UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-13274
MACK-CALI REALTY CORPORATION
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(Exact Name of Registrant as specified in its charter)
MARYLAND 22-3305147
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11 COMMERCE DRIVE, CRANFORD, NEW JERSEY 07016-3599
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(Address of principal executive offices) (Zip code)
(908) 272-8000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
(Title of Each Class) (Name of Each Exchange on Which Registered)
COMMON STOCK, $0.01 PAR VALUE NEW YORK STOCK EXCHANGE
PACIFIC EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. |X|
As of February 14, 2002, the aggregate market value of the voting stock
held by non-affiliates of the registrant was $1,777,099,170. The aggregate
market value was computed with references to the closing price on the New York
Stock Exchange on such date. This calculation does not reflect a determination
that persons are affiliates for any other purpose.
As of February 14, 2002, 56,923,090 shares of common stock, $0.01 par
value, of the Company ("Common Stock") were outstanding.
LOCATION OF EXHIBIT INDEX: The index of exhibits is contained in Part IV
herein on page number 62.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's
definitive proxy statement to be issued in conjunction with the registrant's
annual meeting of shareholders to be held on May 14, 2002 are incorporated by
reference in Part III of this Form 10-K.
TABLE OF CONTENTS
FORM 10-K
PART I PAGE NO.
--------
Item 1 Business ............................................... 3
Item 2 Properties ............................................. 15
Item 3 Legal Proceedings ...................................... 46
Item 4 Submission of Matters to a Vote of Security Holders .... 46
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters ................................. 46
Item 6 Selected Financial Data ................................ 48
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations ................. 49
Item 7a Quantitative and Qualitative Disclosures About Market
Risk ................................................ 61
Item 8 Financial Statements and Supplementary Data ............ 61
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ................. 61
PART III
Item 10 Directors and Executive Officers of the Registrant ..... 62
Item 11 Executive Compensation ................................. 62
Item 12 Security Ownership of Certain Beneficial Owners and
Management .......................................... 62
Item 13 Certain Relationships and Related Transactions ......... 62
PART IV
Item 14 Exhibits, Financial Statements, Schedules and Reports
on Form 8-K ......................................... 62
2
PART I
ITEM 1. BUSINESS
GENERAL
Mack-Cali Realty Corporation, a Maryland corporation (together with its
subsidiaries, the "Company"), is a fully-integrated, self-administered and
self-managed real estate investment trust ("REIT") that owns and operates a real
estate portfolio comprised predominantly of Class A office and office/flex
properties located primarily in the Northeast. The Company performs
substantially all commercial real estate leasing, management, acquisition,
development and construction services on an in-house basis. Mack-Cali Realty
Corporation was incorporated on May 24, 1994. The Company's executive offices
are located at 11 Commerce Drive, Cranford, New Jersey 07016, and its telephone
number is (908) 272-8000. The Company has an internet website at
www.mack-cali.com.
As of December 31, 2001, the Company owned or had interests in 267 properties,
aggregating approximately 28.4 million square feet (collectively, the
"Properties"), plus developable land. The Properties are comprised of: (a) 259
wholly-owned or Company-controlled properties consisting of 153 office buildings
and 94 office/flex buildings totaling approximately 26.6 million square feet,
six industrial/warehouse buildings totaling approximately 387,400 square feet,
one multi-family residential complex consisting of 124 units, two stand-alone
retail properties and three land leases (collectively, the "Consolidated
Properties"); and (b) seven office buildings and one office/flex building
aggregating 1.4 million square feet, owned by unconsolidated joint ventures in
which the Company has investment interests. Unless otherwise indicated, all
references to square feet represent net rentable area. As of December 31, 2001,
the office, office/flex and industrial/warehouse properties included in the
Consolidated Properties (excluding development properties in service for less
than 12 months) were 94.6 percent leased to approximately 2,300 tenants. See
Item 2: Properties. The Properties are located in 10 states, primarily in the
Northeast, and the District of Columbia.
The Company's strategy has been to focus its operations, acquisition and
development of office properties in markets and sub-markets where it believes it
is, or can become, a significant and preferred owner and operator. The Company
will continue this strategy by expanding, through acquisitions and/or
development in Northeast markets and sub-markets where it has, or can achieve,
similar status. The Company believes that its Properties have excellent
locations and access and are well-maintained and professionally managed. As a
result, the Company believes that its Properties attract high quality tenants
and achieve among the highest rental, occupancy and tenant retention rates
within their markets. The Company also believes that its extensive market
knowledge provides it with a significant competitive advantage which is further
enhanced by its strong reputation for, and emphasis on, delivering highly
responsive, professional management services. See "Business Strategies".
As of December 31, 2001, executive officers and directors of the Company and
their affiliates owned approximately 11.0 percent of the Company's outstanding
shares of Common Stock (including Units redeemable or convertible into shares of
Common Stock). As used herein, the term "Units" refers to limited partnership
interests in Mack-Cali Realty, L.P., a Delaware limited partnership ("Operating
Partnership"), through which the Company conducts its real estate activities.
The Company's executive officers have been employed by the Company and/or its
predecessor companies for an average of approximately 14 years.
3
BUSINESS STRATEGIES
OPERATIONS
REPUTATION: The Company has established a reputation as a highly-regarded
landlord with an emphasis on delivering quality tenant services in buildings it
owns and/or manages. The Company believes that its continued success depends in
part on enhancing its reputation as an operator of choice, which will facilitate
the retention of current tenants and the attraction of new tenants. The Company
believes it provides a superior level of service to its tenants, which should in
turn allow the Company to outperform the market with respect to occupancy rates,
as well as improve tenant retention.
COMMUNICATION WITH TENANTS: The Company emphasizes frequent communication with
tenants to ensure first-class service to the Properties. Property managers
generally are located on site at the Properties to provide convenient access to
management and to ensure that the Properties are well-maintained. Property
management's primary responsibility is to ensure that buildings are operated at
peak efficiency in order to meet both the Company's and tenants' needs and
expectations. Property managers additionally budget and oversee capital
improvements and building system upgrades to enhance the Properties' competitive
advantages in their markets and to maintain the quality of the Company's
properties.
Additionally, the Company's in-house leasing representatives develop and
maintain long-term relationships with the Company's diverse tenant base and
coordinate leasing, expansion, relocation and build-to-suit opportunities within
the Company's portfolio. This approach allows the Company to offer office space
in the appropriate size and location to current or prospective tenants in any of
its sub-markets.
GROWTH
The Company plans to continue to own and operate a portfolio of properties in
high-barrier-to-entry markets, with a primary focus in the Northeast. The
Company's primary objectives are to maximize funds from operations and to
enhance the value of its portfolio through effective management, acquisition,
development and property sales strategies, as follows:
INTERNAL GROWTH: The Company seeks to maximize the value of its existing
portfolio through implementing operating strategies designed to produce
increased effective rental and occupancy rates and decreased tenant installation
costs. The Company continues to pursue internal growth through re-leasing space
at higher effective rents with contractual rent increases and developing or
redeveloping space for its diverse base of high credit tenants, including IBM
Corporation, Nabisco Inc. and Allstate Insurance Company. In addition, the
Company seeks economies of scale through volume discounts to take advantage of
its size and dominance in particular sub-markets, and operating efficiencies
through the use of in-house management, leasing, marketing, financing,
accounting, legal, development and construction services.
ACQUISITIONS: The Company also believes that growth opportunities exist through
acquiring operating properties or properties for redevelopment with attractive
returns in its core Northeast sub-markets where, based on its expertise in
leasing, managing and operating properties, it believes it is, or can become, a
significant and preferred owner and operator. The Company intends to acquire,
invest in or redevelop additional properties that: (i) provide attractive
initial yields with potential for growth in cash flow from operations; (ii) are
well-located, of high quality and competitive in their respective sub-markets;
(iii) are located in its existing sub-markets or in sub-markets in which the
Company can become a significant and preferred owner and operator; and (iv) have
been under-managed or are otherwise capable of improved performance through
intensive management, capital improvements and/or leasing that should result in
increased occupancy and rental revenues.
DEVELOPMENT: The Company seeks to selectively develop additional properties
where it believes such development will result in a favorable risk-adjusted
return on investment in coordination with the above operating strategies. Such
development primarily will occur: (i) when leases have been executed prior to
construction; (ii) in stable core Northeast sub-markets where the demand for
such space exceeds available supply; and (iii) where the Company is, or can
become, a significant and preferred owner and operator.
4
The Company, directly or through joint ventures, is underway on the construction
of six office and office/flex buildings. The most significant of this
development activity is currently at the Company's Harborside Financial Center
office complex in Jersey City, New Jersey. Three of the six properties currently
under construction are located at the complex and consist of two office towers,
aggregating approximately 1.6 million square feet, and a 350-room Hyatt Regency
hotel. See "Liquidity and Capital Resources - Capitalization."
PROPERTY SALES: The Company plans to sell substantially all of its properties
located in the Southwestern and Western regions, using such proceeds primarily
to invest in property acquisitions and development projects in its core
Northeast markets. Additionally, while management's principal intention is to
own and operate its properties on a long-term basis, it is constantly assessing
the attributes of each of its properties, with a particular focus on the supply
and demand fundamentals of the sub-markets in which they are located. Based on
these ongoing assessments, the Company may, from time to time, decide to sell
any of its properties.
FINANCIAL
The Company currently intends to maintain a ratio of debt-to-undepreciated
assets (total debt of the Company as a percentage of total undepreciated assets)
of approximately 50 percent or less. As of December 31, 2001, the Company's
total debt constituted approximately 41.5 percent of total undepreciated assets
of the Company. The Company has three investment grade credit ratings. Standard
& Poor's Rating Services ("S&P") and Fitch, Inc. ("Fitch") have each assigned
their BBB rating to existing and prospective senior unsecured debt of the
Operating Partnership. S&P and Fitch have also assigned their BBB- rating to
prospective preferred stock offerings of the Company. Moody's Investors Service
("Moody's") has assigned its Baa3 rating to existing and prospective senior
unsecured debt of the Operating Partnership and its Ba1 rating to prospective
preferred stock offerings of the Company. Although there is no limit in the
Company's organizational documents on the amount of indebtedness that the
Company may incur or the requirement for maintenance of investment grade credit
ratings, the Company has entered into certain financial agreements which contain
covenants that limit the Company's ability to incur indebtedness under certain
circumstances. The Company intends to conduct its operations so as to best be
able to maintain its investment grade rated status. The Company intends to
utilize the most appropriate sources of capital for future acquisitions,
development, capital improvements and other investments, which may include funds
from operating activities, proceeds from property sales, short-term and
long-term borrowings (including draws on the Company's revolving credit
facility), and the issuance of additional debt or equity securities.
EMPLOYEES
As of December 31, 2001, the Company had approximately 380 employees.
COMPETITION
The leasing of real estate is highly competitive. The Properties compete for
tenants with lessors and developers of similar properties located in their
respective markets primarily on the basis of location, rent charged, services
provided, and the design and condition of the Properties. The Company also
experiences competition when attempting to acquire or dispose of real estate,
including competition from domestic and foreign financial institutions, other
REITs, life insurance companies, pension trusts, trust funds, partnerships and
individual investors.
REGULATIONS
Many laws and governmental regulations are applicable to the Properties and
changes in these laws and regulations, or their interpretation by agencies and
the courts, occur frequently.
5
Under various laws and regulations relating to the protection of the
environment, an owner of real estate may be held liable for the costs of removal
or remediation of certain hazardous or toxic substances located on or in the
property. These laws often impose liability without regard to whether the owner
was responsible for, or even knew of, the presence of such substances. The
presence of such substances may adversely affect the owner's ability to rent or
sell the property or to borrow using such property as collateral and may expose
it to liability resulting from any release of, or exposure to, such substances.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances at another location may also be liable for the costs of removal or
remediation of such substances at the disposal or treatment facility, whether or
not such facility is owned or operated by such person. Certain environmental
laws impose liability for release of asbestos-containing materials into the air,
and third parties may also seek recovery from owners or operators of real
properties for personal injury associated with asbestos-containing materials and
other hazardous or toxic substances.
In connection with the ownership (direct or indirect), operation, management and
development of real properties, the Company may be considered an owner or
operator of such properties or as having arranged for the disposal or treatment
of hazardous or toxic substances and, therefore, potentially liable for removal
or remediation costs, as well as certain other related costs, including
governmental penalties and injuries to persons and property.
There can be no assurance that (i) future laws, ordinances or regulations will
not impose any material environmental liability, (ii) the current environmental
condition of the Properties will not be affected by tenants, by the condition of
land or operations in the vicinity of the Properties (such as the presence of
underground storage tanks), or by third parties unrelated to the Company, or
(iii) the Company's assessments reveal all environmental liabilities and that
there are no material environmental liabilities of which the Company is aware.
If compliance with the various laws and regulations, now existing or hereafter
adopted, exceeds the Company's budgets for such items, the Company's ability to
make expected distributions to stockholders could be adversely affected.
There are no other laws or regulations which have a material effect on the
Company's operations, other than typical federal, state and local laws affecting
the development and operation of real property, such as zoning laws.
INDUSTRY SEGMENTS
The Company operates in only one industry segment - real estate. The Company
does not have any foreign operations and its business is not seasonal.
RECENT DEVELOPMENTS
In September 2001, the Company announced a 1.6 percent increase in its quarterly
dividend, commencing with the Company's dividend with respect to the third
quarter of 2001, from $0.61 per share of Common Stock ($2.44 per share of Common
Stock on an annualized basis) to $0.62 per share of Common Stock ($2.48 per
share of Common Stock on an annualized basis). The Company declared a cash
dividend of $0.62 per share on December 18, 2001 to shareholders of record as of
January 4, 2002, with respect to the fourth quarter of 2001. The dividend was
paid on January 22, 2002. The Company has increased its quarterly dividend for
seven consecutive years representing an increase of 53.5 percent over the
period.
In 2001, the Company:
o acquired ten office and office/flex properties aggregating 901,888
square feet at a total cost of approximately $96.6 million;
o placed in service two office properties aggregating 405,254 square
feet at a total cost of approximately $82.3 million;
o acquired two developable land parcels at a total cost of
approximately $3.7 million; and
o sold seven office properties aggregating 1,021,823 square feet, a
multi-family residential property and a vacant pier for aggregate
net sales proceeds of approximately $164.1 million.
Additionally, in 2001, the Company, through unconsolidated joint ventures,
placed in service a 369,682 square foot office property; and sold two office
properties, aggregating 372,926 square feet, for aggregate net sales proceeds of
approximately $84.5 million. See Note 4 to the Financial Statements for further
information regarding joint venture activity.
6
OPERATING PROPERTY ACQUISITIONS
The Company acquired the following operating properties during the year ended
December 31, 2001:
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Investment by
Acquisition # of Rentable Company (a)
Date Property/Portfolio Name Location Bldgs. Square Feet (IN THOUSANDS)
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OFFICE:
4/6/01 4 & 6 Campus Drive Parsippany, Morris County, NJ 2 295,766 $48,404
11/6/01 9 Campus Drive (b) Parsippany, Morris County, NJ 1 156,495 15,073
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Total Office Property Acquisitions: 3 452,261 $63,477
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OFFICE/FLEX:
2/14/01 31 & 41 Twosome Drive Moorestown, Burlington County, NJ 2 127,250 $7,155
4/27/01 1245 & 1247 N. Church St,
2 Twosome Drive Moorestown, Burlington County, NJ 3 154,200 11,083
8/3/01 5 & 6 Skyline Drive (c) Hawthorne, Westchester County, NY 2 168,177 14,846
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Total Office/Flex Property Acquisitions: 7 449,627 $33,084
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Total Operating Property Acquisitions: 10 901,888 $96,561
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(a) Transactions were funded primarily through borrowings on the Company's
revolving credit facility, from net proceeds received in the sale or sales
of rental property, and/or from the Company's cash reserves.
(b) The Company acquired the remaining 50 percent interest in this property
from an unconsolidated joint venture. Investment by Company represents the
net cost of acquiring the remaining interest.
(c) The property was acquired from an entity whose principals include Timothy
M. Jones, Robert F. Weinberg and Martin S. Berger, each of whom are
affiliated with the Company as the President of the Company, a current
member of the Board of Directors and a former member of the Board of
Directors of the Company, respectively. See Note 18 to the Financial
Statements.
PROPERTIES PLACED IN SERVICE
The Company placed in service the following properties during the year ended
December 31, 2001:
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Investment by
Date Placed # of Rentable Company (a)
in Service Property/Portfolio Name Location Bldgs. Square Feet (IN THOUSANDS)
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OFFICE:
1/15/01 105 Eisenhower Parkway Roseland, Essex County, NJ 1 220,000 $47,328
3/1/01 8181 East Tufts Avenue Denver, Denver County, CO 1 185,254 34,993
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Total Properties Placed in Service 2 405,254 $82,321
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(a) Development costs were funded primarily through draws on the Company's
revolving credit facility.
LAND ACQUISITIONS
On January 5, 2001, the Company acquired approximately 7.1 acres of developable
land located in Littleton, Arapahoe County, Colorado, for approximately $2.7
million. When the Company had committed itself to acquire the land, the Company
had intended to develop the site consistent with its then business strategy. Due
to a change in the Company's strategy, this land is currently held for sale (see
Note 7 to the Financial Statements).
7
On September 13, 2001, the Company acquired approximately 5.0 acres of
developable land located in Elmsford, Westchester County, New York. The land was
acquired for approximately $1.0 million from an entity whose principals include
Timothy M. Jones, Robert F. Weinberg and Martin S. Berger, each of whom are
affiliated with the Company as the President of the Company, a current member of
the Board of Directors and a former member of the Board of Directors of the
Company, respectively. The Company has commenced construction of a fully
pre-leased 33,000 square-foot office/flex building on the acquired land.
PROPERTY SALES
The Company sold the following properties during the year ended December 31,
2001:
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Net Sales Net Book Realized
Sale # of Rentable Proceeds Value Gain/(Loss)
Date Property Name Location Bldgs. Square Feet (IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS)
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OFFICE:
6/1/01 1777 N.E. Loop 410 San Antonio, Bexar County, TX 1 256,137 $21,313 $16,703 $ 4,610
6/15/01 14511 Falling Creek Houston, Harris County, TX 1 70,999 2,982 2,458 524
7/17/01 8214 Westchester Dallas, Dallas County, TX 1 95,509 8,966 8,465 501
8/1/01 2600 Westown Parkway West Des Moines, Polk County, IA 1 72,265 5,165 5,570 (405)
9/26/01 1709 New York Ave, NW Washington, DC 1 166,000 65,151 50,640 14,511
11/14/01 200 Concord Plaza Drive San Antonio, Bexar County, TX 1 248,700 30,927 32,609 (1,682)
12/21/01 5225 Katy Freeway Houston, Harris County, TX 1 112,213 6,887 7,393 (506)
RESIDENTIAL:
6/21/01 Tenby Chase Apartments Delran, Burlington County, NJ 1 327 units 19,336 2,399 16,937
OTHER:
4/3/01 North Pier-Harborside (a) Jersey City, Hudson County, NJ -- n/a 3,357 2,918 439
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Totals: 8 1,021,823 $164,084 $129,155 $34,929
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(a) Net sales proceeds consisted of $1,330 in cash and $2,027 of a note
receivable due in 2002.
In January 2002, the Company sold 25 Martine Avenue, a 124-unit multi-family
residential property located in White Plains, Westchester County, New York, for
net sales proceeds of approximately $17.8 million, which resulted in a gain of
approximately $7.3 million.
FINANCING ACTIVITY
ISSUANCES OF SENIOR UNSECURED NOTES
On January 29, 2001, the Operating Partnership issued $300.0 million face amount
of 7.75 percent senior unsecured notes due February 15, 2011 with interest
payable semi-annually in arrears. The total proceeds from the issuance (net of
selling commissions and discount) of approximately $296.3 million were used to
pay down outstanding borrowings under the 2000 Unsecured Facility (see Note 8 to
the Financial Statements). The senior unsecured notes were issued at a discount
of approximately $1.7 million.
MORTGAGE FINANCING
On May 18, 2001, the Company obtained an additional $70.0 million in proceeds
from Northwestern Mutual Life Insurance Company and Principal Capital
Management, LLC on a mortgage loan secured by Harborside Financial Center Plazas
2 and 3. The mortgage on Plazas 2 and 3, with a balance of $162.0 million at
December 31, 2001, bears interest at a weighted average fixed rate of 7.36
percent and matures in January 2006. Proceeds from the financing were used to
pay down outstanding borrowings on the Company's revolving credit facility.
STOCK REPURCHASES
On September 13, 2000, the Board of Directors authorized an increase to the
Company's repurchase program under which the Company is permitted to purchase up
to an additional $150.0 million of the Company's outstanding common stock
("Repurchase Program"). From that date through February 14, 2002, the Company
purchased for constructive retirement under the Repurchase Program 3.3 million
shares of its outstanding common stock for an aggregate cost of approximately
$91.1 million, of which 1.3 million shares were repurchased in 2001 for a total
cost of $35.4 million. As a result, the Company has a remaining authorization to
repurchase up to an additional $58.9 million of its outstanding common stock,
which it may repurchase from time to time in open market transactions at
prevailing prices or through privately negotiated transactions.
8
RISK FACTORS
Our results from operations and ability to make distributions on our equity and
debt service on our indebtedness may be affected by the risk factors set forth
below. All investors should consider the following risk factors before deciding
to purchase securities of the Company. The Company refers to itself as "we" or
"our" in the following risk factors.
WE ARE DEPENDENT UPON THE ECONOMICS OF THE NORTHEASTERN OFFICE MARKETS.
A majority of our revenues are derived from our properties located in the
Northeast, particularly in New Jersey, New York, Pennsylvania and Connecticut.
Adverse economic developments in this region could adversely impact the
operations of our properties and, therefore, our profitability. Because our
portfolio consists primarily of office and office/flex buildings (as compared to
a more diversified real estate portfolio), a decline in the economy and/or a
decline in the demand for office space may adversely affect our ability to make
distributions or payments to our investors.
The current economic downturn has resulted in a receding real estate market, the
relocation of companies and an uncertain economic future for many businesses. We
are uncertain how long the current downturn will last. The terrorist attacks on
September 11, 2001 in New York and Washington, D.C. (and the uncertainty as to
whether there may be more) may exacerbate this downturn or cause it to linger
and may also result in increases in certain of our expenses for items such as
security. The current economic downturn and the events of September 11 may also
be having a negative economic impact on most industries, including securities,
insurance services, telecommunications and computer systems and other
technology, businesses in which many of our tenants are involved. Such economic
impact may cause our tenants to have difficulty or be unable to meet their
obligations to us.
OUR PERFORMANCE IS SUBJECT TO RISKS ASSOCIATED WITH THE REAL ESTATE INDUSTRY.
GENERAL: Our ability to make distributions or payments to our investors depends
on the ability of our properties to generate funds in excess of operating
expenses (including scheduled principal payments on debt and capital expenditure
requirements). Events or conditions that are beyond our control may adversely
affect our operations and the value of our properties. Such events or conditions
could include:
o changes in the general economic climate;
o changes in local conditions such as oversupply of office space or a
reduction in demand for office space;
o decreased attractiveness of our properties to potential tenants;
o competition from other office and office/flex buildings;
o our inability to provide adequate maintenance;
o increased operating costs, including insurance premiums and real
estate taxes, due to inflation and other factors which may not
necessarily be offset by increased rents;
o changes in laws and regulations (including tax, environmental and
housing laws and regulations) and agency or court interpretations of
such laws and regulations and the related costs of compliance;
o changes in interest rate levels and the availability of financing;
o the inability of a significant number of tenants to pay rent;
o our inability to rent office space on favorable terms; and
o civil unrest, earthquakes and other natural disasters or acts of God
that may result in uninsured losses.
FINANCIALLY DISTRESSED TENANTS MAY BE UNABLE TO PAY RENT: If a tenant defaults,
we may experience delays and incur substantial costs in enforcing our rights as
landlord and protecting our investments. If a tenant files for bankruptcy, a
potential court judgment rejecting and terminating such tenant's lease could
adversely affect our ability to make distributions or payments to our investors.
9
OUR INSURANCE COVERAGE ON OUR PROPERTIES MAY BE INADEQUATE: We currently carry
comprehensive insurance on all of our properties, including insurance for
liability, fire and flood. Our existing insurance policies expire in April 2002.
As a consequence of the September 11, 2001 terrorist attacks, we may be unable
to renew or duplicate our current insurance coverage in adequate amounts or at
reasonable prices. In addition, insurance companies may no longer offer coverage
against certain types of losses, such as losses due to terrorist acts and toxic
mold, or, if offered, these types of insurance may be prohibitively expensive.
If any or all of the foregoing should occur, we may not have insurance coverage
against certain types of losses and/or there may be decreases in the limits of
insurance available. Should an uninsured loss or a loss in excess of our insured
limits occur, we could lose all or a portion of the capital we have invested in
a property or properties, as well as the anticipated future revenue from the
property or properties. Nevertheless, we might remain obligated for any mortgage
debt or other financial obligations related to the property or properties. We
cannot guarantee that material losses in excess of insurance proceeds will not
occur in the future. If any of our properties were to experience a catastrophic
loss, it could seriously disrupt our operations, delay revenue and result in
large expenses to repair or rebuild the property. Such events could adversely
affect our ability to make distributions or payments to our investors.
ILLIQUIDITY OF REAL ESTATE LIMITS OUR ABILITY TO ACT QUICKLY: Real estate
investments are relatively illiquid. Such illiquidity may limit our ability to
react quickly in response to changes in economic and other conditions. If we
want to sell an investment, we might not be able to dispose of that investment
in the time period we desire, and the sales price of that investment might not
recoup or exceed the amount of our investment. The prohibition in the Internal
Revenue Code of 1986, as amended, and related regulations on a real estate
investment trust holding property for sale also may restrict our ability to sell
property. In addition, we acquired a significant number of our properties from
individuals to whom we issued limited partnership units as part of the purchase
price. In connection with the acquisition of these properties, in order to
preserve such individual's tax deferral, we contractually agreed not to sell or
otherwise transfer the properties for a specified period of time, subject to
certain exceptions. As of December 31, 2001, 141 of our properties, with an
aggregate net book value of approximately $1.9 billion, were subject to these
restrictions. The above limitations on our ability to sell our investments could
adversely affect our ability to make distributions or payments to our investors.
AMERICANS WITH DISABILITIES ACT COMPLIANCE COULD BE COSTLY: Under the Americans
with Disabilities Act of 1990, all public accommodations and commercial
facilities must meet certain federal requirements related to access and use by
disabled persons. Compliance with the ADA requirements could involve removal of
structural barriers from certain disabled persons' entrances. Other federal,
state and local laws may require modifications to or restrict further
renovations of our properties with respect to such accesses. Although we believe
that our properties are substantially in compliance with present requirements,
noncompliance with the ADA or related laws or regulations could result in the
United States government imposing fines or private litigants being awarded
damages against us. Such costs may adversely affect our ability to make
distributions or payments to our investors.
ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND MAY BE COSTLY: Various federal, state
and local laws and regulations subject property owners or operators to liability
for the costs of removal or remediation of certain hazardous or toxic substances
located on or in the property. These laws often impose liability without regard
to whether the owner or operator was responsible for or even knew of the
presence of such substances. The presence of or failure to properly remediate
hazardous or toxic substances (such as toxic mold) may adversely affect our
ability to rent, sell or borrow against contaminated property. Various laws and
regulations also impose liability on persons who arrange for the disposal or
treatment of hazardous or toxic substances at another location for the costs of
removal or remediation of such substances at the disposal or treatment facility.
These laws often impose liability whether or not the person arranging for such
disposal ever owned or operated the disposal facility. Certain other
environmental laws and regulations impose liability on owners or operators of
property for injuries relating to the release of asbestos-containing materials
into the air. As owners and operators of property and as potential arrangers for
hazardous substance disposal, we may be liable under such laws and regulations
for removal or remediation costs, governmental penalties, property damage,
personal injuries and related expenses. Payment of such costs and expenses could
adversely affect our ability to make distributions or payments to our investors.
10
COMPETITION FOR ACQUISITIONS MAY RESULT IN INCREASED PRICES FOR PROPERTIES: We
plan to acquire additional properties in New Jersey, New York and Pennsylvania
and in the Northeast generally. We may be competing for investment opportunities
with entities that have greater financial resources. Several office building
developers and real estate companies may compete with us in seeking properties
for acquisition, land for development and prospective tenants. Such competition
may adversely affect our ability to make distributions or payments to our
investors by:
o reducing the number of suitable investment opportunities offered to
us;
o increasing the bargaining power of property owners;
o interfering with our ability to attract and retain tenants;
o increasing vacancies which lowers market rental rates and limits our
ability to negotiate rental rates; and/or
o adversely affecting our ability to minimize expenses of operation.
DEVELOPMENT OF REAL ESTATE COULD BE COSTLY: As part of our operating strategy,
we may acquire land for development under certain conditions. Included among the
risks of the real estate development business are the following, which may
adversely affect our ability to make distributions or payments to our investors:
o financing for development projects may not be available on favorable
terms;
o long-term financing may not be available upon completion of
construction; and
o failure to complete construction on schedule or within budget may
increase debt service expense and construction costs.
PROPERTY OWNERSHIP THROUGH JOINT VENTURES COULD SUBJECT US TO THE CONTRARY
BUSINESS OBJECTIVES OF OUR CO-VENTURERS: We, from time to time, invest in joint
ventures or partnerships in which we do not hold a controlling interest. These
investments involve risks that do not exist with properties in which we own a
controlling interest, including the possibility that our co-venturers or
partners may, at any time, have business, economic or other objectives that are
inconsistent with our objectives. Because we lack a controlling interest, our
co-venturers or partners may be in a position to take action contrary to our
instructions or requests or contrary to our policies or objectives. While the
Company seeks protective rights against such company action, there can be no
assurance that the Company will be successful in procuring any such protective
rights, or if procured, that the rights will be sufficient to fully protect the
Company against contrary actions. Our organizational documents do not limit the
amount of available funds that we may invest in joint ventures or partnerships.
If the objectives of our co-venturers or partners are inconsistent with ours, it
may adversely affect our ability to make distributions or payments to our
investors.
DEBT FINANCING COULD ADVERSELY AFFECT OUR ECONOMIC PERFORMANCE.
SCHEDULED DEBT PAYMENTS AND REFINANCING COULD ADVERSELY AFFECT OUR FINANCIAL
CONDITION: We are subject to the risks normally associated with debt financing.
These risks, including the following, may adversely affect our ability to make
distributions or payments to our investors:
o our cash flow may be insufficient to meet required payments of
principal and interest;
o payments of principal and interest on borrowings may leave us with
insufficient cash resources to pay operating expenses;
o we may not be able to refinance indebtedness on our properties at
maturity; and
o if refinanced, the terms of refinancing may not be as favorable as
the original terms of the related indebtedness.
As of December 31, 2001, we had total outstanding indebtedness of $1.7 billion
comprised of $1.1 billion of senior unsecured notes, outstanding borrowings of
$59.5 million under our unsecured $800.0 million revolving credit facility and
approximately $543.8 million of mortgage indebtedness. We may have to refinance
the principal due on our indebtedness at maturity, and we may not be able to
refinance any indebtedness we incur in the future.
11
If we are unable to refinance our indebtedness on acceptable terms, or at all,
events or conditions that may adversely affect our ability to make distributions
or payments to our investors include the following:
o we may need to dispose of one or more of our properties upon
disadvantageous terms;
o prevailing interest rates or other factors at the time of
refinancing could increase interest rates and, therefore, our
interest expense;
o if we mortgage property to secure payment of indebtedness and are
unable to meet mortgage payments, the mortgagee could foreclose upon
such property or appoint a receiver to receive an assignment of our
rents and leases; and
o foreclosures upon mortgaged property could create taxable income
without accompanying cash proceeds and, therefore, hinder our
ability to meet the real estate investment trust distribution
requirements of the Internal Revenue Code.
RISING INTEREST RATES MAY ADVERSELY AFFECT OUR CASH FLOW: Outstanding borrowings
of approximately $59.5 million (as of December 31, 2001) under our revolving
credit facility and approximately $32.2 million (as of December 31, 2001) of our
mortgage indebtedness bear interest at variable rates. We may incur additional
indebtedness in the future that also bears interest at variable rates. Variable
rate debt creates higher debt service requirements if market interest rates
increase. Higher debt service requirements could adversely affect our ability to
make distributions or payments to our investors and/or cause us to default under
certain debt covenants.
OUR DEGREE OF LEVERAGE COULD ADVERSELY AFFECT OUR CASH FLOW: We fund acquisition
opportunities and development partially through short-term borrowings (including
our revolving credit facility), as well as from proceeds from property sales and
undistributed cash. We expect to refinance projects purchased with short-term
debt either with long-term indebtedness or equity financing depending upon the
economic conditions at the time of refinancing. Our Board of Directors has a
general policy of limiting the ratio of our indebtedness to total undepreciated
assets (total debt as a percentage of total undepreciated assets) to 50 percent
or less, although there is no limit in Mack-Cali Realty, L.P.'s or our
organizational documents on the amount of indebtedness that we may incur.
However, we have entered into certain financial agreements which contain
financial and operating covenants that limit our ability under certain
circumstances to incur additional secured and unsecured indebtedness. The Board
of Directors could alter or eliminate its current policy on borrowing at any
time in its discretion. If this policy were changed, we could become more highly
leveraged, resulting in an increase in debt service that could adversely affect
our cash flow and our ability to make distributions or payments to our investors
and/or could cause an increased risk of default on our obligations.
WE ARE DEPENDENT ON OUR KEY PERSONNEL WHOSE CONTINUED SERVICE IS NOT GUARANTEED.
We are dependent upon our executive officers for strategic business direction
and real estate experience. While we believe that we could find replacements for
these key personnel, loss of their services could adversely affect our
operations. We have entered into an employment agreement (including
non-competition provisions) which provides for a continuous four-year employment
term with each of Mitchell E. Hersh, Timothy M. Jones, Barry Lefkowitz and Roger
W. Thomas. We also have entered into an employment agreement (including
non-competition provisions) with Michael A. Grossman which provides for an
initial three year employment term and a continuous one-year term from and after
the two-year anniversary of the execution of the agreement. We do not have key
man life insurance for our executive officers.
12
CONSEQUENCES OF FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION.
FAILURE TO MAINTAIN OWNERSHIP LIMITS COULD CAUSE US TO LOSE OUR QUALIFICATION
AS A REAL ESTATE INVESTMENT TRUST: In order for us to maintain our
qualification as a real estate investment trust, not more than 50 percent in
value of our outstanding stock may be actually and/or constructively owned by
five or fewer individuals (as defined in the Internal Revenue Code to include
certain entities). We have limited the ownership of our outstanding shares of
our common stock by any single stockholder to 9.8 percent of the outstanding
shares of our common stock. Our Board of Directors could waive this
restriction if they were satisfied, based upon the advice of tax counsel or
otherwise, that such action would be in our best interests and would not
affect our qualifications as a real estate investment trust. Common stock
acquired or transferred in breach of the limitation may be redeemed by us for
the lesser of the price paid and the average closing price for the 10 trading
days immediately preceding redemption or sold at the direction of us. We may
elect to redeem such shares of common stock for limited partnership units,
which are nontransferable except in very limited circumstances. Any transfer
of shares of common stock which, as a result of such transfer, causes us to
be in violation of any ownership limit will be deemed void. Although we
currently intend to continue to operate in a manner which will enable us to
continue to qualify as a real estate investment trust, it is possible that
future economic, market, legal, tax or other considerations may cause our
Board of Directors to revoke the election for us to qualify as a real estate
investment trust. Under our organizational documents, our Board of Directors
can make such revocation without the consent of our stockholders.
In addition, the consent of the holders of at least 85 percent of Mack-Cali
Realty, L.P.'s partnership units is required: (i) to merge (or permit the merger
of) us with another unrelated person, pursuant to a transaction in which
Mack-Cali Realty, L.P. is not the surviving entity; (ii) to dissolve, liquidate
or wind up Mack-Cali Realty, L.P.; or (iii) to convey or otherwise transfer all
or substantially all of Mack-Cali Realty, L.P.'s assets. As general partner, we
own approximately 79.8 percent of Mack-Cali Realty, L.P.'s outstanding
partnership units (assuming conversion of all preferred limited partnership
units).
TAX LIABILITIES AS A CONSEQUENCE OF FAILURE TO QUALIFY AS A REAL ESTATE
INVESTMENT TRUST: We have elected to be treated and have operated so as to
qualify as a real estate investment trust for federal income tax purposes since
our taxable year ended December 31, 1994. Although we believe we will continue
to operate in such manner, we cannot guarantee that we will do so. Qualification
as a real estate investment trust involves the satisfaction of various
requirements (some on an annual and quarterly basis) established under highly
technical and complex tax provisions of the Internal Revenue Code. Because few
judicial or administrative interpretations of such provisions exist and
qualification determinations are fact sensitive, we cannot assure you that we
will qualify as a real estate investment trust for any taxable year.
If we fail to qualify as a real estate investment trust in any taxable year, we
will be subject to the following:
o we will not be allowed a deduction for dividends to shareholders;
o we will be subject to federal income tax at regular corporate rates,
including any alternative minimum tax, if applicable; and
o unless we are entitled to relief under certain statutory provisions,
we will not be permitted to qualify as a real estate investment
trust for the four taxable years following the year during which we
were disqualified.
A loss of our status as a real estate investment trust could have an adverse
effect on us. Failure to qualify as a real estate investment trust also would
eliminate the requirement that we pay dividends to our stockholders.
OTHER TAX LIABILITIES: Even if we qualify as a real estate investment trust, we
are subject to certain federal, state and local taxes on our income and property
and, in some circumstances, certain other state and local taxes. Our net income
from third party management and tenant improvements, if any, also may be subject
to federal income tax.
RISK OF CHANGES IN THE TAX LAW APPLICABLE TO REAL ESTATE INVESTMENT TRUSTS:
Since the Internal Revenue Service, the United States Treasury Department and
Congress frequently review federal income tax legislation, we cannot predict
whether, when or to what extent new federal tax laws, regulations,
interpretations or rulings will be adopted. Any of such legislative action may
prospectively or retroactively modify our and Mack-Cali Realty, L.P.'s tax
treatment and, therefore, may adversely affect taxation of us, Mack-Cali Realty,
L.P., and/or our investors.
13
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The Company considers portions of this information to be forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934. The Company intends such forward-looking statements to be covered by the
safe harbor provisions for forward-looking statements contained in Section 21E
of the Exchange Act. Such forward-looking statements relate to, without
limitation, the Company's future economic performance, plans and objectives for
future operations and projections of revenue and other financial items.
Forward-looking statements can be identified by the use of words such as "may,"
"will," "should," "expect," "anticipate," "estimate," "continue" or comparable
terminology. Forward-looking statements are inherently subject to risks and
uncertainties, many of which the Company cannot predict with accuracy and some
of which the Company might not even anticipate. Although the Company believes
that the expectations reflected in such forward-looking statements are based
upon reasonable assumptions at the time made, it can give no assurance that its
expectations will be achieved. Future events and actual results, financial and
otherwise, may differ materially from the results discussed in the
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements. Among the factors about which the Company has
made assumptions are changes in the general economic climate; conditions,
including those affecting industries in which the Company's principal tenants
compete; any failure of the general economy to recover timely from the current
economic downturn; the extent of any tenant bankruptcies; the Company's ability
to lease or re-lease space at current or anticipated rents; changes in the
supply of and demand for office, office/flex and industrial/warehouse
properties; changes in interest rate levels; changes in operating costs; the
Company's ability to obtain adequate insurance, including coverage for terrorist
acts; the availability of financing; and other risks associated with the
development and acquisition of properties, including risks that the development
may not be completed on schedule, that the tenants will not take occupancy or
pay rent, or that development or operating costs may be greater than
anticipated. For further information on factors which could impact the Company
and the statements contained herein, see the "Risk Factors" section. The Company
assumes no obligation to update and supplement forward-looking statements that
become untrue because of subsequent events.
14
ITEM 2. PROPERTIES
PROPERTY LIST
As of December 31, 2001, the Company's Consolidated Properties consisted of 253
in-service office, office/flex and industrial/warehouse properties, ranging from
one to 20 stories, as well as one multi-family residential property, two
stand-alone retail properties and three land leases. The Consolidated Properties
are located primarily in the Northeast. The Consolidated Properties are easily
accessible from major thoroughfares and are in close proximity to numerous
amenities. The Consolidated Properties contain a total of approximately 27.0
million square feet, with the individual properties ranging from approximately
6,200 to 761,200 square feet. The Consolidated Properties, managed by on-site
employees, generally have attractively landscaped sites, atriums and covered
parking in addition to quality design and construction. The Company's tenants
include many service sector employers, including a large number of professional
firms and national and international businesses. The Company believes that all
of its properties are well-maintained and do not require significant capital
improvements.
