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, 2009
 
[   ]
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     
incorporation or organization) 
(IRS Employer
Identification No.)
 
 
 
343 Thornall Street, Edison, New Jersey     08837-2206
(Address of principal executive offices)  (Zip code)
                                                                    
                                                                                                                                     
(732) 590-1000
(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
 
                                                                                                                                                                         
Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes X No ___

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes ___ No X

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ___ No ___ (the Registrant is not yet required to submit Interactive Data)

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 ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x                                                                                                                               Accelerated filer  ¨

Non-accelerated filer  ¨ (Do not check if a smaller reporting company)                                                                                                                                                        Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)  Yes ___ No X

As of June 30, 2009, the aggregate market value of the voting stock held by non-affiliates of the registrant was $1,754,174,430.  The aggregate market value was computed with reference 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 8, 2010, 79,190,883 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 herein on page number 124.

DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the registrant’s definitive proxy statement for fiscal year ended December 31, 2009 to be issued in conjunction with the registrant’s annual meeting of shareholders expected to be held on May 25, 2010 are incorporated by reference in Part III of this Form 10-K.  The definitive proxy statement will be filed by the registrant with the SEC not later than 120 days from the end of the registrant’s fiscal year ended December 31, 2009.

 
 
 

FORM 10-K

Table of Contents

 
PART I
  
Page No.
Item 1
Business
3
Item 1A
Risk Factors
8
Item 1B
Unresolved Staff Comments
17
Item 2
Properties
18
Item 3
Legal Proceedings
38
Item 4
Submission of Matters to a Vote of Security Holders
38
     
PART II
    
Item 5
Market for Registrant’s Common Equity, Related Stockholder Matters
  
 
and Issuer Purchases of Equity Securities
39
Item 6
Selected Financial Data
42
Item 7
Management’s Discussion and Analysis of Financial Condition and
  
 
Results of Operations
43
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
62
Item 8
Financial Statements and Supplementary Data
63
Item 9
Changes in and Disagreements with Accountants on Accounting and
  
 
Financial Disclosure
64
Item 9A
Controls and Procedures
64
Item 9B
Other Information
65
     
PART III
    
Item 10
Directors, Executive Officers and Corporate Governance
65
Item 11
Executive Compensation
65
Item 12
Security Ownership of Certain Beneficial Owners and Management
  
 
and Related Stockholder Matters
65
Item 13
Certain Relationships and Related Transactions, and Director Independence
65
Item 14
Principal Accounting Fees and Services
65
     
PART IV
    
Item 15
Exhibits and Financial Statement Schedules
66
     
SIGNATURES
 
122
     
EXHIBIT INDEX
 
124

 

 
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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 343 Thornall Street, Edison, New Jersey 08837-2206, and its telephone number is (732) 590-1000.  The Company has an internet website at www.mack-cali.com.

As of December 31, 2009, the Company owned or had interests in 289 properties, aggregating approximately 33.2 million square feet, plus developable land (collectively, the “Properties”), which are leased to approximately 2,100 tenants.  The Properties are comprised of: (a) 268  wholly-owned or Company-controlled properties consisting of 162 office buildings and 95 office/flex buildings aggregating approximately 30.5 million square feet, six industrial/warehouse buildings totaling approximately 387,400 square feet, two stand-alone retail properties totaling approximately 17,300 square feet, and three land leases (collectively, the “Consolidated Properties”); and (b) 20 buildings, which are primarily office properties, aggregating approximately 2.2 million square feet, and a 350-room hotel, which are 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, 2009, the office, office/flex, industrial/warehouse and stand-alone retail properties included in the Consolidated Properties were 90.1 percent leased.  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future, and leases that expire at the period end date.  Leases that expire as of December 31, 2009 aggregate 64,672 square feet, or 0.2 percent of the net rentable square footage.  The Properties are located in five states, primarily in the Northeast, and the District of Columbia.  See Item 2: Properties.

The Company’s strategy has been to focus its operations, acquisition and development of office properties in high-barrier-to-entry markets and sub-markets where it believes it is, or can become, a significant and preferred owner and operator.  The Company plans to continue this strategy by expanding through acquisitions and/or development in Northeast 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.  The Company also believes that its extensive market knowledge provides it 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, 2009, executive officers and directors of the Company and their affiliates owned approximately eight percent of the Company’s outstanding shares of Common Stock (including Units redeemable 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 (the “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 22 years.

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, allow the Company to outperform the market with respect to occupancy rates, as well as improve tenant retention.


 
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Communication with tenants: The Company emphasizes frequent communication with tenants to ensure first-class service to the Properties.  Property management personnel 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 management personnel additionally budget and oversee capital improvements and building system upgrades to enhance the Properties’ competitive advantages in their respective markets and to maintain the quality of the Properties.

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.

Portfolio Management: 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.  The Company’s primary objectives are to maximize operating cash flow and to enhance the value of its portfolio through effective management, acquisition, development and property sales strategies, as follows:

The Company seeks to maximize the value of its existing portfolio through implementing operating strategies designed to produce the highest effective rental and occupancy rates and lowest tenant installation cost within the markets that it operates, and further within the parameters of those markets.  The Company continues to pursue internal growth through leasing vacant space, 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 Wyndham Worldwide Operations, National Union Fire Insurance and The United States of America - GSA.  In addition, the Company seeks economies of scale through volume discounts to take advantage of its 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 services.

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 either directly or through joint ventures to acquire, invest in or redevelop additional properties that: (i) are expected to 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 and operator; and (iv) it believes have been under-managed or are otherwise capable of improved performance through intensive management, capital improvements and/or leasing that should result in increased effective rental and occupancy rates.

Development: The Company seeks to selectively develop additional properties either directly or through joint ventures 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: While management’s principal intention is to own and operate its properties on a long-term basis, it periodically assesses 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 50 percent or less, however there can be no assurance that the Company will be successful in maintaining this ratio.  As of December 31, 2009 and 2008, the Company’s total debt constituted approximately 39.8 and 40.6 percent of total undepreciated assets of the Company, respectively.  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 and their BB+ rating to existing and prospective preferred stock offerings of the Company.  Moody’s Investors Service (“Moody’s”) has assigned its Baa2 rating to existing and prospective senior unsecured debt of the Operating Partnership and its Baa3 rating to existing and 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 a requirement for the 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 so as to best be able to maintain its investment grade debt rating 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 and land sales, short-term and long-term borrowings (including draws on the Company’s revolving credit facility), and the issuance of additional debt or equity securities.
 
 
 
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EMPLOYEES

As of December 31, 2009, the Company had approximately 422 full-time employees.

COMPETITION

The leasing of real estate is highly competitive.  The Properties compete for tenants with lessors and developers of similar properties located in their respective markets primarily on the basis of location, the quality of properties, leasing terms (including rent and other charges and allowances for tenant improvements), services provided, the design and condition of the Properties, and reputation as an owner and operator of quality office properties in the relevant market.  The Company also experiences competition when attempting to acquire or dispose of real estate, including competition from domestic and foreign financial institutions, other REITs, life insurance companies, pension trusts, trust funds, partnerships, individual investors and others.

REGULATIONS

Many laws and governmental regulations apply to the ownership and/or operation of the Properties and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently.

Under various laws and regulations relating to the protection of the environment, an owner of real estate may be held liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property.  These laws often impose liability without regard to whether the owner was responsible for, or even knew of, the presence of such substances.  The presence of such substances may adversely affect the owner’s ability to rent or sell the property or to borrow using such property as collateral and may expose it to liability resulting from any release of, or exposure to, such substances.  Persons who arrange for the disposal or treatment of hazardous or toxic substances at another location may also be liable for the costs of re­moval or remediation of such substances at the disposal or treatment facility, whether or not such facility is owned or operated by such person.  Certain environmental laws impose liability for the 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.
 
 
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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 two industry segments:  (i) real estate; and (ii) construction services.  As of December 31, 2009, the Company does not have any foreign operations and its business is not seasonal.  Please see our financial statements attached hereto and incorporated by reference herein for financial information relating to our industry segments.

RECENT DEVELOPMENTS

On March 1, 2009, the Company placed in service a 249,409 square-foot, class A office building, which is fully leased through August 2024.  The building is located in the Mack-Cali Business Campus in Parsippany, New Jersey.

On April 29, 2009, the Company acquired SL Green’s interests in the Mack-Green-Gale LLC and subsidiaries (“Mack-Green”) and 55 Corporate Partners, LLC (“55 Corporate”) joint ventures (the “SL Green Transactions”)  for $5 million.  As a result, the Company owns 100 percent of Mack-Green and 55 Corporate. Concurrent with the SL Green Transactions, the loan agreement with an affiliate of Gramercy Capital Corporation (“Gramercy”) on six office properties indirectly owned by Mack-Green was restructured providing Gramercy with the power to control the activities that are most important to the properties’ economic performance.  At the time of the restructuring, the estimated fair value of the six properties was less than the aggregate carrying amount of the non-recourse mortgage loans.

As a result of the SL Green Transactions and the agreement with Gramercy, as of April 29, 2009, the Company began consolidating 11 office properties, aggregating approximately 1.5 million square feet, owned and controlled by Mack-Green, and a pre-leased 205,000 square foot office development project owned and controlled by 55 Corporate.  The Company also has retained a non-controlling interest in entities that own 100 percent of six office properties, aggregating 786,198 square feet, which were previously indirectly owned by Mack-Green.  See “Mack-Green-Gale LLC” and “55 Corporate Partners, LLC” under Note 4: Investments in Unconsolidated Joint Ventures – to the Financial Statements for further discussion on the transactions.

The Company’s core markets continue to be weak.  The percentage leased in the Company’s consolidated portfolio of stabilized operating properties was 90.1 percent at December 31, 2009, as compared to 91.3 percent at December 31, 2008 and 92.7 percent at December 31, 2007.  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date.  Leases that expired as of December 31, 2009, 2008 and 2007 aggregate 64,672, 67,473 and 146,261 square feet, respectively, or 0.2, 0.2 and 0.5 percentage of the net rentable square footage, respectively.  Rental rates on the Company’s space that was re-leased (based on first rents payable) during the year ended December 31, 2009 decreased an average of 9.3 percent compared to rates that were in effect under the prior leases, as compared to a 1.5 percent increase in 2008 and a 0.2 percent decrease in 2007.  The Company believes that vacancy rates may continue to increase in some of its markets through 2010 and possibly beyond.  As a result, the Company’s future earnings and cash flow may continue to be negatively impacted by current market conditions.

The Company expects that the impact of the current state of the economy, including rising unemployment and the unprecedented volatility in the financial and credit markets, will continue to have a dampening effect on the fundamentals of its business, including increases in past due accounts, defaults, lower occupancy and reduced effective rents.  These conditions would negatively affect the Company’s future net income and cash flows and could have a material adverse effect on the Company’s financial condition.

FINANCING ACTIVITY

On January 27, 2009, the Company obtained $64.5 million in mortgage financing from Guardian Life Insurance Company of America.  The two mortgage loans, which are collateralized by one and three office properties located in Clark and Red Bank, New Jersey, respectively, both carry an effective rate of 7.31 percent per annum and carry a 10-year term.
 
 
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On April 29, 2009, in connection with the SL Green Transactions, the Company consolidated 11 office properties, which are encumbered by mortgage loans with Wachovia CMBS as lender which were recorded at an aggregate amount of approximately $151.1 million at the closing date.  The mortgage loans carry an average effective interest rate of 10.66 percent per annum and mature through May 2016.

On May 6, 2009, the Company completed a public offering of 11,500,000 shares of Common Stock and used the net proceeds, which totaled approximately $274.8 million (after offering costs), to repay borrowings under its unsecured revolving credit facility.

On June 30, 2009, the Company obtained $17.0 million in mortgage financing from Valley National Bank.  The mortgage loan, which is collateralized by an office property in Woodbridge, New Jersey, is for a 25-year term and bears interest at an effective rate of 6.94 percent per annum through the end of the 10th year.  The coupon interest rate will be reset at the end of year 10 and year 20 at 225 basis points over the 10-year treasury yield 45 days prior to the reset dates, with a minimum rate of 6.875 percent.

On August 14, 2009, the Operating Partnership completed the sale of $250 million face amount of 7.750 percent senior unsecured notes due August 15, 2019 with interest payable semi-annually in arrears.  The net proceeds of approximately $246.2 million, after underwriting discount, were used for general corporate purposes.

On January 15, 2010, the Company refinanced its $150 million secured loan with The Prudential Insurance Company of America.  The new loan also includes VPCM, LLC, a wholly-owned subsidiary of the Virginia Retirement System, as co-lender.  The mortgage loan, which is collateralized by seven properties, is for a seven-year term and carries an interest rate of 6.25 percent.

AVAILABLE INFORMATION

The Company’s internet website is www.mack-cali.com.  The Company makes available free of charge on or through its website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission.  In addition, the Company’s internet website includes other items related to corporate governance matters, including, among other things, the Company’s corporate governance principles, charters of various committees of the Board of Directors, and the Company’s code of business conduct and ethics applicable to all employees, officers and directors.  The Company intends to disclose on its internet website any amendments to or waivers from its code of business conduct and ethics as well as any amendments to its corporate governance principles or the charters of various committees of the Board of Directors.  Copies of these documents may be obtained, free of charge, from our internet website.  Any shareholder also may obtain copies of these documents, free of charge, by sending a request in writing to: Mack-Cali Investor Relations Department, 343 Thornall Street, Edison, NJ  08837-2206.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

We consider portions of this report, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act.  Such forward-looking statements relate to, without limitation, our 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,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue” or comparable terminology.  Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate.  Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved.  Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements.

Among the factors about which we have made assumptions are:
 
 
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·  
risks and uncertainties affecting the general economic climate and conditions, including the impact of the general economic recession as it impacts the national and local economies, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants;
·  
the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;
·  
the extent of any tenant bankruptcies or of any early lease terminations;
·  
our ability to lease or re-lease space at current or anticipated rents;
·  
changes in the supply of and demand for office, office/flex and industrial/warehouse properties;
·  
changes in interest rate levels and volatility in the securities markets;
·  
changes in operating costs;
·  
our ability to obtain adequate insurance, including coverage for terrorist acts;
·  
the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;
·  
changes in governmental regulation, tax rates and similar matters; and
·  
other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.

For further information on factors which could impact us and the statements contained herein, see Item 1A: Risk Factors. We assume no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

ITEM 1A.                      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.

Adverse economic and geopolitical conditions in general and the Northeastern office markets in particular could have a material adverse effect on our results of operations, financial condition and our ability to pay distributions to you.

Our business may be affected by the unprecedented volatility in the financial and credit markets, the general global economic recession, and other market or economic challenges experienced by the U.S. economy or real estate industry as a whole.  Our business may also be adversely affected by local economic conditions, as substantially all of our revenues are derived from our properties located in the Northeast, particularly in New Jersey, New York and Pennsylvania.  Because our portfolio consists primarily of office and office/flex buildings (as compared to a more diversified real estate portfolio) located principally in the Northeast, if economic conditions persist or deteriorate, then our results of operations, financial condition and ability to service current debt and to pay distributions to our shareholders may be adversely affected by the following, among other potential conditions:

·  
significant job losses in the financial and professional services industries may occur, which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted;
·  
our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from both our existing operations and our acquisition and development activities and increase our future interest expense;
·  
reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;
·  
the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors;
·  
reduced liquidity in debt markets and increased credit risk premiums for certain market participants may impair our ability to access capital; and
·  
one or more lenders under our line of credit could refuse or be unable to fund their financing commitment to us and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.
 
 
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These conditions, which could have a material adverse effect on our results of operations, financial condition and ability to pay distributions, may continue or worsen in the future.

Our performance is subject to risks associated with the real estate industry.
General: Our business and our ability to make distributions or payments to our investors depend on the ability of our properties to generate funds in excess of operating expenses (including scheduled principal payments on debt and capital expenditures).  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 and conditions, including the impact of the current global economic recession;
·  
changes in local conditions, such as an oversupply of office space, a reduction in demand for office space, or reductions in office market rental rates;
· decreased attractiveness of our properties to tenants;
· competition from other office and office/flex properties;
· our inability to provide adequate maintenance;
·  
increased operating costs, including insurance premiums, utilities 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, zoning and building codes, 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, acts of terrorism and other natural disasters or acts of God that may result in uninsured losses.

We may suffer adverse consequences if our revenues decline since our operating costs do not necessarily decline in proportion to our revenue:  We earn a significant portion of our income from renting our properties. Our operating costs, however, do not necessarily fluctuate in relation to changes in our rental revenue.  This means that our costs will not necessarily decline even if our revenues do.  Our operating costs could also increase while our revenues do not.  If our operating costs increase but our rental revenues do not, we may be forced to borrow to cover our costs, we may incur losses and we may not have cash available for distributions to our stockholders.

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 as we may be unable to replace the defaulting tenant with a new tenant at a comparable rental rate without incurring significant expenses or a reduction in rental income.

Renewing leases or re-letting space could be costly: If a tenant does not renew its lease upon expiration or terminates its lease early, we may not be able to re-lease the space.  If a tenant does renew its lease or we re-lease the space, the terms of the renewal or new lease, including the cost of required renovations or concessions to the tenant, may be less favorable than the current lease terms, which could adversely affect our ability to make distributions or payments to our investors.

Adverse developments concerning some of our major tenants and industry concentrations could have a negative impact on our revenue: Recent developments in the general economy and the global credit markets have had a significant adverse effect on many companies in numerous industries.  We have tenants concentrated in various industries that may be experiencing adverse effects of current economic conditions.  Our business could be adversely affected if any of these tenants or any other tenants became insolvent, declared bankruptcy or otherwise refused to pay rent in a timely manner or at all.
 
 
9
 

 
Our insurance coverage on our properties may be inadequate or our insurance providers may default on their obligations to pay claims: We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire and flood.  We cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our properties.  We cannot guarantee that we will be able to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices.  In addition, while our current insurance policies insure us against loss from terrorist acts and toxic mold, in the future, insurance companies may no longer offer coverage against these types of losses, or, if offered, these types of insurance may be prohibitively expensive.  If any or all of the foregoing should occur, we may not have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available.  Should an uninsured loss or a loss in excess of our insured limits occur, we could lose all or a portion of the capital we have invested in a property or properties, as well as the anticipated future revenue from the property or properties.  Nevertheless, we might remain obligated for any mortgage debt or other financial obligations related to the property or properties.  We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future.  If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property.  Such events could adversely affect our ability to make distributions or payments to our investors.  If one or more of our insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations.  In addition, if one or more of our insurance providers were to become subject to insolvency, bankruptcy or other proceedings and our insurance policies with the provider were terminated or canceled as a result of those proceedings, we cannot guarantee that we would be able to find alternative coverage in adequate amounts or at reasonable prices.  In such case, we could experience a lapse in any or adequate insurance coverage with respect to one or more properties and be exposed to potential losses relating to any claims that may arise during such period of lapsed or inadequate coverage.

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 (the “Code”), 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 Units as part of the purchase price.  In connection with the acquisition of these properties, in order to preserve such individual’s income tax deferral, we contractually agreed not to sell or otherwise transfer the properties for a specified period of time, except in a manner which does not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimburses the appropriate individuals for the income tax consequences of the recognition of such built-in-gains.  As of December 31, 2009, 11 of our properties, with an aggregate net book value of approximately $199.8 million, were subject to these restrictions, which expire periodically through 2016.  For those properties where such restrictions have lapsed, we are generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the appropriate individuals. 126 of our properties, with an aggregate net book value of approximately $1.8 billion, have lapsed restrictions and are subject to these conditions.  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 (“ADA”), all public accommodations and commercial facilities must meet certain federal requirements related to access and use by disabled persons.  Compliance with the ADA requirements could involve removal of structural barriers from certain disabled persons’ entrances.  Other federal, state and local laws may require modifications to or restrict further renovations of our properties with respect to such accesses.  Although we believe that our properties are substantially in compliance with present requirements, noncompliance with the ADA or related laws or regulations could result in the United States government imposing fines or private litigants being awarded damages against us.  Such costs may adversely affect our ability to make distributions or payments to our investors.

Environmental problems are possible and may be costly: Various federal, state and local laws and regulations subject property owners or operators to liability for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property.  These laws often impose liability without regard to whether the owner or operator was responsible for or even knew of the presence of such substances.  The presence of or failure to properly remediate hazardous or toxic substances (such as toxic mold) may adversely affect our ability to rent, sell or borrow against contaminated property and may impose liability upon us for personal injury to persons exposed to such substances.  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 or other materials into the air, water or otherwise into the environment.  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.
 
 
10
 

 
We face risks associated with property acquisitions: We have acquired in the past, and our long-term strategy is to continue to pursue the acquisition of properties and portfolios of properties in New Jersey, New York and Pennsylvania and in the Northeast generally, including large real estate portfolios that could increase our size and result in alterations to our capital structure.  We may be competing for investment opportunities with entities that have greater financial resources.  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.

Our acquisition activities and their success are subject to the following risks:

·  
adequate financing to complete acquisitions may not be available on favorable terms or at all as a result of the unprecedented volatility in the financial and credit markets;
·  
even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition and risk the loss of certain non-refundable deposits and incurring certain other acquisition-related costs;
·  
the actual costs of repositioning or redeveloping acquired properties may be greater than our estimates;
·  
any acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations to our satisfaction or other conditions that are not within our control, which may not be satisfied; and
·  
we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and acquired properties may fail to perform as expected; which may adversely affect our results of operations and financial condition.

New acquisitions may fail to perform as expected: We may acquire new office properties, assuming that we are able to obtain capital on favorable terms.  Such newly acquired properties may not perform as expected and may subject us to unknown liability with respect to liabilities relating to such properties for clean-up of undisclosed environmental contamination or claims by tenants, vendors or other persons against the former owners of the properties.  Inaccurate assumptions regarding future rental or occupancy rates could result in overly optimistic estimates of future revenues.  In addition, future operating expenses or the costs necessary to bring an acquired property up to standards established for its intended market position may be underestimated.

Development of real estate could be costly: As part of our operating strategy, we may acquire land for development or construct on owned land, 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.
 
 
11
 

 
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 in the assets underlying the entities in which we invest, including joint ventures in which (i) we own a direct interest in an entity which controls such assets, or (ii) we own a direct interest in an entity which owns indirect interests, through one or more intermediaries, of such assets.  These investments involve risks that do not exist with properties in which we own a controlling interest with respect to the underlying assets, 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.  While we seek protective rights against such contrary actions, there can be no assurance that we will be successful in procuring any such protective rights, or if procured, that the rights will be sufficient to fully protect us against contrary actions.  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.

Our real estate construction management activities are subject to risks particular to third-party construction projects.
As we may perform fixed price construction services for third parties, we are subject to a variety of risks unique to these activities.  If construction costs of a project exceed original estimates, such costs may have to be absorbed by us, thereby making the project less profitable than originally estimated, or possibly not profitable at all.  In addition, a construction project may be delayed due to government or regulatory approvals, supply shortages, or other events and circumstances beyond our control, or the time required to complete a construction project may be greater than originally anticipated.  If any such excess costs or project delays were to be material, such events may adversely effect our cash flow and liquidity and thereby impact our ability to pay dividends or make distributions to our investors.

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, 2009, we had total outstanding indebtedness of $2.3 billion comprised of $1.6 billion of senior unsecured notes and approximately $755 million of mortgages, loans payable and other obligations.  We may have to refinance the principal due on our current or future indebtedness at maturity, and we may not be able to do so.

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;
·  
we may be subject to an event of default pursuant to covenants for our indebtedness;
·  
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 Code.
 
 
12
 

 
We are obligated to comply with financial covenants in our indebtedness that could restrict our range of operating activities: The mortgages on our properties contain customary negative covenants, including limitations on our ability, without the prior consent of the lender, to further mortgage the property, to enter into new leases outside of stipulated guidelines or to materially modify existing leases.  In addition, our revolving credit facility contains customary requirements, including restrictions and other limitations on our ability to incur debt, debt to assets ratios, secured debt to total assets ratios, interest coverage ratios and minimum ratios of unencumbered assets to unsecured debt.  The indentures under which our senior unsecured debt have been issued contain financial and operating covenants including coverage ratios and limitations on our ability to incur secured and unsecured debt.  These covenants limit our flexibility in conducting our operations and create a risk of default on our indebtedness if we cannot continue to satisfy them.  Some of our debt instruments are cross-collateralized and contain cross default provisions with other debt instruments.  Due to this cross-collateralization, a failure or default with respect to certain debt instruments or properties could have an adverse impact on us or our properties that are subject to the cross-collateralization under the applicable debt instrument.  Failure to comply with these covenants could cause a default under the agreements and, in certain circumstances, our lenders may be entitled to accelerate our debt obligations.  Defaults under our debt agreements could materially and adversely affect our financial condition and results of operations.

Rising interest rates may adversely affect our cash flow: As of December 31, 2009, there were no outstanding borrowings under our revolving credit facility under which borrowings bear interest at variable rates.  We may incur indebtedness in the future that 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 and/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 facility), 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 at 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/or could cause an increased risk of default on our obligations.

We are dependent on external sources of capital for future growth: To qualify as a real estate investment trust under the Code, we must distribute to our shareholders each year at least 90 percent of our net taxable income, excluding any net capital gain. Because of this distribution requirement, it is not likely that we will be able to fund all future capital needs, including for acquisitions and developments, from income from operations.  Therefore, we will have to rely on third-party sources of capital, which may or may not be available on favorable terms or at all.  Our access to third-party sources of capital depends on a number of things, including the market’s perception of our growth potential and our current and potential future earnings.  Moreover, additional equity offerings may result in substantial dilution of our shareholders’ interests, and additional debt financing may substantially increase our leverage.

Competition for skilled personnel could increase our labor costs.
We compete with various other companies in attracting and retaining qualified and skilled personnel.  We depend on our ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our company.  Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel.  We may not be able to offset such added costs by increasing the rates we charge our tenants.  If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be harmed.
 
 
13
 

 
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, Barry Lefkowitz and Roger W. Thomas and a continuous one-year employment term with Michael A. Grossman and Mark Yeager.  We do not have key man life insurance for our executive officers.


Certain provisions of Maryland law and our charter and bylaws could hinder, delay or prevent changes in control.
Certain provisions of Maryland law, our charter and our bylaws have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control.  These provisions include the following:

Classified Board of Directors: Our Board of Directors is divided into three classes with staggered terms of office of three years each.  The classification and staggered terms of office of our directors make it more difficult for a third party to gain control of our board of directors.  At least two annual meetings of stockholders, instead of one, generally would be required to affect a change in a majority of the board of directors.

Removal of Directors: Under our charter, subject to the rights of one or more classes or series of preferred stock to elect one or more directors, a director may be removed only for cause and only by the affirmative vote of at least two-thirds of all votes entitled to be cast by our stockholders generally in the election of directors.  Neither the Maryland General Corporation Law nor our charter define the term “cause.”  As a result, removal for “cause” is subject to Maryland common law and to judicial interpretation and review in the context of the facts and circumstances of any particular situation.

Number of Directors, Board Vacancies, Terms of Office: We have, in our bylaws, elected to be subject to certain provisions of Maryland law which vest in the Board of Directors the exclusive right to determine the number of directors and the exclusive right, by the affirmative vote of a majority of the remaining directors, even if the remaining directors do not constitute a quorum, to fill vacancies on the board.  These provisions of Maryland law, which are applicable even if other provisions of Maryland law or the charter or bylaws provide to the contrary, also provide that any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, rather than the next annual meeting of stockholders as would otherwise be the case, and until his or her successor is elected and qualifies.

Stockholder Requested Special Meetings: Our bylaws provide that our stockholders have the right to call a special meeting only upon the written request of the stockholders entitled to cast not less than a majority of all the votes entitled to be cast by the stockholders at such meeting.

Advance Notice Provisions for Stockholder Nominations and Proposals: Our bylaws require advance written notice for stockholders to nominate persons for election as directors at, or to bring other business before, any meeting of stockholders.  This bylaw provision limits the ability of stockholders to make nominations of persons for election as directors or to introduce other proposals unless we are notified in a timely manner prior to the meeting.

Exclusive Authority of the Board to Amend the Bylaws: Our bylaws provide that our board of directors has the exclusive power to adopt, alter or repeal any provision of the bylaws or to make new bylaws.  Thus, our stockholders may not effect any changes to our bylaws.

Preferred Stock: Under our charter, our Board of Directors has authority to issue preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of our stockholders.

Duties of Directors with Respect to Unsolicited Takeovers: Maryland law provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act, or (d) act or fail to act solely because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition.  Moreover, under Maryland law, the act of a director of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not subject to any higher duty or greater scrutiny than is applied to any other act of a director. Maryland law also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under Maryland law.
 
 
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Ownership Limit: In order to preserve our status as a real estate investment trust under the Code, our charter generally prohibits any single stockholder, or any group of affiliated stockholders, from beneficially owning more than 9.8 percent of our outstanding capital stock unless our Board of Directors waives or modifies this ownership limit.

Maryland Business Combination Act: The Maryland Business Combination Act provides that unless exempted, a Maryland corporation may not engage in business combinations, including mergers, dispositions of 10 percent or more of its assets, certain issuances of shares of stock and other specified transactions, with an “interested stockholder” or an affiliate of an interested stockholder, for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met.  An interested stockholder is generally a person owning or controlling, directly or indirectly, 10 percent or more of the voting power of the outstanding stock of the Maryland corporation.  Our board of directors has exempted from this statute business combinations between the Company and certain affiliated individuals and entities.  However, unless our board adopts other exemptions, the provisions of the Maryland Business Combination Act will be applicable to business combinations with other persons.

Maryland Control Share Acquisition Act: Maryland law provides that “control shares” of a corporation acquired in a “control share acquisition” shall have no voting rights except to the extent approved by a vote of two-thirds of the votes eligible to cast on the matter under the Maryland Control Share Acquisition Act.  “Control shares” means shares of stock that, if aggregated with all other shares of stock previously acquired by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of the voting power:  one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power.  A “control share acquisition” means the acquisition of control shares, subject to certain exceptions.

If voting rights of control shares acquired in a control share acquisition are not approved at a stockholder’s meeting, then subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value.  If voting rights of such control shares are approved at a stockholder’s meeting and the acquirer becomes entitled to vote a majority of the shares of stock entitled to vote, all other stockholders may exercise appraisal rights.  Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any acquisitions of shares by certain affiliated individuals and entities, any directors, officers or employees of the Company and any person approved by the board of directors prior to the acquisition by such person of control shares.  Any control shares acquired in a control share acquisition which are not exempt under the foregoing provisions of our bylaws will be subject to the Maryland Control Share Acquisition Act.

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 under the Code, 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 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 qualification as a real estate investment trust under the Code.  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 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 under the Code, 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.
 
 
15
 

 
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 of February 8, 2010, as general partner, we own approximately 85.6 percent of Mack-Cali Realty, L.P.’s outstanding common 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 some on a quarterly basis) established under highly technical and complex tax provisions of the 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 paid to shareholders;
·  
we will be subject to federal income tax at regular corporate rates, including any alternative minimum tax, if applicable; and
·  
unless we are entitled to relief under certain statutory provisions, we will not be permitted to qualify as a real estate investment trust for the four taxable years following the year during which we were disqualified.

A loss of our status as a real estate investment trust could have an adverse effect on us.  Failure to qualify as a real estate investment trust also would eliminate the requirement that we pay dividends to our stockholders.

Other tax liabilities: Even if we qualify as a real estate investment trust under the Code, we are subject to certain federal, state and local taxes on our income and property and, in some circumstances, certain other state and local taxes.  In addition, our taxable REIT subsidiaries will be subject to federal, state and local income tax for income received in connection with certain non-customary services performed for tenants and/or third parties.

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 our investors.

Changes in market conditions could adversely affect the market price of our common stock.
As with other publicly traded equity securities, the value of our common stock depends on various market conditions, which may change from time to time.  The market price of our common stock could change in ways that may or may not be related to our business, our industry or our operating performance and financial condition.  Among the market conditions that may affect the value of our common stock are the following:

 
·
 the extent of your interest in us;
 
·
 the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;
 
·
 our financial performance; and
 
·
 general stock and bond market conditions.

The market value of our common stock is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash dividends. Consequently, our common stock may trade at prices that are higher or lower than our net asset value per share of common stock.
 
 
 
16
 

 
ITEM 1B.                      UNRESOLVED STAFF COMMENTS

None.

 
17
 


ITEM 2.                 PROPERTIES

PROPERTY LIST

As of December 31, 2009, the Company’s Consolidated Properties consisted of 263 in-service office, office/flex and industrial/warehouse properties, as well as 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 30.9 million square feet, with the individual properties ranging from 6,216 to 1,246,283 square feet.  The Consolidated Properties, managed by on-site employees, generally have attractively landscaped sites and atriums 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.

 
18
 


 
Office Properties
                
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
NEW JERSEY
              
               
Bergen County
              
Fair Lawn
              
17-17 Route 208 North
1987
143,000
67.2
2,095
0.34
21.80
19.66
Fort Lee
              
One Bridge Plaza
1981
200,000
81.3
4,390
0.71
27.00
23.46
2115 Linwood Avenue
1981
68,000
53.7
966
0.16
26.45
24.24
Little Ferry
              
200 Riser Road
1974
286,628
100.0
2,076
0.34
7.24
6.69
Lyndhurst
              
210 Clay Avenue (f)
1981
121,203
89.1
1,681
0.27
23.19
20.97
Montvale
              
95 Chestnut Ridge Road
1975
47,700
100.0
808
0.13
16.94
15.53
135 Chestnut Ridge Road
1981
66,150
99.7
1,465
0.24
22.21
17.74
Paramus
              
15 East Midland Avenue
1988
259,823
80.5
4,859
0.79
23.23
22.48
140 East Ridgewood Avenue
1981
239,680
93.0
4,925
0.80
22.09
19.49
461 From Road
1988
253,554
98.6
6,074
0.99
24.30
24.23
650 From Road
1978
348,510
82.3
6,944
1.12
24.21
21.39
61 South Paramus Avenue
1985
269,191
83.3
6,663
1.08
29.71
26.21
Ridgefield Park
              
105 Challenger Road
1992
150,050
100.0
4,778
0.78
31.84
28.65
Rochelle Park
              
120 Passaic Street
1972
52,000
99.6
1,402
0.23
27.07
25.51
365 West Passaic Street
1976
212,578
96.1
4,313
0.70
21.11
19.25
395 West Passaic Street
1979
100,589
100.0
2,431
0.39
24.17
20.42
Upper Saddle River
              
1 Lake Street
1973/94
474,801
100.0
7,465
1.21
15.72
15.72
10 Mountainview Road
1986
192,000
71.8
3,155
0.51
22.89
20.52
Woodcliff Lake
              
400 Chestnut Ridge Road
1982
89,200
100.0
1,950
0.32
21.86
16.32
470 Chestnut Ridge Road
1987
52,500
100.0
1,277
0.21
24.32
19.03
530 Chestnut Ridge Road
1986
57,204
79.9
1,053
0.17
23.04
21.07
50 Tice Boulevard
1984
235,000
95.3
6,236
1.01
27.84
25.74
300 Tice Boulevard
1991
230,000
96.0
5,326
0.86
24.12
21.35
               
Burlington County
              
Moorestown
              
224 Strawbridge Drive
1984
74,000
100.0
1,680
0.27
22.70
20.27
228 Strawbridge Drive
1984
74,000
100.0
1,853
0.30
25.04
23.86
232 Strawbridge Drive
1986
74,258
98.8
1,470
0.24
20.04
17.57
               
Essex County
              
Millburn
              
150 J.F. Kennedy Parkway
1980
247,476
100.0
7,322
1.19
29.59
25.63

 
19
 


Office Properties
                
(Continued)
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Roseland
              
4 Becker Farm Road (f)
1983
281,762
97.1
4,552
0.74
24.79
22.88
5 Becker Farm Road (f)
1982
118,343
89.8
1,681
0.27
23.57
21.50
6 Becker Farm Road (f)
1982
129,732
100.0
2,148
0.35
24.67
22.60
101 Eisenhower Parkway
1980
237,000
89.4
5,086
0.83
24.00
21.73
103 Eisenhower Parkway
1985
151,545
65.9
2,441
0.40
24.44
20.89
105 Eisenhower Parkway
2001
220,000
96.3
4,970
0.81
23.46
17.55
75 Livingston Avenue (f)
1985
94,221
55.6
989
0.16
28.13
22.27
85 Livingston Avenue (f)
1985
124,595
84.8
1,799
0.29
25.37
23.60
               
Hudson County
              
Jersey City
              
Harborside Financial Center Plaza 1
1983
400,000
100.0
11,295
1.83
28.24
24.47
Harborside Financial Center Plaza 2
1990
761,200
100.0
18,914
3.06
24.85
22.50
Harborside Financial Center Plaza 3
1990
725,600
99.2
20,367
3.30
28.30
25.93
Harborside Financial Center Plaza 4-A
2000
207,670
99.3
6,187
1.00
30.00
25.71
Harborside Financial Center Plaza 5
2002
977,225
99.7
35,879
5.83
36.83
31.46
101 Hudson Street
1992
1,246,283
100.0
32,230
5.22
25.86
22.83
               
Mercer County
              
Hamilton Township
              
3 AAA Drive
1981
35,270
68.7
527
0.09
21.75
17.37
2 South Gold Drive
1974
33,962
64.5
482
0.08
22.00
19.40
600 Horizon Drive
2002
95,000
100.0
1,373
0.22
14.45
14.45
700 Horizon Drive
2007
120,000
100.0
2,459
0.40
20.49
18.33
Princeton
              
103 Carnegie Center
1984
96,000
90.1
1,770
0.29
20.46
16.72
2 Independence Way (f)
1981
67,401
100.0
1,014
0.16
22.41
19.98
3 Independence Way
1983
111,300
91.8
2,031
0.33
19.88
14.95
100 Overlook Center
1988
149,600
100.0
5,032
0.82
33.64
28.54
5 Vaughn Drive
1987
98,500
96.4
2,508
0.41
26.41
22.94
               
Middlesex County
              
East Brunswick
              
377 Summerhill Road
1977
40,000
100.0
353
0.06
8.83
7.70
Edison
              
343 Thornall Street (c)
1991
195,709
100.0
4,181
0.68
21.36
15.63
Piscataway
              
30 Knightsbridge Road, Bldg 3
1977
160,000
100.0
2,465
0.40
15.41
15.41
30 Knightsbridge Road, Bldg 4
1977
115,000
100.0
1,771
0.29
15.40
15.40
30 Knightsbridge Road, Bldg 5
1977
332,607
80.8
4,902
0.80
18.24
13.41
30 Knightsbridge Road, Bldg 6
1977
72,743
63.8
206
0.03
4.44
2.09
Plainsboro
              
500 College Road East
1984
158,235
15.0
2,005
0.33
84.47
75.25
Woodbridge
              
581 Main Street
1991
200,000
100.0
5,263
0.85
26.32
23.01
               
Monmouth County
              
Freehold
              
2 Paragon Way
1989
44,524
40.5
413
0.07
22.90
16.58
3 Paragon Way
1991
66,898
75.8
1,038
0.17
20.47
15.03
4 Paragon Way
2002
63,989
30.8
1,109
0.18
56.27
54.09
100 Willbowbrook Road
1988
60,557
86.2
1,096
0.18
21.00
18.91
Holmdel
              
23 Main Street
1977
350,000
100.0
4,023
0.65
11.49
8.67
               

 
20
 

Office Properties
                
(Continued)
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Middletown
              
One River Center Bldg 1
1983
122,594
100.0
3,145
0.51
25.65
21.07
One River Center Bldg 2
1983
120,360
100.0
2,899
0.47
24.09
22.05
One River Center Bldg 3
1984
214,518
93.6
4,557
0.74
22.70
22.20
Neptune
              
3600 Route 66
1989
180,000
100.0
2,400
0.39
13.33
12.06
Wall Township
              
1305 Campus Parkway
1988
23,350
92.4
435
0.07
20.16
14.00
1350 Campus Parkway
1990
79,747
99.9
1,572
0.26
19.73
17.47
               
Morris County
              
Florham Park
              
325 Columbia Turnpike
1987
168,144
70.2
3,241
0.53
27.46
23.36
Morris Plains
              
250 Johnson Road
1977
75,000
100.0
1,579
0.26
21.05
18.47
201 Littleton Road
1979
88,369
83.3
1,668
0.27
22.66
20.31
Morris Township
              
