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, 2011
 
[   ]
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 X   No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.  [   ]

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, 2011, the aggregate market value of the voting stock held by non-affiliates of the registrant was $2,828,296,158.  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.  The registrant has no non-voting common stock.

As of February 6, 2012, 87,800,496 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 114.

DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the registrant’s definitive proxy statement for fiscal year ended December 31, 2011 to be issued in conjunction with the registrant’s annual meeting of shareholders expected to be held on June 5, 2012 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, 2011.

 
 
 

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
Mine Safety Disclosure
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
63
Item 8
Financial Statements and Supplementary Data
64
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
  
112
     
EXHIBIT INDEX
  
114


 
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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, 2011, the Company owned or had interests in 278 properties, aggregating approximately 32.4 million square feet, plus developable land (collectively, the “Properties”), which are leased to over 2,000 tenants.  The Properties are comprised of: (a) 269  wholly-owned or Company-controlled properties consisting of 163 office buildings and 95 office/flex buildings aggregating approximately 30.8 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) eight buildings, which are primarily office properties, aggregating approximately 1.2 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, 2011, the office, office/flex, industrial/warehouse and stand-alone retail properties included in the Consolidated Properties were 88.3 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, 2011 aggregate 193,213 square feet, or 0.6 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, 2011, executive officers and directors of the Company and their affiliates owned approximately six 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 24 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, 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, 2011 and 2010, the Company’s total debt constituted approximately 33.6 percent and 37.0 percent of total undepreciated assets of the Company, respectively.  Although there is no limit in the Company’s organizational documents on the amount of indebtedness that the Company may incur, 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 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, 2011, the Company had approximately 379 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.

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, 2011, 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.
 
 
 
 
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RECENT DEVELOPMENTS

On May 1, 2011, the Company placed in service 55 Corporate Drive, a 204,057 square-foot office building located in Bridgewater, New Jersey. The Company incurred total costs on the project of approximately $48.1 million through December 31, 2011.

In August 2011, the Company commenced construction of a 203,000 square foot office building which is pre-leased for 15 years and three months, subject to two extension options of between five and 10 years each, to Wyndham Worldwide.  Wyndham currently leases space in neighboring buildings in the Mack-Cali Business Campus in Parsippany, New Jersey.  The new building is expected to be delivered to the tenant in the first quarter of 2013 at a total estimated cost of approximately $53.5 million.

On December 5, 2011, the Company entered into a development agreement (the “Development Agreement”) with Ironstate Development LLC (“Ironstate”) for the development of up to 2 million square feet of residential space with associated parking and ancillary retail space on land owned by the Company at its Harborside Financial Center complex in Jersey City, New Jersey (the “Harborside Residential Project”).  The first phase of the project is expected to consist of a parking pedestal to support two high-rise towers of approximately 500 apartment units each, and estimated to cost approximately $400 million.  The parties anticipate a fourth quarter 2012 ground breaking and the project will be ready for occupancy within approximately two years thereafter.

Pursuant to the Development Agreement, the Company and Ironstate shall co-develop the Harborside Residential Project with Ironstate responsible for obtaining all required development permits and approvals.  Major decisions with respect to the Harborside Residential Project will require the consent of the Company and Ironstate.  The Company and Ironstate will have 85 and 15 percent interests, respectively, in the Harborside Residential Project.  The Company will receive capital credit of $30 per approved developable square foot for its land.

The Development Agreement is subject to obtaining required approvals and development financing as well as numerous customary undertakings, covenants, obligations and conditions.  The Company has the right to reasonably determine that any phase of the Harborside Residential Project is not economically viable and may elect not to proceed, subject to certain conditions, with no further obligations to Ironstate other than reimbursement to Ironstate of all or a portion of the costs incurred by it to obtain any required approvals.

The Company’s core markets continue to be weak.  The percentage leased in the Company’s consolidated portfolio of stabilized operating properties was 88.3 percent at December 31, 2011, as compared to 89.1 percent at December 31, 2010 and 90.1 percent at December 31, 2009.  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, 2011, 2010 and 2009 aggregate 193,213, 187,058 and 64,672 square feet, respectively, or 0.6, 0.6 and 0.2 percentage of the net rentable square footage, respectively.  The Company believes that vacancy rates may continue to increase in some of its markets through 2012 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 high unemployment, will continue to have a dampening effect on the fundamentals of its business, including 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 February 18, 2011, the Company completed a public offering of 7,187,500 shares of common stock and used the net proceeds, which totaled approximately $227.4 million (after offering costs) primarily to repay borrowings under the Company’s unsecured revolving credit facility.

On October 21, 2011, the Operating Partnership, refinanced its unsecured revolving credit facility with a group of 20 lenders.  The $600 million unsecured facility, which is expandable to $1 billion, carries an interest rate equal to LIBOR plus 125 basis points.  The credit facility, which also carries a facility fee of 25 basis points, has a four-year term with a one-year extension option.  The interest rate and facility fee are subject to adjustment, on a sliding scale, based upon the Operating Partnership’s unsecured debt ratings.
 
 
 
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On October 28, 2011, the Company redeemed its Series C Preferred Stock at a price of $2,500 per share, plus accrued and unpaid dividends through the date prior to the redemption date.  The write off of preferred stock issuance costs of $164,000 is included in preferred stock dividends for the year ended December 31, 2011.

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,” “potential,” “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, 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.
 
 
 
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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 suburban 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 continuing volatility in the financial and credit markets, the general global economic conditions, continuing high unemployment, and other market or economic challenges experienced by the U.S. economy or real estate industry as a whole.  Our business also may 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.

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;
·  
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;
 
 
 
 
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· 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 and we may incur losses.  Such losses may adversely affect our ability to make distributions or payments to our investors.

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 on favorable terms or at all.  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.

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.
 
 
 
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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, 2011, seven of our properties, with an aggregate net book value of approximately $131.6 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.  129 of our properties, with an aggregate net book value of approximately $1.7 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.

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:
 
 
 
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·  
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 continuing 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;
·  
failure to complete construction on schedule or within budget may increase debt service expense and construction costs; and
·  
failure to rent the development at all or at rent levels originally contemplated.

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.
 
 
 
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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 make distributions or payments to our investors.

We face possible risks associated with the physical effects of climate change.
We cannot predict with certainty whether climate change is occurring and, if so, at what rate.  However, the physical effects of climate change could have a material adverse effect on our properties, operations and business.  For example, many of our properties are located along the East coast, particularly those in New Jersey, New York and Connecticut.  To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity and rising sea-levels.  Over time, these conditions could result in declining demand for office space in our buildings or the inability of us to operate the buildings at all.  Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy and increasing the cost of snow removal or related costs at our properties.  Proposed legislation to address climate change could increase utility and other costs of operating our properties which, if not offset by rising rental income, would reduce our net income.  There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.

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, 2011, we had total outstanding indebtedness of $1.9 billion comprised of $1.1 billion of senior unsecured notes, outstanding borrowings of $56 million under our $600 million revolving credit facility and approximately $739 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.
 
 
 
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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, 2011, outstanding borrowings of approximately $56 million under our revolving credit facility and approximately $11 million of our mortgage indebtedness bear interest at variable rates.  We may incur additional 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.

 
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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.  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.  As a result, our Board of Directors may establish a series of preferred stock that could delay or prevent a transaction or a change in control.

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.
 
 
 
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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 6, 2012, as general partner, we own approximately 87.8 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.  From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and amount of such increase.  These actions could adversely affect our financial condition and results of operations. 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.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our tenants and business partners, including personally identifiable information of our tenants and employees, in our data centers and on our networks.  Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.  Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, which could adversely affect our business.

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:
 
 
 
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·
 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.

ITEM 1B.        UNRESOLVED STAFF COMMENTS

None.

 
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ITEM 2.            PROPERTIES

PROPERTY LIST

As of December 31, 2011, the Company’s Consolidated Properties consisted of 264 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 31.2 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
                
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
NEW JERSEY
              
               
Bergen County
              
Fair Lawn
              
17-17 Route 208 North
1987
143,000
97.3
2,964
0.49
21.30
17.87
Fort Lee
              
One Bridge Plaza
1981
200,000
86.8
4,435
0.74
25.55
21.52
2115 Linwood Avenue
1981
68,000
49.3
879
0.15
26.22
24.52
Little Ferry
              
200 Riser Road
1974
286,628
100.0
2,045
0.34
7.13
6.87
Lyndhurst
              
210 Clay Avenue
1981
121,203
90.9
2,530
0.42
22.96
20.75
Montvale
              
95 Chestnut Ridge Road
1975
47,700
0.0
7
0.00
0.00
0.00
135 Chestnut Ridge Road
1981
66,150
76.4
544
0.09
10.76
8.45
Paramus
              
15 East Midland Avenue
1988
259,823
80.5
4,527
0.75
21.64
20.89
140 East Ridgewood Avenue
1981
239,680
91.9
4,730
0.79
21.47
18.34
461 From Road
1988
253,554
97.0
5,983
1.00
24.33
24.21
650 From Road
1978
348,510
83.2
6,385
1.06
22.02
19.24
61 South Paramus Road (f)
1985
269,191
59.6
4,470
0.74
27.86
24.10
Rochelle Park
              
120 West Passaic Street
1972
52,000
99.6
1,474
0.25
28.46
26.82
365 West Passaic Street
1976
212,578
93.3
4,127
0.69
20.81
18.34
395 West Passaic Street
1979
100,589
43.6
1,373
0.23
31.31
26.20
Upper Saddle River
              
1 Lake Street
1973/94
474,801
100.0
7,465
1.24
15.72
15.72
10 Mountainview Road
1986
192,000
75.4
3,087
0.51
21.32
18.51
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
1,248
0.21
23.77
18.48
530 Chestnut Ridge Road
1986
57,204
80.2
695
0.12
15.15
14.36
50 Tice Boulevard
1984
235,000
91.5
5,424
0.90
25.22
22.56
300 Tice Boulevard
1991
230,000
100.0
5,589
0.93
24.30
21.90
               
Burlington County
              
Moorestown
              
224 Strawbridge Drive
1984
74,000
100.0
1,729
0.29
23.36
20.27
228 Strawbridge Drive
1984
74,000
100.0
1,853
0.31
25.04
21.61
232 Strawbridge Drive
1986
74,258
28.9
921
0.15
42.92
37.56
               
Essex County
              
Millburn
              
150 J.F. Kennedy Parkway
1980
247,476
95.6
7,668
1.28
32.41
28.04
Roseland
              
4 Becker Farm Road
1983
281,762
95.5
6,593
1.10
24.50
22.36
5 Becker Farm Road
1982
118,343
86.3
2,417
0.40
23.67
21.51
6 Becker Farm Road
1982
129,732
78.3
2,571
0.43
25.31
23.52
101 Eisenhower Parkway
1980
237,000
89.0
4,925
0.82
23.35
20.24
103 Eisenhower Parkway
1985
151,545
72.0
2,393
0.40
21.93
18.20
105 Eisenhower Parkway
2001
220,000
94.9
5,139
0.86
24.61
18.42
75 Livingston Avenue
1985
94,221
59.4
1,326
0.22
23.69
19.78
85 Livingston Avenue
1985
124,595
84.8
2,712
0.45
25.67
23.76
               

 
19
 

Office Properties
                
(Continued)
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Hudson County
              
Jersey City
              
Harborside Financial Center Plaza 1
1983
400,000
100.0
11,281
1.88
28.20
24.55
Harborside Financial Center Plaza 2
1990
761,200
100.0
18,538
3.09
24.35
22.34
Harborside Financial Center Plaza 3
1990
725,600
95.6
21,042
3.51
30.33
28.23
Harborside Financial Center Plaza 4-A
2000
207,670
100.0
6,198
1.03
29.85
25.58
Harborside Financial Center Plaza 5
2002
977,225
96.4
35,127
5.84
37.29
32.26
101 Hudson Street
1992
1,246,283
87.0
28,370
4.73
26.17
23.00
               
Mercer County
              
Hamilton Township
              
3 AAA Drive
1981
35,270
89.5
566
0.09
17.93
14.22
600 Horizon Drive
2002
95,000
100.0
1,419
0.24
14.94
14.94
700 Horizon Drive
2007
120,000
100.0
2,459
0.41
20.49
18.33
2 South Gold Drive
1974
33,962
61.6
412
0.07
19.69
17.02
Princeton
              
103 Carnegie Center
1984
96,000
89.2
2,299
0.38
26.85
21.99
2 Independence Way
1981
67,401
100.0
1,525
0.25
22.63
22.06
3 Independence Way
1983
111,300
85.0
1,935
0.32
20.45
15.75
100 Overlook Center
1988
149,600
89.6
3,955
0.66
29.51
25.46
5 Vaughn Drive
1987
98,500
90.0
2,087
0.35
23.54
20.00
               
Middlesex County
              
East Brunswick
              
377 Summerhill Road
1977
40,000
100.0
372
0.06
9.30
9.05
Edison
              
343 Thornall Street (c)
1991
195,709
93.8
3,876
0.65
21.11
16.65
Piscataway
              
30 Knightsbridge Road, Bldg 3
1977
160,000
100.0
2,445
0.41
15.28
15.28
30 Knightsbridge Road, Bldg 4
1977
115,000
100.0
1,757
0.29
15.28
15.28
30 Knightsbridge Road, Bldg 5
1977
332,607
84.8
4,954
0.83
17.56
13.08
30 Knightsbridge Road, Bldg 6
1977
72,743
63.8
206
0.03
4.44
2.00
Plainsboro
              
500 College Road East (f)
1984
158,235
75.5
1,852
0.31
15.50
11.98
Woodbridge
              
581 Main Street
1991
200,000
93.1
4,950
0.82
26.58
22.93
               
Monmouth County
              
Freehold
              
2 Paragon Way
1989
44,524
47.2
417
0.07
19.84
17.04
3 Paragon Way
1991
66,898
68.0
839
0.14
18.44
14.82
4 Paragon Way
2002
63,989
30.8
531
0.09
26.94
26.94
100 Willow Brook Road
1988
60,557
57.4
757
0.13
21.78
18.70
Holmdel
              
23 Main Street
1977
350,000
100.0
4,012
0.67
11.46
8.63
Middletown
              
One River Center Bldg 1
1983
122,594
93.4
2,924
0.49
25.54
21.33
One River Center Bldg 2
1983
120,360
100.0
2,376
0.40
19.74
17.53
One River Center Bldg 3 and 4
1984
214,518
93.6
4,389
0.73
21.86
20.71
Neptune
              
3600 Route 66
1989
180,000
100.0
2,400
0.40
13.33
12.06
Wall Township
              
1305 Campus Parkway
1988
23,350
92.4
485
0.08
22.48
17.24
1350 Campus Parkway
1990
79,747
99.9
1,078
0.18
13.53
11.60

 
20
 

Office Properties
                  
(Continued)
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Morris County
              
Florham Park
              
325 Columbia Turnpike
1987
168,144
100.0
3,310
0.55
19.69
17.19
Morris Plains
              
250 Johnson Road
1977
75,000
100.0
1,514
0.25
20.19
17.60
201 Littleton Road
1979
88,369
42.1
655
0.11
17.61
15.05
Morris Township
              
412 Mt. Kemble Avenue
1986
475,100
63.4
5,798
0.97
19.25
14.62
Parsippany
              
4 Campus Drive
1983
147,475
62.4
3,028
0.50
32.90
21.45
6 Campus Drive
1983
148,291
90.0
3,151
0.53
23.61
18.83
7 Campus Drive
1982
154,395
78.0
2,381
0.40
19.77
15.69
8 Campus Drive
1987
215,265
82.9
5,330
0.89
29.87
26.85
9 Campus Drive
1983
156,495
72.7
2,550
0.42
22.41
10.43
4 Century Drive
1981
100,036
61.3
1,087
0.18
17.73
13.63
5 Century Drive
1981
79,739
52.0
1,082
0.18
26.09
21.05
6 Century Drive
1981
100,036
24.8
616
0.10
24.83
16.28
2 Dryden Way
1990
6,216
100.0
99
0.02
15.93
14.64
4 Gatehall Drive
1988
248,480
94.3
6,516
1.09
27.81
23.81
2 Hilton Court
1991
181,592
100.0
6,533
1.09
35.98
31.46
1633 Littleton Road
1978
57,722
100.0
1,131
0.19
19.59
19.59
600 Parsippany Road
1978
96,000
90.1
1,553
0.26
17.95
14.86
1 Sylvan Way
1989
150,557
85.9
3,096
0.52
23.94
19.53
4 Sylvan Way
1984
105,135
100.0
1,929
0.32
18.35
16.47
5 Sylvan Way
1989
151,383
89.0
3,929
0.65
29.16
26.36
7 Sylvan Way
1987
145,983
100.0
3,219
0.54
22.05
19.29
22 Sylvan Way
2009
249,409
100.0
6,183
1.03
24.79
22.40
20 Waterview Boulevard
1988
225,550
99.1
4,895
0.82
21.90
20.26
35 Waterview Boulevard
1990
172,498
96.8
3,948
0.66
23.64
20.65
5 Wood Hollow Road
1979
317,040
88.1
5,328
0.89
19.08
15.24
               
Passaic County
              
Clifton
              
777 Passaic Avenue
1983
75,000
65.4
1,159
0.19
23.63
21.49
Totowa
              
999 Riverview Drive
1988
56,066
67.7
815
0.14
21.47
17.76
               
Somerset County
              
Basking Ridge
              
222 Mt. Airy Road
1986
49,000
100.0
1,074
0.18
21.92
16.51
233 Mt. Airy Road
1987
66,000
56.8
1,012
0.17
27.00
24.35
Bernards
              
106 Allen Road
2000
132,010
93.5
3,505
0.58
28.40
24.32
Branchburg
              
51 Imclone Drive
1986
63,213
100.0
521
0.09
8.24
7.66
Bridgewater
              
55 Corporate Drive (g)
2011
204,057
100.0
3,210
0.53
23.44
22.90
440 Route 22 East
1990
198,376
93.4
4,130
0.69
22.29
19.83
721 Route 202/206
1989
192,741
86.4
3,818
0.64
22.93
16.43
Warren
              
10 Independence Boulevard
1988
120,528
86.3
2,783
0.46
26.76
26.20
               
Union County
              
Clark
              
100 Walnut Avenue
1985
182,555
98.1
4,488
0.75
25.06
21.36

 
21
 

Office Properties
                  
(Continued)
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Cranford
              
6 Commerce Drive
1973
56,000
81.8
1,024
0.17
22.35
19.95
11 Commerce Drive
1981
90,000
95.0
2,223
0.37
26.00
22.01
12 Commerce Drive
1967
72,260
84.7
903
0.15
14.75
11.81
14 Commerce Drive
1971
67,189
81.1
1,151
0.19
21.12
16.98
20 Commerce Drive
1990
176,600
93.3
4,059
0.68
24.63
21.84
25 Commerce Drive
1971
67,749
90.7
1,457
0.24
23.71
20.05
65 Jackson Drive
1984
82,778
94.0
1,825
0.30
23.45
20.60
New Providence
              
890 Mountain Avenue
1977
80,000
58.3
1,051
0.18
22.53
20.28
               
Total New Jersey Office
  
19,600,117
88.4
409,080
68.17
23.70
20.66
               
NEW YORK
              
               
New York County
              
New York
              
125 Broad Street
1970
524,476
95.5
11,036
1.83
22.03
19.71
               
Rockland County
              
Suffern
              
400 Rella Boulevard
1988
180,000
86.6
3,596
0.60
23.07
20.37
               
Westchester County
              
Elmsford
              
100 Clearbrook Road (c)
1975
60,000
83.0
1,136
0.19
22.81
20.80
101 Executive Boulevard
1971
50,000
0.0
70
0.01
0.00
0.00
555 Taxter Road
1986
170,554
79.5
3,457
0.58
25.50
20.53
565 Taxter Road
1988
170,554
81.0
3,512
0.59
25.42
22.19
570 Taxter Road
1972
75,000
68.4
1,322
0.22
25.77
23.53
Hawthorne
              
1 Skyline Drive
1980
20,400
99.0
397
0.07
19.66
18.72
2 Skyline Drive
1987
30,000
100.0
543
0.09
18.10
10.63
7 Skyline Drive
1987
109,000
88.6
2,391
0.40
24.76
21.26
17 Skyline Drive (f)
1989
85,000
100.0
1,670
0.28
19.65
19.01
19 Skyline Drive
1982
248,400
100.0
4,036
0.67
16.25
15.11
Tarrytown
              
200 White Plains Road
1982
89,000
82.9
1,866
0.31
25.29
22.26
220 White Plains Road
1984
89,000
77.2
1,622
0.27
23.61
21.00
White Plains
              
1 Barker Avenue
1975
68,000
99.8
1,722
0.29
25.37
22.68
3 Barker Avenue
1983
65,300
94.1
1,612
0.27
26.23
23.73
50 Main Street
1985
309,000
83.5
8,264
1.38
32.03
28.73
11 Martine Avenue
1987
180,000
79.3
4,445
0.74
31.14
26.90
1 Water Street
1979
45,700
96.1
1,137
0.19
25.89
22.66
Yonkers
              
1 Executive Boulevard
1982
112,000
100.0
2,797
0.47
24.97
21.84
3 Executive Boulevard
1987
58,000
100.0
1,676
0.28
28.90
27.29
               
Total New York Office
  
2,739,384
87.5
58,307
9.73
24.31
21.53
               

 
22
 

Office Properties
                
(Continued)
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
PENNSYLVANIA
              
               
Chester County
              
Berwyn
              
1000 Westlakes Drive
1989
60,696
96.7
863
0.14
14.70
14.06
1055 Westlakes Drive
1990
118,487
79.1
2,387
0.40
25.47
21.24
1205 Westlakes Drive
1988
130,265
89.0
3,139
0.52
27.08
23.89
1235 Westlakes Drive
1986
134,902
92.0
2,860
0.48
23.04
17.85
               
Delaware County
              
Lester
              
100 Stevens Drive
1986
95,000
100.0
2,771
0.46
29.17
26.55
200 Stevens Drive
1987
208,000
100.0
6,088
1.01
29.27
26.99
300 Stevens Drive
1992
68,000
86.6
1,349
0.22
22.91
18.82
Media
              
1400 Providence Road – Center I
1986
100,000
91.9
2,186
0.36
23.79
20.37
1400 Providence Road – Center II
1990
160,000
99.2
3,283
0.55
20.68
17.08
               
Montgomery County
              
Bala Cynwyd
              
150 Monument Road
1981
125,783
83.0
2,752
0.46
26.36
22.25
Blue Bell
              
4 Sentry Park
1982
63,930
83.5
1,009
0.17
18.90
15.44
5 Sentry Park East
1984
91,600
58.5
1,175
0.20
21.93
15.45
5 Sentry Park West
1984
38,400
31.5
253
0.04
20.92
18.44
16 Sentry Park West
1988
93,093
100.0
2,276
0.38
24.45
21.26
18 Sentry Park West
1988
95,010
99.8
2,295
0.38
24.20
21.25
King of Prussia
              
2200 Renaissance Boulevard
1985
174,124
47.3
1,696
0.28
20.59
19.79
Lower Providence
              
1000 Madison Avenue
1990
100,700
72.3
1,219
0.20
16.74
10.66
Plymouth Meeting
              
1150 Plymouth Meeting Mall
1970
167,748
72.4
2,488
0.41
20.49
16.46
               
Total Pennsylvania Office
  
2,025,738
83.6
40,089
6.66
23.68
20.22
               
CONNECTICUT
              
               
Fairfield County
              
Norwalk
              
40 Richards Avenue
1985
145,487
53.3
2,094
0.35
27.00
22.39
Stamford
              
1266 East Main Street
1984
179,260
87.7
3,177
0.53
20.21
16.65
               
Total Connecticut Office
  
324,747
72.3
5,271
0.88
22.45
18.55
               
DISTRICT OF COLUMBIA
              
               
Washington
              
1201 Connecticut Avenue, NW
1940
169,549
89.4
6,272
1.05
41.38
36.51
1400 L Street, NW
1987
159,000
100.0
5,624
0.94
35.37
29.86
               
Total District of Columbia Office
  
328,549
94.5
11,896
1.99
38.30
33.10
               
               
               
               
               

 
23
 

Office Properties
                
(Continued)
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
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
85.6
1,709
0.28
17.83
15.36
6303 Ivy Lane
1980
112,047
85.6
2,362
0.39
24.63
21.53
6305 Ivy Lane
1982
112,022
92.8
1,489
0.25
14.32
12.81
6404 Ivy Lane
1987
165,234
65.8
2,268
0.38
20.86
15.61
6406 Ivy Lane
1991
163,857
11.5
0
0.00
0.00
0.00
6411 Ivy Lane
1984
138,405
66.0
2,337
0.39
25.58
21.52
Lanham
              