15
PROPERTY LISTING
OFFICE PROPERTIES
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
-------------------------------------------------------------------------------------------------------------------------------
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive.............. 1987 40,422 100.0 784 737 0.16
200 Decadon Drive.............. 1991 39,922 100.0 731 688 0.15
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Route 208 North.......... 1987 143,000 100.0 3,248 3,162 0.65
FORT LEE
One Bridge Plaza............... 1981 200,000 98.7 4,994 4,643 0.99
2115 Linwood Avenue............ 1981 68,000 99.7 1,687 1,292 0.34
LITTLE FERRY
200 Riser Road................. 1974 286,628 100.0 2,081 2,022 0.41
MONTVALE
95 Chestnut Ridge Road......... 1975 47,700 100.0 567 567 0.11
135 Chestnut Ridge Road........ 1981 66,150 100.0 1,558 1,338 0.31
PARAMUS
15 East Midland Avenue......... 1988 259,823 100.0 6,729 6,726 1.34
461 From Road.................. 1988 253,554 99.8 6,041 6,034 1.20
650 From Road.................. 1978 348,510 92.8 6,083 5,931 1.21
140 Ridgewood Avenue .......... 1981 239,680 100.0 5,326 5,187 1.06
61 South Paramus Avenue........ 1985 269,191 100.0 6,167 5,670 1.23
ROCHELLE PARK
120 Passaic Street............. 1972 52,000 99.6 1,439 1,366 0.29
365 West Passaic Street........ 1976 212,578 95.2 4,219 3,887 0.84
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
--------------------------------------------------------------------------------------------------------------------------------
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive.............. 19.40 18.23 Computer Sciences Corp. (100%)
200 Decadon Drive.............. 18.31 17.23 Computer Sciences Corp. (100%)
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Route 208 North.......... 22.71 22.11 Lonza, Inc. (63%)
FORT LEE
One Bridge Plaza............... 25.30 23.52 PricewaterhouseCoopers, LLP (35%), Broadview Associates, LLP
(16%), Bozell Worldwide, Inc. (16%)
2115 Linwood Avenue............ 24.88 19.06 US Depot Inc. (23%), Ameribrom Inc. (14%), Mack Management &
Construction (12%), Morgan Stanley Dean Witter (10%)
LITTLE FERRY
200 Riser Road................. 7.26 7.05 Ford Motor Company (34%), Casio Inc. (33%), Dassault Falcon
Jet Corp. (33%)
MONTVALE
95 Chestnut Ridge Road......... 11.89 11.89 Aventis Environmental Science (100%)
135 Chestnut Ridge Road........ 23.55 20.23 Paycheck Inc. (45%), Automated Resources Group Inc. (26%),
Sys-Con Publications Inc. (11%), Lexmark International (10%)
PARAMUS
15 East Midland Avenue......... 25.90 25.89 AT&T Wireless Services (100%)
461 From Road.................. 23.87 23.85 Toys 'R' Us, Inc. (96%)
650 From Road.................. 18.81 18.34 Movado Group Inc. (18%), Long Beach Acceptance Corp. (10%)
140 Ridgewood Avenue .......... 22.22 21.64 AT&T Wireless Services (57%), Smith Barney Shearson Inc. (19%)
61 South Paramus Avenue........ 22.91 21.06 Morgan Stanley Dean Witter, Inc. (10%)
ROCHELLE PARK
120 Passaic Street............. 27.78 26.37 SBC Telecom Inc. (53%), Cantor Fitzgerald LP (46%)
365 West Passaic Street........ 20.85 19.21 United Retail Inc. (31%), Catalina Marketing Corp. (10%),
Regulus LLC (10%)
16
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
---------------------------------------------------------------------------------------------------------------------------------
SADDLE RIVER
1 Lake Street.................. 1973/94 474,801 100.0 7,466 7,466 1.49
UPPER SADDLE RIVER
10 Mountainview Road........... 1986 192,000 98.0 3,988 3,923 0.79
WOODCLIFF LAKE
400 Chestnut Ridge Road........ 1982 89,200 100.0 2,124 2,124 0.42
470 Chestnut Ridge Road........ 1987 52,500 100.0 1,192 1,192 0.24
530 Chestnut Ridge Road........ 1986 57,204 100.0 1,166 1,166 0.23
50 Tice Boulevard.............. 1984 235,000 95.0 5,288 4,570 1.05
300 Tice Boulevard............. 1991 230,000 99.3 4,831 4,647 0.96
BURLINGTON COUNTY, NEW JERSEY
MOORESTOWN
224 Strawbridge Drive.......... 1984 74,000 100.0 1,467 1,104 0.29
228 Strawbridge Drive.......... 1984 74,000 100.0 1,433 1,072 0.29
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway....... 1980 247,476 88.5 6,228 6,068 1.24
ROSELAND
101 Eisenhower Parkway......... 1980 237,000 83.8 4,136 3,778 0.82
103 Eisenhower Parkway......... 1985 151,545 90.0 3,157 2,852 0.63
105 Eisenhower Parkway (g) (k). 2001 220,000 50.9 3,340 2,980 0.67
HUDSON COUNTY, NEW JERSEY
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
--------------------------------------------------------------------------------------------------------------------------------
SADDLE RIVER
1 Lake Street.................. 15.72 15.72 Prentice-Hall Inc. (100%)
UPPER SADDLE RIVER
10 Mountainview Road........... 21.19 20.85 Thomson Minwax Company (23%), Professional Detailing Inc.
(20%), Corning Life Sciences Inc. (15%), ITT Fluid Technology
(14%), Pearson Education (14%)
WOODCLIFF LAKE
400 Chestnut Ridge Road........ 23.81 23.81 Timeplex, Inc. (100%)
470 Chestnut Ridge Road........ 22.70 22.70 Andermatt LP (100%)
530 Chestnut Ridge Road........ 20.38 20.38 KPMG Peat Marwick, LLP (100%)
50 Tice Boulevard.............. 23.69 20.47 Syncsort, Inc. (25%)
300 Tice Boulevard............. 21.15 20.35 Chase Home Mortgage Corp. (25%), KPMG LLP (20%), BMW of North
America, LLC (15%), NYCE Corp. (11%)
BURLINGTON COUNTY, NEW JERSEY
MOORESTOWN
224 Strawbridge Drive.......... 19.82 14.92 Allstate Insurance Company (49%), Harleysville Mutual
Insurance (28%)
228 Strawbridge Drive.......... 19.36 14.49 Cendant Mortgage Corporation (100%)
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway....... 28.44 27.71 KPMG Peat Marwick, LLP (34%), Budd Larner Gross Et Al (23%)
ROSELAND
101 Eisenhower Parkway......... 20.83 19.02 Brach, Eichler, Rosenberg, Silver, Bernstein & Hammer (13%)
103 Eisenhower Parkway......... 23.15 20.91 CPG Partners L.P. (24%), Lum, Danzis, Drasco Positan &
Kleinberg (16%), Salomon Smith Barney, Inc. (11%)
105 Eisenhower Parkway (g) (k). 31.02 27.67 Arthur Andersen (51%)
HUDSON COUNTY, NEW JERSEY
17
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
NET LEASED 2001 2001
RENTABLE AS OF BASE EFFECTIVE
PROPERTY YEAR AREA 12/31/01 RENT RENT
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f)
-------------------------------------------------------------------------------------------------------------------------
JERSEY CITY
Harborside Financial Center Plaza 1.......... 1983 400,000 99.0 3,375 3,372
Harborside Financial Center Plaza 2.......... 1990 761,200 100.0 18,998 18,073
Harborside Financial Center Plaza 3.......... 1990 725,600 100.0 18,108 17,227
Harborside Financial Center Plaza 4-A (i).... 2000 207,670 93.9 5,935 5,715
MERCER COUNTY, NEW JERSEY
PRINCETON
103 Carnegie Center.......................... 1984 96,000 100.0 2,313 2,147
100 Overlook Center.......................... 1988 149,600 100.0 3,386 3,231
5 Vaughn Drive............................... 1987 98,500 75.7 2,159 2,037
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road.......................... 1977 40,000 100.0 373 368
PLAINSBORO
500 College Road East........................ 1984 158,235 100.0 3,207 3,163
SOUTH BRUNSWICK
3 Independence Way........................... 1983 111,300 100.0 2,205 2,139
WOODBRIDGE
581 Main Street.............................. 1991 200,000 100.0 4,842 4,736
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66................................ 1989 180,000 100.0 2,410 2,410
WALL TOWNSHIP
PERCENTAGE
OF TOTAL 2001 2001
OFFICE, 2001 AVERAGE
OFFICE/FLEX AVERAGE EFFECTIVE
AND INDUSTRIAL/ BASE RENT RENT
PROPERTY WAREHOUSE PER SQ. FT. PER SQ. FT.
LOCATION BASE RENT (%) ($) (d) (f) ($) (e) (f)
-------------------------------------------------------------------------------------------
JERSEY CITY
Harborside Financial Center Plaza 1.......... 0.67 8.52 8.52
Harborside Financial Center Plaza 2.......... 3.78 24.96 23.74
Harborside Financial Center Plaza 3.......... 3.61 24.96 23.74
Harborside Financial Center Plaza 4-A (i).... 1.18 33.91 32.66
MERCER COUNTY, NEW JERSEY
PRINCETON
103 Carnegie Center.......................... 0.46 24.09 22.36
100 Overlook Center.......................... 0.67 22.63 21.60
5 Vaughn Drive............................... 0.43 28.95 27.32
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road.......................... 0.07 9.33 9.20
PLAINSBORO
500 College Road East........................ 0.64 20.27 19.99
SOUTH BRUNSWICK
3 Independence Way........................... 0.44 19.81 19.22
WOODBRIDGE
581 Main Street.............................. 0.96 24.21 23.68
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66................................ 0.48 13.39 13.39
WALL TOWNSHIP
TENANTS LEASING 10% OR
MORE OF NET RENTABLE
PROPERTY AREA PER PROPERTY
LOCATION AS OF 12/31/01 (f)
----------------------------------------------------------------------------------------------------------------
JERSEY CITY
Harborside Financial Center Plaza 1.......... Bankers Trust Harborside, Inc. (96%)
Harborside Financial Center Plaza 2.......... Dean Witter Trust Company (26%), DLJ Securities (24%), Dow
Jones & Company, Inc. (11%), Morgan Stanley Dean Witter, Inc.
(10%), Lewco Securities Corp. (10%)
Harborside Financial Center Plaza 3.......... AICPA (36%), BTM Information Services, Inc. (20%), Exodus
Communications (10%)
Harborside Financial Center Plaza 4-A (i).... TD Waterhouse Securities Inc. (89%)
MERCER COUNTY, NEW JERSEY
PRINCETON
103 Carnegie Center.......................... Ronin Development Corp. (15%), R.G. Vanderweil Engineers
(14%), Kurt Salmon Assoc. Inc. (11%)
100 Overlook Center.......................... Regus Business Centre Corp. (26%), Xerox Corporation (23%),
Paine Webber Inc. (14%)
5 Vaughn Drive............................... Woodrow Wilson National Fellowship Foundation (17%),
Floorgraphics Inc. (14%), Villeroy & Boch Tableware Ltd. (11%)
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road.......................... Greater New York Mutual Insurance Company (100%)
PLAINSBORO
500 College Road East........................ SSB Realty, LLC (72%), Buchanan Ingersoll P.C. (17%), PNC
Bank, N.A. (10%)
SOUTH BRUNSWICK
3 Independence Way........................... Merrill Lynch Pierce Fenner & Smith (82%)
WOODBRIDGE
581 Main Street.............................. First Investors Management Company, Inc. (38%), Cast North
America Ltd. (11%)
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66................................ United States Life Insurance Company (100%)
WALL TOWNSHIP
18
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
------------------------------------------------------------------------------------------------------------------------------
1305 Campus Parkway.......... 1988 23,350 92.4 389 364 0.08
1350 Campus Parkway.......... 1990 79,747 99.9 1,430 1,317 0.28
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Turnpike........ 1987 168,144 100.0 4,413 3,959 0.88
MORRIS PLAINS
250 Johnson Road............. 1977 75,000 100.0 1,594 1,433 0.32
201 Littleton Road........... 1979 88,369 80.3 1,796 1,716 0.36
MORRIS TOWNSHIP
340 Mt. Kemble Avenue........ 1985 387,000 100.0 5,530 5,530 1.10
PARSIPPANY
4 Campus Drive (g)........... 1983 147,475 86.8 2,461 2,461 0.49
6 Campus Drive (g)........... 1983 148,291 82.2 2,734 2,734 0.54
7 Campus Drive............... 1982 154,395 100.0 2,041 1,927 0.41
8 Campus Drive............... 1987 215,265 100.0 5,631 5,401 1.12
9 Campus Drive (g)........... 1983 156,495 94.5 693 692 0.14
2 Dryden Way................. 1990 6,216 100.0 70 68 0.01
4 Gatehall Drive............. 1988 248,480 91.2 5,850 5,802 1.17
2 Hilton Court............... 1991 181,592 100.0 4,764 4,542 0.95
600 Parsippany Road.......... 1978 96,000 78.2 1,734 1,626 0.35
1 Sylvan Way................. 1989 150,557 100.0 3,513 3,109 0.70
5 Sylvan Way................. 1989 151,383 100.0 4,010 3,881 0.80
7 Sylvan Way................. 1987 145,983 100.0 2,920 2,772 0.58
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
-------------------------------------------------------------------------------------------------------------------------------
1305 Campus Parkway.......... 18.03 16.87 Waterford Wedgewood USA Inc. (47%), McLaughlin, Bennett,
Gelson (45%)
1350 Campus Parkway.......... 17.95 16.53 Meridan Health Realty Corp. (22%), Milestone Material Inc.
(18%), Stephen E. Gertler Law Office (17%), Sportsgolf L.L.C.
(12%), Amper Politzner & Mattia PA (11%)
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Turnpike........ 26.25 23.55 Bressler Amery & Ross (24%), Salomon Smith Barney Inc. (13%),
Atlantic Health Systems (12%), Dun & Bradstreet Inc. (12%)
MORRIS PLAINS
250 Johnson Road............. 21.25 19.11 Electronic Data Systems Corp. (100%)
201 Littleton Road........... 25.31 24.18 Xerox Corporation (50%), Bozell Worldwide Inc. (19%), CHEP USA
(11%)
MORRIS TOWNSHIP
340 Mt. Kemble Avenue........ 14.29 14.29 AT&T Corporation (100%)
PARSIPPANY
4 Campus Drive (g)........... 25.99 25.99 Nabisco Inc. (27%), Summit Equities Inc. (20%)
6 Campus Drive (g)........... 30.32 30.32 Prudential Insurance Company (37%)
7 Campus Drive............... 13.22 12.48 Nabisco Inc. (100%)
8 Campus Drive............... 26.16 25.09 Prudential Insurance Co. (31%), MCI Telecommunications Corp.
(26%), Ayco Company L.P. (13%)
9 Campus Drive (g)........... 30.54 30.50 GAB Business Service Inc. (63%)
2 Dryden Way................. 11.26 10.94 Bright Horizons Childrens Center (100%)
4 Gatehall Drive............. 25.81 25.60 J.B. Hanauer & Company (20%), Royal Indemnity Company (16%),
Toyota Motor Credit Corp. (10%)
2 Hilton Court............... 26.23 25.01 Deloitte & Touche USA LLP (64%), Sankyo Parke Davis (31%)
600 Parsippany Road.......... 23.10 21.66 Exario Networks Inc. (36%)
1 Sylvan Way................. 23.33 20.65 Cendant Operations Inc. (99%)
5 Sylvan Way................. 26.49 25.64 Integrated Communications (41%), Experian Information Solution
(15%), DRS Technologies Inc. (13%)
7 Sylvan Way................. 20.00 18.99 Nabisco Inc. (100%)
19
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
-------------------------------------------------------------------------------------------------------------------------------
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue............. 1983 75,000 97.9 1,402 1,238 0.28
TOTOWA
999 Riverview Drive............ 1988 56,066 65.0 881 782 0.18
WAYNE
201 Willowbrook Boulevard...... 1970 178,329 49.1 2,042 2,020 0.41
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road.............. 1986 49,000 100.0 738 686 0.15
233 Mt. Airy Road.............. 1987 66,000 100.0 1,315 1,193 0.26
BERNARDS
106 Allen Road (i)............. 2000 132,010 66.7 2,073 1,671 0.41
BRIDGEWATER
721 Route 202/206.............. 1989 192,741 100.0 4,406 4,228 0.88
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue.............. 1985 182,555 100.0 4,399 3,826 0.88
CRANFORD
6 Commerce Drive............... 1973 56,000 93.1 1,073 1,001 0.21
11 Commerce Drive (f).......... 1981 90,000 95.8 1,019 912 0.20
12 Commerce Drive.............. 1967 72,260 84.1 870 842 0.17
20 Commerce Drive.............. 1990 176,600 100.0 4,310 3,897 0.86
65 Jackson Drive............... 1984 82,778 100.0 1,712 1,411 0.34
NEW PROVIDENCE
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
--------------------------------------------------------------------------------------------------------------------------------
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue............. 19.09 16.86 Grosvenor Marketing Ltd. (10%)
TOTOWA
999 Riverview Drive............ 24.17 21.46 Telsource Corporation (19%), Humana Press (15%)
WAYNE
201 Willowbrook Boulevard...... 23.32 23.07 URS Corporation (26%), Meridian Benefit Inc. (22%)
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
222 Mt. Airy Road.............. 15.06 14.00 Avaya Inc. (100%)
233 Mt. Airy Road.............. 19.92 18.08 Avaya Inc. (100%)
BERNARDS
106 Allen Road (i)............. 24.37 19.65 KPMG Consulting LLC (59%)
BRIDGEWATER
721 Route 202/206.............. 22.86 21.94 Allstate Insurance Company (37%), Norris, McLaughlin & Marcus,
PA (32%), Johnson and Johnson (15%), Datatek Applications Inc.
(12%)
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue.............. 24.10 20.96 CAP Gemini America Inc. (40%), DFDS Transport (14%),
Mastercare Companies Inc. (10%)
CRANFORD
6 Commerce Drive............... 20.58 19.20 Kendle International Inc. (50%)
11 Commerce Drive (f).......... 11.82 10.58 Northeast Administrators (10%), Countrywide Home Loans (10%)
12 Commerce Drive.............. 14.32 13.86 Registrar & Transfer Company (36%), URS Corporation (28%)
20 Commerce Drive.............. 24.41 22.07 Public Service Electric & Gas Company (26%), Quintiles Inc.
(21%)
65 Jackson Drive............... 20.68 17.05 PMK Group Inc. (35%), Allstate Insurance Company (27%),
Procter & Gamble Distribution Co., Inc. (18%), Provident
Companies Inc. (14%)
NEW PROVIDENCE
20
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
------------------------------------------------------------------------------------------------------------------------------
890 Mountain Road............. 1977 80,000 100.0 2,436 2,363 0.49
------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE 12,103,070 96.0 245,030 232,214 48.80
------------------------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive.......... 1987 118,727 92.4 2,143 2,107 0.43
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
600 Community Drive (j)....... 1983 237,274 100.0 5,533 5,533 1.10
111 East Shore Road........... 1980 55,575 100.0 1,518 1,504 0.30
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard........... 1988 180,000 100.0 3,882 3,690 0.77
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
100 Clearbrook Road (f)....... 1975 60,000 100.0 875 803 0.17
101 Executive Boulevard....... 1971 50,000 83.8 951 912 0.19
555 Taxter Road............... 1986 170,554 100.0 4,005 4,003 0.80
565 Taxter Road............... 1988 170,554 90.5 3,712 3,673 0.74
570 Taxter Road............... 1972 75,000 94.7 1,594 1,502 0.32
HAWTHORNE
1 Skyline Drive............... 1980 20,400 99.0 342 327 0.07
2 Skyline Drive............... 1987 30,000 98.9 477 433 0.10
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
-------------------------------------------------------------------------------------------------------------------------------
890 Mountain Road............. 30.45 29.54 Aspen Technology Inc. (52%), Dun & Bradstreet (27%), K Line
America, Inc. (16%)
-------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE 21.58 20.47
-------------------------------------------------------------------------------------------------------------------------------
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive.......... 19.53 19.21 Allstate Insurance Company (16%)
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
600 Community Drive (j)....... 23.32 23.32 CMP Media, LLC. (100%)
111 East Shore Road........... 27.31 27.06 Administrators For The Professions, Inc. (100%)
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard........... 21.57 20.50 Provident Savings Bank F.A. (20%), Allstate Insurance Company
(19%), Aetna Life Insurance Company (14%)
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
100 Clearbrook Road (f)....... 14.58 13.38 MIM Corporation (18%), Pyrotek Inc. (11%)
101 Executive Boulevard....... 22.70 21.77 Pennysaver Group Inc. (23%), Kyocera Mita America Inc. (11%)
555 Taxter Road............... 23.48 23.47 Fuji Photo Film USA Inc. (71%), Royal Indemnity Company (12%)
565 Taxter Road............... 24.05 23.80 Nextel of New York Inc. (29%), KLM Royal Dutch Airlines (10%),
National Mutual Insurance (10%)
570 Taxter Road............... 22.44 21.15 New York State United Teachers Association (15%), Wilder
Balter Partners LLC (15%)
HAWTHORNE
1 Skyline Drive............... 16.93 16.19 Boxx International Corp. (50%), Childtime Childcare Inc. (49%)
2 Skyline Drive............... 16.08 14.59 MW Samara (56%), Perini Construction (43%)
21
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
--------------------------------------------------------------------------------------------------------------------------------
7 Skyline Drive................. 1987 109,000 97.9 2,190 2,177 0.44
17 Skyline Drive................ 1989 85,000 100.0 1,359 1,333 0.27
19 Skyline Drive................ 1982 248,400 100.0 4,407 3,972 0.88
TARRYTOWN
200 White Plains Road........... 1982 89,000 77.0 1,527 1,366 0.30
220 White Plains Road........... 1984 89,000 99.4 2,074 1,983 0.41
WHITE PLAINS
1 Barker Avenue................. 1975 68,000 99.0 1,666 1,612 0.33
3 Barker Avenue................. 1983 65,300 100.0 1,142 1,080 0.23
50 Main Street.................. 1985 309,000 99.7 8,347 7,828 1.66
11 Martine Avenue............... 1987 180,000 100.0 4,563 4,215 0.91
1 Water Street.................. 1979 45,700 68.1 1,037 997 0.21
YONKERS
1 Executive Boulevard........... 1982 112,000 99.4 2,536 2,414 0.51
3 Executive Plaza............... 1987 58,000 100.0 1,427 1,305 0.28
--------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE 2,626,484 97.0 57,307 54,769 11.42
--------------------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive............ 1989 60,696 93.4 1,545 1,531 0.31
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
---------------------------------------------------------------------------------------------------------------------------------
7 Skyline Drive................. 20.52 20.40 E.M. Industries Inc. (42%), Cortlandt Group Inc. (14%)
17 Skyline Drive................ 15.99 15.68 IBM Corporation (100%)
19 Skyline Drive................ 17.74 15.99 IBM Corporation (100%)
TARRYTOWN
200 White Plains Road........... 22.28 19.93 Allmerica Financial (17%), NYS Dept. of Environmental Services
(13%)
220 White Plains Road........... 23.44 22.42 Eagle Family Foods Inc. (17%), ATM Services Inc. (10%)
WHITE PLAINS
1 Barker Avenue................. 24.75 23.95 O'Connor McGuinness Conte (19%), United Skys Realty Corp. (18%)
3 Barker Avenue................. 17.49 16.54 Trigen Energy Corporation (56%), TNS Intersearch Corporation
(10%)
50 Main Street.................. 27.09 25.41 TMP Worldwide Inc. (15%), National Economic Research (10%)
11 Martine Avenue............... 25.35 23.42 Salomon Smith Barney Inc. (12%), McCarthy Fingar Donovan Et Al
(11%), David Worby (11%), Dean Witter Reynolds Inc. (11%)
1 Water Street.................. 33.32 32.04 AMG In-Store Inc. (32%)
YONKERS
1 Executive Boulevard........... 22.78 21.68 Bronx Healthplan Inc. (18%), AVR Realty Company (11%),
Protective Tech International (11%), York International Agency
Inc. (11%)
3 Executive Plaza............... 24.60 22.50 Montefiore Medical Center (46%), Metropolitan Life Insurance
(21%), Allstate Insurance Company (19%), City & Suburban
Federal Savings Bank (14%)
---------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE 22.49 21.49
---------------------------------------------------------------------------------------------------------------------------------
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive............ 27.25 27.01 Drinker Biddle & Reath (42%), PNC Bank, NA (38%)
22
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
-----------------------------------------------------------------------------------------------------------------------------------
1055 Westlakes Drive............... 1990 118,487 52.0 1,108 1,071 0.22
1205 Westlakes Drive............... 1988 130,265 83.7 2,695 2,612 0.54
1235 Westlakes Drive............... 1986 134,902 93.3 3,225 3,110 0.64
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive.................. 1986 95,000 100.0 2,554 2,379 0.51
200 Stevens Drive.................. 1987 208,000 100.0 5,493 5,252 1.09
300 Stevens Drive.................. 1992 68,000 52.2 1,402 1,330 0.28
MEDIA
1400 Providence Road - Center I.... 1986 100,000 91.4 1,954 1,874 0.39
1400 Providence Road - Center II... 1990 160,000 77.2 2,816 2,625 0.56
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue................ 1990 100,700 89.4 1,832 1,796 0.36
PLYMOUTH MEETING
1150 Plymouth Meeting Mall......... 1970 167,748 98.0 3,212 3,082 0.64
Five Sentry Parkway East........... 1984 91,600 100.0 1,700 1,666 0.34
Five Sentry Parkway West........... 1984 38,400 100.0 835 813 0.17
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL PENNSYLVANIA OFFICE 1,473,798 87.6 30,371 29,141 6.05
-----------------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam Avenue............. 1973 121,250 96.0 3,042 2,897 0.61
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
------------------------------------------------------------------------------------------------------------------------------------
1055 Westlakes Drive............... 17.98 17.38 Regus Business Centre Corp. (35%), Zarix Inc. (18%)
1205 Westlakes Drive............... 24.72 23.96 Oracle Corporation (30%), Provident Mutual Life Insurance Co.
(11%), International Rehab Assoc. (10%)
1235 Westlakes Drive............... 25.62 24.71 Ratner & Prestia (19%), Chartwell Investment Partners (17%)
Turner Investment Partners (16%),
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive.................. 26.88 25.04 Keystone Mercy Health Plan (100%)
200 Stevens Drive.................. 26.41 25.25 Keystone Mercy Health Plan (100%)
300 Stevens Drive.................. 39.50 37.47 Hewlett Packard Company (35%)
MEDIA
1400 Providence Road - Center I.... 21.38 20.50 General Services Admin. (13%), Erie Insurance Company (11%)
1400 Providence Road - Center II... 22.80 21.25 Barnett International (36%)
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue................ 20.35 19.95 Reality Online Inc. (42%), Banc One National Processing (21%),
Seton Company (15%)
PLYMOUTH MEETING
1150 Plymouth Meeting Mall......... 19.54 18.75 Lincoln Technical Institute (18%), Ken-Crest Services (18%),
Ikea US General Partners Inc. (14%), ECC Management Services
(13%)
Five Sentry Parkway East........... 18.56 18.19 Merck & Co. Inc. (77%), Selas Fluid Processing Corp. (23%)
Five Sentry Parkway West........... 21.74 21.17 Merck & Co. Inc. (70%), David Cutler Group (30%)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL PENNSYLVANIA OFFICE 23.52 22.57
------------------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam Avenue............. 26.13 24.89 Hachette Filipacchi Magazines (27%), McMahan Securities Co, LP
(15%), Greenwich Hospital (13%), Winklevoss Consultants Inc.
(12%)
23
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
-----------------------------------------------------------------------------------------------------------------------------------
NORWALK
40 Richards Avenue................. 1985 145,487 91.7 3,312 3,065 0.67
SHELTON
1000 Bridgeport Avenue............. 1986 133,000 100.0 2,523 2,332 0.50
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE 399,737 95.8 8,877 8,294 1.78
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON, D.C.
1201 Connecticut Avenue, NW........ 1940 169,549 100.0 5,201 5,025 1.04
1400 L Street, NW.................. 1987 159,000 100.0 6,267 6,089 1.25
1709 New York Avenue, NW (h)....... 1972 -- -- 5,491 5,270 1.09
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA OFFICE 328,549 100.0 16,959 16,384 3.38
-----------------------------------------------------------------------------------------------------------------------------------
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place.............. 1989 122,000 95.2 2,482 2,321 0.49
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL MARYLAND OFFICE 122,000 95.2 2,482 2,321 0.49
-----------------------------------------------------------------------------------------------------------------------------------
BEXAR COUNTY, TEXAS
SAN ANTONIO
200 Concord Plaza Drive (h)........ 1986 -- -- 3,991 3,990 0.79
84 N.E. Loop 410................... 1971 187,312 90.9 2,675 2,674 0.53
1777 N.E. Loop 410 (h)............. 1986 -- -- 1,437 1,436 0.29
111 Soledad........................ 1918 248,153 49.9 2,004 1,996 0.40
COLLIN COUNTY, TEXAS
PLANO
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
------------------------------------------------------------------------------------------------------------------------------------
NORWALK
40 Richards Avenue................. 24.83 22.97 South Beach Beverage Co., LLC (17%), Media Horizons Inc.
(12%), Programmed Solutions Inc. (10%)
SHELTON
1000 Bridgeport Avenue............. 18.97 17.53 William Carter Company (23%), Weseley Software Development
(22%), Toyota Motor Credit Corporation (11%), LandStar Gemini
Inc. (11%)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE 23.19 21.67
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON, D.C.
1201 Connecticut Avenue, NW........ 30.68 29.64 Zuckerman Spaeder Goldstein (30%), Leo A. Daly Company (18%),
RFE/RL Inc. (16%)
1400 L Street, NW.................. 39.42 38.30 Winston & Strawn (68%)
1709 New York Avenue, NW (h)....... -- -- --
------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRICT OF COLUMBIA OFFICE 51.62 49.87
------------------------------------------------------------------------------------------------------------------------------------
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place.............. 21.37 19.98 Group I Software Inc. (56%), Infinity Broadcasting Company
(16%), State Farm Mutual Auto Ins. Co. (11%)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL MARYLAND OFFICE 21.37 19.98
------------------------------------------------------------------------------------------------------------------------------------
BEXAR COUNTY, TEXAS
SAN ANTONIO
200 Concord Plaza Drive (h)........ -- -- --
84 N.E. Loop 410................... 15.71 15.70 KBL Cable, Inc. (26%), Chase Bank and Services Inc. (25%),
Philip Morris Mgmt. Corp. (25%)
1777 N.E. Loop 410 (h)............. -- -- --
111 Soledad........................ 16.18 16.12 --
COLLIN COUNTY, TEXAS
PLANO
24
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
---------------------------------------------------------------------------------------------------------------------------
555 Republic Place......... 1986 97,889 93.6 1,286 1,269 0.26
DALLAS COUNTY, TEXAS
DALLAS
3030 LBJ Freeway (f)....... 1984 367,018 86.2 6,725 6,640 1.34
3100 Monticello............ 1984 173,837 84.3 2,743 2,713 0.55
8214 Westchester (h)....... 1983 -- -- 720 705 0.14
IRVING
2300 Valley View........... 1985 142,634 84.1 2,492 2,447 0.50
RICHARDSON
1122 Alma Road............. 1977 82,576 100.0 607 607 0.12
HARRIS COUNTY, TEXAS
HOUSTON
14511 Falling Creek (h).... 1982 -- -- 289 289 0.06
5225 Katy Freeway (h)...... 1983 -- -- 1,445 1,440 0.29
5300 Memorial.............. 1982 155,099 87.6 2,278 2,269 0.45
1717 St. James Place....... 1975 109,574 97.0 1,487 1,485 0.30
1770 St. James Place....... 1973 103,689 68.3 1,216 1,211 0.24
10497 Town & Country Way... 1981 148,434 82.9 1,756 1,751 0.35
TARRANT COUNTY, TEXAS
EULESS
150 West Parkway........... 1984 74,429 98.1 1,095 1,086 0.22
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
----------------------------------------------------------------------------------------------------------------------------
555 Republic Place......... 14.04 13.85 William F. Smith Enterprises (19%), Dayton Hudson Corporation
(14%)
DALLAS COUNTY, TEXAS
DALLAS
3030 LBJ Freeway (f)....... 21.26 20.99 Club Corporation of America (38%)
3100 Monticello............ 18.72 18.51 Insignia Commercial, Inc. (23%), Time Marketing
Corporation/Evans Group (12%), Tarragon Realty Adv. Inc.
(11%), Health Insurance Brokers, Inc. (10%)
8214 Westchester (h)....... -- -- --
IRVING
2300 Valley View........... 20.77 20.40 Alltel Information Services, Inc. (18%), US Personnel Inc.
(18%), Allied Integrated Services (16%), Tricon Restaurant
Services (12%)
RICHARDSON
1122 Alma Road............. 7.35 7.35 MCI Telecommunications Corp. (100%)
HARRIS COUNTY, TEXAS
HOUSTON
14511 Falling Creek (h).... -- -- --
5225 Katy Freeway (h)...... -- -- --
5300 Memorial.............. 16.77 16.70 Datavox, Inc. (20%), HCI Chemicals USA, Inc. (19%)
1717 St. James Place....... 13.99 13.97 MCX Corp (14%)
1770 St. James Place....... 17.17 17.10 --
10497 Town & Country Way... 14.27 14.23 Vastar Resources, Inc. (23%)
TARRANT COUNTY, TEXAS
EULESS
150 West Parkway........... 15.00 14.87 Warrantech Automotive, Inc. (34%), Mike Bowman
Realtors/Century 21 Inc. (17%), Landmark Bank-Mid Cities (16%)
25
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
TOTAL TEXAS OFFICE 1,890,644 82.5 34,246 34,008 6.83
--------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard...... 1991 181,596 100.0 1,709 1,707 0.34
PHOENIX
19640 North 31st Street......... 1990 124,171 100.0 1,599 1,567 0.32
SCOTTSDALE
9060 E. Via Linda Boulevard..... 1984 111,200 100.0 2,431 2,429 0.48
--------------------------------------------------------------------------------------------------------------------------------
TOTAL ARIZONA OFFICE 416,967 100.0 5,739 5,703 1.14
--------------------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street...... 1997 108,240 100.0 2,901 2,901 0.58
DENVER
400 South Colorado Boulevard.... 1983 125,415 98.6 2,259 2,228 0.45
ENGLEWOOD
9359 East Nichols Avenue........ 1997 72,610 100.0 900 900 0.18
5350 South Roslyn Street........ 1982 63,754 100.0 1,256 1,245 0.25
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court...... 1997 37,574 100.0 558 558 0.11
303 South Technology Court-A.... 1997 34,454 100.0 403 403 0.08
303 South Technology Court-B.... 1997 40,416 100.0 472 472 0.09
LOUISVILLE
248 Centennial Parkway.......... 1996 39,266 100.0 644 643 0.13
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY ER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION $) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
TOTAL TEXAS OFFICE 21.95 21.80
--------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard...... 9.41 9.40 Honeywell, Inc. (100%)
PHOENIX
19640 North 31st Street......... 12.88 12.62 American Express Travel Related Services Co., Inc. (100%)
SCOTTSDALE
9060 E. Via Linda Boulevard..... 21.86 21.84 Sentry Insurance (63%), PCS Health Systems Inc. (37%)
--------------------------------------------------------------------------------------------------------------------------------
TOTAL ARIZONA OFFICE 13.76 13.68
--------------------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street...... 26.80 26.80 T.R.W. Inc. (100%)
DENVER
400 South Colorado Boulevard.... 18.27 18.02 Community Health Plan (36%), State of Colorado (12%), Wells
Fargo Bank West NA (11%), Senter Goldfarb & Rice LLC (11%)
ENGLEWOOD
9359 East Nichols Avenue........ 12.39 12.39 First Tennessee Bank NA (100%)
5350 South Roslyn Street........ 19.70 19.53 Alliance Metro Real Estate (19%), Business Word Inc. (17%),
Walker Parking Consultants (12%), First Industrial Realty
Trust (10%)
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court...... 14.85 14.85 Sun Microsystems Inc. (100%)
303 South Technology Court-A.... 11.70 11.70 Sun Microsystems Inc. (100%)
303 South Technology Court-B.... 11.68 11.68 Sun Microsystems Inc. (100%)
LOUISVILLE
248 Centennial Parkway.......... 16.40 16.38 Walnut Brewery Inc. (80%), Global Imaging Inc. (10%), RX
Kinetix Inc. (10%)
26
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
----------------------------------------------------------------------------------------------------------------------------------
1172 Century Drive................ 1996 49,566 100.0 511 511 0.10
285 Century Place................. 1997 69,145 100.0 1,092 1,092 0.22
DENVER COUNTY, COLORADO
DENVER
3600 South Yosemite............... 1974 133,743 100.0 1,287 1,287 0.26
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
8181 East Tufts Avenue (g) (k).... 2001 185,254 77.2 2,776 2,741 0.55
400 Inverness Drive............... 1997 111,608 100.0 2,366 2,351 0.47
67 Inverness Drive East........... 1996 54,280 0.0 492 488 0.10
384 Inverness Drive South......... 1985 51,523 78.4 742 734 0.15
5975 South Quebec Street (f)...... 1996 102,877 49.1 1,882 1,871 0.37
PARKER
9777 Mount Pyramid Court.......... 1995 120,281 100.0 1,323 1,323 0.26
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
8415 Explorer..................... 1998 47,368 100.0 605 604 0.12
1975 Research Parkway............. 1997 115,250 100.0 1,792 1,757 0.36
2375 Telstar Drive................ 1998 47,369 100.0 605 603 0.12
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard............... 1985 63,600 100.0 1,164 1,146 0.23
----------------------------------------------------------------------------------------------------------------------------------
TOTAL COLORADO OFFICE 1,673,593 92.0 26,030 25,858 5.18
----------------------------------------------------------------------------------------------------------------------------------
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
-----------------------------------------------------------------------------------------------------------------------------------
1172 Century Drive................ 10.31 10.31 nCube Corporation (33%), Evolving Systems Inc. (18%), MCI
Systemhouse Corp. (18%), Aircell Inc. (18%), RX Kinetix Inc.
(13%)
285 Century Place................. 15.79 15.79 HBO & Company of Georgia (100%)
DENVER COUNTY, COLORADO
DENVER
3600 South Yosemite............... 9.62 9.62 MDC Holding Inc. (100%)
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
8181 East Tufts Avenue (g) (k).... 23.15 22.86 URS Greiner (63%)
400 Inverness Drive............... 21.20 21.06 Cochlear Corporation (33%), Ciber Inc. (22%) Compuware Corp.
(18%), HQ Global Workplaces Inc. (16%)
67 Inverness Drive East........... -- -- --
384 Inverness Drive South......... 18.37 18.17 Quickpen International Corp. (37%), Worth Group Architects
(10%)
5975 South Quebec Street (f)...... 37.26 37.04 Silicon Graphics Inc. (28%), Qwest Communications Corp. (15%)
PARKER
9777 Mount Pyramid Court.......... 11.00 11.00 Evolving System Inc. (100%)
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
8415 Explorer..................... 12.77 12.75 Encoda Systems Inc. (74%), URS Greiner Consultants Inc. (22%)
1975 Research Parkway............. 15.55 15.25 Bombardier Capital Florida Inc. (52%), Concert Management
Services (18%), General Dynamics Govt Systems (17%)
2375 Telstar Drive................ 12.77 12.73 Narwhal Corporation (44%), Memorial Hospital (38%), Aerotek
Inc. (13%)
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard............... 18.30 18.02 Arbitration Forums Inc. (18%), Frontier Real Estate - HB&G
(15%)
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL COLORADO OFFICE 17.26 17.14
-----------------------------------------------------------------------------------------------------------------------------------
27
PROPERTY LISTING
OFFICE PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
------------------------------------------------------------------------------------------------------------------------------------
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
795 Folsom Street................... 1977 183,445 100.0 7,428 6,666 1.48
760 Market Street................... 1908 267,446 95.9 8,611 8,309 1.72
------------------------------------------------------------------------------------------------------------------------------------
TOTAL CALIFORNIA OFFICE 450,891 97.6 16,039 14,975 3.20
------------------------------------------------------------------------------------------------------------------------------------
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard............... 1982 297,429 91.4 3,829 3,769 0.76
------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLORIDA OFFICE 297,429 91.4 3,829 3,769 0.76
------------------------------------------------------------------------------------------------------------------------------------
POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway (h)............ 1988 -- -- 656 628 0.13
------------------------------------------------------------------------------------------------------------------------------------
TOTAL IOWA OFFICE -- -- 656 628 0.13
------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES 21,783,162 94.2 447,565 428,064 89.16
====================================================================================================================================
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
------------------------------------------------------------------------------------------------------------------------------------
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
795 Folsom Street................... 40.49 36.34 Move.com Operations Inc.(51%), AT&T Corp. (34%), Regus
Business Centre Corp. (15%)
760 Market Street................... 33.57 32.40 R.H. Macy & Company, Inc. (19%)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL CALIFORNIA OFFICE 36.46 34.04
------------------------------------------------------------------------------------------------------------------------------------
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard............... 14.08 13.86 Fowler, White, Gillen, Boggs, Villareal & Banker, PA (33%),
Sykes Enterprises Inc. (23%)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLORIDA OFFICE 14.08 13.86
------------------------------------------------------------------------------------------------------------------------------------
POLK COUNTY, IOWA
WEST DES MOINES
2600 Westown Parkway (h)............ -- -- --
------------------------------------------------------------------------------------------------------------------------------------
TOTAL IOWA OFFICE -- --
------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES 22.12 21.17
====================================================================================================================================
28
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (d) (f) BASE RENT (%)
---------------------------------------------------------------------------------------------------------------------------------
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane..................... 1991 64,500 61.4 302 287 0.06
5 Terri Lane..................... 1992 74,555 82.2 525 503 0.10
MOORESTOWN
2 Commerce Drive................. 1986 49,000 100.0 371 367 0.07
101 Commerce Drive............... 1988 64,700 100.0 336 296 0.07
102 Commerce Drive............... 1987 38,400 100.0 187 185 0.04
201 Commerce Drive............... 1986 38,400 100.0 203 197 0.04
202 Commerce Drive............... 1988 51,200 100.0 268 268 0.05
1 Executive Drive................ 1989 20,570 100.0 207 165 0.04
2 Executive Drive ............... 1988 60,800 75.5 403 394 0.08
101 Executive Drive.............. 1990 29,355 100.0 254 205 0.05
102 Executive Drive.............. 1990 64,000 100.0 372 319 0.07
225 Executive Drive.............. 1990 50,600 100.0 318 300 0.06
97 Foster Road................... 1982 43,200 100.0 188 188 0.04
1507 Lancer Drive................ 1995 32,700 100.0 139 130 0.03
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
----------------------------------------------------------------------------------------------------------------------------------
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane..................... 7.63 7.25 Tempel Steel Company (18%), ATC Group Services Inc. (10%),
General Service Administrators (10%)
5 Terri Lane..................... 8.57 8.21 United Rentals Inc. (22%), Lykes Dispensing Systems Inc.
(20%), West Electronics Inc. (12%)
MOORESTOWN
2 Commerce Drive................. 7.57 7.49 Computer Sciences Corporation (100%)
101 Commerce Drive............... 5.19 4.57 Beckett Corporation (100%)
102 Commerce Drive............... 4.87 4.82 Nelson Associates (25%), Compaq Computer Company (13%), D&A
Eastern Fasteners Inc. (13%), Moorestown Weightlifting Club
(13%), Opex Corporation (13%), RGP Impressions Inc. (13%),
Transaction Payment Systems (10%)
201 Commerce Drive............... 5.29 5.13 Flow Thru Metals Inc. (25%), Franchise Stores Realty Corp.
(25%), RE/Com Group (25%), Tropicana Products Inc. (25%)
202 Commerce Drive............... 5.23 5.23 Standard Register Co. (100%)
1 Executive Drive................ 10.06 8.02 Bechtel Infrastructure Corp. (57%), T.T.I. (18%)
2 Executive Drive ............... 8.78 8.58 CSI Computer Specialists Inc. (32%), On-Campus Marketing
Concepts (16%), Nia Zia D/B/A Alpha Academy (10%)
101 Executive Drive.............. 8.65 6.98 Bayada Nurses Inc. (56%), Foundations Inc. (15%), ABC
Financial (10%), Bechtel Infrastructure Corp. (10%)
102 Executive Drive.............. 5.81 4.98 Comtrex Systems Corp. (29%), Kencom Communications & Svcs.
(21%), Schermerhorn Bros. Co. (20%), Xermis Inc. (20%),
Innovasystems Inc. (10%)
225 Executive Drive.............. 6.28 5.93 Eastern Research Inc. (77%), Langston 21, LLC (14%)
97 Foster Road................... 4.35 4.35 Consumer Response Company Inc. (50%), Pioneer and Company Inc.
(33%), Colornet Inc. (17%)
1507 Lancer Drive................ 4.25 3.98 Tad's Delivery Service Inc. (100%)
29
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (d) (f) BASE RENT (%)
--------------------------------------------------------------------------------------------------------------------------------
1510 Lancer Drive............... 1998 88,000 100.0 370 370 0.07
1245 North Church Street (g).... 1998 52,810 100.0 252 252 0.05
1247 North Church Street (g).... 1998 52,790 100.0 313 312 0.06
1256 North Church Street........ 1984 63,495 100.0 227 190 0.05
840 North Lenola Road........... 1995 38,300 100.0 218 198 0.04
844 North Lenola Road........... 1995 28,670 100.0 217 209 0.04
915 North Lenola Road........... 1998 52,488 100.0 261 261 0.05
2 Twosome Drive (g)............. 2000 48,600 100.0 265 265 0.05
30 Twosome Drive................ 1997 39,675 89.9 221 221 0.04
31 Twosome Drive (g)............ 1998 84,200 100.0 385 385 0.08
40 Twosome Drive................ 1996 40,265 93.4 267 263 0.05
41 Twosome Drive (g)............ 1998 43,050 89.2 259 259 0.05
50 Twosome Drive................ 1997 34,075 86.6 258 256 0.05
WEST DEPTFORD
1451 Metropolitan Drive......... 1996 21,600 100.0 148 148 0.03
MERCER COUNTY, NEW JERSEY
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
---------------------------------------------------------------------------------------------------------------------------------
1510 Lancer Drive............... 4.20 4.20 Tad's Delivery Service Inc. (100%)
1245 North Church Street (g).... 6.99 6.99 Health Ink, LLC (38%), C&L Properties L.L.C. (35%), C&L
Packaging Inc. (27%)
1247 North Church Street (g).... 8.69 8.66 Otis Elevator Company (23%), Dilks Agency Inc. (23%),
Telesciences Inc. (17%), Spot-Coolers Inc. (14%)
1256 North Church Street........ 3.58 2.99 Weiler Labeling Systems, Inc. (50%), James C. Anderson
Associates (30%), Ketec Inc. (20%)
840 North Lenola Road........... 5.69 5.17 Millar Elevator Service (31%), Omega Storage Inc. (31%),
Payroll Associates (20%), Innovasystems Inc. (18%)
844 North Lenola Road........... 7.57 7.29 Lockheed Martin Corp. (41%), Curbell Inc. (34%), James J.
Martin Inc. (25%)
915 North Lenola Road........... 4.97 4.97 Premier Percussion USA Inc. (37%), Vision Realty LLC (23%),
Riley Sales Inc. (18%), United States Postal Service (13%)
2 Twosome Drive (g)............. 7.99 7.99 Sterling Medical Services LLC (100%)
30 Twosome Drive................ 6.20 6.20 Hartman Cards Inc. (28%), Commercial Office Furniture (24%),
Aramark Sports Entertainment (14%), The Closet Factory (12%),
C&L Packaging Inc. (12%)
31 Twosome Drive (g)............ 5.20 5.20 Cort Furniture Rental Corp. (56%), Prism Color Corp. (44%)
40 Twosome Drive................ 7.10 6.99 Neighborcare - TCI Inc. (49%), Marconi Communications Inc.
(30%), Bellstar Inc. (14%)
41 Twosome Drive (g)............ 7.67 7.67 Kit Industries Inc. (22%), Momentum Systems Limited (22%), DIA
- Nielsen USA Inc. (11%), Harrington Robb Company (11%), S&S
Specialty Products (11%), Williams Communications (11%)
50 Twosome Drive................ 8.74 8.68 Wells Fargo Alarm Services (44%), Sussex Wine Merchants (42%)
WEST DEPTFORD
1451 Metropolitan Drive......... 6.85 6.85 Garlock Bearings Inc. (100%)
MERCER COUNTY, NEW JERSEY
30
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (d) (f) BASE RENT (%)
-------------------------------------------------------------------------------------------------------------------------------
HAMILTON TOWNSHIP
100 Horizon Drive.............. 1989 13,275 100.0 192 170 0.04
200 Horizon Drive.............. 1991 45,770 100.0 475 457 0.10
300 Horizon Drive.............. 1989 69,780 86.4 1,124 1,096 0.22
500 Horizon Drive.............. 1990 41,205 100.0 349 326 0.07
MONMOUTH COUNTY, NEW JERSEY
WALL TOWNSHIP
1325 Campus Parkway............ 1988 35,000 100.0 466 435 0.09
1340 Campus Parkway............ 1992 72,502 100.0 856 729 0.17
1345 Campus Parkway............ 1995 76,300 62.6 744 736 0.15
1433 Highway 34................ 1985 69,020 65.1 701 522 0.14
1320 Wyckoff Avenue............ 1986 20,336 100.0 176 166 0.04
1324 Wyckoff Avenue............ 1987 21,168 100.0 220 175 0.04
PASSAIC COUNTY, NEW JERSEY
TOTOWA
1 Center Court................. 1999 38,961 100.0 366 265 0.07
2 Center Court................. 1998 30,600 99.3 348 237 0.07
11 Commerce Way................ 1989 47,025 100.0 507 434 0.10
20 Commerce Way................ 1992 42,540 75.9 387 375 0.08
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
--------------------------------------------------------------------------------------------------------------------------------
HAMILTON TOWNSHIP
100 Horizon Drive.............. 14.46 12.81 PSEG Energy Technologies Inc. (100%)
200 Horizon Drive.............. 10.38 9.98 O.H.M. Remediation Services Corp. (100%)
300 Horizon Drive.............. 18.64 18.18 State of New Jersey/DEP (50%), Lucent Technologies Inc. (26%),
Stephen Gould of Pennsylvania (10%)
500 Horizon Drive.............. 8.47 7.91 Yardville National Bank (42%), Lakeview Child Center Inc.
(19%), New Jersey Builders Assoc. (14%), Diedre Moire Corp.
