SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported ) June 12, 1998
Mack-Cali Realty Corporation
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(Exact name of registrant as specified in its charter)
Maryland 1-13274 22-3305147
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(state or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification Number)
11 Commerce Drive, Cranford , New Jersey 07016
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Registrant's telephone number, including area code: (908) 272-8000
N/A
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(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information (unaudited)
The pro forma financial information for the Company previously presented
as Item 7(b) of the Current Report on Form 8-K dated June 12, 1998 is hereby
amended in its entirety.
o Condensed consolidated balance sheet as of March 31, 1998,
o Condensed consolidated statements of operations for the three months
ended March 31, 1998 and the year ended December 31, 1997, and
o Estimated twelve-month pro forma statement of taxable net operating
income and operating funds available for the twelve month period
ended March 31, 1998.
This current report on Form 8-K/A should be read in conjunction with the
current report on Form 8-K dated June 12, 1998.
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 hereunto duly authorized.
MACK-CALI REALTY CORPORATION
August 5, 1998 By: /s/ Thomas A. Rizk
------------------------------------
Thomas A. Rizk
Chief Executive Officer and Director
August 5, 1998 By: /s/ Barry Lefkowitz
------------------------------------
Barry Lefkowitz
Executive Vice President and
Chief Financial Officer
2
MACK-CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
As of March 31, 1998 (in thousands)
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The following unaudited pro forma condensed consolidated balance sheet is
presented as if the completion by the Company of the acquisitions of the
remaining properties in the McGarvey Portfolio (not yet acquired), the remaining
properties in the Pacifica Portfolio not yet acquired at March 31, 1998, 3600 S.
Yosemite, Ramland Road, 500 College Road, D.C. Portfolio and 400 South Colorado,
(collectively, the "Second Quarter 1998 Acquisitions"), as well as the Company's
1998 stock offerings from April 1, 1998 through May 29, 1998, had all occurred
on March 31, 1998. This unaudited pro forma condensed consolidated balance sheet
should be read in conjunction with the pro forma condensed consolidated
statement of operations of the Company and the historical financial statements
and notes thereto of the Company included in the Company's Form 10-Q for the
three months ended March 31, 1998.
The pro forma condensed consolidated balance sheet is unaudited and is not
necessarily indicative of what the actual financial position of the Company
would have been had the aforementioned acquisitions and stock offerings actually
occurred on March 31, 1998, nor does it purport to represent the future
financial position of the Company.
Pro Forma
Adjustments for
Company the Second Quarter Company
ASSETS Historical 1998 Acquisitions Pro Forma
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Rental property, net $2,965,384 $263,414 (a) $3,228,798
Cash and cash equivalents 11,717 (6,700)(b) 5,017
Investment in partially-owned entity 18,034 -- 18,034
Unbilled rents receivable 30,641 -- 30,641
Deferred charges and other assets, net 21,672 -- 21,672
Restricted cash 6,791 -- 6,791
Accounts receivable, net 3,826 -- 3,826
Mortgage note receivable 27,250 -- 27,250
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Total assets $3,085,315 $256,714 $3,342,029
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Mortgages and loans payable $1,207,592 $167,146 (c) $1,374,734
Dividends and distributions payable 35,139 -- 35,139
Accounts payable and accrued expenses 31,510 -- 31,510
Accrued interest payable 1,935 -- 1,935
Rents received in advance
and security deposits 29,651 -- 29,651
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Total liabilities 1,305,827 167,146 1,472,973
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Minority interest of unitholders in
Operating Partnership 404,830 20,753(d) 425,583
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Stockholders' equity
Common stock, $0.01 par value 558 20(e) 578
Other stockholders' equity 1,374,100 68,795(e) 1,442,895
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Total stockholders' equity 1,374,658 68,815 1,443,473
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Total liabilities and stockholders' equity $3,085,315 $256,714 $3,342,029
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See accompanying footnotes on subsequent page
3
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Balance Sheet (unaudited)
As of March 31, 1998 (in thousands, except share/unit amounts )
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(a) Represents the approximate aggregate cost of the Second Quarter 1998
Acquisitions, comprised of: the remaining properties in the McGarvey
Portfolio not yet acquired ($11,997), remaining properties in the
Pacifica Portfolio not yet acquired at March 31, 1998 ($92,567), 3600
S. Yosemite ($13,500), Ramland Road ($6,700), 500 College Road
($21,200), D.C. Portfolio ($105,450) and 400 S. Colorado ($12,000).
