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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K


ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

o

 

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
(Exact Name of Registrant as specified in its charter)

Maryland
(State or other jurisdiction of
incorporation or organization)
  22-3305147
(IRS Employer Identification No.)

343 Thornall Street, Edison, New Jersey
(Address of principal executive offices)

 

08837-2206
(Zip code)

(732) 590-1000
(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
Preferred Share Purchase Rights
  New York Stock Exchange

         Securities registered pursuant to Section 12(g) of the Act:
None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o    No ý

         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 ý    No o

         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. ý

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company)
  Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)Yes o    No ý

         As of June 30, 2008, the aggregate market value of the voting stock held by non-affiliates of the registrant was $2,207,789,785. The aggregate market value was computed with reference 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 5, 2009, 66,421,465 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 herein on page number 118.

         DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's definitive proxy statement for fiscal year ended December 31, 2008 to be issued in conjunction with the registrant's annual meeting of shareholders expected to be held on June 2, 2009 are incorporated by reference in Part III of this Form 10-K. The definitive proxy statement will be filed by the registrant with the SEC not later than 120 days from the end of the registrant's fiscal year ended December 31, 2008.



FORM 10-K

Table of Contents

 
   
  Page No.

PART I

       

Item 1

 

Business

  3

Item 1A

 

Risk Factors

  9

Item 1B

 

Unresolved Staff Comments

  20

Item 2

 

Properties

  20

Item 3

 

Legal Proceedings

  39

Item 4

 

Submission of Matters to a Vote of Security Holders

  39

PART II

       

Item 5

 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

  40

Item 6

 

Selected Financial Data

  42

Item 7

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

  43

Item 7A

 

Quantitative and Qualitative Disclosures About Market Risk

  64

Item 8

 

Financial Statements and Supplementary Data

  64

Item 9

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

  65

Item 9A

 

Controls and Procedures

  65

Item 9B

 

Other Information

  66

PART III

       

Item 10

 

Directors, Executive Officers and Corporate Governance

  66

Item 11

 

Executive Compensation

  66

Item 12

 

Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters

  66

Item 13

 

Certain Relationships and Related Transactions, and Director Independence

  66

Item 14

 

Principal Accounting Fees and Services

  66

PART IV

       

Item 15

 

Exhibits and Financial Statement Schedules

  67

SIGNATURES

 
128

EXHIBIT INDEX

 
130

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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 343 Thornall Street, Edison, New Jersey 08837-2206, and its telephone number is (732) 590-1000. The Company has an internet website at www.mack-cali.com.

        As of December 31, 2008, the Company owned or had interests in 293 properties, aggregating approximately 33.5 million square feet, plus developable land (collectively, the "Properties"), which are leased to approximately 2,100 tenants. The Properties are comprised of: (a) 255 wholly-owned or Company-controlled properties consisting of 150 office buildings and 95 office/flex buildings aggregating approximately 28.8 million square feet, six industrial/warehouse buildings totaling approximately 387,400 square feet, two stand-alone retail properties totaling approximately 17,300 square feet, and two land leases (collectively, the "Consolidated Properties"); and (b) 37 buildings, which are primarily office properties, aggregating approximately 4.3 million square feet, and a 350-room hotel, which are 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, 2008, the office, office/flex, industrial/warehouse and stand-alone retail properties included in the Consolidated Properties were 91.3 percent leased. Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future, and leases that expire at the period end date. Leases that expire as of December 31, 2008 aggregate 67,473 square feet, or 0.2 percent of the net rentable square footage. The Properties are located in six states, primarily in the Northeast, and the District of Columbia. See Item 2: Properties.

        The Company's strategy has been to focus its operations, acquisition and development of office properties in high-barrier-to-entry markets and sub-markets where it believes it is, or can become, a significant and preferred owner and operator. The Company plans to continue this strategy by expanding through acquisitions and/or development in Northeast 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, 2008, executive officers and directors of the Company and their affiliates owned approximately 9 percent of the Company's outstanding shares of Common Stock (including Units redeemable 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 (the "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 20 years.

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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 management personnel 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 management personnel additionally budget and oversee capital improvements and building system upgrades to enhance the Properties' competitive advantages in their respective markets and to maintain the quality of the 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.

        Portfolio Management:    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 operating cash flow and to enhance the value of its portfolio through effective management, acquisition, development and property sales strategies, as follows:

        The Company seeks to maximize the value of its existing portfolio through implementing operating strategies designed to produce the highest effective rental and occupancy rates and lowest tenant installation cost within the markets that it operates, and further within the parameters of those markets. 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 New Cingular Wireless PCS LLC, National Union Fire Insurance and The United States of America—GSA. 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 either directly or through joint ventures to acquire, invest in or redevelop additional properties that: (i) are expected to 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) it believes have been under-managed or are otherwise capable of improved performance through intensive management, capital improvements and/or leasing that should result in increased effective rental and occupancy rates.

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        Development:    The Company seeks to selectively develop additional properties either directly or through joint ventures 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.

        Property Sales:    While management's principal intention is to own and operate its properties on a long-term basis, it periodically assesses 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 50 percent or less, however there can be no assurance that the Company will be successful in maintaining this ratio. As of December 31, 2008 and 2007, the Company's total debt constituted approximately 40.6 and 40.2 percent of total undepreciated assets of the Company, respectively. 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. Fitch has assigned its BBB- rating and S&P has assigned its BB+ rating to existing and prospective preferred stock offerings of the Company. Moody's Investors Service ("Moody's") has assigned its Baa2 rating to existing and prospective senior unsecured debt of the Operating Partnership and its Baa3 rating to existing and 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 a requirement for the 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 debt rating 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 and land 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, 2008, the Company had approximately 444 full-time 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, the quality of properties, leasing terms (including rent and other charges and allowances for tenant improvements), services provided, the design and condition of the Properties, and reputation as an owner and operator of quality office properties in the relevant market. 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, individual investors and others.

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REGULATIONS

        Many laws and governmental regulations apply to the ownership and/or operation of the Properties and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently.

        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 the 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 two industry segments: (i) real estate; and (ii) construction services. As of December 31, 2008, the Company does not have any foreign operations and its business is not seasonal. In May 2006, in conjunction with the Company's acquisition of the Gale Company and related businesses, the Company acquired a business specializing solely in construction and related services whose operations comprise the Company's construction services segment. Please see our financial statements attached hereto and incorporated by reference herein for financial information relating to our industry segments.

RECENT DEVELOPMENTS

        The Company's core markets continue to be weak. The percentage leased in the Company's consolidated portfolio of stabilized operating properties was 91.3 percent at December 31, 2008, as compared to 92.7 percent at December 31, 2007 and 92.0 percent at December 31, 2006. Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates

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in the future and leases that expire at the period end date. Leases that expired as of December 31, 2008, 2007 and 2006 aggregate 67,473, 146,261 and 103,477 square feet, respectively, or 0.2, 0.5 and 0.4 percentage of the net rentable square footage, respectively. Rental rates on the Company's space that was re-leased (based on first rents payable) during the year ended December 31, 2008 increased an average of 1.5 percent compared to rates that were in effect under the prior leases, as compared to a 0.2 percent decrease in 2007 and a 0.2 percent decrease in 2006. The Company believes that vacancy rates may continue to increase in some of its markets through 2009 and possibly beyond. As a result, the Company's future earnings and cash flow may continue to be negatively impacted by current market conditions.

        Deteriorating economic conditions have resulted in a reduction of the availability of financing and overall higher borrowing rates. These factors, coupled with a slowing economy, have reduced the volume of real estate transactions and created credit stresses on most businesses. On September 15, 2008, Lehman Brothers Holdings Inc. ("Lehman") filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. Lehman leases 270,063 square feet of office space from the Company at 101 Hudson Street in Jersey City, New Jersey, which are scheduled to expire through 2018. Lehman has currently sublet 54.1 percent of its leased space to subtenants. Should Lehman's lease no longer be in effect, the subtenants would become direct tenants of the Company for the remainder of the term of their respective subleases. This would mitigate a portion of the Company's potential future loss of the Lehman lease as a result of Lehman's bankruptcy.

        The Company expects that the impact of the current state of the economy, including rising unemployment and the unprecedented volatility and illiquidity in the financial and credit markets, will continue to have a dampening effect on the fundamentals of its business, including increases in past due accounts, defaults, lower occupancy and reduced effective rents. These conditions would negatively affect the Company's future net income and cash flows and could have a material adverse effect on the Company's financial condition. In addition to the financial constraints on the Company's tenants, many of the debt capital markets that real estate companies like the Company frequently access, such as the unsecured bond market and the convertible debt market, are not currently available to the Company on terms that management believes are economically attractive. Although the Company believes that the quality of its assets and its strong balance sheet will enable it to raise capital from other sources such as traditional term or secured loans from banks, pension funds and life insurance companies, these sources are lending fewer dollars, under stricter terms and at higher borrowing rates, and there can be no assurance that the Company will be able to do so on terms that are economically attractive or at all.

FINANCING ACTIVITY

        On October 28, 2008, the Company obtained $240 million in mortgage financing from The Northwestern Mutual Life Insurance Company and New York Life Insurance Company as co-lenders. The mortgage loan, which is collateralized by its Harborside Plaza 5 office property, bears interest at a rate of 6.8 percent per annum and carries a 10-year term. Proceeds from the loan were used to pay down outstanding borrowings under the Company's unsecured revolving credit facility.

        On November 17, 2008, the Company accepted for purchase $100.3 million principal amount of its 7.25 percent Senior Unsecured Notes due March 15, 2009 (the "Notes"), validly tendered pursuant to its previously announced cash tender offer on November 6, 2008 (the "Tender Offer"). The Notes accepted for purchase represented approximately 33.4 percent of the principal amount of Notes outstanding prior to the Tender Offer. The aggregate consideration for Notes accepted for payment, including accrued and unpaid interest, was approximately $101.5 million, which was funded primarily from borrowing on the Company's revolving credit facility. The Notes purchased pursuant to the Tender Offer have been cancelled and approximately $199.7 million principal amount of the Notes remain outstanding.

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        On January 27, 2009, the Company obtained $64.5 million in mortgage financing from Guardian Life Insurance Company of America. The two mortgage loans, which are collateralized by one and three office properties located in Clark and Red Bank, New Jersey, respectively, both bear interest at a rate of 7.25 percent per annum and carry a 10-year term.

AVAILABLE INFORMATION

        The Company's internet website is www.mack-cali.com. The Company makes available free of charge on or through its website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission. In addition, the Company's internet website includes other items related to corporate governance matters, including, among other things, the Company's corporate governance principles, charters of various committees of the Board of Directors, and the Company's code of business conduct and ethics applicable to all employees, officers and directors. The Company intends to disclose on its internet website any amendments to or waivers from its code of business conduct and ethics as well as any amendments to its corporate governance principles or the charters of various committees of the Board of Directors. Copies of these documents may be obtained, free of charge, from our internet website. Any shareholder also may obtain copies of these documents, free of charge, by sending a request in writing to: Mack-Cali Investor Relations Department, 343 Thornall Street, Edison, NJ 08837-2206.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

        We consider portions of this report, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act. Such forward-looking statements relate to, without limitation, our 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," "plan," "should," "expect," "anticipate," "estimate," "continue" or comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such 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 we have made assumptions are:

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        For further information on factors which could impact us and the statements contained herein, see Item 1A: Risk Factors. We assume no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

ITEM 1A.    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.

Adverse economic and geopolitical conditions in general and the Northeastern office markets in particular could have a material adverse effect on our results of operations, financial condition and our ability to pay distributions to you.

        Our business may be affected by the unprecedented volatility and illiquidity in the financial and credit markets, the general global economic recession, and other market or economic challenges experienced by the U.S. economy or real estate industry as a whole. Our business may also be adversely affected by local economic conditions, as substantially all of our revenues are derived from our properties located in the Northeast, particularly in New Jersey, New York and Pennsylvania. Because our portfolio consists primarily of office and office/flex buildings (as compared to a more diversified real estate portfolio) located principally in the Northeast, if economic conditions persist or deteriorate, then our results of operations, financial condition and ability to service current debt and to pay distributions to our shareholders may be adversely affected by the following, among other potential conditions:

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        These conditions, which could have a material adverse effect on our results of operations, financial condition and ability to pay distributions, may continue or worsen in the future.

Our performance is subject to risks associated with the real estate industry.

        General:    Our business and our ability to make distributions or payments to our investors depend on the ability of our properties to generate funds in excess of operating expenses (including scheduled principal payments on debt and capital expenditures). 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:

        We may suffer adverse consequences if our revenues decline since our operating costs do not necessarily decline in proportion to our revenue:    We earn a significant portion of our income from renting our properties. Our operating costs, however, do not necessarily fluctuate in relation to changes in our rental revenue. This means that our costs will not necessarily decline even if our revenues do. Our operating costs could also increase while our revenues do not. If our operating costs increase but our rental revenues do not, we may be forced to borrow to cover our costs, we may incur losses and we may not have cash available for distributions to our stockholders.

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        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 as we may be unable to replace the defaulting tenant with a new tenant at a comparable rental rate without incurring significant expenses or a reduction in rental income.

        Renewing leases or re-letting space could be costly:    If a tenant does not renew its lease upon expiration or terminates its lease early, we may not be able to re-lease the space. If a tenant does renew its lease or we re-lease the space, the terms of the renewal or new lease, including the cost of required renovations or concessions to the tenant, may be less favorable than the current lease terms, which could adversely affect our ability to make distributions or payments to our investors.

        Adverse developments concerning some of our major tenants and industry concentrations could have a negative impact on our revenue:    Recent developments in the general economy and the global credit markets have had a significant adverse effect on many companies in numerous industries. We have tenants concentrated in various industries that may be experiencing adverse effects of current economic conditions. Our business could be adversely affected if any of these tenants or any other tenants became insolvent, declared bankruptcy or otherwise refused to pay rent in a timely manner or at all.

        Our insurance coverage on our properties may be inadequate or our insurance providers may default on their obligations to pay claims:    We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire and flood. We cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our properties. We cannot guarantee that we will be able to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices. In addition, while our current insurance policies insure us against loss from terrorist acts and toxic mold, in the future, insurance companies may no longer offer coverage against these types of losses, 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. If one or more of our insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations. In addition, if one or more of our insurance providers were to become subject to insolvency, bankruptcy or other proceedings and our insurance policies with the provider were terminated or canceled as a result of those proceedings, we cannot guarantee that we would be able to find alternative coverage in adequate amounts or at reasonable prices. In such case, we could experience a lapse in any or adequate insurance coverage with respect to one or more properties and be exposed to potential losses relating to any claims that may arise during such period of lapsed or inadequate coverage.

        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 (the

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"Code"), 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 Units as part of the purchase price. In connection with the acquisition of these properties, in order to preserve such individual's income tax deferral, we contractually agreed not to sell or otherwise transfer the properties for a specified period of time, 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 individuals for the income tax consequences of the recognition of such built-in-gains. As of December 31, 2008, 11 of our properties, with an aggregate net book value of approximately $203.5 million, were subject to these restrictions, which expire periodically through 2016. For those properties where such restrictions have lapsed, we are generally 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 individuals. 126 of our properties, with an aggregate net book value of approximately $1.8 billion, have lapsed restrictions and are subject to these conditions. 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 ("ADA"), 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 and may impose liability upon us for personal injury to persons exposed to such substances. 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 or other materials into the air, water or otherwise into the environment. 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.

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        We face risks associated with property acquisitions:    We have acquired in the past, and our long-term strategy is to continue to pursue the acquisition of properties and portfolios of properties in New Jersey, New York and Pennsylvania and in the Northeast generally, including large real estate portfolios that could increase our size and result in alterations to our capital structure. 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:

        Our acquisition activities and their success are subject to the following risks:

        New acquisitions may fail to perform as expected:    We may acquire new office properties, assuming that we are able to obtain capital on favorable terms. Such newly acquired properties may not perform as expected and may subject us to unknown liability with respect to liabilities relating to such properties for clean-up of undisclosed environmental contamination or claims by tenants, vendors or other persons against the former owners of the properties. Inaccurate assumptions regarding future rental or occupancy rates could result in overly optimistic estimates of future revenues. In addition, future operating expenses or the costs necessary to bring an acquired property up to standards established for its intended market position may be underestimated.

        Development of real estate could be costly:    As part of our operating strategy, we may acquire land for development or construct on owned land, 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:

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        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 in the assets underlying the entities in which we invest, including joint ventures in which (i) we own a direct interest in an entity which controls such assets, or (ii) we own a direct interest in an entity which owns indirect interests, through one or more intermediaries, of such assets. These investments involve risks that do not exist with properties in which we own a controlling interest with respect to the underlying assets, 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 we seek protective rights against such contrary actions, there can be no assurance that we will be successful in procuring any such protective rights, or if procured, that the rights will be sufficient to fully protect us 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.

Our real estate construction management activities are subject to risks particular to third-party construction projects.

        As we perform fixed price construction services for third parties, we are subject to a variety of risks unique to these activities. If construction costs of a project exceed original estimates, such costs may have to be absorbed by us, thereby making the project less profitable than originally estimated, or possibly not profitable at all. In addition, a construction project may be delayed due to government or regulatory approvals, supply shortages, or other events and circumstances beyond our control, or the time required to complete a construction project may be greater than originally anticipated. If any such excess costs or project delays were to be material, such events may adversely effect our cash flow and liquidity and thereby impact our ability to pay dividends or make distributions 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:

        As of December 31, 2008, we had total outstanding indebtedness of $2.2 billion comprised of $1.5 billion of senior unsecured notes, outstanding borrowings of $161 million under our $775 million revolving credit facility and approximately $531 million of mortgage loans payable and other obligations indebtedness. We may have to refinance the principal due on our current or future indebtedness at maturity, and we may not be able to do so.

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        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:

        We are obligated to comply with financial covenants in our indebtedness that could restrict our range of operating activities:    The mortgages on our properties contain customary negative covenants, including limitations on our ability, without the prior consent of the lender, to further mortgage the property, to enter into new leases outside of stipulated guidelines or to materially modify existing leases. In addition, our revolving credit facility contains customary requirements, including restrictions and other limitations on our ability to incur debt, debt to assets ratios, secured debt to total assets ratios, interest coverage ratios and minimum ratios of unencumbered assets to unsecured debt. The indentures under which our senior unsecured debt have been issued contain financial and operating covenants including coverage ratios and limitations on our ability to incur secured and unsecured debt. These covenants limit our flexibility in conducting our operations and create a risk of default on our indebtedness if we cannot continue to satisfy them. Some of our debt instruments are cross-collateralized and contain cross default provisions with other debt instruments. Due to this cross-collateralization, a failure or default with respect to certain debt instruments or properties could have an adverse impact on us or our properties that are subject to the cross-collateralization under the applicable debt instrument. Failure to comply with these covenants could cause a default under the agreements and, in certain circumstances, our lenders may be entitled to accelerate our debt obligations. Defaults under our debt agreements could materially and adversely affect our financial condition and results of operations.

        Rising interest rates may adversely affect our cash flow:    As of December 31, 2008, outstanding borrowings of approximately $161 million under our revolving credit facility 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

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Directors could alter or eliminate its current policy on borrowing at any time at 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 external sources of capital for future growth:    To qualify as a real estate investment trust under the Code, we must distribute to our shareholders each year at least 90 percent of our net taxable income, excluding any net capital gain. Because of this distribution requirement, it is not likely that we will be able to fund all future capital needs, including for acquisitions and developments, from income from operations. Therefore, we will have to rely on third-party sources of capital, which may or may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of things, including the market's perception of our growth potential and our current and potential future earnings. Moreover, additional equity offerings may result in substantial dilution of our shareholders' interests, and additional debt financing may substantially increase our leverage.

Competition for skilled personnel could increase our labor costs.

        We compete with various other companies in attracting and retaining qualified and skilled personnel. We depend on our ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our company. Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel. We may not be able to offset such added costs by increasing the rates we charge our tenants. If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be harmed.

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, Barry Lefkowitz and Roger W. Thomas, a continuous one-year employment term with Michael A. Grossman, and an initial three-year employment term with Mark Yeager which, as of May 9, 2009, shall convert to a continuous one-year employment term. We do not have key man life insurance for our executive officers.

Certain provisions of Maryland law and our charter and bylaws as well as our stockholder rights plan could hinder, delay or prevent changes in control.

        Certain provisions of Maryland law, our charter and our bylaws, as well as our stockholder rights plan have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control. These provisions include the following:

        Classified Board of Directors:    Our Board of Directors is divided into three classes with staggered terms of office of three years each. The classification and staggered terms of office of our directors make it more difficult for a third party to gain control of our board of directors. At least two annual meetings of stockholders, instead of one, generally would be required to affect a change in a majority of the board of directors.

        Removal of Directors:    Under our charter, subject to the rights of one or more classes or series of preferred stock to elect one or more directors, a director may be removed only for cause and only by the affirmative vote of at least two-thirds of all votes entitled to be cast by our stockholders generally

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in the election of directors. Neither the Maryland General Corporation Law nor our charter define the term "cause." As a result, removal for "cause" is subject to Maryland common law and to judicial interpretation and review in the context of the facts and circumstances of any particular situation.

        Number of Directors, Board Vacancies, Terms of Office:    We have, in our bylaws, elected to be subject to certain provisions of Maryland law which vest in the Board of Directors the exclusive right to determine the number of directors and the exclusive right, by the affirmative vote of a majority of the remaining directors, even if the remaining directors do not constitute a quorum, to fill vacancies on the board. These provisions of Maryland law, which are applicable even if other provisions of Maryland law or the charter or bylaws provide to the contrary, also provide that any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, rather than the next annual meeting of stockholders as would otherwise be the case, and until his or her successor is elected and qualifies.

        Stockholder Requested Special Meetings:    Our bylaws provide that our stockholders have the right to call a special meeting only upon the written request of the stockholders entitled to cast not less than a majority of all the votes entitled to be cast by the stockholders at such meeting.

        Advance Notice Provisions for Stockholder Nominations and Proposals:    Our bylaws require advance written notice for stockholders to nominate persons for election as directors at, or to bring other business before, any meeting of stockholders. This bylaw provision limits the ability of stockholders to make nominations of persons for election as directors or to introduce other proposals unless we are notified in a timely manner prior to the meeting.

        Exclusive Authority of the Board to Amend the Bylaws:    Our bylaws provide that our board of directors has the exclusive power to adopt, alter or repeal any provision of the bylaws or to make new bylaws. Thus, our stockholders may not effect any changes to our bylaws.

        Preferred Stock:    Under our charter, our Board of Directors has authority to issue preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of our stockholders.

        Duties of Directors with Respect to Unsolicited Takeovers:    Maryland law provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act, or (d) act or fail to act solely because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition. Moreover, under Maryland law, the act of a director of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not subject to any higher duty or greater scrutiny than is applied to any other act of a director. Maryland law also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under Maryland law.

        Ownership Limit:    In order to preserve our status as a real estate investment trust under the Code, our charter generally prohibits any single stockholder, or any group of affiliated stockholders, from beneficially owning more than 9.8 percent of our outstanding capital stock unless our Board of Directors waives or modifies this ownership limit.

        Maryland Business Combination Act:    The Maryland Business Combination Act provides that unless exempted, a Maryland corporation may not engage in business combinations, including mergers,

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dispositions of 10 percent or more of its assets, certain issuances of shares of stock and other specified transactions, with an "interested stockholder" or an affiliate of an interested stockholder, for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10 percent or more of the voting power of the outstanding stock of the Maryland corporation. Our board of directors has exempted from this statute business combinations between the Company and certain affiliated individuals and entities. However, unless our board adopts other exemptions, the provisions of the Maryland Business Combination Act will be applicable to business combinations with other persons.

        Maryland Control Share Acquisition Act:    Maryland law provides that "control shares" of a corporation acquired in a "control share acquisition" shall have no voting rights except to the extent approved by a vote of two-thirds of the votes eligible to cast on the matter under the Maryland Control Share Acquisition Act. "Control shares" means shares of stock that, if aggregated with all other shares of stock previously acquired by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of the voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. A "control share acquisition" means the acquisition of control shares, subject to certain exceptions.

        If voting rights of control shares acquired in a control share acquisition are not approved at a stockholder's meeting, then subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a stockholder's meeting and the acquirer becomes entitled to vote a majority of the shares of stock entitled to vote, all other stockholders may exercise appraisal rights. Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any acquisitions of shares by certain affiliated individuals and entities, any directors, officers or employees of the Company and any person approved by the board of directors prior to the acquisition by such person of control shares. Any control shares acquired in a control share acquisition which are not exempt under the foregoing provisions of our bylaws will be subject to the Maryland Control Share Acquisition Act.

        Stockholder Rights Plan:    We have adopted a stockholder rights plan that may discourage any potential acquirer from acquiring more than 15 percent of our outstanding common stock since, upon this type of acquisition without approval of our Board of Directors, all other common stockholders will have the right to purchase a specified amount of common stock at a substantial discount from market price.

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 under the Code, 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 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 qualification as a real estate investment trust under the Code. 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 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

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enable us to continue to qualify as a real estate investment trust under the Code, 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 of February 5, 2009, as general partner, we own approximately 82.1 percent of Mack-Cali Realty, L.P.'s outstanding common 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 some on a quarterly basis) established under highly technical and complex tax provisions of the 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:

        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 under the Code, 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. In addition, our taxable REIT subsidiaries will be subject to federal, state and local income tax for income received in connection with certain non-customary services performed for tenants and/or third parties.

        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.

Changes in market conditions could adversely affect the market price of our common stock.

        As with other publicly traded equity securities, the value of our common stock depends on various market conditions, which may change from time to time. The market price of our common stock could

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change in ways that may or may not be related to our business, our industry or our operating performance and financial condition. Among the market conditions that may affect the value of our common stock are the following:

        The market value of our common stock is based primarily upon the market's perception of our growth potential and our current and potential future earnings and cash dividends. Consequently, our common stock may trade at prices that are higher or lower than our net asset value per share of common stock.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        None.

ITEM 2.    PROPERTIES

PROPERTY LIST

        As of December 31, 2008, the Company's Consolidated Properties consisted of 251 in-service office, office/flex and industrial/warehouse properties, as well as two stand-alone retail properties and two 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 29.2 million square feet, with the individual properties ranging from 6,216 to 1,246,283 square feet. The Consolidated Properties, managed by on-site employees, generally have attractively landscaped sites and atriums 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.

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Office Properties

Property Location
  Year
Built
  Net
Rentable Area
(Sq. Ft.)
  Percentage
Leased as of
12/31/08
(%) (a)
  2008
Base Rent
($000's)
(b) (c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($) (c) (d)
  2008
Average
Effective Rent
Per Sq. Ft.
($) (c) (e)
 

NEW JERSEY

                                           
                                             

Bergen County

                                           

Fair Lawn

                                           

17-17 Route 208 North

    1987     143,000     63.2     2,150     0.36     23.79     21.29  

Fort Lee

                                           

One Bridge Plaza

    1981     200,000     82.3     3,753     0.63     22.80     19.87  

2115 Linwood Avenue

    1981     68,000     56.5     859     0.14     22.36     20.61  

Little Ferry

                                           

200 Riser Road

    1974     286,628     100.0     2,076     0.35     7.24     6.69  

Montvale

                                           

95 Chestnut Ridge Road

    1975     47,700     100.0     801     0.13     16.79     15.39  

135 Chestnut Ridge Road

    1981     66,150     99.7     1,539     0.26     23.34     19.59  

Paramus

                                           

15 East Midland Avenue

    1988     259,823     80.5     4,859     0.82     23.23     22.48  

140 East Ridgewood Avenue

    1981     239,680     93.0     4,686     0.79     21.02     18.87  

461 From Road

    1988     253,554     98.6     6,074     1.02     24.30     24.21  

650 From Road

    1978     348,510     88.8     7,301     1.22     23.59     20.65  

61 South Paramus Avenue

    1985     269,191     97.5     7,533     1.27     28.70     25.33  

Ridgefield Park

                                           

105 Challenger Road

    1992     150,050     100.0     4,271     0.72     28.46     26.14  

Rochelle Park

                                           

120 Passaic Street

    1972     52,000     99.6     1,402     0.24     27.07     25.51  

365 West Passaic Street

    1976     212,578     98.0     4,558     0.77     21.88     19.84  

395 West Passaic Street

    1979     100,589     98.5     2,343     0.39     23.65     19.86  

Upper Saddle River

                                           

1 Lake Street

    1973/94     474,801     100.0     7,465     1.26     15.72     15.72  

10 Mountainview Road

    1986     192,000     72.2     3,759     0.63     27.12     24.70  

Woodcliff Lake

                                           

400 Chestnut Ridge Road

    1982     89,200     100.0     1,950     0.33     21.86     16.32  

470 Chestnut Ridge Road

    1987     52,500     100.0     1,328     0.22     25.30     22.82  

530 Chestnut Ridge Road

    1986     57,204     100.0     1,246     0.21     21.78     20.21  

50 Tice Boulevard

    1984     235,000     99.1     6,281     1.06     26.97     24.78  

300 Tice Boulevard

    1991     230,000     98.2     5,741     0.97     25.42     22.82  

Burlington County

                                           

Moorestown

                                           

224 Strawbridge Drive

    1984     74,000     94.2     1,430     0.24     20.51     18.12  

228 Strawbridge Drive

    1984     74,000     100.0     1,226     0.21     16.57     15.39  

232 Strawbridge Drive

    1986     74,258     98.8     1,461     0.25     19.91     16.22  

Essex County

                                           

Millburn

                                           

150 J.F. Kennedy Parkway

    1980     247,476     100.0     7,495     1.26     30.29     26.21  

Roseland

                                           

101 Eisenhower Parkway

    1980     237,000     87.4     5,382     0.91     25.98     23.44  

103 Eisenhower Parkway

    1985     151,545     78.9     2,721     0.46     22.76     19.51  

105 Eisenhower Parkway

    2001     220,000     91.9     4,891     0.82     24.19     18.09  

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Office Properties
(Continued)

Property Location
  Year
Built
  Net
Rentable Area
(Sq. Ft.)
  Percentage
Leased as of
12/31/08
(%) (a)
  2008
Base Rent
($000's)
(b) (c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($) (c) (d)
  2008
Average
Effective Rent
Per Sq. Ft.
($) (c) (e)
 

Hudson County

                                           

Jersey City

                                           

Harborside Financial Center Plaza 1

    1983     400,000     100.0     11,186     1.88     27.97     24.39  

Harborside Financial Center Plaza 2

    1990     761,200     99.6     18,905     3.18     24.94     23.14  

Harborside Financial Center Plaza 3

    1990     725,600     99.3     18,132     3.05     25.17     23.36  

Harborside Financial Center Plaza 4-A

    2000     207,670     99.4     6,231     1.05     30.19     26.01  

Harborside Financial Center Plaza 5

    2002     977,225     100.0     35,459     5.96     36.29     30.30  

101 Hudson Street

    1992     1,246,283     100.0     30,148     5.07     24.19     21.19  

Mercer County

                                           

Hamilton Township

                                           

3 AAA Drive

    1981     35,270     62.6     547     0.09     24.77     20.74  

2 South Gold Drive

    1974     33,962     64.5     490     0.08     22.37     20.41  

600 Horizon Drive

    2002     95,000     100.0     1,373     0.23     14.45     14.45  

700 Horizon Drive

    2007     120,000     100.0     2,459     0.41     20.49     19.38  

Princeton

                                           

103 Carnegie Center

    1984     96,000     68.5     1,812     0.31     27.55     22.54  

3 Independence Way

    1983     111,300     91.8     1,343     0.23     13.14     10.39  

100 Overlook Center

    1988     149,600     100.0     5,052     0.85     33.77     28.76  

5 Vaughn Drive

    1987     98,500     100.0     2,555     0.43     25.94     22.93  

Middlesex County

                                           

East Brunswick

                                           

377 Summerhill Road

    1977     40,000     100.0     353     0.06     8.83     8.65  

Edison

                                           

343 Thornall Street (c)

    1991     195,709     100.0     4,178     0.70     21.35     15.75  

Piscataway

                                           

30 Knightsbridge Road, Bldg 3

    1977     160,000     100.0     2,465     0.42     15.41     15.41  

30 Knightsbridge Road, Bldg 4

    1977     115,000     100.0     1,771     0.30     15.40     15.40  

30 Knightsbridge Road, Bldg 5

    1977     332,607     80.8     3,899     0.66     14.51     10.88  

30 Knightsbridge Road, Bldg 6

    1977     72,743     63.8     206     0.03     4.44     2.13  

Plainsboro

                                           

500 College Road East

    1984     158,235     88.1     4,172     0.70     29.93     27.16  

Woodbridge

                                           

581 Main Street

    1991     200,000     100.0     5,286     0.89     26.43     22.93  

Monmouth County

                                           

Freehold

                                           

2 Paragon Way

    1989     44,524     44.4     380     0.06     19.22     13.51  

3 Paragon Way

    1991     66,898     75.8     1,251     0.21     24.67     19.19  

4 Paragon Way

    2002     63,989     100.0     1,221     0.21     19.08     18.11  

100 Willbowbrook Road

    1988     60,557     74.8     923     0.16     20.38     17.79  

Holmdel

                                           

23 Main Street

    1977     350,000     100.0     4,012     0.68     11.46     8.64  

22


Table of Contents

Office Properties
(Continued)

Property Location
  Year
Built
  Net
Rentable Area
(Sq. Ft.)
  Percentage
Leased as of
12/31/08
(%) (a)
  2008
Base Rent
($000's)
(b) (c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($) (c) (d)
  2008
Average
Effective Rent
Per Sq. Ft.
($) (c) (e)
 

Middletown

                                           

One River Center Bldg 1

    1983     122,594     100.0     3,116     0.52     25.42     20.82  

One River Center Bldg 2

    1983     120,360     100.0     2,833     0.48     23.54     21.70  

One River Center Bldg 3

    1984     214,518     93.6     4,628     0.78     23.05     22.56  

Neptune

                                           

3600 Route 66

    1989     180,000     100.0     2,400     0.40     13.33     12.06  

Wall Township

                                           

1305 Campus Parkway

    1988     23,350     83.7     398     0.07     20.36     14.33  

1350 Campus Parkway

    1990     79,747     91.9     1,523     0.26     20.78     18.02  

Morris County

                                           

Florham Park

                                           

325 Columbia Turnpike

    1987     168,144     89.7     3,665     0.62     24.30     20.80  

Morris Plains

                                           

250 Johnson Road

    1977     75,000     100.0     1,579     0.27     21.05     18.47  

201 Littleton Road

    1979     88,369     88.6     1,781     0.30     22.75     20.46  

Morris Township

                                           

412 Mt. Kemble Avenue

    1986     475,100     47.1     3,649     0.61     16.31     12.23  

Parsippany

                                           

4 Campus Drive

    1983     147,475     95.7     3,248     0.55     23.01     19.95  

6 Campus Drive

    1983     148,291     86.2     2,659     0.45     20.80     16.86  

7 Campus Drive

    1982     154,395     54.6     2,180     0.37     25.86     22.59  

8 Campus Drive

    1987     215,265     100.0     6,233     1.04     28.96     25.88  

9 Campus Drive

    1983     156,495     92.7     3,223     0.54     22.22     18.46  

4 Century Drive

    1981     100,036     77.4     1,694     0.29     21.88     19.54  

5 Century Drive

    1981     79,739     83.4     1,378     0.23     20.72     18.84  

6 Century Drive

    1981     100,036     94.7     1,377     0.23     14.54     9.30  

2 Dryden Way

    1990     6,216     100.0     99     0.02     15.93     14.64  

4 Gatehall Drive

    1988     248,480     98.6     6,092     1.03     24.87     21.83  

2 Hilton Court

    1991     181,592     100.0     5,513     0.93     30.36     27.30  

1633 Littleton Road

    1978     57,722     100.0     1,131     0.19     19.59     19.59  

600 Parsippany Road

    1978     96,000     92.4     1,630     0.27     18.38     14.24  

1 Sylvan Way

    1989     150,557     100.0     3,530     0.59     23.45     21.47  

5 Sylvan Way

    1989     151,383     96.5     4,130     0.70     28.27     24.97  

7 Sylvan Way

    1987     145,983     100.0     3,219     0.54     22.05     19.28  

35 Waterview Boulevard

    1990     172,498     82.5     3,979     0.67     27.96     24.57  

5 Wood Hollow Road

    1979     317,040     73.1     5,391     0.91     23.26     19.18  

Passaic County

                                           

Clifton

                                           

777 Passaic Avenue

    1983     75,000     87.4     1,536     0.26     23.43     21.27  

Totowa

                                           

999 Riverview Drive

    1988     56,066     85.1     1,021     0.17     21.40     19.22  

Somerset County

                                           

Basking Ridge

                                           

222 Mt. Airy Road

    1986     49,000     100.0     760     0.13     15.51     11.63  

233 Mt. Airy Road

    1987     66,000     100.0     1,315     0.22     19.92     16.71  

23


Table of Contents

Office Properties
(Continued)

Property Location
  Year
Built
  Net
Rentable
Area
(Sq. Ft.)
  Percentage
Leased
as of
12/31/08
(%)(a)
  2008
Base
Rent
($000's)
(b)(c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($)(c)(d)
  2008
Average
Effective
Rent
Per Sq. Ft.
($)(c)(e)
 

Bernards

                                           

106 Allen Road

    2000     132,010     98.9     3,219     0.54     24.66     18.76  

Bridgewater

                                           

721 Route 202/206

    1989     192,741     81.2     3,685     0.62     23.55     18.11  

Union County

                                           

Clark

                                           

100 Walnut Avenue

    1985     182,555     97.3     4,557     0.77     25.66     22.24  

Cranford

                                           

6 Commerce Drive

    1973     56,000     82.4     998     0.17     21.63     18.96  

11 Commerce Drive

    1981     90,000     93.8     1,834     0.31     21.72     19.27  

12 Commerce Drive

    1967     72,260     95.0     967     0.16     14.09     12.13  

14 Commerce Drive

    1971     67,189     75.9     1,009     0.17     19.79     19.16  

20 Commerce Drive

    1990     176,600     100.0     4,458     0.75     25.24     21.82  

25 Commerce Drive

    1971     67,749     88.7     1,288     0.22     21.43     18.92  

65 Jackson Drive

    1984     82,778     97.5     1,888     0.32     23.39     20.30  

New Providence

                                           