412 Mt. Kemble Avenue
1986
475,100
49.7
4,774
0.78
20.22
14.66
Parsippany
              
4 Campus Drive
1983
147,475
91.8
3,252
0.53
24.02
19.91
6 Campus Drive
1983
148,291
93.2
2,937
0.48
21.25
17.42
7 Campus Drive
1982
154,395
55.4
1,726
0.28
20.18
16.46
8 Campus Drive
1987
215,265
100.0
6,110
0.99
28.38
25.81
9 Campus Drive
1983
156,495
66.2
2,663
0.43
25.70
22.89
4 Century Drive
1981
100,036
70.5
1,658
0.27
23.51
20.35
5 Century Drive
1981
79,739
77.1
1,352
0.22
21.99
18.62
6 Century Drive
1981
100,036
94.7
1,637
0.27
17.28
11.27
2 Dryden Way
1990
6,216
100.0
99
0.02
15.93
14.64
4 Gatehall Drive
1988
248,480
94.4
6,473
1.05
27.60
24.31
2 Hilton Court
1991
181,592
100.0
6,529
1.06
35.95
31.43
1633 Littleton Road
1978
57,722
100.0
1,131
0.18
19.59
19.59
600 Parsippany Road
1978
96,000
86.6
1,626
0.26
19.56
15.26
1 Sylvan Way
1989
150,557
43.0
675
0.11
10.43
9.67
4 Sylvan Way (f)
1984
105,135
100.0
1,286
0.21
18.22
16.35
5 Sylvan Way
1989
151,383
96.5
3,803
0.62
26.03
22.72
7 Sylvan Way
1987
145,983
100.0
3,219
0.52
22.05
19.28
22 Sylvan Way (f)
2009
249,409
100.0
5,045
0.82
24.13
21.76
20 Waterview Boulevard (f)
1988
225,550
96.8
3,532
0.57
24.10
21.28
35 Waterview Boulevard
1990
172,498
90.9
3,810
0.62
24.30
21.75
5 Wood Hollow Road
1979
317,040
73.1
4,766
0.77
20.56
16.60
               
Passaic County
              
Clifton
              
777 Passaic Avenue
1983
75,000
81.6
1,416
0.23
23.14
21.23
Totowa
              
999 Riverview Drive
1988
56,066
76.7
983
0.16
22.86
21.23
               
Somerset County
              
Basking Ridge
              
222 Mt. Airy Road
1986
49,000
100.0
1,031
0.17
21.04
15.71
233 Mt. Airy Road
1987
66,000
100.0
1,315
0.21
19.92
16.71

 
21
 

Office Properties
                
(Continued)
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Bernards
              
106 Allen Road
2000
132,010
99.7
2,783
0.45
21.15
15.43
Branchburg
              
51 Imclone Drive (f)
1986
63,213
100.0
230
0.04
5.42
4.53
Bridgewater
              
721 Route 202/206
1989
192,741
81.2
3,685
0.60
23.55
17.09
Warren
              
10 Independence Boulevard (f)
1988
120,528
100.0
2,220
0.36
27.44
25.20
               
Union County
              
Clark
              
100 Walnut Avenue
1985
182,555
99.1
4,591
0.75
25.38
21.74
Cranford
              
6 Commerce Drive
1973
56,000
85.7
942
0.15
19.63
16.19
11 Commerce Drive
1981
90,000
93.8
1,969
0.32
23.32
19.79
12 Commerce Drive
1967
72,260
87.6
824
0.13
13.02
10.05
14 Commerce Drive
1971
67,189
68.7
1,133
0.18
24.55
20.26
20 Commerce Drive
1990
176,600
98.9
4,298
0.70
24.61
21.14
25 Commerce Drive
1971
67,749
94.2
1,363
0.22
21.36
19.38
65 Jackson Drive
1984
82,778
97.5
1,884
0.31
23.34
20.17
New Providence
              
890 Mountain Avenue
1977
80,000
91.4
1,856
0.30
25.38
23.66
               
Total New Jersey Office
  
19,347,734
90.6
411,338
66.78
24.10
21.09
               
NEW YORK
              
               
New York County
              
New York
              
125 Broad Street
1970
524,476
100.0
19,886
3.22
37.92
34.42
               
Rockland County
              
Suffern
              
400 Rella Boulevard
1988
180,000
90.7
3,690
0.60
22.60
20.44
               
Westchester County
              
Elmsford
              
100 Clearbrook Road (c)
1975
60,000
91.9
1,108
0.18
20.09
18.15
101 Executive Boulevard
1971
50,000
30.8
492
0.08
31.95
27.79
555 Taxter Road
1986
170,554
80.1
3,500
0.57
25.62
21.13
565 Taxter Road
1988
170,554
95.9
3,965
0.64
24.24
20.08
570 Taxter Road
1972
75,000
67.0
1,311
0.21
26.09
24.48
Hawthorne
              
1 Skyline Drive
1980
20,400
99.0
298
0.05
14.76
13.62
2 Skyline Drive
1987
30,000
82.9
166
0.03
6.67
5.99
7 Skyline Drive
1987
109,000
100.0
2,810
0.46
25.78
23.87
17 Skyline Drive
1989
85,000
100.0
1,630
0.26
19.18
16.34
19 Skyline Drive
1982
248,400
100.0
4,036
0.66
16.25
15.11
               
               

 
22
 

Office Properties
                
(Continued)
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Tarrytown
              
200 White Plains Road
1982
89,000
78.8
1,485
0.24
21.17
18.81
220 White Plains Road
1984
89,000
85.9
1,785
0.29
23.35
20.98
White Plains
              
1 Barker Avenue
1975
68,000
96.3
1,786
0.29
27.27
25.36
3 Barker Avenue
1983
65,300
98.3
1,725
0.28
26.87
24.51
50 Main Street
1985
309,000
99.0
9,969
1.62
32.59
28.73
11 Martine Avenue
1987
180,000
78.4
4,023
0.65
28.51
25.53
1 Water Street
1979
45,700
100.0
1,103
0.18
24.14
20.66
Yonkers
              
1 Executive Boulevard
1982
112,000
100.0
3,059
0.50
27.31
24.38
3 Executive Boulevard
1987
58,000
92.8
1,473
0.24
27.37
24.92
               
Total New York Office
  
2,739,384
92.4
69,300
11.25
27.38
24.48
               
PENNSYLVANIA
              
               
Chester County
              
Berwyn
              
1000 Westlakes Drive
1989
60,696
92.2
1,537
0.25
27.47
26.36
1055 Westlakes Drive
1990
118,487
94.7
2,873
0.47
25.60
21.26
1205 Westlakes Drive
1988
130,265
87.6
3,148
0.51
27.59
23.98
1235 Westlakes Drive
1986
134,902
99.0
3,091
0.50
23.14
19.00
               
Delaware County
              
Lester
              
100 Stevens Drive
1986
95,000
100.0
2,771
0.45
29.17
27.08
200 Stevens Drive
1987
208,000
100.0
6,087
0.98
29.26
27.55
300 Stevens Drive
1992
68,000
84.7
1,398
0.23
24.27
20.00
Media
              
1400 Providence Road – Center I
1986
100,000
98.5
2,138
0.35
21.71
19.01
1400 Providence Road – Center II
1990
160,000
95.0
3,042
0.49
20.01
15.99
               
Montgomery County
              
Bala Cynwyd
              
150 Monument Road
1981
125,783
98.4
3,002
0.49
24.25
21.15
Blue Bell
              
4 Sentry Park
1982
63,930
78.8
867
0.14
17.21
16.28
5 Sentry Park East
1984
91,600
51.3
921
0.15
19.60
14.88
5 Sentry Park West
1984
38,400
31.5
253
0.04
20.92
18.44
16 Sentry Park
1988
93,093
93.0
2,083
0.34
24.06
21.76
18 Sentry Park
1988
95,010
96.5
2,080
0.34
22.69
20.33
King of Prussia
              
2200 Renaissance Boulevard
1985
174,124
66.7
2,329
0.38
20.05
16.21
Lower Providence
              
1000 Madison Avenue
1990
100,700
54.5
924
0.15
16.84
10.29
Plymouth Meeting
              
1150 Plymouth Meeting Mall
1970
167,748
75.8
2,681
0.44
21.08
16.26
               
Total Pennsylvania Office
  
2,025,738
85.7
41,225
6.70
23.74
20.45
               

 
23
 

Office Properties
                
(Continued)
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
CONNECTICUT
              
               
Fairfield County
              
Norwalk
              
40 Richards Avenue
1985
145,487
71.1
2,628
0.43
25.41
22.34
Stamford
              
1266 East Main Street
1984
179,260
87.3
3,807
0.62
24.33
21.03
               
Total Connecticut Office
  
324,747
80.1
6,435
1.05
24.73
21.52
               
DISTRICT OF COLUMBIA
              
               
Washington
              
1201 Connecticut Avenue, NW
1940
169,549
100.0
6,807
1.10
40.15
35.98
1400 L Street, NW
1987
159,000
100.0
5,895
0.96
37.08
31.29
               
Total District of Columbia Office
  
328,549
100.0
12,702
2.06
38.66
33.71
               
MARYLAND
              
               
Prince George’s County
              
Greenbelt
              
9200 Edmonston Road
1973
38,690
100.0
910
0.15
23.52
21.17
6301 Ivy Lane
1979
112,003
75.8
1,932
0.31
22.76
19.81
6303 Ivy Lane
1980
112,047
68.7
1,627
0.26
21.14
19.10
6305 Ivy Lane
1982
112,022
73.5
1,702
0.28
20.67
17.45
6404 Ivy Lane
1987
165,234
43.3
1,660
0.27
23.20
17.69
6406 Ivy Lane
1991
163,857
0.0
63
0.01
0.00
0.00
6411 Ivy Lane
1984
138,405
85.9
2,854
0.46
24.01
20.81
Lanham
              
4200 Parliament Place
1989
122,000
89.2
2,757
0.45
25.33
23.42
               
Total Maryland Office
  
964,258
60.4
13,505
2.19
23.20
20.20
               
TOTAL OFFICE PROPERTIES
  
25,730,410
89.3
554,505
90.03
24.63
21.58
               
               

 
24
 

Office/Flex Properties
                
 
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
NEW JERSEY
              
               
Burlington County
              
Burlington
              
3 Terri Lane
1991
64,500
100.0
558
0.09
8.65
5.94
5 Terri Lane
1992
74,555
78.8
456
0.07
7.76
6.18
Moorestown
              
2 Commerce Drive
1986
49,000
74.1
253
0.04
6.97
4.85
101 Commerce Drive
1988
64,700
100.0
275
0.04
4.25
3.85
102 Commerce Drive
1987
38,400
100.0
236
0.04
6.15
4.58
201 Commerce Drive
1986
38,400
100.0
227
0.04
5.91
4.56
202 Commerce Drive
1988
51,200
100.0
263
0.04
5.14
3.54
1 Executive Drive
1989
20,570
81.1
157
0.03
9.41
7.01
2 Executive Drive
1988
60,800
100.0
469
0.08
7.71
5.59
101 Executive Drive
1990
29,355
99.7
304
0.05
10.39
8.61
102 Executive Drive
1990
64,000
100.0
474
0.08
7.41
7.02
225 Executive Drive
1990
50,600
67.6
151
0.02
4.41
2.60
97 Foster Road
1982
43,200
75.5
155
0.03
4.75
3.53
1507 Lancer Drive
1995
32,700
100.0
134
0.02
4.10
3.79
1245 North Church Street
1998
52,810
100.0
223
0.04
4.22
3.65
1247 North Church Street
1998
52,790
58.1
224
0.04
7.30
6.19
1256 North Church Street
1984
63,495
100.0
467
0.08
7.35
6.47
840 North Lenola Road
1995
38,300
100.0
370
0.06
9.66
7.86
844 North Lenola Road
1995
28,670
100.0
168
0.03
5.86
4.53
915 North Lenola Road
1998
52,488
100.0
290
0.05
5.53
4.32
2 Twosome Drive
2000
48,600
100.0
449
0.07
9.24
8.79
30 Twosome Drive
1997
39,675
89.9
277
0.04
7.77
5.97
31 Twosome Drive
1998
84,200
100.0
483
0.08
5.74
5.44
40 Twosome Drive
1996
40,265
100.0
322
0.05
8.00
6.66
41 Twosome Drive
1998
43,050
77.7
209
0.03
6.25
5.47
50 Twosome Drive
1997
34,075
100.0
257
0.04
7.54
7.13
               
Gloucester County
              
West Deptford
              
1451 Metropolitan Drive
1996
21,600
100.0
139
0.02
6.44
6.20
               
Mercer County
              
Hamilton Township
              
100 Horizon Center Boulevard
1989
13,275
100.0
215
0.03
16.20
14.16
200 Horizon Drive
1991
45,770
85.3
548
0.09
14.04
12.58
300 Horizon Drive
1989
69,780
100.0
1,011
0.16
14.49
11.16
500 Horizon Drive
1990
41,205
72.6
549
0.09
18.35
17.35
               

 
25
 


Office/Flex Properties
                
(Continued)
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Monmouth County
              
Wall Township
              
1325 Campus Parkway
1988
35,000
100.0
655
0.11
18.71
14.06
1340 Campus Parkway
1992
72,502
100.0
959
0.16
13.23
10.58
1345 Campus Parkway
1995
76,300
85.4
866
0.14
13.29
10.74
1433 Highway 34
1985
69,020
82.7
470
0.08
8.23
6.08
1320 Wyckoff Avenue
1986
20,336
100.0
222
0.04
10.92
10.42
1324 Wyckoff Avenue
1987
21,168
100.0
217
0.04
10.25
7.75
               
Passaic County
              
Totowa
              
1 Center Court
1999
38,961
62.2
380
0.06
15.68
14.20
2 Center Court
1998
30,600
99.3
396
0.06
13.03
11.49
11 Commerce Way
1989
47,025
100.0
577
0.09
12.27
11.53
20 Commerce Way
1992
42,540
91.1
411
0.07
10.61
9.91
29 Commerce Way
1990
48,930
100.0
699
0.11
14.29
11.18
40 Commerce Way
1987
50,576
43.5
422
0.07
19.18
16.82
45 Commerce Way
1992
51,207
96.4
529
0.09
10.72
8.10
60 Commerce Way
1988
50,333
100.0
615
0.10
12.22
9.93
80 Commerce Way
1996
22,500
100.0
260
0.04
11.56
10.53
100 Commerce Way
1996
24,600
66.9
284
0.05
17.26
15.74
120 Commerce Way
1994
9,024
100.0
126
0.02
13.96
12.85
140 Commerce Way
1994
26,881
89.3
377
0.06
15.71
14.54
               
Total New Jersey Office/Flex
  
2,189,531
91.0
18,778
3.06
9.42
7.84
               
NEW YORK
              
               
Westchester County
              
Elmsford
              
11 Clearbrook Road
1974
31,800
72.8
442
0.07
19.09
16.80
75 Clearbrook Road
1990
32,720
100.0
293
0.05
8.95
7.85
125 Clearbrook Road
2002
33,000
100.0
712
0.12
21.58
17.94
150 Clearbrook Road
1975
74,900
100.0
1,016
0.16
13.56
12.48
175 Clearbrook Road
1973
98,900
100.0
1,513
0.25
15.30
14.11
200 Clearbrook Road
1974
94,000
76.6
753
0.12
10.46
8.83
250 Clearbrook Road
1973
155,000
97.3
1,434
0.23
9.51
8.50
50 Executive Boulevard
1969
45,200
87.6
463
0.08
11.69
9.55
77 Executive Boulevard
1977
13,000
100.0
252
0.04
19.38
18.31
85 Executive Boulevard
1968
31,000
99.4
577
0.09
18.73
15.87
300 Executive Boulevard
1970
60,000
100.0
731
0.12
12.18
11.07
350 Executive Boulevard
1970
15,400
98.8
233
0.04
15.31
15.12
399 Executive Boulevard
1962
80,000
100.0
1,038
0.17
12.98
12.40
400 Executive Boulevard
1970
42,200
63.5
565
0.09
21.08
17.13
500 Executive Boulevard
1970
41,600
100.0
672
0.11
16.15
13.92

 
26
 

Office/Flex Properties
                
(Continued)
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
525 Executive Boulevard
1972
61,700
100.0
1,054
0.17
17.08
15.77
1 Westchester Plaza
1967
25,000
100.0
349
0.06
13.96
13.48
2 Westchester Plaza
1968
25,000
100.0
538
0.09
21.52
19.68
3 Westchester Plaza
1969
93,500
84.9
749
0.12
9.44
8.34
4 Westchester Plaza
1969
44,700
59.1
427
0.07
16.16
13.89
5 Westchester Plaza
1969
20,000
100.0
241
0.04
12.05
10.05
6 Westchester Plaza
1968
20,000
100.0
310
0.05
15.50
13.90
7 Westchester Plaza
1972
46,200
100.0
759
0.12
16.43
16.23
8 Westchester Plaza
1971
67,200
100.0
997
0.16
14.84
12.63
Hawthorne
              
200 Saw Mill River Road
1965
51,100
92.0
659
0.11
14.02
12.91
4 Skyline Drive
1987
80,600
94.5
1,362
0.22
17.88
15.28
5 Skyline Drive
1980
124,022
99.3
1,749
0.28
14.20
12.29
6 Skyline Drive
1980
44,155
100.0
228
0.04
5.16
5.10
8 Skyline Drive
1985
50,000
79.3
983
0.16
24.79
18.08
10 Skyline Drive
1985
20,000
84.4
298
0.05
17.65
14.28
11 Skyline Drive
1989
45,000
100.0
803
0.13
17.84
17.11
12 Skyline Drive
1999
46,850
100.0
755
0.12
16.12
12.32
15 Skyline Drive
1989
55,000
100.0
1,191
0.19
21.65
20.04
Yonkers
              
100 Corporate Boulevard
1987
78,000
98.3
1,480
0.24
19.30
18.14
200 Corporate Boulevard South
1990
84,000
99.8
1,525
0.25
18.19
17.56
4 Executive Plaza
1986
80,000
100.0
1,393
0.23
17.41
14.14
6 Executive Plaza
1987
80,000
99.2
1,542
0.25
19.43
18.04
1 Odell Plaza
1980
106,000
99.9
1,324
0.21
12.50
11.38
3 Odell Plaza
1984
71,065
100.0
1,595
0.26
22.44
20.81
5 Odell Plaza
1983
38,400
89.2
576
0.09
16.82
13.49
7 Odell Plaza
1984
42,600
99.6
737
0.12
17.37
16.22
               
Total New York Office/Flex
  
2,348,812
95.0
34,318
5.57
15.38
13.72
               
CONNECTICUT
              
               
Fairfield County
              
Stamford
              
419 West Avenue
1986
88,000
100.0
1,363
0.22
15.49
13.84
500 West Avenue
1988
25,000
100.0
411
0.07
16.44
14.88
550 West Avenue
1990
54,000
100.0
840
0.14
15.56
15.44
600 West Avenue
1999
66,000
100.0
745
0.12
11.29
10.73
650 West Avenue
1998
40,000
100.0
686
0.11
17.15
15.90
               
Total Connecticut Office/Flex
  
273,000
100.0
4,045
0.66
14.82
13.80
               
               
TOTAL OFFICE/FLEX PROPERTIES
4,811,343
93.5
57,141
9.29
12.71
11.12


 
27
 


Industrial/Warehouse, Retail and Land Lease Properties
          
 
             
2009
     
Percentage
2009
  
2009
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/09
($000’s)
of Total 2009
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
NEW YORK
              
               
Westchester County
              
Elmsford
              
1 Warehouse Lane
1957
6,600
100.0
92
0.01
13.94
12.27
2 Warehouse Lane
1957
10,900
100.0
167
0.03
15.32
14.77
3 Warehouse Lane
1957
77,200
100.0
363
0.06
4.70
4.48
4 Warehouse Lane
1957
195,500
96.7
1,434
0.23
7.59
6.64
5 Warehouse Lane
1957
75,100
97.1
922
0.15
12.64
11.12
6 Warehouse Lane
1982
22,100
100.0
519
0.08
23.48
22.53
               
Total Industrial/Warehouse Properties
387,400
97.8
3,497
0.56
9.23
8.32
               
Westchester County
              
Tarrytown
              
230 White Plains Road
1984
9,300
100.0
159
0.03
17.10
16.24
Yonkers
              
2 Executive Boulevard
1986
8,000
100.0
94
0.02
11.75
11.75
               
Total Retail Properties
  
17,300
100.0
253
0.05
14.62
14.16
               
Westchester County
              
Elmsford
              
700 Executive Boulevard
--
--
--
173
0.03
--
--
Yonkers
              
1 Enterprise Boulevard
--
--
--
185
0.03
--
--
               
Total New York Land Leases
  
--
--
358
0.06
--
--
               
Prince George’s County, Maryland
              
Greenbelt
              
Capital Office Park Parcel A (f)
--
--
--
85
0.01
--
--
               
Total Maryland Land Leases
  
--
--
85
0.01
--
--
               
Total Land Leases
  
--
--
443
0.07
--
--
               
               
TOTAL PROPERTIES
  
30,946,453
90.1
615,839
100.00
22.51
19.72


 
28
 


(a)
Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases expiring December 31, 2009 aggregating 64,672 square feet (representing 0.2 percent of the Company’s total net rentable square footage) for which no new leases were signed.
(b)
Total base rent for 2009, 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.
(c)      Excludes space leased by the Company.
(d)
Base rent for 2009 divided by net rentable square feet leased at December 31, 2009.
(e)
Total base rent for 2009 minus total 2009 amortization of tenant improvements, leasing commissions and other concessions and costs, determined in accordance with GAAP, divided by net rentable square feet leased at December 31, 2009.
(f)
As this property was acquired, placed in service or initially consolidated by the Company during 2009, the amounts represented in 2009 base rent reflect only that portion of the year during which the Company owned the property.  Accordingly, these amounts may not be indicative of the property’s full year results.  For comparison purposes, the amounts represented in 2009 average base rent per sq. ft. and 2009 average effective rent per sq. ft. for this property have been calculated by taking 2009 base rent and 2009 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, 2009.  These annualized per square foot amounts may not be indicative of the property’s results had the Company owned the property for the entirety of 2009.

PERCENTAGE LEASED

The following table sets forth the year-end percentages of square feet leased in the Company’s stabilized operating Consolidated Properties for the last five years:

 
Percentage of
December 31,
Square Feet Leased (%) (a)
2009
90.1
   
2008
91.3
   
2007
92.7
   
2006
92.0
   
2005
91.0
   

(a)  
Percentage of square-feet leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date.



 
29
 


SIGNIFICANT TENANTS

The following table sets forth a schedule of the Company’s 50 largest tenants for the Consolidated Properties as of December 31, 2009 based upon annualized base rental revenue:

     
Percentage of
      
   
Annualized
Company
Square
Percentage
Year of
 
Number of
Base Rental
Annualized Base
Feet
Total Company
Lease
 
Properties
Revenue ($) (a)
Rental Revenue (%)
Leased
Leased Sq. Ft. (%)
Expiration
             
National Union Fire Insurance
            
  Company of Pittsburgh, PA
3
    14,137,802
2.2
526,023
1.8
 (b)
Citigroup Global Markets, Inc.
2
    11,309,837
1.7
348,003
1.2
 (c)
DB Services New Jersey, Inc.
2
    10,905,425
1.7
402,068
1.5
2017
Wyndham Worldwide Operations
2
      9,170,108
1.5
395,983
1.4
 (d)
United States of America-GSA
12
      9,118,457
1.5
290,598
1.1
 (e)
New Cingular Wireless PCS, LLC
3
      8,995,940
1.4
405,530
1.5
 (f)
Keystone Mercy Health Plan
2
      8,867,108
1.4
303,149
1.1
2020
Prentice-Hall, Inc.
1
      8,643,699
1.4
474,801
1.7
2014
Forest Research Institute, Inc.
1
      8,271,398
1.3
215,659
0.8
2017
AT&T Corp.
2
      7,934,132
1.3
395,528
1.4
 (g)
ICAP Securities USA, LLC
1
      6,236,408
1.0
159,834
0.6
2017
Toys ‘R’ Us – NJ, Inc.
1
      6,152,682
1.0
242,518
0.9
2012
Daiichi Sankyo, Inc.
2
      5,896,710
0.9
180,807
0.7
(h)
TD Ameritrade Online Holdings
1
      5,830,626
0.9
184,222
0.7
2015
IBM Corporation
3
      5,226,858
0.8
310,263
1.1
(i)
Credit Suisse (USA), Inc.
1
      5,212,307
0.8
153,464
0.6
(j)
Allstate Insurance Company
8
      5,080,600
0.8
213,236
0.8
(k)
Merrill Lynch Pierce Fenner
1
      5,001,213
0.8
294,189
1.1
2017
Montefiore Medical Center
5
      4,901,818
0.8
222,670
0.8
(l)
National Financial Services
1
      4,798,621
0.8
112,964
0.4
2012
KPMG, LLP
3
      4,752,555
0.8
176,520
0.6
(m)
Samsung Electronics America
1
      4,184,278
0.7
150,050
0.5
2010
J.H. Cohn, LLP
1
      4,151,405
0.7
154,035
0.6
2020
Morgan Stanley Smith Barney
4
      4,050,623
0.6
142,530
0.5
(n)
Vonage America, Inc.
1
      4,011,000
0.6
350,000
1.3
2017
Bank Of Tokyo-Mitsubishi, Ltd.
1
      3,872,785
0.6
137,076
0.5
2019
Arch Insurance Company
1
      3,685,118
0.6
106,815
0.4
2024
Morgan Stanley & Co., Inc.
1
      3,674,040
0.6
306,170
1.1
2013
Lehman Brothers Holdings, Inc.
1
      3,611,421
0.6
135,190
0.5
(o)
American Institute of Certified Public
            
  Accountants
1
      3,455,040
0.6
142,953
0.5
2012
Oppenheimer & Co., Inc.
1
      3,269,465
0.5
118,871
0.4
(p)
E*Trade Financial Corporation
1
      3,124,160
0.5
106,573
0.4
2022
Dow Jones & Company, Inc.
1
      3,057,773
0.5
92,312
0.3
2012
Shaw Facilities, Inc.
3
      2,992,248
0.5
141,172
0.5
(q)
SunAmerica Asset Management
1
      2,958,893
0.5
69,621
0.3
2018
United States Life Insurance Co.
1
      2,880,000
0.5
180,000
0.7
2013
High Point Safety & Insurance
2
      2,794,113
0.4
116,889
0.4
2020
HQ Global Workplaces, LLC
7
      2,789,620
0.4
133,209
0.5
(r)
Tullett Prebon Holdings Corp.
1
      2,787,758
0.4
113,041
0.4
(s)
Connell Foley, LLP
2
      2,533,422
0.4
97,822
0.4
2015
AAA Mid-Atlantic, Inc.
2
      2,529,519
0.4
129,784
0.5
(t)
Regus Business Centre Corp.
2
      2,528,176
0.4
79,805
0.3
2011
Tradeweb Markets, LLC
1
      2,490,140
0.4
64,976
0.2
2017
New Jersey Turnpike Authority
1
      2,455,463
0.4
100,223
0.4
2017
Movado Group, Inc
1
      2,449,828
0.4
90,050
0.3
2013
Lowenstein Sandler, P.C.
1
      2,417,586
0.4
98,677
0.4
2017
Natixis North America, Inc.
1
      2,408,679
0.4
83,629
0.3
2021
Sony BMG Music Entertainment
1
      2,359,986
0.4
97,653
0.4
2014
Nextel of New York, Inc.
2
      2,225,875
0.4
97,435
0.4
 (u)
UBS Financial Services, Inc.
3
      2,209,326
0.4
82,092
0.3
 (v)
             
Totals
  
244,402,044
39.0
 9,726,682
35.5
  

See footnotes on subsequent page.

 
30
 


Significant Tenants Footnotes

(a)  
Annualized base rental revenue is based on actual December, 2009 billings times 12.  For leases whose rent commences after January 1, 2010, 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.
(b)  
394,849 square feet expire in 2012; 14,056 square feet expire in 2013; 117,118 square feet expire 2019.
(c)  
330,900 square feet expired in 2010; 17,103 square feet expire in 2018.
(d)  
145,983 square feet expire in 2011; 250,000 square feet expire in 2024.
(e)  
11,825 square feet expire in 2010; 9,901 square feet expire in 2011; 11,216 square feet expire in 2012; 65,438 square feet expire in 2013; 4,879 square feet expire in 2014; 180,729 square feet expire in 2015; 6,610 square feet expire in 2017.
(f)  
333,145 square feet expire in 2013; 72,385 square feet expire in 2014.
(g)  
120,528 square feet expire in 2011; 275,000 square feet expire in 2014.
(h)  
8,907 square feet expire in 2013; 171,900 square feet expire in 2022.
(i)  
17,959 square feet expired in 2010; 248,399 square feet expire in 2012; 43,905 square feet expire in 2013.
(j)  
71,511 square feet expire in 2011; 81,953 square feet expire in 2012.
(k)  
41,207 square feet expire in 2010; 83,693 square feet expire in 2011; 29,005 square feet expire in 2013; 5,348 square feet expire in 2015; 53,983 square feet expire in 2017.
(l)  
5,850 square feet expire in 2014; 7,200 square feet expire in 2016; 30,872 square feet expire in 2017; 36,385 square feet expire in 2018; 133,763 square feet expire in 2019; 8,600 square feet expire in 2020.
(m)  
77,381 square feet expire in 2012; 53,409 square feet expire in 2019; 45,730 square feet expire in 2020.
(n)  
26,834 square feet expire in 2014; 29,654 square feet expire in 2015; 63,260 square feet expire in 2016; 22,782 square feet expire in 2018.
(o)  
63,686 square feet expire in 2010; 71,504 square feet expire in 2012.
(p)  
104,008 square feet expire in 2013; 14,863 square feet expire in 2017.
(q)  
39,060 square feet expire in 2013; 102,112 square feet expire in 2015.
(r)  
22,064 square feet expire in 2013; 22,279 square feet expire in 2015; 33,649 square feet expire in 2018; 19,485 square feet expire in 2019; 21,008 square feet expire in 2020; 14,724 square feet expire in 2021.
(s)  
12,282 square feet expire in 2011; 100,759 square feet expire in 2023.
(t)  
9,784 square feet expire in 2017; 120,000 square feet expire in 2022.
(u)  
62,435 square feet expire in 2010; 35,000 square feet expire in 2014.
(v)  
21,554 square feet expire in 2012; 23,373 square feet expire in 2013; 37,165 square feet expire in 2016.


 
31
 

SCHEDULE OF LEASE EXPIRATIONS: ALL CONSOLIDATED PROPERTIES

The following table sets forth a schedule of 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, 2010, assuming that none of the tenants exercise renewal or termination options:

         
Average
  
         
Annual Base
  
     
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
Revenue Under
Represented
Rent Under
Year Of
Leases
Leases
By Expiring
Expiring
By Expiring
Expiring
Expiration
Expiring (a)
(Sq. Ft.)
Leases (%)
Leases ($) (b)
Leases ($)
Leases (%)
             
2010 (c)
314
2,310,385
8.4
55,381,172
23.97
8.7
             
2011
414
3,333,461
12.2
74,391,972
23.32
11.9
             
2012
332
3,038,565
11.1
73,361,704
24.14
11.7
             
2013
335
3,790,310
13.9
82,432,246
21.75
13.2
             
2014
276
2,847,201
10.4
62,565,633
21.97
10.0
             
2015
216
3,110,622
11.4
68,984,430
22.18
11.0
             
2016
105
1,432,346
5.2
31,076,532
21.70
5.0
             
2017
101
2,601,506
9.5
62,445,560
24.00
10.0
             
2018
61
990,128
3.6
23,698,940
23.94
3.8
             
2019
49
1,024,497
3.7
21,765,173
21.24
3.5
             
2020
45
974,583
3.6
22,536,407
23.12
3.6
             
2021 and thereafter
39
1,920,671
7.0
47,791,562
24.88
7.6
Totals/Weighted
            
  Average
2,287
27,374,275
(c) (d)
100.0
626,431,331
22.88
100.0

(a)  
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.
(b)  
Annualized base rental revenue is based on actual December 2009 billings times 12.  For leases whose rent commences after January 1, 2010, 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.
(c)  
Includes leases expiring December 31, 2009 aggregating 64,672 square feet and representing annualized rent of $1,399,732 for which no new leases were signed.
(d)  
Reconciliation to Company’s total net rentable square footage is as follows:


 
Square Feet
Square footage leased to commercial tenants
27,374,275
Square footage used for corporate offices, management offices,
  
building use, retail tenants, food services, other ancillary
  
service tenants and occupancy adjustments
495,524
Square footage unleased
  3,076,654
Total net rentable square footage (does not include land leases)
30,946,453

 
32
 

SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES

The following table sets forth a schedule of lease expirations for the office properties beginning January 1, 2010, assuming that none of the tenants exercise renewal or termination options:

         
Average
  
         
Annual Base
  
     
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 (a)
(Sq. Ft.)
Leases (%)
Leases ($) (b)
Leases ($)
Leases (%)
             
2010 (c)
248
1,863,174
8.3
49,566,722
26.60
8.8
             
2011
330
2,642,150
11.8
66,776,219
25.27
11.9
             
2012
260
2,411,627
10.7
65,208,931
27.04
11.6
             
2013
253
2,911,768
12.9
69,988,369
24.04
12.5
             
2014
223
2,319,187
10.3
55,877,950
24.09
10.0
             
2015
182
2,831,075
12.6
65,695,399
23.21
11.7
             
2016
85
1,017,472
4.5
25,105,588
24.67
4.5
             
2017
82
2,400,683
10.7
59,195,449
24.66
10.5
             
2018
39
715,489
3.2
19,751,962
27.61
3.5
             
2019
34
680,750
3.0
16,806,721
24.69
3.0
             
2020
34
814,895
3.6
20,468,253
25.12
3.6
             
2021 and thereafter
37
1,886,665
8.4
47,165,624
25.00
8.4
Totals/Weighted
            
  Average
1,807
22,494,935 (c)
100.0
561,607,187
24.97
100.0

(a)  
Includes office tenants only.  Excludes leases for amenity, retail, parking and month-to-month tenants.  Some tenants have multiple leases.
(b)  
Annualized base rental revenue is based on actual December 2009 billings times 12.  For leases whose rent commences after January 1, 2010, 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.
(c)  
Includes leases expiring December 31, 2009 aggregating 53,806 square feet and representing annualized rent of $1,263,441 for which no new leases were signed.



 
33
 


SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES

The following table sets forth a schedule of lease expirations for the office/flex properties beginning January 1, 2010, assuming that none of the tenants exercise renewal or termination options:

         
Average
  
         
Annual Base
  
     
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 (a)
(Sq. Ft.)
Leases (%)
Leases ($) (b)
Leases ($)
Leases (%)
             
2010 (c)
65
442,261
9.7
5,725,350
12.95
9.6
             
2011
82
671,911
15.0
7,387,153
10.99
12.3
             
2012
71
620,300
13.8
8,079,755
13.03
13.4
             
2013
71
724,237
16.2
11,057,827
15.27
18.4
             
2014
49
488,169
10.9
5,883,973
12.05
9.8
             
2015
33
251,547
5.6
2,967,031
11.80
4.9
             
2016
18
279,792
6.2
4,451,272
15.91
7.4
             
2017
19
200,823
4.5
3,250,111
16.18
5.4
             
2018
21
266,639
6.0
3,698,928
13.87
6.2
             
2019
15
343,747
7.7
4,958,452
14.42
8.2
             
2020
11
159,688
3.6
2,068,154
12.95
3.4
             
2021 and thereafter
2
34,006
0.8
625,938
18.41
1.0
Totals/Weighted
            
  Average
457
4,483,120 (c)
100.0
60,153,944
13.42
100.0

(a)  
Includes office/flex tenants only.  Excludes leases for amenity, retail, parking and month-to-month tenants.  Some tenants have multiple leases.
(b)  
Annualized base rental revenue is based on actual December 2009 billings times 12.  For leases whose rent commences after January 1, 2010, 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.
(c)  
Includes leases expiring December 31, 2009 aggregating 10,866 square feet and representing annualized rent of $136,291 for which no new leases were signed.



 
34
 

SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES

The following table sets forth a schedule of lease expirations for the industrial/warehouse properties beginning January 1, 2010, assuming that none of the tenants exercise renewal or termination options:

         
Average
  
         
Annual Base
  
     
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 (a)
(Sq. Ft.)
Leases (%)
Leases ($) (b)
Leases ($)
Leases (%)
             
2010
1
4,950
1.3
89,100
18.00
2.1
             
2011
2
19,400
5.1
228,600
11.78
5.4
             
2012
1
6,638
1.8
73,018
11.00
1.7
             
2013
11
154,305
40.7
1,386,050
8.98
32.6
             
2014
3
30,545
8.1
628,710
20.58
14.8
             
2015
1
28,000
7.4
322,000
11.50
7.6
             
2016
2
135,082
35.6
1,519,672
11.25
35.8
Totals/Weighted
            
  Average
21
378,920
100.0
4,247,150
11.21
100.0

(a)  
Includes industrial/warehouse tenants only.  Excludes leases for amenity, retail, parking and month-to-month industrial/warehouse tenants.  Some tenants have multiple leases.
(b)  
Annualized base rental revenue is based on actual December 2009 billings times 12.  For leases whose rent commences after January 1, 2010, 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, 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 lease expirations for the stand-alone retail properties beginning January 1, 2010 assuming that none of the tenants exercise renewal or termination options:

         
Average
  
         
Annual Base
  
     
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 (a)
(Sq. Ft.)
Leases (%)
Leases ($) (b)
Leases ($)
Leases (%)
             
2014
1
9,300
53.8
175,000
18.82
41.4
             
2018
1
8,000
46.2
248,050
31.01
58.6
Totals/Weighted
            
  Average
2
17,300
100.0
423,050
24.45
100.0

(a)  
Includes stand-alone retail property tenants only.
(b)  
Annualized base rental revenue is based on actual December 2009 billings times 12.  For leases whose rent commences after January 1, 2010 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.


 
35
 


INDUSTRY DIVERSIFICATION

The following table lists the Company’s 30 largest industry classifications based on annualized contractual base rent of the Consolidated Properties:

 
 
 
Industry Classification (a)
Annualized
Base Rental
Revenue
($) (b) (c) (d)
Percentage of 
Company
Annualized Base
Rental Revenue (%)
Square
Feet Leased
(c) (d)
Percentage of 
Total Company
Leased
Sq. Ft. (%)
Securities, Commodity Contracts & Other Financial
102,997,592
16.5
3,782,274
13.9
Insurance Carriers & Related Activities
57,847,293
9.3
2,353,291
8.6
Manufacturing
51,007,205
8.2
2,635,523
9.6
Telecommunications
41,733,313
6.7
2,133,663
7.8
Legal Services
37,099,125
5.9
1,418,926
5.2
Health Care & Social Assistance
29,380,389
4.7
1,383,604
5.1
Computer System Design Services
27,729,122
4.4
1,321,821
4.8
Credit Intermediation & Related Activities
26,448,185
4.2
1,022,498
3.7
Scientific Research/Development
23,094,736
3.7
848,562
3.1
Wholesale Trade
18,608,260
3.0
1,265,984
4.6
Accounting/Tax Preparation
17,537,017
2.8
664,178
2.4
Admin & Support, Waste Mgt. & Remediation Services
17,271,629
2.8
796,133
2.9
Public Administration
15,622,668
2.5
602,186
2.2
Architectural/Engineering
15,558,218
2.5
717,557
2.6
Retail Trade
14,654,985
2.3
730,010
2.7
Management/Scientific
12,383,219
2.0
499,410
1.8
Real Estate & Rental & Leasing
11,906,880
1.9
534,418
2.0
Accommodation & Food Services
11,432,807
1.8
497,378
1.8
Other Services (except Public Administration)
11,389,243
1.8
459,859
1.7
Arts, Entertainment & Recreation
11,376,812
1.8
679,077
2.5
Advertising/Related Services
8,949,998
1.4
346,731
1.3
Information Services
8,022,081
1.3
296,610
1.1
Construction
7,013,989
1.1
337,843
1.2
Other Professional
6,487,489
1.0
269,372
1.0
Publishing Industries
6,195,183
1.0
249,148
0.9
Broadcasting
5,693,198
0.9
204,248
0.7
Transportation
5,433,129
0.9
289,568
1.1
Utilities
5,296,482
0.8
226,567
0.8
Data Processing Services
4,784,933
0.8
201,858
0.7
Educational Services
3,969,992
0.6
203,446
0.7
Other
9,506,159
1.4
402,532
1.5
         
TOTAL
626,431,331
100.0
27,374,275
100.0

(a)  
The Company’s tenants are classified according to the U.S. Government’s North American Industrial Classification System (NAICS).
(b)  
Annualized base rental revenue is based on actual December 2009 billings times 12.  For leases whose rent commences after January 1, 2010 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.
(c)  
Includes office, office/flex, industrial/warehouse and stand-alone retail tenants only.  Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.
(d)  
Includes leases in effect as of the period end date, some of which have commencement dates in the future and leases expiring December 31, 2009 aggregating 64,672 square feet and representing annualized rent of $1,399,732 for which no new leases were signed.



