UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________________ to _______________________
Commission file number 1-13274
Mack-Cali Realty Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 22-3305147
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016-3501
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(Address of principal executive office)
(Zip Code)
(908) 272-8000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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 twelve (12) months (or such shorter period that the
Registrant was required to file such report) YES |X| NO |_| and (2) has been
subject to such filing requirements for the past ninety (90) days YES |X| NO |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of April 30, 1998, there were 56,977,190 shares of $0.01 par value common
stock outstanding.
Page 1 of 28
MACK-CALI REALTY CORPORATION
Form 10-Q
INDEX
Part I Financial Information Page #
------
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1998
and December 31, 1997 ...................................4
Consolidated Statements of Operations for the three months
ended March 31, 1998 and 1997 ...........................5
Consolidated Statement of Stockholders' Equity for the
three months ended March 31, 1998 .......................6
Consolidated Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 ...........................7
Notes to Consolidated Financial Statements .................8 - 21
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ..................................22 - 25
Item 3. Quantitative and Qualitative
Disclosures about Market Risk...............................25
Part II Other Information and Signatures
Item 1. Legal Proceedings ..........................................25
Item 2. Changes in Securities and Use of Proceeds ..................25
Item 6. Exhibits....................................................26 - 27
Signatures .................................................28
Page 2 of 28
MACK-CALI REALTY CORPORATION
Part I - Financial Information
Item I: Financial Statements
The accompanying unaudited consolidated balance sheets, statements
of operations, of stockholders' equity, and of cash flows and
related notes, have been prepared in accordance with generally
accepted accounting principles ("GAAP") for interim financial
information and in conjunction with the rules and regulations of the
Securities and Exchange Commission ("SEC"). Accordingly, they do not
include all of the disclosures required by GAAP for complete
financial statements. The financial statements reflect all
adjustments consisting only of normal, recurring adjustments, which
are, in the opinion of management, necessary for a fair presentation
for the interim periods.
The aforementioned financial statements should be read in
conjunction with the notes to the aforementioned financial
statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations and the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
The results of operations for the three month period ended March 31,
1998 are not necessarily indicative of the results to be expected
for the entire fiscal year or any other period.
Page 3 of 28
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)
================================================================================
March 31, December 31,
ASSETS 1998 1997
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Rental property
Land $ 461,368 $ 374,242
Buildings and improvements 2,567,225 2,206,462
Tenant improvements 50,708 44,596
Furniture, fixtures and equipment 4,650 4,316
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3,083,951 2,629,616
Less - accumulated depreciation and amortization (118,567) (103,133)
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Total rental property 2,965,384 2,526,483
Cash and cash equivalents 11,717 2,704
Investment in partially-owned entity 18,034 --
Unbilled rents receivable 30,641 27,438
Deferred charges and other assets, net 21,672 18,989
Restricted cash 6,791 6,844
Accounts receivable, net of allowance for
doubtful accounts of $493 and $327 3,826 3,736
Mortgage notes receivable 27,250 7,250
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Total assets $3,085,315 $2,593,444
==============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------
Mortgages and loans payable $1,207,592 $ 972,650
Dividends and distributions payable 35,139 28,089
Accounts payable and accrued expenses 31,510 31,136
Rents received in advance and security deposits 29,651 21,395
Accrued interest payable 1,935 3,489
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Total liabilities 1,305,827 1,056,759
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Minority interest of unitholders in Operating
Partnership 404,830 379,245
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Commitments and contingencies
Stockholders' equity:
Preferred stock, 5,000,000 shares authorized,
none issued
Common stock, $0.01 par value,
190,000,000 shares authorized, 55,835,686
and 49,856,289 shares outstanding 558 499
Additional paid-in capital 1,463,460 1,244,883
Dividends in excess of net earnings (89,360) (87,942)
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Total stockholders' equity 1,374,658 1,157,440
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Total liabilities and stockholders' equity $3,085,315 $2,593,444
==============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4 of 28
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
================================================================================
Three Months Ended March 31,
REVENUES 1998 1997
- --------------------------------------------------------------------------------
Base rents $ 92,916 $42,791
Escalations and recoveries from tenants 10,357 6,612
Parking and other 2,006 1,544
Interest income 544 1,208
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Total revenues 105,823 52,155
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EXPENSES
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Real estate taxes 10,073 5,433
Utilities 8,301 3,725
Operating services 12,693 6,416
General and administrative 6,196 3,173
Depreciation and amortization 16,231 7,493
Interest expense 18,480 7,820
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Total expenses 71,974 34,060
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Income before minority interest 33,849 18,095
Minority interest 7,306 1,636
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Net income $ 26,543 $ 16,459
================================================================================
Basic earnings per share $ 0.52 $ 0.45
Diluted earnings per share $ 0.51 $ 0.44
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Dividends declared per common share $ 0.50 $ 0.45
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Basic weighted average shares outstanding 51,363 36,461
Diluted weighted average shares outstanding 58,682 40,817
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The accompanying notes are an integral part of these consolidated financial
statements.
Page 5 of 28
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands)
================================================================================
Retained
Earnings
Additional (Dividends in Total
Common Stock Paid-In Excess of Stockholders'
Shares Par Value Capital Net Earnings) Equity
- -------------------------------------------------------------------------------------------------
Balance at January 1, 1998 49,856 $499 $1,244,883 $(87,942) $1,157,440
Net income -- -- -- 26,543 26,543
Dividends -- -- -- (27,961) (27,961)
Net proceeds from common stock
offerings 5,856 58 215,726 -- 215,784
Conversion of Units to shares
of common stock 22 -- 848 -- 848
Proceeds from stock options
exercised 102 1 2,003 -- 2,004
- -------------------------------------------------------------------------------------------------
Balance at March 31, 1998 55,836 $558 $1,463,460 $(89,360) $1,374,658
=================================================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
Page 6 of 28
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
================================================================================
Three Months Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES 1998 1997
- -----------------------------------------------------------------------------------
Net income $ 26,543 $ 16,459
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 16,231 7,493
Amortization of deferred financing costs 254 271
Minority interest 7,306 1,636
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (3,203) (1,606)
Increase in deferred charges and other assets, net (3,790) (1,665)
Increase in accounts receivable, net (34) (1,508)
Increase in accounts payable and
accrued expenses 374 6,585
Increase in rents received in advance and
security deposits 8,256 4,827
Decrease in accrued interest payable (1,554) (954)
- -----------------------------------------------------------------------------------
Net cash provided by operating activities $ 50,383 $ 31,538
===================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
- -----------------------------------------------------------------------------------
Additions to rental property $(406,659) $(230,429)
Issuance of mortgage note receivable (20,000) (11,600)
Investment in partially-owned entity (18,034) --
Decrease (increase) in restricted cash 53 (170)
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Net cash used in investing activities $(444,640) $(242,199)
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from mortgages and loans payable $ 419,851 $ 47,195
Repayments of mortgages and loans payable (205,514) (19,299)
Repurchase of common units (766) --
Net proceeds from common stock offerings 215,784 --
Proceeds from stock options exercised 2,004 2,297
Payment of dividends and distributions (28,089) (17,554)
- -----------------------------------------------------------------------------------
Net cash provided by financing activities $ 403,270 $ 12,639
===================================================================================
Net increase (decrease) in cash and cash equivalents $ 9,013 $(198,022)
Cash and cash equivalents, beginning of period 2,704 204,807
- -----------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 11,717 $ 6,785
===================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
Page 7 of 28
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
================================================================================
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Mack-Cali Realty Corporation, a Maryland corporation, and subsidiaries (the
"Company"), is a fully-integrated, self-administered, self-managed real estate
investment trust ("REIT") providing leasing, management, acquisition,
development, construction and tenant-related services for its properties. As of
March 31, 1998, the Company owned and operated 227 properties and had a
significant equity interest in another property (the "Properties"). The
Properties aggregate approximately 25.2 million square feet, and are comprised
of 216 office and office/flex buildings totaling approximately 24.8 million
square feet, six industrial/warehouse buildings totaling approximately 387,000
square feet, two multi-family residential complexes consisting of 453 units, two
stand-alone retail properties and two land leases. The Properties are located in
11 states, primarily in the Northeast and Southwest.
Basis of Presentation
The accompanying consolidated financial statements include all accounts of the
Company and its majority-owned subsidiaries, which consist principally of
Mack-Cali Realty, L.P. (the "Operating Partnership"). See Investment in
Partially-owned Entity in Note 2 for the Company's treatment of unconsolidated
partnership interests. All significant intercompany accounts and transactions
have been eliminated.
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
Rental
Property Rental properties are stated at cost less accumulated
depreciation and amortization. Costs directly related to the
acquisition and development of rental properties are
capitalized. Capitalized development costs include interest,
property taxes, insurance and other project costs incurred
during the period of construction. 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.
