentry November 7, 1996 1,546 -- -- 131 28
Whiteweld December 10, 1996 3,038 250 -- 343 560
One Bridge December 16, 1996 2,808 250 -- 329 332
Airport Center December 17, 1996 5,433 758 30 604 815
------- ------ ---- ------ -----
Total Pro Forma Adj.
for Reported Events $40,605 $7,536 $230 $4,130 $2,547
======= ====== ==== ====== ======
Operating General and
Property Services Administrative Depreciation (2)
- -------- -------- -------------- ----------------
Harborside $3,016 $1,675 $4,737
Five Sentry 289 78 198
Whiteweld 465 153 558
One Bridge 489 156 427
Airport Center 949 287 685
------ ------ ------
Total Pro Forma Adj.
for Reported Events $5,208 $2,349 $6,605
====== ====== ======
(1) Pro forma base rents are presented on a straight-line basis.
(2) Depreciation is based on the building-related portion of the purchase price
and associated costs depreciated using the straight-line method over a
40-year life.
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in thousands)
(c) The pro forma adjustments to interest expense reflect interest on
mortgage debt assumed with certain acquisitions and the use of proceeds
from the Offerings to pay down outstanding borrowings on the Company's
credit facilities. Pro forma interest expense is computed as follows:
Interest expense on the Initial Mortgage Financing, after the Partial $ 3,645
Prepayment (fixed interest rate of 8.02 percent on $44,313 and variable
rate of 30-day LIBOR plus 100 basis points on $20,195; weighted average
interest rate used is 6.47 percent)
Interest expense on loan assumed with Fair Lawn acquisition on March 3, 1,154
1995 (fixed interest rate of 8.25 percent on average outstanding
principal balance of approximately $18,654)
Interest expense on mortgages assumed with Harborside acquisition on 8,131
November 4, 1996 (fixed interest rate of 7.32 percent on $107,912 and
initial rate of 6.99 percent on $42,088)
Interest expense on outstanding borrowings on the Company's credit 1,535
lines (a variable rate of 30-day LIBOR plus 150 basis points during the
period on $29,805; weighted average interest rate used is 6.87 percent)
-------
Total pro forma interest expense for nine months ended September 30,
1996: $14,465
=======
Interest expense can be effected by increases and decreases in the
variable interest rates under the Company's various floating rate debt.
For example, a one-eighth percent change in such variable interest
rates will result in a $86 change for the nine months ended September
30, 1996.
(d) Represents the pro forma income allocated to the estimated 8.87 percent
pro forma weighted average minority interest (Units) in Cali Realty
L.P. (the Operating Partnership).
(e) Pro forma weighted average shares outstanding is computed assuming that
the Offerings occurred as of January 1, 1995 and that shares were not
issued in excess of amounts needed to fund the Acquisitions and pay
down the credit facilities.
CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in thousands, except per share amount)
(unaudited)
Pro Forma Pro Forma
Adj. for 1995 Adj. for YTD
Company Acquired Sept. 1996
REVENUES Historical Properties (a) Sub-total Events (b) Sub-total
- -------- ---------- -------------- --------- ---------- ---------
Base rents $50,808 $12,961 $63,769 $5,197 $68,966
Escalations and recoveries from tenants 9,504 2,684 12,188 487 12,675
Parking and other 1,702 -- 1,702 -- 1,702
Interest income 321 -- 321 -- 321
------- ------- ------- ------ -------
Total revenues 62,335 15,645 77,980 5,684 83,664
------- ------- ------- ------ -------
EXPENSES
- --------
Real estate taxes 5,856 1,821 7,677 653 8,330
Utilities 6,330 939 7,269 580 7,849
Operating services 8,519 1,354 9,873 337 10,210
General and administrative 3,712 519 4,231 186 4,417
Depreciation and amortization 12,111 2,201 14,312 654 14,966
Interest expense (d) 8,661 n/a 8,661 n/a 8,661
------- ------- ------- ------ -------
