UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
|
[X]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the fiscal year ended December 31, 2006
|
[
]
|
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
|
22-3305147
|
|
(State
or other jurisdiction of
|
(IRS
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
|
343
Thornall Street, Edison, New Jersey
|
08837-2206
|
|
(Address
of principal executive offices)
|
(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
|
New
York Stock Exchange
|
|
Preferred
Share Purchase Rights
|
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 X
No
___
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 ___ No X
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes X
No
___
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [ X ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
One):
Large
accelerated filer X
Accelerated
filer ___ Non-accelerated
filer ___
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.) Yes ___ No X
As
of
June 30, 2006, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $2,384,277,179. As of February 16, 2007,
the aggregate market value of the voting stock held by non-affiliates of the
registrant was $3,628,695,380. The aggregate market values were computed with
references to the closing prices on the New York Stock Exchange on such dates.
These calculations do not reflect a determination that persons are affiliates
for any other purpose.
As
of
February 16, 2007, 67,792,367 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 126.
DOCUMENTS
INCORPORATED BY REFERENCE:
Portions
of the registrant’s definitive proxy statement for fiscal year ended December
31, 2006 to be issued in conjunction with the registrant’s annual meeting of
shareholders expected to be held on May 23, 2007 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, 2006.
FORM
10-K
Table
of Contents
|
PART
I
|
Page
No.
|
||
|
Item
1
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Business
|
3
|
|
|
Item
1A
|
Risk
Factors
|
10
|
|
|
Item
1B
|
Unresolved
Staff Comments
|
17
|
|
|
Item
2
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Properties
|
18
|
|
|
Item
3
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Legal
Proceedings
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38
|
|
|
Item
4
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Submission
of Matters to a Vote of Security Holders
|
39
|
|
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PART
II
|
|||
|
Item
5
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Market
for Registrant’s Common Equity, Related Stockholder
Matters
|
||
|
and
Issuer Purchases of Equity Securities
|
40
|
||
|
Item
6
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Selected
Financial Data
|
42
|
|
|
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and
|
||
|
Results
of Operations
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43
|
||
|
Item
7A
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Quantitative
and Qualitative Disclosures About Market Risk
|
63
|
|
|
Item
8
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Financial
Statements and Supplementary Data
|
64
|
|
|
Item
9
|
Changes
in and Disagreements with Accountants on Accounting and
|
||
|
Financial
Disclosure
|
64
|
||
|
Item
9A
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Controls
and Procedures
|
64
|
|
|
Item
9B
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Other
Information
|
65
|
|
|
PART
III
|
|||
|
Item
10
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Directors,
Executive Officers and Corporate Governance
|
65
|
|
|
Item
11
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Executive
Compensation
|
65
|
|
|
Item
12
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Security
Ownership of Certain Beneficial Owners and Management
|
||
|
and
Related Stockholder Matters
|
65
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||
|
Item
13
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Certain
Relationships and Related Transactions, and Director
Independence
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65
|
|
|
Item
14
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Principal
Accountant Fees and Services
|
65
|
|
|
PART
IV
|
|||
|
Item
15
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Exhibits
and Financial Statement Schedules
|
66
|
|
|
SIGNATURES
|
124
|
||
|
EXHIBIT
INDEX
|
126
|
2
PART
I
ITEM
1. BUSINESS
GENERAL
Mack-Cali
Realty Corporation, a Maryland corporation (together with its subsidiaries,
the
“Company”), is a fully-integrated, self-administered and self-managed real
estate investment trust (“REIT”) that owns and operates a real estate portfolio
comprised predominantly of Class A office and office/flex properties located
primarily in the Northeast. The Company performs substantially all commercial
real estate leasing, management, acquisition, development and construction
services on an in-house basis. Mack-Cali Realty Corporation was incorporated
on
May 24, 1994. The Company’s executive offices are located at 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, 2006, the Company owned or had interests in 300 properties,
aggregating approximately 34.3 million square feet, plus developable land
(collectively, the “Properties”), which are leased to over 2,200 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 28.5 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) 44 buildings, which are
primarily office properties, aggregating approximately 5.4 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, 2006, the office,
office/flex, industrial/warehouse and stand-alone retail properties included
in
the Consolidated Properties were 92.0 percent leased. Percentage leased includes
all leases in effect as of the period end date, some of which have commencement
dates in the future (including, at December 31, 2006, a lease with a
commencement date substantially in the future consisting of 8,590 square feet
scheduled to commence in 2009), and leases that expire at the period end date.
Leases that expire as of December 31, 2006 aggregate 103,477 square feet, or
0.4
percent of the net rentable square footage. The Properties are located in seven
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.”
In
May
2006, in conjunction with the completion of the Gale Company acquisition, the
Company acquired The Gale Construction Company and its related companies, which
offer a full complement of professional services in the areas of construction
management, general contracting and advisory services.
As
of
December 31, 2006, executive officers and directors of the Company and their
affiliates owned approximately 8.8 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 19 years.
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.
3
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 markets and to maintain the quality of the Company’s
properties.
Additionally,
the Company’s in-house leasing representatives develop and maintain long-term
relationships with the Company’s diverse tenant base and coordinate leasing,
expansion, relocation and build-to-suit opportunities within the Company’s
portfolio. This approach allows the Company to offer office space in the
appropriate size and location to current or prospective tenants in any of its
sub-markets.
Growth
The
Company plans to continue to own and operate a portfolio of properties in
high-barrier-to-entry markets, with a primary focus in the Northeast. The
Company’s primary objectives are to maximize operating cash flow and to enhance
the value of its portfolio through effective management, acquisition,
development and property sales strategies, as follows:
Internal
Growth:
The
Company seeks to maximize the value of its existing portfolio through
implementing operating strategies designed to produce the highest effective
rental and occupancy rates and lowest tenant installation cost within the
markets that it operates. 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, Morgan Stanley 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.
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. As of December 31, 2006, the Company’s total debt
constituted
4
approximately
41.4 percent of total undepreciated assets of the Company. The Company has
three
investment grade credit ratings. Standard & Poor’s Rating Services
(“S&P”) and Fitch, Inc. (“Fitch”) have each assigned their BBB rating to
existing and prospective senior unsecured debt of the Operating Partnership.
S&P and Fitch have also assigned their BBB- rating to 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 rated status. The Company intends
to utilize the most appropriate sources of capital for future acquisitions,
development, capital improvements and other investments, which may include
funds
from operating activities, proceeds from property 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, 2006, the Company had approximately 540 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, rent charged, services provided,
and
the design and condition of the Properties. The Company also experiences
competition when attempting to acquire or dispose of real estate, including
competition from domestic and foreign financial institutions, other REITs,
life
insurance companies, pension trusts, trust funds, partnerships, individual
investors and others.
REGULATIONS
Many
laws
and governmental regulations are applicable to the Properties and changes in
these laws and regulations, or their interpretation by agencies and the courts,
occur frequently.
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 re-moval 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.
5
INDUSTRY
SEGMENTS
The
Company operates in two industry segments: (i) real estate; and (ii)
construction services. As of December 31, 2006, 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 increased to
92.0 percent at December 31, 2006 as compared to 91.0 percent at December 31,
2005 and 91.2 percent at December 31, 2004. Percentage leased includes all
leases in effect as of the period end date, some of which have commencement
dates in the future (including, at December 31, 2006, a lease with a
commencement date substantially in the future consisting of 8,590 square feet
scheduled to commence in 2009), and leases that expire at the period end date.
Leases that expire as of the period end date aggregate 103,477 square feet,
or
0.4 percent of the net rentable square footage. Excluded from percentage leased
at December 31, 2004 was a non-strategic, non-core 318,224 square foot property
acquired through a deed in lieu of foreclosure, which was 12.7 percent leased
at
December 31, 2004 and subsequently sold on February 4, 2005. Market rental
rates
have declined in most markets from peak levels in late 2000 and early 2001.
Rental rates on the Company’s space that was re-leased (based on first rents
payable) during the year ended December 31, 2006 decreased an average of 0.2
percent compared to rates that were in effect under expiring leases, as compared
to a 8.2 percent decrease in 2005 and a 8.7 percent decrease in 2004. The
Company believes that vacancy rates may continue to increase in most of its
markets in 2007. As a result, the Company’s future earnings and cash flow may
continue to be negatively impacted by current market conditions.
Gale/Green
Transactions
On
May 9,
2006, the Company completed the acquisitions of: (i) The Gale Company and
certain of its related businesses, which engage in construction, property
management, facilities management, and leasing services (collectively, the
“Gale
Company”); (ii) three office properties; and (iii) indirect interests in a
portfolio of office properties, located primarily in New Jersey, which were
owned indirectly by The Gale Company and its affiliates (“Gale”) and affiliates
of SL Green Realty Corp. (“SL Green”). The agreements (“Gale/Green Agreements”)
to complete the aforementioned acquisitions (collectively, the “Gale/Green
Transactions”) required that the Company complete all of the acquisitions.
Simultaneous with the completion of the Gale/Green Transactions, The Gale
Company’s President, Mark Yeager, was named an executive vice president of the
Company.
Under
the
Gale/Green Agreements, the Company acquired 100 percent of the ownership
interests in three office properties located in New Jersey, aggregating 518,257
square feet (the “Wholly-Owned Properties”).
Also,
as
part of the Gale/Green Agreements, the Company entered into a joint venture
with
an entity controlled by SL Green (in which Stanley C. Gale has an interest),
known as Mack-Green-Gale LLC (“Mack-Green”), to hold an approximate 96 percent
interest and act as general partner of Gale SLG NJ Operating Partnership, L.P.
(the “OP LP”). The
OP LP
owns 100 percent of entities which own 25 office properties (collectively,
the“OP
LP
Properties”) which aggregate 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.
Mr.
Gale
has agreed to pay Mark Yeager, an executive officer of the Company, 49 percent
of any payments he receives on account of Mr. Gale’s interest with SL Green in
Mack-Green.
The
Gale
Company, the Wholly-Owned Properties, and the interest in Mack-Green were
acquired by the Company for a total initial acquisition cost of approximately
$245 million consisting of: (i) the issuance by the Company of 224,719 common
units of the Operating Partnership; (ii) the payment of a total of approximately
$194 million in cash, which was primarily funded through borrowing under the
Company’s revolving credit facility; and (iii) the assumption of $39.9 million
in existing mortgage indebtedness on two of the Wholly-Owned Properties. Mr.
Gale has agreed to transfer to Mark Yeager 33,700 of his common units of the
Operating Partnership on April 30, 2009, provided that Mr. Yeager’s employment
with the Company has not been terminated involuntarily without cause
(“Employment Continuation”) prior to such date. Additionally, the agreement to
acquire the Gale Company (“Gale Agreement”) contains earn-out provisions
providing for the payment of contingent purchase consideration of up to $18
million in cash based upon the achievement of Gross Income and NOI (as such
terms are defined in the Gale Agreement) targets and other events for The Gale
Company for the three years following the closing date.
6
Mr.
Gale
has agreed to pay to Mr. Yeager 49 percent of all amounts he receives pursuant
to the Gale Agreement earn-out provisions, subject to certain conditions
including Mr. Yeager’s Employment Continuation.
The
Company has not yet obtained all the information necessary to finalize its
estimates to complete the purchase price allocations related to the Gale/Green
Transactions. The purchase price allocations will be finalized once the
information identified by the Company has been received, which should not be
longer than one year from the date of acquisition.
In
addition, the Gale Agreement provides for the Company to acquire certain other
ownership interests in up to 11 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 will 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.
Mr.
Gale
has agreed to pay to Mr. Yeager 49 percent of any payments he receives with
respect to the Gale Participation Rights, subject to adjustments for payments
Mr. Yeager receives from his direct interests in such rights and subject to,
in
certain cases, Mr. Yeager’s Employment Continuation. Mr. Gale has also agreed to
pay to Mr. Yeager 49 percent of the distributions he receives with respect
to
Mr. Gale’s interest in certain land located in Florham Park, New Jersey, which
is one of the Non-Portfolio Properties not yet acquired by the Company. Such
distribution may include the amounts Mr. Gale receives from the conveyance
of
his interest in the Florham Park land to the Company.
With
respect to the arrangements between Mr. Gale and Mr. Yeager regarding the Gale
Agreement earn-out provisions and the Florham Park land, they have agreed to
consider offering payments to certain persons that have been employed by certain
subsidiaries of The Gale Company, which may include current employees of the
Company.
Through
December 31, 2006, the Company has completed acquisitions of eight of the
interests in the Non-Portfolio Properties, which included the acquisitions
of
interests in: a 527,015 square foot, mixed-use office/retail complex; a 416,429
square-foot multi-tenanted office property; a 139,750 square-foot fully-leased
office property; an office property in development; two vacant land parcels
(one
of which Mr. Yeager has a 16.49 percent interest in the Participation Rights)
and two pre-developed projects. The aggregate cost of the completed acquisitions
was approximately $25.6 million.
Pursuant
to Mr. Gale’s agreements with Mr. Yeager, as described herein, Mr. Yeager
received approximately $5.6 million during the year ended December 31,
2006.
In
connection with the Company’s acquisition of the Gale Company, Mr. Gale and
certain other affiliates of Gale are restricted from competing with the Company
or hiring the Company’s employees for a period of four years expiring on May 9,
2010.
7
Property
Acquisitions
The
Company acquired the following office properties during the year ended December
31, 2006: (dollars
in thousands)
|
Acquisition
|
#
of
|
Rentable
|
Acquisition
|
||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Square
Feet
|
Cost
|
|
02/28/06
|
Capital
Office Park (a)
|
Greenbelt,
Maryland
|
7
|
842,258
|
$166,011
|
|
05/09/06
|
35
Waterview Boulevard (b) (c)
|
Parsippany,
New Jersey
|
1
|
172,498
|
33,586
|
|
05/09/06
|
105
Challenger Road (b) (d)
|
Ridgefield
Park, New Jersey
|
1
|
150,050
|
34,960
|
|
05/09/06
|
343
Thornall Street (b) (e)
|
Edison,
New Jersey
|
1
|
195,709
|
46,193
|
|
07/31/06
|
395
W. Passaic Street (f)
|
Rochelle
Park, New Jersey
|
1
|
100,589
|
22,219
|
|
Total
Property Acquisitions:
|
11
|
1,461,104
|
$302,969
|
||
|
(a) This
transaction was funded primarily through the assumption of $63.2
million
of mortgage debt and the issuance of 1.9 million common operating
partnership units valued at $87.2 million.
|
|||||
|
(b) The
property was acquired as part of the Gale/Green
Transactions.
|
|||||
|
(c) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $20.4 million of mortgage
debt.
|
|||||
|
(d) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $19.5 million of mortgage
debt.
|
|||||
|
(e) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility.
|
|||||
|
(f) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $13.1 million of mortgage
debt.
|
|||||
For
a
discussion of the ownership interests in Mack-Green, see Note 4: Investments
in
Unconsolidated Joint Ventures - Mack-Green-Gale LLC - to our financial
statements included within this annual report on Form 10-K.
Sales
The
Company sold the following office properties during the year ended December
31,
2006: (dollars
in thousands)
|
Rentable
|
Net
|
Net
|
Realized
|
||||
|
Sale
|
#
of
|
Square
|
Sales
|
Book
|
Gain/
|
||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Feet
|
Proceeds
|
Value
|
(Loss)
|
|
06/28/06
|
Westage
Business Center
|
Fishkill,
New York
|
1
|
118,727
|
$
14,765
|
$
10,872
|
$
3,893
|
|
06/30/06
|
1510
Lancer Drive
|
Moorestown,
New Jersey
|
1
|
88,000
|
4,146
|
3,134
|
1,012
|
|
11/10/06
|
Colorado
portfolio
|
Various
cities, Colorado
|
19
|
1,431,610
|
193,404
|
165,072
|
28,332
|
|
12/21/06
|
California
portfolio
|
San
Francisco, California
|
2
|
450,891
|
124,182
|
97,814
|
26,368
|
|
Total
Office Property Sales:
|
23
|
2,089,228
|
$336,497
|
$276,892
|
$59,605
|
||
On
November 6, 2006, the Company sold substantially all of its 50-percent interest
in G&G Martco, a joint venture which owned a 305,618 square foot office
building located in San Francisco, California for approximately $16.3 million,
realizing a gain on the sale of approximately $10.8 million.
On
November 7, 2006, the Company sold 10.1 acres of developable land adjacent
to
its Horizon Center properties in Hamilton Township, New Jersey, for net sales
proceeds of approximately $1.5 million, realizing a gain of approximately $1.1
million from the sale.
Investments
in Marketable Securities
In
2005,
the Company purchased approximately 1.5 million shares of common stock in
CarrAmerica Realty Corporation. From January 1, 2006 through January 25, 2006,
the Company purchased an additional 336,500 shares in CarrAmerica for a total
purchase price of approximately $11.9 million. During the three months ended
March 31, 2006, the Company sold all of its 1,804,800 shares of CarrAmerica
common stock, realizing a gain of approximately $15.1 million.
8
FINANCING
ACTIVITY
On
January 24, 2006, the Company issued $100 million face amount of 5.80 percent
senior unsecured notes due January 15, 2016 with interest payable semi-annually
in arrears, and $100 million face amount of 5.25 percent senior unsecured notes
due January 15, 2012 with interest payable semi-annually in arrears. The total
proceeds from the issuances, including accrued interest on the 5.80 percent
notes of approximately $200.8 million, were used to reduce outstanding
borrowings under the Company’s unsecured facility.
On
February 7, 2007, the Company completed an underwritten offer and sale of
4,650,000 shares of its common stock and used the net proceeds, which totaled
approximately $252 million (after offering costs), primarily to pay down its
outstanding borrowings under the Company’s revolving credit facility and for
general corporate purposes.
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 guidelines, 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:
| · |
changes
in the general economic climate and conditions, including those affecting
industries in which our principal tenants operate;
|
| · |
the
extent of any tenant bankruptcies or of any early lease terminations;
|
| · |
our
ability to lease or re-lease space at current or anticipated rents;
|
| · |
changes
in the supply of and demand for office, office/flex and
industrial/warehouse properties;
|
| · |
changes
in interest rate levels;
|
| · |
changes
in operating costs;
|
| · |
our
ability to obtain adequate insurance, including coverage for terrorist
acts;
|
| · |
the
availability of financing;
|
| · |
changes
in governmental regulation, tax rates and similar matters;
and
|
| · |
other
risks associated with the development and acquisition of properties,
including risks that the development may not be completed on schedule,
that the tenants will not take occupancy or pay rent, or that development
or operating costs may be greater than anticipated.
|
9
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.
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.
Declines
in economic activities in the Northeastern office markets could adversely affect
our operating results.
A
majority of our revenues are derived from our properties located in the
Northeast, particularly in New Jersey, New York and Pennsylvania. Adverse
economic developments in this region could adversely impact the operations
of
our properties and, therefore, our profitability. Because our portfolio consists
primarily of office and office/flex buildings (as compared to a more diversified
real estate portfolio), a decline in the economy and/or a decline in the demand
for office space may adversely affect our ability to make distributions or
payments to our investors.
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:
| · |
changes
in the general economic climate;
|
| · |
changes
in local conditions such as an oversupply of office space, a reduction
in
demand for office space, or reductions in office market rental
rates;
|
| · |
decreased
attractiveness of our properties to
tenants;
|
| · |
competition
from other office and office/flex
properties;
|
| · |
our
inability to provide adequate
maintenance;
|
| · |
increased
operating costs, including insurance premiums, utilities and real
estate
taxes, due to inflation and other factors which may not necessarily
be
offset by increased rents;
|
| · |
changes
in laws and regulations (including tax, environmental, zoning and
building
codes, and housing laws and regulations) and agency or court
interpretations of such laws and regulations and the related costs
of
compliance;
|
| · |
changes
in interest rate levels and the availability of
financing;
|
| · |
the
inability of a significant number of tenants to pay
rent;
|
| · |
our
inability to rent office space on favorable terms;
and
|
| · |
civil
unrest, earthquakes, acts of terrorism and other natural disasters
or acts
of God that may result in uninsured
losses.
|
Financially
distressed tenants may be unable to pay rent:
If a
tenant defaults, we may experience delays and incur substantial costs in
enforcing our rights as landlord and protecting our investments. If a tenant
files for bankruptcy, a potential court judgment rejecting and terminating
such
tenant’s lease could adversely affect our ability to make distributions or
payments to our investors.
10
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.
Our
insurance coverage on our properties may be inadequate:
We
currently carry comprehensive insurance on all of our properties, including
insurance for liability, fire and flood. 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.
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 “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, 2006, 50 of our
properties, with an aggregate net book value of approximately $1.3 billion,
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. 88 of our properties, with an
aggregate net book value of approximately $809.0 million, 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
11
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.
Competition
for acquisitions may result in increased prices for
properties:
We plan
to acquire additional properties in New Jersey, New York and Pennsylvania and
in
the Northeast generally. We may be competing for investment opportunities with
entities that have greater financial resources. Several office building
developers and real estate companies may compete with us in seeking properties
for acquisition, land for development and prospective tenants. Such competition
may adversely affect our ability to make distributions or payments to our
investors by:
| · |
reducing
the number of suitable investment opportunities offered to
us;
|
| · |
increasing
the bargaining power of property
owners;
|
| · |
interfering
with our ability to attract and retain
tenants;
|
| · |
increasing
vacancies which lowers market rental rates and limits our ability
to
negotiate rental rates; and/or
|
| · |
adversely
affecting our ability to minimize expenses of
operation.
|
Development
of real estate could be costly:
As part
of our operating strategy, we may acquire land for development 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:
| · |
financing
for development projects may not be available on favorable
terms;
|
| · |
long-term
financing may not be available upon completion of construction;
and
|
| · |
failure
to complete construction on schedule or within budget may increase
debt
service expense and construction
costs.
|
Property
ownership through joint ventures could subject us to the contrary business
objectives of our co-venturers:
We, from
time to time, invest in joint ventures or partnerships in which we do not hold
a
controlling interest 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 equity 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
a
result of the Gale/Green Transactions, we now perform fixed price construction
services for third parties and 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.
12
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:
| · |
our
cash flow may be insufficient to meet required payments of principal
and
interest;
|
| · |
payments
of principal and interest on borrowings may leave us with insufficient
cash resources to pay operating
expenses;
|
| · |
we
may not be able to refinance indebtedness
on our properties at maturity; and
|
| · |
if
refinanced, the terms of refinancing may not be as favorable as the
original terms of the related
indebtedness.
|
As
of
December 31, 2006, we had total outstanding indebtedness of $2.2 billion
comprised of $1.6 billion of senior unsecured notes, outstanding borrowings
of
$145.0 million under our $600.0 million revolving credit facility and
approximately $383.5 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.
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
may need to dispose of one or more of our properties upon disadvantageous
terms;
|
| · |
prevailing
interest rates or other factors at the time of refinancing could
increase
interest rates and, therefore, our interest
expense;
|
| · |
if
we mortgage property to secure payment of indebtedness and are unable
to
meet mortgage payments, the mortgagee could foreclose upon such property
or appoint a receiver to receive an assignment of our rents and leases;
and
|
| · |
foreclosures
upon mortgaged property could create taxable income without accompanying
cash proceeds and, therefore, hinder our ability to meet the real
estate
investment trust distribution requirements of the Internal Revenue
Code.
|
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 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.
Rising
interest rates may adversely affect our cash flow:
As of
December 31, 2006, outstanding borrowings of approximately $145.0 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 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.
13
We
are dependent on external sources of capital for future
growth:
To
qualify as a real estate investment trust, 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 a 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 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, Term 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.
14
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,
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.
15
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,
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. 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 enable us to continue to qualify as a real estate investment trust,
it is possible that future economic, market, legal, tax or other considerations
may cause our Board of Directors to revoke the election for us to qualify as
a
real estate investment trust. Under our organizational documents, our Board
of
Directors can make such revocation without the consent of our stockholders.