(11%)
MONMOUTH COUNTY, NEW JERSEY
WALL TOWNSHIP
1325 Campus Parkway............ 13.31 12.43 Cisco Systems Inc. (100%)
1340 Campus Parkway............ 11.81 10.05 Groundwater & Environmental Services Inc. (33%), GEAC
Computers Inc. (22%), State Farm Mutual Insurance (17%),
Association For Retarded Citizens (11%), Digital Lightwave,
Inc. (11%)
1345 Campus Parkway............ 15.58 15.41 Quadramed Corp. (24%), De Vine Corp. (11%)
1433 Highway 34................ 15.60 11.62 State Farm Mutual Insurance Co. (48%), Applied Image Inc. (11%)
1320 Wyckoff Avenue............ 8.65 8.16 The County of Monmouth (100%)
1324 Wyckoff Avenue............ 10.39 8.27 Blackhawk Management Corp. (53%), Systems Fulfillment (25%),
Supply Saver, Inc. (22%)
PASSAIC COUNTY, NEW JERSEY
TOTOWA
1 Center Court................. 9.39 6.80 Rock-Tenn Converting Company (46%), Eizo Nanao Technologies
Inc. (38%), Onyx Waste Services Inc. (16%)
2 Center Court................. 11.45 7.80 Nomadic Display (36%), Electro Rent Corp. (33%), Alpine
Electronics of America (30%)
11 Commerce Way................ 10.78 9.23 Coram Alternative Site Services (56%), D.A. Kopp & Associates
Inc. (22%), Gentiva Health Services (22%)
20 Commerce Way................ 11.99 11.61 Lodan Totowa Inc. F/K/A Emersub (62%), Dish Network Service
Corp. (14%)
31
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (d) (f) BASE RENT (%)
---------------------------------------------------------------------------------------------------------------------------------
29 Commerce Way.................. 1990 48,930 100.0 285 236 0.06
40 Commerce Way.................. 1987 50,576 100.0 512 422 0.10
45 Commerce Way.................. 1992 51,207 100.0 502 461 0.10
60 Commerce Way.................. 1988 50,333 83.2 483 416 0.10
80 Commerce Way.................. 1996 22,500 100.0 282 174 0.06
100 Commerce Way................. 1996 24,600 100.0 308 190 0.06
120 Commerce Way................. 1994 9,024 99.6 100 95 0.02
140 Commerce Way................. 1994 26,881 99.6 298 285 0.06
---------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE/FLEX 2,277,531 93.4 17,415 15,795 3.45
---------------------------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
11 Clearbrook Road............... 1974 31,800 100.0 384 379 0.08
75 Clearbrook Road............... 1990 32,720 100.0 816 816 0.16
150 Clearbrook Road.............. 1975 74,900 100.0 1,095 1,049 0.22
175 Clearbrook Road.............. 1973 98,900 98.5 1,492 1,429 0.30
200 Clearbrook Road.............. 1974 94,000 99.8 1,209 1,137 0.24
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
----------------------------------------------------------------------------------------------------------------------------------
29 Commerce Way.................. 5.82 4.82 ADT Security Services Inc. (55%), Patterson Dental Supply Inc.
(23%), Fujitec America Inc. (22%)
40 Commerce Way.................. 10.12 8.34 Thales Components Corporation (43%), Intertek Testing Services
Inc. (29%), System 3R USA Inc. (14%), Pitney Bowes Inc. (14%)
45 Commerce Way.................. 9.80 9.00 Ericsson Inc. (52%), Woodward Clyde Consultants (27%), Oakwood
Corporate Housing (21%)
60 Commerce Way.................. 11.53 9.93 Jen Mar Graphics Inc. (27%), Dolan & Traynor Building Prod
(16%), Prestige Telecom Ltd. (14%), HW Exhibits (14%),
Bearings Ltd. (12%)
80 Commerce Way.................. 12.53 7.73 Learning Stop LLC (40%), Idexx Veterinary Services (37%),
Inter-American Safety Council (12%), Haas Publishing Companies
(11%)
100 Commerce Way................. 12.52 7.72 Geri Script LLC (34%), Minolta Business Systems Inc. (34%),
CCH Incorporated (32%)
120 Commerce Way................. 11.13 10.57 Senior Care Centers of America (62%), Showa Tool USA Inc.
(19%), Telsource Corporation (19%)
140 Commerce Way................. 11.13 10.64 Universal Hospital Services (36%), Advanced Image Systems Inc.
(25%), Alpha Testing Laboratories (13%), Holder Group Inc.
(13%), Dairygold (12%)
----------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW JERSEY OFFICE/FLEX 8.41 7.65
----------------------------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
11 Clearbrook Road............... 12.08 11.92 Eastern Jungle Gym Inc. (27%), MCS Marketing Group Inc. (24%),
Treetops Inc. (21%), Portables Unlimited Inc. (14%), Karate
Kat Inc. (14%)
75 Clearbrook Road............... 24.94 24.94 Evening Out Inc. (100%)
150 Clearbrook Road.............. 14.62 14.01 Sportive Ventures I LLC (24%), Philips Medical Systems N.A.
(18%), Transwestern Publications (12%), ADT Security Services
Inc. (11%)
175 Clearbrook Road.............. 15.32 14.67 Nextel of New York Inc. (35%), Hypres Inc. (15%), Perk-Up Inc.
(10%)
200 Clearbrook Road.............. 12.89 12.12 Brunschwig & Fils Inc. (39%), Proftech Corp (20%)
32
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (d) (f) BASE RENT (%)
---------------------------------------------------------------------------------------------------------------------------
250 Clearbrook Road........ 1973 155,000 94.5 1,340 1,281 0.27
50 Executive Boulevard..... 1969 45,200 75.8 265 256 0.05
77 Executive Boulevard..... 1977 13,000 100.0 126 122 0.03
85 Executive Boulevard..... 1968 31,000 99.4 432 423 0.09
300 Executive Boulevard.... 1970 60,000 99.7 633 595 0.13
350 Executive Boulevard.... 1970 15,400 98.8 263 262 0.05
399 Executive Boulevard.... 1962 80,000 100.0 965 928 0.19
400 Executive Boulevard.... 1970 42,200 100.0 656 602 0.13
500 Executive Boulevard.... 1970 41,600 100.0 647 604 0.13
525 Executive Boulevard.... 1972 61,700 100.0 894 865 0.18
1 Westchester Plaza........ 1967 25,000 100.0 307 289 0.06
2 Westchester Plaza........ 1968 25,000 100.0 452 441 0.09
3 Westchester Plaza........ 1969 93,500 100.0 1,405 1,383 0.28
4 Westchester Plaza........ 1969 44,700 99.8 627 600 0.12
5 Westchester Plaza........ 1969 20,000 100.0 277 272 0.06
6 Westchester Plaza........ 1968 20,000 100.0 312 291 0.06
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
----------------------------------------------------------------------------------------------------------------------------
250 Clearbrook Road........ 9.15 8.75 AFP Imaging Corp (31%), The Artina Group Inc. (14%), Prints
Plus Inc. (13%), Conri Services Inc. (13%), Merrill-Sharpe Ltd
(10%)
50 Executive Boulevard..... 7.73 7.47 MMO Music Group (74%)
77 Executive Boulevard..... 9.69 9.38 Bright Horizons Children Center (55%), Richmonds Childrens
Center Inc. (45%)
85 Executive Boulevard..... 14.02 13.73 VREX Inc. (49%), Westhab Inc. (32%), Wald Optics Laboratory
Inc. (13%)
300 Executive Boulevard.... 10.58 9.95 Princeton Ski Outlet Corp. (57%), Varta Batteries Inc. (31%),
Infovalue Computing Inc. (12%)
350 Executive Boulevard.... 17.29 17.22 Fujitsu Network Communication (99%)
399 Executive Boulevard.... 12.06 11.60 American Banknote Holographic (72%), Game Sportswear Ltd (28%)
400 Executive Boulevard.... 15.55 14.27 Baker Engineering NY, Inc. (39%), Ultra Fabrics Inc. (25%),
Blum Promotions and Display (10%)
500 Executive Boulevard.... 15.55 14.52 Original Consume (36%), Thyssen Krupp Elevator Corp. (16%),
Angelica Corporation (16%), Olympia Sports Inc. (13%),
Philips Medical Systems N.A. (13%)
525 Executive Boulevard.... 14.49 14.02 Vie De France Yamazaki Inc. (59%), New York Blood Center Inc.
(21%)
1 Westchester Plaza........ 12.28 11.56 British Apparel (40%), Thin Film Concepts Inc. (20%), RS Knapp
(20%), JT Lynne Representatives (20%)
2 Westchester Plaza........ 18.08 17.64 Board of Cooperative Education (80%), Kin-Tronics (10%),
Squires Productions Inc. (10%)
3 Westchester Plaza........ 15.03 14.79 Reveo Inc. (51%), Kangol Headwear (28%), Esperya USA Inc. (12%)
4 Westchester Plaza........ 14.05 13.45 Metropolitan Life Insurance (38%), Marconi Applied
Technologies (34%)
5 Westchester Plaza........ 13.85 13.60 Apria Healthcare Inc. (38%), Rokonet Industries USA Inc.
(25%), UA Plumbers Education Fund (25%), BBA Project Inc. (12%)
6 Westchester Plaza........ 15.60 14.55 Pinkerton Systems Integration (28%), Xerox Corporation (28%),
Game Parts Inc. (24%), Girard Rubber Co. (12%)
33
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (d) (f) BASE RENT (%)
---------------------------------------------------------------------------------------------------------------------------------
7 Westchester Plaza.............. 1972 46,200 100.0 652 646 0.13
8 Westchester Plaza.............. 1971 67,200 100.0 864 766 0.17
HAWTHORNE
200 Saw Mill River Road.......... 1965 51,100 100.0 656 622 0.13
4 Skyline Drive.................. 1987 80,600 100.0 1,405 1,286 0.28
5 Skyline Drive (g).............. 1980 124,022 100.0 657 657 0.13
6 Skyline Drive (g).............. 1980 44,155 100.0 290 290 0.06
8 Skyline Drive.................. 1985 50,000 98.7 618 487 0.12
10 Skyline Drive................. 1985 20,000 100.0 285 263 0.06
11 Skyline Drive................. 1989 45,000 100.0 724 674 0.14
12 Skyline Drive................. 1999 46,850 100.0 806 633 0.16
15 Skyline Drive................. 1989 55,000 100.0 966 843 0.19
YONKERS
100 Corporate Boulevard.......... 1987 78,000 98.2 1,384 1,307 0.28
200 Corporate Boulevard South.... 1990 84,000 99.8 1,377 1,348 0.27
4 Executive Plaza................ 1986 80,000 99.0 939 867 0.19
6 Executive Plaza................ 1987 80,000 98.7 1,184 1,162 0.24
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
----------------------------------------------------------------------------------------------------------------------------------
7 Westchester Plaza.............. 14.11 13.98 Emigrant Savings Bank (69%), Fire End Croker Corp. (27%)
8 Westchester Plaza.............. 12.86 11.40 Mamiya America Corp. (24%), Ciba Specialty Chemicals Corp.
(17%), Kubra Data Transfer Ltd. (15%)
HAWTHORNE
200 Saw Mill River Road.......... 12.84 12.17 Walter DeGruyter Inc. (21%), Abscoa Industries Inc. (18%), TJ
Quatroni Plumbing and Heat (17%), Cablevision Lighpath Inc.
(12%), SI International Instruments Inc. (10%)
4 Skyline Drive.................. 17.43 15.96 Alstom USA Inc. (33%), Evonyx Inc. (23%)
5 Skyline Drive (g).............. 12.81 12.81 Taro Pharmaceuticals USA Inc. (75%), Westco Closet Corp. (20%)
6 Skyline Drive (g).............. 15.88 15.88 Evonyx Inc. (73%), Anvik Corporation (27%)
8 Skyline Drive.................. 12.52 9.87 Ameriquest Mortgage Company (51%), Evonyx Inc. (29%), Minolta
Business Solutions Inc. (20%)
10 Skyline Drive................. 14.25 13.15 Bi-Tronic Inc/LCA Sales Corp. (51%), Phoenix Systems Int'l
(32%), ENSR Corp. (17%)
11 Skyline Drive................. 16.09 14.98 Xand Corporation (100%)
12 Skyline Drive................. 17.20 13.51 Creative Visual Enterprises (38%), Medelec Inc. (32%), Savin
Corporation (30%)
15 Skyline Drive................. 17.56 15.33 Accorda Therapeutics Inc. (54%), Tellabs Operations Inc. (46%)
YONKERS
100 Corporate Boulevard.......... 18.07 17.06 Montefiore Medical Center (28%), Sempra Energy Trading Corp.
(13%), Minami International Corp. (12%), Otis Elevator Company
(11%), Genzyme Genetics Corp. (11%)
200 Corporate Boulevard South.... 16.43 16.08 Belmay Inc. (32%), Montefiore Medical Center (23%), Advanced
Viral Research Corp. (20%), Micromold Products Inc. (10%)
4 Executive Plaza................ 11.86 10.95 Wise Contact US Optical Corp. (35%), E&B Giftware Inc. (22%),
TT Systems LLC (10%)
6 Executive Plaza................ 14.99 14.72 CSC Holdings Inc. (52%), Yonkers Savings & Loan Assoc. (11%),
Empire Managed Care Inc. (10%)
34
PROPERTY LISTING
OFFICE/FLEX PROPERTIES
(CONTINUED)
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (d) (f) BASE RENT (%)
---------------------------------------------------------------------------------------------------------------------------------
1 Odell Plaza.................... 1980 106,000 90.8 1,217 1,166 0.24
5 Odell Plaza.................... 1983 38,400 99.6 599 577 0.12
7 Odell Plaza.................... 1984 42,600 95.9 657 650 0.13
---------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE/FLEX 2,244,747 98.3 29,877 28,268 5.96
---------------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
419 West Avenue.................. 1986 88,000 99.7 1,282 1,233 0.26
500 West Avenue.................. 1988 25,000 74.9 349 294 0.07
550 West Avenue.................. 1990 54,000 100.0 808 685 0.16
600 West Avenue.................. 1999 66,000 100.0 826 789 0.16
650 West Avenue.................. 1998 40,000 100.0 173 61 0.03
---------------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE/FLEX 273,000 97.6 3,438 3,062 0.68
---------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES 4,795,278 96.0 50,730 47,125 10.09
---------------------------------------------------------------------------------------------------------------------------------
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
----------------------------------------------------------------------------------------------------------------------------------
1 Odell Plaza.................... 12.64 12.11 Sportive Ventures 2 LLC (19%), Market Dynamics Group LLC (11%)
5 Odell Plaza.................... 15.66 15.09 Voyetra Technologies Inc. (44%), Photo File Inc. (34%), The
New Geri Care of Yonkers (22%)
7 Odell Plaza.................... 16.08 15.91 US Postal Service (41%), TT Systems Company (24%), Bright
Horizons Childrens Center (16%)
----------------------------------------------------------------------------------------------------------------------------------
TOTAL NEW YORK OFFICE/FLEX 14.14 13.41
----------------------------------------------------------------------------------------------------------------------------------
FAIRFIELD COUNTY, CONNECTICUT
STAMFORD
419 West Avenue.................. 14.61 14.05 Fuji Medical Systems USA Inc. (90%), Instill and Company Inc.
(10%)
500 West Avenue.................. 18.64 15.70 Lead Trackers Inc. (47%), Iner Tel Technologies Inc. (17%),
M Cohen and Sons Inc. (11%)
550 West Avenue.................. 14.96 12.69 Lifecodes Corp. (68%), Davidoff of Geneva (CT) Inc. (32%)
600 West Avenue.................. 12.52 11.95 Clarence House Imports, Ltd (100%)
650 West Avenue.................. 4.33 1.53 Davidoff of Geneva (CT) Inc. (100%)
----------------------------------------------------------------------------------------------------------------------------------
TOTAL CONNECTICUT OFFICE/FLEX 12.90 11.49
----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES 11.42 10.64
----------------------------------------------------------------------------------------------------------------------------------
35
PROPERTY LISTING
INDUSTRIAL/WAREHOUSE PROPERTIES
PERCENTAGE
OF TOTAL 2001
PERCENTAGE OFFICE,
NET LEASED 2001 2001 OFFICE/FLEX
RENTABLE AS OF BASE EFFECTIVE AND INDUSTRIAL/
PROPERTY YEAR AREA 12/31/01 RENT RENT WAREHOUSE
LOCATION BUILT (SQ. FT.) (%) (a) ($000'S) (b) (f) ($000'S) (c) (f) BASE RENT (%)
-------------------------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane............... 1957 6,600 100.0 71 71 0.01
2 Warehouse Lane............... 1957 10,900 96.3 134 127 0.03
3 Warehouse Lane............... 1957 77,200 100.0 290 279 0.06
4 Warehouse Lane............... 1957 195,500 97.4 1,941 1,890 0.40
5 Warehouse Lane............... 1957 75,100 97.1 776 668 0.15
6 Warehouse Lane............... 1982 22,100 100.0 511 509 0.10
-------------------------------------------------------------------------------------------------------------------------------
TOTAL INDUSTRIAL/WAREHOUSE PROPERTIES 387,400 98.0 3,723 3,544 0.75
-------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX,
AND INDUSTRIAL/WAREHOUSE
PROPERTIES 26,965,840 94.6 502,018 478,733 100.0
===============================================================================================================================
2001
2001 AVERAGE
AVERAGE EFFECTIVE TENANTS LEASING 10% OR
BASE RENT RENT MORE OF NET RENTABLE
PROPERTY PER SQ. FT. PER SQ. FT. AREA PER PROPERTY
LOCATION ($) (d) (f) ($) (e) (f) AS OF 12/31/01 (f)
--------------------------------------------------------------------------------------------------------------------------------
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
1 Warehouse Lane............... 10.76 10.76 JP Trucking Service Center Inc. (100%)
2 Warehouse Lane............... 12.77 12.10 RJ Bruno Roofing Inc. (55%), Teleport Communications Group
(41%)
3 Warehouse Lane............... 3.76 3.61 United Parcel Service (100%)
4 Warehouse Lane............... 10.19 9.93 San Mar Laboratories Inc. (63%), Westinghouse Air Brake Co.
Inc. (14%)
5 Warehouse Lane............... 10.64 9.16 Great Spring Waters of America (48%), Chamart Exclusives Inc.
(16%), Mallory Kotzen Tire Company (11%)
6 Warehouse Lane............... 23.12 23.03 Conway Central Express (100%)
--------------------------------------------------------------------------------------------------------------------------------
TOTAL INDUSTRIAL/WAREHOUSE PROPERTIES 9.80 9.33
--------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE, OFFICE/FLEX,
AND INDUSTRIAL/WAREHOUSE
PROPERTIES 20.00 19.08
================================================================================================================================
(a) Based on all leases in effect as of December 31, 2001.
(b) Total base rent for 2001, determined in accordance with generally accepted
accounting principles ("GAAP"). Substantially all of the leases provide
for annual base rents plus recoveries and escalation charges based upon
the tenant's proportionate share of and/or increases in real estate taxes
and certain operating costs, as defined, and the pass through of charges
for electrical usage.
(c) Total base rent for 2001 minus total 2001 amortization of tenant
improvements, leasing commissions and other concessions and costs,
determined in accordance with GAAP.
(d) Base rent for 2001 divided by net rentable square feet leased at December
31, 2001. For those properties acquired or placed in service during 2001,
amounts are annualized, as per Note g.
(e) Effective rent for 2001 divided by net rentable square feet leased at
December 31, 2001. For those properties acquired or placed in service
during 2001, amounts are annualized, as per Note g.
(f) Excludes space leased by the Company.
(g) As this property was acquired or placed in service by the Company during
2001, the amounts represented in 2001 base rent and 2001 effective rent
reflect only that portion of the year during which the Company owned or
placed the property in service. Accordingly, these amounts may not be
indicative of the property's full year results. For comparison purposes,
the amounts represented in 2001 average base rent per sq. ft. and 2001
average effective rent per sq. ft. for this property have been calculated
by taking 2001 base rent and 2001 effective rent for such property and
annualizing these partial-year results, dividing such annualized amounts
by the net rentable square feet leased at December 31, 2001. These
annualized per square foot amounts may not be indicative of the property's
results had the Company owned or placed such property in service for the
entirety of 2001.
(h) The property was sold by the Company in 2001.
(i) Calculation based on square feet in service as of December 31, 2001.
(j) The Company constructed an expansion to this building increasing its size
by 31,000 square feet.
(k) Property is excluded from weighted average percentage leased as it was an
in-service development property as of December 31, 2001. Had these
properties been included, weighted average percentage leased for total
office, office/flex, and industrial/warehouse properties would be 94.1
percent.
36
RETAIL PROPERTIES
The Company owned two stand-alone retail properties as of December 31, 2001, as
described below:
The Company owns an 8,000 square foot restaurant, constructed in 1986, located
at 2 Executive Plaza in the South Westchester Executive Park in Yonkers,
Westchester County, New York. The restaurant is 100 percent leased to Benni's
LLC for use as a Bennigan's restaurant under a 16-year lease. The lease
currently provides for fixed annual base rent of $175,000, with fully-reimbursed
real estate taxes, and operating expenses escalated based on the consumer price
index ("CPI") over a base year CPI. The lease, which commenced in December 2001
and expires in December 2017, includes scheduled rent increases in January 2003
to approximately $205,000 annually, in January 2006 to approximately $225,000
annually, in January 2010 to approximately $248,000 annually, and in January
2014 to approximately $273,000 annually. The lease also provides for additional
rent calculated as a percentage of sales over a specified sales amount, as well
as for two five-year renewal options. 2001 total base rent for the property,
calculated in accordance with GAAP, was approximately $13,497.
The Company also owns a 9,300 square foot restaurant, constructed in 1984,
located at 230 White Plains Road, Tarrytown, Westchester County, New York. The
restaurant is 100 percent leased to TGI Friday's under a 10-year lease which
provides for fixed annual base rent of approximately $195,000, with
fully-reimbursed real estate taxes, and operating expenses escalated based on
CPI over a base year CPI. The lease, which expires in August 2004, also provides
for additional rent calculated as a percentage of sales over a specified sales
amount, as well as for four five-year renewal options. 2001 total base rent for
the property, calculated in accordance with GAAP, was approximately $195,000.
LAND LEASES
The Company owned three land parcels, which were leased as of December 31, 2001,
as described below:
The Company leases land to Star Enterprises, on which a 2,264 square-foot Texaco
gas station was constructed, located at 1 Enterprise Boulevard in Yonkers,
Westchester County, New York. The 15-year, triple-net land lease provides for
annual rent of approximately $145,000 and expires in April 2005. The lease also
provides for two five-year renewal options. 2001 total base rent under this
lease, calculated in accordance with GAAP, was approximately $143,972.
The Company also leases five acres of land to Rake Realty, on which a 103,500
square-foot office building exists, located at 700 Executive Boulevard,
Elmsford, Westchester County, New York. The 22-year, triple-net land lease
provides for fixed annual rent plus a CPI adjustment every five years, and
expires in November 2018. 2001 total base rent under this lease, calculated in
accordance with GAAP, was approximately $114,276. The lease also provides for
several renewal options which could extend the lease term for an additional 30
years.
The Company also leases 27.7 acres of land to Home Depot, on which a 134,000
square-foot retail store was constructed, located at the Company's Horizon
Center Business Park, Hamilton Township, Mercer County, New Jersey. The net
lease, which began on February 1, 1999, provides for annual rent of
approximately $298,000 through the fifth year of the lease and fixed annual rent
plus a CPI adjustment every five years for the years thereafter and expires in
January 2094. The lease also provides an option for Home Depot to purchase the
land in 2002. 2001 total base rent under this lease, calculated in accordance
with GAAP, was approximately $260,750.
MULTI-FAMILY RESIDENTIAL PROPERTY
The Company owned a multi-family residential property as of December 31, 2001,
as well as sold a multi-family residential property in 2001, as described below:
25 MARTINE AVENUE, WHITE PLAINS, WESTCHESTER COUNTY, NEW YORK: The Company's
multi-family residential property, known as 25 Martine Avenue, was built in
1987. The property contains 124 residential units, comprised of 18 studio units,
71 one-bedroom units and 35 two-bedroom units, with an average size of
approximately 722 square feet per unit. The property had an average monthly
rental rate of approximately $1,572 per unit during 2001 and was 97.0 percent
leased as of December 31, 2001. The property also has retail space. The property
had 2001 total base rent of approximately $2.4 million, which represented
approximately 0.5 percent of the Company's 2001 total base rent. The average
occupancy rate for the property in each of 2001, 2000 and 1999 was 97.0 percent,
96.5 percent and 96.8 percent, respectively. In January 2002, the Company sold
this property for net sales proceeds of approximately $17.8 million.
37
TENBY CHASE APARTMENTS, DELRAN, BURLINGTON COUNTY, NEW JERSEY: During 2001, the
Company owned the Tenby Chase Apartments, a 327-unit, multi-family residential
property located in Delran, Burlington County, New Jersey, which was sold on
June 21, 2001. During 2001, the Company recognized approximately $1.4 million in
total base rent from the property.
OCCUPANCY
The table below sets forth the year-end percentages of rentable square feet
leased in the Company's in-service Consolidated Properties for the last five
years:
Percentage of
Year ended December 31, Square Feet Leased (%)
--------------------------------------------------------------------------------
2001 94.6
2000 96.8
1999 96.5
1998 96.6
1997 95.8
38
SIGNIFICANT TENANTS
The following table sets forth a schedule of the Company's 20 largest tenants
for the Consolidated Properties as of December 31, 2001, based upon annualized
base rents:
PERCENTAGE OF
ANNUALIZED COMPANY SQUARE PERCENTAGE YEAR OF
NUMBER OF BASE RENTAL ANNUALIZED BASE FEET TOTAL COMPANY LEASE
PROPERTIES REVENUE ($) (a) RENTAL REVENUE (%) LEASED LEASED SQ. FT. (%) EXPIRATION
-----------------------------------------------------------------------------------------------------------------------------------
AT&T Wireless Services 2 9,819,454 2.0 395,955 1.6 2007 (b)
Donaldson, Lufkin & Jenrette
Securities Corp. 1 8,317,176 1.7 271,953 1.1 2011
AT&T Corporation 2 7,268,746 1.5 450,278 1.8 2009 (c)
Keystone Mercy Health Plan 2 7,017,899 1.4 303,149 1.2 2015
Prentice-Hall Inc. 1 6,744,495 1.4 474,801 1.9 2014
IBM Corporation 3 6,390,275 1.3 361,688 1.4 2007 (d)
Nabisco Inc. 3 6,066,357 1.2 340,746 1.4 2006 (e)
Toys 'R' Us - NJ, Inc. 1 5,342,672 1.1 242,518 1.0 2012
Waterhouse Securities, Inc. 1 5,314,805 1.1 184,222 0.7 2015
American Institute of Certified
Public Accountants 1 4,981,357 1.0 249,768 1.0 2012
CMP Media Inc. 1 4,817,298 1.0 237,274 0.9 2014
Allstate Insurance Company 9 4,798,224 1.0 224,321 0.9 2009 (f)
Winston & Strawn 1 4,472,348 0.9 108,100 0.4 2003
Dean Witter Trust Company 1 4,319,508 0.9 221,019 0.9 2008
Morgan Stanley Dean Witter, Inc. 5 4,025,077 0.8 163,253 0.7 2010 (g)
Move.com Operations, Inc. 1 3,891,597 0.8 94,917 0.4 2006
Regus Business Centre Corp. 3 3,671,129 0.8 107,608 0.4 2011 (h)
Bank of Tokyo - Mitsubishi Ltd. 1 3,378,923 0.7 137,076 0.5 2009
KPMG, LLP 2 3,313,701 0.7 142,317 0.6 2012 (i)
BT Harborside 1 3,272,500 0.7 385,000 1.5 2003
-----------------------------------------------------------------------------------------------------------------------------------
Totals 107,223,541 22.0 5,095,963 20.3
===================================================================================================================================
(a) Annualized base rental revenue is based on actual December 2001 billings
times 12. For leases whose rent commences after January 1, 2002,
annualized base rental revenue is based on the first full month's billing
times 12. As annualized base rental revenue is not derived from historical
GAAP results, historical results may differ from those set forth above.
(b) 12,150 square feet expire September 2004; 345,799 square feet expire March
2007; 38,006 square feet expire June 2007.
(c) 63,278 square feet expire May 2004; 387,000 square feet expire January
2009.
(d) 28,289 square feet expire January 2005; 85,000 square feet expire December
2005; 248,399 square feet expire December 2007.
(e) 300,378 square feet expire December 2005; 40,368 square feet expire March
2006.
(f) 18,882 square feet expire April 2003; 4,398 square feet expire January
2004; 36,305 square feet expire January 2005; 23,024 square feet expire
October 2005; 22,444 square feet expire July 2006; 6,108 square feet
expire August 2006; 70,517 square feet expire June 2007; 31,143 square
feet expire April 2008; 11,500 square feet expire April 2009.
(g) 7,500 square feet expire September 2003; 18,539 square feet expire April
2005; 85,151 square feet expire February 2008; 19,500 square feet expire
June 2008; 7,000 square feet expire October 2009; 25,563 square feet
expire January 2010.
(h) 27,803 square feet expire January 2011; 38,930 square feet expire April
2011; 40,875 square feet expire June 2011.
(i) 15,113 square feet expire September 2002; 57,204 square feet expire July
2007; 70,000 square feet expire September 2012.
39
SCHEDULE OF LEASE EXPIRATIONS
The following table sets forth a schedule of lease expirations for the total of
the Company's office, office/flex, industrial/warehouse and stand-alone retail
properties, included in the Consolidated Properties, beginning January 1, 2002,
assuming that none of the tenants exercise renewal options:
AVERAGE ANNUAL
PERCENTAGE OF RENT PER NET
NET RENTABLE TOTAL LEASED ANNUALIZED RENTABLE PERCENTAGE OF
AREA SUBJECT SQUARE FEET BASE RENTAL SQUARE FOOT ANNUAL BASE
NUMBER OF TO EXPIRING REPRESENTED BY REVENUE UNDER REPRESENTED RENT UNDER
YEAR OF LEASES LEASES EXPIRING EXPIRING BY EXPIRING EXPIRING
EXPIRATION EXPIRING (a) (SQ. FT.) LEASES (%) (b) LEASES ($) (c) LEASES ($) LEASES (%)
---------------------------------------------------------------------------------------------------------------------------
2002 448 2,130,311 8.5 36,854,419 17.30 7.6
2003 487 3,951,403 15.8 71,598,719 18.12 14.7
2004 384 2,234,380 8.9 42,473,250 19.01 8.7
2005 373 3,179,979 12.7 60,296,606 18.96 12.4
2006 352 2,935,237 11.7 60,353,314 20.56 12.4
2007 168 2,314,745 9.2 48,673,525 21.03 10.0
2008 101 1,500,299 6.0 26,600,000 17.73 5.5
2009 55 1,369,891 5.5 25,512,500 18.62 5.3
2010 87 1,213,079 4.9 23,653,243 19.50 4.9
2011 61 1,436,628 5.7 35,215,623 24.51 7.2
2012 27 865,861 3.5 19,035,316 21.98 3.9
2013 and thereafter 35 1,906,090 7.6 35,766,979 18.76 7.4
---------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,578 25,037,903 (d) 100.0 486,033,494 19.41 100.0
===========================================================================================================================
(a) Includes office, office/flex, industrial/warehouse and stand-alone retail
property tenants only. Excludes leases for amenity, retail, parking and
month-to-month tenants. Some tenants have multiple leases.
(b) Excludes all unleased space as of December 31, 2001.
(c) Annualized base rental revenue is based on actual December 2001 billings
times 12. For leases whose rent commences after January 1, 2002,
annualized base rental revenue is based on the first full month's billing
times 12. As annualized base rental revenue is not derived from historical
GAAP results, historical results may differ from those set forth above.
(d) Reconciliation to Company's total net rentable square footage is as
follows:
Square Feet
-----------
Square footage leased to commercial tenants 25,037,903
Square footage used for corporate offices, management offices,
building use, retail tenants, food services, other ancillary
service tenants and occupancy adjustments 352,407
Square footage unleased 1,592,830
----------
Total net rentable square footage (does not include
residential, land lease, retail or not-in-service properties) 26,983,140
==========
40
SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES
The following table sets forth a schedule of lease expirations for the office
properties beginning January 1, 2002, assuming that none of the tenants exercise
renewal options:
AVERAGE ANNUAL
PERCENTAGE OF RENT PER NET
NET RENTABLE TOTAL LEASED ANNUALIZED RENTABLE PERCENTAGE OF
AREA SUBJECT SQUARE FEET BASE RENTAL SQUARE FOOT ANNUAL BASE
NUMBER OF TO EXPIRING REPRESENTED BY REVENUE UNDER REPRESENTED RENT UNDER
YEAR OF LEASES LEASES EXPIRING EXPIRING BY EXPIRING EXPIRING
EXPIRATION EXPIRING (a) (SQ. FT.) LEASES (%) (b) LEASES ($) (c) LEASES ($) LEASES (%)
---------------------------------------------------------------------------------------------------------------------
2002 350 1,443,177 7.2 29,947,927 20.75 7.0
2003 397 3,180,278 15.8 64,042,823 20.14 15.0
2004 312 1,572,593 7.8 34,967,523 22.24 8.2
2005 296 2,508,329 12.5 52,699,906 21.01 12.3
2006 287 2,319,244 11.6 52,198,688 22.51 12.2
2007 145 1,927,069 9.6 43,455,258 22.55 10.1
2008 83 1,182,186 5.9 23,582,800 19.95 5.5
2009 37 1,195,103 6.0 23,357,006 19.54 5.5
2010 56 822,428 4.1 17,584,655 21.38 4.1
2011 55 1,355,737 6.8 34,067,977 25.13 8.0
2012 23 798,999 4.0 18,214,549 22.80 4.2
2013 and thereafter 30 1,739,655 8.7 33,761,607 19.41 7.9
---------------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2,071 20,044,798 100.0 427,880,719 21.35 100.0
=====================================================================================================================
(a) Includes office tenants only. Excludes leases for amenity, retail, parking
and month-to-month office tenants. Some tenants have multiple leases.
(b) Excludes all unleased space as of December 31, 2001.
(c) Annualized base rental revenue is based on actual December 2001 billings
times 12. For leases whose rent commences after January 1, 2002,
annualized base rental revenue is based on the first full month's billing
times 12. As annualized base rental revenue is not derived from historical
GAAP results, historical results may differ from those set forth above.
41
SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES
The following table sets forth a schedule of lease expirations for the
office/flex properties beginning January 1, 2002, assuming that none of the
tenants exercise renewal options:
AVERAGE ANNUAL
PERCENTAGE OF RENT PER NET
NET RENTABLE TOTAL LEASED ANNUALIZED RENTABLE PERCENTAGE OF
AREA SUBJECT SQUARE FEET BASE RENTAL SQUARE FOOT ANNUAL BASE
NUMBER OF TO EXPIRING REPRESENTED BY REVENUE UNDER REPRESENTED RENT UNDER
YEAR OF LEASES LEASES EXPIRING EXPIRING BY EXPIRING EXPIRING
EXPIRATION EXPIRING (a) (SQ. FT.) LEASES (%) (b) LEASES ($) (c) LEASES ($) LEASES (%)
----------------------------------- -------------------------------------------------- --------------------------------
2002 92 633,362 13.8 6,326,002 9.99 11.7
2003 85 670,151 14.6 7,011,158 10.46 13.0
2004 62 452,367 9.8 5,010,227 11.08 9.3
2005 74 658,496 14.3 7,414,824 11.26 13.7
2006 65 615,993 13.4 8,154,626 13.24 15.1
2007 23 387,676 8.4 5,218,267 13.46 9.6
2008 18 318,113 6.9 3,017,200 9.48 5.6
2009 17 162,988 3.5 2,049,294 12.57 3.8
2010 31 390,651 8.5 6,068,588 15.53 11.2
2011 6 80,891 1.8 1,147,646 14.19 2.1
2012 4 66,862 1.5 820,767 12.28 1.5
2013 and thereafter 4 158,435 3.5 1,830,372 11.55 3.4
----------------------------------- -------------------------------------------------- --------------------------------
Totals/Weighted
Average 481 4,595,985 100.0 54,068,971 11.76 100.0
=================================== ================================================== ================================
(a) Includes office/flex tenants only. Excludes leases for amenity, retail,
parking and month-to-month office/flex tenants. Some tenants have multiple
leases.
(b) Excludes all unleased space as of December 31, 2001.
(c) Annualized base rental revenue is based on actual December 2001 billings
times 12. For leases whose rent commences after January 1, 2002,
annualized base rental revenue is based on the first full month's billing
times 12. As annualized base rental revenue is not derived from historical
GAAP results, historical results may differ from those set forth above.