Total expenses 45,189 6,834 52,023 2,410 54,433
------- ------- ------- ------ -------
Income before minority interest 17,146 8,811 25,957 3,274 29,231
Minority interest (e) 3,508 n/a 3,508 n/a 3,508
------- ------- ------- ------ -------
Net income $13,638 $8,811 $22,449 $3,274 $25,723
======= ====== ======= ====== =======
Pro forma weighted average common
shares outstanding (f)
Pro forma net income per common share
Pro Forma
Adj. for
Reported Company
REVENUES Events(C) Pro Forma
- -------- -------- ---------
Base rents $51,055 $120,021
Escalations and recoveries from tenants 11,053 23,728
Parking and other 210 1,912
Interest income -- 321
------- --------
Total revenues 62,318 145,982
------- --------
EXPENSES
- --------
Real estate taxes 5,931 14,261
Utilities 3,314 11,163
Operating services 6,790 17,000
General and administrative 3,445 7,862
Depreciation and amortization 8,812 23,778
Interest expense (d) 11,263 19,924
------- --------
Total expenses 39,555 93,988
------- --------
Income before minority interest 22,763 51,994
Minority interest (e) 1,234 4,742(e)
------- --------
Net income $21,529 $47,252
======= =======
Pro forma weighted average common
shares outstanding (f) 27,812(f)
------
Pro forma net income per common share $1.70
=====
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in thousands)
(a) Reflects revenues and expenses of the properties acquired in 1995 for the
period January 1, 1995 through the date of acquisition, as follows:
Acquisition Base Escalations/ Real Estate
Property Date Rents (1) Recoveries Taxes Utilities
- -------- ---- --------- ---------- ----- ---------
1717 Rt. 208 Fair Lawn, NJ March 3, 1995 $ 564 $ 61 $ 48 $ 62
400 Rella Blvd Montebello, NY April 11, 1995 874 68 121 132
5 Vaughn Dr. Princeton, NJ July 21, 1995 1,031 100 126 93
New Jersey Resources Nov 8, 1995 6,004 954 802 506
Commerce Center Totowa, NJ Nov 6, 1995 2,942 786 407 71
Horizon Center Business Park Nov 8, 1995 1,546 715 317 75
------ ------ ------ ----
Total Pro Forma Adj. for
1995 Acquired Properties $12,961 $2,684 $1,821 $939
======= ====== ====== ====
General and Operating
Property Administrative Depreciation (2) Services
- -------- -------------- ---------------- --------
1717 Rt. 208 Fair Lawn, NJ $ 64 $ 25 $81
400 Rella Blvd Montebello, NY 100 29 85
5 Vaughn Dr. Princeton, NJ 127 40 137
New Jersey Resources 591 202 1,046
Commerce Center Totowa, NJ 295 147 586
Horizon Center Business Park 177 76 266
------ ---- ------
Total Pro Forma Adj. for
1995 Acquired Properties $1,354 $519 $2,201
====== ==== ======
(b) Reflects:
Revenues and expenses of the properties acquired from January 1, 1996 through
September 30, 1996 for the period January 1, 1995 through December 31, 1995, as
follows:
Base Escalations/ Real Estate Operating General and
Property/Event Date Rents(1) Recoveries Taxes Utilities Services Administrative Depreciation(2)
- -------------- ---- -------- ---------- ----- --------- -------- -------------- ---------------
Carnegie March 20, 1996 $1,538 $159 $248 $246 $207 $ 46 $ 195
Rose Tree May 2, 1996 3,990 367 455 549 451 141 633
Mount Airy Buildings July 23, 1996 1,130 183 183 -- 6 52 189
------ ---- ---- ---- ---- ---- ------
$6,658 $709 $886 $795 $664 $239 $1,017
------ ---- ---- ---- ---- ---- ------
Revenues and expenses of the property disposed of in 1996 for the period January
1, 1995 through December 31, 1995, as follows:
Essex Road March 20, 1996 ($1,461) ($222) ($233) ($215) ($327) ($53) ($334)
------- ----- ----- ----- ----- ---- -----
Revenues and expenses related to the Partial Prepayment in 1996 for the period
January 1, 1995 through December 31, 1995, as follows:
Partial Prepayment March 12, 1996 -- -- -- -- -- -- (29)
------ ---- ---- ---- ---- ---- ----
Total Pro forma Adj. for
YTD Sept. 1996 Events $5,197 $487 $653 $580 $337 $186 $654
====== ==== ==== ==== ==== ==== ====
See accompanying footnotes on the subsequent page.