4200 Parliament Place
1989
122,000
99.1
2,941
0.49
24.33
22.51
               
Total Maryland Office
  
964,258
69.9
14,016
2.33
20.79
17.91
               
TOTAL OFFICE PROPERTIES
  
25,982,793
87.1
538,659
89.76
23.86
20.79
               
               

 
24
 

Office/Flex Properties
                
 
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
NEW JERSEY
              
               
Burlington County
              
Burlington
              
3 Terri Lane
1991
64,500
100.0
559
0.09
8.67
7.38
5 Terri Lane
1992
74,555
100.0
616
0.10
8.26
6.51
Moorestown
              
2 Commerce Drive
1986
49,000
75.6
207
0.03
5.59
4.35
101 Commerce Drive
1988
64,700
100.0
275
0.05
4.25
3.85
102 Commerce Drive
1987
38,400
100.0
217
0.04
5.65
4.40
201 Commerce Drive
1986
38,400
100.0
199
0.03
5.18
4.14
202 Commerce Drive
1988
51,200
82.8
216
0.04
5.10
4.32
1 Executive Drive
1989
20,570
60.5
120
0.02
9.64
7.15
2 Executive Drive
1988
60,800
90.3
442
0.07
8.05
5.76
101 Executive Drive
1990
29,355
99.7
295
0.05
10.08
8.03
102 Executive Drive
1990
64,000
100.0
474
0.08
7.41
7.09
225 Executive Drive
1990
50,600
79.1
268
0.04
6.70
5.15
97 Foster Road
1982
43,200
100.0
163
0.03
3.77
2.82
1507 Lancer Drive
1995
32,700
100.0
34
0.01
1.04
0.98
1245 North Church Street
1998
52,810
100.0
277
0.05
5.25
4.51
1247 North Church Street
1998
52,790
80.7
275
0.05
6.46
5.45
1256 North Church Street
1984
63,495
100.0
457
0.08
7.20
6.61
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
172
0.03
6.00
5.27
915 North Lenola Road
1998
52,488
100.0
292
0.05
5.56
4.57
2 Twosome Drive
2000
48,600
100.0
376
0.06
7.74
4.55
30 Twosome Drive
1997
39,675
100.0
303
0.05
7.64
6.05
31 Twosome Drive
1998
84,200
100.0
469
0.08
5.57
5.24
40 Twosome Drive
1996
40,265
72.7
234
0.04
7.99
6.97
41 Twosome Drive
1998
43,050
77.7
203
0.03
6.07
5.26
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
120
0.02
5.56
4.91
               
Mercer County
              
Hamilton Township
              
100 Horizon Center Boulevard
1989
13,275
100.0
97
0.02
7.31
5.35
200 Horizon Drive
1991
45,770
100.0
640
0.11
13.98
13.20
300 Horizon Drive
1989
69,780
46.0
461
0.08
14.36
10.78
500 Horizon Drive
1990
41,205
93.8
557
0.09
14.41
13.12
               
Monmouth County
              
Wall Township
              
1325 Campus Parkway
1988
35,000
100.0
642
0.11
18.34
16.29
1340 Campus Parkway
1992
72,502
100.0
954
0.16
13.16
10.80
1345 Campus Parkway
1995
76,300
100.0
948
0.16
12.42
9.42
1433 Highway 34
1985
69,020
67.3
507
0.08
10.91
7.97
1320 Wyckoff Avenue
1986
20,336
100.0
213
0.04
10.47
8.02
1324 Wyckoff Avenue
1987
21,168
81.5
183
0.03
10.61
4.29
               
               
               
               

 
25
 


Office/Flex Properties
                
(Continued)
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Passaic County
              
Totowa
              
1 Center Court
1999
38,961
100.0
443
0.07
11.37
10.06
2 Center Court
1998
30,600
62.8
245
0.04
12.75
10.67
11 Commerce Way
1989
47,025
77.8
609
0.10
16.65
13.20
20 Commerce Way
1992
42,540
61.1
288
0.05
11.08
10.89
29 Commerce Way
1990
48,930
75.2
620
0.10
16.85
14.30
40 Commerce Way
1987
50,576
86.3
406
0.07
9.30
7.35
45 Commerce Way
1992
51,207
100.0
515
0.09
10.06
8.34
60 Commerce Way
1988
50,333
100.0
563
0.09
11.19
8.94
80 Commerce Way
1996
22,500
100.0
291
0.05
12.93
11.24
100 Commerce Way
1996
24,600
100.0
318
0.05
12.93
11.26
120 Commerce Way
1994
9,024
100.0
105
0.02
11.64
9.97
140 Commerce Way
1994
26,881
89.3
312
0.05
13.00
11.08
               
Total New Jersey Office/Flex
  
2,189,531
90.7
17,807
2.98
8.97
7.42
               
NEW YORK
              
               
Westchester County
              
Elmsford
              
11 Clearbrook Road
1974
31,800
72.8
364
0.06
15.72
13.87
75 Clearbrook Road
1990
32,720
100.0
327
0.05
9.99
8.89
125 Clearbrook Road
2002
33,000
100.0
706
0.12
21.39
17.76
150 Clearbrook Road
1975
74,900
99.3
841
0.14
11.31
10.20
175 Clearbrook Road
1973
98,900
100.0
1,415
0.24
14.31
13.00
200 Clearbrook Road
1974
94,000
99.8
955
0.16
10.18
8.27
250 Clearbrook Road
1973
155,000
97.3
1,423
0.24
9.44
8.60
50 Executive Boulevard
1969
45,200
66.7
411
0.07
13.63
12.54
77 Executive Boulevard
1977
13,000
100.0
244
0.04
18.77
18.23
85 Executive Boulevard
1968
31,000
86.2
558
0.09
20.88
17.74
300 Executive Boulevard
1970
60,000
100.0
739
0.12
12.32
11.13
350 Executive Boulevard
1970
15,400
98.8
235
0.04
15.45
15.25
399 Executive Boulevard
1962
80,000
100.0
1,038
0.17
12.98
12.40
400 Executive Boulevard
1970
42,200
78.0
550
0.09
16.71
13.82
500 Executive Boulevard
1970
41,600
100.0
748
0.12
17.98
16.49
525 Executive Boulevard
1972
61,700
100.0
966
0.16
15.66
14.23
1 Westchester Plaza
1967
25,000
100.0
346
0.06
13.84
11.96
2 Westchester Plaza
1968
25,000
100.0
545
0.09
21.80
20.92
3 Westchester Plaza
1969
93,500
85.0
1,011
0.17
12.72
10.87
4 Westchester Plaza
1969
44,700
100.0
685
0.11
15.32
12.93
5 Westchester Plaza
1969
20,000
100.0
277
0.05
13.85
9.45
6 Westchester Plaza
1968
20,000
89.8
289
0.05
16.09
14.64
7 Westchester Plaza
1972
46,200
100.0
653
0.11
14.13
13.64
8 Westchester Plaza
1971
67,200
84.1
898
0.15
15.89
13.71
Hawthorne
              
200 Saw Mill River Road
1965
51,100
92.0
593
0.10
12.61
11.42
4 Skyline Drive
1987
80,600
100.0
1,417
0.24
17.58
14.21
5 Skyline Drive
1980
124,022
96.1
1,539
0.26
12.91
11.23
6 Skyline Drive
1980
44,155
100.0
519
0.09
11.75
7.32
8 Skyline Drive
1985
50,000
98.7
959
0.16
19.43
15.76
10 Skyline Drive
1985
20,000
100.0
381
0.06
19.05
14.90
11 Skyline Drive (f)
1989
45,000
100.0
926
0.15
20.58
20.42
12 Skyline Drive (f)
1999
46,850
100.0
627
0.10
13.38
10.42
15 Skyline Drive (f)
1989
55,000
100.0
1,204
0.20
21.89
18.84

 
26
 

Office/Flex Properties
                
(Continued)
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
Yonkers
              
100 Corporate Boulevard
1987
78,000
98.3
1,559
0.26
20.33
19.26
200 Corporate Boulevard South
1990
84,000
100.0
1,528
0.25
18.19
16.89
4 Executive Plaza
1986
80,000
100.0
1,372
0.23
17.15
12.98
6 Executive Plaza
1987
80,000
100.0
1,513
0.25
18.91
17.25
1 Odell Plaza
1980
106,000
91.9
1,089
0.18
11.18
9.65
3 Odell Plaza
1984
71,065
100.0
1,596
0.27
22.46
20.83
5 Odell Plaza
1983
38,400
99.6
641
0.11
16.76
13.36
7 Odell Plaza
1984
42,600
99.6
780
0.13
18.38
17.09
               
Total New York Office/Flex
  
2,348,812
96.2
34,467
5.74
15.25
13.39
               
CONNECTICUT
              
               
Fairfield County
              
Stamford
              
419 West Avenue
1986
88,000
100.0
1,470
0.24
16.70
15.58
500 West Avenue
1988
25,000
100.0
423
0.07
16.92
16.20
550 West Avenue
1990
54,000
100.0
986
0.16
18.26
17.46
600 West Avenue
1999
66,000
100.0
670
0.11
10.15
9.27
650 West Avenue
1998
40,000
100.0
686
0.11
17.15
15.90
               
Total Connecticut Office/Flex
  
273,000
100.0
4,235
0.69
15.51
14.53
               
               
TOTAL OFFICE/FLEX PROPERTIES
4,811,343
93.9
56,509
9.41
12.50
10.84


 
27
 


Industrial/Warehouse, Retail and Land Lease Properties
          
 
             
2011
     
Percentage
2011
  
2011
Average
   
Net
Leased
Base
  
Average
Effective
   
Rentable
as of
Rent
Percentage
Base Rent
Rent
 
Year
Area
12/31/11
($000’s)
of Total 2011
Per Sq. Ft.
Per Sq. Ft.
Property Location
Built
(Sq. Ft.)
(%) (a)
 (b) (c)
Base Rent (%)
($) (c) (d)
($) (c) (e)
               
NEW YORK
              
               
Westchester County
              
Elmsford
              
1 Warehouse Lane (f)
1957
6,600
100.0
96
0.02
14.55
12.12
2 Warehouse Lane (f)
1957
10,900
100.0
140
0.02
12.84
12.29
3 Warehouse Lane (f)
1957
77,200
100.0
363
0.06
4.70
4.48
4 Warehouse Lane (f)
1957
195,500
96.7
1,889
0.31
9.99
9.02
5 Warehouse Lane (f)
1957
75,100
97.1
961
0.16
13.18
11.57
6 Warehouse Lane (f)
1982
22,100
100.0
538
0.09
24.34
23.53
               
Total Industrial/Warehouse Properties
387,400
97.8
3,987
0.66
10.53
9.58
               
Westchester County
              
Tarrytown
              
230 White Plains Road
1984
9,300
100.0
179
0.03
19.25
19.35
Yonkers
              
2 Executive Boulevard
1986
8,000
100.0
343
0.06
42.88
42.88
               
Total Retail Properties
  
17,300
100.0
522
0.09
30.17
30.23
               
Westchester County
              
Elmsford
              
700 Executive Boulevard
--
--
--
148
0.02
--
--
Yonkers
              
1 Enterprise Boulevard
--
--
--
185
0.03
--
--
               
Total New York Land Leases
  
--
--
333
0.05
--
--
               
Prince George’s County, Maryland
              
Greenbelt
              
Capital Office Park Parcel A
--
--
--
153
0.03
--
--
               
Total Maryland Land Leases
  
--
--
153
0.03
--
--
               
Total Land Leases
  
--
--
486
0.08
--
--
               
               
TOTAL PROPERTIES
  
31,198,836
88.3
600,163
100.00
21.84
19.02

(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, 2011 aggregating 193,213 square feet (representing 0.6 percent of the Company’s total net rentable square footage) for which no new leases were signed.
(b)
Total base rent for 2011, 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 2011 divided by net rentable square feet leased at December 31, 2011.
(e)
Total base rent for 2011 minus total 2011 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, 2011.
(f)
This property is located on land leased by the Company.
(g)
As this property was acquired, placed in service or initially consolidated by the Company during 2011, the amounts represented in 2011 base rent reflect only that portion of the year during which the Company owned or consolidated the property.  Accordingly, these amounts may not be indicative of the property’s full year results.  For comparison purposes, the amounts represented in 2011 average base rent per sq. ft. and 2011 effective rent per sq. ft. for this property have been calculated by taking 2011 base rent and 2011 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, 2011.  These annualized per square foot amounts may not be indicative of the property’s results had the Company owned or consolidated the property for the entirety of 2011.
 
 
 
28
 
 

 
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)
2011
88.3
   
2010
89.1
   
2009
90.1
   
2008
91.3
   
2007
92.7

(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, 2011 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
     13,662,108
2.1
472,651
1.7
(b)
DB Services New Jersey, Inc.
2
12,335,217
1.9
409,166
1.5
2017
New Cingular Wireless PCS, LLC
4
9,744,793
1.5
433,296
1.6
(c)
Wyndham Worldwide Operations
2
9,360,884
1.5
395,392
1.5
(d)
Keystone Mercy Health Plan
2
9,079,313
1.5
303,149
1.1
2020
United States of America-GSA
13
9,023,124
1.4
295,633
1.1
(e)
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
ICAP Securities USA, LLC
1
6,304,775
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
6,131,521
1.0
180,807
0.7
(f)
TD Ameritrade Online Holdings
1
6,100,756
1.0
188,776
0.7
2020
Montefiore Medical Center
5
5,426,458
0.9
247,122
0.9
(g)
Bank Of Tokyo-Mitsubishi, Ltd.
1
5,254,698
0.8
161,683
0.6
(h)
IBM Corporation
2
5,177,420
0.8
292,304
1.1
(i)
KPMG, LLP
3
5,092,360
0.8
187,536
0.7
(j)
Credit Suisse (USA), Inc.
1
5,010,415
0.8
146,366
0.5
2012
Merrill Lynch Pierce Fenner
1
5,001,213
0.8
294,189
1.1
2017
National Financial Services
1
4,798,621
0.8
112,964
0.4
2012
Sanofi-Aventis U.S., Inc.
1
4,489,254
0.7
204,057
0.8
2026
J.H. Cohn, LLP
2
4,335,049
0.7
155,056
0.6
(k)
Vonage America, Inc.
1
4,172,000
0.7
350,000
1.3
2017
AT&T Corp.
1
4,137,500
0.7
275,000
1.0
2014
Morgan Stanley Smith Barney
4
4,106,594
0.7
142,530
0.5
(l)
Allstate Insurance Company
8
4,051,625
0.7
179,425
0.7
(m)
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
HQ Global Workplaces, LLC
10
3,583,031
0.6
182,643
0.7
(n)
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
(o)
Shaw Facilities, Inc.
3
3,122,835
0.5
141,172
0.5
(p)
Dow Jones & Company, Inc.
1
3,057,773
0.5
92,312
0.3
2012
Alpharma, LLC
1
3,053,604
0.5
112,235
0.4
2018
SunAmerica Asset Management
1
2,958,893
0.5
69,621
0.3
2018
E*Trade Financial Corporation
1
2,930,757
0.5
106,573
0.4
2022
United States Life Insurance Co.
1
2,880,000
0.5
180,000
0.7
2013
High Point Safety & Insurance
2
2,861,217
0.5
116,889
0.4
2020
Natixis North America, Inc.
1
2,823,569
0.5
89,907
0.3
2021
Tullett Prebon Holdings Corp.
1
2,809,850
0.5
100,759
0.4
2023
Continental Casualty Company
2
2,784,736
0.4
100,712
0.4
(q)
Lehman Brothers Holdings, Inc.
1
2,631,235
0.4
74,114
0.3
2012
Connell Foley, LLP
2
2,572,383
0.4
97,822
0.4
2015
AAA Mid-Atlantic, Inc.
2
2,542,238
0.4
129,784
0.5
(r)
New Jersey Turnpike Authority
1
2,530,631
0.4
100,223
0.4
2017
Tradeweb Markets, LLC
1
2,490,140
0.4
64,976
0.2
2017
Lowenstein Sandler, P.C.
1
2,466,925
0.4
98,677
0.4
2017
Movado Group, Inc.
1
2,449,828
0.4
90,050
0.3
2018
Savvis Communications Corporation
1
2,430,116
0.4
71,474
0.3
2015
Virgin Mobile USA, LP
1
2,427,776
0.4
93,376
0.3
2016
Sony Music Entertainment
1
2,359,986
0.4
97,653
0.4
2014
             
Totals
  
237,714,663
38.3
9,405,695
34.8
  

See footnotes on subsequent page.

 
30
 


Significant Tenants Footnotes

(a)  
Annualized base rental revenue is based on actual December 2011 billings times 12.  For leases whose rent commences after January 1, 2012, 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)  
74,510 square feet expire in 2012; 281,023 square feet expire in 2018; 117,118 square feet expire 2019.
(c)  
333,145 square feet expire in 2013; 72,385 square feet expire in 2014; 27,766 square feet expire in 2015.
(d)  
145,983 square feet expire in 2013; 249,409 square feet expire in 2029.
(e)  
67,167 square feet expire in 2013; 4,879 square feet expire in 2014; 180,729 square feet expire in 2015; 15,851 square feet expire in 2016; 8,241 square feet expire in 2017; 18,766 square feet expire in 2022.
(f)  
8,907 square feet expire in 2013; 171,900 square feet expire in 2022.
(g)  
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; 14,842 square feet expire in 2021; 9,610 square feet expire in 2022.
(h)  
24,607 square feet expire in 2019; 137,076 square feet expire in 2029.
(i)  
248,399 square feet expire in 2012; 43,905 square feet expire in 2013.
(j)  
77,381 square feet expire in 2012; 10,877 square feet expire in 2013; 53,409 square feet expire in 2019; 45,869 square feet expire in 2020.
(k)  
1,021 square feet expire in 2014; 154,035 square feet expire in 2020.
(l)  
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.
(m)  
5,516 square feet expire in 2012; 29,005 square feet expire in 2013; 4,456 square feet expire in 2014; 5,348 square feet expire in 2015; 4,014 square feet expire in 2016; 79,480 square feet expire in 2017; 51,606 square feet expire in 2018.
(n)  
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; 49,434 square feet expire in 2023.
(o)  
104,008 square feet expire in 2013; 14,863 square feet expire in 2017.
(p)  
39,060 square feet expire in 2013; 102,112 square feet expire in 2015.
(q)  
19,416 square feet expire in 2016; 81,296 square feet expire in 2031.
(r)  
9,784 square feet expire in 2017; 120,000 square feet expire in 2022.



 
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, 2012, 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 (%)
             
2012 (c)
337
2,526,759
9.4
62,110,073
24.58
10.0
             
2013
420
3,876,064
14.3
80,069,611
20.66
12.9
             
2014
355
3,122,456
11.6
69,135,251
22.14
11.1
             
2015
288
3,285,022
12.2
71,290,019
21.70
11.5
             
2016
263
2,518,636
9.3
54,773,814
21.75
8.8
             
2017
209
3,351,750
12.4
78,468,858
23.41
12.7
             
2018
130
1,865,858
6.9
47,208,890
25.30
7.6
             
2019
75
1,172,657
4.3
24,549,514
20.93
4.0
             
2020
56
1,144,569
4.2
26,218,236
22.91
4.2
             
2021
72
1,154,495
4.3
28,816,459
24.96
4.6
             
2022
41
1,024,924
3.8
23,931,570
23.35
3.9
             
2023 and thereafter
44
1,986,536
7.3
53,919,820
27.14
8.7
Totals/Weighted
            
  Average
2,290
27,029,726
(c) (d)
100.0
620,492,115
22.96
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 2011 billings times 12.  For leases whose rent commences after January 1, 2012 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, 2011 aggregating 193,213 square feet and representing annualized rent of $3,859,489 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
27,029,726
Square footage used for corporate offices, management offices,
  
building use, retail tenants, food services, other ancillary
  
service tenants and occupancy adjustments
522,457
Square footage unleased
  3,646,653
Total net rentable square footage (does not include land leases)
31,198,836

 
32
 

SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES

The following table sets forth a schedule of lease expirations for the office properties beginning January 1, 2012, 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 (%)
             
2012 (c)
272
1,964,727
8.8
54,729,166
27.86
9.8
             
2013
310
2,748,533
12.4
65,423,356
23.80
11.8
             
2014
293
2,524,841
11.4
61,911,156
24.52
11.1
             
2015
236
2,844,494
12.9
65,811,042
23.14
11.8
             
2016
212
2,034,965
9.2
47,901,053
23.54
8.6
             
2017
167
2,980,011
13.5
73,770,017
24.75
13.3
             
2018
98
1,491,747
6.7
42,320,343
28.37
7.6
             
2019
55
755,199
3.4
18,720,713
24.79
3.4
             
2020
45
971,021
4.4
24,117,842
24.84
4.3
             
2021
56
1,011,300
4.6
26,495,188
26.20
4.8
             
2022
36
962,382
4.4
23,096,118
24.00
4.2
             
2023 and thereafter
36
1,840,721
8.3
51,754,217
28.12
9.3
Totals/Weighted
            
  Average
1,816
22,129,941 (c)
100.0
556,050,211
25.13
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 2011 billings times 12.  For leases whose rent commences after January 1, 2012 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, 2011 aggregating 131,588 square feet and representing annualized rent of $3,216,893 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, 2012, 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 (%)
             
2012 (c)
65
562,032
12.4
7,380,907
13.13
12.2
             
2013
98
838,144
18.6
11,922,481
14.22
19.9
             
2014
58
557,770
12.3
6,399,169
11.47
10.7
             
2015
51
412,528
9.1
5,142,977
12.47
8.6
             
2016
47
452,683
10.1
6,537,555
14.44
10.9
             
2017
42
371,739
8.3
4,698,841
12.64
7.8
             
2018
32
374,111
8.3
4,888,547
13.07
8.2
             
2019
20
417,458
9.3
5,828,801
13.96
9.7
             
2020
11
173,548
3.9
2,100,394
12.10
3.5
             
2021
16
143,195
3.2
2,321,271
16.21
3.9
             
2022
5
62,542
1.4
835,452
13.36
1.4
             
2023 and thereafter
7
137,815
3.1
1,893,603
13.74
3.2
Totals/Weighted
            
  Average
452
4,503,565 (c)
100.0
59,949,998
13.31
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 2011 billings times 12.  For leases whose rent commences after January 1, 2012, 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. Includes office/flex tenants only.  Excludes leases for amenity, retail, parking and month-to-month tenants.  Some tenants have multiple leases.
(c)  
Includes leases expiring December 31, 2011 aggregating 61,625 square feet and representing annualized rent of $642,596 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, 2012, 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 (%)
             
2013
12
289,387
76.4
2,723,774
9.41
67.3
             
2014
3
30,545
8.0
649,926
21.28
16.1
             
2015
1
28,000
7.4
336,000
12.00
8.3
             
2016
4
30,988
8.2
335,206
10.82
8.3
Totals/Weighted
            
  Average
20
378,920
100.0
4,044,906
10.67
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 2011 billings times 12.  For leases whose rent commences after January 1, 2012, 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, 2012 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
39.2
             
2023 and thereafter
1
8,000
46.2
272,000
34.00
60.8
Totals/Weighted
            
  Average
2
17,300
100.0
447,000
25.84
100.0

(a)  
Includes stand-alone retail property tenants only.
(b)  
Annualized base rental revenue is based on actual December 2011 billings times 12.  For leases whose rent commences after January 1, 2012 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
88,616,772
14.3
3,211,570
11.8
Insurance Carriers & Related Activities
61,285,614
9.9
2,404,868
8.9
Manufacturing
52,950,735
8.5
2,649,193
9.8
Telecommunications
37,721,881
6.1
1,988,041
7.4
Legal Services
35,977,736
5.8
1,361,191
5.0
Health Care & Social Assistance
32,351,167
5.2
1,542,449
5.7
Credit Intermediation & Related Activities
29,136,526
4.7
1,048,160
3.9
Computer System Design Svcs.
26,627,688
4.3
1,283,363
4.7
Accounting/Tax Prep.
23,402,046
3.8
896,686
3.3
Scientific Research/Development
20,583,666
3.3
727,529
2.7
Wholesale Trade
20,116,078
3.2
1,374,399
5.1
Architectural/Engineering
16,575,220
2.7
720,632
2.7
Admin & Support, Waste Mgt. & Remediation Svcs.
15,970,138
2.6
775,172
2.9
Public Administration
14,746,349
2.4
565,615
2.1
Retail Trade
13,972,976
2.3
695,193
2.6
Other Services (except Public Administration)
13,793,496
2.2
554,157
2.1
Management/Scientific
13,153,395
2.1
531,811
2.0
Arts, Entertainment & Recreation
11,779,249
1.9
694,807
2.6
Accommodation & Food Services
11,722,977
1.9
501,945
1.9
Real Estate & Rental & Leasing
11,305,724
1.8
549,386
2.0
Advertising/Related Services
8,936,919
1.4
357,038
1.3
Other Professional
7,283,439
1.2
319,479
1.2
Construction
6,585,664
1.1
337,640
1.2
Information Services
6,268,737
1.0
246,120
0.9
Data Processing Services
6,164,458
1.0
240,815
0.9
Transportation
5,584,093
0.9
294,591
1.1
Publishing Industries
5,439,156
0.9
211,483
0.8
Broadcasting
5,076,675
0.8
185,449
0.7
Utilities
4,455,033
0.7
184,709
0.7
Educational Services
3,745,731
0.6
194,229
0.7
Other
9,162,777
1.4
382,006
1.3
         
TOTAL
620,492,115
100.0
27,029,726
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 2011 billings times 12.  For leases whose rent commences after January 1, 2012, 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, 2011 aggregating 193,213 square feet and representing annualized rent of $3,859,489 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)
136,429,110
22.0
6,495,715
20.8
Jersey City, NJ
118,116,795
19.1
4,317,978
13.9
Westchester-Rockland, NY
89,899,553
14.5
4,968,420
15.9
Bergen-Passaic, NJ
82,860,244
13.4
4,573,554
14.7
Philadelphia, PA-NJ
53,651,026
8.6
3,529,994
11.3
Middlesex-Somerset-Hunterdon, NJ
44,032,367
7.1
2,320,685
7.4
Washington, DC-MD-VA-WV
27,250,692
4.4
1,292,807
4.1
Monmouth-Ocean, NJ
25,645,417
4.1
1,620,863
5.2
Trenton, NJ
18,235,147
2.9
956,597
3.1
New York (Manhattan)
14,555,106
2.3
524,476
1.7
Stamford-Norwalk, CT
9,816,658
1.6
597,747
1.9
         
Totals
620,492,115
100.0
31,198,836
100.0

(a)
Annualized base rental revenue is based on actual December 2011 billings times 12.  For leases whose rent commences after January 1, 2012, 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, 2011 aggregating 193,213 square feet and representing annualized rent of $3,859,489 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.      MINE SAFETY DISCLOSURE

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, 2011 and 2010, respectively:

For the Year Ended December 31, 2011:
       
 
High
Low
Close
First Quarter
$35.44
$31.99
$33.90
Second Quarter
$35.96
$31.12
$32.94
Third Quarter
$34.77
$25.70
$26.75
Fourth Quarter
$28.91
$23.71
$26.69
       
For the Year Ended December 31, 2010:
       
 
High
Low
Close
First Quarter
$36.31
$30.33
$35.25
Second Quarter
$38.74
$29.22
$29.73
Third Quarter
$33.81
$27.77
$32.71
Fourth Quarter
$34.88
$29.85
$33.06

On February 6, 2012, the closing Common Stock price reported on the NYSE was $29.27 per share.