In
addition, the consent of the holders of at least 85 percent of Mack-Cali Realty,
L.P.’s partnership units is required: (i) to merge (or permit the merger of) us
with another unrelated person, pursuant to a transaction in which Mack-Cali
Realty, L.P. is not the surviving entity; (ii) to dissolve, liquidate or wind
up
Mack-Cali Realty, L.P.; or (iii) to convey or otherwise transfer all or
substantially all of Mack-Cali Realty, L.P.’s assets. As of February 16, 2007,
as general partner, we own approximately 81.6 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 Internal Revenue Code. Because few judicial or
administrative interpretations of such provisions exist and qualification
determinations are fact sensitive, we cannot assure you that we will qualify
as
a real estate investment trust for any taxable year.
If
we
fail to qualify as a real estate investment trust in any taxable year, we will
be subject to the following:
| · |
we
will not be allowed a deduction for dividends paid to
shareholders;
|
| · |
we
will be subject to federal income tax at regular corporate rates,
including any alternative minimum tax, if applicable;
and
|
| · |
unless
we are entitled to relief under certain statutory provisions, we
will not
be permitted to qualify as a real estate investment trust for the
four
taxable years following the year during which we were
disqualified.
|
A
loss of
our status as a real estate investment trust could have an adverse effect on
us.
Failure to qualify as a real estate investment trust also would eliminate the
requirement that we pay dividends to our stockholders.
16
Other
tax liabilities:
Even if
we qualify as a real estate investment trust, we are subject to certain federal,
state and local taxes on our income and property and, in some circumstances,
certain other state and local taxes. 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.
ITEM
1B. UNRESOLVED
STAFF COMMENTS
None.
17
ITEM
2. PROPERTIES
PROPERTY
LIST
As
of
December 31, 2006, 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
28.9 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.
18
|
Office
Properties
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
NEW
JERSEY
|
|||||||||
|
Atlantic
County
|
|||||||||
|
Egg
Harbor
|
|||||||||
|
100
Decadon Drive
|
1987
|
40,422
|
100.0
|
954
|
907
|
0.18
|
23.60
|
22.44
|
|
|
200
Decadon Drive
|
1991
|
39,922
|
100.0
|
936
|
872
|
0.17
|
23.45
|
21.84
|
|
|
Bergen
County
|
|||||||||
|
Fair
Lawn
|
|||||||||
|
17-17
Route 208 North
|
1987
|
143,000
|
100.0
|
3,463
|
2,960
|
0.64
|
24.22
|
20.70
|
|
|
Fort
Lee
|
|||||||||
|
One
Bridge Plaza
|
1981
|
200,000
|
54.4
|
2,549
|
2,371
|
0.47
|
23.43
|
21.79
|
|
|
2115
Linwood Avenue
|
1981
|
68,000
|
62.6
|
1,253
|
1,017
|
0.23
|
29.44
|
23.89
|
|
|
Little
Ferry
|
|||||||||
|
200
Riser Road
|
1974
|
286,628
|
100.0
|
2,066
|
1,916
|
0.38
|
7.21
|
6.68
|
|
|
Montvale
|
|||||||||
|
95
Chestnut Ridge Road
|
1975
|
47,700
|
100.0
|
796
|
729
|
0.15
|
16.69
|
15.28
|
|
|
135
Chestnut Ridge Road
|
1981
|
66,150
|
88.9
|
1,440
|
1,173
|
0.26
|
24.49
|
19.95
|
|
|
Paramus
|
|||||||||
|
15
East Midland Avenue
|
1988
|
259,823
|
100.0
|
5,597
|
5,440
|
1.03
|
21.54
|
20.94
|
|
|
140
East Ridgewood Avenue
|
1981
|
239,680
|
92.1
|
4,844
|
4,218
|
0.89
|
21.94
|
19.11
|
|
|
461
From Road
|
1988
|
253,554
|
98.6
|
6,064
|
6,044
|
1.11
|
24.26
|
24.18
|
|
|
650
From Road
|
1978
|
348,510
|
93.8
|
7,884
|
6,894
|
1.45
|
24.12
|
21.09
|
|
|
61
South Paramus Avenue
|
1985
|
269,191
|
99.0
|
6,649
|
5,906
|
1.22
|
24.95
|
22.16
|
|
|
Ridgefield
Park
|
|||||||||
|
105
Challenger Road (g)
|
1992
|
150,050
|
87.5
|
2,759
|
2,527
|
0.51
|
32.36
|
29.64
|
|
|
Rochelle
Park
|
|||||||||
|
120
Passaic Street
|
1972
|
52,000
|
99.6
|
1,402
|
1,322
|
0.26
|
27.07
|
25.53
|
|
|
365
West Passaic Street
|
1976
|
212,578
|
97.6
|
4,177
|
3,742
|
0.77
|
20.13
|
18.04
|
|
|
395
West Passaic Street (g)
|
1979
|
100,589
|
90.2
|
918
|
794
|
0.17
|
23.98
|
20.74
|
|
|
Upper
Saddle River
|
|||||||||
|
1
Lake Street
|
1973/94
|
474,801
|
100.0
|
7,465
|
7,465
|
1.37
|
15.72
|
15.72
|
|
|
10
Mountainview Road
|
1986
|
192,000
|
100.0
|
4,352
|
4,045
|
0.80
|
22.67
|
21.07
|
|
|
Woodcliff
Lake
|
|||||||||
|
400
Chestnut Ridge Road
|
1982
|
89,200
|
100.0
|
1,950
|
1,456
|
0.36
|
21.86
|
16.32
|
|
|
470
Chestnut Ridge Road
|
1987
|
52,500
|
81.2
|
479
|
455
|
0.09
|
11.24
|
10.67
|
|
|
530
Chestnut Ridge Road
|
1986
|
57,204
|
100.0
|
1,166
|
1,166
|
0.21
|
20.38
|
20.38
|
|
|
50
Tice Boulevard
|
1984
|
235,000
|
100.0
|
6,155
|
5,570
|
1.13
|
26.19
|
23.70
|
|
|
300
Tice Boulevard
|
1991
|
230,000
|
100.0
|
6,155
|
5,504
|
1.13
|
26.76
|
23.93
|
|
|
Burlington
County
|
|||||||||
|
Moorestown
|
|||||||||
|
224
Strawbridge Drive
|
1984
|
74,000
|
98.4
|
1,309
|
1,218
|
0.24
|
17.98
|
16.73
|
|
|
228
Strawbridge Drive
|
1984
|
74,000
|
100.0
|
1,043
|
896
|
0.19
|
14.09
|
12.11
|
|
|
232
Strawbridge Drive
|
1986
|
74,258
|
98.8
|
1,446
|
1,400
|
0.27
|
19.71
|
19.08
|
|
|
Essex
County
|
|||||||||
|
Millburn
|
|||||||||
|
150
J.F. Kennedy Parkway
|
1980
|
247,476
|
100.0
|
7,454
|
6,462
|
1.37
|
30.12
|
26.11
|
|
19
|
Office
Properties
|
|||||||||
|
(Continued)
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
Roseland
|
|||||||||
|
101
Eisenhower Parkway
|
1980
|
237,000
|
93.9
|
5,522
|
5,014
|
1.01
|
24.81
|
22.53
|
|
|
103
Eisenhower Parkway
|
1985
|
151,545
|
87.5
|
3,026
|
2,629
|
0.56
|
22.82
|
19.83
|
|
|
105
Eisenhower Parkway
|
2001
|
220,000
|
85.8
|
4,126
|
3,088
|
0.76
|
21.86
|
16.36
|
|
|
Hudson
County
|
|||||||||
|
Jersey
City
|
|||||||||
|
Harborside
Financial Center Plaza 1
|
1983
|
400,000
|
92.8
|
3,930
|
3,475
|
0.72
|
10.59
|
9.36
|
|
|
Harborside
Financial Center Plaza 2
|
1990
|
761,200
|
100.0
|
17,838
|
16,694
|
3.27
|
23.43
|
21.93
|
|
|
Harborside
Financial Center Plaza 3
|
1990
|
725,600
|
98.5
|
17,870
|
16,780
|
3.28
|
25.00
|
23.48
|
|
|
Harborside
Financial Center Plaza 4-A
|
2000
|
207,670
|
99.1
|
6,749
|
5,903
|
1.24
|
32.79
|
28.68
|
|
|
Harborside
Financial Center Plaza 5
|
2002
|
977,225
|
97.5
|
35,570
|
29,406
|
6.53
|
37.33
|
30.86
|
|
|
101
Hudson Street
|
1992
|
1,246,283
|
100.0
|
29,822
|
26,212
|
5.47
|
23.93
|
21.03
|
|
|
Mercer
County
|
|||||||||
|
Hamilton
Township
|
|||||||||
|
600
Horizon Drive
|
2002
|
95,000
|
100.0
|
1,373
|
1,373
|
0.25
|
14.45
|
14.45
|
|
|
Princeton
|
|||||||||
|
103
Carnegie Center
|
1984
|
96,000
|
84.9
|
2,311
|
2,029
|
0.42
|
28.35
|
24.89
|
|
|
3
Independence Way
|
1983
|
111,300
|
49.9
|
884
|
702
|
0.16
|
15.92
|
12.64
|
|
|
100
Overlook Center
|
1988
|
149,600
|
100.0
|
3,975
|
3,431
|
0.73
|
26.57
|
22.93
|
|
|
5
Vaughn Drive
|
1987
|
98,500
|
94.0
|
2,431
|
2,120
|
0.45
|
26.26
|
22.90
|
|
|
Middlesex
County
|
|||||||||
|
East
Brunswick
|
|||||||||
|
377
Summerhill Road
|
1977
|
40,000
|
100.0
|
353
|
346
|
0.06
|
8.83
|
8.65
|
|
|
Edison
|
|||||||||
|
343
Thornall Street (c) (g)
|
1991
|
195,709
|
100.0
|
1,953
|
1,608
|
0.36
|
15.37
|
12.65
|
|
|
Piscataway
|
|||||||||
|
30
Knightsbridge Road, Bldg 3
|
1977
|
160,000
|
100.0
|
2,465
|
2,465
|
0.45
|
15.41
|
15.41
|
|
|
30
Knightsbridge Road, Bldg 4
|
1977
|
115,000
|
100.0
|
1,771
|
1,771
|
0.33
|
15.40
|
15.40
|
|
|
30
Knightsbridge Road, Bldg 5
|
1977
|
332,607
|
43.6
|
1,275
|
1,080
|
0.23
|
8.79
|
7.45
|
|
|
30
Knightsbridge Road, Bldg 6
|
1977
|
72,743
|
62.9
|
--
|
--
|
--
|
--
|
--
|
|
|
Plainsboro
|
|||||||||
|
500
College Road East
|
1984
|
158,235
|
95.7
|
4,031
|
3,807
|
0.74
|
26.62
|
25.14
|
|
|
Woodbridge
|
|||||||||
|
581
Main Street
|
1991
|
200,000
|
100.0
|
4,586
|
4,346
|
0.84
|
22.93
|
21.73
|
|
|
Monmouth
County
|
|||||||||
|
Freehold
|
|||||||||
|
2
Paragon Way
|
1989
|
44,524
|
64.8
|
648
|
502
|
0.12
|
22.46
|
17.40
|
|
|
3
Paragon Way
|
1991
|
66,898
|
58.4
|
770
|
699
|
0.14
|
19.71
|
17.89
|
|
|
4
Paragon Way
|
2002
|
63,989
|
100.0
|
1,168
|
900
|
0.21
|
18.25
|
14.06
|
|
|
100
Willbowbrook
|
1988
|
60,557
|
74.8
|
812
|
721
|
0.15
|
17.93
|
15.92
|
|
|
Holmdel
|
|||||||||
|
23
Main Street
|
1977
|
350,000
|
100.0
|
4,039
|
3,187
|
0.74
|
11.54
|
9.11
|
|
20
|
Office
Properties
|
|||||||||
|
(Continued)
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
Middletown
|
|||||||||
|
One
River Center Bldg 1
|
1983
|
122,594
|
100.0
|
3,064
|
2,633
|
0.56
|
24.99
|
21.48
|
|
|
One
River Center Bldg 2
|
1983
|
120,360
|
100.0
|
2,775
|
2,738
|
0.51
|
23.06
|
22.75
|
|
|
One
River Center Bldg 3
|
1984
|
214,518
|
93.6
|
4,374
|
4,329
|
0.80
|
21.78
|
21.56
|
|
|
Neptune
|
|||||||||
|
3600
Route 66
|
1989
|
180,000
|
100.0
|
2,400
|
2,171
|
0.44
|
13.33
|
12.06
|
|
|
Wall
Township
|
|||||||||
|
1305
Campus Parkway
|
1988
|
23,350
|
92.4
|
393
|
368
|
0.07
|
18.22
|
17.06
|
|
|
1350
Campus Parkway
|
1990
|
79,747
|
99.9
|
1,564
|
1,423
|
0.29
|
19.63
|
17.86
|
|
|
Morris
County
|
|||||||||
|
Florham
Park
|
|||||||||
|
325
Columbia Turnpike
|
1987
|
168,144
|
99.4
|
4,093
|
3,652
|
0.75
|
24.49
|
21.85
|
|
|
Morris
Plains
|
|||||||||
|
250
Johnson Road
|
1977
|
75,000
|
100.0
|
1,579
|
1,385
|
0.29
|
21.05
|
18.47
|
|
|
201
Littleton Road
|
1979
|
88,369
|
88.9
|
1,783
|
1,582
|
0.33
|
22.70
|
20.14
|
|
|
Morris
Township
|
|||||||||
|
412
Mt. Kemble Avenue
|
1986
|
475,100
|
33.5
|
81
|
81
|
0.01
|
0.51
|
0.51
|
|
|
Parsippany
|
|||||||||
|
4
Campus Drive
|
1983
|
147,475
|
96.9
|
2,634
|
2,308
|
0.48
|
18.43
|
16.15
|
|
|
6
Campus Drive
|
1983
|
148,291
|
87.2
|
2,376
|
1,906
|
0.44
|
18.37
|
14.74
|
|
|
7
Campus Drive
|
1982
|
154,395
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
8
Campus Drive
|
1987
|
215,265
|
100.0
|
6,306
|
5,534
|
1.16
|
29.29
|
25.71
|
|
|
9
Campus Drive
|
1983
|
156,495
|
86.9
|
3,720
|
3,149
|
0.68
|
27.35
|
23.16
|
|
|
4
Century Drive
|
1981
|
100,036
|
71.9
|
1,592
|
1,444
|
0.29
|
22.13
|
20.08
|
|
|
5
Century Drive
|
1981
|
79,739
|
67.2
|
1,951
|
1,950
|
0.36
|
36.41
|
36.39
|
|
|
6
Century Drive
|
1981
|
100,036
|
69.9
|
28
|
22
|
0.01
|
0.40
|
0.31
|
|
|
2
Dryden Way
|
1990
|
6,216
|
100.0
|
93
|
93
|
0.02
|
14.96
|
14.96
|
|
|
4
Gatehall Drive
|
1988
|
248,480
|
85.4
|
5,190
|
4,707
|
0.95
|
24.46
|
22.18
|
|
|
2
Hilton Court
|
1991
|
181,592
|
100.0
|
5,089
|
4,600
|
0.93
|
28.02
|
25.33
|
|
|
1633
Littleton Road
|
1978
|
57,722
|
100.0
|
1,131
|
1,131
|
0.21
|
19.59
|
19.59
|
|
|
600
Parsippany Road
|
1978
|
96,000
|
94.7
|
1,235
|
1,020
|
0.23
|
13.58
|
11.22
|
|
|
1
Sylvan Way
|
1989
|
150,557
|
100.0
|
3,499
|
3,103
|
0.64
|
23.24
|
20.61
|
|
|
5
Sylvan Way
|
1989
|
151,383
|
100.0
|
3,929
|
3,592
|
0.72
|
25.95
|
23.73
|
|
|
7
Sylvan Way
|
1987
|
145,983
|
100.0
|
3,219
|
2,803
|
0.59
|
22.05
|
19.20
|
|
|
35
Waterview Boulevard (g)
|
1990
|
172,498
|
92.2
|
2,774
|
2,491
|
0.51
|
26.86
|
24.12
|
|
|
5
Wood Hollow Road
|
1979
|
317,040
|
96.7
|
5,758
|
4,963
|
1.06
|
18.78
|
16.19
|
|
|
Passaic
County
|
|||||||||
|
Clifton
|
|||||||||
|
777
Passaic Avenue
|
1983
|
75,000
|
100.0
|
1,517
|
1,375
|
0.28
|
20.23
|
18.33
|
|
|
Totowa
|
|||||||||
|
999
Riverview Drive
|
1988
|
56,066
|
100.0
|
1,079
|
962
|
0.20
|
19.25
|
17.16
|
|
|
Somerset
County
|
|||||||||
|
Basking
Ridge
|
|||||||||
|
222
Mt. Airy Road
|
1986
|
49,000
|
60.7
|
615
|
462
|
0.11
|
20.68
|
15.53
|
|
|
233
Mt. Airy Road
|
1987
|
66,000
|
100.0
|
1,315
|
1,103
|
0.24
|
19.92
|
16.71
|
|
21
|
Office
Properties
|
|||||||||
|
(Continued)
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
Bernards
|
|||||||||
|
106
Allen Road
|
2000
|
132,010
|
97.0
|
3,027
|
2,273
|
0.56
|
23.64
|
17.75
|
|
|
Bridgewater
|
|||||||||
|
721
Route 202/206
|
1989
|
192,741
|
97.0
|
3,984
|
3,757
|
0.73
|
21.31
|
20.10
|
|
|
Union
County
|
|||||||||
|
Clark
|
|||||||||
|
100
Walnut Avenue
|
1985
|
182,555
|
99.8
|
4,737
|
4,145
|
0.87
|
26.00
|
22.75
|
|
|
Cranford
|
|||||||||
|
6
Commerce Drive
|
1973
|
56,000
|
88.1
|
1,116
|
988
|
0.20
|
22.62
|
20.03
|
|
|
11
Commerce Drive (c)
|
1981
|
90,000
|
92.7
|
1,020
|
860
|
0.19
|
12.23
|
10.31
|
|
|
12
Commerce Drive
|
1967
|
72,260
|
95.1
|
991
|
817
|
0.18
|
14.42
|
11.89
|
|
|
14
Commerce Drive
|
1971
|
67,189
|
87.3
|
1,232
|
1,190
|
0.23
|
21.00
|
20.29
|
|
|
20
Commerce Drive
|
1990
|
176,600
|
100.0
|
4,332
|
3,806
|
0.80
|
24.53
|
21.55
|
|
|
25
Commerce Drive
|
1971
|
67,749
|
100.0
|
1,436
|
1,351
|
0.26
|
21.20
|
19.94
|
|
|
65
Jackson Drive
|
1984
|
82,778
|
95.5
|
1,918
|
1,706
|
0.35
|
24.26
|
21.58
|
|
|
New
Providence
|
|||||||||
|
890
Mountain Avenue
|
1977
|
80,000
|
87.1
|
1,775
|
1,672
|
0.33
|
25.47
|
24.00
|
|
|
Total
New Jersey Office
|
17,537,754
|
91.7
|
354,747
|
316,402
|
65.13
|
22.40
|
19.97
|
||
|
NEW
YORK
|
|||||||||
|
Rockland
County
|
|||||||||
|
Suffern
|
|||||||||
|
400
Rella Boulevard
|
1988
|
180,000
|
100.0
|
4,296
|
3,826
|
0.79
|
23.87
|
21.26
|
|
|
Westchester
County
|
|||||||||
|
Elmsford
|
|||||||||
|
100
Clearbrook Road (c)
|
1975
|
60,000
|
99.5
|
1,131
|
1,040
|
0.21
|
18.94
|
17.42
|
|
|
101
Executive Boulevard
|
1971
|
50,000
|
45.3
|
511
|
462
|
0.09
|
22.56
|
20.40
|
|
|
555
Taxter Road
|
1986
|
170,554
|
100.0
|
4,173
|
3,499
|
0.77
|
24.47
|
20.52
|
|
|
565
Taxter Road
|
1988
|
170,554
|
100.0
|
4,052
|
3,511
|
0.74
|
23.76
|
20.59
|
|
|
570
Taxter Road
|
1972
|
75,000
|
95.9
|
1,843
|
1,708
|
0.34
|
25.62
|
23.75
|
|
|
Hawthorne
|
|||||||||
|
1
Skyline Drive
|
1980
|
20,400
|
99.0
|
388
|
365
|
0.07
|
19.21
|
18.07
|
|
|
2
Skyline Drive
|
1987
|
30,000
|
98.9
|
475
|
412
|
0.09
|
16.01
|
13.89
|
|
|
7
Skyline Drive
|
1987
|
109,000
|
95.3
|
2,532
|
2,324
|
0.46
|
24.37
|
22.37
|
|
|
17
Skyline Drive
|
1989
|
85,000
|
51.7
|
719
|
713
|
0.13
|
16.36
|
16.22
|
|
|
19
Skyline Drive
|
1982
|
248,400
|
100.0
|
4,471
|
4,174
|
0.82
|
18.00
|
16.80
|
|
22
|
Office
Properties
|
|||||||||
|
(Continued)
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
Tarrytown
|
|||||||||
|
200
White Plains Road
|
1982
|
89,000
|
97.9
|
1,824
|
1,655
|
0.33
|
20.93
|
18.99
|
|
|
220
White Plains Road
|
1984
|
89,000
|
92.0
|
1,819
|
1,670
|
0.33
|
22.22
|
20.40
|
|
|
White
Plains
|
|||||||||
|
1
Barker Avenue
|
1975
|
68,000
|
97.3
|
1,743
|
1,621
|
0.32
|
26.34
|
24.50
|
|
|
3
Barker Avenue
|
1983
|
65,300
|
91.0
|
1,631
|
1,494
|
0.30
|
27.45
|
25.14
|
|
|
50
Main Street
|
1985
|
309,000
|
98.0
|
9,249
|
8,496
|
1.70
|
30.54
|
28.06
|
|
|
11
Martine Avenue
|
1987
|
180,000
|
90.8
|
4,889
|
4,368
|
0.90
|
29.91
|
26.73
|
|
|
1
Water Street
|
1979
|
45,700
|
100.0
|
1,011
|
878
|
0.19
|
22.12
|
19.21
|
|
|
Yonkers
|
|||||||||
|
1
Executive Boulevard
|
1982
|
112,000
|
100.0
|
2,779
|
2,484
|
0.51
|
24.81
|
22.18
|
|
|
3
Executive Plaza
|
1987
|
58,000
|
100.0
|
1,472
|
1,281
|
0.27
|
25.38
|
22.09
|
|
|
Total
New York Office
|
2,214,908
|
94.7
|
51,008
|
45,981
|
9.36
|
24.31
|
21.92
|
||
|
PENNSYLVANIA
|
|||||||||
|
Chester
County
|
|||||||||
|
Berwyn
|
|||||||||
|
1000
Westlakes Drive
|
1989
|
60,696
|
95.7
|
1,592
|
1,515
|
0.29
|
27.41
|
26.08
|
|
|
1055
Westlakes Drive
|
1990
|
118,487
|
90.2
|
2,885
|
2,334
|
0.53
|
26.99
|
21.84
|
|
|
1205
Westlakes Drive
|
1988
|
130,265
|
63.8
|
2,234
|
1,954
|
0.41
|
26.88
|
23.51
|
|
|
1235
Westlakes Drive
|
1986
|
134,902
|
97.7
|
2,789
|
2,436
|
0.51
|
21.16
|
18.48
|
|
|
Delaware
County
|
|||||||||
|
Lester
|
|||||||||
|
100
Stevens Drive
|
1986
|
95,000
|
100.0
|
2,551
|
2,358
|
0.47
|
26.85
|
24.82
|
|
|
200
Stevens Drive
|
1987
|
208,000
|
100.0
|
5,598
|
5,252
|
1.03
|
26.91
|
25.25
|
|
|
300
Stevens Drive
|
1992
|
68,000
|
100.0
|
1,592
|
1,254
|
0.29
|
23.41
|
18.44
|
|
|
Media
|
|||||||||
|
1400
Providence Road - Center I
|
1986
|
100,000
|
96.8
|