 
36
 

MARKET DIVERSIFICATION

The following table lists the Company’s markets (MSAs), based on annualized contractual base rent of the Consolidated Properties:

     
 
    
     
Percentage Of
    
   
 
Company
 
  
   
Annualized Base
Annualized
Total Property
 
 
 
Rental Revenue
Base Rental
Size Rentable
Percentage Of
Market (MSA)
($) (a) (b) (c)
 Revenue (%)    Area (b) (c)    Rentable Area (%)  
Newark, NJ
        
 (Essex-Morris-Union Counties)
135,486,909
21.6
6,495,715
20.8
Jersey City, NJ
118,413,718
18.9
4,317,978
14.0
Westchester-Rockland, NY
92,786,586
14.8
4,968,420
16.1
Bergen-Passaic, NJ
91,010,110
14.5
4,723,604
15.3
Philadelphia, PA-NJ
56,046,278
8.9
3,529,994
11.4
Middlesex-Somerset-Hunterdon, NJ
36,207,931
5.8
1,918,252
6.2
Washington, DC-MD-VA-WV
26,638,168
4.3
1,292,807
4.2
Monmouth-Ocean, NJ
26,331,433
4.2
1,620,863
5.2
Trenton, NJ
17,079,000
2.7
956,597
3.1
New York (Manhattan)
16,120,934
2.6
524,476
1.7
Bridgeport-Stamford-Norwalk, CT
10,310,264
1.7
597,747
2.0
         
Totals
626,431,331
100.0
30,946,453
100.0

(a)  
Annualized base rental revenue is based on actual December 2009 billings times 12.  For leases whose rent commences after January 1, 2010, 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.
(b)  
Includes leases in effect as of the period end date, some of which have commencement dates in the future, and leases expiring December 31, 2009 aggregating 64,672 square feet and representing annualized rent of $1,399,732 for which no new leases were signed.
(c)  
Includes office, office/flex, industrial/warehouse and stand-alone retail tenants only.  Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.


 
37
 

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.

 
38
 

PART II

ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

The shares of the Company’s Common Stock are traded on the New York Stock Exchange (“NYSE”) under the symbol “CLI.”

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, 2009 and 2008, respectively:

For the Year Ended December 31, 2009:
       
 
High
Low
Close
First Quarter
$23.99
$14.14
$19.81
Second Quarter
$28.01
$18.30
$22.80
Third Quarter
$37.63
$21.13
$32.33
Fourth Quarter
$36.23
$29.24
$34.57
       
For the Year Ended December 31, 2008:
       
 
High
Low
Close
First Quarter
$37.42
$28.44
$35.71
Second Quarter
$40.56
$33.67
$34.17
Third Quarter
$43.00
$31.00
$33.87
Fourth Quarter
$33.31
$13.16
$24.50

On February 8, 2010, the closing Common Stock price reported on the NYSE was $31.24 per share.

On June 26, 2009, the Company filed with the NYSE its annual CEO Certification and Annual Written Affirmation pursuant to Section 303A.12 of the NYSE Listed Company Manual, each certifying that the Company was in compliance with all of the listing standards of the NYSE.

HOLDERS

On February 8, 2010, the Company had 518 common shareholders of record.  This does not include beneficial owners for whom Cede & Co. or others act as nominee.

RECENT SALES OF UNREGISTERED SECURITIES; USES OF PROCEEDS FROM REGISTERED SECURITIES

During the three months ended December 31, 2009, the Company issued 326,719 shares of Common Stock to holders of common units in the Operating Partnership upon the redemption of such common units in private offerings pursuant to Section 4(2) of the Securities Act.  The holders of the common units were limited partners of the Operating Partnership and accredited investors under Rule 501 of the Securities Act.  The common units were converted into an equal number of shares of Common Stock.  The Company has registered the resale of such shares under the Securities Act.

DIVIDENDS AND DISTRIBUTIONS

During the year ended December 31, 2009, the Company declared four quarterly cash dividends on its common stock and common units of $0.45 per share and per unit for each of the first to the fourth quarter, respectively.  Additionally, in 2009, the Company declared quarterly preferred stock cash dividends of $50.00 per preferred share from the first to the fourth quarter.
 
 
39
 

 
During the year ended December 31, 2008, the Company declared four quarterly cash dividends on its common stock and common units of $0.64 per share and per unit for each of the first to the fourth quarter, respectively.  Additionally, in 2008, the Company declared quarterly preferred stock cash dividends of $50.00 per preferred share from the first to the fourth quarter.

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, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and the general overall economic conditions and other factors.

 
PERFORMANCE GRAPH

The following graph compares total stockholder returns from the last five fiscal years to the Standard & Poor’s 500 Index (“S&P 500”) and to the National Association of Real Estate Investment Trusts, Inc.’s Equity REIT Total Return Index (“NAREIT”).  The graph assumes that the value of the investment in the Company’s Common Stock and in the S&P 500 and NAREIT indices was $100 at December 31, 2004 and that all dividends were reinvested.  The price of the Company’s Common Stock on December 31, 2004 (on which the graph is based) was $46.03.  The past stockholder return shown on the following graph is not necessarily indicative of future performance.

Comparison of Five-Year Cumulative Total Return




 
40
 


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS


Equity Compensation Plan Information
 
The following table summarizes information, as of December 31, 2009, relating to equity compensation plans of the Company (including individual compensation arrangements) pursuant to which equity securities of the Company are authorized for issuance.
 
Plan Category
(a)
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options and Rights
(b)
Weighted-Average
Exercise Price
of Outstanding
Options and Rights
(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity Compensation
Plans (excluding
securities reflected
in column(a))
Equity Compensation Plans Approved by Stockholders
675,272  (2)
$28.74  (3)
3,824,270
Equity Compensation Plans Not Approved by Stockholders(1)
71,848.471
N/A      
N/A  (4)
Total
747,120.471
N/A      
3,824,270
       
       
(1)
The only plan included in the table that was adopted without stockholder approval was the Directors’ Deferred Compensation Plan.  See Note 15: Mack-Cali Realty Corporation Stockholder Equity - Deferred Stock Compensation Plan For Directors.
 
(2)
Includes 323,088 shares of restricted Common Stock.
 
(3)
Weighted-average exercise price of outstanding options; excludes restricted Common Stock.
 
(4)
The Directors’ Deferred Compensation Plan does not limit the number of stock units issuable thereunder, but applicable SEC and NYSE rules restricted the aggregate number of stock units issuable thereunder to one percent (1%) of the Company’s outstanding shares when the plan commenced on January 1, 1999.
 
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None.


 
41
 


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 other data of the Company as of December 31, 2009, 2008, 2007, 2006 and 2005, and for the years then ended have been derived from the Company’s financial statements for the respective periods.

Operating Data (a)
Year Ended December 31,
In thousands, except per share data
2009
2008
2007
2006
2005
Total revenues
$   764,525
$   777,969
$   808,350
$   732,012
$   591,991
Property expenses (b)
$   276,992
$   279,844
$   270,913
$   253,667
$   207,558
Direct construction costs
$     20,323
$     37,649
$     85,179
$     53,602
--
General and administrative
$     39,807
$     43,984
$     52,162
$     49,074
$     32,432
Interest expense
$   141,273
$   128,145
$   126,672
$   134,964
$   119,070
Income from continuing operations
$     63,728
$     64,879
$     88,612
$   104,582
$     92,299
Net income available to common shareholders
$     52,568
$     51,726
$   108,466
$   142,666
$     93,488
Income from continuing operations
          
  per share – basic
$         0.71
$         0.79
$         1.06
$         1.33
$         1.17
Income from continuing operations
 
 
      
  per share – diluted
$         0.71
$         0.79
$         1.06
$         1.32
$         1.16
Net income per share – basic
$         0.71
$         0.79
$         1.62
$         2.29
$         1.52
Net income per share – diluted
$         0.71
$         0.79
$         1.61
$         2.28
$         1.51
Dividends declared per common share
$         1.80
$         2.56
$         2.56
$         2.54
$         2.52
Basic weighted average shares outstanding
74,318
65,489
67,026
62,237
61,477
Diluted weighted average shares outstanding
88,389
80,648
82,500
77,901
74,189

Balance Sheet Data
December 31,
In thousands
2009
2008
2007
2006
2005
Rental property, before accumulated
          
  depreciation and amortization
$5,186,208
$4,963,780
$4,885,429
$4,573,587
$4,491,752
Total assets
$4,721,637
$4,443,922
$4,593,202
$4,422,889
$4,247,502
Total debt (c)
$2,337,437
$2,225,475
$2,211,735
$2,159,959
$2,126,181
Total liabilities
$2,578,447
$2,484,559
$2,492,797
$2,412,762
$2,335,396
Total Mack-Cali Realty Corporation
          
  Stockholders’ equity
$1,831,458
$1,544,463
$1,642,555
$1,527,907
$1,511,287
Total noncontrolling interests in subsidiaries
$   311,732
$   414,900
$   457,850
$   482,220
$   400,819
           


(a)
Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.
(b)
Property expenses is calculated by taking the sum of real estate taxes, utilities and operating services for each of the periods presented.
(c)
Total debt is calculated by taking the sum of senior unsecured notes, revolving credit facilities, and mortgages, loans payable and other obligations.

 
42
 

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 (collectively, the “Financial Statements”).  Certain defined terms used herein have the meaning ascribed to them in the Financial Statements.


Executive Overview

Mack-Cali Realty Corporation together with its subsidiaries, (the “Company”) is one of the largest real estate investment trusts (REITs) in the United States.  The Company has been involved in all aspects of commercial real estate development, management and ownership for over 50 years and has been a publicly-traded REIT since 1994.  The Company owns or has interests in 289 properties (collectively, the “Properties”), primarily class A office and office/flex buildings, totaling approximately 33.2 million square feet, leased to approximately 2,100 tenants.  The Properties are located primarily in suburban markets of the Northeast, some with adjacent, Company-controlled developable land sites able to accommodate up to 12.5 million square feet of additional commercial space.

The Company’s strategy is to be a significant real estate owner and operator in its core, high-barriers-to-entry markets, primarily in the Northeast.

As an owner of real estate, almost all of the Company’s earnings and cash flow is derived from rental revenue received pursuant to leased space at the Properties.  Key factors that affect the Company’s business and financial results include the following:

· 
the general economic climate;
· 
the occupancy rates of the Properties;
· 
rental rates on new or renewed leases;
· 
tenant improvement and leasing costs incurred to obtain and retain tenants;
· 
the extent of early lease terminations;
· 
operating expenses;
· 
cost of capital; and
· 
the extent of acquisitions, development and sales of real estate.

Any negative effects of the above key factors could potentially cause a deterioration in the Company’s revenue and/or earnings.  Such negative effects could include: (1) failure to renew or execute new leases as current leases expire; (2) failure to renew or execute new leases with rental terms at or above the terms of in-place leases; and (3) tenant defaults.

A failure to renew or execute new leases as current leases expire or to execute new leases with rental terms at or above the terms of in-place leases may be affected by several factors such as: (1) the local economic climate, which may be adversely impacted by business layoffs or downsizing, industry slowdowns, changing demographics and other factors; and (2) local real estate conditions, such as oversupply of office and office/flex space or competition within the market.

The Company’s core markets continue to be weak.  The percentage leased in the Company’s consolidated portfolio of stabilized operating properties was 90.1 percent at December 31, 2009 as compared to 91.3 percent at December 31, 2008 and 92.7 percent at December 31, 2007.  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date.  Leases that expired as of December 31, 2009, 2008 and 2007 aggregate 64,672, 67,473 and 146,261 square feet, respectively, or 0.2, 0.2 and 0.5 percentage of the net rentable square footage, respectively.  Rental rates on the Company’s space that was re-leased (based on first rents payable) during the year ended December 31, 2009 decreased an average of 9.3 percent compared to rates that were in effect under the prior leases, as compared to a 1.5 percent increase in 2008 and a 0.2 percent decrease in 2007.  The Company believes that vacancy rates may continue to increase in some of its markets through 2010 and possibly beyond.  As a result, the Company’s future earnings and cash flow may continue to be negatively impacted by current market conditions.
 
 
43
 

 
Deteriorating economic conditions have resulted in a reduction of the availability of financing and overall higher borrowing rates.  These factors, coupled with a slowing economy, have reduced the volume of real estate transactions and created credit stresses on most businesses.

The Company expects that the impact of the current state of the economy, including rising unemployment and the unprecedented volatility in the financial and credit market, will continue to have a dampening effect on the fundamentals of its business, including increases in past due accounts, defaults, lower occupancy and reduced effective rents.  These conditions would negatively affect the Company’s future net income and cash flows and could have a material adverse effect on the Company’s financial condition.  Although the Company believes that the quality of its assets and its strong balance sheet will enable it to raise capital from traditional sources, these sources are offering fewer dollars, under stricter terms and at higher rates, and there can be no assurance that the Company will be able to do so on terms that are economically attractive or at all.

The remaining portion of this Management’s Discussion and Analysis of Financial Condition and Results of Operations should help the reader understand:

· 
property transactions during the period;
· 
critical accounting policies and estimates;
· 
results of operations for the year ended December 31, 2009 as compared to the year ended December 31, 2008;
· 
results of operations for the year ended December 31, 2008 as compared to the year ended December 31, 2007; and
· 
liquidity and capital resources.


Property Transactions

On March 1, 2009, the Company placed in service a 249,409 square-foot, class A office building, which is fully leased through August 2024.  The building is located in the Mack-Cali Business Campus in Parsippany, New Jersey.

On April 29, 2009, the Company acquired SL Green’s interests in the Mack-Green-Gale LLC and subsidiaries (“Mack-Green”) and 55 Corporate Partners, LLC (“55 Corporate”) joint ventures (the “SL Green Transactions”) for $5 million.  As a result, the Company owns 100 percent of Mack-Green and 55 Corporate. Concurrent with the SL Green Transactions, the loan agreement with an affiliate of Gramercy Capital Corporation (“Gramercy”) on six office properties indirectly owned by Mack-Green was restructured providing Gramercy with the power to control the activities that are most important to the properties’ economic performance.  At the time of the restructuring, the estimated fair value of the six properties was less than the aggregate carrying amount of the non-recourse mortgage loans.

As a result of the SL Green Transactions and the agreement with Gramercy, as of April 29, 2009, the Company began consolidating 11 office properties, aggregating approximately 1.5 million square feet, owned and controlled by Mack-Green, and a pre-leased 205,000 square foot office development project owned and controlled by 55 Corporate.  The Company also has retained a non-controlling interest in entities that own 100 percent of six office properties, aggregating 786,198 square feet, which were previously indirectly owned by Mack-Green.  See “Mack-Green-Gale LLC” and “55 Corporate Partners, LLC” under Note 4: Investments in Unconsolidated Joint Ventures – to the Financial Statements for further discussion on the transactions.

The Company’s office property located at 105 Challenger Road in Ridgefield Park, New Jersey, aggregating 150,000 square feet, is collateral for a mortgage loan scheduled to mature on June 30, 2010 with a balance of $19.4 million at December 31, 2009.  As of December 31, 2009, the Company estimated that the carrying value of the property may not be recoverable over its anticipated holding period. In order to reduce the carrying value of the property to its estimated fair market value, the Company recorded an impairment charge of $16.6 million at December 31, 2009.

 
44
 


Critical Accounting Policies and Estimates

The Financial Statements have been prepared in conformity with generally accepted accounting principles.  The preparation of the Financial Statements 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 reported period.  These estimates and assumptions are based on management’s historical experience that are believed to be reasonable at the time.  However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment.  The Company’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain.  Different estimates could have a material effect on the Company’s financial results.  Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances.

Rental Property:
Rental properties are stated at cost less accumulated depreciation and amortization.  Costs directly related to the acquisition, development and construction of rental properties are capitalized.  Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development.  Interest capitalized by the Company for the years ended December 31, 2009, 2008 and 2007 was $1.4 million, $5.8 million and $5.1 million, 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.

The Company considers a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup).  If portions of a rental project are substantially completed and occupied by tenants, or held available for occupancy, and other portions have not yet reached that stage, the substantially completed portions are accounted for as a separate project.  The Company allocates costs incurred between the portions under construction and the portions substantially completed and held available for occupancy and capitalizes only those costs associated with the portion under construction.

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

Upon acquisition of rental property, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships.  The Company allocates the purchase price to the assets acquired and liabilities assumed based on their fair values. The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information.  The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.  The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases.
 
 
45
 

 
Other intangible assets acquired include amounts for in-place lease values and tenant relationship values which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant.  Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases.  In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions.  In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses.  Characteristics considered by management in valuing tenant relationships include the nature and extent of the Company’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals.  The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases.  The value of tenant relationship intangibles will be amortized to expense over the anticipated life of the relationships.

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s rental 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 is 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.  The Company’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Rental Property Held for Sale and Discontinued Operations:
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 as held for sale is less than the net book value of the assets, a valuation allowance is established.  Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used.  A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

Investments in Unconsolidated Joint Ventures:
The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting.  The Company applies the equity method by initially recording these investments at cost, as Investments in Unconsolidated Joint Ventures, subsequently adjusted for equity in earnings and cash contributions and distributions.

Accounting Standards Codification (“ASC”) 810, Consolidation, provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIE (the “primary beneficiary”).  Generally, the consideration of whether an entity is a VIE applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.
 
 
46

 
On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired.  An investment is impaired only if management’s estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary.  To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment.  The Company’s estimates of value for each investment (particularly in commercial real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its impairment analyses may not be realized.

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.  Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed-rate renewal options for below-market leases.  The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.  Escalations and recoveries from tenants 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.

Construction services revenue includes fees earned and reimbursements received by the Company for providing construction management and general contractor services to clients.  Construction services revenue is recognized on the percentage of completion method.  Using this method, profits are recorded on the basis of our estimates of the overall profit and percentage of completion of individual contracts.  A portion of the estimated profits is accrued based upon estimates of the percentage of completion of the construction contract.  This revenue recognition method involves inherent risks relating to profit and cost estimates.  Real estate services revenue includes property management, facilities management, leasing commission fees and other services, and payroll and related costs reimbursed from clients.  Other income includes income from parking spaces leased to tenants, income from tenants for additional services arranged for the Company and income from tenants for early lease terminations.

Allowance for Doubtful Accounts:
Management periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances.  Management’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.

 
47
 

Results From Operations

The following comparisons for the year ended December 31, 2009 (“2009”), as compared to the year ended December 31, 2008 (“2008”), and for 2008, as compared to the year ended December 31, 2007 (“2007”), make reference to the following:  (i) the effect of the “Same-Store Properties,” which represent all in-service properties owned by the Company at December 31, 2007, (for the 2009 versus 2008 comparison) and which represent all in-service properties owned by the Company at December 31, 2006, (for the 2008 versus 2007 comparison), excluding properties sold or held for sale through December 31, 2008; and (ii) the effect of the “Acquired Properties,” which represent all properties acquired by the Company, commencing initial operations or initially consolidated by the Company from January 1, 2008 through December 31, 2009 (for the 2009 versus 2008 comparison) and which represent all properties acquired by the Company or commencing initial operation from January 1, 2007 through December 31, 2008 (for the 2008 versus 2007 comparison).

 
48
 


Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

   
Year Ended
              
   
December 31,
    
Dollar
    
Percent
  
(dollars in thousands)
  
2009
    
2008
    
Change
    
Change
  
Revenue from rental operations and other:
                        
Base rents
   $ 615,839     $ 593,898     $ 21,941       3.7 %
Escalations and recoveries from tenants
     103,887       109,690       (5,803 )     (5.3 )
Other income
     13,530       20,214       (6,684 )     (33.1 )
Total revenues from rental operations
     733,256       723,802       9,454       1.3  
                                 
Property expenses:
                                
Real estate taxes
     93,998       88,001       5,997       6.8  
Utilities
     71,545       84,227       (12,682 )     (15.1 )
Operating services
     111,449       107,616       3,833       3.6  
Total property expenses
     276,992       279,844       (2,852 )     (1.0 )
                                 
Non-property revenues:
                                
Construction services
     21,910       40,680       (18,770 )     (46.1 )
Real estate services
     9,359       13,487       (4,128 )     (30.6 )
Total non-property revenues
     31,269       54,167       (22,898 )     (42.3 )
                                 
Non-property expenses:
                                
Direct construction costs
     20,323       37,649       (17,326 )     (46.0 )
General and administrative
     39,807       43,984       (4,177 )     (9.5 )
Depreciation and amortization
     202,543       194,635       7,908       4.1  
Impairment charge on rental property
     16,563       --       16,563       100.0  
Total non-property expenses
     279,236       276,268       2,968       1.1  
Operating  income
     208,297       221,857       (13,560 )     (6.1 )
Other (expense) income:
                                
Interest expense
     (141,273 )     (128,145 )     (13,128 )     (10.2 )
Interest and other investment income
     571       1,385       (814 )     (58.8 )
Equity in earnings (loss) of unconsolidated
                                
joint ventures
     (5,560 )     (39,752 )     34,192       86.0  
Gain on sale of investment in marketable securities
     --       471       (471 )     (100.0 )
Gain on reduction of other obligations
     1,693       9,063       (7,370 )     (81.3 )
Total other (expense) income
     (144,569 )     (156,978 )     12,409       7.9  
Income from continuing operations
     63,728       64,879       (1,151 )     (1.8 )
Net income
     63,728       64,879       (1,151 )     (1.8 )
Noncontrolling interest in consolidated joint
                                
ventures
     943       664       279       42.0  
Noncontrolling interest in Operating Partnership
     (10,103 )     (11,817 )     1,714       14.5  
Preferred stock dividends
     (2,000 )     (2,000 )     --       --  
                                 
Net income available to common shareholders
   $ 52,568     $ 51,726     $ 842       1.6 %

 
49
 


The following is a summary of the changes in revenue from rental operations and property expenses in 2009 as compared to 2008 divided into Same-Store Properties and Acquired Properties (dollars in thousands):


 
Total Company
Same-Store Properties
Acquired Properties
 
Dollar
Percent
Dollar
Percent
Dollar
Percent
 
Change
Change
Change
Change
Change
Change
Revenue from rental operations:
            
Base rents
$ 21,941
3.7%
$   (4,445)
(0.8)%
$ 26,386
4.5%
Escalations and recoveries
            
   from tenants
(5,803)
(5.3)
(7,689)
(7.0)
1,886
1.7
Other income
(6,684)
(33.1)
(6,797)
(33.6)
113
0.5
Total
$   9,454
1.3%
$ (18,931)
(2.6)
$ 28,385
3.9%
             
Property expenses:
            
Real estate taxes
$   5,997
6.8%
$    2,703
3.1%
$   3,294
3.7%
Utilities
(12,682)
(15.1)
(14,781)
(17.5)
2,099
2.4
Operating services
3,833
3.6
(612)
(0.6)
4,445
4.2
Total
$  (2,852)
(1.0)%
$ (12,690)
(4.5)%
$   9,838
3.5%
             
OTHER DATA:
            
Number of Consolidated Properties
268
  
255
  
13
  
Square feet (in thousands)
30,946
  
29,245
  
1,701
  


Base rents for the Same-Store Properties decreased $4.4 million, or 0.8 percent, for 2009 as compared to 2008, due primarily to decreased occupancy.  Escalations and recoveries from tenants for the Same-Store Properties decreased $7.7 million, or 7.0 percent, for 2009 over 2008, due primarily to lower operating and utility expenses in 2009, as compared to 2008.  Other income for the Same-Store Properties decreased $6.8 million, or 33.6 percent, due primarily to a decrease in lease breakage income for 2009 as compared to 2008.

Real estate taxes on the Same-Store Properties increased $2.7 million, or 3.1 percent, for 2009 as compared to 2008, due primarily to real estate tax refunds received in 2008.  Utilities for the Same-Store Properties decreased $14.8 million, or 17.5 percent, for 2009 as compared to 2008, due primarily to lower electric rates and usage in 2009 as compared to 2008.  Operating services for the Same-Store Properties decreased $0.6 million, or 0.6 percent, due primarily to a decrease in property insurance, partially offset by an increase in snow removal costs in 2009 as compared to 2008.

Construction services revenue decreased $18.8 million, or 46.1 percent, in 2009 as compared to 2008, due to lesser activity in 2009.  Real estate services revenues decreased by $4.1 million, or 30.6 percent, for 2009 as compared to 2008, due primarily to decreases in management fee income of $1.8 million, salary reimbursements of $1.4 million, and commissions income of $0.7 million.

Direct construction costs decreased $17.3 million, or 46.0 percent, in 2009 as compared to 2008, due primarily to lesser activity in 2009.

General and administrative decreased by $4.2 million, or 9.5 percent, for 2009 as compared to 2008 due primarily to decreases in professional fees and state taxes.

Depreciation and amortization increased by $7.9 million, or 4.1 percent, for 2009 over 2008.  This increase was due primarily to the Acquired Properties.

In 2009, the Company incurred $16.6 million in impairment charge on rental property.
 
 
50
 

 
Interest expense increased $13.1 million, or 10.2 percent, for 2009 as compared to 2008.  This increase was primarily as a result of higher average interest rates on outstanding debt and capitalizing less interest on development projects in 2009 as compared to 2008.

Interest and other investment income decreased $0.8 million, or 58.8 percent, for 2009 as compared to 2008.  This decrease was due primarily to lower interest rates on invested cash and cash equivalents for 2009 as compared to 2008.

Equity in earnings of unconsolidated joint ventures increased $34.2 million, or 86.0 percent, for 2009 as compared to 2008.  The increase was due primarily to the recording of the Company’s share of the venture’s impairment charges in 2008 of $27.1 million in the Mack-Gale-Green/Gramercy venture, and $11.9 million in the Boston-Downtown Crossing joint venture, partially offset by the write-off in 2009 of the Company’s investment in the Route 93 Portfolio venture for an increased loss of $3.2 million in 2009.

The Company recognized a gain on sale of investments in marketable securities of $0.5 million in 2008.

The Company had a gain on reduction of other obligations of $1.7 million on account of the expiration of the Assumed Obligations in 2009, as well as, a gain on reduction of other obligations of $9.1 million in 2008 due to a change in the Company’s estimates of payables under its remaining assumed lease obligations.

Income from continuing operations decreased to $63.7 million in 2009 from approximately $64.9 million in 2008.  The decrease of $1.2 million was due to the factors discussed above.

Net income available to common shareholders increased by $0.8 million, or 1.6 percent, from $51.7 million in 2008 to approximately $52.5 million in 2009.  The increase was primarily the result of a decrease in income allocated to noncontrolling interest in Operating Partnership of approximately $1.7 million and an increase in losses allocated to noncontrolling interest in consolidated joint ventures of $0.3 million for 2009 as compared to 2008.  These were offset by a decrease in income from continuing operations of $1.2 million.


 
51
 


Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

   
Year Ended
              
   
December 31,
    
Dollar
    
Percent
  
(dollars in thousands)
  
2008
    
2007
    
Change
    
Change
  
Revenue from rental operations:
                        
Base rents
   $ 593,898     $ 575,463     $ 18,435       3.2 %
Escalations and recoveries from tenants
     109,690       104,781       4,909       4.7  
Other income
     20,214       22,070       (1,856 )     (8.4 )
Total revenues from rental operations
     723,802       702,314       21,488       3.1  
                                 
Property expenses:
                                
Real estate taxes
     88,001       90,895       (2,894 )     (3.2 )
Utilities
     84,227       73,072       11,155       15.3  
Operating services
     107,616       106,946       670       0.6  
Total property expenses
     279,844       270,913       8,931       3.3  
                                 
Non-property revenues:
                                
Construction services
     40,680       88,066       (47,386 )     (53.8 )
Real estate services
     13,487       17,970       (4,483 )     (24.9 )
Total non-property revenues
     54,167       106,036       (51,869 )     (48.9 )
                                 
Non-property expenses:
                                
Direct constructions costs
     37,649       85,179       (47,530 )     (55.8 )
General and administrative
     43,984       52,162       (8,178 )     (15.7 )
Depreciation and amortization
     194,635       183,564       11,071       6.0  
Total non-property expenses
     276,268       320,905       (44,637 )     (13.9 )
Operating Income
     221,857       216,532       5,325       2.5  
Other (expense) income:
                                
Interest expense
     (128,145 )     (126,672 )     (1,473 )     (1.2 )
Interest and other investment income
     1,385       4,670       (3,285 )     (70.3 )
Equity in earnings (loss) of unconsolidated
                                
joint ventures
     (39,752 )     (5,918 )     (33,834 )     (571.7 )
Gain on sale of investment in marketable securities
     471       --       471       100.0  
Gain on reduction of other obligations
     9,063       --       9,063       100.0  
Total other (expense) income
     (156,978 )     (127,920 )     (29,058 )     (22.7 )
Income from continuing operations
     64,879       88,612       (23,733 )     (26.8 )
Discontinued operations:
                                
Income (loss) from discontinued operations
     --       1,297       (1,297 )     (100.0 )
Realized gains (losses) and unrealized losses
                                
on disposition of rental property, net
     --       44,414       (44,414 )     (100.0 )
Total discontinued operations, net
     --       45,711       (45,711 )     (100.0 )
Net income
     64,879       134,323       (69,444 )     (51.7 )
Noncontrolling interest in consolidated joint
                                
ventures
     664       643       21       3.3  
Noncontrolling interest in Operating Partnership
     (11,817 )     (16,126 )     4,309       26.7  
Noncontrolling interest in discontinued operations
     --       (8,374 )     8,374       100.0  
Preferred stock dividends
     (2,000 )     (2,000 )     --       --  
                                 
Net income available to common shareholders
   $ 51,726     $ 108,466     $ (56,740 )     (52.3 )%

 
52
 


The following is a summary of the changes in revenue from rental operations and property expenses in 2008 as compared to 2007 divided into Same-Store Properties and Acquired Properties (dollars in thousands):

 
 
Total Company
Same-Store Properties
Acquired Properties
 
Dollar
Percent
Dollar
Percent
Dollar
Percent
 
Change
Change
Change
Change
Change
Change
Revenue from rental operations:
            
Base rents
$ 18,435
3.2%
$  7,882
1.4%
$ 10,553
1.8%
Escalations and recoveries
            
   from tenants
4,909
4.7
1,639
1.6
3,270
3.1
Other income
(1,856)
(8.4)
(1,896)
(8.5)
40
0.1
Total
$ 21,488
3.1%
$  7,625
1.1%
$ 13,863
2.0%
             
Property expenses:
            
Real estate taxes
$ (2,894)
(3.2)%
$ (4,745)
(5.2)%
$   1,851
2.0%
Utilities
11,155
15.3
10,625
14.5
530
0.8
Operating services
670
0.6
(2,287)
(2.1)
2,957
2.7
Total
$   8,931
3.3%
$  3,593
1.3%
$   5,338
2.0%
             
OTHER DATA:
            
Number of Consolidated Properties
255
  
251
  
4
  
Square feet (in thousands)
29,245
  
28,532
  
713
  


Base rents for the Same-Store Properties increased $7.9 million, or 1.4 percent, for 2008 as compared to 2007, due primarily to increased rental rates at certain properties in 2008 as compared to 2007.  Escalations and recoveries from tenants for the Same-Store Properties increased $1.6 million, or 1.6 percent, for 2008 over 2007, due primarily to an increase in amounts recovered from tenants resulting from higher utility expenses in 2008.  Other income for the Same-Store Properties decreased $1.9 million, or 8.5 percent, due primarily to a decrease in lease termination fees of $0.7 million and garage rental fees of $0.4 million for 2008 as compared to 2007.

Real estate taxes on the Same-Store Properties decreased $4.7 million, or 5.2 percent, for 2008 as compared to 2007, due primarily to reduced assessments and real estate tax refunds on certain properties in 2008, as compared to 2007.  Utilities for the Same-Store Properties increased $10.6 million, or 14.5 percent, for 2008 as compared to 2007, due primarily to increased electric rates in 2008 as compared to 2007.  Operating services for the Same-Store Properties decreased $2.3 million, or 2.1 percent, due primarily to decreases in snow removal costs of $0.9 million, property insurance expense of $0.9 million, property management salaries and related labor costs of $0.7 million, in 2008 as compared to 2007.

Construction services revenue decreased $47.4 million, or 53.8 percent, in 2008 as compared to 2007, due to lesser activity in 2008 at The Gale Company and its related businesses.  Real estate services revenues decreased by $4.5 million, or 24.9 percent, for 2008 as compared to 2007, due primarily to decreases in management fee income of $2.0 million, commissions income of $1.3 million, and salary reimbursements of $1.0 million.

Direct construction costs decreased $47.5 million, or 55.8 percent, in 2008 as compared to 2007, due primarily to lesser activity of The Gale Company and its related businesses.

General and administrative decreased by $8.2 million, or 15.7 percent, for 2008 as compared to 2007 due primarily to decreases in salaries and related expenses of $4.9 million, state tax expenses of $2.3 million and professional fees of $1.3 million for 2008 as compared to 2007.

Depreciation and amortization increased by $11.1 million, or 6.0 percent, for 2008 over 2007.  Of this increase, $3.8 million, or 2.1 percent, was attributable to the Same-Store Properties and $7.3 million, or 3.9 percent, was due to the Acquired Properties.
 
 
 
53

 
Interest expense increased $1.5 million, or 1.2 percent, for 2008 as compared to 2007.  This increase was primarily as a result of higher average debt balances in 2008 as compared to 2007, partially offset by lower interest rates in 2008 as compared to 2007.

Interest and other investment income decreased $3.3 million, or 70.3 percent, for 2008 as compared to 2007.  This decrease was due primarily to lower cash balances invested in 2008.

Equity in earnings of unconsolidated joint ventures decreased $33.8 million, or 571.7 percent, for 2008 as compared to 2007. The decrease was due primarily to the Company’s share of the venture’s recording of impairment charges of $27.1 million in the Mack-Green joint venture, and $11.9 million in the Boston-Downtown Crossing’s joint venture.  These were partially offset by increased income in 2008 of $1.6 million in the Harborside South Pier joint venture, a decreased operating loss of $1.4 million in the Mack-Green joint venture, a decreased loss of $1.1 million in the Route 93 joint venture, increased income of $0.6 million in the Gale Kimball joint venture, and a decreased loss of $0.5 million in the Ramland Realty joint venture in 2008 as compared to 2007.

The Company recognized a gain on sale of investments in marketable securities of $0.5 million in 2008.

The Company recognized a gain on reduction of other obligations of $9.1 million in 2008 due to a change in the Company’s current estimates of payables under its remaining assumed lease obligations.

Income from continuing operations decreased to $64.9 million in 2008 from approximately $88.6 million in 2007. The decrease of $23.7 million was due to the factors discussed above.

Net income available to common shareholders decreased by $56.7 million, or 52.3 percent, from approximately $108.4 million in 2007 to $51.7 million in 2008.  This decrease was primarily the result of realized gains on disposition of rental property of $44.4 million in 2007, a decrease in income from continuing operations before noncontrolling interest in Operating Partnership of $23.7 million and a decrease in income from discontinued operations of approximately $1.3 million as compared to 2007.  These were partially offset by a noncontrolling interest in discontinued operations of $8.4 million in 2007 and a decrease in income allocated to noncontrolling interest in Operating Partnership of $4.3 million for 2008 as compared to 2007.




 
54
 


LIQUIDITY AND CAPITAL RESOURCES


Liquidity

Overview:
Historically, rental revenue has been the Company’s principal source of funds to pay operating expenses, debt service, capital expenditures and dividends, excluding non-recurring capital expenditures.  To the extent that the Company’s cash flow from operating activities is insufficient to finance its non-recurring capital expenditures such as property acquisitions, development and construction costs and other capital expenditures, the Company has and expects to continue to finance such activities through borrowings under its revolving credit facility and other debt and equity financings.

The Company believes that with the general downturn in the Company’s markets in recent years, it is reasonably likely that vacancy rates may continue to increase, effective rental rates on new and renewed leases may continue to decrease and tenant installation costs, including concessions, may continue to increase in most or all of its markets in 2010 and possibly beyond.  As a result of the potential negative effects on the Company’s revenue from the overall reduced demand for office space, the Company’s cash flow could be insufficient to cover increased tenant installation costs over the short-term.  If this situation were to occur, the Company expects that it would finance any shortfalls through borrowings under its revolving credit facility and other debt and equity financings.

The Company expects to meet its short-term liquidity requirements generally through its working capital, net cash provided by operating activities and from its revolving credit facility.  The Company frequently examines potential property acquisitions and development projects and, at any given time, one or more of such acquisitions or development projects may be under consideration.  Accordingly, the ability to fund property acquisitions and development 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 and short-term borrowings (including draws on the Company’s revolving credit facility) and the issuance of additional debt and/or equity securities.

Financial markets have recently experienced unusual volatility and uncertainty.  Liquidity has tightened in all financial markets, including the debt and equity markets.  The Company’s ability to fund property acquisitions or development projects, as well as its ability to repay or refinance debt maturities could be adversely affected by an inability to secure financing at reasonable terms, if at all.  While the Company currently does not expect any difficulties, it is possible, in these unusual and uncertain times, that one or more lenders in the Company’s revolving credit facility could fail to fund a borrowing request.  Such an event could adversely affect the ability of the Company to access funds from its revolving credit facility when needed.

If current economic conditions persist or deteriorate, the Company may experience increases in past due accounts, defaults, lower occupancy rates and reduced effective rents.  This condition would negatively affect the Company’s future net income and cash flows and could have a material adverse effect on the Company’s financial condition.

Construction Projects:
Sanofi-Aventis U.S. Inc. (“Sanofi”), which occupies neighboring buildings in Bridgewater, New Jersey, exercised its option to cause 55 Corporate Drive II LLC, to construct a building on its vacant, developable land and has signed a lease for the building.  The lease has a term of fifteen years, subject to three five-year extension options.  The construction of the 205,000 square foot building commenced in 2009 and is expected to be delivered to the tenant in January 2011.  The total estimated costs of the project are expected to be approximately $50.9 million (of which the Company has incurred $19.7 million through December 31, 2009). As of April 29, 2009, the Company owns 100 percent of 55 Corporate Partners L.L.C. after acquiring the remaining 50 percent interest from SLG Gale 55 Corporate LLC.

The Company is obligated to acquire from an entity (the “Florham Entity”) whose beneficial owners include Stanley C. Gale and Mark Yeager, an executive officer of the Company, a 50 percent interest in a venture which owns a developable land parcel in Florham Park, New Jersey (the “Florham Park Land”) for a maximum purchase price of up to $10.5 million, subject to reduction based on developable square feet approved and other conditions, with the completion of such acquisition subject to the Florham Entity obtaining final development permits and approvals and related conditions necessary to allow for office development expected to be 600,000 square feet.  In the event the acquisition of the Florham Park Land does not close by May 9, 2010, subject to certain conditions, the Florham Entity will be obligated to pay certain deferred costs and an additional $1 million to the Company at that time.
 
 
55

 
REIT Restrictions:
To maintain its qualification as a REIT under the Code, the Company must make annual distributions to its stockholders of at least 90 percent of its REIT taxable income, determined without regard to the dividends paid deduction and by excluding net capital gains.  Moreover, the Company intends to continue to make regular quarterly distributions to its common stockholders.  Based upon the most recently paid quarterly common stock dividend of $0.45 per common share, in the aggregate, such distributions would equal approximately $142.1 million on an annualized basis.  However, any such distribution, whether for federal income tax purposes or otherwise, would be paid out of (a) available cash, including borrowings and other sources, after meeting operating requirements, preferred stock dividends and distributions, and scheduled debt service on the Company’s debt, and (b) for distributions declared on or before December 31, 2012 with respect to a taxable year ending on or before December 31, 2011, our stock, as permitted pursuant to Internal Revenue Service Revenue Procedure 2010-12, 2010-3 I.R.B. Under this Revenue Procedure, we are permitted to make taxable distributions of our stock (in lieu of cash) if (x) any such distribution is declared on or before December 31, 2012 with respect to a taxable year ending on or before December 31, 2011, and (y) each of our stockholders is permitted to elect to receive its entire entitlement under such declaration in either cash or shares of equivalent value subject to a limitation in the amount of cash to be distributed in the aggregate; provided that (i) the amount of cash that we set aside for distribution is not less than 10 percent of the aggregate distribution so declared, and (ii) if too many of our stockholders elect to receive cash, a pro rata amount of cash will be distributed to each such stockholder electing to receive cash, but in no event will any such stockholder receive less than its entire entitlement under such declaration.

Property Lock-Ups:
The Company may not dispose of or distribute certain of its properties, currently comprising 11 properties with an aggregate net book value of approximately $199.8 million, which were originally contributed by certain unrelated common unitholders of the Operating Partnership, without the express written consent of such common unitholders, as applicable, except in a manner which does not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimburses the appropriate specific common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”).  The aforementioned restrictions do not apply in the event that the Company sells all of its properties or in connection with a sale transaction which the Company’s Board of Directors determines is reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Company or to cure any material monetary default on any mortgage secured by a property.  The Property Lock-Ups expire periodically through 2016.  Upon the expiration of the Property Lock-Ups, the Company is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the Company’s Board of Directors; David S. Mack, director; Earle I. Mack, a former director; and Mitchell E. Hersh, president, chief executive officer and director), the Robert Martin Group (which includes Martin S. Berger, director; Robert F. Weinberg, a former director; and Timothy M. Jones, former president), the Cali Group (which includes John R. Cali, director, and John J. Cali, a former director).  As of December 31, 2009, 126 of the Company’s properties, with an aggregate net book value of approximately $1.8 billion, have lapsed restrictions and are subject to these conditions.