890 Mountain Avenue

    1977     80,000     95.1     1,881     0.32     24.72     22.95  
                                 

Total New Jersey Office

         
17,646,642
   
92.5
   
385,084
   
64.83
   
23.58
   
20.68
 
                                 

NEW YORK

                                           

New York County

                                           

New York

                                           

125 Broad Street

    1970     524,476     100.0     20,611     3.46     39.30     35.65  

Rockland County

                                           

Suffern

                                           

400 Rella Boulevard

    1988     180,000     89.2     3,736     0.63     23.27     21.08  

Westchester County

                                           

Elmsford

                                           

100 Clearbrook Road(c)

    1975     60,000     91.9     1,105     0.19     20.04     18.17  

101 Executive Boulevard

    1971     50,000     43.0     569     0.10     26.47     24.14  

555 Taxter Road

    1986     170,554     80.1     3,731     0.63     27.31     15.93  

565 Taxter Road

    1988     170,554     91.4     4,042     0.68     25.93     21.50  

570 Taxter Road

    1972     75,000     72.7     1,404     0.24     25.75     23.75  

Hawthorne

                                           

1 Skyline Drive

    1980     20,400     99.0     381     0.06     18.87     17.73  

2 Skyline Drive

    1987     30,000     58.6     339     0.06     19.28     15.93  

7 Skyline Drive

    1987     109,000     100.0     2,633     0.44     24.16     22.00  

17 Skyline Drive

    1989     85,000     100.0     1,630     0.27     19.18     16.34  

19 Skyline Drive

    1982     248,400     100.0     4,036     0.68     16.25     16.12  

Tarrytown

                                           

200 White Plains Road

    1982     89,000     97.5     2,067     0.35     23.82     21.57  

220 White Plains Road

    1984     89,000     93.5     2,049     0.35     24.62     22.18  

24


Table of Contents

Office Properties
(Continued)

Property Location
  Year
Built
  Net
Rentable
Area
(Sq. Ft.)
  Percentage
Leased
as of
12/31/08
(%)(a)
  2008
Base
Rent
($000's)
(b)(c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($)(c)(d)
  2008
Average
Effective
Rent
Per Sq. Ft.
($)(c)(e)
 

White Plains

                                           

1 Barker Avenue

    1975     68,000     99.0     1,782     0.30     26.47     24.90  

3 Barker Avenue

    1983     65,300     100.0     1,742     0.29     26.68     24.24  

50 Main Street

    1985     309,000     99.6     9,881     1.66     32.11     29.12  

11 Martine Avenue

    1987     180,000     74.4     4,323     0.73     32.28     28.85  

1 Water Street

    1979     45,700     100.0     1,178     0.20     25.78     22.28  

Yonkers

                                           

1 Executive Boulevard

    1982     112,000     100.0     2,825     0.48     25.22     22.28  

3 Executive Boulevard

    1987     58,000     96.0     1,449     0.24     26.02     22.63  
                                 

Total New York Office

         
2,739,384
   
92.9
   
71,513
   
12.04
   
28.11
   
24.94
 
                                 

PENNSYLVANIA

                                           

Chester County

                                           

Berwyn

                                           

1000 Westlakes Drive

    1989     60,696     95.7     1,591     0.27     27.39     26.37  

1055 Westlakes Drive

    1990     118,487     94.7     3,083     0.52     27.48     22.98  

1205 Westlakes Drive

    1988     130,265     86.9     3,054     0.51     26.98     23.47  

1235 Westlakes Drive

    1986     134,902     100.0     2,988     0.49     22.15     18.11  

Delaware County

                                           

Lester

                                           

100 Stevens Drive

    1986     95,000     100.0     2,551     0.43     26.85     24.85  

200 Stevens Drive

    1987     208,000     100.0     5,604     0.94     26.94     25.27  

300 Stevens Drive

    1992     68,000     91.6     1,439     0.24     23.10     19.31  

Media

                                           

1400 Providence Road—Center I

    1986     100,000     94.2     2,112     0.36     22.42     19.98  

1400 Providence Road—Center II

    1990     160,000     95.0     2,758     0.46     18.14     15.49  

Montgomery County

                                           

Bala Cynwyd

                                           

150 Monument Road

    1981     125,783     95.7     3,071     0.52     25.51     22.51  

Blue Bell

                                           

4 Sentry Parkway

    1982     63,930     58.3     836     0.14     22.43     22.14  

5 Sentry Parkway East

    1984     91,600     39.3     701     0.12     19.47     18.17  

5 Sentry Parkway West

    1984     38,400     31.5     253     0.04     20.92     18.44  

16 Sentry Parkway

    1988     93,093     96.4     2,384     0.40     26.57     24.35  

18 Sentry Parkway

    1988     95,010     85.6     2,019     0.34     24.83     22.50  

King of Prussia

                                           

2200 Renaissance Boulevard

    1985     174,124     65.1     2,598     0.44     22.92     18.41  

Lower Providence

                                           

1000 Madison Avenue

    1990     100,700     66.4     1,322     0.22     19.77     14.63  

Plymouth Meeting

                                           

1150 Plymouth Meeting Mall

    1970     167,748     77.6     3,010     0.51     23.12     18.16  
                                 

Total Pennsylvania Office

         
2,025,738
   
84.8
   
41,374
   
6.95
   
24.10
   
21.04
 
                                 

25


Table of Contents

Office Properties
(Continued)

Property Location
  Year
Built
  Net
Rentable
Area
(Sq. Ft.)
  Percentage
Leased
as of
12/31/08
(%)(a)
  2008
Base
Rent
($000's)
(b)(c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($)(c)(d)
  2008
Average
Effective
Rent
Per Sq. Ft.
($)(c)(e)
 

CONNECTICUT

                                           

Fairfield County

                                           

Norwalk

                                           

40 Richards Avenue

    1985     145,487     76.4     2,591     0.44     23.31     20.69  

Stamford

                                           

1266 East Main Street

    1984     179,260     79.2     3,788     0.63     26.68     23.39  
                                 

Total Connecticut Office

         
324,747
   
77.9
   
6,379
   
1.07
   
25.20
   
22.21
 
                                 

DISTRICT OF COLUMBIA

                                           

Washington

                                           

1201 Connecticut Avenue, NW

    1940     169,549     100.0     6,806     1.14     40.14     36.44  

1400 L Street, NW

    1987     159,000     100.0     5,853     0.99     36.81     31.60  
                                 

Total District of Columbia Office

         
328,549
   
100.0
   
12,659
   
2.13
   
38.53
   
34.10
 
                                 

MARYLAND

                                           

Prince George's County

                                           

Greenbelt

                                           

9200 Edmonston Road

    1973     38,690     100.0     910     0.15     23.52     21.17  

6301 Ivy Lane

    1979     112,003     75.8     2,022     0.34     23.82     20.51  

6303 Ivy Lane

    1980     112,047     57.2     1,723     0.29     26.88     23.67  

6305 Ivy Lane

    1982     112,022     70.1     1,708     0.29     21.75     17.32  

6404 Ivy Lane

    1987     165,234     66.2     2,516     0.42     23.00     18.71  

6406 Ivy Lane

    1991     163,857     0.0     564     0.09     0.00     0.00  

6411 Ivy Lane

    1984     138,405     88.4     2,665     0.44     21.78     18.73  

Lanham

                                           

4200 Parliament Place

    1989     122,000     90.8     2,687     0.45     24.26     22.46  
                                 

Total Maryland Office

         
964,258
   
63.1
   
14,795
   
2.47
   
24.31
   
21.07
 
                                 

TOTAL OFFICE PROPERTIES

         
24,029,318
   
90.7
   
531,804
   
89.49
   
24.41
   
21.44
 
                                 

26


Table of Contents

Office/Flex Properties

Property Location
  Year
Built
  Net
Rentable
Area
(Sq. Ft.)
  Percentage
Leased
as of
12/31/08
(%)(a)
  2008
Base
Rent
($000's)
(b)(c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($)(c)(d)
  2008
Average
Effective
Rent
Per Sq. Ft.
($)(c)(e)
 

NEW JERSEY

                                           

Burlington County

                                           

Burlington

                                           

3 Terri Lane

    1991     64,500     100.0     556     0.09     8.62     5.30  

5 Terri Lane

    1992     74,555     74.1     643     0.11     11.64     9.63  

Moorestown

                                           

2 Commerce Drive

    1986     49,000     74.1     123     0.02     3.39     1.87  

101 Commerce Drive

    1988     64,700     100.0     275     0.05     4.25     3.85  

102 Commerce Drive

    1987     38,400     87.5     224     0.04     6.67     5.24  

201 Commerce Drive

    1986     38,400     100.0     219     0.04     5.70     4.14  

202 Commerce Drive

    1988     51,200     100.0     237     0.04     4.63     2.95  

1 Executive Drive

    1989     20,570     81.1     157     0.03     9.41     6.41  

2 Executive Drive

    1988     60,800     100.0     478     0.08     7.86     5.67  

101 Executive Drive

    1990     29,355     99.7     284     0.05     9.70     7.62  

102 Executive Drive

    1990     64,000     100.0     474     0.08     7.41     6.86  

225 Executive Drive

    1990     50,600     67.6     239     0.04     6.99     5.17  

97 Foster Road

    1982     43,200     75.5     160     0.03     4.91     4.11  

1507 Lancer Drive

    1995     32,700     100.0     134     0.02     4.10     3.79  

1245 North Church Street

    1998     52,810     71.6     243     0.04     6.43     5.69  

1247 North Church Street

    1998     52,790     58.1     221     0.04     7.21     6.13  

1256 North Church Street

    1984     63,495     100.0     457     0.08     7.20     6.21  

840 North Lenola Road

    1995     38,300     100.0     361     0.06     9.43     7.81  

844 North Lenola Road

    1995     28,670     100.0     180     0.03     6.28     4.95  

915 North Lenola Road

    1998     52,488     100.0     273     0.05     5.20     4.36  

2 Twosome Drive

    2000     48,600     100.0     450     0.08     9.26     8.81  

30 Twosome Drive

    1997     39,675     77.8     283     0.05     9.17     7.22  

31 Twosome Drive

    1998     84,200     100.0     470     0.08     5.58     5.48  

40 Twosome Drive

    1996     40,265     100.0     290     0.05     7.20     5.84  

41 Twosome Drive

    1998     43,050     88.9     275     0.05     7.19     6.64  

50 Twosome Drive

    1997     34,075     100.0     257     0.04     7.54     7.13  

Gloucester County

                                           

West Deptford

                                           

1451 Metropolitan Drive

    1996     21,600     100.0     148     0.02     6.85     6.85  

Mercer County

                                           

Hamilton Township

                                           

100 Horizon Center Boulevard

    1989     13,275     100.0     197     0.03     14.84     12.88  

200 Horizon Drive

    1991     45,770     85.3     604     0.10     15.47     14.09  

300 Horizon Drive

    1989     69,780     73.9     1,092     0.18     21.18     16.95  

500 Horizon Drive

    1990     41,205     94.3     616     0.10     15.85     15.13  

27


Table of Contents

Office/Flex Properties
(Continued)

Property Location
  Year
Built
  Net
Rentable
Area
(Sq. Ft.)
  Percentage
Leased
as of
12/31/08
(%)(a)
  2008
Base
Rent
($000's)
(b)(c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($)(c)(d)
  2008
Average
Effective
Rent
Per Sq. Ft.
($)(c)(e)
 

Monmouth County

                                           

Wall Township

                                           

1325 Campus Parkway

    1988     35,000     100.0     655     0.11     18.71     14.06  

1340 Campus Parkway

    1992     72,502     100.0     948     0.16     13.08     10.10  

1345 Campus Parkway

    1995     76,300     95.9     926     0.16     12.66     10.10  

1433 Highway 34

    1985     69,020     78.4     543     0.09     10.03     7.82  

1320 Wyckoff Avenue

    1986     20,336     100.0     178     0.03     8.75     8.26  

1324 Wyckoff Avenue

    1987     21,168     100.0     231     0.04     10.91     9.12  

Passaic County

                                           

Totowa

                                           

1 Center Court

    1999     38,961     100.0     537     0.09     13.78     12.45  

2 Center Court

    1998     30,600     99.3     396     0.07     13.03     11.49  

11 Commerce Way

    1989     47,025     100.0     577     0.10     12.27     11.53  

20 Commerce Way

    1992     42,540     100.0     455     0.08     10.70     9.47  

29 Commerce Way

    1990     48,930     100.0     711     0.12     14.53     11.51  

40 Commerce Way

    1987     50,576     72.1     478     0.08     13.11     11.87  

45 Commerce Way

    1992     51,207     96.4     559     0.09     11.32     8.83  

60 Commerce Way

    1988     50,333     100.0     488     0.08     9.70     8.23  

80 Commerce Way

    1996     22,500     100.0     269     0.05     11.96     10.89  

100 Commerce Way

    1996     24,600     66.9     294     0.05     17.86     16.28  

120 Commerce Way

    1994     9,024     100.0     126     0.02     13.96     12.74  

140 Commerce Way

    1994     26,881     99.5     374     0.06     13.98     12.82  
                                 

Total New Jersey Office/Flex

         
2,189,531
   
91.4
   
19,365
   
3.28
   
9.68
   
8.10
 
                                 

NEW YORK

                                           

Westchester County

                                           

Elmsford

                                           

11 Clearbrook Road

    1974     31,800     100.0     468     0.08     14.72     12.99  

75 Clearbrook Road

    1990     32,720     100.0     648     0.11     19.80     18.70  

125 Clearbrook Road

    2002     33,000     100.0     712     0.12     21.58     17.94  

150 Clearbrook Road

    1975     74,900     100.0     1,043     0.18     13.93     12.64  

175 Clearbrook Road

    1973     98,900     100.0     1,596     0.27     16.14     14.96  

200 Clearbrook Road

    1974     94,000     98.8     1,210     0.20     13.03     11.93  

250 Clearbrook Road

    1973     155,000     97.3     1,491     0.25     9.89     8.96  

50 Executive Boulevard

    1969     45,200     91.8     489     0.08     11.78     10.48  

77 Executive Boulevard

    1977     13,000     100.0     227     0.04     17.46     16.54  

85 Executive Boulevard

    1968     31,000     99.4     561     0.09     18.21     15.58  

300 Executive Boulevard

    1970     60,000     100.0     633     0.11     10.55     9.52  

350 Executive Boulevard

    1970     15,400     98.8     270     0.05     17.75     16.76  

399 Executive Boulevard

    1962     80,000     100.0     78     0.01     0.98     0.54  

400 Executive Boulevard

    1970     42,200     100.0     688     0.12     16.30     14.45  

500 Executive Boulevard

    1970     41,600     94.3     614     0.10     15.65     13.77  

28


Table of Contents

Office/Flex Properties
(Continued)

Property Location
  Year
Built
  Net
Rentable
Area
(Sq. Ft.)
  Percentage
Leased
as of
12/31/08
(%)(a)
  2008
Base
Rent
($000's)
(b)(c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($)(c)(d)
  2008
Average
Effective
Rent
Per Sq. Ft.
($)(c)(e)
 

525 Executive Boulevard

    1972     61,700     100.0     817     0.14     13.24     12.14  

1 Westchester Plaza

    1967     25,000     100.0     339     0.06     13.56     12.88  

2 Westchester Plaza

    1968     25,000     100.0     525     0.09     21.00     19.56  

3 Westchester Plaza

    1969     93,500     50.4     590     0.10     12.52     10.72  

4 Westchester Plaza

    1969     44,700     92.6     653     0.11     15.78     13.72  

5 Westchester Plaza

    1969     20,000     100.0     298     0.05     14.90     13.70  

6 Westchester Plaza

    1968     20,000     100.0     280     0.05     14.00     12.65  

7 Westchester Plaza

    1972     46,200     100.0     748     0.13     16.19     16.00  

8 Westchester Plaza

    1971     67,200     100.0     985     0.17     14.66     12.96  

Hawthorne

                                           

200 Saw Mill River Road

    1965     51,100     92.0     649     0.11     13.80     12.38  

4 Skyline Drive

    1987     80,600     92.2     1,349     0.23     18.15     15.41  

5 Skyline Drive

    1980     124,022     99.3     1,770     0.30     14.37     12.69  

6 Skyline Drive

    1980     44,155     100.0     376     0.06     8.52     8.47  

8 Skyline Drive

    1985     50,000     98.7     877     0.15     17.77     12.64  

10 Skyline Drive

    1985     20,000     84.4     326     0.05     19.31     14.69  

11 Skyline Drive

    1989     45,000     100.0     804     0.14     17.87     17.04  

12 Skyline Drive

    1999     46,850     100.0     796     0.13     16.99     13.19  

15 Skyline Drive

    1989     55,000     100.0     1,075     0.18     19.55     16.49  

Yonkers

                                           

100 Corporate Boulevard

    1987     78,000     98.3     1,485     0.25     19.37     18.18  

200 Corporate Boulevard South

    1990     84,000     99.8     1,343     0.23     16.02     15.44  

4 Executive Plaza

    1986     80,000     100.0     1,385     0.23     17.31     14.28  

6 Executive Plaza

    1987     80,000     100.0     1,374     0.23     17.18     15.75  

1 Odell Plaza

    1980     106,000     99.9     1,435     0.24     13.55     12.76  

3 Odell Plaza

    1984     71,065     100.0     1,597     0.27     22.47     20.84  

5 Odell Plaza

    1983     38,400     89.2     456     0.08     13.31     12.09  

7 Odell Plaza

    1984     42,600     93.3     792     0.13     19.93     18.62  
                                 

Total New York Office/Flex

         
2,348,812
   
96.4
   
33,852
   
5.72
   
14.95
   
13.40
 
                                 

CONNECTICUT

                                           

Fairfield County

                                           

Stamford

                                           

419 West Avenue

    1986     88,000     100.0     1,370     0.23     15.57     13.92  

500 West Avenue

    1988     25,000     100.0     410     0.07     16.40     14.40  

550 West Avenue

    1990     54,000     100.0     855     0.14     15.83     15.72  

600 West Avenue

    1999     66,000     100.0     804     0.14     12.18     11.62  

650 West Avenue

    1998     40,000     100.0     686     0.12     17.15     16.10  
                                 

Total Connecticut Office/Flex

         
273,000
   
100.0
   
4,125
   
0.70
   
15.11
   
14.08
 
                                 

TOTAL OFFICE/FLEX PROPERTIES

         
4,811,343
   
94.3
   
57,342
   
9.70
   
12.64
   
11.10
 
                                 

29


Table of Contents

Industrial/Warehouse, Retail and Land Lease Properties

Property Location
  Year
Built
  Net
Rentable
Area
(Sq. Ft.)
  Percentage
Leased
as of
12/31/08
(%)(a)
  2008
Base
Rent
($000's)
(b)(c)
  Percentage
of Total 2008
Base Rent (%)
  2008
Average
Base Rent
Per Sq. Ft.
($)(c)(d)
  2008
Average
Effective
Rent
Per Sq. Ft.
($)(c)(e)
 

NEW YORK

                                           

Westchester County

                                           

Elmsford

                                           

1 Warehouse Lane

    1957     6,600     100.0     86     0.01     13.03     12.73  

2 Warehouse Lane

    1957     10,900     100.0     164     0.03     15.05     14.59  

3 Warehouse Lane

    1957     77,200     100.0     337     0.06     4.37     4.03  

4 Warehouse Lane

    1957     195,500     96.7     2,010     0.34     10.63     9.67  

5 Warehouse Lane

    1957     75,100     81.4     924     0.16     15.11     13.41  

6 Warehouse Lane

    1982     22,100     100.0     512     0.09     23.17     21.99  
                                 

Total Industrial/Warehouse Properties

          387,400     94.7     4,033     0.69     10.99     10.05  
                                 

Westchester County

                                           

Tarrytown

                                           

230 White Plains Road

    1984     9,300     100.0     195     0.03     20.97     19.68  

Yonkers

                                           

2 Executive Boulevard

    1986     8,000     100.0     225     0.04     28.13     28.13  
                                 

Total Retail Properties

          17,300     100.0     420     0.07     24.28     23.58  
                                 

Westchester County

                                           

Elmsford

                                           

700 Executive Boulevard

                114     0.02          

Yonkers

                                           

1 Enterprise Boulevard

                185     0.03          
                                 

Total Land Leases

                  299     0.05          
                                 

TOTAL PROPERTIES

          29,245,361     91.3     593,898     100.00     22.24     19.54  
                                 

(a)
Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases expiring December 31, 2008 aggregating 67,473 square feet (representing 0.2 percent of the Company's total net rentable square footage) for which no new leases were signed.

(b)
Total base rent for 2008, 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)
Excludes space leased by the Company.

(d)
Base rent for 2008 divided by net rentable square feet leased at December 31, 2008.

(e)
Total base rent for 2008 minus total 2008 amortization of tenant improvements, leasing commissions and other concessions and costs, determined in accordance with GAAP, divided by net rentable square feet leased at December 31, 2008.

30


Table of Contents

PERCENTAGE LEASED

        The following table sets forth the year-end percentages of square feet leased in the Company's stabilized operating Consolidated Properties for the last five years:

December 31,
  Percentage of Square
Feet Leased (%)(a)
 

2008

    91.3  

2007

    92.7  

2006

    92.0  

2005

    91.0  

2004

    91.2  

31


Table of Contents

SIGNIFICANT TENANTS

        The following table sets forth a schedule of the Company's 50 largest tenants for the Consolidated Properties as of December 31, 2008 based upon annualized base rental revenue:

 
  Number of Properties   Annualized Base Rental Revenue($)(a)   Percentage of Company Annualized Base Rental Revenue(%)   Square Feet Leased   Percentage
Total Company
Leased Sq. Ft.(%)
  Year of Lease Expiration  

National Union Fire Insurance

    4     14,331,708     2.4     532,278     2.0     2019 (b)

Citigroup Global Markets, Inc. 

    6     14,170,242     2.4     462,077     1.8     2018 (c)

DB Services New Jersey, Inc. 

    2     10,905,426     1.8     402,068     1.5     2017  

New Cingular Wireless PCS, LLC

    3     8,995,940     1.5     405,530     1.5     2014 (d)

United States Of America-GSA

    11     8,926,642     1.5     283,685     1.1     2017 (e)

Keystone Mercy Health Plan

    2     8,761,006     1.5     303,149     1.2     2020  

Prentice-Hall, Inc. 

    1     7,694,097     1.3     474,801     1.8     2014  

Forest Research Institute, Inc. 

    2     7,463,777     1.3     202,857     0.8     2017 (f)

ICAP Securities USA, LLC

    1     6,236,408     1.0     159,834     0.6     2017  

Toys 'R' Us—NJ, Inc. 

    1     6,152,682     1.0     242,518     0.9     2012  

Lehman Brothers Holdings, Inc. 

    1     5,835,986     1.0     270,063     1.0     2018 (g)

Daiichi Sankyo, Inc. 

    2     5,783,186     1.0     180,807     0.7     2022 (h)

TD Ameritrade Online Holdings

    1     5,766,149     1.0     184,222     0.7     2015  

Morgan Stanley & Co., Inc. 

    4     5,637,926     0.9     370,113     1.4     2016 (i)

Allstate Insurance Company

    10     5,418,363     0.9     226,059     0.9     2017 (j)

KPMG, LLP

    3     5,232,195     0.9     187,994     0.7     2014 (k)

Credit Suisse (USA), Inc. 

    1     5,212,307     0.9     153,464     0.6     2012 (l)

Merrill Lynch Pierce Fenner

    2     5,108,037     0.9     298,640     1.1     2017 (m)

IBM Corporation

    3     5,007,630     0.8     310,263     1.2     2012 (n)

National Financial Services

    1     4,798,621     0.8     112,964     0.4     2012  

Montefiore Medical Center

    5     4,385,180     0.7     211,414     0.8     2019 (o)

Samsung Electronics America

    1     4,184,278     0.7     150,050     0.6     2010  

Vonage America, Inc. 

    1     3,934,000     0.7     350,000     1.3     2017  

Bank Of Tokyo-Mitsubishi, Ltd. 

    1     3,872,785     0.7     137,076     0.5     2019  

AT&T Corp. 

    1     3,805,000     0.6     275,000     1.0     2014  

Wyndham Worldwide Corporation

    1     3,773,775     0.6     150,951     0.6     2009  

Arch Insurance Company

    1     3,685,118     0.6     106,815     0.4     2024  

SSB Realty, LLC

    1     3,492,830     0.6     114,519     0.4     2009  

American Institute of Certified Public Accountants

    1     3,455,040     0.6     142,953     0.5     2012  

Wyndham Worldwide Operations

    1     3,211,626     0.5     145,983     0.6     2011  

E*Trade Financial Corporation

    1     3,124,160     0.5     106,573     0.4     2022  

Dow Jones & Company, Inc. 

    1     3,057,773     0.5     92,312     0.4     2012  

SunAmerica Asset Management

    1     2,958,893     0.5     69,621     0.3     2018  

United States Life Insurance Co. 

    1     2,880,000     0.5     180,000     0.7     2013  

Shaw Facilities, Inc. 

    3     2,828,059     0.5     138,095     0.5     2015 (p)

Oppenheimer & Co., Inc. 

    1     2,808,712     0.5     104,008     0.4     2013  

Tullett Prebon Holdings Corp. 

    1     2,787,758     0.5     113,041     0.4     2023 (q)

High Point Safety & Insurance

    2     2,760,561     0.5     116,889     0.4     2020  

Moody's Advisors, Inc. 

    1     2,671,149     0.4     91,344     0.3     2011 (r)

AAA Mid-Atlantic, Inc. 

    2     2,523,550     0.4     129,784     0.5     2022 (s)

Bunge Management Services, Inc. 

    2     2,499,661     0.4     70,283     0.3     2013 (t)

Regus Business Centre Corp. 

    2     2,488,274     0.4     79,805     0.3     2011  

J.P. Morgan Chase Bank, N.A. 

    4     2,478,137     0.4     94,010     0.4     2014 (u)

New Jersey Turnpike Authority

    1     2,455,463     0.4     100,223     0.4     2017  

Tradeweb Markets, LLC

    1     2,453,235     0.4     64,976     0.2     2017  

Natixis North America, Inc. 

    1     2,408,679     0.4     83,629     0.3     2021  

Movado Group, Inc

    1     2,317,604     0.4     93,907     0.4     2013 (v)

Nextel of New York, Inc. 

    2     2,225,875     0.4     97,435     0.4     2014 (w)

UBS Financial Services, Inc. 

    3     2,207,612     0.4     82,092     0.3     2016 (x)

Barr Laboratories, Inc. 

    1     2,119,597     0.4     89,510     0.3     2015  
                               

Totals

          237,292,712     39.9     9,545,684     36.2        
                               

See footnotes on subsequent page.

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Significant Tenants Footnotes

(a)
Annualized base rental revenue is based on actual December, 2008 billings times 12. For leases whose rent commences after January 1, 2009, 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)
394,849 square feet expire in 2012; 20,311 square feet expire in 2013; 117,118 square feet expire 2019.

(c)
38,196 square feet expire in 2009; 330,900 square feet expire in 2010; 26,834 square feet expire in 2014; 26,262 square feet expire in 2016; 39,885 square feet expire in 2018.

(d)
333,145 square feet expire in 2013; 72,385 square feet expire in 2014.

(e)
7,008 square feet expire in 2009; 4,950 square feet expire in 2010; 9,901 square feet expire in 2011; 11,216 square feet expire in 2012; 58,392 square feet expire in 2013; 4,879 square feet expire in 2014; 180,729 square feet expire in 2015; 6,610 square feet expire in 2017.

(f)
22,785 square feet expire in 2009; 180,072 square feet expire in 2017.

(g)
198,559 square feet expire in 2010; 71,504 square feet expire in 2018.

(h)
8,907 square feet expire in 2013; 171,900 square feet expire in 2022.

(i)
7,000 square feet expire in 2009; 306,170 square feet expire in 2013; 29,654 square feet expire in 2015; 27,289 square feet expire in 2016.

(j)
12,823 square feet expire in 2009; 46,555 square feet expire in 2010; 83,693 square feet expire in 2011; 29,005 square feet expire in 2013; 53,983 square feet expire in 2017.

(k)
46,440 square feet expire in 2009; 57,204 square feet expire in 2010; 77,381 square feet expire in 2012; 6,969 square feet expire in 2014.

(l)
71,511 square feet expire in 2011; 81,953 square feet expire in 2012.

(m)
4,451 square feet expire in 2009; 294,189 square feet expire in 2017.

(n)
61,864 square feet expire in 2010; 248,399 square feet expire in 2012.

(o)
6,800 square feet expire in 2009; 5,850 square feet expire in 2014; 7,200 square feet expire in 2016; 30,872 square feet expire in 2017; 36,385 square feet expire in 2018; 124,307 square feet expire in 2019.

(p)
39,060 square feet expire in 2013; 99,035 square feet expire in 2015.

(q)
12,282 square feet expire in 2011; 100,759 square feet expire in 2023.

(r)
43,344 square feet expire in 2009; 36,193 square feet expire in 2010; 11,807 square feet expire in 2011.

(s)
9,784 square feet expire in 2017; 120,000 square feet expire in 2022.

(t)
19,500 square feet expire in 2009; 50,783 square feet expire in 2013.

(u)
73,480 square feet expire in 2009; 4,650 square feet expire in 2010; 15,880 square feet expire in 2014.

(v)
3,857 square feet expire in 2009; 90,050 square feet expire in 2013.

(w)
62,435 square feet expire in 2010; 35,000 square feet expire in 2014.

(x)
21,554 square feet expire in 2010; 23,373 square feet expire in 2013; 37,165 square feet expire in 2016.

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Table of Contents

SCHEDULE OF LEASE EXPIRATIONS: ALL CONSOLIDATED PROPERTIES

        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, 2009, assuming that none of the tenants exercise renewal or termination options:

Year Of
Expiration
  Number Of
Leases
Expiring(a)
  Net Rentable
Area Subject
To Expiring
Leases
(Sq. Ft.)
  Percentage Of
Total Leased
Square Feet
Represented
By Expiring
Leases (%)
  Annualized
Base Rental
Revenue Under
Expiring
Leases ($)(b)
  Average
Annual Base
Rent Per Net
Rentable
Square Foot
Represented
By Expiring
Leases ($)
  Percentage Of
Annual Base
Rent Under
Expiring
Leases (%)
 

2009(c)

    269     1,713,681     6.5     40,126,762     23.42     6.8  

2010

    390     2,947,966     11.2     68,767,516     23.33     11.6  

2011

    388     3,435,293     13.1     78,888,087     22.96     13.3  

2012

    286     2,810,697     10.7     65,735,117     23.39     11.1  

2013

    303     3,567,714     13.6     76,215,519     21.36     12.8  

2014

    195     2,201,238     8.4     47,378,305     21.52     8.0  

2015

    116     2,461,226     9.4     53,308,090     21.66     9.0  

2016

    87     1,090,155     4.1     22,521,871     20.66     3.8  

2017

    78     2,322,911     8.9     55,648,059     23.96     9.3  

2018

    56     1,012,568     3.9     24,895,835     24.59     4.2  

2019

    42     932,709     3.6     18,787,008     20.14     3.1  

2020 and thereafter

    41     1,742,871     6.6     41,887,946     24.03     7.0  
                           

Totals/Weighted
Average

    2,251     26,239,029 (d)   100.0     594,160,115     22.64     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)
Annualized base rental revenue is based on actual December 2008 billings times 12. For leases whose rent commences after January 1, 2009, 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 leases expiring December 31, 2008 aggregating 58,223 square feet and representing annualized rent of $1,429,664 for which no new leases were signed.

(d)
Reconciliation to Company's total net rentable square footage is as follows:
 
  Square Feet  

Square footage leased to commercial tenants

    26,239,029  
 

Square footage used for corporate offices, management offices, building use, retail tenants, food services, other ancillary service tenants and occupancy adjustments

    466,741  

Square footage unleased

    2,539,591  
       

Total net rentable square footage (does not include land leases)

    29,245,361  
       

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Table of Contents

SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES

        The following table sets forth a schedule of lease expirations for the office properties beginning January 1, 2009, assuming that none of the tenants exercise renewal or termination options:

Year Of
Expiration
  Number Of
Leases
Expiring(a)
  Net Rentable
Area Subject
To Expiring
Leases
(Sq. Ft.)
  Percentage Of
Total Leased
Square Feet
Represented
By Expiring
Leases (%)
  Annualized
Base Rental
Revenue Under
Expiring
Leases ($)(b)
  Average
Annual Base
Rent Per Net
Rentable
Square Foot
Represented
By Expiring
Leases ($)
  Percentage Of
Annual Base
Rent Under
Expiring
Leases (%)
 

2009

    213     1,341,499     6.3     34,811,961     25.95     6.6  

2010

    298     2,226,112     10.4     58,715,332     26.38     11.1  

2011

    318     2,876,619     13.5     72,110,314     25.07     13.6  

2012

    212     2,175,585     10.2     57,369,693     26.37     10.9  

2013

    231     2,753,360     12.9     65,280,127     23.71     12.3  

2014

    150     1,764,835     8.3     42,074,527     23.84     8.0  

2015

    101     2,243,331     10.5     51,009,849     22.74     9.6  

2016

    72     759,683     3.6     18,185,916     23.94     3.4  

2017

    64     2,158,505     10.1     52,944,903     24.53     10.0  

2018

    36     754,954     3.5     21,220,087     28.11     4.0  

2019

    27     588,962     2.8     14,040,808     23.84     2.7  

2020 and thereafter

    39     1,686,536     7.9     41,173,661     24.41     7.8  
                           

Totals/Weighted Average

    1,761     21,329,981 (c)   100.0     528,937,178     24.80     100.0  
                           

(a)
Includes office tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.

(b)
Annualized base rental revenue is based on actual December 2008 billings times 12. For leases whose rent commences after January 1, 2009, 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 leases expiring December 31, 2008 aggregating 41,559 square feet and representing annualized rent of $1,197,188 for which no new leases were signed..

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Table of Contents

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, 2009, assuming that none of the tenants exercise renewal or termination options:

Year Of
Expiration
  Number Of
Leases
Expiring(a)
  Net Rentable
Area Subject
To Expiring
Leases
(Sq. Ft.)
  Percentage Of
Total Leased
Square Feet
Represented By
Expiring
Leases(%)
  Annualized
Base Rental
Revenue Under
Expiring
Leases($)(b)
  Average
Annual Base
Rent Per Net
Rentable
Square Foot
Represented
By Expiring
Leases($)
  Percentage Of
Annual Base
Rent Under
Expiring
Leases(%)
 

2009

   
55
   
362,882
   
8.0
   
5,119,801
   
14.11
   
8.4
 

2010

   
90
   
688,904
   
15.2
   
9,641,084
   
13.99
   
15.9
 

2011

   
69
   
551,074
   
12.2
   
6,682,773
   
12.13
   
11.0
 

2012

   
73
   
628,474
   
13.9
   
8,301,036
   
13.21
   
13.7
 

2013

   
61
   
660,049
   
14.6
   
9,562,808
   
14.49
   
15.7
 

2014

   
42
   
405,858
   
9.0
   
4,691,228
   
11.56
   
7.7
 

2015

   
15
   
217,895
   
4.8
   
2,298,241
   
10.55
   
3.8
 

2016

   
13
   
195,390
   
4.3
   
2,917,594
   
14.93
   
4.8
 

2017

   
14
   
164,406
   
3.6
   
2,703,156
   
16.44
   
4.4
 

2018

   
19
   
249,614
   
5.5
   
3,450,748
   
13.82
   
5.7
 

2019

   
15
   
343,747
   
7.6
   
4,746,200
   
13.81
   
7.8
 

2020 and thereafter

   
2
   
56,335
   
1.3
   
714,285
   
12.68
   
1.1
 
                           

Totals/Weighted
Average

   
468
   
4,524,628

(c)
 
100.0
   
60,828,954
   
13.44
   
100.0
 
                           

(a)
Includes office/flex tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.

(b)
Annualized base rental revenue is based on actual December 2008 billings times 12. For leases whose rent commences after January 1, 2009, 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. Includes office/flex tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.

(c)
Includes leases expiring December 31, 2008 aggregating 16,664 square feet and representing annualized rent of $232,476 for which no new leases were signed.

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Table of Contents

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, 2009, assuming that none of the tenants exercise renewal or termination options:

Year Of
Expiration
  Number Of
Leases
Expiring(a)
  Net Rentable
Area Subject
To Expiring
Leases
(Sq. Ft.)
  Percentage Of
Total Leased
Square Feet
Represented By
Expiring
Leases(%)
  Annualized
Base Rental
Revenue Under
Expiring
Leases($)(b)
  Average
Annual Base
Rent Per Net
Rentable
Square Foot
Represented
By Expiring
Leases($)
  Percentage Of
Annual Base
Rent Under
Expiring
Leases(%)
 

2010

    2     32,950     9.0     411,100     12.48     10.3  

2011

    1     7,600     2.1     95,000     12.50     2.4  

2012

    1     6,638     1.8     64,388     9.70     1.6  

2013

    11     154,305     42.0     1,372,584     8.90     34.6  

2014

    3     30,545     8.3     612,550     20.05     15.4  

2016

    2     135,082     36.8     1,418,361     10.50     35.7  
                           

Totals/Weighted
Average

    20     367,120     100.0     3,973,983     10.82     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)
Annualized base rental revenue is based on actual December 2008 billings times 12. For leases whose rent commences after January 1, 2009, 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, 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, 2009 assuming that none of the tenants exercise renewal or termination options:

Year Of
Expiration
  Number Of
Leases
Expiring(a)
  Net Rentable
Area Subject
To Expiring
Leases
(Sq. Ft.)
  Percentage Of
Total Leased
Square Feet
Represented By
Expiring
Leases(%)
  Annualized
Base Rental
Revenue Under
Expiring
Leases($)(b)
  Average
Annual Base
Rent Per Net
Rentable
Square Foot
Represented
By Expiring
Leases($)
  Percentage Of
Annual Base
Rent Under
Expiring
Leases(%)
 

2009

    1     9,300     53.8     195,000     20.97     46.4  

2018

    1     8,000     46.2     225,000     28.13     53.6  
                           

Totals/Weighted
Average

    2     17,300     100.0     420,000     24.28     100.0  
                           

(a)
Includes stand-alone retail property tenants only.