On June 21, 2011, 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 6, 2012, the Company had 484 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, 2011, the Company issued 573,983 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, 2011, 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 2011, the Company declared quarterly preferred stock cash dividends of $50.00 per preferred share from the first to the third quarter.  In connection with the redemption of its Series C Preferred Stock on October 28, 2011, the Company paid accrued and unpaid dividends through the date prior to the redemption date.

 
39
 


During the year ended December 31, 2010, 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 2010, 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, cash flows, 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 FTSE NAREIT Equity REIT 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, 2006 and that all dividends were reinvested.  The price of the Company’s Common Stock on December 31, 2006 (on which the graph is based) was $51.00.  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, 2011, 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
371,317 (2)
29.51 (3)
2,343,337
Equity Compensation Plans Not Approved by Stockholders(1)
98,009
N/A
N/A  (4)
Total
469,326
N/A
2,343,337
       
 
 
   
 
(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 Stockholders’ Equity - Deferred Stock Compensation Plan For Directors.

(2)           Includes 187,447 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, 2011, 2010, 2009, 2008 and 2007, 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
2011
2010
2009
2008
2007
Total revenues
$  724,279
$  787,480
$   758,925
$   772,780
$   803,162
Property expenses (b)
$  278,392
$  282,064
$   274,418
$   277,142
$   268,404
Direct construction costs
$    11,458
$    60,255
$     20,323
$     37,649
$     85,180
General and administrative
$    35,541
$    35,003
$     39,779
$     43,861
$     52,156
Interest expense
$  125,975
$  149,329
$   140,068
$   126,937
$   125,467
Income from continuing operations
$    81,387
$    58,750
$     80,308
$     65,390
$     88,790
Net income available to common shareholders
$    69,684
$    52,900
$     52,568
$     51,726
$   108,466
Income from continuing operations
          
  per share – basic
$        0.81
$        0.62
$         0.90
$         0.79
$         1.06
Income from continuing operations
          
  per share – diluted
$        0.81
$        0.62
$         0.90
$         0.79
$         1.06
Net income per share – basic
$        0.81
$        0.67
$         0.71
$         0.79
$         1.62
Net income per share – diluted
$        0.81
$        0.67
$         0.71
$         0.79
$         1.61
Dividends declared per common share
$        1.80
$        1.80
$         1.80
$         2.56
$         2.56
Basic weighted average shares outstanding
86,047
79,224
74,318
65,489
67,026
Diluted weighted average shares outstanding
98,962
92,477
88,389
80,648
82,500

Balance Sheet Data
December 31,
In thousands
2011
2010
2009
2008
2007
Rental property, before accumulated
          
  depreciation and amortization
$5,279,770
$5,216,720
$5,186,208
$4,963,780
$4,885,429
Total assets
$4,295,759
$4,362,466
$4,721,637
$4,443,922
$4,593,202
Total debt (c)
$1,914,215
$2,089,494
$2,337,437
$2,225,475
$2,211,735
Total liabilities
$2,141,759
$2,318,529
$2,578,447
$2,484,559
$2,492,797
Total Mack-Cali Realty Corporation
          
  stockholders’ equity
$1,889,564
$1,758,272
$1,831,458
$1,544,463
$1,642,555
Total noncontrolling interests in subsidiaries
$   264,436
$   285,665
$   311,732
$   414,900
$   457,850
           
 
(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 278 properties (collectively, the “Properties”), primarily class A office and office/flex buildings, totaling approximately 32.4 million square feet, leased to over 2,000 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 12.3 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 88.3 percent at December 31, 2011 as compared to 89.1 percent at December 31, 2010 and 90.1 percent at December 31, 2009.  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, 2011, 2010 and 2009 aggregate 193,213, 187,058 and 64,672 square feet, respectively, or 0.6, 0.6 and 0.2 percentage of the net rentable square footage, respectively.  The Company believes that vacancy rates may continue to increase and rental rates may continue to decline in some of its markets through 2012 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
 

The Company expects that the impact of the current state of the economy, including high unemployment will continue to have a negative effect on the fundamentals of its business, including lower occupancy, reduced effective rents, and increases in defaults and past due accounts.  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.

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

· 
transactions;
· 
critical accounting policies and estimates;
· 
results of operations for the year ended December 31, 2011 as compared to the year ended December 31, 2010;
· 
results of operations for the year ended December 31, 2010 as compared to the year ended December 31, 2009;
· 
liquidity and capital resources.


Summary of Transactions

On February 18, 2011, the Company completed a public offering of 7,187,500 shares of common stock and used the net proceeds, which totaled approximately $227.4 million (after offering costs) primarily to repay borrowings under its unsecured revolving credit facility.

On May 1, 2011, the Company placed in service 55 Corporate Drive, a 204,057 square-foot office building located in Bridgewater, New Jersey. The Company incurred total costs on the project of approximately $48.1 million through December 31, 2011.

In August 2011, the Company commenced construction of a 203,000 square foot office building which is pre-leased for 15 years and 3 months, subject to two extension options of between five and 10 years each, to Wyndham Worldwide.  Wyndham currently leases space in neighboring buildings in the Mack-Cali Business Campus in Parsippany, New Jersey.  The new building is expected to be delivered to the tenant in the first quarter of 2013 at a total estimated cost of approximately $53.5 million.

On December 5, 2011, the Company entered into a development agreement (the “Development Agreement”) with Ironstate Development LLC (“Ironstate”) for the development of up to 2 million square feet of residential space with associated parking and ancillary retail space on land owned by the Company at its Harborside Financial Center complex in Jersey City, New Jersey (the “Harborside Residential Project”).  The first phase of the project is expected to consist of a parking pedestal to support two high-rise towers of approximately 500 apartment units each, and estimated to cost approximately $400 million.  The parties anticipate a fourth quarter 2012 ground breaking and the project will be ready for occupancy within approximately two years thereafter.

Pursuant to the Development Agreement, the Company and Ironstate shall co-develop the Harborside Residential Project with Ironstate responsible for obtaining all required development permits and approvals.  Major decisions with respect to the Harborside Residential Project will require the consent of the Company and Ironstate.  The Company and Ironstate will have 85 and 15 percent interests, respectively, in the Harborside Residential Project.  The Company will receive capital credit of $30 per approved developable square foot for its land.

The Development Agreement is subject to obtaining required approvals and development financing as well as numerous customary undertakings, covenants, obligations and conditions.  The Company has the right to reasonably determine that any phase of the Harborside Residential Project is not economically viable and may elect not to proceed, subject to certain conditions, with no further obligations to Ironstate other than reimbursement to Ironstate of all or a portion of the costs incurred by it to obtain any required approvals.



 
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, 2011, 2010 and 2009 was $1.1 million, $1.9 million and $1.4 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.  In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment.  The criteria considered by management include reviewing low leased percentages, significant near-term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near-term mortgage debt maturities or other factors that might impact the Company’s intent and ability to hold the property.  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.  These assumptions are generally based on management’s experience in its local real estate markets and the effects of current market conditions.  The assumptions 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, and actual losses or impairments may be realized in the future.

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.
 
 
 
46
 

 
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 VIEs (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 January 1, 2010, the Company adopted the updated provisions of ASC 810, which amends FIN 46(R) to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  Additionally, ASC 810 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.  ASC 810 amends certain guidance in Interpretation 46(R) for determining whether an entity is a variable interest entity.  Also, ASC 810 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.  The adoption of this guidance did not have a material impact to the Financial Statements.  See Note 4: Investments in Unconsolidated Joint Ventures to the Financial Statements for disclosures regarding the Company’s unconsolidated joint ventures.

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, and actual losses or impairment may be realized in the future.

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.
 
 
 
47
 
 

 
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.

 
48
 

Results From Operations

The following comparisons for the year ended December 31, 2011 (“2011”), as compared to the year ended December 31, 2010 (“2010”), and for 2010 as compared to the year ended December 31, 2009 (“2009”), 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, 2009, (for the 2011 versus 2010 comparison) and which represent all in-service properties owned by the Company at December 31, 2008, (for the 2010 versus 2009 comparison), excluding properties sold or held for sale through December 31, 2011; 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, 2010 through December 31, 2011 (for the 2011 versus 2010 comparison) and which represent all properties acquired by the Company or commencing initial operation from January 1, 2009 through December 31, 2010 (for the 2010 versus 2009 comparison).

 
49
 


Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
 
   
Year Ended
              
   
December 31,
    
Dollar
    
Percent
  
(dollars in thousands)
  
2011
    
2010
    
Change
    
Change
  
Revenue from rental operations and other:
                        
Base rents
   $ 600,163     $ 602,357     $ (2,194 )     (0.4 )%
Escalations and recoveries from tenants
     94,047       101,699       (7,652 )     (7.5 )
Other income
     12,812       12,553       259       2.1  
Total revenues from rental operations
     707,022       716,609       (9,587 )     (1.3 )
                                 
Property expenses:
                                
Real estate taxes
     87,473       93,535       (6,062 )     (6.5 )
Utilities
     73,274       74,077       (803 )     (1.1 )
Operating services
     117,645       114,452       3,193       2.8  
Total property expenses
     278,392       282,064       (3,672 )     (1.3 )
                                 
Non-property revenues:
                                
Construction services
     12,058       62,997       (50,939 )     (80.9 )
Real estate services
     5,199       7,874       (2,675 )     (34.0 )
Total non-property revenues
     17,257       70,871       (53,614 )     (75.7 )
                                 
Non-property expenses:
                                
Direct construction costs
     11,458       60,255       (48,797 )     (81.0 )
General and administrative
     35,541       35,003       538       1.5  
Depreciation and amortization
     193,587       191,168       2,419       1.3  
Impairment charge on rental property
     --       9,521       (9,521 )     (100.0 )
Total non-property expenses
     240,586       295,947       (55,361 )     (18.7 )
Operating  income
     205,301       209,469       (4,168 )     (2.0 )
Other (expense) income:
                                
Interest expense
     (125,975 )     (149,329 )     23,354       15.6  
Interest and other investment income
     39       86       (47 )     (54.7 )
Equity in earnings (loss) of unconsolidated
                                
joint ventures
     2,022       2,276       (254 )     (11.2 )
Loss from early extinguishment of debt
     --       (3,752 )     3,752       100.0  
Total other (expense) income
     (123,914 )     (150,719 )     26,805       17.8  
Income from continuing operations
     81,387       58,750       22,637       38.5  
Discontinued Operations:
                                
Income (loss) from discontinued operations
     --       242       (242 )     (100.0 )
Realized gains (losses) and unrealized losses
                                
  on disposition of rental property, net
     --       4,447       (4,447 )     (100.0 )
Total discontinued operations, net
     --       4,689       (4,689 )     (100.0 )
Net income
     81,387       63,439       17,948       28.3  
Noncontrolling interest in consolidated joint
                                
ventures
     402       262       140       53.4  
Noncontrolling interest in Operating Partnership
     (10,369 )     (8,133 )     (2,236 )     (27.5 )
Noncontrolling interest in discontinued operations
     --       (668 )     668       100.0  
Preferred stock dividends
     (1,736 )     (2,000 )     264       13.2  
                                 
Net income available to common shareholders
   $ 69,684     $ 52,900     $ 16,784       31.7 %

 
50
 


The following is a summary of the changes in revenue from rental operations and property expenses in 2011 as compared to 2010 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
   $ (2,194 )     (0.4 )%   $ (9,536 )     (1.6 )%   $ 7,342       1.2 %
Escalations and recoveries
                                                
   from tenants
     (7,652 )     (7.5 )     (7,842 )     (7.7 )     190       0.2  
Other income
     259       2.1       224       1.8       35       0.3  
Total
   $ (9,587 )     (1.3 )%   $ (17,154 )     (2.4 )%   $ 7,567       1.1 %
                                                 
Property expenses:
                                                
Real estate taxes
   $ (6,062 )     (6.5 )%   $ (6,366 )     (6.8 )%   $ 304       0.3 %
Utilities
     (803 )     (1.1 )     (1,120 )     (1.5 )     317       0.4  
Operating services
     3,193       2.8       2,371       2.1       822       0.7  
Total
   $ (3,672 )     (1.3 )%   $ (5,115 )     (1.8 )%   $ 1,443       0.5 %
                                                 
OTHER DATA:
                                                
Number of Consolidated Properties
     269               267               2          
Square feet (in thousands)
     31,199               30,797               402          

Base rents for the Same-Store Properties decreased $9.5 million, or 1.6 percent, for 2011 as compared to 2010, due primarily to decreased occupancy and rental rates in 2011 over 2010.  Escalations and recoveries from tenants for the Same-Store Properties decreased $7.8 million, or 7.7 percent, for 2011 over 2010, due primarily to lower recoveries from newer tenants in 2011, as well as lower property expenses in 2011 (primarily from greater refunds on tax appeals), as compared to 2010.  Other income for the Same-Store Properties increased $0.2 million, or 1.8 percent, due primarily to an increase in lease termination fees recognized in 2011 as compared to 2010.

Real estate taxes on the Same-Store Properties decreased $6.4 million, or 6.8 percent, for 2011 as compared to 2010, due primarily to greater refunds on tax appeals received in 2011 as compared to 2010.  Utilities for the Same-Store Properties decreased $1.1 million, or 1.5 percent, for 2011 as compared to 2010, due primarily to lower rates in 2011 as compared to 2010.  Operating services for the Same-Store Properties increased $2.4 million, or 2.1 percent, due primarily to increases in maintenance and snow removal costs in 2011 as compared to 2010.

Construction services revenue decreased $50.9 million, or 80.9 percent, in 2011 as compared to 2010, due primarily to decreased contracts in 2011.  Real estate services revenues decreased by $2.7 million, or 34.0 percent, for 2011 as compared to 2010, due primarily to a decrease in properties under management in 2011 as compared to 2010.

Direct construction costs decreased $48.8 million, or 81.0 percent, in 2011 as compared to 2010, due primarily to decreased construction contracts in 2011.

General and administrative increased by $0.5 million, or 1.5 percent, for 2011 as compared to 2010 due primarily to an increase in salaries and related expenses in 2011.

Depreciation and amortization increased by $2.4 million, or 1.3 percent, for 2011 over 2010.  This increase was due primarily to the effect of the Acquired Properties.

In 2010, the Company incurred a $9.5 million impairment charge on a rental property.
 
 
 
 
51
 
 

 
Interest expense decreased $23.4 million, or 15.6 percent, for 2011 as compared to 2010.  This decrease was primarily as a result of lower average debt balances in 2011 as compared to 2010, primarily from proceeds received from the common stock offering in 2011.

Interest and other investment income was relatively unchanged for 2011 as compared to 2010.
 
 
Equity in earnings of unconsolidated joint ventures decreased $0.3 million, or 11.2 percent, for 2011 as compared to 2010.  The decrease was due primarily to income of $1.9 million in 2010 from the Gale Kimball venture (which sold its office property in late 2010).  This was partially offset by increased income of $1.2 million (due primarily to renovated rooms returned to service in 2011), in the Harborside South Pier venture in 2011 as compared to 2010, and a loss of $0.4 million in 2010 from the Princeton Forrestal Village venture (which sold its property in late 2010).

The Company recognized a loss from early extinguishment of debt of $3.8 million in 2010 as a result of the prepayment of $300 million of senior unsecured notes in 2010 which were scheduled to mature in February 2011.

Income from continuing operations increased to $81.4 million in 2011 from $58.8 million in 2010.  The increase of $22.6 million was due to the factors discussed above.

Net income available to common shareholders increased by $16.8 million, or 31.7 percent, from $52.9 million in 2010 to $69.7 million in 2011.  The increase was primarily the result of an increase in income from continuing operations of $22.6 million, a decrease in noncontrolling interest in discontinued operations of $0.7 million, a decrease in preferred stock dividends of $0.3 million (due to the redemption of the preferred stock in 2011), and an increase in noncontrolling interest in consolidated joint ventures of $0.1 million for 2011 as compared to 2010.  These were partially offset by a realized gain on disposition of rental property of $4.4 million in 2010, an increase in noncontrolling interest in Operating Partnership of $2.2 million for 2011 as compared to 2010, and a decrease in income from discontinued operations of approximately $0.3 million for 2011 as compared to 2010.


 
52
 


Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

   
Year Ended
              
   
December 31,
    
Dollar
    
Percent
  
(dollars in thousands)
  
2010
    
2009
    
Change
    
Change
  
Revenue from rental operations and other:
                        
Base rents
   $ 602,357     $ 611,061     $ (8,704 )     (1.4 )%
Escalations and recoveries from tenants
     101,699       103,057       (1,358 )     (1.3 )
Other income
     12,553       13,538       (985 )     (7.3 )
Total revenues from rental operations
     716,609       727,656       (11,047 )     (1.5 )
                                 
Property expenses:
                                
Real estate taxes
     93,535       93,322       213       0.2  
Utilities
     74,077       70,927       3,150       4.4  
Operating services
     114,452       110,169       4,283       3.9  
Total property expenses
     282,064       274,418       7,646       2.8  
                                 
Non-property revenues:
                                
Construction services
     62,997       21,910       41,087       187.5  
Real estate services
     7,874       9,359       (1,485 )     (15.9 )
Total non-property revenues
     70,871       31,269       39,602       126.6  
                                 
Non-property expenses:
                                
Direct construction costs
     60,255       20,323       39,932       196.5  
General and administrative
     35,003       39,779       (4,776 )     (12.0 )
Depreciation and amortization
     191,168       200,732       (9,564 )     (4.8 )
Impairment charge on rental property
     9,521       --       9,521       --  
Total non-property expenses
     295,947       260,834       35,113       13.5  
Operating  income
     209,469       223,673       (14,204 )     (6.4 )
Other (expense) income:
                                
Interest expense
     (149,329 )     (140,068 )     (9,261 )     (6.6 )
Interest and other investment income
     86       570       (484 )     (84.9 )
Equity in earnings (loss) of unconsolidated
                                
joint ventures
     2,276       (5,560 )     7,836       140.9  
Loss from early extinguishment of debt
     (3,752 )     --       (3,752 )     --  
Gain on reduction of other obligations
     --       1,693       (1,693 )     (100.0 )
Total other (expense) income
     (150,719 )     (143,365 )     (7,354 )     (5.1 )
Income from continuing operations
     58,750       80,308       (21,558 )     (26.8 )
Discontinued Operations:
                                
Income (loss) from discontinued operations
     242       (17 )     259       1,523.5  
Impairment charge on rental property
     --       (16,563 )     16,563       100.0  
Realized gains (losses) and unrealized losses
                                
  on disposition of rental property, net
     4,447       --       4,447       --  
Total discontinued operations, net
     4,689       (16,580 )     21,269       128.3  
Net income
     63,439       63,728       (289 )     (0.5 )
Noncontrolling interest in consolidated joint
                                
ventures
     262       943       (681 )     (72.2 )
Noncontrolling interest in Operating Partnership
     (8,133 )     (12,550 )     4,417       35.2  
Noncontrolling interest in discontinued operations
     (668 )     2,447       (3,115 )     (127.3 )
Preferred stock dividends
     (2,000 )     (2,000 )     --       --  
                                 
Net income available to common shareholders
   $ 52,900     $ 52,568     $ 332       0.6 %

 
53
 


The following is a summary of the changes in revenue from rental operations and property expenses in 2010 as compared to 2009 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
   $ (8,704 )     (1.4 )%   $ (19,418 )     (3.2 )%   $ 10,714       1.8 %
Escalations and recoveries
                                                
   from tenants
     (1,358 )     (1.3 )     (2,583 )     (2.5 )     1,225       1.2  
Other income
     (985 )     (7.3 )     (975 )     (7.2 )     (10 )     (0.1 )
Total
   $ (11,047 )     (1.5 )%   $ (22,976 )     (3.2 )%   $ 11,929       1.7 %
                                                 
Property expenses:
                                                
Real estate taxes
   $ 213       0.2 %   $ (1,416 )     (1.5 )%   $ 1,629       1.7 %
Utilities
     3,150       4.4       2,807       4.0       343       0.4  
Operating services
     4,283       3.9       2,216       2.0       2,067       1.9  
Total
   $ 7,646       2.8 %   $ 3,607       1.3 %   $ 4,039       1.5 %
                                                 
OTHER DATA:
                                                
Number of Consolidated Properties
     268               254               14          
Square feet (in thousands)
     30,995               29,095               1,900          

Base rents for the Same-Store Properties decreased $19.4 million, or 3.2 percent, for 2010 as compared to 2009, due primarily to decreased occupancy and rental rates in 2010 over 2009.  Escalations and recoveries from tenants for the Same-Store Properties decreased $2.6 million, or 2.5 percent, for 2010 over 2009, due primarily to lower recoveries from newer tenants in 2010. Other income for the Same-Store Properties decreased $1.0 million, or 7.2 percent, due primarily to a decrease in tenant extra services in 2010.

Real estate taxes on the Same-Store Properties decreased $1.4 million, or 1.5 percent, for 2010 as compared to 2009, due primarily to reductions in certain property tax assessments and real estate tax refunds in 2010.  Utilities for the Same-Store Properties increased $2.8 million, or 4.0 percent, for 2010 as compared to 2009, due primarily to increased usage and rates in 2010 as compared to 2009.  Operating services for the Same-Store Properties increased $2.2 million, or 2.0 percent, due primarily to an increase in snow removal and maintenance costs in 2010 as compared to 2009.

Construction services revenue increased $41.1 million, or 187.5 percent, in 2010 as compared to 2009, due primarily to increased construction contracts in 2010.  Real estate services revenues decreased by $1.5 million, or 15.9 percent, for 2010 as compared to 2009, due primarily to decreases in management fee income of $0.6 million, salary reimbursements of $0.6 million, and commissions income of $0.3 million on account of a reduction in third party management and leasing assignments in 2010.

Direct construction costs increased $39.9 million, or 196.5 percent, in 2010 as compared to 2009, due primarily to increased construction contracts in 2010.

General and administrative decreased by $4.8 million, or 12.0 percent, for 2010 as compared to 2009 due primarily to decreases in salaries and related expenses and professional fees in 2010.