Depreciation and amortization is computed on a straight-line
basis over the estimated useful lives of the assets as follows:
Buildings and improvements 5 to 40 years
---------------------------------------------------------------
Tenant improvements The shorter of the term of
the related lease or useful life
---------------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
---------------------------------------------------------------
On a periodic basis, management assesses whether there are any
indicators that the value of the real estate properties may be
impaired. A property's value is impaired only if management's
estimate of the aggregate future cash flows (undiscounted and
without interest charges) to be generated by the property are
less than the carrying value of the property. Management does
not believe that the value of any of its rental properties is
impaired.
Page 8 of 28
Investment in
Partially-owned
Entity The Company acquired a 50 percent interest in an office property
in March 1998. The Company accounts for its investment in a
partially-owned entity under the equity method of accounting as
the Company exercises significant influence. This investment is
recorded initially at cost, as Investment in Partially-Owned
Entity, and subsequently adjusted for net equity in income
(loss) and cash contributions and distributions.
Cash and Cash
Equivalents All highly liquid investments with a maturity of three months or
less when purchased are considered to be cash equivalents.
Deferred
Financing Costs Costs incurred in obtaining financing are capitalized and
amortized on a straight-line basis, which approximates the
effective interest method, over the term of the related
indebtedness. Amortization of such costs is included in interest
expense and was $254 and $271 for the three months ended March
31, 1998 and 1997, respectively.
Deferred
Leasing Costs Costs incurred in connection with leases are capitalized
and amortized on a straight-line basis over the terms of the
related leases and included in depreciation and amortization.
Unamortized deferred leasing costs are charged to amortization
expense upon early termination of the lease. Certain employees
of the Operating Partnership provide leasing services to the
Properties and receive fees as compensation ranging from 0.667
percent to 2.667 percent of adjusted rents. For the three months
ended March 31, 1998 and 1997, such fees, which are capitalized
and amortized, approximated $577 and $206, respectively.
Revenue
Recognition The Company recognizes base rental revenue on a straight-line
basis over the terms of the respective leases. Unbilled rents
receivable represents the amount by which straight-line rental
revenue exceeds rents currently billed in accordance with the
lease agreements. Parking revenue includes income from parking
spaces leased to tenants. Rental income on residential property
under operating leases having terms generally of one year or
less is recognized when earned.
The Company receives reimbursements 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 11).
Income and
Other Taxes The Company has elected to be taxed as a REIT under Sections
856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"). As a REIT, the Company generally will
not be subject to federal income tax to the extent it
distributes at least 95 percent of its REIT taxable income to
its shareholders and satisfies certain other requirements.
REITs are subject to a number of organizational and
operational requirements. If the Company fails to qualify as a
REIT in any taxable year, the Company will be subject to
federal income tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate tax
rates. The Company is subject to certain state and local
taxes.
Interest Rate
Contracts Interest rate contracts are utilized by the Company to reduce
interest rate risks. The Company does not hold or issue
derivative financial instruments for trading purposes.
The differentials to be received or paid under contracts
designated as hedges are recognized in income over the life of
the contracts as adjustments to interest expense. Gains and
losses are deferred and amortized to interest expense over the
remaining life of the associated debt to the extent that such
debt remains outstanding.
Page 9 of 28
Earnings
Per Share In accordance with the Statement of Financial Accounting
Standards No. 128 ("FASB No. 128") the Company presents both
basic and diluted earnings per share ("EPS"). Basic EPS excludes
dilution and is computed by dividing net income available to
common stockholders by the weighted average number of shares
outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common
stock, where such exercise or conversion would result in a lower
EPS amount.
Dividends and
Distributions
Payable The dividends and distributions payable at March 31, 1998
represents dividends payable to shareholders of record on April
3, 1998 (55,922,025 shares), distributions payable to minority
interest common unitholders (6,789,352 common units) on that
same date and preferred distributions to preferred unitholders
(232,401 preferred units) for the first quarter 1998. The first
quarter 1998 dividends and common unit distributions of $0.50
per share and per common unit, as well as the first quarter
preferred unit distribution of $16.875 per preferred unit, were
approved by the Board of Directors on March 18, 1998 and were
paid on April 21, 1998.
Underwriting
Commissions
and Costs Underwriting commissions and costs incurred in connection
with the Company's stock offerings are reflected as a reduction
of additional paid-in-capital.
Stock Options The Company accounts for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations ("APB No. 25"). Under
APB No. 25, compensation cost is measured as the excess, if
any, of the quoted market price of the Company's stock at the
date of grant over the exercise price of the option granted.
Compensation cost for stock options, if any, is recognized
ratably over the vesting period. The Company's policy is to
grant options with an exercise price equal to the quoted
closing market price of the Company's stock on the business
day preceding the grant date. Accordingly, no compensation
cost has been recognized for the Company's stock option plans.
The Company provides additional pro forma disclosures as
required under Statement of Financial Accounting Standards No.
123, "Accounting for Stock- Based Compensation" ("FASB No.
123"). See Note 12.
Reclassifi-
cations Certain reclassifications have been made to prior period
balances in order to conform with current period presentation.
3. ACQUISITIONS/TRANSACTIONS
On January 31, 1997, the Company acquired 65 properties ("RM Properties") from
Robert Martin Company, LLC and affiliates ("RM") for a total cost of
approximately $450,000. The cost of the transaction (the "RM Transaction") was
financed through the assumption of $185,283 of mortgage indebtedness ("TIAA
Mortgage"), the payment of approximately $220,000 in cash, substantially all of
which was obtained from the Company's cash reserves, and the issuance of
1,401,225 common units, valued at $43,788. The RM Properties consist primarily
of 54 office and office/flex properties, aggregating approximately 3.7 million
square feet, and six industrial/warehouse properties, aggregating approximately
387,000 square feet.
In connection with the RM Transaction, the Company was granted a three-year
option to acquire two properties (the "Option Properties"), under certain
conditions, one of which was acquired in 1997 (see below). The purchase price
for the remaining Option Property, under the agreement, is subject to adjustment
based on different formulas and is payable in cash or common units. The Company
holds a $7,250 mortgage loan ("RM Note Receivable") secured by the remaining
Option Property (see Note 6).
Page 10 of 28
On December 11, 1997, the Company acquired 54 office properties, aggregating
approximately 9.2 million square feet, (the "Mack Properties") from the Mack
Company and Patriot American Office Group (the "Mack Transaction"), pursuant to
a Contribution and Exchange Agreement (the "Agreement"), for a total cost of
approximately $1,102,024.
The total cost of the Mack Transaction was financed as follows: (i) $498,757 in
cash made available from the Company's cash reserves and from the $200,000
Prudential Term Loan (see Note 7), (ii) $291,879 in debt assumed by the Company
(the "Mack Mortgages"), (iii) the issuance of 1,965,886 common units valued at
$66,373, (iv) the issuance of 15,237 Series A preferred units and 215,325 Series
B preferred units, valued at $236,491 (collectively, the "Preferred Units"), (v)
warrants to purchase 2,000,000 common units (the "Unit Warrants"), valued at
$8,524, and (vi) the issuance of Contingent Units, as described below.
In addition, 2,006,432 contingent common units, 11,895 Series A contingent
preferred units and 7,799 Series B contingent preferred units (collectively, the
"Contingent Units") were issued as contingent non-participating units. Such
Contingent Units have no voting, distribution or other rights until such time as
they are redeemed into common units, Series A preferred units, and Series B
preferred units, respectively. Redemption of such Contingent Units shall occur
upon the achievement of certain performance goals relating to certain of the
Mack Properties, specifically the achievement of certain leasing activity.
On account of the achievement of certain of the performance goals during the
three months ended March 31, 1998, certain of the Contingent Units were redeemed
for a specified amount of common and preferred units (see Note 8).
With the completion of the Mack Transaction, the Cali Realty Corporation name
was changed to Mack-Cali Realty Corporation, and the name of the Operating
Partnership was changed from Cali Realty, L.P. to Mack-Cali Realty, L.P.
Additionally in 1997, the Company acquired 13 office and office/flex properties,
aggregating 1,495,950 square feet, in nine separate transactions with separate
sellers, for an aggregate cost of approximately $204,446. Such acquisitions were
funded primarily with drawings on the Company's revolving credit facilities.
On January 23, 1998, the Company acquired 10 acres of vacant land in the
Stamford Executive Park, located in Stamford, Fairfield County, Connecticut for
approximately $1,338, which was funded from the Company's cash reserves. The
vacant land, on which the Company plans to develop a 40,000 square-foot
office/flex property, was acquired from RMC Development Co., LLC. In conjunction
with the acquisition of the developable land, the Company signed a 15- year
lease, on a triple-net basis, with a single tenant to occupy the entire property
being developed.