(b)
Annualized base rental revenue is based on actual December 2008 billings times 12. For leases whose rent commences after January 1, 2009 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.

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Table of Contents

INDUSTRY DIVERSIFICATION

        The following table lists the Company's 30 largest industry classifications based on annualized contractual base rent of the Consolidated Properties:

Industry Classification(a)
  Annualized
Base Rental
Revenue
($)(b)(c)(d)
  Percentage of
Company
Annualized Base
Rental Revenue(%)
  Square
Feet Leased
(c)(d)
  Percentage of
Total Company
Leased
Sq. Ft.(%)
 

Securities, Commodity Contracts & Other Financial

    109,556,237     18.3     4,028,981     15.5  

Insurance Carriers & Related Activities

    54,445,581     9.2     2,232,752     8.6  

Manufacturing

    39,101,665     6.6     1,903,238     7.3  

Telecommunications

    30,878,765     5.2     1,652,846     6.3  

Scientific Research/Development

    27,225,267     4.6     1,042,572     4.0  

Health Care & Social Assistance

    26,210,965     4.4     1,261,848     4.8  

Credit Intermediation & Related Activities

    26,115,511     4.4     1,001,903     3.8  

Computer System Design Services

    24,727,137     4.2     1,166,996     4.4  

Legal Services

    23,475,533     4.0     911,400     3.5  

Wholesale Trade

    22,424,357     3.8     1,430,875     5.5  

Other Professional

    21,233,309     3.6     908,352     3.5  

Accounting/Tax Prep. 

    18,415,549     3.1     737,618     2.8  

Public Administration

    16,463,841     2.8     625,452     2.4  

Other Services (except Public Administration)

    16,245,536     2.7     826,522     3.1  

Retail Trade

    15,332,211     2.6     903,338     3.4  

Advertising/Related Services

    15,319,667     2.6     613,511     2.3  

Construction

    11,316,256     1.9     509,980     1.9  

Information Services

    10,735,650     1.8     453,966     1.7  

Arts, Entertainment & Recreation

    10,138,144     1.7     636,794     2.4  

Real Estate & Rental & Leasing

    8,859,152     1.5     398,066     1.5  

Architectural/Engineering

    8,833,109     1.5     379,505     1.4  

Admin & Support, Waste Mgt. & Remediation Services

    8,000,799     1.3     431,165     1.6  

Utilities

    7,366,239     1.2     332,846     1.3  

Transportation

    6,673,603     1.1     361,855     1.4  

Data Processing Services

    6,097,582     1.0     245,431     0.9  

Educational Services

    5,406,123     0.9     271,621     1.0  

Broadcasting

    3,875,596     0.7     127,794     0.5  

Publishing Industries

    3,369,710     0.6     169,042     0.6  

Management of Companies & Finance

    3,038,119     0.5     124,089     0.5  

Specialized Design Services

    2,782,314     0.5     133,229     0.5  

Other

    10,496,588     1.7     415,442     1.6  
                   

TOTAL

    594,160,115     100.0     26,239,029     100.0  
                   

(a)
The Company's tenants are classified according to the U.S. Government's North American Industrial Classification System (NAICS).

(b)
Annualized base rental revenue is based on actual December 2008 billings times 12. For leases whose rent commences after January 1, 2009, annualized base rental revenue is based on the first

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Table of Contents

(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.

(d)
Includes leases in effect as of the period end date, some of which have commencement dates in the future and leases expiring December 31, 2008 aggregating 67,473 square feet and representing annualized rent of $1,429,664 for which no new leases were signed.

MARKET DIVERSIFICATION

        The following table lists the Company's markets (MSAs), based on annualized contractual base rent of the Consolidated Properties:

Market (MSA)
  Annualized Base
Rental Revenue
($)(a)(b)(c)
  Percentage Of
Company
Annualized
Base Rental
Revenue(%)
  Total Property
Size Rentable
Area(b)(c)
  Percentage Of
Rentable Area (%)
 

Newark, NJ (Essex-Morris-Union Counties)

    117,466,146     19.8     5,847,318     20.0  

Jersey City, NJ

    116,768,070     19.7     4,317,978     14.8  

Westchester-Rockland, NY

    92,751,056     15.6     4,968,420     17.0  

Bergen-Passaic, NJ

    91,317,222     15.4     4,602,401     15.7  

Philadelphia, PA-NJ

    54,862,380     9.2     3,529,994     12.1  

Washington, DC-MD-VA-WV

    27,234,548     4.6     1,292,807     4.4  

Monmouth-Ocean, NJ

    26,626,509     4.5     1,620,863     5.5  

Middlesex-Somerset-Hunterdon, NJ

    21,072,538     3.5     986,760     3.4  

Trenton, NJ

    20,132,790     3.4     956,597     3.3  

New York (Manhattan)

    15,614,553     2.6     524,476     1.8  

Stamford-Norwalk, CT

    7,825,615     1.3     452,260     1.5  

Bridgeport, CT

    2,488,688     0.4     145,487     0.5  
                   

Totals

    594,160,115     100.0     29,245,361     100.0  
                   

(a)
Annualized base rental revenue is based on actual December 2008 billings times 12. For leases whose rent commences after January 1, 2009, 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 leases in effect as of the period end date, some of which have commencement dates in the future and leases expiring December 31, 2008 aggregating 67,473 feet and representing annualized rent of $1,429,664 for which no new leases were signed.

(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.

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.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

        The shares of the Company's Common Stock are traded on the New York Stock Exchange ("NYSE") under the symbol "CLI."

        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, 2008 and 2007, respectively:

        For the Year Ended December 31, 2008:

 
  High   Low   Close  

First Quarter

  $ 37.42   $ 28.44   $ 35.71  

Second Quarter

  $ 40.56   $ 33.67   $ 34.17  

Third Quarter

  $ 43.00   $ 31.00   $ 33.87  

Fourth Quarter

  $ 33.31   $ 13.16   $ 24.50  

        For the Year Ended December 31, 2007:

 
  High   Low   Close  

First Quarter

  $ 56.52   $ 46.89   $ 47.63  

Second Quarter

  $ 50.83   $ 42.33   $ 43.49  

Third Quarter

  $ 44.98   $ 36.80   $ 41.10  

Fourth Quarter

  $ 46.51   $ 30.41   $ 34.00  

        On February 5, 2009, the closing Common Stock price reported on the NYSE was $19.89 per share.

        On June 17, 2008, the Company filed with the NYSE its annual CEO Certification and Annual Written Affirmation pursuant to Section 303A.12 of the NYSE Listed Company Manual, each certifying that the Company was in compliance with all of the listing standards of the NYSE.

HOLDERS

        On February 5, 2009, the Company had 562 common shareholders of record. This does not include beneficial owners for whom Cede & Co. or others act as nominee.

RECENT SALES OF UNREGISTERED SECURITIES; USES OF PROCEEDS FROM REGISTERED SECURITIES

        During the three months ended December 31, 2008, the Company issued 418,408 shares of Common Stock to holders of common units in the Operating Partnership upon the redemption of such common units in private offerings pursuant to Section 4(2) of the Securities Act. The holders of the common units were limited partners of the Operating Partnership and accredited investors under Rule 501 of the Securities Act. The common units were converted into an equal number of shares of Common Stock. The Company has registered the resale of such shares under the Securities Act.

DIVIDENDS AND DISTRIBUTIONS

        During the year ended December 31, 2008, the Company declared four quarterly cash dividends on its common stock and common units of $0.64 per share and per unit for each of the first to the fourth

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quarter, respectively. Additionally, in 2008, the Company declared quarterly preferred stock cash dividends of $50.00 per preferred share from the first to the fourth quarter.

        During the year ended December 31, 2007, the Company declared four quarterly cash dividends on its common stock and common units of $0.64 per share and per unit for each of the first to the fourth quarter, respectively. Additionally, in 2007, the Company declared quarterly preferred stock cash dividends of $50.00 per preferred share from the first to the fourth quarter.

        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, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and the general overall economic conditions and other factors.

PERFORMANCE GRAPH

        The following graph compares total stockholder returns from the last five fiscal years to the Standard & Poor's 500 Index ("S&P 500") and to the National Association of Real Estate Investment Trusts, Inc.'s Equity REIT Total Return Index ("NAREIT"). The graph assumes that the value of the investment in the Company's Common Stock and in the S&P 500 and NAREIT indices was $100 at December 31, 2003 and that all dividends were reinvested. The price of the Company's Common Stock on December 31, 2003 (on which the graph is based) was $41.62. The past stockholder return shown on the following graph is not necessarily indicative of future performance.

Comparison of Five-Year Cumulative Total Return

GRAPHIC

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

        Information regarding securities authorized for issuance under our equity compensation plans is disclosed in Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

        None.

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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 other data of the Company as of December 31, 2008, 2007, 2006, 2005 and 2004, and for the years then ended have been derived from the Company's financial statements for the respective periods.

 
  Year Ended December 31,  
Operating Data(a)
In thousands, except per share data
  2008   2007   2006   2005   2004  

Total revenues

  $ 777,969   $ 808,350   $ 732,012   $ 591,991   $ 529,225  

Property expenses(b)

  $ 279,844   $ 270,913   $ 253,667   $ 207,558   $ 168,021  

Direct construction costs

  $ 37,649   $ 85,179   $ 53,602          

General and administrative

  $ 43,984   $ 52,162   $ 49,074   $ 32,432   $ 31,305  

Interest expense

  $ 128,145   $ 126,672   $ 134,964   $ 119,070   $ 109,211  

Income from continuing operations

  $ 53,726   $ 73,129   $ 84,679   $ 73,987   $ 77,977  

Net income available to common shareholders

  $ 51,726   $ 108,466   $ 142,666   $ 93,488   $ 100,453  

Income from continuing operations per share—basic

  $ 0.79   $ 1.06   $ 1.33   $ 1.17   $ 1.26  

Income from continuing operations per share—diluted

  $ 0.79   $ 1.06   $ 1.32   $ 1.16   $ 1.25  

Net income per share—basic

  $ 0.79   $ 1.62   $ 2.29   $ 1.52   $ 1.66  

Net income per share—diluted

  $ 0.79   $ 1.61   $ 2.28   $ 1.51   $ 1.65  

Dividends declared per common share

  $ 2.56   $ 2.56   $ 2.54   $ 2.52   $ 2.52  

Basic weighted average shares outstanding

    65,489     67,026     62,237     61,477     60,351  

Diluted weighted average shares outstanding

    80,648     82,500     77,901     74,189     68,743  

 

 
  December 31,  
Balance Sheet Data
In thousands
  2008   2007   2006   2005   2004  

Rental property, before accumulated depreciation and amortization

  $ 4,963,780   $ 4,885,429   $ 4,573,587   $ 4,491,752   $ 4,160,959  

Rental property held for sale, net

                  $ 19,132  

Total assets

  $ 4,443,922   $ 4,593,202   $ 4,422,889   $ 4,247,502   $ 3,850,165  

Total debt(c)

  $ 2,225,475   $ 2,211,735   $ 2,159,959   $ 2,126,181   $ 1,702,300  

Total liabilities

  $ 2,484,559   $ 2,492,797   $ 2,412,762   $ 2,335,396   $ 1,877,096  

Minority interests

  $ 414,900   $ 457,850   $ 482,220   $ 400,819   $ 427,958  

Stockholders' equity

  $ 1,544,463   $ 1,642,555   $ 1,527,907   $ 1,511,287   $ 1,545,111  

(a)
Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.

(b)
Property expenses is calculated by taking the sum of real estate taxes, utilities and operating services for each of the periods presented.

(c)
Total debt is calculated by taking the sum of senior unsecured notes, revolving credit facilities, and mortgages, loans payable and other obligations.

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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 (collectively, the "Financial Statements"). Certain defined terms used herein have the meaning ascribed to them in the Financial Statements.


Executive Overview

        Mack-Cali Realty Corporation together with its subsidiaries, (the "Company") is one of the largest real estate investment trusts (REITs) in the United States. The Company has been involved in all aspects of commercial real estate development, management and ownership for over 50 years and has been a publicly-traded REIT since 1994. The Company owns or has interests in 293 properties (collectively, the "Properties"), primarily class A office and office/flex buildings, totaling approximately 33.5 million square feet, leased to approximately 2,100 tenants. The Properties are located primarily in suburban markets of the Northeast, some with adjacent, Company-controlled developable land sites able to accommodate up to 12.7 million square feet of additional commercial space.

        The Company's strategy is to be a significant real estate owner and operator in its core, high-barriers-to-entry markets, primarily in the Northeast.

        As an owner of real estate, almost all of the Company's earnings and cash flow is derived from rental revenue received pursuant to leased space at the Properties. Key factors that affect the Company's business and financial results include the following:

        Any negative effects of the above key factors could potentially cause a deterioration in the Company's revenue and/or earnings. Such negative effects could include: (1) failure to renew or execute new leases as current leases expire; (2) failure to renew or execute new leases with rental terms at or above the terms of in-place leases; and (3) tenant defaults.

        A failure to renew or execute new leases as current leases expire or to execute new leases with rental terms at or above the terms of in-place leases may be affected by several factors such as: (1) the local economic climate, which may be adversely impacted by business layoffs or downsizing, industry slowdowns, changing demographics and other factors; and (2) local real estate conditions, such as oversupply of office and office/flex space or competition within the market.

        The Company's core markets continue to be weak. The percentage leased in the Company's consolidated portfolio of stabilized operating properties was 91.3 percent at December 31, 2008, as compared to 92.7 percent at December 31, 2007 and 92.0 percent at December 31, 2006. Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date. Leases that expired as of December 31, 2008, 2007 and 2006 aggregate 67,473, 146,261 and 103,477 square feet, respectively, or 0.2, 0.5 and 0.4 percentage of the net rentable square footage, respectively. Rental rates on the Company's space that was re-leased (based on first rents payable) during the year ended December 31, 2008 increased an average of 1.5 percent compared to rates that were in effect under the prior leases, as compared to a

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0.2 percent decrease in 2007 and a 0.2 percent decrease in 2006. The Company believes that vacancy rates may continue to increase in some of its markets through 2009 and possibly beyond. As a result, the Company's future earnings and cash flow may continue to be negatively impacted by current market conditions.

        Deteriorating economic conditions have resulted in a reduction of the availability of financing and overall higher borrowing rates. These factors, coupled with a slowing economy, have reduced the volume of real estate transactions and created credit stresses on most businesses. On September 15, 2008, Lehman Brothers Holdings Inc. ("Lehman") filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. Lehman leases 270,063 square feet of office space from the Company at 101 Hudson Street in Jersey City, New Jersey, which are scheduled to expire through 2018. Lehman has currently sublet 54.1 percent of its leased space to subtenants. Should Lehman's lease no longer be in effect, the subtenants would become direct tenants of the Company for the remainder of the term of their respective subleases. This would mitigate a portion of the Company's potential future loss of the Lehman lease as a result of Lehman's bankruptcy.

        The Company expects that the impact of the current state of the economy, including rising unemployment and the unprecedented volatility and illiquidity in the financial and credit markets, will continue to have a dampening effect on the fundamentals of its business, including increases in past due accounts, defaults, lower occupancy and reduced effective rents. These conditions would negatively affect the Company's future net income and cash flows and could have a material adverse effect on the Company's financial condition. In addition to the financial constraints on the Company's tenants, many of the debt capital markets that real estate companies like the Company frequently access, such as the unsecured bond market and the convertible debt market, are not currently available to the Company on terms that management believes are economically attractive. Although the Company believes that the quality of its assets and its strong balance sheet will enable it to raise capital from other sources such as traditional term or secured loans from banks, pension funds and life insurance companies, these sources are lending fewer dollars, under stricter terms and at higher borrowing rates, and there can be no assurance that the Company will be able to do so on terms that are economically attractive or at all.

        The remaining portion of this Management's Discussion and Analysis of Financial Condition and Results of Operations should help the reader understand:


Critical Accounting Policies and Estimates

        The Financial Statements have been prepared in conformity with generally accepted accounting principles. The preparation of the Financial Statements 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 reported period. These estimates and assumptions are based on management's historical experience that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. The Company's critical accounting policies are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Company's financial results. Judgments and uncertainties affecting the application of these policies

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and estimates may result in materially different amounts being reported under different conditions and circumstances.

Rental Property:

        Rental properties are stated at cost less accumulated depreciation and amortization. Costs directly related to the acquisition, development and construction of rental properties are capitalized. Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development. Interest capitalized by the Company for the years ended December 31, 2008, 2007 and 2006 was $5.8 million, $5.1, million and $6.1 million, 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.

        The Company considers a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup). If portions of a rental project are substantially completed and occupied by tenants, or held available for occupancy, and other portions have not yet reached that stage, the substantially completed portions are accounted for as a separate project. The Company allocates costs incurred between the portions under construction and the portions substantially completed and held available for occupancy and capitalizes only those costs associated with the portion under construction.

        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

        Upon acquisition of rental property, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their relative fair values. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

        Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases.

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        Other intangible assets acquired include amounts for in-place lease values and tenant relationship values which are based on management's evaluation of the specific characteristics of each tenant's lease and the Company's overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Company's existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles will be amortized to expense over the anticipated life of the relationships.

        On a periodic basis, management assesses whether there are any indicators that the value of the Company's rental 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 is 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. The Company's estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management's assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Rental Property Held for Sale and Discontinued Operations:

        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 as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

        If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

Investments in Unconsolidated Joint Ventures, Net:

        The Company accounts for its investments in unconsolidated joint ventures for which Financial Accounting Standards Board ("FASB") Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities ("FIN 46") does not apply 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.

        FIN 46 provides guidance on the identification of entities for which control is achieved through means other than voting rights ("variable interest entities" or "VIEs") and the determination of which business enterprise, if any, should consolidate the VIE (the "primary beneficiary"). Generally, FIN 46 applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of

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a controlling financial interest, (2) the equity investment at risk is insufficient to finance that entity's activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.

        On a periodic basis, management assesses whether there are any indicators that the value of the Company's investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management's estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment. The Company's estimates of value for each investment (particularly in commercial real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter management's assumptions, the values estimated by management in its impairment analyses may not be realized.

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. Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed-rate renewal options for below-market leases. The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases. Escalations and recoveries from tenants 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.

        Construction services revenue includes fees earned and reimbursements received by the Company for providing construction management and general contractor services to clients. Construction services revenue is recognized on the percentage of completion method. Using this method, profits are recorded on the basis of our estimates of the overall profit and percentage of completion of individual contracts. A portion of the estimated profits is accrued based upon estimates of the percentage of completion of the construction contract. This revenue recognition method involves inherent risks relating to profit and cost estimates. Real estate services revenue includes property management, facilities management, leasing commission fees and other services, and payroll and related costs reimbursed from clients. Other income includes income from parking spaces leased to tenants, income from tenants for additional services arranged for the Company and income from tenants for early lease terminations.

Allowance for Doubtful Accounts:

        Management periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectibility of those balances. Management's estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.

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Results From Operations

        The following comparisons for the year ended December 31, 2008 ("2008"), as compared to the year ended December 31, 2007 ("2007"), and for 2007, as compared to the year ended December 31, 2006 ("2006"), 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, 2006, (for the 2008 versus 2007 comparison) and which represents all in-service properties owned by the Company at December 31, 2005, (for the 2007 versus 2006 comparison), excluding properties sold or held for sale through December 31, 2008; and (ii) the effect of the "Acquired Properties," which represents all properties acquired by the Company or commencing initial operations from January 1, 2007 through December 31, 2008 (for the 2008 versus 2007 comparison) and which represent all properties acquired by the Company or commencing initial operation from January 1, 2006 through December 31, 2007 (for the 2007 versus 2006 comparison).

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Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

 
  Year Ended
December 31,
   
   
 
 
  Dollar
Change
  Percent
Change
 
(dollars in thousands)
  2008   2007  

Revenue from rental operations:

                         

Base rents

  $ 593,898   $ 575,463   $ 18,435     3.2 %

Escalations and recoveries from tenants

    109,690     104,781     4,909     4.7  

Other income

    20,214     22,070     (1,856 )   (8.4 )
                   
 

Total revenues from rental operations

    723,802     702,314     21,488     3.1  
                   

Property expenses:

                         

Real estate taxes

    88,001     90,895     (2,894 )   (3.2 )

Utilities

    84,227     73,072     11,155     15.3  

Operating services

    107,616     106,946     670     0.6  
                   
 

Total property expenses

    279,844     270,913     8,931     3.3  
                   

Non-property revenues:

                         

Construction services

    40,680     88,066     (47,386 )   (53.8 )

Real estate services

    13,487     17,970     (4,483 )   (24.9 )
                   
 

Total non-property revenues

    54,167     106,036     (51,869 )   (48.9 )
                   

Non-property expenses:

                         

Direct constructions costs

    37,649     85,179     (47,530 )   (55.8 )

General and administrative

    43,984     52,162     (8,178 )   (15.7 )

Depreciation and amortization

    194,635     183,564     11,071     6.0  
                   
 

Total non-property expenses

    276,268     320,905     (44,637 )   (13.9 )
                   

Operating Income

    221,857     216,532     5,325     2.5  

Other (expense) income:

                         

Interest expense

    (128,145 )   (126,672 )   (1,473 )   (1.2 )

Interest and other investment income

    1,385     4,670     (3,285 )   (70.3 )
 

Equity in earnings (loss) of unconsolidated joint ventures

    (39,752 )   (5,918 )   (33,834 )   (571.7 )

Minority interest in consolidated joint ventures

    664     643     21     3.3  

Gain on sale of investment in marketable securities

    471         471      

Gain on reduction of other obligations

    9,063         9,063      
                   
 

Total other (expense) income

    (156,314 )   (127,277 )   (29,037 )   (22.8 )
                   

Income from continuing operations before minority interest in Operating Partnership

    65,543     89,255     (23,712 )   (26.6 )

Minority interest in Operating Partnership

    (11,817 )   (16,126 )   4,309     26.7  
                   

Income from continuing operations

    53,726     73,129     (19,403 )   (26.5 )

Discontinued operations (net of minority interest):

                         
 

Income (loss) from discontinued operations

        1,057     (1,057 )   (100.0 )
 

Realized gains (losses) and unrealized losses on disposition of rental property, net

        36,280     (36,280 )   (100.0 )
                   

Total discontinued operations, net

        37,337     (37,337 )   (100.0 )
                   

Net income

    53,726     110,466     (56,740 )   (51.4 )

Preferred stock dividends

    (2,000 )   (2,000 )        
                   

Net income available to common shareholders

  $ 51,726   $ 108,466   $ (56,740 )   (52.3 )%
                   

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        The following is a summary of the changes in revenue from rental operations and property expenses in 2008 as compared to 2007 divided into Same-Store Properties and Acquired Properties (dollars in thousands):

 
  Total Company   Same-Store Properties   Acquired Properties  
 
  Dollar
Change
  Percent
Change
  Dollar
Change
  Percent
Change
  Dollar
Change
  Percent
Change
 

Revenue from rental operations:

                                     

Base rents

  $ 18,435     3.2 % $ 7,882     1.4 % $ 10,553     1.8 %

Escalations and recoveries from tenants

    4,909     4.7     1,639     1.6     3,270     3.1  

Other income

    (1,856 )   (8.4 )   (1,896 )   (8.5 )   40     0.1  
                           

Total

  $ 21,488     3.1 % $ 7,625     1.1 % $ 13,863     2.0 %
                           

Property expenses:

                                     

Real estate taxes

  $ (2,894 )   (3.2 )% $ (4,745 )   (5.2 )% $ 1,851     2.0 %

Utilities

    11,155     15.3     10,625     14.5     530     0.8  

Operating services

    670     0.6     (2,287 )   (2.1 )   2,957     2.7  
                           

Total

  $ 8,931     3.3 % $ 3,593     1.3 % $ 5,338     2.0 %
                           

OTHER DATA:

                                     

Number of Consolidated Properties

    255           251           4        

Square feet (in thousands)

    29,245           28,532           713        

        Base rents for the Same-Store Properties increased $7.9 million, or 1.4 percent, for 2008 as compared to 2007, due primarily to increased rental rates at certain properties in 2008 as compared to 2007. Escalations and recoveries from tenants for the Same-Store Properties increased $1.6 million, or 1.6 percent, for 2008 over 2007, due primarily to an increase in amounts recovered from tenants resulting from higher utility expenses in 2008. Other income for the Same-Store Properties decreased $1.9 million, or 8.5 percent, due primarily to a decrease in lease termination fees of $0.7 million and garage rental fees of $0.4 million for 2008 as compared to 2007.

        Real estate taxes on the Same-Store Properties decreased $4.7 million, or 5.2 percent, for 2008 as compared to 2007, due primarily to reduced assessments and real estate tax refunds on certain properties in 2008, as compared to 2007. Utilities for the Same-Store Properties increased $10.6 million, or 14.5 percent, for 2008 as compared to 2007, due primarily to increased electric rates in 2008 as compared to 2007. Operating services for the Same-Store Properties decreased $2.3 million, or 2.1 percent, due primarily to decreases in snow removal costs of $0.9 million, property insurance expense of $0.9 million, property management salaries and related labor costs of $0.7 million, in 2008 as compared to 2007.

        Construction services revenue decreased $47.4 million, or 53.8 percent, in 2008 as compared to 2007, due to lesser activity in 2008 at The Gale Company and its related businesses. Real estate services revenues decreased by $4.5 million, or 24.9 percent, for 2008 as compared to 2007, due primarily to decreases in management fee income of $2.0 million, commissions income of $1.3 million, and salary reimbursements of $1.0 million.

        Direct construction costs decreased $47.5 million, or 55.8 percent, in 2008 as compared to 2007, due primarily to lesser activity of The Gale Company and its related businesses.

        General and administrative decreased by $8.2 million, or 15.7 percent, for 2008 as compared to 2007 due primarily to decreases in salaries and related expenses of $4.9 million, state tax expenses of $2.3 million and professional fees of $1.3 million for 2008 as compared to 2007.

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        Depreciation and amortization increased by $11.1 million, or 6.0 percent, for 2008 over 2007. Of this increase, $3.8 million, or 2.1 percent, was attributable to the Same-Store Properties and $7.3 million, or 3.9 percent, was due to the Acquired Properties.

        Interest expense increased $1.5 million, or 1.2 percent, for 2008 as compared to 2007. This increase was primarily as a result of higher average debt balances in 2008 as compared to 2007, partially offset by lower interest rates in 2008 as compared to 2007.

        Interest and other investment income decreased $3.3 million, or 70.3 percent, for 2008 as compared to 2007. This decrease was due primarily to lower cash balances invested in 2008.

        Equity in earnings of unconsolidated joint ventures decreased $33.8 million, or 571.7 percent, for 2008 as compared to 2007. The decrease was due primarily to the recording of impairment charges of $27.1 million in the Mack-Green joint venture, and $11.9 million in the Boston-Downtown Crossing's joint venture. These were partially offset by increased income in 2008 of $1.6 million in the Harborside South Pier joint venture, a decreased operating loss of $1.4 million in the Mack-Green joint venture, a decreased loss of $1.1 million in the Route 93 joint venture, increased income of $0.6 million in the Gale Kimball joint venture, and a decreased loss of $0.5 million in the Ramland Realty joint venture in 2008 as compared to 2007.

        The Company recognized a gain on sale of investments in marketable securities of $0.5 million in 2008.

        The Company recognized a gain on reduction of other obligations of $9.1 million in 2008 due to a change in the Company's current estimates of payables under its remaining assumed lease obligations.

        Income from continuing operations before minority interest in Operating Partnership decreased to $65.5 million in 2008 from approximately $89.2 million in 2007. The decrease of $23.7 million was due to the factors discussed above.

        Net income available to common shareholders decreased by approximately $56.8 million, or 52.3 percent, from $108.5 million in 2007 to $51.7 million in 2008. This decrease was primarily the result of realized gains on disposition of rental property of $36.3 million in 2007, a decrease in income from continuing operations before minority interest in Operating Partnership of $23.7 million and a decrease in income from discontinued operations of approximately $1.1 million as compared to 2007. These were partially offset by a decrease in minority interest in Operating Partnership of $4.3 million for 2008 as compared to 2007.

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Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

 
  Year Ended December 31,    
   
 
 
  Dollar
Change
  Percent
Change
 
(dollars in thousands)
  2007   2006  

Revenue from rental operations:

                         

Base rents

  $ 575,463   $ 532,879   $ 42,584     8.0 %

Escalations and recoveries from tenants

    104,781     90,214     14,567     16.1  

Other income

    22,070     21,649     421     1.9  
                   
 

Total revenues from rental operations

    702,314     644,742     57,572     8.9  
                   

Property expenses:

                         

Real estate taxes

    90,895     85,999     4,896     5.7  

Utilities

    73,072     59,788     13,284     22.2  

Operating services

    106,946     107,880     (934 )   (0.9 )
                   
 

Total property expenses

    270,913     253,667     17,246     6.8  
                   

Non-property revenues:

                         

Construction services

    88,066     56,225     31,841     56.6  

Real estate services

    17,970     31,045     (13,075 )   (42.1 )
                   
 

Total non-property revenues

    106,036     87,270     18,766     21.5  
                   

Non-property expenses:

                         

Direct constructions costs

    85,179     53,602     31,577     58.9  

General and administrative

    52,162     49,074     3,088     6.3  

Depreciation and amortization

    183,564     159,096     24,468     15.4  
                   
 

Total non-property expenses

    320,905     261,772     59,133     22.6  
                   

Operating Income

    216,532     216,573     (41 )    

Other (expense) income:

                         

Interest expense

    (126,672 )   (134,964 )   8,292     6.1  

Interest and other investment income

    4,670     3,054     1,616     52.9  

Equity in earnings (loss) of unconsolidated joint ventures

    (5,918 )   (5,556 )   (362 )   (6.5 )

Minority interest in consolidated joint ventures

    643     218     425     195.0  

Gain on sale of investment in marketable securities

        15,060     (15,060 )   (100.0 )

Gain on sale of investment in joint ventures

        10,831     (10,831 )   (100.0 )

Gain/(loss) on sale of land and other assets

        (416 )   416     100.0  
                   
 

Total other (expense) income

    (127,277 )   (111,773 )   (15,504 )   (13.9 )
                   

Income from continuing operations before minority interest in Operating Partnership

    89,255     104,800     (15,545 )   (14.8 )

Minority interest in Operating Partnership

    (16,126 )   (20,121 )   3,995     19.9  
                   

Income from continuing operations

    73,129     84,679     (11,550 )   (13.6 )

Discontinued operations (net of minority interest):

                         
 

Income (loss) from discontinued operations

    1,057     12,272     (11,215 )   (91.4 )
 

Realized gains (losses) and unrealized losses on disposition of rental property, net

    36,280     47,715     (11,435 )   (24.0 )
                   

Total discontinued operations, net

    37,337     59,987     (22,650 )   (37.8 )
                   

Net income

    110,466     144,666     (34,200 )   (23.6 )

Preferred stock dividends

    (2,000 )   (2,000 )        
                   

Net income available to common shareholders

  $ 108,466   $ 142,666   $ (34,200 )   (24.0 )%
                   

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        The following is a summary of the changes in revenue from rental operations and property expenses in 2007 as compared to 2006 divided into Same-Store Properties and Acquired Properties (dollars in thousands):

 
  Total Company   Same-Store Properties   Acquired Properties  
 
  Dollar
Change
  Percent
Change
  Dollar
Change
  Percent
Change
  Dollar
Change
  Percent
Change
 

Revenue from rental operations:

                                     

Base rents

  $ 42,584     8.0 % $ 19,823     3.7 % $ 22,761     4.3 %

Escalations and recoveries from tenants

    14,567     16.1     9,086     10.1     5,481     6.0  

Other income

    421     1.9     2,037     9.4     (1,616 )   (7.5 )
                           

Total

  $ 57,572     8.9 % $ 30,946     4.8 % $ 26,626     4.1 %
                           

Property expenses:

                                     

Real estate taxes

  $ 4,896     5.7 % $ 1,660     1.9 % $ 3,236     3.8 %

Utilities

    13,284     22.2     10,878     18.2     2,406     4.0  

Operating services

    (934 )   (0.9 )   8,884     8.2     (9,818 )   (9.1 )
                           

Total

  $ 17,246     6.8 % $ 21,422     8.4 % $ (4,176 )   (1.6 )%
                           

OTHER DATA:

                                     

Number of Consolidated Properties

    255           240           15        

Square feet (in thousands)

    29,245           27,070           2,175        

        Base rents for the Same-Store Properties increased $19.8 million, or 3.7 percent, for 2007 as compared to 2006, due primarily to an increase in the percentage of space leased at the properties in 2007 from 2006. Escalations and recoveries from tenants for the Same-Store Properties increased $9.1 million, or 10.1 percent, for 2007 over 2006, due primarily to an increased amount of total property expenses in 2007. Other income for the Same-Store Properties increased $2.0 million, or 9.4 percent, due primarily to an increase in lease termination fees in 2007.

        Real estate taxes on the Same-Store Properties increased $1.7 million, or 1.9 percent, for 2007 as compared to 2006, due primarily to property tax rate increases in certain municipalities in 2007, partially offset by reduced assessments on certain properties in 2007. Utilities for the Same-Store Properties increased $10.9 million, or 18.2 percent, for 2007 as compared to 2006, due primarily to increased electric rates in 2007 as compared to 2006. Operating services for the Same-Store Properties increased $8.9 million, or 8.2 percent, due primarily to increases in maintenance costs of $3.9 million, snow removal costs of $2.0 million, salaries and related expenses of $1.0 million, and property insurance expense of $0.7 million in 2007 as compared to 2006.

        Construction services revenue increased $31.8 million in 2007 as compared to 2006, due to the effect of the Gale/Green transactions completed in May 2006 ("Gale/Green Transactions"). Real estate services revenues decreased by $13.1 million, or 42.1 percent, for 2007 as compared to 2006, due primarily to the contribution of the Gale facilities management business to an unconsolidated joint venture in late 2006.

        Direct construction costs increased $31.6 million in 2007 as compared to 2006, due primarily to the effect of the Gale/Green Transactions.

        General and administrative increased by $3.1 million, or 6.3 percent, for 2007 as compared to 2006 due primarily to the effect of the Gale/Green Transactions.

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        Depreciation and amortization increased by $24.5 million, or 15.4 percent, for 2007 over 2006. Of this increase, $8.8 million, or 5.5 percent, was attributable to the Same-Store Properties and $15.7 million, or 9.9 percent, was due to the Acquired Properties.

        Interest expense decreased $8.3 million, or 6.1 percent, for 2007 as compared to 2006. This decrease was primarily as a result of lower average debt balances in 2007 as compared to 2006, partially due to the use of proceeds from the common stock offering in February 2007 to repay outstanding borrowings.

        Interest and other investment income increased $1.6 million, or 52.9 percent, for 2007 as compared to 2006. This increase was due primarily to higher cash balances invested in 2007.

        Equity in earnings of unconsolidated joint ventures decreased $0.4 million, or 6.5 percent, for 2007 as compared to 2006. The decrease was due primarily to an increased loss of $2.1 million in the Route 93 joint venture and an increased loss of $1.7 million in the Mack-Green joint venture. These losses were partially offset by 2006 losses of $1.9 million in the Meadowlands Xanadu venture and $0.9 million in the G&G Martco venture, with no activity for these ventures in 2007, and an increased net income of $0.4 million in 2007 in the 12 Vreeland venture.

        The Company recognized a gain on sale of investment in marketable securities of $15.1 million in 2006.

        Gain on sale of investment in unconsolidated joint ventures amounted to $10.8 million in 2006 from the sale of the Company's interest in the G&G Martco joint venture.

        Gain (loss) on sale of land and other assets amounted to a loss of $0.4 million in 2006 due to a loss on the sale of Gale Global Facilities and related companies in 2006 of $1.5 million, partially offset by a gain of $1.1 million from the sale of a parcel of land in Hamilton, New Jersey.

        Income from continuing operations before minority interest in Operating Partnership decreased to approximately $89.2 million in 2007 from $104.8 million in 2006. The decrease of approximately $15.6 million was due to the factors discussed above.

        Net income available to common shareholders decreased by $34.2 million, or 24.0 percent, from $142.7 million in 2006 to $108.5 million in 2007. This decrease was primarily the result of realized gains on disposition of rental property of $47.7 million in 2006, decrease in income from continuing operations before minority interest in Operating Partnership of approximately $15.6 million and a decrease in income from discontinued operations of $11.2 million for 2007 as compared to 2006. These were partially offset by realized gains on disposition of rental property of $36.3 million in 2007, and a decrease in minority interest in Operating Partnership in 2007 of $4.0 million as compared to 2006.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Overview:

        Historically, rental revenue has been the principal source of funds to pay operating expenses, debt service, capital expenditures and dividends, excluding non-recurring capital expenditures. To the extent that the Company's cash flow from operating activities is insufficient to finance its non-recurring capital expenditures such as property acquisitions, development and construction costs and other capital expenditures, the Company has and expects to continue to finance such activities through borrowings under its revolving credit facility and other debt and equity financings.

        The Company believes that with the general downturn in the Company's markets in recent years, it is reasonably likely that vacancy rates may continue to increase, effective rental rates on new and renewed leases may continue to decrease and tenant installation costs, including concessions, may continue to increase in most or all of its markets in 2009 and possibly beyond. As a result of the potential negative effects on the Company's revenue from the overall reduced demand for office space, the Company's cash flow could be insufficient to cover increased tenant installation costs over the short-term. If this situation were to occur, the Company expects that it would finance any shortfalls through borrowings under its revolving credit facility and other debt and equity financings.

        The Company expects to meet its short-term liquidity requirements generally through its working capital, net cash provided by operating activities and from its revolving credit facility. The Company frequently examines potential property acquisitions and development projects and, at any given time, one or more of such acquisitions or development projects may be under consideration. Accordingly, the ability to fund property acquisitions and development 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 and short-term borrowings (including draws on the Company's revolving credit facility) and the issuance of additional debt and/or equity securities.

        Financial markets have recently experienced unusual volatility and uncertainty. Liquidity has tightened in all financial markets, including the debt and equity markets. The Company's ability to fund property acquisitions or development projects, as well as its ability to repay or refinance debt maturities could be adversely affected by an inability to secure financing at reasonable terms, if at all. While the Company currently does not expect any difficulties, it is possible, in these unusual and uncertain times, that one or more lenders in the Company's revolving credit facility could fail to fund a borrowing request. Such an event could adversely affect the ability of the Company to access funds from its revolving credit facility when needed.