Depreciation and amortization decreased by $9.6 million, or 4.8 percent, for 2010 over 2009.  This decrease was due primarily to assets becoming fully amortized in 2010.

In 2010, the Company incurred a $9.5 million impairment charge on a rental property.

Interest expense increased $9.3 million, or 6.6 percent, for 2010 as compared to 2009.  This increase was primarily as a result of higher average debt balances and interest rates in 2010 as compared to 2009.
 
 
 
54
 
 

 
Interest and other investment income decreased $0.5 million, or 84.9 percent, for 2010 as compared to 2009.  This decrease was due primarily to the repayment of a note receivable in late 2009.

Equity in earnings of unconsolidated joint ventures increased $7.8 million, or 140.9 percent, for 2010 as compared to 2009.  The increase was due primarily to the write-off in 2009 of the Company’s investment in the Route 93 Portfolio venture for an increased loss of $4.4 million, a decreased loss of $4.1 million in the Boston-Downtown Crossing venture for 2010 as compared to 2009, increased income of $1.3 million in the Gale Kimball venture for 2010 as compared to 2009.  These were partially offset by decreased income of $2.6 million from the Harborside South Pier venture for 2010 as compared to 2009.

The Company recognized a loss from early extinguishment of debt of $3.8 million in 2010 as a result of the prepayment of $300 million of senior unsecured notes in 2010 which were scheduled to mature in February 2011.

The Company had a gain on reduction of other obligations of $1.7 million on account of the expiration of certain assumed obligations in 2009.

Income from continuing operations decreased to approximately $58.7 million in 2010 from $80.3 million in 2009.  The decrease of $21.6 million was due to the factors discussed above.

Net income available to common shareholders increased by $0.3 million, or 0.6 percent, from $52.6 million in 2009 to $52.9 million in 2010.  The increase was primarily the result of an impairment charge on rental property of $16.6 million in 2009, a realized gain on disposition of rental property of $4.4 million, an increase in noncontrolling interest in Operating Partnership of $4.4 million, and an increase in income from discontinued operation of $0.3 million for 2010 as compared to 2009.  These were partially offset by a decrease in income from continuing operations of $21.6 million, a decrease in noncontrolling interest in discontinued operations of $3.1 million, and a decrease in noncontrolling interest in consolidated joint ventures of $0.7 million for 2010 as compared to 2009.



 
55
 

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 2012 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, to the extent available, 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.

Construction Projects:
In August 2011, the Company commenced construction of a 203,000 square foot office building which is pre-leased for 15 years and three months, subject to two extension options of between five and 10 years each, to Wyndham Worldwide.  Wyndham currently leases space in neighboring buildings in the Mack-Cali Business Campus in Parsippany, New Jersey.  The new building is expected to be delivered to the tenant in the first quarter of 2013 at a total estimated cost of approximately $53.5 million (of which the Company has incurred $14.4 million through December 31, 2011).

On December 5, 2011, the Company entered into a development agreement (the “Development Agreement”) with Ironstate Development LLC (“Ironstate”) for the development of up to 2 million square feet of residential space with associated parking and ancillary retail space on land owned by the Company at its Harborside Financial Center complex in Jersey City, New Jersey (the “Harborside Residential Project”).  The first phase of the project is expected to consist of a parking pedestal to support two high-rise towers of approximately 500 apartment units each, and estimated to cost approximately $400 million.  The parties anticipate a fourth quarter 2012 ground breaking and the project will be ready for occupancy within approximately two years thereafter.

Pursuant to the Development Agreement, the Company and Ironstate shall co-develop the Harborside Residential Project with Ironstate responsible for obtaining all required development permits and approvals.  Major decisions with respect to the Harborside Residential Project will require the consent of the Company and Ironstate.  The Company and Ironstate will have 85 and 15 percent interests, respectively, in the Harborside Residential Project.  The Company will receive capital credit of $30 per approved developable square foot for its land.

The Development Agreement is subject to obtaining required approvals and development financing as well as numerous customary undertakings, covenants, obligations and conditions.  The Company has the right to reasonably determine that any phase of the Harborside Residential Project is not economically viable and may elect not to proceed, subject to certain conditions, with no further obligations to Ironstate other than reimbursement to Ironstate of all or a portion of the costs incurred by it to obtain any required approvals.
 
 
 
56
 
 

 
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 $158.0 million ($180.0 million, including common units in the Operating Partnership, held by parties other than the Company) 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 seven properties with an aggregate net book value of approximately $131.6 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 Robert F. Weinberg, 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, 2011, 129 of the Company’s properties, with an aggregate net book value of approximately $1.7 billion, have lapsed restrictions and are subject to these conditions.

Unencumbered Properties:
As of December 31, 2011, the Company had 237 unencumbered properties, totaling 24.5 million square feet, representing 78.6 percent of the Company’s total portfolio on a square footage basis.


Cash Flows

Cash and cash equivalents decreased by $1.3 million to $20.5 million at December 31, 2011, compared to $21.8 million at December 31, 2010.  This decrease is comprised of the following net cash flow items:

(1)  
$252.1 million provided by operating activities.
 
 
 
57
 
 

 
(2)  
$94.2 million used in investing activities, consisting primarily of the following:

(a)  
$91.7 million used for additions to rental property; plus
(b)  
$0.5 million used for investments in unconsolidated joint ventures; plus
(c)  
$3.4 million used for restricted cash; minus
(d)  
$1.5 million received from distributions in excess of cumulative earnings from unconsolidated joint ventures.

(3)  
$159.2 million used in financing activities, consisting primarily of the following:

(a)  
$472.0 million used for repayments of borrowings under the Company’s unsecured credit facility; plus
(b)  
$178.5 million used for payments of dividends and distributions; plus
(c)  
$25.0 million used for the redemption of preferred stock; plus
(d)  
$8.7 million used for repayments of mortgages, loans payable and other obligation; plus
(e)  
$5.0 million used for payments of financing costs; minus
(f)  
$299.5 million from borrowings under the revolving credit facility; minus
(g)  
$227.4 million from proceeds received from common stock offerings; minus
(h)  
$3.0 million from proceeds received from stock options exercised.


Debt Financing

Summary of Debt:
The following is a breakdown of the Company’s debt between fixed and variable-rate financing as of December 31, 2011.

 
Balance
  
Weighted Average
Weighted Average Maturity
 
($000’s)
% of Total
Interest Rate (a)
in Years
Fixed Rate Unsecured Debt and
        
  Other Obligations
$1,119,267
58.47%
6.08%
3.45
Fixed Rate Secured Debt
728,448
38.06%
7.46%
5.53
Variable Rate Secured Debt
11,000
0.57%
2.90%
1.00
Variable Rate Unsecured Debt
55,500
2.90%
1.54% (b)
3.81
         
Totals/Weighted Average:
$1,914,215
100.00%
6.46%
4.24
         
(a)   The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 0.29 percent as of December 31, 2011.
(b)   Excludes amortized deferred financing costs pertaining to the Company’s unsecured revolving credit facility which amounted to $2.6 million for the year ended December 31, 2011.
 


 
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Debt Maturities:
Scheduled principal payments and related weighted average annual interest rates for the Company’s debt as of December 31, 2011 are as follows:

   
Scheduled
    
Principal
          
Weighted Avg.
    
   
Amortization
    
Maturities
    
Total
    
Interest Rate of
    
Period
  
($000’s)
    
($000’s)
    
($000’s)
    
Future Repayments (a)
    
2012
   $ 11,159     $ 221,148     $ 232,307       6.05%    
2013
     11,315       145,223       156,538       5.39%    
2014
     10,468       335,257       345,725       6.82%    
2015
     8,941       205,500       214,441       4.41%  
(b)
2016
     8,753       273,120       281,873       7.16%    
Thereafter
     26,992       679,562       706,554       7.15%    
Sub-total
     77,628       1,859,810       1,937,438            
Adjustment for unamortized debt
                                  
  discount/premium and
                                  
  mark-to-market, net, as of
                                  
  December 31, 2011
     (23,223 )     --       (23,223 )          
                                   
Totals/Weighted Average
   $ 54,405     $ 1,859,810     $ 1,914,215       6.46%    
                                   
(a)  The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 0.29 percent as of December 31, 2011.
    
(b)  Excludes amortized deferred financing costs pertaining to the Company’s unsecured revolving credit facility which amounted to $2.6 million for the year ended December 31, 2011.
    

Senior Unsecured Notes:
The terms of the Company’s senior unsecured notes (which totaled approximately $1.1 billion as of December 31, 2011) 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:
On October 21, 2011, the Company amended and restated its unsecured revolving credit facility with a group of 20 lenders.  The $600 million facility is expandable to $1 billion and matures in October 2015. It has a one year extension option with the payment of a 20 basis point fee.  The interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) and the facility fee on the current borrowing capacity payable quarterly in arrears are based upon the Operating Partnership’s unsecured debt ratings, as follows:

Operating Partnership’s
Interest Rate –
  
Unsecured Debt Ratings:
Applicable Basis Points
Facility Fee
Higher of S&P or Moody’s
Above LIBOR
Basis Points
No ratings or less than BBB-/Baa3
185.0
45.0
BBB- or Baa3
150.0
35.0
BBB or Baa2(current)
125.0
25.0
BBB+or  Baa1
107.5
20.0
A-or A3 or higher
100.0
17.5

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 those above.

The terms of the unsecured facility include certain restrictions and covenants which limit, among other things 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.  If an event of default has occurred and is continuing, the Company will not make any excess distributions except to enable the Company to continue to qualify as a REIT under the Code.
 
 
 
59
 
 

 
The lending group for the credit facility consists of: JPMorgan Chase Bank, N.A., as administrative agent; Bank of America, N.A., as syndication agent; Deutsche Bank Trust Company Americas; US Bank National Association and Wells Fargo Bank, N.A., as documentation agents; Capital One, N.A.; Citicorp North America, Inc.; Comerica Bank; PNC Bank, National Association; SunTrust Bank; The Bank of New York Mellon; The Bank of Tokyo-Mitsubishi UFJ, LTD., as managing agents; and Compass Bank; Branch Banking and Trust Company; TD Bank, N.A.; Citizens Bank of Pennsylvania; Chang Hwa Commercial Bank, LTD., New York Branch; Mega International Commercial Bank Co., LTD., New York Branch; First Commercial Bank, New York Branch; and Hua Nan Commercial Bank, LTD., New York Agency, as participants.

As of February 6, 2012, the Company had outstanding borrowings of $210 million under its unsecured revolving credit facility.

Through October 20, 2011, the Company had a $775 million unsecured revolving credit facility.  The interest rate on outstanding borrowings was LIBOR plus 55 basis points.

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, 2011, 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.

Debt Strategy:
The Company does not intend to reserve funds to retire the Company’s senior unsecured notes, borrowings under its unsecured revolving credit facility, 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 6, 2012, the Company had $210 million of outstanding borrowings under its $600 million unsecured revolving credit facility and no outstanding borrowings 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 2012.  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.



 
60
 

Equity Financing and Registration Statements


Common Equity:
On February 18, 2011, the Company completed a public offering of 7,187,500 shares of common stock and used the net proceeds, which totaled approximately $227.4 million (after offering costs) primarily 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, 2010 to December 31, 2011.

 
Common
Common
  
 
Stock
Units
Total
Outstanding at December 31, 2010
79,605,474
13,007,668
92,613,142
Common stock offering
7,187,500
--
7,187,500
Stock options exercised
107,806
--
107,806
Common units redeemed for Common Stock
810,546
(810,546)
--
Shares issued under Dividend Reinvestment
      
  and Stock Purchase Plan
6,417
--
6,417
Restricted shares issued
81,736
--
81,736
       
Outstanding at December 31, 2011
87,799,479
12,197,122
99,996,601

Preferred Stock:
On October 28, 2011, the Company redeemed its Series C Preferred Stock at a price of $2,500 per share, plus accrued and unpaid dividends through the date prior to the redemption date.  The write off of preferred stock issuance costs of $164,000 is included in preferred stock dividends for the year ended December 31, 2011.

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, 2011, 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 no securities have been sold as of February 6, 2012.
 
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 no securities have been sold as of February 6, 2012.
 
 
 
 
61
 

 

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 $5.5 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, 2011:

 
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
$1,413,242
$258,408
$431,590
$415,119
$308,125
--
Revolving credit facility
58,784
857
1,713
56,214
--
--
Mortgages, loans payable
            
  and other obligations
1,016,266
86,204
263,834
159,072
489,045
$18,111
Payments in lieu of taxes
            
  (PILOT)
45,753
4,407
13,222
8,815
19,309
--
Ground lease payments
18,145
367
1,089
638
1,162
14,889
Total
$2,552,190
$350,243
$711,448
$639,858
$817,641
$33,000


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,” “potential,” “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.

 
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Among the factors about which we have made assumptions are:

·  
risks and uncertainties affecting the general economic climate and conditions, 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 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.

Approximately $1.8 billion of the Company’s long-term debt as of December 31, 2011 bears interest at fixed rates and therefore the fair value of these instruments is affected by changes in market interest rates.  The following table presents principal cash flows (in thousands) based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the fixed rate debt.  The interest rates on the Company’s variable rate debt as of December 31, 2011 ranged from LIBOR plus 125 basis points to LIBOR plus 200 basis points.  If market rates of interest on the Company’s variable rate debt increased or decreased by 100 basis points, then the increase or decrease in interest costs on the Company’s variable rate debt would be approximately $665,000 annually and the increase or decrease in the fair value of the Company’s fixed rate debt as of December 31, 2011 would be approximately $70 million.

December 31, 2011
                    
Debt,
                  
Fair
including current portion
($’s in thousands)
2012
2013
2014
2015
2016
Thereafter
Sub-total
Other (a)
Total
Value
                     
Fixed Rate
$221,307
$156,538
$345,725
$158,941
$281,873
$706,554
$1,870,938
$(23,223)
$1,847,715
$1,995,718
Average Interest Rate
6.21%
5.39%
6.82%
5.40%
7.16%
7.15%
    
6.63%
  
                     
Variable Rate
$  11,000
    
$  55,500
    
$     66,500
  
$     66,500
$     66,500

(a)      Adjustment for unamortized debt discount/premium and mark-to-market, net, as of December 31, 2011.
 
 
 
63
 
 

 
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, 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.


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, 2011 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, 2011.
 
 
 
64
 
 

 
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, 2011 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.


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 June 5, 2012, 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 June 5, 2012, 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 June 5, 2012, 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 June 5, 2012, 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 June 5, 2012, 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, 2011 and 2010

Consolidated Statements of Operations for the Years Ended December 31, 2011, 2010 and 2009

Consolidated Statements of Changes in Equity for the Years Ended December 31, 2011, 2010 and 2009

Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and 2009

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, 2011

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, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011 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)(i) 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, 2011, 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.

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 8, 2012


 
67
 

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

   
December 31,
  
ASSETS
  
2011
    
2010
  
Rental property
            
Land and leasehold interests
   $ 773,026     $ 771,960  
Buildings and improvements
     4,001,943       3,970,177  
Tenant improvements
     500,336       470,098  
Furniture, fixtures and equipment
     4,465       4,485  
      5,279,770       5,216,720  
Less – accumulated depreciation and amortization
     (1,409,163 )     (1,278,985 )
Net investment in rental property
     3,870,607       3,937,735  
Cash and cash equivalents
     20,496       21,851  
Investments in unconsolidated joint ventures
     32,015       34,220  
Unbilled rents receivable, net
     134,301       126,917  
Deferred charges and other assets, net
     210,470       212,038  
Restricted cash
     20,716       17,310  
Accounts receivable, net of allowance for doubtful accounts
                
of $2,697 and $2,790
     7,154       12,395  
                 
Total assets
   $ 4,295,759     $ 4,362,466  
                 
LIABILITIES AND EQUITY
                
Senior unsecured notes
   $ 1,119,267     $ 1,118,451  
Revolving credit facility
     55,500       228,000  
Mortgages, loans payable and other obligations
     739,448       743,043  
Dividends and distributions payable
     44,999       42,176  
Accounts payable, accrued expenses and other liabilities
     100,480       101,944  
Rents received in advance and security deposits
     53,019       57,877  
Accrued interest payable
     29,046       27,038  
Total liabilities
     2,141,759       2,318,529  
Commitments and contingencies
                
                 
Equity:
                
Mack-Cali Realty Corporation stockholders’ equity:
                
Preferred stock, $0.01 par value, 5,000,000 shares authorized,
                
0 and 10,000 shares outstanding, at liquidation preference
     --       25,000  
Common stock, $0.01 par value, 190,000,000 shares authorized,
                
87,799,479 and 79,605,474 shares outstanding
     878       796  
Additional paid-in capital
     2,536,184       2,292,641  
Dividends in excess of net earnings
     (647,498 )     (560,165 )
Total Mack-Cali Realty Corporation stockholders’ equity
     1,889,564       1,758,272  
                 
Noncontrolling interests in subsidiaries:
                
Operating Partnership
     262,499       283,219  
Consolidated joint ventures
     1,937       2,446  
Total noncontrolling interests in subsidiaries
     264,436       285,665  
                 
Total equity
     2,154,000       2,043,937  
                 
Total liabilities and equity
   $ 4,295,759     $ 4,362,466  
                 
                 
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
  
2011
    
2010
    
2009
  
Base rents
   $ 600,163     $ 602,357     $ 611,061  
Escalations and recoveries from tenants
     94,047       101,699       103,057  
Construction services
     12,058       62,997       21,910  
Real estate services
     5,199       7,874       9,359  
Other income
     12,812       12,553       13,538  
Total revenues
     724,279       787,480       758,925  
                         
EXPENSES
                        
Real estate taxes
     87,473       93,535       93,322  
Utilities
     73,274       74,077       70,927  
Operating services
     117,645       114,452       110,169  
Direct construction costs
     11,458       60,255       20,323  
General and administrative
     35,541       35,003       39,779  
Depreciation and amortization
     193,587       191,168       200,732  
Impairment charge on rental property
     --       9,521       --  
Total expenses
     518,978       578,011       535,252  
Operating income
     205,301       209,469       223,673  
                         
OTHER (EXPENSE) INCOME
                        
Interest expense
     (125,975 )     (149,329 )     (140,068 )
Interest and other investment income
     39       86       570  
Equity in earnings (loss) of unconsolidated joint ventures
     2,022       2,276       (5,560 )
Loss from early extinguishment of debt
     --       (3,752 )     --  
Gain on reduction of other obligations
     --       --       1,693  
Total other (expense) income
     (123,914 )     (150,719 )     (143,365 )
Income from continuing operations
     81,387       58,750       80,308  
Discontinued operations:
                        
Income (loss) from discontinued operations
     --       242       (17 )
Impairment charge on rental property
     --       --       (16,563 )
Realized gains (losses) and unrealized losses
                        
  on disposition of rental property, net
     --       4,447       --  
Total discontinued operations, net
     --       4,689       (16,580 )
Net income
     81,387       63,439       63,728  
Noncontrolling interest in consolidated joint ventures
     402       262       943  
Noncontrolling interest in Operating Partnership
     (10,369 )     (8,133 )     (12,550 )
Noncontrolling interest in discontinued operations
     --       (668 )     2,447  
Preferred stock dividends
     (1,736 )     (2,000 )     (2,000 )
Net income available to common shareholders
   $ 69,684     $ 52,900     $ 52,568  
                         
Basic earnings per common share:
                        
Income from continuing operations
   $ 0.81     $ 0.62     $ 0.90  
Discontinued operations
     --       0.05       (0.19 )
Net income available to common shareholders
   $ 0.81     $ 0.67     $ 0.71  
                         
Diluted earnings per common share:
                        
Income from continuing operations
   $ 0.81     $ 0.62     $ 0.90  
Discontinued operations
     --       0.05       (0.19 )
Net income available to common shareholders
   $ 0.81     $ 0.67     $ 0.71  
                         
Basic weighted average shares outstanding
     86,047       79,224       74,318  
                         
Diluted weighted average shares outstanding
     98,962       92,477       88,389  
                         
                         
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)

             
             
     
Additional
Dividends in
Noncontrolling
  
 
Preferred Stock
Common Stock
Paid-In
Excess of
Interests
Total   
 
Shares
Amount 
Shares
Par Value
Capital
Net Earnings
in Subsidiaries
Equity  
Balance at January 1, 2009
10
$25,000
66,419
$664
$1,905,386
$(386,587)
$414,900
$1,959,363  
Net income
--
--
--
--
--
54,568
9,160
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
Stock compensation
--
--
80
1
4,503
--
--
4,504
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
Net income
--
--
--
--
--
54,900
8,539
63,439
Preferred stock dividends
--
--
--
--
--
(2,000)
--
(2,000)
Common stock dividends
--
--
--
--
--
(143,018)
--
(143,018)
Common unit distributions
--
--
--
--
--
--
(23,543)
(23,543)
Decrease in noncontrolling
                
  interests
--
--
--
--
--
--
(321)
(321)
Redemption of common units
                
  for common stock
--
--
487
5
11,047
--
(11,052)
--
Shares issued under Dividend
                
  Reinvestment and Stock
                
  Purchase Plan
--
--
5
--
158
--
--
158
Stock options exercised
--
--
55
1
1,503
--
--
1,504
Stock compensation
--
--
88
1
4,527
--
--
4,528
Rebalancing of ownership
                
  percent between parent
                
  and subsidiaries
--
--
--
--
(310)
--
310
--
Balance at December 31, 2010
10
$25,000
79,605
$  796
$2,292,641
$(560,165)
$285,665
$2,043,937
Net income
--
--
--
--
--
71,420
9,967
81,387
Preferred stock dividends
--
--
--
--
--
(1,736)
--
(1,736)
Common stock dividends
--
--
--
--
--
(157,017)
--
(157,017)
Common unit distributions
--
--
--
--
--
--
(22,794)
(22,794)
Common stock offering
--
--
7,188
72
227,302
--
--
227,374
Decrease in noncontrolling
                
  interests
--
--
--
--
--
--
(107)
(107)
Redemption of common units
                
  for common stock
--
--
811
8
17,686
--
(17,694)
--
Shares issued under Dividend
                
  Reinvestment and Stock
                
  Purchase Plan
--
--
6
--
187
--
--
187
Stock options exercised
--
--
108
1
3,047
--
--
3,048
Stock compensation
--
--
82
1
4,556
--
--
4,557
Redemption of
                
  preferred stock
(10)
(25,000)
--
--
164
--
--
(24,836)
Rebalancing of ownership
                
  percent between parent
                
  and subsidiaries
--
--
--
--
(9,399) 
--
9,399
--
Balance at December 31, 2011
--
--
87,800
$878
$2,536,184
$(647,498)
$264,436
$2,154,000


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
  
2011
    
2010
    
2009
  
Net income
   $ 81,387     $ 63,439     $ 63,728  
Adjustments to reconcile net income to net cash provided by
                        
Operating activities:
                        
Depreciation and amortization, including related intangible assets
     193,005       190,260       194,786  
Depreciation and amortization on discontinued operations
     --       409       1,811  
Amortization of stock compensation
     4,557       4,528       2,272  
Amortization of deferred financing costs and debt discount
     2,370       2,656       2,730  
Equity in (earnings) loss of unconsolidated joint venture, net
     (2,022 )     (2,276 )     5,560  
Gain on reduction of other obligations
     --       --       (1,693 )
Realized gains on disposition of rental property
     --       (4,447 )     --  
Impairment charge on rental property
     --       9,521       --  
Impairment charge on rental property from discontinued operations
     --       --       16,563  
Distributions of cumulative earnings from unconsolidated joint ventures
     3,301       2,311       2,637  
Changes in operating assets and liabilities:
                        
Increase in unbilled rents receivable, net
     (7,352 )     (7,458 )     (6,859 )
(Increase) decrease in deferred charges and other assets, net
     (27,398 )     (24,069 )     403  
(Increase) decrease in accounts receivable, net
     5,241       (4,306 )     14,880  
Increase (decrease) in accounts payable, accrued expenses and other liabilities
     1,827       (424 )     (4,267 )
(Decrease) increase in rents received in advance and security deposits
     (4,859 )     3,184       (1,570 )
(Decrease) increase in accrued interest payable
     2,008       (10,292 )     3,705  
                         
Net cash provided by operating activities
   $ 252,065     $ 223,036     $ 294,686  
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                        
Additions to rental property and related intangibles
   $ (91,729 )   $ (92,499 )   $ (77,767 )
Repayment of notes receivable
     --       --       11,441  
Investment in unconsolidated joint ventures
     (501 )     (954 )     (6,327 )
Distributions in excess of cumulative earnings from unconsolidated joint ventures
     1,460       2,410       518  
(Increase) decrease in restricted cash
     (3,407 )     2,018       (7,962 )
                         
Net cash used in investing activities
   $ (94,177 )   $ (89,025 )   $ (80,097 )
                         
CASH FLOW FROM FINANCING ACTIVITIES
                        
Borrowings from revolving credit facility
   $ 299,500     $ 250,000     $ 337,000  
Repayment of revolving credit facility and money market loans
     (472,000 )     (22,000 )     (498,000 )
Proceeds from senior unsecured notes
     --       --       246,238  
Repayment of senior unsecured notes
     --       (465,000 )     (199,724 )
Proceeds from mortgages and loans payable
     --       11,000       81,500  
Repayment of mortgages, loans payable and other obligations
     (8,684 )     (8,154 )     (11,462 )
Payment of financing costs
     (4,993 )     (2,074 )     (2,766 )
Proceeds from offering of common stock
     227,374       --       274,826  
Redemption of preferred stock
     (25,000 )     --       --  
Proceeds from stock options exercised
     3,048       1,504       504  
Payment of dividends and distributions
     (178,488 )     (168,495 )     (173,267 )
                         
Net cash (used in) provided by financing activities
   $ (159,243 )   $ (403,219 )   $ 54,849  
                         
Net (decrease) increase in cash and cash equivalents
   $ (1,355 )   $ (269,208 )   $ 269,438  
Cash and cash equivalents, beginning of period
     21,851       291,059       21,621  
                         
Cash and cash equivalents, end of period
   $ 20,496     $ 21,851     $ 291,059  
                         
                         
The accompanying notes are an integral part of these consolidated financial statements.
  