2,038
|
1,838
|
0.37
|
21.05
|
18.99
|
|
|
1400
Providence Road - Center II
|
1990
|
160,000
|
95.8
|
3,346
|
2,921
|
0.61
|
21.83
|
19.06
|
|
|
Montgomery
County
|
|||||||||
|
Bala
Cynwyd
|
|||||||||
|
150
Monument Road
|
1981
|
125,783
|
98.4
|
2,387
|
2,286
|
0.44
|
19.29
|
18.47
|
|
|
Blue
Bell
|
|||||||||
|
4
Sentry Parkway
|
1982
|
63,930
|
94.1
|
1,373
|
1,368
|
0.25
|
22.82
|
22.74
|
|
|
5
Sentry Parkway East
|
1984
|
91,600
|
30.5
|
1,185
|
1,152
|
0.22
|
42.42
|
41.23
|
|
|
5
Sentry Parkway West
|
1984
|
38,400
|
100.0
|
590
|
572
|
0.11
|
15.36
|
14.90
|
|
|
16
Sentry Parkway
|
1988
|
93,093
|
100.0
|
2,268
|
2,156
|
0.42
|
24.36
|
23.16
|
|
|
18
Sentry Parkway
|
1988
|
95,010
|
97.6
|
2,040
|
1,900
|
0.37
|
22.00
|
20.49
|
|
|
King
of Prussia
|
|||||||||
|
2200
Renaissance Boulevard
|
1985
|
174,124
|
74.9
|
3,329
|
3,052
|
0.61
|
25.53
|
23.40
|
|
|
Lower
Providence
|
|||||||||
|
1000
Madison Avenue
|
1990
|
100,700
|
75.8
|
768
|
622
|
0.14
|
10.06
|
8.15
|
|
|
Plymouth
Meeting
|
|||||||||
|
1150
Plymouth Meeting Mall
|
1970
|
167,748
|
92.9
|
2,981
|
2,446
|
0.55
|
19.13
|
15.70
|
|
|
Total
Pennsylvania Office
|
2,025,738
|
88.8
|
41,546
|
37,416
|
7.62
|
23.09
|
20.79
|
||
23
|
Office
Properties
|
|||||||||
|
(Continued)
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
CONNECTICUT
|
|||||||||
|
Fairfield
County
|
|||||||||
|
Greenwich
|
|||||||||
|
500
West Putnam Avenue
|
1973
|
121,250
|
96.3
|
3,337
|
3,153
|
0.61
|
28.58
|
27.00
|
|
|
Norwalk
|
|||||||||
|
40
Richards Avenue
|
1985
|
145,487
|
80.6
|
2,544
|
2,239
|
0.47
|
21.69
|
19.09
|
|
|
Shelton
|
|||||||||
|
1000
Bridgeport Avenue
|
1986
|
133,000
|
93.6
|
2,188
|
1,775
|
0.40
|
17.58
|
14.26
|
|
|
Stamford
|
|||||||||
|
1266
East Main Street
|
1984
|
179,260
|
76.2
|
3,627
|
3,453
|
0.67
|
26.55
|
25.28
|
|
|
Total
Connecticut Office
|
578,997
|
85.5
|
11,696
|
10,620
|
2.15
|
23.62
|
21.45
|
||
|
DISTRICT
OF COLUMBIA
|
|||||||||
|
Washington
|
|||||||||
|
1201
Connecticut Avenue, NW
|
1940
|
169,549
|
100.0
|
5,090
|
4,758
|
0.93
|
30.02
|
28.06
|
|
|
1400
L Street, NW
|
1987
|
159,000
|
90.6
|
4,839
|
4,667
|
0.89
|
33.59
|
32.40
|
|
|
Total
District of Columbia Office
|
328,549
|
95.5
|
9,929
|
9,425
|
1.82
|
31.66
|
30.05
|
||
|
MARYLAND
|
|||||||||
|
Prince
George’s County
|
|||||||||
|
Greenbelt
|
|||||||||
|
9200
Edmonston Road (g)
|
1973
|
38,690
|
100.0
|
774
|
699
|
0.14
|
23.78
|
21.48
|
|
|
6301
Ivy Lane (g)
|
1979
|
112,003
|
86.1
|
1,564
|
1,335
|
0.29
|
19.28
|
16.46
|
|
|
6303
Ivy Lane (g)
|
1980
|
112,047
|
87.4
|
2,040
|
1,826
|
0.37
|
24.77
|
22.17
|
|
|
6305
Ivy Lane (g)
|
1982
|
112,022
|
73.6
|
1,387
|
1,127
|
0.25
|
20.00
|
16.25
|
|
|
6404
Ivy Lane (g)
|
1987
|
165,234
|
77.9
|
2,274
|
1,815
|
0.42
|
21.00
|
16.76
|
|
|
6406
Ivy Lane (g)
|
1991
|
163,857
|
100.0
|
2,275
|
2,066
|
0.42
|
16.51
|
14.99
|
|
|
6411
Ivy Lane (g)
|
1984
|
138,405
|
90.8
|
2,359
|
2,067
|
0.43
|
22.32
|
19.55
|
|
|
Lanham
|
|||||||||
|
4200
Parliament Place
|
1989
|
122,000
|
91.2
|
2,832
|
2,627
|
0.52
|
25.45
|
23.61
|
|
|
Total
Maryland Office
|
964,258
|
87.6
|
15,505
|
13,562
|
2.84
|
21.18
|
18.49
|
||
|
TOTAL
OFFICE PROPERTIES
|
23,650,204
|
91.4
|
484,431
|
433,406
|
88.92
|
22.76
|
20.35
|
||
24
|
Office/Flex
Properties
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
NEW
JERSEY
|
|||||||||
|
Burlington
County
|
|||||||||
|
Burlington
|
|||||||||
|
3
Terri Lane
|
1991
|
64,500
|
90.4
|
452
|
369
|
0.08
|
7.75
|
6.33
|
|
|
5
Terri Lane
|
1992
|
74,555
|
91.7
|
608
|
516
|
0.11
|
8.89
|
7.55
|
|
|
Moorestown
|
|||||||||
|
2
Commerce Drive
|
1986
|
49,000
|
76.3
|
330
|
301
|
0.06
|
8.83
|
8.05
|
|
|
101
Commerce Drive
|
1988
|
64,700
|
100.0
|
275
|
249
|
0.05
|
4.25
|
3.85
|
|
|
102
Commerce Drive
|
1987
|
38,400
|
87.5
|
232
|
184
|
0.04
|
6.90
|
5.48
|
|
|
201
Commerce Drive
|
1986
|
38,400
|
75.0
|
163
|
112
|
0.03
|
5.66
|
3.89
|
|
|
202
Commerce Drive
|
1988
|
51,200
|
100.0
|
307
|
237
|
0.06
|
6.00
|
4.63
|
|
|
1
Executive Drive
|
1989
|
20,570
|
81.1
|
156
|
101
|
0.03
|
9.35
|
6.05
|
|
|
2
Executive Drive
|
1988
|
60,800
|
84.7
|
384
|
364
|
0.07
|
7.46
|
7.07
|
|
|
101
Executive Drive
|
1990
|
29,355
|
99.7
|
274
|
258
|
0.05
|
9.36
|
8.82
|
|
|
102
Executive Drive
|
1990
|
64,000
|
100.0
|
273
|
229
|
0.05
|
4.27
|
3.58
|
|
|
225
Executive Drive
|
1990
|
50,600
|
48.6
|
116
|
112
|
0.02
|
4.72
|
4.55
|
|
|
97
Foster Road
|
1982
|
43,200
|
75.5
|
152
|
137
|
0.03
|
4.66
|
4.20
|
|
|
1507
Lancer Drive
|
1995
|
32,700
|
100.0
|
117
|
108
|
0.02
|
3.58
|
3.30
|
|
|
1245
North Church Street
|
1998
|
52,810
|
62.1
|
362
|
349
|
0.07
|
11.04
|
10.64
|
|
|
1247
North Church Street
|
1998
|
52,790
|
77.5
|
398
|
360
|
0.07
|
9.73
|
8.80
|
|
|
1256
North Church Street
|
1984
|
63,495
|
100.0
|
435
|
360
|
0.08
|
6.85
|
5.67
|
|
|
840
North Lenola Road
|
1995
|
38,300
|
100.0
|
367
|
300
|
0.07
|
9.58
|
7.83
|
|
|
844
North Lenola Road
|
1995
|
28,670
|
100.0
|
180
|
133
|
0.03
|
6.28
|
4.64
|
|
|
915
North Lenola Road
|
1998
|
52,488
|
100.0
|
296
|
224
|
0.05
|
5.64
|
4.27
|
|
|
2
Twosome Drive
|
2000
|
48,600
|
100.0
|
408
|
378
|
0.07
|
8.40
|
7.78
|
|
|
30
Twosome Drive
|
1997
|
39,675
|
100.0
|
144
|
125
|
0.03
|
3.63
|
3.15
|
|
|
31
Twosome Drive
|
1998
|
84,200
|
100.0
|
471
|
470
|
0.09
|
5.59
|
5.58
|
|
|
40
Twosome Drive
|
1996
|
40,265
|
100.0
|
278
|
229
|
0.05
|
6.90
|
5.69
|
|
|
41
Twosome Drive
|
1998
|
43,050
|
77.7
|
224
|
220
|
0.04
|
6.70
|
6.58
|
|
|
50
Twosome Drive
|
1997
|
34,075
|
100.0
|
245
|
228
|
0.04
|
7.19
|
6.69
|
|
|
Gloucester
County
|
|||||||||
|
West
Deptford
|
|||||||||
|
1451
Metropolitan Drive
|
1996
|
21,600
|
100.0
|
148
|
148
|
0.03
|
6.85
|
6.85
|
|
|
Mercer
County
|
|||||||||
|
Hamilton
Township
|
|||||||||
|
100
Horizon Center Boulevard
|
1989
|
13,275
|
100.0
|
192
|
166
|
0.04
|
14.46
|
12.50
|
|
|
200
Horizon Drive
|
1991
|
45,770
|
100.0
|
591
|
537
|
0.11
|
12.91
|
11.73
|
|
|
300
Horizon Drive
|
1989
|
69,780
|
100.0
|
1,123
|
1,029
|
0.21
|
16.09
|
14.75
|
|
|
500
Horizon Drive
|
1990
|
41,205
|
100.0
|
613
|
584
|
0.11
|
14.88
|
14.17
|
|
25
|
Office/Flex
Properties
|
|||||||||
|
(Continued)
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
Monmouth
County
|
|||||||||
|
Wall
Township
|
|||||||||
|
1325
Campus Parkway
|
1988
|
35,000
|
100.0
|
655
|
476
|
0.12
|
18.71
|
13.60
|
|
|
1340
Campus Parkway
|
1992
|
72,502
|
100.0
|
917
|
684
|
0.17
|
12.65
|
9.43
|
|
|
1345
Campus Parkway
|
1995
|
76,300
|
100.0
|
933
|
685
|
0.17
|
12.23
|
8.98
|
|
|
1433
Highway 34
|
1985
|
69,020
|
68.3
|
373
|
317
|
0.07
|
7.91
|
6.72
|
|
|
1320
Wyckoff Avenue
|
1986
|
20,336
|
100.0
|
178
|
168
|
0.03
|
8.75
|
8.26
|
|
|
1324
Wyckoff Avenue
|
1987
|
21,168
|
100.0
|
220
|
202
|
0.04
|
10.39
|
9.54
|
|
|
Passaic
County
|
|||||||||
|
Totowa
|
|||||||||
|
1
Center Court
|
1999
|
38,961
|
100.0
|
534
|
415
|
0.10
|
13.71
|
10.65
|
|
|
2
Center Court
|
1998
|
30,600
|
99.3
|
244
|
230
|
0.04
|
8.03
|
7.57
|
|
|
11
Commerce Way
|
1989
|
47,025
|
100.0
|
552
|
511
|
0.10
|
11.74
|
10.87
|
|
|
20
Commerce Way
|
1992
|
42,540
|
38.5
|
99
|
94
|
0.02
|
6.04
|
5.74
|
|
|
29
Commerce Way
|
1990
|
48,930
|
100.0
|
711
|
563
|
0.13
|
14.53
|
11.51
|
|
|
40
Commerce Way
|
1987
|
50,576
|
100.0
|
687
|
651
|
0.13
|
13.58
|
12.87
|
|
|
45
Commerce Way
|
1992
|
51,207
|
64.5
|
360
|
290
|
0.07
|
10.90
|
8.78
|
|
|
60
Commerce Way
|
1988
|
50,333
|
85.8
|
580
|
499
|
0.11
|
13.43
|
11.55
|
|
|
80
Commerce Way
|
1996
|
22,500
|
88.7
|
305
|
271
|
0.06
|
15.28
|
13.58
|
|
|
100
Commerce Way
|
1996
|
24,600
|
100.0
|
333
|
296
|
0.06
|
13.54
|
12.03
|
|
|
120
Commerce Way
|
1994
|
9,024
|
100.0
|
125
|
114
|
0.02
|
13.85
|
12.63
|
|
|
140
Commerce Way
|
1994
|
26,881
|
99.5
|
374
|
342
|
0.07
|
13.98
|
12.79
|
|
|
Total
New Jersey Office/Flex
|
2,189,531
|
90.6
|
18,494
|
15,925
|
3.40
|
9.32
|
8.03
|
||
|
NEW
YORK
|
|||||||||
|
Westchester
County
|
|||||||||
|
Elmsford
|
|||||||||
|
11
Clearbrook Road
|
1974
|
31,800
|
100.0
|
415
|
392
|
0.08
|
13.05
|
12.33
|
|
|
75
Clearbrook Road
|
1990
|
32,720
|
100.0
|
702
|
672
|
0.13
|
21.45
|
20.54
|
|
|
125
Clearbrook Road
|
2002
|
33,000
|
100.0
|
712
|
592
|
0.13
|
21.58
|
17.94
|
|
|
150
Clearbrook Road
|
1975
|
74,900
|
100.0
|
931
|
857
|
0.17
|
12.43
|
11.44
|
|
|
175
Clearbrook Road
|
1973
|
98,900
|
100.0
|
1,553
|
1,444
|
0.29
|
15.70
|
14.60
|
|
|
200
Clearbrook Road
|
1974
|
94,000
|
99.8
|
1,222
|
1,118
|
0.22
|
13.03
|
11.92
|
|
|
250
Clearbrook Road
|
1973
|
155,000
|
97.3
|
1,427
|
1,262
|
0.26
|
9.46
|
8.37
|
|
|
50
Executive Boulevard
|
1969
|
45,200
|
98.2
|
480
|
464
|
0.09
|
10.81
|
10.45
|
|
|
77
Executive Boulevard
|
1977
|
13,000
|
100.0
|
233
|
222
|
0.04
|
17.92
|
17.08
|
|
|
85
Executive Boulevard
|
1968
|
31,000
|
93.8
|
343
|
317
|
0.06
|
11.80
|
10.90
|
|
|
300
Executive Boulevard
|
1970
|
60,000
|
100.0
|
581
|
550
|
0.11
|
9.68
|
9.17
|
|
|
350
Executive Boulevard
|
1970
|
15,400
|
98.8
|
296
|
272
|
0.05
|
19.45
|
17.88
|
|
|
399
Executive Boulevard
|
1962
|
80,000
|
100.0
|
968
|
941
|
0.18
|
12.10
|
11.76
|
|
|
400
Executive Boulevard
|
1970
|
42,200
|
100.0
|
782
|
703
|
0.14
|
18.53
|
16.66
|
|
|
500
Executive Boulevard
|
1970
|
41,600
|
100.0
|
641
|
578
|
0.12
|
15.41
|
13.89
|
|
26
|
Office/Flex
Properties
|
|||||||||
|
(Continued)
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
525
Executive Boulevard
|
1972
|
61,700
|
83.6
|
807
|
714
|
0.15
|
15.65
|
13.84
|
|
|
1
Westchester Plaza
|
1967
|
25,000
|
100.0
|
332
|
316
|
0.06
|
13.28
|
12.64
|
|
|
2
Westchester Plaza
|
1968
|
25,000
|
100.0
|
502
|
482
|
0.09
|
20.08
|
19.28
|
|
|
3
Westchester Plaza
|
1969
|
93,500
|
100.0
|
556
|
468
|
0.10
|
5.95
|
5.01
|
|
|
4
Westchester Plaza
|
1969
|
44,700
|
99.8
|
645
|
605
|
0.12
|
14.46
|
13.56
|
|
|
5
Westchester Plaza
|
1969
|
20,000
|
88.9
|
297
|
260
|
0.05
|
16.70
|
14.62
|
|
|
6
Westchester Plaza
|
1968
|
20,000
|
100.0
|
330
|
312
|
0.06
|
16.50
|
15.60
|
|
|
7
Westchester Plaza
|
1972
|
46,200
|
100.0
|
790
|
778
|
0.14
|
17.10
|
16.84
|
|
|
8
Westchester Plaza
|
1971
|
67,200
|
100.0
|
935
|
861
|
0.17
|
13.91
|
12.81
|
|
|
Hawthorne
|
|||||||||
|
200
Saw Mill River Road
|
1965
|
51,100
|
100.0
|
656
|
602
|
0.12
|
12.84
|
11.78
|
|
|
4
Skyline Drive
|
1987
|
80,600
|
92.2
|
1,248
|
1,092
|
0.23
|
16.79
|
14.69
|
|
|
5
Skyline Drive
|
1980
|
124,022
|
100.0
|
1,629
|
1,511
|
0.30
|
13.13
|
12.18
|
|
|
6
Skyline Drive
|
1980
|
44,155
|
100.0
|
312
|
311
|
0.06
|
7.07
|
7.04
|
|
|
8
Skyline Drive
|
1985
|
50,000
|
98.7
|
711
|
362
|
0.13
|
14.41
|
7.34
|
|
|
10
Skyline Drive
|
1985
|
20,000
|
100.0
|
240
|
204
|
0.04
|
12.00
|
10.20
|
|
|
11
Skyline Drive
|
1989
|
45,000
|
100.0
|
803
|
760
|
0.15
|
17.84
|
16.89
|
|
|
12
Skyline Drive
|
1999
|
46,850
|
85.1
|
663
|
440
|
0.12
|
16.63
|
11.04
|
|
|
15
Skyline Drive
|
1989
|
55,000
|
73.3
|
632
|
630
|
0.12
|
15.68
|
15.63
|
|
|
Yonkers
|
|||||||||
|
100
Corporate Boulevard
|
1987
|
78,000
|
98.3
|
1,432
|
1,348
|
0.26
|
18.68
|
17.58
|
|
|
200
Corporate Boulevard South
|
1990
|
84,000
|
99.8
|
1,401
|
1,324
|
0.26
|
16.71
|
15.79
|
|
|
4
Executive Plaza
|
1986
|
80,000
|
100.0
|
1,006
|
805
|
0.18
|
12.58
|
10.06
|
|
|
6
Executive Plaza
|
1987
|
80,000
|
100.0
|
1,341
|
1,268
|
0.25
|
16.76
|
15.85
|
|
|
1
Odell Plaza
|
1980
|
106,000
|
96.8
|
1,486
|
1,409
|
0.27
|
14.48
|
13.73
|
|
|
3
Odell Plaza
|
1984
|
71,065
|
100.0
|
1,597
|
1,481
|
0.29
|
22.47
|
20.84
|
|
|
5
Odell Plaza
|
1983
|
38,400
|
99.6
|
614
|
592
|
0.11
|
16.05
|
15.48
|
|
|
7
Odell Plaza
|
1984
|
42,600
|
99.6
|
734
|
704
|
0.13
|
17.30
|
16.59
|
|
|
Total
New York Office/Flex
|
2,348,812
|
97.7
|
32,985
|
30,023
|
6.03
|
14.37
|
13.08
|
||
|
CONNECTICUT
|
|||||||||
|
Fairfield
County
|
|||||||||
|
Stamford
|
|||||||||
|
419
West Avenue
|
1986
|
88,000
|
100.0
|
1,263
|
1,106
|
0.23
|
14.35
|
12.57
|
|
|
500
West Avenue
|
1988
|
25,000
|
82.3
|
389
|
345
|
0.07
|
18.91
|
16.77
|
|
|
550
West Avenue
|
1990
|
54,000
|
100.0
|
884
|
879
|
0.16
|
16.37
|
16.28
|
|
|
600
West Avenue
|
1999
|
66,000
|
100.0
|
804
|
767
|
0.15
|
12.18
|
11.62
|
|
|
650
West Avenue
|
1998
|
40,000
|
100.0
|
555
|
424
|
0.10
|
13.88
|
10.60
|
|
|
Total
Connecticut Office/Flex
|
273,000
|
98.4
|
3,895
|
3,521
|
0.71
|
14.50
|
13.11
|
||
|
TOTAL
OFFICE/FLEX PROPERTIES
|
4,811,343
|
94.5
|
55,374
|
49,469
|
10.14
|
12.18
|
10.88
|
||
27
|
Industrial/Warehouse,
Retail and Land Lease Properties
|
|||||||||
|
2006
|
|||||||||
|
Percentage
|
2006
|
2006
|
2006
|
Average
|
|||||
|
Net
|
Leased
|
Base
|
Effective
|
Average
|
Effective
|
||||
|
Rentable
|
as
of
|
Rent
|
Rent
|
Percentage
|
Base
Rent
|
Rent
|
|||
|
Year
|
Area
|
12/31/06
|
($000’s)
|
($000’s)
|
of
Total 2006
|
Per
Sq. Ft.
|
Per
Sq. Ft.
|
||
|
Property
Location
|
Built
|
(Sq.
Ft.)
|
(%)
(a)
|
(b)
(c)
|
(c)
(d)
|
Base
Rent (%)
|
($)
(c) (e)
|
($)
(c) (f)
|
|
|
NEW
YORK
|
|||||||||
|
Westchester
County
|
|||||||||
|
Elmsford
|
|||||||||
|
1
Warehouse Lane
|
1957
|
6,600
|
100.0
|
86
|
84
|
0.02
|
13.03
|
12.73
|
|
|
2
Warehouse Lane
|
1957
|
10,900
|
100.0
|
159
|
133
|
0.03
|
14.59
|
12.20
|
|
|
3
Warehouse Lane
|
1957
|
77,200
|
100.0
|
324
|
293
|
0.06
|
4.20
|
3.80
|
|
|
4
Warehouse Lane
|
1957
|
195,500
|
97.4
|
2,164
|
1,964
|
0.40
|
11.36
|
10.31
|
|
|
5
Warehouse Lane
|
1957
|
75,100
|
97.1
|
964
|
857
|
0.18
|
13.22
|
11.75
|
|
|
6
Warehouse Lane
|
1982
|
22,100
|
100.0
|
513
|
509
|
0.09
|
23.21
|
23.03
|
|
|
Total
Industrial/Warehouse Properties
|
387,400
|
98.1
|
4,210
|
3,840
|
0.78
|
11.07
|
10.10
|
||
|
Westchester
County
|
|||||||||
|
Tarrytown
|
|||||||||
|
230
White Plains Road
|
1984
|
9,300
|
100.0
|
195
|
183
|
0.04
|
20.97
|
19.68
|
|
|
Yonkers
|
|||||||||
|
2
Executive Boulevard
|
1986
|
8,000
|
100.0
|
361
|
361
|
0.07
|
45.13
|
45.13
|
|
|
Total
Retail Properties
|
17,300
|
100.0
|
556
|
544
|
0.11
|
32.14
|
31.45
|
||
|
Westchester
County
|
|||||||||
|
Elmsford
|
|||||||||
|
700
Executive Boulevard
|
--
|
--
|
--
|
114
|
114
|
0.02
|
--
|
--
|
|
|
Yonkers
|
|||||||||
|
1
Enterprise Boulevard
|
--
|
--
|
--
|
185
|
183
|
0.03
|
--
|
--
|
|
|
Total
Land Leases
|
--
|
--
|
299
|
297
|
0.05
|
--
|
--
|
||
|
TOTAL
PROPERTIES
|
28,866,247
|
92.0
|
544,870
|
487,556
|
100.00
|
20.80
|
18.57
|
||
|
(a)
|
Percentage
leased includes all leases in effect as of the period end date, some
of
which have commencement dates in the future (including, at December
31,
2006, a lease with a commencement date substantially in the future
consisting of 8,590 square feet scheduled to commence in 2009), and
leases
expiring December 31, 2006 aggregating 103,477 square feet (representing
0.4 percent of the Company’s total net rentable square footage) for which
no new leases were signed.
|
|
(b)
|
Total
base rent for 2006, 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) Total
base rent for 2006 minus total 2006 amortization of tenant improvements, leasing
commissions and other concessions and costs, determined in accordance with
GAAP.
|
(e)
|
Base
rent for 2006 divided by net rentable square feet leased at December
31,
2006. For those properties acquired during 2006, amounts are annualized,
as per Note g.
|
| (f) |
Effective
rent for 2006 divided by net rentable square feet leased at December
31,
2006. For those properties acquired during 2006, amounts are annualized,
as described in Note g.
|
| (g) |
As
this property was acquired by the Company during 2006, the amounts
represented in 2006 base rent and 2006 effective rent reflect only
that
portion of the year during which the Company owned the property.