        On September 15, 2008, Lehman Brothers Holdings Inc. ("Lehman") filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. Lehman leases 270,063 square feet of office space from the Company at 101 Hudson Street in Jersey City, New Jersey, which are scheduled to expire through 2018. Lehman has currently sublet 54.1 percent of its leased space to subtenants. Should Lehman's lease no longer be in effect, the subtenants would become direct tenants of the Company for the remainder of the term of their respective subleases. This would mitigate a portion of the Company's potential future loss of the Lehman lease as a result of Lehman's bankruptcy.

        If economic conditions persist or deteriorate, the Company may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents. This condition would negatively affect the Company's future net income and cash flows and could have a material adverse effect on the Company's financial condition.

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Construction Projects:

        In July 2007, the Company commenced construction on a 250,000 square-foot, class A office building, which Wyndham Worldwide pre-leased for 15 years, on a land site located in the Company's Mack-Cali Business Campus in Parsippany, New Jersey. The building is expected to be completed in the first quarter 2009 at a total estimated cost of approximately $64.8 million (of which the Company has incurred $52.5 million through December 31, 2008).

        The Company is obligated to acquire from an entity (the "Florham Entity") whose beneficial owners include Stanley C. Gale and Mark Yeager, an executive officer of the Company, a 50 percent interest in a venture which owns a developable land parcel in Florham Park, New Jersey (the "Florham Park Land") for a maximum purchase price of up to $10.5 million, subject to reduction based on developable square feet approved and other conditions, with the completion of such acquisition subject to the Florham Entity obtaining final development permits and approvals and related conditions necessary to allow for office development expected to be 600,000 square feet. In the event the acquisition of the Florham Park Land does not close by May 9, 2010, subject to certain conditions, the Florham Entity will be obligated to pay certain deferred costs and an additional $1 million to the Company at that time.

        Sanofi-Aventis U.S. Inc. ("Sanofi"), which occupies neighboring buildings in Bridgewater, New Jersey, exercised its option to cause 55 Corporate Drive II LLC, a joint venture in which the Company owns a 50 percent interest, to construct a building on the venture's vacant, developable land and has signed a lease thereof. The lease has a term of fifteen years, subject to three five-year extension options. The construction of the 205,000 square foot building, estimated to cost approximately $36 million, is not required to commence until July 1, 2009 for a July 2011 delivery; however, if Sanofi gives a Construction Start Date Acceleration Notice in accordance with the provisions of its lease, then construction shall promptly commence after the necessary permits are obtained, even if such construction start date shall occur prior to July 1, 2009. The venture will seek construction financing for the project. In any event, the venture's operating agreement provides for Mack-Cali and its partner to share equally in any future venture costs.

REIT Restrictions:

        To maintain its qualification as a REIT under the Code, 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 common stockholders. Based upon the most recently paid quarterly common stock dividend of $0.64 per common share, in the aggregate, such distributions would equal approximately $173.9 million on an annualized basis. However, any such distribution, whether for federal income tax purposes or otherwise, would be paid out of (a) available cash, including borrowings and other sources, after meeting operating requirements, preferred stock dividends and distributions, and scheduled debt service on the Company's debt, and (b) for distributions with respect to a taxable year ending on or before December 31, 2009, our stock, as permitted pursuant to Internal Revenue Service Revenue Procedure 2009-15, 2009-4 I.R.B. 356. Under this Revenue Procedure, we are permitted to make taxable distributions of our stock (in lieu of cash) if (x) any such distribution is declared with respect to a taxable year ending on or before December 31, 2009, and (y) each of our stockholders is permitted to elect to receive its entire entitlement under such declaration in either cash or shares of equivalent value subject to a limitation in the amount of cash to be distributed in the aggregate; provided that (i) the amount of cash that we set aside for distribution is not less than 10% of the aggregate distribution so declared, and (ii) if too many of our stockholders elect to receive cash, a pro rata amount of cash will be distributed to each such stockholder electing to receive cash, but in no event will any such stockholder receive less than its entire entitlement under such declaration.

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Property Lock-Ups:

        The Company may not dispose of or distribute certain of its properties, currently comprising 11 properties with an aggregate net book value of approximately $203.5 million, which were originally contributed by certain unrelated common unitholders of the Operating Partnership, without the express written consent of such common unitholders, 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 specific common unitholders 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 2016. Upon the expiration of the Property Lock-Ups, the Company is generally 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 specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the Company's Board of Directors; David S. Mack, director; Earle I. Mack, a former director; and Mitchell E. Hersh, president, chief executive officer and director), the Robert Martin Group (which includes Robert F. Weinberg, director; Martin S. Berger, a former director; and Timothy M. Jones, former president), the Cali Group (which includes John R. Cali, director, and John J. Cali, a former director). 126 of the Company's properties, with an aggregate net book value of approximately $1.8 billion, have lapsed restrictions and are subject to these conditions.

Unencumbered Properties:

        As of December 31, 2008, the Company had 238 unencumbered properties, totaling 24.8 million square feet, representing 84.9 percent of the Company's total portfolio on a square footage basis.

Credit Ratings:

        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. Fitch has assigned its BBB- rating and S&P has assigned its BB+ rating to existing and prospective preferred stock offerings of the Company. Moody's Investors Service ("Moody's") has assigned its Baa2 rating to existing and prospective senior unsecured debt of the Operating Partnership and its Baa3 rating to existing and prospective preferred stock offerings of the Company.


Cash Flows

        Cash and cash equivalents decreased by $3.1 million to $21.6 million at December 31, 2008, compared to $24.7 million at December 31, 2007. This decrease is comprised of the following net cash flow items:

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Debt Financing

Summary of Debt:

        The following is a breakdown of the Company's debt between fixed and variable-rate financing as of December 31, 2008:

 
  Balance
($000's)
  % of
Total
  Weighted Average
Interest Rate(a)
  Weighted Average
Maturity in Years
 

Fixed Rate Unsecured Debt and Other Obligations

  $ 1,538,439     69.13 %   6.25 %   3.56  

Fixed Rate Secured Debt

    526,036     23.64 %   6.01 %   6.20  

Variable Rate Unsecured Debt

    161,000     7.23 %   1.82 %   2.48  
                   

Totals/Weighted Average:

  $ 2,225,475     100.00 %   5.87 %   4.10  
                   

Debt Maturities:

        Scheduled principal payments and related weighted average annual interest rates for the Company's debt as of December 31, 2008 are as follows:

Period
  Scheduled
Amortization
($000's)
  Principal
Maturities
($000's)
  Total
($000's)
  Weighted Avg.
Interest Rate of
Future Repayments(a)
 

2009

  $ 10,074   $ 199,724   $ 209,798     7.40 %

2010

    5,315     334,500     339,815     5.27 %

2011

    5,667     461,000     466,667     5.80 %

2012

    5,992     210,148     216,140     6.14 %

2013

    5,236     145,222     150,458     5.25 %

Thereafter

    24,004     820,260     844,264     5.82 %
                   

Sub-total

    56,288     2,170,854     2,227,142     5.87 %

Adjustment for unamortized debt discount/premium, net, as of December 31, 2008

    (1,667 )   0     (1,667 )      
                   

Totals/Weighted Average

  $ 54,621   $ 2,170,854   $ 2,225,475     5.87 %
                   

(a)
Actual weighted average LIBOR contract rates relating to the Company's outstanding debt as of December 31, 2008 of 1.27 percent was used in calculating revolving credit facility.

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Senior Unsecured Notes:

        The terms of the Company's senior unsecured notes (which totaled approximately $1.5 billion as of December 31, 2008) 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.

Unsecured Revolving Credit Facility:

        The Company has an unsecured revolving credit facility with a borrowing capacity of $775 million (expandable to $800 million). The facility matures in June 2011, with an extension option of one year, which would require a payment of 15 basis points of the then borrowing capacity of the facility upon exercise. In addition, the interest rate on outstanding borrowings (not electing the Company's competitive bid feature) is LIBOR plus 55 basis points at the BBB/Baa2 pricing level. As of February 5, 2009, the Company had $208 million of outstanding borrowings under its unsecured revolving credit facility.

        The facility has a competitive bid feature, which allows the Company to solicit bids from lenders under the facility to borrow up to $300 million at interest rates less than the current LIBOR plus 55 basis point spread. The Company may also elect an interest rate representing the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. The unsecured facility also requires a 15 basis point facility fee on the current borrowing capacity payable quarterly in arrears.

        The interest rate and the facility fee are subject to adjustment, on a sliding scale, based upon the operating partnership's unsecured debt ratings. In the event of a change in the Operating Partnership's unsecured debt rating, the interest and facility fee rates will be adjusted in accordance with the following table:

Operating Partnership's Unsecured Debt Ratings: S&P Moody's/Fitch(a)
  Interest Rate—
Applicable Basis
Points Above LIBOR
  Facility Fee
Basis Points
 

No ratings or less than BBB-/Baa3/BBB-

    100.0     25.0  

BBB-/Baa3/BBB-

    75.0     20.0  

BBB/Baa2/BBB (current)

    55.0     15.0  

BBB+/Baa1/BBB+

    42.5     15.0  

A-/A3/A- or higher

    37.5     12.5  

(a)
If the Operating Partnership has debt ratings from two 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 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.

        The terms of the 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 real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the facility described below; or (ii) the property dispositions are completed while the Company is under an event of default under the facility, unless, under certain circumstances, such disposition is being carried out to cure such default), 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

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amount of fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property interest coverage and certain investment limitations. The dividend restriction referred to above provides that, if an event of default has occurred and is continuing, the Company will not make any excess distributions with respect to common stock or other common equity interests except to enable the Company to continue to qualify as a REIT under the Code.

        The lending group for the credit facility consists of: JPMorgan Chase Bank, N.A., as administrative agent (the "Agent"); Bank of America, N.A., as syndication agent; Scotiabanc, Inc., Wachovia Bank, National Association, and Wells Fargo Bank, National Association, as documentation agents; SunTrust Bank, as senior managing agent; US Bank National Association, Citicorp North America, Inc. and PNC Bank, National Association, as managing agents; and Bank of China, New York Branch, The Bank of New York; Chevy Chase Bank, F.S.B., The Royal Bank of Scotland PLC, Mizuho Corporate Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd. (successor by merger to UFJ Bank Limited), North Fork Bank, Bank Hapoalim B.M., Comerica Bank, Chang Hwa Commercial Bank, Ltd., New York Branch, First Commercial Bank, New York Agency, Mega International Commercial Bank Co. Ltd., New York Branch, Deutsche Bank Trust Company Americas and Hua Nan Commercial Bank, New York Agency, as participants.

Money Market Loan:

        The Company entered into an agreement with JPMorgan Chase Bank to participate in a money market loan program ("Money Market Loan"). The Money Market Loan is an unsecured borrowing of up to $75 million arranged by JPMorgan Chase Bank ("the lender") with maturities of 30 days or less. The rate of interest on the Money Market Loan borrowing is set at the time of each borrowing. As of December 31, 2008, the Company had no outstanding borrowings under its Money Market Loan program

Mortgages, Loans Payable and Other Obligations:

        The Company has mortgages, loans payable and other obligations which consist of various loans collateralized by certain of the Company's rental properties. Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only.

        On October 28, 2008, the Company obtained $240 million in mortgage financing from The Northwestern Mutual Life Insurance Company and New York Life Insurance Company as co-lenders. The mortgage loan, which is collateralized by its Harborside Plaza 5 office property, bears interest at a rate of 6.8 percent per annum and carries a 10-year term. Proceeds from the loan were used to pay down outstanding borrowings under the Company's unsecured revolving credit facility.

        On January 27, 2009, the Company obtained $64.5 million in mortgage financing from Guardian Life Insurance Company of America. The two mortgage loans, which are collateralized by one and three office properties located in Clark and Red Bank, New Jersey, respectively, both bear interest at a rate of 7.25 percent per annum and carry a 10-year term.

Debt Strategy:

        The Company does not intend to reserve funds to retire the Company's senior unsecured notes or its mortgages, loans payable and other obligations 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 on or before the applicable maturity dates. If it cannot raise sufficient proceeds to retire the maturing debt, the Company may draw on its revolving credit facility to retire the maturing indebtedness, which would reduce the future availability of funds under such facility. As of February 5, 2009, the Company had $208 million in outstanding borrowings under its $775 million unsecured revolving credit facility, and no outstanding borrowings under the Money Market Loan. The Company

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is reviewing various refinancing options, including the purchase of its senior unsecured notes in privately-negotiated transactions, the issuance of additional, or exchange of current, unsecured debt, preferred stock, and/or obtaining additional mortgage debt, some or all of which may be completed during 2009. The Company currently 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 in the short term. However, if these sources of funds are insufficient or unavailable, due to current economic conditions or otherwise, the Company's ability to make the expected distributions discussed in "REIT Restrictions" above may be adversely affected.

        Many commercial real estate lenders have substantially tightened underwriting standards or have withdrawn from the lending marketplace. Also, spreads in the investment grade bond market have substantially widened. These circumstances have materially impacted liquidity in the debt markets, making financing terms less attractive, and in certain cases have resulted in the unavailability of certain types of debt financing. As a result, the Company expects debt financings will be more difficult to obtain and that borrowing costs on new and refinanced debt will be more expensive. Moreover, the recent volatility in the financial markets, in general, will make it more difficult or costly, or even impossible, for the Company to raise capital through the issuance of common stock, preferred stock or other equity instruments or through public issuances of debt securities from its shelf registration statements as it has been able to do in the past. Accordingly, the Company may have to explore other alternatives to fund the Company's operating expenses, debt service, capital expenditures and dividends. Whereas the Company expects to be able to do so, there can be no assurance it will be successful or on what terms.


Equity Financing and Registration Statements

Equity Activity:

        The following table presents the changes in the Company's issued and outstanding shares of Common Stock and the Operating Partnership's common units from December 31, 2007 to December 31, 2008:

 
  Common
Stock
  Common
Units
  Total  

Outstanding at December 31, 2007

    65,558,073     14,985,538     80,543,611  
 

Stock options exercised

    81,675         81,675  
 

Common units redeemed for Common Stock

    547,807     (547,807 )      
 

Shares issued under Dividend Reinvestment and Stock Purchase Plan

    9,901         9,901  
 

Restricted shares issued, net of cancellations

    372,829         372,829  
 

Repurchase of Common Stock

    (151,230 )       (151,230 )
               

Outstanding at December 31, 2008

    66,419,055     14,437,731     80,856,786  
               

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Share Repurchase Program:

        The Company has a share repurchase program which was authorized by its Board of Directors in September 2007 to purchase up to $150 million of the Company's outstanding common stock ("Repurchase Program"), which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. As of December 31, 2008, the Company has a remaining authorization under the Repurchase Program of $46 million.

Dividend Reinvestment and Stock Purchase Plan

        The Company has a Dividend Reinvestment and Stock Purchase Plan (the "DRIP") which commenced in March 1999 under which 5.5 million shares of the Company's common stock have been reserved for future issuance. The DRIP provides for automatic reinvestment of all or a portion of a participant's dividends from the Company's shares of common stock. The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company's effective registration statement on Form S-3 filed with the Securities and Exchange Commission ("SEC") for the 5.5 million shares of the Company's common stock reserved for issuance under the DRIP.

Shelf Registration Statements:

        The Company has an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.0 billion in common stock, preferred stock, depositary shares, and/or warrants of the Company, under which no securities have been sold through February 5, 2009.

        The Company and the Operating Partnership also have an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.5 billion in common stock, preferred stock, depositary shares and guarantees of the Company and debt securities of the Operating Partnership, under which no securities have been sold as of February 5, 2009.


Off-Balance Sheet Arrangements

Unconsolidated Joint Venture Debt:

        The debt of the Company's unconsolidated joint ventures are generally non-recourse to the Company except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations. The Company has also posted a $6.7 million letter of credit in support of the Harborside South Pier joint venture, $3.4 million of which is indemnified by Hyatt Corporation, the Company's joint venture partner.

        The Company's off-balance sheet arrangements are further discussed in Note 3: Investments in Unconsolidated Joint Ventures to the Financial Statements.

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Contractual Obligations

        The following table outlines the timing of payment requirements related to the Company's debt (principal and interest), PILOT agreements, ground lease and other agreements as of December 31, 2008:

 
  Payments Due by Period  
(dollars in thousands)
  Total   Less than
1 Year
  1–3 Years   4–5 Years   6–10 Years   After
10 Years
 

Senior unsecured notes

  $ 1,895,910   $ 289,343   $ 598,326   $ 400,035   $ 608,206      

Revolving credit facility

    168,321     2,928     165,393              

Mortgages, loans payable and other obligations

    730,979     41,567     226,593     87,585     375,235      

Payments in lieu of taxes (PILOT)

    61,716     4,194     12,881     8,807     24,440   $ 11,394  

Ground lease payments

    36,972     517     1,503     1,030     2,298     31,624  
                           

Total

  $ 2,893,898   $ 338,549   $ 1,004,696   $ 497,457   $ 1,010,179   $ 43,018  
                           


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.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

        We consider portions of this information, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act. Such forward-looking statements relate to, without limitation, our 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," "plan," "should," "expect," "anticipate," "estimate," "continue" or comparable terminology. Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such 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 we have made assumptions are:

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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 $2.0 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, 2008 was LIBOR plus 55 basis points.

December 31, 2008 Debt, including current portion ($'s in thousands)
  2009   2010   2011   2012   2013   Thereafter   Total   Fair Value  

Fixed Rate

  $ 208,911   $ 339,131   $ 305,251   $ 215,934   $ 150,833   $ 844,415   $ 2,064,475   $ 1,672,684  

Average Interest Rate

    7.40 %   5.27 %   7.90 %   6.14 %   5.25 %   5.82 %   6.19 %      

Variable Rate

              $ 161,000                     $ 161,000   $ 151,867  

        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 information required by Item 8 is contained in the Consolidated Financial Statements and Report of PricewaterhouseCoopers LLP, together with the notes to the Consolidated Financial Statements and the report of independent registered public accounting firm, filed with this annual report on Form 10-K, see Item 15: Exhibits and Financial Statements.

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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None.

ITEM 9A.    CONTROLS AND PROCEDURES

        Disclosure Controls and Procedures.    The Company's management, with the participation of the Company's chief executive officer and chief financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's chief executive officer and chief financial officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

        Management's Report on Internal Control Over Financial Reporting.    Internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, is a process designed by, or under the supervision of, the Company's chief executive officer and chief financial officer, or persons performing similar functions, and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company's management, with the participation of the Company's chief executive officer and chief financial officer, has established and maintained policies and procedures designed to maintain the adequacy of the Company's internal control over financial reporting, and includes those policies and procedures that:

        The Company's management has evaluated the effectiveness of the Company's internal control over financial reporting as of December 31, 2008 based on the criteria established in a report entitled Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment and those criteria, the Company's management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2008.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

        The effectiveness of the Company's internal control over financial reporting as of December 31, 2008 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

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        Changes In Internal Control Over Financial Reporting.    There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

        Not Applicable.


PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

        The information required by Item 10 will be set forth in the Company's definitive proxy statement for its annual meeting of shareholders expected to be held on June 2, 2009, and is incorporated herein by reference.

ITEM 11.    EXECUTIVE COMPENSATION

        The information required by Item 11 will be set forth in the Company's definitive proxy statement for its annual meeting of shareholders expected to be held on June 2, 2009, and is incorporated herein by reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        The information required by Item 12 will be set forth in the Company's definitive proxy statement for its annual meeting of shareholders expected to be held on June 2, 2009, and is incorporated herein by reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

        The information required by Item 13 will be set forth in the Company's definitive proxy statement for its annual meeting of shareholders expected to be held on June 2, 2009, and is incorporated herein by reference.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

        The information required by Item 14 will be set forth in the Company's definitive proxy statement for its annual meeting of shareholders expected to be held on June 2, 2009, and is incorporated herein by reference.

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PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 1.   All Financial Statements

 

 

Report of Independent Registered Public Accounting Firm

 

 

Consolidated Balance Sheets as of December 31, 2008 and 2007

 

 

Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006

 

 

Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2008, 2007 and 2006

 

 

Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006

 

 

Notes to Consolidated Financial Statements

(a) 2.

 

Financial Statement Schedules

 

 

Schedule III—Real Estate Investments and Accumulated Depreciation as of December 31, 2008

 

 

All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

 

 

Mack-Green-Gale LLC and Subsidiaries Consolidated Balance Sheets at December 31, 2008 and 2007 and Consolidated Statements of Operations, Changes in Members' Capital and Cash Flows for the years ended December 31, 2008 and 2007 and for the period from May 9, 2006 (Commencement of Operations) through December 31, 2006*

(a) 3.

 

Exhibits

 

 

The exhibits required by this item are set forth on the Exhibit Index attached hereto.

*
to be filed by amendment.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To Board of Directors and Shareholders
of Mack-Cali Realty Corporation:

        In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Mack-Cali Realty Corporation and its subsidiaries (collectively, the "Company") at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 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 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Controls Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
New York, New York
February 11, 2009

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 
  December 31,  
 
  2008   2007  

ASSETS

             

Rental property

             
 

Land and leasehold interests

  $ 731,086   $ 726,253  
 

Buildings and improvements

    3,792,186     3,753,088  
 

Tenant improvements

    431,616     397,132  
 

Furniture, fixtures and equipment

    8,892     8,956  
           

    4,963,780     4,885,429  
 

Less—accumulated depreciation and amortization

    (1,040,778 )   (907,013 )
           
   

Net investment in rental property

    3,923,002     3,978,416  

Cash and cash equivalents

    21,621     24,716  

Marketable securities available for sale at fair value

        4,839  

Investments in unconsolidated joint ventures

    138,495     181,066  

Unbilled rents receivable, net

    112,524     107,761  

Deferred charges and other assets, net

    212,422     246,386  

Restricted cash

    12,719     13,613  

Accounts receivable, net of allowance for doubtful accounts of $2,319 and $1,576

    23,139     36,405  
           

Total assets

  $ 4,443,922   $ 4,593,202  
           

LIABILITIES AND STOCKHOLDERS' EQUITY

             

Senior unsecured notes

  $ 1,533,349   $ 1,632,547  

Revolving credit facilities

    161,000     250,000  

Mortgages, loans payable and other obligations

    531,126     329,188  

Dividends and distributions payable

    52,249     52,099  

Accounts payable, accrued expenses and other liabilities

    119,451     142,778  

Rents received in advance and security deposits

    54,406     51,992  

Accrued interest payable

    32,978     34,193  
           
   

Total liabilities

    2,484,559     2,492,797  
           

Minority interests:

             
 

Operating Partnership

    414,114     456,436  
 

Consolidated joint ventures

    786     1,414  
           

Total minority interests

    414,900     457,850  
           

Commitments and contingencies

             

Stockholders' equity:

             

Preferred stock, $0.01 par value, 5,000,000 shares authorized, 10,000 and 10,000 shares outstanding, at liquidation preference

    25,000     25,000  

Common stock, $0.01 par value, 190,000,000 shares authorized, 66,419,055 and 65,558,073 shares outstanding

    664     656  

Additional paid-in capital

    1,905,386     1,886,467  

Dividends in excess of net earnings

    (386,587 )   (269,521 )

Accumulated other comprehensive loss

        (47 )
           
   

Total stockholders' equity

    1,544,463     1,642,555  
           

Total liabilities and stockholders' equity

  $ 4,443,922   $ 4,593,202  
           

The accompanying notes are an integral part of these consolidated financial statements.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 
  Year Ended December 31,  
 
  2008   2007   2006  

REVENUES

                   

Base rents

  $ 593,898   $ 575,463   $ 532,879  

Escalations and recoveries from tenants

    109,690     104,781     90,214  

Construction services

    40,680     88,066     56,225  

Real estate services

    13,487     17,970     31,045  

Other income

    20,214     22,070     21,649  
               
   

Total revenues

    777,969     808,350     732,012  
               

EXPENSES

                   

Real estate taxes

    88,001     90,895     85,999  

Utilities

    84,227     73,072     59,788  

Operating services

    107,616     106,946     107,880  

Direct construction costs

    37,649     85,179     53,602  

General and administrative

    43,984     52,162     49,074  

Depreciation and amortization

    194,635     183,564     159,096  
               
   

Total expenses

    556,112     591,818     515,439  
               

Operating Income

    221,857     216,532     216,573  

OTHER (EXPENSE) INCOME

                   

Interest expense

    (128,145 )   (126,672 )   (134,964 )

Interest and other investment income

    1,385     4,670     3,054  

Equity in earnings (loss) of unconsolidated joint ventures

    (39,752 )   (5,918 )   (5,556 )

Minority interest in consolidated joint ventures

    664     643     218  

Gain on reduction of other obligations

    9,063          

Gain on sale of investment in marketable securities

    471         15,060  

Gain on sale of investment in unconsolidated joint ventures

            10,831  

Gain/(loss) on sale of land and other assets

            (416 )
               
   

Total other (expense) income

    (156,314 )   (127,277 )   (111,773 )
               

Income from continuing operations before minority interest in Operating Partnership

    65,543     89,255     104,800  

Minority interest in Operating Partnership

    (11,817 )   (16,126 )   (20,121 )
               

Income from continuing operations

    53,726     73,129     84,679  

Discontinued operations (net of minority interest):

                   
 

Income from discontinued operations

        1,057     12,272  
 

Realized gains (losses) and unrealized losses on disposition of rental property, net

        36,280     47,715  
               

Total discontinued operations, net

        37,337     59,987  
               

Net income

    53,726     110,466     144,666  
 

Preferred stock dividends

    (2,000 )   (2,000 )   (2,000 )
               

Net income available to common shareholders

  $ 51,726   $ 108,466   $ 142,666  
               

Basic earnings per common share:

                   

Income from continuing operations

  $ 0.79   $ 1.06   $ 1.33  

Discontinued operations

        0.56     0.96  
               

Net income available to common shareholders

  $ 0.79   $ 1.62   $ 2.29  
               

Diluted earnings per common share:

                   

Income from continuing operations

  $ 0.79   $ 1.06   $ 1.32  

Discontinued operations

        0.55     0.96  
               

Net income available to common shareholders

  $ 0.79   $ 1.61   $ 2.28  
               

Dividends declared per common share

  $ 2.56   $ 2.56   $ 2.54  
               

Basic weighted average shares outstanding

    65,489     67,026     62,237  
               

Diluted weighted average shares outstanding

    80,648     82,500     77,901  
               

The accompanying notes are an integral part of these consolidated financial statements.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(in thousands)

 
  Preferred
Stock
  Common
Stock
   
   
   
   
   
   
 
 
   
   
  Dividends
in Excess
of Net
Earnings
  Accumulated
Other
Comprehensive
Income (Loss)
   
   
 
 
  Shares   Amount   Shares   Par
Value
  Additional
Paid-In
Capital
  Unamortized
Stock
Compensation
  Total
Stockholders'
Equity
  Comprehensive
Income
 

Balance at January 1, 2006

    10   $ 25,000     62,020   $ 620   $ 1,682,141   $ (6,105 ) $ (189,579 ) $ (790 ) $ 1,511,287      
 

Reclassification upon the adoption of FASB No. 123(R)

                    (6,105 )   6,105                  
 

Net income

                            144,666         144,666   $ 144,666  
 

Preferred stock dividends

                            (2,000 )       (2,000 )    
 

Common stock dividends

                            (158,862 )       (158,862 )    
 

Redemption of common units for common stock

            475     5     14,669                 14,674      
 

Shares issued under Dividend Reinvestment and Stock Purchase Plan

            5         244                 244      
 

Stock options exercised

            353     3     10,442                 10,445      
 

Stock options expense

                    465                 465      
 

Comprehensive Gain:

                                                             
 

Unrealized holding gain on marketable securities available for sale

                                15,850     15,850     15,850  
 

Directors Deferred comp. plan

                    302                 302      
 

Issuance of restricted stock

            81     1                     1      
 

Stock Compensation

                    5,895                 5,895      
 

Cancellation of restricted stock

            (9 )                            
 

Reclassification adjustment for for realized gain included in net income

                                (15,060 )   (15,060 )   (15,060 )
                                           

Balance at December 31, 2006

    10   $ 25,000     62,925   $ 629   $ 1,708,053       $ (205,775 )     $ 1,527,907   $ 145,456  
                                                             
 

Net income

   
   
   
   
   
   
   
110,466
   
   
110,466
   
110,466
 
 

Preferred stock dividends

                            (2,000 )       (2,000 )    
 

Common stock dividends

                            (172,212 )       (172,212 )    
 

Common stock offering

            4,650     47     251,685                 251,732      
 

Redemption of common units for common stock

            472     5     14,618                 14,623      
 

Shares issued under Dividend Reinvestment and Stock

                                                           
 

Purchase Plan

                7         311                 311      
 

Stock options exercised

            133     1     3,801                 3,802      
 

Stock options expense

                    132                 132      
 

Comprehensive Gain:

                                                             
 

Unrealized holding gain on marketable securities available for sale

                              $ (47 )   (47 )   (47 )
 

Directors Deferred comp. plan

                    323                 323      
 

Issuance of restricted stock

            113     1     2,851                 2,852      
 

Stock Compensation

                    3,487                 3,487      
 

Cancellation of restricted stock

                                                     
 

Repurchase of common stock

            (2,742 )   (27 )   (98,794 )               (98,821 )    
                                           

Balance at December 31, 2007

    10   $ 25,000     65,558   $ 656   $ 1,886,467       $ (269,521 ) $ (47 ) $ 1,642,555   $ 110,419  
                                                             

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)

(in thousands)

 
  Preferred
Stock
  Common
Stock
   
   
   
   
   
   
 
 
   
   
  Dividends
in Excess
of Net
Earnings
  Accumulated
Other
Comprehensive
Income (Loss)
   
   
 
 
  Shares   Amount   Shares   Par
Value
  Additional
Paid-In
Capital
  Unamortized
Stock
Compensation
  Total
Stockholders'
Equity
  Comprehensive
Income
 
 

Net income

                            53,726         53,726     53,726  
 

Preferred stock dividends

                            (2,000 )       (2,000 )    
 

Common stock dividends

                            (168,792 )       (168,792 )    
 

Redemption of common units for common stock

            547     5     16,243                 16,248      
 

Shares issued under Dividend Reinvestment and Stock Purchase Plan

                10         319                 319      
 

Stock options exercised

            82         2,311                 2,311      
 

Comprehensive Gain:

                                                             
 

Unrealized holding gain on marketable securities available for sale

                                518     518     518  
 

Directors Deferred comp. plan

                    388                 388      
 

Issuance of restricted stock

            375     3     1,965                 1,968      
 

Stock Compensation

                2     2,949                 2,951      
 

Cancellation of restricted stock

            (2 )       (60 )                     (60 )      
 

Repurchase of common stock

            (151 )   (2 )   (5,196 )               (5,198 )    
 

Reclassification adjustment for for realized gain included in net income

                                (471 )   (471 )   (471 )
                                           

Balance at December 31, 2008

    10   $ 25,000     66,419   $ 664   $ 1,905,386       $ (386,587 )     $ 1,544,463   $ 53,773  
                                           

The accompanying notes are an integral part of these consolidated financial statements.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
  Year Ended December 31,  
 
  2008   2007   2006  

CASH FLOWS FROM OPERATING ACTIVITIES

                   

Net income

  $ 53,726   $ 110,466   $ 144,666  

Adjustments to reconcile net income to net cash provided by

                   
 

Operating activities:

                   
   

Depreciation and amortization, including related intangible assets

    188,729     179,705     156,987  
   

Depreciation and amortization on discontinued operations

        424     8,853  
   

Stock options expense

        132     465  
   

Amortization of stock compensation

    2,951     3,487     5,895  
   

Amortization of deferred financing costs and debt discount

    2,873     2,808     3,157  
   

Equity in (earnings) loss of unconsolidated joint venture, net

    39,752     5,918     5,556  
   

Gain on sale of investment in unconsolidated joint ventures

            (10,831 )
   

Gain on sale of marketable securities

    (471 )       (15,060 )
   

Gain on reduction of other obligations

    (9,063 )        
   

Loss on sale of land and other assets

            416  
   

(Realized gains) unrealized losses on disposition of rental property (net of minority interest)

        (36,280 )   (47,715 )
   

Distributions of cumulative earnings from unconsolidated joint ventures

    5,784     1,875     2,302  
   

Minority interest in Operating Partnership

    11,817     16,126     20,121  
   

Minority interest in consolidated joint ventures

    (664 )   (643 )   (218 )
   

Minority interest in income from discontinued operations

        240     3,015  

Changes in operating assets and liabilities:

                   
   

Increase in unbilled rents receivable, net

    (4,636 )   (7,490 )   (15,989 )
   

Increase in deferred charges and other assets, net

    (20,324 )   (20,665 )   (37,975 )
   

Decrease (increase) in accounts receivable, net

    13,266     (8,766 )   3,162  
   

(Decrease) increase in accounts payable, accrued expenses and other liabilities

    (8,950 )   6,532     4,598  
   

Increase (decrease) in rents received in advance and security deposits

    2,414     6,020     (1,713 )
   

(Decrease) increase in accrued interest payable

    (1,215 )   87     6,235  
               
 

Net cash provided by operating activities

  $ 275,989   $ 259,976   $ 235,927  
               

CASH FLOWS FROM INVESTING ACTIVITIES

                   

Additions to rental property, related intangibles and service companies

  $ (91,734 ) $ (382,742 ) $ (217,804 )

Repayment of mortgage note receivable

    166     159     150  

Investment in unconsolidated joint ventures

    (7,779 )   (29,017 )   (163,428 )

Distributions in excess of cumulative earnings from unconsolidated joint ventures

    4,565     992     39,982  

Proceeds from sale of investment in unconsolidated joint venture

        575     16,324  

Proceeds from sales of rental property and service company

        57,204     338,546  

Purchase of marketable securities available for sale

        (4,884 )   (11,912 )

Proceeds from sale of marketable securities available for sale

    5,355         78,609  

Decrease (increase) in restricted cash

    894     1,835     (6,227 )
               
 

Net cash (used in) provided by investing activities

  $ (88,533 ) $ (355,878 ) $ 74,240  
               

CASH FLOW FROM FINANCING ACTIVITIES

                   

Borrowings from revolving credit facility and money market loans

  $ 1,137,100   $ 539,000   $ 983,250  

Proceeds from senior unsecured notes

    (100,276 )       199,914  

Proceeds from mortgages

    240,000          

Repurchase of common stock

    (5,198 )   (98,821 )    

Repayment of revolving credit facility and money market loans

    (1,226,100 )   (434,000 )   (1,104,643 )

Repayment of mortgages, loans payable and other obligations

    (28,903 )   (29,038 )   (160,626 )

Payment of financing costs

    (952 )   (1,797 )   (646 )

Proceeds from stock options exercised

    2,311     3,802     10,445  

Proceeds from issuance of common stock

        251,732      

Payment of dividends and distributions

    (208,533 )   (211,483 )   (197,035 )
               
 

Net cash (used in) provided by financing activities

  $ (190,551 ) $ 19,395   $ (269,341 )
               

Net (decrease) increase in cash and cash equivalents

  $ (3,095 ) $ (76,507 ) $ 40,826  

Cash and cash equivalents, beginning of period

    24,716     101,223     60,397  
               

Cash and cash equivalents, end of period

  $ 21,621   $ 24,716   $ 101,223  
               

The accompanying notes are an integral part of these consolidated financial statements.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION

        Mack-Cali Realty Corporation, a Maryland corporation, together with its subsidiaries (collectively, 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 and third parties. As of December 31, 2008, the Company owned or had interests in 293 properties plus developable land (collectively, the "Properties"). The Properties aggregate approximately 33.5 million square feet, which are comprised of 282 buildings, primarily office and office/flex buildings totaling approximately 33.1 million square feet (which include 37 buildings, primarily office buildings aggregating approximately 4.3 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, two retail properties totaling approximately 17,300 square feet, one hotel (which is owned by an unconsolidated joint venture in which the Company has an investment interest) and two parcels of land leased to others. The Properties are located in six 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. (the "Operating Partnership") and variable interest entities for which the Company has determined itself to be the primary beneficiary, if any. See Note 2: Significant Accounting Policies—Investments in Unconsolidated Joint Ventures, Net for the Company's treatment of unconsolidated joint venture interests. 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, development and construction of rental properties are capitalized. Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development. Included in total rental property is construction, tenant improvements and development in-progress of $143,010,000 and $126,470,000 (including land of $70,709,000 and $68,328,000) as of December 31, 2008 and 2007, 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.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

    The Company considers a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup). If portions of a rental project are substantially completed and occupied by tenants, or held available for occupancy, and other portions have not yet reached that stage, the substantially completed portions are accounted for as a separate project. The Company allocates costs incurred between the portions under construction and the portions substantially completed and held available for occupancy, and capitalizes only those costs associated with the portion under construction.

 

 

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

 

    Upon acquisition of rental property, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their relative fair values. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

 

 

Above-market and below-market lease values for acquired properties are recorded based on the present value, (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

    Other intangible assets acquired include amounts for in-place lease values and tenant relationship values, which are based on management's evaluation of the specific characteristics of each tenant's lease and the Company's overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Company's existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.

 

 

On a periodic basis, management assesses whether there are any indicators that the value of the Company's real estate properties held for use 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 is 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. The Company's estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management's assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.

Rental Property
Held for Sale and
Discontinued
Operations

 

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 as held for sale is less than the net book value of the assets, a valuation allowance is established. Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented. See Note 6: Discontinued Operations.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

    If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

Investments in
Unconsolidated
Joint Ventures, Net

 

The Company accounts for its investments in unconsolidated joint ventures for which Financial Accounting Standards Board ("FASB") Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities ("FIN 46") does not apply 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.

 

 

FIN 46 provides guidance on the identification of entities for which control is achieved through means other than voting rights ("variable interest entities" or "VIEs") and the determination of which business enterprise, if any, should consolidate the VIE (the "primary beneficiary"). Generally, FIN 46 applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that entity's activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.