 
71
 

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, 2011, the Company owned or had interests in 278 properties plus developable land (collectively, the “Properties”).  The Properties aggregate approximately 32.4 million square feet, which are comprised of 266 buildings, primarily office and office/flex buildings totaling approximately 32.0 million square feet (which include eight buildings, primarily office buildings aggregating approximately 1.2 million square feet owned by unconsolidated joint ventures in which the Company has investment interests), six industrial/warehouse buildings totaling approximately 387,400 square feet, two 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.  Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.


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 ASC 805, 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 $37,069,000 and $65,990,000 as of December 31, 2011 and 2010, 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.
 
 
 
 
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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.

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 rental properties held for use may be impaired.  In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment.  The criteria considered by management include reviewing low leased percentages, significant near-term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near-term mortgage debt maturities or other factors that might impact the Company’s intent and ability to hold the property.  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.  These assumptions are generally based on management’s experience in its local real estate markets and the effects of current market conditions.  The assumptions 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, and actual losses or impairment may be realized in the future.
 
 
 
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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 disposed of 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.

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 January 1, 2010, the Company adopted the updated provisions of ASC 810, which amends FIN 46(R) to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  Additionally, ASC 810 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.  ASC 810 amends certain guidance in Interpretation 46(R) for determining whether an entity is a variable interest entity.  Also, ASC 810 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.  The adoption of this guidance did not have a material impact to these financial statements.  See Note 4: Investments in Unconsolidated Joint Ventures for disclosures regarding the Company’s unconsolidated joint ventures.

 
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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, and actual losses or impairment may be realized in the future.  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.

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 $2,370,000, $2,656,000 and $2,730,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

Deferred
Leasing Costs
Costs incurred in connection with leases are capitalized and amortized on a straight-line basis over the terms of the related leases and included in depreciation and amortization.  Unamortized deferred leasing costs are charged to amortization expense upon early termination of the lease. Certain employees of the Company are compensated for providing leasing services to the Properties.  The portion of such compensation, which is capitalized and amortized, approximated $4,432,000, $3,986,000 and $3,725,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

 
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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 terms of the lease for above-market leases and the remaining initial terms plus the terms 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 terms 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.

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.
 
 
 
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Pursuant to the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes, 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, 2011, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are generally from the year 2007 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, 2011 represents dividends payable to common shareholders (87,800,047 shares), and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (12,197,122 common units) for all such holders of record as of January 5, 2012 with respect to the fourth quarter 2011.  The fourth quarter 2011 common stock dividends and common unit distributions of $0.45 per common share and unit were approved by the Board of Directors on December 6, 2011.  The common stock dividends and common unit distributions payable were paid on January 13, 2012.

The dividends and distributions payable at December 31, 2010 represents dividends payable to preferred shareholders (10,000 shares) and common shareholders (79,605,542 shares), and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (13,007,668 common units) for all such holders of record as of January  5, 2011 with respect to the fourth quarter 2010. The fourth quarter 2010 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 7, 2010.  The common stock dividends, common unit distributions and preferred stock dividends payable were paid on January 14, 2011.

The Company has determined that the $1.80 dividend per common share paid during the year ended December 31, 2011 represented approximately 77 percent ordinary income and approximately 23 percent return of capital to its stockholders; the $1.80 dividend per common share paid during the year ended December 31, 2010 represented approximately 75 percent ordinary income and approximately 25 percent return of capital to its stockholders; and 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.


 
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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 restricted stock expense of $4,123,000, $4,121,000 and $4,097,000 for the years ended December 31, 2011, 2010 and 2009, 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 May 1, 2011, the Company placed in service 55 Corporate Drive, a 204,057 square-foot office building located in Bridgewater, New Jersey. The Company incurred total costs on the project of approximately $48.1 million through December 31, 2011.


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, material misrepresentations, and 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”), which owns 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.  The venture owns undeveloped land currently used as a parking facility.

SOUTH PIER AT HARBORSIDE – HOTEL
The Company has a joint venture with Hyatt Corporation (“Hyatt”) which owns a 350-room hotel on the South Pier at Harborside Financial Center, Jersey City, New Jersey.  The Company owns a 50 percent interest in the venture.

The venture has a mortgage loan with a balance as of December 31, 2011 of $65.2 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, 2011 of $5.5 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 $5.5 million letter of credit in support of this loan, half of which is indemnified by Hyatt.
 
 
 
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RED BANK CORPORATE PLAZA
The Company has a joint venture with The PRC Group, which owns 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.

The venture had a $20.3 million loan with a commercial bank collateralized by the office property, which bore interest at a rate of the London Interbank Offered Rate (“LIBOR”) plus 125 basis points and was scheduled to mature in May 2011. In May 2011, the venture paid the lender $1.7 million and refinanced the remainder of the loan.  The new loan, with a balance of $18.1 million at December 31, 2011, bears interest at a rate of LIBOR plus 300 basis points and matures on May 17, 2016.  LIBOR was 0.29 percent at December 31, 2011.  The loan includes contingent guarantees for a portion of the principal by the Company based on certain conditions.  On September 22, 2011, the interest rate on 75 percent of the loan was fixed at 3.99375 percent effective from October 17, 2011 through maturity.

The Company performs management, leasing, and other services for the property owned by the joint venture and recognized $100,000, $91,000 and $92,600 in fees for such services in the years ended December 31, 2011, 2010 and 2009, respectively.

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.

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. 
 
 
 
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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, 2009, 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 points 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 was scheduled to terminate 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.  On November 5, 2010, the Portfolio Entities that owned the remaining four unconsolidated Portfolio Properties provided estimates of the properties’ fair market values to Gramercy, pursuant to the Gramercy Agreement.  On May 5, 2011, the Gramercy Agreement was extended to December 31, 2011.  On November 16, 2011, the Gramercy Agreement was further extended to April 30, 2012.

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 not subject to the Gramercy Agreement, as its 100-percent ownership and rights regarding these entities were unchanged in the transaction.  The OPLP does not consolidate the Portfolio Entities subject to the Gramercy Agreement, as the Gramercy Agreement is considered a reconsideration event under the provisions of ASC 810, 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.

On March 31, 2010, the venture sold one of its unconsolidated Portfolio Properties subject to the Gramercy Agreement, 1280 Wall Street West, a 121,314 square foot office property, located in Lyndhurst, New Jersey, for approximately $13.9 million, which was primarily used to pay down mortgage loans pursuant to the Gramercy Agreement.

On December 17, 2010, the venture repaid the $26.8 million allocated loan amount of one of the unconsolidated Portfolio Properties which was subject to the Gramercy Agreement, One Grande Commons, a 198,376 square foot office property, located in Bridgewater, New Jersey.  Concurrent with the repayment, the venture placed $11 million mortgage financing on the property obtained from a bank.  As a result of the repayment of the existing mortgage loan, the venture, which is consolidated by the Company, obtained a controlling interest and is consolidating the office property.

The Company performs management, leasing, and construction services for properties owned by the unconsolidated joint ventures and recognized $508,000, $861,000 and $2.3 million in income (net of $0, $0 and $1.1 million in direct costs) for such services in the years ended December 31, 2011, 2010 and 2009, respectively.

GE/GALE FUNDING LLC (Princeton Forrestal Village)
On May 9, 2006, the Company acquired a 10 percent indirect interest in the entity (“GE Gale”) which owned 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”) for $1.8 million.
 
 
 
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On December 16, 2010, GE Gale sold PFV for $55 million, realizing a gain on the sale of $207,000 (of which the Company’s share of $41,000 is included in equity in earnings for the year ended December 31, 2010).

The Company had performed management services for PFV and recognized $87,000 for such services in the year ended December 31, 2011 and management, leasing, and other services for PFV prior to its sale and recognized $1.4 million and $1.1 million in income for such services in the years ended December 31, 2010 and 2009, respectively.

GALE KIMBALL, L.L.C.
On June 15, 2006, the Company acquired an 8.33 percent indirect 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”).

On December 10, 2010, 100 Kimball sold its office property for approximately $60 million, realizing a gain on the sale of $19.8 million (of which the Company’s share of $1.6 million is included in equity in earnings for the year ended December 31, 2010).  As a result of the sale the Company received a distribution of approximately $5.4 million, of which $2.4 million was paid out pursuant to the Participation Rights (see Note 16: Noncontrolling Interests in Subsidiaries – Participation Rights).

The Company had performed management, leasing, and other services for the property prior to its sale and recognized $262,000 and $234,000 in income for such services in the years ended December 31, 2010 and 2009, respectively.

12 VREELAND ASSOCIATES, L.L.C.
On September 8, 2006, the Company entered into a joint venture to form M-C Vreeland, LLC (“M-C Vreeland”), for the sole purpose of acquiring 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 Participation Rights (see Note 16: Noncontrolling Interests in Subsidiaries – Participation Rights).

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, 2011, the outstanding balance on the mortgage note was $1.2 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
In October 2006, the Company entered into a joint venture with affiliates of Vornado Realty LP and JP Morgan Chase Bank to acquire and redevelop the Filenes property located in the Downtown Crossing district of Boston, Massachusetts (the “Filenes Property”).  The venture was organized 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, aggregating 1.2 million square feet.  The Company, through subsidiaries, separately holds approximately a 15 percent indirect ownership interest in each of the units.  The project is subject to governmental approvals.

The venture acquired the Filenes Property on January 29, 2007, for approximately $100 million.

Distributions will generally be in proportion to its members’ respective ownership interests and, depending upon the development unit, promotes will be available to specified partners after the achievement of certain internal rates of return ranging from 10 to 15 percent.

The joint venture has suspended its plans for the development of the Filenes Property.  The venture recorded an impairment charge of approximately $69.5 million on its development project in 2008.
 
 
 
81
 

 
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”) for the sole purpose of acquiring an 8.33 percent indirect interest in One Jefferson Road LLC (“One Jefferson”), which developed and placed in service a 100,010 square foot office property at One Jefferson Road, Parsippany, New Jersey, (“the Jefferson Property”).  The property has been fully leased to a single tenant starting in 2010 through August 2025.

The operating agreement of M-C Jefferson provides, among other things, for the Participation Rights (see Note 16: Noncontrolling Interests in Subsidiaries – Participation Rights).  The operating agreements of Gale Jefferson, L.L.C. (“Gale Jefferson”), which is owned 33.33 percent by M-C Jefferson and 66.67 percent by the Hampshire Generational Fund, L.L.C. (“Hampshire”) 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.

One Jefferson had a loan in the amount of $21 million, bore interest at a rate of LIBOR plus 160 basis points, which was repaid on October 24, 2011.  On October 24, 2011, One Jefferson obtained a new loan in the amount of $20.2 million, which bears interest at a rate of one-month LIBOR plus 160 basis points and matures on October 24, 2012 with a one year extension option, subject to the payment of a fee and certain other conditions.

The Company performs management, leasing, and other services for Gale Jefferson and recognized $154,000, $532,000 and $190,000 in income (net of $0, $5.6 million and $646,000 in direct costs) for such services in the years ended December 31, 2011, 2010 and 2009, 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 deterioration at the time 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.  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.


 
82
 

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, 2011 and 2010:  (dollars in thousands)

 
December 31, 2011
 
Plaza
  
Red Bank
  
Princeton
    
Boston-
    
 
VIII & IX
Harborside
Corporate
Gramercy
Forrestal
Gale
12
Downtown
Gale
Combined
 
Associates
South Pier
Plaza I & II
Agreement
Village
Kimball
Vreeland
Crossing
Jefferson
Total
Assets:
                    
Rental property, net
$   8,335
$ 59,733
$ 22,903
$ 39,276
--
--
$ 13,122
--
--
$ 143,369
Other assets
933
12,840
2,909
5,669
$     160
$        4
521
$ 46,121
$ 2,927
72,084
Total assets
$   9,268
$ 72,573
$ 25,812
$ 44,945
$     160
$        4
$ 13,643
$ 46,121
$ 2,927
$ 215,453
Liabilities and
                    
 partners’/members’
                    
 capital (deficit):
                    
Mortgages, loans payable
                    
  and other obligations
--
$ 70,690
$ 18,100
$ 50,978
--
--
$   1,207
--
--
$ 140,975
Other liabilities
$      531
4,982
117
1,086
$       40
--
168
--
--
6,924
Partners’/members’
                    
  capital (deficit)
8,737
(3,099)
7,595
(7,119)
120
$        4
 12,268
$ 46,121
$ 2,927
   67,554
Total liabilities and
                    
  partners’/members’
                    
  capital (deficit)
$   9,268
$ 72,573
$ 25,812
$ 44,945
$     160
$        4
$ 13,643
$ 46,121
$ 2,927
$ 215,453
Company’s investments
                    
  in unconsolidated
                    
  joint ventures, net
$   4,291
$    (343)
$   3,676
--
--
--
$  10,233
$ 13,005
$ 1,153
$   32,015


 
December 31, 2010
 
Plaza
  
Red Bank
  
Princeton
    
Boston-
    
 
VIII & IX
Harborside
Corporate
Gramercy
Forrestal
Gale
12
Downtown
Gale
Combined
 
Associates
South Pier
Plaza I & II
Agreement
Village
Kimball
Vreeland
Crossing
Jefferson
Total
Assets:
                    
Rental property, net
$   8,947
$ 64,964
$ 23,594
$ 40,786
--
--
$ 14,081
--
--
$ 152,372
Other assets
906
11,681
6,422
6,261
$  1,435
$      51
734
$ 46,111
$ 2,440
76,041
Total assets
$   9,853
$ 76,645
$ 30,016
$ 47,047
$  1,435
$      51
$ 14,815
$ 46,111
$ 2,440
$ 228,413
Liabilities and
                    
 partners’/members’
                    
 capital (deficit):
                    
Mortgages, loans payable
                    
  and other obligations
--
$ 72,168
$ 20,424
$ 50,978
--
--
$   3,161
--
--
$ 146,731
Other liabilities
$      529
4,356
89
1,719
$     612
--
--
--
--
7,305
Partners’/members’
                    
  capital (deficit)
9,324
121
9,503
(5,650)
823
$      51
 11,654
$ 46,111
$ 2,440
74,377
Total liabilities and
                    
  partners’/members’
                    
  capital (deficit)
$   9,853
$ 76,645
$ 30,016
$ 47,047
$  1,435
$      51
$ 14,815
$ 46,111
$ 2,440
$ 228,413
Company’s investments
                    
  in unconsolidated
                    
  joint ventures, net
$   4,584
$   1,161
$   4,598
--
--
--
$   9,860
$ 13,022
$    995
$   34,220



 
83
 

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 2011, 2010 and 2009:  (dollars in thousands)


 
Year Ended December 31, 2011
 
Plaza
  
Red Bank
    
Princeton
      
Boston-
    
 
VIII & IX
Harborside
Corporate
  
Gramercy
Forrestal
Route 93
Gale
12
Downtown
Gale
Combined
 
Associates
South Pier
Plaza I & II
M-G-G
Agreement
Village
Portfolio
Kimball
Vreeland
Crossing
Jefferson
Total
Total revenues
$    963
$  38,428
$ 3,257
--
$   6,141
--
--
--
$ 2,250
--
$ 278
$  51,317
Operating and other
(214)
(25,521)
(902)
--
(3,821)
--
--
--
(159)
$ (1,473)
--
(32,090)
Depreciation and amortization
(613)
(5,664)
(903)
--
(2,230)
--
--
--
(1,183)
--
--
(10,593)
Interest expense
--
(4,464)
(560)
--
(1,559)
--
--
--
(160)
--
--
(6,743)
                         
Net income
$    136
$    2,779
$    892
--
$  (1,469)
--
--
--
$    748
$ (1,473)
$ 278
$    1,891
Company’s equity in earnings
                        
  (loss) o f unconsolidated
                        
  joint ventures
$      68
$    1,495
$    446
--
--
--
--
--
$    374
$    (448)
$   87
$    2,022


 
Year Ended December 31, 2010
 
Plaza
  
Red Bank
    
Princeton
      
Boston-
    
 
VIII & IX
Harborside
Corporate
  
Gramercy
Forrestal
Route 93
Gale
12
Downtown
Gale
Combined
 
Associates
South Pier
Plaza I & II
M-G-G
Agreement
Village
Portfolio
Kimball
Vreeland
Crossing
Jefferson
Total
Total revenues
$    798
$ 34,680
$ 4,325
--
$ 17,802
$ 11,677
--
$ 5,194
$ 2,386
--
--
$  76,862
Operating and other
(206)
(24,206)
(1,028)
--
(5,793)
(6,614)
--
--
(161)
$ (1,446)
$ (88)
(39,542)
Depreciation and amortization
(612)
(5,067)
(901)
--
(3,965)
(3,154)
--
--
(1,411)
--
--
(15,110)
Interest expense
--
(4,449)
(335)
--
(2,485)
(1,620)
--
--
(293)
--
--
(9,182)
                         
Net income
$     (20)
$      958
$ 2,061
--
$    5,559
$       289
--
$ 5,194
$    521
$ (1,446)
$ (88)
$  13,028
Company’s equity in earnings
                        
  (loss) o f unconsolidated
                        
  joint ventures
$     (10)
$      301
$    649
--
--
$    (379)
--
$ 1,909
$    260
$    (437)
$ (17)
$    2,276


 
Year Ended December 31, 2009
 
Plaza
  
Red Bank
    
Princeton
      
Boston-
    
 
VIII & IX
Harborside
Corporate
  
Gramercy
Forrestal
Route 93
Gale
12
Downtown
Gale
Combined
 
Associates
South Pier
Plaza I & II
M-G-G
Agreement
Village
Portfolio
Kimball
Vreeland
Crossing
Jefferson
Total
Total revenues
$    804
$ 35,002
$ 3,214
$ 17,582
$   7,902
$ 13,171
$  2,153
$ 1,664
$ 2,579
--
--
$  84,071
Operating and other
(192)
(23,170)
(1,002)
(7,076)
(4,675)
(7,558)
(2,487)
--
(62)
$ (10,881)
$ (58)
(57,161)
Depreciation and amortization
(612)
(4,215)
(871)
(6,493)
(3,073)
(3,948)
(1,206)
--
(1,251)
--
--
(21,669)
Interest expense
--
(4,592)
(340)
(4,883)
(1,862)
(1,788)
(649)
--
(467)
--
--
(14,581)
                         
Net income
--
$   3,025
$ 1,001
$     (870)
$  (1,708)
$    (123)
$ (2,189)
$ 1,664
$    799
 $ (10,881)
$ (58)
$   (9,340)
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)






 
84
 

5.  
DEFERRED CHARGES AND OTHER ASSETS

 
December 31,
(dollars in thousands)
2011
2010
Deferred leasing costs
$ 261,106
$ 241,281
Deferred financing costs
16,158
20,149
 
277,264
261,430
Accumulated amortization
(123,597)
(120,580)
Deferred charges, net
153,667
140,850
In-place lease values, related intangible and other assets, net
28,055
41,155
Prepaid expenses and other assets, net
28,748
30,033
     
Total deferred charges and other assets, net
$ 210,470
$ 212,038


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,
 
2011
2010
Security deposits
$   7,198
$   6,995
Escrow and other reserve funds
13,518
10,315
     
Total restricted cash
$ 20,716
$ 17,310


7.  
DISCONTINUED OPERATIONS

The Company did not dispose of any properties during the year ended December 31, 2011.

The Company’s office property located at 105 Challenger Road in Ridgefield Park, New Jersey, aggregating 150,050 square feet, was collateral for a $19.5 million mortgage loan scheduled to mature on June 6, 2010.  The Company had recorded an impairment charge on the property of $16.6 million at December 31, 2009.   On June 1, 2010, the Company transferred the deed for 105 Challenger to the lender in satisfaction of its obligations.  As a result, the Company recorded a gain on the disposal of the office property of approximately $4.4 million in 2010.  The Company has presented this property as discontinued operations in its statements of operations for all periods presented.

 
85
 


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 years ended December 31, 2010 and 2009:  (dollars in thousands)

   
                                    Years Ended December 31,
  
   
2010
    
2009
  
Total revenues
   $ 2,255     $ 5,601  
Operating and other expenses
     (1,173 )     (2,603 )
Depreciation and amortization
     (409 )     (1,811 )
Interest expense (net of interest income)
     (431 )     (1,204 )
                 
Income from discontinued operations before
                
gains (losses) and unrealized losses on
                
disposition of rental property
     242       (17 )
Impairment charge on rental property
     --       (16,563 )
Realized gains (losses) and unrealized losses on
                
disposition of rental property, net
     4,447       --  
                 
Total discontinued operations, net
   $ 4,689     $ (16,580 )


8.  
SENIOR UNSECURED NOTES

A summary of the Company’s senior unsecured notes as of December 31, 2011 and 2010 is as follows:  (dollars in thousands)

 
December 31,
December 31,
Effective
 
2011
2010
Rate (1)
5.250% Senior Unsecured Notes, due January 15, 2012 (2)
$     99,988
$     99,793
5.457%
6.150% Senior Unsecured Notes, due December 15, 2012
94,438
93,946
6.894%
5.820% Senior Unsecured Notes, due March 15, 2013
25,972
25,861
6.448%
4.600% Senior Unsecured Notes, due June 15, 2013
99,958
99,930
4.742%
5.125% Senior Unsecured Notes, due February 15, 2014
200,509
200,749
5.110%
5.125% Senior Unsecured Notes, due January 15, 2015
149,717
149,625
5.297%
5.800% Senior Unsecured Notes, due January 15, 2016
200,313
200,389
5.806%
7.750% Senior Unsecured Notes, due August 15, 2019
248,372
248,158
8.017%
       
Total Senior Unsecured Notes
$1,119,267
$1,118,451
  
       
(1)   Includes the cost of terminated treasury lock agreements (if any), offering and other transaction costs and the discount/premium on the notes, as applicable.
(2)   These notes were paid at maturity, primarily from borrowing on the Company’s unsecured revolving credit facility.

On December 15, 2010, the Company redeemed $300 million principal amount of its 7.75 percent senior unsecured notes due February 15, 2011.  The redemption price, including a make-whole premium, was 101.225 percent of the principal amount of the notes, plus accrued and unpaid interest up to the redemption date.  The Company funded the redemption price, including accrued and unpaid interest, of approximately $311.4 million from borrowing on its unsecured revolving credit facility, as well as cash on hand.  In connection with the redemption, the Company recorded approximately $3.8 million as a loss from early extinguishment of debt in 2010.


9.  
UNSECURED REVOLVING CREDIT FACILITY

On October 21, 2011, the Company amended and restated its unsecured revolving credit facility with a group of 20 lenders.  The $600 million facility is expandable to $1 billion and matures in October 2015. It has a one year extension option with the payment of a 20 basis point fee.  The interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) and the facility fee on the current borrowing capacity payable quarterly in arrears are based upon the Operating Partnership’s unsecured debt ratings, as follows:
 
 
 
86
 

 
Operating Partnership’s
Interest Rate –
  
Unsecured Debt Ratings:
Applicable Basis Points
Facility Fee
Higher of S&P or Moody’s
Above LIBOR
Basis Points
No ratings or less than BBB-/Baa3
185.0
45.0
BBB- or Baa3
150.0
35.0
BBB or Baa2(current)
125.0
25.0
BBB+or  Baa1
107.5
20.0
A-or A3 or higher
100.0
17.5

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 those above.