Accordingly, these amounts may not be indicative of the property’s full
year results. For comparison purposes, the amounts represented in
2006
average base rent per sq. ft. and 2006 average effective rent per
sq. ft.
for this property have been calculated by taking 2006 base rent and
2006
effective rent for such property and annualizing these partial-year
results, dividing such annualized amounts by the net rentable square
feet
leased at December 31, 2006. These annualized per square foot amounts
may
not be indicative of the property’s results had the Company owned the
property for the entirety of
2006.
|
28
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:
|
Percentage
of
|
|
|
December
31,
|
Square
Feet Leased (%) (a)
|
|
2006
|
92.0
|
|
2005
|
91.0
|
|
2004
(b)
|
91.2
|
|
2003
|
91.5
|
|
2002
|
92.3
|
| (a) |
Percentage
of square-feet 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.
|
| (b) |
Excluded
from percentage leased at December 31, 2004 is a non-strategic, non-core
318,224 square foot property acquired through a deed in lieu of
foreclosure, which was 12.7 percent leased at December 31, 2004 and
subsequently sold on February 4,
2005.
|
29
SIGNIFICANT
TENANTS
The
following table sets forth a schedule of the Company’s 50 largest tenants for
the Consolidated Properties as of December 31, 2006 based upon annualized base
rental revenue:
|
Percentage
of
|
|||||||
|
Annualized
|
Company
|
Square
|
Percentage
|
Year
of
|
|||
|
Number
of
|
Base
Rental
|
Annualized
Base
|
Feet
|
Total
Company
|
Lease
|
||
|
Properties
|
Revenue
($) (a)
|
Rental
Revenue (%)
|
Leased
|
Leased
Sq. Ft. (%)
|
Expiration
|
||
|
New
Cingular Wireless PCS LLC
|
4
|
9,743,293
|
1.6
|
460,973
|
1.9
|
2014
|
(b)
|
|
Morgan
Stanley D.W. Inc.
|
5
|
9,395,415
|
1.6
|
381,576
|
1.6
|
2013
|
(c)
|
|
United
States Of America-GSA
|
12
|
8,621,861
|
1.5
|
285,684
|
1.1
|
2015
|
(d)
|
|
Merrill
Lynch Pierce Fenner
|
3
|
8,613,150
|
1.5
|
501,500
|
1.9
|
2017
|
(e)
|
|
Credit
Suisse First Boston
|
1
|
7,940,235
|
1.4
|
234,331
|
0.9
|
2012
|
(f)
|
|
Keystone
Mercy Health Plan
|
2
|
7,897,031
|
1.4
|
303,149
|
1.2
|
2015
|
|
|
National
Union Fire Insurance
|
1
|
7,711,023
|
1.3
|
317,799
|
1.2
|
2012
|
|
|
Prentice-Hall
Inc.
|
1
|
7,694,097
|
1.3
|
474,801
|
1.8
|
2014
|
|
|
DB
Services New Jersey, Inc.
|
1
|
7,551,990
|
1.3
|
281,920
|
1.1
|
2017
|
|
|
Forest
Laboratories Inc.
|
2
|
6,961,107
|
1.2
|
202,857
|
0.8
|
2017
|
(g)
|
|
Cendant
Operations Inc.
|
2
|
6,839,418
|
1.2
|
296,934
|
1.1
|
2011
|
(h)
|
|
Allstate
Insurance Company
|
10
|
6,455,295
|
1.1
|
269,594
|
1.0
|
2017
|
(i)
|
|
Toys
'R' Us - NJ Inc.
|
1
|
6,072,651
|
1.1
|
242,518
|
0.9
|
2012
|
|
|
ICAP
Securities USA LLC
|
1
|
5,973,008
|
1.0
|
159,834
|
0.6
|
2017
|
|
|
American
Institute of Certified Public
|
|||||||
|
Accountants
|
1
|
5,817,181
|
1.0
|
249,768
|
1.0
|
2012
|
|
|
TD
Ameritrade Online Holdings
|
1
|
5,637,193
|
1.0
|
184,222
|
0.7
|
2015
|
|
|
IBM
Corporation
|
3
|
5,562,770
|
1.0
|
310,263
|
1.2
|
2012
|
(j)
|
|
KPMG,
LLP
|
3
|
4,784,243
|
0.8
|
181,025
|
0.7
|
2012
|
(k)
|
|
National
Financial Services
|
1
|
4,346,765
|
0.8
|
112,964
|
0.4
|
2012
|
|
|
Bank
Of Tokyo-Mitsubishi Ltd.
|
1
|
4,228,795
|
0.7
|
137,076
|
0.5
|
2009
|
|
|
AT&T
Corp.
|
1
|
3,805,000
|
0.7
|
275,000
|
1.1
|
2014
|
|
|
Vonage
America Inc.
|
1
|
3,780,000
|
0.7
|
350,000
|
1.3
|
2017
|
|
|
Samsung
Electronics America
|
1
|
3,678,028
|
0.6
|
131,300
|
0.5
|
2010
|
|
|
Citigroup
Global Markets Inc.
|
5
|
3,492,988
|
0.6
|
132,475
|
0.5
|
2016
|
(l)
|
|
E*Trade
Financial Corporation
|
1
|
3,456,141
|
0.6
|
106,573
|
0.4
|
2022
|
|
|
Lehman
Brothers Holdings Inc.
|
1
|
3,420,667
|
0.6
|
207,300
|
0.8
|
2010
|
|
|
Montefiore
Medical Center
|
5
|
3,397,583
|
0.6
|
163,529
|
0.6
|
2019
|
(m)
|
|
Hewlett-Packard
Company
|
1
|
3,346,048
|
0.6
|
163,857
|
0.6
|
2007
|
|
|
SSB
Realty LLC
|
1
|
3,321,051
|
0.6
|
114,519
|
0.4
|
2009
|
|
|
Dow
Jones & Company Inc.
|
1
|
3,057,773
|
0.5
|
92,312
|
0.4
|
2012
|
|
|
Daiichi
Sankyo Inc.
|
2
|
2,872,353
|
0.5
|
90,366
|
0.3
|
2012
|
(n)
|
|
High
Point Safety & Insurance
|
2
|
2,694,417
|
0.5
|
116,358
|
0.4
|
2020
|
|
|
American
Home Assurance Co.
|
2
|
2,686,732
|
0.5
|
131,174
|
0.5
|
2019
|
(o)
|
|
SunAmerica
Asset Management
|
1
|
2,680,409
|
0.5
|
69,621
|
0.3
|
2018
|
|
|
Moody’s
Investors Service
|
1
|
2,671,149
|
0.5
|
91,344
|
0.3
|
2011
|
(p)
|
|
United
States Life Ins. Co.
|
1
|
2,520,000
|
0.4
|
180,000
|
0.7
|
2013
|
|
|
New
Jersey Turnpike Authority
|
1
|
2,455,463
|
0.4
|
100,223
|
0.4
|
2016
|
|
|
Barr
Laboratories Inc.
|
2
|
2,450,087
|
0.4
|
109,510
|
0.4
|
2015
|
(q)
|
|
IXIS
North America Inc.
|
1
|
2,408,679
|
0.4
|
83,629
|
0.3
|
2021
|
|
|
Movado
Group Inc
|
1
|
2,283,547
|
0.4
|
90,050
|
0.3
|
2013
|
|
|
Lonza
Inc.
|
1
|
2,236,200
|
0.4
|
89,448
|
0.3
|
2007
|
|
|
Deloitte
& Touche USA LLP
|
1
|
2,171,275
|
0.4
|
86,851
|
0.3
|
2007
|
|
|
Regus
Business Centre Corp.
|
2
|
2,159,029
|
0.4
|
79,805
|
0.3
|
2011
|
|
|
Computer
Sciences Corporation
|
3
|
2,136,129
|
0.4
|
109,825
|
0.4
|
2011
|
(r)
|
|
Nextel
of New York Inc.
|
2
|
2,093,440
|
0.4
|
97,436
|
0.4
|
2014
|
(s)
|
|
Bearingpoint
Inc.
|
1
|
2,065,834
|
0.4
|
77,956
|
0.3
|
2011
|
|
|
GAB
Robins North America Inc.
|
2
|
2,049,674
|
0.4
|
84,649
|
0.3
|
2009
|
(t)
|
|
Norris
McLaughlin & Marcus PA
|
1
|
2,045,307
|
0.4
|
86,913
|
0.3
|
2017
|
|
|
Sumitomo
Mitsui Banking Corp.
|
2
|
2,027,861
|
0.4
|
71,153
|
0.3
|
2016
|
|
|
UBS
Financial Services Inc.
|
3
|
1,949,797
|
0.3
|
73,250
|
0.3
|
2016
|
(u)
|
|
Totals
|
219,259,182
|
38.3
|
9,245,214
|
35.3
|
|||
See
footnotes on subsequent page.
30
Significant
Tenants Footnotes
| (a) |
Annualized
base rental revenue is based on actual December 2006 billings times
12.
For leases whose rent commences after January 1, 2007, 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) |
50,660
square feet expire 2007; 4,783 square feet expire in 2008; 333,145
square
feet expire in 2013; 72,385 square feet expire in
2014.
|
| (c) |
19,500
square feet expire in 2008; 7,000 square feet expire in 2009; 48,906
square feet expire in 2010; 306,170 square feet expire in
2013.
|
| (d) |
51,049
square feet expire in 2007; 26,710 square feet expire in 2008; 9,901
square feet expire in 2011; 38,690 square feet expire in 2013; 4,879
square feet expire in 2014; 154,455 square feet expire in
2015.
|
| (e) |
253,214
square feet expire in 2007; 7,485 square feet expire in 2008; 4,451
square
feet expires in 2009; 236,350 square feet expire in
2017.
|
| (f) |
152,378
feet expire in 2011; 81,953 square feet expire in
2012.
|
| (g) |
22,785
square feet expire in 2010; 180,072 square feet expire in
2017.
|
| (h) |
150,951
square feet expire in 2008; 145,983 square feet expire in
2011.
|
| (i) |
32,035
square feet expire in 2007; 31,143 square feet expire in 2008; 22,185
square feet expire in 2009; 46,555 square feet expire in 2010; 83,693
square feet expire in 2011; 53,983 square feet expire in
2017.
|
| (j) |
61,864
square feet expire in 2010; 248,399 square feet expire in
2012.
|
| (k) |
23,807
square feet expire in 2007; 46,440 square feet expire in 2009; 33,397
square feet expires in 2010; 77,381 square feet expire in
2012.
|
| (l) |
19,668
square feet expire in 2007; 59,711 square feet expire in 2009; 26,834
square feet expire in 2014; 26,262 square feet expire in
2016.
|
| (m) |
48,542
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; 71,065 square
feet
expire in 2019.
|
| (n) |
5,315
square feet expire in 2011; 85,051 square feet expire in
2012.
|
| (o) |
14,056
square feet expire in 2008; 117,118 square feet expire in
2019.
|
| (p) |
43,344
square feet expire in 2009; 36,193 square feet expire in 2010; 11,807
square feet expire in 2011.
|
| (q) |
20,000
square feet expire in 2008; 89,510 square feet expire in
2015.
|
| (r) |
26,975
square feet expire in 2007; 82,850 square feet expire in
2011.
|
| (s) |
62,436
square feet expire in 2010; 35,000 square feet expire in
2014.
|
| (t) |
75,049
square feet expire in 2008; 9,600 square feet expire in
2009.
|
| (u) |
21,554
square feet expire in 2010; 17,383 square feet expire in 2013; 34,313
square feet expire in 2016.
|
31
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, 2007,
assuming that none of the tenants exercise renewal or termination
options:
|
Average
|
|||||||
|
Annual
|
|||||||
|
Percentage
Of
|
Rent
Per Net
|
||||||
|
Net
Rentable
|
Total
Leased
|
Annualized
|
Rentable
|
Percentage
Of
|
|||
|
Area
Subject
|
Square
Feet
|
Base
Rental
|
Square
Foot
|
Annual
Base
|
|||
|
Number
Of
|
To
Expiring
|
Represented
|
Revenue
Under
|
Represented
|
Rent
Under
|
||
|
Year
Of
|
Leases
|
Leases
|
By
Expiring
|
Expiring
|
By
Expiring
|
Expiring
|
|
|
Expiration
|
Expiring
(a)
|
(Sq.
Ft.)
|
Leases
(%)
|
Leases
($) (b)
|
Leases
($)
|
Leases
(%)
|
|
|
2007
(c)
|
272
|
2,091,378
|
8.0
|
44,243,148
|
21.16
|
7.8
|
|
|
2008
|
375
|
2,686,853
|
10.4
|
54,923,081
|
20.44
|
9.6
|
|
|
2009
|
346
|
2,419,053
|
9.2
|
54,356,856
|
22.47
|
9.5
|
|
|
2010
|
343
|
2,850,749
|
10.9
|
60,230,025
|
21.13
|
10.5
|
|
|
2011
|
339
|
3,438,716
|
13.1
|
77,117,443
|
22.43
|
13.5
|
|
|
2012
|
206
|
2,511,774
|
9.6
|
58,548,780
|
23.31
|
10.2
|
|
|
2013
|
145
|
2,436,006
|
9.3
|
54,142,108
|
22.23
|
9.5
|
|
|
2014
|
75
|
1,524,878
|
5.8
|
32,788,456
|
21.50
|
5.7
|
|
|
2015
|
57
|
2,136,593
|
8.2
|
45,924,670
|
21.49
|
8.0
|
|
|
2016
|
47
|
756,090
|
2.9
|
14,439,966
|
19.10
|
2.5
|
|
|
2017
|
52
|
1,869,363
|
7.1
|
43,255,052
|
23.14
|
7.6
|
|
|
2018
and thereafter
|
53
|
1,449,768
|
5.5
|
32,086,350
|
22.13
|
5.6
|
|
|
Totals/Weighted
|
|||||||
|
Average
|
2,310
|
26,171,221
(d)
|
100.0
|
572,055,935
|
21.86
|
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 2006 billings times
12.
For leases whose rent commences after January 1, 2007, 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, 2006 aggregating 103,477 square feet
and
representing annualized rent of $1,909,260 for which no new leases
were
signed.
|
| (d) |
Reconciliation
to the Company’s total net rentable square footage is as
follows:
|
|
Square
Feet
|
||
|
Square
footage leased to commercial tenants
|
26,171,221
|
|
|
Square
footage used for corporate offices, management offices,
|
||
|
building
use, retail tenants, food services, other ancillary
|
||
|
service
tenants and occupancy adjustments
|
399,991
|
|
|
Square
footage unleased
|
2,295,035
|
|
|
Total
net rentable square footage (does not include
|
||
|
land
leases)
|
28,866,247
|
32
SCHEDULE
OF LEASE EXPIRATIONS: OFFICE PROPERTIES
The
following table sets forth a schedule of lease expirations for the office
properties beginning January 1, 2007, assuming that none of the tenants exercise
renewal or termination options:
|
Average
|
||||||
|
Annual
|
||||||
|
Percentage
Of
|
Rent
Per Net
|
|||||
|
Net
Rentable
|
Total
Leased
|
Annualized
|
Rentable
|
Percentage
Of
|
||
|
Area
Subject
|
Square
Feet
|
Base
Rental
|
Square
Foot
|
Annual
Base
|
||
|
Number
Of
|
To
Expiring
|
Represented
By
|
Revenue
Under
|
Represented
|
Rent
Under
|
|
|
Year
Of
|
Leases
|
Leases
|
Expiring
|
Expiring
|
By
Expiring
|
Expiring
|
|
Expiration
|
Expiring
(a)
|
(Sq.
Ft.)
|
Leases
(%)
|
Leases
($) (b)
|
Leases
($)
|
Leases
(%)
|
|
2007
(c)
|
214
|
1,642,707
|
7.7
|
38,852,100
|
23.65
|
7.6
|
|
2008
|
285
|
1,911,710
|
9.0
|
46,403,461
|
24.27
|
9.1
|
|
2009
|
271
|
1,812,739
|
8.5
|
46,270,273
|
25.53
|
9.1
|
|
2010
|
263
|
1,997,684
|
9.4
|
48,563,899
|
24.31
|
9.6
|
|
2011
|
276
|
2,897,514
|
13.7
|
70,958,531
|
24.49
|
14.0
|
|
2012
|
157
|
2,077,170
|
9.8
|
52,378,087
|
25.22
|
10.3
|
|
2013
|
108
|
2,010,703
|
9.5
|
48,194,962
|
23.97
|
9.5
|
|
2014
|
62
|
1,371,378
|
6.5
|
30,612,320
|
22.32
|
6.0
|
|
2015
|
44
|
1,974,442
|
9.3
|
43,908,667
|
22.24
|
8.6
|
|
2016
|
34
|
455,091
|
2.1
|
10,428,710
|
22.92
|
2.1
|
|
2017
|
44
|
1,795,270
|
8.5
|
42,191,404
|
23.50
|
8.3
|
|
2018
and thereafter
|
45
|
1,278,703
|
6.0
|
29,663,825
|
23.20
|
5.8
|
|
Totals/Weighted
|
||||||
|
Average
|
1,803
|
21,225,111
|
100.0
|
508,426,239
|
23.95
|
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 2006 billings times
12.
For leases whose rent commences after January 1, 2007, 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, 2006 aggregating 85,823 square feet
and
representing annualized rent of $1,691,239 for which no new leases
were
signed.
|
33
SCHEDULE
OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES
The
following table sets forth a schedule of lease expirations for the office/flex
properties beginning January 1, 2007, assuming that none of the tenants exercise
renewal or termination options:
|
Average
|
||||||
|
Annual
|
||||||
|
Percentage
Of
|
Rent
Per Net
|
|||||
|
Net
Rentable
|
Total
Leased
|
Annualized
|
Rentable
|
Percentage
Of
|
||
|
Area
Subject
|
Square
Feet
|
Base
Rental
|
Square
Foot
|
Annual
Base
|
||
|
Number
Of
|
To
Expiring
|
Represented
By
|
Revenue
Under
|
Represented
|
Rent
Under
|
|
|
Year
Of
|
Leases
|
Leases
|
Expiring
|
Expiring
|
By
Expiring
|
Expiring
|
|
Expiration
|
Expiring
(a)
|
(Sq.
Ft.)
|
Leases
(%)
|
Leases
($) (b)
|
Leases
($)
|
Leases
(%)
|
|
2007
(c)
|
54
|
434,671
|
9.6
|
5,160,091
|
11.87
|
8.7
|
|
2008
|
87
|
683,774
|
15.0
|
8,043,229
|
11.76
|
13.6
|
|
2009
|
69
|
548,031
|
12.0
|
7,102,195
|
12.96
|
12.0
|
|
2010
|
79
|
825,065
|
18.1
|
11,358,126
|
13.77
|
19.2
|
|
2011
|
62
|
533,602
|
11.7
|
6,063,912
|
11.36
|
10.2
|
|
2012
|
49
|
434,604
|
9.6
|
6,170,693
|
14.20
|
10.4
|
|
2013
|
30
|
370,067
|
8.1
|
5,248,671
|
14.18
|
8.9
|
|
2014
|
13
|
153,500
|
3.4
|
2,176,136
|
14.18
|
3.7
|
|
2015
|
13
|
162,151
|
3.6
|
2,016,003
|
12.43
|
3.4
|
|
2016
|
11
|
165,917
|
3.7
|
2,592,895
|
15.63
|
4.4
|
|
2017
|
8
|
74,093
|
1.6
|
1,063,648
|
14.36
|
1.8
|
|
2018
and thereafter
|
7
|
163,065
|
3.6
|
2,197,525
|
13.48
|
3.7
|
|
Totals/Weighted
|
||||||
|
Average
|
482
|
4,548,540
|
100.0
|
59,193,124
|
13.01
|
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 2006 billings times
12.
For leases whose rent commences after January 1, 2007, 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, 2006 aggregating 17,654 square feet
and
representing annualized rent of $218,021 for which no new leases
were
signed.
|
34
SCHEDULE
OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES
The
following table sets forth a schedule of lease expirations for the
industrial/warehouse properties beginning January 1, 2007, assuming that none
of
the tenants exercise renewal or termination options:
|
Average
|
||||||
|
Annual
|
||||||
|
Percentage
Of
|
Rent
Per Net
|
|||||
|
Net
Rentable
|
Total
Leased
|
Annualized
|
Rentable
|
Percentage
Of
|
||
|
Area
Subject
|
Square
Feet
|
Base
Rental
|
Square
Foot
|
Annual
Base
|
||
|
Number
Of
|
To
Expiring
|
Represented
By
|
Revenue
Under
|
Represented
|
Rent
Under
|
|
|
Year
Of
|
Leases
|
Leases
|
Expiring
|
Expiring
|
By
Expiring
|
Expiring
|
|
Expiration
|
Expiring
(a)
|
(Sq.
Ft.)
|
Leases
(%)
|
Leases
($) (b)
|
Leases
($)
|
Leases
(%)
|
|
2007
|
4
|
14,000
|
3.7
|
230,957
|
16.50
|
5.7
|
|
2008
|
3
|
91,369
|
24.0
|
476,391
|
5.21
|
11.8
|
|
2009
|
5
|
48,983
|
12.9
|
789,388
|
16.12
|
19.7
|
|
2010
|
1
|
28,000
|
7.4
|
308,000
|
11.00
|
7.7
|
|
2011
|
1
|
7,600
|
2.0
|
95,000
|
12.50
|
2.4
|
|
2013
|
7
|
55,236
|
14.5
|
698,475
|
12.65
|
17.4
|
|
2016
|
2
|
135,082
|
35.5
|
1,418,361
|
10.50
|
35.3
|
|
Totals/Weighted
|
||||||
|
Average
|
23
|
380,270
|
100.0
|
4,016,572
|
10.56
|
100.0
|
| (a) |
Includes
industrial/warehouse tenants only. Excludes leases for amenity, retail,
parking and month-to-month industrial/warehouse tenants. Some tenants
have
multiple leases.
|
| (b) |
Annualized
base rental revenue is based on actual December 2006 billings times
12.
For leases whose rent commences after January 1, 2007, annualized
base
rental revenue is based on the first full month’s billing times 12. As
annualized base rental revenue is not derived from historical GAAP
results, the historical results may differ from those set forth
above.
|
SCHEDULE
OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES
The
following table sets forth a schedule of lease expirations for the stand-alone
retail properties beginning January 1, 2007, assuming that none of the tenants
exercise renewal or termination options:
|
Average
|
||||||
|
Annual
|
||||||
|
Percentage
Of
|
Rent
Per Net
|
|||||
|
Net
Rentable
|
Total
Leased
|
Annualized
|
Rentable
|
Percentage
Of
|
||
|
Area
Subject
|
Square
Feet
|
Base
Rental
|
Square
Foot
|
Annual
Base
|
||
|
Number
Of
|
To
Expiring
|
Represented
By
|
Revenue
Under
|
Represented
|
Rent
Under
|
|
|
Year
Of
|
Leases
|
Leases
|
Expiring
|
Expiring
|
By
Expiring
|
Expiring
|
|
Expiration
|
Expiring
(a)
|
(Sq.
Ft.)
|
Leases
(%)
|
Leases
($) (b)
|
Leases
($)
|
Leases
(%)
|
|
2009
|
1
|
9,300
|
53.8
|
195,000
|
20.97
|
46.4
|
|
2018
and thereafter
|
1
|
8,000
|
46.2
|
225,000
|
28.13
|
53.6
|
|
Totals/Weighted
|
||||||
|
Average
|
2
|
17,300
|
100.0
|
420,000
|
24.28
|
100.0
|
| (a) |
Includes
stand-alone retail property tenants
only.
|
| (b) |
Annualized
base rental revenue is based on actual December 2006 billings times
12.