 

 

On a periodic basis, management assesses whether there are any indicators that the value of the Company's investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management's estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment. The Company's estimates of value for each investment (particularly in commercial real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter management's assumptions, the values estimated by management in its impairment analyses may not be realized. See Note 3: Investments in Unconsolidated Joint Ventures.

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Cash and Cash
Equivalents
  All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.

Marketable
Securities

 

The Company classifies its marketable securities among three categories: Held-to-maturity, trading and available-for-sale. Unrealized holding gains and losses relating to available-for-sale securities are excluded from earnings and reported as other comprehensive income (loss) in stockholders' equity until realized. A decline in the market value of any marketable security below cost that is deemed to be other than temporary results in a reduction in the carrying amount to fair value. Any impairment would be charged to earnings and a new cost basis for the security established.

 

 

The Company received dividend income of approximately $65,000 from its holdings in marketable securities during the year ended December 31, 2008, which is included in interest and other investment income. During the year ended December 31, 2008, the Company disposed of its marketable securities and realized a gain of $471,000.

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 $2,873,000, $2,808,000 and $3,157,000 for the years ended December 31, 2008, 2007 and 2006, 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 are compensated for providing leasing services to the Properties. The portion of such compensation, which is capitalized and amortized, approximated $3,690,000, $4,132,000 and $3,749,000 for the years ended December 31, 2008, 2007 and 2006, respectively.

Derivative
Instruments

 

The Company measures derivative instruments, including certain derivative instruments embedded in other contracts, at fair value and records them as an asset or liability, depending on the Company's rights or obligations under the applicable derivative contract. For derivatives designated and qualifying as fair value hedges, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of the derivative are reported in other comprehensive income ("OCI") and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging and ineffective portions of hedges are recognized in earnings in the affected period.

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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. Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed-rate renewal options for below-market leases. The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases. Escalations and recoveries from tenants 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 14: Tenant Leases. Construction services revenue includes fees earned and reimbursements received by the Company for providing construction management and general contractor services to clients. Construction services revenue is recognized on the percentage of completion method. Using this method, profits are recorded on the basis of estimates of the overall profit and percentage of completion of individual contracts. A portion of the estimated profits is accrued based upon estimates of the percentage of completion of the construction contract. This revenue recognition method involves inherent risks relating to profit and cost estimates. Real estate services revenue includes property management, facilities management, leasing commission fees and other services, and payroll and related costs reimbursed from clients. Other income includes income from parking spaces leased to tenants, income from tenants for additional services arranged for by the Company and income from tenants for early lease terminations.

Allowance for
Doubtful Accounts

 

Management periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectibility of those balances. Management's estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.

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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 (including alternative minimum tax) on net income that it currently distributes to its shareholders, provided that the Company satisfies certain organizational and operational requirements including the requirement to distribute at least 90 percent of its REIT taxable income to its shareholders. The Company has elected to treat certain of its corporate subsidiaries as taxable REIT subsidiaries (each a "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. 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.

 

 

The Company adopted the provisions of FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 ("FAS No. 109") on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no material adjustments regarding its tax accounting treatment. The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which is included in general and administrative expense.

Earnings
Per Share

 

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 shareholders 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, 2008 represents dividends payable to preferred shareholders (10,000 shares) and common shareholders (66,419,764 shares), and distributions payable to minority interest common unitholders of the Operating Partnership (14,437,731 common units) for all such holders of record as of January 6, 2009 with respect to the fourth quarter 2008. The fourth quarter 2008 preferred stock dividends of $50.00 per share, common stock dividends and common unit distributions of $0.64 per common share and unit were approved by the Board of Directors on December 9, 2008. The common stock dividends and common unit distributions payable were paid on January 12, 2009. The preferred stock dividends payable were paid on January 15, 2009.

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    The dividends and distributions payable at December 31, 2007 represents dividends payable to preferred shareholders (10,000 shares) and common shareholders (65,637,709 shares), and distributions payable to minority interest common unitholders of the Operating Partnership (14,985,538 common units) for all such holders of record as of January 4, 2008 with respect to the fourth quarter 2007. The fourth quarter 2007 preferred stock dividends of $50.00 per share, common stock dividends and common unit distributions of $0.64 per common share and unit were approved by the Board of Directors on December 4, 2007. The common stock dividends and common unit distributions payable were paid on January 14, 2008. The preferred stock dividends payable were paid on January 15, 2008.

 

 

The Company has determined that the $2.56 dividend per common share paid during the year ended December 31, 2008 represented approximately 81 percent ordinary income, approximately 18 percent return of capital and approximately one percent capital gain to its stockholders; the $2.56 dividend per common share paid during the year ended December 31, 2007 represented 80 percent ordinary income and approximately 20 percent capital gain to its stockholders; and the $2.53 dividend per common share paid during the year ended December 31, 2006 represented approximately 81 percent ordinary income and approximately 19 percent capital gain to its stockholders.

Costs Incurred
For Stock
Issuances

 

Costs incurred in connection with the Company's stock issuances are reflected as a reduction of additional paid-in capital.

Stock
Compensation

 

The Company accounts for stock options and restricted stock awards granted prior to 2002 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 for stock options 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 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 made prior to 2002. Restricted stock awards granted prior to 2002 are valued at the vesting dates of such awards with compensation cost for such awards recognized ratably over the vesting period.

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    In 2002, the Company adopted the provisions of FASB No. 123, and in 2006, the Company adopted the provisions of FASB No. 123(R), which did not have a material effect on the Company's financial position and results of operations. These provisions require that the estimated fair value of restricted stock ("Restricted Stock Awards") and stock options at the grant date be amortized ratably into expense over the appropriate vesting period. For the years ended December 31, 2008, 2007 and 2006, the Company recorded restricted stock and stock options expense of $4,870,000, $6,470,000 and $6,360,000, respectively.

Other
Comprehensive
Income

 

Other comprehensive income (loss) includes items that are recorded in equity, such as unrealized holding gains or losses on marketable securities available for sale.

3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

        The debt of the Company's unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations, and except as otherwise indicated below.

PLAZA VIII AND IX ASSOCIATES, L.L.C.

        Plaza VIII and IX Associates, L.L.C. is a joint venture between the Company and Columbia Development Company, L.L.C. ("Columbia"). The venture was formed to acquire land for future development, located on the Hudson River waterfront in Jersey City, New Jersey, adjacent to the Company's Harborside Financial Center office complex. The Company and Columbia each hold a 50 percent interest in the 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 venture owns undeveloped land currently used as a parking facility.

RAMLAND REALTY ASSOCIATES L.L.C. (One Ramland Road)

        On August 20, 1998, the Company entered into a joint venture 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 and adjacent developable land, located in Orangeburg, 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 venture recorded an impairment loss of approximately $4.3 million on its rental property as of December 31, 2007. The venture had a mortgage loan collateralized by its office/flex property scheduled to mature in January 2009. On December 31, 2008, the venture transferred the deed to the lender in satisfaction of its obligations, including its mortgage with a balance of $14.7 million. The venture recorded a gain on the disposal of its office property of $7.5 million.

        The Company performed management, leasing and other services for the property when owned by the joint venture and recognized $57,000, $63,000 and $100,000 in fees for such services in the years ended December 31, 2008, 2007 and 2006, respectively.

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SOUTH PIER AT HARBORSIDE—HOTEL DEVELOPMENT

        On November 17, 1999, the Company entered into a joint venture with Hyatt Corporation ("Hyatt") to develop a 350-room hotel on the South Pier at Harborside Financial Center, Jersey City, New Jersey, which was completed and commenced initial operations in July 2002. The Company owns a 50 percent interest in the venture.

        The venture has a mortgage loan with a balance as of December 31, 2008 of $68.2 million collateralized by the hotel property. The loan carries an interest rate of 6.15 percent and matures in November 2016. The venture has a loan with a balance as of December 31, 2008 of $6.7 million with the City of Jersey City, provided by the U.S. Department of Housing and Urban Development. The loan currently bears interest at fixed rates ranging from 6.09 percent to 6.62 percent and matures in August 2020. The Company has posted a $6.7 million letter of credit in support of this loan, $3.4 million of which is indemnified by Hyatt Corporation, the Company's joint venture partner.

RED BANK CORPORATE PLAZA L.L.C./RED BANK CORPORATE PLAZA II, L.L.C.

        On March 23, 2006, the Company entered into a joint venture with The PRC Group ("PRC") to form Red Bank Corporate Plaza L.L.C. The venture was formed to develop Red Bank Corporate Plaza, a 92,878 square foot office building located in Red Bank, New Jersey. The property is fully leased to Hovnanian Enterprises, Inc. through September 30, 2017. The Company holds a 50 percent interest in the venture. PRC contributed the vacant land for the development of the office building as its initial capital in the venture. The Company funded the costs of development up to the value of the land contributed by PRC of $3.5 million as its initial capital.

        On October 20, 2006, the venture entered into a $22.0 million construction loan with a commercial bank collateralized by the land and development project. The loan (with a balance as of December 31, 2008 of $20.4 million), carried an interest rate of LIBOR plus 130 basis points through March 2008. In April 2008, the interest rate was reduced to LIBOR plus 125 basis points and the maturity was extended to April 2010. The loan currently has a one-year extension option subject to certain conditions, which requires payment of a fee.

        In September 2007, the joint venture completed development of the property and placed the office building in service. The Company performs management, leasing and other services for the property owned by the joint venture and recognized $128,000 and $678,000 in fees for such services during the years ended December 31, 2008 and 2007, respectively.

        On July 20, 2006, the Company entered into a second joint venture agreement with PRC to form Red Bank Corporate Plaza II L.L.C. The venture was formed to hold land on which it plans to develop Red Bank Corporate Plaza II, an 18,561 square foot office building located in Red Bank, New Jersey. The Company holds a 50 percent interest in the venture. The terms of the venture are similar to Red Bank Corporate Plaza L.L.C. PRC contributed the vacant land as its initial capital in the venture.

MACK-GREEN-GALE LLC

        On May 9, 2006, as part of the Gale/Green transactions completed in May 2006, the Company entered into a joint venture, Mack-Green-Gale LLC ("Mack-Green"), with SL Green, pursuant to which Mack-Green holds a 96 percent interest in and acts as general partner of Gale SLG NJ Operating Partnership, L.P. (the "OP LP"). The Company's acquisition cost for its interest in

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Mack-Green was approximately $125 million, which was funded primarily through borrowing under the Company's revolving credit facility. The OP LP owns 100 percent of entities which owned 25 office properties (the "OP LP Properties") which aggregated 3.5 million square feet (consisting of 17 office properties aggregating 2.3 million square feet located in New Jersey and eight properties aggregating 1.2 million square feet located in Troy, Michigan), as well as a minor, non-controlling interest in four office properties aggregating 419,000 square feet located in Naperville, Illinois, which was subsequently sold. In December 2007, the OP LP sold its eight properties located in Troy, Michigan for $83.5 million. The venture recognized a loss of approximately $22.3 million from the sale. Included in the Company's equity in earnings in 2007 was $223,000 in loss related to the sale.

        As defined in the Mack-Green operating agreement, the Company shares decision-making equally with SL Green regarding: (i) all major decisions involving the operations of Mack-Green; and (ii) overall general partner responsibilities in operating the OP LP.

        The Mack-Green operating agreement generally provides for profits and losses to be allocated as follows:

        Substantially all of the OP LP Properties are encumbered by mortgage loans with an aggregate outstanding principal balance of $276.8 million at December 31, 2008. $186.5 million of the mortgage loans bear interest at a weighted average fixed interest rate of 6.26 percent per annum and mature at various times through May 2016. $90.3 million of the mortgage loans bear interest at a floating rate of LIBOR plus 275 basis points per annum and mature in May 2009. The floating rate mortgage loans are provided by an affiliate of SL Green. Based on the venture's anticipated holding period pertaining to six of its properties encumbered by a floating-rate mortgage loan that matures on May 9, 2009, the venture believes that the carrying amounts of these properties may not be recoverable at December 31, 2008. Accordingly, as the venture determined that its carrying value of these properties exceeded the estimated fair value, it recorded an impairment charge of approximately $32.3 million on its rental property as of December 31, 2008. Included in the Company's equity in earnings (loss) at December 31, 2008 is $27 million in loss related to the impairment charge.

        The Company performs management, leasing, and construction services for the properties owned by the joint venture and recognized $5.2 million, $5.2 million and $2.1 million in income (net of $3.5 million, $3.3 million and $3.4 million in direct costs) for such services in the years ended December 31, 2008, 2007 and 2006, respectively.

        The Company has determined that as of December 31, 2008, Mack-Green met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X. The separate financial statements of Mack-Green required pursuant to Rule 3-09 of Regulation S-X shall be filed by an amendment to the

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Company's Annual Report on Form 10-K not later than ninety (90) days from the end of the Company's fiscal year on December 31, 2008.

GE/GALE FUNDING LLC (PFV)

        The Gale agreement signed as part of the Gale/Green transactions in May 2006 provides for the Company to acquire certain ownership interests in real estate projects (the "Non-Portfolio Properties"), subject to obtaining certain third party consents and the satisfaction of various project-related and/or other conditions. Each of the Company's acquired interests in the Non-Portfolio Properties provide for the initial distributions of net cash flow solely to the Company, and thereafter an affiliate of Mr. Gale ("Gale Affiliate") has participation rights ("Gale Participation Rights") in 50 percent of the excess net cash flow remaining after the distribution to the Company of the aggregate amount equal to the sum of: (a) the Company's capital contributions, plus (b) an internal rate of return ("IRR") of 10 percent per annum, accruing on the date or dates of the Company's investments.

        On May 9, 2006, as part of the Gale/Green transactions, the Company acquired from a Gale Affiliate for $1.8 million a 50 percent controlling interest in GMW Village Associates, LLC ("GMW Village"). GMW Village holds a 20 percent interest in GE/Gale Funding LLC ("GE Gale"). GE Gale owns a 100 percent interest in the entity owning Princeton Forrestal Village, a mixed-use, office/retail complex aggregating 527,015 square feet and located in Plainsboro, New Jersey ("Princeton Forrestal Village" or "PFV").

        In addition to the cash consideration paid to acquire the interest, the Company provided a Gale affiliate with the Gale Participation Rights.

        The operating agreement of GE Gale, which is owned 80 percent by GEBAM, Inc., provides for, among other things, distributions of net cash flow, initially, in proportion to each member's interest and subject to adjustment upon achievement of certain financial goals, as defined in the operating agreement.

        GE Gale has a mortgage loan with a balance of $52.8 million at December 31, 2008. The loan bears interest at a rate of LIBOR plus 275 basis points and matures on January 9, 2010, with an extension option through January 9, 2011.

        The Company performs management, leasing, and other services for PFV and recognized $881,000, $1.1 million and $956,000 in income (net of $288,000, $1.6 million and $7.0 million in direct costs) for such services in the years ended December 31, 2008, 2007 and 2006, respectively.

ROUTE 93 MASTER LLC ("Route 93 Participant")/ROUTE 93 BEDFORD MASTER LLC (with the Route 93 Participant, collectively, the "Route 93 Venture")

        On June 1, 2006, the Route 93 Venture was formed between the Route 93 Participant, a majority-owned subsidiary of the Company, having a 30 percent interest and the Commingled Pension Trust Fund (Special Situation Property) of JPMorgan Chase Bank having a 70 percent interest, for the purpose of acquiring seven office buildings, aggregating 666,697 square feet, located in the towns of Andover, Bedford and Billerica, Massachusetts. Profits and losses are shared by the partners in proportion to their respective interests until the investment yields an 11 percent IRR, then sharing will shift to 40/60, and when the IRR reaches 15 percent, then sharing will shift to 50/50.

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        The Route 93 Participant is a joint venture between the Company and a Gale affiliate. Profits and losses are shared by the partners under this venture in proportion to their respective interests (83.3/16.7) until the investment yields an 11 percent IRR, then sharing will shift to 50/50.

        The Route 93 Ventures has a mortgage loan with an amount not to exceed $58.6 million, with a $43.5 million balance at December 31, 2008 collateralized by its office properties. The loan provides the venture the ability to draw additional monies for qualified leasing and capital improvement costs. The loan bears interest at a rate of LIBOR plus 220 basis points and matures on July 11, 2009, with two one-year extension options.

        The Company had performed services for Route 93 Master LLC and Route 93 Bedford Master LLC and recognized $45,000 and $0 in fees for such services for the years ended December 31, 2008 and 2007, respectively.

GALE KIMBALL, L.L.C.

        On June 15, 2006, the Company entered into a joint venture with a Gale Affiliate to form M-C Kimball, LLC ("M-C Kimball"). M-C Kimball was formed for the sole purpose of acquiring a Gale Affiliate's 33.33 percent membership interest in Gale Kimball, L.L.C. ("Gale Kimball"), an entity holding a 25 percent interest in 100 Kimball Drive LLC ("100 Kimball"), which developed and placed in service a 175,000 square foot office property that has been substantially pre-leased to a single tenant, located at 100 Kimball Drive, Parsippany, New Jersey (the "Kimball Property").

        The operating agreement of M-C Kimball provides, among other things, for the Gale Participation Rights (of which Mark Yeager, an Executive Vice President of the Company, has a direct 26 percent interest).

        Gale Kimball is owned 33.33 percent by M-C Kimball and 66.67 percent by the Hampshire Generational Fund, L.L.C. ("Hampshire"). The operating agreement of Gale Kimball provides, among other things, for the distribution of net cash flow, initially, in accordance with its members' respective membership interests and, upon achievement of certain financial conditions, 50 percent to each of the Company and Hampshire.

        100 Kimball is owned 25 percent by Gale Kimball and 75 percent by 100 Kimball Drive Realty Member LLC, an affiliate of JPMorgan ("JPM"). The operating agreement of 100 Kimball provides, among other things, for the distributions to be made in the following order:

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        On September 21, 2007, 100 Kimball obtained a $47 million mortgage loan which bears interest at a rate of 5.95 percent and matures in September 2012.

        The Company performs management, leasing, and other services for the property owned by 100 Kimball for which it recognized $377,000, $1.7 million and $271,000 in income (net of $1.0 million, $9.4 million and $6.6 million in direct costs) in the years ended December 31, 2008, 2007 and 2006, respectively.

55 CORPORATE PARTNERS, LLC

        On June 9, 2006, the Company entered into a joint venture with a Gale Affiliate to form 55 Corporate Partners L.L.C. ("55 Corporate"). 55 Corporate was formed for the sole purpose of acquiring from a Gale Affiliate a 50 percent interest in SLG 55 Corporate Drive II LLC ("SLG 55"), an entity presently holding a 100 percent indirect condominium interest in a vacant land parcel located in Bridgewater, New Jersey, which can accommodate development of an approximately 205,000 square foot office building (the "55 Corporate Property"). The remaining 50 percent in SLG 55 is owned by SLG Gale 55 Corporate LLC, an affiliate of SL Green Realty Corp. ("SLG Gale 55").

        In November 2007, Sanofi-Aventis U.S. Inc. ("Sanofi"), which occupies neighboring buildings, exercised its option to cause the venture to construct a building on the Property and has signed a lease thereof. The lease has a term of fifteen years, subject to three five-year extension options. The construction of the building, estimated to cost approximately $36 million, is not required to commence until July 1, 2009 for a July 2011 delivery; however, if Sanofi gives a Construction Start Date Acceleration Notice in accordance with the provisions of its lease, then construction shall promptly commence after the necessary permits are obtained, even if such construction start date shall occur prior to July 1, 2009.

        The operating agreement of 55 Corporate provides, among other things, for the Gale Participation Rights (of which Mr. Yeager has a direct 26 percent interest). If Mr. Gale receives any commission payments with respect to a Sanofi lease on the development property, Mr. Gale has agreed to pay to Mr. Yeager 26 percent of such payments.

        The operating agreement of SLG 55 provides, among other things, for the distribution of the available net cash flow to each of 55 Corporate and SLG Gale 55 in proportion to their respective membership interests in SLG 55 (50 percent each).

12 VREELAND ASSOCIATES, L.L.C.

        On September 8, 2006, the Company entered into a joint venture with a Gale Affiliate to form M-C Vreeland, LLC ("M-C Vreeland"). M-C Vreeland was formed for the sole purpose of acquiring a Gale Affiliate's 50 percent membership interest in 12 Vreeland Associates, L.L.C., an entity owning an office property located at 12 Vreeland Road, Florham Park, New Jersey.

        The operating agreement of M-C Vreeland provides, among other things, for the Gale Participation Rights (of which Mr. Yeager has a direct 15 percent interest).

        The office property at 12 Vreeland is a 139,750 square foot office building that is fully leased to a single tenant through June 15, 2012. The property is subject to a mortgage loan, which matures on

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (Continued)


July 1, 2012, and bears interest at 6.9 percent per annum. As of December 31, 2008 the outstanding balance on the mortgage note was $7.2 million.

        Under the operating agreement of 12 Vreeland Associates, L.L.C., M-C Vreeland has a 50 percent interest, with S/K Florham Park Associates, L.L.C. (the managing member) and its affiliate holding the other 50 percent.

BOSTON-DOWNTOWN CROSSING

        On October 20, 2006, the Company formed a joint venture (the "MC/Gale JV LLC") with Gale International/426 Washington St. LLC ("Gale/426"), which, in turn, entered into a joint venture (the "Vornado JV LLC") with VNO 426 Washington Street JV LLC ("Vornado"), an affiliate of Vornado Realty LP, which was formed to acquire and redevelop the Filenes property located in the Downtown Crossing district of Boston, Massachusetts (the "Filenes Property").

        On January 25, 2007, (i) each of M-C/Gale JV LLC, Gale and Washington Street Realty Member LLC ("JPM") formed a joint venture ("JPM JV LLC"), (ii) M-C/Gale JV LLC assigned its entire 50 percent ownership interest in the Vornado JV LLC to JPM JV LLC, (iii) the Limited Liability Company Agreement of Vornado JV LLC was amended to reflect, among other things, the change in the ownership structure described in subsection (ii) above, and (iv) the Limited Liability Company Agreement of MC/Gale JV LLC was amended and restated to reflect, among other things, the change in the ownership structure described in subsection (ii) above. The Vornado JV LLC acquired the Filenes Property on January 29, 2007, for approximately $100 million.

        On or about September 16, 2008, Vornado JV LLC was reorganized in contemplation of developing and converting the Filenes property into a condominium consisting of a retail unit, an office unit, a parking unit, a hotel unit and a residential unit. Pursuant to this reorganization, (i) the Company and Gale/426 formed a new joint venture ("M-C/Gale JV II LLC") and (ii) M-C/Gale JV II LLC and Washington Street Realty Member II LLC ("JPM II") formed a new joint venture ("JPM JV II LLC") to invest in a new joint venture ("Vornado JV II LLC") with Vornado RTR DC LLC, an affiliate of Vornado Realty, LP ("Vornado II"). Following this reorganization, Vornado JV LLC owns the interests in the retail unit and the office unit (the "Filenes Office/Retail Component") and Vornado JV II LLC owns the interests in the parking unit, the hotel unit and the residential unit ("the "Filenes Hotel/Residential/Parking Component"). In connection with the foregoing, (a) the Limited Liability Company Agreement of Vornado JV LLC, as amended, was amended and restated to reflect, among other things, the change in the ownership structure described above, (b) the Limited Liability Company Agreement of JPM JV LLC was amended and restated to reflect, among other things, the change in the ownership structure described above and (c) the Limited Liability Company Agreement of M-C/Gale JV LLC was amended and restated to reflect, among other things, the change in the ownership structure described above.

        As a result of the foregoing transactions, (A) (i) the Filenes Office/Retail Component is owned by Vornado JV LLC, (ii) Vornado JV LLC is owned 50 percent by each of Vornado and JPM JV LLC, (iii) JPM JV LLC is owned 30 percent by M-C/Gale JV LLC, 70 percent by JPM and managed by Gale/426, which has no ownership interest in JPM JV LLC, and (iv) M-C/Gale JV LLC is owned 99.99 percent by the Company and 0.01 percent by Gale/426 and (B) (i) the Filenes Hotel/Residential/Parking Component is owned by Vornado JV II LLC, (ii) Vornado JV II LLC is owned 50 percent by each of Vornado II and JPM JV II LLC, (iii) JPM JV II LLC is owned 30 percent by M-C/Gale JV

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II LLC, 70 percent by JPM II and managed by Gale/426, which has no ownership interest in JPM JV II LLC, and (iv) M-C/Gale JV II LLC is owned 99.99 percent by the Company and 0.01 percent by Gale/426. Thus, the Company holds approximately a 15 percent indirect ownership interest in each of Vornado JV LLC and Vornado JV II LLC and the Filenes Property.

        Distributions are made (i) by Vornado JV LLC in proportion to its members' respective ownership interests, (ii) by JPM JV LLC (a) initially, in proportion to its members' respective ownership interests until JPM's investment yields an 11 percent IRR, (b) thereafter, 60/40 to JPM and MC/Gale JV LLC, respectively, until JPM's investment yields a 15 percent IRR and (c) thereafter, 50/50 to JPM and MC/Gale JV LLC, respectively, and (iii) by MC/Gale JV LLC (w) initially, in proportion to its members' respective ownership interests until each member has received a 10 percent IRR on its investment, (x) thereafter, 65/35 to the Company and Gale/426, respectively, until the Company's investment yields a 15 percent IRR, (y) if by the time the Company receives a 15 percent IRR on its investment, Gale/426 has not done so, 100 percent to Gale/426 until Gale/426's investment yields a 15 percent IRR, and (z) thereafter, 50/50 to each of the Company and Gale/426.

        Distributions are made (i) by Vornado JV II LLC in proportion to its members' respective ownership interests, (ii) by JPM JV II LLC (a) initially, in proportion to its members' respective ownership interests until JPM II's investment yields an 11 percent IRR, (b) thereafter, 60/40 to JPM II and M-C/Gale JV II LLC, respectively, until JPM II's investment yields a 15 percent IRR and (c) thereafter, 50/50 to JPM II and M-C/Gale JV II LLC, respectively, and (iii) by M-C/Gale JV II LLC (w) initially, in proportion to its members' respective ownership interests until each member has received a 10 percent IRR on its investment, (x) thereafter, 65/35 to the Company and Gale/426, respectively, until the Company's investment yields a 15 percent IRR, (y) if by the time the Company receives a 15 percent IRR on its investment, Gale/426 has not done so, 100 percent to Gale/426 until Gale/426's investment yields a 15 percent IRR, and (z) thereafter, 50/50 to each of the Company and Gale/426.

        The joint venture currently has suspended its plans for the development of the Filenes Property which was to include approximately 1.2 million square feet consisting of office, retail, condominium apartments, hotel and a parking garage. The project is subject to governmental approvals.

        The venture recorded an impairment charge of approximately $67 million on its development project on December 31, 2008. Included in the Company's equity in earnings (loss) at December 31, 2008, is $11.9 million in loss related to the impairment charge.

NKFGMS OWNERS, LLC

        On December 28, 2006, the Company contributed its facilities management business, which was acquired on May 9, 2006 as part of the Gale/Green transactions, to a newly-formed joint venture called NKFGMS Owners, LLC. With the contribution, the Company received $600,000 in cash and a 40 percent interest in the joint venture. In connection with the Contribution, the Company recognized a loss of approximately $1.5 million. The joint venture operating agreement provided for, among other things, profits and losses generally to be allocated in proportion to each member's interest.

        On September 21, 2007, the Company sold its 40 percent interest in NKFGMS to its joint venture partner for net proceeds of $575,000, and recorded a gain of $19,000 on the sale.

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3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (Continued)

GALE JEFFERSON, L.L.C.

        On August 22, 2007, the Company entered into a joint venture with a Gale Affiliate to form M-C Jefferson, L.L.C. ("M-C Jefferson"). M-C Jefferson was formed for the sole purpose of acquiring a Gale Affiliate's 33.33 percent membership interest in Gale Jefferson, L.L.C. ("Gale Jefferson"), an entity holding a 25 percent interest in One Jefferson Road LLC ("One Jefferson"), which is developing a 100,000 square foot office property located at 1 Jefferson Road, Parsippany, New Jersey (the "Jefferson Property").

        The operating agreement of M-C Jefferson provides, among other things, for the Gale Participation Rights (of which Mark Yeager, an Executive Vice President of the Company, has a direct 26 percent interest). Gale Jefferson is owned 33.33 percent by M-C Jefferson and 66.67 percent by the Hampshire Generational Fund, L.L.C. ("Hampshire"). The operating agreements of Gale Jefferson provides, among other things, for the distribution of net cash flow, first, in accordance with its member's respective interests until each member is provided, as a result of such distributions, with an annual 12 percent compound return on the Member's Capital Contributions, as defined in the operating agreement and secondly, 50 percent to each of the Company and Hampshire.

        One Jefferson is owned 25 percent by Gale Jefferson and 75 percent by One Jefferson Road Realty Member LLC, an affiliate of JPMorgan ("JPM"). The operating agreement of One Jefferson provides, among other things, for the distribution of net cash flow, first, in accordance with its members' respective interests until each member is provided, as a result of such distributions, with an annual 12 percent compound return on the Member's Capital Contributions, as defined in the operating agreement and secondly, 50 percent to JPM and Gale Jefferson. One Jefferson has a construction loan in an amount not to exceed $21 million (with a balance of $10.3 million at December 31, 2008), bearing interest at a rate of LIBOR plus 160 basis points and maturing on October 24, 2010 with a one-year extension option.

        The Company performs management, leasing and other services for Gale Jefferson and recognized $286,000 and $102,000 in income (net of $9.6 million and $4.0 million in direct costs) for such services for the years ended December 31, 2008 and 2007, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (Continued)

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, 2008 and 2007: (dollars in thousands)

 
  December 31, 2008  
 
  Plaza
VIII & IX
Associates
  Ramland
Realty
  Harborside
South Pier
  Red Bank
Corporate
Plaza I & II
  Mack-
Gale-
Green
  Princeton
Forrestal
Village
  Route 93
Portfolio
  Gale
Kimball
  55
Corporate
  12
Vreeland
  Boston-
Downtown
Crossing
  Gale
Jefferson
  Combined
Total
 

Assets:

                                                                               

Rental property, net

  $ 10,173       $ 62,469   $ 24,583   $ 326,912   $ 41,673   $ 56,771   $ 9,769       $ 14,598             $ 546,948  

Other assets

    1,008   $ 20     34,654     4,301     43,037     22,396     495     425   $ 17,896     789   $ 63,521   $ 4,416     192,958  
                                                       

Total assets

  $ 11,181   $ 20   $ 97,123   $ 28,884   $ 369,949   $ 64,069   $ 57,266   $ 10,194   $ 17,896   $ 15,387   $ 63,521   $ 4,416   $ 739,906  
                                                       

Liabilities and partners'/members' capital (deficit):

                                                                               

Mortgages, loans payable and other obligations

          $ 74,852   $ 20,416   $ 276,752   $ 52,800   $ 43,541   $ 11,750       $ 7,170           $ 487,281  

Other liabilities

  $ 531         21,652     87     21,451     5,128     985     45           $ 18,515   $ 2,578     70,972  

Partners'/members' capital (deficit)

    10,650   $ 20     619     8,381     71,746     6,141     12,740     (1,601 ) $ 17,896     8,217     45,006     1,838   $ 181,653  
                                                       

Total liabilities and partners'/members' capital (deficit)

  $ 11,181   $ 20   $ 97,123   $ 28,884   $ 369,949   $ 64,069   $ 57,266   $ 10,194   $ 17,896   $ 15,387   $ 63,521   $ 4,416   $ 739,906  
                                                       

Company's investment in unconsolidated joint ventures, net

  $ 5,248       $ 254   $ 3,929   $ 92,110   $ 1,342   $ 4,024       $ 9,068   $ 8,300   $ 13,464   $ 756   $ 138,495  
                                                       

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3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (Continued)

 
  December 31, 2007  
 
  Plaza
VIII & IX
Associates
  Ramland
Realty
  Harborside
South Pier
  Red Bank
Corporate
Plaza I & II
  Mack-
Gale-
Green
  Princeton
Forrestal
Village
  Route 93
Portfolio
  Gale
Kimball
  55
Corporate
  12
Vreeland
  Boston-
Downtown
Crossing
  Gale
Jefferson
  Combined
Total
 

Assets:

                                                                               

Rental property, net

  $ 10,787   $ 7,254   $ 65,611   $ 23,618   $ 368,028   $ 42,517   $ 57,368   $ 7,813       $ 7,954           $ 590,950  

Other assets

    2,250     763     17,995     2,818     52,741     25,679     3,323     1,809   $ 17,000     851   $ 81,651   $ 1,918     208,798  
                                                       

Total assets

  $ 13,037   $ 8,017   $ 83,606   $ 26,436   $ 420,769   $ 68,196   $ 60,691   $ 9,622   $ 17,000   $ 8,805   $ 81,651   $ 1,918   $ 799,748  
                                                       

Liabilities and partners'/members' capital (deficit):

                                                                               

Mortgages, loans payable and other obligations

      $ 14,771   $ 76,072   $ 18,116   $ 281,746   $ 52,800   $ 42,495   $ 10,103       $ 8,761           $ 504,864  

Other liabilities

  $ 532     366     6,324     132     23,809     6,847     1,809     30           $ 20,678   $ 80     60,607  

Partners'/members' capital (deficit)

    12,505     (7,120 )   1,210     8,188     115,214     8,549     16,387     (511 ) $ 17,000     44     60,973     1,838     234,277  
                                                       

Total liabilities and partners'/members' capital (deficit)

  $ 13,037   $ 8,017   $ 83,606   $ 26,436   $ 420,769   $ 68,196   $ 60,691   $ 9,622   $ 17,000   $ 8,805   $ 81,651   $ 1,918   $ 799,748  
                                                       

Company's investment in unconsolidated joint ventures, net

  $ 6,175       $ 513   $ 3,703   $ 128,107   $ 2,029   $ 4,729       $ 8,518   $ 7,752   $ 18,828   $ 712   $ 181,066  
                                                       

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3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (Continued)

SUMMARIES OF UNCONSOLIDATED JOINT VENTURES

        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, 2008, 2007 and 2006: (dollars in thousands)

 
  Year Ended December 31, 2008  
 
  Plaza
VIII & IX
Associates
  Ramland
Realty
  Harborside
South Pier
  Red Bank
Corporate
Plaza I & II
  Mack-
Green-
Gale
  Princeton
Forrestal
Village
  Route 93
Portfolio
  Gale
Kimball
  55
Corporate
  12
Vreeland
  Boston-
Downtown
Crossings
  NKFGMS
Owners
LLC
  Gale
Jefferson
  Meadowlands
Xanadu
  G&G
Martco
  Combined
Total
 

Total revenues

  $ 1,131   $ 9,186   $ 45,783   $ 3,205   $ 51,051   $ 10,423   $ 2,770   $ 1,648       $ 2,188   $ 51                   $ 127,436  

Operating and other expenses

    (183 )   (1,182 )   (26,772 )   (868 )   (53,334 )   (6,552 )   (3,716 )   (632 )       (72 )   (33,333 )                   (126,644 )

Depreciation and amortization

    (614 )   (481 )   (4,919 )   (593 )   (20,433 )   (4,885 )   (1,758 )   (350 )       (511 )                       (34,544 )

Interest expense

        (203 )   (4,682 )   (792 )   (17,381 )   (3,318 )   (2,443 )   (700 )       (509 )                       (30,028 )
                                                                   

Net income

  $ 334   $ 7,320   $ 9,410   $ 952   $ (40,097 ) $ (4,332 ) $ (5,147 ) $ (34 )     $ 1,096   $ (33,282 )                 $ (63,780 )
                                                                   

Company's equity in earnings (loss) of unconsolidated joint ventures

  $ 167   $ 90   $ 4,740   $ 475   $ (32,354 ) $ (880 ) $ (1,154 ) $ 455       $ 548   $ (11,839 )                 $ (39,752 )
                                                                   

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3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (Continued)

 
  Year Ended December 31, 2007  
 
  Plaza
VIII & IX
Associates
  Ramland
Realty
  Harborside
South Pier
  Red Bank
Corporate
Plaza I & II
  Mack-
Green-
Gale
  Princeton
Forrestal
Village
  Route 93
Portfolio
  Gale
Kimball
  55
Corporate
  12
Vreeland
  Boston-
Downtown
Crossings
  NKFGMS
Owners
LLC
  Gale
Jefferson
  Meadowlands
Xanadu
  G&G
Martco
  Combined
Total
 

Total revenues

  $ 1,015   $ 1,903   $ 43,952   $ 1,098   $ 67,113   $ 12,996   $ 2,522   $ 12       $ 2,280   $ 664                   $ 133,555  

Operating and other expenses

    (174 )   (5,795 )   (26,706 )   (238 )   (53,123 )   (6,529 )   (3,593 )   (83 )       (65 )   (688 )                   (96,994 )

Depreciation and amortization

    (616 )   (727 )   (5,929 )   (208 )   (24,751 )   (3,785 )   (1,652 )   (118 )       (352 )                       (38,138 )

Interest expense

        (1,047 )   (4,669 )   (367 )   (26,706 )   (4,768 )   (3,428 )   (323 )       (663 )                       (41,971 )
                                                                   

Net income

  $ 225   $ (5,666 ) $ 6,648   $ 285   $ (37,467 ) $ (2,086 ) $ (6,151 ) $ (512 )     $ 1,200   $ (24 )                 $ (43,548 )
                                                                   

Company's equity in earnings (loss) of unconsolidated joint ventures

  $ 113   $ (375 ) $ 3,182   $ 143   $ (6,677 ) $ (531 ) $ (2,236 ) $ (180 )     $ 600   $ (10 ) $ 53               $ (5,918 )
                                                                   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (Continued)

 
  Year Ended December 31, 2006  
 
  Plaza
VIII & IX
Associates
  Ramland
Realty
  Harborside
South Pier
  Red Bank
Corporate
Plaza I & II
  Mack-
Green-
Gale
  Princeton
Forrestal
Village
  Route 93
Portfolio
  Gale
Kimball
  55
Corporate
  12
Vreeland
  Boston-
Downtown
Crossings
  NKFGMS
Owners
LLC
  Gale
Jefferson
  Meadowlands
Xanadu
  G&G
Martco
  Combined
Total
 

Total revenues

  $ 755   $ 2,058   $ 39,229   $ 15   $ 44,262   $ 9,495   $ 3,486   $ 1       $ 2,102                   $ 5,990   $ 107,393  

Operating and other expenses

    (186 )   (1,496 )   (23,591 )   (6 )   (19,136 )   (5,925 )   (1,585 )           (76 )                   (2,702 )   (54,703 )

Depreciation and amortization

    (616 )   (736 )   (5,853 )       (21,129 )   (2,908 )   (622 )           (352 )                   (1,216 )   (33,432 )

Interest expense

        (1,022 )   (4,078 )       (17,117 )   (3,063 )   (1,969 )           (755 )                   (2,499 )   (30,503 )
                                                                   

Net income

  $ (47 ) $ (1,196 ) $ 5,707   $ 9   $ (13,120 ) $ (2,401 ) $ (690 ) $ 1       $ 919                   $ (427 ) $ (11,245 )
                                                                   

Company's equity in earnings (loss) of unconsolidated joint ventures

  $ (24 ) $ (225 ) $ 2,820       $ (4,945 ) $ (436 ) $ (148 )         $ 208               $ (1,876 ) $ (930 ) $ (5,556 )
                                                                   

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4. DEFERRED CHARGES AND OTHER ASSETS

 
  December 31,  
(dollars in thousands)
  2008   2007  

Deferred leasing costs

  $ 214,887   $ 202,282  

Deferred financing costs

    23,723     22,922  
           

    238,610     225,204  

Accumulated amortization

    (104,652 )   (90,482 )
           

Deferred charges, net

    133,958     134,722  

Notes receivable

    11,443     11,610  

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

    33,256     64,212  

Prepaid expenses and other assets, net

    33,765     35,842  
           

Total deferred charges and other assets, net

  $ 212,422   $ 246,386  
           

5. RESTRICTED CASH

        Restricted cash includes security deposits for certain of the Company's 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: (dollars in thousands)

 
  December 31,  
 
  2008   2007  

Security deposits

  $ 8,757   $ 8,710  

Escrow and other reserve funds

    3,962     4,903  
           

Total restricted cash

  $ 12,719   $ 13,613  
           

6. DISCONTINUED OPERATIONS

        There were no discontinued operations during the year ended December 31, 2008.