(b) Represents the acquisition of Ramland Road on May 14, 1998 funded from
the Company's cash reserves.
(c) Represents the Company's approximate aggregate pro forma drawings on
the Company's credit facilities of $167,146, which are to be, or have
been used, as the primary means in funding the cash portion of the
Second Quarter 1998 Acquisitions.
(d) Represents the issuance of approximately 567,024 common operating
partnership units, valued at approximately $20,753, in connection with
the acquisition of certain of the Pacifica Portfolio properties.
(e) Represents the issuance of 1,978,843 shares of common stock in two
stock offerings, raising total net proceeds of approximately $68,815,
which proceeds were used, for pro forma purposes, as part of the
funding of the Second Quarter 1998 Acquisitions.
4
MACK-CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
And the Year Ended December 31, 1997
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The unaudited pro forma condensed consolidated statements of operations for the
three months ended March 31, 1998 and for the year ended December 31, 1997 are
presented as if each of the following had occurred on January 1, 1997: (i) the
completion by the Company of the Robert Martin Company transaction (the "RM
Transaction"), (ii) the acquisition by the Company of the properties known as
1345 Campus Parkway, Westlakes Office Park, Moorestown Buildings, Shelton Plaza,
200 Corporate Boulevard, Three Independence Way, The Trooper Building, Princeton
Overlook and Concord Plaza, (iii) the completion by the Company of the October
1997 13 million share stock offering, (iv) the completion by the Company of the
acquisition of the properties of the Mack Company and Patriot American Office
Group (the "Mack Transaction") and (v) the completion by the Company of the 1998
Offerings and the 1998 Acquisitions (collectively, the "Reported Events"). Items
(i), (ii), (iii) and (iv) are to be collectively hereinafter referred to as the
1997 Events.
Such pro forma information is based upon the historical consolidated results of
operations of the Company for the three months ended March 31, 1998 and for the
year ended December 31, 1997, after giving effect to the transactions described
above. The pro forma condensed consolidated statements of operations should be
read in conjunction with the pro forma condensed consolidated balance sheet of
the Company and the historical financial statements and notes thereto of the
Company included in the Company's Form 10-Q for the three months ended March 31,
1998, and in the Company's Form 10-K for the year ended December 31, 1997.
The unaudited pro forma condensed consolidated statements of operations are not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the transactions had been completed as set forth above,
nor does it purport to represent the Company's results of operations for future
periods.
5
MACK-CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands, except per share amounts)
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1998
Company Acquisitions Pro Forma Company
REVENUES Historical Historical adjustments Pro Forma
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Base rents $ 92,916 $ 14,372 $1,436 (b) $ 108,724
Escalations and recoveries from tenants 10,357 1,797 -- 12,154
Parking and other 2,006 825 -- 2,831
Interest income 544 -- -- 544
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Total revenues 105,823 16,994 1,436 124,253
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EXPENSES
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Real estate taxes 10,073 1,945 -- 12,018
Utilities 8,301 1,340 -- 9,641
Operating services 12,693 1,782 -- 14,475
General and administrative 6,196 974 -- 7,170
Depreciation and amortization 16,231 -- 2,972 (b) 19,203
Interest expense 18,480 -- 6,590 (c) 25,070 (c)
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Total expenses 71,974 6,041 9,562 87,577
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Income before minority interest 33,849 10,953 (8,126) 36,676
Minority interest 7,306 -- 248 (d) 7,554 (d)
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Net income $26,543 $10,953 (8,374) $ 29,122
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Basic weighted average common shares
outstanding (e) 51,363 57,768 (e)
------ ------
Net income per basic and diluted
common share (f) $ 0.52 $ 0.50