For leases whose rent commences after January 1, 2007 annualized
base
rental revenue is based on the first full month’s billing times 12. As
annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth
above.
|
35
INDUSTRY
DIVERSIFICATION
The
following table lists the Company’s 30 largest industry classifications based on
annualized contractual base rent of the Consolidated Properties:
|
Annualized
|
Percentage
of
|
Percentage
of
|
||
|
Base
Rental
|
Company
|
Square
|
Total
Company
|
|
|
Revenue
|
Annualized
Base
|
Feet
|
Leased
|
|
|
Industry
Classification (a)
|
($)
(b) (c) (d)
|
Rental
Revenue (%)
|
Leased
(d)
|
Sq.
Ft. (%)
|
|
Securities,
Commodity Contracts
|
||||
|
&
Other Financial
|
101,287,164
|
17.7
|
3,801,890
|
14.6
|
|
Manufacturing
|
48,710,080
|
8.5
|
2,324,704
|
9.0
|
|
Insurance
Carriers & Related Activities
|
46,461,377
|
8.1
|
2,070,823
|
7.9
|
|
Computer
System Design Services
|
31,816,449
|
5.6
|
1,504,890
|
5.8
|
|
Credit
Intermediation & Related Activities
|
28,501,580
|
5.0
|
1,148,669
|
4.4
|
|
Telecommunications
|
25,970,292
|
4.5
|
1,261,689
|
4.8
|
|
Legal
Services
|
24,471,697
|
4.3
|
980,359
|
3.7
|
|
Health
Care & Social Assistance
|
24,343,912
|
4.3
|
1,212,140
|
4.6
|
|
Wholesale
Trade
|
21,918,707
|
3.8
|
1,419,040
|
5.4
|
|
Scientific
Research/Development
|
21,336,995
|
3.7
|
957,503
|
3.7
|
|
Other
Professional
|
18,050,828
|
3.2
|
799,887
|
3.1
|
|
Accounting/Tax
Prep.
|
17,217,047
|
3.0
|
727,887
|
2.8
|
|
Retail
Trade
|
16,272,370
|
2.8
|
980,650
|
3.7
|
|
Public
Administration
|
15,819,365
|
2.8
|
610,340
|
2.3
|
|
Advertising/Related
Services
|
15,240,009
|
2.7
|
634,569
|
2.4
|
|
Other
Services (except Public Administration)
|
12,383,016
|
2.2
|
685,321
|
2.6
|
|
Information
Services
|
10,476,463
|
1.8
|
453,549
|
1.7
|
|
Real
Estate & Rental & Leasing
|
9,745,287
|
1.7
|
451,915
|
1.7
|
|
Arts,
Entertainment & Recreation
|
9,199,907
|
1.6
|
563,141
|
2.2
|
|
Broadcasting
|
7,428,246
|
1.3
|
474,532
|
1.8
|
|
Architectural/Engineering
|
7,392,806
|
1.3
|
336,549
|
1.3
|
|
Construction
|
7,187,628
|
1.3
|
359,355
|
1.4
|
|
Utilities
|
6,316,637
|
1.1
|
312,222
|
1.2
|
|
Data
Processing Services
|
5,725,405
|
1.0
|
245,949
|
0.9
|
|
Transportation
|
5,431,003
|
0.9
|
297,239
|
1.1
|
|
Educational
Services
|
5,388,364
|
0.9
|
272,450
|
1.0
|
|
Publishing
Industries
|
4,392,580
|
0.8
|
221,179
|
0.8
|
|
Admin
& Support, Waste Mgt.
|
||||
|
&
Remediation Services
|
4,023,252
|
0.7
|
258,929
|
1.0
|
|
Specialized
Design Services
|
3,824,875
|
0.7
|
177,950
|
0.7
|
|
Management
of Companies & Finance
|
3,611,995
|
0.6
|
146,335
|
0.6
|
|
Other
|
12,110,599
|
2.1
|
479,566
|
1.8
|
|
Totals
|
572,055,935
|
100.0
|
26,171,221
|
100.0
|
| (a) |
The
Company’s tenants are classified according to the U.S. Government’s North
American Industrial Classification System (NAICS) which has replaced
the
Standard Industrial Code (SIC) system.
|
| (b) |
Annualized
base rental revenue is based on actual December 2006 billings times
12.
For leases whose rent commences after January 1, 2007, annualized
base
rental revenue is based on the first full month’s billing times 12. As
annualized base rental revenue is not derived from historical GAAP
results, historical results may differ from those set forth
above.
|
| (c) |
Includes
office, office/flex, industrial/warehouse and stand-alone retail
tenants
only. Excludes leases for amenity, retail, parking and month-to-month
tenants. Some tenants have multiple
leases.
|
| (d) |
Includes
leases in effect as of the period end date, some of which have
commencement dates in the future (including, at December 31, 2006,
a lease
with a commencement date substantially in the future consisting of
8,590
square feet scheduled to commence in 2009), and leases expiring December
31, 2006 aggregating 103,477 square feet and representing annualized
rent
of $1,909,260 for which no new leases were
signed.
|
36
MARKET
DIVERSIFICATION
The
following table lists the Company’s markets (MSAs), based on annualized
contractual base rent of the Consolidated Properties:
|
Percentage
Of
|
||||
|
Company
|
||||
|
Annualized
Base
|
Annualized
|
Total
Property
|
||
|
Rental
Revenue
|
Base
Rental
|
Size
Rentable
|
Percentage
Of
|
|
|
Market
(MSA)
|
($)
(a) (b) (c)
|
Revenue
(%)
|
Area
(b) (c)
|
Rentable
Area (%)
|
|
Newark,
NJ
|
||||
|
(Essex-Morris-Union
Counties)
|
111,232,535
|
19.5
|
5,847,318
|
20.3
|
|
Jersey
City, NJ
|
111,092,277
|
19.5
|
4,317,978
|
15.0
|
|
New
York, NY
|
||||
|
(Westchester-Rockland
Counties)
|
92,351,278
|
16.1
|
4,968,420
|
17.2
|
|
Bergen-Passaic,
NJ
|
91,713,438
|
16.0
|
4,602,401
|
15.9
|
|
Philadelphia,
PA-NJ
|
54,788,117
|
9.6
|
3,529,994
|
12.2
|
|
Washington,
DC-MD-VA-WV
|
30,725,147
|
5.4
|
1,292,807
|
4.5
|
|
Monmouth-Ocean,
NJ
|
25,299,731
|
4.4
|
1,620,863
|
5.6
|
|
Middlesex-Somerset-Hunterdon,
NJ
|
20,111,613
|
3.5
|
986,760
|
3.4
|
|
Trenton,
NJ
|
16,985,745
|
3.0
|
767,365
|
2.7
|
|
Stamford-Norwalk,
CT
|
13,317,359
|
2.3
|
706,510
|
2.4
|
|
Bridgeport,
CT
|
2,558,828
|
0.4
|
145,487
|
0.5
|
|
Atlantic-Cape
May, NJ
|
1,879,867
|
0.3
|
80,344
|
0.3
|
|
Totals
|
572,055,935
|
100.0
|
28,866,247
|
100.0
|
| (a) |
Annualized
base rental revenue is based on actual December 2006 billings times
12.
For leases whose rent commences after January 1, 2007, 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 (including, at December 31, 2006,
a lease
with a commencement date substantially in the future consisting of
8,590
square feet scheduled to commence in 2009), and leases expiring December
31, 2006 aggregating 103,477 and representing annualized rent of
$1,909,260 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.
|
37
ITEM
3. LEGAL
PROCEEDINGS
On
February 12, 2003, the NJSEA selected The Mills Corporation and the Company
to
redevelop the Continental Airlines Arena site (“Arena Site”) for mixed uses,
including retail. In March 2003, Hartz Mountain Industries, Inc., (“Hartz”),
filed a lawsuit in the Superior Court of New Jersey, Law Division, for Bergen
County, seeking to enjoin NJSEA from entering into a contract with the
Meadowlands Venture for the redevelopment of the Continental Airlines Arena
site. In May 2003, the court denied Hartz’s request for an injunction and
dismissed its suit for failure to exhaust administrative remedies. In June
2003,
the NJSEA held hearings on Hartz’s protest, and on a parallel protest filed by
another rejected developer, Westfield, Inc. (“Westfield”). On September 10,
2003, the NJSEA ruled against Hartz’s and Westfield’s protests. Hartz and
Westfield, as well as Elliot Braha and three other taxpayers (collectively
“Braha”), thereafter filed appeals from the NJSEA’s final decision. By decision
dated May 14, 2004, the Appellate Division of the Superior Court of New Jersey
rejected the appellants’ contention that the NJSEA lacks statutory authority to
allow retail development of its property. The Appellate Division also remanded
Hart’s claim under the Open Public Records Acts, seeking disclosure of
additional documents from NJSEA, to the Law Division for further proceedings.
The Supreme Court of New Jersey declined to review the Appellate Division’s
decision. On August 19, 2004, the Law Division issued a decision resolving
Hartz’s Open Public Records Act claim and ordered NJSEA to disclose some, but
not all, of the documents Hartz was seeking. The Appellate Division, in a
decision rendered on November 24, 2004, upheld the findings of the Law Division
in the remand proceeding. The Supreme Court of New Jersey declined to review
the
Appellate Division’s decision. At Hartz’s request, the NJSEA thereafter held
further hearings on December 15 and 16, 2004, to review certain additional
facts
in support of Hartz’s and Westfield’s bid protest. Braha, as a taxpayer, did not
have standing to participate in the supplemental protest hearing. On March
4,
2005, the Hearing Officer rendered his Supplemental Report and Recommendation
to
the NJSEA, finding no merit in the protests presented by Hartz and Westfield.
The NJSEA accepted the Hearing Officer’s Supplemental Report and Recommendation
on March 30, 2005 and Hartz and Braha have appealed that decision to the
Appellate Division.
In
January 2004, Hartz and Westfield also appealed to the Appellate Division of
the
Superior Court of New Jersey from the NJSEA’s December 2003 approval and
execution of the Redevelopment Agreement with the Meadowlands
Venture.
In
November 2004, Hartz and Westfield filed additional appeals in the Appellate
Division challenging NJSEA’s resolution authorizing the execution of the First
Amendment to the Redevelopment Agreement with Meadowlands Venture and the ground
lease with the Meadowlands Venture.
All
of
the above appeals were consolidated by the Appellate Division. On August 17,
2006, the Appellate Division issued an opinion affirming NJSEA’s selection of
the Meadowlands Venture and rejecting the appellants’ arguments in all respects.
On August 28, 2006, Hartz made a motion before the Appellate Division for
reconsideration of this decision and for supplementation of the record. That
motion was denied, and neither Hartz nor Braha has sought review in the New
Jersey Supreme Court. These consolidated appeals are now resolved.
On
September 30, 2004, the Borough of Carlstadt filed an action in the Superior
Court of New Jersey Law Division, challenging Meadowlands Xanadu, which asserted
claims that are substantially the same as claims asserted by Hartz and Braha
in
the above appeals. By Order dated November 19, 2004, the Law Division
transferred that matter to the Superior Court of New Jersey, Appellate Division.
This matter was voluntarily dismissed by Carlstadt in accordance with a March
22, 2006, Settlement Agreement and Release between Carlstadt and the Meadowlands
Venture.
Several
appeals filed by Hartz, the Sierra Club and others, including certain
environmental groups, that challenge certain approvals received by the
Meadowlands Venture from the NJSEA, the New Jersey Meadowlands Commission
(“NJMC”) and the New Jersey Department of Environmental Protection (“NJDEP”)
remain pending before the Appellate Division. Some of these appeals challenge
NJDEP’s issuance of a stream encroachment permit, waterfront development permit,
and coastal zone consistency determination for Meadowlands Xanadu. Other of
these appeals are from NJDEP’s and NJMC’s issuance of reports in connection with
a consultation process the NJSEA was statutorily required to undertake in
connection with any NJSEA-development project.
A
Hartz
affiliate and a trade association have filed an appeal from an advisory opinion
favorable to the Meadowlands Venture issued by the Director of the Division
of
Alcoholic Beverage Control concerning the availability of special concessionaire
permits. That appeal is also pending in the Appellate Division of the Superior
Court of New Jersey.
38
Three
separate lawsuits have been filed in the United States District Court for the
District of New Jersey, challenging a permit issued by the U.S. Army Corps
of
Engineers (“USACE”) in connection with the project. The first suit was filed on
March 30, 2005, by the Sierra Club, the New Jersey Public Interest Research
Group, Citizen Lobby, Inc. and the New Jersey Environmental Federation.
Additional suits were filed on May 16 and May 31, 2005, respectively, by Hartz
(together with one of its officers as an individually-named plaintiff) and
the
Borough of Carlstadt. The Sierra Club also filed a motion for a preliminary
injunction to stop certain construction activities on the project, which the
Court denied on July 6, 2005. On October 26, 2005, the court granted the motions
of the Meadowlands Venture and the USACE to dismiss the Hartz complaint for
lack
of standing. The deadline for appealing that decision has passed, so the Hartz
action is ended. On October 31, 2005, the USACE filed a motion to dismiss the
complaint filed by the Borough of Carlstadt for lack of standing. On February
7,
2006, the Court granted the motion and dismissed the Borough of Carlstadt’s
complaint in its entirety. On March 9, 2006, Carlstadt filed a notice of appeal
of this decision to the United States Court of Appeals for the Third Circuit.
This appeal has been dismissed pursuant to the Settlement Agreement and Release
executed by Carlstadt and the Meadowlands Venture.
On
April
5, 2005, the New York Football Giants (“Giants”) filed an emergent application
with the Supreme Court of New Jersey, Chancery Division, seeking an injunction
stopping all work on the Meadowlands Xanadu project as being in violation of
its
existing lease with the NJSEA. After hearing oral argument on the application
on
August 5, 2005, the court denied the Giants’ motion for preliminary injunctive
relief. On June 22, 2006, the court entered a Stipulation and Consent Order
that
dismissed without prejudice the parties’ respective claims.
The
New
Jersey Builders’ Association (“NJBA”) has commenced an action, which is pending
in the Appellate Division, alleging that the NJSEA has failed to meet a
purported obligation to provide affordable housing at the Meadowlands Complex
and seeking, among other relief, an order enjoining the construction of
Meadowlands Xanadu. NJBA filed an application for preliminary injunctive relief
seeking to enjoin further construction of Meadowlands Xanadu, which the
Appellate Division denied on July 28, 2005. The Meadowlands Venture is not
a
party to that action.
On
January 25, 2006, the Bergen Cliff Hawks Baseball Club, LLC (the “Cliff Hawks”),
filed a complaint against the Company and Mills, alleging that the Company
and
Mills breached an agreement to provide the Cliff Hawks with a minor league
baseball park as part of the Xanadu Project. This matter is
pending.
The
Company believes that the Meadowlands Venture’s proposal and the planned project
comply with applicable laws, and the Meadowlands Venture intends to continue
its
vigorous defense of its rights under the Redevelopment Agreement and Ground
Lease. Although there can be no assurance, the Company does not believe that
the
pending lawsuits will have any material affect on its ability to develop the
Meadowlands Xanadu project.
There
are
no other 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.
39
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, 2006
and
2005, respectively:
|
For
the Year Ended December 31, 2006:
|
|||
|
High
|
Low
|
Close
|
|
|
First
Quarter
|
$48.37
|
$42.34
|
$48.00
|
|
Second
Quarter
|
$47.47
|
$42.17
|
$45.92
|
|
Third
Quarter
|
$53.66
|
$45.47
|
$51.80
|
|
Fourth
Quarter
|
$55.37
|
$48.24
|
$51.00
|
|
For
the Year Ended December 31, 2005:
|
|||
|
High
|
Low
|
Close
|
|
|
First
Quarter
|
$45.97
|
$41.53
|
$42.35
|
|
Second
Quarter
|
$46.99
|
$41.00
|
$45.30
|
|
Third
Quarter
|
$48.25
|
$43.22
|
$44.94
|
|
Fourth
Quarter
|
$44.80
|
$40.21
|
$43.20
|
On
February 16, 2007, the closing Common Stock price reported on the NYSE was
$54.13 per share.
On
June
16, 2006, 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 16, 2007, the Company had 596 common shareholders of
record.
RECENT
SALES OF UNREGISTERED SECURITIES; USES OF PROCEEDS FROM REGISTERED
SECURITIES
During
the three months ended December 31, 2006, the Company issued 253,542 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, 2006, the Company declared four quarterly common
stock dividends and common unit distributions in the amounts of $0.63, $0.63,
$0.64 and $0.64 per share and per unit from the first to the fourth quarter,
respectively. Additionally, in 2006, the Company declared quarterly preferred
stock dividends of $50.00 per preferred share from the first to the fourth
quarter.
40
During
the year ended December 31, 2005, the Company declared four quarterly common
stock dividends and common unit distributions of $0.63 per share and per unit
from the first to the fourth quarter. Additionally, in 2005, the Company
declared quarterly preferred stock dividends of $50.00 per preferred share
from
the first to the fourth quarter. The Company also declared one quarterly
preferred unit distribution of $18.1818 per preferred unit for the first
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,
applicable REIT and legal restrictions 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, 2001 and that all dividends were
reinvested. The price of the Company’s Common Stock on December 31, 2001
(on which the graph is based) was $31.02. The stockholder return shown on the
following graph is not necessarily indicative of future
performance.
Comparison
of Five-Year Cumulative Total Return
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.
41
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, 2006, 2005, 2004, 2003 and 2002, and for
the
years then ended have been derived from the Company’s financial statements for
the respective periods.
|
Operating
Data (a)
|
Year
Ended December 31,
|
||||
|
In
thousands, except per share data
|
2006
|
2005
|
2004
|
2003
|
2002
|
|
Total
revenues
|
$
740,309
|
$
600,131
|
$
537,239
|
$
516,536
|
$
474,765
|
|
Property
expenses (b)
|
$
238,112
|
$
210,473
|
$
170,814
|
$
158,755
|
$
138,332
|
|
Direct
construction costs
|
$
53,602
|
--
|
--
|
--
|
--
|
|
General
and administrative
|
$
49,077
|
$
32,441
|
$
31,324
|
$
30,843
|
$
26,344
|
|
Interest
expense
|
$
136,357
|
$
119,337
|
$
109,649
|
$
115,430
|
$
105,385
|
|
Income
from continuing operations
|
$
86,360
|
$
76,594
|
$
80,780
|
$
113,146
|
$
100,601
|
|
Net
income available to common shareholders
|
$
142,666
|
$
93,488
|
$
100,453
|
$
141,381
|
$
139,722
|
|
Income
from continuing operations
|
|||||
|
per
share - basic
|
$
1.35
|
$
1.21
|
$
1.30
|
$
1.93
|
$
1.80
|
|
Income
from continuing operations
|
|||||
|
per
share - diluted
|
$
1.35
|
$
1.20
|
$
1.29
|
$
1.92
|
$
1.79
|
|
Net
income per share - basic
|
$
2.29
|
$
1.52
|
$
1.66
|
$
2.45
|
$
2.44
|
|
Net
income per share - diluted
|
$
2.28
|
$
1.51
|
$
1.65
|
$
2.43
|
$
2.43
|
|
Dividends
declared per common share
|
$
2.54
|
$
2.52
|
$
2.52
|
$
2.52
|
$
2.50
|
|
Basic
weighted average shares outstanding
|
62,237
|
61,477
|
60,351
|
57,724
|
57,227
|
|
Diluted
weighted average shares outstanding
|
77,901
|
74,189
|
68,743
|
65,980
|
65,475
|
|
Balance
Sheet Data
|
December
31,
|
||||
|
In
thousands
|
2006
|
2005
|
2004
|
2003
|
2002
|
|
Rental
property, before accumulated
|
|||||
|
depreciation
and amortization
|
$4,573,587
|
$4,491,752
|
$4,160,959
|
$3,954,632
|
$3,857,657
|
|
Rental
property held for sale, net
|
--
|
--
|
$
19,132
|
--
|
--
|
|
Total
assets
|
$4,422,889
|
$4,247,502
|
$3,850,165
|
$3,749,570
|
$3,796,429
|
|
Total
debt (c)
|
$2,159,959
|
$2,126,181
|
$1,702,300
|
$1,628,584
|
$1,752,372
|
|
Total
liabilities
|
$2,412,762
|
$2,335,396
|
$1,877,096
|
$1,779,983
|
$1,912,199
|
|
Minority
interests
|
$
482,220
|
$
400,819
|
$
427,958
|
$
428,099
|
$
430,036
|
|
Stockholders’
equity
|
$1,527,907
|
$1,511,287
|
$1,545,111
|
$1,541,488
|
$1,454,194
|
________________________
|
(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.
|
42
|
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 (the “Company”) is one of the largest real estate investment
trusts (REITs) in the United States, with a total market capitalization of
approximately $6.2 billion at December 31, 2006. 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 300 properties (collectively, the “Properties”),
primarily class A office and office/flex buildings, totaling approximately
34.3
million square feet, leased to over 2,200 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 11.5 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 office space at the
Properties. Key factors that affect the Company’s business and financial results
include the following:
| · |
the
general economic climate;
|
| · |
the
occupancy rates of the Properties;
|
| · |
rental
rates on new or renewed leases;
|
| · |
tenant
improvement and leasing costs incurred to obtain and retain
tenants;
|
| · |
the
extent of early lease terminations;
|
| · |
operating
expenses;
|
| · |
cost
of capital; and
|
| · |
the
extent of acquisitions, development and sales of real
estate.
|
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 increased to
92.0 percent at December 31, 2006 as compared to 91.0 percent at December 31,
2005 and 91.2 percent at December 31, 2004. Percentage leased includes all
leases in effect as of the period end date, some of which have commencement
dates in the future (including, at December 31, 2006, a lease with a
commencement date substantially in the future consisting of 8,590 square feet
scheduled to commence in 2009), and leases that expire at the period end date.
Excluded from percentage leased at December 31, 2004 was a non-strategic,
non-core 318,224 square foot property acquired through a deed in lieu of
foreclosure, which was 12.7 percent leased at December 31, 2004 and subsequently
sold on February 4, 2005. Leases that expired as of December 31, 2006, 2005
and
2004 aggregate 103,477, 311,623 and 439,697 square feet, respectively, or 0.4,
1.1 and 1.5 percentage of the net rentable square footage, respectively. Market
rental rates have declined in most markets from peak levels in late 2000 and
early 2001. Rental rates on the Company’s space that was re-leased (based on
first rents payable) during the year ended December 31, 2006 decreased an
average of 0.2 percent compared to rates that were in effect under expiring
leases, as compared to a 8.2 percent decrease in 2005 and a 8.7 percent decrease
in 2004. The Company believes that vacancy rates may continue to increase in
most of its markets in 2007. As a result, the Company’s future earnings and cash
flow may continue to be negatively impacted by current market
conditions.
43
The
remaining portion of this Management’s Discussion and Analysis of Financial
Condition and Results of Operations should help the reader
understand:
| · |
property
transactions during the period;
|
| · |
critical
accounting policies and estimates;
|
| · |
results
of operations for the year ended December 31, 2006, as compared to
the
year ended December 31, 2005;
|
| · |
results
of operations for the year ended December 31, 2005, as compared to
the
year ended December 31, 2004; and
|
| · |
liquidity
and capital resources.
|
Summary
of Transactions
Gale/Green
Transactions
On
May 9,
2006, the Company completed the acquisitions of: (i) The Gale Company and
certain of its related businesses, which engage in construction, property
management, facilities management, and leasing services (collectively, the
“Gale
Company”); (ii) three office properties; and (iii) indirect interests in a
portfolio of office properties, located primarily in New Jersey, which were
owned indirectly by The Gale Company and its affiliates (“Gale”) and affiliates
of SL Green Realty Corp. (“SL Green”). The agreements (“Gale/Green Agreements”)
to complete the aforementioned acquisitions (collectively, the “Gale/Green
Transactions”) required that the Company complete all of the acquisitions.
Simultaneous with the completion of the Gale/Green Transactions, The Gale
Company’s President, Mark Yeager, was named an executive vice president of the
Company.