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in thousands)
(continued)
(c) Reflects:
Revenues and expenses of the Acquisitions for the period January 1, 1995 through
December 31, 1995, as follows:
Base Escalations/ Other Real Estate
Property/Event Date Rents(1) Recoveries Income Taxes Utilities
- -------------- ---- -------- ---------- ------ ----- ---------
Harborside November 4, 1996 $34,782 $ 9,369 $182 $4,081 $1,109
Five Sentry November 7, 1996 2,055 -- -- 173 35
Whiteweld December 10, 1996 3,625 359 -- 468 698
One Bridge Plaza December 16, 1996 3,508 288 -- 468 417
Airport Center December 17, 1996 7,085 1,037 28 741 1,055
------- ------ ---- ------ ------
Total Pro Forma Adj. for
1996 Reported Events $51,055 $11,053 $210 $5,931 $3,314
======= ======= ==== ====== ======
Operating General and
Property/Event Services Administrative Depreciation(2)
- -------------- -------- -------------- --------------
Harborside $4,203 $2,530 $6,316
Five Sentry 357 101 264
Whiteweld 524 147 748
One Bridge Plaza 554 259 570
Airport Center 1,152 408 914
------ ------ ------
Total Pro Forma Adj. for
1996 Reported Events $6,790 $3,445 $8,812
====== ====== ======
(1) Pro forma base rents are presented on a straight-line basis calculated from
January 1, 1995 forward.
(2) Depreciation is based on building-related portion of the purchase price and
associated costs depreciated using the straight-line method over a 40-year life.
CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in thousands)
(continued)
(d) The pro forma adjustments to interest expense reflect interest on
mortgage debt assumed with certain acquisitions, the effect of the
Partial Prepayment, and the use of proceeds from the Offerings to pay
down outstanding borrowings on the Company's credit facilities. Pro
forma interest expense is computed as follows:
Interest expense on the Initial Mortgage Financing, after the Partial $ 4,962
Prepayment (fixed interest rate of 8.02 percent on $44,313 and variable
rate of 30-day LIBOR plus 100 basis points on $20,195; weighted average
interest rate used is 6.97 percent)
Interest expense on loan assumed with Fair Lawn acquisition on March 3, 1,539
1995 (fixed interest rate of 8.25 percent on average outstanding
principal balance of approximately $18,654)
Interest expense on mortgages assumed with Harborside acquisition on 10,840
November 4, 1996 (fixed interest rate of 7.32 percent on $107,912 and
initial rate of 6.99 percent on $42,088)
Additional interest expense incurred as a result of the Partial Prepay- 257
ment on March 12, 1996
Interest expense on outstanding borrowings on the Company's credit lines 2,326
(a variable rate decreasing from 30-day LIBOR plus 275 basis point to
30-day LIBOR 150 basis points during the period on $29,805; weighted
average interest rate used is 7.80 percent)
-------
Total 1995 pro forma interest expense $19,924
=======
Interest expense can be effected by increases and decreases in the
variable interest rates under the Company's various floating rate debt.
For example, a one-eighth percent change in such variable interest rates
will result in a $115 change for the year ended December 31, 1995.
(e) Represents the pro forma income allocated to the estimated 9.12 percent
pro forma weighted average minority interest (Units) in Cali Realty L.P.
(the Operating Partnership).
(f) Pro forma weighted average shares outstanding is computed assuming that
the Offerings occurred as of January 1, 1995 and that shares were not
issued in excess of amounts needed to fund the Acquisitions and pay
down the credit facilities.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Cali Realty Corporation on Forms S-3 (File Nos. 333-09875, 333-09081, 33-96542,
and 33-96538) and Form S-8 (File Nos. 33-91822 and 333-18725) of our report
dated December 16, 1996 on our audit of the Statement of Revenue and Certain
Expenses for One Bridge Plaza which report is included in this Current Report on
Form 8-K.
/s/ Schonbraun Safris Sternlieb & Co., L.L.C.
- ---------------------------------------------
Schonbraun Safris Sternlieb & Co., L.L.C.
Roseland, New Jersey
December 31, 1996
Exhibit Index
Exhibit
Number Exhibit Title
- ------ -------------
10.57 Sale Agreement between Metropolitan Life Insurance
Company, a New York corporation, as Seller, and
Cali Realty Acquisition Corp., a Delaware corporation,
as Purchaser, as of November 26, 1996
10.58 Amendment to Sale Agreement as of December 4, 1996,
by and between Metropolitan Life Insurance Company,
a New York corporation, and Cali Realty Acquisition Corp.,
a Delaware corporation.