- ---- - ----
6
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands)
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(a) Reflects historical revenues and certain expenses for the 1998 Acquisitions
for the period from January 1, 1998 through the earlier of the date of
acquisition or March 31, 1998, as follows:
Parking Real
Base Escalations/ and Estate Operating General and
Property (1) Acquis. Date Rents Recoveries Other Taxes Utilities Services Administrative
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McGarvey Portfolio Jan. 30, 1998 (2) $ 423 $ 146 -- $ 109 $ 11 $ 34 $ 1
500 West Putnam Feb. 5, 1998 230 38 -- 17 26 27 15
Mountainview Feb. 25, 1998 422 34 -- 35 68 70 14
Cielo Center Mar. 12, 1998 943 43 $ 19 124 89 138 73
Pacifica Portfolio Mar. 27, 1998 (3) 3,227 372 19 326 168 246 98
Prudential Bus. Campus Mar. 27, 1998 3,033 252 636 612 285 168 496
Morris County Fin. Ctr. Mar. 30, 1998 1,511 499 -- 193 252 322 86
3600 S. Yosemite May 13, 1998 405 18 -- 30 52 82 10
500 College Road East May 22, 1998 707 117 -- 79 153 86 33
D.C. Portfolio June 1, 1998 (4) 3,032 251 151 371 186 509 123
400 S. Colorado June 3, 1998 439 27 -- 49 50 100 25
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Total 1998 Acquisitions $14,372 $1,797 $825 $1,945 $1,340 $1,782 $974
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(1) 2115 Linwood, Ramland Road and certain of the properties in the Pacifica
Portfolio (aggregate cost of $26,761) were not in operation, due to being
vacant and/or under development, during the three months ended March 31,
1998.
(2) Acquisition of four of the 21 properties in this portfolio has not yet been
completed: results for period include full quarter operations for those
pending acquisitions.
(3) Acquisition of six of the 18 properties was completed on June 8, 1998 and
acquisition of two of the 18 properties in this portfolio has not yet been
completed: results for period include full quarter operations for those
pending acquisitions.
(4) Acquisition of one of the three properties in this portfolio has not yet
been completed: results for period include full quarter operations for
those pending acquisitions.
7
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands)
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(b) Reflects pro forma adjustments to base rent and depreciation for the 1998
Acquisitions for the period from January 1, 1998 through the earlier of the
date of acquisition or March 31, 1998, as follows:
Base
Property (1) Acquis. Date Rent Adj. (2) Depreciation (3)
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McGarvey Portfolio Jan. 30, 1998 (4) $308 $109
500 West Putnam Feb. 5, 1998 14 35
Mountainview Feb. 25, 1998 3 88
Cielo Center Mar. 12, 1998 88 172
Pacifica Portfolio Mar. 27, 1998 (5) 51 736
Prudential Bus. Campus Mar. 27, 1998 463 743
Morris County Fin. Ctr. Mar. 30, 1998 (27) 280
3600 S. Yosemite May 13, 1998 (17) 72
500 College Road East May 22, 1998 52 113
D.C. Portfolio June 1, 1998 (6) 516 560
400 S. Colorado June 3, 1998 (15) 64
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Total Pro Forma Adj. $1,436 $2,972
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(1) 2115 Linwood, Ramland Road and certain of the properties in the Pacifica
Portfolio (aggregate cost of $26,761) were not in operation, due to being
vacant and/or under development, during the three months ended March 31,
1998.
(2) Adjustments to base rent to reflect the resetting of the straight-line rent
for all leases in effect from January 1, 1997 forward.
(3) Pro forma depreciation is based on the building-related portion of the
purchase price and associated costs (for those properties in operation
during the period), depreciated using the straight-line method over a
40-year useful life.
(4) Acquisition of four of the 21 properties in this portfolio has not yet been
completed: results for period include full quarter operations for those
pending acquisitions.
(5) Acquisition of six of the 18 properties was completed on June 8, 1998 and
acquisition of two of the 18 properties in this portfolio has not yet been
completed: results for period include full quarter operations for those
pending acquisitions.
(6) Acquisition of one of the three properties in this portfolio has not yet
been completed: results for period include full quarter operations for
those pending acquisitions.