42
SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES
The following table sets forth a schedule of lease expirations for the
industrial/warehouse properties beginning January 1, 2002, assuming that none of
the tenants exercise renewal options:
AVERAGE ANNUAL
PERCENTAGE OF RENT PER NET
NET RENTABLE TOTAL LEASED ANNUALIZED RENTABLE PERCENTAGE OF
AREA SUBJECT SQUARE FEET BASE RENTAL SQUARE FOOT ANNUAL BASE
NUMBER OF TO EXPIRING REPRESENTED BY REVENUE UNDER REPRESENTED RENT UNDER
YEAR OF LEASES LEASES EXPIRING EXPIRING BY EXPIRING EXPIRING
EXPIRATION EXPIRING (a) (SQ. FT.) LEASES (%) (b) LEASES ($) (c) LEASES ($) LEASES (%)
----------------------------------------------------------------------------------------------------------------
2002 6 53,772 14.1 580,490 10.80 15.6
2003 5 100,974 26.6 544,738 5.39 14.7
2004 9 200,120 52.7 2,300,500 11.50 61.9
2005 3 13,154 3.5 181,876 13.83 4.9
2009 1 11,800 3.1 106,200 9.00 2.9
----------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 24 379,820 100.0 3,713,804 9.78 100.0
================================================================================================================
(a) Includes industrial/warehouse tenants only. Excludes leases for amenity,
retail, parking and month-to-month industrial/warehouse tenants. Some
tenants have multiple leases.
(b) Excludes all unleased space as of December 31, 2001.
(c) Annualized base rental revenue is based on actual December 2001 billings
times 12. For leases whose rent commences after January 1, 2002,
annualized base rent revenue is based on the first full month's billing
times 12. As annualized base rental revenue is not derived from historical
GAAP results, the historical results may differ from those set forth
above.
SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES
The following table sets forth a schedule of lease expirations for the
stand-alone retail properties beginning January 1, 2002, assuming that none of
the tenants exercise renewal options:
AVERAGE ANNUAL
PERCENTAGE OF RENT PER NET
NET RENTABLE TOTAL LEASED ANNUALIZED RENTABLE PERCENTAGE OF
AREA SUBJECT SQUARE FEET BASE RENTAL SQUARE FOOT ANNUAL BASE
NUMBER OF TO EXPIRING REPRESENTED BY REVENUE UNDER REPRESENTED RENT UNDER
YEAR OF LEASES LEASES EXPIRING EXPIRING BY EXPIRING EXPIRING
EXPIRATION EXPIRING (a) (SQ. FT.) LEASES (%) LEASES ($) (b) LEASES ($) LEASES (%)
----------------------------------------------------------------------------------------------------------------
2004 1 9,300 53.8 195,000 20.97 52.7
2013 1 8,000 46.2 175,000 21.87 47.3
----------------------------------------------------------------------------------------------------------------
Totals/Weighted
Average 2 17,300 100.0 370,000 21.39 100.0
================================================================================================================
(a) Includes stand-alone retail property tenants only.
(b) Annualized base rental revenue is based on actual December 2001 billings
times 12. For leases whose rent commences after January 1, 2002,
annualized base rental revenue is based on the first full month's billing
times 12. As annualized base rental revenue is not derived from historical
GAAP results, historical results may differ from those set forth above.
43
INDUSTRY DIVERSIFICATION
The following table lists the Company's 30 largest industry classifications
based on annualized contractual base rent of the Consolidated Properties:
ANNUALIZED PERCENTAGE OF PERCENTAGE OF
BASE RENTAL COMPANY SQUARE TOTAL COMPANY
REVENUE ANNUALIZED BASE FEET LEASED
INDUSTRY CLASSIFICATION (a) ($) (b) (c) RENTAL REVENUE (%) LEASED SQ. FT. (%)
-----------------------------------------------------------------------------------------------------------------
Securities, Commodity Contracts & Other Financial 56,121,434 11.5 2,344,132 9.4
Manufacturing 45,537,999 9.4 2,627,823 10.5
Telecommunications 32,855,538 6.8 1,748,089 7.0
Computer System Design Svcs. 31,430,419 6.5 1,615,175 6.4
Insurance Carriers & Related Activities 30,872,702 6.4 1,525,486 6.1
Legal Services 28,614,936 5.9 1,225,323 4.9
Health Care & Social Assistance 21,262,798 4.4 1,105,824 4.4
Credit Intermediation & Related Activities 20,629,510 4.2 1,176,807 4.7
Wholesale Trade 18,834,448 3.9 1,303,059 5.2
Accounting/Tax Prep. 18,432,329 3.8 798,786 3.2
Other Professional 17,958,955 3.7 942,452 3.8
Information Services 14,480,262 3.0 653,239 2.6
Retail Trade 13,809,551 2.8 800,648 3.2
Publishing Industries 12,863,723 2.6 565,855 2.3
Scientific Research/Development 12,121,662 2.5 690,708 2.7
Arts, Entertainment & Recreation 10,813,042 2.2 718,073 2.9
Real Estate & Rental & Leasing 10,093,912 2.1 494,105 2.0
Architectural/Engineering 9,987,054 2.1 470,093 1.9
Management of Companies & Finance 9,481,822 2.0 411,977 1.6
Other Services (except Public Administration) 9,326,018 1.9 683,458 2.7
Advertising/Related Services 8,806,638 1.8 398,406 1.6
Transportation 7,435,691 1.5 483,716 1.9
Management/Scientific 6,426,163 1.3 296,185 1.2
Data Processing Services 5,292,121 1.1 239,183 0.9
Construction 4,974,994 1.0 270,573 1.1
Educational Services 4,205,381 0.9 220,135 0.9
Utilities 4,000,505 0.8 185,257 0.7
Admin. & Support, Waste Mgt. & Remediation Svc. 3,645,038 0.7 256,062 1.0
Public Administration 3,393,501 0.7 170,696 0.7
Specialized Design Services 3,101,804 0.6 145,959 0.6
Other 9,223,544 1.9 470,619 1.9
-----------------------------------------------------------------------------------------------------------------
Totals 486,033,494 100.0 25,037,903 100.0
=================================================================================================================
(a) The Company's tenants are classified according to the U.S. Government's
new North American Industrial Classification System (NAICS) which has
replaced the Standard Industrial Code (SIC) system.
(b) Annualized base rental revenue is based on actual December billings times
12. For leases whose rent commences after January 1, 2002, annualized base
rental revenue is based on the first full month's billing times 12. As
annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth above.
(c) Includes office, office/flex, industrial/warehouse and stand-alone retail
tenants only. Excludes leases for amenity, retail, parking and
month-to-month tenants. Some tenants have multiple leases.
44
MARKET DIVERSIFICATION
The following table lists the Company's markets (MSAs), based on annualized
contractual base rent of the Consolidated Properties:
ANNUALIZED PERCENTAGE OF
BASE RENTAL COMPANY TOTAL
REVENUE ANNUALIZED BASE PROPERTY SIZE PERCENTAGE OF
MARKET (MSA) ($) (a) (b) RENTAL REVENUE (%) RENTABLE AREA RENTABLE AREA (%)
--------------------------------------------------------------------------------------------------------------------
Bergen-Passaic, NJ 85,795,008 17.7 4,530,091 16.8
New York, NY (Westchester-Rockland Counties) 85,324,473 17.6 4,864,355 18.0
Newark, NJ (Essex-Morris-Union Counties) 85,027,901 17.5 4,116,859 15.3
Jersey City, NJ 43,470,865 8.9 2,094,470 7.8
Philadelphia, PA-NJ 40,460,353 8.3 2,991,796 11.1
Denver, CO 18,720,330 3.8 1,193,185 4.4
Middlesex-Somerset-Hunterdon, NJ 15,772,224 3.2 791,051 2.9
Trenton, NJ (Mercer County) 14,099,825 2.9 672,365 2.5
Dallas, TX 13,460,321 2.8 863,954 3.2
San Francisco, CA 12,885,972 2.6 450,891 1.7
Washington, DC-MD-VA 12,721,507 2.6 450,549 1.7
Stamford-Norwalk, CT 9,090,436 1.9 527,250 2.0
Monmouth-Ocean, NJ 7,084,732 1.5 577,423 2.1
Houston, TX 6,903,067 1.4 516,796 1.9
Nassau-Suffolk, NY 6,373,398 1.3 292,849 1.1
Phoenix-Mesa, AZ 5,646,402 1.2 416,967 1.5
San Antonio, TX 4,425,870 0.9 435,465 1.6
Tampa-St. Petersburg-Clearwater, FL 3,933,426 0.8 297,429 1.1
Boulder-Longmont, CO 3,655,875 0.8 270,421 1.0
Bridgeport, CT 3,170,791 0.7 145,487 0.5
Colorado Springs, CO 2,961,797 0.6 209,987 0.8
Dutchess County, NY 2,103,516 0.4 118,727 0.4
Atlantic-Cape May, NJ 1,790,343 0.4 80,344 0.3
Fort Worth-Arlington, TX 1,155,062 0.2 74,429 0.3
--------------------------------------------------------------------------------------------------------------------
Totals 486,033,494 100.0 26,983,140 100.0
====================================================================================================================
(a) Annualized base rental revenue is based on actual December 2001 billings
times 12. For leases whose rent commences after January 1, 2002,
annualized base rental revenue is based on the first full month's billing
times 12. As annualized base rental revenue is not derived from historical
GAAP results, historical results may differ from those set forth above.
(b) Includes office, office/flex, industrial/warehouse and stand-alone retail
tenants only. Excludes leases for amenity, retail, parking and
month-to-month tenants. Some tenants have multiple leases.
45
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary routine
litigation incidental to its business, to which the Company is a party or to
which any of the Properties is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The shares of the Company's Common Stock are traded on the New York Stock
Exchange ("NYSE") and the Pacific Exchange under the symbol "CLI".
MARKET INFORMATION
The following table sets forth the quarterly high, low, and closing price per
share of Common Stock reported on the NYSE for the years ended December 31, 2001
and 2000, respectively:
For the Year Ended December 31, 2001
High Low Close
---- --- -----
First Quarter $28.5000 $25.4900 $27.0000
Second Quarter $28.7000 $25.7900 $28.4800
Third Quarter $32.0000 $27.3000 $31.0000
Fourth Quarter $32.2000 $28.3800 $31.0200
For the Year Ended December 31, 2000
High Low Close
---- --- -----
First Quarter $26.6250 $22.7500 $25.5000
Second Quarter $28.4375 $24.4375 $25.6875
Third Quarter $28.6250 $25.0625 $28.1875
Fourth Quarter $28.8750 $25.7500 $28.5625
On February 14, 2002, the closing Common Stock sales price on the NYSE was
$31.45 per share.
HOLDERS
On February 14, 2002, the Company had 528 common shareholders of record.
RECENT SALES OF UNREGISTERED SECURITIES
The Company did not issue any unregistered securities in the year ended December
31, 2001.
DIVIDENDS AND DISTRIBUTIONS
During the year ended December 31, 2001, the Company declared four quarterly
common stock dividends and common unit distributions in the amounts of $0.61,
$0.61, $0.62 and $0.62 per share and common unit from the first to the fourth
quarter, respectively.
46
During the year ended December 31, 2000, the Company declared four quarterly
common stock dividends and common unit distributions in the amounts of $0.58,
$0.58, $0.61 and $0.61 per share and common unit from the first to the fourth
quarter, respectively.
The declaration and payment of dividends and distributions will continue to be
determined by the Board of Directors in light of conditions then existing,
including the Company's earnings, financial condition, capital requirements,
applicable legal restrictions and other factors.
47
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data on a consolidated basis
for the Company. The consolidated selected operating, balance sheet and cash
flow data of the Company as of December 31, 2001, 2000, 1999, 1998 and 1997, and
for the years then ended have been derived from financial statements audited by
PricewaterhouseCoopers LLP, independent accountants.
OPERATING DATA Year Ended December 31,
IN THOUSANDS, EXCEPT PER SHARE DATA 2001 2000 1999 1998 1997
-------------------------------------------------------------------------------------------------------------------------
Total revenues $ 584,348 $ 576,153 $ 551,484 $ 493,699 $ 249,801
Operating and other expenses $ 174,686 $ 172,146 $ 168,651 $ 150,448 $ 75,353
General and administrative $ 28,490 $ 23,276 $ 25,480 $ 24,828 $ 15,659
Depreciation and amortization $ 91,471 $ 92,088 $ 87,209 $ 78,916 $ 36,825
Interest expense $ 112,003 $ 105,394 $ 102,960 $ 88,043 $ 39,078
Non-recurring charges $ -- $ 37,139 $ 16,458 $ -- $ 46,519
Realized gains (losses) and unrealized losses on
disposition of rental property, net $ (11,864) $ 85,353 $ 1,957 $ -- $ --
Income before minority interests and extraordinary $ 177,698 $ 231,463 $ 152,683 $ 151,464 $ 36,367
item
Income before extraordinary item $ 131,659 $ 185,338 $ 119,739 $ 118,951 $ 4,988
Net income $ 131,659 $ 185,338 $ 119,739 $ 116,578 $ 1,405
Basic earnings per share - before extraordinary item $ 2.33 $ 3.18 $ 2.05 $ 2.13 $ 0.13
Diluted earnings per share - before extraordinary $ 2.32 $ 3.10 $ 2.04 $ 2.11 $ 0.12
item
Dividends declared per common share $ 2.46 $ 2.38 $ 2.26 $ 2.10 $ 1.90
Basic weighted average shares outstanding 56,538 58,338 58,385 55,840 39,266
Diluted weighted average shares outstanding 64,775 73,070 67,133 63,893 44,156
BALANCE SHEET DATA December 31,
IN THOUSANDS 2001 2000 1999 1998 1997
-------------------------------------------------------------------------------------------------------------------------
Rental property, before accumulated depreciation
and amortization $3,378,071 $3,589,877 $3,654,845 $3,467,799 $2,629,616
Rental property held for sale, net $ 384,626 $ 107,458 $ -- $ -- $ --
Total assets $3,746,770 $3,676,977 $3,629,601 $3,452,194 $2,593,444
Total debt $1,700,150 $1,628,512 $1,490,175 $1,420,931 $ 972,650
Total liabilities $1,867,938 $1,774,239 $1,648,844 $1,526,974 $1,056,759
Minority interests $ 446,244 $ 449,448 $ 538,875 $ 501,313 $ 379,245
Stockholders' equity $1,432,588 $1,453,290 $1,441,882 $1,423,907 $1,157,440
OTHER DATA Year Ended December 31,
IN THOUSANDS 2001 2000 1999 1998 1997
-------------------------------------------------------------------------------------------------------------------------
Cash flows provided by operating activities $ 265,883 $ 180,529 $ 243,638 $ 208,761 $ 98,142
Cash flows (used in) provided by investing $ (145,586) $ 6,189 $ (195,178) $ (749,067) $ (939,501)
activities
Cash flows (used in) provided by financing $ (120,641) $ (182,210) $ (45,598) $ 543,411 $ 639,256
activities
Funds from operations (1), before distributions to
preferred unitholders $ 260,497 $ 262,071 $ 244,240 $ 216,949 $ 111,752
Funds from operations (1), after distributions to
preferred unitholders $ 244,853 $ 246,630 $ 228,764 $ 200,636 $ 110,864
----------
(1) The Company considers funds from operations (after adjustment for
straight-lining of rents and non-recurring charges) one measure of REIT
performance. Funds from operations ("FFO") is defined as net income (loss)
before minority interest of unitholders (preferred and common) computed in
accordance with generally accepted accounting principles ("GAAP"),
excluding gains (or losses) from debt restructuring, other extraordinary
items, and sales of depreciable rental property, plus real estate-related
depreciation and amortization. FFO should not be considered as an
alternative for net income as an indication of the Company's performance
or to cash flows as a measure of liquidity. FFO presented herein is not
necessarily comparable to FFO presented by other real estate companies due
to the fact that not all real estate companies use the same definition.
However, the Company's FFO is comparable to the FFO of real estate
companies that use the current definition of the National Association of
Real Estate Investment Trusts ("NAREIT"), after the adjustment for
straight-lining of rents and non-recurring charges. Refer to "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
contained elsewhere in this Report, for the calculation of FFO for the
periods presented.
48
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Mack-Cali Realty Corporation and the notes thereto.
Certain defined terms used herein have the meaning ascribed to them in the
Financial Statements.
The Company has a focused strategy geared to attractive opportunities in
high-barrier-to-entry markets, primarily predicated on the Company's strong
presence in the Northeast region. The Company plans to sell substantially all of
its properties located in the Southwestern and Western regions, using such
proceeds to invest in property acquisitions and development projects in its core
Northeast markets, as well as to repay debt and fund stock repurchases.
Consistent with its strategy, in the fourth quarter 2000, the Company started
construction of a 980,000 square-foot office property, to be known as Plaza 5,
at its Harborside Financial Center office complex in Jersey City, Hudson County,
New Jersey, which is approximately 55 percent leased as of February 14, 2002.
The project is currently projected to cost approximately $260 million, of which
$113.3 million has been incurred by the Company through December 31, 2001, and
is anticipated to be completed in late 2002. Additionally, in the fourth quarter
2000, the Company, through a joint venture, started construction of a 575,000
square-foot office property, to be known as Plaza 10, on land owned by the joint
venture located adjacent to the Company's Harborside complex. The Company holds
a 50 percent interest in the joint venture. Among other things, the joint
venture agreement provides for a preferred return on the Company's invested
capital in the venture, in addition to the Company's proportionate share of the
venture's profit, as defined in the agreement. The project is currently
projected to cost the Company approximately $145 million, of which $74.0 million
has been incurred by the Company through December 31, 2001. The Project, which
is 100 percent leased to Charles Schwab & Co. Inc. ("Schwab") for a 15-year
term, is anticipated to be completed in late 2002. The lease agreement obligates
the Company, among other things, to deliver space to the tenant by required
timelines and offers the tenant expansion options into additional space in any
adjacent Harborside projects. Such options may obligate the Company to construct
an additional building at Harborside if vacant space is not available in any of
its existing Harborside properties. Should the Company be unable to or choose
not to provide such expansion space, the Company could be liable to Schwab for
its actual damages, in no event to exceed $15 million. The Company anticipates
expending an additional approximately $218.5 million for the completion of Plaza
5, Plaza 10 and other projects. The Company expects to finance its funding
requirements primarily through drawing on its revolving credit facility.
On a periodic basis, management assesses whether there are any indicators that
the value of the Company's 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. To the extent
impairment has occurred, the loss shall be measured as the excess of the
carrying amount of the property over the fair value of the property. Except for
certain assets classified as held for sale, as discussed below, management does
not believe that the value of any of the Company's rental properties is
impaired.
When assets are identified by management as held for sale, the Company
discontinues depreciating the assets and estimates the sales price, net of
selling costs, of such assets. If, in management's opinion, the net sales price
of the assets which have been identified for sale is less than the net book
value of the assets, a valuation allowance is established.
As of December 31, 2001, the Company identified 37 office properties,
aggregating approximately 4.3 million square feet, a multi-family residential
property and a land parcel as held for sale. These properties are located in
Texas, Colorado, Arizona, Florida and New York. Such properties carried an
aggregate book value of $384.6 million, net of accumulated depreciation of $28.4
million and a valuation allowance of $40.5 million at December 31, 2001. In
January 2002, the Company sold 25 Martine Avenue, a 124-unit multi-family
residential property located in White Plains, Westchester County, New York, for
net sales proceeds of approximately $17.8 million, which resulted in a gain of
approximately $7.3 million. The Company is currently in various stages of
contract negotiations for the sale or sales of certain of the remainder of these
properties. Substantially all of the properties are unencumbered. The sale of
one or more of these assets will enhance the company's short-term liquidity
although there is no assurance when and if any sales will occur or, if they
occur, how much proceeds the Company will realize.
49
As of December 31, 2000, the Company had identified 10 office properties,
aggregating approximately 1.6 million square feet, and a land parcel as held for
sale, all of which are located in San Antonio and Houston, Texas. Such
properties carried an aggregate book value of $107.5 million, net of accumulated
depreciation, of $7.0 million. In 2001, the Company sold four of these
properties for total net sales proceeds of approximately $62.1 million.
The following comparisons for the year ended December 31, 2001 ("2001"), as
compared to the year ended December 31, 2000 ("2000"), and for 2000, as compared
to the year ended December 31, 1999 ("1999"), make reference to the following:
(i) the effect of the "Same-Store Properties," which represents all in-service
properties owned by the Company at December 31, 1999, excluding Dispositions as
defined below (for the 2001 versus 2000 comparison) and which represents all
in-service properties owned by the Company at December 31, 1998, excluding
Dispositions as defined below (for the 2000 versus 1999 comparison), (ii) the
effect of the "Acquired Properties," which represents all properties acquired or
placed in service by the Company from January 1, 2000 through December 31, 2001
(for the 2001 versus 2000 comparison) and which represents all properties
acquired or placed in service by the Company from January 1, 1999 through
December 31, 2000 (for the 2000 versus 1999 comparison) and (iii) the effect of
the "Dispositions", which represents results for each period for those rental
properties sold by the Company during the respective periods.
YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000
Year Ended
December 31, Dollar Percent
(DOLLARS IN THOUSANDS) 2001 2000 Change Change
--------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 506,557 $491,193 $ 15,364 3.1%
Escalations and recoveries from tenants 56,083 58,488 (2,405) (4.1)
Parking and other 10,518 15,325 (4,807) (31.4)
--------------------------------------------------------------------------------------------------
Sub-total 573,158 565,006 8,152 1.4
Equity in earnings of unconsolidated joint ventures 9,004 8,055 949 11.8
Interest income 2,186 3,092 (906) (29.3)
--------------------------------------------------------------------------------------------------
Total revenues 584,348 576,153 8,195 1.4
--------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 62,015 59,400 2,615 4.4
Utilities 43,892 42,035 1,857 4.4
Operating services 68,779 70,711 (1,932) (2.7)
--------------------------------------------------------------------------------------------------
Sub-total 174,686 172,146 2,540 1.5
General and administrative 28,490 23,276 5,214 22.4
Depreciation and amortization 91,471 92,088 (617) (0.7)
Interest expense 112,003 105,394 6,609 6.3
Non-recurring charges -- 37,139 (37,139) (100.0)
--------------------------------------------------------------------------------------------------
Total expenses 406,650 430,043 (23,393) (5.4)
--------------------------------------------------------------------------------------------------
Income before realized gains (losses) and unrealized
losses on disposition of rental property and
minority interests 177,698 146,110 31,588 21.6
Realized gains (losses) and unrealized losses on
disposition of rental property, net (11,864) 85,353 (97,217) (113.9)
--------------------------------------------------------------------------------------------------
Income before minority interests 165,834 231,463 (65,629) (28.4)
MINORITY INTERESTS:
Operating partnership 34,175 41,053 (6,878) (16.8)
Partially-owned properties -- 5,072 (5,072) (100.0)
--------------------------------------------------------------------------------------------------
Net income $ 131,659 $185,338 $(53,679) (29.0)%
==================================================================================================
50
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Same-Store Properties, Acquired Properties and
Dispositions (dollars in thousands):
Total Company Same-Store Properties Acquired Properties Dispositions
----------------- --------------------- ------------------- ------------------
Dollar Percent Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change Change Change
----------------------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
Base rents $15,364 3.1% $10,039 2.0% $26,940 5.5% $(21,615) (4.4)%
Escalations and recoveries
from tenants (2,405) (4.1) (1,804) (3.1) 2,556 4.4 (3,157) (5.4)
Parking and other (4,807) (31.4) (4,432) (28.9) 399 2.6 (774) (5.1)
----------------------------------------------------------------------------------------------------------------------------
Total $ 8,152 1.4% $ 3,803 0.6% $29,895 5.3% $(25,546) (4.5)%
============================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $ 2,615 4.4% $ 938 1.6% $ 3,945 6.6% $ (2,268) (3.8)%
Utilities 1,857 4.4 1,696 4.0 2,227 5.3 (2,066) (4.9)
Operating services (1,932) (2.7) (1,279) (1.8) 3,942 5.6 (4,595) (6.5)
----------------------------------------------------------------------------------------------------------------------------
Total $ 2,540 1.5% $ 1,355 0.8% $10,114 5.9% $ (8,929) (5.2)%
============================================================================================================================
OTHER DATA:
Number of Consolidated Properties 259 240 19 15
Square feet (in thousands) 26,983 24,602 2,381 2,971
Base rents for the Same-Store Properties increased $10.0 million, or 2.0
percent, for 2001 as compared to 2000, due primarily to rental rate increases in
2001. Escalations and recoveries from tenants for the Same-Store Properties
decreased $1.8 million, or 3.1 percent, for 2001 over 2000, due to the recovery
of a decreased amount of total property expenses partially as a result of new
base years established from 2001 leasing activity. Parking and other income for
the Same-Store Properties decreased $4.4 million, or 28.9 percent, due primarily
to fewer lease termination fees in 2001.
Base rental revenue is recognized on a straight-line basis over the terms of the
respective leases. Unbilled rents receivable represents the amount by which
straight-line rental revenue exceeds rents currently billed in accordance with
the lease agreements. Parking and other revenue includes income from parking
spaces leased to tenants, income from tenants for additional services provided
by the Company, income from tenants for early lease terminations and income from
managing properties for third parties. Rental income on residential property
under operating leases having terms generally of one year or less is recognized
when earned. Escalations and recoveries are received from tenants for certain
costs as provided in the lease agreements. These costs generally include real
estate taxes, utilities, insurance, common area maintenance and other
recoverable costs. See Note 15 to the Financial Statements.
Real estate taxes on the Same-Store Properties increased $0.9 million, or 1.6
percent, for 2001 as compared to 2000, due primarily to property tax rate
increases in certain municipalities in 2001, partially offset by lower
assessments on certain properties in 2001. Utilities for the Same-Store
Properties increased $1.7 million, or 4.0 percent, for 2001 as compared to 2000,
due primarily to increased rates. Operating services for the Same-Store
Properties decreased $1.3 million, or 1.8 percent, due primarily to decreased
maintenance and snow removal costs in 2001.
Equity in earnings of unconsolidated joint ventures increased $0.9 million, or
11.8 percent, for 2001 as compared to 2000. This is due primarily to properties
developed by joint ventures being placed in service in 2001 and higher
occupancies at certain properties, partially offset by the sale of joint venture
office properties in 2001 (see Note 4 to the Financial Statements).
The Company accounts for its investments in unconsolidated joint ventures under
the equity method of accounting as the Company exercises significant influence,
but does not control these entities. These investments are recorded initially at
cost, as Investments in Unconsolidated Joint Ventures, and subsequently adjusted
for equity in earnings and cash contributions and distributions. Any difference
between the carrying amount of these investments on the balance sheet of the
Company and the underlying equity in net assets is amortized as an adjustment to
equity in earnings of unconsolidated joint ventures over 40 years. See Note 4 to
the Financial Statements.
51
Interest income decreased $0.9 million, or 29.3 percent, for 2001 as compared to
2000. This decrease was due primarily to additional interest income in 2000 on
investment of proceeds from the 2000 Dispositions in cash and cash equivalents
for longer periods of time.
General and administrative increased by $5.2 million, or 22.4 percent, for 2001
as compared to 2000. This increase is due primarily to increased bad debt
expense of approximately $2.5 million in 2001, related to a lease termination
fee receivable due from a former tenant deemed uncollectible, increased
professional fees, mostly on account of costs for transactions not consummated,
and increased payroll and payroll-related costs in 2001.
Costs incurred in connection with leases are capitalized and amortized on a
straight-line basis over the terms of the related leases and included in
depreciation and amortization. Unamortized deferred leasing costs are charged to
amortization expense upon early termination of the lease. Certain employees of
the Company provide leasing services to the Properties and receive compensation
based on space leased. The portion of such compensation, which is capitalized
and amortized, approximated $4.0 million and $3.7 million for the years ended
December 31, 2001 and 2000, respectively.
Depreciation and amortization decreased by $0.6 million, or 0.7 percent, for
2001 over 2000. Of this decrease, $2.1 million, or 2.2 percent, is attributable
to the Same-Store Properties, and $3.3 million, or 3.7 percent, is due to the
Dispositions, partially offset by an increase of $4.8 million, or 5.2 percent,
due to the Acquired Properties.
Interest expense increased $6.6 million, or 6.3 percent, for 2001 as compared to
2000. This increase is due primarily to higher average outstanding debt balances
in 2001 versus 2000, primarily as a result of Common Stock repurchases in late
2000 and early 2001 and, to a lesser extent, the replacement in early 2001 of
short-term credit facility borrowings with long-term, higher fixed rate debt.
Costs directly related to the development of rental properties are capitalized.
Capitalized development costs include interest, property taxes, insurance and
other project costs incurred during the period of development. Interest
capitalized by the Company for the years ended December 31, 2001 and 2000 was
$16.7 million and $11.5 million, respectively.
Non-recurring charges of $37.1 million were incurred in 2000 as a result of
costs associated with the termination of the Prentiss merger agreement in
September 2000 (see Note 3 to the Financial Statements) and costs associated
with the resignations of certain officers of the Company in June 2000 (see Note
14 to the Financial Statements).
Income before realized gains (losses) and unrealized losses on disposition of
rental property and minority interests increased to $177.7 million in 2001 from
$146.1 million in 2000. The increase of approximately $31.6 million is due to
the factors discussed above.
Net income decreased by $53.6 million, from $185.3 million in 2000 to $131.7
million in 2001. This decrease was a result of realized gains on disposition of
rental property of $85.3 million in 2000 and realized gains (losses) and
unrealized losses on disposition of rental property, net, of $11.9 million in
2001. This was partially offset by an increase in 2001 in income before realized
gains (losses) and unrealized losses on dispositions of rental property and
minority interests of $31.6 million and a decrease in minority interests of
$12.0 million in 2001.
52
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999
Year Ended
December 31, Dollar Percent
(DOLLARS IN THOUSANDS) 2000 1999 Change Change
-------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
Base rents $491,193 $469,853 $ 21,340 4.5%
Escalations and recoveries from tenants 58,488 62,182 (3,694) (5.9)
Parking and other 15,325 15,915 (590) (3.7)
-------------------------------------------------------------------------------------------------------------
Sub-total 565,006 547,950 17,056 3.1
Equity in earnings of unconsolidated joint ventures 8,055 2,593 5,462 210.6
Interest income 3,092 941 2,151 228.6
-------------------------------------------------------------------------------------------------------------
Total revenues 576,153 551,484 24,669 4.5
-------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 59,400 57,382 2,018 3.5
Utilities 42,035 41,580 455 1.1
Operating services 70,711 69,689 1,022 1.5
-------------------------------------------------------------------------------------------------------------
Sub-total 172,146 168,651 3,495 2.1
General and administrative 23,276 25,480 (2,204) (8.6)
Depreciation and amortization 92,088 87,209 4,879 5.6
Interest expense 105,394 102,960 2,434 2.4
Non-recurring charges 37,139 16,458 20,681 125.7
-------------------------------------------------------------------------------------------------------------
Total expenses 430,043 400,758 29,285 7.3
-------------------------------------------------------------------------------------------------------------
Income before realized gains (losses) and unrealized
losses on disposition of rental property and
minority interests 146,110 150,726 (4,616) (3.1)
Realized gains (losses) and unrealized losses on
disposition of rental property, net 85,353 1,957 83,396 4,261.4
-------------------------------------------------------------------------------------------------------------
Income before minority interests 231,463 152,683 78,780 51.6
MINORITY INTERESTS:
Operating partnership 41,053 32,865 8,188 24.9
Partially-owned properties 5,072 79 4,993 6,320.3
-------------------------------------------------------------------------------------------------------------
Net income $185,338 $119,739 $ 65,599 54.8%
=============================================================================================================
53
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Same-Store Properties, Acquired Properties and
Dispositions (DOLLARS IN THOUSANDS):
TOTAL COMPANY SAME-STORE PROPERTIES ACQUIRED PROPERTIES DISPOSITIONS
------------- --------------------- ------------------- ------------
Dollar Percent Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change Change Change
------------------------------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
Base rents $21,340 4.5% $16,615 3.5% $21,429 4.6% $(16,704) (3.6)%
Escalations and recoveries
from tenants (3,694) (5.9) (577) (0.9) 1,602 2.6 (4,719) (7.6)
Parking and other (590) (3.7) (111) (0.7) 150 0.9 (629) (3.9)
------------------------------------------------------------------------------------------------------------------------------------
Total $17,056 3.1% $15,927 2.9% $23,181 4.2% $(22,052) (4.0)%
====================================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $ 2,018 3.5% $ 1,267 2.2% $ 2,287 4.0% $ (1,536) (2.7)%
Utilities 455 1.1 752 1.8 1,501 3.6 (1,798) (4.3)
Operating services 1,022 1.5 664 1.0 3,359 4.8 (3,001) (4.3)
------------------------------------------------------------------------------------------------------------------------------------
Total $ 3,495 2.1% $ 2,683 1.6% $ 7,147 4.2% $ (6,335) (3.7)%
====================================================================================================================================
OTHER DATA:
Number of Consolidated Properties 255 237 18 7
Square feet (in thousands) 26,667 24,886 1,781 1,949
Base rents for the Same-Store Properties increased $16.6 million, or 3.5
percent, for 2000 as compared to 1999, due primarily to rental rate increases in
2000. Escalations and recoveries from tenants for the Same-Store Properties
decreased $0.6 million, or 0.9 percent, for 2000 over 1999, due to the recovery
of a decreased amount of total property expenses. Parking and other income for
the Same-Store Properties decreased $0.1 million, or 0.7 percent, due primarily
to fewer lease termination fees in 2000.
Base rental revenue is recognized on a straight-line basis over the terms of the
respective leases. Unbilled rents receivable represents the amount by which
straight-line rental revenue exceeds rents currently billed in accordance with
the lease agreements. Parking and other revenue includes income from parking
spaces leased to tenants, income from tenants for additional services provided
by the Company, income from tenants for early lease terminations and income from
managing properties for third parties. Rental income on residential property
under operating leases having terms generally of one year or less is recognized
when earned. Escalations and recoveries are received from tenants for certain
costs as provided in the lease agreements. These costs generally include real
estate taxes, utilities, insurance, common area maintenance and other
recoverable costs. See Note 15 to the Financial Statements.
Real estate taxes on the Same-Store Properties increased $1.3 million, or 2.2
percent, for 2000 as compared to 1999, due primarily to property tax rate
increases in certain municipalities in 2000. Utilities for the Same-Store
Properties increased $0.8 million, or 1.8 percent, for 2000 as compared to 1999,
due primarily to increased rates. Operating services for the Same-Store
Properties increased $0.7 million, or 1.0 percent, due primarily to an increase
in maintenance costs in 2000.
Equity in earnings of unconsolidated joint ventures increased $5.5 million, or
210.6 percent, for 2000 as compared to 1999. This is due primarily to properties
developed by joint ventures being placed in service in 2000 and higher
occupancies (see Note 4 to the Financial Statements).
The Company accounts for its investments in unconsolidated joint ventures under
the equity method of accounting as the Company exercises significant influence,
but does not control these entities. These investments are recorded initially at
cost, as Investments in Unconsolidated Joint Ventures, and subsequently adjusted
for equity in earnings and cash contributions and distributions. Any difference
between the carrying amount of these investments on the balance sheet of the
Company and the underlying equity in net assets is amortized as an adjustment to
equity in earnings of unconsolidated joint ventures over 40 years. See Note 4 to
the Financial Statements.
54
Interest income increased $2.2 million, or 228.6 percent, for 2000 as compared
to 1999. This increase was due primarily to the effect of net proceeds from
certain property sales being invested in cash and cash equivalents for the
period of time prior to which such proceeds were reinvested, as well as income
from mortgages receivable in 2000.
General and administrative decreased by $2.2 million, or 8.6 percent, for 2000
as compared to 1999. This decrease is due primarily to decreased payroll and
payroll-related costs in 2000.
Costs incurred in connection with leases are capitalized and amortized on a
straight-line basis over the terms of the related leases and included in
depreciation and amortization. Unamortized deferred leasing costs are charged to
amortization expense upon early termination of the lease. Certain employees of
the Company provide leasing services to the Properties and receive compensation
based on space leased. The portion of such compensation, which is capitalized
and amortized, approximated $3.7 million and $3.7 million for the years ended
December 31, 2000 and 1999, respectively.
Depreciation and amortization increased by $4.9 million, or 5.6 percent, for
2000 over 1999. Of this increase, $5.4 million, or 6.2 percent, is attributable
to the Same-Store Properties, and $3.8 million, or 4.4 percent, is due to the
Acquired Properties, partially offset by a decrease of $4.3 million, or 5.0
percent, due to the Dispositions.
Interest expense increased $2.4 million, or 2.4 percent, for 2000 as compared to
1999. This increase is due primarily to the replacement in March 1999 of
short-term credit facility borrowings with long-term fixed rate unsecured notes
and increase in LIBOR in 2000 over 1999.
Costs directly related to the development of rental properties are capitalized.
Capitalized development costs include interest, property taxes, insurance and
other project costs incurred during the period of development. Interest
capitalized by the Company for the years ended December 31, 2000 and 1999 was
$11.5 million and $6.8 million, respectively.
Non-recurring charges of $37.1 million were incurred in 2000 as a result of
costs associated with the termination of the Prentiss merger agreement in
September 2000 (see Note 3 to the Financial Statements) and costs associated
with the resignations of certain officers of the Company in June 2000 (see Note
14 to the Financial Statements). Non-recurring charges of $16.5 million were
incurred in 1999 as a result of the resignation of an officer (see Note 14 to
the Financial Statements).
Income before realized gains (losses) and unrealized losses on disposition of
rental property and minority interests decreased to $146.1 million in 2000 from
$150.7 million in 1999. The decrease of approximately $4.6 million is due to the
factors discussed above.
Net income increased by $65.6 million, from $119.7 million in 1999 to $185.3
million in 2000. This increase was a result of a realized gain on disposition of
rental property of $85.4 million in 2000. This was partially offset by a
decrease in income before realized gains (losses) and unrealized losses on
disposition of rental property and minority interests of $4.6 million in 2000 as
compared to 1999, a realized gain on disposition of rental property of $2.0
million in 1999, and an increase in minority interests of $13.2 million in 2000.
LIQUIDITY AND CAPITAL RESOURCES
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 and construction project costs and other capital
expenditures, the Company expects to finance such activities through borrowings
under its revolving credit facility and other debt and equity financing.
The Company expects to meet its short-term liquidity requirements generally
through its working capital, net cash provided by operating activities and from
the 2000 Unsecured Facility. The Company frequently examines potential property
acquisitions and construction projects and, at any given time, one or more of
such acquisitions or construction projects may be under consideration.
Accordingly, the ability to fund property acquisitions and construction projects
is a major part of the Company's financing requirements. The Company expects to
meet its financing requirements through funds generated from operating
activities, proceeds from property sales, long-term or short-term borrowings
(including draws on the Company's revolving credit facility) and the issuance of
additional debt or equity securities.
55
As of December 31, 2001, the Company's total indebtedness of $1.7 billion
(weighted average interest rate of 7.17 percent) was comprised of $91.7 million
of revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 3.38 percent) and fixed rate debt of $1.6 billion
(weighted average rate of 7.38 percent).
The Company has three investment grade credit ratings. Standard & Poor's Rating
Services ("S&P") and Fitch, Inc. ("Fitch") have each assigned their BBB rating
to existing and prospective senior unsecured debt of the Operating Partnership.
S&P and Fitch have also assigned their BBB- rating to prospective preferred
stock offerings of the Company. Moody's Investors Service ("Moody's") has
assigned its Baa3 rating to the existing and prospective senior unsecured debt
of the Operating Partnership and its Ba1 rating to prospective preferred stock
offerings of the Company.
As of December 31, 2001, the Company had outstanding borrowings of $59.5 million
under its 2000 Unsecured Facility, as defined in Note 9 to the Financial
Statements (with aggregate borrowing capacity of $800.0 million). The interest
rate on outstanding borrowings under the 2000 Unsecured Facility is currently
LIBOR plus 80 basis points. The Company may instead elect an interest rate
representing the higher of the lender's prime rate or the Federal Funds rate
plus 50 basis points. The 2000 Unsecured Facility also currently requires a 20
basis point facility fee on the current borrowing capacity payable quarterly in
arrears.
In the event of a change in the Company's unsecured debt rating, the interest
and facility fee rate will be adjusted in accordance with the following table:
OPERATING PARTNERSHIP'S INTEREST RATE -
UNSECURED DEBT RATINGS: APPLICABLE BASIS POINTS FACILITY FEE
S&P/MOODY'S/FITCH (a) ABOVE LIBOR BASIS POINTS
---------------------------------------------------------------------------------
No rating or less than BBB-/Baa3/BBB- 120.0 30.0
BBB-/Baa3/BBB- 95.0 20.0
BBB/Baa2/BBB (current) 80.0 20.0
BBB+/Baa1/BBB+ 72.5 17.5
A-/A3/A- or higher 65.0 15.0
(a) If the Operating Partnership has debt ratings from two rating agencies one
of which is S&P or Moody's, the rates per the above table shall be based
on the lower of such ratings. If the Operating Partnership has debt
ratings from three rating agencies, one of which is S&P or Moody's, the
rates per the above table shall be based on the lower of the two highest
ratings. If the Operating Partnership has debt ratings from only one
agency, it will be considered to have no rating or less than
BBB-/Baa3/BBB- per the above table.
Subject to certain conditions, the Company has the ability through June 22, 2002
to increase the borrowing capacity of the 2000 Unsecured Facility up to $1.0
billion. The 2000 Unsecured Facility matures in June 2003, with an extension
option of one year, which would require a payment of 25 basis points of the then
borrowing capacity of the credit line upon exercise. The Company believes that
the 2000 Unsecured Facility is sufficient to meet its revolving credit facility
needs.
The terms of the 2000 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common stock
or other equity interests in an aggregate amount in excess of 90 percent of
funds from operations (as defined) for such period, subject to certain other
adjustments.
On January 29, 2001, the Operating Partnership issued $300.0 million face amount
of 7.75 percent senior unsecured notes due February 15, 2011 with interest
payable semi-annually in arrears. The total proceeds from the issuance (net of
selling commissions and discount) of approximately $296.3 million were used to
pay down outstanding borrowings under the 2000 Unsecured Facility. The senior
unsecured notes were issued at a discount of approximately $1.7 million.
56
The terms of the Operating Partnership's Senior Unsecured Notes, as defined in
Note 8 to the Financial Statements (which totaled approximately $1.1 billion as
of December 31, 2001), include certain restrictions and covenants which require
compliance with financial ratios relating to the maximum amount of debt
leverage, the maximum amount of secured indebtedness, the minimum amount of debt
service coverage and the maximum amount of unsecured debt as a percent of
unsecured assets.
On May 18, 2001, the Company obtained $70.0 million in additional mortgage
financing secured by Harborside Financial Center Plazas 2 and 3 from the
existing lenders. The 7.42 percent interest only financing matures concurrent
with the existing financing on January 1, 2006. The total financing secured by
Harborside Financial Center Plazas 2 and 3 of $162.0 million at December 31,
2001, has a weighted average interest rate of 7.36 percent. Proceeds from the
financing were used to pay down the outstanding borrowings on the 2000 Unsecured
Facility.