On January 30, 1998, the Company acquired a 17-building office/flex portfolio,
aggregating approximately 748,660 square feet located in the Moorestown West
Corporate Center in Moorestown, Burlington County, New Jersey and in Bromley
Commons in Burlington, Burlington County, New Jersey. The 17 properties were
acquired for a total cost of approximately $47,452. The Company is under
contract to acquire an additional four office/flex properties in the same
locations. The Company also has an option to purchase a property following
completion of construction and required lease-up for approximately $3,700. The
purchase contract also provides the Company a right of first refusal to acquire
up to six additional office/flex properties totaling 202,000 square feet upon
their development and lease-up. The initial transaction was funded primarily
from drawing on one of the Company's credit facilities as well as the assumption
of mortgage debt with an estimated fair value of $8,354 (the "McGarvey
Mortgages"). The McGarvey Mortgages currently have a weighted average annual
effective interest rate of 6.24 percent and are secured by five of the
office/flex properties acquired.
On February 2, 1998, the Company acquired 2115 Linwood Avenue, a 68,000
square-foot vacant office building located in Fort Lee, Bergen County, New
Jersey. The building was acquired for approximately $5,164, which was made
available from drawing on one of the Company's credit facilities.
On February 5, 1998, the Company acquired 500 West Putnam Avenue ("500 West
Putnam"), a 121,250 square-foot office building located in Greenwich, Fairfield
County, Connecticut. The property was acquired for a total cost of approximately
$20,125, funded from drawing on one of the Company's credit facilities as well
as the assumption of mortgage debt with an estimated fair value of $12,104 which
bears interest at an annual effective interest rate of 6.52 percent.
On February 25, 1998, the Company acquired 10 Mountainview Road
("Mountainview"), a 192,000 square-foot office property, located in Upper Saddle
River, Bergen County, New Jersey. The property was acquired for approximately
$24,725, which was made available from proceeds received from the Company's
February 1998 offering of common stock.
Page 11 of 28
On March 12, 1998, the Company acquired 1250 Capital of Texas Highway South, a
270,703 square foot Class A office building in Austin, Travis County, Texas. The
property was acquired for a total cost of approximately $37,062, which was made
available from drawing on one of the Company's credit facilities.
On March 27, 1998, the Company acquired four office buildings, a daycare center,
plus land parcels, and a 50 percent interest in another office building, all of
such properties aggregating 875,000 square feet and located in the Prudential
Business Campus office complex in Parsippany and East Hanover, Morris County,
New Jersey. The properties were acquired for a total cost of approximately
$175,856 million, which funds were made available from the Company's cash
reserves (provided in part from the proceeds received in the sale of 2,705,628
shares of the Company's Common Stock pursuant to a Stock Purchase Agreement with
The Prudential Insurance Company of America, Strategic Value Investors, LLC and
Strategic Value Investors International, LLC) and from drawing on one of the
Company's credit facilities.
Also, on March 27, 1998, the Company acquired ten office properties (the
"Pacifica I Acquisition"), located in suburban Denver and Colorado Springs,
Colorado, and 2.5 acres of vacant land, located in the Denver Tech Center, from
Pacifica Holding Company ("Pacifica"), a private real estate owner and operator
in Denver, Colorado, for a total cost of approximately $74,712. Such funds were
made available from drawing on one of the Company's credit facilities and the
issuance of common units (see Note 8). The Pacifica I Acquisition was comprised
of approximately 620,156 square feet of Pacifica's entire 1.4 million
square-foot office portfolio, which consists of 19 office buildings and related
operations. The Company currently is a party to a letter of intent to acquire
the remaining nine office buildings, encompassing 742,973 square feet, from
Pacifica for an aggregate purchase price of approximately $113,000.
On March 30, 1998, the Company acquired two office buildings, aggregating
308,215 square feet, in the Morris County Financial Center located in
Parsippany, Morris County, New Jersey. The properties were acquired for a total
cost of approximately $52,753, which was made available from drawing on one of
the Company's credit facilities.
4. DEFERRED CHARGES AND OTHER ASSETS
March 31, December 31,
1998 1997
---- ----
Deferred leasing costs $ 22,662 $ 20,297
Deferred financing costs 3,669 3,640
- ------------------------------------------------------------------------------
26,331 23,937
Accumulated amortization (10,428) (9,535)
- ------------------------------------------------------------------------------
Deferred charges, net 15,903 14,402
Prepaid expenses and other assets 5,769 4,587
- ------------------------------------------------------------------------------
Total deferred charges and other assets,
net $ 21,672 $ 18,989
==============================================================================
5. RESTRICTED CASH
Restricted cash includes security deposits for the Company's residential
properties and certain commercial properties, and escrow and reserve funds for
debt service, real estate taxes, property insurance, capital improvements,
tenant improvements, and leasing costs established pursuant to certain mortgage
financing arrangements, and is comprised of the following:
March 31, December 31,
1998 1997
---- ----
Escrow and other reserve funds $ 1,552 $ 1,278
Security deposits 5,239 5,566
- ------------------------------------------------------------------------------
Total restricted cash $6,791 $ 6,844
==============================================================================
6. MORTGAGE NOTES RECEIVABLE
In connection with the RM Transaction on January 31, 1997, the Company provided
a $11,600 non-recourse mortgage loan (the "RM Note Receivable") to entities
controlled by the RM principals, bearing interest at an annual rate of 450 basis
points over the one-month LIBOR. The RM Note Receivable, which is secured by the
Option Properties and
Page 12 of 28
guaranteed by certain of the RM principals, matures on February 1, 2000. In
conjunction with the acquisition of one of the Option Properties on August 15,
1997, the sellers of the property, certain RM principals, prepaid $4,350 of the
RM Note Receivable, leaving a remaining principal balance of $7,250 secured by
the remaining Option Property.
On March 6, 1998, prior to the completion of the Pacifica I Acquisition, the
Company provided a $20,000 mortgage loan to an entity controlled by certain
principals of Pacifica. Such mortgage loan is secured by an office property in
California. The mortgage note receivable bears interest at an annual rate of
9.25 percent and has a two-year term.
7. MORTGAGES AND LOANS PAYABLE
March 31, December 31,
1998 1997
- -------------------------------------------------------------------------------
TIAA Mortgage $ 185,283 $ 185,283
Harborside Mortgages 150,000 150,000
CIGNA Mortgages 75,910 86,650
Mitsubishi Mortgages 72,204 72,204
Prudential Mortgages 61,669 62,205
Other Mortgages 99,937 88,474
Prudential Term Loan 200,000 200,000
Revolving Credit Facilities 356,751 122,100
Contingent Obligation 5,838 5,734
- ------------------------------------------------------------------------------
Total mortgages and loans payable $1,207,592 $ 972,650
==============================================================================
TIAA MORTGAGE
In connection with the RM Transaction, on January 31, 1997, the Company assumed
a $185,283 non-recourse mortgage loan with Teachers Insurance and Annuity
Association of America ("TIAA"), with interest only payable monthly at a fixed
annual rate of 7.18 percent (the "TIAA Mortgage"). The TIAA Mortgage is secured
and cross-collateralized by 43 of the RM Properties and matures on December 31,
2003. The Company, at its option, may convert the TIAA Mortgage to unsecured
debt upon achievement by the Company of an investment credit rating of Baa3/BBB-
or better. The TIAA Mortgage is prepayable in whole or in part subject to
certain provisions, including yield maintenance.
HARBORSIDE MORTGAGES
In connection with the acquisition of Harborside Financial Center
("Harborside"), on November 4, 1996, the Company assumed existing mortgage debt
and was provided seller-financed mortgage debt aggregating $150,000. The
existing financing, with a principal balance of $104,059 as of March 31, 1998,
bears interest at a fixed rate of 7.32 percent for a term of approximately nine
years. The seller-provided financing, with a principal balance of $45,941 as of
March 31, 1998, also has a term of approximately nine years and initially bears
interest at a rate of 6.99 percent. The interest rate on the seller-provided
financing will be reset at the end of the third and sixth loan years based on
the yield of the three-year treasury obligation at that time, with spreads of
110 basis points in years four through six and 130 basis points in years seven
through maturity.
CIGNA MORTGAGES
In connection with the Mack Transaction, the Company assumed non-recourse
mortgage debt (the "CIGNA Mortgages") aggregating $75,910 in principal as of
March 31, 1998, with Connecticut General Life Insurance Company (CIGNA). Such
mortgages, which are secured by five of the Mack Properties, bear interest at a
weighted average fixed rate of 7.68 percent and require monthly payments of
interest and principal on various term amortization schedules. The various
mortgages mature between October 1998 and October 2003.
In April 1998, simultaneous with the Company obtaining the $150,000 Prudential
Mortgage Loan, as described below, the Company retired one of the CIGNA
Mortgages with a principal balance of $27,835.
MITSUBISHI MORTGAGES
In connection with the Mack Transaction, the Company assumed non-recourse
variable-rate mortgage debt (the "Mitsubishi Mortgages") aggregating $72,204 in
principal as of December 31, 1997 with Mitsubishi Trust and Banking Corporation.
Such mortgages, which are secured by two of the Mack Properties, bear interest
at a variable rate of 65 basis points over LIBOR (5.6875 percent at March 31,
1998) and mature between January 2008 and January 2009.