8
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands)
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(c) Pro forma adjustment to interest expense for the three months ended March
31,1998 reflects interest on mortgage debt assumed with certain
acquisitions and additional borrowings from the Company's credit facilities
to fund certain acquisitions. Pro forma interest expense for the three
months ended March 31, 1998 is computed as follows:
Interest expense on loan assumed with Fair Lawn acquisition on March 3, 1995 $ 371
(fixed interest rate of 8.25 percent on average outstanding principal balance
of approximately $18,185)
Interest expense on mortgages assumed in connection with the Harborside 2,708
acquisition in 1996 (fixed interest rate of 7.32 percent on $107,912 and
initial rate of 6.99 percent on $42,088)
Interest expense on the Teachers Mortgage assumed with the RM Transaction 3,326
on January 31, 1997 (fixed interest rate of 7.18 percent on
$185,283)
Interest expense on the Mack Transaction Assumed Debt during the period 5,288
Interest expense on West Putnam Mortgage ($12,104) with an effective 197
interest rate of 6.52 percent
Interest expense on McGarvey Mortgages ($8,354) with a weighted average 130
effective interest rate of 6.24 percent
Interest expense on Prudential Term Loan ($200,000) with an 3,395
interest rate of 6.79 percent
Interest expense on pro forma drawings on the Company's credit facilities of 9,401
$545,772 at a weighted average interest rate of 6.89 percent
Historical amortization of deferred mortgage, finance and title costs for the 254
three months ended March 31,1998 ------
Pro forma interest expense for the three months ended March 31, 1998: 25,070
Company historical interest expense: 18,480
-------
Pro Forma Adjustment $6,590
-------
-------
Interest expense can be effected by increases and decreases in the variable
interest rates under the Company's various floating rate debt. For example,
a one-eighth percent change in such variable interest rates will result in
a $264 change for the three months ended March 31, 1998.
9
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Three Months Ended March 31, 1998
(in thousands)
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(d) Represents pro forma minority interest computed as follows:
Income before minority interest $36,676
Preferred unit dividend $3,911
Income allocable to common stockholders of the Company and
unitholders in the Operating Partnership $32,765
-------
Allocation to minority interest based upon weighted average
percentage of Common Units outstanding of 11.12 percent 3,643
--------
Pro forma minority interest for the three months ended
March 31, 1998 7,554
--------
Company historical 7,306
Pro Forma Adjustment: $ 248
--------
--------
(e) The following is a reconciliation of the historical basic weighted average
common shares outstanding to the pro forma basic weighted average common
shares outstanding (shares in thousands):
Historical basic weighted average common shares outstanding 51,363
Effect of pro forma adjustment for shares issued in connection 6,405
with the 1998 stock offerings
Pro forma basic weighted average common shares outstanding 57,768
---------
---------
(f) Diluted pro forma net income per share is not presented since common stock
equivalents and the Preferred Units are not dilutive.
10
MACK-CALI REALTY CORPORATION
Pro Forma Condensed Consolidated Statement Of Operations (unaudited)
For the Year Ended December 31, 1997
(in thousands, except per share amounts)
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1997 Events and
Company 1998 Acquis. Pro Forma Company
Historical Historical (a) Adjustments Pro Forma
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Base rents $206,215 $200,806 $15,764 (b) $422,785
Escalations and recoveries
from tenants 31,130 25,749 -- 56,879
Parking and other 6,910 10,168 -- 17,078
Interest income 5,546 -- (835) (g) 4,711
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Total revenues 249,801 236,723 14,929 501,453
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EXPENSES
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Real estate taxes 25,992 25,955 -- 51,947
Utilities 18,246 20,335 -- 38,581
Operating services 30,912 29,964 -- 60,876
General and administrative 15,862 11,822 -- 27,684
Depreciation and amortization 36,825 -- 37,434 (b) 74,259
Interest expense 39,078 -- 66,589 (c) 105,667(c)
Non-recurring merger -
related charges 46,519 -- (46,519) (h) --
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Total expenses 213,434 88,076 57,504 359,014