Under
the
Gale/Green Agreements, the Company acquired 100 percent of the ownership
interests in three office properties located in New Jersey, aggregating 518,257
square feet (the “Wholly-Owned Properties”).
Also,
as
part of the Gale/Green Agreements, the Company entered into a joint venture
with
an entity controlled by SL Green (in which Stanley C. Gale has an interest),
known as Mack-Green-Gale LLC (“Mack-Green”), to hold an approximate 96 percent
interest and act as general partner of Gale SLG NJ Operating Partnership, L.P.
(the “OP LP”). The
OP LP
owns 100 percent of entities which own 25 office properties (collectively,
the“OP
LP
Properties”) which aggregate 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. For a discussion of the
ownership interests in Mack-Green, see Note 4: Investments in Unconsolidated
Joint Ventures - Mack-Green-Gale LLC - to our financial statements included
within this annual report on Form 10-K.
Mr.
Gale
has agreed to pay Mark Yeager, an executive officer of the Company, 49 percent
of any payments he receives on account of Mr. Gale’s interest with SL Green in
Mack-Green.
The
Gale
Company, the Wholly-Owned Properties, and the interest in Mack-Green were
acquired by the Company for a total initial acquisition cost of approximately
$245 million consisting of: (i) the issuance by the Company of 224,719 common
units of the Operating Partnership; (ii) the payment of a total of approximately
$194 million in cash, which was primarily funded through borrowing under the
Company’s revolving credit facility; and (iii) the assumption of $39.9 million
in existing mortgage indebtedness on two of the Wholly-Owned Properties. Mr.
Gale has agreed to transfer to Mark Yeager 33,700 of his common units of the
Operating Partnership on April 30, 2009, provided that Mr. Yeager’s employment
with the Company has not been terminated involuntarily without cause
(“Employment Continuation”) prior to such date. Additionally, the agreement to
acquire the Gale Company (“Gale Agreement”) contains earn-out provisions
providing for the payment of contingent purchase consideration of up to $18
million in cash based upon the achievement of Gross Income and NOI (as such
terms are defined in the Gale Agreement) targets and other events for The Gale
Company for the three years following the closing date.
44
Mr.
Gale
has agreed to pay to Mr. Yeager 49 percent of all amounts he receives pursuant
to the Gale Agreement earn-out provisions, subject to certain conditions
including Mr. Yeager’s Employment Continuation.
The
Company has not yet obtained all the information necessary to finalize its
estimates to complete the purchase price allocations related to the Gale/Green
Transactions. The purchase price allocations will be finalized once the
information identified by the Company has been received, which should not be
longer than one year from the date of acquisition.
In
addition, the Gale Agreement provides for the Company to acquire certain other
ownership interests in up to 11 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 will 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.
Mr.
Gale
has agreed to pay to Mr. Yeager 49 percent of any payments he receives with
respect to the Gale Participation Rights, subject to adjustments for payments
Mr. Yeager receives from his direct interests in such rights and subject to,
in
certain cases, Mr. Yeager’s Employment Continuation. Mr. Gale has also agreed to
pay to Mr. Yeager 49 percent of the distributions he receives with respect
to
Mr. Gale’s interest in certain land located in Florham Park, New Jersey, which
is one of the Non-Portfolio Properties not yet acquired by the Company. Such
distribution may include the amounts Mr. Gale receives from the conveyance
of
his interest in the Florham Park land to the Company.
With
respect to the arrangements between Mr. Gale and Mr. Yeager regarding the Gale
Agreement earn-out provisions and the Florham Park land, they have agreed to
consider offering payments to certain persons that have been employed by certain
subsidiaries of The Gale Company, which may include current employees of the
Company.
Through
December 31, 2006, the Company has completed acquisitions of eight of the
interests in the Non-Portfolio Properties, which included the acquisitions
of
interests in: a 527,015 square foot, mixed-use office/retail complex; a 416,429
square-foot multi-tenanted office property; a 139,750 square-foot fully-leased
office property; an office property in development; two vacant land parcels
(one
of which Mr. Yeager has a 16.49 percent interest in the Participation Rights)
and two pre-developed projects. The aggregate cost of the completed acquisitions
was approximately $25.6 million.
Pursuant
to Mr. Gale’s agreements with Mr. Yeager, as described herein, Mr. Yeager
received approximately $5.6 million during the year ended December 31,
2006.
In
connection with the Company’s acquisition of the Gale Company, Mr. Gale and
certain other affiliates of Gale are restricted from competing with the Company
or hiring the Company’s employees for a period of four years expiring on May 9,
2010.
Property
Acquisitions
The
Company acquired the following office properties during the year ended December
31, 2006: (dollars
in thousands)
|
Acquisition
|
#
of
|
Rentable
|
Acquisition
|
||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Square
Feet
|
Cost
|
|
02/28/06
|
Capital
Office Park (a)
|
Greenbelt,
Maryland
|
7
|
842,258
|
$166,011
|
|
05/09/06
|
35
Waterview Boulevard (b) (c)
|
Parsippany,
New Jersey
|
1
|
172,498
|
33,586
|
|
05/09/06
|
105
Challenger Road (b) (d)
|
Ridgefield
Park, New Jersey
|
1
|
150,050
|
34,960
|
|
05/09/06
|
343
Thornall Street (b) (e)
|
Edison,
New Jersey
|
1
|
195,709
|
46,193
|
|
07/31/06
|
395
W. Passaic Street (f)
|
Rochelle
Park, New Jersey
|
1
|
100,589
|
22,219
|
|
Total
Property Acquisitions:
|
11
|
1,461,104
|
$302,969
|
||
|
(a) This
transaction was funded primarily through the assumption of $63.2
million
of mortgage debt and the issuance of 1.9 million common operating
partnership units valued at $87.2 million.
|
|||||
|
(b) The
property was acquired as part of the Gale/Green
Transactions.
|
|||||
|
(c) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $20.4 million of mortgage
debt.
|
|||||
|
(d) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $19.5 million of mortgage
debt.
|
|||||
|
(e) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility.
|
|||||
|
(f) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $13.1 million of mortgage
debt.
|
|||||
Sales
The
Company sold the following office properties during the year ended December
31,
2006: (dollars
in thousands)
|
Rentable
|
Net
|
Net
|
Realized
|
||||
|
Sale
|
#
of
|
Square
|
Sales
|
Book
|
Gain/
|
||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Feet
|
Proceeds
|
Value
|
(Loss)
|
|
06/28/06
|
Westage
Business Center
|
Fishkill,
New York
|
1
|
118,727
|
$
14,765
|
$
10,872
|
$
3,893
|
|
06/30/06
|
1510
Lancer Drive
|
Moorestown,
New Jersey
|
1
|
88,000
|
4,146
|
3,134
|
1,012
|
|
11/10/06
|
Colorado
portfolio
|
Various
cities, Colorado
|
19
|
1,431,610
|
193,404
|
165,072
|
28,332
|
|
12/21/06
|
California
portfolio
|
San
Francisco, California
|
2
|
450,891
|
124,182
|
97,814
|
26,368
|
|
Total
Office Property Sales:
|
23
|
2,089,228
|
$336,497
|
$276,892
|
$59,605
|
||
On
November 6, 2006, the Company sold its 50-percent interest in G&G Martco, a
joint venture which owned a 305,618 square foot office building located in
San
Francisco, California for approximately $16.3 million, realizing a gain on
the
sale of approximately $10.8 million.
On
November 7, 2006, the Company sold 10.1 acres of developable land adjacent
to
its Horizon Center properties in Hamilton Township, New Jersey, for net sales
proceeds of approximately $1.5 million, realizing a gain of approximately $1.1
million from the sale.
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 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, 2006, 2005 and 2004 was $6.1 million, $5.5 million and $3.9 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
45
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.
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. Management does not believe that the
value of any of the Company’s rental properties is impaired.
46
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.
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 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. Parking and other revenue includes income from parking
spaces leased to tenants, income from tenants for additional services provided
by the Company, income from tenants for early lease terminations and income
from
managing and/or leasing properties for third parties. Escalations and recoveries
are received from tenants for certain costs as provided in the lease agreements.
These costs generally include real estate taxes, utilities, insurance, common
area maintenance and other recoverable costs.
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.
47
Results
From Operations
The
following comparisons for the year ended December 31, 2006 (“2006”), as compared
to the year ended December 31, 2005 (“2005”), and for 2005, as compared to the
year ended December 31, 2004 (“2004”), 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, 2004, (for the 2006 versus
2005
comparison) and which represents all in-service properties owned by the Company
at December 31, 2003, (for the 2005 versus 2004 comparison), excluding
properties sold or held for sale through December 31, 2006, and (ii) the effect
of the “Acquired Properties,” which represents all properties acquired by the
Company or commencing initial operations from January 1, 2005 through December
31, 2006 (for the 2006 versus 2005 comparison) and which represent all
properties acquired by the Company or commencing initial operation from January
1, 2004 through December 31, 2005 (for the 2005 versus 2004
comparison).
48
Year
Ended December 31, 2006 Compared to Year Ended December 31,
2005
|
Year
Ended
|
|||||||||||||
|
December
31,
|
Dollar
|
Percent
|
|||||||||||
|
(dollars
in thousands)
|
2006
|
2005
|
Change
|
Change
|
|||||||||
|
Revenue
from rental operations:
|
|||||||||||||
|
Base
rents
|
$
|
544,870
|
$
|
508,227
|
$
|
36,643
|
7.2
|
%
|
|||||
|
Escalations
and recoveries from tenants
|
91,044
|
77,900
|
13,144
|
16.9
|
|||||||||
|
Other
income
|
17,125
|
11,087
|
6,038
|
54.5
|
|||||||||
|
Total
revenues from rental operations
|
653,039
|
597,214
|
55,825
|
9.4
|
|||||||||
|
Property
expenses:
|
|||||||||||||
|
Real
estate taxes
|
86,612
|
77,252
|
9,360
|
12.1
|
|||||||||
|
Utilities
|
60,487
|
52,401
|
8,086
|
15.4
|
|||||||||
|
Operating
services
|
91,013
|
80,820
|
10,193
|
12.6
|
|||||||||
|
Total
property expenses
|
238,112
|
210,473
|
27,639
|
13.1
|
|||||||||
|
Non-property
revenues:
|
|||||||||||||
|
Construction
services
|
56,225
|
--
|
56,225
|
--
|
|||||||||
|
Real
estate services
|
31,045
|
2,917
|
28,128
|
964.3
|
|||||||||
|
Total
non-property revenues
|
87,270
|
2,917
|
84,353
|
2,891.8
|
|||||||||
|
Non-property
expenses:
|
|||||||||||||
|
Direct
constructions costs
|
53,602
|
--
|
53,602
|
--
|
|||||||||
|
Real
estate services and salaries, wages
|
|||||||||||||
|
and
other costs
|
18,600
|
--
|
18,600
|
--
|
|||||||||
|
General
and administrative
|
49,077
|
32,441
|
16,636
|
51.3
|
|||||||||
|
Depreciation
and amortization
|
160,859
|
143,593
|
17,266
|
12.0
|
|||||||||
|
Total
non-property expenses
|
282,138
|
176,034
|
106,104
|
60.3
|
|||||||||
|
Operating
Income
|
220,059
|
213,624
|
6,435
|
3.0
|
|||||||||
|
Other
(expense) income:
|
|||||||||||||
|
Interest
expense
|
(136,357
|
)
|
(119,337
|
)
|
(17,020
|
)
|
(14.3
|
)
|
|||||
|
Interest
and other investment income
|
3,054
|
856
|
2,198
|
256.8
|
|||||||||
|
Equity
in earnings (loss) of unconsolidated
|
|||||||||||||
|
joint
ventures
|
(5,556
|
)
|
248
|
(5,804
|
)
|
(2,340.3
|
)
|
||||||
|
Minority
interest in consolidated joint ventures
|
218
|
(74
|
)
|
292
|
394.6
|
||||||||
|
Gain
on sale of investment in marketable securities
|
15,060
|
--
|
15,060
|
--
|
|||||||||
|
Gain
on sale of investment in joint ventures
|
10,831
|
35
|
10,796
|
30,845.7
|
|||||||||
|
Gain/(loss)
on sale of land and other assets
|
(416
|
)
|
--
|
(416
|
)
|
--
|
|||||||
|
Total
other (expense) income
|
(113,166
|
)
|
(118,272
|
)
|
5,106
|
4.3
|
|||||||
|
Income
from continuing operations before minority
|
|||||||||||||
|
interest
in Operating Partnership
|
106,893
|
95,352
|
11,541
|
12.1
|
|||||||||
|
Minority
interest in Operating Partnership
|
(20,533
|
)
|
(18,758
|
)
|
(1,775
|
)
|
(9.5
|
)
|
|||||
|
Income
from continuing operations
|
86,360
|
76,594
|
9,766
|
12.8
|
|||||||||
|
Discontinued
operations (net of minority interest):
|
|||||||||||||
|
Income
(loss) from discontinued operations
|
10,591
|
14,468
|
(3,877
|
)
|
(26.8
|
)
|
|||||||
|
Realized
gains (losses) and unrealized losses
|
|||||||||||||
|
on
disposition of rental property, net
|
47,715
|
4,426
|
43,289
|
978.1
|
|||||||||
|
Total
discontinued operations, net
|
58,306
|
18,894
|
39,412
|
208.6
|
|||||||||
|
Net
income
|
144,666
|
95,488
|
49,178
|
51.5
|
|||||||||
|
Preferred
stock dividends
|
(2,000
|
)
|
(2,000
|
)
|
--
|
--
|
|||||||
|
Net
income available to common shareholders
|
$
|
142,666
|
$
|
93,488
|
$
|
49,178
|
52.6
|
%
|
|||||
49
The
following is a summary of the changes in revenue from rental operations and
property expenses in 2006 as compared to 2005 divided into Same-Store Properties
and Acquired Properties (dollars
in thousands):
|
Total
Company
|
Same-Store
Properties
|
Acquired
Properties
|
|||||||||||||||||
|
Dollar
|
Percent
|
Dollar
|
Percent
|
Dollar
|
Percent
|
||||||||||||||
|
Change
|
Change
|
Change
|
Change
|
Change
|
Change
|
||||||||||||||
|
Revenue
from rental operations:
|
|||||||||||||||||||
|
Base
rents
|
$
|
36,643
|
7.2
|
%
|
$
|
7,277
|
1.4
|
%
|
$
|
29,366
|
5.8
|
%
|
|||||||
|
Escalations
and recoveries
|
|||||||||||||||||||
|
from
tenants
|
13,144
|
16.9
|
6,596
|
8.5
|
6,548
|
8.4
|
|||||||||||||
|
Other
income
|
6,038
|
54.5
|
5,177
|
46.7
|
861
|
7.8
|
|||||||||||||
|
Total
|
$
|
55,825
|
9.4
|
%
|
$
|
19,050
|
3.2
|
%
|
$
|
36,775
|
6.2
|
%
|
|||||||
|
Property
expenses:
|
|||||||||||||||||||
|
Real
estate taxes
|
$
|
9,360
|
12.1
|
%
|
$
|
5,229
|
6.8
|
%
|
$
|
4,131
|
5.3
|
%
|
|||||||
|
Utilities
|
8,086
|
15.4
|
3,821
|
7.3
|
4,265
|
8.1
|
|||||||||||||
|
Operating
services
|
10,193
|
12.6
|
1,875
|
2.3
|
8,318
|
10.3
|
|||||||||||||
|
Total
|
$
|
27,639
|
13.1
|
%
|
$
|
10,925
|
5.2
|
%
|
$
|
16,714
|
7.9
|
%
|
|||||||
|
OTHER
DATA:
|
|||||||||||||||||||
|
Number
of Consolidated Properties
|
255
|
238
|
17
|
||||||||||||||||
|
Square
feet (in thousands)
|
28,866
|
25,573
|
3,293
|
||||||||||||||||
Base
rents for the Same-Store Properties increased $7.3 million, or 1.4 percent,
for
2006 as compared to 2005, due primarily to an increase in the percentage of
space leased at the properties in 2006 from 2005. Escalations and recoveries
from tenants for the Same-Store Properties increased $6.6 million, or 8.5
percent, for 2006 over 2005, due primarily to an increased amount of total
property expenses in 2006. Other income for the Same-Store Properties increased
$5.2 million, or 46.7 percent, due primarily to an increase in lease breakage
fees of $3.1 million in 2006 and $1.4 million recognized in 2006 for additional
purchase consideration earned from a past sale of a joint venture.
Real
estate taxes on the Same-Store Properties increased $5.2 million, or 6.8
percent, for 2006 as compared to 2005, due primarily to property tax rate
increases in certain municipalities in 2006. Utilities for the Same-Store
Properties increased $3.8 million, or 7.3 percent, for 2006 as compared to
2005,
due primarily to increased electric rates in 2006 as compared to 2005. Operating
services for the Same-Store Properties increased $1.9 million, or 2.3 percent,
due primarily to increased maintenance and related labor costs of $5.1 million
for 2006 as compared to 2005, partially offset by a decrease in snow removal
costs in 2006 of $3.1 million.
Construction
services amounted to $56.2 million in 2006, due to the effect of the Gale/Green
Transactions. Real estate services increased by $28.1 million, or 964.3 percent,
for 2006 as compared to 2005, also due primarily to the effect of the Gale/Green
Transactions.
Direct
construction costs totaled $53.6 million in 2006, due primarily to the effect
of
the Gale/Green Transactions. Real estate services salaries, wages and other
costs equaled $18.6 million in 2006, also due primarily to the effect of the
Gale/Green Transactions. General and administrative increased by $16.6 million,
or 51.3 percent, for 2006 as compared to 2005 due primarily to the effect of
the
Gale/Green Transactions.
Depreciation
and amortization increased by $17.3 million, or 12.0 percent, for 2006 over
2005. Of this increase, $2.9 million, or 2.0 percent, was attributable to the
Same-Store Properties and $14.4 million, or 10.0 percent, was due to the
Acquired Properties.
Interest
expense increased $17.0 million, or 14.3 percent, for 2006 as compared to 2005.
This increase was primarily as a result of higher average debt balances in
2006
as compared to 2005.
50
Interest
and other investment income increased $2.2 million, or 256.8 percent, for 2006
as compared to 2005. This increase was due primarily to the receipt of
approximately $0.9 million in dividends on the Company’s investment in
marketable securities, as well as higher cash balances invested in 2006 due
primarily to property sales proceeds as compared to 2005.
Equity
in
earnings of unconsolidated joint ventures decreased $5.8 million, or 2,340.3
percent, for 2006 as compared to 2005. The decrease was due primarily to a
loss
of $4.9 million in 2006 in the Mack-Green joint venture and a loss of $1.9
million in 2006 in the Meadowlands Xanadu joint venture, partially offset by
an
increase of $1.1 million in the Harborside South Pier joint
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 on sale of investment in unconsolidated joint ventures amounted
to
$35,000 in 2005 from the sale of the Company’s interest in the Ashford Loop
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
increased to $106.9 million in 2006 from $95.4 million in 2005. The increase
of
approximately $11.5 million was due to the factors discussed above.
Net
income available to common shareholders increased by $49.2 million, or 52.6
percent, from $93.5 million in 2005 to $142.7 million in 2006. This increase
was
primarily the result of realized gains on disposition of rental property of
$47.7 million in 2006 and an increase in income from continuing operations
before minority interest in Operating Partnership of $11.5 million. These were
partially offset by realized gains on disposition of rental property of $4.4
million in 2005, a decrease in income from discontinued operations of
approximately $3.8 million in 2006 as compared to 2005, and an increase in
minority interest in Operating Partnership in 2006 of $1.8 million as compared
to 2005.
51
Year
Ended December 31, 2005 Compared to Year Ended December 31,
2004
|
Year
Ended
|
|||||||||||||
|
December
31,
|
Dollar
|
Percent
|
|||||||||||
|
(dollars
in thousands)
|
2005
|
2004
|
Change
|
Change
|
|||||||||
|
Revenue
from rental operations:
|
|||||||||||||
|
Base
rents
|
$
|
508,227
|
$
|
464,303
|
$
|
43,924
|
9.5
|
%
|
|||||
|
Escalations
and recoveries from tenants
|
77,900
|
60,492
|
17,408
|
28.8
|
|||||||||
|
Other
income
|
11,087
|
7,950
|
3,137
|
39.5
|
|||||||||
|
Total
revenues from rental operations
|
597,214
|
532,745
|
64,469
|
12.1
|
|||||||||
|
Property
expenses:
|
|||||||||||||
|
Real
estate taxes
|
77,252
|
64,036
|
13,216
|
20.6
|
|||||||||
|
Utilities
|
52,401
|
38,456
|
13,945
|
36.3
|
|||||||||
|
Operating
services
|
80,820
|
68,322
|
12,498
|
18.3
|
|||||||||
|
Total
property expenses
|
210,473
|
170,814
|
39,659
|
23.2
|
|||||||||
|
Non-property
revenues:
|
|||||||||||||
|
Construction
services
|
--
|
--
|
--
|
--
|
|||||||||
|
Real
estate services
|
2,917
|
4,494
|
(1,577
|
)
|
(35.1
|
)
|
|||||||
|
Total
non-property revenues
|
2,917
|
4,494
|
(1,577
|
)
|
(35.1
|
)
|
|||||||
|
Non-property
expenses:
|
|||||||||||||
|
Direct
constructions costs
|
--
|
--
|
--
|
--
|
|||||||||
|
Real
estate services and salaries, wages
|
|||||||||||||
|
and
other costs
|
--
|
--
|
--
|
--
|
|||||||||
|
General
and administrative
|
32,441
|
31,324
|
1,117
|
3.6
|
|||||||||
|
Depreciation
and amortization
|
143,593
|
117,097
|
26,496
|
22.6
|
|||||||||
|
Total
non-property expenses
|
176,034
|
148,421
|
27,613
|
18.6
|
|||||||||
|
Operating
Income
|
213,624
|
218,004
|
(4,380
|
)
|
(2.0
|
)
|
|||||||
|
Other
(expense) income:
|
|||||||||||||
|
Interest
expense
|
(119,337
|
)
|
(109,649
|
)
|
(9,688
|
)
|
8.8
|
||||||
|
Interest
and other investment income
|
856
|
1,367
|
(511
|
)
|
(37.4
|
)
|
|||||||
|
Equity
in earnings (loss) of unconsolidated
|
|||||||||||||
|
joint
ventures
|
248
|
(3,886
|
)
|
4,134
|
106.4
|
||||||||
|
Minority
interest in consolidated joint ventures
|
(74
|
)
|
--
|
(74
|
)
|
--
|
|||||||
|
Gain
on sale of investment in marketable
|
|||||||||||||
|
securities
|
--
|
--
|
--
|
--
|
|||||||||
|
Gain
on sale of investment in joint ventures
|
35
|
720
|
(685
|
)
|
(95.1
|
)
|
|||||||
|
Total
other (expense) income
|
(118,272
|
)
|
(111,448
|
)
|
(6,824
|
)
|
(6.1
|
)
|
|||||
|
Income
from continuing operations before minority
|
|||||||||||||
|
interest
in Operating Partnership
|
95,352
|
106,556
|
(11,204
|
)
|
(10.5
|
)
|
|||||||
|
Minority
interest in Operating Partnership
|
(18,758
|
)
|
(25,776
|
)
|
7,018
|
27.2
|
|||||||
|
Income
from continuing operations
|
76,594
|
80,780
|
(4,186
|
)
|
(5.2
|
)
|
|||||||
|
Discontinued
operations (net of minority interest):
|
|||||||||||||
|
Income
(loss) from discontinued operations
|
14,468
|
22,292
|
(7,824
|
)
|
(35.1
|
)
|
|||||||
|
Realized
gains (losses) and unrealized losses
|
|||||||||||||
|
on
disposition of rental property, net
|
4,426
|
(619
|
)
|
5,045
|
815.0
|
||||||||
|
Total
discontinued operations, net
|
18,894
|
21,673
|
(2,779
|
)
|
(12.8
|
)
|
|||||||
|
Net
income
|
95,488
|
102,453
|
(6,965
|
)
|
(6.8
|
)
|
|||||||
|
Preferred
stock dividends
|
(2,000
|
)
|
(2,000
|
)
|
--
|
--
|
|||||||
|
Net
income available to common shareholders
|
$
|
93,488
|
$
|
100,453
|
$
|
(6,965
|
)
|
(6.9
|
)%
|
||||
52
The
following is a summary of the changes in revenue from rental operations and
property expenses in 2005 as compared to 2004 divided into Same-Store Properties
and Acquired Properties (dollars
in thousands):
|
Total
Company
|
Same-Store
Properties
|
Acquired
Properties
|
|||||||||||||||||
|
Dollar
|
Percent
|
Dollar
|
Percent
|
Dollar
|
Percent
|
||||||||||||||
|
Change
|
Change
|
Change
|
Change
|
Change
|
Change
|
||||||||||||||
|
Revenue
from rental operations:
|
|||||||||||||||||||
|
Base
rents
|
$
|
43,924
|
9.5
|
%
|
$
|
(191
|
)
|
--
|
$
|
44,115
|
9.5
|
%
|
|||||||
|
Escalations
and recoveries
|
|||||||||||||||||||
|
from
tenants
|
17,408
|
28.8
|
6,816
|
11.3
|
%
|
10,592
|
17.5
|
||||||||||||
|
Other
income
|
3,137
|
39.5
|
1,294
|
16.3
|
1,843
|
23.2
|
|||||||||||||
|
Total
|
$
|
64,469
|
12.1
|
%
|
$
|
7,919
|
1.5
|
%
|
$
|
56,550
|
10.6
|
%
|
|||||||
|
Property
expenses:
|
|||||||||||||||||||
|
Real
estate taxes
|
$
|
13,216
|
20.6
|
%
|
$
|
4,074
|
6.4
|
%
|
$
|
9,142
|
14.2
|
%
|
|||||||
|
Utilities
|
13,945
|
36.3
|
8,755
|
22.8
|
5,190
|
13.5
|
|||||||||||||
|
Operating
services
|
12,498
|
18.3
|
2,485
|
3.6
|
10,013
|
14.7
|
|||||||||||||
|
Total
|
$
|
39,659
|
23.2
|
%
|
$
|
15,314
|
9.0
|
%
|
$
|
24,345
|
14.2
|
%
|
|||||||
|
OTHER
DATA:
|
|||||||||||||||||||
|
Number
of Consolidated Properties
|
244
|
224
|
20
|
||||||||||||||||
|
Square
feet (in thousands)
|
27,405
|
23,163
|
4,242
|
||||||||||||||||
Base
rents for the Same-Store Properties decreased $0.2 million, for 2005 as compared
to 2004, due primarily to decreased rental rates for new leases in 2005 as
compared to 2004. Escalations and recoveries from tenants for the Same-Store
Properties increased $6.8 million, or 11.3 percent, for 2005 over 2004, due
primarily to an increased amount of total property expenses in 2005. Other
income for the Same-Store Properties increased $1.3 million, or 16.3 percent,
due primarily to an increase in lease termination fees in 2005 as compared
to
2004.