Unencumbered Properties:
As of December 31, 2009, the Company had 236 unencumbered properties, totaling 24.3 million square feet, representing 78.6 percent of the Company’s total portfolio on a square footage basis.

Credit Ratings:
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 and their BB+ rating to existing and prospective preferred stock offerings of the Company.  Moody’s Investors Service (“Moody’s”) has assigned its Baa2 rating to existing and prospective senior unsecured debt of the Operating Partnership and its Baa3 rating to existing and prospective preferred stock offerings of the Company.
 
 
56
 

 

Cash Flows

Cash and cash equivalents increased by $269.4 million to $291.0 million at December 31, 2009, compared to $21.6 million at December 31, 2008.  This increase is comprised of the following net cash flow items:

(1)  
$294.7 million provided by operating activities.

(2)  
$80.1 million used in investing activities, consisting primarily of the following:

(a)  
$77.8 million used for additions to rental property; minus
(b)  
$6.3 million used for investments in unconsolidated joint ventures; minus
(c)  
$11.4 million received from repayments of notes receivable; plus
(d)  
$8.0 million received from restricted cash.

(3)  
$54.8 million provided by financing activities, consisting primarily of the following:

(a)  
$337.0 million from borrowings under the revolving credit facility; plus
(b)  
$274.8 million from proceeds received from a Common Stock offering; plus
(c)  
$246.2 million from proceeds received from senior unsecured notes; minus
(d)  
$498.0 million used for repayments of borrowings under the Company’s unsecured credit facility; minus
(e)  
$199.7 million used for repayment of senior unsecured notes; minus
(f)  
$173.3 million used for payments of dividends and distributions; minus
(g)  
$11.5 million used for repayments of mortgages, loans payable and other obligations.


Debt Financing

Summary of Debt:
The following is a breakdown of the Company’s debt consisting of all fixed rate financing as of December 31, 2009:

 
Balance
  
Weighted Average
Weighted Average Maturity
 
($000’s)
% of Total
Interest Rate (a)
in Years
Fixed Rate Unsecured Debt and
        
  Other Obligations
$1,582,434
67.70%
6.37%
4.10
Fixed Rate Secured Debt
755,003
32.30%
7.09%
5.98
         
Totals/Weighted Average:
$2,337,437
100.00%
6.61%
4.70

(a)      No variable-rate borrowings as of December 31, 2009.

 
57
 

Debt Maturities:
Scheduled principal payments and related weighted average annual interest rates for the Company’s debt as of December 31, 2009 are as follows:

   
Scheduled
    
Principal
          
Weighted Avg.
  
   
Amortization
    
Maturities
    
Total
    
Interest Rate of
  
Period
  
($000’s)
    
($000’s)
    
($000’s)
    
Future Repayments (a)
  
2010
   $ 8,155     $ 334,500     $ 342,655       5.31 %
2011
     9,217       300,000       309,217       7.92 %
2012
     9,968       210,148       220,116       6.21 %
2013
     9,515       145,223       154,738       5.37 %
2014
     8,553       335,257       343,810       6.83 %
Thereafter
     40,360       961,381       1,001,741       6.99 %
Sub-total
     85,768       2,286,509       2,372,277          
Adjustment for unamortized debt
                                
  discount/premium and
                                
  mark-to-market, net, as of
                                
  December 31, 2009
     (34,840 )     --       (34,840 )     --  
                                 
Totals/Weighted Average
   $ 50,928     $ 2,286,509     $ 2,337,437       6.61 %
                                 
(a)   No variable-rate borrowings were outstanding as of December 31, 2009.
  

Senior Unsecured Notes:
On August 14, 2009, the Operating Partnership completed the sale of $250 million face amount of 7.750 percent senior unsecured notes due August 15, 2019 with interest payable semi-annually in arrears.  The net proceeds from the issuance of approximately $246.2 million, after underwriting discount, were used for general corporate purposes.

The terms of the Company’s senior unsecured notes (which totaled approximately $1.6 billion as of December 31, 2009) 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.

Unsecured Revolving Credit Facility:
The Company has an unsecured revolving credit facility with a borrowing capacity of $775 million (expandable to $800 million).  The facility matures in June 2011, with an extension option of one year, which would require a payment of 15 basis points of the then borrowing capacity of the facility upon exercise.  In addition, the interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) is LIBOR plus 55 basis points at the BBB/Baa2 pricing level.  As of February 8, 2010, the Company had no outstanding borrowings under its unsecured revolving credit facility.

The facility has a competitive bid feature, which allows the Company to solicit bids from lenders under the facility to borrow up to $300 million at interest rates less than the current LIBOR plus 55 basis point spread.  The Company may also elect an interest rate representing the higher of the lender’s prime rate or the Federal Funds rate plus 50 basis points. The unsecured facility also requires a 15 basis point facility fee on the current borrowing capacity payable quarterly in arrears.


 
58
 

The interest rate and the facility fee are subject to adjustment, on a sliding scale, based upon the operating partnership’s unsecured debt ratings.  In the event of a change in the Operating Partnership’s unsecured debt rating, the interest and facility fee rates will be adjusted in accordance with the following table:

Operating Partnership’s
Interest Rate –
  
Unsecured Debt Ratings:
Applicable Basis Points
Facility Fee
S&P Moody’s/Fitch (a)
Above LIBOR
Basis Points
No ratings or less than BBB-/Baa3/BBB-
100.0
25.0
BBB-/Baa3/BBB-
75.0
20.0
BBB/Baa2/BBB (current)
55.0
15.0
BBB+/Baa1/BBB+
42.5
15.0
A-/A3/A- or higher
37.5
12.5
     
(a)   If the Operating Partnership has debt ratings from two rating agencies, one of which is Standard & Poor’s Rating Services (“S&P”) or Moody’s Investors Service (“Moody’s”), the rates per the above table shall be based on the lower of such ratings.  If the Operating Partnership has debt ratings from three rating agencies, one of which is S&P or Moody’s, the rates per the above table shall be based on the lower of the two highest ratings.  If the Operating Partnership has debt ratings from only one agency, it will be considered to have no rating or less than BBB-/Baa3/BBB- per the above table.

The terms of the 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 real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the facility described below; or (ii) the property dispositions are completed while the Company is under an event of default under the facility, unless, under certain circumstances, such disposition is being carried out to cure such default), 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 fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property interest coverage and certain investment limitations.  The dividend restriction referred to above provides that, if an event of default has occurred and is continuing, the Company will not make any excess distributions with respect to common stock or other common equity interests except to enable the Company to continue to qualify as a REIT under the Code.

The lending group for the credit facility consists of: JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”); Bank of America, N.A., as syndication agent; Scotiabanc, Inc., Wachovia Bank, National Association, and Wells Fargo Bank, National Association, as documentation agents; SunTrust Bank, as senior managing agent; US Bank National Association, Citicorp North America, Inc. and PNC Bank, National Association, as managing agents; and Bank of China, New York Branch, The Bank of New York; Chevy Chase Bank, F.S.B., The Royal Bank of Scotland PLC, Mizuho Corporate Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd. (successor by merger to UFJ Bank Limited), North Fork Bank, Bank Hapoalim B.M., Comerica Bank, Chang Hwa Commercial Bank, Ltd., New York Branch, First Commercial Bank, New York Agency, Mega International Commercial Bank Co. Ltd., New York Branch, Deutsche Bank Trust Company Americas and Hua Nan Commercial Bank, New York Agency, as participants.

Money Market Loan:
The Company entered into an agreement with JPMorgan Chase Bank to participate in a noncommitted money market loan program (“Money Market Loan”).  The Money Market Loan is an unsecured borrowing of up to $75 million arranged by JPMorgan Chase Bank (“the lender”) with maturities of 30 days or less.  The rate of interest on the Money Market Loan borrowing is set at the time of each borrowing.  As of December 31, 2009, the Company had no outstanding borrowings under its Money Market Loan program.

Mortgages, Loans Payable and Other Obligations:
The Company has mortgages, loans payable and other obligations which consist of various loans collateralized by certain of the Company’s rental properties.  Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only.

On January 27, 2009, the Company obtained $64.5 million in mortgage financing from Guardian Life Insurance Company of America.  The two mortgage loans, which are collateralized by one and three office properties located in Clark and Red Bank, New Jersey, respectively, both bear interest at a net effective rate of 7.31 percent per annum and carry a 10-year term.
 
 
59

 
On June 30, 2009, the Company obtained $17.0 million in mortgage financing from Valley National Bank.  The mortgage loan, which is collateralized by an office property in Woodbridge, New Jersey, is for a 25-year term and bears interest at an effective rate of 6.94 percent per annum through the end of the 10th year.  The coupon interest rate will be reset at the end of year 10 and year 20 at 225 basis points over the 10-year treasury yield 45 days prior to the reset dates, with a minimum rate of 6.875 percent.

On January 15, 2010, the Company refinanced its $150 million secured loan with The Prudential Insurance Company of America.  The new loan also includes VPCM, LLC, a wholly-owned subsidiary of the Virginia Retirement System, as co-lender.  The mortgage loan, which is collateralized by seven properties, is for a seven-year term and carries an interest rate of 6.25 percent.

Debt Strategy:
The Company does not intend to reserve funds to retire the Company’s senior unsecured notes or its mortgages, loans payable and other obligations 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 on or before the applicable maturity dates.  If it cannot raise sufficient proceeds to retire the maturing debt, the Company may draw on its revolving credit facility to retire the maturing indebtedness, which would reduce the future availability of funds under such facility.  As of February 8, 2010, the Company had no outstanding borrowings under its $775 million unsecured revolving credit facility and under the Money Market Loan.  The Company is reviewing various refinancing options, including the purchase of its senior unsecured notes in privately-negotiated transactions, the issuance of additional, or exchange of current, unsecured debt, common and preferred stock, and/or obtaining additional mortgage debt, some or all of which may be completed during 2010.  The Company currently 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 in the short term.  However, if these sources of funds are insufficient or unavailable, due to current economic conditions or otherwise, the Company’s ability to make the expected distributions discussed in “REIT Restrictions” above may be adversely affected.


Equity Financing and Registration Statements


Common Equity:
On May 6, 2009 the Company completed a public offering of 11,500,000 shares of Common Stock and used the net proceeds, which totaled approximately $274.8 million (after offering costs), to repay borrowings under its unsecured revolving credit facility.

The following table presents the changes in the Company’s issued and outstanding shares of Common Stock and the Operating Partnership’s common units from December 31, 2008 to December 31, 2009:

 
Common
Common
  
 
Stock
Units
Total
Outstanding at December 31, 2008
66,419,055
14,437,731
80,856,786
Common Stock Offering
11,500,000
--
11,500,000
Stock options exercised
18,917
--
18,917
Common units redeemed for Common Stock
942,695
(942,695)
--
Shares issued under Dividend Reinvestment
      
  and Stock Purchase Plan
8,748
--
8,748
Restricted shares issued, net of cancellations
80,337
--
80,337
       
Outstanding at December 31, 2009
78,969,752
13,495,036
92,464,788


 
60
 

Share Repurchase Program:
The Company has a share repurchase program which was authorized by its Board of Directors in September 2007 to purchase up to $150 million of the Company’s outstanding common stock (“Repurchase Program”), which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. As of December 31, 2009, the Company has a remaining authorization under the Repurchase Program of $46 million.

Dividend Reinvestment and Stock Purchase Plan:
The Company has a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) which commenced in March 1999 under which 5.5 million shares of the Company’s common stock have been reserved for future issuance.  The DRIP provides for automatic reinvestment of all or a portion of a participant’s dividends from the Company’s shares of common stock.  The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company’s effective registration statement on Form S-3 filed with the Securities and Exchange Commission (“SEC”) for the 5.5 million shares of the Company’s common stock reserved for issuance under the DRIP.

Shelf Registration Statements:
The Company has an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.0 billion in common stock, preferred stock, depositary shares, and/or warrants of the Company, under which $287.5 million of securities have been sold through February 8, 2010 and $1.7 billion remains available for future issuances.
 
The Company and the Operating Partnership also have an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.5 billion in common stock, preferred stock, depositary shares and guarantees of the Company and debt securities of the Operating Partnership, under which $250 million of securities have been sold as of February 8, 2010 and $2.25 billion remains available for future issuances.


Off-Balance Sheet Arrangements

Unconsolidated Joint Venture Debt:
The debt of the Company’s unconsolidated joint ventures are generally non-recourse to the Company except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations.  The Company has also posted a $6.3 million letter of credit in support of the Harborside South Pier joint venture, half of which is indemnified by Hyatt Corporation, the Company’s joint venture partner.

The Company’s off-balance sheet arrangements are further discussed in Note 4: Investments in Unconsolidated Joint Ventures to the Financial Statements.


Contractual Obligations

The following table outlines the timing of payment requirements related to the Company’s debt (principal and interest), PILOT agreements, ground lease and other agreements as of December 31, 2009:

 
Payments Due by Period
   
Less than 1
1 – 3
4 – 5
6 – 10
After 10
(dollars in thousands)
Total
Year
Years
Years
Years
Years
Senior unsecured notes
$2,050,318
$259,332
$636,152
$431,590
$723,244
--
Mortgages, loans payable
            
  and other obligations
1,061,159
218,772
113,382
227,093
480,924
$20,988
Payments in lieu of taxes
            
  (PILOT)
57,523
4,294
12,991
8,807
25,046
6,385
Ground lease payments
36,538
502
1,506
1,065
2,176
31,289
Total
$3,205,538
$482,900
$764,031
$668,555
$1,231,390
$58,662
 
 
 
61
 
 
 
 
 
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.


DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

We consider portions of this information, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act.  Such forward-looking statements relate to, without limitation, our 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,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue” or comparable terminology.  Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate.  Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved.  Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements.

Among the factors about which we have made assumptions are:

·  
risks and uncertainties affecting the general economic climate and conditions, including the impact of the general economic recession as it impacts the national and local economies, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants;
·  
the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;
·  
the extent of any tenant bankruptcies or of any early lease terminations;
·  
our ability to lease or re-lease space at current or anticipated rents;
·  
changes in the supply of and demand for office, office/flex and industrial/warehouse properties;
·  
changes in interest rate levels and volatility in the security markets;
·  
changes in operating costs;
·  
our ability to obtain adequate insurance, including coverage for terrorist acts;
·  
the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;
·  
changes in governmental regulation, tax rates and similar matters; and
·  
other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.

For further information on factors which could impact us and the statements contained herein, see Item 1A: Risk Factors. We assume no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.


 
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, its ability to make distributions or payments to its investors.
 
 
62
 

 
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.

December 31, 2009
                    
Debt,
                  
Fair
including current portion
($’s in thousands)
2010
2011
2012
2013
2014
Thereafter
Sub-total
Other (a)
Total
Value
                     
Fixed Rate
$342,655
$309,217
$220,116
$154,738
$343,810
$1,001,741
$2,372,277
$(34,840)
$2,337,437
$2,353,092
Average Interest Rate
5.31%
7.92%
6.21%
5.37%
6.83%
6.99%
    
6.61%
--

(a)      Adjustment for unamortized debt discount/premium and mark-to-market, net, as of December 31, 2009.

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 could adversely affect its operating results and liquidity.


ITEM 8.                 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Company and the Report of PricewaterhouseCoopers LLP, together with the notes to the Consolidated Financial Statements of the Company, and the Consolidated Financial Statements of Mack-Green-Gale LLC and the Report of the Cornerstone Accounting Group LLP, together with the notes to the Consolidated Financial Statements of Mack-Green-Gale LLC, each as set forth in the index in Item 15: Exhibits and Financial Statements are filed under this Item 8: Financial Statements and Supplementary Data and are incorporated herein by reference.




 
63
 

ITEM 9.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None.


ITEM 9A.       CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s chief executive officer and chief financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s chief executive officer and chief financial officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

Management’s Report on Internal Control Over Financial Reporting.  Internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, is a process designed by, or under the supervision of, the Company’s chief executive officer and chief financial officer, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  The Company’s management, with the participation of the Company’s chief executive officer and chief financial officer, has established and maintained policies and procedures designed to maintain the adequacy of the Company’s internal control over financial reporting, and includes those policies and procedures that:

 
(1)
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
 
 
(2)
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

 
(3)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

The Company’s management has evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 based on the criteria established in a report entitled Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on our assessment and those criteria, the Company’s management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2009.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Changes In Internal Control Over Financial Reporting.  There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
 
 
64

 

ITEM 9B.                OTHER INFORMATION

Not Applicable.


PART III

ITEM 10.                DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 25, 2010, and is incorporated herein by reference.


ITEM 11.                EXECUTIVE COMPENSATION

The information required by Item 11 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 25, 2010, and is incorporated herein by reference.


ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 25, 2010, and is incorporated herein by reference.


ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 25, 2010, and is incorporated herein by reference.


ITEM 14.               PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 25, 2010, and is incorporated herein by reference.



 
65
 

PART IV


ITEM 15.              EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a) 1.
All Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2009 and 2008

Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007

Consolidated Statements of Changes in Equity for the Years Ended December 31, 2009, 2008 and 2007

Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007

Notes to Consolidated Financial Statements
 
(a) 2.           Financial Statement Schedules

(i)      Mack-Cali Realty Corporation:

Schedule III – Real Estate Investments and Accumulated Depreciation as of December 31, 2009

All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.


(ii)      Mack-Green-Gale LLC:

Mack-Green-Gale LLC met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X for the fiscal year ended December 31, 2008 and was consolidated by the Company as of April 29, 2009.  The following financial statements of Mack-Green-Gale LLC for the periods indicated are being filed pursuant to Rule 3-09 of Regulation S-X.

Mack-Green-Gale LLC and Subsidiaries Consolidated Balance Sheets at December 31, 2008 and 2007 and Consolidated Statements of Operations, Changes in Members' Capital and Cash Flows for the years ended December 31, 2008 and 2007 and for the period from May 9, 2006 (Commencement of Operations) through December 31, 2006, including the report of independent registered public accounting firm (filed as Exhibit 99.1 to this Annual Report on Form 10-K)

Mack-Green-Gale LLC and Subsidiaries Consolidated Balance Sheet at April 28, 2009 and Consolidated Statements of Operations, Changes in Members' Capital and Cash Flows for the period January 1, 2009 through April 28, 2009 (Date of Consolidation) (unaudited) (filed as Exhibit 99.2 to this Annual Report on Form 10-K)

All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

(a) 3.       Exhibits
The exhibits required by this item are set forth on the Exhibit Index attached hereto.



 
66
 


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To Board of Directors and Shareholders
of Mack-Cali Realty Corporation:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Mack-Cali Realty Corporation and its subsidiaries (collectively, the "Company") at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 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 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.  Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Controls Over Financial Reporting appearing under Item 9A.  Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits of the financial statements included 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.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 16 to the consolidated financial statements, the Company changed the manner in which it accounts for noncontrolling interests in subsidiaries in 2009.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
New York, New York
February 10, 2010

 
67
 

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)

   
December 31,
  
ASSETS
  
2009
    
2008
  
Rental property
            
Land and leasehold interests
   $ 771,794     $ 731,086  
Buildings and improvements
     3,948,509       3,792,186  
Tenant improvements
     456,547       431,616  
Furniture, fixtures and equipment
     9,358       8,892  
      5,186,208       4,963,780  
Less – accumulated depreciation and amortization
     (1,153,223 )     (1,040,778 )
Net investment in rental property
     4,032,985       3,923,002  
Cash and cash equivalents
     291,059       21,621  
Investments in unconsolidated joint ventures
     35,680       138,495  
Unbilled rents receivable, net
     119,469       112,524  
Deferred charges and other assets, net
     213,674       212,422  
Restricted cash
     20,681       12,719  
Accounts receivable, net of allowance for doubtful accounts
                
of $2,036 and $2,319
     8,089       23,139  
                 
Total assets
   $ 4,721,637     $ 4,443,922  
                 
LIABILITIES AND EQUITY
                
Senior unsecured notes
   $ 1,582,434     $ 1,533,349  
Revolving credit facility
     --       161,000  
Mortgages, loans payable and other obligations
     755,003       531,126  
Dividends and distributions payable
     42,109       52,249  
Accounts payable, accrued expenses and other liabilities
     106,878       119,451  
Rents received in advance and security deposits
     54,693       54,406  
Accrued interest payable
     37,330       32,978  
Total liabilities
     2,578,447       2,484,559  
Commitments and contingencies
                
                 
Equity:
                
Mack-Cali Realty Corporation stockholders’ equity:
                
Preferred stock, $0.01 par value, 5,000,000 shares authorized, 10,000
                
and 10,000 shares outstanding, at liquidation preference
     25,000       25,000  
Common stock, $0.01 par value, 190,000,000 shares authorized,
                
78,969,752 and 66,419,055 shares outstanding
     789       664  
Additional paid-in capital
     2,275,716       1,905,386  
Dividends in excess of net earnings
     (470,047 )     (386,587 )
Total Mack-Cali Realty Corporation stockholders’ equity
     1,831,458       1,544,463  
                 
Noncontrolling interests in subsidiaries:
                
Operating Partnership
     308,703       414,114  
Consolidated joint ventures
     3,029       786  
Total noncontrolling interests in subsidiaries
     311,732       414,900  
                 
Total equity
     2,143,190       1,959,363  
                 
Total liabilities and equity
   $ 4,721,637     $ 4,443,922  
                 
                 
The accompanying notes are an integral part of these consolidated financial statements.
  

 
68
 

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)

   
Year Ended December 31,
  
REVENUES
  
2009
    
2008
    
2007
  
Base rents
   $ 615,839     $ 593,898     $ 575,463  
Escalations and recoveries from tenants
     103,887       109,690       104,781  
Construction services
     21,910       40,680       88,066  
Real estate services
     9,359       13,487       17,970  
Other income
     13,530       20,214       22,070  
Total revenues
     764,525       777,969       808,350  
                         
EXPENSES
                        
Real estate taxes
     93,998       88,001       90,895  
Utilities
     71,545       84,227       73,072  
Operating services
     111,449       107,616       106,946  
Direct construction costs
     20,323       37,649       85,179  
General and administrative
     39,807       43,984       52,162  
Depreciation and amortization
     202,543       194,635       183,564  
Impairment charge on rental property
     16,563       --       --  
Total expenses
     556,228       556,112       591,818  
Operating income
     208,297       221,857       216,532  
                         
OTHER (EXPENSE) INCOME
                        
Interest expense
     (141,273 )     (128,145 )     (126,672 )
Interest and other investment income
     571       1,385       4,670  
Equity in earnings (loss) of unconsolidated joint ventures
     (5,560 )     (39,752 )     (5,918 )
Gain on reduction of other obligations
     1,693       9,063       --  
Gain on sale of investment in marketable securities
     --       471       --  
Total other (expense) income
     (144,569 )     (156,978 )     (127,920 )
Income from continuing operations
     63,728       64,879       88,612  
Discontinued operations:
                        
Income from discontinued operations
     --       --       1,297  
Realized gains (losses) and unrealized losses
                        
  on disposition of rental property, net
     --       --       44,414  
Total discontinued operations, net
     --       --       45,711  
Net income
     63,728       64,879       134,323  
Noncontrolling interest in consolidated joint ventures
     943       664       643  
Noncontrolling interest in Operating Partnership
     (10,103 )     (11,817 )     (16,126 )
Noncontrolling interest in discontinued operations
     --       --       (8,374 )
Preferred stock dividends
     (2,000 )     (2,000 )     (2,000 )
Net income available to common shareholders
   $ 52,568     $ 51,726     $ 108,466  
                         
Basic earnings per common share:
                        
Income from continuing operations
   $ 0.71     $ 0.79     $ 1.06  
Discontinued operations
     --       --       0.56  
Net income available to common shareholders
   $ 0.71     $ 0.79     $ 1.62  
                         
Diluted earnings per common share:
                        
Income from continuing operations
   $ 0.71     $ 0.79     $ 1.06  
Discontinued operations
     --       --       0.55  
Net income available to common shareholders
   $ 0.71     $ 0.79     $ 1.61  
                         
Basic weighted average shares outstanding
     74,318       65,489       67,026  
                         
Diluted weighted average shares outstanding
     88,389       80,648       82,500  
                         
                         
The accompanying notes are an integral part of these consolidated financial statements.
  

 
69
 

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in thousands)

                                                 
                           
Accumulated
                    
               
Additional
    
Dividends in
    
Other
    
Noncontrolling
              
   
Preferred Stock
    
Common Stock
    
Paid-In
    
Excess of
    
Comprehensive
    
Interests
    
Total
    
Comprehensive
  
   
Shares
    
Amount
    
Shares
    
Par Value
    
Capital
    
Net Earnings
    
Income (Loss)
    
in Subsidiaries
    
Equity
    
Income
  
Balance at January 1, 2007
     10     $ 25,000       62,925     $ 629     $ 1,708,053     $ (205,775 )     --     $ 482,220     $ 2,010,127       --  
Net income
     --       --       --       --       --       110,466       --       23,857       134,323     $ 134,323  
Preferred stock dividends
     --       --       --       --       --       (2,000 )     --       --       (2,000 )     --  
Common stock dividends
     --       --       --       --       --       (172,212 )     --       --       (172,212 )     --  
Common unit distributions
     --       --       --       --       --       --       --       (38,788 )     (38,788 )     --  
Common unit offering
     --       --       --       --       --       --       --       5,243       5,243       --  
Common stock offering
     --       --       4,650       47       251,685       --       --       --       251,732       --  
Increase in noncontrolling
                                                                                
  interests
     --       --       --       --       --       --       --       (59 )     (59 )     --  
Redemption of common units
                                                                                
  for common stock
     --       --       472       5       14,618       --       --       (14,623 )     --       --  
Shares issued under Dividend
                                                                                
  Reinvestment and Stock
                                                                             --  
  Purchase Plan
     --       --       7       --       311       --       --       --       311       --  
Stock options exercised
     --       --       133       1       3,801       --       --               3,802       --  
Stock option expense
     --       --       --       --       132       --       --       --       132       --  
Comprehensive Gain (Loss):
                                                                                
  Unrealized holding gain (loss)
                                                                                
  on marketable securities
                                                                                
  available for sale
     --       --       --       --       --       --     $ (47 )     --       (47 )     (47 )
Directors Deferred comp. plan
     --       --       --       --       323       --       --               323       --  
Issuance of restricted stock
     --       --       113       1       2,851       --       --       --       2,852       --  
Stock Compensation
     --       --       --       --       3,487       --       --       --       3,487       --  
Repurchase of common stock
     --       --       (2,742 )     (27 )     (98,794 )     --       --       --       (98,821 )     --  
Balance at December 31, 2007
     10     $ 25,000       65,558     $ 656     $ 1,886,467     $ (269,521 )   $ (47 )   $ 457,850     $ 2,100,405     $ 134,276  
Net income
     --       --       --       --       --       53,726       --       11,153       64,879       64,879  
Preferred stock dividends
     --       --       --       --       --       (2,000 )     --               (2,000 )     --  
Common stock dividends
     --       --       --       --       --       (168,792 )     --       --       (168,792 )     --  
Common unit distributions
     --       --       --       --       --       --       --       (37,891 )     (37,891 )     --  
Increase in noncontrolling
                                                                                
  interests
     --       --       --       --       --       --       --       36       36       --  
Redemption of common units
                                                                                
  for common stock
     --       --       547       5       16,243       --       --       (16,248 )     --       --  
Shares issued under Dividend
                                                                                
  Reinvestment and Stock
                                                                             --  
  Purchase Plan
     --       --       10       --       319       --       --       --       319       --  
Stock options exercised
     --       --       82       --       2,311       --       --       --       2,311       --  
Comprehensive Gain:
                                                                                
  Unrealized holding gain
                                                                                
  on marketable securities
                                                                                
  available for sale
     --       --       --       --       --       --       518       --       518       518  
Directors Deferred comp. plan
     --       --       --       --       388       --       --               388       --  
Issuance of restricted stock
     --       --       375       3       1,965       --       --       --       1,968       --  
Cancellation of restricted stock
     --       --       (2 )     --       (60 )             --       --       (60 )     --  
Stock Compensation
     --       --       --       2       2,949       --       --               2,951       --  
Repurchase of common stock
     --       --       (151 )     (2 )     (5,196 )     --       --               (5,198 )     --  
Reclassification adjustment for
                                                                                
  for realized gain included
                                                                                
  in net income
     --       --       --       --       --       --       (471 )     --       (471 )     (471 )
Balance at December 31, 2008
     10     $ 25,000       66,419     $ 664     $ 1,905,386     $ (386,587 )     --     $ 414,900     $ 1,959,363     $ 64,926  
Net income
     --       --       --       --       --       54,568       --       9,160       63,728       63,728  
Preferred stock dividends
     --       --       --       --       --       (2,000 )     --       --       (2,000 )     --  
Common stock dividends
     --       --       --       --       --       (136,028 )     --       --       (136,028 )     --  
Common unit distributions
     --       --       --       --       --       --       --       (25,100 )     (25,100 )     --  
Common stock offering
     --       --       11,500       115       274,711       --       --       --       274,826       --  
Increase in noncontrolling
                                                                                
  interests
     --       --       --       --       --       --       --       3,186       3,186       --  
Redemption of common units
                                                                                
  for common stock
     --       --       943       9       24,109       --       --       (24,118 )     --       --  
Shares issued under Dividend
                                                                                
  Reinvestment and Stock
                                                                             --  
  Purchase Plan
     --       --       9       --       207       --       --       --       207       --  
Stock options exercised
     --       --       19       --       504       --       --       --       504       --  
Directors Deferred comp. plan
     --       --       --       --       407       --       --       --       407       --  
Issuance of restricted stock
     --       --       83       1       1,973       --       --       --       1,974       --  
Cancellation of restricted stock
     --       --       (3 )     --       (149 )     --       --       --       (149 )        
Stock Compensation
     --       --       --       --       2,272       --       --       --       2,272       --  
Rebalancing of ownership
                                                                                
  percent between parent
                                                                                
  and subsidiaries
     --       --       --       --       66,296       --       --       (66,296 )     --          
Balance at December 31, 2009
     10     $ 25,000       78,970     $ 789     $ 2,275,716     $ (470,047 )     --     $ 311,732     $ 2,143,190     $ 63,728  


The accompanying notes are an integral part of these consolidated financial statements.

 
70
 

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

   
Year Ended December 31,
  
CASH FLOWS FROM OPERATING ACTIVITIES
  
2009
    
2008
    
2007
  
Net income
   $ 63,728     $ 64,879     $ 134,323  
Adjustments to reconcile net income to net cash provided by
                        
Operating activities:
                        
Depreciation and amortization, including related intangible assets
     196,597       188,729       179,705  
Depreciation and amortization on discontinued operations
     --       --       424  
Amortization of stock compensation
     2,272       2,951       3,619  
Amortization of deferred financing costs and debt discount
     2,730       2,873       2,808  
Equity in (earnings) loss of unconsolidated joint venture, net
     5,560       39,752       5,918  
Gain on sale of investment in marketable securities
     --       (471 )     --  
Gain on reduction of other obligations
     (1,693 )     (9,063 )     --  
(Realized gains) unrealized losses on disposition of rental property
     --       --       (44,414 )
Impairment charge on rental property
     16,563       --       --  
Distributions of cumulative earnings from unconsolidated joint ventures
     2,637       5,784       1,875  
Changes in operating assets and liabilities:
                        
Increase in unbilled rents receivable, net
     (6,859 )     (4,636 )     (7,490 )
Decrease (increase) in deferred charges and other assets, net
     403       (20,324 )     (20,665 )
Decrease (increase) in accounts receivable, net
     14,880       13,266       (8,766 )
(Decrease) increase in accounts payable, accrued expenses and other liabilities
     (4,267 )     (8,950 )     6,532  
(Decrease) increase in rents received in advance and security deposits
     (1,570 )     2,414       6,020  
Increase (decrease) in accrued interest payable
     3,705       (1,215 )     87  
                         
Net cash provided by operating activities
   $ 294,686     $ 275,989     $ 259,976  
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                        
Additions to rental property and related intangibles
   $ (77,767 )   $ (91,734 )   $ (382,742 )
Repayment of notes receivable
     11,441       166       159  
Investment in unconsolidated joint ventures
     (6,327 )     (7,779 )     (29,017 )
Distributions in excess of cumulative earnings from unconsolidated joint ventures
     518       4,565       992  
Proceeds of sale of investment in unconsolidated joint venture
     --       --       575  
Proceeds from sales of rental property and service company
     --       --       57,204  
Purchase of marketable securities available for sale
     --       --       (4,884 )
Proceeds from the sale of available for sale securities
     --       5,355       --  
(Increase) decrease in restricted cash
     (7,962 )     894       1,835  
                         
Net cash used in investing activities
   $ (80,097 )   $ (88,533 )   $ (355,878 )
                         
CASH FLOW FROM FINANCING ACTIVITIES
                        
Borrowings from revolving credit facility
   $ 337,000     $ 1,137,100     $ 539,000  
Repayment of revolving credit facility and money market loans
     (498,000 )     (1,226,100 )     (434,000 )
Proceeds from senior unsecured notes
     246,238       --       --  
Repayments of senior unsecured notes
     (199,724 )     (100,276 )     --  
Proceeds from mortgages and loans payable
     81,500       240,000       --  
Repurchase of common stock
     --       (5,198 )     (98,821 )
Repayment of mortgages, loans payable and other obligations
     (11,462 )     (28,903 )     (29,038 )
Payment of financing costs
     (2,766 )     (952 )     (1,797 )
Proceeds from offering of common stock
     274,826       --       251,732  
Proceeds from stock options exercised
     504       2,311       3,802  
Payment of dividends and distributions
     (173,267 )     (208,533 )     (211,483 )
                         
Net cash provided by (used in) financing activities
   $ 54,849     $ (190,551 )   $ 19,395  
                         
Net increase (decrease) in cash and cash equivalents
   $ 269,438     $ (3,095 )   $ (76,507 )
Cash and cash equivalents, beginning of period
     21,621       24,716       101,223  
                         
Cash and cash equivalents, end of period
   $ 291,059     $ 21,621     $ 24,716  
                         
                         
The accompanying notes are an integral part of these consolidated financial statements.
  

 
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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  
ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION
Mack-Cali Realty Corporation, a Maryland corporation, together with its subsidiaries (collectively, 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 and third parties.  As of December 31, 2009, the Company owned or had interests in 289 properties plus developable land (collectively, the “Properties”).  The Properties aggregate approximately 33.2 million square feet, which are comprised of 277 buildings, primarily office and office/flex buildings totaling approximately 32.8 million square feet (which include 20 buildings, primarily office buildings aggregating approximately 2.2 million square feet owned by unconsolidated joint ventures in which the Company has investment interests), six industrial/warehouse buildings totaling approximately 387,400 square feet, two retail properties totaling approximately 17,300 square feet, one hotel (which is owned by an unconsolidated joint venture in which the Company has an investment interest) and three parcels of land leased to others.  The Properties are located in five states, primarily in the Northeast, plus the District of Columbia.

BASIS OF PRESENTATION
The accompanying consolidated financial statements include all accounts of the Company, its majority-owned and/or controlled subsidiaries, which consist principally of Mack-Cali Realty, L.P. (the “Operating Partnership”), and variable interest entities for which the Company has determined itself to be the primary beneficiary, if any.  See Note 2:  Significant Accounting Policies – Investments in Unconsolidated Joint Ventures for the Company’s treatment of unconsolidated joint venture interests.  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.  The Company evaluated subsequent events through February 10, 2010, the date these financial statements were available to be issued.  Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.

On July 1, 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, also known as FASB Accounting Standards Codification (“ASC”) 105-10, General Accepted Accounting Principles, (“ASC 105-10”).  ASC 105-10 establishes the FASB Accounting Standards Codification (“Codification”) as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities.  Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  The Codification supersedes all existing non-SEC accounting and reporting standards.  All other nongrandfathered, non-SEC accounting literature not included in the Codification will become nonauthoritative.  Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.  Instead, it will issue Accounting Standards Updates, which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification.  GAAP was not intended to be changed as a result of the FASB’s Codification project, but it will change the way the guidance is organized and presented.  The Company has implemented the Codification in this annual report by providing references to the Codification topics, as appropriate.


 
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2.  
SIGNIFICANT ACCOUNTING POLICIES

Rental
Property
Rental properties are stated at cost less accumulated depreciation and amortization.  Costs directly related to the acquisition, development and construction of rental properties are capitalized. Pursuant to the Company’s adoption of the authoritative guidance on business combinations, effective January 1, 2009, acquisition-related costs are expensed as incurred.  Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development.  Included in total rental property is construction, tenant improvement and development in-progress of $107,226,000 and $143,010,000 (including land of $69,438,000 and $70,709,000) as of December 31, 2009 and 2008, 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.

The Company considers a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup).  If portions of a rental project are substantially completed and occupied by tenants, or held available for occupancy, and other portions have not yet reached that stage, the substantially completed portions are accounted for as a separate project.  The Company allocates costs incurred between the portions under construction and the portions substantially completed and held available for occupancy, and capitalizes only those costs associated with the portion under construction.

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

Upon acquisition of rental property, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships.  The Company allocates the purchase price to the assets acquired and liabilities assumed based on their fair values.  The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction.  In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information.  The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Above-market and below-market lease values for acquired properties are initially recorded based on the present value, (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases.
 
 
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Other intangible assets acquired include amounts for in-place lease values and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant.  Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases.  In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions.  In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses.  Characteristics considered by management in valuing tenant relationships include the nature and extent of the Company’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals.  The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases.  The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s real estate properties held for use 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 is 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.  The Company’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Rental Property
 
Held for Sale and
 
Discontinued
 
Operations
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 estimated net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established.  Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.  See Note 7: Discontinued Operations.

If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used.  A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.
 
 
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Investments in
Unconsolidated
Joint Ventures
The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting.  The Company applies the equity method by initially recording these investments at cost, as Investments in Unconsolidated Joint Ventures, subsequently adjusted for equity in earnings and cash contributions and distributions.

 
ASC 810, Consolidation, provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIE (the “primary beneficiary”).  Generally, the consideration of whether an entity is a VIE applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired.  An investment is impaired only if management’s estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary.  To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment.  The Company’s estimates of value for each investment (particularly in commercial real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its impairment analyses may not be realized. See Note 4: Investments in Unconsolidated Joint Ventures.

Cash and Cash
 
Equivalents
All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.

Marketable
 
Securities
The Company classifies its marketable securities among three categories: held-to-maturity, trading and available-for-sale.  Unrealized holding gains and losses relating to available-for-sale securities are excluded from earnings and reported as other comprehensive income (loss) in equity until realized.  A decline in the market value of any held-to-maturity  marketable security below cost that is deemed to be other than temporary results in a reduction in the carrying amount to fair value.  Any impairment would be charged to earnings and a new cost basis for the security established.

The fair value of the marketable securities is determined using level I inputs under ASC 820, Fair Value Measurements and Disclosures.  Level I inputs represent quoted prices available in an active market for identical investments as of the reporting date

The Company received approximately $65,000 in dividend income from its holdings in marketable securities during the year ended December 31, 2008.  During the year ended December 31, 2008, the Company disposed of its marketable securities for aggregate net proceeds of $5.4 million and realized a gain of $471,000.

Deferred
Financing Costs
Costs incurred in obtaining financing are capitalized and amortized over the term of the related indebtedness. Amortization of such costs is included in interest expense and was $2,730,000, $2,873,000 and $2,808,000 for the years ended December 31, 2009, 2008 and 2007, respectively.
 
 
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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 are compensated for providing leasing services to the Properties.  The portion of such compensation, which is capitalized and amortized, approximated $3,725,000, $3,690,000 and $4,132,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

Derivative
Instruments
The Company measures derivative instruments, including certain derivative instruments embedded in other contracts, at fair value and records them as an asset or liability, depending on the Company’s rights or obligations under the applicable derivative contract.  For derivatives designated and qualifying as fair value hedges, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings.  For derivatives designated as cash flow hedges, the effective portions of the derivative are reported in other comprehensive income (“OCI”) and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging and ineffective portions of hedges are recognized in earnings in the affected period.

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.  Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed-rate renewal options for below-market leases.  The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.  Escalations and recoveries from tenants 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 14: Tenant Leases.  Construction services revenue includes fees earned and reimbursements received by the Company for providing construction management and general contractor services to clients.  Construction services revenue is recognized on the percentage of completion method.  Using this method, profits are recorded on the basis of estimates of the overall profit and percentage of completion of individual contracts.  A portion of the estimated profits is accrued based upon estimates of the percentage of completion of the construction contract.  This revenue recognition method involves inherent risks relating to profit and cost estimates.  Real estate services revenue includes property management, facilities management, leasing commission fees and other services, and payroll and related costs reimbursed from clients.  Other income includes income from parking spaces leased to tenants, income from tenants for additional services arranged for by the Company and income from tenants for early lease terminations.

Allowance for
Doubtful Accounts
Management periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectability of those balances.  Management’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.
 
 
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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 (including alternative minimum tax) on net income that it currently distributes to its shareholders, provided that the Company satisfies certain organizational and operational requirements including the requirement to distribute at least 90 percent of its REIT taxable income to its shareholders.  The Company has elected to treat certain of its corporate subsidiaries as taxable REIT subsidiaries (each a “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.  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.