Page 13 of 28
PRUDENTIAL MORTGAGES
The Company has mortgage debt (the "Prudential Mortgages") aggregating $61,669
in principal as of March 31, 1998 with Prudential Insurance Company of America,
substantially all of which was assumed in the Mack Transaction. Such mortgages,
which are secured by three properties, bear interest at a weighted average fixed
rate of 8.43 percent, all of which require monthly payments of interest. Certain
of the Prudential Mortgages require monthly payments of principal, in addition
to interest, on various term amortization schedules. The Prudential Mortgages
mature between October 2003 and July 2004.
OTHER MORTGAGES
The Company has mortgage debt ("Other Mortgages") aggregating $99,937 in
principal as of March 31, 1998 with eight different lenders, which were assumed
in the Mack Transaction and the 1998 acquisitions of the McGarvey Properties and
500 West Putnam, and are secured by 14 individual properties. The Other
Mortgages are comprised of: (i) fixed rate debt aggregating $80,723, which bears
interest at a weighted average effective rate of 6.89 percent, and require
monthly payments of principal and interest on various term amortization
schedules, and (ii) variable rate debt aggregating $19,214, which bears interest
at 115 basis points over LIBOR. The Other Mortgages mature between February 1999
and October 2010.
In April 1998, simultaneous with the Company obtaining the $150,000 Prudential
Mortgage Loan, as described below, the Company retired $20,338 of the Other
Mortgages.
PRUDENTIAL TERM LOAN
On December 10, 1997, the Company obtained a $200,000 term loan from Prudential
Securities Corp. ("PSC") the "Prudential Term Loan." The proceeds of the loan
were used to fund a portion of the cash consideration in completion of the Mack
Transaction. The loan has a one-year term and interest payments are required
monthly at an interest rate of 110 basis points over one-month LIBOR. The loan
is a recourse loan secured by 11 properties owned by the Company and located in
New Jersey. The Prudential Term Loan was subsequently retired in April 1998,
simultaneous with the Company obtaining the $150,000 Prudential Mortgage Loan,
as described below.
REVOLVING CREDIT FACILITIES
Prudential Facility
The Company has a revolving credit facility (the "Prudential Facility") from
PSC in the amount of $100,000 which currently bears interest at 110 basis
points over one-month LIBOR, and matures on March 31, 1999. The Prudential
Facility is a recourse liability of the Operating Partnership and is secured
by the Company's equity interest in Harborside. The terms of the Prudential
Facility include certain restrictions and covenants that limit, among other
things, dividend payments and additional indebtedness and that require
compliance with specified financial ratios and other financial measurements.
The Company had no outstanding borrowings at March 31, 1998 and December 31,
1997 under the Prudential Facility.
Original Unsecured Facility
On August 6, 1997, the Company obtained an unsecured revolving credit
facility (the "Original Unsecured Facility") in the amount of $400,000 from a
group of 13 lender banks. The facility carries a three-year term and bears
interest at 125 basis points over one-month LIBOR.
The terms of the Original Unsecured Facility included certain restrictions
and covenants which limit, among other things, dividend payments and
additional indebtedness and which required compliance with specified
financial ratios and other financial measurements. The facility also required
a fee on the unused balance payable quarterly in arrears, at a rate ranging
from one-eighth of one percent to one-quarter of one percent of such balance,
depending on the level of borrowings outstanding in relation to the total
facility commitment.
The Company had outstanding borrowings of $356,751 and $122,100 at March 31,
1998 and December 31, 1997, respectively, under the Original Unsecured
Facility. The Original Unsecured Facility was subsequently repaid and retired
in connection with the Company obtaining the 1998 Unsecured Facility in April
1998, as described below.
1998 Unsecured Facility
On April 17, 1998, the Company repaid in full and terminated the Original
Unsecured Facility and obtained a new unsecured revolving credit facility
(the "1998 Unsecured Facility") in the amount of $870,000 from a group of 25
lender banks, led by The Chase Manhattan Bank and Fleet National Bank. The
1998 Unsecured Facility has a three-year term and currently bears interest at
110 basis points over LIBOR, a reduction of 15 basis points from the retired
Page 14 of 28
Original Unsecured Facility. Based upon the Company's achievement of an
investment grade long-term unsecured debt rating, the interest rate will be
reduced, on a sliding scale, and a competitive bid option will become
available.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, dividend payments and additional
indebtedness and which require compliance with specified financial ratios and
other financial measurements. The 1998 Unsecured Facility also requires a
17.5 basis point fee on the unused balance payable quarterly in arrears.
The lending group for the 1998 Unsecured Facility consists of: The Chase
Manhattan Bank, as administrative agent; Fleet National Bank, as syndication
agent; PNC Bank, N.A., as documentation agent; Bankers Trust, Commerzbank,
AG, The First National Bank of Chicago, First Union National Bank and
NationsBank, as managing agents; Creditanstalt Corporate Finance, Inc.,
Dresdner Bank, AG, European American Bank (EAB), Hypo Bank, Societe Generale
and Summit Bank, as co-agents; and Kredietbank, N.V., Key Bank, Mellon Bank,
N.A., The Bank of New York, Citizens Bank, Crestar, DG Bank, Tokai Bank, US
Trust, Bayerische Landesbank and Erste Bank.
$150,000 PRUDENTIAL MORTGAGE LOAN
On April 30, 1998, the Company obtained a $150,000, interest-only mortgage loan
from The Prudential Insurance Company of America with a seven-year term. The
mortgage loan, which is secured by 12 of the Company's Properties, has an
effective annual interest rate of 7.1 percent, and includes a conversion feature
whereby the Company, upon receiving an investment-grade credit rating, will have
the option to convert the loan into senior unsecured debt.
The proceeds of the new loan were used, along with funds drawn from one of the
Company's credit facilities, to retire the Prudential Term Loan, as well as
approximately $48,200 of the Mack Mortgages.
CONTINGENT OBLIGATION
As part of the Harborside acquisition, the Company agreed to make payments (with
an estimated net present value of approximately $5,252 at acquisition date) to
the seller for development rights ("Contingent Obligation") if and when the
Company commences construction on the acquired site during the next several
years. However, the agreement provides, among other things, that even if the
Company does not commence construction, the seller may nevertheless require the
Company to acquire these rights during the six-month period after the end of the
sixth year. After such period, the seller's option lapses, but any development
in years 7 through 30 will require a payment, on an increasing scale, for the
development rights. For the quarter ended March 31, 1998, interest was imputed
on the Contingent Obligation, thereby increasing the balance of the Contingent
Obligation to $5,838 as of March 31, 1998.
INTEREST RATE CONTRACTS
On May 24, 1995, the Company entered into an interest rate swap agreement with a
commercial bank. The swap agreement fixes the Company's one-month LIBOR base to
a fixed 6.285 percent per annum on a notional amount of $24,000 through August
1999.
On January 23, 1996, the Company entered into another interest rate swap
agreement with a commercial bank. This swap agreement has a three-year term and
a notional amount of $26,000, which fixes the Company's one-month LIBOR base to
5.265 percent per annum.
The Company is exposed to credit loss in the event of non-performance by the
other parties to the interest rate contracts. However, the Company does not
anticipate non-performance by any of its counterparties.
CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the three ended month ended March 31, 1998 and 1997
was $20,302 and $8,503, respectively. Interest capitalized by the Company for
the three month ended March 31, 1998 and 1997 was $201 and none, respectively.
8. MINORITY INTEREST
Minority interest in the accompanying consolidated financial statements relates
to common units in the Operating Partnership, in addition to certain preferred
units issued in the Mack Transaction, held by parties other than the Company.
Preferred and common units issued in 1997 and the three months ended March 31,
1998 are described in Note 3.
Page 15 of 28
Preferred Units
As described in Note 3, in connection with the funding of the Mack Transaction,
the Company issued 15,237 Series A Preferred Units and 215,325 Series B
Preferred Units, with an aggregate value of $236,490. The Preferred Units have a
stated value of $1,000 per unit and are preferred as to assets over any class of
common units or other class of preferred units of the Company, based on
circumstances per the applicable unit certificates.
The quarterly distribution on each Preferred Unit (representing 6.75 percent of
the Preferred Unit stated value of $1,000 on an annualized basis) is an amount
equal to the greater of (i) $16.875 or (ii) the quarterly distribution
attributable to a Preferred Unit determined as if such unit had been converted
into common units, subject to adjustment for customary anti-dilution rights.
Each of the Series A Preferred Units may be converted at any time into common
units at a conversion price of $34.65 per unit, and, after the one year
anniversary of the date of the Series A Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the Series B Preferred Units may be converted at any time into
common units at a conversion price of $34.65 per unit, and, after the three year
anniversary of the date of the Series B Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the common units are redeemable after one year for an equal
number of shares of common stock.