        As the Company sold 1000 Bridgeport in Shelton, Connecticut; 500 West Putnam in Greenwich, Connecticut; and 100 & 200 Decadon in Egg Harbor, New Jersey; 300 Westage Business Center Drive in Fishkill, New York; 1510 Lancer Drive in Moorestown, New Jersey; a Colorado portfolio in various cities throughout Colorado; and a portfolio in San Francisco, California during the years ended December 31, 2007 and 2006, the Company has presented these assets as discontinued operations in its statements of operations for the periods presented.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. DISCONTINUED OPERATIONS (Continued)

        The following tables summarize income from discontinued operations (net of minority interest) and the related realized gains (losses) and unrealized losses on disposition of rental property (net of minority interest), net for the years ended December 31, 2007 and 2006: (dollars in thousands)

 
  Year Ended December 31,  
 
  2007   2006  

Total revenues

  $ 3,881   $ 43,645  

Operating and other expenses

    (1,638 )   (18,214 )

Depreciation and amortization

    (424 )   (8,853 )

Interest expense (net of interest income)

    (522 )   (1,291 )

Minority interest

    (240 )   (3,015 )
           

Income from discontinued operations (net of minority interest)

  $ 1,057   $ 12,272  
           

Realized gains (losses) on disposition of rental property, net

 
$

44,414
 
$

59,605
 

Unrealized losses on disposition of rental property

         

Minority interest

    (8,134 )   (11,890 )
           

Realized gains (losses) and unrealized losses on disposition of rental property (net of minority interest), net

  $ 36,280   $ 47,715  
           

7. SENIOR UNSECURED NOTES

        A summary of the Company's senior unsecured notes as of December 31, 2008 and 2007 is as follows: (dollars in thousands)

 
  December 31,    
 
 
  Effective
Rate(a)
 
 
  2008   2007  

7.250% Senior Unsecured Notes, due March 15, 2009

  $ 199,689   $ 299,716     7.49 %

5.050% Senior Unsecured Notes, due April 15, 2010

    149,929     149,874     5.27 %

7.835% Senior Unsecured Notes, due December 15, 2010

    15,000     15,000     7.95 %

7.750% Senior Unsecured Notes, due February 15, 2011

    299,641     299,468     7.93 %

5.250% Senior Unsecured Notes, due January 15, 2012

    99,404     99,210     5.46 %

6.150% Senior Unsecured Notes, due December 15, 2012

    92,963     92,472     6.89 %

5.820% Senior Unsecured Notes, due March 15, 2013

    25,641     25,530     6.45 %

4.600% Senior Unsecured Notes, due June 15, 2013

    99,872     99,844     4.74 %

5.125% Senior Unsecured Notes, due February 15, 2014

    201,229     201,468     5.11 %

5.125% Senior Unsecured Notes, due January 15, 2015

    149,441     149,349     5.30 %

5.800% Senior Unsecured Notes, due January 15, 2016

    200,540     200,616     5.81 %
               

Total Senior Unsecured Notes

  $ 1,533,349   $ 1,632,547     6.25 %
               

(a)
Interest rate for unsecured notes reflects effective rate of debt, including cost of treasury lock agreement (if any), offering and other transaction costs and the discount on the notes, as applicable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. SENIOR UNSECURED NOTES (Continued)

        On November 17, 2008, the Company accepted for purchase $100.3 million principal amount of its 7.25 percent Senior Unsecured Notes due March 15, 2009 (the "Notes"), validly tendered pursuant to its previously announced cash tender offer on November 6, 2008 (the "Tender Offer"). The Notes accepted for purchase represented approximately 33.4 percent of the principal amount of Notes outstanding prior to the Tender Offer. The aggregate consideration for Notes accepted for payment, including accrued and unpaid interest, was approximately $101.5 million, which was funded primarily from borrowing on the Company's revolving credit facility. The Notes purchased pursuant to the Tender Offer have been cancelled and approximately $199.7 million principal amount of the Notes remain outstanding.

8. UNSECURED REVOLVING CREDIT FACILITY

        The Company has a $775 million unsecured credit facility with a group of 23 Lenders. The facility matures in June 2011, with an extension option of one year, which would require a payment of 15 basis points of the then borrowing capacity of the facility upon exercise. The interest rate on outstanding borrowings (not electing the Company's competitive bid feature) is LIBOR plus 55 basis points at the BBB/Baa2 pricing level.

        The facility has a competitive bid feature, which allows the Company to solicit bids from lenders under the facility to borrow up to $300 million at interest rates less than the current LIBOR plus 55 basis point spread. The Company may also elect an interest rate representing the higher of the lender's prime rate or the Federal Funds rate plus 50 basis points. The unsecured facility also requires a 15 basis point facility fee on the current borrowing capacity payable quarterly in arrears.

        The interest rate and the facility fee are subject to adjustment, on a sliding scale, based upon the Operating Partnership's unsecured debt ratings. In the event of a change in the Operating Partnership's unsecured debt rating, the interest and facility fee rates will be adjusted in accordance with the following table:

Operating Partnership's
Unsecured Debt Ratings:
S&P Moody's/Fitch(a)
  Interest Rate—
Applicable Basis Points
Above LIBOR
  Facility Fee
Basis Points
 

No ratings or less than BBB-/Baa3/BBB-

    100.0     25.0  

BBB-/Baa3/BBB-

    75.0     20.0  

BBB/Baa2/BBB (current)

    55.0     15.0  

BBB+/Baa1/BBB+

    42.5     15.0  

A-/A3/A- or higher

    37.5     12.5  

(a)
If the Operating Partnership has debt ratings from two 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 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.

        The terms of the unsecured facility include certain restrictions and covenants which limit, among other things, the payment of dividends (as discussed below), the incurrence of additional indebtedness,

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8. UNSECURED REVOLVING CREDIT FACILITY (Continued)


the incurrence of liens and the disposition of real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the facility described below, or (ii) the property dispositions are completed while the Company is under an event of default under the facility, unless, under certain circumstances, such disposition is being carried out to cure such default), 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 fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property interest coverage and certain investment limitations. The dividend restriction referred to above provides that, if an event of default has occurred and is continuing, the Company will not make any excess distributions with respect to common stock or other common equity interests except to enable the Company to continue to qualify as a REIT under the Code.

        The lending group for the credit facility consists of: JPMorgan Chase Bank, N.A., as administrative agent (the "Agent"); Bank of America, N.A., as syndication agent; Scotiabanc, Inc., Wachovia Bank, National Association; and Wells Fargo Bank, National Association, as documentation agents; SunTrust Bank, as senior managing agent; US Bank National Association, Citicorp North America, Inc.; and PNC Bank National Association, as managing agents; and Bank of China, New York Branch; The Bank of New York; Chevy Chase Bank, F.S.B.; The Royal Bank of Scotland PLC; Mizuho Corporate Bank, Ltd.; The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Successor by merger to UFJ Bank Limited); North Fork Bank; Bank Hapoalim B.M.; Comerica Bank; Chang Hwa Commercial Bank, Ltd., New York Branch; First Commercial Bank, New York Agency; Mega International Commercial Bank Co. Ltd., New York Branch; Deutsche Bank Trust Company Americas and Hua Nan Commercial Bank, New York Agency, as participants.

        As of December 31, 2008 and 2007, the Company had outstanding borrowings of $161 million and $250 million, respectively, under its unsecured revolving credit facility.

MONEY MARKET LOAN

        The Company has an agreement with JPMorgan Chase Bank to participate in a money market loan program ("Money Market Loan"). The Money Market Loan is an unsecured borrowing of up to $75 million arranged by JPMorgan Chase Bank with maturities of 30 days or less. The rate of interest on the Money Market Loan borrowing is set at the time of each borrowing. As of December 31, 2008 and 2007, the Company had no outstanding borrowings under the Money Market Loan.

9. MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS

        The Company has mortgages, loans payable and other obligations which primarily consist of various loans collateralized by certain of the Company's rental properties. As of December 31, 2008, 17 of the Company's properties, with a total book value of approximately $954 million, are encumbered by the Company's mortgages and loans payable. Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only.

        On October 28, 2008, the Company obtained $240 million in mortgage financing from The Northwestern Mutual Life Insurance Company and New York Life Insurance Company as co-lenders. The mortgage loan, which is collateralized by its Harborside Plaza 5 office property, bears interest at a rate of 6.8 percent per annum and carries a 10-year term. Proceeds from the loan were used to pay down outstanding borrowings under the Company's unsecured revolving credit facility.

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9. MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS (Continued)

        On January 27, 2009, the Company obtained $64.5 million in mortgage financing from Guardian Life Insurance Company of America. The two mortgage loans, which are collateralized by one and three office properties located in Clark and Red Bank, New Jersey, respectively, both bear interest at a rate of 7.25 percent per annum and carry a 10-year term.

        Based on the recent expirations of a majority of the Company's acquired lease obligations incurred as part of the consideration for certain properties acquired in 2004 ("Assumed Obligations") included in mortgages, loans payable and other obligations, and the Company's current estimates of amounts expected to be payable under the remaining obligations which are scheduled to expire through May 2009, the Company recorded a reduction of these obligations of $9.1 million at December 31, 2008.

        A summary of the Company's mortgages, loans payable and other obligations as of December 31, 2008 and 2007 is as follows: (dollars in thousands)

 
   
   
  Principal Balance at
December 31,
   
 
 
   
  Effective
Interest
Rate(a)
   
 
Property Name
  Lender   2008   2007   Maturity  

6404 Ivy Lane

 

Wachovia CMBS

    5.58 %     $ 13,029     08/01/08 (b)

Assumed Obligations

 

Various

    4.92 % $ 5,090     27,657     05/01/09 (c)

Various(d)

 

Prudential Insurance Co.

    4.84 %   150,000     150,000     01/15/10  

105 Challenger Road

 

Archon Financial CMBS

    6.24 %   19,188     18,968     06/06/10  

2200 Renaissance Boulevard

 

Wachovia CMBS

    5.89 %   17,043     17,442     12/01/12  

Soundview Plaza

 

Morgan Stanley CMBS

    6.02 %   17,109     17,575     01/01/13  

9200 Edmonston Road

 

Principal Commercial Funding, L.L.C.

    5.53 %   4,955     5,096     05/01/13  

6305 Ivy Lane

 

John Hancock Life Insurance Co.

    5.53 %   6,901     7,098     01/01/14  

395 West Passaic

 

State Farm Life Insurance Co.

    6.00 %   12,176     12,596     05/01/14  

6301 Ivy Lane

 

John Hancock Life Insurance Co.

    5.52 %   6,480     6,655     07/01/14  

35 Waterview

 

Wachovia CMBS

    6.35 %   19,868     20,104     08/11/14  

23 Main Street

 

JP Morgan CMBS

    5.59 %   32,521     32,968     09/01/18  

Harborside Plaza 5

 

The Northwestern Mutual Life Insurance Co. & New York Life Insurance Co.

    6.80 %   239,795         11/01/18  
                       

Total Mortgages, loans payable and other obligations:

        $ 531,126   $ 329,188        
                           

(a)
Effective interest rate for mortgages loans payable and other obligations reflects effective rate of debt, including deferred financing costs, comprised of the cost of terminated treasury lock agreements (if any), debt initiation costs and other transaction costs, as applicable.

(b)
On May 5, 2008, the Company repaid this mortgage loan at par, using available cash.

(c)
The obligations mature at various times through May 2009.

(d)
Mortgage is collateralized by seven properties.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS (Continued)

SCHEDULED PRINCIPAL PAYMENTS

        Scheduled principal payments and related weighted average annual interest rates for the Company's senior unsecured notes (see Note 7), unsecured revolving credit facility and mortgages, loans payable and other obligations as of December 31, 2008 are as follows: (dollars in thousands)

Period
  Scheduled
Amortization
  Principal
Maturities
  Total   Weighted Avg.
Interest Rate of
Future Repayments(a)
 

2009

  $ 10,074   $ 199,724   $ 209,798     7.40 %

2010

    5,315     334,500     339,815     5.27 %

2011

    5,667     461,000     466,667     5.80 %

2012

    5,992     210,148     216,140     6.14 %

2013

    5,236     145,222     150,458     5.25 %

Thereafter

    24,004     820,260     844,264     5.82 %
                   

Sub-total

    56,288     2,170,854     2,227,142     5.87 %

Adjustment for unamortized debt discount/premium, net, as of December 31, 2008

    (1,667 )       (1,667 )      
                   

Totals/Weighted Average

  $ 54,621   $ 2,170,854   $ 2,225,475     5.87 %
                   

(a)
Actual weighted average LIBOR contract rates relating to the Company's outstanding debt as of December 31, 2008 of 1.27 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, 2008, 2007 and 2006 was $131,304,000, $128,678,000 and $132,904,000, respectively. Interest capitalized by the Company for the years ended December 31, 2008, 2007 and 2006 was $5,799,000, $5,101,000 and $6,058,000, respectively.

SUMMARY OF INDEBTEDNESS

        As of December 31, 2008 the Company's total indebtedness of $2,225,475,000 (weighted average interest rate of 5.87 percent) was comprised of $161,000,000 of revolving credit facility borrowings (weighted average rate of 1.82 percent) and fixed rate debt and other obligations of $2,064,475,000 (weighted average rate of 6.18 percent).

        As of December 31, 2007 the Company's total indebtedness of $2,211,735,000 (weighted average interest rate of 6.08 percent) was comprised of $250,000,000 of revolving credit facility borrowings (weighted average rate of 5.55 percent) and fixed rate debt and other obligations of $1,961,735,000 (weighted average rate of 6.15 percent).

10. MINORITY INTERESTS

        Minority interests in the accompanying consolidated financial statements relate to (i) preferred units ("Preferred Units") and common units in the Operating Partnership, held by parties other than

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10. MINORITY INTERESTS (Continued)


the Company, and (ii) interests in consolidated joint ventures for the portion of such properties not owned by the Company.

OPERATING PARTNERSHIP

Preferred Units

        The Operating Partnership has one class of outstanding Preferred Units, the Series C Preferred Units, which is described as follows:

Series C

        In connection with the Company's issuance of $25 million of Series C cumulative redeemable perpetual preferred stock, the Company acquired from the Operating Partnership $25 million of Series C Preferred Units (the "Series C Preferred Units"), which have terms essentially identical to the Series C preferred stock. See Note 15: Stockholders' Equity—Preferred Stock.

Common Units

        Certain individuals and entities own common units in the Operating Partnership. A common unit and a share of common stock of the Company have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Operating Partnership. Common units are redeemable by the common unitholders at their option, subject to certain restrictions, on the basis of one common unit for either one share of common stock or cash equal to the fair market value of a share at the time of the redemption. The Company has the option to deliver shares of common stock in exchange for all or any portion of the cash requested. The common unitholders may not put the units for cash to the Company or the Operating Partnership. 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. MINORITY INTERESTS (Continued)

Unit Transactions

        The following table sets forth the changes in minority interest which relate to the common units in the Operating Partnership for the years ended December 31, 2008, 2007 and 2006: (dollars in thousands)

 
  Common
Units
  Common
Unitholders
  Total  

Balance at January 1, 2006

    13,650,439   $ 400,819   $ 400,819  
 

Net income

        35,026     35,026  
 

Distributions

        (38,585 )   (38,585 )
 

Issuance of common units

    2,167,053     97,517     97,517  
 

Redemption of common units for shares of common stock

    (475,209 )   (14,674 )   (14,674 )
               

Balance at December 31, 2006

    15,342,283   $ 480,103   $ 480,103  
 

Net income

        24,500     24,500  
 

Distributions

        (38,788 )   (38,788 )
 

Issuance of common units

    114,911     5,244     5,244  
 

Redemption of common units for shares of common stock

    (471,656 )   (14,623 )   (14,623 )
               

Balance at December 31, 2007

    14,985,538   $ 456,436   $ 456,436  
 

Net income

        11,817     11,817  
 

Distributions

        (37,891 )   (37,891 )
 

Issuance of common units

             
 

Redemption of common units for shares of common stock

    (547,807 )   (16,248 )   (16,248 )
               

Balance at December 31, 2008

    14,437,731     414,114     414,114  
               

Minority Interest Ownership

        As of December 31, 2008 and December 31, 2007, the minority interest common unitholders owned 18.6 percent and 18.5 percent of the Operating Partnership, respectively.

CONSOLIDATED JOINT VENTURES

        The Company has ownership interests in certain joint ventures which it consolidates. Various entities and/or individuals hold minority interests in these ventures.

11. EMPLOYEE BENEFIT 401(k) PLANS

        Employees of the Company, other than those assigned to the Gale Company and affiliated employers, who meet certain minimum age and service requirements are eligible to participate in the Mack-Cali Realty Corporation 401(k) Savings/Retirement Plan (the "401(k) Plan"). Eligible employees may elect to defer from 1 percent up to 30 percent of their annual compensation on a pre-tax basis to the 401(k) Plan, subject to certain limitations imposed by federal law. The amounts contributed by employees are immediately vested and non-forfeitable. The Company may make discretionary matching or profit sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year. Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit sharing contributions made on their behalf after two years of service with the

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11. EMPLOYEE BENEFIT 401(k) PLANS (Continued)


Company at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Company. All contributions are allocated as a percentage of compensation of the eligible participants for the Plan year. The assets of the 401(k) Plan are held in trust and a separate account is established for each participant. A participant may receive a distribution of his or her vested account balance in the 401(k) Plan in a single sum or in installment payments upon his or her termination of service with the Company. Total expense recognized by the Company for the 401(k) Plan for each of the three years ended December 31, 2008, 2007 and 2006 was $471,000, $400,000 and $400,000, respectively.

        All employees of the Gale Company and other affiliated participating employers, other than certain employees who are represented for collective bargaining purposes by a labor organization, who attained age 201/2 and completed one-half year of service with a participating employer were eligible to participate in the Gale Company Employee Savings Plan (the "Gale Plan"). The Gale Plan permitted eligible employees to defer their annual compensation on a pre-tax basis, subject to certain limitations imposed by federal law. The amounts contributed by employees were immediately vested and non-forfeitable. The Gale Company or the participant's employer were able to match the employee's deferral at the rate of 50 percent of the first six percent of the employee's annual compensation for employees who have at least 1,000 hours of service and are employed on the last day of the plan year. In addition, the Company, at management's discretion, was able to make discretionary contributions. Participants become 50 percent vested in employer contributions after two years of service and become 100 percent vested after three years. The assets of the Gale Plan were held in trust and a separate account was established for each participant. A participant may receive a distribution of his or her vested account balance in the Gale Plan in a single sum or in installment payments or in the form of an annuity upon his or her termination of service with the Company. Effective April 1, 2007, the Gale Plan was merged into the 401(k) Plan. In accordance with the Gale/Green transactions, the Company continued to make matching contributions to former Gale Plan participants under the Gale Plan matching contribution formula through the payroll period ending May 4, 2007. Moreover, federal law requires the Company to preserve (i) the Gale Plan vesting schedule for certain Gale Plan participants with three or more years of service as of May 4, 2007 and (ii) certain benefits previously offered under the Gale Plan. Total expense recognized by the Company for the Gale Plan for the years ended December 31, 2007 and 2006 was $111,000 and $370,000, respectively.

12. 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 judgment 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, 2008 and 2007. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

        Cash equivalents, marketable securities, receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2008 and 2007.

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12. DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

        The fair value of the Company's long-term debt, consisting of senior unsecured notes, unsecured revolving credit facility and mortgages, loans payable and other obligations aggregate approximately $1.8 billion as compared to the book value of approximately $2.2 billion as of December 31, 2008. The fair value of the long-term debt approximated the book value as of December 31, 2007. The fair value of the Company's long-term debt is estimated on a level 2 basis (as provided by FASB Statement No. 157), using a discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt and the unsecured notes was determined by discounting the future contractual interest and principal payments by a market rate.

        Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2008 and 2007. 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, 2008 and current estimates of fair value may differ significantly from the amounts presented herein.

13. COMMITMENTS AND CONTINGENCIES

TAX ABATEMENT AGREEMENTS

Harborside Financial Center

        Pursuant to agreements with the City of Jersey City, New Jersey, the Company is required to make payments in lieu of property taxes ("PILOT") on certain of its properties located in Jersey City, as follows:

        Total Project Costs for Harborside Plaza 5 and Harborside Plaza 4-A are currently being reviewed by the City of Jersey City. The Company believes that the ultimate resolution of such reviews will not have a material adverse effect on the Company's financial condition.

        At the conclusion of the above-referenced PILOT agreements, it is expected that the properties will be assessed by the municipality and be subject to real estate taxes at the then prevailing rates.

LITIGATION

        The Company is a defendant in litigation arising in the normal course of its business activities. Management does not believe that the ultimate resolution of these matters will have a materially adverse effect upon the Company's financial condition taken as whole.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. COMMITMENTS AND CONTINGENCIES (Continued)

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, 2008, are as follows: (dollars in thousands)

Year
  Amount  

2009

  $ 517  

2010

    501  

2011

    501  

2012

    501  

2013

    501  

2014 through 2084

    34,451  
       

Total

  $ 36,972  
       

        Ground lease expense incurred by the Company during the years ended December 31, 2008, 2007 and 2006 amounted to $701,000, $663,000 and $698,000, respectively.

OTHER

        The Company may not dispose of or distribute certain of its properties, currently comprising 11 properties with an aggregate net book value of approximately $203.5 million, which were originally contributed by certain unrelated common unitholders, without the express written consent of such common unitholders, 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 specific common unitholders 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 2016. Upon the expiration of the Property Lock-Ups, the Company is generally 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 specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the Company's Board of Directors; David S. Mack, director; Earle I. Mack, a former director; and Mitchell E. Hersh, president, chief executive officer and director), the Robert Martin Group (which includes Robert F. Weinberg, director; Martin S. Berger, a former director; and Timothy M. Jones, former president), the Cali Group (which includes John R. Cali, director, and John J. Cali, a former director). 126 of the Company's properties, with an aggregate net book value of approximately $1.8 billion, have lapsed restrictions and are subject to these conditions.

14. TENANT LEASES

        The Properties are leased to tenants under operating leases with various expiration dates through 2029. Substantially all of the leases provide for annual base rents plus recoveries and escalation charges

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. TENANT LEASES (Continued)


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, 2008 are as follows: (dollars in thousands)

Year
  Amount  

2009

  $ 580,443  

2010

    529,839  

2011

    465,666  

2012

    399,126  

2013

    317,692  

2014 and thereafter

    1,039,875  
       

Total

  $ 3,332,641  
       

15. 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 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 demands 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.

PREFERRED STOCK

        The Company has 10,000 shares of eight-percent Series C cumulative redeemable perpetual preferred stock issued and outstanding ("Series C Preferred Stock") in the form of 1,000,000 depositary shares ($25 stated value per depositary share). Each depositary share represents 1/100th of a share of Series C Preferred Stock.

        The Series C Preferred Stock has preference rights with respect to liquidation and distributions over the common stock. Holders of the Series C Preferred Stock, except under certain limited conditions, will not be entitled to vote on any matters. In the event of a cumulative arrearage equal to six quarterly dividends, holders of the Series C Preferred Stock will have the right to elect two additional members to serve on the Company's Board of Directors until dividends have been paid in full. At December 31, 2008, there were no dividends in arrears. The Company may issue unlimited additional preferred stock ranking on a parity with the Series C Preferred Stock but may not issue any preferred stock senior to the Series C Preferred Stock without the consent of two-thirds of its holders. The Series C Preferred Stock is essentially on an equivalent basis in priority with the Preferred Units.

        The Series C Preferred Stock is redeemable at the option of the Company, in whole or in part, at $25 per depositary share, plus accrued and unpaid dividends.

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SHARE REPURCHASE PROGRAM

        On September 12, 2007, the Board of Directors authorized an increase to the Company's repurchase program under which the Company was permitted to purchase up to $150 million of the Company's outstanding common stock ("Repurchase Program"). The Company has purchased and retired 2,893,630 shares of its outstanding common stock for an aggregate cost of approximately $104 million through December 31, 2008 under the Repurchase Program. The Company has a remaining authorization to repurchase up to approximately $46 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.

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

        The Company has a Dividend Reinvestment and Stock Purchase Plan (the "DRIP") which commenced in March 1999 under which 5.5 million shares of the Company's common stock have been reserved for future issuance. The DRIP provides for automatic reinvestment of all or a portion of a participant's dividends from the Company's shares of common stock. The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company's effective registration statement on Form S-3 filed with the Securities and Exchange Commission ("SEC") for the 5.5 million shares of the Company's common stock reserved for issuance under the DRIP.

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.

STOCK OPTION PLANS

        In May 2004, the Company established the 2004 Incentive Stock Plan under which a total of 2,500,000 shares have been reserved for issuance. No options have been granted through December 31, 2008 under this plan. In September 2000, the Company established the 2000 Employee Stock Option Plan ("2000 Employee Plan") and the Amended and Restated 2000 Director Stock Option Plan ("2000 Director Plan"). In May 2002, shareholders of the Company approved amendments to both plans to

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increase the total shares reserved for issuance under both of the 2000 plans from 2,700,000 to 4,350,000 shares of the Company's common stock (from 2,500,000 to 4,000,000 shares under the 2000 Employee Plan and from 200,000 to 350,000 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 had been reserved for issuance (4,980,188 shares under the Employee Plan and 400,000 shares under the Director Plan). As the Employee Plan and Director Plan expired in 2004, stock options may no longer be issued under those plans. Stock options granted under the Employee Plan in 1994 and 1995 became exercisable over a three-year period. Stock options granted under the 2000 Employee Plan and those options granted subsequent to 1995 under the Employee Plan 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, 2008 and December 31, 2007, the stock options outstanding had a weighted average remaining contractual life of approximately 3.3 and 4.1 years, respectively. Stock options exercisable at December 31, 2008 and December 31, 2007 had a weighted average remaining contractual life of approximately 3.5 and 4.0 years, respectively.

        Information regarding the Company's stock option plans is summarized below:

 
  Shares
Under
Options
  Weighted
Average
Exercise
Price
  Aggregate
Intrinsic
Value
$(000's)
 

Outstanding at January 1, 2006

    1,083,585   $ 29.63        

Exercised

    (352,699 ) $ 29.65        

Lapsed or canceled

    (40,580 ) $ 28.53        
               

Outstanding at December 31, 2006

    690,306   $ 29.68        

Exercised

    (132,770 ) $ 28.63        

Lapsed or canceled

    (59,805 ) $ 37.44        
               

Outstanding at December 31, 2007

    497,731   $ 29.03        

Exercised

    (81,675 ) $ 28.30        

Lapsed or canceled

    (20,515 ) $ 37.00        
               

Outstanding at December 31, 2008 ($24.63—$45.47)

    395,541   $ 28.77   $ (1,689 )
               

Options exercisable at December 31, 2007

    497,731   $ 29.03   $ 2,474  

Options exercisable at December 31, 2008

    395,541         $ (1,689 )
               

Available for grant at December 31, 2007

    4,537,574              

Available for grant at December 31, 2008

    4,538,294              
               

        No stock options were granted during the years ended December 31, 2008, 2007 and 2006.

        Cash received from options exercised under all stock option plans was $2.3 million, $3.8 million and $10.5 million for the years ended December 31, 2008, 2007 and 2006, respectively. The total intrinsic value of options exercised during the years ended December 31, 2008, 2007 and 2006 was

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15. STOCKHOLDERS' EQUITY (Continued)


$832,000, $3.2 million and $6.2 million, respectively. The Company has a policy of issuing new shares to satisfy stock option exercises.

        The Company recognized stock options expense of $0, $132,000 and $465,000 for the years ended December 31, 2008, 2007 and 2006, respectively. As of December 31, 2008, the Company had $7.8 million of total unrecognized compensation cost related to unvested stock compensation granted under the Company's stock compensation plans. That cost is expected to be recognized over a weighted average period of 3.4 years.

        The Company has issued stock awards ("Restricted Stock Awards") to officers, certain other employees, and nonemployee members of the Board of Directors of the Company, which allow the holders to each receive a certain amount of shares of the Company's common stock generally over a one to seven-year vesting period, of which 375,006 unvested shares were outstanding at December 31, 2008. Of the outstanding Restricted Stock Awards issued to executive officers and senior management, 232,586 are contingent upon the Company meeting certain performance goals to be set by the Committee each year, with the remaining based on time and service. All Restricted Stock Awards provided to the officers and certain other employees were issued under the 2000 Employee Plan and the Employee Plan. Restricted Stock Awards provided to directors were issued under the 2000 Director Plan.

        Information regarding the Restricted Stock Awards is summarized below:

 
  Shares   Weighted-Average
Grant—Date
Fair Value
 

Outstanding at January 1, 2006

    246,944   $ 37.17  

Granted (a)

    81,034   $ 52.94  

Vested

    (102,808 ) $ 43.72  

Forfeited

    (8,550 ) $ 43.59  
           

Outstanding at December 31, 2006

    216,620   $ 39.78  

Granted (b)

    113,118   $ 36.29  

Vested

    (158,927 ) $ 42.10  
           

Outstanding at December 31, 2007

    170,811   $ 35.32  

Granted (c)

    374,529   $ 30.72  

Vested

    (168,634 ) $ 27.01  

Forfeited

    (1,700 ) $ 35.13  
           

Outstanding at December 31, 2008

    375,006   $ 34.46  
           

(a)
Included in the 81,034 Restricted Stock Awards granted in 2006 were 67,834 awards granted to the Company's five executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas, Michael Grossman and Mark Yeager.

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15. STOCKHOLDERS' EQUITY (Continued)

(b)
Included in the 113,118 Restricted Stock Awards granted in 2007 were 82,518 awards granted to the Company's five executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas, Michael Grossman and Mark Yeager.

(c)
Included in the 374,529 Restricted Stock Awards granted in 2008 were 322,609 awards granted to the Company's five executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas, Michael Grossman and Mark Yeager.

DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS

        The Deferred Compensation Plan for Directors, 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.

        During the years ended December 31, 2008, 2007 and 2006, 12,889, 8,054 and 6,266 deferred stock units were earned, respectively. As of December 31, 2008 and 2007, there were 55,446 and 44,179 director stock units outstanding, respectively.

EARNINGS PER SHARE

        Basic EPS excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

        The following information presents the Company's results for the years ended December 31, 2008, 2007 and 2006 in accordance with FASB No. 128: (dollars in thousands)

 
  Year Ended December 31,  
 
  2008   2007   2006  

Computation of Basic EPS

                   

Income from continuing operations

  $ 53,726   $ 73,129   $ 84,679  

Deduct: Preferred stock dividends

    (2,000 )   (2,000 )   (2,000 )
               

Income from continuing operations available to common shareholders

    51,726     71,129     82,679  

Income from discontinued operations

        37,337     59,987  
               

Net income available to common shareholders

  $ 51,726   $ 108,466   $ 142,666  
               

Weighted average common shares

    65,489     67,026     62,237  
               

Basic EPS:

                   

Income from continuing operations

  $ 0.79   $ 1.06   $ 1.33  

Income from discontinued operations

        0.56     0.96  
               

Net income available to common shareholders

  $ 0.79   $ 1.62   $ 2.29  
               

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  Year Ended December 31,  
 
  2008   2007   2006  

Computation of Diluted EPS

                   

Income from continuing operations available to common shareholders

  $ 51,726   $ 71,129   $ 82,679  
 

Add: Income from continuing operations attributable to Operating Partnership—common units

    11,817     16,126     20,121  
               

Income from continuing operations for diluted earnings per share

    63,543     87,255     102,800  

Income from discontinued operations for diluted earnings per share

        45,711     74,892  
               

Net income available to common shareholders

  $ 63,543   $ 132,966   $ 177,692  
               

Weighted average common shares

    80,648     82,500     77,901  
               

Diluted EPS:

                   

Income from continuing operations

  $ 0.79   $ 1.06   $ 1.32  

Income from discontinued operations

        0.55     0.96  
               

Net income available to common shareholders

  $ 0.79   $ 1.61   $ 2.28  
               

        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,  
 
  2008   2007   2006  

Basic EPS shares

    65,489     67,026     62,237  

Add: Operating Partnership—common units

    14,915     15,190     15,286  
 

Stock options

    95     185     310  
 

Restricted Stock Awards

    149     99     68  
 

Stock Warrants

             
               

Diluted EPS Shares

    80,648     82,500     77,901  

        Not included in the computations of diluted EPS were 10,000, 5,000 and 0 stock options as such securities were anti-dilutive during the years ended December 31, 2008, 2007 and 2006, respectively. Also excluded from diluted EPS computations was 1,530,105 Series B Preferred Units, on an as converted basis into common units, as such securities were anti-dilutive during the year ended December 31, 2005. Unvested restricted stock outstanding as of December 31, 2008, 2007 and 2006 were 375,006, 170,811 and 216,620, respectively.

16. SEGMENT REPORTING

        The Company operates in two business segments: (i) real estate and (ii) construction services. The Company provides leasing, property and facilities management, acquisition, development, construction and tenant-related services for its portfolio. In May 2006, in conjunction with the Company's acquisition of the Gale Company and related businesses, the Company acquired a business specializing solely in construction and related services whose operations comprise the Company's construction services segment. The Company had no revenues from foreign countries recorded for the years ended December 31, 2008 and 2007. Included in the Company's revenues for the year ended December 31, 2006 was $4,806,000 derived from foreign countries. The Company had no long lived assets in foreign

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16. SEGMENT REPORTING (Continued)


locations as of December 31, 2008 and 2007. The accounting policies of the segments are the same as those described in Note 2: Significant Accounting Policies, excluding depreciation and amortization.

        The Company evaluates performance based upon net operating income from the combined properties in the real estate segment and net operating income from its construction services segment.

        Selected results of operations for the years ended December 31, 2008, 2007 and 2006 and selected asset information as of December 31, 2007 and 2006 regarding the Company's operating segments are as follows: (dollars in thousands)

 
  Real Estate   Construction Services   Corporate
& Other(d)
  Total Company  

Total revenues:

                         
 

2008

  $ 734,159   $ 58,105   $ (14,295 ) $ 777,969  
 

2007

    716,932     97,951     (6,533 )   808,350  
 

2006

    668,297     56,582     7,133     732,012  

Total operating and interest expenses(a):

                         
 

2008

  $ 268,302   $ 56,628   $ 163,307   $ 488,237 (e)
 

2007

    263,175     96,699     170,382     530,256 (f)
 

2006

    257,688     55,871     174,694     488,253 (g)

Equity in earnings of unconsolidated joint ventures:

                         
   

2008

  $ (39,752 )         $ (39,752 )
   

2007

    (5,918 )           (5,918 )
   

2006

    (5,556 )           (5,556 )

Net operating income(b):

                         
 

2008

  $ 426,105   $ 1,477   $ (177,602 ) $ 249,980 (e)
 

2007

    447,839     1,252     (176,915 )   272,176 (f)
 

2006

    405,053     711     (167,561 )   238,203 (g)

Total assets:

                         
 

2008

  $ 4,731,929   $ 25,845   $ (313,852 ) $ 4,443,922  
 

2007

    4,633,500   $ 35,019     (75,317 )   4,593,202  

Total long-lived assets(c):

                         
 

2008

  $ 4,191,036       $ (17,015 ) $ 4,174,021  
 

2007

    4,268,260         (1,017 )   4,267,243  

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17. RELATED PARTY TRANSACTIONS

        William L. Mack, Chairman of the Board of Directors of the Company ("W. Mack"), David S. Mack, a director of the Company, and Earle I. Mack, a former director of the Company ("E. Mack"), are the executive officers, directors and stockholders of a corporation that leases approximately 7,801 square feet at one of the Company's office properties, which is scheduled to expire in November 2011. The Company has recognized $258,000, $233,000 and $228,000 in revenue under this lease for the years ended December 31, 2008, 2007 and 2006, respectively, and had no accounts receivable from the corporation as of December 31, 2008 and 2007.