Real
estate taxes on the Same-Store Properties increased $4.1 million, or 6.4
percent, for 2005 as compared to 2004, due primarily to property tax rate
increases in certain municipalities in 2005, partially offset by lower
assessments on certain properties in 2005. Utilities for the Same-Store
Properties increased $8.8 million, or 22.8 percent, for 2005 as compared to
2004, due primarily to increased electric rates and increased usage in 2005.
Operating services for the Same-Store Properties increased $2.5 million, or
3.6
percent, due primarily to increases in 2005 as compared to 2004 in snow removal
costs of $2.0 million, and property management compensation and related expenses
of $0.8 million.
General
and administrative increased by $1.1 million, or 3.6 percent, for 2005 as
compared to 2004. This was due primarily to increases in 2005 as compared to
2004 in compensation costs and related expenses of $0.9 million and state income
tax expense of $0.5 million, as well as compensation costs and related expenses
in 2005 of $0.6 million in connection with the resignation of a non-executive
officer, and a write-down in 2005 of a technology investment of $0.5 million.
These increases were partially offset by compensation costs and related expenses
incurred in 2004 in connection with the resignation of the Company’s president
of $1.3 million.
Depreciation
and amortization increased by $26.5 million, or 22.6 percent, for 2005 over
2004. Of this increase, $5.4 million, or 4.6 percent, was attributable to the
Same-Store Properties primarily on account of the amortization of additional
tenant installation costs in 2005 and $21.1 million, or 18.0 percent, was due
to
the Acquired Properties.
Interest
expense increased $9.7 million, or 8.8 percent, for 2005 as compared to 2004.
This increase was primarily as a result of higher average debt balances in
2005,
as well as an overall increase in interest rates on the Company’s debt.
Interest
and other investment income decreased $0.5 million, or 37.4 percent, for 2005
as
compared to 2004. This decrease was due primarily to lower interest income
from
mortgage notes receivable in 2005 and lower average cash balances in
2005.
53
Equity
in
earnings of unconsolidated joint ventures increased $4.1 million, or 106.4
percent, for 2005 as compared to 2004. This increase was due primarily to the
following: an increase of $5.2 million in 2005 on account of the Ashford Loop
joint venture having a loss in 2004, with no activity in 2005 due to the
Company’s sale of its interest in the venture in early 2005; an increase of $0.8
million from increased earnings in 2005 at the Harborside South Pier Hyatt
Hotel
Venture; and an increase of $0.6 million in 2005 on account of equity in loss
in
2004 at the Ramland Realty joint venture, with no equity in earnings in 2005.
These increases were partially offset by a decrease in equity in earnings of
$1.9 million at the G&G Martco joint venture on account of equity in loss in
2005; and a decrease of $0.7 million in 2005 on account of equity in earnings
in
the HPMC joint venture in 2004, with no activity in 2005 due to the joint
venture’s sale of the Pacific Plaza I & II complex in 2004.
Gain
on
sale of investment in unconsolidated joint ventures amounted to $35,000 in
2005
from the sale of the Company’s interest in the Ashford Loop joint venture. Gain
on sale of investment in unconsolidated joint venture amounted to $0.7 million
in 2004 on account of the receipt of additional contingent purchase
consideration from the Harborside North Pier sale.
Income
from continuing operations before minority interest in Operating Partnership
decreased to $95.4 million in 2005 from $106.6 million in 2004. The decrease
of
approximately $11.2 million was due to the factors discussed above.
Net
income available to common shareholders decreased by $7.0 million, or 6.9
percent, from $100.5 million in 2004 to $93.5 million in 2005. This decrease
was
primarily the result of a decrease in 2005 from 2004 in income from continuing
operations before minority interest in Operating Partnership of $11.2 million,
and a decrease in income from discontinued operations of approximately $7.8
million. These were partially offset by a decrease in minority interest in
Operating Partnership of $7.0 million, realized gains on disposition of rental
property of $4.4 million in 2005, and realized gains and unrealized losses
on
disposition of rental property of $0.6 million in 2004.
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 2007. 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.
54
Gale
Company Earn-Out:
The
agreement under which the Company acquired the Gale Company on May 9, 2006
(“Gale Agreement”), contains earn-out provisions providing for the payment of
contingent purchase consideration of up to $18 million in cash based upon the
achievement of Gross Income and NOI (as such terms are defined in the Gale
Agreement) targets and other events for the three years following the closing
date.
Construction
Projects:
The
Company entered into a 15-year lease with AAA Mid-Atlantic (“AAA”) for a 120,000
square foot office building being constructed by the Company in its Horizon
Center Business Park located in Hamilton Township, New Jersey. The building
is
expected to be completed during the early part of 2007 at an estimated cost
of
approximately $19.2 million (of which the Company has incurred $15.7 million
through December 31, 2006), which is expected to be funded through borrowings
on
the Company’s unsecured credit facility. Concurrent with the signing of the
lease, the Company executed a purchase and sale agreement with AAA pursuant
to
which the Company, upon the commencement of the 120,000 square foot lease,
will
acquire AAA’s three office and office/flex buildings, totaling approximately
84,000, square feet and certain vacant, developable land, all located in
Hamilton Township, New Jersey, for a total purchase price of approximately
$10
million, subject to certain conditions.
Additionally,
the Company, through a joint venture with the PRC Group, is constructing a
92,878 square-foot office property, to be known as Red Bank Corporate Plaza,
located in Red Bank, New Jersey, on land contributed by its joint venture
partner. The project is fully leased to Hovnanian Enterprise, Inc. for a 10-year
term. The total cost of the project, which is expected to be completed in the
third quarter 2007, is estimated to be approximately $27 million, of which
the
Company currently expects to fund approximately $3 million. On October 20,
2006,
the venture entered into a $22.0 million construction loan with a commercial
bank. The loan carries an interest rate of LIBOR plus 130 basis points and
matures in April 2008. The loan currently has three one-year extension options
subject to certain conditions, each of which require payment of a
fee.
The
Company owns a 15 percent indirect interest in a joint venture which plans
to
develop a 1.2 million square foot mixed-use project in downtown Boston
consisting of office and retail space, condominium apartments, a hotel and
garage. The development project, which is subject to government approval, is
currently projected to cost approximately $630 million, of which the Company
is
currently projected to invest a total of approximately $20.3 million (of which
the Company has invested $14.8 million through February 16, 2007).
REIT
Restrictions:
To
maintain its qualification as a REIT, the Company must make annual distributions
to its stockholders of at least 90 percent of its REIT taxable income,
determined without regard to the dividends paid deduction and by excluding
net
capital gains. Moreover, the Company intends to continue to make regular
quarterly distributions to its common stockholders which, based upon current
policy, in the aggregate would equal approximately $173.5 million on an
annualized basis. However, any such distribution, whether for federal income
tax
purposes or otherwise, would only be paid out of available cash, including
borrowings and other sources, after meeting operating requirements, preferred
stock and unit dividends and distributions, and scheduled debt service on the
Company’s debt.
Property
Lock-Ups:
The
Company may not dispose of or distribute certain of its properties, currently
comprising 50 properties with an aggregate net book value of approximately
$1.3
billion, which were originally contributed by members of either the Mack Group
(which includes William L. Mack, Chairman of the Company’s Board of Directors;
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) or certain
other common unitholders, without the express written consent of a
representative of the Mack Group, the Robert Martin Group, the Cali Group or
the
specific certain other 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 Mack Group, Robert
Martin Group, Cali Group members or the specific certain other 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 generally is required to use commercially reasonable efforts to prevent
any sale, transfer or other disposition of the subject properties from resulting
in the recognition of built-in gain to the appropriate Mack Group, Robert Martin
Group, Cali Group members or the specific certain other common unitholders.
88
of our properties, with an aggregate net book value of approximately $809.0
million, have lapsed restrictions and are subject to these
conditions.
55
Unencumbered
Properties:
As
of
December 31, 2006, the Company had 236 unencumbered properties, totaling 24.8
million square feet, representing 85.8 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. S&P and Fitch have also assigned their BBB- 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 its
existing and prospective preferred stock offerings of the Company.
Cash
Flows
Cash
and
cash equivalents increased by $40.8 million to $101.2 million at December 31,
2006, compared to $60.4 million at December 31, 2005. This increase is comprised
of the following net cash flow items:
| 1) |
$235.9
million provided by operating
activities.
|
| 2) |
$74.2
million provided by investing activities, consisting primarily of
the
following:
|
| (a) |
$217.8
million used for additions to rental property;
minus
|
| (b) |
$163.4
million used for investments in unconsolidated joint ventures;
minus
|
| (c) |
$11.9
million used for the purchase of marketable securities;
plus
|
| (d) |
$338.5
million received from proceeds from sale of rental properties;
plus
|
| (e) |
$78.6
million received from proceeds from the sale of marketable securities;
plus
|
| (f) |
$16.3
million received from proceeds from the sale of investment in
unconsolidated joint ventures; plus
|
| (g) |
$40
million received from distributions from investments in unconsolidated
joint ventures.
|
|
3)
|
$269.3
million used in financing activities, consisting primarily of the
following:
|
| (a) |
$983
million from borrowings under the revolving credit facility;
minus
|
| (b) |
$200
million from proceeds from the sale of senior unsecured notes;
minus
|
| (c) |
$10.4
million from proceeds received from stock options and warrants exercised;
plus
|
| (d) |
$1.1
billion used for repayments of borrowings under the Company’s unsecured
credit facility; plus
|
| (e) |
$197
million used for payments of dividends and distributions;
plus
|
| (f) |
$160.6
million used for repayments of mortgages, loans payable and other
obligations.
|
56
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, 2006:
|
Balance
|
Weighted
Average
|
Weighted
Average Maturity
|
||
|
($000’s)
|
%
of Total
|
Interest
Rate (a)
|
in
Years
|
|
|
Fixed
Rate Unsecured Debt
|
$1,670,225
|
77.33%
|
6.28%
|
5.29
|
|
Fixed
Rate Secured Debt and
|
||||
|
Other
Obligations
|
344,734
|
15.96%
|
5.43%
|
5.11
|
|
Variable
Rate Unsecured Debt
|
145,000
|
6.71%
|
5.76%
|
2.90
|
|
Totals/Weighted
Average:
|
$2,159,959
|
100.00%
|
6.11%
|
5.10
|
Debt
Maturities:
Scheduled
principal payments and related weighted average annual interest rates for the
Company’s debt as of December 31, 2006 are as follows:
|
Scheduled
|
Principal
|
Weighted
Avg.
|
|||||||||||
|
Amortization
|
Maturities
|
Total
|
Interest
Rate of
|
||||||||||
|
Period
|
($000’s)
|
($000’s)
|
($000’s)
|
Future
Repayments (a)
|
|||||||||
|
2007
|
$
|
19,126
|
$
|
15,152
|
$
|
34,278
|
5.67
|
%
|
|||||
|
2008
|
17,971
|
12,563
|
30,534
|
5.25
|
%
|
||||||||
|
2009
|
10,100
|
445,000
|
455,100
|
6.89
|
%
|
||||||||
|
2010
|
2,795
|
334,500
|
337,295
|
5.26
|
%
|
||||||||
|
2011
|
3,580
|
300,000
|
303,580
|
7.91
|
%
|
||||||||
|
Thereafter
|
11,685
|
993,091
|
1,004,776
|
5.57
|
%
|
||||||||
|
Sub-total
|
65,257
|
2,100,306
|
2,165,563
|
6.11
|
%
|
||||||||
|
Adjustment
for unamortized debt
|
|||||||||||||
|
discount/premium,
net, as of
|
|||||||||||||
|
December
31, 2006
|
(5,604
|
)
|
--
|
(5,604
|
)
|
--
|
|||||||
|
Totals/Weighted
Average
|
$
|
59,653
|
$
|
2,100,306
|
$
|
2,159,959
|
6.11
|
%
|
|||||
|
(a) Actual
weighted average LIBOR contract rates relating to the Company’s
outstanding debt as of December 31, 2006 of 5.35 percent was used
in
calculating revolving credit
facility.
|
|||||||||||||
Senior
Unsecured Notes:
On
January 24, 2006, the Company issued $100 million face amount of 5.80 percent
senior unsecured notes due January 15, 2016 with interest payable semi-annually
in arrears, and $100 million face amount of 5.25 percent senior unsecured notes
due January 15, 2012 with interest payable semi-annually in arrears. The
Company’s total proceeds from the issuances, including accrued interest on the
5.80 percent notes of approximately $200.8 million, were used to reduce
outstanding borrowings under the total unsecured facility.
The
terms
of the Company’s senior unsecured notes (which totaled approximately $1.6
billion as of December 31, 2006) 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
$600 million (expandable to $800 million). The interest rate on outstanding
borrowings (not electing the Company’s competitive bid feature) under the
unsecured facility is currently LIBOR plus 65 basis points. 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 65 basis point spread. As of December 31, 2006, the Company’s
outstanding borrowings carried a weighted
57
average
interest rate of LIBOR plus 41 basis points. 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, which also requires
a
15 basis point facility fee on the current borrowing capacity payable quarterly
in arrears, is scheduled to mature in November 2009 and has an
extension option of one year, which would require a payment of 25 basis points
of the then borrowing capacity of the facility upon exercise.
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
|
Interest
Rate -
|
|
|
Unsecured
Debt Ratings:
|
Applicable
Basis Points
|
Facility
Fee
|
|
S&P
Moody’s/Fitch (a)
|
Above
LIBOR
|
Basis
Points
|
|
No
ratings or less than BBB-/Baa3/BBB-
|
112.5
|
25.0
|
|
BBB-/Baa3/BBB-
|
80.0
|
20.0
|
|
BBB/Baa2/BBB
(current)
|
65.0
|
15.0
|
|
BBB+/Baa1/BBB+
|
55.0
|
15.0
|
|
A-/A3/A-
or higher
|
50.0
|
15.0
|
|
(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 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, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common
stock
or other common equity interests in an aggregate amount in excess of 90 percent
of funds from operations (as defined in the facility agreement) for such period,
subject to certain other adjustments.
The
lending group for the unsecured facility consists of: JPMorgan Chase Bank,
N.A.,
as administrative agent; Bank of America, N. A., as syndication agent; The
Bank
of Nova Scotia, New York Agency; 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.; UFJ Bank Limited, New York
Branch; The Governor and Company of the Bank of Ireland; Bank Hapoalim B.M.;
Comerica Bank; Chang Hwa Commercial Bank, Ltd., New York Branch; First
Commercial Bank, New York Agency; Chiao Tung Bank Co., Ltd., New York Agency;
Deutsche Bank Trust Company Americas; and Hua Nan Commercial Bank, New York
Agency.
Mortgages,
Loans Payable and Other Obligations:
The
Company has mortgages, loans payable and other obligations which consist
principally 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.
58
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 16, 2007, the Company
had $75.0 million of outstanding borrowings under its $600 million unsecured
revolving credit facility. The Company 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 2007. The Company anticipates that its available
cash and cash equivalents and cash flows from operating activities, together
with cash available from borrowings and other sources, will be adequate to
meet
the Company’s capital and liquidity needs both in the short and long-term.
However, if these sources of funds are insufficient or unavailable, the
Company’s ability to make the expected distributions discussed below may be
adversely affected.
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 since
December 31, 2005:
|
Common
|
Common
|
||
|
Stock
|
Units
|
Total
|
|
|
Outstanding
at December 31, 2005
|
62,019,646
|
13,650,439
|
75,670,085
|
|
Stock
options exercised
|
352,699
|
--
|
352,699
|
|
Common
units redeemed for Common Stock
|
475,208
|
(475,208)
|
--
|
|
Common
units redeemed for cash
|
--
|
(1)
|
(1)
|
|
Common
units issued
|
--
|
2,167,053
|
2,167,053
|
|
Shares
issued under Dividend Reinvestment
|
|||
|
and
Stock Purchase Plan
|
5,154
|
--
|
5,154
|
|
Restricted
shares issued, net of cancellations
|
72,484
|
--
|
72,484
|
|
|
|||
|
Outstanding
at December 31, 2006
|
62,925,191
|
15,342,283
|
78,267,474
|
On
February 7, 2007, the Company completed an underwritten offer and sale of
4,650,000 shares of its common stock and used the net proceeds, which totaled
approximately $252 million (after offering costs), primarily to pay down its
outstanding borrowings under the Company’s revolving credit facility and for
general corporate purposes.
Share
Repurchase Program:
The
Company has authorization to repurchase up to $45.5 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.
Shelf
Registration Statements:
The
Company has an effective shelf registration statement on Form S-3 filed with
the
Securities and Exchange Commission (“SEC”) for an aggregate amount of $2.0
billion in common stock, preferred stock, depositary shares, and/or warrants
of
the Company, under which $260.1 million of securities have been sold through
February 16, 2007 and $1.7 billion remains available for future
issuances.
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 $600
million of securities have been sold through February 16, 2007 and $1.9 billion
remains available for future issuances.
59
Off-Balance
Sheet Arrangements
Unconsolidated
Joint Venture Debt:
The
debt
of the Company’s unconsolidated joint ventures aggregating $571.7 million, at
December 31, 2006, is 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 posted
a $7.3 million letter of credit in support of the Harborside South Pier joint
venture, $3.6 million of which is indemnified by Hyatt.
The
Company’s off-balance sheet arrangements are further discussed in Note 4 to our
financial statements filed with this annual report on Form 10-K: Investments
in
Unconsolidated Joint Ventures to the Financial Statements.
Contractual
Obligations
The
following table outlines the timing of payment requirements related to the
Company’s debt (principal and interest), PILOT agreements, and ground lease
agreements as of December 31, 2006 (dollars
in thousands):
|
Payments
Due by Period
|
||||||
|
Less
than 1
|
1
- 3
|
4
- 5
|
6
- 10
|
After
10
|
||
|
Total
|
year
|
years
|
years
|
years
|
years
|
|
|
Senior
unsecured notes
|
$2,197,175
|
$100,494
|
$490,114
|
$598,326
|
$1,008,241
|
--
|
|
Revolving
credit facility (1)
|
169,369
|
8,355
|
161,014
|
--
|
--
|
--
|
|
Mortgages,
loans payable
|
||||||
|
and
other obligations
|
472,847
|
52,057
|
72,262
|
190,734
|
127,280
|
$30,514
|
|
Payments
in lieu of taxes (PILOT)
|
70,102
|
4,193
|
12,680
|
8,587
|
23,229
|
21,413
|
|
Operating
lease payments
|
499
|
412
|
87
|
--
|
--
|
--
|
|
Ground
lease payments
|
37,950
|
508
|
1,488
|
1,002
|
2,525
|
32,427
|
|
Total
|
$2,947,942
|
$166,019
|
$737,645
|
$798,649
|
$1,161,275
|
$84,354
|
|
(1) Interest
payments assume current revolving credit facility borrowings and
interest
rates remain at the December 31, 2006 level until
maturity.
|
||||||
Other
Commitments and Contingencies
Legal
Proceedings:
On
February 12, 2003, the NJSEA selected The Mills Corporation and the Company
to
redevelop the Continental Airlines Arena site (“Arena Site”) for mixed uses,
including retail. In March 2003, Hartz Mountain Industries, Inc., (“Hartz”),
filed a lawsuit in the Superior Court of New Jersey, Law Division, for Bergen
County, seeking to enjoin NJSEA from entering into a contract with the
Meadowlands Venture for the redevelopment of the Continental Airlines Arena
site. In May 2003, the court denied Hartz’s request for an injunction and
dismissed its suit for failure to exhaust administrative remedies. In June
2003,
the NJSEA held hearings on Hartz’s protest, and on a parallel protest filed by
another rejected developer, Westfield, Inc. (“Westfield”). On September 10,
2003, the NJSEA ruled against Hartz’s and Westfield’s protests. Hartz and
Westfield, as well as Elliot Braha and three other taxpayers (collectively
“Braha”), thereafter filed appeals from the NJSEA’s final decision. By decision
dated May 14, 2004, the Appellate Division of the Superior Court of New Jersey
rejected the appellants’ contention that the NJSEA lacks statutory authority to
allow retail development of its property. The Appellate Division also remanded
Hart’s claim under the Open Public Records Acts, seeking disclosure of
additional documents from NJSEA, to the Law Division for further proceedings.
The Supreme Court of New Jersey declined to review the Appellate Division’s
decision. On August 19, 2004, the Law Division issued a decision resolving
Hartz’s Open Public Records Act claim and ordered NJSEA to disclose some, but
not all, of the documents Hartz was seeking. The Appellate Division, in a
decision rendered on November 24, 2004, upheld the findings of the Law Division
in the remand proceeding. The Supreme Court of New Jersey declined to review
the
Appellate Division’s decision. At Hartz’s request, the NJSEA thereafter held
further hearings on December 15 and 16, 2004, to review certain additional
facts
in support of Hartz’s and Westfield’s bid protest. Braha, as a taxpayer, did not
have standing to participate in the supplemental protest hearing. On March
4,
2005, the Hearing Officer rendered his Supplemental Report and Recommendation
to
the NJSEA, finding no merit in the protests presented by Hartz and Westfield.
The NJSEA accepted the Hearing Officer’s Supplemental Report and Recommendation
on March 30, 2005 and Hartz and Braha have appealed that decision to the
Appellate Division.
60
In
January 2004, Hartz and Westfield also appealed to the Appellate Division of
the
Superior Court of New Jersey from the NJSEA’s December 2003 approval and
execution of the Redevelopment Agreement with the Meadowlands
Venture.