The Preferred Units, issued in the Mack Transaction, are convertible into Common
Units at $34.65 per common unit, which is an amount less than the $39.0625
closing stock price on the date of closing of the Mack Transaction. Accordingly,
the Company recorded, on December 11, 1997, the financial value ascribed to the
beneficial conversion feature inherent in the Preferred Units upon issuance,
which totaled $26,801 ($29,361, before allocation to minority common
unitholders) and was recorded as beneficial conversion feature in stockholders'
equity. The beneficial conversion feature was amortized in full as the Preferred
Units were immediately convertible upon issuance; such amortization was included
in minority interest for the year ended December 31, 1997.
During the three months ended March 31, 1998, the Company issued 1,839
additional Preferred Units (1,111 of Series A and 728 of Series B), valued at
approximately $1,886, in connection with the achievement of certain performance
goals at the Mack Properties in the redemption of an equivalent number of
Contingent Units. Such Preferred Units carry the identical terms as those issued
in the Mack Transaction.
Common Units
Certain individuals and entities own common units in the Operating Partnership.
A common unit and a share of common stock of the Company have substantially the
same economic characteristics in as much as they effectively share equally in
the net income or loss of the Operating Partnership.
Common units are redeemable by the common unitholders at their option, subject
to certain restrictions, on the basis of one common unit for either one share of
common stock or cash equal to the fair market value of a share at the time of
the redemption. The Company has the option to deliver shares of common stock in
exchange for all or any portion of the cash requested. When a unitholder redeems
a common unit, minority interest is reduced and the Company's investment in the
Operating Partnership is increased.
During the three months ended March 31, 1998, a common unitholder in the
operating partnership redeemed 20,000 common units and received $766 in cash
from the Company. Additionally, certain other common unitholders redeemed an
aggregate of 22,300 common units for an equivalent number of shares of common
stock in the Company.
As described in Note 3, the Company issued an aggregate of 3,408,532 common
units in 1997 in connection with the completion of the RM Transaction, the Mack
Transaction and a 1997 single-property acquisition.
On March 26, 1998, in connection with the Pacifica I Acquisition, the Company
issued 100,175 common units, valued at approximately $3,779.
During the three months ended March 31, 1998, the Company also issued 634,000
common units, valued at approximately $21,405, in connection with the
achievement of certain performance goals at the Mack Properties in redemption of
an equivalent number of contingent common Units.
Contingent Common & Preferred Units
In conjunction with the completion of the Mack Transaction, 2,006,432 contingent
common units, 11,895 Series A contingent Preferred Units and 7,799 Series B
contingent Preferred Units were issued as contingent non-participating units.
Such Contingent Units have no voting, distribution or other rights until such
time as they are redeemed into common units, Series A Preferred Units, and
Series B Preferred Units, respectively. Redemption of such Contingent
Page 16 of 28
Units shall occur upon the achievement of certain performance goals relating to
certain of the Mack Properties, specifically the achievement of certain leasing
activity. On account of certain of the performance goals having been achieved
during the three months ended March 31, 1998, the Company redeemed 634,000
contingent common units and 1,839 contingent Preferred Units and issued an
equivalent number of common and Preferred Units, as indicated above.
Unit Warrants
As described in Note 3, in connection with the funding of the Mack Transaction,
the Company granted warrants to purchase 2,000,000 common units. The Unit
Warrants are exercisable at any time after one year from the date of their
issuance and prior to the fifth anniversary thereof at an exercise price of
$37.80 per common unit.
Minority Ownership
As of March 31, 1998 and December 31, 1997, the minority interest common
unitholders owned 10.8 percent (19.5 percent, including the effect of the
conversion of Preferred Units into common units) and 10.9 percent (20.4 percent
including the effect of the conversion of Preferred Units into common units) of
the Operating Partnership, respectively (excluding any effect for the exercise
of Unit Warrants).
9. EMPLOYEE BENEFIT PLAN
All employees of the Company who meet certain minimum age and period of service
requirements are eligible to participate in a 401(k) defined contribution plan
(the "Plan"). The Plan allows eligible employees to defer up to 15 percent of
their annual compensation. The amounts contributed by employees are immediately
vested and non-forfeitable. The Company, at management's discretion, may match
employee contributions. No employer contributions have been made to date.
10. COMMITMENTS AND CONTINGENCIES
Tax Abatement Agreements
Grove Street Property
Pursuant to an agreement with the City of Jersey City, New Jersey, as amended,
expiring in 2004, the Company is required to make payments in lieu of property
taxes ("PILOT") on its property at 95 Christopher Columbus Drive, Jersey City,
Hudson County, New Jersey. Such PILOT, as defined, is $1,267 per annum through
May 31, 1999 and $1,584 per annum through May 31, 2004.
Harborside Financial Center Property
Pursuant to an agreement with the City of Jersey City, New Jersey obtained by
the former owner of the Harborside property in 1988 and assumed by the Company
as part of the acquisition of the property in November 1996, the Company is
required to make PILOT payments on its Harborside property. The agreement, which
commenced in 1990, is for a term of 15 years. Such PILOT is equal to two percent
of Total Project Costs, as defined, in year one and increases by $75 per annum
through year fifteen. Total Project Costs, as defined, are $148,712.
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 March 31, 1998 are as
follows:
Period Amount
- ------------------------------------------------------------------------------
April 1, 1998 to December 31, 1998 $ 240
1999 320
2000 320
2001 320
2002 320
Thereafter 17,851
- ------------------------------------------------------------------------------
Total $19,371
==============================================================================
Page 17 of 28
Other Contingencies
On December 10, 1997, a Shareholder's Derivative Action was filed in Maryland
Court on behalf of a shareholder. The complaint questioned certain executive
compensation decisions made by the Company's Board of Directors in connection
with the Mack Transaction. The Board's compensation decisions were discussed in
the proxy materials distributed in connection with the Mack Transaction and were
approved by in excess of 99 percent of the voting shareholders. Although the
Company believes that this lawsuit was factually and legally baseless, the
Company on May 4, 1998 agreed to a settlement pursuant to which it incurred a
cost of $554, and agreed to certain changes to employment agreements of certain
of its executive officers. The Company expects to incur an additional $196 in
costs associated with defending this action. The Company provided for $750 at
December 31, 1997 for this matter.
The Company is a defendant in other certain litigation arising in the normal
course of business activities. Management does not believe that the resolution
of these matters will have a materially adverse effect upon the Company.
11. TENANT LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2020. 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.
12. STOCKHOLDERS' EQUITY
To maintain its qualification as a REIT, not more than 50 percent in value of
the outstanding shares of the Company may be owned, directly or indirectly, by
five or fewer individuals at any time during the last half of any taxable year
of the Company, other than its initial taxable year (defined to include certain
entities), applying certain constructive ownership rules. To help ensure that
the Company will not fail this test, the Company's Articles of Incorporation
provide for, among other things, certain restrictions on the transfer of the
common stock to prevent further concentration of stock ownership. Moreover, to
evidence compliance with these requirements, the Company must maintain records
that disclose the actual ownership of its outstanding common stock and will
demand written statements each year from the holders of record of designated
percentages of its common stock requesting the disclosure of the beneficial
owners of such common stock.
On May 15, 1997, the stockholders approved an increase in the authorized shares
of common stock in the Company to 190,000,000.
On October 15, 1997, the Company completed an underwritten public offer and sale
of 13,000,000 shares (the "1997 Offering") of its common stock. The Company
received approximately $489,116 in net proceeds (after offering costs) from the
1997 Offering. The Company used $160,000 of such proceeds to repay outstanding
borrowings on its Original Unsecured Facility and the remainder of the proceeds
to fund a portion of the purchase price of the Mack Transaction, for other
potential acquisitions, and for general corporate purposes.
On February 25, 1998, the Company completed an underwritten public offer and
sale of 2,500,000 shares of its common stock and used the net proceeds, which
totaled approximately $92,194 (after offering costs) to pay down a portion of
its outstanding borrowings under the Company's credit facilities and fund the
acquisition of Moutainview (see Note 3).
On March 18, 1998, in connection with the acquisition of Prudential Business
Campus, the Company completed an offer and sale of 2,705,628 shares of its
common stock using the net proceeds of approximately $99,899 (after offering
costs) in the funding of such acquisition. (see Note 3).
On March 27, 1998, the Company completed an underwritten public offer and sale
of 650,407 shares of its common stock and used the net proceeds, which totaled
approximately $23,690 (after offering costs) to pay down a portion of its
outstanding borrowings under the Company's credit facilities.
Finally, on April 29, 1998, the Company completed an underwritten offer and sale
of 994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34,650 (after offering costs) primarily to pay down a portion of
its outstanding borrowings under the Company's credit facilities.
Page 18 of 28
Stock Option Plans
In 1994, and as subsequently amended, the Company established the Cali Employee
Stock Option Plan ("Employee Plan") and the Cali Director Stock Option Plan
("Director Plan") under which a total of 5,380,188 shares (subject to
adjustment) of the Company's common stock have been reserved for issuance
(4,980,188 shares under the Employee Plan and 400,000 shares under the Director
Plan). Stock options granted under the Employee Plan in 1994 and 1995 become
exercisable over a three-year period and those options granted under the
Employee Plan in 1996 and 1997 become exercisable over a five-year period. All
stock options granted under the Director Plan become exercisable in one year.