The terms of the unsecured facility include certain restrictions and covenants which limit, among other things 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.  If an event of default has occurred and is continuing, the Company will not make any excess distributions 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; Bank of America, N.A., as syndication agent; Deutsche Bank Trust Company Americas; US Bank National Association and Wells Fargo Bank, N.A., as documentation agents; Capital One, N.A.; Citicorp North America, Inc.; Comerica Bank; PNC Bank, National Association; SunTrust Bank; The Bank of New York Mellon; The Bank of Tokyo-Mitsubishi UFJ, LTD., as managing agents; and Compass Bank; Branch Banking and Trust Company; TD Bank, N.A.; Citizens Bank of Pennsylvania; Chang Hwa Commercial Bank, LTD., New York Branch; Mega International Commercial Bank Co., LTD., New York Branch; First Commercial Bank, New York Branch; and Hua Nan Commercial Bank, LTD., New York Agency, as participants.

As of December 31, 2011 and 2010, the Company had outstanding borrowings of $56 million and $228 million, respectively, under its unsecured revolving credit facility.

Through October 20, 2011, the Company had a $775 million unsecured revolving credit facility.  The interest rate on outstanding borrowings was LIBOR plus 55 basis points.

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, 2011 and 2010, the Company had no outstanding borrowings under the Money Market Loan.


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, 2011, 32 of the Company’s properties, with a total book value of approximately $950,891,000, 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.
 
 
 
87
 

 
A summary of the Company’s mortgages, loans payable and other obligations as of December 31, 2011 and 2010 is as follows: (dollars in thousands)

   
Effective
    
   
Interest
                  December 31,
  
Property Name
Lender
Rate (a)
2011
2010
    Maturity
2200 Renaissance Boulevard (b)
Wachovia CMBS
5.888%
$  16,171
$  16,171
12/01/12
One Grande Commons (c)
Capital One Bank
LIBOR +2.00%
11,000
11,000
12/31/12
Soundview Plaza
Morgan Stanley Mortgage Capital
6.015%
15,531
16,089
01/01/13
9200 Edmonston Road
Principal Commercial Funding L.L.C.
5.534%
4,479
4,646
05/01/13
6305 Ivy Lane
John Hancock Life Insurance Co.
5.525%
6,245
6,475
01/01/14
395 West Passaic
State Farm Life Insurance Co.
6.004%
10,781
11,270
05/01/14
6301 Ivy Lane
John Hancock Life Insurance Co.
5.520%
5,899
6,103
07/01/14
35 Waterview Boulevard
Wachovia CMBS
6.348%
19,051
19,341
08/11/14
6 Becker, 85 Livingston,
  75 Livingston &
  20 Waterview
Wachovia CMBS
10.220%
62,127
61,224
08/11/14
4 Sylvan
Wachovia CMBS
10.190%
14,438
14,395
08/11/14
10 Independence
Wachovia CMBS
12.440%
15,908
15,606
08/11/14
4 Becker
Wachovia CMBS
9.550%
37,769
37,096
05/11/16
5 Becker
Wachovia CMBS
12.830%
12,056
11,599
05/11/16
210 Clay
Wachovia CMBS
13.420%
11,844
11,467
05/11/16
51 Imclone
Wachovia CMBS
8.390%
3,886
3,893
05/11/16
Various (d)
Prudential Insurance
6.332%
150,000
150,000
01/15/17
23 Main Street
JPMorgan CMBS
5.587%
31,002
31,537
09/01/18
Harborside Plaza 5
The Northwestern Mutual Life Insurance Co. & New York Life Insurance Co.
6.842%
231,603
234,521
11/01/18
100 Walnut Avenue
Guardian Life Insurance Co.
7.311%
19,241
19,443
02/01/19
One River Center (e)
Guardian Life Insurance Co.
7.311%
44,079
44,540
02/01/19
581 Main Street (f)
Valley National Bank
6.935% (g)
16,338
16,627
07/01/34
           
Total mortgages, loans payable and other obligations
  
$739,448
$743,043
  

(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)   The property does not generate sufficient cash flow to meet debt service requirements.  As a result, beginning January 2011, debt service has not been made and the Company is currently in discussion with the lender regarding a deed in lieu of foreclosure.  As of December 31, 2010, 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 approximately $9.5 million in 2010.
(c)   The mortgage loan has two one-year extension options subject to certain conditions and the payment of a fee.
(d)   Mortgage is collateralized by seven properties.  The Operating Partnership has agreed, subject to certain conditions, to guarantee repayment of a portion of the loan.
(e)   Mortgage is collateralized by the three properties comprising One River Center.
(f)   The Operating Partnership has agreed, subject to certain conditions, to guarantee repayment of a portion of the loan.
(g)   The coupon interest rate will be reset at the end of year 10 (2019) and year 20 (2029) 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.

 
88
 

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, 2011 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)
    
2012
   $ 11,159     $ 221,148     $ 232,307       6.05 %  
2013
     11,315       145,223       156,538       5.39 %  
2014
     10,468       335,257       345,725       6.82 %  
2015
     8,941       205,500       214,441       4.41 %
(b)
2016
     8,753       273,120       281,873       7.16 %  
Thereafter
     26,992       679,562       706,554       7.15 %  
Sub-total
     77,628       1,859,810       1,937,438            
Adjustment for unamortized debt
                                  
  discount/premium and
                                  
  mark-to-market, net, as of
                                  
  December 31, 2011
     (23,223 )     --       (23,223 )          
                                   
Totals/Weighted Average
   $ 54,405     $ 1,859,810     $ 1,914,215       6.46 %  
                                   
(a)   The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 0.29 percent as of December 31, 2011.
    
(b)   Excludes amortized deferred financing costs pertaining to the Company’s unsecured revolving credit facility which amounted to $2.6 million for the year ended December 31, 2011.
    

CASH PAID FOR INTEREST AND INTEREST CAPITALIZED
Cash paid for interest for the years ended December 31, 2011, 2010 and 2009 was $116,772,000, $153,608,000 and $131,912,000, respectively.  Interest capitalized by the Company for the years ended December 31, 2011, 2010 and 2009 was $1,081,000, $1,912,000 and $1,401,000, respectively.

SUMMARY OF INDEBTEDNESS
As of December 31, 2011, the Company’s total indebtedness of $1,914,215,000 (weighted average interest rate of 6.46 percent) was comprised of $66,500,000 of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 1.77 percent) and fixed rate debt and other obligations of $1,847,715,000 (weighted average rate of 6.63 percent).

As of December 31, 2010, the Company’s total indebtedness of $2,089,494,000 (weighted average interest rate of 5.97 percent) was comprised of $239,000,000 of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 0.90 percent) and fixed rate debt and other obligations of $1,850,494,000 (weighted average rate of 6.62 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.  The Company did not make any contributions nor recognize any expense for the 401(k) Plan for each of the three years ended December 31, 2011, 2010 and 2009, respectively.
 
 
 
89
 

 

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, 2011 and 2010.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash equivalents, receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2011 and 2010.

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 $2.1 billion and $2.2 billion as compared to the book value of approximately $1.9 billion and $2.1 billion as of December 31, 2011 and 2010, 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, 2011 and 2010.  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, 2011 and current estimates of fair value may differ significantly from the amounts presented herein.


13.  
COMMITMENTS AND CONTINGENCIES

TAX ABATEMENT AGREEMENTS
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, as amended, which commenced in 2002, is for a term of 20 years.  The PILOT is equal to two percent of Total Project Costs, as defined.  Total Project Costs are $49.5 million.  The PILOT totaled $990,000, $1.2 million and $1.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Harborside Plaza 5 agreement, as amended, which commenced in 2002, is for a term of 20 years.  The PILOT is equal to two percent of Total Project Costs, as defined.  Total Project Costs are $170.9 million.  The PILOT totaled $3.4 million, $3.8 million and $3.2 million for the years ended December 31, 2011, 2010 and 2009, respectively.

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.

 
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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, 2011, are as follows: (dollars in thousands)

Year
Amount
2012
$    367
2013
351
2014
367
2015
371
2016
371
2017 through 2084
16,318
   
Total
$18,145

Ground lease expense incurred by the Company during the years ended December 31, 2011, 2010 and 2009 amounted to $406,000, $490,000 and $734,000, respectively.

OTHER
The Company may not dispose of or distribute certain of its properties, currently comprising seven properties with an aggregate net book value of approximately $131.6 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 Robert F. Weinberg, director; and Timothy M. Jones, former president), the Cali Group (which includes John R. Cali, director, and John J. Cali, a former director).  129 of the Company’s properties, with an aggregate net book value of approximately $1.7 billion, have lapsed restrictions and are subject to these conditions.

In August 2011, the Company commenced construction of a 203,000 square foot office building which is pre-leased for 15 years and three months, subject to two extension options of between five and 10 years each, to Wyndham Worldwide. Wyndham currently leases space in neighboring buildings in the Mack-Cali Business Campus in Parsippany, New Jersey.  The new building is expected to be delivered to the tenant in the first quarter of 2013 at a total estimated cost of approximately $53.5 million (of which the Company has incurred $14.4 million through December 31, 2011).

On December 5, 2011, the Company entered into a development agreement (the “Development Agreement”) with Ironstate Development LLC (“Ironstate”) for the development of up to 2 million square feet of residential space with associated parking and ancillary retail space on land owned by the Company at its Harborside Financial Center complex in Jersey City, New Jersey (the “Harborside Residential Project”).  The first phase of the project is expected to consist of a parking pedestal to support two high-rise towers of approximately 500 apartment units each, and estimated to cost approximately $400 million.  The parties anticipate a fourth quarter 2012 ground breaking and the project will be ready for occupancy within approximately two years thereafter.

Pursuant to the Development Agreement, the Company and Ironstate shall co-develop the Harborside Residential Project with Ironstate responsible for obtaining all required development permits and approvals.  Major decisions with respect to the Harborside Residential Project will require the consent of the Company and Ironstate.  The Company and Ironstate will have 85 and 15 percent interests, respectively, in the Harborside Residential Project.  The Company will receive capital credit of $30 per approved developable square foot for its land.
 
 
 
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The Development Agreement is subject to obtaining required approvals and development financing as well as numerous customary undertakings, covenants, obligations and conditions.  The Company has the right to reasonably determine that any phase of the Harborside Residential Project is not economically viable and may elect not to proceed, subject to certain conditions, with no further obligations to Ironstate other than reimbursement to Ironstate of all or a portion of the costs incurred by it to obtain any required approvals.

In January 2012, Michael A. Grossman, executive vice president, left the Company.  The Company expects to take a charge of approximately $1.4 million in the first quarter 2012 related to his departure.


14.  
TENANT LEASES

The Properties are leased to tenants under operating leases with various expiration dates through 2033.  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, 2011 are as follows (dollars in thousands):

Year
Amount
2012
$   581,668
2013
511,679
2014
449,777
2015
381,610
2016
329,344
2017 and thereafter
1,248,752
   
Total
$3,502,830


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 Charter provides, 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.

PREFERRED STOCK
The Company had 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 represented 1/100th of a share of Series C Preferred Stock.

The Series C Preferred Stock had preference rights with respect to liquidation and distributions over the common stock. Holders of the Series C Preferred Stock, except under certain limited conditions, were not 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 would 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, 2011, there were no dividends in arrears.  The Series C Preferred Stock was essentially on an equivalent basis in priority with the preferred units of the Operating Partnership (See Note 16: Noncontrolling interests in subsidiaries).
 
 
 
92
 

 
On October 28, 2011, the Company redeemed its Series C Preferred Stock, at a price of $2,500 per share, plus accrued and unpaid dividends through the date prior to the redemption date.  The write off of preferred stock issuance costs of $164,000 is included in preferred stock dividends for the year ended December 31, 2011.

COMMON STOCK
On February 18, 2011, the Company completed a public offering of 7,187,500 shares of common stock and used the net proceeds, which totaled approximately $227.4 million (after offering costs) primarily to repay borrowings under its unsecured revolving credit facility.

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, 2011 under the Repurchase Program (none of which has occurred in 2010 and 2011).  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.

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, 2011 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, and the 2000 Employee Plan and 2000 Director Plan expired in September 2010, 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 became exercisable over a five-year period. All stock options granted under both the 2000 Director Plan and Director Plan became 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, 2011 and 2010, the stock options outstanding, which were all exercisable, had a weighted average remaining contractual life of approximately 0.9 and 1.7 years, respectively.
 
 
 
93
 
 

 
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, 2009
395,541
$28.77
  
Exercised
(18,917)
$26.66
  
Lapsed or canceled
(24,440)
$30.89
  
Outstanding at December 31, 2009
352,184
$28.74
  
Exercised
(55,508)
$27.10
  
Lapsed or canceled
(1,000)
$26.75
  
Outstanding at December 31, 2010 ($26.31 – $45.47)
295,676
$29.05
$ 1,186
Exercised
(107,806)
$28.27
  
Lapsed or canceled
(4,000)
$28.80
  
Outstanding at December 31, 2011 ($28.47 – $45.47)
183,870
$29.51
--
Options exercisable at December 31, 2010
295,676
  
$ 1,186
Options exercisable at December 31, 2011
183,870
  
--
Available for grant at December 31, 2010
2,425,073
    
Available for grant at December 31, 2011
2,343,337
    

Cash received from options exercised under all stock option plans was $3.0 million, $1.5 million and $504,000 for the years ended December 31, 2011, 2010 and 2009 respectively.  The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $496,000, $349,000 and $123,000, respectively.  The Company has a policy of issuing new shares to satisfy stock option exercises.

The Company recognized no stock options expense for the years ended December 31, 2011, 2010 and 2009, respectively. As of December 31, 2011, the Company had $2.8 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 one year.

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 187,447 unvested shares were outstanding at December 31, 2011.  Of the outstanding Restricted Stock Awards issued to executive officers and senior management, 98,524 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 2004 Incentive Stock Plan, 2000 Employee Plan and the Employee Plan. Restricted Stock Awards provided to directors were issued under the 2004 Incentive Stock Plan and the 2000 Director Plan.
 
 
 
 
94
 

 
Information regarding the Restricted Stock Awards is summarized below:

   
Weighted-Average
   
Grant – Date
 
Shares
Fair Value
Outstanding at January 1, 2009
375,006
$  34.46
Granted (a)
83,337
$  32.27
Vested
(132,255)
$  27.55
Forfeited
(3,000)
$  49.61
Outstanding at December 31, 2009
323,088
$  36.58
Granted (b)
111,127
$  32.10
Vested
(170,978)
$  34.74
Forfeited
(23,478)
$  35.70
Outstanding at December 31, 2010
239,759
$  35.90
Granted (c)
81,736
$  25.38
Vested
(134,048)
$  32.39
Outstanding at December 31, 2011
187,447
$  33.82
   
(a)   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.
(b)   Included in the 111,127 Restricted Stock Awards granted in 2010 were 51,970 awards granted to the Company’s four executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas and Michael Grossman.
(c)   Included in the 81,736 Restricted Stock Awards granted in 2011 were 51,970 awards granted to the Company’s four executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas and Michael Grossman.

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, 2011, 2010 and 2009, 14,886, 12,563 and 15,082 deferred stock units were earned, respectively.  As of December 31, 2011 and 2010, there were 98,009 and 84,236 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.


 
95
 

The following information presents the Company’s results for the years ended December 31, 2011, 2010 and 2009 in accordance with ASC 260, Earning Per Share: (dollars in thousands)

   
Year Ended December 31,
  
Computation of Basic EPS
  
2011
    
2010
    
2009
  
Income from continuing operations
   $ 81,387     $ 58,750     $ 80,308  
Add:     Noncontrolling interest in consolidated joint ventures
     402       262       943  
Deduct:  Noncontrolling interest in Operating Partnership
     (10,369 )     (8,133 )     (12,550 )
Deduct:  Preferred stock dividends
     (1,736 )     (2,000 )     (2,000 )
Income from continuing operations available to common shareholders
     69,684       48,879       66,701  
Income (loss) from discontinued operations available to common
                        
   shareholders
     --       4,021       (14,133 )
Net income available to common shareholders
   $ 69,684     $ 52,900     $ 52,568  
                         
Weighted average common shares
     86,047       79,224       74,318  
                         
Basic EPS:
                        
Income from continuing operations available to common shareholders
   $ 0.81     $ 0.62     $ 0.90  
Income (loss) from discontinued operations available to common
                        
   shareholders
     --       0.05       (0.19 )
Net income available to common shareholders
   $ 0.81     $ 0.67     $ 0.71  


   
Year Ended December 31,
  
Computation of Diluted EPS
  
2011
    
2010
    
2009
  
Income from continuing operations available to common shareholders
   $ 69,684     $ 48,879     $ 66,701  
Add:         Noncontrolling interest in Operating Partnership
     10,369       8,133       12,550  
Income from continuing operations for diluted earnings per share
     80,053       57,012       79,251  
Income (loss) from discontinued operations for diluted earnings
                        
   per share
     --       4,689       (16,580 )
Net income available to common shareholders
   $ 80,053     $ 61,701     $ 62,671  
                         
Weighted average common shares
     98,962       92,477       88,389  
                         
Diluted EPS:
                        
Income from continuing operations available to common shareholders
   $ 0.81     $ 0.62     $ 0.90  
Income (loss) from discontinued operations available to common
                        
   shareholders
     --       0.05       (0.19 )
Net income available to common shareholders
   $ 0.81     $ 0.67     $ 0.71  


The following schedule reconciles the shares used in the basic EPS calculation to the shares used in the diluted EPS calculation: (in thousands)

 
Year Ended December 31,
 
2011
2010
2009
Basic EPS shares
86,047
79,224
74,318
Add:Operating Partnership – common units
12,808
13,149
14,028
Stock options
18
44
1
Restricted Stock Awards
89
60
42
Diluted EPS Shares
98,962
92,477
88,389

Not included in the computations of diluted EPS were 15,000, 15,000 and 307,184 stock options as such securities were anti-dilutive during the years ended December 31, 2011, 2010 and 2009, respectively.  Unvested restricted stock outstanding as of December 31, 2011, 2010 and 2009 were 187,447, 239,759 and 323,088, respectively.

 
96
 

Dividends declared per common share for each of the years ended December 31, 2011, 2010 and 2009 was $1.80 per share.


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.

OPERATING PARTNERSHIP

Preferred Units
In connection with the Company’s issuance of $25 million of Series C Preferred Stock, the Company acquired from the Operating Partnership $25 million of Series C Preferred Units (the “Series C Preferred Units”), which had terms essentially identical to the Series C Preferred Stock.  In connection with the Company’s redemption of Series C Preferred Stock on October 28, 2011, the Operating Partnership redeemed from the company all issued and outstanding Series C Preferred Units.  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.

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, 2011, 2010 and 2009:

 
Common
 
Units
Balance at January 1, 2009
14,437,731
Redemption of common units for shares of common stock
(942,695)
Balance at December 31, 2009
13,495,036
Redemption of common units for shares of common stock
(487,368)
Balance at December 31, 2010
13,007,668
Redemption of common units for shares of common stock
(810,546)
   
Balance at December 31, 2011
12,197,122

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, 2011, the Company has increased noncontrolling interests in the Operating Partnership and decreased additional paid-in capital in Mack-Cali Realty Corporation stockholders’ equity by approximately $9.4 million as of December 31, 2011.
 
 
 
97
 
 

 
NONCONTROLLING INTEREST OWNERSHIP
As of December 31, 2011 and 2010, the noncontrolling interest common unitholders owned 12.2 percent and 14.0 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.

PARTICIPATION RIGHTS
The Company’s interests in certain real estate projects (four office buildings aggregating 860,246 square feet and two future developments) acquired in 2006 each provide for the initial distributions of net cash flow solely to the Company, and thereafter, other parties, including Mark Yeager, a former executive officer of the Company, have participation rights (“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.


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, 2011, 2010 and 2009.  The Company had no long lived assets in foreign locations as of December 31, 2011, 2010 and 2009.  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.

 
98
 

Selected results of operations for the years ended December 31, 2011, 2010 and 2009 and selected asset information as of December 31, 2011 and 2010 regarding the Company’s operating segments are as follows: (dollars in thousands)

   
Real Estate
    
Construction
Services
    
Corporate
& Other (d)
    
Total Company
    
Total revenues:
                          
2011
   $ 709,120     $ 13,079     $ 2,080     $ 724,279    
2010
     726,394       63,703       (2,617 )     787,480    
2009
     733,287       31,207       (5,569 )     758,925    
                                   
Total operating and interest expenses (a):
                                  
2011
   $ 280,079     $ 13,874     $ 157,374     $ 451,327  
(e)
2010
     284,694       63,141       178,730       526,565  
(f)
2009
     270,906       31,816       171,296       474,018  
(g)
                                   
Equity in earnings (loss) of unconsolidated
                                  
  joint ventures:
                                  
2011
   $ 2,022       --       --     $ 2,022    
2010
     2,276       --       --       2,276    
2009
     (5,560 )     --       --       (5,560 )  
                                   
Net operating income (loss) (b):
                                  
2011
   $ 431,063     $ (795 )   $ (155,294 )   $ 274,974  
(e)
2010
     443,976       562       (181,347 )     263,191  
(f)
2009
     456,821       (609 )     (176,865 )     279,347  
(g)
                                   
Total assets:
                                  
2011
   $ 4,272,469     $ 7,022     $ 16,268     $ 4,295,759    
2010
     4,332,408       13,929       16,129       4,362,466    
                                   
Total long-lived assets (c):
                                  
2011
   $ 4,034,651       --     $ 2,272     $ 4,036,923    
2010
     4,096,242       --       2,630       4,098,872    
                                   

(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 $193,587 of depreciation and amortization.
(f)
Excludes $191,168 of depreciation and amortization and $9,521 of impairment charge on rental property.
(g)   Excludes $200,732 of depreciation and amortization.


 
99
 

18.  
RELATED PARTY TRANSACTIONS

William L. Mack, Chairman of the Board of Directors of the Company, David S. Mack, a director of the Company, and Earle I. Mack, a former director of the Company, 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 on a month-to-month basis.  The Company has recognized $253,000, $250,000 and $255,000 in revenue under this lease for the years ended December 31, 2011, 2010 and 2009, respectively, and had $0 accounts receivable from the corporation as of December 31, 2011 and 2010.

The Company has conducted business with certain entities (“RMC Entity” or “RMC Entities”), whose principals include Timothy M. Jones (a former president of the Company), Martin S. Berger (former member of the Company’s Board of Directors) and Robert F. Weinberg (current member of the Company’s Board of Directors).  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 continued to share his board seat with Mr. Weinberg.  On September 13, 2011, the Company was advised that Mr. Berger had died on September 12, 2011. At its regularly scheduled meeting on September 14, 2011, the Board of Directors of the Company appointed Mr. Weinberg to fill the vacancy of Mr. Berger’s unexpired term as a Class III director.   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 $1.2 million, $1.4 million and $1.6 million in revenue from RMC Entities for the years ended December 31, 2011, 2010 and 2009, respectively.  As of December 31, 2011 and 2010, respectively, the Company had $92,000 and $75,000 in accounts receivable from RMC Entities.

(2)  
An RMC Entity leases space at one of the Company’s office properties for approximately 4,860 square feet on a month-to-month basis.  The Company has recognized $130,000, $137,000 and $140,000, in revenue under this lease for the years ended December 31, 2011, 2010 and 2009, respectively, and had $0 accounts receivable due from the RMC Entity, as of December 31, 2011 and 2010.

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 $97,000, $101,000 and $115,000 from Mr. Cali for the years ended December 31, 2011, 2010 and 2009, respectively.  An affiliate of Mr. Cali has leases totaling 2,631 square feet of space at one of the Company’s office properties, which are scheduled to expire at the end of 2014.  The Company recognized approximately $69,000, $68,000 and $68,000 in total revenue under the leases for the years ended December 31, 2011, 2010 and 2009, respectively, and had $15,000 and $17,000 in accounts receivable from the affiliate as of December 31, 2011 and 2010.