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Income before minority
interest and extraordinary item 36,367 148,647 (42,575) 142,439
Minority interest 31,379 -- (2,456) (d) 28,923(d)
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Income before extraordinary
item $4,988 $ 148,647 $(40,119) $113,516
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Basic weighted average common
shares outstanding (e) 39,266 57,510(e)
------ ------
Income before extraordinary
item per basic and diluted
common share (f) $ 0.13 $ 1.97
------ ------
11
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997 (in thousands)
- --------------------------------------------------------------------------------
(a) Reflects historical revenues and certain expenses for the 1997 Events and
1998 Acquisitions for the period from January 1, 1997 through the earlier
of the date of acquisition or December 31, 1997, as follows:
Real
Base Escalations/ Other Estate Operating General and
Transaction/Acquis. (1) Date Completed Rents Recoveries Income Taxes Utilities Services Administrative
- -----------------------------------------------------------------------------------------------------------------------------------
1345 Campus Parkway Jan. 28, 1997 $ 58 $ 19 -- $ 7 $ 1 $ 4 $ 1
RM Transaction Jan. 31, 1997 5,219 195 $ 524 817 379 858 410
Westlakes May 8, 1997 2,825 866 -- 258 362 449 246
Shelton Place July 31, 1997 1,259 123 -- 94 168 162 57
200 Corporate Blvd. Aug. 15, 1997 482 15 -- 68 6 91 1
Three Independence Way Sept. 3, 1997 1,312 2 -- 163 72 147 28
The Trooper Buildings Nov. 19, 1997 1,395 537 -- 113 228 172 54
The Mack Transaction Dec. 11, 1997 122,989 16,099 6,500 15,099 13,210 18,679 7,043
Princeton Overlook Dec. 19, 1997 3,166 265 -- 436 209 302 183
Concord Plaza Dec. 19, 1997 3,470 511 128 619 249 721 227
McGarvey Portfolio Jan. 30, 1998 (4) 5,002 1,009 -- 780 90 376 2
500 West Putnam Feb. 5, 1998 2,270 482 -- 170 269 314 167
Mountainview Feb. 25, 1998 2,654 211 4 221 421 508 110
Cielo Center Mar. 12, 1998 3,977 206 106 597 492 849 264
Pacifica Portfolio Mar. 27, 1998 (5) 7,825 791 53 1,084 495 808 263
Prudential Bus. Campus Mar. 27, 1998 12,225 1,082 2,159 2,531 941 828 1,632
Morris County Fin. Ctr. Mar. 30, 1998 6,044 1,794 48 789 939 1,229 329
3600 S. Yosemite May 13, 1998 1,678 10 69 119 195 316 49
500 College Road East May 22, 1998 2,828 437 -- 318 479 407 161
D.C. Portfolio June 1, 1998 (6) 12,739 1,000 577 1,487 899 2,362 486
400 S. Colorado June 3, 1998 1,389 95 -- 185 231 382 109
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Total 1997 Events
and 1998 Acquisitions Historical $200,806 $25,749 $10,168 $25,955 $20,335 $29,964 $11,822
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See footnotes to this page on subsequent page.
12
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997 (in thousands)
- --------------------------------------------------------------------------------
(b) Reflects pro forma adjustments to base rent and depreciation for the 1997
Events and 1998 Acquisitions for the period from January 1, 1997 through
the earlier of the date of acquisition or December 31, 1997, as follows:
Base
Transaction/Acquis. (1) Date Completed Rent Adj. (2) Depreciation (3)
- -----------------------------------------------------------------------------------------------
1345 Campus Parkway Jan. 28, 1997 $ -- $ 12
RM Transaction Jan. 31, 1997 (10) 864
Westlakes May 8, 1997 301 607
Shelton Place July 31, 1997 (113) 192
200 Corporate Blvd. Aug. 15, 1997 -- 106
Three Independence Way Sept. 3, 1997 (3) 189
The Trooper Buildings Nov. 19, 1997 1 303
The Mack Transaction Dec. 11, 1997 10,018 20,797
Princeton Overlook Dec. 19, 1997 149 578
Concord Plaza Dec. 19, 1997 252 724
McGarvey Portfolio Jan. 30, 1998 (4) 307 1,308
500 West Putnam Feb. 5, 1998 150 426
Mountainview Feb. 25, 1998 10 525
Cielo Center Mar. 12, 1998 626 825
Pacifica Portfolio Mar. 27, 1998 (5) 224 2,470
Prudential Bus. Campus Mar. 27, 1998 1,913 3,153
Morris County Fin. Ctr. Mar. 30, 1998 4 1,121
3600 S. Yosemite May 13, 1998 (17) 287
500 College Road East May 22, 1998 208 451
D.C. Portfolio June 1, 1998 (6) 1,721 2,241
400 S. Colorado June 3, 1998 23 255
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Total 1997 Events and
1998 Acquisitions Historical $ 15,764 $ 37,434
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- -----------------------------------------------------------------------------------------------
See footnotes to this page on subsequent page.