As of December 31, 2001, the Company had 235 unencumbered properties, totaling
20.8 million square feet, representing 77.2 percent of the Company's total
portfolio on a square footage basis.
The debt of the Company's joint ventures aggregating $455.7 million are non-
recourse to the Company except for (i) customary exceptions pertaining to such
matters as misuse of funds, environmental conditions and material
misrepresentations and (ii) approximately $11.1 million of debt on the
Harborside Financial Center South Pier joint venture with Hyatt Corporation
("Hyatt"). Additionally, the Company has posted an $8.0 million letter of credit
in support of another loan to that joint venture, $4.0 million of which is
indemnified by Hyatt. In addition, the Company and Hyatt have guaranteed
completion of the hotel project to the joint venture's construction lender. If
the joint venture fails to complete the hotel project as required under the
construction loan documents and the construction loan proceeds remaining to be
advanced together with the capital contributed by the partners to such date are
insufficient to complete the hotel project, the Company and/or Hyatt may be
required to provide additional funds sufficient to complete the hotel project.
The following table outlines the timing of payment requirements related to the
Company's debt and ground lease agreements (IN THOUSANDS):
PAYMENTS DUE BY PERIOD
-------------------------------------------------------------------------------------------
LESS THAN 1 1 - 3 4 - 5 6 - 10 AFTER 10
TOTAL YEAR YEARS YEARS YEARS YEARS
------------------------------------------------------------------------------------------------------------------------------------
Senior unsecured notes $1,100,196 $ -- $485,267 $ -- $614,929 $ --
Revolving credit facility 59,500 -- 59,500 -- -- --
Mortgages and loans payable 543,807 3,435 23,552 475,228 41,592 --
Payments in
lieu of taxes (PILOT) 27,969 4,723 10,581 1,911 4,204 6,551
Ground lease payments 24,127 487 1,109 1,068 2,070 19,393
As of December 31, 2001, the Company's total debt had a weighted average term to
maturity of approximately 4.8 years. The Company does not intend to reserve
funds to retire the Company's Senior Unsecured Notes or its 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 is reviewing various refinancing options, including the
issuance of additional unsecured debt, preferred stock, and/or obtaining
additional mortgage debt, some or all of which may be completed during 2002. 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
distributions discussed below may be adversely affected.
57
The Company has an effective shelf registration statement with the SEC for an
aggregate amount of $2.0 billion in equity securities of the Company. The
Company and Operating Partnership also have an effective shelf registration
statement with the SEC for an aggregate of $2.0 billion in debt securities,
preferred stock and preferred stock represented by depositary shares, under
which the Operating Partnership has issued an aggregate of $1.1 billion of
senior unsecured notes.
On September 13, 2000, the Board of Directors authorized an increase to the
Company's repurchase program under which the Company is permitted to purchase up
to an additional $150.0 million of the Company's outstanding common stock
("Repurchase Program"). From that date through February 14, 2002, the Company
purchased for constructive retirement under the Repurchase Program 3.3 million
shares of its outstanding common stock for an aggregate cost of approximately
$91.1 million of which 1.3 million shares were repurchased in 2001 for a total
cost of approximately $35.4 million. As a result, the Company has a remaining
authorization to repurchase up to an additional $58.9 million of its outstanding
common stock, which it may repurchase from time to time in open market
transactions at prevailing prices or through privately negotiated transactions.
The Company may not dispose of or distribute certain of its properties,
currently comprising 141 properties with an aggregate net book value of
approximately $1.9 billion, which were originally contributed by members of
either the Mack Group (which includes William L. Mack, Chairman of the Company's
Board of Directors; Earle I. Mack, director; and Mitchell E. Hersh, chief
executive officer and director), the Robert Martin Group (which includes Robert
F. Weinberg, director; Martin W. Berger, a former director; Timothy M. Jones,
president; and Michael A. Grossman, executive vice president) or the Cali Group
(which includes John J. Cali, director and John R. Cali, director) without the
express written consent of a representative of the Mack Group, the Robert Martin
Group or the Cali Group, as applicable, except in a manner which does not result
in recognition of any built-in-gain (which may result in an income tax
liability) or which reimburses the appropriate Mack Group, Robert Martin Group
or Cali Group members for the tax consequences of the recognition of such
built-in-gains (collectively, the "Property Lock-Ups"). The aforementioned
restrictions do not apply in the event that the Company sells all of its
properties or in connection with a sale transaction which the Company's Board of
Directors determines is reasonably necessary to satisfy a material monetary
default on any unsecured debt, judgment or liability of the Company or to cure
any material monetary default on any mortgage secured by a property. The
Property Lock-Ups expire periodically through 2008. Upon the expiration of the
Property Lock-Ups, the Company is required to use commercially reasonable
efforts to prevent any sale, transfer or other disposition of the subject
properties from resulting in the recognition of built-in gain to the appropriate
Mack Group, Robert Martin Group or Cali Group members.
To maintain its qualification as a REIT, the Company must make annual
distributions to its stockholders of at least 90 percent of its REIT taxable
income, determined without regard to the dividends paid deduction and by
excluding net capital gains. Moreover, the Company intends to continue to make
regular quarterly distributions to its stockholders which, based upon current
policy, in the aggregate would equal approximately $141.2 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 the Company's debt.
58
FUNDS FROM OPERATIONS
The Company considers funds from operations ("FFO"), after adjustment for
straight-lining of rents and non-recurring charges, one measure of REIT
performance. FFO is defined as net income (loss) before minority interest of
unitholders, computed in accordance with generally accepted accounting
principles ("GAAP"), excluding gains (or losses) from debt restructuring, other
extraordinary items, and sales of depreciable rental property, plus real
estate-related depreciation and amortization. FFO 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. FFO presented herein is not necessarily
comparable to FFO presented by other real estate companies due to the fact that
not all real estate companies use the same definition. However, the Company's
FFO is comparable to the FFO of real estate companies that use the current
definition of the National Association of Real Estate Investment Trusts
("NAREIT"), after the adjustment for straight-lining of rents and non-recurring
charges.
FFO for the years ended December 31, 2001, 2000 and 1999, as calculated in
accordance with NAREIT's definition as published in October 1999, after
adjustment for straight-lining of rents and non-recurring charges, are
summarized in the following table (IN THOUSANDS):
Year Ended December 31,
2001 2000 1999
--------------------------------------------------------------------------------------------------------
Income before realized gains (losses) and unrealized losses on
disposition of rental property,
minority interests and extraordinary item $ 177,698 $ 146,110 $ 150,726
Add: Real estate-related depreciation and amortization (1) 94,198 94,250 89,731
Gain on sale of land -- 2,248 --
Non-recurring charges -- 37,139 16,458
Deduct: Rental income adjustment for straight-lining of rents (2) (11,399) (12,604) (12,596)
Minority interests: partially-owned properties -- (5,072) (79)
--------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for straight-lining
of rents and non-recurring charges $ 260,497 $ 262,071 $ 244,240
Deduct: Distributions to preferred unitholders (15,644) (15,441) (15,476)
--------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for straight-lining
of rents and non-recurring charges, after distributions
to preferred unitholders $ 244,853 $ 246,630 $ 228,764
========================================================================================================
Cash flows provided by operating activities $ 265,883 $ 180,529 $ 243,638
Cash flows (used in) provided by investing activities $(145,586) $ 6,189 $(195,178)
Cash flows used in financing activities $(120,641) $(182,210) $ (45,598)
--------------------------------------------------------------------------------------------------------
Basic weighted averages shares/units outstanding (3) 64,495 66,392 66,885
--------------------------------------------------------------------------------------------------------
Diluted weighted average shares/units outstanding (3) 71,134 73,070 73,769
--------------------------------------------------------------------------------------------------------
(1) Includes the Company's share from unconsolidated joint ventures of $3,567,
$2,928 and $3,166 for the years ended December 31, 2001, 2000 and 1999.
(2) Includes the Company's share from unconsolidated joint ventures of $83,
$24 and $158 for the years ended December 31, 2001, 2000 and 1999.
(3) See calculations for the amounts presented in the following
reconciliation.
59
The following schedule reconciles the Company's basic weighted average shares
outstanding to the basic and diluted weighted average shares/units outstanding
presented above (IN THOUSANDS):
Year Ended December 31,
2001 2000 1999
--------------------------------------------------------------------------------
Basic weighted average shares outstanding: 56,538 58,338 58,385
Add: Weighted average common units 7,957 8,054 8,500
--------------------------------------------------------------------------------
Basic weighted average shares/units: 64,495 66,392 66,885
Add: Weighted average preferred units
(after conversion to common units) 6,359 6,485 6,636
Stock options 270 188 241
Restricted Stock Awards 10 5 7
--------------------------------------------------------------------------------
Diluted weighted average shares/units outstanding: 71,134 73,070 73,769
===============================================================================
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.
60
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in interest rates,
foreign currency exchange rates, commodity prices and equity prices. In pursuing
its business plan, the primary market risk to which the Company is exposed is
interest rate risk. Changes in the general level of interest rates prevailing in
the financial markets may affect the spread between the Company's yield on
invested assets and cost of funds and, in turn, its ability to make
distributions or payments to its investors.
Approximately $1.6 billion of the Company's long-term debt bears interest at
fixed rates and therefore the fair value of these instruments is affected by
changes in market interest rates. The following table presents principal cash
flows (in thousands) based upon maturity dates of the debt obligations and the
related weighted-average interest rates by expected maturity dates for the fixed
rate debt. The interest rate on the variable rate debt as of December 31, 2001
ranged from LIBOR plus 65 basis points to LIBOR plus 80 basis points.
DECEMBER 31, 2001
Debt,
including current portion 2002 2003 2004 2005 2006 Thereafter Total Fair Value
------------------------- ---- ---- ---- ---- ---- ---------- ----- ----------
Fixed Rate $3,259 $195,501 $312,110 $254,598 $219,814 $623,190 $1,608,472 $1,645,314
Average Interest Rate 7.72% 7.30% 7.34% 7.13% 7.06% 7.70% 7.38%
Variable Rate $ 59,500 $ 32,178 $ 91,678 $ 91,678
While the Company has not experienced any significant credit losses, in the
event of a significant rising interest rate environment and/or economic
downturn, defaults could increase and result in losses to the Company which
could adversely affect its operating results and liquidity.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this Form 10-K.
See Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
61
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference from the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on May 14, 2002.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on May 14, 2002.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on May 14, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from the
Company's definitive proxy statement for its annual meeting of shareholders to
be held on May 14, 2002.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements and Report of PricewaterhouseCoopers LLP,
Independent Accountants
Consolidated Balance Sheets as of December 31, 2001 and 2000
Consolidated Statements of Operations for the Years Ended December 31,
2001, 2000 and 1999
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows for the Years Ended December 31,
2001, 2000 and 1999
Notes to Consolidated Financial Statements
(a) 2. FINANCIAL STATEMENT SCHEDULES
Schedule III - Real Estate Investments and Accumulated Depreciation as of
December 31, 2001
All other schedules are omitted because they are not required or the
required information is shown in the financial statements or notes
thereto.
62
(a) 3. EXHIBITS
The following exhibits are filed herewith or are incorporated by reference
to exhibits previously filed:
Exhibit
Number Exhibit Title
------ -------------
3.1 Restated Charter of Mack-Cali Realty Corporation dated June
11, 2001 (filed as Exhibit 3.1 to the Company's Form 10-Q
dated June 30, 2001 and incorporated herein by reference).
3.2 Amended and Restated Bylaws of Mack-Cali Realty Corporation
dated June 10, 1999 (filed as Exhibit 3.2 to the Company's
Form 8-K dated June 10, 1999 and incorporated herein by
reference).
3.3 Second Amended and Restated Agreement of Limited Partnership
of Mack-Cali Realty, L.P. dated December 11, 1997 (filed as
Exhibit 10.110 to the Company's Form 8-K dated December 11,
1997 and incorporated herein by reference).
3.4 Amendment No. 1 to the Second Amended and Restated Agreement
of Limited Partnership of Mack-Cali Realty, L.P. dated August
21, 1998 (filed as Exhibit 3.1 to the Company's and the
Operating Partnership's Registration Statement on Form S-3,
Registration No. 333-57103, and incorporated herein by
reference).
3.5 Second Amendment to the Second Amended and Restated Agreement
of Limited Partnership of Mack-Cali Realty, L.P. dated July 6,
1999 (filed as Exhibit 10.1 to the Company's Form 8-K dated
July 6, 1999 and incorporated herein by reference).
4.1 Amended and Restated Shareholder Rights Agreement, dated as of
March 7, 2000, between Mack-Cali Realty Corporation and
EquiServe Trust Company, N.A., as Rights Agent (filed as
Exhibit 4.1 to the Company's Form 8-K dated March 7, 2000 and
incorporated herein by reference).
4.2 Amendment No. 1 to the Amended and Restated Shareholder Rights
Agreement, dated as of June 27, 2000, by and among Mack-Cali
Realty Corporation and EquiServe Trust Company, N.A. (filed as
Exhibit 4.1 to the Company's Form 8-K dated June 27, 2000
and incorporated herein by reference).
4.3 Indenture dated as of March 16, 1999, by and among Mack-Cali
Realty, L.P., as issuer, Mack-Cali Realty Corporation, as
guarantor, and Wilmington Trust Company, as trustee (filed as
Exhibit 4.1 to the Operating Partnership's Form 8-K dated
March 16, 1999 and incorporated herein by reference).
4.4 Supplemental Indenture No. 1 dated as of March 16, 1999, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated March 16, 1999 and
incorporated herein by reference).
4.5 Supplemental Indenture No. 2 dated as of August 2, 1999, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.4 to the
Operating Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
63
Exhibit
Number Exhibit Title
------ -------------
4.6 Supplemental Indenture No. 3 dated as of December 21, 2000, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated December 21, 2000 and
incorporated herein by reference).
4.7 Supplemental Indenture No. 4 dated as of January 29, 2001, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated January 29, 2001 and
incorporated herein by reference).
10.1 Amended and Restated Employment Agreement dated as of July 1,
1999 between Mitchell E. Hersh and Mack-Cali Realty
Corporation (filed as Exhibit 10.2 to the Company's Form 10-Q
dated June 30, 1999 and incorporated herein by reference).
10.2 Second Amended and Restated Employment Agreement dated as of
July 1, 1999 between Timothy M. Jones and Mack-Cali Realty
Corporation (filed as Exhibit 10.3 to the Company's Form 10-Q
dated June 30, 1999 and incorporated herein by reference).
10.3 Second Amended and Restated Employment Agreement dated as of
July 1, 1999 between Barry Lefkowitz and Mack-Cali Realty
Corporation (filed as Exhibit 10.6 to the Company's Form 10-Q
dated June 30, 1999 and incorporated herein by reference).
10.4 Second Amended and Restated Employment Agreement dated as of
July 1, 1999 between Roger W. Thomas and Mack-Cali Realty
Corporation (filed as Exhibit 10.7 to the Company's Form 10-Q
dated June 30, 1999 and incorporated herein by reference).
10.5 Employment Agreement dated as of December 5, 2000 between
Michael Grossman and Mack-Cali Realty Corporation (filed as
Exhibit 10.5 to the Company's Form 10-K for the year ended
December 31, 2000 and incorporated herein by reference).
10.6 Restricted Share Award Agreement dated as of July 1, 1999
between Mitchell E. Hersh and Mack-Cali Realty Corporation
(filed as Exhibit 10.8 to the Company's Form 10-Q dated June
30, 1999 and incorporated herein by reference).
10.7 Restricted Share Award Agreement dated as of July 1, 1999
between Timothy M. Jones and Mack-Cali Realty Corporation
(filed as Exhibit 10.9 to the Company's Form 10-Q dated June
30, 1999 and incorporated herein by reference).
10.8 Restricted Share Award Agreement dated as of July 1, 1999
between Barry Lefkowitz and Mack-Cali Realty Corporation
(filed as Exhibit 10.12 to the Company's Form 10-Q dated June
30, 1999 and incorporated herein by reference).
10.9 Restricted Share Award Agreement dated as of July 1, 1999
between Roger W. Thomas and Mack-Cali Realty Corporation
(filed as Exhibit 10.13 to the Company's Form 10-Q dated June
30, 1999 and incorporated herein by reference).
10.10 Restricted Share Award Agreement dated as of March 12, 2001
between Roger W. Thomas and Mack-Cali Realty Corporation
(filed as Exhibit 10.10 to the Company's Form 10-Q dated March
31, 2001 and incorporated herein by reference).
64
Exhibit
Number Exhibit Title
------ -------------
10.11 Restricted Share Award Agreement dated as of March 12, 2001
between Michael Grossman and Mack-Cali Realty Corporation
(filed as Exhibit 10.11 to the Company's Form 10-Q dated March
31, 2001 and incorporated herein by reference).
10.12 Amendment No. 3 to and Restatement of Revolving Credit
Agreement dated as of June 22, 2000, by and among Mack-Cali
Realty, L.P. and The Chase Manhattan Bank, Fleet National Bank
and Other Lenders Which May Become Parties Thereto with The
Chase Manhattan Bank, as administrative agent, Fleet National
Bank, as syndication agent, Bank of America, N.A., as
documentation agent, Chase Securities Inc. and FleetBoston
Robertson Stephens Inc., as arrangers, Bank One, N.A., First
Union National Bank and Commerzbank Aktiengesellschaft, as
senior managing agents, PNC Bank National Association, as
managing agent, and Societe Generale, Dresdner Bank AG, Wells
Fargo Bank, National Association, Bank Austria Creditanstalt
Corporate Finance, Inc., Bayerische Hypo-und Vereinsbank and
Summit Bank, as co-agents (filed as Exhibit 10.10 to the
Company's Form 10-K for the year ended December 31, 2000 and
incorporated herein by reference).
10.13 Contribution and Exchange Agreement among The MK Contributors,
The MK Entities, The Patriot Contributors, The Patriot
Entities, Patriot American Management and Leasing Corp., Cali
Realty, L.P. and Cali Realty Corporation, dated September 18,
1997 (filed as Exhibit 10.98 to the Company's Form 8-K dated
September 19, 1997 and incorporated herein by reference).
10.14 First Amendment to Contribution and Exchange Agreement, dated
as of December 11, 1997, by and among the Company and the Mack
Group (filed as Exhibit 10.99 to the Company's Form 8-K dated
December 11, 1997 and incorporated herein by reference).
10.15 Employee Stock Option Plan of Mack-Cali Realty Corporation
(filed as Exhibit 10.1 to the Company's Post-Effective
Amendment No. 1 to Form S-8, Registration No. 333-44443, and
incorporated herein by reference).
10.16 Director Stock Option Plan of Mack-Cali Realty Corporation
(filed as Exhibit 10.2 to the Company's Post-Effective
Amendment No. 1 to Form S-8, Registration No. 333-44443, and
incorporated herein by reference).
10.17 2000 Employee Stock Option Plan (filed as Exhibit 10.1 to the
Company's Registration Statement on Form S-8, Registration No.
333-52478, and incorporated herein by reference).
10.18 2000 Director Stock Option Plan (filed as Exhibit 10.2 to the
Company's Registration Statement on Form S-8, Registration No.
333-52478, and incorporated herein by reference).
*21 Subsidiaries of the Company.
*23 Consent of PricewaterhouseCoopers LLP, independent
accountants.
(b) Reports on Form 8-K
During the fourth quarter of 2001, the Company filed a report on Form 8-K
dated November 8, 2001, furnishing under Item 9 certain supplemental data
regarding its operations.
----------
*FILED HEREWITH
65
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Mack-Cali Realty Corporation
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 62 present fairly, in all material
respects, the financial position of Mack-Cali Realty Corporation and its
subsidiaries at December 31, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2001 in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement
schedule listed in the index appearing under Item 14(a)(2) on page 62 presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
----------------------------------------
PricewaterhouseCoopers LLP
New York, New York
February 19, 2002
66
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
================================================================================
December 31,
ASSETS 2001 2000
-------------------------------------------------------------------------------------------
Rental property
Land and leasehold interests $ 479,358 $ 542,841
Buildings and improvements 2,751,453 2,934,383
Tenant improvements 140,071 106,208
Furniture, fixtures and equipment 7,189 6,445
-------------------------------------------------------------------------------------------
3,378,071 3,589,877
Less - accumulated depreciation and amortization (350,705) (302,932)
-------------------------------------------------------------------------------------------
3,027,366 3,286,945
Rental property held for sale, net 384,626 107,458
-------------------------------------------------------------------------------------------
Net investment in rental property 3,411,992 3,394,403
Cash and cash equivalents 12,835 13,179
Investments in unconsolidated joint ventures 146,540 101,438
Unbilled rents receivable, net 60,829 50,499
Deferred charges and other assets, net 101,499 102,655
Restricted cash 7,914 6,557
Accounts receivable, net of allowance for doubtful accounts
of $752 and $552 5,161 8,246
-------------------------------------------------------------------------------------------
Total assets $ 3,746,770 $ 3,676,977
===========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------------------------------------------------
Senior unsecured notes $ 1,096,843 $ 798,099
Revolving credit facilities 59,500 348,840
Mortgages and loans payable 543,807 481,573
Dividends and distributions payable 44,069 43,496
Accounts payable and accrued expenses 64,620 53,608
Rents received in advance and security deposits 33,512 31,146
Accrued interest payable 25,587 17,477
-------------------------------------------------------------------------------------------
Total liabilities 1,867,938 1,774,239
-------------------------------------------------------------------------------------------
MINORITY INTERESTS:
Operating Partnership 446,244 447,523
Partially-owned properties -- 1,925
-------------------------------------------------------------------------------------------
Total minority interests 446,244 449,448
-------------------------------------------------------------------------------------------
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,
56,712,270 and 56,980,893 shares outstanding 567 570
Additional paid-in capital 1,501,623 1,513,037
Dividends in excess of net earnings (64,906) (57,149)
Unamortized stock compensation (4,696) (3,168)
-------------------------------------------------------------------------------------------
Total stockholders' equity 1,432,588 1,453,290
-------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 3,746,770 $ 3,676,977
===========================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
67
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
================================================================================
Year Ended December 31,
REVENUES 2001 2000 1999
------------------------------------------------------------------------------------------------
Base rents $ 506,557 $491,193 $469,853
Escalations and recoveries from tenants 56,083 58,488 62,182
Parking and other 10,518 15,325 15,915
Equity in earnings of unconsolidated joint ventures 9,004 8,055 2,593
Interest income 2,186 3,092 941
------------------------------------------------------------------------------------------------
Total revenues 584,348 576,153 551,484
------------------------------------------------------------------------------------------------
EXPENSES
------------------------------------------------------------------------------------------------
Real estate taxes 62,015 59,400 57,382
Utilities 43,892 42,035 41,580
Operating services 68,779 70,711 69,689
General and administrative 28,490 23,276 25,480
Depreciation and amortization 91,471 92,088 87,209
Interest expense 112,003 105,394 102,960
Non-recurring charges -- 37,139 16,458
------------------------------------------------------------------------------------------------
Total expenses 406,650 430,043 400,758
------------------------------------------------------------------------------------------------
Income before realized gains (losses) and unrealized losses
on disposition of rental property and minority interests 177,698 146,110 150,726
Realized gains (losses) and unrealized losses on disposition
of rental property, net (11,864) 85,353 1,957
------------------------------------------------------------------------------------------------
Income before minority interests 165,834 231,463 152,683
MINORITY INTERESTS:
Operating partnership 34,175 41,053 32,865
Partially-owned properties -- 5,072 79
------------------------------------------------------------------------------------------------
Net income $ 131,659 $185,338 $119,739
===============================================================================================
BASIC EARNINGS PER SHARE:
Net income $ 2.33 $ 3.18 $ 2.05
DILUTED EARNINGS PER SHARE:
Net income $ 2.32 $ 3.10 $ 2.04
Dividends declared per common share $ 2.46 $ 2.38 $ 2.26
------------------------------------------------------------------------------------------------
Basic weighted average shares outstanding 56,538 58,338 58,385
------------------------------------------------------------------------------------------------
Diluted weighted average shares outstanding 64,775 73,070 67,133
------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
68
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS)
================================================================================
Additional Dividends in Unamortized Total
Common Stock Paid-In Excess of Stock Stockholders'
Shares Par Value Capital Net Earnings Compensation Equity
------------------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 1999 57,266 $ 573 $ 1,514,648 $ (91,314) $ -- $ 1,423,907
Net income -- -- -- 119,739 -- 119,739
Dividends -- -- -- (132,327) -- (132,327)
Redemption of common units for
shares of common stock 1,935 19 56,046 -- 56,065
Proceeds from stock options exercised 48 -- 1,049 -- -- 1,049
Proceeds from dividend reinvestment
and stock purchase plan 1 -- 32 -- -- 32
Deferred compensation plan for directors -- -- 90 -- -- 90
Issuance of Restricted Stock Awards 212 2 5,513 -- (5,515) --
Amortization of stock compensation -- -- -- -- 827 827
Repurchase of common stock (1,015) (10) (27,490) -- -- (27,500)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 58,447 584 1,549,888 (103,902) (4,688) 1,441,882
Net income -- -- -- 185,338 -- 185,338
Dividends -- -- -- (138,585) -- (138,585)
Redemption of common units for
shares of common stock 448 5 14,234 -- -- 14,239
Proceeds from stock options exercised 117 1 2,499 -- -- 2,500
Deferred compensation plan for directors -- -- 111 -- -- 111
Amortization of stock compensation -- -- -- -- 1,672 1,672
Adjustment to fair value of restricted stock -- -- 380 -- (283) 97
Cancellation of Restricted Stock Awards (5) -- (131) -- 131 --
Repurchase of common stock (2,026) (20) (55,494) -- -- (55,514)
Stock options charge -- -- 1,550 -- -- 1,550
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000 56,981 570 1,513,037 (57,149) (3,168) 1,453,290
Net income -- -- -- 131,659 -- 131,659
Dividends -- -- -- (139,416) -- (139,416)
Redemption of common units for
shares of common stock 9 -- 239 -- -- 239
Proceeds from stock options exercised 904 9 20,666 -- -- 20,675
Deferred compensation plan for directors -- -- 156 -- -- 156
Issuance of Restricted Stock Awards 95 1 2,567 -- (2,527) 41
Amortization of stock compensation -- -- -- -- 1,356 1,356
Adjustment to fair value of restricted stock -- -- 557 -- (557) --
Cancellation of Restricted Stock Awards (7) -- (200) -- 200 --
Repurchase of common stock (1,270) (13) (35,399) -- -- (35,412)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001 56,712 $ 567 $ 1,501,623 $ (64,906) $ (4,696) $ 1,432,588
====================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
69
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
================================================================================
Year Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES 2001 2000 1999
----------------------------------------------------------------------------------------------------------------------
Net income $ 131,659 $ 185,338 $ 119,739
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 91,471 92,088 87,209
Amortization of stock compensation 1,356 1,769 827
Amortization of deferred financing costs and debt discount 5,113 4,257 3,570
Stock options charge -- 1,550 --
Equity in earnings of unconsolidated joint ventures (9,004) (8,055) (2,593)
Realized gains (losses) and unrealized losses on disposition
of rental property, net 11,864 (85,353) (1,957)
Minority interests 34,175 46,125 32,944
Changes in operating assets and liabilities:
Increase in unbilled rents receivable, net (11,318) (12,591) (12,412)
Increase in deferred charges and other assets, net (14,006) (31,332) (28,893)
Decrease (increase) in accounts receivable, net 3,085 (1,436) (2,882)
Increase (decrease) in accounts payable and accrued expenses 11,012 (9,786) 27,536
Increase (decrease) in rents received in advance and security deposits 2,366 (2,896) 6,170
Increase in accrued interest payable 8,110 851 14,380
----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 265,883 $ 180,529 $ 243,638
======================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
----------------------------------------------------------------------------------------------------------------------
Additions to rental property $(279,686) $(268,243) $(191,507)
Issuance of mortgage note receivable -- (14,733) --
Repayment of mortgage note receivable 5,983 -- --
Investments in unconsolidated joint ventures (71,272) (17,587) (40,567)
Distributions from unconsolidated joint ventures 38,689 13,338 20,551
Proceeds from sales of rental property 162,057 292,890 17,400
(Increase) decrease in restricted cash (1,357) 524 (1,055)
----------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities $(145,586) $ 6,189 $(195,178)
======================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
----------------------------------------------------------------------------------------------------------------------
Proceeds from senior unsecured notes $ 298,269 $ 15,000 $ 782,535
Proceeds from revolving credit facilities 412,240 708,004 372,248
Proceeds from mortgages and loans payable 70,000 -- 45,500
Repayments of revolving credit facilities (701,581) (536,164) (866,848)
Repayments of mortgages and loans payable (7,290) (48,817) (264,431)
Proceeds from minority interest of consolidated partially-owned properties -- -- 83,600
Distributions to minority interest in partially-owned properties -- (88,672) --
Repurchase of common stock (35,412) (55,514) (27,500)
Payment of financing costs (3,484) (6,394) (7,048)
Proceeds from stock options exercised 20,675 2,500 1,049
Proceeds from dividend reinvestment and stock purchase plan -- -- 32
Payment of dividends and distributions (174,058) (172,153) (164,735)
----------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities $(120,641) $(182,210) $ (45,598)
======================================================================================================================
Net (decrease) increase in cash and cash equivalents $ (344) $ 4,508 $ 2,862
Cash and cash equivalents, beginning of period $ 13,179 $ 8,671 $ 5,809
----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 12,835 $ 13,179 $ 8,671
======================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
70
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER
SHARE/UNIT 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
December 31, 2001, the Company owned or had interests in 267 properties plus
developable land (collectively, the "Properties"). The Properties aggregate
approximately 28.4 million square feet, and are comprised of 160 office
buildings and 95 office/flex buildings, totaling approximately 28.0 million
square feet (which includes seven office buildings and one office/flex building
aggregating 1.4 million square feet, owned by unconsolidated joint ventures in
which the Company has investment interests), six industrial/warehouse buildings
totaling approximately 387,400 square feet, one multi-family residential complex
consisting of 124 units, two stand-alone retail properties and three land
leases. The Properties are located in 10 states, primarily in the Northeast,
plus the District of Columbia.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include all accounts of the
Company, its majority-owned and/or controlled subsidiaries, which consist
principally of Mack-Cali Realty, L.P. ("Operating Partnership"). See Investments
in Unconsolidated Joint Ventures in Note 2 for the Company's treatment of
unconsolidated joint venture 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 development. Included in total rental
property is construction-in-progress of $210,463 and $188,077
as of December 31, 2001 and 2000, respectively. Ordinary
repairs and maintenance are expensed as incurred; major
replacements and betterments, which improve or extend the life
of the asset, are capitalized and depreciated over their
estimated useful lives. Fully-depreciated assets are removed
from the accounts.
Properties are depreciated using the straight-line method over
the estimated useful lives of the assets. The estimated useful
lives are as follows:
Leasehold interests Remaining lease term
--------------------------------------------------------------
Buildings and improvements 5 to 40 years
--------------------------------------------------------------
Tenant improvements The shorter of the term of
the related lease or useful life
--------------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
--------------------------------------------------------------
71
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. To the extent
impairment has occurred, the loss shall be measured as the
excess of the carrying amount of the property over the fair
value of the property. Management does not believe that the
value of any of the Company's rental properties is impaired.
When assets are identified by management as held for sale, the
Company discontinues depreciating the assets and estimates the
sales price, net of selling costs, of such assets. If, in
management's opinion, the net sales price of the assets which
have been identified for sale is less than the net book value
of the assets, a valuation allowance is established. See Note
7.
INVESTMENTS IN
UNCONSOLIDATED
JOINT VENTURES The Company accounts for its investments in unconsolidated
joint ventures under the equity method of accounting as the
Company exercises significant influence, but does not control
these entities. These investments are recorded initially at
cost, as Investments in Unconsolidated Joint Ventures, and
subsequently adjusted for equity in earnings and cash
contributions and distributions. Any difference between the
carrying amount of these investments on the balance sheet of
the Company and the underlying equity in net assets is
amortized as an adjustment to equity in earnings of
unconsolidated joint ventures over 40 years. See Note 4.
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 $4,638, $3,943 $3,320 for the years
ended December 31, 2001, 2000 and 1999, respectively.
DEFERRED
LEASING COSTS Costs incurred in connection with leases are capitalized and
amortized on a straight-line basis over the terms of the
related leases and included in depreciation and amortization.
Unamortized deferred leasing costs are charged to amortization
expense upon early termination of the lease. Certain employees
of the Company provide leasing services to the Properties and
receive compensation based on space leased. The portion of
such compensation, which is capitalized and amortized,
approximated $4,013, $3,704 and $3,704 for the years ended
December 31, 2001, 2000 and 1999, respectively.
REVENUE
RECOGNITION Base rental revenue is recognized on a straight-line basis
over the terms of the respective leases. Unbilled rents
receivable represents the amount by which straight-line rental
revenue exceeds rents currently billed in accordance with the
lease agreements. Parking and other revenue includes income
from parking spaces leased to tenants, income from tenants for
additional services provided by the Company, income from
tenants for early lease terminations and income from managing
properties for third parties. Rental income on residential
property under operating leases having terms generally of one
year or less is recognized when earned.
Reimbursements are received from tenants for certain costs as
provided in the lease agreements. These costs generally
include real estate taxes, utilities, insurance, common area
maintenance and other recoverable costs. See Note 15.
72
INCOME AND
OTHER TAXES The Company has elected to be taxed as a REIT under Sections
856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"). As a REIT, the Company generally will
not be subject to corporate federal income tax on net income
that it currently distributes to its shareholders, provided
that the Company, for its taxable years beginning prior to
January 1, 2001, satisfies certain organizational and
operational requirements including the requirement to
distribute at least 95 percent of its REIT taxable income to
its shareholders. For its taxable years beginning after
December 31, 2000, as a result of amendments to the Code, the
Company is required to distribute at least 90 percent of its
REIT taxable income to its shareholders. Effective January 1,
2001, the Company may elect to treat one or more of its
existing or newly created corporate subsidiaries as a taxable
REIT subsidiary ("TRS"). In general, a TRS of the Company may
perform additional services for tenants of the Company and
generally may engage in any real estate or non-real estate
related business (except for the operation or management of
health care facilities or lodging facilities or the providing
to any person, under a franchise, license or otherwise, rights
to any brand name under which any lodging facility or health
care facility is operated). A TRS is subject to corporate
federal income tax. The Company has elected to treat certain
of its existing and newly created corporate subsidiaries as a
TRS. 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.
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 December 31, 2001
represents dividends payable to shareholders of record as of
January 4, 2002 (56,765,840 shares), distributions payable to
minority interest common unitholders (7,954,775 common units)
on that same date and preferred distributions payable to
preferred unitholders (220,340 preferred units) for the fourth
quarter 2001. The fourth quarter 2001 dividends and common
unit distributions of $0.62 per share and per common unit, as
well as the fourth quarter preferred unit distribution of
$17.8932 per preferred unit, were approved by the Board of
Directors on December 18, 2001 and paid on January 22, 2002.
The dividends and distributions payable at December 31, 2000
represents dividends payable to shareholders of record as of
January 4, 2001 (56,982,893 shares), distributions payable to
minority interest common unitholders (7,963,725 common units)
on that same date and preferred distributions payable to
preferred unitholders (220,340 preferred units) for the fourth
quarter 2000. The fourth quarter 2000 dividends and common
unit distributions of $0.61 per share and per common unit, as
well as the fourth quarter preferred unit distribution of
$17.6046 per preferred unit, were approved by the Board of
Directors on December 20, 2000 and paid on January 22, 2001.
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.
73
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 under the Company's stock option
plans for the granting of stock options. 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 16.
NON-RECURRING
CHARGES The Company considers non-recurring charges as costs incurred
specific to significant non-recurring events that impact the
comparative measurement of the Company's performance.
RECLASSIFICATIONS Certain reclassifications have been made to prior period
amounts in order to conform with current period presentation.
3. ACQUISITIONS, PROPERTY SALES AND OTHER TRANSACTIONS
2001 TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
The Company acquired the following operating properties during the year ended
December 31, 2001:
---------------------------------------------------------------------------------------------------------------------------
Acquisition # of Rentable Investment by
Date Property/Portfolio Name Location Bldgs. Square Feet Company (a)
---------------------------------------------------------------------------------------------------------------------------
OFFICE:
4/6/01 4 & 6 Campus Drive Parsippany, Morris County, NJ 2 295,766 $48,404
11/6/01 9 Campus Drive (b) Parsippany, Morris County, NJ 1 156,495 15,073
---------------------------------------------------------------------------------------------------------------------------
Total Office Property Acquisitions: 3 452,261 $63,477
---------------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX:
2/14/01 31 & 41 Twosome Drive Moorestown, Burlington County, NJ 2 127,250 $7,155
4/27/01 1245 & 1247 N. Church St,
2 Twosome Drive Moorestown, Burlington County, NJ 3 154,200 11,083
8/3/01 5 & 6 Skyline Drive (c) Hawthorne, Westchester County, NY 2 168,177 14,846
---------------------------------------------------------------------------------------------------------------------------
Total Office/Flex Property Acquisitions: 7 449,627 $33,084
---------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING PROPERTY ACQUISITIONS: 10 901,888 $96,561
===========================================================================================================================
(a) Transactions were funded primarily through borrowings on the Company's
revolving credit facility, from net proceeds received in the sale or sales
of rental property, and/or from the Company's cash reserves.
(b) The Company acquired the remaining 50 percent interest in this property
from an unconsolidated joint venture. Investment by Company represents the
net cost of acquiring the remaining interest.
(c) The property was acquired from an entity whose principals include Timothy
M. Jones, Robert F. Weinberg and Martin S. Berger, each of whom are
affiliated with the Company as the President of the Company, a current
member of the Board of Directors and a former member of the Board of
Directors of the Company, respectively. See Note 18.
74
PROPERTIES PLACED IN SERVICE
The Company placed in service the following properties during the year ended
December 31, 2001:
------------------------------------------------------------------------------------------------------------------
Date Placed # of Rentable Investment by
in Service Property/Portfolio Name Location Bldgs. Square Feet Company (a)
------------------------------------------------------------------------------------------------------------------
OFFICE:
1/15/01 105 Eisenhower Parkway Roseland, Essex County, NJ 1 220,000 $47,328
3/1/01 8181 East Tufts Avenue Denver, Denver County, CO 1 185,254 34,993
------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 2 405,254 $82,321
==================================================================================================================
(a) Development costs were funded primarily through draws on the Company's
revolving credit facilities.
LAND ACQUISITIONS
On January 5, 2001, the Company acquired approximately 7.1 acres of developable
land located in Littleton, Arapahoe County, Colorado. The land was acquired for
approximately $2,711. When the Company had committed itself to acquire the land,
the Company had intended to develop the site consistent with its then business
strategy. Due to a change in the Company's strategy, this land is currently held
for sale (see Note 7).
On September 13, 2001, the Company acquired approximately 5.0 acres of
developable land located in Elmsford, Westchester County, New York. The land was
acquired for approximately $1,000 from an entity whose principals include
Timothy M. Jones, Robert F. Weinberg and Martin S. Berger, each of whom are
affiliated with the Company as the President of the Company, a current member of
the Board of Directors and a former member of the Board of Directors of the
Company, respectively. The Company has commenced construction of a fully
pre-leased 33,000 square-foot office/flex building on the acquired land.
PROPERTY SALES
The Company sold the following properties during the year ended December 31,
2001:
-----------------------------------------------------------------------------------------------------------------------------------
Sale # of Rentable Net Sales Net Book Realized
Date Property Name Location Bldgs. Square Feet Proceeds Value Gain (Loss)
-----------------------------------------------------------------------------------------------------------------------------------
OFFICE:
6/1/01 1777 N.E. Loop 410 San Antonio, Bexar County, TX 1 256,137 $21,313 $16,703 $4,610
6/15/01 14511 Falling Creek Houston, Harris County, TX 1 70,999 2,982 2,458 524
7/17/01 8214 Westchester Dallas, Dallas County, TX 1 95,509 8,966 8,465 501
8/1/01 2600 Westown Parkway West Des Moines, Polk County, IA 1 72,265 5,165 5,570 (405)
9/26/01 1709 New York Ave, NW Washington, DC 1 166,000 65,151 50,640 14,511
11/14/01 200 Concord Plaza Drive San Antonio, Bexar County, TX 1 248,700 30,927 32,609 (1,682)
12/21/01 5225 Katy Freeway Houston, Harris County, TX 1 112,213 6,887 7,393 (506)
RESIDENTIAL:
6/21/01 Tenby Chase Apartments Delran, Burlington County, NJ 1 327 units 19,336 2,399 16,937
OTHER:
4/3/01 North Pier-Harborside (a) Jersey City, Hudson County, NJ -- n/a 3,357 2,918 439
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTY SALES: 8 1,021,823 $164,084 $129,155 $34,929
===================================================================================================================================
(a) Net sales proceeds consisted of $1,330 in cash and $2,027 of a note
receivable due in 2002.
In January 2002, the Company sold 25 Martine Avenue, a 124-unit multi-family
residential property located in White Plains, Westchester County, New York, for
net sales proceeds of approximately $17.8 million, which resulted in a gain of
approximately $7.3 million.
75
2000 TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
The Company acquired the following operating properties during the year ended
December 31, 2000:
-------------------------------------------------------------------------------------------------------------------
Acquisition # of Rentable Investment by
Date Property/Portfolio Name Location Bldgs. Square Feet Company (a)
-------------------------------------------------------------------------------------------------------------------
OFFICE:
5/23/00 555 & 565 Taxter Road Elmsford, Westchester County, NY 2 341,108 $42,980
6/14/00 Four Gatehall Drive Parsippany, Morris County, NJ 1 248,480 42,381
-------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTY ACQUISITIONS: 3 589,588 $85,361
-------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX:
3/24/00 Two Executive Drive (b) Moorestown, Burlington County, NJ 1 60,800 $ 4,007
7/14/00 915 North Lenola Road (b) Moorestown, Burlington County, NJ 1 52,488 2,542
-------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTY ACQUISITIONS: 2 113,288 $ 6,549
-------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING PROPERTY ACQUISITIONS: 5 702,876 $91,910
===================================================================================================================
(a) Transactions were funded primarily from net proceeds received in the sale
or sales of rental property.
(b) The properties were acquired through the exercise of a purchase option
obtained in the initial acquisition of the McGarvey portfolio in January
1998.
PROPERTIES PLACED IN SERVICE
The Company placed in service the following properties through the completion of
development during the year ended December 31, 2000:
--------------------------------------------------------------------------------------------------------------------------
Date Placed # of Rentable Investment by
in Service Property Name Location Bldgs. Square Feet Company (a)
--------------------------------------------------------------------------------------------------------------------------
OFFICE:
9/01/00 Harborside Plaza 4-A (b) Jersey City, Hudson County, NJ 1 207,670 $61,459
9/15/00 Liberty Corner Corp. Center Bernards Township, Somerset County, NJ 1 132,010 17,430
--------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE: 2 339,680 $78,889
==========================================================================================================================
(a) Transactions were funded primarily through draws on the Company's
revolving credit facilities.