All options were granted at the fair market value at the dates of grant and have
terms of ten years.
Information regarding the Company's stock option plans is summarized below:
Weighted
Shares Average
Under Exercise
Options Price
------------------------------------------------------------------------
Outstanding at January 1, 1995 625,000 $17.23
Granted 230,200 17.69
Exercised -- --
Lapsed or canceled 3,588 17.25
------------------------------------------------------------------------
Outstanding at December 31, 1995 851,612 17.36
Granted 809,700 23.97
Exercised 126,041 17.25
Lapsed or canceled 7,164 19.52
------------------------------------------------------------------------
Outstanding at December 31, 1996 1,528,107 20.86
Granted 2,126,538 37.35
Exercised 337,282 21.33
Lapsed or canceled 30,073 22.62
------------------------------------------------------------------------
Outstanding at December 31, 1997 3,287,290 31.47
Granted 901,150 37.31
Exercised 101,062 19.81
Lapsed or canceled 344 30.40
------------------------------------------------------------------------
Outstanding at March 31, 1998 4,087,034 $33.04
========================================================================
Options exercisable at
December 31, 1997 1,432,027 $25.22
Options exercisable at
March 31, 1998 1,340,965 $25.68
------------------------------------------------------------------------
Available for grant at
December 31, 1997 1,629,575
Available for grant at
March 31, 1998 728,769
------------------------------------------------------------------------
Stock Warrants
On January 31, 1997, in conjunction with the completion of the RM Transaction,
the Company granted a total of 400,000 warrants to purchase an equal number of
shares of common stock ("Stock Warrants") at $33 per share (the market price at
date of grant) to Timothy Jones, Brad Berger and certain other Company employees
formerly with RM. Such warrants vest equally over a three-year period and have a
term of ten years.
On December 12, 1997, in conjunction with the completion of the Mack
Transaction, the Company granted a total of 491,756 Stock Warrants to purchase
an equal number of shares of common stock at $38.75 per share (the market price
at date of grant) to Mitchell Hersh, and certain other Company executives
formerly with the Patriot American Office Group. Such warrants vest equally over
a five-year period and have a term of ten years.
Stock Compensation
In January 1997, the Company entered into employment contracts with seven of its
key executives which provided for, among other things, compensation in the form
of stock awards (the "Restricted Stock Awards") and Company-financed stock
purchase rights (the "Stock Purchase Rights"), and associated tax obligation
payments. In connection with the Restricted Stock Awards, the executives were to
receive 199,070 shares of the Company's common stock vesting over a five-year
period contingent on the Company meeting certain performance objectives.
Additionally, pursuant to the terms of the Stock Purchase Rights, the Company
provided fixed rate, non-recourse loans, aggregating $4,750, to such executives
to finance their purchase of 152,000 shares of the Company's common stock, which
the Company agreed to forgive ratably over five years, subject to continued
employment. Such loans were for amounts equal to the fair market value of the
associated shares at the date of grant. Subsequently, from April 18, 1997
through April 24, 1997, the Company
Page 19 of 28
purchased, for constructive retirement, 152,000 shares of its outstanding common
stock for $4,680. The excess of the purchase price over par value was recorded
as a reduction to additional paid-in capital. Concurrent with this purchase, the
Company sold to the Operating Partnership 152,000 Units for $4,680.
The value of the Restricted Stock Awards and the balance of the loans related to
the Stock Purchase Rights at the grant date were recorded as unamortized stock
compensation in stockholders' equity. As a result of provisions contained in
certain of the Company's executive officers' employment agreements, which were
triggered by the Mack Transaction on December 11, 1997, the loans provided by
the Company under the Stock Purchase Rights were forgiven by the Company, and
the vesting and issuance of the restricted stock issued under the Restricted
Stock Awards was accelerated, and related tax obligation payments were made.
Earnings Per Share
FASB No. 128 requires a dual presentation of basic and diluted earnings per
share ("EPS") on the face of the income statement for all companies with complex
capital structures even where the effect of such dilution is not material. Basic
EPS excludes dilution and is computed by dividing net income available to common
stockholders by the weighted average number of shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock.
The following information presents the Company's results for the three months
ended March 31, 1998, and 1997 in accordance with FASB No. 128.
For the Three Months Ended March 31,
1998 1997
---- ----
Basic EPS Diluted EPS Basic EPS Diluted EPS
--------- ----------- --------- -----------
Net income $26,543 $26,543 $16,459 $16,459
Add: Net income attributable
to potentially dilutive
securities -- 3,395 -- 1,636
- --------------------------------------------------------------------------------
Adjusted net income $26,543 $29,938 $16,459 $18,095
================================================================================
Weighted average shares 51,363 58,682 36,461 40,817
- --------------------------------------------------------------------------------
Per Share $ 0.52 $ 0.51 $ 0.45 $ 0.44
================================================================================
The following schedule reconciles the shares used in the basic EPS calculation
to the shares used in the diluted EPS calculation.
1998 1997
---- ----
Basic EPS Shares: 51,363 36,461
Add: Stock Options 612 533
Restricted Stock Awards -- 199
Stock Warrants 137 --
Operating Partnership Units 6,570 3,624
- -----------------------------------------------------------------------------
Diluted EPS Shares: 58,682 40,817
=============================================================================
13. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income ("FASB No. 130"), which establishes
standards for the reporting and display of comprehensive income and its
components. This statement requires a separate statement to report the
components of comprehensive income for each period reported. The provisions of
this statement are effective for fiscal years beginning after December 15, 1997.
Management believes that there are no items that would require presentation in a
separate statement of comprehensive income.
In June 1997, the FASB also issued Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information,
("FASB No. 131"), which establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and require that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. This
Page 20 of 28
statement is effective for financial statements for annual periods beginning
after December 15, 1997 and interim periods a year later, and requires that
comparative information from earlier years be restated to conform to the
requirements of this standard.
14. PRO FORMA FINANCIAL INFORMATION (unaudited)
The following proforma financial information for the three month periods ended
March 31, 1998 and 1997 are presented as if the RM Transaction, the Mack
Transaction and all other acquisitions and common stock offerings completed in
1997, and all acquisitions and common stock offerings completed during the three
months ended March 31, 1998 had all occurred on January 1, 1997. In management's
opinion, all adjustments necessary to reflect the effects of these transactions
have been made.
This pro forma financial information is not necessarily indicative of what the
actual results of operations of the Company would have been assuming such
transactions had been completed as of January 1, 1997, nor do they represent the
results of operations of future periods.
Three Months Ended
March 31,
1998 1997
---- ----
Total revenues $ 116,530 $ 116,554
Operating and other expenses (34,470) (35,779)
General and administrative (6,600) (6,070)
Depreciation and amortization (17,982) (16,910)
Interest expense (22,753) (24,469)
- --------------------------------------------------------------------------------
Income before minority interest and extraordinary item 34,725 33,326
Minority interest (7,181) (6,847)
- --------------------------------------------------------------------------------
Income before extraordinary item $ 27,544 $ 26,479
================================================================================
Basic earnings per common share $ 0.49 $ 0.48
- --------------------------------------------------------------------------------
Page 21 of 28
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
Item 2:
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.
The following comparisons for the three months ended March 31, 1998 ("1998"), as
compared to the three months ended March 31, 1997 ("1997") make reference to the
following: (i) the effect of the "Same-Store Properties," which represents all
properties owned by the Company at December 31, 1996, (ii) the effect of the
acquisition of the RM Properties on January 31, 1997, (iii) the effect of the
acquisition of the Mack Properties on December 11, 1997, and (iv) the effect of
the "Acquired Properties," which represents all properties acquired by the
Company from January 1, 1997 through March 31, 1998, excluding RM and Mack.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Total revenues increased $53.7 million, or 102.9 percent, for 1998 over 1997.
Base rents increased $50.1 million, or 117.1 percent, of which an increase of
$8.5 million, or 19.9 percent, was attributable to the Acquired Properties, an
increase of $5.5 million, or 12.8 percent, due to the RM Properties, an increase
of $35.7 million, or 83.3 percent, due to the Mack Properties and an increase of
$0.4 million, or 1.1 percent, due to occupancy and rental rate changes at the
Same-Store Properties. Escalations and recoveries increased $3.8 million, or
56.6 percent, of which an increase of $1.1 million, or 16.5 percent, was
attributable to the Acquired Properties, an increase of $0.5 million, or 6.5
percent, due to the RM Properties, and an increase of $2.3 million, or 34.9
percent, due to the Mack Properties, offset by a decrease of $0.1 million, or
1.3 percent, due to occupancy changes at the Same-Store Properties. Parking and
other income increased $0.5 million, or 29.9 percent, of which $0.1 million, or
7.1 percent, was attributable to the RM Properties, $0.4 million, or 21.4
percent, due to the Mack Properties, and $0.1 million, or 8.7 percent, was
attributable to the Acquired Properties, offset by a decrease of $0.1 million,
or 7.3 percent, due to the Same-Store Properties. Interest income decreased $0.7
million, or 55.0 percent, due primarily to the use of the funds previously
invested to fund the RM Transaction.