13
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997
(in thousands)
- --------------------------------------------------------------------------------
Notes to Footnote "(a)" and Footnote "(b)":
(1) Moorestown Properties, 2115 Linwood, Ramland Road and certain of the
properties in the Pacifica Portfolio (aggregate cost of $49,047) were
not in operations, due to being vacant and/or under development,
during the year ended December 31, 1997.
(2) Adjustments to base rent to reflect the resetting of the straight-line
rent for all leases in effect from January 1, 1997 forward.
(3) Pro forma depreciation is based on the building-related portion of the
purchase price and associated costs (for those properties operation
during the period) depreciated using the straight-line method over a
40-year life.
(4) Acquisition of four of the 21 properties in this portfolio has not yet
been completed.
(5) Acquisition of six of the 18 properties was completed on June 8, 1998
and acquisition of two of the 18 properties in this portfolio has not
yet been completed.
(6) Acquisition of one of the three properties in this portfolio has not
yet been completed.
- ---------------------------
(c) The pro forma adjustment to interest expense for the year ended December
31, 1997 reflects interest on mortgage debt assumed with certain
acquisitions and additional borrowings from the Company's credit facilities
to fund certain acquisitions. Pro forma interest expense for the year ended
December 31, 1997 is computed as follows:
Interest expense on the Initial Mortgage Financing, after the Partial Pre- $4,858
payment (fixed interest rate of 8.02 percent on $44,313 and variable rate
of 30-day LIBOR plus 100 basis points on $20,195; weighted average interest
rate used is 6.46 percent)
Interest expense on loan assumed with Fair Lawn acquisition on March 3, 1995 1,500
(fixed interest rate of 8.25 percent on average outstanding principal balance
of approximately $18,185)
Interest expense on mortgages in connection with the Harborside acquisition on 10,841
November 4, 1996 (fixed interest rate of 7.32 percent on $107,912 and initial rate
of 6.99 percent on $42,088)
Interest expense on Teachers Mortgage assumed with the RM Transaction on 13,303
January 31, 1997 (fixed interest rate of 7.18 percent on $185,283)
Interest expense on Mack Assumed Debt ($291,883) with a weighted average 22,530
interest rate of 7.72 percent
Interest expense on West Putnam Mortgage ($12,104) with an effective 789
interest rate of 6.52 percent
Interest expense on McGarvey Mortgage ($8,354) with a weighted average 519
effective interest rate of 6.24 percent
Interest expense on Prudential Term Loan ($200,000) at a weighted average 13,700
interest rate of 6.85 percent
14
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997
(in thousands)
- --------------------------------------------------------------------------------
Interest expense on pro forma drawings on the Company's credit facilities of 36,644
$523,486 at a weighted average rate of 7.00 percent
Historical amortization of deferred mortgage, finance and title costs for the 983
year ended December 31, 1997
-------
Pro forma interest expense for the year ended December 31, 1997: 105,667
Company historical interest expense 39,078
Pro Forma Adjustment: $66,589
-------
-------
Interest expense can be effected by increases and decreases in the
variable rates under the Company's various floating rate debt. For
example, a one-eight percent change in such variable interest rates will
result in a $1,055 change for the year ended December 31, 1997.