(b) Project includes seven-story, 1,100-car parking garage.
LAND ACQUISITIONS
On January 13, 2000, the Company acquired approximately 12.7 acres of
developable land located at the Company's Airport Business Center, Lester,
Delaware County, Pennsylvania. The land was acquired for approximately $2,069.
On August 24, 2000, the Company entered into a joint venture with SJP Properties
Company ("SJP Properties") to form MC-SJP Morris V Realty, LLC and MC-SJP Morris
VI Realty, LLC, which acquired approximately 47.5 acres of developable land
located in Parsippany, Morris County, New Jersey. The land was acquired for
approximately $16,193. The Company accounts for the joint venture on a
consolidated basis.
76
PROPERTY SALES
The Company sold the following properties during the year ended December 31,
2000:
-----------------------------------------------------------------------------------------------------------------------------------
Realized
Sale # of Rentable Net Sales Net Book Gain/
Date Property Name Location Bldgs. Square Feet Proceeds Value (Loss)
-----------------------------------------------------------------------------------------------------------------------------------
LAND:
02/25/00 Horizon Center Land Hamilton Township, Mercer County, NJ -- 39.1 acres $ 4,180 $ 1,932 $ 2,248
OFFICE:
04/17/00 95 Christopher Columbus Dr. Jersey City, Hudson County, NJ 1 621,900 148,222 80,583 67,639
04/20/00 6900 IH-40 West Amarillo, Potter County, TX 1 71,771 1,467 1,727 (260)
06/09/00 412 Mt. Kemble Avenue Morris Twp., Morris County, NJ 1 475,100 81,981 75,439 6,542
09/21/00 Cielo Center Austin, Travis County, TX 1 270,703 45,785 35,749 10,036
11/15/00 210 South 16th Street (a) Omaha, Douglas County, NE 1 319,535 11,976 12,828 (852)
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTY SALES: 5 1,759,009 $293,611 $208,258 $85,353
===================================================================================================================================
(a) In connection with the sale of the Omaha, Nebraska property, the Company
provided to the purchaser an $8,750 mortgage loan bearing interest payable
monthly at an annual rate of 9.50 percent. The loan is secured by the
Omaha, Nebraska property and will mature on November 14, 2003.
OTHER EVENTS
On June 27, 2000, both Brant Cali and John R. Cali resigned their positions as
officers of the Company and Brant Cali resigned as a director of the Company.
John R. Cali was appointed to the Board of Directors of the Company to take the
seat previously held by Brant Cali. As required by Brant Cali and John R. Cali's
employment agreements with the Company: (i) the Company paid $2,820 and $2,806
(less applicable withholding) to Brant Cali and John R. Cali, respectively; (ii)
all options to acquire shares of the Company's common stock and Restricted Stock
Awards (as hereinafter defined) held by Brant Cali and John R. Cali became fully
vested on the effective date of their resignations from the Company. All costs
associated with Brant Cali and John R. Cali's resignations, which totaled
approximately $9,228, are included in non-recurring charges for the year ended
December 31, 2000.
On September 21, 2000, the Company and Prentiss Properties Trust, a Maryland
REIT ("Prentiss"), mutually agreed to terminate the agreement and plan of merger
("Merger Agreement") dated as of June 27, 2000, among the Company, the Operating
Partnership, Prentiss and Prentiss Properties Acquisition Partners, L.P., a
Delaware limited partnership of which Prentiss (through a wholly-owned direct
subsidiary) is the sole general partner ("Prentiss Partnership"). In connection
with such termination, the Company deposited $25,000 into escrow for the benefit
of Prentiss and Prentiss Partnership. This cost and approximately $2,911 of
other costs associated with the termination of the Merger Agreement are included
in non-recurring charges for the year ended December 31, 2000. Simultaneous with
the termination, the Company sold to Prentiss its 270,703 square-foot Cielo
Center property located in Austin, Travis County, Texas, and recognized a gain
of approximately $10,036.
4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
The debt of the Company's joint ventures aggregating $455,671 are non recourse
to the Company, except for customary exceptions pertaining to such matters as
misuse of funds, environmental conditions and material misrepresentations and
except as otherwise indicated below.
PRU-BETA 3 (NINE CAMPUS DRIVE)
On March 27, 1998, the Company acquired a 50 percent interest in an existing
joint venture with The Prudential Insurance Company of America ("Prudential"),
known as Pru-Beta 3, which owns and operates Nine Campus Drive, a 156,495
square-foot office building, located in the Mack-Cali Business Campus office
complex in Parsippany, Morris County, New Jersey. The Company performed
management and leasing services for the property owned by the joint venture and
recognized $146, $140 and $149 in fees for such services in the years ended
December 31, 2001, 2000 and 1999, respectively. On November 5, 2001, the Company
acquired the remaining interest in the property for approximately $15,073.
77
HPMC
On April 23, 1998, the Company entered into a joint venture agreement with HCG
Development, L.L.C. and Summit Partners I, L.L.C. to form HPMC Development
Partners, L.P. and, on July 21, 1998, entered into a second joint venture, HPMC
Development Partners II, L.P. (formerly known as HPMC Lava Ridge Partners,
L.P.), with these same parties. HPMC Development Partners, L.P.'s efforts have
focused on two development projects, commonly referred to as Continental Grand
II and Summit Ridge. HPMC Development Partners II, L.P.'s efforts have focused
on three development projects, commonly referred to as Lava Ridge, Pacific Plaza
I & II and Stadium Gateway. Among other things, the partnership agreements
provide for a preferred return on the Company's invested capital in each
venture, in addition to 50 percent of such venture's profit above the preferred
returns, as defined in each agreement.
CONTINENTAL GRAND II
Continental Grand II is a 239,085 square-foot office building located in
El Segundo, Los Angeles County, California, which was constructed and
placed in service by the venture. On June 29, 2001, the venture sold the
office property for approximately $67,000.
SUMMIT RIDGE
Summit Ridge is an office complex of three one-story buildings aggregating
133,841 square feet located in San Diego, San Diego County, California,
which was constructed and placed in service by the venture. On January 29,
2001, the venture sold the office complex for approximately $17,450.
LAVA RIDGE
Lava Ridge is an office complex of three two-story buildings aggregating
183,200 square feet located in Roseville, Placer County, California, which
was constructed and placed in service by the venture.
PACIFIC PLAZA I & II
Pacific Plaza I & II is a two-phase development joint venture project,
located in the city of Daly City, San Mateo County, California between
HPMC Development Partners II, L.P. and a third-party entity. Phase I of
the project, which was placed in service in August 2001, consists of a
nine-story office building, aggregating 369,682 square feet. Phase II,
which is currently under construction, will comprise a three-story retail
and theater complex.
STADIUM GATEWAY
Stadium Gateway is a development joint venture project located in Anaheim,
Orange County, California between HPMC Development Partners II, L.P. and a
third-party entity. The venture has commenced construction of a six-story
261,554 square-foot office building, which is expected to be placed in
service in early 2002.
G&G MARTCO (CONVENTION PLAZA)
On April 30, 1998, the Company acquired a 49.9 percent interest in an existing
joint venture, known as G&G Martco, which owns Convention Plaza, a 305,618
square-foot office building, located in San Francisco, San Francisco County,
California. A portion of its initial investment was financed through the
issuance of common units, as well as funds drawn from the Company's credit
facilities. Subsequently, on June 4, 1999, the Company acquired an additional
0.1 percent interest in G&G Martco through the issuance of common units. The
Company performs management and leasing services for the property owned by the
joint venture and recognized $235, $231 and $225 in fees for such services in
the years ended December 31, 2001, 2000 and 1999, respectively.
AMERICAN FINANCIAL EXCHANGE L.L.C.
On May 20, 1998, the Company entered into a joint venture agreement with
Columbia Development Company, L.L.C. to form American Financial Exchange L.L.C.
The venture was initially formed to acquire land for future development, located
on the Hudson River waterfront in Jersey City, Hudson County, New Jersey,
adjacent to the Company's Harborside Financial Center office complex. The
Company holds a 50 percent interest in the joint venture. Among other things,
the partnership agreement provides for a preferred return on the Company's
invested capital in the venture, in addition to the Company's proportionate
share of the venture's profit, as defined in the agreement. The joint venture
acquired land on which it constructed a parking facility, a portion of which is
currently licensed to a parking operator. Such parking facility serves a ferry
service between the Company's Harborside property and Manhattan. In the fourth
quarter 2000, the Company started construction of a 575,000 square-foot office
building on certain of the land owned by
78
the venture. Plaza 10 is 100 percent pre-leased to Charles Schwab & Co. Inc.
("Schwab") for a 15-year term. The lease agreement obligates the Company, among
other things, to deliver space to the tenant by required timelines and offers
expansion options, at the tenant's election, to additional space in any adjacent
Harborside projects. Such options may obligate the Company to construct an
additional building at Harborside if vacant space is not available in any of its
existing Harborside properties. Should the Company be unable to or choose not to
provide such expansion space, the Company could be liable to Schwab for its
actual damages, in no event to exceed $15,000. The project under construction,
which is anticipated to be completed in late 2002, is currently projected to
cost the Company approximately $145,000, of which $74,034 has been incurred by
the Company through December 31, 2001.
RAMLAND REALTY ASSOCIATES L.L.C. (ONE RAMLAND ROAD)
On August 20, 1998, the Company entered into a joint venture agreement with S.B.
New York Realty Corp. to form Ramland Realty Associates L.L.C. The venture was
formed to own, manage and operate One Ramland Road, a 232,000 square-foot
office/flex building plus adjacent developable land, located in Orangeburg,
Rockland County, New York. In August 1999, the joint venture completed
redevelopment of the property and placed the office/flex building in service.
The Company holds a 50 percent interest in the joint venture. The Company
performs management, leasing and other services for the property owned by the
joint venture and recognized $108, $198 and $628 in fees for such services in
the years ended December 31, 2001, 2000 and 1999, respectively.
ASHFORD LOOP ASSOCIATES L.P. (1001 SOUTH DAIRY ASHFORD/2100 WEST LOOP SOUTH)
On September 18, 1998, the Company entered into a joint venture agreement with
Prudential to form Ashford Loop Associates L.P. The venture was formed to own,
manage and operate 1001 South Dairy Ashford, a 130,000 square-foot office
building acquired on September 18, 1998 and 2100 West Loop South, a 168,000
square-foot office building acquired on November 25, 1998, both located in
Houston, Harris County, Texas. The Company holds a 20 percent interest in the
joint venture. The Company performs management and leasing services for the
properties owned by the joint venture and recognized $170, $172 and $117 in fees
for such services in the years ended December 31, 2001, 2000 and 1999,
respectively. Under certain circumstances, Prudential has the right to convert
its interest in the venture into common stock of the Company, based on the
underlying fair value of Prudential's interest in venture at the time of
conversion.
ARCAP INVESTORS, L.L.C.
On March 18, 1999, the Company invested in ARCap Investors, L.L.C., a joint
venture with several participants, which was formed to invest in sub-investment
grade tranches of commercial mortgage-backed securities ("CMBS"). The Company
has invested $20,000 in the venture. William L. Mack, Chairman of the Board of
Directors of the Company, is a principal of the managing member of the venture.
At December 31, 2001, the venture held approximately $595,937 of assets,
comprised principally of subordinated CMBS recorded at market value.
79
MC-SJP MORRIS V REALTY, LLC AND MC-SJP MORRIS VI REALTY, LLC
The Company has an agreement with SJP Properties, which provides for a
cooperative effort in seeking approvals to develop up to approximately 1.8
million square feet of office development on certain vacant land owned by the
Company and SJP Properties, in Hanover and Parsippany, Morris County, New
Jersey. The agreement provides that the parties shall share equally in the costs
associated with seeking such requisite approvals. Upon mutual consent, the
Company and SJP Properties may enter into one or more joint ventures to
construct on the vacant land, or seek to dispose of their respective vacant land
parcels subject to the agreement. Pursuant to the agreement with SJP Properties,
on August 24, 2000, the Company entered into a joint venture with SJP Properties
to form MC-SJP Morris V Realty, LLC and MC-SJP Morris VI Realty, LLC, which
acquired developable land able to accommodate approximately 650,000 square feet
of office space located in Parsippany, Morris County, New Jersey. The land was
acquired for approximately $16,193. The venture entered into an agreement
pertaining to the acquired land and two other land parcels in Parsippany with an
insurance company to provide for a guarantee on the funding of the development
of four office properties, aggregating 850,000 square feet. Such agreement
provides, if the venture elects to develop, that the insurance company will be
admitted to the joint venture and provide all the equity required to fund the
development, subject to certain conditions. In addition, the venture obtained a
loan on the acquired land from a bank, which is guaranteed by the insurance
company.
SOUTH PIER AT HARBORSIDE - HOTEL DEVELOPMENT
On November 17, 1999, the Company entered into an agreement with Hyatt
Corporation ("Hyatt") to develop a 350-room hotel on the Company's South Pier at
Harborside Financial Center, Jersey City, Hudson County, New Jersey. In July
2000, the joint venture began development of the hotel project, which is
expected to be completed by late 2002. The total cost of the construction
project is estimated to be approximately $103,000. The venture has obtained a
construction loan of $63,700, of which each partner has severally guaranteed
repayment of approximately $11,148. Additionally, the Company has posted an
$8,000 letter of credit in support of another loan to the joint venture, $4,000
of which is indemnified by Hyatt. In addition, the Company and Hyatt have
guaranteed completion of the hotel project to the joint venture's construction
lender. If the joint venture fails to complete the hotel project as required
under the construction loan documents and the construction loan proceeds
remaining to be advanced together with the capital contributed by the partners
to such date are insufficient to complete the hotel project, the Company and/or
Hyatt may be required to provide additional funds sufficient to complete the
hotel project.
80
SUMMARIES OF UNCONSOLIDATED JOINT VENTURES
The following is a summary of the financial position of the unconsolidated joint
ventures in which the Company had investment interests as of December 31, 2001
and 2000:
December 31, 2001
------------------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $ -- $ 19,556 $ 9,598 $ 81,070 $18,119 $37,358 $ -- $16,607 $ 63,236 $245,544
Other assets 732 20,267 2,178 120 4,822 829 595,937 107 100 625,092
-----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 732 $ 39,823 $ 11,776 $ 81,190 $22,941 $38,187 $595,937 $16,714 $ 63,336 $870,636
===================================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $ 13,976 $ 50,000 $ -- $15,974 $ -- $324,819 $16,795 $ 34,107 $455,671
Other liabilities -- 897 1,175 9,667 83 830 3,736 103 2,927 19,418
Partners'/members' capital 732 24,950 (39,399) 71,523 6,884 37,357 267,382 (184) 26,302 395,547
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $ 732 $ 39,823 $ 11,776 $ 81,190 $22,941 $38,187 $595,937 $16,714 $ 63,336 $870,636
===================================================================================================================================
Company's net investment
in unconsolidated
joint ventures $ 350 $ 24,545 $ 2,795 $ 74,651 $ 3,014 $ 7,809 $ 17,897 $ 183 $ 15,296 $146,540
-----------------------------------------------------------------------------------------------------------------------------------
December 31, 2000
------------------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $20,810 $ 78,119 $ 10,589 $ 12,546 $18,947 $37,665 $ -- $ -- $ -- $178,676
Other assets 2,737 27,082 2,508 11,851 4,755 849 310,342 -- -- 360,124
-----------------------------------------------------------------------------------------------------------------------------------
Total assets $23,547 $105,201 $ 13,097 $ 24,397 $23,702 $38,514 $310,342 $ -- $ -- $538,800
===================================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $ 63,486 $ 50,000 $ -- $16,666 $ -- $129,562 $ -- $ -- $259,714
Other liabilities 160 5,035 1,368 9,400 522 1,005 3,750 -- -- 21,240
Partners'/members' capital 23,387 36,680 (38,271) 14,997 6,514 37,509 177,030 -- -- 257,846
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $23,547 $105,201 $ 13,097 $ 24,397 $23,702 $38,514 $310,342 $ -- $ -- $538,800
===================================================================================================================================
Company's net investment
in unconsolidated
joint ventures $16,110 $ 35,079 $ 3,973 $ 15,809 $ 2,782 $ 7,874 $ 19,811 $ -- $ -- $101,438
-----------------------------------------------------------------------------------------------------------------------------------
81
The following is a summary of the results of operations of the unconsolidated
joint ventures for the period in which the Company had investment interests
during the years ended December 31, 2001, 2000 and 1999:
Year Ended December 31, 2001
------------------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
-----------------------------------------------------------------------------------------------------------------------------------
Total revenues $11,337 $ 22,826 $ 12,515 $ 543 $ 3,718 $ 5,685 $ 64,791 $ -- $ -- $121,415
Operating and other expenses (1,322) (2,839) (3,558) (63) (1,191) (2,594) (32,200) -- -- (43,767)
Depreciation and amortization (992) (3,530) (1,557) (39) (1,031) (957) -- -- -- (8,106)
Interest expense -- (2,995) (3,095) -- (1,126) -- (19,231) -- -- (26,447)
-----------------------------------------------------------------------------------------------------------------------------------
Net income $ 9,023 $ 13,462 $ 4,305 $ 441 $ 370 $ 2,134 $ 13,360 $ -- $ -- $ 43,095
===================================================================================================================================
Company's equity in earnings
of unconsolidated
joint ventures $ 785 $ 6,064 $ 1,582 $ (322) $ 232 $ 388 $ 275 $ -- $ -- $ 9,004
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 2000
------------------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
-----------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 5,075 $ 9,254 $ 10,785 $ 1,009 $ 4,011 $ 5,776 $ 19,931 $ -- $ -- $ 55,841
Operating and other expenses (1,619) (2,628) (3,312) (155) (1,030) (2,773) (3,060) -- -- (14,577)
Depreciation and amortization (1,226) (5,908) (1,532) (825) (975) (839) -- -- -- (11,305)
Interest expense -- (4,535) (4,060) -- (1,547) -- (5,045) -- -- (15,187)
-----------------------------------------------------------------------------------------------------------------------------------
Net income $ 2,230 $ (3,817) $ 1,881 $ 29 $ 459 $ 2,164 $ 11,826 $ -- $ -- $ 14,772
===================================================================================================================================
Company's equity in earnings
of unconsolidated
joint ventures $ 935 $ 3,248 $ 483 $ 735 $ 180 $ 474 $ 2,000 $ -- $ -- $ 8,055
-----------------------------------------------------------------------------------------------------------------------------------
82
Year Ended December 31, 1999
------------------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
-----------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 4,938 $ 459 $ 9,011 $ 917 $ 1,426 $ 4,162 $ 10,093 $ -- $ -- $ 31,006
Operating and other expenses (1,505) (104) (3,238) (287) (352) (2,327) (3,774) -- (11,587)
Depreciation and amortization (1,234) (100) (1,422) (96) (439) (551) -- -- (3,842)
Interest expense -- (119) (3,116) -- (45) -- (2,185) -- (5,465)
-----------------------------------------------------------------------------------------------------------------------------------
Net income $ 2,199 $ 136 $ 1,235 $ 534 $ 590 $ 1,284 $ 4,134 $ -- $ -- $ 10,112
===================================================================================================================================
Company's equity in earnings
of unconsolidated
joint ventures $ 827 $ -- $ (366) $ 541 $ 298 $ 233 $ 1,060 $ -- $ -- $ 2,593
-----------------------------------------------------------------------------------------------------------------------------------
83
5. DEFERRED CHARGES AND OTHER ASSETS
December 31,
2001 2000
--------------------------------------------------------------------------------
Deferred leasing costs $ 93,677 $ 80,667
Deferred financing costs 26,569 23,085
--------------------------------------------------------------------------------
120,246 103,752
Accumulated amortization (36,746) (26,303)
--------------------------------------------------------------------------------
Deferred charges, net 83,500 77,449
Prepaid expenses and other assets 17,999 25,206
--------------------------------------------------------------------------------
Total deferred charges and other assets, net $ 101,499 $ 102,655
================================================================================
6. RESTRICTED CASH
Restricted cash includes security deposits for the Company's residential
property 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:
December 31,
2001 2000
---------------------------------------------------------------------------------
Security deposits $7,839 $6,477
Escrow and other reserve funds 75 80
---------------------------------------------------------------------------------
Total restricted cash $7,914 $6,557
=================================================================================
7. RENTAL PROPERTY HELD FOR SALE
As of December 31, 2001, the Company has identified 37 office properties,
aggregating approximately 4.3 million square feet, a multi-family residential
property and a land parcel as held for sale. These properties are located in
Texas, Colorado, Arizona, Florida and New York. Such properties carried an
aggregate book value of $384,626, net of accumulated depreciation of $28,379 and
a valuation allowance of $40,464 at December 31, 2001.
In January 2002, the Company sold 25 Martine Avenue, a 124-unit multi-family,
residential property located in White Plains, Westchester County, New York, for
net sales proceeds of approximately $17,800, which resulted in a gain of
approximately $7,300.
As of December 31, 2000, the Company had identified 10 office properties,
aggregating approximately 1.6 million square feet, and a land parcel as held for
sale, all of which are located in San Antonio and Houston, Texas. Such
properties carried an aggregate book value of $107,458, net of accumulated
depreciation, of $7,019.
In 2001, the Company sold four of these properties for total net sales proceeds
of approximately $62,109.
The following is a summary of the condensed results of operations of the rental
properties held for sale at December 31, 2001 for the years ended December 31,
2001, 2000 and 1999:
Year Ended December 31,
2001 2000 1999
--------------------------------------------------------------------------------
Total revenues $ 73,839 $ 72,500 $ 68,857
Operating and other expenses (30,364) (28,419) (27,804)
Depreciation and amortization (2,634) (10,020) (9,377)
--------------------------------------------------------------------------------
Net income $ 40,841 $ 34,061 $ 31,676
================================================================================
84
There can be no assurance if and when sales of the Company's rental properties
held for sale will occur.
During the year ended December 31, 2001, the Company determined that the
carrying amounts of certain properties identified as held for sale were not
expected to be recovered from estimated net sale proceeds from these property
sales and, accordingly, recognized a valuation allowance of $46,793.
The following table summarizes realized gains (losses) and unrealized losses on
disposition of rental property, net:
Year Ended December 31,
2001 2000 1999
-------------------------------------------------------------------------------------------------
Realized gains (losses) on sale of rental property and land, net $ 34,929 $85,353 $ 1,957
Valuation allowance on rental property held for sale (46,793) -- --
-------------------------------------------------------------------------------------------------
Realized gains (losses) and unrealized losses, net $(11,864) $85,353 $ 1,957
=================================================================================================
8. SENIOR UNSECURED NOTES
On January 29, 2001, the Operating Partnership issued $300,000 face amount of
7.75 percent senior unsecured notes due February 15, 2011 with interest payable
semi-annually in arrears. The total proceeds from the issuance (net of selling
commissions and discount) of approximately $296,300 were used to pay down
outstanding borrowings under the 2000 Unsecured Facility, as defined in Note 9.
The senior unsecured notes were issued at a discount of approximately $1,731,
which will be amortized over the term as an adjustment to interest expense.
On December 21, 2000, the Operating Partnership issued $15,000 of senior
unsecured notes with interest payable semi-annually in arrears. The total
proceeds from the issuance (net of selling commissions) of approximately $14,907
were used primarily to pay down outstanding borrowings under the Prudential
Facility, as defined in Note 9.
The Operating Partnership's senior unsecured notes (collectively, "Senior
Unsecured Notes") are redeemable at any time at the option of the Company,
subject to certain conditions including yield maintenance.
The terms of the Senior Unsecured Notes include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.
A summary of the terms of the Senior Unsecured Notes outstanding as of December
31, 2001 and 2000 is as follows:
December 31, Effective
2001 2000 Rate (1)
---------------------------------------------------------------------------------------
7.180% Senior Unsecured Notes, due December 31, 2003 $ 185,283 $185,283 7.23%
7.000% Senior Unsecured Notes, due March 15, 2004 299,824 299,744 7.27%
7.250% Senior Unsecured Notes, due March 15, 2009 298,307 298,072 7.49%
7.835% Senior Unsecured Notes, due December 15, 2010 15,000 15,000 7.95%
7.750% Senior Unsecured Notes, due February 15, 2011 298,429 -- 7.93%
---------------------------------------------------------------------------------------
Total Senior Unsecured Notes $1,096,843 $798,099 7.51%
=======================================================================================
(1) Includes the cost of terminated treasury lock agreements (if any),
offering and other transaction costs and the discount on the notes, as
applicable.
85
9. REVOLVING CREDIT FACILITIES
2000 UNSECURED FACILITY
On June 22, 2000, the Company obtained an unsecured revolving credit facility
("2000 Unsecured Facility") with a current borrowing capacity of $800,000 from a
group of 24 lenders. The interest rate on outstanding borrowings under the
credit line is currently the London Inter-Bank Offered Rate ("LIBOR") (1.87
percent at December 31, 2001) plus 80 basis points. The Company may instead
elect an interest rate representing the higher of the lender's prime rate or the
Federal Funds rate plus 50 basis points. The 2000 Unsecured Facility also
requires a 20 basis point facility fee on the current borrowing capacity payable
quarterly in arrears. Subject to certain conditions, the Company has the ability
through June 22, 2002 to increase the borrowing capacity of the credit line up
to $1,000,000. The 2000 Unsecured Facility matures in June 2003, with an
extension option of one year, which would require a payment of 25 basis points
of the then borrowing capacity of the credit line upon exercise.
In the event of a change in the Company's unsecured debt rating, the interest
rate and facility fee will be adjusted in accordance with the following table:
OPERATING PARTNERSHIP'S INTEREST RATE -
UNSECURED DEBT RATINGS: APPLICABLE BASIS POINTS FACILITY FEE
S&P/MOODY'S/FITCH (a) ABOVE LIBOR BASIS POINTS
---------------------------------------------------------------------------------
No rating or less than BBB-/Baa3/BBB- 120.0 30.0
BBB-/Baa3/BBB- 95.0 20.0
BBB/Baa2/BBB 80.0 20.0
BBB+/Baa1/BBB+ 72.5 17.5
A-/A3/A- or higher 65.0 15.0
(a) If the Operating Partnership has debt ratings from two rating agencies one
of which is S&P or Moody's, the rates per the above table shall be based
on the lower of such ratings. If the Operating Partnership has debt
ratings from three rating agencies, one of which is Standard & Poor's
Rating Services ("S&P") or Moody's Investors Service ("Moody's"), the
rates per the above table shall be based on the lower of the two highest
ratings. If the Operating Partnership has debt ratings from only one
agency, it will be considered to have no rating or less than
BBB-/Baa3/BBB- per the above table.
The terms of the 2000 Unsecured Facility include certain restrictions and
covenants which limit, among other things the payment of dividends (as discussed
below), the incurrence of additional indebtedness, the incurrence of liens and
the disposition of assets, and which require compliance with financial ratios
relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common stock
or other equity interests in an aggregate amount in excess of 90 percent of
funds from operations (as defined) for such period, subject to certain other
adjustments.
The lending group for the 2000 Unsecured Facility consists of: Chase Manhattan
Bank, as administrative agent; Fleet National Bank, as syndication agent; Bank
of America, N.A., as documentation agent; Bank One, NA, Commerzbank
Aktiengesellschaft and First Union National Bank, as senior managing agents; PNC
Bank, N.A., as managing agent; Bayerische Hypo-und Vereinsbank AG, Dresdner Bank
AG, Societe Generale and Wells Fargo Bank, N.A., as co-agents; and Bayerische
Landesbank Girozentrale; Citizens Bank of Massachusetts; European American Bank;
Chevy Chase Bank; Citicorp Real Estate, Inc.; DG Bank Deutsche
Genossenschaftsbank, AG; Erste Bank; KBC Bank N.V.; SunTrust Bank; Bank Leumi
USA and Israel Discount Bank of New York.
In conjunction with obtaining the 2000 Unsecured Facility, the Company drew
funds on the new facility to repay in full and terminate the Unsecured Facility,
as defined below.
86
UNSECURED FACILITY
The Company had an unsecured revolving credit facility ("Unsecured Facility")
with a borrowing capacity of $1,000,000 from a group of 28 lenders. The interest
rate was based on the Company's achievement of investment grade unsecured debt
ratings and, at the Company's election, bore interest at either 90 basis points
over LIBOR or the higher of the lender's prime rate or the Federal Funds rate
plus 50 basis points. In conjunction with obtaining the 2000 Unsecured Facility,
the Company repaid in full and terminated the Unsecured Facility on June 22,
2000.
PRUDENTIAL FACILITY
The Company had a revolving credit facility ("Prudential Facility") with
Prudential Securities Corp. ("PSC") in the amount of $100,000, which bore
interest at 110 basis points over one-month LIBOR, with a maturity date of June
29, 2001. The Prudential Facility was a recourse liability of the Operating
Partnership and was secured by the Company's equity interest in Harborside
Plazas 2 and 3. The Prudential Facility was repaid in full and terminated at
maturity on June 29, 2001.
SUMMARY
As of December 31, 2001 and 2000, the Company had outstanding borrowings of
$59,500 and $348,840, respectively, under its revolving credit facilities (with
aggregate borrowing capacity of $800,000 and $900,000, respectively). The total
outstanding borrowings were from the 2000 Unsecured Facility.
10. MORTGAGES AND LOANS PAYABLE
The Company has mortgages and loans payable which are comprised of various loans
collateralized by certain of the Company's rental properties. Payments on
mortgages and loans payable are generally due in monthly installments of
principal and interest, or interest only.
A summary of the Company's mortgages and loans payable as of December 31, 2001
and 2000 is as follows:
EFFECTIVE PRINCIPAL BALANCE AT
INTEREST DECEMBER 31,
PROPERTY NAME LENDER RATE 2001 2000 MATURITY
-----------------------------------------------------------------------------------------------------------------
101 & 225 Executive Drive Sun Life Assurance Co. 6.27% $ -- $ 2,198 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.51% -- 2,169 12/31/01
Mack-Cali Willowbrook CIGNA 8.67% 8,598 9,460 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.44% 12,646 13,588 07/01/04
Mack-Cali Centre VI Principal Life Insurance Co. 6.87% 35,000 35,000 04/01/05
Various (a) Prudential Insurance Co. 7.10% 150,000 150,000 05/15/05
Mack-Cali Bridgewater I New York Life Ins. Co. 7.00% 23,000 23,000 09/10/05
Mack-Cali Woodbridge II New York Life Ins. Co. 7.50% 17,500 17,500 09/10/05
Mack-Cali Short Hills Prudential Insurance Co. 7.74% 25,218 25,911 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.52% 9,273 10,069 10/10/05
Harborside - Plaza 1 U.S. West Pension Trust 5.61% 57,978 54,370 01/01/06
Harborside - Plazas 2 and 3 Northwestern/Principal 7.36% 162,022 95,630 01/01/06
Mack-Cali Airport Allstate Life Insurance Co. 7.05% 10,394 10,500 04/01/07
Kemble Plaza I Mitsubishi Tr & Bk Co. LIBOR+0.65% 32,178 32,178 01/31/09
-----------------------------------------------------------------------------------------------------------------
Total Property Mortgages $543,807 $481,573
=================================================================================================================
(a) The Company has the option to convert the mortgage loan, which is secured
by 12 properties, to unsecured debt, subject to, amongst other things, the
Company having an investment grade ratings from two rating agencies (at
least one of which must be from S&P or Moody's) at the time of conversion.
87
SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates
for the Company's Senior Unsecured Notes (see Note 8), revolving credit
facilities (see Note 9) and mortgages and loans payable as of December 31, 2001
are as follows:
WEIGHTED AVG.
SCHEDULED PRINCIPAL INTEREST RATE OF
PERIOD AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (a)
----------------------------------------------------------------------------------------------------
2002 $ 3,996 $ -- $ 3,996 7.72%
2003 4,145 251,594 255,739 6.31%
2004 2,922 309,863 312,785 7.34%
2005 2,066 253,178 255,244 7.13%
2006 222 220,000 220,222 7.06%
Thereafter 58 656,542 656,600 7.41%
----------------------------------------------------------------------------------------------------
Sub-total 13,409 1,691,177 1,704,586 7.17%
Adjustment for unamortized debt
discount/premium, net, as of
December 31, 2001 (4,436) -- (4,436) --
----------------------------------------------------------------------------------------------------
Totals/Weighted Average $ 8,973 $1,691,177 $ 1,700,150 7.17%
====================================================================================================
(a) Actual weighted average LIBOR contract rates relating to the Company's
outstanding debt as of December 31, 2001 of 2.64 percent was used in
calculating revolving credit facility and other variable rate debt
interest rates.
CASH PAID FOR INTEREST AND INTEREST CAPITALIZED
Cash paid for interest for the years ended December 31, 2001, 2000 and 1999 was
$115,772, $112,157 and $91,883, respectively. Interest capitalized by the
Company for the years ended December 31, 2001, 2000 and 1999 was $16,722,
$11,524 and $6,840, respectively.
SUMMARY OF INDEBTEDNESS
As of December 31, 2001, the Company's total indebtedness of $1,700,150
(weighted average interest rate of 7.17 percent) was comprised of $91,678 of
revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 3.38 percent) and fixed rate debt of $1,608,472
(weighted average rate of 7.38 percent).
As of December 31, 2000, the Company's total indebtedness of $1,628,512
(weighted average interest rate of 7.29 percent) was comprised of $381,018 of
revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 7.53 percent) and fixed rate debt of $1,247,494
(weighted average rate of 7.25 percent).
11. MINORITY INTERESTS
Minority interests in the accompanying consolidated financial statements relate
to (i) preferred units in the Operating Partnership ("Preferred Units"), common
units in the Operating Partnership and warrants to purchase common units ("Unit
Warrants"), held by parties other than the Company, and (ii) interests in
consolidated partially-owned properties for the portion of such properties not
owned by the Company.
88
OPERATING PARTNERSHIP
PREFERRED UNITS
At January 1, 2000, the Company had 6,180 Series A Preferred Units and 223,124
Series B Preferred Units outstanding.
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 is an amount equal to the greater
of (i) $16.875 (representing 6.75 percent of the Preferred Unit stated value of
an annualized basis) 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 Preferred
Units may be converted at any time into common units at a conversion price of
$34.65 per unit. Common units received pursuant to such conversion may be
redeemed for an equal number of shares of common stock.
During the year ended December 31, 2000, 6,180 Series A Preferred Units and
2,784 Series B Preferred Units were converted into 258,702 common units.
As of December 31, 2001, there were 220,340 Series B Preferred Units outstanding
(convertible into 6,359,019 common units). There were no Series A Preferred
Units outstanding as of December 31, 2001.
COMMON UNITS
At January 1, 2000, the Company had 8,153,710 common units outstanding.
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 in the Operating Partnership is reduced and the Company's investment in
the Operating Partnership is increased.
During the year ended December 31, 2000, the Company issued 258,702 common units
in connection with the conversion of 8,964 Preferred Units, and an aggregate of
448,688 common units were redeemed for an equivalent number of shares of common
stock in the Company.
As of December 31, 2000, there were 7,963,725 common units outstanding.
During the year ended December 31, 2001, 8,950 common units were redeemed for an
equivalent number of shares of common stock in the Company.
As of December 31, 2001, there were 7,954,775 common units outstanding.
CONTINGENT COMMON AND PREFERRED UNITS
In connection with the Mack transaction in December 1997, 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
("Contingent Units"). Redemption of such Contingent Units occurred upon the
achievement of certain performance goals relating to certain of the Mack
properties ("Mack Properties"), specifically the achievement of certain leasing
activity. When Contingent Units were redeemed for common and Preferred Units, an
adjustment to the purchase price of certain of the Mack Properties was recorded,
based on the value of the units issued.
On account of certain of the performance goals at the Mack Properties having
been achieved during the year ended December 31, 1999, the Company redeemed
275,046 contingent common units and issued an equivalent number of common units,
as indicated above. There were no Contingent Units outstanding as of December
31, 1999.
89
UNIT WARRANTS
The Company has 2,000,000 Unit Warrants outstanding which enable the holders to
purchase an equal number of common units at $37.80 per unit. The Unit Warrants
are all currently exercisable and expire on December 11, 2002.
MINORITY INTEREST OWNERSHIP
As of December 31, 2001 and 2000, the minority interest common unitholders owned
12.3 percent (20.2 percent, including the effect of the conversion of Preferred
Units into common units) and 12.3 percent (20.1 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).
PARTIALLY-OWNED PROPERTIES
On December 28, 1999, the Company sold an interest in six office properties
located in Parsippany, Morris County, New Jersey for $83,600. Amongst other
things, the operating agreements provided for a preferred return to the joint
venture members. On June 29, 2000 the Company acquired a 100 percent interest in
these properties and the Company paid an additional $836 to the minority
interest member in excess of its investment.
On August 24, 2000, MC-SJP Morris V Realty, LLC and MC-SJP Morris VI Realty, LLC
acquired land in which SJP Properties has a minority interest amounting to
$1,925.
The Company controlled these operations and has consolidated the financial
position and results of operations of partially-owned properties in the
financial statements of the Company. The equity interests of the other members
are reflected as minority interests: partially-owned properties in the
consolidated financial statements of the Company.
12. 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 "401(k) Plan"). The 401(k) Plan allows eligible employees to defer up to 15
percent of their annual compensation, subject to certain limitations imposed by
federal law. The amounts contributed by employees are immediately vested and
non-forfeitable. The Company, at management's discretion, may match employee
contributions and/or make discretionary contributions. Management has approved,
for the year ended December 31, 2001, a Company matching contribution to be paid
under the 401(k) Plan equal to 50 percent of the first 3.5 percent of annual
salary, as defined in the 401(k) Plan, contributed to the plan in 2001. Total
expense recognized by the Company for the years ended December 31, 2001, 2000
and 1999 was $400, $0 and $400, respectively.
13. DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of estimated fair value was determined by management
using available market information and appropriate valuation methodologies.
However, considerable judgement is necessary to interpret market data and
develop estimated fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts the Company could realize on
disposition of the financial instruments at December 31, 2001 and 2000. The use
of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
Cash equivalents, receivables, accounts payable, and accrued expenses and other
liabilities are carried at amounts which reasonably approximate their fair
values as of December 31, 2001 and 2000.
The estimated fair value (excluding prepayment penalties) of the Senior
Unsecured Notes and mortgages and loans payable as of December 31, 2001
approximated the carrying values of $1,126,759 and $518,555, respectively, and
as of December 31, 2000 approximated the carrying values of $798,099 and
$481,573, respectively, based upon then current interest rates for debt with
similar terms and remaining maturities. Revolving credit facility borrowings as
of December 31, 2001 and 2000 approximated the carrying values of $59,500 and
$348,840, respectively.
90
Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 2001 and 2000. Although
management is not aware of any factors that would significantly affect the fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since December 31, 2001 and current estimates of
fair value may differ significantly from the amounts presented herein.
14. COMMITMENTS AND CONTINGENCIES
TAX ABATEMENT AGREEMENTS
HARBORSIDE FINANCIAL CENTER
Pursuant to an agreement with the City of Jersey City, New Jersey, the Company
is required to make payments in lieu of property taxes ("PILOT") on its
Harborside Plaza 2 and 3 properties. 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 15.
Total Project Costs, as defined, are $145,644. The PILOT totaled $2,752, $2,677
and $2,620 for the years ended December 31, 2001, 2000 and 1999, respectively.
The Company has entered into a similar agreement with the City of Jersey City,
New Jersey on its Harborside Plaza 4-A property. The agreement, which commenced
in 2000, is for a term of 20 years. The PILOT is equal to two percent of Total
Project costs, as defined, and increase by 10% in years 7, 10 and 13 and by 50%
in year 16. Total Project costs, as defined, are $45,497. The PILOT totaled
$891, $25 and $0 for the years ended December 31, 2001, 2000 and 1999,
respectively.
Additionally, the Company has entered into a similar agreement with the City of
Jersey City, New Jersey on its Harborside Plaza 5 property. The agreement, which
will commence upon substantial completion of the property, as defined, is for a
term of 20 years. The PILOT is equal to two percent of Total Project Costs, as
defined, and increases by 10 percent in years 7, 10 and 13, and by 50 percent in
year 16. Total Project Costs, as defined, are $132,294. The Company incurred no
costs pursuant to the PILOT for the years ended December 31, 2001, 2000 and
1999.
GROUND LEASE AGREEMENTS
Future minimum rental payments under the terms of all non-cancelable ground
leases under which the Company is the lessee, as of December 31, 2001, are as
follows:
Year Amount
--------------------------------------------------------------------------------
2002 $ 531
2003 531
2004 534
2005 534
2006 534
2007 through 2080 21,463
--------------------------------------------------------------------------------
Total $24,127
================================================================================
Ground lease expense incurred during the years ended December 31, 2001, 2000 and
1999 amounted to $569, $570 and $561, respectively.
OTHER
The Company may not dispose of or distribute certain of its properties,
currently comprising 141 properties with an aggregate net book value of
approximately $1,869,821, which were originally contributed by members of either
the Mack Group (which includes William L. Mack, Chairman of the Company's Board
of Directors; Earle I. Mack, director; and Mitchell E. Hersh, chief executive
officer and director), the Robert Martin Group (which includes Robert F.
Weinberg, director; Martin W. Berger, a former director; Timothy M. Jones,
president; and Michael A. Grossman, executive vice president) or the Cali Group
(which includes John J. Cali, director and John R. Cali, director) without the
express written consent of a representative of the Mack Group, the Robert Martin
Group or the Cali Group, as applicable, except in a manner which does not result
in recognition of any built-in-gain (which may result in an income tax
liability) or which reimburses the appropriate Mack Group, Robert Martin Group
or Cali Group members for the tax consequences of the recognition of such
built-in-gains (collectively, the "Property Lock-Ups"). The aforementioned
restrictions do not apply
91
in the event that the Company sells all of its properties or in connection with
a sale transaction which the Company's Board of Directors determines is
reasonably necessary to satisfy a material monetary default on any unsecured
debt, judgment or liability of the Company or to cure any material monetary
default on any mortgage secured by a property. The Property Lock-Ups expire
periodically through 2008. Upon the expiration of the Property Lock-Ups, the
Company is required to use commercially reasonable efforts to prevent any sale,
transfer or other disposition of the subject properties from resulting in the
recognition of built-in gain to the appropriate Mack Group, Robert Martin Group
or Cali Group members.
On April 19, 1999, the Company announced the following changes in the membership
of its Board of Directors and the identities, titles and responsibilities of its
executive officers: (i) Thomas A. Rizk resigned from the Board of Directors, the
Executive Committee of the Board of Directors, his position as Chief Executive
Officer and as an employee of the Company; (ii) Mitchell E. Hersh was appointed
Chief Executive Officer of the Company simultaneous with his resignation from
his positions as President and Chief Operating Officer of the Company; (iii)
Timothy M. Jones was appointed President of the Company simultaneous with his
resignation from his positions as Executive Vice President and Chief Investment
Officer of the Company; and (iv) Brant Cali was appointed to the Board of
Directors of the Company to fill the remainder of Thomas A. Rizk's term as a
Class III Director and was appointed Chief Operating Officer of the Company,
also remaining as an Executive Vice President and Assistant Secretary of the
Company.
