SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported ) May 24, 1999
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
of 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
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N/A
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
For the period January 1, 1998 through December 31, 1998, Mack-Cali Realty
Corporation and subsidiaries (collectively, the "Company") acquired 60
properties aggregating approximately 5.9 million square feet in 17 separate
transactions, comprised of 39 office properties and 21 office/flex properties.
Additionally, during the same period, in connection with two of the transactions
included above, the Company entered into contracts to acquire two additional
office properties and four additional office/flex properties.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Unaudited pro forma financial information for the Company's condensed
consolidated statement of operations for the year ended December 31,
1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Mack-Cali
Realty Corporation has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MACK-CALI REALTY CORPORATION
May 24, 1999 By: /s/ Mitchell E. Hersh
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Mitchell E. Hersh
Chief Executive Officer
May 24, 1999 By: /s/ Barry Lefkowitz
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Barry Lefkowitz
Executive Vice President and
Chief Financial Officer
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MACK-CALI REALTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1998
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The unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1998 is presented as if each of the following had
occurred on January 1, 1998: (i) the acquisition by the Company of the
properties known as the McGarvey Portfolio, 500 West Putnam, Mountainview, Cielo
Center, Prudential Business Campus, the Pacifica Portfolio, Morris County
Financial Center, 3600 S. Yosemite, 500 College Road East, D.C. Buildings, 400
S. Colorado, Eastpoint I & II, 40 Richards Avenue and 7 Skyline Drive
(collectively, "1998 Acquisitions") and (ii) the Company's 1998 stock offerings.
Such pro forma information is based upon the historical consolidated results
of operations of the Company for the year ended December 31, 1998, after
giving effect to the transactions described above. The pro forma condensed
consolidated statement of operations should be read in conjunction with the
historical financial statements and notes thereto of the Company included in
the Company's Form 10-K for the year ended December 31, 1998.
The unaudited pro forma condensed consolidated statement of operations is 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.
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MACK-CALI REALTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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1998
Company Acquisition Pro Forma Company
REVENUES Historical Historical (a) Adjustments Pro Forma
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Base rents $ 427,528 $ 22,134 $ 3,067 (b) $ 452,729
Escalations and recoveries from tenants 51,981 2,839 -- 54,820
Parking and other 10,712 990 -- 11,702
Interest income 2,423 -- -- 2,423
Equity in earnings of unconsolidated
joint ventures 1,055 (68) -- 987
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Total revenues 493,699 25,895 3,067 522,661
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EXPENSES
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Real estate taxes 48,297 2,966 -- 51,263
Utilities 38,440 2,168 -- 40,608
Operating services 62,967 2,860 -- 65,827
General and administrative 25,572 1,329 -- 26,901
Depreciation and amortization 78,916 -- 4,494 (b) 83,410
Interest expense 88,043 -- 14,785 (c) 102,828 (c)
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Total expenses 342,235 9,323 19,279 370,837
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Income before minority interest
and extraordinary item 151,464 16,572 (16,212) 151,824
Minority interest 32,513 -- 731 (d) 33,244 (d)
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Income before extraordinary item $ 118,951 $ 16,572 $ (16,943) $ 118,580
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Basic weighted average common shares
outstanding (e) 55,840 57,652 (e)
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Diluted weighted average common
shares outstanding (f) 63,893 66,338 (f)
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Basic income before extraordinary item
per common share $ 2.13 $ 2.06
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Diluted income before extraordinary
item per common share $ 2.11 $ 2.04
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MACK-CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 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 December 31, 1998, as follows:
Parking Real
Acquisition Base Escalations/ and Estate Operating General and
Property (1) Date Rents Recoveries Other Taxes Utilities Services Administrative
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McGarvey Portfolio Jan. 30, 1998 (2) $ 1,003 $ 368 $ -- $ 238 $ 20 $ 115 $ 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 4,119 615 24 447 287 339 132
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 592 3 27 44 74 115 18
500 College Road East May 22, 1998 1,108 210 -- 124 227 134 52
D.C. Buildings June 1, 1998 4,248 357 276 565 227 609 264
400 S. Colorado June 3, 1998 719 46 -- 82 81 157 43
Eastpoint I & II July 16, 1998 976 73 -- 68 124 235 55
40 Richards Avenue Sept. 10, 1998 1,829 202 6 269 195 194 79
7 Skyline Drive Sept. 15, 1998 1,401 99 2 148 213 237 1
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Total 1998 Acquisitions $22,134 $2,839 $ 990 $2,966 $2,168 $2,860 $1,329
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(1) 2115 Linwood, 1510 Lancer 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 year ended December
31, 1998.