 
100
 

19.  
CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited)

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

Quarter Ended 2011
December 31
September 30
June 30
March 31
Total revenues
$179,687
$177,155
$181,107
$186,330
Operating and other expenses
69,844
62,661
69,921
75,966
Direct construction costs
2,802
2,290
2,784
3,582
General and administrative
9,003
8,683
9,226
8,629
Depreciation and amortization
48,673
48,498
48,268
48,148
Impairment charge on rental property
--
--
--
--
Total expenses
130,322
122,132
130,199
136,325
Operating Income
49,365
55,023
50,908
50,005
Interest expense
(31,784)
(31,489)
(31,363)
(31,339)
Interest and other investment income
9
10
10
10
Equity in earnings (loss) of unconsolidated
        
joint ventures
848
539
736
(101)
Loss from early extinguishment of debt
--
--
--
--
Gain on reduction of other obligations
--
--
--
--
Total other (expense) income
(30,927)
(30,940)
(30,617)
(31,430)
Income (loss) from continuing operations
18,438
24,083
20,291
18,575
Discontinued operations:
        
Income (loss) from discontinued operations
--
--
--
--
Realized gains (losses) and unrealized losses
        
  on disposition of rental property, net
--
--
--
--
Total discontinued operations, net
--
--
--
--
Net income (loss)
18,438
24,083
20,291
18,575
Noncontrolling interest in consolidated joint ventures
94
96
102
110
Noncontrolling interest in Operating Partnership
(2,338)
(3,015)
(2,560)
(2,456)
Noncontrolling interest in discontinued operations
--
--
--
--
Preferred stock dividends
(72)
(664)
(500)
(500)
Net income (loss) available to common shareholders
$  16,122
$  20,500
$  17,333
$  15,729
         
Basic earnings per common share:
        
Income (loss) from continuing operations
$      0.18
$      0.24
$      0.20
$      0.19
Discontinued operations
--
--
--
--
Net income (loss) available to common shareholders
$      0.18
$      0.24
$      0.20
$      0.19
         
Diluted earnings per common share:
        
Income (loss) from continuing operations
$      0.18
$      0.24
$      0.20
$      0.19
Discontinued operations
--
--
--
--
Net income (loss) available to common shareholders
$      0.18
$      0.24
$      0.20
$      0.19
         
Dividends declared per common share
$      0.45
$      0.45
$      0.45
$      0.45


 
101
 


Quarter Ended 2010
December 31
September 30
June 30
March 31
Total revenues
$192,156
$197,956
$202,785
$194,583
Operating and other expenses
67,913
73,089
70,394
70,668
Direct construction costs
12,667
15,884
21,411
10,293
General and administrative
8,939
8,992
8,658
8,414
Depreciation and amortization
47,226
47,978
47,474
48,490
Impairment charge on rental property
9,521
--
--
--
Total expenses
146,266
145,943
147,937
137,865
Operating Income
45,890
52,013
54,848
56,718
Interest expense
(35,982)
(36,941)
(37,335)
(39,071)
Interest and other investment income
13
34
18
21
Equity in earnings (loss) of unconsolidated
        
joint ventures
2,063
475
260
(522)
Loss from early extinguishment of debt
(3,752)
--
--
--
Gain on reduction of other obligations
--
--
--
--
Total other (expense) income
(37,658)
(36,432)
(37,057)
(39,572)
Income (loss) from continuing operations
8,232
15,581
17,791
17,146
Discontinued operations:
        
Income (loss) from discontinued operations
--
--
11
231
Realized gains (losses) and unrealized losses
        
  on disposition of rental property, net
--
--
4,447
--
Total discontinued operations, net
--
--
4,458
231
Net income (loss)
8,232
15,581
22,249
17,377
Noncontrolling interest in consolidated joint ventures
(19)
108
86
87
Noncontrolling interest in Operating Partnership
(1,086)
(2,150)
(2,475)
(2,422)
Noncontrolling interest in discontinued operations
--
--
(635)
(33)
Preferred stock dividends
(500)
(500)
(500)
(500)
Net income (loss) available to common shareholders
$    6,627
$  13,039
$  18,725
$  14,509
         
Basic earnings per common share:
        
Income (loss) from continuing operations
$      0.09
$      0.16
$      0.19
$      0.18
Discontinued operations
--
--
0.05
--
Net income (loss) available to common shareholders
$      0.09
$      0.16
$      0.24
$      0.18
         
Diluted earnings per common share:
        
Income (loss) from continuing operations
$      0.09
$      0.16
$      0.19
$      0.18
Discontinued operations
--
--
0.05
--
Net income (loss) available to common shareholders
$      0.09
$      0.16
$      0.24
$      0.18
         
Dividends declared per common share
$      0.45
$      0.45
$      0.45
$      0.45





 
102
 


                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2011
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized          
Period (F)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (G)
                     
NEW JERSEY
                    
Bergen County
                    
Fair Lawn
                    
17-17 Rte 208 North (A)
1987
1995
--
$    3,067
$    19,415
$    3,780
$     3,067
$    23,195
$    26,262
$    9,119
Fort Lee
                    
One Bridge Plaza (A)
1981
1996
--
2,439
24,462
7,481
2,439
31,943
34,382
11,737
2115 Linwood Avenue (A)
1981
1998
--
474
4,419
4,473
474
8,892
9,366
2,629
Little Ferry
                    
200 Riser Road (A)
1974
1997
--
3,888
15,551
413
3,888
15,964
19,852
5,670
Lyndhurst
                    
210 Clay Avenue (A)
1978
2009
$   11,844
2,300
11,189
--
2,300
11,189
13,489
1,302
Montvale
                    
95 Chestnut Ridge Road (A)
1975
1997
--
1,227
4,907
209
1,227
5,116
6,343
1,811
135 Chestnut Ridge Road (A)
1981
1997
--
2,587
10,350
1,314
2,588
11,663
14,251
4,051
Paramus
                    
15 East Midland Avenue (A)
1988
1997
13,000
10,375
41,497
663
10,374
42,161
52,535
14,690
140 East Ridgewood
                    
  Avenue (A)
1981
1997
12,250
7,932
31,463
6,078
7,932
37,541
45,473
13,091
461 From Road (A)
1988
1997
--
13,194
52,778
619
13,194
53,397
66,591
18,683
650 From Road (A)
1978
1997
23,500
10,487
41,949
7,144
10,487
49,093
59,580
18,361
61 South Paramus Road (A) (H)
1985
1997
23,000
9,005
36,018
7,150
9,005
43,168
52,173
15,533
Rochelle Park
                    
120 West Passaic Street (A)
1972
1997
--
1,354
5,415
95
1,357
5,507
6,864
1,964
365 West Passaic Street (A)
1976
1997
12,250
4,148
16,592
3,849
4,148
20,441
24,589
7,150
395 West Passaic Street (A)
1979
2006
10,781
2,550
17,131
1,049
2,550
18,180
20,730
3,729
Upper Saddle River
                    
1 Lake Street (A)
1994
1997
42,000
13,952
55,812
1,409
13,953
57,220
71,173
19,701
10 Mountainview Road (A)
1986
1998
--
4,240
20,485
3,012
4,240
23,497
27,737
8,890
Woodcliff Lake
                    
400 Chestnut Ridge Road (A)
1982
1997
--
4,201
16,802
5,080
4,201
21,882
26,083
9,359
470 Chestnut Ridge Road (A)
1987
1997
--
2,346
9,385
1,517
2,346
10,902
13,248
3,954
530 Chestnut Ridge Road (A)
1986
1997
--
1,860
7,441
210
1,860
7,651
9,511
2,613
50 Tice Boulevard (A)
1984
1994
24,000
4,500
--
25,376
4,500
25,376
29,876
15,874
300 Tice Boulevard (A)
1991
1996
--
5,424
29,688
5,039
5,424
34,727
40,151
12,695
                     
Burlington County
                    
Burlington
                    
3 Terri Lane (B)
1991
1998
--
652
3,433
2,019
658
5,446
6,104
2,193
5 Terri Lane (B)
1992
1998
--
564
3,792
2,550
569
6,337
6,906
2,370
Moorestown
                    
2 Commerce Drive (B)
1986
1999
--
723
2,893
741
723
3,634
4,357
1,207
101 Commerce Drive (B)
1988
1998
--
422
3,528
436
426
3,960
4,386
1,451
102 Commerce Drive (B)
1987
1999
--
389
1,554
538
389
2,092
2,481
713
201 Commerce Drive (B)
1986
1998
--
254
1,694
480
258
2,170
2,428
889
202 Commerce Drive (B)
1988
1999
--
490
1,963
774
490
2,737
3,227
1,015
1 Executive Drive (B)
1989
1998
--
226
1,453
586
228
2,037
2,265
880
2 Executive Drive (B)
1988
2000
--
801
3,206
960
801
4,166
4,967
1,599
101 Executive Drive (B)
1990
1998
--
241
2,262
713
244
2,972
3,216
1,218
102 Executive Drive (B)
1990
1998
--
353
3,607
370
357
3,973
4,330
1,379
225 Executive Drive (B)
1990
1998
--
323
2,477
485
326
2,959
3,285
1,148
97 Foster Road (B)
1982
1998
--
208
1,382
429
211
1,808
2,019
668
1507 Lancer Drive (B)
1995
1998
--
119
1,106
51
120
1,156
1,276
419
1245 North Church Street (B)
1998
2001
--
691
2,810
135
691
2,945
3,636
826
1247 North Church Street (B)
1998
2001
--
805
3,269
204
805
3,473
4,278
1,027

 
103
 

                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2011
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized          
Period (F)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (G)
                     
1256 North Church Street (B)
1984
1998
--
354
3,098
517
357
3,612
3,969
1,321
840 North Lenola Road (B)
1995
1998
--
329
2,366
540
333
2,902
3,235
1,205
844 North Lenola Road (B)
1995
1998
--
239
1,714
346
241
2,058
2,299
881
915 North Lenola Road (B)
1998
2000
--
508
2,034
267
508
2,301
2,809
715
224 Strawbridge Drive (A)
1984
1997
--
766
4,335
3,209
767
7,543
8,310
2,910
228 Strawbridge Drive (A)
1984
1997
--
766
4,334
3,945
767
8,278
9,045
2,714
232 Strawbridge Drive (A)
1986
2004
--
1,521
7,076
1,953
1,521
9,029
10,550
2,300
2 Twosome Drive (B)
2000
2001
--
701
2,807
218
701
3,025
3,726
886
30 Twosome Drive (B)
1997
1998
--
234
1,954
490
236
2,442
2,678
961
31 Twosome Drive (B)
1998
2001
--
815
3,276
186
815
3,462
4,277
981
40 Twosome Drive (B)
1996
1998
--
297
2,393
313
301
2,702
3,003
1,111
41 Twosome Drive (B)
1998
2001
--
605
2,459
69
605
2,528
3,133
715
50 Twosome Drive (B)
1997
1998
--
301
2,330
92
304
2,419
2,723
897
                     
Gloucester County
                    
West Deptford
                    
1451 Metropolitan Drive (B)
1996
1998
--
203
1,189
30
206
1,216
1,422
451
                     
Essex County
                    
Millburn
                    
150 J.F. Kennedy Parkway (A)
1980
1997
--
12,606
50,425
8,537
12,606
58,962
71,568
23,851
Roseland
                    
4 Becker Farm Road (A)
1983
2009
37,769
5,600
38,285
1,286
5,600
39,571
45,171
3,724
5 Becker Farm Road (A)
1982
2009
12,056
2,400
11,885
76
2,400
11,961
14,361
1,300
6 Becker Farm Road (A)
1983
2009
13,590
2,600
15,548
263
2,600
15,811
18,411
1,430
101 Eisenhower Parkway (A)
1980
1994
--
228
--
21,074
228
21,074
21,302
11,192
103 Eisenhower Parkway (A)
1985
1994
--
--
--
15,057
2,300
12,757
15,057
7,763
105 Eisenhower Parkway (A)
2001
2001
--
4,430
42,898
6,997
3,835
50,490
54,325
18,922
75 Livingston Avenue (A)
1985
2009
10,401
1,900
6,312
198
1,900
6,510
8,410
955
85 Livingston Avenue (A)
1985
2009
14,561
2,500
14,238
122
2,500
14,360
16,860
1,401
                     
Hudson County
                    
Jersey City
                    
Harborside Financial Center
                    
  Plaza 1 (A)
1983
1996
--
3,923
51,013
27,703
3,923
78,716
82,639
27,153
Harborside Financial Center
                    
  Plaza 2 (A)
1990
1996
--
17,655
101,546
19,433
15,071
123,563
138,634
47,505
Harborside Financial Center
                    
  Plaza 3 (A)
1990
1996
--
17,655
101,878
19,101
15,071
123,563
138,634
47,505
Harborside Financial Center
                    
  Plaza 4A (A)
2000
2000
--
1,244
56,144
11,196
1,244
67,340
68,584
21,686
Harborside Financial Center
                    
  Plaza 5 (A)
2002
2002
231,603
6,218
170,682
52,641
5,705
223,836
229,541
61,293
101 Hudson Street (A)
1992
2004
--
45,530
271,376
6,440
45,530
277,816
323,346
57,486
                     
Mercer County
                    
Hamilton Township
                    
3 AAA Drive (A)
1981
2007
--
242
3,218
1,144
242
4,362
4,604
764
100 Horizon Center
                    
  Boulevard (B)
1989
1995
--
205
1,676
226
315
1,792
2,107
783
200 Horizon Drive (B)
1991
1995
--
205
3,027
527
348
3,411
3,759
1,477
300 Horizon Drive (B)
1989
1995
--
379
4,355
1,742
521
5,955
6,476
2,937
500 Horizon Drive (B)
1990
1995
--
379
3,395
1,088
487
4,375
4,862
1,972
600 Horizon Drive (B)
2002
2002
--
--
7,549
650
685
7,514
8,199
1,705
                     

 
104
 

                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2011
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized          
Period (F)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (G)
                     
700 Horizon Drive (A)
2007
2007
--
490
43
16,492
865
16,160
17,025
2,059
2 South Gold Drive (A)
1974
2007
--
476
3,487
398
476
3,885
4,361
556
Princeton
                    
103 Carnegie Center (A)
1984
1996
--
2,566
7,868
3,353
2,566
11,221
13,787
4,707
2 Independence Way (A)
1985
2009
--
1,300
7,246
125
1,300
7,371
8,671
748
3 Independence Way (A)
1983
1997
--
1,997
11,391
3,786
1,997
15,177
17,174
5,991
100 Overlook Center (A)
1988
1997
--
2,378
21,754
5,094
2,378
26,848
29,226
11,376
5 Vaughn Drive (A)
1987
1995
--
657
9,800
3,003
657
12,803
13,460
5,940
                     
Middlesex County
                    
East Brunswick
                    
377 Summerhill Road (A)
1977
1997
--
649
2,594
412
649
3,006
3,655
1,084
Edison
                    
343 Thornall Street (A)
1991
2006
--
6,027
39,101
5,054
6,027
44,155
50,182
9,194
Piscataway
                    
30 Knightsbridge Road,
                    
  Building 3 (A)
1977
2004
--
1,030
7,269
346
1,034
7,611
8,645
1,451
30 Knightsbridge Road,
                    
  Building 4 (A)
1977
2004
--
1,433
10,121
385
1,429
10,510
11,939
2,004
30 Knightsbridge Road,
                    
  Building 5 (A)
1977
2004
--
2,979
21,035
10,672
2,979
31,707
34,686
8,574
30 Knightsbridge Road,
                    
  Building 6 (A)
1977
2004
--
448
3,161
4,483
448
7,644
8,092
1,897
Plainsboro
                    
500 College Road East (A) (H)
1984
1998
--
614
20,626
5,790
614
26,416
27,030
8,443
Woodbridge
                    
581 Main Street (A)
1991
1997
16,338
3,237
12,949
24,780
8,115
32,851
40,966
11,960
                     
Monmouth County
                    
Freehold
                    
2 Paragon Way (A)
1989
2005
--
999
4,619
1,035
999
5,654
6,653
1,248
3 Paragon Way (A)
1991
2005
--
1,423
6,041
2,168
1,423
8,209
9,632
1,938
4 Paragon Way (A)
2002
2005
--
1,961
8,827
(469)
1,961
8,358
10,319
1,546
100 Willowbrook Road (A)
1988
2005
--
1,264
5,573
1,129
1,264
6,702
7,966
1,619
Holmdel
                    
23 Main Street (A)
1977
2005
31,002
4,336
19,544
8,903
4,336
28,447
32,783
7,737
Middletown
                    
One River Center,
                    
  Building 1 (A)
1983
2004
11,290
3,070
17,414
2,896
2,451
20,929
23,380
5,589
One River Center,
                    
  Building 2 (A)
1983
2004
12,664
2,468
15,043
1,729
2,452
16,788
19,240
3,302
One River Center,
                    
  Building 3 (A)
1984
2004
20,125
4,051
24,790
5,526
4,627
29,740
34,367
5,625
Neptune
                    
3600 Route 66 (A)
1989
1995
--
1,098
18,146
1,483
1,098
19,629
20,727
7,813
Wall Township
                    
1305 Campus Parkway (A)
1988
1995
--
335
2,560
619
291
3,223
3,514
1,520
1325 Campus Parkway (B)
1988
1995
--
270
2,928
1,058
270
3,986
4,256
1,887
1340 Campus Parkway (B)
1992
1995
--
489
4,621
1,876
489
6,497
6,986
2,823
1345 Campus Parkway (B)
1995
1997
--
1,023
5,703
1,748
1,024
7,450
8,474
3,110
1350 Campus Parkway (A)
1990
1995
--
454
7,134
1,382
454
8,516
8,970
3,784
1433 Highway 34 (B)
1985
1995
--
889
4,321
1,402
889
5,723
6,612
2,546
                     

 
105
 

                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2011
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized          
Period (F)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (G)
                     
1320 Wyckoff Avenue (B)
1986
1995
--
255
1,285
259
216
1,583
1,799
612
1324 Wyckoff Avenue (B)
1987
1995
--
230
1,439
340
190
1,819
2,009
824
                     
Morris County
                    
Florham Park
                    
325 Columbia Parkway (A)
1987
1994
--
1,564
--
16,117
1,564
16,117
17,681
8,858
Morris Plains
                    
250 Johnson Road (A)
1977
1997
--
2,004
8,016
1,854
2,004
9,870
11,874
3,754
201 Littleton Road (A)
1979
1997
--
2,407
9,627
1,382
2,407
11,009
13,416
3,712
Morris Township
                    
412 Mt. Kemble Avenue (A)
1985
2004
--
4,360
33,167
13,894
4,360
47,061
51,421
11,134
Parsippany
                    
4 Campus Drive (A)
1983
2001
--
5,213
20,984
3,279
5,213
24,263
29,476
7,662
6 Campus Drive (A)
1983
2001
--
4,411
17,796
3,565
4,411
21,361
25,772
6,695
7 Campus Drive (A)
1982
1998
--
1,932
27,788
5,925
1,932
33,713
35,645
11,122
8 Campus Drive (A)
1987
1998
--
1,865
35,456
4,022
1,865
39,478
41,343
15,217
9 Campus Drive (A)
1983
2001
--
3,277
11,796
17,132
5,842
26,363
32,205
8,815
4 Century Drive (A)
1981
2004
--
1,787
9,575
2,155
1,787
11,730
13,517
2,715
5 Century Drive (A)
1981
2004
--
1,762
9,341
2,263
1,762
11,604
13,366
2,316
6 Century Drive (A)
1981
2004
--
1,289
6,848
3,423
1,289
10,271
11,560
3,504
2 Dryden Way (A)
1990
1998
--
778
420
110
778
530
1,308
190
4 Gatehall Drive (A)
1988
2000
--
8,452
33,929
4,163
8,452
38,092
46,544
12,051
2 Hilton Court (A)
1991
1998
--
1,971
32,007
5,657
1,971
37,664
39,635
13,330
1633 Littleton Road (A)
1978
2002
--
2,283
9,550
163
2,355
9,641
11,996
3,225
600 Parsippany Road (A)
1978
1994
--
1,257
5,594
2,695
1,257
8,289
9,546
3,667
1 Sylvan Way (A)
1989
1998
--
1,689
24,699
2,352
1,021
27,719
28,740
8,933
4 Sylvan Way (A)
1983
2009
14,438
2,400
13,486
--
2,400
13,486
15,886
1,358
5 Sylvan Way (A)
1989
1998
--
1,160
25,214
2,740
1,161
27,953
29,114
10,311
7 Sylvan Way (A)
1987
1998
--
2,084
26,083
2,091
2,084
28,174
30,258
11,161
22 Sylvan Way (A)
2009
2009
--
14,600
44,392
78
14,600
44,470
59,070
4,457
20 Waterview Boulevard (A)
1988
2009
23,575
4,500
27,246
63
4,500
27,309
31,809
2,411
35 Waterview Boulevard (A)
1990
2006
19,051
5,133
28,059
1,137
5,133
29,196
34,329
5,341
5 Wood Hollow Road (A)
1979
2004
--
5,302
26,488
15,089
5,302
41,577
46,879
10,040
                     
Passaic County
                    
Clifton
                    
777 Passaic Avenue (A)
1983
1994
--
--
--
7,026
1,100
5,926
7,026
3,523
Totowa
                    
1 Center Court (B)
1999
1999
--
270
1,824
490
270
2,314
2,584
620
2 Center Court (B)
1998
1998
--
191
--
2,255
191
2,255
2,446
835
11 Commerce Way (B)
1989
1995
--
586
2,986
541
586
3,527
4,113
1,324
20 Commerce Way (B)
1992
1995
--
516
3,108
26
516
3,134
3,650
1,267
29 Commerce Way (B)
1990
1995
--
586
3,092
908
586
4,000
4,586
1,791
40 Commerce Way (B)
1987
1995
--
516
3,260
1,217
516
4,477
4,993
1,460
45 Commerce Way (B)
1992
1995
--
536
3,379
468
536
3,847
4,383
1,539
60 Commerce Way (B)
1988
1995
--
526
3,257
628
526
3,885
4,411
1,679
80 Commerce Way (B)
1996
1996
--
227
--
1,270
227
1,270
1,497
463
100 Commerce Way (B)
1996
1996
--
226
--
1,270
226
1,270
1,496
462
120 Commerce Way (B)
1994
1995
--
228
--
1,328
229
1,327
1,556
536
140 Commerce Way (B)
1994
1995
--
229
--
1,326
228
1,327
1,555
536
999 Riverview Drive (A)
1988
1995
--
476
6,024
2,419
1,102
7,817
8,919
3,397
                     

 
106
 

                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2011
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized          
Period (F)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (G)
                     
Somerset County
                    
Basking Ridge
                    
222 Mt. Airy Road (A)
1986
1996
--
775
3,636
2,958
775
6,594
7,369
2,756
233 Mt. Airy Road (A)
1987
1996
--
1,034
5,033
1,650
1,034
6,683
7,717
3,422
Bernards
                    
106 Allen Road (A)
2000
2000
--
3,853
14,465
3,128
4,093
17,353
21,446
7,632
Branchburg
                    
51 Imclone Drive (A)
1978
2009
3,886
1,900
3,475
(1)
1,900
3,474
5,374
310
Bridgewater
                    
55 Corporate Drive (A)
2011
2011
  
13,338
26,637
6,407
13,338
33,044
46,382
643
440 Route 22 East (A)
1990
2010
11,000
3,986
13,658
3,882
3,986
17,540
21,526
832
721 Route 202/206 (A)
1989
1997
--
6,730
26,919
8,945
6,730
35,864
42,594
13,319
Warren
                    
10 Independence Boulevard (A)
1988
2009
15,908
2,300
15,499
161
2,300
15,660
17,960
1,504
                     
Union County
                    
Clark
                    
100 Walnut Avenue (A)
1985
1994
19,241
--
--
17,715
1,822
15,893
17,715
9,840
Cranford
                    
6 Commerce Drive (A)
1973
1994
--
250
--
2,867
250
2,867
3,117
2,029
11 Commerce Drive (A)
1981
1994
--
470
--
5,865
470
5,865
6,335
4,472
12 Commerce Drive (A)
1967
1997
--
887
3,549
2,212
887
5,761
6,648
2,531
14 Commerce Drive (A)
1971
2003
--
1,283
6,344
1,110
1,283
7,454
8,737
1,831
20 Commerce Drive (A)
1990
1994
--
2,346
--
20,003
2,346
20,003
22,349
9,838
25 Commerce Drive (A)
1971
2002
--
1,520
6,186
692
1,520
6,878
8,398
2,502
65 Jackson Drive (A)
1984
1994
--
541
--
6,768
542
6,767
7,309
4,446
New Providence
                    
890 Mountain Road (A)
1977
1997
--
2,796
11,185
5,173
3,765
15,389
19,154
5,350
                     
NEW YORK
                    
New York County
                    
New York
                    
125 Broad Street (A)
1970
2007
--
50,191
207,002
19,426
50,191
226,428
276,619
26,114
                     
Rockland County
                    
Suffern
                    
400 Rella Boulevard (A)
1988
1995
--
1,090
13,412
3,110
1,090
16,522
17,612
7,235
                     
Westchester County
                    
Elmsford
                    
11 Clearbrook Road (B)
1974
1997
--
149
2,159
493
149
2,652
2,801
1,073
75 Clearbrook Road (B)
1990
1997
--
2,314
4,716
107
2,314
4,823
7,137
1,818
100 Clearbrook Road (A)
1975
1997
--
220
5,366
812
220
6,178
6,398
2,471
125 Clearbrook Road (B)
2002
2002
--
1,055
3,676
(51)
1,055
3,625
4,680
1,577
150 Clearbrook Road (B)
1975
1997
--
497
7,030
1,334
497
8,364
8,861
3,126
175 Clearbrook Road (B)
1973
1997
--
655
7,473
968
655
8,441
9,096
3,347
200 Clearbrook Road (B)
1974
1997
--
579
6,620
1,696
579
8,316
8,895
3,212
250 Clearbrook Road (B)
1973
1997
--
867
8,647
1,309
867
9,956
10,823
3,749
50 Executive Boulevard (B)
1969
1997
--
237
2,617
234
237
2,851
3,088
1,044
77 Executive Boulevard (B)
1977
1997
--
34
1,104
179
34
1,283
1,317
459
85 Executive Boulevard (B)
1968
1997
--
155
2,507
647
155
3,154
3,309
1,368
101 Executive Boulevard (A)
1971
1997
--
267
5,838
754
267
6,592
6,859
2,533
300 Executive Boulevard (B)
1970
1997
--
460
3,609
376
460
3,985
4,445
1,581
                     