The Company adopted the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes, on January 1, 2007.  As a result of the implementation of the guidance, the Company recognized no material adjustments regarding its tax accounting treatment.  The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which is included in general and administrative expense.

In the normal course of business, the Company or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable.  As of December 31, 2009, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2005 forward.

Earnings
 
Per Share
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 shareholders 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, 2009 represents dividends payable to preferred shareholders (10,000 shares) and common shareholders (78,969,858 shares), and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (13,495,036 common units) for all such holders of record as of January 6, 2010 with respect to the fourth quarter 2009.  The fourth quarter 2009 preferred stock dividends of $50.00 per share, common stock dividends and common unit distributions of $0.45 per common share and unit were approved by the Board of Directors on December 8, 2009.  The common stock dividends, common unit distributions and preferred stock dividends payable were paid on January 15, 2010.

The dividends and distributions payable at December 31, 2008 represents dividends payable to preferred shareholders (10,000 shares) and common shareholders (66,419,764 shares), and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (14,437,731 common units) for all such holders of record as of January 6, 2009 with respect to the fourth quarter 2008.  The fourth quarter 2008 preferred stock dividends of $50.00 per share, common stock dividends and common unit distributions of $0.64 per common share and unit were approved by the Board of Directors on December 9, 2008.  The common stock dividends and common unit distributions payable were paid on January 12, 2009.  The preferred stock dividends payable were paid on January 15, 2009.
 
 
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The Company has determined that the $1.99 dividend per common share paid during the year ended December 31, 2009 represented approximately 93 percent ordinary income and approximately 7 percent return of capital to its stockholders; the $2.56 dividend per common share paid during the year ended December 31, 2008 represented approximately 81 percent ordinary income, approximately 18 percent return of capital and approximately one percent capital gain to its stockholders; and the $2.56 dividend per common share paid during the year ended December 31, 2007 represented approximately 80 percent ordinary income and approximately 20 percent capital gain to its stockholders.

Costs Incurred
 
For Stock
 
Issuances
Costs incurred in connection with the Company’s stock issuances are reflected as a reduction of additional paid-in capital.

Stock
 
Compensation
The Company accounts for stock options and restricted stock awards granted prior to 2002 using the intrinsic value method prescribed in the previously existing accounting guidance on accounting for stock issued to employees.  Under this guidance, compensation cost for stock options 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 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 made prior to 2002.  Restricted stock awards granted prior to 2002 are valued at the vesting dates of such awards with compensation cost for such awards recognized ratably over the vesting period.

In 2002, the Company adopted the provisions of ASC 718, Compensation-Stock Compensation.  In 2006, the Company adopted the amended guidance, which did not have a material effect on the Company’s financial position and results of operations.  These provisions require that the estimated fair value of restricted stock (“Restricted Stock Awards”) and stock options at the grant date be amortized ratably into expense over the appropriate vesting period.  The Company recorded stock expense of $4,097,000, $4,870,000 and $6,470,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

Other
 
Comprehensive
 
Income
Other comprehensive income (loss) includes items that are recorded in equity, such as unrealized holding gains or losses on marketable securities available for sale.


3.
REAL ESTATE TRANSACTIONS

On March 1, 2009, the Company placed in service a 249,409 square-foot, class A office building, which is fully leased through August 2024.  The building is located in the Mack-Cali Business Campus in Parsippany, New Jersey.

On April 29, 2009, the Company acquired SL Green’s interests in the Mack-Green-Gale LLC and subsidiaries (“Mack-Green”) and 55 Corporate Partners, LLC (“55 Corporate”) joint ventures (the “SL Green Transactions”) for $5 million.  As a result, the Company owns 100 percent of Mack-Green and 55 Corporate. Concurrent with the SL Green Transactions, the loan agreement with an affiliate of Gramercy Capital Corporation (“Gramercy”) on six office properties indirectly owned by Mack-Green was restructured providing Gramercy with the power to control the activities that are most important to the properties’ economic performance.  At the time of the restructuring, the estimated fair value of the six properties was less than the aggregate carrying amount of the non-recourse mortgage loans.
 
 
 
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As a result of the SL Green Transactions and the agreement with Gramercy, as of April 29, 2009, the Company began consolidating 11 office properties, aggregating approximately 1.5 million square feet, owned and controlled by Mack- Green, and a pre-leased 205,000 square foot office development project owned and controlled by 55 Corporate.  The Company also has retained a non-controlling interest in entities that own 100 percent of six office properties, aggregating 786,198 square feet, which were previously indirectly owned by Mack-Green. The consolidated properties’ aggregate acquisition amounts were allocated as follows:  $43.0 million to land and leasehold interests, $150.1 million to buildings and improvements, $14.3 million to tenant improvements, $43.7 million to deferred lease costs and other lease intangibles, net, $13.1 million to other assets acquired (including cash and accounts receivable) and $156.8 million to liabilities (including mortgage debt with a fair market value of approximately $151.1 million), as well as an allocation to noncontrolling interests in consolidated joint ventures of $3.2 million.  There was no contingent consideration associated with the acquisition.  See “Mack-Green-Gale LLC” and “55 Corporate Partners, LLC” under Note 4: Investments in Unconsolidated Joint Ventures for further discussion on the transactions.

The Company’s office property located at 105 Challenger Road in Ridgefield Park, New Jersey, aggregating 150,000 square feet, is collateral for a mortgage loan scheduled to mature on June 30, 2010 with a balance of $19.4 million at December 31, 2009.  As of December 31, 2009, the Company estimated that the carrying value of the property may not be recoverable over its anticipated holding period. In order to reduce the carrying value of the property to its estimated fair market value, the Company recorded an impairment charge of $16.6 million at December 31, 2009.


4.  
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

The debt of the Company’s unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations, and except as otherwise indicated below.

PLAZA VIII AND IX ASSOCIATES, L.L.C.
Plaza VIII and IX Associates, L.L.C. is a joint venture between the Company and Columbia Development Company, L.L.C. (“Columbia”).  The venture was formed to acquire land for future development, located on the Hudson River waterfront in Jersey City, New Jersey, adjacent to the Company’s Harborside Financial Center office complex.  The Company and Columbia each hold a 50 percent interest in the 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 venture owns undeveloped land currently used as a parking facility.

RAMLAND REALTY ASSOCIATES L.L.C. (One Ramland Road)
On August 20, 1998, the Company entered into a 50/50 joint venture 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 and adjacent developable land, located in Orangeburg, New York.  In August 1999, the joint venture completed redevelopment of the property and placed the office/flex building in service.  The venture recorded an impairment loss of approximately $4.3 million on its rental property as of December 31, 2007.  On December 31, 2008, the venture transferred the deed to the lender in satisfaction of its obligations, including its mortgage with a balance of $14.7 million, and recorded a gain on the disposal of its office property of $7.5 million.

The Company performed management, leasing and other services for the property when owned by the joint venture and recognized $57,000 and $63,000 in fees for such services for the years ended December 31, 2008 and 2007, respectively.
 
 
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SOUTH PIER AT HARBORSIDE – HOTEL DEVELOPMENT
On November 17, 1999, the Company entered into a joint venture with Hyatt Corporation (“Hyatt”) to develop a 350-room hotel on the South Pier at Harborside Financial Center, Jersey City, New Jersey, which was completed and commenced initial operations in July 2002.  The Company owns a 50 percent interest in the venture.

The venture has a mortgage loan with a balance as of December 31, 2009 of $67.2 million collateralized by the hotel property.  The loan carries an interest rate of 6.15 percent and matures in November 2016.  The venture has a loan with a balance as of December 31, 2009 of $6.3 million with the City of Jersey City, provided by the U.S. Department of Housing and Urban Development.  The loan currently bears interest at fixed rates ranging from 6.09 percent to 6.62 percent and matures in August 2020.  The Company has posted a $6.3 million letter of credit in support of this loan, half of which is indemnified by Hyatt.

RED BANK CORPORATE PLAZA L.L.C./RED BANK CORPORATE PLAZA II, L.L.C.
On March 23, 2006, the Company entered into a joint venture with The PRC Group (“PRC”) to form Red Bank Corporate Plaza L.L.C.  The venture was formed to develop Red Bank Corporate Plaza, a 92,878 square foot office building located in Red Bank, New Jersey.  The property is fully leased to Hovnanian Enterprises, Inc. through September 30, 2017.  The Company holds a 50 percent interest in the venture.  PRC contributed the vacant land for the development of the office building as its initial capital in the venture.  The Company funded the costs of development up to the value of the land contributed by PRC of $3.5 million as its initial capital.

On October 20, 2006, the venture entered into a $22.0 million construction loan with a commercial bank collateralized by the land and development project.  The loan (with a balance as of December 31, 2009 of $20.8 million), carried an interest rate of LIBOR plus 130 basis points through March 2008.  In April 2008, the interest rate was reduced to LIBOR plus 125 basis points and the maturity was extended to April 2010.  The loan currently has a one-year extension option subject to certain conditions, which requires payment of a fee.

In September 2007, the joint venture completed development of the property and placed the office building in service.  The Company performs management, leasing and other services for the property owned by the joint venture and recognized $92,600, $128,000 and $678,000 in fees for such services during the years ended December 31, 2009, 2008 and 2007, respectively.

On July 20, 2006, the Company entered into a second joint venture agreement with PRC to form Red Bank Corporate Plaza II L.L.C.  The venture was formed to hold land able to accommodate an 18,561 square foot office building located in Red Bank, New Jersey.  The Company holds a 50 percent interest in the venture.  The terms of the venture are similar to Red Bank Corporate Plaza L.L.C.  PRC contributed the vacant land as its initial capital in the venture. On January 26, 2010, the venture sold its vacant land for approximately $1.7 million.

MACK-GREEN-GALE LLC/GRAMERCY AGREEMENT
On May 9, 2006, the Company entered into a joint venture, Mack-Green-Gale LLC and subsidiaries (“Mack-Green”), with SL Green, pursuant to which Mack-Green held an approximate 96 percent interest in and acted as general partner of Gale SLG NJ Operating Partnership, L.P. (the “OPLP”).  The Company’s acquisition cost for its interest in Mack-Green was approximately $125 million, which was funded primarily through borrowing under the Company’s revolving credit facility.  At the time, the OPLP owned 100 percent of entities (“Property Entities”) which owned 25 office properties (the “OPLP Properties”) which aggregated 3.5 million square feet (consisting of 17 office properties aggregating 2.3 million square feet located in New Jersey and eight properties aggregating 1.2 million square feet located in Troy, Michigan).  In December 2007, the OPLP sold its eight properties located in Troy, Michigan for $83.5 million.  The venture recognized a loss of approximately $22.3 million from the sale.

As defined in the Mack-Green operating agreement, the Company shared decision-making equally with SL Green regarding:  (i) all major decisions involving the operations of Mack-Green; and (ii) overall general partner responsibilities in operating the OPLP.

The Mack-Green operating agreement generally provided for profits and losses to be allocated as follows:

 
(i)
99 percent of Mack-Green’s share of the profits and losses from 10 specific OPLP Properties allocable to the Company and one percent allocable to SL Green;
 
(ii)
one percent of Mack-Green’s share of the profits and losses from eight specific OPLP Properties and its minor interest in four office properties allocable to the Company and 99 percent allocable to SL Green; and
 
(iii)
50 percent of all other profits and losses allocable to the Company and 50 percent allocable to SL Green.
 
 
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Substantially all of the OPLP Properties were encumbered by mortgage loans with an aggregate outstanding principal balance of $276.3 million at March 31, 2009.  $185.0 million of the mortgage loans bore interest at a weighted average fixed interest rate of 6.26 percent per annum and matured at various times through May 2016.

Six of the OPLP Properties (the “Portfolio Properties”) were encumbered by $90.3 million of mortgage loans which bore interest at a floating rate of LIBOR plus 275 basis points per annum and were scheduled to mature in May 2009. The floating rate mortgage loans were provided to the six entities which owned the Portfolio Properties (collectively, the “Portfolio Entities”) by Gramercy, which was a related party of SL Green.  Based on the venture’s anticipated holding period pertaining to the Portfolio Properties, the venture believed that the carrying amounts of these properties may not have been recoverable at December 31, 2008.  Accordingly, as the venture determined that its carrying value of these properties exceeded the estimated fair value, it recorded an impairment charge of approximately $32.3 million as of December 31, 2008. 

On April 29, 2009, the Company acquired the remaining interests in Mack-Green from SL Green.  As a result, the Company owns 100 percent of Mack-Green.  Additionally, on April 29, the mortgage loans with Gramercy on the Portfolio Properties (the “Gramercy Agreement”) were modified to provide for, among other things, interest to accrue at the current rate of LIBOR plus 275 basis point per annum, with the interest pay rate capped at 3.15 percent per annum.  Under the Gramercy Agreement, the payment of debt service is subordinate to the payment of operating expenses.  Interest at the pay rate is payable only out of funds generated by the Portfolio Properties and only to the extent that the Portfolio Properties’ operating expenses have been paid, with any accrued unpaid interest above the pay rate serving to increase the balance of the amounts due at the termination of the agreement.  Any excess funds after payment of debt service generally will be escrowed and available for future capital and leasing costs, as well as to cover future cash flow shortfalls, as appropriate.  The Gramercy Agreement terminates on May 9, 2011.  Approximately six months in advance of the end of the term of the Gramercy Agreement, the Portfolio Entities are to provide estimates of each property’s fair market value (“FMV”).  Gramercy has the right to accept or reject the FMV.  If Gramercy rejects the FMV, Gramercy must market the property for sale in cooperation with the Portfolio Entities and must approve the ultimate sale.  However, Gramercy has no obligation to market a Portfolio Property if the FMV is less than the allocated amount due, including accrued, unpaid interest. If any Portfolio Property is not sold, the Portfolio Entities have agreed to give a deed in lieu of foreclosure, unless the FMV was equal to or greater than the allocated amount due for such Portfolio Property, in which case they can elect to have that Portfolio Property released by paying the FMV.  If Gramercy accepts the FMV, the Portfolio Property will be released from the Gramercy Agreement upon payment of the FMV.  Under the direction of Gramercy, the Company continues to perform management, leasing, and construction services for the Portfolio Properties at market terms.  The Portfolio Entities have a participation interest which provides for sharing 50 percent of any amount realized in excess of the allocated amounts due for each Portfolio Property.

As the Company acquired SL Green’s interests in Mack-Green, the Company owns 100 percent of Mack-Green and is consolidating Mack-Green as of the closing date.  Mack-Green, in turn, has been and will continue consolidating the OPLP as Mack-Green’s approximate 96 percent, general partner ownership interest in the OPLP remained unchanged as of the closing date.  Additionally, as of the closing date, the OPLP continues to consolidate its Property Entities which own 11 office properties aggregating 1.5 million square feet as its 100-percent ownership and rights regarding these entities were unchanged in the transaction.  The OPLP will not be consolidating the Portfolio Entities that own six office properties, aggregating 786,198 square feet, as the Gramercy Agreement is considered a reconsideration event under the provisions of the authoritative guidance on consolidation and accordingly, the Portfolio Entities were deemed to be variable interest entities for which the OPLP was not considered the primary beneficiary based on the Gramercy Agreement as described above.  As a result of the SLG Transactions, the Company has an unconsolidated joint venture interest in the Portfolio Properties.


In connection with these transactions, at the closing date, the Company also acquired the remaining 50 percent interest in 55 Corporate Partners L.L.C. from an affiliate of SL Green (see “55 Corporate Partners, LLC” below).
 
 
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The Company performs management, leasing, and construction services for properties owned by the unconsolidated joint ventures and recognized $2.3 million, $5.2 million and $5.2 million in income (net of $1.1 million, $3.5 million and $3.3 million in direct costs) for such services in the years ended December 31, 2009, 2008 and 2007, respectively.

GE/GALE FUNDING LLC (PFV)
The Gale agreement signed as part of the Gale/Green transactions in May 2006 provides for the Company to acquire certain ownership interests in real estate projects (the “Non-Portfolio Properties”), subject to obtaining certain third party consents and the satisfaction of various project-related and/or other conditions.  Each of the Company’s acquired interests in the Non-Portfolio Properties provide for the initial distributions of net cash flow solely to the Company, and thereafter an affiliate of Mr. Gale (“Gale Affiliate”) has participation rights (“Gale Participation Rights”) in 50 percent of the excess net cash flow remaining after the distribution to the Company of the aggregate amount equal to the sum of: (a) the Company’s capital contributions, plus (b) an internal rate of return (“IRR”) of 10 percent per annum, accruing on the date or dates of the Company’s investments.

On May 9, 2006, as part of the Gale/Green transactions, the Company acquired from a Gale Affiliate for $1.8 million a 50 percent controlling interest in GMW Village Associates, LLC (“GMW Village”).  GMW Village holds a 20 percent interest in GE/Gale Funding LLC (“GE Gale”).  GE Gale owns a 100 percent interest in the entity owning Princeton Forrestal Village, a mixed-use, office/retail complex aggregating 527,015 square feet and located in Plainsboro, New Jersey (“Princeton Forrestal Village” or “PFV”).

In addition to the cash consideration paid to acquire the interest, the Company provided a Gale affiliate with the Gale Participation Rights.

The operating agreement of GE Gale, which is owned 80 percent by GEBAM, Inc., provides for, among other things, distributions of net cash flow, initially, in proportion to each member’s interest and subject to adjustment upon achievement of certain financial goals, as defined in the operating agreement.

GE Gale has a mortgage loan with a balance of $51.2 million at December 31, 2009.  The loan bears interest at a rate of LIBOR plus 275 basis points and matures on January 9, 2011.

The Company performs management, leasing, and other services for PFV and recognized $1.1 million, $881,000 and $1.1 million in income (net of $0, $288,000 and $1.6 million in direct costs) for such services in the years ended December 31, 2009, 2008 and 2007, respectively.

ROUTE 93 MASTER LLC (“Route 93 Participant”)/ROUTE 93 BEDFORD MASTER LLC (with the Route 93 Participant, collectively, the “Route 93 Venture”)
On June 1, 2006, the Route 93 Venture was formed between the Route 93 Participant, a majority-owned subsidiary of the Company, having a 30 percent interest and the Commingled Pension Trust Fund (Special Situation Property) of JPMorgan Chase Bank having a 70 percent interest, for the purpose of acquiring seven office buildings, aggregating 666,697 square feet, located in the towns of Andover, Bedford and Billerica, Massachusetts.  Profits and losses were shared by the partners in proportion to their respective interests until the investment yielded an 11 percent IRR, then sharing shifted to 40/60, and when the IRR reached 15 percent, then sharing shifted to 50/50.

The Route 93 Participant is a joint venture between the Company and a Gale affiliate.  Profits and losses were shared by the partners under this venture in proportion to their respective interests (83.3/16.7) until the investment yielded an 11 percent IRR, then sharing shifted to 50/50.

On March 31, 2009, on account of the recent deterioration in the commercial real estate markets in the Boston area, the Company wrote off its investment in the venture and recorded an impairment charge in equity in earnings (loss) of $4.0 million (of which $0.6 million was attributable to noncontrolling interest in consolidated joint ventures) during the period.
 
 
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The Route 93 Ventures had a mortgage loan with a $44.2 million balance at September 1, 2009 collateralized by its office properties.  The loan bore interest at a rate of LIBOR plus 220 basis points and was scheduled to mature on July 11, 2009.  On September 2, 2009, the venture transferred the deeds to the lender in satisfaction of its obligations.

Through September 30, 2008, the Company had performed services for Route 93 Master LLC and Route 93 Bedford Master LLC and recognized $45,000 and zero in fees for such services for the years ended December 31, 2008 and 2007, respectively.

GALE KIMBALL, L.L.C.
On June 15, 2006, the Company entered into a joint venture with a Gale Affiliate to form M-C Kimball, LLC (“M-C Kimball”).  M-C Kimball was formed for the sole purpose of acquiring a Gale Affiliate’s 33.33 percent membership interest in Gale Kimball, L.L.C. (“Gale Kimball”), an entity holding a 25 percent interest in 100 Kimball Drive LLC (“100 Kimball”), which developed and placed in service a 175,000 square foot office property that is leased to a single tenant, located at 100 Kimball Drive, Parsippany, New Jersey (the “Kimball Property”).

The operating agreement of M-C Kimball provides, among other things, for the Gale Participation Rights (of which Mark Yeager, an Executive Vice President of the Company, has a direct 26 percent interest).

Gale Kimball is owned 33.33 percent by M-C Kimball and 66.67 percent by the Hampshire Generational Fund, L.L.C. (“Hampshire”).  The operating agreement of Gale Kimball provides, among other things, for the distribution of net cash flow, initially, in accordance with its members’ respective membership interests and, upon achievement of certain financial conditions, 50 percent to each of the Company and Hampshire.

100 Kimball is owned 25 percent by Gale Kimball and 75 percent by 100 Kimball Drive Realty Member LLC, an affiliate of JPMorgan (“JPM”). The operating agreement of 100 Kimball provides, among other things, for the distributions to be made in the following order:

(i)  
first, to JPM, such that JPM is provided with an annual 12 percent compound preferred return on Preferred Equity Capital Contributions (as such term is defined in the operating agreement of 100 Kimball and largely comprised of development and construction costs);
(ii)  
second, to JPM, as return of Preferred Equity Capital Contributions until complete repayment of such Preferred Equity Capital Contributions;
(iii)  
third, to each of JPM and Gale Kimball in proportion to their respective membership interests until each member is provided, as a result of such distributions, with an annual twelve percent compound return on the Member’s Capital Contributions (as defined in the operating agreement of 100 Kimball, and excluding Preferred Equity Capital Contributions, if any); and
(iv)  
fourth, 50 percent to each of JPM and Gale Kimball.

On September 21, 2007, 100 Kimball obtained a $47 million mortgage loan which bore interest at a rate of 5.95 percent and was scheduled to mature in September 2012.  On December 30, 2009 the venture paid the lender $40 million to satisfy the debt and recorded a gain of $7.0 million (of which the Company’s share of $579,000 is included in equity in earnings for the year ended December 31, 2009).  Concurrently, 100 Kimball obtained a $32 million mortgage loan that bears interest at a rate of LIBOR plus 400 basis points and matures on January 10, 2013 with two one-year extension options, subject to certain conditions and payment of a fee.  LIBOR is defined as the greater of (i) 1.50%, and (ii) the rate of interest per annum reported as the thirty day London Interbank Offered Rate.

The Company performs management, leasing, and other services for the property owned by 100 Kimball for which it recognized $234,000, $377,000 and $1.7 million in income (net of $0, $1.0 million and $9.4 million in direct costs) for the years ended December 31, 2009, 2008 and 2007, respectively.

55 CORPORATE PARTNERS, LLC
On June 9, 2006, the Company entered into a joint venture with a Gale Affiliate to form 55 Corporate Partners L.L.C. (“55 Corporate”).  55 Corporate was formed for the sole purpose of acquiring from a Gale Affiliate a 50 percent interest in SLG 55 Corporate Drive II LLC (“SLG 55”), an entity presently holding a 100 percent indirect condominium interest in a vacant land parcel located in Bridgewater, New Jersey, which can accommodate development of an approximately 205,000 square foot office building (the “55 Corporate Property”).  The remaining 50 percent in SLG 55 was owned by SLG Gale 55 Corporate LLC, an affiliate of SL Green Realty Corp. (“SLG Gale 55”).
 
 
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In November 2007, Sanofi-Aventis U.S. Inc. (“Sanofi”), which occupied neighboring buildings, exercised its option to cause the venture to construct a building on the Property and has signed a lease thereof.  The lease has a term of fifteen years, subject to three five-year extension options.  The construction of the building commenced in 2009 and is expected to be delivered to the tenant in January 2011. The total estimated costs of the project are expected to be approximately $50.9 million.

The operating agreement of 55 Corporate provides, among other things, for the Gale Participation Rights (of which Mr. Yeager has a direct 26 percent interest).  If Mr. Gale receives any commission payments with respect to the Sanofi lease on the development property, Mr. Gale has agreed to pay to Mr. Yeager 26 percent of such payments.

The operating agreement of SLG 55 provided, among other things, for the distribution of the available net cash flow to each of 55 Corporate and SLG Gale 55 in proportion to their respective membership interests in SLG 55 (50 percent each).

On April 29, 2009, the Company acquired the remaining 50 percent interest in 55 Corporate from SLG Gale 55 Corporate LLC, an affiliate of SL Green.  As of the closing date, the Company owns 100 percent of and is consolidating the venture, 50 percent of which remains subject to the Gale Participation Rights.  In connection with this transaction, the Company also acquired the remaining interest in Mack-Green from an affiliate of SLG Gale 55 Corporate LLC.

12 VREELAND ASSOCIATES, L.L.C.
On September 8, 2006, the Company entered into a joint venture with a Gale Affiliate to form M-C Vreeland, LLC (“M-C Vreeland”).  M-C Vreeland was formed for the sole purpose of acquiring a Gale Affiliate’s 50 percent membership interest in 12 Vreeland Associates, L.L.C., an entity owning an office property located at 12 Vreeland Road, Florham Park, New Jersey.

The operating agreement of M-C Vreeland provides, among other things, for the Gale Participation Rights (of which Mr. Yeager has a direct 15 percent interest).

The office property at 12 Vreeland is a 139,750 square foot office building.  The property is subject to a fully-amortizing mortgage loan, which matures on July 1, 2012, and bears interest at 6.9 percent per annum.  As of December 31, 2009 the outstanding balance on the mortgage note was $5.0 million.

Under the operating agreement of 12 Vreeland Associates, L.L.C., M-C Vreeland has a 50 percent interest, with S/K Florham Park Associates, L.L.C. (the managing member) and its affiliate holding the other 50 percent.

BOSTON-DOWNTOWN CROSSING
On October 20, 2006, the Company formed a joint venture (the “MC/Gale JV LLC”) with Gale International/426 Washington St. LLC (“Gale/426”), which, in turn, entered into a joint venture (the “Vornado JV LLC”) with VNO 426 Washington Street JV LLC (“Vornado”), an affiliate of Vornado Realty LP, which was formed to acquire and redevelop the Filenes property located in the Downtown Crossing district of Boston, Massachusetts (the “Filenes Property”).

On January 25, 2007, (i) each of M-C/Gale JV LLC, Gale and Washington Street Realty Member LLC (“JPM”) formed a joint venture (“JPM JV LLC”), (ii) M-C/Gale JV LLC assigned its entire 50 percent ownership interest in the Vornado JV LLC to JPM JV LLC, (iii) the Limited Liability Company Agreement of Vornado JV LLC was amended to reflect, among other things, the change in the ownership structure described in subsection (ii) above, and (iv) the Limited Liability Company Agreement of MC/Gale JV LLC was amended and restated to reflect, among other things, the change in the ownership structure described in subsection (ii) above.  The Vornado JV LLC acquired the Filenes Property on January 29, 2007, for approximately $100 million.

On or about September 16, 2008, Vornado JV LLC was reorganized in contemplation of developing and converting the Filenes property into a condominium consisting of a retail unit, an office unit, a parking unit, a hotel unit and a residential unit.  Pursuant to this reorganization, (i) the Company and Gale/426 formed a new joint venture (“M-C/Gale JV II LLC”) and (ii) M-C/Gale JV II LLC and Washington Street Realty Member II LLC (“JPM II”) formed a new joint venture (“JPM JV II LLC”) to invest in a new joint venture (“Vornado JV II LLC”) with Vornado RTR DC LLC, an affiliate of Vornado Realty, LP (“Vornado II”).  Following this reorganization, Vornado JV LLC owns the interests in the retail unit and the office unit (the “Filenes Office/Retail Component”) and Vornado JV II LLC owns the interests in the parking unit, the hotel unit and the residential unit (“the “Filenes Hotel/Residential/Parking Component”).   In connection with the foregoing, (a) the Limited Liability Company Agreement of Vornado JV LLC, as amended, was amended and restated to reflect, among other things, the change in the ownership structure described above, (b) the Limited Liability Company Agreement of JPM JV LLC was amended and restated to reflect, among other things, the change in the ownership structure described above and (c) the Limited Liability Company Agreement of M-C/Gale JV LLC was amended and restated to reflect, among other things, the change in the ownership structure described above.
 
 
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As a result of the foregoing transactions, (A) (i) the Filenes Office/Retail Component is owned by Vornado JV LLC, (ii) Vornado JV LLC is owned 50 percent by each of Vornado and JPM JV LLC, (iii) JPM JV LLC is owned 30 percent by M-C/Gale JV LLC, 70 percent by JPM and managed by Gale/426, which has no ownership interest in JPM JV LLC, and (iv) M-C/Gale JV LLC is owned 99.99 percent by the Company and 0.01 percent by Gale/426 and (B) (i) the Filenes Hotel/Residential/Parking Component is owned by Vornado JV II LLC, (ii) Vornado JV II LLC is owned 50 percent by each of Vornado II and JPM JV II LLC, (iii) JPM JV II LLC is owned 30 percent by M-C/Gale JV II LLC, 70 percent by JPM II and managed by Gale/426, which has no ownership interest in JPM JV II LLC, and (iv) M-C/Gale JV II LLC is owned 99.99 percent by the Company and 0.01 percent by Gale/426.  Thus, the Company holds approximately a 15 percent indirect ownership interest in each of Vornado JV LLC and Vornado JV II LLC and the Filenes Property.

Distributions are made (i) by Vornado JV LLC in proportion to its members’ respective ownership interests, (ii) by JPM JV LLC (a) initially, in proportion to its members’ respective ownership interests until JPM’s investment yields an 11 percent IRR, (b) thereafter, 60/40 to JPM and MC/Gale JV LLC, respectively, until JPM’s investment yields a 15 percent IRR and (c) thereafter, 50/50 to JPM and MC/Gale JV LLC, respectively, and (iii) by MC/Gale JV LLC (w) initially, in proportion to its members’ respective ownership interests until each member has received a 10 percent IRR on its investment, (x) thereafter, 65/35 to the Company and Gale/426, respectively, until the Company’s investment yields a 15 percent IRR, (y) if by the time the Company receives a 15 percent IRR on its investment, Gale/426 has not done so, 100 percent to Gale/426 until Gale/426’s investment yields a 15 percent IRR, and (z) thereafter,  50/50 to each of the Company and Gale/426.

Distributions are made (i) by Vornado JV II LLC in proportion to its members’ respective ownership interests, (ii) by JPM JV II LLC (a) initially, in proportion to its members’ respective ownership interests until JPM II’s investment yields an 11 percent IRR, (b) thereafter, 60/40 to JPM II and M-C/Gale JV II LLC, respectively, until JPM II’s investment yields a 15 percent IRR and (c) thereafter, 50/50 to JPM II and M-C/Gale JV II LLC, respectively, and (iii) by M-C/Gale JV II LLC (w) initially, in proportion to its members’ respective ownership interests until each member has received a 10 percent IRR on its investment, (x) thereafter, 65/35 to the Company and Gale/426, respectively, until the Company’s investment yields a 15 percent IRR, (y) if by the time the Company receives a 15 percent IRR on its investment, Gale/426 has not done so, 100 percent to Gale/426 until Gale/426’s investment yields a 15 percent IRR, and (z) thereafter, 50/50 to each of the Company and Gale/426.

The joint venture has suspended its plans for the development of the Filenes Property which was to include approximately 1.2 million square feet consisting of office, retail, condominium apartments, hotel and a parking garage.  The project is subject to governmental approvals.  The venture recorded an impairment charge of approximately $69.5 million on its development project as of December 31, 2008.

GALE JEFFERSON, L.L.C.
On August 22, 2007, the Company entered into a joint venture with a Gale Affiliate to form M-C Jefferson, L.L.C. (“M-C Jefferson”).  M-C Jefferson was formed for the sole purpose of acquiring a Gale Affiliate’s 33.33 percent membership interest in Gale Jefferson, L.L.C. (“Gale Jefferson”), an entity holding a 25 percent interest in One Jefferson Road LLC (‘One Jefferson”), which developed a 100,000 square foot office property at One Jefferson Road, Parsippany, New Jersey, (“the Jefferson Property”).  The property has been fully leased to a single tenant through August 2025.

The operating agreement of M-C Jefferson provides, among other things, for the Gale Participation Rights (of which Mark Yeager, an Executive Vice President of the Company, has a direct 26 percent interest).  Gale Jefferson is owned 33.33 percent by M-C Jefferson and 66.67 percent by the Hampshire Generational Fund, L.L.C. (“Hampshire”).  The operating agreements of Gale Jefferson provides, among other things, for the distribution of net cash flow, first, in accordance with its member’s respective interests until each member is provided, as a result of such distributions, with an annual 12 percent compound return on the Member’s Capital Contributions, as defined in the operating agreement and secondly, 50 percent to each of the Company and Hampshire.
 
 
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One Jefferson has a construction loan in an amount not to exceed $21 million (with a balance of $13.9 million at December 31, 2009), bearing interest at a rate of LIBOR plus 160 basis points and maturing on October 24, 2010 with a one-year extension option, subject to certain conditions and payment of a fee.

The Company performs management, leasing and other services for Gale Jefferson and recognized $190,000, $286,000 and $102,000 in income (net of $646,000, $9.6 million and $4.0 million in direct costs) for such services for the years ended December 31, 2009, 2008 and 2007, respectively.

 
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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, 2009 and 2008:  (dollars in thousands)


 
December 31, 2009
  
 
Plaza
    
Red Bank
  
Princeton
        
Boston-
    
 
VIII & IX
Ramland
Harborside
Corporate
Gramercy
Forrestal
Route 93
Gale
55
12
Downtown
Gale
Combined
 
Associates
Realty
South Pier
Plaza I & II
Agreement
Village
Portfolio
Kimball
Corporate
Vreeland
Crossing
Jefferson
Total
Assets:
                          
Rental property, net
$   9,560
--
$ 61,836
$ 24,884
$   73,037
$ 38,722
--
--
--
$ 15,265
--
--
$ 223,304
Other assets
997
--
15,483
4,623
8,631
22,034
--
$ 1,992
--
1,068
$ 45,884
$ 1,758
102,470
Total assets
$ 10,557
--
$ 77,319
$ 29,507
$   81,668
$ 60,756
--
$ 1,992
--
$ 16,333
$ 45,884
$ 1,758
$ 325,774
Liabilities and
                          
 partners’/members’
                          
 capital (deficit):
                          
Mortgages, loans
                          
  payable and other
                          
  obligations
--
--
$ 73,553
$ 20,764
$   90,288
$ 51,186
--
--
--
$   5,007
--
--
$ 240,798
Other liabilities
$      532
--
4,458
162
2,589
3,928
--
--
--
--
--
--
11,669
Partners’/members’
                          
  capital (deficit)
10,025
--
(692)
8,581
(11,209)
5,642
--
$ 1,992
--
 11,326
$ 45,884
$ 1,758
73,307
Total liabilities and
                          
  partners’/members’
                          
  capital (deficit)
$ 10,557
--
$ 77,319
$ 29,507
$   81,668
$ 60,756
--
$ 1,992
--
$ 16,333
$ 45,884
$ 1,758
$ 325,774
Company’s
                          
  investment
                          
  in unconsolidated
                          
  joint ventures, net
$   4,935
--
$      860
$   4,104
--
$   1,211
--
$ 1,259
--
$   9,599
$ 12,948
$    764
$   35,680

 
December 31, 2008
  
 
Plaza
    
Red Bank
  
Princeton
        
Boston-
    
 
VIII & IX
Ramland
Harborside
Corporate
  
Forrestal
Route 93
Gale
55
12
Downtown
Gale
Combined
 
Associates
Realty
South Pier
Plaza I & II
M-G-G
Village
Portfolio
Kimball
Corporate
Vreeland
Crossing
Jefferson
Total
Assets:
                          
Rental property, net
$ 10,173
--
$ 62,462
$ 24,507
$ 326,912
 $ 41,058
$ 56,771
--
--
$ 14,598
--
--
$ 536,481
Other assets
1,008
$ 20
16,979
4,301
 45,391
21,680
 495
--
$ 17,896
789
$ 43,577
$ 1,838
153,974
Total assets
$ 11,181
$ 20
$ 79,441
$ 28,808
$ 372,303
 $ 62,738
$ 57,266
--
$ 17,896
$ 15,387
$ 43,577
 $ 1,838
$ 690,455
Liabilities and
                          
 partners’/members’
                          
 capital (deficit):
                          
Mortgages, loans
                          
  payable and other
                          
  obligations
--
--
$ 74,852
$ 20,416
 $ 276,752
 $ 52,800
$ 43,541
--
--
$  7,170
--
--
$ 475,531
Other liabilities
$      531
--
3,950
 87
23,805
 4,156
985
--
--
--
--
--
33,514
Partners’/members’
                          
  capital (deficit)
10,650
$ 20
639
8,305
71,746
5,782
12,740
--
$ 17,896
8,217
$ 43,577
$ 1,838
 181,410
Total liabilities and
                          
  partners’/members’
                          
  capital (deficit)
$ 11,181
$ 20
$ 79,441
$ 28,808
$ 372,303
 $ 62,738
$ 57,266
--
$ 17,896
$ 15,387
$ 43,577
$ 1,838
$ 690,455
Company’s
                          
  investment
                          
  in unconsolidated
                          
  joint ventures, net
$   5,248
--
$      254
$   3,929
$   92,110
$   1,342
$   4,024
--
$  9,068
$   8,300
$ 13,464
$    756
$ 138,495



 
87
 

SUMMARIES OF UNCONSOLIDATED JOINT VENTURES
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, 2009, 2008, and 2007:  (dollars in thousands)


 
Year Ended December 31, 2009
  
   
Plaza
Ramland
  
Red Bank
    
Princeton
        
Boston-
    
   
VIII & IX
Realty/
Harborside
Corporate
  
Gramercy
Forrestal
Route 93
Gale
55
12
Downtown
Gale
Combined
   
Associates
Other
South Pier
Plaza I & II
M-G-G
Agreement
Village
Portfolio
Kimball
Corporate
Vreeland
Crossing
Jefferson
Total
Total revenues
  
$  804
--
$ 35,002
$ 3,214
$ 17,582
$  7,902
$ 12,387
$  2,153
--
--
$ 2,579
--
--
$  81,623
Operating and other
  
(192)
--
(23,026)
(1,002)
(7,076)
(4,675)
(6,773)
(2,487)
$ 1,659
--
(62)
$ (10,846)
$ (79)
(54,559)
Depreciation and amortization
  
(612)
--
(4,215)
(871)
(6,493)
(3,073)
(3,966)
(1,206)
--
--
(1,251)
--
--
(21,687)
Interest expense
  
--
--
(4,592)
(340)
(4,883)
(1,862)
(1,788)
(649)
--
--
(467)
--
--
(14,581)
                               
Net income
  
--
--
$   3,169
$ 1,001
$     (870)
$  (1,708)
$    (140)
$ (2,189)
$ 1,659
--
$    799
 $ (10,846)
$ (79)
$   (9,204)
Company’s equity in earnings
                              
  (loss) o f unconsolidated
                              
  joint ventures
  
--
--
$   2,856
$    463
$     (916)
--
$    (131)
$ (4,354)
$    648
--
$    400
$  ( 4,500)
$ (26)
$   (5,560)


 
Year Ended December 31, 2008
  
   
Plaza
Ramland
  
Red Bank
    
Princeton
        
Boston-
    
   
VIII & IX
Realty/
Harborside
Corporate
  
Gramercy
Forrestal
Route 93
Gale
55
12
Downtown
Gale
Combined
   
Associates
Other
South Pier
Plaza I & II
M-G-G
Agreement
Village
Portfolio
Kimball
Corporate
Vreeland
Crossing
Jefferson
Total
Total revenues
  
$ 1,131
$ 9,186
$ 45,783
$ 3,205
$ 51,285
--
$ 12,924
$  2,770
--
--
$ 2,188
  
--
$ 128,472
Operating and other
  
(183)
(1,182)
(26,746)
(906)
(52,213)
--
(8,843)
(3,716)
$      (43)
--
(72)
$ (34,712)
--
(128,616)
Depreciation and amortization
  
(614)
(481)
(4,926)
(631)
(20,433)
--
(5,454)
(1,758)
--
--
(511)
--
--
(34,808)
Interest expense
  
--
(203)
(4,682)
(792)
(17,381)
--
(3,318)
(2,443)
--
--
(509)
--
--
(29,328)
                               
Net income
  
$    334
$ 7,320
$   9,429
$    876
$ (38,742)
--
$ (4,691)
$ (5,147)
$      (43)
--
$ 1,096
$ (34,712)
--
$  (64,280)
Company’s equity in earnings
                              
  (loss) o f unconsolidated
                              
  joint ventures
  
$    167
$      90
$   4,740
$    475
$ (32,354)
--
$    (880)
$ (1,154)
$     455
--
$    548
$ (11,839)
--
$  (39,752)



 
Year Ended December 31, 2007
  
   
Plaza
Ramland
  
Red Bank
    
Princeton
        
Boston-
    
   
VIII & IX
Realty/
Harborside
Corporate
  
Gramercy
Forrestal
Route 93
Gale
55
12
Downtown
Gale
Combined
   
Associates
Other
South Pier
Plaza I & II
M-G-G
Agreement
Village
Portfolio
Kimball
Corporate
Vreeland
Crossing
Jefferson
Total
Total revenues
  
$ 1,015
$  1,903
$ 43,952
$ 1,098
$  52,659
--
$ 12,996
$  2,522
--
--
$ 2,280
--
--
$ 118,425
Operating and other
  
(174)
(5,795)
(26,706)
(238)
(48,182)
--
(6,529)
(3,593)
$    (512)
--
(65)
$        (24)
--
(91,818)
Depreciation and amortization
  
(616)
(727)
(5,929)
(208)
(19,437)
--
(3,785)
(1,652)
--
--
(352)
--
--
(32,706)
Interest expense
  
--
(1,047)
(4,669)
(367)
(21,218)
--
(4,768)
(3,428)
--
--
(663)
--
--
(36,160)
                               
Net income
  
$    225
$ (5,666)
$   6,648
$    285
$ (36,178)
--
$  (2,086)
$ (6,151)
$    (512)
--
$ 1,200
$        (24)
--
$  (42,259)
Company’s equity in earnings
                              
  (loss) o f unconsolidated
                              
  joint ventures
  
$    113
$    (322)
$   3,182
$    143
$   (6,677)
--
$     (531)
$ (2,236)
$    (180)
--
$    600
$        (10)
--
$    (5,918)




 
88
 

5.  
DEFERRED CHARGES AND OTHER ASSETS

 
December 31,
(dollars in thousands)
2009
2008
Deferred leasing costs
$ 229,725
$ 214,887
Deferred financing costs
26,733
23,723
 
256,458
238,610
Accumulated amortization
(119,267)
(104,652)
Deferred charges, net
137,191
133,958
Notes receivable
--
11,443
In-place lease values, related intangible and other assets, net
49,180
33,256
Prepaid expenses and other assets, net
27,303
33,765
     
Total deferred charges and other assets, net
$ 213,674
$ 212,422


6.  
RESTRICTED CASH

Restricted cash includes security deposits for certain of the Company’s 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:  (dollars in thousands)

 
December 31,
 
2009
2008
Security deposits
$   8,618
$   8,757
Escrow and other reserve funds
12,063
3,962
     
Total restricted cash
$ 20,681
$ 12,719


7.  
DISCONTINUED OPERATIONS

There were no discontinued operations during the years ended December 31, 2009 and 2008.