Total expenses for 1998 increased $37.9 million, or 111.3 percent, as compared
to 1997. Real estate taxes increased $4.6 million, or 85.4 percent, for 1998
over 1997, of which an increase of $0.8 million, or 14.8 percent, was
attributable to the Acquired Properties, an increase of $0.8 million, or 14.7
percent, due to the RM Properties, an increase of $2.9 million, or 53.2 percent,
due to the Mack Properties, and an increase of $0.1 million, or 2.7 percent,
attributable to the Same-Store Properties. Additionally, operating services
increased $6.3 million, or 97.8 percent, and utilities increased $4.6 million,
or 122.8 percent, for 1998 over 1997. The aggregate increase in operating
services and utilities of $10.9 million, or 107.0 percent, consists of $1.8
million, or 17.6 percent, attributable to the Acquired Properties, an increase
of $1.1 million, or 10.9 percent, due to the RM Properties, and an increase of
$8.4 million, or 82.1 percent, due to the Mack Properties, offset by a decrease
of $0.4 million, or 3.6 percent, attributable to the Same-Store Properties.
General and administrative expense increased $3.0 million, or 95.3 percent, of
which $2.0 million, or 64.3 percent, is due primarily to an increase in payroll
and related costs as a result of the Company's expansion, $0.8 million, or 23.8
percent, due to additional costs related to the Mack Properties, and $0.2
million, or 7.2 percent, attributable to additional costs related to the RM
Properties. Depreciation and amortization increased $8.7 million, or 116.6
percent, for 1998 over 1997, of which $1.5 million, or 20.8 percent, relates to
depreciation on the Acquired Properties, an increase of $1.1 million, or 15.0
percent, attributable to the RM Properties, an increase of $5.6 million, or 74.5
percent, due to the Mack Properties, and an increase of $0.5 million, or 6.3
percent, due to the Same-Store Properties. Interest expense increased $10.7
million, or 136.3 percent, for 1998 over 1997, of which $1.1 million, or 14.2
percent, was attributable to the TIAA Mortgage, $0.2 million, or 2.6 percent,
due to assumed mortgages on Acquired Properties, an increase of $5.3 million, or
67.5 percent, due to assumed mortgages from the Mack Properties, and an increase
of $4.1 million, or 52.0 percent, due to net additional drawings from the
Company's credit facilities as a result of Company acquisitions and the $200
million Prudential Term Loan obtained in December 1997, as well as changes in
LIBOR.
Income before minority interest increased to $33.9 million in 1998 from $18.1
million in 1997. The increase of $15.8 million was due to the factors discussed
above.
Net income increased $10.0 million for 1998, from $16.5 million in 1997 to $26.5
million in 1998. This increase was a result of an increase in income before
minority interest of $15.8 million, offset by an increase of $5.7 million in
minority interest, primarily attributable to distributions on preferred units in
1998.
Page 22 of 28
Liquidity and Capital Resources
Statement of Cash Flows
During the three months ended March 31, 1998, the Company generated $50.4
million in cash flows from operating activities, and together with $419.9
million in borrowings from the Company's credit facilities, $215.8 million in
net proceeds from the Company's common stock offerings during the period, $2.7
million from the Company's cash reserves, and $2.0 million in proceeds from
stock options exercised, used an aggregate of $690.8 million to acquire 39
properties and pay for other tenant improvements and building improvements for
$406.7 million, repay outstanding borrowings on its credit facilities and other
mortgage debt of $205.5 million, pay quarterly dividends and distributions of
$28.1 million, provide $20.0 million for a mortgage note receivable, invest
$18.0 million in a partially-owned entity, invest $11.7 of cash reserves in
overnight investments, and repurchase 20,000 common units for $0.8 million.
Capitalization
On February 25, 1998, the Company completed an underwritten public offer and
sale of 2,500,000 shares of its common stock and used the net proceeds, which
totaled approximately $92.2 million (after offering costs) to pay down a portion
of its outstanding borrowings under the Company's credit facilities and fund the
acquisition of Moutainview (see Note 3 to the Financial Statements).
On March 18, 1998, in connection with the acquisition of Prudential Business
Campus, the Company completed an offer and sale of 2,705,628 shares of its
common stock using the net proceeds of approximately $99.9 million (after
offering costs) in the funding of such acquisition (see Note 3 to the Financial
Statements).
On March 26, 1998, in connection with the acquisition of certain properties from
the Pacifica Holding Company, the Company issued 100,175 common units, valued at
approximately $3.8 million.
On March 27, 1998, the Company completed an underwritten public offer and sale
of 650,407 shares of its common stock and used the net proceeds, which totaled
approximately $23.7 million (after offering costs) to pay down a portion of its
outstanding borrowings under the Company's credit facilities.
During the three months ended March 31, 1998, the Company also issued 634,000
common units and 1,839 preferred units, valued at approximately $23.3 million,
in connection with the achievement of certain performance goals at the Mack
Properties, with an equivalent number of contingent common units being redeemed.
On April 29, 1998, the Company completed an underwritten offer and sale of
994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34.7 million (after offering costs) primarily to pay down a
portion of its outstanding borrowings under the Company's credit facilities.
On April 17, 1998, the Company repaid in full and terminated its $400 million
unsecured revolving credit facility, led by Fleet National Bank, and obtained a
new unsecured revolving credit facility (the "1998 Unsecured Facility") in the
amount of $870.0 million from a group of 25 lender banks, led by The Chase
Manhattan Bank and Fleet National Bank. The 1998 Unsecured Facility has a
three-year term and currently bears interest at 110 basis points over one-month
LIBOR, a reduction of 15 basis points from the retired Original Unsecured
Facility. Based upon the Company's achievement of an investment grade long-term
unsecured debt rating, the interest rate will be reduced, on a sliding scale,
and a competitive bid option will become available.
The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, dividend payments and additional
indebtedness and which require compliance with specified financial ratios and
other financial measurements. The 1998 Unsecured Facility also requires a 17.5
basis point fee on the unused balance payable quarterly in arrears.
The lending group for the 1998 Unsecured Facility consists of: The Chase
Manhattan Bank, as administrative agent; Fleet National Bank, as syndication
agent; PNC Bank, N.A., as documentation agent; Bankers Trust, Commerzbank, AG,
The First National Bank of Chicago, First Union National Bank and NationsBank,
as managing agents; Creditanstalt Corporate Finance, Inc., Dresdner Bank, AG,
European American Bank (EAB), Hypo Bank, Societe Generale and Summit Bank, as
co-agents; and Kredietbank, N.V., Key Bank, Mellon Bank, N.A., The Bank of New
York, Citizens Bank, Crestar, DG Bank, Tokai Bank, US Trust, Bayerische
Landesbank and Erste Bank.
The new unsecured facility, together with the Company's previously-existing
$100.0 million revolving credit facility with Prudential Securities Corp.,
provides the Company with a total credit line borrowing capacity of $970.0
million.
Page 23 of 28
On April 30, 1998, the Company obtained a $150.0 million, interest-only mortgage
loan from The Prudential Insurance Company of America with a seven-year term.
The mortgage loan, which is secured by 12 of the Company's Properties, has an
effective annual interest rate of 7.1 percent, and includes a conversion feature
whereby the Company, upon receiving an investment-grade credit rating, will have
the option to convert the loan into senior unsecured debt.
The proceeds of the new loan were used, along with funds drawn from one of the
Company's credit facilities, to pay off and retire a $200.0 million term loan
with Prudential, as well as approximately $48.2 million in property mortgage
loans assumed in the December 1997 Mack/Patriot transaction.
Following the completion of the $150.0 million secured loan with Prudential, the
Company has 151 unencumbered properties, totaling 14.8 million square feet,
representing 59.0 percent of the Company's total portfolio on a square footage
basis.
Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures. Management believes that the Company will
have access to the capital resources necessary to expand and develop its
business. To the extent that the Company's cash flow from operating activities
is insufficient to finance its non-recurring capital expenditures such as
property acquisition costs and other capital expenditures, the Company expects
to finance such activities through borrowings under its credit facilities and
other debt and equity financing.
The Company expects to meet its short-term liquidity requirements generally
through its working capital and net cash provided by operating activities, along
with the Prudential facility and the new unsecured credit facility, led by Chase
and Fleet Bank. The Company is frequently examining potential property
acquisitions and, at any one given time, one or more of such acquisitions may be
under consideration. Accordingly, the ability to fund property acquisitions is a
major part of the Company's financing requirements. The Company expects to meet
its financing requirements through funds generated from operating activities,
long-term or short term borrowings (including draws on the Company's credit
facilities) and the issuance of debt securities or additional equity securities.