        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 former 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. In connection with the Company's acquisition of 65 Class A properties from The Robert Martin Company ("Robert Martin") on January 31, 1997, as subsequently modified, the Company granted Robert Martin the right to designate one seat on the Company's Board of Directors ("RM Board Seat"), which right has since expired. The RM Board Seat had historically been shared between Robert F. Weinberg and Martin S. Berger, each of whom had agreed that, for so long as either of them serves on the Board of Directors, that such board seat would be rotated among Mr. Berger and Mr. Weinberg annually at the time of each annual meeting of stockholders. At the Company's 2003 annual meeting of stockholders, Mr. Berger was elected to the Board of Directors and he continued to share his board seat with Mr. Weinberg. At the Company's 2006 annual meeting of stockholders, Mr. Weinberg was elected to the Board of Directors and he resigned after the Company's 2007 annual meeting of stockholder and Mr. Berger was appointed to his board seat. At the Company's 2008 annual meeting of Stockholders, Mr. Berger resigned and Mr. Weinberg was appointed to his board seat. The business that the Company has conducted with RMC Entities was as follows:

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        Through June 2007, Mr. Berger held a 24 percent interest, acted as chairman and chief executive officer, Mr. Weinberg also held a 24 percent interest and was a director, and W. Mack held a nine percent interest and was a director of City and Suburban Federal Savings Bank and/or one of its affiliates, which leases 12,842 square feet of space at one of the Company's office properties, which was scheduled to expire in April 2013. In July 2007, Mssrs. Berger, Weinberg and Mack sold their interests and no longer are directors of City and Suburban Federal Savings Bank and/or its affiliates. The Company recognized $190,000, $404,000 and $396,000 in revenue under the leases for the years ended December 31, 2007, 2006 and 2005, respectively, and had no accounts receivable from the company as of December 31, 2007 and 2006.

        The Company provides administrative support and related services to John J. Cali, who served as the Chairman Emeritus and a Board member of the Company, for which it was reimbursed $153,000, $192,000 and $184,000 from Mr. Cali for the years ended December 31, 2008, 2007 and 2006, respectively. On June 27, 2005, an affiliate of Mr. Cali entered into a three-year lease for 1,825 square feet of space at one of the Company's office properties, which is scheduled to expire at the end of 2011. On September 18, 2006, an affiliate of Mr. Cali entered into another lease agreement for 806 additional square feet, in the same building, commencing on December 29, 2006, which is scheduled to expire at the end of 2011. The Company recognized approximately $67,000, $68,000 and $47,000 in total revenue under the leases for the year ended December 31, 2008, 2007 and 2006, respectively, and had no accounts receivable from the affiliate as of December 31, 2008 and 2007.

18. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

Fair Value Measurements—SFAS 157 & The Fair Value Option for Financial Assets and Financial Liabilities—SFAS 159, and FASB Staff Position No. 157-2

        Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements" (SFAS 157) and SFAS No. 159 "The Fair Value Option for Financial Assets and Financial Liabilities" (SFAS 159). SFAS 157 defines fair value, establishes a framework for measuring fair value under accounting principles generally accepted in the United States (GAAP) and enhances disclosures about fair value measurements. Fair value is defined under SFAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. The impact of adopting both SFAS 157 and SFAS 159 was immaterial to the Company.

        In February 2008, the FASB issued FASB Staff Position 157-2, which deferred the effective date of SFAS 157 for one-year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value on a nonrecurring basis. SFAS 157 is now effective for those assets and liabilities for years beginning after November 15, 2008.

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18. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS (Continued)

FASB Statement No. 141(R)—(revised 2007), ("FASB No. 141(R)"), Business Combinations

        In December 2007, the FASB issued FASB No. 141(R) which establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements the identifiable assets acquired, liabilities assumed, any noncontrolling interest in the acquiree and goodwill acquired in a business combination. This statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

FASB Statement No. 160 ("FASB No. 160"), Noncontrolling Interests in Consolidated Financial Statements—an Amendment of ARB No. 51

        In December 2007, the FASB issued No. 160, which establishes and expands accounting and reporting standards for minority interests, which will be recharacterized as noncontrolling interests, in a subsidiary and the deconsolidation of a subsidiary. FASB 160 is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This statement is effective for fiscal years beginning on or after December 15, 2008. The Company is currently assessing the potential impact that the adoption of FASB No. 160 will have on its financial position and results of operations.

FASB Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets

        The FASB Staff Position (FSP) No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible assets under FASB Statement No. 142, Goodwill and Other Intangible Assets. The intent of the FSP is to improve the consistency between the useful life of a recognized intangible asset under FASB No. 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141 (revised 2007), Business Combinations, and other U.S. generally accepted accounting principles. The FSP shall be effective be effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The guidance for determining the useful life of a recognized intangible assets if this FSP shall be applied prospectively to intangible assets acquired after the effective date. The disclosure requirements shall be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. The Company does not believe that the adoption of this FSP will have a material effect on the financial position and results of operations.

FASB Staff Position No. 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active

        In October 2008, the FASB issued Staff Position No. 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active ("FSP 157-3"). FSP 157-3 clarified the application of SFAS 157 in cases where a market is not active. FSB 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The Company has considered the guidance provided by FSP 157-3 in its determination of estimated fair values as of December 31, 2008, and the impact was not material.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS (Continued)

FASB Statement No. 161 ("FASB No. 161"), Disclosures about Derivative Instruments and Hedging Activities—an Amendment of FASB Statement No. 133

        In March 2008, the FASB issued FASB No. 161. FASB No. 161 requires entities that utilize derivative instruments to provide qualitative disclosures about their objectives and strategies for using such instruments, as well as any details of credit-risk-related contingent features contained within derivatives. FASB No. 161 also requires entities to disclose additional information about the amounts and location of derivatives located within the financial statements, how the provisions of SFAS 133 have been applied, and the impact that hedges have on an entity's financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company does not anticipate the adoption of SFAS 161 will have a material impact on the disclosures contained in its financial statements.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited)

        The following summarizes the condensed quarterly financial information for the Company: (dollars in thousands)

Quarter Ended 2008
  December 31   September 30   June 30   March 31  

Total revenues

  $ 186,100   $ 204,363   $ 192,793   $ 194,713  
                   

Operating and other expenses

    63,448     74,022     70,937     71,437  

Direct construction costs

    3,562     11,104     10,329     12,654  

General and administrative

    10,885     10,767     11,237     11,095  

Depreciation and amortization

    50,085     49,242     47,586     47,722  
                   
   

Total expenses

    127,980     145,135     140,089     142,908  
                   

Operating Income

    58,120     59,228     52,704     51,805  

Interest expense

    (33,182 )   (31,163 )   (31,340 )   (32,460 )

Interest and other investment income

    270     257     302     556  

Equity in earnings (loss) of unconsolidated

                         
 

joint ventures

    (39,219 )   (269 )   884     (1,148 )

Minority interest in consolidated joint ventures

    378     147     16     123  

Gain on sale of investment in marketable securities

            471      

Gain on reduction of other obligations

    9,063              

Gain/(loss) on sale of land and other assets

                 
                   
   

Total other (expense) income

    (62,690 )   (31,028 )   (29,667 )   (32,929 )
                   

Income (loss) from continuing operations before

                         
 

minority interest in Operating Partnership

    (4,570 )   28,200     23,037     18,876  

Minority interest in Operating Partnership

    934     (5,131 )   (4,193 )   (3,427 )
                   

Income (loss) from continuing operations

    (3,636 )   23,069     18,844     15,449  

Discontinued operations (net of minority interest):

                         
 

Income from discontinued operations

                 
 

Realized gains (losses) and unrealized losses on disposition of rental property, net

                 
                   

Total discontinued operations, net

                 
                   

Net income (loss)

    (3,636 )   23,069     18,844     15,449  
 

Preferred stock dividends

    (500 )   (500 )   (500 )   (500 )
                   

Net income (loss) available to common shareholders

  $ (4,136 ) $ 22,569   $ 18,344   $ 14,949  
                   

Basic earnings per common share:

                         

Income (loss) from continuing operations

  $ (0.06 ) $ 0.34   $ 0.28   $ 0.23  

Discontinued operations

                 
                   

Net income (loss) available to common shareholders

  $ (0.06 ) $ 0.34   $ 0.28   $ 0.23  
                   

Diluted earnings per common share:

                         

Income (loss) from continuing operations

  $ (0.06 ) $ 0.34   $ 0.28   $ 0.23  

Discontinued operations

                 
                   

Net income (loss) available to common shareholders

  $ (0.06 ) $ 0.34   $ 0.28   $ 0.23  
                   

Dividends declared per common share

  $ 0.64   $ 0.64   $ 0.64   $ 0.64  
                   

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited) (Continued)


Quarter Ended 2007:
  December 31   September 30   June 30   March 31  

Total revenues

  $ 201,682   $ 212,881   $ 200,530   $ 193,257  
                   

Operating and other expenses

    67,281     71,462     66,529     65,641  

Direct construction costs

    19,155     22,479     22,634     20,911  

General and administrative

    14,811     13,411     12,870     11,070  

Depreciation and amortization

    48,500     49,790     43,823     41,451  
                   
   

Total expenses

    149,747     157,142     145,856     139,073  
                   

Operating Income

    51,935     55,739     54,674     54,184  

Interest expense

    (32,240 )   (32,163 )   (31,333 )   (30,936 )

Interest and other investment income

    497     985     1,571     1,617  

Equity in earnings (loss) of unconsolidated

                         
 

joint ventures

    (432 )   (1,559 )   (1,696 )   (2,231 )

Minority interest in consolidated joint ventures

    151     51     214     227  

Gain on sale of investment in marketable securities

                 

Gain on sale of investment in unconsolidated joint ventures

                 

Gain/(loss) on sale of land and other assets

                 
                   
   

Total other (expense) income

    (32,024 )   (32,686 )   (31,244 )   (31,323 )
                   

Income from continuing operations before minority

                         
 

interest in Operating Partnership

    19,911     23,053     23,430     22,861  

Minority interest in Operating Partnership

    (3,562 )   (4,146 )   (4,197 )   (4,221 )
                   

Income from continuing operations

    16,349     18,907     19,233     18,640  

Discontinued operations (net of minority interest):

                         
 

Income from discontinued operations

        20     598     439  
 

Realized gains (losses) and unrealized losses on disposition of rental property, net

        4,533     31,747      
                   

Total discontinued operations, net

        4,553     32,345     439  
                   

Net income

    16,349     23,460     51,578     19,079  
 

Preferred stock dividends

    (500 )   (500 )   (500 )   (500 )
                   

Net income available to common shareholders

  $ 15,849   $ 22,960   $ 51,078   $ 18,579  
                   

Basic earnings per common share:

                         

Income from continuing operations

  $ 0.24   $ 0.27   $ 0.28   $ 0.27  

Discontinued operations

        0.07     0.48     0.01  
                   

Net income available to common shareholders

  $ 0.24   $ 0.34   $ 0.76   $ 0.28  
                   

Diluted earnings per common share:

                         

Income from continuing operations

  $ 0.24   $ 0.27   $ 0.28   $ 0.27  

Discontinued operations

        0.07     0.47     0.01  
                   

Net income available to common shareholders

  $ 0.24   $ 0.34   $ 0.75   $ 0.28  
                   

Dividends declared per common share

  $ 0.64   $ 0.64   $ 0.64   $ 0.64  
                   

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MACK-CALI REALTY CORPORATION

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

December 31, 2008

(dollars in thousands)

SCHEDULE III

 
   
   
   
   
   
   
  Gross Amount at
Which Carried at
Close of Period(a)
   
 
 
   
   
   
  Initial Costs   Costs
Capitalized
Subsequent
to
Acquisition
   
 
Property Location(b)
  Year
Built
  Acquired   Related
Encumbrances
  Land   Building and
Improvements
  Land   Building and
Improvements
  Total   Accumulated
Depreciation(c)
 

NEW JERSEY

                                                             

Bergen County

                                                             

Fair Lawn

                                                             

17-17 Rte 208 North(O)

    1987     1995         3,067     19,415     1,317     3,067     20,732     23,799     7,232  

Fort Lee

                                                             

One Bridge Plaza(O)

    1981     1996         2,439     24,462     5,664     2,439     30,126     32,565     8,565  

2115 Linwood Avenue(O)

    1981     1998         474     4,419     4,364     474     8,783     9,257     1,986  

Little Ferry

                                                             

200 Riser Road(O)

    1974     1997         3,888     15,551     729     3,888     16,280     20,168     4,698  

Montvale

                                                             

95 Chestnut Ridge Road(O)

    1975     1997         1,227     4,907     718     1,227     5,625     6,852     1,860  

135 Chestnut Ridge Road(O)

    1981     1997         2,587     10,350     2,068     2,588     12,417     15,005     4,103  

Paramus

                                                             

15 East Midland Avenue(O)

    1988     1997     20,600     10,375     41,497     558     10,374     42,056     52,430     11,495  

461 From Road(O)

    1988     1997         13,194     52,778     264     13,194     53,042     66,236     14,676  

650 From Road(O)

    1978     1997     25,600     10,487     41,949     5,856     10,487     47,805     58,292     14,750  

140 East Ridgewood Avenue(O)

    1981     1997     16,100     7,932     31,463     5,875     7,932     37,338     45,270     9,500  

61 South Paramus Avenue(O)

    1985     1997     20,800     9,005     36,018     6,248     9,005     42,266     51,271     12,192  

Ridgefield Park

                                                             

105 Challenger Road(O)

        2006     19,188     4,714     29,768     95     4,714     29,863     34,577     2,820  

Rochelle Park

                                                             

120 Passaic Street(O)

    1972     1997         1,354     5,415     102     1,357     5,514     6,871     1,545  

365 West Passaic Street(O)

    1976     1997     12,250     4,148     16,592     3,586     4,148     20,178     24,326     6,021  

395 West Passaic Street(O)

    1979     2006     12,176     2,550     17,131     604     2,550     17,735     20,285     1,712  

Upper Saddle River

                                                             

1 Lake Street(O)

    1994     1997     35,550     13,952     55,812     157     13,953     55,968     69,921     15,421  

10 Mountainview Road(O)

    1986     1998         4,240     20,485     2,734     4,240     23,219     27,459     6,559  

Woodcliff Lake

                                                             

400 Chestnut Ridge Road(O)

    1982     1997         4,201     16,802     5,080     4,201     21,882     26,083     6,797  

470 Chestnut Ridge Road(O)

    1987     1997         2,346     9,385     1,430     2,346     10,815     13,161     2,665  

530 Chestnut Ridge Road(O)

    1986     1997         1,860     7,441     46     1,860     7,487     9,347     2,070  

300 Tice Boulevard(O)

    1991     1996         5,424     29,688     3,113     5,424     32,801     38,225     10,430  

50 Tice Boulevard(O)

    1984     1994     19,100     4,500         25,848     4,500     25,848     30,348     15,021  

Burlington County

                                                             

Burlington

                                                             

3 Terri Lane(F)

    1991     1998         652     3,433     1,744     658     5,171     5,829     1,842  

5 Terri Lane(F)

    1992     1998         564     3,792     2,150     569     5,937     6,506     2,155  

Moorestown

                                                             

2 Commerce Drive(F)

    1986     1999         723     2,893     724     723     3,617     4,340     800  

101 Commerce Drive(F)

    1988     1998         422     3,528     437     426     3,961     4,387     1,120  

102 Commerce Drive(F)

    1987     1999         389     1,554     321     389     1,875     2,264     498  

201 Commerce Drive(F)

    1986     1998         254     1,694     615     258     2,305     2,563     767  

202 Commerce Drive(F)

    1988     1999         490     1,963     455     490     2,418     2,908     727  

1 Executive Drive(F)

    1989     1998         226     1,453     418     228     1,869     2,097     662  

2 Executive Drive(F)

    1988     2000         801     3,206     1,119     801     4,325     5,126     1,144  

101 Executive Drive(F)

    1990     1998         241     2,262     634     244     2,893     3,137     870  

102 Executive Drive(F)

    1990     1998         353     3,607     431     357     4,034     4,391     1,127  

225 Executive Drive(F)

    1990     1998         323     2,477     482     326     2,956     3,282     934  

97 Foster Road(F)

    1982     1998         208     1,382     432     211     1,811     2,022     510  

1507 Lancer Drive(F)

    1995     1998         119     1,106     51     120     1,156     1,276     329  

840 North Lenola Road(F)

    1995     1998         329     2,366     633     333     2,995     3,328     993  

844 North Lenola Road(F)

    1995     1998         239     1,714     260     241     1,972     2,213     672  

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MACK-CALI REALTY CORPORATION

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2008

(dollars in thousands)

 
   
   
   
   
   
   
  Gross Amount at
Which Carried at
Close of Period(a)
   
 
 
   
   
   
  Initial Costs   Costs
Capitalized
Subsequent
to
Acquisition
   
 
Property Location(b)
  Year
Built
  Acquired   Related
Encumbrances
  Land   Building and
Improvements
  Land   Building and
Improvements
  Total   Accumulated
Depreciation(c)
 

915 North Lenola Road(F)

    1998     2000         508     2,034     468     508     2,502     3,010     696  

1245 North Church Street(F)

    1998     2001         691     2,810     107     691     2,917     3,608     559  

1247 North Church Street(F)

    1998     2001         805     3,269     205     805     3,474     4,279     709  

1256 North Church(F)

    1984     1998         354     3,098     532     357     3,627     3,984     1,275  

224 Strawbridge Drive(O)

    1984     1997         766     4,335     3,982     767     8,316     9,083     3,276  

228 Strawbridge Drive(O)

    1984     1997         766     4,334     2,720     767     7,053     7,820     2,073  

232 Strawbridge Drive(O)

    1986     2004         1,521     7,076     1,935     1,521     9,011     10,532     1,359  

2 Twosome Drive(F)

    2000     2001         701     2,807     18     701     2,825     3,526     541  

30 Twosome Drive(F)

    1997     1998         234     1,954     500     236     2,452     2,688     669  

31 Twosome Drive(F)

    1998     2001         815     3,276     178     815     3,454     4,269     679  

40 Twosome Drive(F)

    1996     1998         297     2,393     272     301     2,661     2,962     882  

41 Twosome Drive(F)

    1998     2001         605     2,459     43     605     2,502     3,107     507  

50 Twosome Drive(F)

    1997     1998         301     2,330     120     304     2,447     2,751     745  

West Deptford

                                                             

1451 Metropolitan Drive(F)

    1996     1998         203     1,189     30     206     1,216     1,422     358  

Essex County

                                                             

Millburn

                                                             

150 J.F. Kennedy Parkway(O)

    1980     1997         12,606     50,425     8,683     12,606     59,108     71,714     18,054  

Roseland

                                                             

101 Eisenhower Parkway(O)

    1980     1994         228         15,330     228     15,330     15,558     10,191  

103 Eisenhower Parkway(O)

    1985     1994                 14,750     2,300     12,450     14,750     7,382  

105 Eisenhower Parkway(O)

    2001     2001         4,430     42,898     2,803         50,131     50,131     12,728  

Hudson County

                                                             

Jersey City

                                                             

Harborside Financial Center Plaza 1(O)

    1983     1996         3,923     51,013     27,429     3,923     78,442     82,365     18,092  

Harborside Financial Center Plaza 2(O)

    1990     1996         17,655     101,546     16,821     15,060     120,962     136,022     37,198  

Harborside Financial Center Plaza 3(O)

    1990     1996         17,655     101,878     16,489     15,060     120,962     136,022     37,198  

Harborside Financial Center Plaza 4A(O)

    2000     2000         1,244     56,144     8,686     1,244     64,830     66,074     15,576  

Harborside Financial Center Plaza 5(O)

    2002     2002     239,795     6,218     170,682     55,275     5,705     226,470     232,175     41,942  

101 Hudson Street(O)

    1992     2004         45,530     271,376     8,935     45,530     280,311     325,841     36,557  

Mercer County

                                                             

Hamilton Township

                                                             

3 AAA Drive(O)

    1981     2007         242     3,218     885     242     4,103     4,345     203  

100 Horizon Drive(F)

    1989     1995         205     1,676     218     295     1,804     2,099     610  

200 Horizon Drive(F)

    1991     1995         205     3,027     357     328     3,261     3,589     1,159  

300 Horizon Drive(F)

    1989     1995         379     4,355     1,253     501     5,486     5,987     2,136  

500 Horizon Drive(F)

    1990     1995         379     3,395     774     466     4,082     4,548     1,503  

600 Horizon Drive(F)

    2002     2002         0     7,549     651     685     7,515     8,200     1,143  

700 Horizon Drive(O)

    2007     2007         490     43     16,480     865     16,148     17,013     599  

2 South Gold Drive(O)

    1974     2007         476     3,487     388     476     3,875     4,351     168  

Princeton

                                                             

103 Carnegie Center(O)

    1984     1996         2,566     7,868     2,200     2,566     10,068     12,634     3,612  

100 Overlook Center(O)

    1988     1997         2,378     21,754     4,853     2,378     26,607     28,985     8,307  

5 Vaughn Drive(O)

    1987     1995         657     9,800     2,165     657     11,965     12,622     4,660  

Middlesex County

                                                             

East Brunswick

                                                             

377 Summerhill Road(O)

    1977     1997         649     2,594     458     649     3,052     3,701     834  

Edison

                                                             

343 Thornall Street(O)

    1991     2006         6,027     39,101     4,868     6,027     43,969     49,996     4,177  

121


Table of Contents


MACK-CALI REALTY CORPORATION

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2008

(dollars in thousands)

 
   
   
   
   
   
   
  Gross Amount at
Which Carried at
Close of Period(a)
   
 
 
   
   
   
  Initial Costs   Costs
Capitalized
Subsequent
to
Acquisition
   
 
Property Location(b)
  Year
Built
  Acquired   Related
Encumbrances
  Land   Building and
Improvements
  Land   Building and
Improvements
  Total   Accumulated
Depreciation(c)
 

Piscataway

                                                             

30 Knightsbridge Road, Building 3(O)

    1977     2004         1,030     7,269     340     1,034     7,604     8,639     854  

30 Knightsbridge Road, Building 4(O)

    1977     2004         1,433     10,121     375     1,429     10,501     11,929     1,179  

30 Knightsbridge Road, Building 5(O)

    1977     2004         2,979     21,035     9,786     2,979     30,821     33,800     3,833  

30 Knightsbridge Road, Building 6(O)

    1977     2004         448     3,161     4,479     448     7,640     8,088     793  

Plainsboro

                                                             

500 College Road East(O)

    1984     1998         614     20,626     1,759     614     22,385     22,999     6,207  

South Brunswick

                                                             

3 Independence Way(O)

    1983     1997         1,997     11,391     2,100     1,997     13,491     15,488     3,894  

Woodbridge

                                                             

581 Main Street(O)

    1991     1997         3,237     12,949     24,577     8,115     32,648     40,763     8,545  

Monmouth County

                                                             

Middletown

                                                             

23 Main Street(O)

    1977     2005     32,521     4,336     19,544     8,903     4,336     28,447     32,783     3,989  

2 Paragon Way(O)

    1989     2005         999     4,619     1,023     999     5,642     6,641     843  

3 Paragon Way(O)

    1991     2005         1,423     6,041     2,033     1,423     8,074     9,497     987  

4 Paragon Way(O)

    2002     2005         1,961     8,827     69     1,961     8,896     10,857     1,436  

One River Center, Building 1(O)

    1983     2004         3,070     17,414     2,411     2,451     20,444     22,895     3,437  

One River Center, Building 2(O)

    1983     2004         2,468     15,043     974     2,452     16,033     18,485     1,784  

One River Center, Building 3(O)

    1984     2004         4,051     24,790     4,316     4,627     28,530     33,157     2,780  

100 Willowbrook Road(O)

    1988     2005         1,264     5,573     875     1,264     6,448     7,712     821  

Neptune

                                                             

3600 Route 66(O)

    1989     1995         1,098     18,146     1,476     1,098     19,622     20,720     6,244  

Wall Township

                                                             

1305 Campus Parkway(O)

    1988     1995         335     2,560     516     335     3,076     3,411     1,001  

1325 Campus Parkway(F)

    1988     1995         270     2,928     1,337     270     4,265     4,535     1,921  

1340 Campus Parkway(F)

    1992     1995         489     4,621     1,825     489     6,446     6,935     2,191  

1345 Campus Parkway(F)

    1995     1997         1,023     5,703     1,639     1,024     7,341     8,365     2,772  

1350 Campus Parkway(O)

    1990     1995         454     7,134     1,111     454     8,245     8,699     2,938  

1433 Highway 34(F)

    1985     1995         889     4,321     1,070     889     5,391     6,280     1,827  

1320 Wyckoff Avenue(F)

    1986     1995         255     1,285     75     255     1,360     1,615     441  

1324 Wyckoff Avenue(F)

    1987     1995         230     1,439     246     230     1,685     1,915     568  

Morris County

                                                             

Florham Park

                                                             

325 Columbia Parkway(O)

    1987     1994         1,564         15,150     1,564     15,150     16,714     7,573  

Morris Plains

                                                             

250 Johnson Road(O)

    1977     1997         2,004     8,016     1,175     2,004     9,191     11,195     2,704  

201 Littleton Road(O)

    1979     1997         2,407     9,627     1,105     2,407     10,732     13,139     3,214  

Morris Township

                                                             

412 Mt. Kemble Avenue(O)

    1985     2004         4,360     33,167     10,582     4,360     43,749     48,109     4,887  

Parsippany

                                                             

4 Campus Drive(O)

    1983     2001         5,213     20,984     1,889     5,213     22,873     28,086     4,926  

6 Campus Drive(O)

    1983     2001         4,411     17,796     3,368     4,411     21,164     25,575     4,759  

7 Campus Drive(O)

    1982     1998         1,932     27,788     4,314     1,932     32,102     34,034     7,769  

8 Campus Drive(O)

    1987     1998         1,865     35,456     4,229     1,865     39,685     41,550     12,047  

9 Campus Drive(O)

    1983     2001         3,277     11,796     17,827     5,842     27,058     32,900     7,769  

4 Century Drive(O)

    1981     2004         1,787     9,575     1,519     1,787     11,094     12,881     1,371  

5 Century Drive(O)

    1981     2004         1,762     9,341     2,120     1,762     11,461     13,223     1,063  

6 Century Drive(O)

    1981     2004         1,289     6,848     2,812     1,289     9,660     10,949     1,581  

2 Dryden Way(O)

    1990     1998         778     420     110     778     530     1,308     134  

4 Gatehall Drive(O)

    1988     2000         8,452     33,929     4,172     8,452     38,101     46,553     8,952  

2 Hilton Court(O)

    1991     1998         1,971     32,007     3,069     1,971     35,076     37,047     10,193  

1633 Littleton Road(O)

    1978     2002         2,283     9,550     163     2,355     9,641     11,996     2,162  

122


Table of Contents


MACK-CALI REALTY CORPORATION

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2008

(dollars in thousands)

 
   
   
   
   
   
   
  Gross Amount at
Which Carried at
Close of Period(a)
   
 
 
   
   
   
  Initial Costs   Costs
Capitalized
Subsequent
to
Acquisition
   
 
Property Location(b)
  Year
Built
  Acquired   Related
Encumbrances
  Land   Building and
Improvements
  Land   Building and
Improvements
  Total   Accumulated
Depreciation(c)
 

600 Parsippany Road(O)

    1978     1994         1,257     5,594     3,255     1,257     8,849     10,106     3,420  

1 Sylvan Way(O)

    1989     1998         1,689     24,699     394     1,021     25,761     26,782     8,548  

5 Sylvan Way(O)

    1989     1998         1,160     25,214     2,259     1,161     27,472     28,633     7,998  

7 Sylvan Way(O)

    1987     1998         2,084     26,083     2,092     2,084     28,175     30,259     8,431  

35 Waterview Boulevard(O)

    1990     2006     19,868     5,133     28,059     671     5,133     28,730     33,863     2,815  

5 Wood Hollow Road(O)

    1979     2004         5,302     26,488     12,687     5,302     39,175     44,477     5,221  

Passaic County

                                                             

Clifton

                                                             

777 Passaic Avenue(O)

    1983     1994                 6,834     1,100     5,734     6,834     3,186  

Totowa

                                                             

1 Center Court(F)

    1999     1999         270     1,824     228     270     2,052     2,322     643  

2 Center Court(F)

    1998     1998         191     0     2,255     191     2,255     2,446     598  

11 Commerce Way(F)

    1989     1995         586     2,986     58     586     3,044     3,630     1,002  

20 Commerce Way(F)

    1992     1995         516     3,108     81     516     3,189     3,705     1,075  

29 Commerce Way(F)

    1990     1995         586     3,092     950     586     4,042     4,628     1,655  

40 Commerce Way(F)

    1987     1995         516     3,260     209     516     3,469     3,985     1,118  

45 Commerce Way(F)

    1992     1995         536     3,379     515     536     3,894     4,430     1,361  

60 Commerce Way(F)

    1988     1995         526     3,257     733     526     3,990     4,516     1,329  

80 Commerce Way(F)

    1996     1996         227         2,524     453     2,298     2,751     686  

100 Commerce Way(F)

    1996     1996         226         (226 )                

120 Commerce Way(F)

    1994     1995         228         2,819     457     2,590     3,047     918  

140 Commerce Way(F)

    1994     1995         229         (229 )                

999 Riverview Drive(O)

    1988     1995         476     6,024     2,024     1,102     7,422     8,524     2,557  

Somerset County

                                                             

Basking Ridge

                                                             

106 Allen Road(O)

    2000     2000         3,853     14,465     4,014     4,093     18,239     22,332     6,340  

222 Mt. Airy Road(O)

    1986     1996         775     3,636     2,648     775     6,284     7,059     1,739  

233 Mt. Airy Road(O)

    1987     1996         1,034     5,033     1,646     1,034     6,679     7,713     2,667  

Bridgewater

                                                             

721 Route 202/206(O)

    1989     1997         6,730     26,919     8,353     6,730     35,272     42,002     8,555  

Union County

                                                             

Clark

                                                             

100 Walnut Avenue(O)

    1985     1994                 17,627     1,822     15,805     17,627     8,796  

Cranford

                                                             

6 Commerce Drive(O)

    1973     1994         250         2,953     250     2,953     3,203     2,026  

11 Commerce Drive(O)

    1981     1994         470         6,876     470     6,876     7,346     3,756  

12 Commerce Drive(O)

    1967     1997         887     3,549     1,654     887     5,203     6,090     1,699  

14 Commerce Drive(O)

    1971     2003         1,283     6,344     286     1,283     6,630     7,913     847  

20 Commerce Drive(O)

    1990     1994         2,346         20,651     2,346     20,651     22,997     9,089  

25 Commerce Drive(O)

    1971     2002         1,520     6,186     393     1,520     6,579     8,099     1,901  

65 Jackson Drive(O)

    1984     1994         541         6,312     542     6,311     6,853     3,588  

New Providence

                                                             

890 Mountain Road(O)

    1977     1997         2,796     11,185     5,042     3,765     15,258     19,023     4,242  

NEW YORK

                                                             

New York County

                                                             

New York

                                                             

125 Broad Street(O)

    1970     2007           50,191     207,002     7,628     50,191     214,630     264,821     11,224  

Rockland County

                                                             

Suffern

                                                             

400 Rella Boulevard(O)

    1988     1995         1,090     13,412     3,493     1,090     16,905     17,995     6,392  

Westchester County

                                                             

Elmsford

                                                             

11 Clearbrook Road(F)

    1974     1997         149     2,159     440     149     2,599     2,748     800  

75 Clearbrook Road(F)

    1990     1997         2,314     4,716     107     2,314     4,823     7,137     1,434  

100 Clearbrook Road(O)

    1975     1997         220     5,366     1,293     220     6,659     6,879     2,190  

125 Clearbrook Road(F)

    2002     2002         1,055     3,676     (51 )   1,055     3,625     4,680     1,092  

150 Clearbrook Road(F)

    1975     1997         497     7,030     1,206     497     8,236     8,733     2,512  

123


Table of Contents


MACK-CALI REALTY CORPORATION

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2008

(dollars in thousands)

 
   
   
   
   
   
   
  Gross Amount at
Which Carried at
Close of Period(a)
   
 
 
   
   
   
  Initial Costs   Costs
Capitalized
Subsequent
to
Acquisition
   
 
Property Location(b)
  Year
Built
  Acquired   Related
Encumbrances
  Land   Building and
Improvements
  Land   Building and
Improvements
  Total   Accumulated
Depreciation(c)
 

175 Clearbrook Road(F)

    1973     1997         655     7,473     975     655     8,448     9,103     2,707  

200 Clearbrook Road(F)

    1974     1997         579     6,620     1,031     579     7,651     8,230     2,516  

250 Clearbrook Road(F)

    1973     1997         867     8,647     1,679     867     10,326     11,193     3,257  

50 Executive Boulevard(F)

    1969     1997         237     2,617     307     237     2,924     3,161     841  

77 Executive Boulevard(F)

    1977     1997         34     1,104     201     34     1,305     1,339     416  

85 Executive Boulevard(F)

    1968     1997         155     2,507     606     155     3,113     3,268     937  

101 Executive Boulevard(O)

    1971     1997         267     5,838     901     267     6,739     7,006     2,084  

300 Executive Boulevard(F)

    1970     1997         460     3,609     336     460     3,945     4,405     1,186  

350 Executive Boulevard(F)

    1970     1997         100     1,793     153     100     1,946     2,046     676  

399 Executive Boulevard(F)

    1962     1997         531     7,191     153     531     7,344     7,875     2,179  

400 Executive Boulevard(F)

    1970     1997         2,202     1,846     498     2,202     2,344     4,546     883  

500 Executive Boulevard(F)

    1970     1997         258     4,183     802     258     4,985     5,243     1,741  

525 Executive Boulevard(F)

    1972     1997         345     5,499     775     345     6,274     6,619     2,054  

700 Executive Boulevard(L)

    N/A     1997         970             970         970      

3 Odell Plaza(O)

    1984     2003         1,322     4,777     2,301     1,322     7,078     8,400     1,343  

5 Skyline Drive(F)

    1980     2001         2,219     8,916     1,468     2,219     10,384     12,603     2,574  

6 Skyline Drive(F)

    1980     2001         740     2,971     24     740     2,995     3,735     1,025  

555 Taxter Road(O)

    1986     2000         4,285     17,205     5,155     4,285     22,360     26,645     5,575  

565 Taxter Road(O)

    1988     2000         4,285     17,205     3,680     4,233     20,937     25,170     5,569  

570 Taxter Road(O)

    1972     1997         438     6,078     1,311     438     7,389     7,827     2,447  

1 Warehouse Lane(I)

    1957     1997         3     268     248     3     516     519     138  

2 Warehouse Lane(I)

    1957     1997         4     672     109     4     781     785     244  

3 Warehouse Lane(I)

    1957     1997         21     1,948     526     21     2,474     2,495     867  

4 Warehouse Lane(I)

    1957     1997         84     13,393     2,665     85     16,057     16,142     4,924  

5 Warehouse Lane(I)

    1957     1997         19     4,804     1,462     19     6,266     6,285     1,931  

6 Warehouse Lane(I)

    1982     1997         10     4,419     460     10     4,879     4,889     1,406  

1 Westchester Plaza(F)

    1967     1997         199     2,023     192     199     2,215     2,414     667  

2 Westchester Plaza(F)

    1968     1997         234     2,726     250     234     2,976     3,210     896  

3 Westchester Plaza(F)

    1969     1997         655     7,936     580     655     8,516     9,171     2,673  

4 Westchester Plaza(F)

    1969     1997         320     3,729     451     320     4,180     4,500     1,185  

5 Westchester Plaza(F)

    1969     1997         118     1,949     311     118     2,260     2,378     757  

6 Westchester Plaza(F)

    1968     1997         164     1,998     198     164     2,196     2,360     705  

7 Westchester Plaza(F)

    1972     1997         286     4,321     215     286     4,536     4,822     1,356  

8 Westchester Plaza(F)

    1971     1997         447     5,262     1,035     447     6,297     6,744     1,896  

Hawthorne

                                                             

200 Saw Mill River Road(F)

    1965     1997         353     3,353     254     353     3,607     3,960     1,198  

1 Skyline Drive(O)

    1980     1997         66     1,711     301     66     2,012     2,078     634  

2 Skyline Drive(O)

    1987     1997         109     3,128     471     109     3,599     3,708     1,279  

4 Skyline Drive(F)

    1987     1997         363     7,513     1,723     363     9,236     9,599     2,985  

7 Skyline Drive(O)

    1987     1998         330     13,013     1,873     330     14,886     15,216     4,218  

8 Skyline Drive(F)

    1985     1997         212     4,410     2,143     212     6,553     6,765     2,574  

10 Skyline Drive(F)

    1985     1997         134     2,799     605     134     3,404     3,538     955  

11 Skyline Drive(F)

    1989     1997         0     4,788     430         5,218     5,218     1,739  

12 Skyline Drive(F)

    1999     1999         1,562     3,254     1,205     1,320     4,701     6,021     1,739  

14 Skyline Drive(L)

    N/A     2002         964         16     980         980      

15 Skyline Drive(F)

    1989     1997             7,449     482         7,931     7,931     2,520  

16 Skyline Drive(L)

    N/A     2002         850         31     881         881      

17 Skyline Drive(O)

    1989     1997             7,269     1,059         8,328     8,328     2,481  

19 Skyline Drive(O)

    1982     1997         2,355     34,254     3,489     2,356     37,742     40,098     13,050  

Tarrytown

                                                             

200 White Plains Road(O)

    1982     1997         378     8,367     1,349     378     9,716     10,094     3,011  

220 White Plains Road(O)

    1984     1997         367     8,112     1,277     367     9,389     9,756     2,855  

230 White Plains Road(R)

    1984     1997         124     1,845     107     124     1,952     2,076     559  

White Plains

                                                             

1 Barker Avenue(O)

    1975     1997         208     9,629     1,235     207     10,865     11,072     3,398  

3 Barker Avenue(O)

    1983     1997         122     7,864     1,980     122     9,844     9,966     3,403  

50 Main Street(O)

    1985     1997         564     48,105     9,093     564     57,198     57,762     17,859  

11 Martine Avenue(O)

    1987     1997         127     26,833     5,706     127     32,539     32,666     10,845  

1 Water Street(O)

    1979     1997         211     5,382     1,177     211     6,559     6,770     2,174  

Yonkers

                                                             

100 Corporate Boulevard(F)

    1987     1997         602     9,910     1,182     602     11,092     11,694     3,482  

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MACK-CALI REALTY CORPORATION

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2008

(dollars in thousands)

 
   
   
   
   
   
   
  Gross Amount at
Which Carried at
Close of Period(a)
   
 
 
   
   