As the Company sold 1000 Bridgeport in Shelton, Connecticut; 500 West Putnam in Greenwich, Connecticut; and 100 & 200 Decadon in Egg Harbor, New Jersey during the year ended December 31, 2007, the Company has presented these assets as discontinued operations in its statements of operations for the periods presented.


 
89
 

The following table summarizes income from discontinued operations and the related realized gains (losses) and unrealized losses on disposition of rental property, net, for the year ended December 31, 2007:  (dollars in thousands)

   
Year Ended
   
December 31,
   
2007
Total revenues
  
$  3,881
Operating and other expenses
  
(1,638)
Depreciation and amortization
  
(424)
Interest expense (net of interest income)
  
(522)
     
Income from discontinued operations before
    
gains (losses) and unrealized losses on
    
disposition of rental property
  
1,297
Realized gains (losses) and unrealized losses on
    
disposition of rental property, net
  
44,414
     
Total discontinued operations, net
  
45,711
Noncontrolling interest in discontinued operations
  
(8,374)
     
Income from discontinued operations available
    
to common shareholders
  
$37,337


8.  
SENIOR UNSECURED NOTES

On August 14, 2009, the Operating Partnership completed the sale of $250 million face amount of 7.750 percent senior unsecured notes due August 15, 2019 with interest payable semi-annually in arrears.  The net proceeds of approximately $246.2 million, after underwriting discount, were used for general corporate purposes.

A summary of the Company’s senior unsecured notes as of December 31, 2009 and 2008 is as follows:  (dollars in thousands)

 
December 31,
Effective
 
2009
2008
Rate (a)
7.250% Senior Unsecured Notes, due March 15, 2009
--
$   199,689
7.49%
5.050% Senior Unsecured Notes, due April 15, 2010
$   149,984
149,929
5.27%
7.835% Senior Unsecured Notes, due December 15, 2010
15,000
15,000
7.95%
7.750% Senior Unsecured Notes, due February 15, 2011
299,814
299,641
7.93%
5.250% Senior Unsecured Notes, due January 15, 2012
99,599
99,404
5.46%
6.150% Senior Unsecured Notes, due December 15, 2012
93,455
92,963
6.89%
5.820% Senior Unsecured Notes, due March 15, 2013
25,751
25,641
6.45%
4.600% Senior Unsecured Notes, due June 15, 2013
99,901
99,872
4.74%
5.125% Senior Unsecured Notes, due February 15, 2014
200,989
201,229
5.11%
5.125% Senior Unsecured Notes, due January 15, 2015
149,533
149,441
5.30%
5.800% Senior Unsecured Notes, due January 15, 2016
200,464
200,540
5.81%
7.750% Senior Unsecured Notes, due August 15, 2019
247,944
--
8.02%
       
Total Senior Unsecured Notes
$1,582,434
$1,533,349
6.37%
       
(a)  Includes the cost of terminated treasury lock agreements (if any), offering and other transaction costs and the discount/premium on the notes, as applicable.

 
 
90
 

 
9.  
UNSECURED REVOLVING CREDIT FACILITY

The Company has a $775 million unsecured credit facility (expandable to $800 million) with a group of 23 Lenders.  The facility matures in June 2011, with an extension option of one year, which would require a payment of 15 basis points of the then borrowing capacity of the facility upon exercise.  The interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) is LIBOR plus 55 basis points at the BBB/Baa2 pricing level.

The facility has a competitive bid feature, which allows the Company to solicit bids from lenders under the facility to borrow up to $300 million at interest rates less than the current LIBOR plus 55 basis point spread.  The Company may also elect an interest rate representing the higher of the lender’s prime rate or the Federal Funds rate plus 50 basis points. The unsecured facility also requires a 15 basis point facility fee on the current borrowing capacity payable quarterly in arrears.

The interest rate and the facility fee are subject to adjustment, on a sliding scale, based upon the Operating Partnership’s unsecured debt ratings.  In the event of a change in the Operating Partnership’s unsecured debt rating, the interest and facility fee rates will be adjusted in accordance with the following table:

Operating Partnership’s
Interest Rate –
  
Unsecured Debt Ratings:
Applicable Basis Points
Facility Fee
S&P Moody’s/Fitch (a)
Above LIBOR
Basis Points
No ratings or less than BBB-/Baa3/BBB-
100.0
25.0
BBB-/Baa3/BBB-
75.0
20.0
BBB/Baa2/BBB (current)
55.0
15.0
BBB+/Baa1/BBB+
42.5
15.0
A-/A3/A- or higher
37.5
12.5
     
(a)   If the Operating Partnership has debt ratings from two rating agencies, one of which is Standard & Poor’s Rating Services (“S&P”) or Moody’s Investors Service (“Moody’s”), the rates per the above table shall be based on the lower of such ratings.  If the Operating Partnership has debt ratings from three rating agencies, one of which is S&P or Moody’s, the rates per the above table shall be based on the lower of the two highest ratings.  If the Operating Partnership has debt ratings from only one agency, it will be considered to have no rating or less than BBB-/Baa3/BBB- per the above table.

The terms of the 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 real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the facility described below, or (ii) the property dispositions are completed while the Company is under an event of default under the facility, unless, under certain circumstances, such disposition is being carried out to cure such default), 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 fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property interest coverage and certain investment limitations.  The dividend restriction referred to above provides that, if an event of default has occurred and is continuing, the Company will not make any excess distributions with respect to common stock or other common equity interests except to enable the Company to continue to qualify as a REIT under the Code.

The lending group for the credit facility consists of: JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”); Bank of America, N.A., as syndication agent; Scotiabanc, Inc., Wachovia Bank, National Association; and Wells Fargo Bank, National Association, as documentation agents; SunTrust Bank, as senior managing agent; US Bank National Association, Citicorp North America, Inc.; and PNC Bank National Association, as managing agents; and Bank of China, New York Branch; The Bank of New York; Chevy Chase Bank, F.S.B.; The Royal Bank of Scotland PLC; Mizuho Corporate Bank, Ltd.; The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Successor by merger to UFJ Bank Limited); North Fork Bank; Bank Hapoalim B.M.; Comerica Bank; Chang Hwa Commercial Bank, Ltd., New York Branch; First Commercial Bank, New York Agency; Mega International Commercial Bank Co. Ltd., New York Branch; Deutsche Bank Trust Company Americas and Hua Nan Commercial Bank, New York Agency, as participants.
 
 
91
 

 
As of December 31, 2009 and 2008, the Company had outstanding borrowings of zero and $161 million, respectively, under its unsecured revolving credit facility.

MONEY MARKET LOAN
The Company has an agreement with JPMorgan Chase Bank to participate in a noncommitted money market loan program (“Money Market Loan”).  The Money Market Loan is an unsecured borrowing of up to $75 million arranged by JPMorgan Chase Bank with maturities of 30 days or less.  The rate of interest on the Money Market Loan borrowing is set at the time of each borrowing.  As of December 31, 2009 and 2008, the Company had no outstanding borrowings under the Money Market Loan.

 
92
 


10.  
MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS

The Company has mortgages, loans payable and other obligations which primarily consist of various loans collateralized by certain of the Company’s rental properties.  As of December 31, 2009, 32 of the Company’s properties, with a total book value of approximately $1,019,786,000, are encumbered by the Company’s mortgages and loans payable.  Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only.

On January 27, 2009, the Company obtained $64.5 million in mortgage financing from Guardian Life Insurance Company of America.  The two mortgage loans, which are collateralized by one and three office properties located in Clark and Red Bank, New Jersey, respectively, both carry an effective rate of 7.31 percent per annum and carry a 10-year term.

On April 29, 2009, in connection with the SL Green Transactions, the Company consolidated 11 office properties, which are encumbered by mortgage loans with Wachovia CMBS as lender which were recorded at an aggregate amount of approximately $151.1 million at the closing date.  The mortgage loans carry an average effective interest rate of 10.66 percent per annum and mature through May 2016.

On June 30, 2009, the Company obtained $17.0 million in mortgage financing from Valley National Bank.  The mortgage loan, which is collateralized by an office property in Woodbridge, New Jersey, is for a 25-year term and bears interest at an effective rate of 6.94 percent per annum through the end of the 10th year.  The coupon interest rate will be reset at the end of year 10 and year 20 at 225 basis points over the 10-year treasury yield 45 days prior to the reset dates, with a minimum rate of 6.875 percent.

As a result of the recent expirations of the remainder of the Company’s acquired lease obligations incurred as part of the consideration for certain properties acquired in 2004 (“Assumed Obligations”) included in mortgages, loans payable and other obligations, the Company recorded a gain on retirement of other obligations of approximately $1.7 million during the year ended December 31, 2009 on account of the remaining unused balance of the obligations at expiration.



 
93
 

A summary of the Company’s mortgages, loans payable and other obligations as of December 31, 2009 and 2008 is as follows: (dollars in thousands)

   
Effective
      
   
Interest
December 31,
    
Property Name
Lender
Rate (a)
2009
2008
   Maturity
  
Assumed obligations
Various
4.96%
--
$   5,090
n/a
  
Various (b)
Prudential Insurance
4.84%
$150,000
150,000
01/15/10 (c)
105 Challenger Road
Archon Financial CMBS
6.24%
19,408
19,188
06/06/10
  
2200 Renaissance Boulevard
Wachovia CMBS
5.89%
16,619
17,043
12/01/12
  
Soundview Plaza
Morgan Stanley Mortgage Capital
6.02%
16,614
17,109
01/01/13
  
9200 Edmonston Road
Principal Commercial Funding L.L.C.
5.53%
4,804
4,955
05/01/13
  
6305 Ivy Lane
John Hancock Life Insurance Co.
5.53%
6,693
6,901
01/01/14
  
395 West Passaic
State Farm Life Insurance Co.
6.00%
11,735
12,176
05/01/14
  
6301 Ivy Lane
John Hancock Life Insurance Co.
5.52%
6,297
6,480
07/01/14
  
35 Waterview Boulevard
Wachovia CMBS
6.35%
19,613
19,868
08/11/14
  
6 Becker, 85 Livingston,
  75 Livingston &
  20 Waterview
Wachovia CMBS
10.22%
60,409
--
08/11/14
  
4 Sylvan
Wachovia CMBS
10.19%
14,357
--
08/11/14
  
10 Independence
Wachovia CMBS
12.44%
15,339
--
08/11/14
  
4 Becker
Wachovia CMBS
9.55%
36,281
--
05/11/16
  
5 Becker
Wachovia CMBS
12.83%
11,111
--
05/11/16
  
210 Clay
Wachovia CMBS
13.42%
11,138
--
05/11/16
  
51 Imclone
Wachovia CMBS
8.39%
3,899
--
05/11/16
  
23 Main Street
JPMorgan CMBS
5.59%
32,042
32,521
09/01/18
  
Harborside Plaza 5
The Northwestern Mutual Life Insurance Co. & New York Life Insurance Co.
6.84%
237,248
239,795
11/01/18
  
100 Walnut Avenue
Guardian Life Insurance Co.
7.31%
19,600
--
02/01/19
  
One River Center
Guardian Life Insurance Co.
7.31% (d)
44,900
--
02/01/19
  
581 Main Street
Valley National Bank
6.94% (e)
16,896
--
07/01/34
  
             
Total mortgages, loans payable and other obligations
  
$755,003
$531,126
    

(a) Reflects effective rate of debt, including deferred financing costs, comprised of the cost of terminated treasury lock agreements (if any), debt initiation costs, mark-to-market adjustment of acquired debt and other transaction costs, as applicable.
(b) Mortgage is collateralized by seven properties.
(c) On January 15, 2010, the Company extended the mortgage loan until January 15, 2017 at an interest rate of 6.25 percent.
(d) Mortgage is collateralized by the three properties comprising One River Center.
(e) The coupon interest rate will be reset at the end of year 10 and year 20 at 225 basis points over the 10-year treasury yield 45 days prior to the reset dates with a minimum rate of 6.875 percent.


 
94
 

SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates for the Company’s senior unsecured notes (see Note 8), unsecured revolving credit facility and mortgages, loans payable and other obligations as of December 31, 2009 are as follows: (dollars in thousands)

 
Scheduled
Principal
  
Weighted Avg.
 
Amortization
Maturities
Total
Interest Rate of
Period
($000’s)
($000’s)
($000’s)
Future Repayments (a)
2010
$    8,155
$    334,500
$   342,655
5.31%
2011
9,217
300,000
309,217
7.92%
2012
9,968
210,148
220,116
6.21%
2013
9,515
145,223
154,738
5.37%
2014
8,553
335,257
343,810
6.83%
Thereafter
40,360
961,381
1,001,741
6.99%
Sub-total
85,768
2,286,509
2,372,277
  
Adjustment for unamortized debt
        
  discount/premium, net, as of
        
  December 31, 2009
(34,840)
--
(34,840)
--
         
Totals/Weighted Average
$  50,928
$ 2,286,509
$2,337,437
6.61%
         
(a)  No variable-rate borrowings were outstanding as of December 31, 2009.

CASH PAID FOR INTEREST AND INTEREST CAPITALIZED
Cash paid for interest for the years ended December 31, 2009, 2008 and 2007 was $131,912,000, $131,304,000 and $128,678,000, respectively.  Interest capitalized by the Company for the years ended December 31, 2009, 2008 and 2007 was $1,401,000, $5,799,000 and $5,101,000, respectively.

SUMMARY OF INDEBTEDNESS
As of December 31, 2009 the Company’s total indebtedness of $2,337,437,000 (weighted average interest rate of 6.61 percent) was comprised of all fixed rate debt.

As of December 31, 2008 the Company’s total indebtedness of $2,225,475,000 (weighted average interest rate of 5.87 percent) was comprised of $161,000,000 of revolving credit facility borrowings (weighted average rate of 1.82 percent) and fixed rate debt and other obligations of $2,064,475,000 (weighted average rate of 6.18 percent).


11.  
EMPLOYEE BENEFIT 401(k) PLANS

Employees of the Company, who meet certain minimum age and service requirements, are eligible to participate in the Mack-Cali Realty Corporation 401(k) Savings/Retirement Plan (the “401(k) Plan”).  Eligible employees may elect to defer from one percent up to 60 percent of their annual compensation on a pre-tax basis to the 401(k) Plan, subject to certain limitations imposed by federal law.  The amounts contributed by employees are immediately vested and non-forfeitable.  The Company may make discretionary matching or profit sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year.  Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit sharing contributions made on their behalf after two years of service with the Company at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Company.  All contributions are allocated as a percentage of compensation of the eligible participants for the Plan year.  The assets of the 401(k) Plan are held in trust and a separate account is established for each participant.  A participant may receive a distribution of his or her vested account balance in the 401(k) Plan in a single sum or in installment payments upon his or her termination of service with the Company.  Total expense recognized by the Company for the 401(k) Plan for each of the three years ended December 31, 2009, 2008 and 2007 was $0, $471,000 and $400,000, respectively.  The Company did not make contributions to the 401(k) Plan in 2009.

All employees of the Gale Company and other affiliated participating employers, other than certain employees who are represented for collective bargaining purposes by a labor organization, who attained age 201/2 and completed one-half year of service with a participating employer were eligible to participate in the Gale Company Employee Savings Plan (the “Gale Plan”). The Gale Plan permitted eligible employees to defer their annual compensation on a pre-tax basis, subject to certain limitations imposed by federal law.  The amounts contributed by employees were immediately vested and non-forfeitable.  The Gale Company or the participant’s employer were able to  match the employee’s deferral at the rate of 50 percent of the first six percent of the employee’s annual compensation for employees who have at least 1,000 hours of service and are employed on the last day of the plan year.  In addition, the Company, at management’s discretion, was able to make discretionary contributions.  Participants become 50 percent vested in employer contributions after two years of service and become 100 percent vested after three years.  The assets of the Gale Plan were held in trust and a separate account was established for each participant.  A participant may receive a distribution of his or her vested account balance in the Gale Plan in a single sum or in installment payments or in the form of an annuity upon his or her termination of service with the Company.  Effective April 1, 2007, the Gale Plan was merged into the 401(k) Plan.  In accordance with the Gale/Green transactions, the Company continued to make matching contributions to former Gale Plan participants under the Gale Plan matching contribution formula through the payroll period ending May 4, 2007.  Moreover, federal law requires the Company to preserve (i) the Gale Plan vesting schedule for certain Gale Plan participants with three or more years of service as of May 4, 2007 and (ii) certain benefits previously offered under the Gale Plan.  Total expense recognized by the Company for the Gale Plan for the year ended December 31, 2007 was $111,000.

 
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12.  
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 judgment 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, 2009 and 2008.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash equivalents, marketable securities, receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2009 and 2008.

The fair value of the Company’s long-term debt, consisting of senior unsecured notes, an unsecured revolving credit facility and mortgages, loans payable and other obligations aggregate approximately $2.4 billion and $1.8 billion as compared to the book value of approximately $2.3 billion and $2.2 billion as of December 31, 2009 and 2008, respectively.  The fair value of the Company’s long-term debt is estimated on a level 2 basis (as provided by ASC 820, Fair Value Measurements and Disclosures), using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities.  The fair value of the mortgage debt and the unsecured notes was determined by discounting the future contractual interest and principal payments by a market rate.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2009 and 2008.  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, 2009 and current estimates of fair value may differ significantly from the amounts presented herein.


13.  
COMMITMENTS AND CONTINGENCIES

TAX ABATEMENT AGREEMENTS
Harborside Financial Center
Pursuant to agreements with the City of Jersey City, New Jersey, the Company is required to make payments in lieu of property taxes (“PILOT”) on certain of its properties located in Jersey City, as follows:

The Harborside Plaza 4-A agreement, which commenced in 2000, is for a term of 20 years.  The PILOT is equal to two percent of Total Project costs, as defined, and increases by 10 percent in years 7, 10 and 13 and by 50 percent in year 16.  Total Project costs, as defined, are $45.5 million.  The PILOT totaled $1,001,000 for each of the years ended December 31, 2009, 2008 and 2007, respectively.
 
 
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The Harborside Plaza 5 agreement, as amended, which commenced in 2002 upon substantial completion of the property, as defined, is for a term of 20 years.  The PILOT is equal to two percent of Total Project Costs.  Total Project Costs, as defined, are $159.6 million.  The PILOT totaled $3.2 million for each of the years ended December 31, 2009, 2008 and 2007.

Total Project Costs for Harborside Plaza 5 and Harborside Plaza 4-A are currently being reviewed by the City of Jersey City.  The Company believes that the ultimate resolution of such reviews will not have a material adverse effect on the Company’s financial condition.

At the conclusion of the above-referenced PILOT agreements, it is expected that the properties will be assessed by the municipality and be subject to real estate taxes at the then prevailing rates.

LITIGATION
The Company is a defendant in litigation arising in the normal course of its business activities.  Management does not believe that the ultimate resolution of these matters will have a materially adverse effect upon the Company’s financial condition taken as whole.

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, 2009, are as follows: (dollars in thousands)

Year
Amount
2010
$     502
2011
502
2012
502
2013
502
2014
530
2015 through 2084
34,000
   
Total
$36,538

Ground lease expense incurred by the Company during the years ended December 31, 2009, 2008 and 2007 amounted to $734,000, $701,000 and $663,000, respectively.

OTHER
The Company may not dispose of or distribute certain of its properties, currently comprising 11 properties with an aggregate net book value of approximately $199.8 million, which were originally contributed by certain unrelated common unitholders, without the express written consent of such common unitholders, as applicable, except in a manner which does not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimburses the appropriate specific common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”).  The aforementioned restrictions do not apply in the event that the Company sells all of its properties or in connection with a sale transaction which the Company’s Board of Directors determines is reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Company or to cure any material monetary default on any mortgage secured by a property.  The Property Lock-Ups expire periodically through 2016.  Upon the expiration of the Property Lock-Ups, the Company is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the Company’s Board of Directors; David S. Mack, director; Earle I. Mack, a former director; and Mitchell E. Hersh, president, chief executive officer and director), the Robert Martin Group (which includes Martin S. Berger, director; Robert F. Weinberg, a former director; and Timothy M. Jones, former president), the Cali Group (which includes John R. Cali, director, and John J. Cali, a former director).  126 of the Company’s properties, with an aggregate net book value of approximately $1.8 billion, have lapsed restrictions and are subject to these conditions.

The Company is obligated to acquire from an entity (the “Florham Entity”) whose beneficial owners include Stanley C. Gale and Mark Yeager, an executive officer of the Company, a 50 percent interest in a venture which owns a developable land parcel in Florham Park, New Jersey (the “Florham Park Land”) for a maximum purchase price of up to $10.5 million, subject to reduction based on developable square feet approved and other conditions, with the completion of such acquisition subject to the Florham Entity obtaining final development permits and approvals and related conditions necessary to allow for office development expected to be 600,000 square feet.  In the event the acquisition of the Florham Park Land does not close by May 9, 2010, subject to certain conditions, the Florham Entity will be obligated to pay certain deferred costs and an additional $1 million to the Company at that time.

 
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14.  
TENANT LEASES

The Properties are leased to tenants under operating leases with various expiration dates through 2030.  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, 2009 are as follows: (dollars in thousands)

Year
Amount      
2010
$   596,463
2011
544,938
2012
479,871
2013
392,953
2014
322,686
2015 and thereafter
1,085,473
   
Total
$3,422,384


15.  
MACK-CALI REALTY CORPORATION 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 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 demands written statements each year from the holders of record of designated percentages of its common stock requesting the disclosure of the beneficial owners of such common stock.

COMMON STOCK
On May 6, 2009, the Company completed a public offering of 11,500,000 shares of Common Stock and used the net proceeds, which totaled approximately $274.8 million (after offering costs), to repay borrowings under its unsecured revolving credit facility.

PREFERRED STOCK
The Company has 10,000 shares of eight-percent Series C cumulative redeemable perpetual preferred stock issued and outstanding (“Series C Preferred Stock”) in the form of 1,000,000 depositary shares ($25 stated value per depositary share).  Each depositary share represents 1/100th of a share of Series C Preferred Stock.

The Series C Preferred Stock has preference rights with respect to liquidation and distributions over the common stock. Holders of the Series C Preferred Stock, except under certain limited conditions, will not be entitled to vote on any matters.  In the event of a cumulative arrearage equal to six quarterly dividends, holders of the Series C Preferred Stock will have the right to elect two additional members to serve on the Company’s Board of Directors until dividends have been paid in full.  At December 31, 2009, there were no dividends in arrears.  The Company may issue unlimited additional preferred stock ranking on a parity with the Series C Preferred Stock but may not issue any preferred stock senior to the Series C Preferred Stock without the consent of two-thirds of its holders.  The Series C Preferred Stock is essentially on an equivalent basis in priority with the preferred units of the Operating Partnership (See Note 16: Noncontrolling interests in subsidiaries).
 
 
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The Series C Preferred Stock is redeemable at the option of the Company, in whole or in part, at $25 per depositary share, plus accrued and unpaid dividends.

SHARE REPURCHASE PROGRAM
On September 12, 2007, the Board of Directors authorized an increase to the Company’s repurchase program under which the Company was permitted to purchase up to $150 million of the Company’s outstanding common stock (“Repurchase Program”).  The Company has purchased and retired 2,893,630 shares of its outstanding common stock for an aggregate cost of approximately $104 million through December 31, 2009 under the Repurchase Program.  The Company has a remaining authorization to repurchase up to an additional $46 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.

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Company has a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) which commenced in March 1999 under which 5.5 million shares of the Company’s common stock have been reserved for future issuance.  The DRIP provides for automatic reinvestment of all or a portion of a participant’s dividends from the Company’s shares of common stock.  The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company’s effective registration statement on Form S-3 filed with the Securities and Exchange Commission (“SEC”) for the 5.5 million shares of the Company’s common stock reserved for issuance under the DRIP.

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 entitled 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 expired on July 6, 2009.

STOCK OPTION PLANS
In May 2004, the Company established the 2004 Incentive Stock Plan under which a total of 2,500,000 shares have been reserved for issuance.  No options have been granted through December 31, 2009 under this plan.  In September 2000, the Company established the 2000 Employee Stock Option Plan (“2000 Employee Plan”) and the Amended and Restated 2000 Director Stock Option Plan (“2000 Director Plan”).  In May 2002, shareholders of the Company approved amendments to both plans to increase the total shares reserved for issuance under both of the 2000 plans from 2,700,000 to 4,350,000 shares of the Company’s common stock (from 2,500,000 to 4,000,000 shares under the 2000 Employee Plan and from 200,000 to 350,000 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 had been reserved for issuance (4,980,188 shares under the Employee Plan and 400,000 shares under the Director Plan).  As the Employee Plan and Director Plan expired in 2004, stock options may no longer be issued under those plans.  Stock options granted under the Employee Plan in 1994 and 1995 became exercisable over a three-year period.  Stock options granted under the 2000 Employee Plan and those options granted subsequent to 1995 under the Employee Plan 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, 2009 and 2008, the stock options outstanding had a weighted average remaining contractual life of approximately 2.5 and 3.3 years, respectively.  Stock options exercisable at December 31, 2009 and December 31, 2008 had a weighted average remaining contractual life of approximately 2.5 and 3.5 years, respectively.
 
 
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Information regarding the Company’s stock option plans is summarized below:

   
Weighted
Aggregate
 
Shares
Average
Intrinsic
 
Under
Exercise
Value
 
Options
Price
$(000’s)
Outstanding at January 1, 2007
690,306
$29.68
  
Exercised
(132,770)
$28.63
  
Lapsed or canceled
(59,805)
$37.44
  
Outstanding at December 31, 2007
497,731
$29.03
  
Exercised
(81,675)
$28.30
  
Lapsed or canceled
(20,515)
$37.00
  
Outstanding at December 31, 2008 ($24.63 – $45.47)
395,541
$28.77
$(1,689)
Exercised
(18,917)
$26.66
  
Lapsed or canceled
(24,440)
$30.89
  
Outstanding at December 31, 2009 ($26.25 – $45.47)
352,184
$28.74
$  2,055
Options exercisable at December 31, 2008
395,541
  
$(1,689)
Options exercisable at December 31, 2009
352,184
  
$  2,055
Available for grant at December 31, 2008
3,904,607
    
Available for grant at December 31, 2009
3,824,270
    

Cash received from options exercised under all stock option plans was $504,000, $2.3 million and $3.8 million for the years ended December 31, 2009, 2008 and 2007, respectively.  The total intrinsic value of options exercised during the years ended December 31, 2009, 2008 and 2007 was $123,000, $832,000 and $3.2 million, respectively.  The Company has a policy of issuing new shares to satisfy stock option exercises.

The Company recognized stock options expense of $0, $0 and $132,000 for the years ended December 31, 2009, 2008 and 2007, respectively.  As of December 31, 2009, the Company had $2.6 million of total unrecognized compensation cost related to unvested stock compensation granted under the Company’s stock compensation plans.  That cost is expected to be recognized over a weighted average period of 2.5 years.

STOCK COMPENSATION
The Company has issued stock awards (“Restricted Stock Awards”) to officers, certain other employees, and nonemployee members of the Board of Directors of the Company, which allow the holders to each receive a certain amount of shares of the Company’s common stock generally over a one to seven-year vesting period, of which 323,088 unvested shares were outstanding at December 31, 2009.  Of the outstanding Restricted Stock Awards issued to executive officers and senior management, 196,998 are contingent upon the Company meeting certain performance goals to be set by the Executive Compensation and Option Committee of the Board of Directors of the Company each year, with the remaining based on time and service. All Restricted Stock Awards provided to the officers and certain other employees were issued under the 2000 Employee Plan and the Employee Plan. Restricted Stock Awards provided to directors were issued under the 2000 Director Plan.
 
 
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Information regarding the Restricted Stock Awards is summarized below:

   
Weighted-Average
   
Grant – Date
 
Shares
Fair Value
Outstanding at January 1, 2007
216,620
$  39.78
Granted (a)
113,118
$  36.29
Vested
(158,927)
$  42.10
Outstanding at December 31, 2007
170,811
$  35.32
Granted (b)
374,529
$  30.72
Vested
(168,634)
$  27.01
Forfeited
(1,700)
$  35.13
Outstanding at December 31, 2008
375,006
$  34.46
Granted (c)
83,337
$  32.27
Vested
(132,255)
$  27.55
Forfeited
(3,000)
$  49.61
Outstanding at December 31, 2009
323,088
$  36.58
   
(a)  Included in the 113,118 Restricted Stock Awards granted in 2007 were 82,518 awards granted to the Company’s five executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas, Michael Grossman and Mark Yeager.
(b)  Included in the 374,529 Restricted Stock Awards granted in 2008 were 322,609 awards granted to the Company’s five executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas, Michael Grossman and Mark Yeager.
(c)  Included in the 83,337 Restricted Stock Awards granted in 2009 were 61,667 awards granted to the Company’s five executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas, Michael Grossman and Mark Yeager.

DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS
The Amended and Restated Deferred Compensation Plan for Directors, 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.

During the years ended December 31, 2009, 2008 and 2007, 15,082, 12,889 and 8,054 deferred stock units were earned, respectively.  As of December 31, 2009 and 2008, there were 71,848 and 55,446 director stock units outstanding, respectively.

EARNINGS PER SHARE
Basic EPS excludes dilution and is computed by dividing net income available to common shareholders 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.


 
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The following information presents the Company’s results for the years ended December 31, 2009, 2008 and 2007 in accordance with ASC 260, Earning Per Share:  (dollars in thousands)

 
Year Ended December 31,
Computation of Basic EPS
2009 
2008 
2007 
Income from continuing operations
$  63,728 
$  64,879 
$  88,612 
Add:         Noncontrolling interest in consolidated joint ventures
943
664
643
Deduct:  Noncontrolling interest in operating partnership
(10,103)
(11,817)
(16,126)
Deduct:  Preferred stock dividends
(2,000)
(2,000)
(2,000)
Income from continuing operations available to common shareholders
52,568 
51,726 
71,129 
Income from discontinued operations available to common shareholders
-- 
-- 
37,337 
Net income available to common shareholders
52,568 
$  51,726 
$108,466 
       
Weighted average common shares
74,318 
65,489
67,026 
       
Basic EPS:
      
Income from continuing operations available to common shareholders
$      0.71
$      0.79
$      1.06
Income from discontinued operations available to common shareholders
--
--
0.56
Net income available to common shareholders
$      0.71
$      0.79
$      1.62


 
Year Ended December 31,
Computation of Diluted EPS
2009
2008
2007
Income from continuing operations available to common shareholders
$  52,568
$  51,726
$  71,129
Add:         Income from continuing operations attributable to common units
10,103
11,817
16,126
Income from continuing operations for diluted earnings per share
62,671
63,543
87,255
Income from discontinued operations for diluted earnings per share
--
--
45,711
Net income available to common shareholders
$  62,671
$  63,543
$132,966
       
Weighted average common shares
88,389
80,648
82,500
       
Diluted EPS:
      
Income from continuing operations available to common shareholders
$     0.71
$       0.79
$       1.06
Income from discontinued operations available to common shareholders
--
--
0.55
Net income available to common shareholders
$     0.71
$       0.79
$       1.61

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,
 
2009
2008
2007
Basic EPS shares
74,318
65,489
67,026
Add:Operating Partnership – common units
14,028
14,915
15,190
Stock options
1
95
185
Restricted Stock Awards
42
149
99
Diluted EPS Shares
88,389
80,648
82,500

Not included in the computations of diluted EPS were 307,184, 10,000 and 5,000 stock options as such securities were anti-dilutive during the years ended December 31, 2009, 2008 and 2007, respectively.  Unvested restricted stock outstanding as of December 31, 2009, 2008 and 2007 were 323,088, 375,006 and 170,811, respectively.

 
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The following are dividends declared for share of Common Stock for the years ended December 31, 2009, 2008 and 2007.

 
Year Ended December 31,
 
2009
2008
2007
Dividends declared per common share
$1.80
$2.56
$2.56


16.  
NONCONTROLLING INTERESTS IN SUBSIDIARIES

Noncontrolling interests in subsidiaries in the accompanying consolidated financial statements relate to (i) preferred units (“Preferred Units”) and common units in the Operating Partnership, held by parties other than the Company, and (ii) interests in consolidated joint ventures for the portion of such properties not owned by the Company.

Pursuant to the Company’s required adoption on January 1, 2009 of ASC 810, Consolidation, on the accounting and reporting of noncontrolling interests and changes in ownership interests of the subsidiary, the Company is presenting its noncontrolling interests as equity for all periods presented in these financial statements.

OPERATING PARTNERSHIP

Preferred Units
In connection with the Company’s issuance of $25 million of Series C cumulative redeemable perpetual preferred stock, the Company acquired from the Operating Partnership $25 million of Series C Preferred Units (the “Series C Preferred Units”), which have terms essentially identical to the Series C preferred stock.  See Note 15:  Mack-Cali Realty Corporation Stockholders’ Equity – Preferred Stock.

Common Units
Certain individuals and entities own common units in the Operating Partnership.  A common unit and a share of Common Stock of the Company have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Operating Partnership.  Common unitholders have the right to redeem their common units, subject to certain restrictions.  The redemption is required to be satisfied in shares of Common Stock, cash, or a combination thereof, calculated as follows:  one share of the Company’s Common Stock, or cash equal to the fair market value of a share of the Company’s Common Stock at the time of redemption, for each common unit.  The Company, in its sole discretion, determines the form of redemption of common units (i.e., whether a common unitholder receives Common Stock, cash, or any combination thereof).  If the Company elects to satisfy the redemption with shares of Common Stock as opposed to cash, it is obligated to issue shares of its Common Stock to the redeeming unitholder.  Regardless of the rights described above, the common unitholders may not put their units for cash to the Company or the Operating Partnership under any circumstances.  When a unitholder redeems a common unit, noncontrolling interest in the Operating Partnership is reduced and Mack-Cali Realty Corporation Stockholders’ equity is increased.

 
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Unit Transactions
The following table sets forth the changes in noncontrolling interests in subsidiaries which relate to the common units in the Operating Partnership for the years ended December 31, 2009, 2008 and 2007:

 
Common
 
Units
Balance at January 1, 2007
15,342,283
Issuance of common units
114,911
Redemption of common units for shares of common stock
(471,656)
Balance at December 31, 2007
14,985,538
Redemption of common units for shares of common stock
(547,807)
Balance at December 31, 2008
14,437,731
Redemption of common units for shares of common stock
(942,695)
   
Balance at December 31, 2009
13,495,036

Pursuant to ASC 810, Consolidation, on the accounting and reporting for noncontrolling interests and changes in ownership interests of a subsidiary, changes in a parent’s ownership interest (and transactions with noncontrolling interest unitholders in the subsidiary) while the parent retains its controlling interest in its subsidiary should be accounted for as equity transactions.  The carrying amount of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent.  Accordingly, as a result of equity transactions which caused changes in ownership percentages between Mack-Cali Realty Corporation stockholders’ equity and noncontrolling interests in the Operating Partnership that occurred during the year ended December 31, 2009, the Company has decreased noncontrolling interests in the Operating Partnership and increased additional paid-in capital in Mack-Cali Realty Corporation stockholders’ equity by approximately $66.3 million as of December 31, 2009.

NONCONTROLLING INTEREST OWNERSHIP
As of December 31, 2009 and December 31, 2008, the noncontrolling interest common unitholders owned 14.6 percent and 17.9 percent of the Operating Partnership, respectively.

CONSOLIDATED JOINT VENTURES
The Company has ownership interests in certain joint ventures which it consolidates.  Various entities and/or individuals hold noncontrolling interests in these ventures.



 
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17.  
SEGMENT REPORTING

The Company operates in two business segments: (i) real estate and (ii) construction services.  The Company provides leasing, property and facilities management, acquisition, development, construction and tenant-related services for its portfolio.  In May 2006, in conjunction with the Company’s acquisition of the Gale Company and related businesses, the Company acquired a business specializing solely in construction and related services whose operations comprise the Company’s construction services segment.  The Company had no revenues from foreign countries recorded for the years ended December 31, 2009, 2008 and 2007.  The Company had no long lived assets in foreign locations as of December 31, 2009, 2008 and 2007.  The accounting policies of the segments are the same as those described in Note 2: Significant Accounting Policies, excluding depreciation and amortization.

The Company evaluates performance based upon net operating income from the combined properties in the real estate segment and net operating income from its construction services segment.

 
105
 

Selected results of operations for the years ended December 31, 2009, 2008 and 2007 and selected asset information as of December 31, 2009 and 2008 regarding the Company’s operating segments are as follows: (dollars in thousands)

 
 
Real Estate
Construction
Services
Corporate
& Other (d)
 
Total Company 
 
Total revenues:
          
2009
$   738,887
$ 31,207
$     (5,569)
$   764,525
  
2008
734,159
58,105
(14,295)
777,969
  
2007
716,932
97,951
  (6,533)
808,350
  
           
Total operating and interest expenses (a):
          
2009
$   290,072
$ 31,815
$  172,500
$   494,387
(e)
2008
268,302
56,628
163,307
488,237
(f)
2007
263,175
96,699
170,382
530,256
(g)
           
Equity in earnings (loss) of unconsolidated
          
  joint ventures:
          
2009
$      (5,560)
--
--
$      (5,560)
  
2008
(39,752)
--
--
(39,752)
  
2007
(5,918)
--
--
(5,918)
  
           
Net operating income (loss) (b):
          
2009
$   443,255
$     (608)
$ (178,069)
$   264,578
(e)
2008
426,105
1,477
(177,602)
249,980
(f)
2007
447,839
1,252
(176,915)
272,176
(g)
           
Total assets:
          
2009
$4,512,974
$ 12,015
$  196,648
$4,721,637
  
2008
4,499,548
 25,845
 (81,471)
4,443,922
  
           
Total long-lived assets (c):
          
2009
$4,189,276
--
$     (1,142)
$4,188,134
  
2008
4,191,036
--
(17,015)
4,174,021
  
           

(a)
Total operating and interest expenses represent the sum of:  real estate taxes; utilities; operating services; direct construction costs; real estate services salaries, wages and other costs; general and administrative and interest expense (net of interest income). All interest expense, net of interest income, (including for property-level mortgages) is excluded from segment amounts and classified in Corporate & Other for all periods.
(b)
Net operating income represents total revenues less total operating and interest expenses [as defined in Note (a)], plus equity in earnings (loss) of unconsolidated joint ventures, for the period.
(c)
Long-lived assets are comprised of net investment in rental property, unbilled rents receivable and investments in unconsolidated joint ventures.
(d)
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.
(e)
Excludes $202,543 of depreciation and amortization.
(f)
Excludes $194,635 of depreciation and amortization.
(g)   Excludes $183,564 of depreciation and amortization.