In addition, the Company anticipates utilizing the Second Prudential Facility
and the Unsecured Facility primarily to fund property acquisition activities.
The Company does not intend to reserve funds to retire the existing TIAA
mortgage, Harborside mortgages, $150,000 Prudential mortgage loan, its various
other property mortgages, and borrowings under the revolving credit facilities
or other long-term mortgages and loans payable upon maturity. Instead, the
Company will seek to refinance such debt at maturity or retire such debt through
the issuance of additional equity or debt securities. The Company anticipates
that its available cash and cash equivalents and cash flows from operating
activities, together with cash available from borrowings and other sources, will
be adequate to meet the Company's capital and liquidity needs both in the short
and long-term. However, if these sources of funds are insufficient or
unavailable, the Company's ability to make the expected distribution discussed
below may be adversely affected.
To maintain its qualification as a REIT, the Company must make annual
distributions to its stockholders of at least 95 percent of its REIT taxable
income, determined without regard to the dividends paid deduction and by
excluding net capital gains. Moreover, the Company intends to continue to make
regular quarterly distributions to its stockholders which, based upon current
policy, in the aggregate would equal approximately $114.0 million on an
annualized basis. However, any such distribution, whether for federal income tax
purposes or otherwise, would only be paid out of available cash after meeting
both operating requirements and scheduled debt service on mortgages and loans
payable.
Funds from Operations
The Company considers funds from operations, after adjustment for
straight-lining of rents, one measure of REIT performance. Funds from operations
is defined as net income (loss) before minority interest of unitholders
(preferred), computed in accordance with generally accepted accounting
principles ("GAAP"), excluding gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and sales of property, plus
real estate-related depreciation and amortization. Funds from operations should
not be considered as an alternative to net income as an indication of the
Company's performance or to cash flows as a measure of liquidity.
NAREIT's definition of FFO indicates that the calculation should be made before
any extraordinary item (determined in accordance with GAAP), and before any
deduction of significant non-recurring events that materially distort the
comparative measurement of the Company's performance.
Page 24 of 28
Funds from operations for the three months ended March 31, 1998 and 1997 as
calculated in accordance with the National Association of Real Estate Investment
Trusts' definition published in March 1995, are summarized in the following
table (in thousands):
Three Months
Ended March 31,
1998 1997
---- ----
Income before distribution to preferred unitholders
and minority interest $ 33,849 $ 18,095
Add: Real estate-related depreciation and
amortization 16,120 7,479
Deduct: Rental income adjustment for
straight-lining of rents (3,203) (1,607)
- --------------------------------------------------------------------------------
Funds from operations after adjustment
for straight-lining of rents,
before distributions to preferred unitholders $ 46,766 $ 23,967
Deduct: Distribution to preferred unitholders (3,911) --
- --------------------------------------------------------------------------------
Funds from operations after
adjustment for straight-lining of rents $ 42,855 $ 23,967
================================================================================
Fully-converted weighted average shares outstanding (1) 64,621 40,085
- --------------------------------------------------------------------------------
Weighted average shares outstanding (2) 57,932 40,085
- --------------------------------------------------------------------------------
(1) Assumes redemption/conversion of all outstanding units (both preferred and
common), calculated on a weighted average basis, for shares of common
stock in the Company.
(2) Assumes redemption of all outstanding common units, calculated on a
weighted average basis, for shares of common stock in the Company.
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.
Year 2000
Many computer systems experience problems handling dates beyond the year 1999.
Therefore, some computer hardware and software will need to be modified prior to
the year 2000 in order to remain functional. The Company is assessing both the
internal readiness of its systems as well as the compliance of its vendors for
the handling of the year 2000. The Company expects to implement successfully the
systems and programming changes necessary to address year 2000 issues, and does
not believe that the cost of such actions will have a material effect on the
Company's results of operations or financial condition. There can be no
assurance, however, that there will not be a delay in, or increased costs
associated with, the implementation of such changes, and the Company's inability
to implement such changes could have an adverse effect on future results of
operations.
Disclosure Regarding Forward-Looking Statements
The Company considers portions of this information to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of The Securities Exchange Act of 1934. Although the Company
believes that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, it can give no assurance that its
expectations will be achieved.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Appplicable.
PART II - Other Information
Item 1. Legal Proceedings
Reference is made to Other Contingencies in Footnote 10 (Commitments and
Contingencies) to the consolidated financial Statements which is specifically
incorporated by reference herein.
Item 2. Changes in Securities and Use of Proceeds
(c) Reference is made to the first and last paragraphs under
Preferred Units, and the fourth, fifth and sixth paragraphs
under Common Units in Footnote 8 (Minority Interest) to the
Consolidated Financial Statements which are specifically
incorporated by reference herein. Also specifically
incorporated by reference herein are the first, fourth, fifth
and sixth paragraphs in Footnote 3 (Acquisitions/Transactions)
to the Consolidated Financial Statements.
Page 25 of 28
MACK-CALI REALTY CORPORATION
Part II -- Other Information (continued)
Item 6 - Exhibits
The following exhibits are filed herewith:
Exhibit No. Exhibit Title
- ----------- -------------
10.145 Purchase and Sale Agreement by and between Sylvan Way L.L.C., as
Seller, and Mack-Cali Realty Acquisition Corp., as Purchaser, dated
February 4, 1998
10.146 Purchase and Sale Agreement by and between PRUBETA-3, as Seller, and
Mack-Cali Realty Acquisition Corp., as Buyer, dated February 18,
1998
10.147 Second Amendment to Purchase and Sale Agreement by and between
PRUBETA-3, as Seller, and Mack-Cali Realty Acquisition Corp.,
Parsippany Campus Realty Associates, L.P., and Mack-Cali Realty,
L.P., as Buyers, dated March 27, 1998
10.148 Assignment and Assumption Agreement, dated March 27, 1998, by Equity
Parsippany Venture, as Assignor, to Mack-Cali Realty Acquisition
Corp., as Assignee
10.149 Asset Purchase Agreement, dated as of March 25, 1998, between
Mack-Cali Realty, L.P., as Acquiror, and Pacifica Holding Company
LLC, as Contributor
10.150 Contribution and Exchange Agreement, dated March 25, 1998, by and
between Pacifica Progress/Union Limited Liability Company, as
Contributor, and Mack-Cali Realty, L.P. and Mack-Cali Realty
Corporation
10.151 Contribution and Exchange Agreement, dated March 26, 1998, by and
among parties setforth herein, as Contributor, and Mack-Cali Realty,
L.P. and Mack-Cali Realty Corporation [Pacifica Development
Properties II]
10.152 Contribution and Exchange Agreement, dated March 25, 1998, by and
among parties setforth herein, as Contributors, and Mack-Cali
Realty, L.P. and Mack-Cali Realty Corporation [Centennial Valley -
Park One]
10.153 Contribution and Exchange Agreement, dated March 25, 1998, by and
among parties setforth herein, as Contributors, and Mack-Cali
Realty, L.P. and Mack-Cali Realty Corporation [67 Inverness]
10.154 Contribution and Exchange Agreement, dated March 25, 1998, by and
between Apollo/Pacifica Pyramid, LLC, as Contributor, and Mack-Cali
Realty, L.P. and Mack-Cali Realty Corporation
10.155 Contribution and Exchange Agreement, dated March 25, 1998, by and
between Pacifica 384 Inverness Partnership, as Contributor, and
Mack-Cali Realty, L.P. and Mack-Cali Realty Corporation
10.156 Contribution and Exchange Agreement, dated March 25, 1998, by and
between Pacifica Development Properties LLC, as Contributor, and
Mack-Cali Realty, L.P. and Mack-Cali Realty Corporation
10.157 Indemnification Agreement, dated March 25, 1998, among Mack-Cali
Realty Corporation, Mack-Cali Realty, L.P., Apollo Real Estate
Investment Fund II, L.P., Pacifica Holding Company, L.L.C. and
Pacifica Holding Company
Page 26 of 28
10.158 Indemnification Agreement, dated March 25, 1998, among Mack-Cali
Realty Corporation, Mack-Cali Realty, L.P., Pacifica Holding
Company, L.L.C. and Pacifica Holding Company.
10.159 Notice of Settlement of Derivative Action and Hearing on Proposed
Settlement, dated April 2, 1998.
10.160 Revolving Credit Agreement among Mack-Cali Realty, L.P. and The
Chase Manhattan Bank, Fleet National Bank and Other Lenders Which
May Become Parties to This Agreement, dated April 16, 1998
10.161 Underwriting Agreement, dated April 23, 1998, between Mack-Cali
Realty Corporation and Merrill Lynch, Pierce, Fenner and Smith
Incorporated.
Page 27 of 28
MACK-CALI REALTY CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Mack-Cali Realty Corporation
(Registrant)
Date: May 15, 1998 /s/ Thomas A. Rizk
----------------------------
Thomas A. Rizk
Chief Executive Officer
/s/ Barry Lefkowitz
----------------------------
Date: May 15, 1998 Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
Page 28 of 28