Quarterly report pursuant to Section 13 or 15(d)

Deferred Charges, Goodwill And Other Assets, Net

v3.20.2
Deferred Charges, Goodwill And Other Assets, Net
6 Months Ended
Jun. 30, 2020
Deferred Charges, Goodwill And Other Assets [Line Items]  
Deferred Charges, Goodwill And Other Assets, Net 5.    DEFERRED CHARGES, GOODWILL AND OTHER ASSETS, NET

June 30,

December 31,

(dollars in thousands)

2020

2019

Deferred leasing costs

$

140,527

$

142,424

Deferred financing costs - unsecured revolving credit facility (a)

5,559

5,559

146,086

147,983

Accumulated amortization

(60,286)

(59,522)

Deferred charges, net

85,800

88,461

Notes receivable (b)

1,417

1,625

In-place lease values, related intangibles and other assets, net

80,051

86,092

Goodwill (c)

2,945

2,945

Right of use assets (d)

22,604

22,604

Prepaid expenses and other assets, net (e)

45,087

73,375

Total deferred charges, goodwill and other assets, net (f)

$

237,904

$

275,102

(a)Deferred financing costs related to all other debt liabilities (other than for the unsecured revolving credit facility) are netted against those debt liabilities for all periods presented. See Note 2: Significant Accounting Policies – Deferred Financing Costs.

(b)Includes as of June 30, 2020 and December 31, 2019, respectively, an interest-free note receivable with a net present value of $1.4 million and $1.6 million which matures in April 2023. The Company believes this balance is fully collectible.

(c)All goodwill is attributable to the Company’s Multi-family Real Estate and Services segment.

(d)Balance recorded starting in 2019, pursuant to the Company’s adoption of ASU 2016-02 (Topic 842). This amount has a corresponding liability of $23.8 million, which is included in Accounts payable, accrued expense and other liabilities. See Note 13: Commitments and Contingencies – Ground Lease agreements for further details.

(e)Includes as of June 30, 2020 and December 31, 2019, zero and $28.1 million, respectively, of funds available with the Company’s qualified intermediary.

(f)Includes as of June 30, 2020 and December 31, 2019, $67.8 million and $68.6 million, respectively, for properties classified as discontinued operations

DERIVATIVE FINANCIAL INSTRUMENTS

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. During the year ended December 31, 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. As of June 30, 2020, the Company did not have any outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk

During 2019, in connection with the paydown of the Company’s outstanding term loans, the Company terminated interest rate swaps with the corresponding notional amount.  These paydowns resulted in the Company accelerating the reclassification of gains from other comprehensive income to earnings as a result of the hedged forecasted transactions no longer being probable to occur, amounting to $0.5 million and $1.8 million for the three and six months ended June 30, 2019. No additional amounts were recorded for the three and six months ended June 30, 2020.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates no additional amount to be reclassified to interest expense.

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statement of Operations for the six months ending June 30, 2020 and 2019 (dollars in thousands):

Derivatives in Cash Flow Hedging Relationships

Amount of Gain or (Loss) Recognized in OCI on Derivative

Location of Gain or (Loss) Reclassified from Accumulated OCI into Income

Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income

Location of Gain or (Loss) Recognized in Income on Derivative

Amount of Gain or (Loss) Recognized in Income on Derivative and Reclassification for Forecasted Transactions No Longer Probable of Occurring)

Total Amount of Interest Expense presented in the consolidated statements

2020

2019

2020

2019

2020

2019

2020

2019

Three months ended June 30,

Interest rate swaps

$

-

$

(2,812)

Interest expense

$

-

$

1,297

Interest and other investment income (loss)

$

-

$

515

$

$

(20,612)

$

(22,207)

Six months ended June 30,

Interest rate swaps

$

-

$

(4,413)

Interest expense

$

16

$

2,868

$

-

$

1,794

$

(41,530)

$

(45,688)

Credit-risk-related Contingent Features

The Company had agreements with each of its derivative counterparties that contained a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness was accelerated by the lender due to the Company's default on the indebtedness. As of June 30, 2020, the Company did not have any outstanding derivatives.