Pursuant to the terms of Mr. Rizk's employment agreement entered into with the
Company in December 1997 and an agreement entered into simultaneous with his
resigning from the Company, Mr. Rizk received payments of approximately $14,490
in April 1999, $500 in April 2000, $500 in April 2001, and will receive $500 in
April 2002. All costs associated with Mr. Rizk's resignation are included in
non-recurring charges for the year ended December 31, 1999.
On June 27, 2000, both Brant Cali and John R. Cali resigned their positions as
officers of the Company and Brant Cali resigned as a director of the Company.
John R. Cali was appointed to the Board of Directors of the Company to take the
seat previously held by Brant Cali. As required by Brant Cali and John R. Cali's
employment agreements with the Company: (i) the Company paid $2,820 and $2,806
(less applicable withholding) to Brant Cali and John R. Cali, respectively; (ii)
all options to acquire shares of the Company's common stock and Restricted Stock
Awards (as hereinafter defined) held by Brant Cali and John R. Cali became fully
vested on the effective date of their resignations from the Company. All costs
associated with Brant Cali and John R. Cali's resignations, which totaled
approximately $9,228, are included in non-recurring charges for the year ended
December 31, 2000.
The Company is a defendant in 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.
15. TENANT LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2017. Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the tenant's
proportionate share of and/or increases in real estate taxes and certain
operating costs, as defined, and the pass through of charges for electrical
usage.
Future minimum rentals to be received under non-cancelable operating leases at
December 31, 2001 are as follows:
Year Amount
--------------------------------------------------------------------------------
2002 $ 486,053
2003 438,526
2004 385,587
2005 342,501
2006 280,787
Thereafter 955,715
--------------------------------------------------------------------------------
Total $2,889,169
================================================================================
92
16. 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.
COMMON STOCK REPURCHASES
On August 6, 1998, the Board of Directors of the Company authorized a share
repurchase program ("Repurchase Program") under which the Company was permitted
to purchase up to $100,000 of the Company's outstanding common stock. Purchases
could be made from time to time in open market transactions at prevailing prices
or through privately negotiated transactions. Under the Repurchase Program, the
Company purchased for constructive retirement 1,869,200 shares of its
outstanding common stock for an aggregate cost of approximately $52,562 from
August 1998 through December 1999.
On September 13, 2000, the Board of Directors authorized an increase to the
Repurchase Program under which the Company is permitted to purchase up to an
additional $150,000 of the Company's outstanding common stock above the $52,562
that had previously been purchased. The Company purchased for constructive
retirement 3,295,800 shares of its outstanding common stock for an aggregate
cost of approximately $90,925 from September 13, 2000 through December 31, 2001.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Company filed a registration statement with the SEC for the Company's
dividend reinvestment and stock purchase plan ("Plan") which was declared
effective in February 1999. The Plan commenced on March 1, 1999.
During the year ended December 31, 1999, 1,082 shares were issued and proceeds
of approximately $32 were received from stock purchases and/or dividend
reinvestments under the Plan. The Company did not issue any shares under the
Plan during the year ended December 31, 2001.
SHAREHOLDER RIGHTS PLAN
On June 10, 1999, the Board of Directors of the Company authorized a dividend
distribution of one preferred share purchase right ("Right") for each
outstanding share of common stock which were distributed to all holders of
record of the common stock on July 6, 1999. Each Right entitles the registered
holder to purchase from the Company one one-thousandth of a share of Series A
junior participating preferred stock, par value $0.01 per share ("Preferred
Shares"), at a price of $100.00 per one one-thousandth of a Preferred Share
("Purchase Price"), subject to adjustment as provided in the rights agreement.
The Rights expire on July 6, 2009, unless the expiration date is extended or the
Right is redeemed or exchanged earlier by the Company.
The Rights are attached to each share of common stock. The Rights are generally
exercisable only if a person or group becomes the beneficial owner of 15 percent
or more of the outstanding common stock or announces a tender offer for 15
percent or more of the outstanding common stock ("Acquiring Person"). In the
event that a person or group becomes an Acquiring Person, each holder of a Right
will have the right to receive, upon exercise, common stock having a market
value equal to two times the Purchase Price of the Right.
On June 27, 2000, the Company amended its shareholder rights plan to prevent the
triggering of such plan as a result of the Merger Agreement.
93
STOCK OPTION PLANS
In September 2000, the Company established the 2000 Employee Stock Option Plan
("2000 Employee Plan") and the 2000 Director Stock Option Plan ("2000 Director
Plan") under which a total of 2,700,000 shares (subject to adjustment) of the
Company's common stock have been reserved for issuance (2,500,000 shares under
the 2000 Employee Plan and 200,000 shares under the 2000 Director Plan). In
1994, and as subsequently amended, the Company established the Mack-Cali
Employee Stock Option Plan ("Employee Plan") and the Mack-Cali Director Stock
Option Plan ("Director Plan") under which a total of 5,380,188 shares (subject
to adjustment) of the Company's common stock 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 have
become exercisable over a three-year period and those options granted under both
the 2000 Employee Plan and Employee Plan subsequent to 1995 become exercisable
over a five-year period. All stock options granted under both the 2000 Director
Plan and 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. As
of December 31, 2001 and 2000, the stock options outstanding had a weighted
average remaining contractual life of approximately 7.5 and 7.5 years,
respectively.
Information regarding the Company's stock option plans is summarized below:
Weighted
Shares Average
Under Exercise
Options Price
--------------------------------------------------------------------------------
Outstanding at January 1, 1999 3,938,752 $32.23
Granted 426,400 $25.23
Exercised (47,583) $22.31
Lapsed or canceled (590,418) $36.94
--------------------------------------------------------------------------------
Outstanding at December 31, 1999 3,727,151 $31.86
Granted 1,523,900 $26.75
Exercised (117,053) $21.45
Lapsed or canceled (500,679) $34.64
--------------------------------------------------------------------------------
Outstanding at December 31, 2000 4,633,319 $30.14
Granted 1,045,300 $28.85
Exercised (904,401) $22.87
Lapsed or canceled (262,332) $30.47
--------------------------------------------------------------------------------
Outstanding at December 31, 2001 4,511,886 $31.28
================================================================================
Options exercisable at December 31, 2000 2,049,041 $31.02
Options Exercisable at December 31, 2001 1,842,951 $34.63
--------------------------------------------------------------------------------
Available for grant at December 31, 2000 2,344,757
Available for grant at December 31, 2001 1,474,263
--------------------------------------------------------------------------------
The weighted average fair value of options granted during 2001, 2000 and 1999
were $2.53, $3.40, and $2.74 per option, respectively. The fair value of each
significant option grant is estimated on the date of grant using the
Black-Scholes model. The following weighted average assumptions are included in
the Company's fair value calculations of stock options:
2001 2000 1999
--------------------------------------------------------------------------------
Expected life (in years) 6 6 6
Risk-free interest rate 4.99% 5.67% 6.12%
Volatility 17.26% 22.66% 24.72%
Dividend yield 8.46% 8.82% 9.15%
--------------------------------------------------------------------------------
94
FASB NO. 123
Under the above models, the value of stock options granted during 2001, 2000 and
1999 totaled approximately $2,645, $5,181, and $1,167, respectively, which would
be amortized ratably on a pro forma basis over the appropriate vesting period.
Had the Company determined compensation cost for these granted securities in
accordance with FASB No. 123, the Company's pro forma net income, basic earnings
per share and diluted earnings per share would have been $126,193, $2.23 and
$2.22 in 2001, and $179,131, $3.07 and $3.01 in 2000 and $113,854, $1.95 and
$1.94 in 1999, respectively.
STOCK WARRANTS
The Company has 360,000 warrants outstanding which enable the holders to
purchase an equal number of shares of its common stock ("Stock Warrants") at $33
per share (the market price at date of grant). Such warrants are all currently
exercisable and expire on January 31, 2007.
The Company also has 389,976 Stock Warrants outstanding which enable the holders
to purchase an equal number of its shares of common stock at $38.75 per share
(the market price at date of grant). Such warrants vest equally over a five-year
period through December 31, 2001 and expire on December 12, 2007.
As of December 31, 2001 and 2000, there were a total of 749,976 and 749,976
Stock Warrants outstanding, respectively. As of December 31, 2001 and 2000,
there were 749,976 and 613,985 Stock Warrants exercisable, respectively. For the
years ended December 31, 2001 and 2000, zero and 165,000 Stock Warrants were
canceled, respectively. No Stock Warrants have been exercised through December
31, 2001.
STOCK COMPENSATION
The company has granted stock awards to officers and certain other employees of
the Company (collectively, "Restricted Stock Awards"), which allows the
employees to each receive a certain amount of shares of the Company's common
stock generally over a five-year vesting period. Certain Restricted Stock Awards
are contingent upon the Company meeting certain performance and/or stock price
appreciation objectives. All Restricted Stock Awards provided to the officers
and certain other employees were granted under the 2000 Employee Plan and
Employee Plan.
Information regarding the Restricted Stock Awards is summarized below:
Shares
--------------------------------------------------------------------------------
Outstanding at January 1, 1999 --
Granted 211,593
Vested --
Canceled --
--------------------------------------------------------------------------------
Outstanding at December 31, 1999 211,593
Granted --
Vested (70,386)
Canceled (5,100)
--------------------------------------------------------------------------------
Outstanding at December 31, 2000 136,107
Granted 94,934
Vested (25,354)
Canceled (7,408)
--------------------------------------------------------------------------------
Outstanding at December 31, 2001 198,279
================================================================================
DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS
The Deferred Compensation Plan for Directors ("Deferred Compensation Plan"),
which commenced January 1, 1999, allows non-employee directors of the Company to
elect to defer up to 100 percent of their annual retainer fee into deferred
stock units. The deferred stock units are convertible into an equal number of
shares of common stock upon the directors' termination of service from the Board
of Directors or a change in control of the Company, as defined in the plan.
Deferred stock units are credited to each director quarterly using the closing
price of the Company's common stock on the applicable dividend record date for
the respective quarter. Each participating director's account is also credited
for an equivalent amount of deferred stock units based on the dividend rate for
each quarter.
95
During the years ended December 31, 2001 and 2000, 5,446 and 4,227 deferred
stock units were earned, respectively.
EARNINGS PER SHARE
FASB No. 128 requires a dual presentation of basic and diluted 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.
96
The following information presents the Company's results for the years ended
December 31, 2001, 2000 and 1999 in accordance with FASB No. 128:
Year Ended December 31,
2001 2000 1999
---------------------------------------------------------------------------
Basic EPS Diluted EPS Basic EPS Diluted EPS Basic EPS Diluted EPS
--------------------------------------------------------------------------------------------------------------
Net income $131,659 $131,659 $185,338 $185,338 $119,739 $119,739
Add: Net income attributable to
Operating Partnership -
common units -- 18,531 -- 25,612 -- 17,389
Net income attributable to
Operating Partnership -
preferred units -- -- -- 15,441 -- --
--------------------------------------------------------------------------------------------------------------
Adjusted net income $131,659 $150,190 $185,338 $226,391 $119,739 $137,128
==============================================================================================================
Weighted average shares 56,538 64,775 58,338 73,070 58,385 67,133
--------------------------------------------------------------------------------------------------------------
Per Share $ 2.33 $ 2.32 $ 3.18 $ 3.10 $ 2.05 $ 2.04
==============================================================================================================
The following schedule reconciles the shares used in the basic EPS calculation
to the shares used in the diluted EPS calculation:
Year Ended December 31,
2001 2000 1999
--------------------------------------------------------------------------------
Basic EPS Shares 56,538 58,338 58,385
Add: Operating Partnership - common units 7,957 8,054 8,500
Operating Partnership - preferred units
(after conversion to common units) -- 6,485 --
Stock options 270 188 241
Restricted Stock Awards 10 5 7
Stock Warrants -- -- --
--------------------------------------------------------------------------------
Diluted EPS Shares 64,775 73,070 67,133
================================================================================
Preferred Units outstanding in 2001 and 1999 were not included in the 2001 and
1999 computations of diluted EPS as such units were anti-dilutive during the
periods.
Through December 31, 2001, under the Repurchase Program, the Company purchased
for constructive retirement, a total of 5,165,000 shares of its outstanding
common stock for an aggregate cost of approximately $143,487.
17. SEGMENT REPORTING
The Company operates in one business segment - real estate. The Company provides
leasing, management, acquisition, development, construction and tenant-related
services for its portfolio. The Company does not have any foreign operations.
The accounting policies of the segments are the same as those described in Note
2, excluding straight-line rent adjustments, depreciation and amortization and
non-recurring charges.
The Company evaluates performance based upon net operating income from the
combined properties in the segment.
97
Selected results of operations for the years ended December 31, 2001, 2000 and
1999 and selected asset information as of December 31, 2001 and 2000 regarding
the Company's operating segment are as follows:
Total Segment Corporate & Other (e) Total Company
---------------------------------------------------------------------------------------------------------
TOTAL CONTRACT REVENUES (a)
2001 $ 567,608 $ 5,340 $ 572,948 (f)
2000 557,926 5,623 563,549 (g)
1999 534,985 3,903 538,888 (h)
TOTAL OPERATING AND INTEREST EXPENSES (b):
2001 $ 179,209 $ 135,969 $ 315,178 (i)
2000 174,116 126,700 300,816 (j)
1999 168,166 128,925 297,091 (k)
NET OPERATING INCOME (c):
2001 $ 388,399 $(130,629) $ 257,770 (f) (i)
2000 383,810 (121,077) 262,733 (g) (j)
1999 366,819 (125,022) 241,797 (h) (k)
TOTAL ASSETS:
2001 $3,710,411 $ 36,359 $3,746,770
2000 3,623,107 53,870 3,676,977
TOTAL LONG-LIVED ASSETS (d):
2001 $3,595,012 $ 24,348 $3,619,360
2000 3,522,766 23,574 3,546,340
=========================================================================================================
(a) Total contract revenues represent all revenues during the period
(including the Company's share of net income from unconsolidated joint
ventures), excluding adjustments for straight-lining of rents and the
Company's share of straight-line rent adjustments from unconsolidated
joint ventures. All interest income is excluded from segment amounts and
is classified in Corporate & Other for all periods.
(b) Total operating and interest expenses represent the sum of real estate
taxes, utilities, operating services, general and administrative and
interest expense. All interest expense (including for property-level
mortgages) is excluded from segment amounts and classified in Corporate &
Other for all periods.
(c) Net operating income represents total contract revenues [as defined in
Note (a)] less total operating and interest expenses [as defined in Note
(b)] for the period.
(d) Long-lived assets are comprised of total rental property, unbilled rents
receivable and investments in unconsolidated joint ventures.
(e) Corporate & Other represents all corporate-level items (including interest
and other investment income, interest expense and non-property general and
administrative expense) as well as intercompany eliminations necessary to
reconcile to consolidated Company totals.
(f) Excludes $11,316 of adjustments for straight-lining of rents and $83 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures.
(g) Excludes $12,580 of adjustments for straight-lining of rents and $24 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures.
(h) Excludes $12,438 of adjustments for straight-lining of rents and $158 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures.
(i) Excludes $91,471 of depreciation and amortization.
(j) Excludes $92,088 of depreciation and amortization and non-recurring
charges of $37,139.
(k) Excludes $87,209 of depreciation and amortization, and non-recurring
charges of $16,458.
18. RELATED PARTY TRANSACTIONS
William L. Mack, Chairman of the Board of Directors of the Company ("W. Mack"),
is a principal in the Apollo real estate funds, which owns approximately a 7.5
percent interest in Insignia/ESG, Inc. ("Insignia"), a publicly-traded
commercial leasing and real estate services company. The Company has paid
Insignia commissions on numerous leasing transactions, as well as for the sale
of one of its properties. The Company paid commissions to Insignia amounting to
approximately $2,758, $4,801 and $1,658 for the years ended December 31, 2001,
2000 and 1999, respectively. In addition, American Financial Exchange, an
unconsolidated joint venture in which the Company has a 50 percent interest,
98
has paid Insignia approximately $1,305, $3,027 and $0 in commissions for the
years ended December 31, 2001, 2000 and 1999, respectively. The Company
currently has engaged Insignia as its exclusive leasing agent at Harborside
Financial Center, as well as has been engaged as the Company's broker for the
sales of certain of its properties. Additionally, an affiliate of Insignia
leases 40,404 square feet at one of the Company's office properties, which is
scheduled to expire in June 2003. The Company recognized $836, $880 and $824,
respectively, in revenue under this lease for the years ended December 31, 2001,
2000 and 1999, and had accounts receivable of $0, and $4, respectively, as of
December 31, 2001 and 2000.
W. Mack and Earle I. Mack, a director of the Company ("E. Mack"), are the
executive officers, directors and stockholders of a corporation that entered
into a lease in 2000 at one of the Company's office properties for approximately
7,801 square feet, which is scheduled to expire in November 2005. The Company
has recognized $217, $29 and $0 in revenue under this lease for the years ended
December 31, 2001, 2000 and 1999, respectively, and had no accounts receivable
due from the corporation as of December 31, 2001 and 2000.
In connection with the Mack transaction in December 1997, the Company agreed to
provide certain services through December 2000 to an entity, whose principals
include W. Mack and E. Mack. The Company recognized revenue of $0, $958 and
$1,000 for the years ended December 31, 2001, 2000 and 1999, respectively, under
this agreement.
The Company has conducted business with certain entities ("RMC Entity" or "RMC
Entities"), whose principals include Timothy M. Jones, Robert F. Weinberg and
Martin S. Berger, each of whom are affiliated with the Company as the president
of the Company, a current member of the Board of Directors and a former director
of the Board of Directors of the Company, as follows:
(1) The Company has engaged RMC Entities to perform management, leasing
and construction-related services for certain of the Company's
properties. The Company paid these RMC Entities $77, $87 and $57 for
such services for the years ended December 31, 2001, 2000 and 1999,
respectively.
(2) In two separate transactions, the Company acquired properties from
RMC Entities, as follows:
(a) On August 3, 2001, the Company acquired two office/flex
properties aggregating 168,177 square feet located in
Hawthorne, Westchester County, New York, for a total cost of
approximately $14,846; and
(b) On September 13, 2001, the Company acquired approximately five
acres of developable land located in Elmsford, Westchester
County, New York for approximately $1,000. The Company has
commenced construction of a fully pre-leased 33,000
square-foot office/flex building on the acquired land.
(3) The Company has a loan payable of $500 to an RMC Entity in
connection with the Company's acquisition in May 1999 of 2.5 acres
of land, which the Company acquired for a total cost of
approximately $2,200, of which $1,500 was paid in cash. The loan
requires quarterly payments of interest only at an annual interest
rate of 10.5 percent. Payment of the principal is contingent upon
the tenant's status in 2002. The Company incurred $53, $57 and $23
in interest expense for the years ended December 2001, 2000 and
1999, respectively, in connection with this loan.
(4) The Company provides management, leasing and related services to
properties in which RMC Entities have an ownership interest. The
Company recognized approximately $2,072, $1,579, and $1,318 in
revenues from RMC Entities for the years ended December 31, 2001,
2000 and 1999, respectively. As of December 31, 2001 and 2000,
respectively, the Company had no accounts receivable from RMC
Entities.
(5) An RMC Entity leases space at one of the Company's office properties
for approximately 3,330 square feet, which is scheduled to expire in
August 2002. The Company has recognized $89, $92 and $89,
respectively, in revenue under this lease for the years ended
December 31, 2001, 2000 and 1999, and had no accounts receivable due
from the RMC Entity, as of December 31, 2001 and 2000.
Vincent Tese, a director of the Company, is also currently a director of
Cablevision, Inc. who, through its affiliates, leases an aggregate of 58,885
square feet of office space, as well as has several telecom licensing agreements
at the Company's properties. The Company recognized approximately $1,101, $596
and $457 in total revenue from affiliates of Cablevision for the years ended
December 31, 2001, 2000 and 1999, respectively, and had accounts receivable of
$7 and $1, respectively, as of December 31, 2001 and 2000.
99
W. Mack and Vincent Tese are both currently members of the Board of Directors of
Bear, Stearns & Co. Inc. Roy Zuckerberg, a director of the Company, is also
currently on the Board of Directors of Goldman Sachs & Co. Bear Stearns and
Goldman Sachs have both acted as underwriters on several of the Operating
Partnership's previously-completed public debt offerings.
The son of a former director of the Company, who was also a former officer of
the Company, served as an officer and continues to have a financial interest in
a company which provides cleaning and other related services to certain of the
Company's properties. The Company has incurred costs from this company of
approximately $4,674, $3,164 and $2,524 for the years ended December 31, 2001,
2000 and 1999, respectively. As of December 31, 2001 and 2000, respectively, the
Company had accounts payable of approximately $4 and $108 to this company.
19. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities ("FASB No. 133"), is effective
commencing January 1, 2001. FASB No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in
the fair value of derivatives are recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is
appropriately designated as part of a hedge transaction. Due to its limited
use of derivative instruments, (none outstanding at December 31, 2000 and
none transacted during 2001), the adoption of FASB No. 133 did not have a
significant effect on the Company's financial position and results of
operations for the year ended December 31, 2001, nor is it expected to
materially impact future results of operations.
In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, Business Combinations which addresses financial accounting and
reporting for business combinations. Effective July 1, 2001, all business
combinations must be accounted for using the purchase method of accounting,
which requires an allocation of the purchase price paid to the assets
acquired and liabilities assumed. Additionally, this statement requires that
an intangible asset be recognized as an asset apart from goodwill if it
arises from contractual or legal rights. The impact of adopting this
statement is not expected to be material to the Company's financial
statements.
In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. This statement addresses financial accounting and reporting for
intangible assets acquired, goodwill and other intangible assets after their
acquisition. This statement requires that goodwill be allocated on a reporting
unit level. A reporting unit is an operating segment, as defined in SFAS No.
131, Disclosures about Segments of an Enterprise and Related Information, or one
level below an operating segment. Additionally, goodwill and intangible assets
that have indefinite useful lives will not be amortized but rather will be
tested at least annually for impairment at the reporting unit level. In
addition, this statement requires disclosures about the carrying amount of and
changes in goodwill from period to period. Goodwill and intangible assets
acquired after June 30, 2001 will be subject immediately to the provisions of
this statement. The provisions are effective for fiscal years beginning after
December 15, 2001. The impact of adopting this statement is not expected to be
material to the Company's financial statements.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, which supercedes SFAS No. 121. SFAS No. 144
requires that long-lived assets that are to be disposed of by sale be
measured at the lower of book value or fair value less cost to sell. SFAS No.
144 retains the requirements of SFAS No. 121 regarding impairment loss
recognition and measurement. In addition, it requires that one accounting
model be used for long-lived assets to be disposed of by sale and broadens
the presentation of discontinued operations to include more disposal
transactions. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001. The impact of adopting this statement is not expected to
be material to the Company's financial statements.
100
20. CONDENSED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following summarizes the condensed quarterly financial information for the
Company:
QUARTER ENDED 2001: December 31 September 30 June 30 March 31
-----------------------------------------------------------------------------------------------------
Total revenues $ 143,512 $ 145,912 $148,418 $ 146,506
Operating and other expenses 41,804 43,865 43,895 45,122
General and administrative 6,857 8,767 6,856 6,010
Depreciation and amortization 23,507 22,529 21,951 23,484
Interest expense 27,311 27,772 28,555 28,365
Non-recurring charges -- -- -- --
-----------------------------------------------------------------------------------------------------
Income before realized gains (losses) and
unrealized losses on disposition of rental
property and minority interests 44,033 42,979 47,161 43,525
Realized gains (losses) and unrealized losses
on disposition of rental property, net (2,187) (11,624) 22,510 (20,563)
-----------------------------------------------------------------------------------------------------
Income before minority interests 41,846 31,355 69,671 22,962
Minority interests 8,607 7,346 11,998 6,224
-----------------------------------------------------------------------------------------------------
Net income $ 33,239 $ 24,009 $ 57,673 $ 16,738
=====================================================================================================
BASIC EARNING PER SHARE:
Net income $ 0.59 $ 0.43 $ 1.02 $ 0.29
DILUTED EARNINGS PER SHARE:
Net income $ 0.58 $ 0.43 $ 0.98 $ 0.29
Dividends declared per common share $ 0.62 $ 0.62 $ 0.61 $ 0.61
-----------------------------------------------------------------------------------------------------
QUARTER ENDED 2000: December 31 September 30 June 30 March 31
-----------------------------------------------------------------------------------------------------
Total revenues $ 143,903 $ 143,382 $145,889 $ 142,979
Operating and other expenses 43,561 44,191 41,569 42,825
General and administrative 6,543 5,461 5,159 6,113
Depreciation and amortization 23,641 23,320 22,945 22,182
Interest expense 26,271 25,862 26,835 26,426
Non-recurring charges -- 27,911 9,228 --
-----------------------------------------------------------------------------------------------------
Income before realized gains (losses) and
unrealized losses on disposition of rental
property and minority interests 43,887 16,637 40,153 45,433
Realized gains (losses) and unrealized losses
on disposition of rental property, net (852) 10,036 73,921 2,248
-----------------------------------------------------------------------------------------------------
Income before minority interests 43,035 26,673 114,074 47,681
Minority interests 8,632 6,661 19,766 11,066
-----------------------------------------------------------------------------------------------------
Net income $ 34,403 $ 20,012 $ 94,308 $ 36,615
=====================================================================================================
BASIC EARNING PER SHARE:
Net income $ 0.60 $ 0.34 $ 1.61 $ 0.63
DILUTED EARNINGS PER SHARE:
Net income $ 0.59 $ 0.34 $ 1.52 $ 0.62
Dividends declared per common share $ 0.61 $ 0.61 $ 0.58 $ 0.58
-----------------------------------------------------------------------------------------------------
101
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(DOLLARS IN THOUSANDS)
SCHEDULE III
INITIAL COSTS COSTS
--------------------- CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
--------------------- ----- -------- ------------ ---- ------------ --------------
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive (O) ....... 1987 1995 $ -- $300 $3,282 $321
200 Decadon Drive (O) ....... 1991 1995 -- 369 3,241 173
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Rte 208 North (O) ..... 1987 1995 -- 3,067 19,415 1,771
FORT LEE
One Bridge Plaza (O) ........ 1981 1996 -- 2,439 24,462 1,868
2115 Linwood Avenue (O) ..... 1981 1998 -- 474 4,419 4,913
LITTLE FERRY
200 Riser Road (O) .......... 1974 1997 10,394 3,888 15,551 246
MONTVALE
95 Chestnut Ridge Road (O) .. 1975 1997 2,135 1,227 4,907 523
135 Chestnut Ridge Road (O) . 1981 1997 -- 2,587 10,350 2,285
PARAMUS
15 East Midland Avenue (O) .. 1988 1997 24,790 10,375 41,497 70
461 From Road (O) ........... 1988 1997 35,000 13,194 52,778 243
650 From Road (O) ........... 1978 1997 23,316 10,487 41,949 3,821
140 Ridgewood Avenue (O) .... 1981 1997 15,392 7,932 31,463 808
61 South Paramus Avenue (O) . 1985 1997 15,776 9,005 36,018 4,307
ROCHELLE PARK
120 Passaic Street (O) ...... 1972 1997 -- 1,354 5,415 129
365 West Passaic Street (O) . 1976 1997 7,468 4,148 16,592 1,682
SADDLE RIVER
1 Lake Street (O) ........... 1994 1997 35,789 13,952 55,812 8
UPPER SADDLE RIVER
10 Mountainview Road (O) .... 1986 1998 -- 4,240 20,485 374
WOODCLIFF LAKE
400 Chestnut Ridge Road (O) . 1982 1997 12,646 4,201 16,802 21
470 Chestnut Ridge Road (O) . 1987 1997 4,087 2,346 9,385 2
530 Chestnut Ridge Road (O) . 1986 1997 4,032 1,860 7,441 3
300 Tice Boulevard (O) ...... 1991 1996 -- 5,424 29,688 1,184
50 Tice Boulevard (O) ....... 1984 1994 -- 4,500 -- 27,546
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane (F) ............ 1991 1998 -- 652 3,433 909
5 Terri Lane (F) ............ 1992 1998 -- 564 3,792 1,693
MOORESTOWN
2 Commerce Drive (F) ........ 1986 1999 -- 723 2,893 59
101 Commerce Drive (F) ...... 1988 1998 -- 422 3,528 253
102 Commerce Drive (F) ...... 1987 1999 -- 389 1,554 44
201 Commerce Drive (F) ...... 1986 1998 -- 254 1,694 91
202 Commerce Drive (F) ...... 1988 1999 -- 490 1,963 27
1 Executive Drive (F) ....... 1989 1998 -- 226 1,453 209
2 Executive Drive (F) ....... 1988 2000 -- 801 3,206 87
101 Executive Drive (F) ..... 1990 1998 -- 241 2,262 283
102 Executive Drive (F) ..... 1990 1998 -- 353 3,607 254
225 Executive Drive (F) ..... 1990 1998 -- 323 2,477 110
97 Foster Road (F) .......... 1982 1998 -- 208 1,382 54
1507 Lancer Drive (F) ....... 1995 1998 -- 119 1,106 44
1510 Lancer Drive (F) ....... 1998 1998 -- 732 2,928 41
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF COSTS
PERIOD (1)
------------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
--------------------- ---- ------------ ----- ------------
ATLANTIC COUNTY, NEW JERSEY
EGG HARBOR
100 Decadon Drive (O) ....... $300 $3,603 $3,903 $545
200 Decadon Drive (O) ....... 369 3,414 3,783 585
BERGEN COUNTY, NEW JERSEY
FAIR LAWN
17-17 Rte 208 North (O) ..... 3,067 21,186 24,253 3,516
FORT LEE
One Bridge Plaza (O) ........ 2,439 26,330 28,769 3,689
2115 Linwood Avenue (O) ..... 474 9,332 9,806 827
LITTLE FERRY
200 Riser Road (O) .......... 3,888 15,797 19,685 1,592
MONTVALE
95 Chestnut Ridge Road (O) .. 1,227 5,430 6,657 500
135 Chestnut Ridge Road (O) . 2,588 12,634 15,222 1,201
PARAMUS
15 East Midland Avenue (O) .. 10,374 41,568 51,942 4,200
461 From Road (O) ........... 13,194 53,021 66,215 5,343
650 From Road (O) ........... 10,487 45,770 56,257 4,342
140 Ridgewood Avenue (O) .... 7,932 32,271 40,203 2,939
61 South Paramus Avenue (O) . 9,005 40,325 49,330 4,424
ROCHELLE PARK
120 Passaic Street (O) ...... 1,357 5,541 6,898 549
365 West Passaic Street (O) . 4,148 18,274 22,422 2,009
SADDLE RIVER
1 Lake Street (O) ........... 13,953 55,819 69,772 5,643
UPPER SADDLE RIVER
10 Mountainview Road (O) .... 4,240 20,859 25,099 2,350
WOODCLIFF LAKE
400 Chestnut Ridge Road (O) . 4,201 16,823 21,024 1,696
470 Chestnut Ridge Road (O) . 2,346 9,387 11,733 949
530 Chestnut Ridge Road (O) . 1,860 7,444 9,304 753
300 Tice Boulevard (O) ...... 5,424 30,872 36,296 3,927
50 Tice Boulevard (O) ....... 4,500 27,546 32,046 13,196
BURLINGTON COUNTY, NEW JERSEY
BURLINGTON
3 Terri Lane (F) ............ 658 4,336 4,994 489
5 Terri Lane (F) ............ 569 5,480 6,049 578
MOORESTOWN
2 Commerce Drive (F) ........ 723 2,952 3,675 147
101 Commerce Drive (F) ...... 426 3,777 4,203 509
102 Commerce Drive (F) ...... 389 1,598 1,987 79
201 Commerce Drive (F) ...... 258 1,781 2,039 205
202 Commerce Drive (F) ...... 490 1,990 2,480 99
1 Executive Drive (F) ....... 228 1,660 1,888 235
2 Executive Drive (F) ....... 801 3,293 4,094 143
101 Executive Drive (F) ..... 244 2,542 2,786 313
102 Executive Drive (F) ..... 357 3,857 4,214 475
225 Executive Drive (F) ..... 326 2,584 2,910 313
97 Foster Road (F) .......... 211 1,433 1,644 154
1507 Lancer Drive (F) ....... 120 1,149 1,269 123
1510 Lancer Drive (F) ....... 735 2,966 3,701 259
102
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(DOLLARS IN THOUSANDS)
SCHEDULE III
INITIAL COSTS COSTS
------------------ CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
--------------------- ----- -------- ------------ ---- ------------ --------------
840 North Lenola Road (F) .................. 1995 1998 -- 329 2,366 135
844 North Lenola Road (F) .................. 1995 1998 -- 239 1,714 38
915 North Lenola Road (F) .................. 1998 2000 -- 508 2,034 23
1245 North Church Street (F) ............... 1998 2001 -- 691 2,810 17
1247 North Church Street (F) ............... 1998 2001 -- 805 3,269 18
1256 North Church Street (F) ............... 1984 1998 -- 354 3,098 365
224 Strawbridge Drive (O) .................. 1984 1997 -- 766 4,335 3,165
228 Strawbridge Drive (O) .................. 1984 1997 -- 766 4,334 2,901
2 Twosome Drive (F) ........................ 2000 2001 -- 701 2,807 18
30 Twosome Drive (F) ....................... 1997 1998 -- 234 1,954 48
31 Twosome Drive (F) ....................... 1998 2001 -- 815 3,276 102
40 Twosome Drive (F) ....................... 1996 1998 -- 297 2,393 64
41 Twosome Drive (F) ....................... 1998 2001 -- 605 2,459 5
50 Twosome Drive (F) ....................... 1997 1998 -- 301 2,330 67
WEST DEPTFORD
1451 Metropolitan Drive (F) ................ 1996 1998 -- 203 1,189 30
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway (O) ............... 1980 1997 25,218 12,606 50,425 1,874
ROSELAND
101 Eisenhower Parkway (O) ................. 1980 1994 -- 228 -- 15,847
103 Eisenhower Parkway (O) ................. 1985 1994 -- -- -- 13,459
105 Eisenhower Parkway (O) ................. 2001 2001 -- 4,430 42,898 1,918
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
Harborside Financial Center Plaza 1 (O) 1983 1996 57,978 3,923 51,013 --
Harborside Financial Center Plaza 2 (O) 1990 1996 81,011 17,655 101,546 4,178
Harborside Financial Center Plaza 3 (O) 1990 1996 81,011 17,655 101,878 3,847
Harborside Financial Center Plaza 4A (O) 2000 2000 -- 1,244 56,144 6,329
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive (F) ...................... 1989 1995 -- 205 1,676 45
200 Horizon Drive (F) ...................... 1991 1995 -- 205 3,027 212
300 Horizon Drive (F) ...................... 1989 1995 -- 379 4,355 827
500 Horizon Drive (F) ...................... 1990 1995 -- 379 3,395 337
Zero Horizon Drive (L) ..................... n/a 1999 -- 498 -- 1,794
PRINCETON
103 Carnegie Center (O) .................... 1984 1996 -- 2,566 7,868 737
100 Overlook Center (O) .................... 1988 1997 -- 2,378 21,754 1,096
5 Vaughn Drive (O) ......................... 1987 1995 -- 657 9,800 520
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road (O) .................... 1977 1997 -- 649 2,594 252
PLAINSBORO
500 College Road East (O) .................. 1984 1998 -- 614 20,626 399
SOUTH BRUNSWICK
3 Independence Way (O) ..................... 1983 1997 -- 1,997 11,391 351
WOODBRIDGE
581 Main Street (O) ........................ 1991 1997 17,500 3,237 12,949 19,582
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66 (O) .......................... 1989 1995 -- 1,098 18,146 45
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF COSTS
PERIOD (1)
--------------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
--------------------- ---- ------------ ----- ------------
840 North Lenola Road (F) .................. 333 2,497 2,830 286
844 North Lenola Road (F) .................. 241 1,750 1,991 200
915 North Lenola Road (F) .................. 508 2,057 2,565 76
1245 North Church Street (F) ............... 691 2,827 3,518 46
1247 North Church Street (F) ............... 805 3,287 4,092 54
1256 North Church Street (F) ............... 357 3,460 3,817 426
224 Strawbridge Drive (O) .................. 766 7,500 8,266 1,255
228 Strawbridge Drive (O) .................. 766 7,235 8,001 1,395
2 Twosome Drive (F) ........................ 701 2,825 3,526 47
30 Twosome Drive (F) ....................... 236 2,000 2,236 239
31 Twosome Drive (F) ....................... 815 3,378 4,193 75
40 Twosome Drive (F) ....................... 301 2,453 2,754 272
41 Twosome Drive (F) ....................... 605 2,464 3,069 56
50 Twosome Drive (F) ....................... 304 2,394 2,698 277
WEST DEPTFORD
1451 Metropolitan Drive (F) ................ 206 1,216 1,422 142
ESSEX COUNTY, NEW JERSEY
MILLBURN
150 J.F. Kennedy Parkway (O) ............... 12,606 52,299 64,905 5,242
ROSELAND
101 Eisenhower Parkway (O) ................. 228 15,847 16,075 8,987
103 Eisenhower Parkway (O) ................. 2,300 11,159 13,459 4,820
105 Eisenhower Parkway (O) ................. 4,430 44,816 49,246 720
HUDSON COUNTY, NEW JERSEY
JERSEY CITY
Harborside Financial Center Plaza 1 (O) 3,923 51,013 54,936 6,589
Harborside Financial Center Plaza 2 (O) 15,463 107,916 123,379 13,838
Harborside Financial Center Plaza 3 (O) 15,463 107,917 123,380 13,839
Harborside Financial Center Plaza 4A (O) 1,244 62,473 63,717 1,792
MERCER COUNTY, NEW JERSEY
HAMILTON TOWNSHIP
100 Horizon Drive (F) ...................... 205 1,721 1,926 269
200 Horizon Drive (F) ...................... 205 3,239 3,444 467
300 Horizon Drive (F) ...................... 379 5,182 5,561 688
500 Horizon Drive (F) ...................... 379 3,732 4,111 614
Zero Horizon Drive (L) ..................... 498 1,794 2,292 45
PRINCETON
103 Carnegie Center (O) .................... 2,566 8,605 11,171 1,490
100 Overlook Center (O) .................... 2,378 22,850 25,228 2,305
5 Vaughn Drive (O) ......................... 657 10,320 10,977 1,813
MIDDLESEX COUNTY, NEW JERSEY
EAST BRUNSWICK
377 Summerhill Road (O) .................... 649 2,846 3,495 285
PLAINSBORO
500 College Road East (O) .................. 614 21,025 21,639 1,999
SOUTH BRUNSWICK
3 Independence Way (O) ..................... 1,997 11,742 13,739 1,318
WOODBRIDGE
581 Main Street (O) ........................ 8,115 27,653 35,768 2,475
MONMOUTH COUNTY, NEW JERSEY
NEPTUNE
3600 Route 66 (O) .......................... 1,098 18,191 19,289 2,812
103
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(DOLLARS IN THOUSANDS)
SCHEDULE III
INITIAL COSTS COSTS
------------------ CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
--------------------- ----- -------- ------------ ---- ------------ --------------
WALL TOWNSHIP
1305 Campus Parkway (O) .................... 1988 1995 -- 335 2,560 156
1325 Campus Parkway (F) .................... 1988 1995 -- 270 2,928 584
1340 Campus Parkway (F) .................... 1992 1995 -- 489 4,621 414