 
106
 

18.  
RELATED PARTY TRANSACTIONS

William L. Mack, Chairman of the Board of Directors of the Company (“W. Mack”), David S. Mack, a director of the Company, and Earle I. Mack, a former director of the Company (“E. Mack”), are the executive officers, directors and stockholders of a corporation that leases approximately 7,801 square feet at one of the Company’s office properties, which is scheduled to expire in November 2011.  The Company has recognized $255,000, $258,000 and $233,000 in revenue under this lease for the years ended December 31, 2009, 2008 and 2007, respectively, and had zero accounts receivable from the corporation as of December 31, 2009 and 2008.

The Company has conducted business with certain entities (“RMC Entity” or “RMC Entities”), whose principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg, each of whom are affiliated with the Company as the former 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.  In connection with the Company’s acquisition of 65 Class A properties from The Robert Martin Company (“Robert Martin”) on January 31, 1997, as subsequently modified, the Company granted Robert Martin the right to designate one seat on the Company’s Board of Directors (“RM Board Seat”), which right has since expired.  The RM Board Seat had historically been shared between Robert F. Weinberg and Martin S. Berger, each of whom had agreed that, for so long as either of them serves on the Board of Directors, that such board seat would be rotated among Mr. Berger and Mr. Weinberg annually at the time of each annual meeting of stockholders.  At the Company’s 2003 annual meeting of stockholders, Mr. Berger was elected to the Board of Directors and he continued to share his board seat with Mr. Weinberg.  At the Company’s 2006 annual meeting of stockholders, Mr. Weinberg was elected to the Board of Directors and he continued to share his board seat with Mr. Berger.  At the Company’s 2009 annual meeting of stockholders, Mr. Berger was elected to the Board of Directors and he continues to share his board seat with Mr. Weinberg.  The business that the Company has conducted with RMC Entities was as follows:

(1)  
The Company provides management, leasing and construction-related services to properties in which RMC Entities have an ownership interest.  The Company recognized approximately $1.6 million, $2.5 million and $2 million in revenue from RMC Entities for the years ended December 31, 2009, 2008 and 2007, respectively.  As of December 31, 2009 and 2008, respectively, the Company had zero and $161,000 accounts receivable from RMC Entities.
(2)  
An RMC Entity leased space at one of the Company’s office properties for approximately 4,860 square feet, which, after a one-year renewal signed in October 2009, is scheduled to expire in October 2010.  The Company has recognized $140,000, $133,000 and $132,000, in revenue under this lease for the years ended December 31, 2009, 2008 and 2007, respectively, and had $500 accounts receivable due from the RMC Entity, as of December 31, 2009 and 2008, respectively.

Through June 2007, Mr. Berger held a 24 percent interest, acted as chairman and chief executive officer, Mr. Weinberg also held a 24 percent interest and was a director, and W. Mack held a nine percent interest and was a director of City and Suburban Federal Savings Bank and/or one of its affiliates, which leases 12,842 square feet of space at one of the Company’s office properties, which was scheduled to expire in April 2013.  In July 2007, Mssrs. Berger, Weinberg and Mack sold their interests and no longer are directors of City and Suburban Federal Savings Bank and/or its affiliates.  The Company recognized $190,000 and $404,000 in revenue under the leases for the years ended December 31, 2007 and 2006, respectively, and had no accounts receivable from the company as of December 31, 2007.

The Company provides administrative support and related services to John J. Cali, who served as the Chairman Emeritus and a Board member of the Company, for which it was reimbursed $115,000, $153,000 and $192,000 from Mr. Cali for the years ended December 31, 2009, 2008 and 2007, respectively.  On June 27, 2005, an affiliate of Mr. Cali entered into a three-year lease for 1,825 square feet of space at one of the Company’s office properties, which is scheduled to expire at the end of 2011. On September 18, 2006, an affiliate of Mr. Cali entered into another lease agreement for 806 additional square feet, in the same building, commencing on December 29, 2006, which is scheduled to expire at the end of 2011.  The Company recognized approximately $68,000, $67,000 and $68,000 in total revenue under the leases for the years ended December 31, 2009, 2008 and 2007, respectively, and had zero accounts receivable from the affiliate as of December 31, 2009 and 2008.

 
107
 


19.  
IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation No. 46(R) (“FASB No. 167”)
 
 
FASB No. 167 amends, among other items, for FIN 46(R) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics:
 
 
a.  
The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance
 
 
b.  
The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.
 
 
Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance.
 
FASB No. 167 also amends FIN 46(R) to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  Additionally, FASB No. 167 amends FIN 46(R) to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity, which was based on determining which enterprise absorbs the majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both.  FASB No. 167 amends certain guidance in Interpretation 46(R) for determining whether an entity is a variable interest entity.  Also, FASB No. 167 amends FIN 46(R) to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity.  The enhanced disclosures are required for any enterprise that holds a variable interest in a variable interest entity.  As FASB No. 167 will be effective as of the beginning of the first annual reporting period that begins after November 15, 2009, the Company is currently assessing the potential impact that the Company’s adoption of FASB No. 167 on January 1, 2010 will have on its financial position and results of operation.
 






 
108
 

20.  
CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited)

The following summarizes the condensed quarterly financial information for the Company: (dollars in thousands)

Quarter Ended 2009
December 31
September 30
June 30
March 31
Total revenues
$ 194,904
$ 193,617
$ 189,338
$ 186,666
Operating and other expenses
71,605
66,597
66,500
72,290
Direct construction costs
4,976
7,337
4,296
3,714
General and administrative
9,256
9,818
10,651
10,082
Depreciation and amortization
52,725
51,830
49,716
48,272
Impairment charge on rental property
16,563
--
--
--
Total expenses
155,125
135,582
131,163
134,358
Operating Income
39,779
58,035
58,175
52,308
Interest expense
(38,923)
(36,048)
(33,508)
(32,794)
Interest and other investment income
20
167
187
197
Equity in earnings (loss) of unconsolidated
        
joint ventures
841
635
(1,922)
(5,114)
Gain on sale of investment in marketable securities
--
--
--
--
Gain on reduction of other obligations
--
--
1,693
--
Total other (expense) income
(38,062)
(35,246)
(33,550)
(37,711)
Income (loss) from continuing operations
1,717
22,789
24,625
14,597
Discontinued operations:
        
Income from discontinued operations
--
--
--
--
Realized gains (losses) and unrealized losses
        
  on disposition of rental property, net
--
--
--
--
Total discontinued operations, net
--
--
--
--
Net income (loss)
1,717
22,789
24,625
14,597
Noncontrolling interest in consolidated joint ventures
(37)
213
135
632
Noncontrolling interest in Operating Partnership
(174)
(3,415)
(3,886)
(2,628)
Noncontrolling interest in discontinued operations
--
--
--
--
Preferred stock dividends
(500)
(500)
(500)
(500)
Net income (loss) available to common shareholders
$     1,006
$   19,087
$   20,374
$   12,101
         
Basic earnings per common share:
        
Income (loss) from continuing operations
$       0.01
$       0.24
$       0.28
$       0.18
Discontinued operations
--
--
--
--
Net income (loss) available to common shareholders
$       0.01
$       0.24
$       0.28
$       0.18
         
Diluted earnings per common share:
        
Income (loss) from continuing operations
$       0.01
$       0.24
$       0.28
$       0.18
Discontinued operations
--
--
--
--
Net income (loss) available to common shareholders
$       0.01
$       0.24
$       0.28
$       0.18
         
Dividends declared per common share
$       0.45
$       0.45
$       0.45
$       0.45


 
109
 


Quarter Ended 2008
December 31
September 30
June 30
March 31
Total revenues
$ 186,100
$ 204,363
$ 192,793
$ 194,713
Operating and other expenses
63,448
74,022
70,937
71,437
Direct construction costs
3,562
11,104
10,329
12,654
General and administrative
10,885
10,767
11,237
11,095
Depreciation and amortization
50,085
49,242
47,586
47,722
Total expenses
127,980
145,135
140,089
142,908
Operating Income
58,120
59,228
52,704
51,805
Interest expense
(33,182)
(31,163)
(31,340)
(32,460)
Interest and other investment income
270
257
302
556
Equity in earnings (loss) of unconsolidated
        
joint ventures
(39,219)
(269)
884
(1,148)
Gain on sale of investment in marketable securities
--
--
471
--
Gain on reduction of other obligations
9,063
--
--
--
Gain/(loss) on sale of land and other assets
--
--
--
--
Total other (expense) income
(63,068)
(31,175)
(29,683)
(33,052)
Income (loss) from continuing operations
(4,948)
28,053
23,021
18,753
Discontinued operations:
        
Income from discontinued operations
--
--
--
--
Realized gains (losses) and unrealized losses
        
  on disposition of rental property, net
--
--
--
--
Total discontinued operations, net
--
--
--
--
Net income (loss)
(4,948)
28,053
23,021
18,753
Noncontrolling interest in consolidated joint ventures
378
147
16
123
Noncontrolling interest in Operating Partnership
934
(5,131)
(4,193)
(3,427)
Noncontrolling interest in discontinued operations
--
--
--
--
Preferred stock dividends
(500)
(500)
(500)
(500)
Net income (loss) available to common shareholders
$   (4,136)
$  22,569
$  18,344
$  14,949
         
Basic earnings per common share:
        
Income (loss) from continuing operations
$     (0.06)
$      0.34
$      0.28
$      0.23
Discontinued operations
--
--
--
--
Net income (loss) available to common shareholders
$     (0.06)
$      0.34
$      0.28
$      0.23
         
Diluted earnings per common share:
        
Income (loss) from continuing operations
$     (0.06)
$      0.34
$      0.28
$      0.23
Discontinued operations
--
--
--
--
Net income (loss) available to common shareholders
$     (0.06)
$      0.34
$      0.28
$      0.23
         
Dividends declared per common share
$       0.64
$      0.64
$      0.64
$      0.64




 
110
 


 
                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
NEW JERSEY
                    
Bergen County
                    
Fair Lawn
                    
17-17 Rte 208 North (O)
1987
1995
--
3,067
19,415
1,575
3,067
20,990
24,057
7,834
Fort Lee
                    
One Bridge Plaza (O)
1981
1996
--
2,439
24,462
6,212
2,439
30,674
33,113
9,712
2115 Linwood Avenue (O)
1981
1998
--
474
4,419
4,365
474
8,784
9,258
2,255
Little Ferry
                    
200 Riser Road (O)
1974
1997
--
3,888
15,551
729
3,888
16,280
20,168
5,187
Lyndhurst
                    
210 Clay Avenue (O)
1978
2009
11,138
2,300
11,189
--
2,300
11,189
13,489
326
Montvale
                    
95 Chestnut Ridge Road (O)
1975
1997
--
1,227
4,907
718
1,227
5,625
6,852
2,056
135 Chestnut Ridge Road (O)
1981
1997
--
2,587
10,350
2,100
2,588
12,449
15,037
4,556
Paramus
                    
15 East Midland Avenue (O)
1988
1997
20,600
10,375
41,497
660
10,374
42,158
52,532
12,559
461 From Road (O)
1988
1997
--
13,194
52,778
264
13,194
53,042
66,236
16,012
650 From Road (O)
1978
1997
25,600
10,487
41,949
6,857
10,487
48,806
59,293
16,132
140 East Ridgewood
                    
  Avenue (O)
1981
1997
16,100
7,932
31,463
6,020
7,932
37,483
45,415
10,659
61 South Paramus Avenue (O)
1985
1997
20,800
9,005
36,018
6,786
9,005
42,804
51,809
13,362
Ridgefield Park
                    
105 Challenger Road (O)
--
2006
19,408
4,714
29,768
(18,430)
2,180
13,872
16,052
1,835
Rochelle Park
                    
120 Passaic Street (O)
1972
1997
--
1,354
5,415
102
1,357
5,514
6,871
1,687
365 West Passaic Street (O)
1976
1997
12,250
4,148
16,592
3,459
4,148
20,051
24,199
6,080
395 West Passaic Street (O)
1979
2006
11,735
2,550
17,131
665
2,550
17,796
20,346
2,458
Upper Saddle River
                    
1 Lake Street (O)
1994
1997
35,550
13,952
55,812
479
13,953
56,290
70,243
16,823
10 Mountainview Road (O)
1986
1998
--
4,240
20,485
2,712
4,240
23,197
27,437
7,276
Woodcliff Lake
                    
400 Chestnut Ridge Road (O)
1982
1997
--
4,201
16,802
5,080
4,201
21,882
26,083
7,651
470 Chestnut Ridge Road (O)
1987
1997
--
2,346
9,385
1,435
2,346
10,820
13,166
3,087
530 Chestnut Ridge Road (O)
1986
1997
--
1,860
7,441
81
1,860
7,522
9,382
2,270
300 Tice Boulevard (O)
1991
1996
--
5,424
29,688
5,010
5,424
34,698
40,122
11,394
50 Tice Boulevard (O)
1984
1994
19,100
4,500
--
24,720
4,500
24,720
29,220
14,311
                     

 
111
 


                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
Burlington County
                    
Burlington
                    
3 Terri Lane (F)
1991
1998
--
652
3,433
1,518
658
4,945
5,603
1,870
5 Terri Lane (F)
1992
1998
--
564
3,792
2,202
569
5,989
6,558
1,875
Moorestown
                    
2 Commerce Drive (F)
1986
1999
--
723
2,893
714
723
3,607
4,330
926
101 Commerce Drive (F)
1988
1998
--
422
3,528
437
426
3,961
4,387
1,230
102 Commerce Drive (F)
1987
1999
--
389
1,554
312
389
1,866
2,255
560
201 Commerce Drive (F)
1986
1998
--
254
1,694
480
258
2,170
2,428
726
202 Commerce Drive (F)
1988
1999
--
490
1,963
723
490
2,686
3,176
839
1 Executive Drive (F)
1989
1998
--
226
1,453
569
228
2,020
2,248
737
2 Executive Drive (F)
1988
2000
--
801
3,206
960
801
4,166
4,967
1,193
101 Executive Drive (F)
1990
1998
--
241
2,262
608
244
2,867
3,111
960
102 Executive Drive (F)
1990
1998
--
353
3,607
371
357
3,974
4,331
1,165
225 Executive Drive (F)
1990
1998
--
323
2,477
366
326
2,840
3,166
930
97 Foster Road (F)
1982
1998
--
208
1,382
392
211
1,771
1,982
538
1507 Lancer Drive (F)
1995
1998
--
119
1,106
51
120
1,156
1,276
360
840 North Lenola Road (F)
1995
1998
--
329
2,366
471
333
2,833
3,166
962
844 North Lenola Road (F)
1995
1998
--
239
1,714
260
241
1,972
2,213
742
915 North Lenola Road (F)
1998
2000
--
508
2,034
286
508
2,320
2,828
556
1245 North Church Street (F)
1998
2001
--
691
2,810
106
691
2,916
3,607
644
1247 North Church Street (F)
1998
2001
--
805
3,269
205
805
3,474
4,279
817
1256 North Church (F)
1984
1998
--
354
3,098
273
357
3,368
3,725
1,120
224 Strawbridge Drive (O)
1984
1997
--
766
4,335
3,191
767
7,525
8,292
2,199
228 Strawbridge Drive (O)
1984
1997
--
766
4,334
3,946
767
8,279
9,046
1,833
232 Strawbridge Drive (O)
1986
2004
--
1,521
7,076
1,935
1,521
9,011
10,532
1,701
2 Twosome Drive (F)
2000
2001
--
701
2,807
18
701
2,825
3,526
612
30 Twosome Drive (F)
1997
1998
--
234
1,954
490
236
2,442
2,678
755
31 Twosome Drive (F)
1998
2001
--
815
3,276
179
815
3,455
4,270
780
40 Twosome Drive (F)
1996
1998
--
297
2,393
314
301
2,703
3,004
953
41 Twosome Drive (F)
1998
2001
--
605
2,459
37
605
2,496
3,101
572
50 Twosome Drive (F)
1997
1998
--
301
2,330
74
304
2,401
2,705
765
West Deptford
                    
1451 Metropolitan Drive (F)
1996
1998
--
203
1,189
30
206
1,216
1,422
389
                     
Essex County
                    
Millburn
                    
150 J.F. Kennedy Parkway (O)
1980
1997
--
12,606
50,425
8,559
12,606
58,984
71,590
19,991
                     

 
112
 
 

                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
Roseland
                    
4 Becker Farm Road (O)
1983
2009
36,281
5,600
38,285
481
5,600
38,766
44,366
906
5 Becker Farm Road (O)
1982
2009
11,111
2,400
11,885
1
2,400
11,886
14,286
329
6 Becker Farm Road (O)
1983
2009
13,214
2,600
15,548
213
2,600
15,761
18,361
415
101 Eisenhower Parkway (O)
1980
1994
--
228
--
15,627
228
15,627
15,855
10,357
103 Eisenhower Parkway (O)
1985
1994
--
--
--
14,762
2,300
12,462
14,762
7,258
105 Eisenhower Parkway (O)
2001
2001
--
4,430
42,898
3,001
--
50,329
50,329
14,769
85 Livingston Avenue (O)
1985
2009
14,158
2,500
14,238
61
2,500
14,299
16,799
343
75 Livingston Avenue (O)
1985
2009
10,113
1,900
6,312
--
1,900
6,312
8,212
295
                     
Hudson County
                    
Jersey City
                    
Harborside Financial Center
                    
  Plaza 1 (O)
1983
1996
--
3,923
51,013
27,429
3,923
78,442
82,365
21,128
Harborside Financial Center
                    
  Plaza 2 (O)
1990
1996
--
17,655
101,546
19,135
15,070
123,266
138,336
40,570
Harborside Financial Center
                    
  Plaza 3 (O)
1990
1996
--
17,655
101,878
18,803
15,070
123,266
138,336
40,571
Harborside Financial Center
                    
  Plaza 4A (O)
2000
2000
--
1,244
56,144
8,692
1,244
64,836
66,080
17,614
Harborside Financial Center
                    
  Plaza 5 (O)
2002
2002
237,248
6,218
170,682
55,154
5,705
226,349
232,054
49,393
101 Hudson Street (O)
1992
2004
--
45,530
271,376
9,035
45,530
280,411
325,941
43,487
                     
Mercer County
                    
Hamilton Township
                    
3 AAA Drive (O)
1981
2007
--
242
3,218
1,042
242
4,260
4,502
381
100 Horizon Drive (F)
1989
1995
--
205
1,676
218
295
1,804
2,099
669
200 Horizon Drive (F)
1991
1995
--
205
3,027
379
328
3,283
3,611
1,261
300 Horizon Drive (F)
1989
1995
--
379
4,355
1,345
501
5,578
6,079
2,446
500 Horizon Drive (F)
1990
1995
--
379
3,395
779
466
4,087
4,553
1,647
600 Horizon Drive (F)
2002
2002
--
--
7,549
651
685
7,515
8,200
1,331
700 Horizon Drive (O)
2007
2007
--
490
43
16,492
865
16,160
17,025
1,085
2 South Gold Drive (O)
1974
2007
--
476
3,487
388
476
3,875
4,351
297
Princeton
                    
103 Carnegie Center (O)
1984
1996
--
2,566
7,868
2,811
2,566
10,679
13,245
3,703
100 Overlook Center (O)
1988
1997
--
2,378
21,754
4,751
2,378
26,505
28,883
9,212
2 Independence Way (O)
1985
2009
  
1,300
7,246
35
1,300
7,281
8,581
225
5 Vaughn Drive (O)
1987
1995
--
657
9,800
2,393
657
12,193
12,850
4,949
                     
Middlesex County
                    
East Brunswick
                    
377 Summerhill Road (O)
1977
1997
--
649
2,594
458
649
3,052
3,701
955
Edison
                    
343 Thornall Street (O)
1991
2006
--
6,027
39,101
4,892
6,027
43,993
50,020
6,084
Piscataway
                    
30 Knightsbridge Road,
                    
  Building 3 (O)
1977
2004
--
1,030
7,269
339
1,034
7,604
8,638
1,052
30 Knightsbridge Road,
                    
  Building 4 (O)
1977
2004
--
1,433
10,121
375
1,428
10,501
11,929
1,454
                     

 
113
 


                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
30 Knightsbridge Road,
                    
  Building 5 (O)
1977
2004
--
2,979
21,035
10,515
2,979
31,550
34,529
5,419
30 Knightsbridge Road,
                    
  Building 6 (O)
1977
2004
--
448
3,161
4,479
448
7,640
8,088
1,161
Plainsboro
                    
500 College Road East (O)
1984
1998
--
614
20,626
1,710
614
22,336
22,950
6,800
South Brunswick
                    
3 Independence Way (O)
1983
1997
--
1,997
11,391
3,230
1,997
14,621
16,618
4,592
Woodbridge
                    
581 Main Street (O)
1991
1997
16,896
3,237
12,949
24,894
8,115
32,965
41,080
9,710
                     
Monmouth County
                    
Middletown
                    
23 Main Street (O)
1977
2005
32,042
4,336
19,544
8,903
4,336
28,447
32,783
5,238
2 Paragon Way (O)
1989
2005
--
999
4,619
854
999
5,473
6,472
876
3 Paragon Way (O)
1991
2005
--
1,423
6,041
1,929
1,423
7,970
9,393
1,268
4 Paragon Way (O)
2002
2005
--
1,961
8,827
(501)
1,961
8,326
10,287
1,100
One River Center,
                    
  Building 1 (O)
1983
2004
11,500
3,070
17,414
2,302
2,451
20,335
22,786
3,831
One River Center,
                    
  Building 2 (O)
1983
2004
12,900
2,468
15,043
990
2,452
16,049
18,501
2,283
One River Center,
                    
  Building 3 (O)
1984
2004
20,500
4,051
24,790
4,506
4,627
28,720
33,347
3,876
100 Willowbrook Road (O)
1988
2005
--
1,264
5,573
975
1,264
6,548
7,812
881
Neptune
                    
3600 Route 66 (O)
1989
1995
--
1,098
18,146
1,482
1,098
19,628
20,726
6,761
Wall Township
                    
1305 Campus Parkway (O)
1988
1995
--
335
2,560
556
335
3,116
3,451
1,152
1325 Campus Parkway (F)
1988
1995
--
270
2,928
788
270
3,716
3,986
1,579
1340 Campus Parkway (F)
1992
1995
--
489
4,621
1,643
489
6,264
6,753
2,278
1345 Campus Parkway (F)
1995
1997
--
1,023
5,703
1,574
1,024
7,276
8,300
2,628
1350 Campus Parkway (O)
1990
1995
--
454
7,134
1,335
454
8,469
8,923
3,192
1433 Highway 34 (F)
1985
1995
--
889
4,321
1,099
889
5,420
6,309
2,055
1320 Wyckoff Avenue (F)
1986
1995
--
255
1,285
295
255
1,580
1,835
477
1324 Wyckoff Avenue (F)
1987
1995
--
230
1,439
279
230
1,718
1,948
592
                     

 
114
 


                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
Morris County
                    
Florham Park
                    
325 Columbia Parkway (O)
1987
1994
--
1,564
--
15,381
1,564
15,381
16,945
8,198
Morris Plains
                    
250 Johnson Road (O)
1977
1997
--
2,004
8,016
1,175
2,004
9,191
11,195
3,053
201 Littleton Road (O)
1979
1997
--
2,407
9,627
982
2,407
10,609
13,016
3,398
Morris Township
                    
412 Mt. Kemble Avenue (O)
1985
2004
--
4,360
33,167
11,005
4,360
44,172
48,532
6,906
Parsippany
                    
4 Campus Drive (O)
1983
2001
--
5,213
20,984
2,884
5,213
23,868
29,081
5,502
6 Campus Drive (O)
1983
2001
--
4,411
17,796
3,364
4,411
21,160
25,571
5,227
7 Campus Drive (O)
1982
1998
--
1,932
27,788
4,588
1,932
32,376
34,308
8,832
8 Campus Drive (O)
1987
1998
--
1,865
35,456
4,054
1,865
39,510
41,375
12,783
9 Campus Drive (O)
1983
2001
--
3,277
11,796
17,157
5,842
26,388
32,230
6,736
4 Century Drive (O)
1981
2004
--
1,787
9,575
1,584
1,787
11,159
12,946
1,805
5 Century Drive (O)
1981
2004
--
1,762
9,341
2,138
1,762
11,479
13,241
1,472
6 Century Drive (O)
1981
2004
--
1,289
6,848
3,403
1,289
10,251
11,540
2,274
2 Dryden Way (O)
1990
1998
--
778
420
110
778
530
1,308
153
4 Gatehall Drive (O)
1988
2000
--
8,452
33,929
4,247
8,452
38,176
46,628
9,801
2 Hilton Court (O)
1991
1998
--
1,971
32,007
5,508
1,971
37,515
39,486
10,871
1633 Littleton Road (O)
1978
2002
--
2,283
9,550
163
2,355
9,641
11,996
2,516
600 Parsippany Road (O)
1978
1994
--
1,257
5,594
2,839
1,257
8,433
9,690
3,452
1 Sylvan Way (O)
1989
1998
--
1,689
24,699
1,027
1,021
26,394
27,415
7,891
4 Sylvan Way (O)
1983
2009
14,357
2,400
13,486
--
2,400
13,486
15,886
340
5 Sylvan Way (O)
1989
1998
--
1,160
25,214
2,282
1,161
27,495
28,656
8,960
7 Sylvan Way (O)
1987
1998
--
2,084
26,083
2,092
2,084
28,175
30,259
9,341
22 Sylvan Way (O)
2009
2009
--
14,600
44,392
--
14,600
44,392
58,992
1,302
20 Waterview Boulevard (O)
1988
2009
22,923
4,500
27,246
247
4,500
27,493
31,993
828
35 Waterview Boulevard (O)
1990
2006
19,613
5,133
28,059
247
5,133
28,306
33,439
3,380
5 Wood Hollow Road (O)
1979
2004
--
5,302
26,488
12,453
5,302
38,941
44,243
6,649
                     
Passaic County
                    
Clifton
                    
777 Passaic Avenue (O)
1983
1994
--
--
--
6,750
1,100
5,650
6,750
3,281
Totowa
                    
1 Center Court (F)
1999
1999
--
270
1,824
228
270
2,052
2,322
700
2 Center Court (F)
1998
1998
--
191
--
2,255
191
2,255
2,446
677
11 Commerce Way (F)
1989
1995
--
586
2,986
58
586
3,044
3,630
1,081
20 Commerce Way (F)
1992
1995
--
516
3,108
56
516
3,164
3,680
1,138
29 Commerce Way (F)
1990
1995
--
586
3,092
1,010
586
4,102
4,688
1,842
40 Commerce Way (F)
1987
1995
--
516
3,260
195
516
3,455
3,971
1,213
45 Commerce Way (F)
1992
1995
--
536
3,379
509
536
3,888
4,424
1,531
60 Commerce Way (F)
1988
1995
--
526
3,257
761
526
4,018
4,544
1,499
                     

 
115
 


 
                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
80 Commerce Way (F)
1996
1996
--
227
--
1,168
227
1,168
1,395
379
100 Commerce Way (F)
1996
1996
--
226
--
1,169
227
1,168
1,395
379
120 Commerce Way (F)
1994
1995
--
228
--
1,277
228
1,277
1,505
484
140 Commerce Way (F)
1994
1995
--
229
--
1,276
228
1,277
1,505
484
999 Riverview Drive (O)
1988
1995
--
476
6,024
2,006
1,102
7,404
8,506
2,804
                     
Somerset County
                    
Basking Ridge
                    
222 Mt. Airy Road (O)
1986
1996
--
775
3,636
2,895
775
6,531
7,306
2,075
233 Mt. Airy Road (O)
1987
1996
--
1,034
5,033
1,646
1,034
6,679
7,713
2,950
Bernards
                    
106 Allen Road (O)
2000
2000
--
3,853
14,465
4,091
4,093
18,316
22,409
7,068
Branchburg
                    
51 Imclone Drive (O)
1978
2009
3,899
1,900
3,475
--
1,900
3,475
5,375
94
Bridgewater
                    
721 Route 202/206 (O)
1989
1997
--
6,730
26,919
8,353
6,730
35,272
42,002
10,189
Warren
                    
10 Independence Boulevard (O)
1988
2009
15,339
2,300
15,499
--
2,300
15,499
17,799
431
                     
Union County
                    
Clark
                    
100 Walnut Avenue (O)
1985
1994
19,600
--
--
17,008
1,822
15,186
17,008
8,706
Cranford
                    
6 Commerce Drive (O)
1973
1994
--
250
--
3,025
250
3,025
3,275
2,121
11 Commerce Drive (O)
1981
1994
--
470
--
5,488
470
5,488
5,958
3,958
12 Commerce Drive (O)
1967
1997
--
887
3,549
2,208
887
5,757
6,644
1,972
14 Commerce Drive (O)
1971
2003
--
1,283
6,344
894
1,283
7,238
8,521
1,154
20 Commerce Drive (O)
1990
1994
--
2,346
--
20,555
2,346
20,555
22,901
9,221
25 Commerce Drive (O)
1971
2002
--
1,520
6,186
583
1,520
6,769
8,289
2,108
65 Jackson Drive (O)
1984
1994
--
541
--
6,312
542
6,311
6,853
3,878
New Providence
                    
890 Mountain Road (O)
1977
1997
--
2,796
11,185
5,063
3,765
15,279
19,044
4,675
                     
NEW YORK
                    
New York County
                    
New York
                    
125 Broad Street (O)
1970
2007
  
50,191
207,002
10,735
50,191
217,737
267,928
19,355
                     
Rockland County
                    
Suffern
                    
400 Rella Boulevard (O)
1988
1995
--
1,090
13,412
3,151
1,090
16,563
17,653
6,125
                     
Westchester County
                    
Elmsford
                    
11 Clearbrook Road (F)
1974
1997
--
149
2,159
474
149
2,633
2,782
889
75 Clearbrook Road (F)
1990
1997
--
2,314
4,716
107
2,314
4,823
7,137
1,561
100 Clearbrook Road (O)
1975
1997
--
220
5,366
1,310
220
6,676
6,896
2,214
125 Clearbrook Road (F)
2002
2002
--
1,055
3,676
(51)
1,055
3,625
4,680
1,254
150 Clearbrook Road (F)
1975
1997
--
497
7,030
1,090
497
8,120
8,617
2,605
                     

 
116
 


 
                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
175 Clearbrook Road (F)
1973
1997
--
655
7,473
952
655
8,425
9,080
2,909
200 Clearbrook Road (F)
1974
1997
--
579
6,620
1,066
579
7,686
8,265
2,631
250 Clearbrook Road (F)
1973
1997
--
867
8,647
1,386
867
10,033
10,900
3,237
50 Executive Boulevard (F)
1969
1997
--
237
2,617
311
237
2,928
3,165
943
77 Executive Boulevard (F)
1977
1997
--
34
1,104
152
34
1,256
1,290
410
85 Executive Boulevard (F)
1968
1997
--
155
2,507
624
155
3,131
3,286
1,081
101 Executive Boulevard (O)
1971
1997
--
267
5,838
851
267
6,689
6,956
2,236
300 Executive Boulevard (F)
1970
1997
--
460
3,609
359
460
3,968
4,428
1,317
350 Executive Boulevard (F)
1970
1997
--
100
1,793
153
100
1,946
2,046
722
399 Executive Boulevard (F)
1962
1997
--
531
7,191
141
531
7,332
7,863
2,351
400 Executive Boulevard (F)
1970
1997
--
2,202
1,846
835
2,202
2,681
4,883
937
500 Executive Boulevard (F)
1970
1997
--
258
4,183
884
258
5,067
5,325
1,899
525 Executive Boulevard (F)
1972
1997
--
345
5,499
930
345
6,429
6,774
2,262
700 Executive Boulevard (L)
N/A
1997
--
970
--
--
970
--
970
--
3 Odell Plaza (O)
1984
2003
--
1,322
4,777
2,301
1,322
7,078
8,400
1,625
5 Skyline Drive (F)
1980
2001
--
2,219
8,916
1,484
2,219
10,400
12,619
3,001
6 Skyline Drive (F)
1980
2001
--
740
2,971
24
740
2,995
3,735
1,100
555 Taxter Road (O)
1986
2000
--
4,285
17,205
5,096
4,285
22,301
26,586
6,311
565 Taxter Road (O)
1988
2000
--
4,285
17,205
3,814
4,233
21,071
25,304
6,268
570 Taxter Road (O)
1972
1997
--
438
6,078
1,146
438
7,224
7,662
2,334
1 Warehouse Lane (I)
1957
1997
--
3
268
248
3
516
519
159
2 Warehouse Lane (I)
1957
1997
--
4
672
113
4
785
789
267
3 Warehouse Lane (I)
1957
1997
--
21
1,948
526
21
2,474
2,495
942
4 Warehouse Lane (I)
1957
1997
--
84
13,393
2,640
85
16,032
16,117
5,431
5 Warehouse Lane (I)
1957
1997
--
19
4,804
1,462
19
6,266
6,285
2,157
6 Warehouse Lane (I)
1982
1997
--
10
4,419
570
10
4,989
4,999
1,532
1 Westchester Plaza (F)
1967
1997
--
199
2,023
154
199
2,177
2,376
706
2 Westchester Plaza (F)
1968
1997
--
234
2,726
245
234
2,971
3,205
989
3 Westchester Plaza (F)
1969
1997
--
655
7,936
697
655
8,633
9,288
2,930
4 Westchester Plaza (F)
1969
1997
--
320
3,729
486
320
4,215
4,535
1,304
5 Westchester Plaza (F)
1969
1997
--
118
1,949
522
118
2,471
2,589
671
6 Westchester Plaza (F)
1968
1997
--
164
1,998
179
164
2,177
2,341
739
7 Westchester Plaza (F)
1972
1997
--
286
4,321
240
286
4,561
4,847
1,473
8 Westchester Plaza (F)
1971
1997
--
447
5,262
960
447
6,222
6,669
2,056
Hawthorne
                    
200 Saw Mill River Road (F)
1965
1997
--
353
3,353
469
353
3,822
4,175
1,268
1 Skyline Drive (O)
1980
1997
--
66
1,711
301
66
2,012
2,078
696
2 Skyline Drive (O)
1987
1997
--
109
3,128
263
109
3,391
3,500
1,099
4 Skyline Drive (F)
1987
1997
--
363
7,513
1,609
363
9,122
9,485
3,232
7 Skyline Drive (O)
1987
1998
--
330
13,013
1,975
330
14,988
15,318
4,515
                     

 
117
 


                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
8 Skyline Drive (F)
1985
1997
--
212
4,410
1,797
212
6,207
6,419
2,425
10 Skyline Drive (F)
1985
1997
--
134
2,799
632
134
3,431
3,565
1,081
11 Skyline Drive (F)
1989
1997
--
--
4,788
415
--
5,203
5,203
1,882
12 Skyline Drive (F)
1999
1999
--
1,562
3,254
1,315
1,320
4,811
6,131
1,966
14 Skyline Drive (L)
N/A
2002
--
964
--
16
980
--
980
--
15 Skyline Drive (F)
1989
1997
--
--
7,449
471
--
7,920
7,920
2,672
16 Skyline Drive (L)
N/A
2002
--
850
--
31
881
--
881
--
17 Skyline Drive (O)
1989
1997
--
--
7,269
1,209
--
8,478
8,478
2,915
19 Skyline Drive (O)
1982
1997
--
2,355
34,254
1,162
2,356
35,415
37,771
11,366
Tarrytown
                    
200 White Plains Road (O)
1982
1997
--
378
8,367
1,351
378
9,718
10,096
3,248
220 White Plains Road (O)
1984
1997
--
367
8,112
1,426
367
9,538
9,905
3,169
230 White Plains Road (R)
1984
1997
--
124
1,845
107
124
1,952
2,076
611
White Plains
                    
1 Barker Avenue (O)
1975
1997
--
208
9,629
1,076
207
10,706
10,913
3,568
3 Barker Avenue (O)
1983
1997
--
122
7,864
1,952
122
9,816
9,938
3,712
50 Main Street (O)
1985
1997
--
564
48,105
9,510
564
57,615
58,179
18,882
11 Martine Avenue (O)
1987
1997
--
127
26,833
6,492
127
33,325
33,452
11,371
1 Water Street (O)
1979
1997
--
211
5,382
1,200
211
6,582
6,793
2,443
Yonkers
                    
100 Corporate Boulevard (F)
1987
1997
--
602
9,910
1,424
602
11,334
11,936
3,814
200 Corporate Boulevard
                    
  South (F)
1990
1997
--
502
7,575
816
502
8,391
8,893
2,541
250 Corporate Boulevard
                    
  South (L)
N/A
2002
--
1,028
--
562
1,139
451
1,590
--
1 Enterprise Boulevard (L)
N/A
1997
--
1,379
--
1
1,380
--
1,380
--
1 Executive Boulevard (O)
1982
1997
--
1,104
11,904
2,499
1,105
14,402
15,507
4,821
2 Executive Plaza (R)
1986
1997
--
89
2,439
3
89
2,442
2,531
788
3 Executive Plaza (O)
1987
1997
--
385
6,256
2,197
385
8,453
8,838
3,380
4 Executive Plaza (F)
1986
1997
--
584
6,134
2,051
584
8,185
8,769
3,012
6 Executive Plaza (F)
1987
1997
--
546
7,246
697
546
7,943
8,489
2,519
1 Odell Plaza (F)
1980
1997
--
1,206
6,815
1,285
1,206
8,100
9,306
2,554
5 Odell Plaza (F)
1983
1997
--
331
2,988
799
331
3,787
4,118
1,163
7 Odell Plaza (F)
1984
1997
--
419
4,418
524
419
4,942
5,361
1,605
                     
PENNSYLVANIA
                    
Chester County
                    
Berwyn
                    
1000 Westlakes Drive (O)
1989
1997
--
619
9,016
517
619
9,533
10,152
3,248
1055 Westlakes Drive (O)
1990
1997
--
1,951
19,046
3,542
1,951
22,588
24,539
8,173
                     

 
118
 


                     
MACK-CALI REALTY CORPORATION
  
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
  
December 31, 2009
  
(dollars in thousands)
  
                       
                 
SCHEDULE III
  
                       
             
Gross Amount at Which
    
           
Costs
Carried at Close of
    
       
Initial Costs
Capitalized
Period (a)
    
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
  
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
  
                       
1205 Westlakes Drive (O)
1988
1997
--
1,323
20,098
2,644
1,323
22,742
24,065
7,596
  
1235 Westlakes Drive (O)
1986
1997
--
1,417
21,215
3,661
1,418
24,875
26,293
8,636
  
                       
Delaware County
                      
Lester
                      
100 Stevens Drive (O)
1986
1996
--
1,349
10,018
3,802
1,349
13,820
15,169
5,014
  
200 Stevens Drive (O)
1987
1996
--
1,644
20,186
5,549
1,644
25,735
27,379
9,375
  
300 Stevens Drive (O)
1992
1996
--
491
9,490
1,574
491
11,064
11,555
3,827
  
Media
                      
1400 Providence Rd,
                      
  Center I (O)
1986
1996
--
1,042
9,054
2,260
1,042
11,314
12,356
4,039
  
1400 Providence Rd,
                      
  Center II (O)
1990
1996
--
1,543
16,464
4,195
1,544
20,658
22,202
7,181
  
                       
Montgomery County
                      
Bala Cynwyd
                      
150 Monument Road (O)
1981
2004
--
2,845
14,780
3,506
2,845
18,286
21,131
2,848
  
Blue Bell
                      
4 Sentry Parkway (O)
1982
2003
--
1,749
7,721
832
1,749
8,553
10,302
1,281
  
16 Sentry Parkway (O)
1988
2002
--
3,377
13,511
1,491
3,377
15,002
18,379
4,141
  
18 Sentry Parkway (O)
1988
2002
--
3,515
14,062
1,658
3,515
15,720
19,235
4,217
  
King of Prussia
                      
2200 Renaissance Blvd (O)
1985
2002
16,619
5,347
21,453
3,481
5,347
24,934
30,281
6,982
  
Lower Providence
                      
1000 Madison Avenue (O)
1990
1997
--
1,713
12,559
2,845
1,714
15,403
17,117
4,962
  
Plymouth Meeting
                      
1150 Plymouth Meeting
                      
  Mall (O)
1970
1997
--
125
499
30,424
6,219
24,829
31,048
8,117
  
Five Sentry Parkway East (O)
1984
1996
--
642
7,992
3,193
642
11,185
11,827
3,011
  
Five Sentry Parkway West (O)
1984
1996
--
268
3,334
606
268
3,940
4,208
1,191
  
                       
CONNETICUT
                      
Fairfield County
                      
Norwalk
                      
40 Richards Avenue (O)
1985
1998
--
1,087
18,399
3,655
1,087
22,054
23,141
6,355
  
Stamford
                      
1266 East Main Street (O)
1984
2002
16,614
6,638
26,567
4,176
6,638
30,743
37,381
7,416
  
                       

 
119
 


                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2009
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized
Period (a)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location (b)
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (c)
                     
419 West Avenue (F)
1986
1997
--
4,538
9,246
1,466
4,538
10,712
15,250
3,876
500 West Avenue (F)
1988
1997
--
415
1,679
203
415
1,882
2,297
701
550 West Avenue (F)
1990
1997
--
1,975
3,856
77
1,975
3,933
5,908
1,253
600 West Avenue (F)
1999
1999
--
2,305
2,863
839
2,305
3,702
6,007
955
650 West Avenue (F)
1998
1998
--
1,328
--
3,292
1,328
3,292
4,620
995
                     
DISTRICT OF COLUMBIA
                    
Washington,
                    
1201 Connecticut Avenue,
                    
  NW (O)
1940
1999
--
14,228
18,571
4,775
14,228
23,346
37,574
6,514
1400 L Street, NW (O)
1987
1998
--
13,054
27,423
7,432
13,054
34,855
47,909
10,458
                     
MARYLAND
                    
Prince George’s County
                    
Greenbelt
                    
9200 Edmonston Road (O)
1973/03
2006
4,804
1,547
4,131
256
1,547
4,387
5,934
690
6301 Ivy Lane (O)
1979/95
2006
6,297
5,168
14,706
984
5,168
15,690
20,858
1,987
6303 Ivy Lane (O)
1980/03
2006
--
5,115
13,860
17
5,115
13,877
18,992
1,790
6305 Ivy Lane (O)
1982/95
2006
6,694
5,615
14,420
673
5,615
15,093
20,708
2,160
6404 Ivy Lane (O)
1987
2006
--
7,578
20,785
587
7,578
21,372
28,950
2,970
6406 Ivy Lane (O)
1991
2006
--
7,514
21,152
(178)
7,514
20,974
28,488
2,007
6411 Ivy Lane (O)
1984/05
2006
--
6,867
17,470
1,166
6,867
18,636
25,503
2,627
Lanham
                    
4200 Parliament Place (O)
1989
1998
--
2,114
13,546
621
1,393
14,888
16,281
5,059
                     
                     
Projects Under Development
                    
  and Developable Land
    
--
125,921
12,395
  
125,921
12,395
138,316
22
                     
Furniture, Fixtures
                    
  and Equipment
    
--
    
9,358
  
9,358
9,358
7,779
                     
TOTALS
    
$755,003
$763,807
$3,640,194
$782,207
$771,794
$4,414,414
$5,186,208
$1,153,223
                     

(a)
The aggregate cost for federal income tax purposes at December 31, 2009 was approximately $3.1 billion.