(d) Represents pro forma minority interest computed as follows:
Income before extraordinary item and minority interest $142,439
Pro forma dividend yield of 6.75 percent on the Preferred $15,563
Units with a par value of $230,562
Income allocable to common stockholders of the Company and 126,876
unitholders in the Operating Partnership -------
Allocation to minority interest based upon weighted average 13,360
percentage of Common Units outstanding of 10.53 percent
-------
Pro Forma minority interest for the Year Ended December 31, 1997 28,923
Company historical including amount related to the beneficial 31,379
conversion feature of the Preferred Units of $26,801 (h)
-------
Pro Forma Adjustment: $(2,456)
-------
-------
(e) The following is a reconciliation of the historical basic weighted average
common shares outstanding to the pro forma basic weighted average common
shares outstanding (shares in thousands):
Historical basic weighted average shares outstanding 39,266
Effect of shares issued in connection with the 1997 and 1998 18,045
stock offerings
Effect of vesting of 199 shares on an accelerated basis as a result of 199
the Mack Transaction --------
Pro forma basic weighted average shares outstanding 57,510
-------
-------
15
MACK-CALI REALTY CORPORATION
Notes to Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997
(in thousands)
- --------------------------------------------------------------------------------
(f) Diluted pro forma net income before extraordinary item per share is not
presented since common stock equivalents and the Preferred Units are not
dilutive.
(g) Represents pro forma reduction for interest income earned on investments of
proceeds from the Company's November 1996 stock offering ($835).
(h) The charge related to the beneficial conversion feature of the preferred
units ($26,801) and the non-recurring merger-related charges ($46,519) were
excluded for pro forma purposes.
16
MACK-CALI REALTY CORPORATION
Estimated Twelve Month Pro Forma Statement of (unaudited)
Taxable Net Operating Income and Operating Funds Available
- --------------------------------------------------------------------------------
The following unaudited statement is a Pro Forma estimate for a twelve month
period of taxable income and funds available from operations of the Company. The
Pro Forma statement is based on the Company's historical operating results for
the twelve month period ended March 31, 1998, adjusted for historical operations
of the properties acquired or to be acquired during the period April 1, 1997 to
June 5, 1998 (as reported in this Current Report and previous Form 8-K and 8-K/A
filings of the Company dated January 16, 1998, December 11, 1997, September 19,
1997, and September 18, 1997) and certain items related to operations which can
be factually supported. This statement does not purport to forecast actual
operating results for any period in the future.
This statement should be read in conjunction with (i) the financial statements
of the Company and (ii) the Pro Forma financial statements of the Company.
Estimate of Taxable Net Operating Income (in thousands):
Mack-Cali Realty Corporation Pro Forma income before minority interest for the
twelve month period ended March 31, 1998,
exclusive of depreciation and amortization (Note 1).................................. 218,403
Net adjustment for tax basis revenue recognition (Note 2).............................. (1,121)
Estimated tax deduction from the exercise and sale of stock
options under the Company's Employee Stock Option Plan............................... (5,158)
Estimated tax depreciation and amortization (Note 3)................................... (67,560)
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Pro Forma taxable income before allocation to minority interest and....................
dividends deduction.................................................................. 144,564
Estimated allocation to minority interest (Note 4)..................................... (30,766)
Estimated dividends deduction (Note 5)................................................. (115,629)
---------
$ (1,831)
Pro Forma taxable net operating income $ 0
---------
---------
Estimate of Operating Funds Available (in thousands):
Pro Forma taxable operating income before allocation to minority
interests and dividends deduction $ 144,564
Add: Pro Forma depreciation and amortization 67,560
---------
Estimated Pro Forma operating funds available (Note 6) $ 212,124
---------
---------
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Note 1 - The Pro Forma income before minority interest represents the Company's
income before minority interest for the twelve month period ended
March 31, 1998.
Note 2 - Represents the net adjustment to (i) recognize prepaid rent and (ii)
reverse the effect of rental revenue recognition on a straight line
basis.
Note 3 - Tax depreciation for the Company is based upon the original cost
or purchase price allocated to the buildings, depreciated on a
straight-line method over their respective tax lives.
Note 4 - Estimated allocation of taxable income to minority
interests is based on a 18.84 percent minority interest in the
operating partnership after certain gross income and depreciation
adjustments, with a special allocation of depreciation on properties
included in the Initial Public Offering and subsequent acquisitions
where Operating Units were issued as part of the consideration in the
transaction.
Note 5 - Estimated dividends deduction is based on 57,814,529 shares
outstanding at the dividend rate of $2.00 per share. Shares
outstanding, on a Pro Forma basis, are 57,814,529.
Note 6 - Operating funds available does not represent cash generated from
operating activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available to fund
cash needs.
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