(2) Acquisition of four of the 21 properties in this portfolio has not yet been
completed; results for period include twelve-month period of operations for
those pending acquisitions.
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MACK-CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
(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 December 31, 1998, as follows:
Acquisition Base Rent
Property (1) Date Adjustment (2) Depreciation (3)
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McGarvey Portfolio Jan. 30, 1998 (4) $ 308 $ 334
500 West Putnam Feb. 5, 1998 14 36
Mountainview Feb. 25, 1998 3 86
Cielo Center Mar. 12, 1998 88 174
Pacifica Portfolio Mar. 27, 1998 1,848 945
Prudential Bus. Campus Mar. 27, 1998 463 758
Morris County Fin. Ctr. Mar. 30, 1998 (27) 313
3600 S. Yosemite May 13, 1998 33 122
500 College Road East May 22, 1998 182 176
D.C. Buildings June 1, 1998 88 725
400 S. Colorado June 3, 1998 24 112
Eastpoint I & II July 16, 1998 28 164
40 Richards Avenue Sept. 10, 1998 15 319
7 Skyline Drive Sept. 15, 1998 -- 230
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Total Pro Forma Adj. $ 3,067 $ 4,494
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(1) 2115 Linwood, 1510 Lancer 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 year ended December
31, 1998.
(2) Adjustments to base rent to reflect the resetting of the straight-line rent
for all leases in effect from January 1, 1998 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 twelve-month period of operations for
those pending acquisitions.
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MACK-CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
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(c) Pro forma adjustment to interest expense for the year ended December 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 year ended
December 31, 1998 is computed as follows:
Interest expense on loan assumed with Fair Lawn acquisition on March 3, 1995 $ 1,471
(fixed interest rate of 8.25 percent on average outstanding principal balance
of approximately $17,830)
Interest expense on mortgages assumed in connection with the Harborside 10,874
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 13,303
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 24,798
Interest expense on West Putnam Mortgage ($12,104) with an effective 789
interest rate of 6.52 percent
Interest expense on McGarvey Mortgages ($8,354) with a weighted average 519
effective interest rate of 6.21 percent
Interest expense on Prudential Term Loan ($200,000) with an 13,580
interest rate of 6.79 percent
Interest expense on pro forma drawings on the Company's credit facilities of 35,914
$542,018 at a weighted average interest rate of 6.63 percent
Historical amortization of deferred mortgage, finance and title costs for the 1,580
year ended December 31, 1998
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Pro forma interest expense for the year ended December 31, 1998: 102,828
Company historical interest expense: 88,043
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Pro Forma Adjustment $ 14,785
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Interest expense can be affected 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
an $1,078 change for the year ended December 31, 1998.
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MACK-CALI REALTY CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)
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(d) Represents pro forma minority interest computed as follows:
Income before minority interest $151,824
Preferred unit dividend $ 16,313
Income allocable to common stockholders of the Company and
unitholders in the Operating Partnership $135,511
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Allocation to minority interest based upon weighted average
percentage of Common Units outstanding of 12.49 percent 16,931
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Pro forma minority interest for the year ended December 31, 1998 33,244
Company historical 32,513
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Pro Forma Adjustment: $ 731
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(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 55,840
Effect of pro forma adjustment for shares issued in connection
with the 1998 stock offerings 1,812
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Pro forma basic weighted average common shares outstanding 57,652
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(f) The following is a reconciliation of the historical diluted average common
shares outstanding to the pro forma diluted weighted average common shares
outstanding (shares in thousands):
Historical diluted weighted average common shares outstanding 63,893
Effect of pro forma adjustment for dilutive securities issued in connection
with the 1998 Acquisitions 2,445
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Pro forma diluted weighted average common shares outstanding 66,338
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