(b)    Legend of Property Codes:
(O)=Office Property                                                   (R)=Stand-alone Retail Property
(F)=Office/Flex Property                                           (L)=Land Lease
(I)=Industrial/Warehouse Property

(c)      Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to 40 years.

 
120
 

MACK-CALI REALTY CORPORATION
NOTE TO SCHEDULE III



Changes in rental properties and accumulated depreciation for the periods ended December 31, 2009, 2008 and 2007 are as follows: (dollars in thousands)

 
2009
2008
2007
Rental Properties
      
Balance at beginning of year
$4,963,780
$4,885,429
$4,573,587
Additions
282,122
92,129
378,724
Properties sold
--
--
(47,394)
Retirements/disposals
     (59,694)
    (13,778)
    (19,488)
Balance at end of year
$5,186,208
$4,963,780
$4,885,429
       
       
Accumulated Depreciation
      
Balance at beginning of year
$1,040,778
$   907,013
$  796,793
Depreciation expense
155,613
147,543
140,240
Properties sold
--
--
(11,224)
Impairment charge on rental property
       (1,009)
--
--
Retirements/disposals
          (42,159)
    (13,778)
    (18,796)
Balance at end of year
$1,153,223
$1,040,778
$   907,013

 
121
 

MACK-CALI REALTY CORPORATION

Signatures


Pursuant to the requirements of Section 13 or 15(d) 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 10, 2010                                                                       /s/ Barry Lefkowitz                                                      
Barry Lefkowitz
Executive Vice President and
  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 10, 2010
 William L. Mack    
     
 /s/ Mitchell E. Hersh  President and Chief Executive  February 10, 2010
 Mitchell E. Hersh   Officer and Director  
     
 /s/ Barry Lefkowitz  Executive Vice President and February10, 2010
 Barry Lefkowitz    Chief Financial Officer  
     
 /s/ Martin S. Berger  Director  February 10, 2010
 Martin S. Berger    
     
 /s/ Alan S. Bernikow  Director   February 10, 2010
 Alan S. Bernikow    
     
 /s/ John R. Cali   Director 
February 10, 2010
 John R. Cali    
     
 /s/ Kenneth M. Duberstein   Director 
February 10, 2010
 Kenneth M. Duberstein    
     
 
 
 
       


 
122
 
 
 
 
 
 
 Name  Title  Date
     
 /s/ Nathan Gantcher  Director   February 10, 2010
 Nathan Gantcher    
     
 /s/ David S. Mack   Director   February 10, 2010
 David S. Mack    
     
 /s/ Alan G. Philibosian  Director   February 10, 2010
 Alan G. Philibosian    
     
 /s/ Irvin D. Reid  Director   February 10, 2010
 Irvin D. Reid    
     
 /s/ Vincent Tese  Director   February 10, 2010
 Vincent Tese    
     
 /s/ Roy J. Zuckerberg  Director   February 10, 2010
 Roy J. Zuckerberg    
 
 
 
 
 


 
123
 

MACK-CALI REALTY CORPORATION

EXHIBIT INDEX


Exhibit
Number
  
Exhibit Title
     
3.1
  
Articles of Restatement of Mack-Cali Realty Corporation dated September 18, 2009 (filed as Exhibit 3.2 to the Company’s Form 8-K dated September 17, 2009 and 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
  
Amendment No. 1 to the Amended and Restated Bylaws of Mack-Cali Realty Corporation dated March 4, 2003, (filed as Exhibit 3.3 to the Company’s Form 10-Q dated March 31, 2003 and incorporated herein by reference).
     
3.4
  
Amendment No. 2 to the Mack-Cali Realty Corporation Amended and Restated Bylaws dated May 24, 2006 (filed as Exhibit 3.1 to the Company’s Form 8-K dated May 24, 2006 and incorporated herein by reference).
     
3.5
  
Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated December 11, 1997 (filed as Exhibit 10.110 to the Company’s Form 8-K dated December 11, 1997 and incorporated herein by reference).
     
3.6
  
Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated August 21, 1998 (filed as Exhibit 3.1 to the Company’s and the Operating Partnership’s Registration Statement on Form S-3, Registration No. 333-57103, and incorporated herein by reference).
     
3.7
  
Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated July 6, 1999 (filed as Exhibit 10.1 to the Company’s Form 8-K dated July 6, 1999 and incorporated herein by reference).
     
3.8
  
Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated September 30, 2003 (filed as Exhibit 3.7 to the Company’s Form 10-Q dated September 30, 2003 and incorporated herein by reference).
     
3.9
  
Certificate of Designation of Series B Preferred Operating Partnership Units of Limited Partnership Interest of Mack-Cali Realty, L.P. (filed as Exhibit 10.101 to the Company’s Form 8-K dated December 11, 1997 and incorporated herein by reference).
     
3.10
  
Certificate of Designation for the 8% Series C Cumulative Redeemable Perpetual Preferred Operating Partnership Units dated March 14, 2003 (filed as Exhibit 3.2 to the Company’s Form 8-K dated March 14, 2003 and incorporated herein by reference).
     

 
124
 

 
Exhibit
Number
  
Exhibit Title
     
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 and incorporated herein by reference).
     
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 Operating Partnership’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 Operating Partnership’s Form 8-K dated March 16, 1999 and incorporated herein by reference).
     
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 Operating Partnership’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 Operating Partnership’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 Operating Partnership’s Form 8-K dated January 29, 2001 and incorporated herein by reference).
     
4.8
  
Supplemental Indenture No. 5 dated as of December 20, 2002, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated December 20, 2002 and incorporated herein by reference).
     
4.9
  
Supplemental Indenture No. 6 dated as of March 14, 2003, by and between 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 14, 2003 and incorporated herein by reference).
     
4.10
  
Supplemental Indenture No. 7 dated as of June 12, 2003, by and between 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 June 12, 2003 and incorporated herein by reference).
     
4.11
  
Supplemental Indenture No. 8 dated as of February 9, 2004, by and between 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 February 9, 2004 and incorporated herein by reference).
     
4.12
  
Supplemental Indenture No. 9 dated as of March 22, 2004, by and between 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 22, 2004 and incorporated herein by reference).

 
125
 


Exhibit
Number
  
Exhibit Title
     
4.13
  
Supplemental Indenture No. 10 dated as of January 25, 2005, by and between 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 25, 2005 and incorporated herein by reference).
     
4.14
  
Supplemental Indenture No. 11 dated as of April 15, 2005, by and between 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 April 15, 2005 and incorporated herein by reference).
     
4.15
  
Supplemental Indenture No. 12 dated as of November 30, 2005, by and between 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 November 30, 2005 and incorporated herein by reference).
     
4.16
  
Supplemental Indenture No. 13 dated as of January 24, 2006, by and between 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 18, 2006 and incorporated herein by reference).
     
4.17
  
Supplemental Indenture No. 14 dated as of August 14, 2009, by and between 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 August 14, 2009 and incorporated herein by reference).
     
4.18
  
Deposit Agreement dated March 14, 2003 by and among Mack-Cali Realty Corporation, EquiServe Trust Company, N.A., and the holders from time to time of the Depositary Receipts described therein (filed as Exhibit 4.1 to the Company’s Form 8-K dated March 14, 2003 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
 
  
Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.4 to the Company's Form 8-K dated December 9, 2008 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
  
Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
     
10.5
  
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).
     
10.6
  
Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.8 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
     
10.7
  
Employment Agreement dated as of December 5, 2000 between Michael Grossman and Mack-Cali Realty Corporation (filed as Exhibit 10.5 to the Company’s Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).

 
126
 


Exhibit
Number
  
Exhibit Title
     
10.8
  
Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.6 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
     
10.9
  
Employment Agreement dated as of May 9, 2006 by and between Mark Yeager and Mack-Cali Realty Corporation (filed as Exhibit 10.15 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.10
  
Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.7 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
     
10.11
  
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).
     
10.12
  
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).
     
10.13
  
Restricted Share Award Agreement dated as of July 1, 1999 between Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.13 to the Company’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).
     
10.14
  
Restricted Share Award Agreement dated as of March 12, 2001 between Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.10 to the Company’s Form 10-Q dated March 31, 2001 and incorporated herein by reference).
     
10.15
  
Restricted Share Award Agreement dated as of March 12, 2001 between Michael Grossman and Mack-Cali Realty Corporation (filed as Exhibit 10.11 to the Company’s Form 10-Q dated March 31, 2001 and incorporated herein by reference).
     
10.16
  
Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.17
  
Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.18
  
First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.19
  
Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.7 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.20
  
Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.8 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 
127
 



Exhibit
Number
  
Exhibit Title
     
10.21
  
First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.9 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.22
  
Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.10 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.23
  
Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.11 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.24
  
First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.12 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.25
  
First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated March 12, 2001 between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.13 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.26
  
Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.14 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.27
  
Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.15 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.28
  
Restricted Share Award Agreement dated December 6, 1999 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.16 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.29
  
First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated December 6, 1999 between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.17 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.30
  
First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated March 12, 2001 between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.18 to the Company’s Form 8-K dated January 2, 2003 and incorporated herein by reference).
     
10.31
  
Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company’s Form 8-K dated December 2, 2003 and incorporated herein by reference).
     


 
128
 


Exhibit
Number
  
Exhibit Title
     
10.32
  
Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company’s Form 8-K dated December 2, 2003 and incorporated herein by reference).
     
10.33
  
Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company’s Form 8-K dated December 2, 2003 and incorporated herein by reference).
     
10.34
  
Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.6 to the Company’s Form 8-K dated December 2, 2003 and incorporated herein by reference).
     
10.35
  
Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Company’s Form 8-K dated December 2, 2003 and incorporated herein by reference).
     
10.36
  
Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.8 to the Company’s Form 8-K dated December 2, 2003 and incorporated herein by reference).
     
10.37
  
Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.9 to the Company’s Form 8-K dated December 2, 2003 and incorporated herein by reference).
     
10.38
  
Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.10 to the Company’s Form 8-K dated December 2, 2003 and incorporated herein by reference).
     
10.39
  
Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company’s Form 8-K dated December 7, 2004 and incorporated herein by reference).
     
10.40
  
Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Company’s Form 8-K dated December 7, 2004 and incorporated herein by reference).
     
10.41
  
Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.4 to the Company’s Form 8-K dated December 7, 2004 and incorporated herein by reference).
     
10.42
  
Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company’s Form 8-K dated December 7, 2004 and incorporated herein by reference).
     


 
129
 


Exhibit
Number
  
Exhibit Title
     
10.43
  
Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.6 to the Company’s Form 8-K dated December 7, 2004 and incorporated herein by reference).
     
10.44
  
Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Company’s Form 8-K dated December 7, 2004 and incorporated herein by reference).
     
10.45
  
Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.8 to the Company’s Form 8-K dated December 7, 2004 and incorporated herein by reference).
     
10.46
  
Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.9 to the Company’s Form 8-K dated December 7, 2004 and incorporated herein by reference).
     
10.47
  
Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company’s Form 8-K dated December 6, 2005 and incorporated herein by reference).
     
10.48
  
Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Company’s Form 8-K dated December 6, 2005 and incorporated herein by reference).
     
10.49
  
Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.4 to the Company’s Form 8-K dated December 6, 2005 and incorporated herein by reference).
     
10.50
  
Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company’s Form 8-K dated December 6, 2005 and incorporated herein by reference).
     
10.51
  
Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.6 to the Company’s Form 8-K dated December 6, 2005 and incorporated herein by reference).
     
10.52
  
Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Company’s Form 8-K dated December 6, 2005 and incorporated herein by reference).
     
10.53
  
Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.8 to the Company’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 
130
 


Exhibit
Number
  
Exhibit Title
     
10.54
  
Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.9 to the Company’s Form 8-K dated December 6, 2005 and incorporated herein by reference).
     
10.55
  
Restricted Share Award Agreement by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.16 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.56
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.57
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.58
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.59
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.4 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.60
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.61
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.6 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.62
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.7 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.63
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.8 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.64
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.9 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.65
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.10 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).

 
131
 


Exhibit
Number
  
Exhibit Title
     
10.66
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.11 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.67
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.12 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.68
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.13 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.69
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.14 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.70
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.15 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.71
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.16 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.72
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.17 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.73
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.18 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.74
  
Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.19 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.75
  
Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.20 to the Company’s Form 8-K dated December 5, 2006 and incorporated herein by reference).
     
10.76
  
Form of Multi-Year Restricted Share Award Agreement (filed as Exhibit 10.1 to the Company’s Form 8-K dated September 12, 2007 and incorporated herein by reference).
     
10.77
  
Form of Tax Gross-Up Agreement (filed as Exhibit 10.2 to the Company’s Form 8-K dated September 12, 2007 and incorporated herein by reference).
     
10.78
  
Form of Restricted Share Award Agreement effective December 4, 2007 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman, Mark Yeager and Roger W. Thomas (filed as Exhibit 10.1 to the Company’s Form 8-K dated December 4, 2007 and incorporated herein by reference).
     

 
132
 


Exhibit
Number
  
Exhibit Title
     
10.79
  
Form of Tax Gross-Up Agreement effective December 4, 2007 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman, Mark Yeager and Roger W. Thomas (filed as Exhibit 10.2 to the Company’s Form 8-K dated December 4, 2007 and incorporated herein by reference).
     
10.80
  
Form of Restricted Share Award Agreement effective December 4, 2007 by and between Mack-Cali Realty Corporation and each of William L. Mack, Martin S. Berger, Alan S. Bernikow, John R. Cali, Kenneth M. Duberstein, Nathan Gantcher, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg (filed as Exhibit 10.3 to the Company's Form 8-K dated December 4, 2007 and incorporated herein by reference).
     
10.81
  
Form of Restricted Share Award Agreement effective December 9, 2008 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman, Mark Yeager and Roger W. Thomas (filed as Exhibit 10.1 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
     
10.82
  
Form of Restricted Share Award Agreement effective December 9, 2008 by and between Mack-Cali Realty Corporation and each of William L. Mack, Alan S. Bernikow, John R. Cali, Kenneth M. Duberstein, Nathan Gantcher, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese, Robert F. Weinberg and Roy J. Zuckerberg (filed as Exhibit 10.2 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
     
10.83
  
Form of Restricted Share Award Agreement effective December 8, 2009 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman, Mark Yeager and Roger W. Thomas (filed as Exhibit 10.1 to the Company's Form 8-K dated December 8, 2009 and incorporated herein by reference).
     
10.84
  
Form of Restricted Share Award Agreement effective December 8, 2009 by and between Mack-Cali Realty Corporation and each of William L. Mack, Martin S. Berger, Alan S. Bernikow, John R. Cali, Kenneth M. Duberstein, Nathan Gantcher, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg (filed as Exhibit 10.2 to the Company's Form 8-K dated December 8, 2009 and incorporated herein by reference).
     
10.85
 
  
Amended and Restated Revolving Credit Agreement dated as of September 27, 2002, among Mack-Cali Realty, L.P. and JPMorgan Chase Bank, Fleet National Bank and Other Lenders Which May Become Parties Thereto with JPMorgan Chase Bank, as administrative agent, swing lender and fronting bank, Fleet National Bank and Commerzbank AG, New York and Grand Cayman branches as syndication agents, Bank of America, N.A. and Wells Fargo Bank, National Association, as documentation agents, and J.P. Morgan Securities Inc. and Fleet Securities, Inc, as arrangers (filed as Exhibit 10.1 to the Company’s Form 8-K dated September 27, 2002 and incorporated herein by reference).
     
10.86
  
Second Amended and Restated Revolving Credit Agreement among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., Bank of America, N.A., and other lending institutions that are or may become a party to the Second Amended and Restated Revolving Credit Agreement dated as of November 23, 2004 (filed as Exhibit 10.1 to the Company’s Form 8-K dated November 23, 2004 and incorporated herein by reference).
     
10.87
  
Extension and Modification Agreement dated as of September 16, 2005 by and among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent, and the several Lenders party thereto (filed as Exhibit 10.1 to the Company’s Form 8-K dated September 16, 2005 and incorporated herein by reference).

 
133
 


Exhibit
Number
  
Exhibit Title
     
10.88
  
Second Modification Agreement dated as of July 14, 2006 by and among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent, and the several Lenders party thereto (filed as Exhibit 10.1 to the Company’s Form 8-K dated July 14, 2006 and incorporated herein by reference).
     
10.89
  
Extension and Third Modification Agreement dated as of June 22, 2007 by and among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent, and the several Lenders party thereto (filed as Exhibit 10.1 to the Company’s Form 8-K dated June 22, 2007 and incorporated herein by reference).
     
10.90
  
Fourth Modification Agreement dated as of September 21, 2007 by and among Mack Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent and the several Lenders party thereto (filed as Exhibit 10.1 to the Company’s Form 8-K dated September 21, 2007 and incorporated herein by reference).
     
10.91
  
Amended and Restated Master Loan Agreement dated as of November 12, 2004 among Mack-Cali Realty, L.P., and Affiliates of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P., as Borrowers, Mack-Cali Realty Corporation and Mack-Cali Realty L.P., as Guarantors and The Prudential Insurance Company of America, as Lender (filed as Exhibit 10.1 to the Company’s Form 8-K dated November 12, 2004 and incorporated herein by reference).
     
10.92
  
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).
     
10.93
  
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).
     
10.94
  
Employee Stock Option Plan of Mack-Cali Realty Corporation (filed as Exhibit 10.1 to the Company’s Post-Effective Amendment No. 1 to Form S-8, Registration No. 333-44443, and incorporated herein by reference).
     
10.95
  
Director Stock Option Plan of Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Company’s Post-Effective Amendment No. 1 to Form S-8, Registration No. 333-44443, and incorporated herein by reference).
     
10.96
  
2000 Employee Stock Option Plan (filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8, Registration No. 333-52478, and incorporated herein by reference), as amended by the First Amendment to the 2000 Employee Stock Option Plan (filed as Exhibit 10.17 to the Company’s Form 10-Q dated June 30, 2002 and incorporated herein by reference).
     
10.97
  
Amended and Restated 2000 Director Stock Option Plan (filed as Exhibit 10.2 to the Company’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8, Registration No. 333-100244, and incorporated herein by reference).
     
10.98
  
Mack-Cali Realty Corporation 2004 Incentive Stock Plan (filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8, Registration No. 333-116437, and incorporated herein by reference).
     
10.99
  
Deferred Compensation Plan for Directors (filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8, Registration No. 333-80081, and incorporated herein by reference).

 
134
 


Exhibit
Number
  
Exhibit Title
     
10.100
  
Amended and Restated Mack-Cali Realty Corporation Deferred Compensation Plan for Directors (filed as Exhibit 10.3 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
     
10.101
  
Form of Indemnification Agreement by and between Mack-Cali Realty Corporation and each of William L. Mack, John J. Cali, Mitchell E. Hersh, John R. Cali, David S. Mack, Martin S. Berger, Alan S. Bernikow, Kenneth M. Duberstein, Martin D. Gruss, Nathan Gantcher, Vincent Tese, Roy J. Zuckerberg, Alan G. Philibosian, Irvin D. Reid, Robert F. Weinberg, Barry Lefkowitz, Roger W. Thomas, Michael A. Grossman, Mark Yeager, Anthony Krug, Dean Cingolani, Anthony DeCaro Jr., Mark Durno, William Fitzpatrick, John Kropke, Nicholas Mitarotonda, Jr., Michael Nevins, Virginia Sobol, Albert Spring, Daniel Wagner, Deborah Franklin, John Marazzo, Christopher DeLorenzo, Jeffrey Warner, Diane Chayes and James Corrigan (filed as Exhibit 10.28 to the Company’s Form 10-Q dated September 30, 2002 and incorporated herein by reference).
     
10.102
  
Indemnification Agreement dated October 22, 2002 by and between Mack-Cali Realty Corporation and John Crandall (filed as Exhibit 10.29 to the Company’s Form 10-Q dated September 30, 2002 and incorporated herein by reference).
     
10.103
  
Second Amendment to Contribution and Exchange Agreement, dated as of June 27, 2000, between RMC Development Company, LLC f/k/a Robert Martin Company, LLC, Robert Martin Eastview North Company, L.P., the Company and the Operating Partnership (filed as Exhibit 10.44 to the Company’s Form 10-K dated December 31, 2002 and incorporated herein by reference).
     
10.104
  
Limited Partnership Agreement of Meadowlands Mills/Mack-Cali Limited Partnership by and between Meadowlands Mills Limited Partnership, Mack-Cali Meadowlands Entertainment L.L.C. and Mack-Cali Meadowlands Special L.L.C. dated November 25, 2003 (filed as Exhibit 10.1 to the Company’s Form 8-K dated December 3, 2003 and incorporated herein by reference).
     
10.105
  
Redevelopment Agreement by and between the New Jersey Sports and Exposition Authority and Meadowlands Mills/Mack-Cali Limited Partnership dated December 3, 2003 (filed as Exhibit 10.2 to the Company’s Form 8-K dated December 3, 2003 and incorporated herein by reference).
     
10.106
  
First Amendment to Redevelopment Agreement by and between the New Jersey Sports and Exposition Authority and Meadowlands Mills/Mack-Cali Limited Partnership dated October 5, 2004 (filed as Exhibit 10.54 to the Company’s Form 10-Q dated September 30, 2004 and incorporated herein by reference).
     
10.107
  
Letter Agreement by and between Mack-Cali Realty Corporation and The Mills Corporation dated October 5, 2004 (filed as Exhibit 10.55 to the Company’s Form 10-Q dated September 30, 2004 and incorporated herein by reference).
     
10.108
  
First Amendment to Limited Partnership Agreement of Meadowlands Mills/Mack-Cali Limited Partnership by and between Meadowlands Mills Limited Partnership, Mack-Cali Meadowlands Entertainment L.L.C. and Mack-Cali Meadowlands Special L.L.C. dated as of June 30, 2005 (filed as Exhibit 10.66 to the Company’s Form 10-Q dated June 30, 2005 and incorporated herein by reference).
     

 
135
 


Exhibit
Number
  
Exhibit Title
     
10.109
  
Mack-Cali Rights, Obligations and Option Agreement by and between Meadowlands Developer Limited Partnership, Meadowlands Limited Partnership, Meadowlands Developer Holding Corp., Meadowlands Mack-Cali GP, L.L.C., Mack-Cali Meadowlands Special, L.L.C., Baseball Meadowlands Mills/Mack-Cali Limited Partnership, A-B Office Meadowlands Mack-Cali Limited Partnership, C-D Office Meadowlands Mack-Cali Limited Partnership, Hotel Meadowlands Mack-Cali Limited Partnership and ERC Meadowlands Mills/Mack-Cali Limited Partnership dated November 22, 2006 (filed as Exhibit 10.92 to the Company’s Form 10-K dated December 31, 2006 and incorporated herein by reference).
     
10.110
  
Redemption Agreement by and among Meadowlands Developer Limited Partnership, Meadowlands Developer Holding Corp., Mack-Cali Meadowlands entertainment L.L.C., Mack-Cali Meadowlands Special L.L.C., and Meadowlands Limited Partnership dated November 22, 2006 (filed as Exhibit 10.93 to the Company’s Form 10-K dated December 31, 2006 and incorporated herein by reference).
     
10.111
  
Contribution and Exchange Agreement by and between Mack-Cali Realty, L.P. and Tenth Springhill Lake Associates L.L.L.P., Eleventh Springhill Lake Associates L.L.L.P., Twelfth Springhill Lake Associates L.L.L.P., Fourteenth Springhill Lake Associates L.L.L.P., each a Maryland limited liability limited partnership, Greenbelt Associates, a Maryland general partnership, and Sixteenth Springhill Lake Associates L.L.L.P., a Maryland limited liability limited partnership, and certain other natural persons, dated as of November 21, 2005 (filed as Exhibit 10.69 to the Company’s Form 10-K dated December 31, 2005 and incorporated herein by reference).
     
10.112
  
Membership Interest Purchase and Contribution Agreement by and among Mr. Stanley C. Gale, SCG Holding Corp., Mack-Cali Realty Acquisition Corp. and Mack-Cali Realty, L.P. dated as of March 7, 2006 (filed as Exhibit 10.1 to the Company’s Form 8-K dated March 7, 2006 and incorporated herein by reference).
     
10.113
  
Amendment No. 1 to Membership Interest Purchase and Contribution Agreement dated as of March 31, 2006 (filed as Exhibit 10.1 to the Company’s Form 8-K dated March 28, 2006 and incorporated herein by reference).
     
10.114
  
Amendment No. 2 to Membership Interest Purchase and Contribution Agreement dated as of May 9, 2006 (filed as Exhibit 10.1 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.115
  
Amendment No. 8 to Membership Interest Purchase and Contribution Agreement by and among Mr. Stanley C. Gale, SCG Holding Corp., Mack-Cali Realty Acquisition Corp. and Mack-Cali Realty, L.P. dated as of May 23, 2007 (filed as Exhibit 10.1 to the Company’s Form 8-K dated May 23, 2007 and incorporated herein by reference).
     
10.116
  
Contribution and Sale Agreement by and among Gale SLG NJ LLC, a Delaware limited liability company, Gale SLG NJ MEZZ LLC, a Delaware limited liability company, and Gale SLG RIDGEFIELD MEZZ LLC, a Delaware limited liability company and Mack-Cali Ventures L.L.C. dated as of March 7, 2006 (filed as Exhibit 10.2 to the Company’s Form 8-K dated March 7, 2006 and incorporated herein by reference).
     

 
136
 


Exhibit
Number
  
Exhibit Title
     
10.117
  
First Amendment to Contribution and Sale Agreement by and among GALE SLG NJ LLC, a Delaware limited liability company, GALE SLG NJ MEZZ LLC, a Delaware limited liability company, and GALE SLG RIDGEFIELD MEZZ LLC, a Delaware limited liability company, and Mack-Cali Ventures L.L.C., a Delaware limited liability company, dated as of May 9, 2006 (filed as Exhibit 10.4 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.118
  
Non-Portfolio Property Interest Contribution Agreement by and among Mr. Stanley C. Gale, Mr. Mark Yeager, GCF II Investor LLC, The Gale Investments Company, LLC, Gale & Wentworth Vreeland, LLC, Gale Urban Solutions LLC, MSGW-ONE Campus Investors, LLC, Mack-Cali Realty Acquisition Corp. and Mack-Cali Realty, L.P. dated as of May 9, 2006 (filed as Exhibit 10.2 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.119
  
Loan Agreement by and among the entities set forth on Exhibit A, collectively, as Borrowers, and Gramercy Warehouse Funding I LLC, as Lender, dated May 9, 2006 (filed as Exhibit 10.5 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.120
  
Promissory Note of One Grande SPE LLC, 1280 Wall SPE LLC, 10 Sylvan SPE LLC, 5 Independence SPE LLC, 1 Independence SPE LLC, and 3 Becker SPE LLC, as Borrowers, in favor of Gramercy Warehouse Funding I, LLC, as Lender, in the principal amount of $90,286,551 dated May 9, 2006 (filed as Exhibit 10.6 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.121
  
Mortgage, Security Agreement and Fixture Filing by and between 4 Becker SPE LLC, as Borrower, and Wachovia Bank, National Association, as Lender, dated May 9, 2006 (filed as Exhibit 10.7 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.122
  
Promissory Note of 4 Becker SPE LLC, as Borrower, in favor of Wachovia Bank, National Association, as Lender, in the principal amount of $43,000,000 dated May 9, 2006 (filed as Exhibit 10.8 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.123
  
Mortgage, Security Agreement and Fixture Filing by and between 210 Clay SPE LLC, as Borrower, and Wachovia Bank, National Association, as Lender, dated May 9, 2006 (filed as Exhibit 10.9 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.124
  
Promissory Note of 210 Clay SPE LLC, as Borrower, in favor of Wachovia Bank, National Association, as Lender, in the principal amount of $16,000,000 dated May 9, 2006 (filed as Exhibit 10.10 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.125
  
Mortgage, Security Agreement and Fixture Filing by and between 5 Becker SPE LLC, as Borrower, and Wachovia Bank, National Association, as Lender, dated May 9, 2006 (filed as Exhibit 10.11 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.126
  
Promissory Note of 5 Becker SPE LLC, as Borrower, in favor of Wachovia Bank, National Association, as Lender, in the principal amount of $15,500,000 dated May 9, 2006 (filed as Exhibit 10.12 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.127
  
Mortgage, Security Agreement and Fixture Filing by and between 51 CHUBB SPE LLC, as Borrower, and Wachovia Bank, National Association, as Lender, dated May 9, 2006 (filed as Exhibit 10.13 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     


 
137
 


Exhibit
Number
  
Exhibit Title
     
10.128
  
Promissory Note of 51 CHUBB SPE LLC, as Borrower, in favor of Wachovia Bank, National Association, as Lender, in the principal amount of $4,500,000 dated May 9, 2006 (filed as Exhibit 10.14 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.129
  
Form of Amended and Restated Limited Liability Company Agreement of Mack-Green-Gale LLC dated                 , 2006 (filed as Exhibit 10.3 to the Company’s Form 8-K dated March 7, 2006 and incorporated herein by reference).
     
10.130
  
Form of Limited Liability Company Operating Agreement (filed as Exhibit 10.3 to the Company’s Form 8-K dated May 9, 2006 and incorporated herein by reference).
     
10.131
  
Agreement of Sale and Purchase dated August 9, 2006 by and between Mack-Cali Realty, L.P. and Westcore Properties AC, LLC (filed as Exhibit 10.91 to the Company’s Form 10-Q dated September 30, 2006 and incorporated herein by reference).
     
10.132
  
First Amendment to Agreement of Sale and Purchase dated September 6, 2006 by and between Mack-Cali Realty, L.P. and Westcore Properties AC, LLC (filed as Exhibit 10.92 to the Company’s Form 10-Q dated September 30, 2006 and incorporated herein by reference).
     
10.133
  
Second Amendment to Agreement of Sale and Purchase dated September 15, 2006 by and between Mack-Cali Realty, L.P. and Westcore Properties AC, LLC (filed as Exhibit 10.93 to the Company’s Form 10-Q dated September 30, 2006 and incorporated herein by reference).
     
10.134
  
Agreement of Sale and Purchase dated September 25, 2006 by and between Phelan Realty Associates L.P., 795 Folsom Realty Associates L.P. and Westcore Properties AC, LLC (filed as Exhibit 10.94 to the Company’s Form 10-Q dated September 30, 2006 and incorporated herein by reference).
     
10.135
  
Membership Interest Purchase and Contribution Agreement dated as of December 28, 2006, by and among NKFGMS Owners, LLC, The Gale Construction Services Company, L.L.C., NKFFM Limited Liability Company, Scott Panzer, Ian Marlow, Newmark & Company Real Estate, Inc. d/b/a Newmark Knight Frank, and Mack-Cali Realty, L.P (filed as Exhibit 10.117 to the Company’s Form 10-K dated December 31, 2006 and incorporated herein by reference).
     
10.136
  
Operating Agreement of NKFGMS Owners, LLC (filed as Exhibit 10.118 to the Company’s Form 10-K dated December 31, 2006 and incorporated herein by reference).
     
10.137
  
Loans, Sale and Services Agreement dated December 28, 2006 by and between Newmark & Company Real Estate, Inc. d/b/a Newmark Knight Frank, Mack-Cali Realty, L.P., and Newmark Knight Frank Global Management Services, LLC (filed as Exhibit 10.119 to the Company’s Form 10-K dated December 31, 2006 and incorporated herein by reference).
     
10.138
  
Term Loan Agreement among Mack-Cali Realty, L.P. and JPMorgan Chase Bank, N.A. as Administrative Agent, J.P. Morgan Securities Inc. as Arranger, and other lender which may become parties to this Agreement dated November 29, 2006 (filed as Exhibit 10.120 to the Company’s Form 10-K dated December 31, 2006 and incorporated herein by reference).
     
 
 
 
138
 
 
 

 
Exhibit
Number
  
Exhibit Title
     
10.139
  
Agreement of Purchase and Sale among SLG Broad Street A LLC and SLG Broad Street C LLC, as Sellers, and M-C Broad 125 A L.L.C. and M-C Broad 125 C L.L.C., as Purchasers, dated as of March 15, 2007 (filed as Exhibit 10.121 to the Company’s Form 10-Q dated March 31, 2007 and incorporated herein by reference).
     
10.140
  
Agreement of Purchase and Sale among 500 West Putnam L.L.C., as Seller, and SLG 500 West Putnam LLC, as Purchaser, dated as of March 15, 2007 (filed as Exhibit 10.122 to the Company’s Form 10-Q dated March 31, 2007 and incorporated herein by reference).
     
10.141
  
Letter Agreement by and between Mack-Cali Realty, L.P., Mack-Cali Realty Acquisition Corp., Mack-Cali Belmar Realty, LLC, M-C Belmar, LLC, Mr. Stanley C. Gale, SCG Holding Corp., Mr. Mark Yeager, GCF II Investor LLC, The Gale Investments Company, LLC, Gale & Wentworth Vreeland, LLC, Gale Urban Solutions LLC, MSGW-ONE Campus Investors, LLC and Gale/Yeager Investments LLC dated October 31, 2007 (filed as Exhibit 10.128 to the Company’s Form 10-Q dated September 30, 2007 and incorporated herein by reference).
     
10.142
  
Mortgage and Security Agreement and Financing Statement dated October 28, 2008 between M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Mortgagors and The Northwestern Mutual Life Insurance Company and New York Life Insurance Company as Mortgagees (filed as Exhibit 10.131 to the Company’s Form 10-Q dated September 30, 2008 and incorporated herein by reference).
     
10.143
  
Promissory Note of M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Borrowers, in favor of The Northwestern Mutual Life Insurance Company, as Lender, in the principal amount of $120,000,000, dated October 28, 2008. (filed as Exhibit 10.132 to the Company’s Form 10-Q dated September 30, 2008 and incorporated herein by reference).
     
10.144
  
Promissory Note of M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Borrowers, in favor of New York Life Insurance Company, as Lender, in the principal amount of $120,000,000, dated October 28, 2008 (filed as Exhibit 10.133 to the Company’s Form 10-Q dated September 30, 2008 and incorporated herein by reference).
     
10.145
  
Guarantee of Recourse Obligations of Mack-Cali Realty, L.P. in favor of The Northwestern Mutual Life Insurance Company and New York Life Insurance Company dated October 28, 2008 (filed as Exhibit 10.134 to the Company’s Form 10-Q dated September 30, 2008 and incorporated herein by reference).
     
10.146
  
Amended and Restated Loan Agreement by and among One Grande SPE LLC, 1280 Wall SPE LLC, 10 Sylvan SPE LLC, 5 Independence SPE LLC, 1 Independence SPE LLC, and 3 Becker SPE LLC, collectively, as Borrowers and Gramercy Warehouse Funding I LLC, as Lender, dated April 29, 2009 (filed as Exhibit 10.144 to the Company’s Form 10-Q dated March 31, 2009 and incorporated herein by reference).
     
10.147
  
Amended and Restated Promissory Note of One Grande SPE LLC, 1280 Wall SPE LLC, 10 Sylvan SPE LLC, 5 Independence SPE LLC, 1 Independence SPE LLC, and 3 Becker SPE LLC, as Borrowers, in favor of Gramercy Warehouse Funding I, LLC, as Lender, dated April 29, 2009 (filed as Exhibit 10.145 to the Company’s Form 10-Q dated March 31, 2009 and incorporated herein by reference).
     
10.148
  
Limited Liability Company Membership Interest Purchase and Sale Agreement dated April 29, 2009 by and among Gale SLG NJ LLC, Mack-Cali Ventures L.L.C., SLG Gale 55 Corporation LLC and 55 Corporate Partners L.L.C.  (filed as Exhibit 10.146 to the Company’s Form 10-Q dated March 31, 2009 and incorporated herein by reference).
 
 
 
139
 

 
Exhibit
Number
  
Exhibit Title
     
10.149
  
Amended and Restated Master Loan Agreement dated as of January 15, 2010 among Mack-Cali Realty, L.P., and Affiliates of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P., as Borrowers, Mack-Cali Realty Corporation and Mack-Cali Realty L.P., as Guarantors and The Prudential Insurance Company of America and VPCM, LLC, as Lenders (filed as Exhibit 10.1 to the Company’s Form 8-K dated January 15, 2010 and incorporated herein by reference).
     
10.150
  
Partial Recourse Guaranty of Mack-Cali Realty, L.P. dated as of January 15, 2010 to The Prudential Insurance Company of America and VPCM, LLC (filed as Exhibit 10.2 to the Company’s Form 8-K dated January 15, 2010 and incorporated herein by reference).
     
10.151
  
Form of Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to each of the collateral properties (filed as Exhibit 10.3 to the Company’s Form 8-K dated January 15, 2010 and incorporated herein by reference).
     
10.152
  
 Form of Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to each of the collateral properties (filed as Exhibit 10.4 to the Company’s Form 8-K dated January 15, 2010 and incorporated herein by reference).
     
10.153
  
Form of Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to each of the collateral properties (filed as Exhibit 10.5 to the Company’s Form 8-K dated January 15, 2010 and incorporated herein by reference).
     
10.154
  
 Form of Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to each of the collateral properties (filed as Exhibit 10.6 to the Company’s Form 8-K dated January 15, 2010 and incorporated herein by reference).
     
10.155
  
Form of Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of the owners of the Collateral Properties to The Prudential Insurance Company of America and VPCM, LLC with respect to each of the collateral properties  (filed as Exhibit 10.7 to the Company’s Form 8-K dated January 15, 2010 and incorporated herein by reference).
     
12.1*
  
Calculation of Ratios of Earnings to Fixed Charges.
     
12.2*
  
Calculation of Ratios of Earnings to Combined Fixed Charges and Preferred Security Dividends.
     
21.1*
  
Subsidiaries of the Company.
     
23.1*
  
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.
     
23.2*
  
Consent of Cornerstone Accounting Group LLP, independent registered public accounting firm.

 
140
 


Exhibit
Number
  
Exhibit Title
     
31.1*
  
Certification of the Company’s President and Chief Executive Officer, Mitchell E. Hersh, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2*
  
Certification of the Company’s Chief Financial Officer, Barry Lefkowitz, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1*
  
Certification of the Company’s President and Chief Executive Officer, Mitchell E. Hersh, and the Company’s Chief Financial Officer, Barry Lefkowitz, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
99.1*
  
Mack-Green-Gale LLC and Subsidiaries Consolidated Balance Sheets at December 31, 2008 and 2007 and Consolidated Statements of Operations, Changes in Members' Capital and Cash Flows for the years ended December 31, 2008 and 2007 and for the period from May 9, 2006 (Commencement of Operations) through December 31, 2006, including the report of independent registered public accounting firm.
     
99.2*
  
Mack-Green-Gale LLC and Subsidiaries Consolidated Balance Sheet at April 28, 2009 and Consolidated Statements of Operations, Changes in Members' Capital and Cash Flows for the period January 1, 2009 through April 28, 2009 (Date of Consolidation).

*filed herewith


 
141