1345 Campus Parkway (F) .................... 1995 1997 -- 1,023 5,703 71
1350 Campus Parkway (O) .................... 1990 1995 -- 454 7,134 700
1433 Highway 34 (F) ........................ 1985 1995 -- 889 4,321 681
1320 Wyckoff Avenue (F) .................... 1986 1995 -- 255 1,285 6
1324 Wyckoff Avenue (F) .................... 1987 1995 -- 230 1,439 216
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway (O) ................... 1987 1994 -- 1,564 -- 16,116
MORRIS PLAINS
250 Johnson Road (O) ....................... 1977 1997 -- 2,004 8,016 576
201 Littleton Road (O) ..................... 1979 1997 -- 2,407 9,627 269
MORRIS TOWNSHIP
340 Mt. Kemble Avenue (O) .................. 1985 1997 32,178 13,624 54,496 40
PARSIPPANY
4 Campus Drive (O) ......................... 1983 2001 -- 5,213 20,984 170
6 Campus Drive (O) ......................... 1983 2001 -- 4,411 17,796 107
7 Campus Drive (O) ......................... 1982 1998 -- 1,932 27,788 107
8 Campus Drive (O) ......................... 1987 1998 -- 1,865 35,456 922
9 Campus Drive (O) ......................... 1983 2001 -- 3,277 11,796 14,367
2 Dryden Way (O) ........................... 1990 1998 -- 778 420 13
4 Gatehall Drive (O) ....................... 1988 2000 -- 8,452 33,929 180
2 Hilton Court (O) ......................... 1991 1998 -- 1,971 32,007 360
600 Parsippany Road (O) .................... 1978 1994 -- 1,257 5,594 1,060
1 Sylvan Way (O) ........................... 1989 1998 -- 1,689 24,699 2,224
5 Sylvan Way (O) ........................... 1989 1998 -- 1,160 25,214 579
7 Sylvan Way (O) ........................... 1987 1998 -- 2,084 26,083 35
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue (O) ..................... 1983 1994 -- -- -- 7,649
TOTOWA
1 Center Court (F) ......................... 1999 1999 -- 270 1,824 713
2 Center Court (F) ......................... 1998 1998 -- 191 -- 2,592
11 Commerce Way (F) ........................ 1989 1995 -- 586 2,986 230
20 Commerce Way (F) ........................ 1992 1995 -- 516 3,108 57
29 Commerce Way (F) ........................ 1990 1995 -- 586 3,092 260
40 Commerce Way (F) ........................ 1987 1995 -- 516 3,260 431
45 Commerce Way (F) ........................ 1992 1995 -- 536 3,379 172
60 Commerce Way (F) ........................ 1988 1995 -- 526 3,257 276
80 Commerce Way (F) ........................ 1996 1996 -- 227 -- 1,657
100 Commerce Way (F) ....................... 1996 1996 -- 226 -- 1,657
120 Commerce Way (F) ....................... 1994 1995 -- 228 -- 1,218
140 Commerce Way (F) ....................... 1994 1995 -- 229 -- 1,219
999 Riverview Drive (O) .................... 1988 1995 -- 476 6,024 602
WAYNE
201 Willowbrook Boulevard (O) .............. 1970 1997 8,598 3,103 12,410 3,391
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
106 Allen Road (O) ......................... 2000 2000 -- 3,853 14,465 404
222 Mt. Airy Road (O) ...................... 1986 1996 3,386 775 3,636 17
233 Mt. Airy Road (O) ...................... 1987 1996 -- 1,034 5,033 1,621
BRIDGEWATER
721 Route 202/206 (O) ...................... 1989 1997 23,000 6,730 26,919 540
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF COSTS
PERIOD (1)
--------------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
--------------------- ---- ------------ ----- ------------
WALL TOWNSHIP
1305 Campus Parkway (O) .................... 335 2,716 3,051 466
1325 Campus Parkway (F) .................... 270 3,512 3,782 481
1340 Campus Parkway (F) .................... 489 5,035 5,524 943
1345 Campus Parkway (F) .................... 1,024 5,773 6,797 710
1350 Campus Parkway (O) .................... 454 7,834 8,288 1,366
1433 Highway 34 (F) ........................ 889 5,002 5,891 1,018
1320 Wyckoff Avenue (F) .................... 255 1,291 1,546 198
1324 Wyckoff Avenue (F) .................... 230 1,655 1,885 339
MORRIS COUNTY, NEW JERSEY
FLORHAM PARK
325 Columbia Parkway (O) ................... 1,564 16,116 17,680 7,278
MORRIS PLAINS
250 Johnson Road (O) ....................... 2,004 8,592 10,596 902
201 Littleton Road (O) ..................... 2,407 9,896 12,303 984
MORRIS TOWNSHIP
340 Mt. Kemble Avenue (O) .................. 13,624 54,536 68,160 5,513
PARSIPPANY
4 Campus Drive (O) ......................... 5,213 21,154 26,367 395
6 Campus Drive (O) ......................... 4,411 17,903 22,314 334
7 Campus Drive (O) ......................... 1,932 27,895 29,827 2,709
8 Campus Drive (O) ......................... 1,865 36,378 38,243 3,758
9 Campus Drive (O) ......................... 5,842 23,598 29,440 95
2 Dryden Way (O) ........................... 778 433 1,211 51
4 Gatehall Drive (O) ....................... 8,452 34,109 42,561 1,353
2 Hilton Court (O) ......................... 1,971 32,367 34,338 3,169
600 Parsippany Road (O) .................... 1,257 6,654 7,911 1,323
1 Sylvan Way (O) ........................... 1,689 26,923 28,612 3,136
5 Sylvan Way (O) ........................... 1,161 25,792 26,953 2,538
7 Sylvan Way (O) ........................... 2,084 26,118 28,202 2,575
PASSAIC COUNTY, NEW JERSEY
CLIFTON
777 Passaic Avenue (O) ..................... 1,100 6,549 7,649 3,062
TOTOWA
1 Center Court (F) ......................... 270 2,537 2,807 227
2 Center Court (F) ......................... 191 2,592 2,783 448
11 Commerce Way (F) ........................ 586 3,216 3,802 547
20 Commerce Way (F) ........................ 516 3,165 3,681 489
29 Commerce Way (F) ........................ 586 3,352 3,938 658
40 Commerce Way (F) ........................ 516 3,691 4,207 814
45 Commerce Way (F) ........................ 536 3,551 4,087 645
60 Commerce Way (F) ........................ 526 3,533 4,059 720
80 Commerce Way (F) ........................ 227 1,657 1,884 560
100 Commerce Way (F) ....................... 226 1,657 1,883 559
120 Commerce Way (F) ....................... 228 1,218 1,446 193
140 Commerce Way (F) ....................... 229 1,219 1,448 193
999 Riverview Drive (O) .................... 476 6,626 7,102 1,132
WAYNE
201 Willowbrook Boulevard (O) .............. 3,103 15,801 18,904 1,330
SOMERSET COUNTY, NEW JERSEY
BASKING RIDGE
106 Allen Road (O) ......................... 3,457 15,265 18,722 746
222 Mt. Airy Road (O) ...................... 775 3,653 4,428 494
233 Mt. Airy Road (O) ...................... 1,034 6,654 7,688 686
BRIDGEWATER
721 Route 202/206 (O) ...................... 6,730 27,459 34,189 2,800
104
MACK-CALI REALTY CORPORATION
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DECEMBER 31, 2001
(DOLLARS IN THOUSANDS)
SCHEDULE III
INITIAL COSTS COSTS
------------------ CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
--------------------- ----- -------- ------------ ---- ------------ --------------
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue (O) ...................... 1985 1994 -- -- -- 18,393
CRANFORD
6 Commerce Drive (O) ....................... 1973 1994 -- 250 -- 2,896
11 Commerce Drive (O) ...................... 1981 1994 -- 470 -- 6,306
12 Commerce Drive (O) ...................... 1967 1997 -- 887 3,549 1,032
20 Commerce Drive (O) ...................... 1990 1994 -- 2,346 -- 22,621
65 Jackson Drive (O) ....................... 1984 1994 -- 541 -- 7,480
NEW PROVIDENCE
890 Mountain Road (O) ...................... 1977 1997 -- 2,796 11,185 4,322
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive (O) ................... 1987 1997 -- 2,258 9,031 244
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
600 Community Drive (O) .................... 1983 1997 -- 11,018 44,070 540
111 East Shore Road (O) .................... 1980 1997 -- 2,093 8,370 363
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard (O) .................... 1988 1995 -- 1,090 13,412 2,072
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
11 Clearbrook Road (F) ..................... 1974 1997 -- 149 2,159 38
75 Clearbrook Road (F) ..................... 1990 1997 -- 2,314 4,716 5
100 Clearbrook Road (O) .................... 1975 1997 -- 220 5,366 132
150 Clearbrook Road (F) .................... 1975 1997 -- 497 7,030 461
175 Clearbrook Road (F) .................... 1973 1997 -- 655 7,473 654
200 Clearbrook Road (F) .................... 1974 1997 -- 579 6,620 522
250 Clearbrook Road (F) .................... 1973 1997 -- 867 8,647 664
50 Executive Boulevard (F) ................. 1969 1997 -- 237 2,617 56
77 Executive Boulevard (F) ................. 1977 1997 -- 34 1,104 64
85 Executive Boulevard (F) ................. 1968 1997 -- 155 2,507 38
101 Executive Boulevard (O) ................ 1971 1997 -- 267 5,838 455
300 Executive Boulevard (F) ................ 1970 1997 -- 460 3,609 36
350 Executive Boulevard (F) ................ 1970 1997 -- 100 1,793 126
399 Executive Boulevard (F) ................ 1962 1997 -- 531 7,191 127
400 Executive Boulevard (F) ................ 1970 1997 -- 2,202 1,846 279
500 Executive Boulevard (F) ................ 1970 1997 -- 258 4,183 555
525 Executive Boulevard (F) ................ 1972 1997 -- 345 5,499 163
700 Executive Boulevard (L) ................ n/a 1997 -- 970 -- --
5 Skyline Drive (F) ........................ 1980 2001 -- 2,219 8,916 (9)
6 Skyline Drive (F) ........................ 1980 2001 -- 740 2,971 4
555 Taxter Road (O) ........................ 1986 2000 -- 4,285 17,205 388
565 Taxter Road (O) ........................ 1988 2000 -- 4,285 17,205 236
570 Taxter Road (O) ........................ 1972 1997 -- 438 6,078 671
1 Warehouse Lane (I) ....................... 1957 1997 -- 3 268 204
2 Warehouse Lane (I) ....................... 1957 1997 -- 4 672 50
3 Warehouse Lane (I) ....................... 1957 1997 -- 21 1,948 448
4 Warehouse Lane (I) ....................... 1957 1997 -- 84 13,393 249
5 Warehouse Lane (I) ....................... 1957 1997 -- 19 4,804 246
6 Warehouse Lane (I) ....................... 1982 1997 -- 10 4,419 125
1 Westchester Plaza (F) .................... 1967 1997 -- 199 2,023 52
2 Westchester Plaza (F) .................... 1968 1997 -- 234 2,726 77
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF COSTS
PERIOD (1)
--------------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
--------------------- ---- ------------ ----- ------------
UNION COUNTY, NEW JERSEY
CLARK
100 Walnut Avenue (O) ...................... 1,822 16,571 18,393 8,334
CRANFORD
6 Commerce Drive (O) ....................... 250 2,896 3,146 1,796
11 Commerce Drive (O) ...................... 470 6,306 6,776 3,608
12 Commerce Drive (O) ...................... 887 4,581 5,468 369
20 Commerce Drive (O) ...................... 2,346 22,621 24,967 7,985
65 Jackson Drive (O) ....................... 541 7,480 8,021 4,118
NEW PROVIDENCE
890 Mountain Road (O) ...................... 3,765 14,538 18,303 1,456
DUTCHESS COUNTY, NEW YORK
FISHKILL
300 South Lake Drive (O) ................... 2,258 9,275 11,533 957
NASSAU COUNTY, NEW YORK
NORTH HEMPSTEAD
600 Community Drive (O) .................... 11,018 44,610 55,628 4,500
111 East Shore Road (O) .................... 2,093 8,733 10,826 873
ROCKLAND COUNTY, NEW YORK
SUFFERN
400 Rella Boulevard (O) .................... 1,090 15,484 16,574 2,724
WESTCHESTER COUNTY, NEW YORK
ELMSFORD
11 Clearbrook Road (F) ..................... 149 2,197 2,346 271
75 Clearbrook Road (F) ..................... 2,314 4,721 7,035 580
100 Clearbrook Road (O) .................... 220 5,498 5,718 841
150 Clearbrook Road (F) .................... 497 7,491 7,988 910
175 Clearbrook Road (F) .................... 655 8,127 8,782 1,027
200 Clearbrook Road (F) .................... 579 7,142 7,721 932
250 Clearbrook Road (F) .................... 867 9,311 10,178 1,147
50 Executive Boulevard (F) ................. 237 2,673 2,910 325
77 Executive Boulevard (F) ................. 34 1,168 1,202 142
85 Executive Boulevard (F) ................. 155 2,545 2,700 320
101 Executive Boulevard (O) ................ 267 6,293 6,560 784
300 Executive Boulevard (F) ................ 460 3,645 4,105 444
350 Executive Boulevard (F) ................ 100 1,919 2,019 220
399 Executive Boulevard (F) ................ 531 7,318 7,849 959
400 Executive Boulevard (F) ................ 2,201 2,126 4,327 353
500 Executive Boulevard (F) ................ 257 4,739 4,996 593
525 Executive Boulevard (F) ................ 345 5,662 6,007 702
700 Executive Boulevard (L) ................ 970 -- 970 --
5 Skyline Drive (F) ........................ 2,219 8,907 11,126 93
6 Skyline Drive (F) ........................ 740 2,975 3,715 31
555 Taxter Road (O) ........................ 4,285 17,593 21,878 688
565 Taxter Road (O) ........................ 4,233 17,493 21,726 690
570 Taxter Road (O) ........................ 438 6,749 7,187 872
1 Warehouse Lane (I) ....................... 3 472 475 47
2 Warehouse Lane (I) ....................... 4 722 726 99
3 Warehouse Lane (I) ....................... 21 2,396 2,417 296
4 Warehouse Lane (I) ....................... 85 13,641 13,726 1,720
5 Warehouse Lane (I) ....................... 19 5,050 5,069 707
6 Warehouse Lane (I) ....................... 10 4,544 4,554 546
1 Westchester Plaza (F) .................... 199 2,075 2,274 270
2 Westchester Plaza (F) .................... 234 2,803 3,037 341
105
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(DOLLARS IN THOUSANDS)
SCHEDULE III
INITIAL COSTS COSTS
------------------ CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
--------------------- ----- -------- ------------ ---- ------------ --------------
3 Westchester Plaza (F) .................... 1969 1997 -- 655 7,936 148
4 Westchester Plaza (F) .................... 1969 1997 -- 320 3,729 100
5 Westchester Plaza (F) .................... 1969 1997 -- 118 1,949 156
6 Westchester Plaza (F) .................... 1968 1997 -- 164 1,998 139
7 Westchester Plaza (F) .................... 1972 1997 -- 286 4,321 46
8 Westchester Plaza (F) .................... 1971 1997 -- 447 5,262 657
HAWTHORNE
200 Saw Mill River Road (F) ................ 1965 1997 -- 353 3,353 156
1 Skyline Drive (O) ........................ 1980 1997 -- 66 1,711 100
2 Skyline Drive (O) ........................ 1987 1997 -- 109 3,128 283
4 Skyline Drive (F) ........................ 1987 1997 -- 363 7,513 641
7 Skyline Drive (O) ........................ 1987 1998 -- 330 13,013 107
8 Skyline Drive (F) ........................ 1985 1997 -- 212 4,410 837
10 Skyline Drive (F) ....................... 1985 1997 -- 134 2,799 96
11 Skyline Drive (F) ....................... 1989 1997 -- -- 4,788 391
12 Skyline Drive (F) ....................... 1999 1999 -- 1,562 3,254 1,499
15 Skyline Drive (F) ....................... 1989 1997 -- -- 7,449 594
17 Skyline Drive (O) ....................... 1989 1997 -- -- 7,269 130
19 Skyline Drive (O) ....................... 1982 1997 -- 2,355 34,254 4,327
TARRYTOWN
200 White Plains Road (O) .................. 1982 1997 -- 378 8,367 770
220 White Plains Road (O) .................. 1984 1997 -- 367 8,112 616
230 White Plains Road (R) .................. 1984 1997 -- 124 1,845 --
WHITE PLAINS
1 Barker Avenue (O) ........................ 1975 1997 -- 208 9,629 586
3 Barker Avenue (O) ........................ 1983 1997 -- 122 7,864 1,413
50 Main Street (O) ......................... 1985 1997 -- 564 48,105 4,187
11 Martine Avenue (O) ...................... 1987 1997 -- 127 26,833 3,606
25 Martine Avenue (M) ...................... 1987 1997 -- 120 11,366 317
1 Water Street (O) ......................... 1979 1997 -- 211 5,382 271
YONKERS
100 Corporate Boulevard (F) ................ 1987 1997 -- 602 9,910 556
200 Corporate Boulevard South (F) .......... 1990 1997 -- 502 7,575 419
1 Enterprise Boulevard (L) ................. n/a 1997 -- 1,379 -- --
1 Executive Boulevard (O) .................. 1982 1997 -- 1,104 11,904 659
2 Executive Plaza (R) ...................... 1986 1997 -- 89 2,439 --
3 Executive Plaza (O) ...................... 1987 1997 -- 385 6,256 994
4 Executive Plaza (F) ...................... 1986 1997 -- 584 6,134 1,107
6 Executive Plaza (F) ...................... 1987 1997 -- 546 7,246 45
1 Odell Plaza (F) .......................... 1980 1997 -- 1,206 6,815 514
5 Odell Plaza (F) .......................... 1983 1997 -- 331 2,988 129
7 Odell Plaza (F) .......................... 1984 1997 -- 419 4,418 106
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive (O) ................... 1989 1997 -- 619 9,016 144
1055 Westlakes Drive (O) ................... 1990 1997 -- 1,951 19,046 1,963
1205 Westlakes Drive (O) ................... 1988 1997 -- 1,323 20,098 648
1235 Westlakes Drive (O) ................... 1986 1997 -- 1,417 21,215 617
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive (O) ...................... 1986 1996 -- 1,349 10,018 2,558
200 Stevens Drive (O) ...................... 1987 1996 -- 1,644 20,186 4,296
300 Stevens Drive (O) ...................... 1992 1996 -- 491 9,490 758
MEDIA
1400 Providence Rd - Center I (O) .......... 1986 1996 -- 1,042 9,054 1,186
1400 Providence Rd. - Center II(O) ......... 1990 1996 -- 1,543 16,464 1,359
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF COSTS
PERIOD (1)
--------------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
--------------------- ---- ------------ ----- ------------
3 Westchester Plaza (F) .................... 655 8,084 8,739 994
4 Westchester Plaza (F) .................... 320 3,829 4,149 514
5 Westchester Plaza (F) .................... 118 2,105 2,223 240
6 Westchester Plaza (F) .................... 164 2,137 2,301 295
7 Westchester Plaza (F) .................... 286 4,367 4,653 545
8 Westchester Plaza (F) .................... 447 5,919 6,366 935
HAWTHORNE
200 Saw Mill River Road (F) ................ 353 3,509 3,862 464
1 Skyline Drive (O) ........................ 66 1,811 1,877 220
2 Skyline Drive (O) ........................ 109 3,411 3,520 477
4 Skyline Drive (F) ........................ 363 8,154 8,517 1,300
7 Skyline Drive (O) ........................ 330 13,120 13,450 1,098
8 Skyline Drive (F) ........................ 212 5,247 5,459 836
10 Skyline Drive (F) ....................... 134 2,895 3,029 389
11 Skyline Drive (F) ....................... -- 5,179 5,179 684
12 Skyline Drive (F) ....................... 1,320 4,995 6,315 455
15 Skyline Drive (F) ....................... -- 8,043 8,043 1,201
17 Skyline Drive (O) ....................... -- 7,399 7,399 906
19 Skyline Drive (O) ....................... 2,356 38,580 40,936 6,571
TARRYTOWN
200 White Plains Road (O) .................. 378 9,137 9,515 1,428
220 White Plains Road (O) .................. 367 8,728 9,095 1,108
230 White Plains Road (R) .................. 124 1,845 1,969 227
WHITE PLAINS
1 Barker Avenue (O) ........................ 207 10,216 10,423 1,294
3 Barker Avenue (O) ........................ 122 9,277 9,399 1,121
50 Main Street (O) ......................... 564 52,292 52,856 7,039
11 Martine Avenue (O) ...................... 127 30,439 30,566 4,001
25 Martine Avenue (M) ...................... 120 11,683 11,803 1,361
1 Water Street (O) ......................... 211 5,653 5,864 723
YONKERS
100 Corporate Boulevard (F) ................ 602 10,466 11,068 1,329
200 Corporate Boulevard South (F) .......... 502 7,994 8,496 910
1 Enterprise Boulevard (L) ................. 1,379 -- 1,379 --
1 Executive Boulevard (O) .................. 1,105 12,562 13,667 1,764
2 Executive Plaza (R) ...................... 89 2,439 2,528 300
3 Executive Plaza (O) ...................... 385 7,250 7,635 914
4 Executive Plaza (F) ...................... 584 7,241 7,825 896
6 Executive Plaza (F) ...................... 546 7,291 7,837 909
1 Odell Plaza (F) .......................... 1,206 7,329 8,535 923
5 Odell Plaza (F) .......................... 331 3,117 3,448 372
7 Odell Plaza (F) .......................... 419 4,524 4,943 605
CHESTER COUNTY, PENNSYLVANIA
BERWYN
1000 Westlakes Drive (O) ................... 618 9,161 9,779 1,124
1055 Westlakes Drive (O) ................... 1,951 21,009 22,960 2,348
1205 Westlakes Drive (O) ................... 1,323 20,746 22,069 2,585
1235 Westlakes Drive (O) ................... 1,418 21,831 23,249 2,742
DELAWARE COUNTY, PENNSYLVANIA
LESTER
100 Stevens Drive (O) ...................... 1,349 12,576 13,925 1,522
200 Stevens Drive (O) ...................... 1,644 24,482 26,126 2,809
300 Stevens Drive (O) ...................... 491 10,248 10,739 1,232
MEDIA
1400 Providence Rd - Center I (O) .......... 1,042 10,240 11,282 1,536
1400 Providence Rd. - Center II(O) ......... 1,544 17,822 19,366 2,796
106
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(DOLLARS IN THOUSANDS)
SCHEDULE III
INITIAL COSTS COSTS
------------------ CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
--------------------- ----- -------- ------------ ---- ------------ --------------
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue (O) .................... 1990 1997 -- 1,713 12,559 524
PLYMOUTH MEETING
1150 Plymouth Meeting Mall (O) ............. 1970 1997 -- 125 499 21,326
Five Sentry Parkway East (O) ............... 1984 1996 -- 642 7,992 480
Five Sentry Parkway West (O) ............... 1984 1996 -- 268 3,334 54
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam Avenue (O) ................. 1973 1998 9,273 3,300 16,734 989
NORWALK
40 Richards Avenue (O) ..................... 1985 1998 -- 1,087 18,399 1,810
SHELTON
1000 Bridgeport Avenue (O) ................. 1986 1997 -- 773 14,934 478
STAMFORD
419 West Avenue (F) ........................ 1986 1997 -- 4,538 9,246 49
500 West Avenue (F) ........................ 1988 1997 -- 415 1,679 185
550 West Avenue (F) ........................ 1990 1997 -- 1,975 3,856 334
600 West Avenue (F) ........................ 1999 1999 -- 2,305 2,863 833
650 West Avenue (F) ........................ 1998 1998 -- 1,328 -- 3,905
WASHINGTON, D.C ............................
1201 Connecticut Avenue, NW (O) ............ 1940 1999 -- 14,228 18,571 1,143
1400 L Street, NW (O) ...................... 1987 1998 -- 13,054 27,423 914
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place (O) .................. 1989 1998 -- 2,114 13,546 583
BEXAR COUNTY, TEXAS
SAN ANTONIO
84 N.E. Loop 410 (O) ....................... 1971 1997 -- 2,295 10,382 685
111 Soledad (O) ............................ 1918 1997 -- 2,004 8,017 805
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place (O) ..................... 1986 1997 -- 942 3,767 648
DALLAS COUNTY, TEXAS
DALLAS
3030 LBJ Freeway (O) ....................... 1984 1997 -- 6,098 24,366 1,411
3100 Monticello (O) ........................ 1984 1997 -- 1,940 7,762 4,887
IRVING
2300 Valley View (O) ....................... 1985 1997 -- 1,913 7,651 1,386
RICHARDSON
1122 Alma Road (O) ......................... 1977 1997 -- 754 3,015 169
HARRIS COUNTY, TEXAS
HOUSTON
10497 Town & Country Way (O) ............... 1981 1997 -- 1,619 6,476 1,082
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF COSTS
PERIOD (1)
--------------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
--------------------- ---- ------------ ----- ------------
MONTGOMERY COUNTY, PENNSYLVANIA
LOWER PROVIDENCE
1000 Madison Avenue (O) .................... 1,714 13,082 14,796 1,397
PLYMOUTH MEETING
1150 Plymouth Meeting Mall (O) ............. 125 21,825 21,950 2,055
Five Sentry Parkway East (O) ............... 642 8,472 9,114 1,093
Five Sentry Parkway West (O) ............... 268 3,388 3,656 439
FAIRFIELD COUNTY, CONNECTICUT
GREENWICH
500 West Putnam Avenue (O) ................. 3,300 17,723 21,023 1,904
NORWALK
40 Richards Avenue (O) ..................... 1,087 20,209 21,296 1,837
SHELTON
1000 Bridgeport Avenue (O) ................. 744 15,441 16,185 1,827
STAMFORD
419 West Avenue (F) ........................ 4,538 9,295 13,833 1,168
500 West Avenue (F) ........................ 415 1,864 2,279 280
550 West Avenue (F) ........................ 1,975 4,190 6,165 749
600 West Avenue (F) ........................ 2,305 3,696 6,001 178
650 West Avenue (F) ........................ 1,328 3,905 5,233 577
WASHINGTON, D.C ............................
1201 Connecticut Avenue, NW (O) ............ 14,228 19,714 33,942 1,254
1400 L Street, NW (O) ...................... 13,054 28,337 41,391 2,659
PRINCE GEORGE'S COUNTY, MARYLAND
LANHAM
4200 Parliament Place (O) .................. 1,393 14,850 16,243 1,369
BEXAR COUNTY, TEXAS
SAN ANTONIO
84 N.E. Loop 410 (O) ....................... 2,295 11,067 13,362 750
111 Soledad (O) ............................ 2,004 8,822 10,826 633
COLLIN COUNTY, TEXAS
PLANO
555 Republic Place (O) ..................... 942 4,415 5,357 371
DALLAS COUNTY, TEXAS
DALLAS
3030 LBJ Freeway (O) ....................... 6,098 25,777 31,875 2,321
3100 Monticello (O) ........................ 2,511 12,078 14,589 985
IRVING
2300 Valley View (O) ....................... 1,913 9,037 10,950 759
RICHARDSON
1122 Alma Road (O) ......................... 754 3,184 3,938 262
HARRIS COUNTY, TEXAS
HOUSTON
10497 Town & Country Way (O) ............... 1,619 7,558 9,177 549
107
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(DOLLARS IN THOUSANDS)
SCHEDULE III
INITIAL COSTS COSTS
------------------ CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
--------------------- ----- -------- ------------ ---- ------------ --------------
5300 Memorial Drive (O) .................... 1982 1997 -- 1,283 7,269 588
1717 St. James Place (O) ................... 1975 1997 -- 909 3,636 450
1770 St. James Place (O) ................... 1973 1997 -- 730 2,920 631
TARRANT COUNTY, TEXAS
EULESS
150 West Park Way (O) ...................... 1984 1997 -- 852 3,410 173
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard (O) ............. 1991 1997 6,717 2,732 10,927 5,744
PHOENIX
19640 North 31st Street (O) ................ 1990 1997 7,112 3,437 13,747 4
SCOTTSDALE
9060 E. Via Linda Boulevard (O) ............ 1984 1997 -- 3,720 14,879 37
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street (O) ............. 1997 1998 -- 2,680 23,125 27
DENVER
400 South Colorado Boulevard (O) ........... 1983 1998 -- 1,461 10,620 568
ENGLEWOOD
9359 East Nichols Avenue (O) ............... 1997 1998 -- 1,155 8,171 (409)
5350 South Roslyn Street (O) ............... 1982 1998 -- 862 6,831 (14)
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court (O) ............. 1997 1998 -- 653 4,936 28
303 South Technology Court-A (O) ........... 1997 1998 -- 623 3,892 35
303 South Technology Court-B (O) ........... 1997 1998 -- 623 3,892 36
LOUISVILLE
1172 Century Drive (O) ..................... 1996 1998 -- 707 4,647 218
248 Centennial Parkway (O) ................. 1996 1998 -- 708 4,647 217
285 Century Place (O) ...................... 1997 1998 -- 889 10,133 26
DENVER COUNTY, COLORADO
DENVER
8181 East Tufts Avenue (O) ................. 2001 2001 -- 2,342 32,029 703
3600 South Yosemite (O) .................... 1974 1998 -- 556 12,980 27
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
67 Inverness Drive East (O) ................ 1996 1998 -- 1,034 5,516 25
384 Inverness Drive South (O) .............. 1985 1998 -- 703 5,653 245
400 Inverness Drive (O) .................... 1997 1998 -- 1,584 19,878 (583)
5975 South Quebec Street (O) ............... 1996 1998 -- 855 11,551 324
PARKER
9777 Pyramid Court (O) ..................... 1995 1998 -- 1,304 13,189 26
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF COSTS
PERIOD (1)
--------------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
--------------------- ---- ------------ ----- ------------
5300 Memorial Drive (O) .................... 1,710 7,430 9,140 494
1717 St. James Place (O) ................... 909 4,086 4,995 319
1770 St. James Place (O) ................... 730 3,551 4,281 276
TARRANT COUNTY, TEXAS
EULESS
150 West Park Way (O) ...................... 852 3,583 4,435 325
MARICOPA COUNTY, ARIZONA
GLENDALE
5551 West Talavi Boulevard (O) ............. 3,593 15,810 19,403 1,225
PHOENIX
19640 North 31st Street (O) ................ 3,437 13,751 17,188 1,132
SCOTTSDALE
9060 E. Via Linda Boulevard (O) ............ 3,720 14,916 18,636 1,225
ARAPAHOE COUNTY, COLORADO
AURORA
750 South Richfield Street (O) ............. 2,682 23,150 25,832 1,746
DENVER
400 South Colorado Boulevard (O) ........... 1,461 11,188 12,649 842
ENGLEWOOD
9359 East Nichols Avenue (O) ............... 1,155 7,762 8,917 600
5350 South Roslyn Street (O) ............... 862 6,817 7,679 580
BOULDER COUNTY, COLORADO
BROOMFIELD
105 South Technology Court (O) ............. 653 4,964 5,617 380
303 South Technology Court-A (O) ........... 623 3,927 4,550 317
303 South Technology Court-B (O) ........... 623 3,928 4,551 318
LOUISVILLE
1172 Century Drive (O) ..................... 707 4,865 5,572 385
248 Centennial Parkway (O) ................. 708 4,864 5,572 385
285 Century Place (O) ...................... 891 10,157 11,048 747
DENVER COUNTY, COLORADO
DENVER
8181 East Tufts Avenue (O) ................. 2,342 32,732 35,074 81
3600 South Yosemite (O) .................... 556 13,007 13,563 957
DOUGLAS COUNTY, COLORADO
ENGLEWOOD
67 Inverness Drive East (O) ................ 1,035 5,540 6,575 450
384 Inverness Drive South (O) .............. 703 5,898 6,601 466
400 Inverness Drive (O) .................... 1,584 19,295 20,879 1,442
5975 South Quebec Street (O) ............... 857 11,873 12,730 932
PARKER
9777 Pyramid Court (O) ..................... 1,306 13,213 14,519 1,063
108
MACK-CALI REALTY CORPORATION
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(DOLLARS IN THOUSANDS)
SCHEDULE III
INITIAL COSTS COSTS
------------------ CAPITALIZED
YEAR RELATED BUILDING AND SUBSEQUENT
PROPERTY LOCATION (2) BUILT ACQUIRED ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
--------------------- ----- -------- ------------ ---- ------------ --------------
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
8415 Explorer (O) .......................... 1998 1999 -- 347 2,507 3,023
1975 Research Parkway (O) .................. 1997 1998 -- 1,397 13,221 2,891
2375 Telstar Drive (O) ..................... 1998 1999 -- 348 2,507 3,021
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard (O) .................... 1985 1998 -- 774 6,891 612
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
795 Folsom Street (O) ...................... 1977 1999 -- 9,348 24,934 6,814
760 Market Street (O) ...................... 1908 1997 -- 5,588 22,352 38,995
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard (O) .................. 1982 1997 -- 3,959 15,837 1,604
PROJECTS UNDER DEVELOPMENT ................. -- 56,020 -- 125,396
FURNITURE, FIXTURES & EQUIPMENT ............ -- -- -- 7,189
--------------------------------------------------------------------------------------------------------------------
TOTALS ..................................... $543,807 $523,288 $2,749,524 $ 558,727
====================================================================================================================
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF COSTS
PERIOD (1)
--------------------------------
BUILDING AND ACCUMULATED
PROPERTY LOCATION (2) LAND IMPROVEMENTS TOTAL DEPRECIATION
--------------------- ---- ------------ ----- ------------
EL PASO COUNTY, COLORADO
COLORADO SPRINGS
8415 Explorer (O) .......................... 348 5,529 5,877 228
1975 Research Parkway (O) .................. 1,611 15,898 17,509 1,166
2375 Telstar Drive (O) ..................... 348 5,528 5,876 229
JEFFERSON COUNTY, COLORADO
LAKEWOOD
141 Union Boulevard (O) .................... 775 7,502 8,277 646
SAN FRANCISCO COUNTY, CALIFORNIA
SAN FRANCISCO
795 Folsom Street (O) ...................... 9,350 31,746 41,096 2,790
760 Market Street (O) ...................... 13,499 53,436 66,935 5,199
HILLSBOROUGH COUNTY, FLORIDA
TAMPA
501 Kennedy Boulevard (O) .................. 3,959 17,441 21,400 1,432
PROJECTS UNDER DEVELOPMENT ................. 56,020 125,396 181,416 --
FURNITURE, FIXTURES & EQUIPMENT ............ -- 7,189 7,189 3,493
----------------------------------------------------------------------------------------------------
TOTALS ..................................... $541,162 $3,290,377 $3,831,539 $379,084
====================================================================================================
(1) The aggregate cost for federal income tax purposes at December 31, 2001
was approximately $2.84 billion.
(2) LEGEND OF PROPERTY CODES:
(O)=Office Property (M)=Multi-family Residential Property
(F)=Office/Flex Property (R)=Stand-alone Retail Property
(I)=Industrial/Warehouse Property (L)=Land Lease
109
MACK-CALI REALTY CORPORATION
NOTE TO SCHEDULE III
Changes in rental properties and accumulated depreciation for the periods ended
December 31, 2001, 2000 and 1999, are as follow (IN THOUSANDS):
2001 2000 1999
---- ---- ----
RENTAL PROPERTIES
Balance at beginning of year $ 3,589,877 $ 3,654,845 $ 3,467,799
Additions 382,382 268,900 204,565
Rental property held for sale -
before accumulated depreciation (453,469) (114,477) --
Properties sold (140,719) (219,391) (15,903)
Retirements/disposals -- -- (1,616)
----------- ----------- -----------
Balance at end of year $ 3,378,071 $ 3,589,877 $ 3,654,845
=========== =========== ===========
ACCUMULATED DEPRECIATION
Balance at beginning of year $ 302,932 $ 256,629 $ 177,934
Depreciation expense 87,716 82,574 81,730
Rental property held for sale (28,379) (7,019) --
Properties sold (11,564) (29,252) (1,419)
Retirements/disposals -- -- (1,616)
----------- ----------- -----------
Balance at end of year $ 350,705 $ 302,932 $ 256,629
=========== =========== ===========
110
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: February 20, 2002 By: /s/ BARRY LEFKOWITZ
----------------------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
/S/ WILLIAM L. MACK Chairman of the Board February 20, 2002
--------------------------
William L. Mack
/S/ MITCHELL E. HERSH Chief Executive Officer February 20, 2002
-------------------------- and Director
Mitchell E. Hersh
/S/ BARRY LEFKOWITZ Executive Vice President and February 20, 2002
-------------------------- Chief Financial Officer
Barry Lefkowitz
/S/ JOHN J. CALI Director February 20, 2002
--------------------------
John J. Cali
/S/ BRENDAN T. BYRNE Director February 20, 2002
--------------------------
Brendan T. Byrne
/S/ JOHN R. CALI Director February 20, 2002
--------------------------
John R. Cali
/S/ NATHAN GANTCHER Director February 20, 2002
--------------------------
Nathan Gantcher
/S/ MARTIN D. GRUSS Director February 20, 2002
--------------------------
Martin D. Gruss
111
NAME TITLE DATE
---- ----- ----
/S/ EARLE I. MACK Director February 20, 2002
--------------------------
Earle I. Mack
/S/ ALAN G. PHILIBOSIAN Director February 20, 2002
--------------------------
Alan G. Philibosian
/S/ IRVIN D. REID Director February 20, 2002
--------------------------
Irvin D. Reid
/S/ VINCENT TESE Director February 20, 2002
--------------------------
Vincent Tese
/S/ ROBERT F. WEINBERG Director February 20, 2002
--------------------------
Robert F. Weinberg
/S/ ROY J. ZUCKERBERG Director February 20, 2002
--------------------------
Roy J. Zuckerberg
112
MACK-CALI REALTY CORPORATION
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT TITLE
------ -------------
3.1 Restated Charter of Mack-Cali Realty Corporation dated June
11, 2001 (filed as Exhibit 3.1 to the Company's Form 10-Q
dated June 30, 2001 and incorporated herein by reference).
3.2 Amended and Restated Bylaws of Mack-Cali Realty Corporation
dated June 10, 1999 (filed as Exhibit 3.2 to the Company's
Form 8-K dated June 10, 1999 and incorporated herein by
reference).
3.3 Second Amended and Restated Agreement of Limited Partnership
of Mack-Cali Realty, L.P. dated December 11, 1997 (filed as
Exhibit 10.110 to the Company's Form 8-K dated December 11,
1997 and incorporated herein by reference).
3.4 Amendment No. 1 to the Second Amended and Restated Agreement
of Limited Partnership of Mack-Cali Realty, L.P. dated August
21, 1998 (filed as Exhibit 3.1 to the Company's and the
Operating Partnership's Registration Statement on Form S-3,
Registration No. 333-57103, and incorporated herein by
reference).
3.5 Second Amendment to the Second Amended and Restated Agreement
of Limited Partnership of Mack-Cali Realty, L.P. dated July 6,
1999 (filed as Exhibit 10.1 to the Company's Form 8-K dated
July 6, 1999 and incorporated herein by reference).
4.1 Amended and Restated Shareholder Rights Agreement, dated as of
March 7, 2000, between Mack-Cali Realty Corporation and
EquiServe Trust Company, N.A., as Rights Agent (filed as
Exhibit 4.1 to the Company's Form 8-K dated March 7, 2000 and
incorporated herein by reference).
4.2 Amendment No. 1 to the Amended and Restated Shareholder Rights
Agreement, dated as of June 27, 2000, by and among Mack-Cali
Realty Corporation and EquiServe Trust Company, N.A. (filed as
Exhibit 4.1 to the Company's Form 8-K dated June 27, 2000
and incorporated herein by reference).
4.3 Indenture dated as of March 16, 1999, by and among Mack-Cali
Realty, L.P., as issuer, Mack-Cali Realty Corporation, as
guarantor, and Wilmington Trust Company, as trustee (filed as
Exhibit 4.1 to the Operating Partnership's Form 8-K dated
March 16, 1999 and incorporated herein by reference).
4.4 Supplemental Indenture No. 1 dated as of March 16, 1999, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated March 16, 1999 and
incorporated herein by reference).
4.5 Supplemental Indenture No. 2 dated as of August 2, 1999, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.4 to the
Operating Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
113
Exhibit
Number Exhibit Title
------ -------------
4.6 Supplemental Indenture No. 3 dated as of December 21, 2000, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated December 21, 2000 and
incorporated herein by reference).
4.7 Supplemental Indenture No. 4 dated as of January 29, 2001, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated January 29, 2001 and
incorporated herein by reference).
10.1 Amended and Restated Employment Agreement dated as of July 1,
1999 between Mitchell E. Hersh and Mack-Cali Realty
Corporation (filed as Exhibit 10.2 to the Company's Form 10-Q
dated June 30, 1999 and incorporated herein by reference).
10.2 Second Amended and Restated Employment Agreement dated as of
July 1, 1999 between Timothy M. Jones and Mack-Cali Realty
Corporation (filed as Exhibit 10.3 to the Company's Form 10-Q
dated June 30, 1999 and incorporated herein by reference).
10.3 Second Amended and Restated Employment Agreement dated as of
July 1, 1999 between Barry Lefkowitz and Mack-Cali Realty
Corporation (filed as Exhibit 10.6 to the Company's Form 10-Q
dated June 30, 1999 and incorporated herein by reference).
10.4 Second Amended and Restated Employment Agreement dated as of
July 1, 1999 between Roger W. Thomas and Mack-Cali Realty
Corporation (filed as Exhibit 10.7 to the Company's Form 10-Q
dated June 30, 1999 and incorporated herein by reference).
10.5 Employment Agreement dated as of December 5, 2000 between
Michael Grossman and Mack-Cali Realty Corporation (filed as
Exhibit 10.5 to the Company's Form 10-K for the year ended
December 31, 2000 and incorporated herein by reference).
10.6 Restricted Share Award Agreement dated as of July 1, 1999
between Mitchell E. Hersh and Mack-Cali Realty Corporation
(filed as Exhibit 10.8 to the Company's Form 10-Q dated June
30, 1999 and incorporated herein by reference).
10.7 Restricted Share Award Agreement dated as of July 1, 1999
between Timothy M. Jones and Mack-Cali Realty Corporation
(filed as Exhibit 10.9 to the Company's Form 10-Q dated June
30, 1999 and incorporated herein by reference).
10.8 Restricted Share Award Agreement dated as of July 1, 1999
between Barry Lefkowitz and Mack-Cali Realty Corporation
(filed as Exhibit 10.12 to the Company's Form 10-Q dated June
30, 1999 and incorporated herein by reference).
10.9 Restricted Share Award Agreement dated as of July 1, 1999
between Roger W. Thomas and Mack-Cali Realty Corporation
(filed as Exhibit 10.13 to the Company's Form 10-Q dated June
30, 1999 and incorporated herein by reference).
10.10 Restricted Share Award Agreement dated as of March 12, 2001
between Roger W. Thomas and Mack-Cali Realty Corporation
(filed as Exhibit 10.10 to the Company's Form 10-Q dated March
31, 2001 and incorporated herein by reference).
114
Exhibit
Number Exhibit Title
------ -------------
10.11 Restricted Share Award Agreement dated as of March 12, 2001
between Michael Grossman and Mack-Cali Realty Corporation
(filed as Exhibit 10.11 to the Company's Form 10-Q dated March
31, 2001 and incorporated herein by reference).
10.12 Amendment No. 3 to and Restatement of Revolving Credit
Agreement dated as of June 22, 2000, by and among Mack-Cali
Realty, L.P. and The Chase Manhattan Bank, Fleet National Bank
and Other Lenders Which May Become Parties Thereto with The
Chase Manhattan Bank, as administrative agent, Fleet National
Bank, as syndication agent, Bank of America, N.A., as
documentation agent, Chase Securities Inc. and FleetBoston
Robertson Stephens Inc., as arrangers, Bank One, N.A., First
Union National Bank and Commerzbank Aktiengesellschaft, as
senior managing agents, PNC Bank National Association, as
managing agent, and Societe Generale, Dresdner Bank AG, Wells
Fargo Bank, National Association, Bank Austria Creditanstalt
Corporate Finance, Inc., Bayerische Hypo-und Vereinsbank and
Summit Bank, as co-agents (filed as Exhibit 10.10 to the
Company's Form 10-K for the year ended December 31, 2000 and
incorporated herein by reference).
10.13 Contribution and Exchange Agreement among The MK Contributors,
The MK Entities, The Patriot Contributors, The Patriot
Entities, Patriot American Management and Leasing Corp., Cali
Realty, L.P. and Cali Realty Corporation, dated September 18,
1997 (filed as Exhibit 10.98 to the Company's Form 8-K dated
September 19, 1997 and incorporated herein by reference).
10.14 First Amendment to Contribution and Exchange Agreement, dated
as of December 11, 1997, by and among the Company and the Mack
Group (filed as Exhibit 10.99 to the Company's Form 8-K dated
December 11, 1997 and incorporated herein by reference).
10.15 Employee Stock Option Plan of Mack-Cali Realty Corporation
(filed as Exhibit 10.1 to the Company's Post-Effective
Amendment No. 1 to Form S-8, Registration No. 333-44443, and
incorporated herein by reference).
10.16 Director Stock Option Plan of Mack-Cali Realty Corporation
(filed as Exhibit 10.2 to the Company's Post-Effective
Amendment No. 1 to Form S-8, Registration No. 333-44443, and
incorporated herein by reference).
10.17 2000 Employee Stock Option Plan (filed as Exhibit 10.1 to the
Company's Registration Statement on Form S-8, Registration No.
333-52478, and incorporated herein by reference).
10.18 2000 Director Stock Option Plan (filed as Exhibit 10.2 to the
Company's Registration Statement on Form S-8, Registration No.
333-52478, and incorporated herein by reference).
*21 Subsidiaries of the Company.
*23 Consent of PricewaterhouseCoopers LLP, independent
accountants.
----------
*FILED HEREWITH
115