 
Mack-Cali Realty LP [Member]  
Deferred Charges, Goodwill And Other Assets [Line Items]  
Deferred Charges, Goodwill And Other Assets, Net 5.    DEFERRED CHARGES, GOODWILL AND OTHER ASSETS, NET

June 30,

December 31,

(dollars in thousands)

2020

2019

Deferred leasing costs

$

140,527

$

142,424

Deferred financing costs - unsecured revolving credit facility (a)

5,559

5,559

146,086

147,983

Accumulated amortization

(60,286)

(59,522)

Deferred charges, net

85,800

88,461

Notes receivable (b)

1,417

1,625

In-place lease values, related intangibles and other assets, net

80,051

86,092

Goodwill (c)

2,945

2,945

Right of use assets (d)

22,604

22,604

Prepaid expenses and other assets, net (e)

45,087

73,375

Total deferred charges, goodwill and other assets, net (f)

$

237,904

$

275,102

(a)Deferred financing costs related to all other debt liabilities (other than for the unsecured revolving credit facility) are netted against those debt liabilities for all periods presented. See Note 2: Significant Accounting Policies – Deferred Financing Costs.

(b)Includes as of June 30, 2020 and December 31, 2019, respectively, an interest-free note receivable with a net present value of $1.4 million and $1.6 million which matures in April 2023. The Company believes this balance is fully collectible.

(c)All goodwill is attributable to the Company’s Multi-family Real Estate and Services segment.

(d)Balance recorded starting in 2019, pursuant to the Company’s adoption of ASU 2016-02 (Topic 842). This amount has a corresponding liability of $23.8 million, which is included in Accounts payable, accrued expense and other liabilities. See Note 13: Commitments and Contingencies – Ground Lease agreements for further details.

(e)Includes as of June 30, 2020 and December 31, 2019, zero and $28.1 million, respectively, of funds available with the Company’s qualified intermediary.

(f)Includes as of June 30, 2020 and December 31, 2019, $67.8 million and $68.6 million, respectively, for properties classified as discontinued operations

DERIVATIVE FINANCIAL INSTRUMENTS

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. During the year ended December 31, 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. As of June 30, 2020, the Company did not have any outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk

During 2019, in connection with the paydown of the Company’s outstanding term loans, the Company terminated interest rate swaps with the corresponding notional amount.  These paydowns resulted in the Company accelerating the reclassification of gains from other comprehensive income to earnings as a result of the hedged forecasted transactions no longer being probable to occur, amounting to $0.5 million and $1.8 million for the three and six months ended June 30, 2019. No additional amounts were recorded for the three and six months ended June 30, 2020.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates no additional amount to be reclassified to interest expense.

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statement of Operations for the six months ending June 30, 2020 and 2019 (dollars in thousands):

Derivatives in Cash Flow Hedging Relationships

Amount of Gain or (Loss) Recognized in OCI on Derivative

Location of Gain or (Loss) Reclassified from Accumulated OCI into Income

Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income

Location of Gain or (Loss) Recognized in Income on Derivative

Amount of Gain or (Loss) Recognized in Income on Derivative and Reclassification for Forecasted Transactions No Longer Probable of Occurring)

Total Amount of Interest Expense presented in the consolidated statements

2020

2019

2020

2019

2020

2019

2020

2019

Three months ended June 30,

Interest rate swaps

$

-

$

(2,812)

Interest expense

$

-

$

1,297

Interest and other investment income (loss)

$

-

$

515

$

$

(20,612)

$

(22,207)

Six months ended June 30,

Interest rate swaps

$

-

$

(4,413)

Interest expense

$

16

$

2,868

$

-

$

1,794

$

(41,530)

$

(45,688)

Credit-risk-related Contingent Features

The Company had agreements with each of its derivative counterparties that contained a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness was accelerated by the lender due to the Company's default on the indebtedness. As of June 30, 2020, the Company did not have any outstanding derivatives.