   
  Initial Costs   Costs
Capitalized
Subsequent
to
Acquisition
   
 
Property Location(b)
  Year
Built
  Acquired   Related
Encumbrances
  Land   Building and
Improvements
  Land   Building and
Improvements
  Total   Accumulated
Depreciation(c)
 

200 Corporate Boulevard South(F)

    1990     1997         502     7,575     566     502     8,141     8,643     2,374  

250 Corporate Boulevard South(L)

    N/A     2002         1,028         276     1,139     165     1,304      

1 Enterprise Boulevard(L)

    N/A     1997         1,379         1     1,380         1,380      

1 Executive Boulevard(O)

    1982     1997         1,104     11,904     2,406     1,105     14,309     15,414     4,639  

2 Executive Plaza(R)

    1986     1997         89     2,439     3     89     2,442     2,531     727  

3 Executive Plaza(O)

    1987     1997         385     6,256     1,806     385     8,062     8,447     3,087  

4 Executive Plaza(F)

    1986     1997         584     6,134     1,905     584     8,039     8,623     2,696  

6 Executive Plaza(F)

    1987     1997         546     7,246     538     546     7,784     8,330     2,360  

1 Odell Plaza(F)

    1980     1997         1,206     6,815     1,041     1,206     7,856     9,062     2,336  

5 Odell Plaza(F)

    1983     1997         331     2,988     670     331     3,658     3,989     1,013  

7 Odell Plaza(F)

    1984     1997         419     4,418     497     419     4,915     5,334     1,465  

PENNSYLVANIA

                                                             

Chester County

                                                             

Berwyn

                                                             

1000 Westlakes Drive(O)

    1989     1997         619     9,016     565     619     9,581     10,200     3,042  

1055 Westlakes Drive(O)

    1990     1997         1,951     19,046     4,230     1,951     23,276     25,227     8,036  

1205 Westlakes Drive(O)

    1988     1997         1,323     20,098     2,815     1,323     22,913     24,236     7,080  

1235 Westlakes Drive(O)

    1986     1997         1,417     21,215     3,640     1,418     24,854     26,272     7,842  

Delaware County

                                                             

Lester

                                                             

100 Stevens Drive(O)

    1986     1996         1,349     10,018     3,264     1,349     13,282     14,631     4,552  

200 Stevens Drive(O)

    1987     1996         1,644     20,186     4,762     1,644     24,948     26,592     8,559  

300 Stevens Drive(O)

    1992     1996         491     9,490     2,296     491     11,786     12,277     4,111  

Media

                                                             

1400 Providence Rd, Center I(O)

    1986     1996         1,042     9,054     2,776     1,042     11,830     12,872     4,151  

1400 Providence Rd, Center II(O)

    1990     1996         1,543     16,464     4,898     1,544     21,361     22,905     7,180  

Montgomery County

                                                             

Bala Cynwyd

                                                             

150 Monument Road(O)

    1981     2004         2,845     14,780     3,474     2,845     18,254     21,099     2,152  

Blue Bell

                                                             

4 Sentry Parkway(O)

    1982     2003         1,749     7,721     204     1,749     7,925     9,674     1,052  

16 Sentry Parkway(O)

    1988     2002         3,377     13,511     1,424     3,377     14,935     18,312     3,669  

18 Sentry Parkway(O)

    1988     2002         3,515     14,062     1,642     3,515     15,704     19,219     3,707  

King of Prussia

                                                             

2200 Renaissance Blvd(O)

    1985     2002     21,635     5,347     21,453     3,808     5,347     25,261     30,608     6,639  

Lower Providence

                                                             

1000 Madison Avenue(O)

    1990     1997         1,713     12,559     2,745     1,714     15,303     17,017     4,502  

Plymouth Meeting

                                                             

1150 Plymouth Meeting

                                                             
 

Mall(O)

    1970     1997         125     499     31,122     6,219     25,527     31,746     8,002  

Five Sentry Parkway East(O)

    1984     1996         642     7,992     2,743     642     10,735     11,377     2,667  

Five Sentry Parkway West(O)

    1984     1996         268     3,334     606     268     3,940     4,208     1,066  

CONNETICUT

                                                             

Fairfield County

                                                             

Norwalk

                                                             

40 Richards Avenue(O)

    1985     1998         1,087     18,399     3,338     1,087     21,737     22,824     5,663  

Stamford

                                                             

1266 East Main Street(O)

    1984     2002     17,109     6,638     26,567     3,850     6,638     30,417     37,055     6,485  

419 West Avenue(F)

    1986     1997         4,538     9,246     1,241     4,538     10,487     15,025     3,504  

500 West Avenue(F)

    1988     1997         415     1,679     199     415     1,878     2,293     644  

550 West Avenue(F)

    1990     1997         1,975     3,856     77     1,975     3,933     5,908     1,155  

600 West Avenue(F)

    1999     1999         2,305     2,863     839     2,305     3,702     6,007     858  

650 West Avenue(F)

    1998     1998         1,328     0     3,292     1,328     3,292     4,620     871  

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MACK-CALI REALTY CORPORATION

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2008

(dollars in thousands)

 
   
   
   
   
   
   
  Gross Amount at
Which Carried at
Close of Period(a)
   
 
 
   
   
   
  Initial Costs   Costs
Capitalized
Subsequent
to
Acquisition
   
 
Property Location(b)
  Year
Built
  Acquired   Related
Encumbrances
  Land   Building and
Improvements
  Land   Building and
Improvements
  Total   Accumulated
Depreciation(c)
 

DISTRICT OF COLUMBIA

                                                             

Washington,

                                                             

1201 Connecticut Avenue, NW(O)

    1940     1999         14,228     18,571     4,480     14,228     23,051     37,279     5,603  

1400 L Street, NW(O)

    1987     1998         13,054     27,423     7,282     13,054     34,705     47,759     8,967  

MARYLAND

                                                             

Prince George's County

                                                             

Greenbelt

                                                             

9200 Edmonston Road(O)

    1973/03     2006     4,955     1,547     4,131     66     1,547     4,197     5,744     508  

6301 Ivy Lane(O)

    1979/95     2006     6,480     5,168     14,706     967     5,168     15,673     20,841     1,716  

6303 Ivy Lane(O)

    1980/03     2006         5,115     13,860     205     5,115     14,065     19,180     1,534  

6305 Ivy Lane(O)

    1982/95     2006     6,901     5,615     14,420     832     5,615     15,252     20,867     1,822  

6404 Ivy Lane(O)

    1987     2006         7,578     20,785     512     7,578     21,297     28,875     2,787  

6406 Ivy Lane(O)

    1991     2006         7,514     21,152     210     7,514     21,362     28,876     1,875  

6411 Ivy Lane(O)

    1984/05     2006         6,867     17,470     601     6,867     18,071     24,938     2,149  

Lanham

                                                             

4200 Parliament Place(O)

    1989     1998         2,114     13,546     649     1,393     14,916     16,309     4,676  

Projects Under Development and Developable Land

               
   
126,998
   
42,851
         
126,998
   
42,851
   
169,849
   
11
 

Furniture, Fixtures and Equipment

               
               
8,892
         
8,892
   
8,892
   
7,167
 

TOTALS

                530,628     720,584     3,461,849     781,347     731,086     4,232,694     4,963,780     1,040,778  

(a)
The aggregate cost for federal income tax purposes at December 31, 2008 was approximately $3.0 billion.

(b)
Legend of Property Codes:
(O)=Office Property
(F)=Office/Flex Property
(I)=Industrial/Warehouse Property
  (R)=Stand-alone Retail Property
(L)=Land Lease
(c)
Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to 40 years.

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MACK-CALI REALTY CORPORATION

NOTE TO SCHEDULE III

        Changes in rental properties and accumulated depreciation for the periods ended December 31, 2008, 2007 and 2006 are as follows: (dollars in thousands)

 
  2008   2007   2006  

Rental Properties

                   

Balance at beginning of year

  $ 4,885,429   $ 4,573,587   $ 4,491,752  
 

Additions

    92,129     378,724     405,883  
 

Properties sold

        (47,394 )   (313,345 )
 

Retirements/disposals

    (13,778 )   (19,488 )   (10,703 )
               

Balance at end of year

  $ 4,963,780   $ 4,885,429   $ 4,573,587  
               

Accumulated Depreciation

                   

Balance at beginning of year

  $ 907,013   $ 796,793   $ 722,980  
 

Depreciation expense

    147,543     140,240     131,848  
 

Properties sold

        (11,224 )   (53,037 )
 

Retirements/disposals

    (13,778 )   (18,796 )   (4,998 )
               

Balance at end of year

  $ 1,040,778   $ 907,013   $ 796,793  
               

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MACK-CALI REALTY CORPORATION


Signatures

        Pursuant to the requirements of Section 13 or 15(d) 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 11, 2009

 

/s/ BARRY LEFKOWITZ

Barry Lefkowitz
Executive Vice President and
    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

William L. Mack
  Chairman of the Board   February 11, 2009

/s/ MITCHELL E. HERSH

Mitchell E. Hersh

 

President and Chief Executive Officer and Director

 

February 11, 2009

/s/ BARRY LEFKOWITZ

Barry Lefkowitz

 

Executive Vice President and Chief Financial Officer

 

February 11, 2009

/s/ ALAN S. BERNIKOW

Alan S. Bernikow

 

Director

 

February 11, 2009

/s/ JOHN R. CALI

John R. Cali

 

Director

 

February 11, 2009

/s/ KENNETH M. DUBERSTEIN

Kenneth M. Duberstein

 

Director

 

February 11, 2009

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Table of Contents

Name
 
Title
 
Date

 

 

 

 

 
/s/ NATHAN GANTCHER

Nathan Gantcher
  Director   February 11, 2009

/s/ DAVID S. MACK

David S. Mack

 

Director

 

February 11, 2009

/s/ ALAN G. PHILIBOSIAN

Alan G. Philibosian

 

Director

 

February 11, 2009

/s/ IRVIN D. REID

Irvin D. Reid

 

Director

 

February 11, 2009

/s/ VINCENT TESE

Vincent Tese

 

Director

 

February 11, 2009

/s/ ROBERT F. WEINBERG

Robert F. Weinberg

 

Director

 

February 11, 2009

/s/ ROY J. ZUCKERBERG

Roy J. Zuckerberg

 

Director

 

February 11, 2009

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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

 

Amendment No. 1 to the Amended and Restated Bylaws of Mack-Cali Realty Corporation dated March 4, 2003 (filed as Exhibit 3.3 to the Company's Form 10-Q dated March 31, 2003 and incorporated herein by reference).

 

3.4

 

Amendment No. 2 to the Mack-Cali Realty Corporation Amended and Restated Bylaws dated May 24, 2006 (filed as Exhibit 3.1 to the Company's Form 8-K dated May 24, 2006 and incorporated herein by reference).

 

3.5

 

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).

 

3.6

 

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).

 

3.7

 

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).

 

3.8

 

Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated September 30, 2003 (filed as Exhibit 3.7 to the Company's Form 10-Q dated September 30, 2003 and incorporated herein by reference).

 

3.9

 

Certificate of Designation of Series B Preferred Operating Partnership Units of Limited Partnership Interest of Mack-Cali Realty, L.P. (filed as Exhibit 10.101 to the Company's Form 8-K dated December 11, 1997 and incorporated herein by reference).

 

3.10

 

Articles Supplementary for the 8 percent Series C Cumulative Redeemable Perpetual Preferred Stock dated March 11, 2003 (filed as Exhibit 3.1 to the Company's Form 8-K dated March 14, 2003 and incorporated herein by reference).

 

3.11

 

Certificate of Designation for the 8 percent Series C Cumulative Redeemable Perpetual Preferred Operating Partnership Units dated March 14, 2003 (filed as Exhibit 3.2 to the Company's Form 8-K dated March 14, 2003 and incorporated herein by reference).

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Table of Contents

Exhibit
Number
  Exhibit Title
  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).

 

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).

 

4.8

 

Supplemental Indenture No. 5 dated as of December 20, 2002, by and between 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 20, 2002 and incorporated herein by reference).

 

4.9

 

Supplemental Indenture No. 6 dated as of March 14, 2003, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company's Form 8-K dated March 14, 2003 and incorporated herein by reference).

 

4.10

 

Supplemental Indenture No. 7 dated as of June 12, 2003, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company's Form 8-K dated June 12, 2003 and incorporated herein by reference).

 

4.11

 

Supplemental Indenture No. 8 dated as of February 9, 2004, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company's Form 8-K dated February 9, 2004 and incorporated herein by reference).

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Exhibit
Number
  Exhibit Title
  4.12   Supplemental Indenture No. 9 dated as of March 22, 2004, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company's Form 8-K dated March 22, 2004 and incorporated herein by reference).

 

4.13

 

Supplemental Indenture No. 10 dated as of January 25, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company's Form 8-K dated January 25, 2005 and incorporated herein by reference).

 

4.14

 

Supplemental Indenture No. 11 dated as of April 15, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company's Form 8-K dated April 15, 2005 and incorporated herein by reference).

 

4.15

 

Supplemental Indenture No. 12 dated as of November 30, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company's Form 8-K dated November 30, 2005 and incorporated herein by reference).

 

4.16

 

Supplemental Indenture No. 13 dated as of January 24, 2006, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company's Form 8-K dated January 18, 2006 and incorporated herein by reference).

 

4.17

 

Deposit Agreement dated March 14, 2003 by and among Mack-Cali Realty Corporation, EquiServe Trust Company, N.A., and the holders from time to time of the Depositary Receipts described therein (filed as Exhibit 4.1 to the Company's Form 8-K dated March 14, 2003 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

 

Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.4 to the Company's Form 8-K dated December 9, 2008 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

 

Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).

 

10.5

 

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).

 

10.6

 

Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.8 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).

132


Table of Contents

Exhibit
Number
  Exhibit Title
  10.7   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).

 

10.8

 

Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.6 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).

 

10.9

 

Employment Agreement dated as of May 9, 2006 by and between Mark Yeager and Mack-Cali Realty Corporation (filed as Exhibit 10.15 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.10

 

Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.7 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).

 

10.11

 

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).

 

10.12

 

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).

 

10.13

 

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).

 

10.14

 

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).

 

10.15

 

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).

 

10.16

 

Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.17

 

Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.18

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.19

 

Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.7 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

133


Table of Contents

Exhibit
Number
  Exhibit Title
  10.20   Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.8 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.21

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.9 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.22

 

Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.10 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.23

 

Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.11 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.24

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.12 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.25

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated March 12, 2001 between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.13 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.26

 

Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.14 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.27

 

Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.15 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.28

 

Restricted Share Award Agreement dated December 6, 1999 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.16 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.29

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated December 6, 1999 between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.17 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.30

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated March 12, 2001 between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.18 to the Company's Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

10.31

 

Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company's Form 8-K dated December 2, 2003 and incorporated herein by reference).

134


Table of Contents

Exhibit
Number
  Exhibit Title
  10.32   Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company's Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

10.33

 

Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company's Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

10.34

 

Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.6 to the Company's Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

10.35

 

Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Company's Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

10.36

 

Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.8 to the Company's Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

10.37

 

Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.9 to the Company's Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

10.38

 

Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.10 to the Company's Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

10.39

 

Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company's Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

10.40

 

Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Company's Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

10.41

 

Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.4 to the Company's Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

10.42

 

Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company's Form 8-K dated December 7, 2004 and incorporated herein by reference).

135


Table of Contents

Exhibit
Number
  Exhibit Title
  10.43   Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.6 to the Company's Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

10.44

 

Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Company's Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

10.45

 

Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.8 to the Company's Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

10.46

 

Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.9 to the Company's Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

10.47

 

Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company's Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

10.48

 

Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Company's Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

10.49

 

Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.4 to the Company's Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

10.50

 

Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company's Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

10.51

 

Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.6 to the Company's Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

10.52

 

Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Company's Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

10.53

 

Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.8 to the Company's Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

10.54

 

Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.9 to the Company's Form 8-K dated December 6, 2005 and incorporated herein by reference).

136


Table of Contents

Exhibit
Number
  Exhibit Title
  10.55   Restricted Share Award Agreement by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.16 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.56

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.57

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.58

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.59

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.4 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.60

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.61

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.6 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.62

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.7 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.63

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.8 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.64

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.9 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.65

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.10 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.66

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.11 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

137


Table of Contents

Exhibit
Number
  Exhibit Title
  10.67   Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.12 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.68

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.13 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.69

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.14 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.70

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.15 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.71

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.16 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.72

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.17 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.73

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.18 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.74

 

Restricted Share Award Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.19 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.75

 

Tax Gross Up Agreement effective December 5, 2006 by and between Mack-Cali Realty Corporation and Mark Yeager (filed as Exhibit 10.20 to the Company's Form 8-K dated December 5, 2006 and incorporated herein by reference).

 

10.76

 

Form of Multi-Year Restricted Share Award Agreement (filed as Exhibit 10.1 to the Company's Form 8-K dated September 12, 2007 and incorporated herein by reference).

 

10.77

 

Form of Tax Gross-Up Agreement (filed as Exhibit 10.2 to the Company's Form 8-K dated September 12, 2007 and incorporated herein by reference).

 

10.78

 

Form of Restricted Share Award Agreement effective December 4, 2007 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman, Mark Yeager and Roger W. Thomas (filed as Exhibit 10.1 to the Company's Form 8-K dated December 4, 2007 and incorporated herein by reference).

138


Table of Contents

Exhibit
Number
  Exhibit Title
  10.79   Form of Tax Gross-Up Agreement effective December 4, 2007 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman, Mark Yeager and Roger W. Thomas (filed as Exhibit 10.2 to the Company's Form 8-K dated December 4, 2007 and incorporated herein by reference).

 

10.80

 

Form of Restricted Share Award Agreement effective December 4, 2007 by and between Mack-Cali Realty Corporation and each of William L. Mack, Martin S. Berger, Alan S. Bernikow, John R. Cali, Kenneth M. Duberstein, Nathan Gantcher, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg (filed as Exhibit 10.3 to the Company's Form 8-K dated December 4, 2007 and incorporated herein by reference).

 

10.81

 

Form of Restricted Share Award Agreement effective December 9, 2008 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Michael Grossman, Mark Yeager and Roger W. Thomas (filed as Exhibit 10.1 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).

 

10.82

 

Form of Restricted Share Award Agreement effective December 9, 2008 by and between Mack-Cali Realty Corporation and each of William L. Mack, Alan S. Bernikow, John R. Cali, Kenneth M. Duberstein, Nathan Gantcher, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese, Robert F. Weinberg and Roy J. Zuckerberg (filed as Exhibit 10.2 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).

 

10.83

 

Amended and Restated Revolving Credit Agreement dated as of September 27, 2002, among Mack-Cali Realty, L.P. and JPMorgan Chase Bank, Fleet National Bank and Other Lenders Which May Become Parties Thereto with JPMorgan Chase Bank, as administrative agent, swing lender and fronting bank, Fleet National Bank and Commerzbank AG, New York and Grand Cayman branches as syndication agents, Bank of America, N.A. and Wells Fargo Bank, National Association, as documentation agents, and J.P. Morgan Securities Inc. and Fleet Securities, Inc, as arrangers (filed as Exhibit 10.1 to the Company's Form 8-K dated September 27, 2002 and incorporated herein by reference).

 

10.84

 

Second Amended and Restated Revolving Credit Agreement among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., Bank of America, N.A., and other lending institutions that are or may become a party to the Second Amended and Restated Revolving Credit Agreement dated as of November 23, 2004 (filed as Exhibit 10.1 to the Company's Form 8-K dated November 23, 2004 and incorporated herein by reference).

 

10.85

 

Extension and Modification Agreement dated as of September 16, 2005 by and among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent, and the several Lenders Party thereto (filed as Exhibit 10.1 to the Company's Form 8-K dated September 16, 2005 and incorporated herein by reference).

 

10.86

 

Second Modification Agreement dated as of July 14, 2006 by and among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent, and the several Lenders party thereto (filed as Exhibit 10.1 to the Company's Form 8-K dated July 14, 2006 and incorporated herein by reference).

139


Table of Contents

Exhibit
Number
  Exhibit Title
  10.87   Extension and Third Modification Agreement dated as of June 22, 2007 by and among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent, and the several Lenders party thereto (filed as Exhibit 10.1 to the Company's Form 8-K dated June 22, 2007 and incorporated herein by reference).

 

10.88

 

Fourth Modification Agreement dated as of September 21, 2007 by and among Mack Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent and the several Lenders party thereto (filed as Exhibit 10.1 to the Company's Form 8-K dated September 21, 2007 and incorporated herein by reference).

 

10.89

 

Amended and Restated Master Loan Agreement dated as of November 12, 2004 among Mack-Cali Realty, L.P., and Affiliates of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P., as Borrowers, Mack-Cali Realty Corporation and Mack-Cali Realty L.P., as Guarantors and The Prudential Insurance Company of America, as Lender (filed as Exhibit 10.1 to the Company's Form 8-K dated November 12, 2004 and incorporated herein by reference).

 

10.90

 

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).

 

10.91

 

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).

 

10.92

 

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).

 

10.93

 

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).

 

10.94

 

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), as amended by the First Amendment to the 2000 Employee Stock Option Plan (filed as Exhibit 10.17 to the Company's Form 10-Q dated June 30, 2002 and incorporated herein by reference).

 

10.95

 

Amended and Restated 2000 Director Stock Option Plan (filed as Exhibit 10.2 to the Company's Post-Effective Amendment No. 1 to Registration Statement on Form S-8, Registration No. 333-100244, and incorporated herein by reference).

 

10.96

 

Mack-Cali Realty Corporation 2004 Incentive Stock Plan (filed as Exhibit 10.1 to the Company's Registration Statement on Form S-8, Registration No. 333-116437, and incorporated herein by reference).

 

10.97

 

Deferred Compensation Plan for Directors (filed as Exhibit 10.1 to the Company's Registration Statement on Form S-8, Registration No. 333-80081, and incorporated herein by reference).

140


Table of Contents

Exhibit
Number
  Exhibit Title
  10.98   Amended and Restated Mack-Cali Realty Corporation Deferred Compensation Plan for Directors (filed as Exhibit 10.3 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).

 

10.99

 

Form of Indemnification Agreement by and between Mack-Cali Realty Corporation and each of William L. Mack, John J. Cali, Mitchell E. Hersh, John R. Cali, David S. Mack, Martin S. Berger, Alan S. Bernikow, Kenneth M. Duberstein, Martin D. Gruss, Nathan Gantcher, Vincent Tese, Roy J. Zuckerberg, Alan G. Philibosian, Irvin D. Reid, Robert F. Weinberg, Barry Lefkowitz, Roger W. Thomas, Michael A. Grossman, Mark Yeager, Anthony Krug, Dean Cingolani, Anthony DeCaro Jr., Mark Durno, William Fitzpatrick, John Kropke, Nicholas Mitarotonda, Jr., Michael Nevins, Virginia Sobol, Albert Spring, Daniel Wagner, Deborah Franklin, John Marazzo, Christopher DeLorenzo, Jeffrey Warner, Diane Chayes and James Corrigan (filed as Exhibit 10.28 to the Company's Form 10-Q dated September 30, 2002 and incorporated herein by reference).

 

10.100

 

Indemnification Agreement dated October 22, 2002 by and between Mack-Cali Realty Corporation and John Crandall (filed as Exhibit 10.29 to the Company's Form 10-Q dated September 30, 2002 and incorporated herein by reference).

 

10.101

 

Second Amendment to Contribution and Exchange Agreement, dated as of June 27, 2000, between RMC Development Company, LLC f/k/a Robert Martin Company, LLC, Robert Martin Eastview North Company, L.P., the Company and the Operating Partnership (filed as Exhibit 10.44 to the Company's Form 10-K dated December 31, 2002 and incorporated herein by reference).

 

10.102

 

Limited Partnership Agreement of Meadowlands Mills/Mack-Cali Limited Partnership by and between Meadowlands Mills Limited Partnership, Mack-Cali Meadowlands Entertainment L.L.C. and Mack-Cali Meadowlands Special L.L.C. dated November 25, 2003 (filed as Exhibit 10.1 to the Company's Form 8-K dated December 3, 2003 and incorporated herein by reference).

 

10.103

 

Redevelopment Agreement by and between the New Jersey Sports and Exposition Authority and Meadowlands Mills/Mack-Cali Limited Partnership dated December 3, 2003 (filed as Exhibit 10.2 to the Company's Form 8-K dated December 3, 2003 and incorporated herein by reference).

 

10.104

 

First Amendment to Redevelopment Agreement by and between the New Jersey Sports and Exposition Authority and Meadowlands Mills/Mack-Cali Limited Partnership dated October 5, 2004 (filed as Exhibit 10.54 to the Company's Form 10-Q dated September 30, 2004 and incorporated herein by reference).

 

10.105

 

Letter Agreement by and between Mack-Cali Realty Corporation and The Mills Corporation dated October 5, 2004 (filed as Exhibit 10.55 to the Company's Form 10-Q dated September 30, 2004 and incorporated herein by reference).

 

10.106

 

First Amendment to Limited Partnership Agreement of Meadowlands Mills/Mack-Cali Limited Partnership by and between Meadowlands Mills Limited Partnership, Mack-Cali Meadowlands Entertainment L.L.C. and Mack-Cali Meadowlands Special L.L.C. dated as of June 30, 2005 (filed as Exhibit 10.66 to the Company's Form 10-Q dated June 30, 2005 and incorporated herein by reference).

141


Table of Contents

Exhibit
Number
  Exhibit Title
  10.107   Mack-Cali Rights, Obligations and Option Agreement by and between Meadowlands Developer Limited Partnership, Meadowlands Limited Partnership, Meadowlands Developer Holding Corp., Meadowlands Mack-Cali GP, L.L.C., Mack-Cali Meadowlands Special, L.L.C., Baseball Meadowlands Mills/Mack-Cali Limited Partnership, A-B Office Meadowlands Mack-Cali Limited Partnership, C-D Office Meadowlands Mack-Cali Limited Partnership, Hotel Meadowlands Mack-Cali Limited Partnership and ERC Meadowlands Mills/Mack-Cali Limited Partnership dated November 22, 2006 (filed as Exhibit 10.92 to the Company's Form 10-K dated December 31, 2006 and incorporated herein by reference).

 

10.108

 

Redemption Agreement by and among Meadowlands Developer Limited Partnership, Meadowlands Developer Holding Corp., Mack-Cali Meadowlands entertainment L.L.C., Mack-Cali Meadowlands Special L.L.C., and Meadowlands Limited Partnership dated November 22, 2006 (filed as Exhibit 10.93 to the Company's Form 10-K dated December 31, 2006 and incorporated herein by reference).

 

10.109

 

Contribution and Exchange Agreement by and between Mack-Cali Realty, L.P. and Tenth Springhill Lake Associates L.L.L.P., Eleventh Springhill Lake Associates L.L.L.P., Twelfth Springhill Lake Associates L.L.L.P., Fourteenth Springhill Lake Associates L.L.L.P., each a Maryland limited liability limited partnership, Greenbelt Associates, a Maryland general partnership, and Sixteenth Springhill Lake Associates L.L.L.P., a Maryland limited liability limited partnership, and certain other natural persons, dated as of November 21, 2005 (filed as Exhibit 10.69 to the Company's Form 10-K dated December 31, 2005 and incorporated herein by reference).

 

10.110

 

Membership Interest Purchase and Contribution Agreement by and among Mr. Stanley C. Gale, SCG Holding Corp., Mack-Cali Realty Acquisition Corp. and Mack-Cali Realty, L.P. dated as of March 7, 2006 (filed as Exhibit 10.1 to the Company's Form 8-K dated March 7, 2006 and incorporated herein by reference).

 

10.111

 

Amendment No. 1 to Membership Interest Purchase and Contribution Agreement dated as of March 31, 2006 (filed as Exhibit 10.1 to the Company's Form 8-K dated March 28, 2006 and incorporated herein by reference).

 

10.112

 

Amendment No. 2 to Membership Interest Purchase and Contribution Agreement dated as of May 9, 2006 (filed as Exhibit 10.1 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.113

 

Amendment No. 8 to Membership Interest Purchase and Contribution Agreement by and among Mr. Stanley C. Gale, SCG Holding Corp., Mack-Cali Realty Acquisition Corp. and Mack-Cali Realty, L.P. dated as of May 23, 2007 (filed as Exhibit 10.1 to the Company's Form 8-K dated May 23, 2007 and incorporated herein by reference).

 

10.114

 

Contribution and Sale Agreement by and among Gale SLG NJ LLC, a Delaware limited liability company, Gale SLG NJ MEZZ LLC, a Delaware limited liability company, and Gale SLG RIDGEFIELD MEZZ LLC, a Delaware limited liability company and Mack-Cali Ventures L.L.C. dated as of March 7, 2006 (filed as Exhibit 10.2 to the Company's Form 8-K dated March 7, 2006 and incorporated herein by reference).

142


Table of Contents

Exhibit
Number
  Exhibit Title
  10.115   First Amendment to Contribution and Sale Agreement by and among GALE SLG NJ LLC, a Delaware limited liability company, GALE SLG NJ MEZZ LLC, a Delaware limited liability company, and GALE SLG RIDGEFIELD MEZZ LLC, a Delaware limited liability company, and Mack-Cali Ventures L.L.C., a Delaware limited liability company, dated as of May 9, 2006 (filed as Exhibit 10.4 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.116

 

Non-Portfolio Property Interest Contribution Agreement by and among Mr. Stanley C. Gale, Mr. Mark Yeager, GCF II Investor LLC, The Gale Investments Company, LLC, Gale & Wentworth Vreeland,  LLC, Gale Urban Solutions LLC, MSGW-ONE Campus Investors, LLC, Mack-Cali Realty Acquisition Corp. and Mack-Cali Realty, L.P. dated as of May 9, 2006 (filed as Exhibit 10.2 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.117

 

Loan Agreement by and among the entities set forth on Exhibit A, collectively, as Borrowers, and Gramercy Warehouse Funding I LLC, as Lender, dated May 9, 2006 (filed as Exhibit 10.5 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.118

 

Promissory Note of One Grande SPE LLC, 1280 Wall SPE LLC, 10 Sylvan SPE LLC, 5 Independence SPE LLC, 1 Independence SPE LLC, and 3 Becker SPE LLC, as Borrowers, in favor of Gramercy Warehouse Funding I, LLC, as Lender, in the principal amount of $90,286,551 dated May 9, 2006 (filed as Exhibit 10.6 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.119

 

Mortgage, Security Agreement and Fixture Filing by and between 4 Becker SPE LLC, as Borrower, and Wachovia Bank, National Association, as Lender, dated May 9, 2006 (filed as Exhibit 10.7 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.120

 

Promissory Note of 4 Becker SPE LLC, as Borrower, in favor of Wachovia Bank, National Association, as Lender, in the principal amount of $43,000,000 dated May 9, 2006 (filed as Exhibit 10.8 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.121

 

Mortgage, Security Agreement and Fixture Filing by and between 210 Clay SPE LLC, as Borrower, and Wachovia Bank, National Association, as Lender, dated May 9, 2006 (filed as Exhibit 10.9 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.122

 

Promissory Note of 210 Clay SPE LLC, as Borrower, in favor of Wachovia Bank, National Association, as Lender, in the principal amount of $16,000,000 dated May 9, 2006 (filed as Exhibit 10.10 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.123

 

Mortgage, Security Agreement and Fixture Filing by and between 5 Becker SPE LLC, as Borrower, and Wachovia Bank, National Association, as Lender, dated May 9, 2006 (filed as Exhibit 10.11 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

143


Table of Contents

Exhibit
Number
  Exhibit Title
  10.124   Promissory Note of 5 Becker SPE LLC, as Borrower, in favor of Wachovia Bank, National Association, as Lender, in the principal amount of $15,500,000 dated May 9, 2006 (filed as Exhibit 10.12 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.125

 

Mortgage, Security Agreement and Fixture Filing by and between 51 CHUBB SPE LLC, as Borrower, and Wachovia Bank, National Association, as Lender, dated May 9, 2006 (filed as Exhibit 10.13 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.126

 

Promissory Note of 51 CHUBB SPE LLC, as Borrower, in favor of Wachovia Bank, National Association, as Lender, in the principal amount of $4,500,000 dated May 9, 2006 (filed as Exhibit 10.14 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.127

 

Form of Amended and Restated Limited Liability Company Agreement of Mack-Green-Gale LLC dated                , 2006 (filed as Exhibit 10.3 to the Company's Form 8-K dated March 7, 2006 and incorporated herein by reference).

 

10.128

 

Form of Limited Liability Company Operating Agreement (filed as Exhibit 10.3 to the Company's Form 8-K dated May 9, 2006 and incorporated herein by reference).

 

10.129

 

Agreement of Sale and Purchase dated August 9, 2006 by and between Mack-Cali Realty, L.P. and Westcore Properties AC, LLC (filed as Exhibit 10.91 to the Company's Form 10-Q dated September 30, 2006 and incorporated herein by reference).

 

10.130

 

First Amendment to Agreement of Sale and Purchase dated September 6, 2006 by and between Mack-Cali Realty, L.P. and Westcore Properties AC, LLC (filed as Exhibit 10.92 to the Company's Form 10-Q dated September 30, 2006 and incorporated herein by reference).

 

10.131

 

Second Amendment to Agreement of Sale and Purchase dated September 15, 2006 by and between Mack-Cali Realty, L.P. and Westcore Properties AC, LLC (filed as Exhibit 10.93 to the Company's Form 10-Q dated September 30, 2006 and incorporated herein by reference).

 

10.132

 

Agreement of Sale and Purchase dated September 25, 2006 by and between Phelan Realty Associates L.P., 795 Folsom Realty Associates L.P. and Westcore Properties AC, LLC (filed as Exhibit 10.94 to the Company's Form 10-Q dated September 30, 2006 and incorporated herein by reference).

 

10.133

 

Membership Interest Purchase and Contribution Agreement dated as of December 28, 2006, by and among NKFGMS Owners, LLC, The Gale Construction Services Company, L.L.C., NKFFM Limited Liability Company, Scott Panzer, Ian Marlow, Newmark & Company Real Estate, Inc. d/b/a Newmark Knight Frank, and Mack-Cali Realty, L.P (filed as Exhibit 10.117 to the Company's Form 10-K dated December 31, 2006 and incorporated herein by reference).

 

10.134

 

Operating Agreement of NKFGMS Owners, LLC (filed as Exhibit 10.118 to the Company's Form 10-K dated December 31, 2006 and incorporated herein by reference).

144


Table of Contents

Exhibit
Number
  Exhibit Title
  10.135   Loans, Sale and Services Agreement dated December 28, 2006 by and between Newmark & Company Real Estate, Inc. d/b/a Newmark Knight Frank, Mack-Cali Realty, L.P., and Newmark Knight Frank Global Management Services, LLC (filed as Exhibit 10.119 to the Company's Form 10-K dated December 31, 2006 and incorporated herein by reference).

 

10.136

 

Term Loan Agreement among Mack-Cali Realty, L.P. and JPMorgan Chase Bank, N.A. as Administrative Agent, J.P. Morgan Securities Inc. as Arranger, and other lender which may become parties to this Agreement dated November 29, 2006 (filed as Exhibit 10.120 to the Company's Form 10-K dated December 31, 2006 and incorporated herein by reference).

 

10.137

 

Agreement of Purchase and Sale among SLG Broad Street A LLC and SLG Broad Street C LLC, as Sellers, and M-C Broad 125 A L.L.C. and M-C Broad 125 C L.L.C., as Purchasers, dated as of March 15, 2007 (filed as Exhibit 10.121 to the Company's Form 10-Q dated March 31, 2007 and incorporated herein by reference).

 

10.138

 

Agreement of Purchase and Sale among 500 West Putnam L.L.C., as Seller, and SLG 500 West Putnam LLC, as Purchaser, dated as of March 15, 2007 (filed as Exhibit 10.122 to the Company's Form 10-Q dated March 31, 2007 and incorporated herein by reference).

 

10.139

 

Letter Agreement by and between Mack-Cali Realty, L.P., Mack-Cali Realty Acquisition Corp., Mack-Cali Belmar Realty, LLC, M-C Belmar, LLC, Mr. Stanley C. Gale, SCG Holding Corp., Mr. Mark Yeager, GCF II Investor LLC, The Gale Investments Company, LLC, Gale & Wentworth Vreeland, LLC, Gale Urban Solutions LLC, MSGW-ONE Campus Investors, LLC and Gale/Yeager Investments LLC dated October 31, 2007 (filed as Exhibit 10.128 to the Company's Form 10-Q dated September 30, 2007 and incorporated herein by reference).

 

10.140

 

Mortgage and Security Agreement and Financing Statement dated October 28, 2008 between M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Mortgagors and The Northwestern Mutual Life Insurance Company and New York Life Insurance Company as Mortgagees (filed as Exhibit 10.131 to the Company's Form 10-Q dated September 30, 2008 and incorporated herein by reference).

 

10.141

 

Promissory Note of M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Borrowers, in favor of The Northwestern Mutual Life Insurance Company, as Lender, in the principal amount of $120,000,000, dated October 28, 2008 (filed as Exhibit 10.132 to the Company's Form 10-Q dated September 30, 2008 and incorporated herein by reference).

 

10.142

 

Promissory Note of M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Borrowers, in favor of New York Life Insurance Company, as Lender, in the principal amount of $120,000,000, dated October 28, 2008 (filed as Exhibit 10.133 to the Company's Form 10-Q dated September 30, 2008 and incorporated herein by reference).

145


Table of Contents

Exhibit
Number
  Exhibit Title
  10.143   Guarantee of Recourse Obligations of Mack-Cali Realty, L.P. in favor of The Northwestern Mutual Life Insurance Company and New York Life Insurance Company dated October 28, 2008 (filed as Exhibit 10.134 to the Company's Form 10-Q dated September 30, 2008 and incorporated herein by reference).

 

12.1*

 

Calculation of Ratios of Earnings to Fixed Charges.

 

12.2*

 

Calculation of Ratios of Earnings to Combined Fixed Charges and Preferred Security Dividends.

 

21.1*

 

Subsidiaries of the Company.

 

23.1*

 

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

 

31.1*

 

Certification of the Company's President and Chief Executive Officer, Mitchell E. Hersh, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

31.2*

 

Certification of the Company's Chief Financial Officer, Barry Lefkowitz, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1*

 

Certification of the Company's President and Chief Executive Officer, Mitchell E. Hersh, and the Company's Chief Financial Officer, Barry Lefkowitz, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*
filed herewith

146