                     

 
107
 

                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2011
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized          
Period (F)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (G)
                     
350 Executive Boulevard (B)
1970
1997
--
100
1,793
15
100
1,808
1,908
674
399 Executive Boulevard (B)
1962
1997
--
531
7,191
163
531
7,354
7,885
2,734
400 Executive Boulevard (B)
1970
1997
--
2,202
1,846
819
2,202
2,665
4,867
907
500 Executive Boulevard (B)
1970
1997
--
258
4,183
690
258
4,873
5,131
2,023
525 Executive Boulevard (B)
1972
1997
--
345
5,499
910
345
6,409
6,754
2,373
700 Executive Boulevard (E)
N/A
1997
--
970
--
--
970
--
970
--
555 Taxter Road (A)
1986
2000
--
4,285
17,205
5,260
4,285
22,465
26,750
8,205
565 Taxter Road (A)
1988
2000
--
4,285
17,205
4,269
4,233
21,526
25,759
7,462
570 Taxter Road (A)
1972
1997
--
438
6,078
1,324
438
7,402
7,840
2,691
1 Warehouse Lane (C) (H)
1957
1997
--
3
268
265
3
533
536
199
2 Warehouse Lane (C) (H)
1957
1997
--
4
672
113
4
785
789
314
3 Warehouse Lane (C) (H)
1957
1997
--
21
1,948
526
21
2,474
2,495
1,076
4 Warehouse Lane (C) (H)
1957
1997
--
84
13,393
3,677
85
17,069
17,154
6,499
5 Warehouse Lane (C) (H)
1957
1997
--
19
4,804
1,490
19
6,294
6,313
2,581
6 Warehouse Lane (C) (H)
1982
1997
--
10
4,419
2,108
10
6,527
6,537
1,886
1 Westchester Plaza (B)
1967
1997
--
199
2,023
425
199
2,448
2,647
850
2 Westchester Plaza (B)
1968
1997
--
234
2,726
262
234
2,988
3,222
1,170
3 Westchester Plaza (B)
1969
1997
--
655
7,936
1,156
655
9,092
9,747
3,430
4 Westchester Plaza (B)
1969
1997
--
320
3,729
923
320
4,652
4,972
1,618
5 Westchester Plaza (B)
1969
1997
--
118
1,949
511
118
2,460
2,578
928
6 Westchester Plaza (B)
1968
1997
--
164
1,998
129
164
2,127
2,291
802
7 Westchester Plaza (B)
1972
1997
--
286
4,321
224
286
4,545
4,831
1,683
8 Westchester Plaza (B)
1971
1997
--
447
5,262
1,003
447
6,265
6,712
2,547
Hawthorne
                    
200 Saw Mill River Road (B)
1965
1997
--
353
3,353
756
353
4,109
4,462
1,413
1 Skyline Drive (A)
1980
1997
--
66
1,711
301
66
2,012
2,078
820
2 Skyline Drive (A)
1987
1997
--
109
3,128
1,533
109
4,661
4,770
1,483
4 Skyline Drive (B)
1987
1997
--
363
7,513
2,889
363
10,402
10,765
3,840
5 Skyline Drive (B)
1980
2001
--
2,219
8,916
1,584
2,219
10,500
12,719
3,813
6 Skyline Drive (B)
1980
2001
--
740
2,971
1,021
740
3,992
4,732
1,436
7 Skyline Drive (A)
1987
1998
--
330
13,013
2,697
330
15,710
16,040
5,683
8 Skyline Drive (B)
1985
1997
--
212
4,410
1,048
212
5,458
5,670
2,147
10 Skyline Drive (B)
1985
1997
--
134
2,799
753
134
3,552
3,686
1,363
11 Skyline Drive (B) (H)
1989
1997
--
--
4,788
97
--
4,885
4,885
1,822
12 Skyline Drive (B) (H)
1999
1999
--
1,562
3,254
844
1,320
4,340
5,660
1,853
15 Skyline Drive (B) (H)
1989
1997
--
--
7,449
546
--
7,995
7,995
3,111
17 Skyline Drive (A) (H)
1989
1997
--
--
7,269
1,161
--
8,430
8,430
2,930
19 Skyline Drive (A)
1982
1997
--
2,355
34,254
1,189
2,356
35,442
37,798
13,597
Tarrytown
                    
200 White Plains Road (A)
1982
1997
--
378
8,367
2,045
378
10,412
10,790
3,916
220 White Plains Road (A)
1984
1997
--
367
8,112
1,635
367
9,747
10,114
3,644
230 White Plains Road (D)
1984
1997
--
124
1,845
107
124
1,952
2,076
714
White Plains
                    
1 Barker Avenue (A)
1975
1997
--
208
9,629
2,187
207
11,817
12,024
4,181
3 Barker Avenue (A)
1983
1997
--
122
7,864
2,250
122
10,114
10,236
4,430
50 Main Street (A)
1985
1997
--
564
48,105
11,866
564
59,971
60,535
21,892
11 Martine Avenue (A)
1987
1997
--
127
26,833
8,352
127
35,185
35,312
12,842
1 Water Street (A)
1979
1997
--
211
5,382
1,099
211
6,481
6,692
2,705
Yonkers
                    
100 Corporate Boulevard (B)
1987
1997
--
602
9,910
1,515
602
11,425
12,027
4,477
200 Corporate Boulevard
                    
  South (B)
1990
1997
--
502
7,575
1,468
502
9,043
9,545
3,103
1 Enterprise Boulevard (E)
N/A
1997
--
1,379
--
1
1,380
--
1,380
--
1 Executive Boulevard (A)
1982
1997
--
1,104
11,904
3,267
1,105
15,170
16,275
6,006
                     

 
108
 

                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2011
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized          
Period (F)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (G)
                     
2 Executive Boulevard (D)
1986
1997
--
89
2,439
100
89
2,539
2,628
911
3 Executive Boulevard (A)
1987
1997
--
385
6,256
1,560
385
7,816
8,201
2,834
4 Executive Plaza (B)
1986
1997
--
584
6,134
2,061
584
8,195
8,779
3,913
6 Executive Plaza (B)
1987
1997
--
546
7,246
1,478
546
8,724
9,270
3,014
1 Odell Plaza (B)
1980
1997
--
1,206
6,815
2,145
1,206
8,960
10,166
3,137
3 Odell Plaza (A)
1984
2003
--
1,322
4,777
2,319
1,322
7,096
8,418
2,189
5 Odell Plaza (B)
1983
1997
--
331
2,988
882
331
3,870
4,201
1,544
7 Odell Plaza (B)
1984
1997
--
419
4,418
622
419
5,040
5,459
1,935
                     
PENNSYLVANIA
                    
Chester County
                    
Berwyn
                    
1000 Westlakes Drive (A)
1989
1997
--
619
9,016
546
619
9,562
10,181
3,720
1055 Westlakes Drive (A)
1990
1997
--
1,951
19,046
3,908
1,951
22,954
24,905
9,712
1205 Westlakes Drive (A)
1988
1997
--
1,323
20,098
2,943
1,323
23,041
24,364
8,856
1235 Westlakes Drive (A)
1986
1997
--
1,417
21,215
3,711
1,418
24,925
26,343
9,801
                     
Delaware County
                    
Lester
                    
100 Stevens Drive (A)
1986
1996
--
1,349
10,018
3,915
1,349
13,933
15,282
6,038
200 Stevens Drive (A)
1987
1996
--
1,644
20,186
6,558
1,644
26,744
28,388
11,206
300 Stevens Drive (A)
1992
1996
--
491
9,490
1,710
491
11,200
11,691
4,586
Media
                    
1400 Providence Rd,
                    
  Center I (A)
1986
1996
--
1,042
9,054
2,881
1,042
11,935
12,977
4,832
1400 Providence Rd,
                    
  Center II (A)
1990
1996
--
1,543
16,464
4,659
1,544
21,122
22,666
8,373
                     
Montgomery County
                    
Bala Cynwyd
                    
150 Monument Road (A)
1981
2004
--
2,845
14,780
4,110
2,845
18,890
21,735
4,247
Blue Bell
                    
4 Sentry Park (A)
1982
2003
--
1,749
7,721
1,004
1,749
8,725
10,474
1,942
5 Sentry Park East (A)
1984
1996
--
642
7,992
3,590
642
11,582
12,224
4,107
5 Sentry Park West (A)
1984
1996
--
268
3,334
616
268
3,950
4,218
1,441
16 Sentry Park West (A)
1988
2002
--
3,377
13,511
2,190
3,377
15,701
19,078
5,299
18 Sentry Park West (A)
1988
2002
--
3,515
14,062
2,157
3,515
16,219
19,734
5,397
King of Prussia
                    
2200 Renaissance Blvd (A)
1985
2002
   16,171
5,347
21,453
(9,121)
3,126
14,553
17,679
4,934
Lower Providence
                    
1000 Madison Avenue (A)
1990
1997
--
1,713
12,559
3,393
1,714
15,951
17,665
6,213
Plymouth Meeting
                    
1150 Plymouth Meeting
                    
  Mall (A)
1970
1997
--
125
499
31,474
6,219
25,879
32,098
10,076
                     
CONNECTICUT
                    
Fairfield County
                    
Norwalk
                    
40 Richards Avenue (A)
1985
1998
--
1,087
18,399
4,809
1,087
23,208
24,295
7,585
Stamford
                    
1266 East Main Street (A)
1984
2002
 15,531
6,638
26,567
5,263
6,638
31,830
38,468
9,184
419 West Avenue (B)
1986
1997
--
4,538
9,246
2,248
4,538
11,494
16,032
4,575
                     

 
109
 

                     
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2011
(dollars in thousands)
                     
                 
SCHEDULE III
                     
             
Gross Amount at Which
  
           
Costs
Carried at Close of
  
       
Initial Costs
Capitalized         
Period (F)
  
 
Year
  
Related
  
Building and
Subsequent
  
Building and
  
Accumulated
Property Location
Built
Acquired
Encumbrances
Land
Improvements
to Acquisition
Land
Improvements
Total
Depreciation (G)
                     
500 West Avenue (B)
1988
1997
--
415
1,679
61
415
1,740
2,155
643
550 West Avenue (B)
1990
1997
--
1,975
3,856
202
1,975
4,058
6,033
1,494
600 West Avenue (B)
1999
1999
--
2,305
2,863
839
2,305
3,702
6,007
1,150
650 West Avenue (B)
1998
1998
--
1,328
--
3,360
1,328
3,360
4,688
1,242
                     
DISTRICT OF COLUMBIA
                    
Washington,
                    
1201 Connecticut Avenue,
                    
  NW (A)
1940
1999
--
14,228
18,571
4,294
14,228
22,865
37,093
7,666
1400 L Street, NW (A)
1987
1998
--
13,054
27,423
7,246
13,054
34,669
47,723
13,128
                     
MARYLAND
                    
Prince George’s County
                    
Greenbelt
                    
Capital Office Park Parcel A (E)
N/A
2009
--
840
--
7
847
--
847
--
9200 Edmonston Road (A)
          1973/03
2006
4,479
1,547
4,131
474
1,547
4,605
6,152
1,056
6301 Ivy Lane (A)
          1979/95
2006
5,899
5,168
14,706
1,312
5,168
16,018
21,186
2,662
6303 Ivy Lane (A)
          1980/03
2006
--
5,115
13,860
596
5,115
14,456
19,571
2,698
6305 Ivy Lane (A)
          1982/95
2006
6,245
5,615
14,420
385
5,615
14,805
20,420
2,654
6404 Ivy Lane (A)
1987
2006
--
7,578
20,785
1,301
7,578
22,086
29,664
3,915
6406 Ivy Lane (A)
1991
2006
--
7,514
21,152
7
7,514
21,159
28,673
3,071
6411 Ivy Lane (A)
          1984/05
2006
--
6,867
17,470
1,106
6,867
18,576
25,443
3,497
Lanham
                    
4200 Parliament Place (A)
1989
1998
--
2,114
13,546
975
1,393
15,242
16,635
5,899
                     
                     
Projects Under Development
                    
  and Developable Land
    
--
112,587
5,715
   --  
112,587
5,715
118,302
64
                     
Furniture, Fixtures
                    
  and Equipment
    
--
--
--
4,465
--
4,465
4,465
3,508
                     
TOTALS
    
$739,448
$761,081
$3,644,041
$874,648
$773,026
$4,506,744
$5,279,770
$1,409,163
                     


(A)      Office Property
(B)      Office/Flex Property
(C)      Industrial/Warehouse Property
(D)     Stand-alone Retail Property
(E)      Land Lease
(F)      The aggregate cost for federal income tax purposes at December 31, 2011 was approximately $3.2 billion.
(G)      Depreciation of buildings and improvements are calculated over lives ranging from the life of the lease to 40 years.
(H)      This property is located on land leased by the Company.




 
110
 

MACK-CALI REALTY CORPORATION
NOTE TO SCHEDULE III



Changes in rental properties and accumulated depreciation for the periods ended December 31, 2011, 2010 and 2009 are as follows: (dollars in thousands)

   
2011
    
2010
    
2009
  
Rental Properties
                  
Balance at beginning of year
   $ 5,216,720     $ 5,186,208     $ 4,963,780  
Additions
     91,716       86,455       282,122  
Properties sold
     --       (16,052 )     --  
Impairment charge on rental property
     --       (12,560 )     --  
Retirements/disposals
     (28,666 )     (27,331 )     (59,694 )
Balance at end of year
   $ 5,279,770     $ 5,216,720     $ 5,186,208  
                         
                         
Accumulated Depreciation
                        
Balance at beginning of year
   $ 1,278,985     $ 1,153,223     $ 1,040,778  
Depreciation expense
     158,559       158,318       155,613  
Properties sold
     --       (2,091 )     --  
Impairment charge on rental property
     --       (3,256 )     (1,009 )
Retirements/disposals
     (28,381 )     (27,209 )     (42,159 )
Balance at end of year
   $ 1,409,163     $ 1,278,985     $ 1,153,223  

 
111
 

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 8, 2012
  
/s/ Barry Lefkowitz
   
Barry Lefkowitz
   
Executive Vice President and
   
  Chief Financial Officer
   
(principal accounting officer and     
  principal 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 8, 2012
William L. Mack    
     
/s/ Mitchell E. Hersh
President and Chief Executive 
 February 8, 2012
Mitchell E. Hersh 
 
Officer and Director
(principal executive officer)
  
     
/s/ Barry Lefkowitz Executive Vice President and    February 8, 2012
Barry Lefkowitz  
 
 
Chief Financial Officer
(principal accounting officer and
principal financial officer)
  
     
/s/ Alan S. Bernikow Director  February 8, 2012
Alan S. Bernikow    
     
/s/ John R. Cali Director February 8, 2012
John R. Cali    
     
/s/ Kenneth M. Duberstein  Director February 8, 2012
Kenneth M. Duberstein    
     
 
 

 
 
 

 
112
 

                                                                                                

 
 


 
 
 
Name   Title Date
     
/s/ Nathan Gantcher
 Director  February 8, 2012
Nathan Gantcher    
     
/s/ David S. Mack  Director 
February 8, 2012
David S. Mack    
     
/s/ Alan G. Philibosian  Director 
February 8, 2012
Alan G. Philibosian    
     
/s/ Irvin D. Reid  Director  February 8, 2012
Irvin D. Reid    
     
/s/ Vincent Tese Director  February 8, 2012
Vincent Tese    
     
/s/ Robert F. Weinberg  Director  February 8, 2012
Robert F. Weinberg    
     
/s/ Roy J. Zuckerberg  Director February 8, 2012
Roy J. Zuckerberg    
     
 
 
 
 
 

 
113
 

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).
     
4.1
  
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).
     
4.2
  
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).

 
114
 


Exhibit
Number
  
Exhibit Title
     
4.3
  
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).
     
4.4
  
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).
     
4.5
  
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).
     
4.6
  
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).
     
4.7
  
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).
     
4.8
  
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).
     
4.9
  
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).
     
4.10
  
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).
     
4.11
  
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).
     
4.12
  
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).
     
4.13
  
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).
     
4.14
  
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).
     
4.15
  
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).

 
115
 


Exhibit
Number
  
Exhibit Title
     
4.16
  
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).
     
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
  
Agreement and Release by and between Michael Grossman and the Company dated January 12, 2012 (filed as Exhibit 10.1 to the Company’s Form 8-K dated January 12, 2012 and incorporated herein by reference).
     

 
116
 


Exhibit
Number
  
Exhibit Title
     
10.12
  
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).
     
10.13
  
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).
     
10.14
  
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).
     
10.15
  
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).
     
10.16
  
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).
     
10.17
  
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).
     
10.18
  
Form of Restricted Share Award Agreement effective December 7, 2010 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman and Roger W. Thomas (filed as Exhibit 10.1 to the Company's Form 8-K dated December 7, 2010 and incorporated herein by reference).
     
10.19
  
Form of Restricted Share Award Agreement effective December 7, 2010 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 7, 2010 and incorporated herein by reference).
     
10.20
  
Form of Restricted Share Award Agreement effective December 6, 2011 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman and Roger W. Thomas (filed as Exhibit 10.1 to the Company's Form 8-K dated December 6, 2011 and incorporated herein by reference).
     
10.21
  
Form of Restricted Share Award Agreement effective December 6, 2011 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 6, 2011 and incorporated herein by reference).
     

 
117
 


Exhibit
Number
  
Exhibit Title
     
10.22
  
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).
     
10.23
  
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).
     
10.24
  
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).
     
10.25
  
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).
     
10.26
  
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).
     
10.27
  
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).
     
10.28
  
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).
     
10.29
  
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).
     
10.30
  
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).
     

 
118
 


Exhibit
Number
  
Exhibit Title
     
10.31
  
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).
     
10.32
  
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).
     
10.33
  
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).
     
10.34
  
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).
     
10.35
  
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).
     
10.36
  
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).
     
     
10.37
  
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).
     
10.38
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and William L. Mack dated October 22, 2002 (filed as Exhibit 10.101 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.39
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Mitchell E. Hersh dated October 22, 2002 (filed as Exhibit 10.102 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.40
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Martin S. Berger dated December 11, 1997 (filed as Exhibit 10.103 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.41
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Alan S. Bernikow dated May 20, 2004 (filed as Exhibit 10.104 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.42
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and John R. Cali dated October 22, 2002 (filed as Exhibit 10.105 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     

 
119
 


Exhibit
Number
  
Exhibit Title
     
10.43
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Kenneth M. Duberstein dated September 13, 2005 (filed as Exhibit 10.106 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.44
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Nathan Gantcher dated October 22, 2002 (filed as Exhibit 10.107 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.45
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and David S. Mack dated December 11, 1997 (filed as Exhibit 10.108 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.46
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Alan G. Philibosian dated October 22, 2002 (filed as Exhibit 10.109 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.47
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Irvin D. Reid dated October 22, 2002 (filed as Exhibit 10.110 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.48
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Vincent Tese dated October 22, 2002 (filed as Exhibit 10.111 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.49
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Robert F. Weinberg dated October 22, 2002 (filed as Exhibit 10.112 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.50
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Roy J. Zuckerberg dated October 22, 2002 (filed as Exhibit 10.113 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.51
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Barry Lefkowitz dated October 22, 2002 (filed as Exhibit 10.114 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.52
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Michael Grossman dated October 22, 2002 (filed as Exhibit 10.115 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.53
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Roger W. Thomas dated October 22, 2002 (filed as Exhibit 10.116 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.54
  
Indemnification Agreement by and between Mack-Cali Realty Corporation and Mark Yeager dated May 9, 2006 (filed as Exhibit 10.117 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     

 
120
 


Exhibit
Number
  
Exhibit Title
     
10.55
  
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).
     
10.56
  
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).
     
10.57
  
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).
     
10.58
  
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).
     
10.59
  
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).
     
10.60
  
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).
     
10.61
  
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).
     
10.62
  
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).
     
10.63
  
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).
     

 
121
 


Exhibit
Number
  
Exhibit Title
     
10.64
  
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).
     
10.65
  
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).
     
10.66
  
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).
     
10.67
  
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).
     
10.68
  
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).
     
10.69
  
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).
     
10.70
  
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).
     
10.71
  
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).
     
10.72
  
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).
     
     

 
122
 


Exhibit
Number
  
Exhibit Title
     
10.73
  
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).
     
10.74
  
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).
     
10.75
  
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).
     
10.76
  
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).
     
10.77
  
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).
     
10.78
  
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).
     
10.79
  
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).
     
10.80
  
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).
     
10.81
  
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).
     
10.82
  
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).
     
10.83
  
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).
     
10.84
  
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).
     
     

 
123
 


Exhibit
Number
  
Exhibit Title
     
10.85
  
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).
     
10.86
  
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).
     
10.87
  
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).
     
10.88
  
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).
     
10.89
  
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).
     
10.90
 
  
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).
     
10.91
  
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).
     
10.92
  
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).
     
10.93
  
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).
     
10.94
  
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).

 
124
 


Exhibit
Number
  
Exhibit Title
     
10.95
  
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).
     
10.96
  
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).
     
10.97
  
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).
     
10.98
  
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).
     
10.99
  
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).
     
10.100
  
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).
     
10.101
  
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).
     
10.102
  
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 Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.165 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.103
  
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 Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.166 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

 
125
 


Exhibit
Number
  
Exhibit Title
     
10.104
  
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 Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.167 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.105
  
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 Mack-Cali Centre IV in Bergen County, New Jersey filed as Exhibit 10.168 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.106
  
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali F Properties, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.169 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.107
  
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Chestnut Ridge, L.L.C., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.170 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.108
  
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 Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.171 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.109
  
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 Mack-Cali Centre I in Bergen County, New Jersey  (filed as Exhibit 10.172 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.110
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.173 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.111
  
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 Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.174 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.112
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.175 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     

 
126
 


Exhibit
Number
  
Exhibit Title
     
10.113
  
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 Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.176 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.114
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.177 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.115
  
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 Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.178 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.116
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.179 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.117
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali F Properties, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre VII in Bergen County, New Jersey  (filed as Exhibit 10.180 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.118
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali F Properties, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.181 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.119
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Corp. Center in Bergen County, New Jersey  (filed as Exhibit 10.182 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.120
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. in favor of VPCM, LLC with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.183 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.121
  
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 Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.184 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.122
  
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.185 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     

 
127
 


Exhibit
Number
  
Exhibit Title
     
10.123
  
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 certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.186 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.124
  
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 certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.187 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.125
  
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 certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.188 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.126
  
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 certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.189 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.127
  
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 certain liabilities of Mack-Cali F Properties, L.P. with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.190 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.128
  
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 certain liabilities of Mack-Cali Chestnut Ridge, L.L.C. with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.191 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.129
  
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 certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.192 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.130
  
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.193 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     

 
128
 


Exhibit
Number
  
Exhibit Title
     
10.131
  
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.194 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.132
  
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.195 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.133
  
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.196 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.134
  
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali F Properties, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.197 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.135
  
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.198 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.136
  
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.199 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
     
10.137
  
Development Agreement dated December 5, 2011 by and between M-C Plaza VI & VII L.L.C. and Ironstate Development LLC (filed as Exhibit 10.1 to the Company’s Form 8-K dated December 5, 2011 and incorporated herein by reference).
     
10.138
  
Form of Amended and Restated Limited Liability Company Agreement (filed as Exhibit 10.2 to the Company’s Form 8-K dated December 5, 2011 and incorporated herein by reference).
     
10.139
  
Third Amended and Restated Revolving Credit Agreement among Mack-Cali Realty, L.P., as borrower, and JPMorgan Chase Bank, N.A., as the administrative agent, the other agents listed therein and the lending institutions party thereto and referred to therein dated as of October 21, 2011 (filed as Exhibit 10.134 to the Company’s Form 10-Q dated September 30, 2011 and incorporated herein by reference).
     
12.1*
  
Calculation of Ratios of Earnings to Fixed Charges.

 
129
 


Exhibit
Number
  
Exhibit Title
     
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.
     
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.
     
101.1*
  
The following financial statements from Mack-Cali Realty Corporation’s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statement of Changes in Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.
 

* filed herewith




 
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