In
November 2004, Hartz and Westfield filed additional appeals in the Appellate
Division challenging NJSEA’s resolution authorizing the execution of the First
Amendment to the Redevelopment Agreement with Meadowlands Venture and the ground
lease with the Meadowlands Venture.
All
of
the above appeals were consolidated by the Appellate Division. On August 17,
2006, the Appellate Division issued an opinion affirming NJSEA’s selection of
the Meadowlands Venture and rejecting the appellants’ arguments in all respects.
On August 28, 2006, Hartz made a motion before the Appellate Division for
reconsideration of this decision and for supplementation of the record. That
motion was denied, and neither Hartz nor Braha has sought review in the New
Jersey Supreme Court. These consolidated appeals are now resolved.
On
September 30, 2004, the Borough of Carlstadt filed an action in the Superior
Court of New Jersey Law Division, challenging Meadowlands Xanadu, which asserted
claims that are substantially the same as claims asserted by Hartz and Braha
in
the above appeals. By Order dated November 19, 2004, the Law Division
transferred that matter to the Superior Court of New Jersey, Appellate Division.
This matter was voluntarily dismissed by Carlstadt in accordance with a March
22, 2006, Settlement Agreement and Release between Carlstadt and the Meadowlands
Venture.
Several
appeals filed by Hartz, the Sierra Club and others, including certain
environmental groups, that challenge certain approvals received by the
Meadowlands Venture from the NJSEA, the New Jersey Meadowlands Commission
(“NJMC”) and the New Jersey Department of Environmental Protection (“NJDEP”)
remain pending before the Appellate Division. Some of these appeals challenge
NJDEP’s issuance of a stream encroachment permit, waterfront development permit,
and coastal zone consistency determination for Meadowlands Xanadu. Other of
these appeals are from NJDEP’s and NJMC’s issuance of reports in connection with
a consultation process the NJSEA was statutorily required to undertake in
connection with any NJSEA-development project.
A
Hartz
affiliate and a trade association have filed an appeal from an advisory opinion
favorable to the Meadowlands Venture issued by the Director of the Division
of
Alcoholic Beverage Control concerning the availability of special concessionaire
permits. That appeal is also pending in the Appellate Division of the Superior
Court of New Jersey.
Three
separate lawsuits have been filed in the United States District Court for the
District of New Jersey, challenging a permit issued by the U.S. Army Corps
of
Engineers (“USACE”) in connection with the project. The first suit was filed on
March 30, 2005, by the Sierra Club, the New Jersey Public Interest Research
Group, Citizen Lobby, Inc. and the New Jersey Environmental Federation.
Additional suits were filed on May 16 and May 31, 2005, respectively, by Hartz
(together with one of its officers as an individually-named plaintiff) and
the
Borough of Carlstadt. The Sierra Club also filed a motion for a preliminary
injunction to stop certain construction activities on the project, which the
Court denied on July 6, 2005. On October 26, 2005, the court granted the motions
of the Meadowlands Venture and the USACE to dismiss the Hartz complaint for
lack
of standing. The deadline for appealing that decision has passed, so the Hartz
action is ended. On October 31, 2005, the USACE filed a motion to dismiss the
complaint filed by the Borough of Carlstadt for lack of standing. On February
7,
2006, the Court granted the motion and dismissed the Borough of Carlstadt’s
complaint in its entirety. On March 9, 2006, Carlstadt filed a notice of appeal
of this decision to the United States Court of Appeals for the Third Circuit.
This appeal has been dismissed pursuant to the Settlement Agreement and Release
executed by Carlstadt and the Meadowlands Venture.
On
April
5, 2005, the New York Football Giants (“Giants”) filed an emergent application
with the Supreme Court of New Jersey, Chancery Division, seeking an injunction
stopping all work on the Meadowlands Xanadu project as being in violation of
its
existing lease with the NJSEA. After hearing oral argument on the application
on
August 5, 2005, the court denied the Giants’ motion for preliminary injunctive
relief. On June 22, 2006, the court entered a Stipulation and Consent Order
that
dismissed without prejudice the parties’ respective claims.
61
The
New
Jersey Builders’ Association (“NJBA”) has commenced an action, which is pending
in the Appellate Division, alleging that the NJSEA has failed to meet a
purported obligation to provide affordable housing at the Meadowlands Complex
and seeking, among other relief, an order enjoining the construction of
Meadowlands Xanadu. NJBA filed an application for preliminary injunctive relief
seeking to enjoin further construction of Meadowlands Xanadu, which the
Appellate Division denied on July 28, 2005. The Meadowlands Venture is not
a
party to that action.
On
January 25, 2006, the Bergen Cliff Hawks Baseball Club, LLC (the “Cliff Hawks”),
filed a complaint against the Company and Mills, alleging that the Company
and
Mills breached an agreement to provide the Cliff Hawks with a minor league
baseball park as part of the Xanadu Project. This matter is
pending.
The
Company believes that the Meadowlands Venture’s proposal and the planned project
comply with applicable laws, and the Meadowlands Venture intends to continue
its
vigorous defense of its rights under the Redevelopment Agreement and Ground
Lease. Although there can be no assurance, the Company does not believe that
the
pending lawsuits will have any material affect on its ability to develop the
Meadowlands Xanadu project.
There
are
no other 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.
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:
| · |
changes
in the general economic climate and conditions, including those affecting
industries in which our principal tenants operate;
|
| · |
the
extent of any tenant bankruptcies or of any early lease terminations;
|
| · |
our
ability to lease or re-lease space at current or anticipated rents;
|
| · |
changes
in the supply of and demand for office, office/flex and
industrial/warehouse properties;
|
| · |
changes
in interest rate levels;
|
| · |
changes
in operating costs;
|
| · |
our
ability to obtain adequate insurance, including coverage for terrorist
acts;
|
| · |
the
availability of financing;
|
| · |
changes
in governmental regulation, tax rates and similar matters;
and
|
| · |
other
risks associated with the development and acquisition of properties,
including risks that the development may not be completed on schedule,
that the tenants will not take occupancy or pay rent, or that development
or operating costs may be greater than anticipated.
|
62
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.
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
$2.0 billion of the Company’s long-term debt bears interest at fixed rates and
therefore the fair value of these instruments is affected by changes in market
interest rates. The following table presents principal cash flows (in thousands)
based upon maturity dates of the debt obligations and the related
weighted-average interest rates by expected maturity dates for the fixed rate
debt. The average interest rate on the variable rate debt as of December 31,
2006 was LIBOR plus 41 basis points.
|
December
31, 2006
|
||||||||
|
Debt,
|
||||||||
|
including
current portion
($’s
in thousands)
|
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
Total
|
Fair
Value
|
|
Fixed
Rate
|
$
32,967
|
$29,377
|
$309,246
|
$336,398
|
$302,766
|
$1,004,205
|
$2,014,959
|
$2,033,913
|
|
Average
Interest Rate
|
5.67%
|
5.25%
|
7.41%
|
5.26%
|
7.91%
|
5.57%
|
6.14%
|
|
|
Variable
Rate
|
$145,000
|
$
145,000
|
$
145,000
|
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.
63
ITEM
8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
The
information required by Item 8 is contained in the Consolidated Financial
Statements, together with the notes to the Consolidated Financial Statements
and
the report of independent registered public accounting firm.
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:
|
(1)
|
Pertain
to the maintenance of records that in reasonable detail accurately
and
fairly reflect the transactions and dispositions of the assets of
the
Company;
|
|
(2)
|
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
|
|
(3)
|
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.
|
The
Company’s management has evaluated the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2006 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, 2006.
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.
64
Management’s
assessment of the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2006
has
been audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report which appears herein.
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
May 23, 2007, 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
May 23, 2007, 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
May 23, 2007, 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
May 23, 2007, and is incorporated herein by reference.
ITEM
14. PRINCIPAL
ACCOUNTANT 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
May 23, 2007, and is incorporated herein by reference.
65
PART
IV
ITEM
15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
(a)
1.
|
Financial
Statements and Report of PricewaterhouseCoopers LLP, Independent
Registered Public Accounting
Firm
|
Consolidated
Balance Sheets as of December 31, 2006 and 2005
Consolidated
Statements of Operations for the Years Ended December 31, 2006, 2005 and
2004
Consolidated
Statements of Changes in Stockholders’ Equity for the Years Ended December 31,
2006, 2005 and 2004
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and
2004
Notes
to
Consolidated Financial Statements
(a)
2. Financial
Statement Schedules
Schedule
III - Real Estate Investments and Accumulated Depreciation as of December 31,
2006
All
other
schedules are omitted because they are not required or the required information
is shown in the financial statements or notes thereto.
(a)
3. Exhibits
The
exhibits required by this item are set forth on the Exhibit Index attached
hereto.
66
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
Board
of Directors and Shareholders
of
Mack-Cali Realty Corporation:
We
have
completed integrated audits of Mack-Cali Realty
Corporation’s
consolidated financial statements and of its internal control over financial
reporting as of December 31, 2006, in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Our opinions, based on our audits, are presented
below.
Consolidated
financial
statements and financial statement schedule
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, 2006 and 2005, and
the results of their operations and their cash flows for each of the three
years
in the period ended December 31, 2006 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. These financial statements and financial statement
schedule are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit
to
obtain reasonable assurance about whether the financial statements are free
of
material misstatement. An audit of financial statements includes examining,
on
a
test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
Internal
control over financial reporting
Also,
in
our opinion, management’s assessment, included in Management’s Report on
Internal Control Over Financial Reporting appearing
under Item 9A, that the Company maintained effective internal control over
financial reporting as of December 31, 2006 based on criteria established in
Internal
Control - Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
is fairly stated, in all material respects, based on those criteria.
Furthermore, in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2006
based on criteria established in Internal
Control - Integrated Framework
issued
by the COSO. The Company’s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility
is to express opinions on management’s assessment and on the effectiveness
of the Company’s internal control over financial reporting based on our audit.
We conducted our audit of internal control over financial reporting in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit
to
obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. An audit of
internal control over financial reporting includes obtaining an understanding
of
internal control over financial reporting, evaluating management’s assessment,
testing and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we consider necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.
67
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
21, 2007
68
MACK-CALI
REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS (in
thousands, except per share amounts)
|
December
31,
|
|||||||
|
ASSETS
|
2006
|
2005
|
|||||
|
Rental
property
|
|||||||
|
Land
and leasehold interests
|
$
|
659,169
|
$
|
637,653
|
|||
|
Buildings
and improvements
|
3,549,699
|
3,539,003
|
|||||
|
Tenant
improvements
|
356,495
|
307,664
|
|||||
|
Furniture,
fixtures and equipment
|
8,224
|
7,432
|
|||||
|
4,573,587
|
4,491,752
|
||||||
|
Less
- accumulated depreciation and amortization
|
(796,793
|
)
|
(722,980
|
)
|
|||
|
Net
investment in rental property
|
3,776,794
|
3,768,772
|
|||||
|
Cash
and cash equivalents
|
101,223
|
60,397
|
|||||
|
Marketable
securities available for sale at fair value
|
--
|
50,847
|
|||||
|
Investments
in unconsolidated joint ventures
|
160,301
|
62,138
|
|||||
|
Unbilled
rents receivable, net
|
100,847
|
92,692
|
|||||
|
Deferred
charges and other assets, net
|
240,637
|
197,634
|
|||||
|
Restricted
cash
|
15,448
|
9,221
|
|||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
|||||||
|
of
$1,260 and $1,088
|
27,639
|
5,801
|
|||||
|
Total
assets
|
$
|
4,422,889
|
$
|
4,247,502
|
|||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Senior
unsecured notes
|
$
|
1,631,482
|
$
|
1,430,509
|
|||
|
Revolving
credit facilities
|
145,000
|
227,000
|
|||||
|
Mortgages,
loans payable and other obligations
|
383,477
|
468,672
|
|||||
|
Dividends
and distributions payable
|
50,591
|
48,178
|
|||||
|
Accounts
payable, accrued expenses and other liabilities
|
122,134
|
85,481
|
|||||
|
Rents
received in advance and security deposits
|
45,972
|
47,685
|
|||||
|
Accrued
interest payable
|
34,106
|
27,871
|
|||||
|
Total
liabilities
|
2,412,762
|
2,335,396
|
|||||
|
Minority
interests:
|
|||||||
|
Operating
Partnership
|
480,103
|
400,819
|
|||||
|
Consolidated
joint ventures
|
2,117
|
--
|
|||||
|
Total
minority interests
|
482,220
|
400,819
|
|||||
|
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,
|
|||||||
|
62,925,191
and 62,019,646 shares outstanding
|
629
|
620
|
|||||
|
Additional
paid-in capital
|
1,708,053
|
1,682,141
|
|||||
|
Unamortized
stock compensation
|
--
|
(6,105
|
)
|
||||
|
Dividends
in excess of net earnings
|
(205,775
|
)
|
(189,579
|
)
|
|||
|
Accumulated
other comprehensive loss
|
--
|
(790
|
)
|
||||
|
Total
stockholders’ equity
|
1,527,907
|
1,511,287
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
4,422,889
|
$
|
4,247,502
|
|||
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|||||||
69
MACK-CALI
REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS (in
thousands, except per share amounts)
|
Year
Ended December 31,
|
||||||||||
|
REVENUES
|
2006
|
2005
|
2004
|
|||||||
|
Base
rents
|
$
|
544,870
|
$
|
508,227
|
$
|
464,303
|
||||
|
Escalations
and recoveries from tenants
|
91,044
|
77,900
|
60,492
|
|||||||
|
Construction
services
|
56,225
|
--
|
--
|
|||||||
|
Real
estate services
|
31,045
|
2,917
|
4,494
|
|||||||
|
Other
income
|
17,125
|
11,087
|
7,950
|
|||||||
|
Total
revenues
|
740,309
|
600,131
|
537,239
|
|||||||
|
EXPENSES
|
||||||||||
|
Real
estate taxes
|
86,612
|
77,252
|
64,036
|
|||||||
|
Utilities
|
60,487
|
52,401
|
38,456
|
|||||||
|
Operating
services
|
91,013
|
80,820
|
68,322
|
|||||||
|
Direct
construction costs
|
53,602
|
--
|
--
|
|||||||
|
Real
estate services salaries, wages and other costs
|
18,600
|
--
|
--
|
|||||||
|
General
and administrative
|
49,077
|
32,441
|
31,324
|
|||||||
|
Depreciation
and amortization
|
160,859
|
143,593
|
117,097
|
|||||||
|
Total
expenses
|
520,250
|
386,507
|
319,235
|
|||||||
|
Operating
Income
|
220,059
|
213,624
|
218,004
|
|||||||
|
OTHER
(EXPENSE) INCOME
|
||||||||||
|
Interest
expense
|
(136,357
|
)
|
(119,337
|
)
|
(109,649
|
)
|
||||
|
Interest
and other investment income
|
3,054
|
856
|
1,367
|
|||||||
|
Equity
in earnings (loss) of unconsolidated joint ventures
|
(5,556
|
)
|
248
|
(3,886
|
)
|
|||||
|
Minority
interest in consolidated joint ventures
|
218
|
(74
|
)
|
--
|
||||||
|
Gain
on sale of investment in marketable securities
|
15,060
|
--
|
||||||||
|
Gain
on sale of investment in unconsolidated joint ventures
|
10,831
|
35
|
720
|
|||||||
|
Gain/(loss)
on sale of land and other assets
|
(416
|
)
|
--
|
--
|
||||||
|
Total
other (expense) income
|
(113,166
|
)
|
(118,272
|
)
|
(111,448
|
)
|
||||
|
Income
from continuing operations before minority interest
|
||||||||||
|
in
Operating Partnership
|
106,893
|
95,352
|
106,556
|
|||||||
|
Minority
interest in Operating Partnership
|
(20,533
|
)
|
(18,758
|
)
|
(25,776
|
)
|
||||
|
Income
from continuing operations
|
86,360
|
76,594
|
80,780
|
|||||||
|
Discontinued
operations (net of minority interest):
|
||||||||||
|
Income
from discontinued operations
|
10,591
|
14,468
|
22,292
|
|||||||
|
Realized
gains (losses) and unrealized losses
|
||||||||||
|
on
disposition of rental property, net
|
47,715
|
4,426
|
(619
|
)
|
||||||
|
Total
discontinued operations, net
|
58,306
|
18,894
|
21,673
|
|||||||
|
Net
income
|
144,666
|
95,488
|
102,453
|
|||||||
|
Preferred
stock dividends
|
(2,000
|
)
|
(2,000
|
)
|
(2,000
|
)
|
||||
|
Net
income available to common shareholders
|
$
|
142,666
|
$
|
93,488
|
$
|
100,453
|
||||
|
Basic
earnings per common share:
|
||||||||||
|
Income
from continuing operations
|
$
|
1.35
|
$
|
1.21
|
$
|
1.30
|
||||
|
Discontinued
operations
|
0.94
|
0.31
|
0.36
|
|||||||
|
Net
income available to common shareholders
|
$
|
2.29
|
$
|
1.52
|
$
|
1.66
|
||||
|
Diluted
earnings per common share:
|
||||||||||
|
Income
from continuing operations
|
$
|
1.35
|
$
|
1.20
|
$
|
1.29
|
||||
|
Discontinued
operations
|
0.93
|
0.31
|
0.36
|
|||||||
|
Net
income available to common shareholders
|
$
|
2.28
|
$
|
1.51
|
$
|
1.65
|
||||
|
Dividends
declared per common share
|
$
|
2.54
|
$
|
2.52
|
$
|
2.52
|
||||
|
Basic
weighted average shares outstanding
|
62,237
|
61,477
|
60,351
|
|||||||
|
Diluted
weighted average shares outstanding
|
77,901
|
74,189
|
68,743
|
|||||||
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
||||||||||
70
MACK-CALI
REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (in
thousands)
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Additional
|
Unamortized
|
Dividends
in
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Preferred
Stock
|
Common
Stock
|
Paid-In
|
Stock
|
Excess
of
|
Comprehensive
|
Stockholders’
|
Comprehensive
|
||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Par
Value
|
Capital
|
Compensation
|
Net
Earnings
|
Income
(Loss)
|
Equity
|
Income
|
||||||||||||||||||||||
|
Balance
at January 1, 2004
|
10
|
$
|
25,000
|
59,420
|
$
|
594
|
$
|
1,597,785
|
$
|
(7,170
|
)
|
$
|
(74,721
|
)
|
--
|
$
|
1,541,488
|
--
|
|||||||||||||
|
Net
income
|
--
|
--
|
--
|
--
|
--
|
--
|
102,453
|
--
|
102,453
|
$
|
102,453
|
||||||||||||||||||||
|
Preferred
stock dividends
|
--
|
--
|
--
|
--
|
--
|
--
|
(2,000
|
)
|
--
|
(2,000
|
)
|
--
|
|||||||||||||||||||
|
Common
stock dividends
|
--
|
--
|
--
|
--
|
--
|
--
|
(153,097
|
)
|
--
|
(153,097
|
)
|
--
|
|||||||||||||||||||
|
Redemption
of common units
|
|||||||||||||||||||||||||||||||
|
for
common stock
|
--
|
--
|
179
|
2
|
4,642
|
--
|
--
|
--
|
4,644
|
--
|
|||||||||||||||||||||
|
Shares
issued under Dividend
|
|||||||||||||||||||||||||||||||
|
Reinvestment
and Stock
|
|||||||||||||||||||||||||||||||
|
Purchase
Plan
|
--
|
--
|
12
|
--
|
481
|
--
|
--
|
--
|
481
|
--
|
|||||||||||||||||||||
|
Stock
options exercised
|
--
|
--
|
1,251
|
13
|
40,507
|
--
|
--
|
--
|
40,520
|
--
|
|||||||||||||||||||||
|
Stock
warrants exercised
|
--
|
--
|
149
|
1
|
4,924
|
--
|
--
|
--
|
4,925
|
--
|
|||||||||||||||||||||
|
Stock
options expense
|
--
|
--
|
--
|
--
|
415
|
--
|
--
|
--
|
415
|
--
|
|||||||||||||||||||||
|
Directors
Deferred comp. plan
|
--
|
--
|
--
|
--
|
265
|
--
|
--
|
--
|
265
|
--
|
|||||||||||||||||||||
|
Issuance
of restricted stock
|
--
|
--
|
47
|
--
|
2,106
|
(578
|
)
|
--
|
--
|
1,528
|
--
|
||||||||||||||||||||
|
Amortization
of stock comp.
|
--
|
--
|
--
|
--
|
--
|
3,489
|
--
|
--
|
3,489
|
--
|
|||||||||||||||||||||
|
Adj.
to fair value of
|
|||||||||||||||||||||||||||||||
|
restricted
stock
|
--
|
--
|
--
|
--
|
284
|
(284
|
)
|
--
|
--
|
--
|
--
|
||||||||||||||||||||
|
Cancellation
of restricted stock
|
--
|
--
|
(19
|
)
|
--
|
(575
|
)
|
575
|
--
|
--
|
--
|
--
|
|||||||||||||||||||
|
Balance
at December 31, 2004
|
10
|
$
|
25,000
|
61,039
|
$
|
610
|
$
|
1,650,834
|
$
|
(3,968
|
)
|
$
|
(127,365
|
)
|
--
|
$
|
1,545,111
|
$
|
102,453
|
||||||||||||
|
Net
income
|
--
|
--
|
--
|
--
|
--
|
--
|
95,488
|
--
|
95,488
|
95,488
|
|||||||||||||||||||||
|
Preferred
stock dividends
|
--
|
--
|
--
|
--
|
--
|
--
|
(2,000
|
)
|
--
|
(2,000
|
)
|
--
|
|||||||||||||||||||
|
Common
stock dividends
|
--
|
--
|
--
|
--
|
--
|
--
|
(155,702
|
)
|
--
|
(155,702
|
)
|
--
|
|||||||||||||||||||
|
Redemption
of common units
|
|||||||||||||||||||||||||||||||
|
for
common stock
|
--
|
--
|
235
|
2
|
6,788
|
--
|
--
|
--
|
6,790
|
--
|
|||||||||||||||||||||
|
Shares
issued under Dividend
|
|||||||||||||||||||||||||||||||
|
Reinvestment
and Stock
|
|||||||||||||||||||||||||||||||
|
Purchase
Plan
|
--
|
--
|
9
|
--
|
390
|
--
|
--
|
--
|
390
|
--
|
|||||||||||||||||||||
|
Stock
options exercised
|
--
|
--
|
574
|
6
|
16,597
|
--
|
--
|
--
|
16,603
|
--
|
|||||||||||||||||||||
|
Stock
options expense
|
--
|
--
|
--
|
--
|
448
|
--
|
--
|
--
|
448
|
--
|
|||||||||||||||||||||
|
Comprehensive
Loss:
|
|||||||||||||||||||||||||||||||
|
Unrealized
holding loss
|
|||||||||||||||||||||||||||||||
|
on
marketable securities
|
|||||||||||||||||||||||||||||||
|
available
for sale
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(790
|
)
|
(790
|
)
|
(790
|
)
|
||||||||||||||||||
|
Directors
Deferred comp. plan
|
--
|
--
|
5
|
--
|
288
|
--
|
--
|
--
|
288
|
--
|
|||||||||||||||||||||
|
Issuance
of restricted stock
|
--
|
--
|
166
|
2
|
7,189
|
(7,191
|
)
|
--
|
--
|
--
|
--
|
||||||||||||||||||||
|
Amortization
of stock comp.
|
--
|
--
|
--
|
--
|
--
|
4,661
|
--
|
--
|
4,661
|
--
|
|||||||||||||||||||||
|
Adj.
to fair value of
|
|||||||||||||||||||||||||||||||
|
restricted
stock
|
--
|
--
|
--
|
--
|
(37
|
)
|
37
|
--
|
--
|
--
|
--
|
||||||||||||||||||||
|
Cancellation
of restricted stock
|
--
|
--
|
(8
|
)
|
--
|
(356
|
)
|
356
|
--
|
--
|
--
|
--
|
|||||||||||||||||||
|
Balance
at December 31, 2005
|
10
|
$
|
25,000
|
62,020
|
$
|
620
|
$
|
1,682,141
|
$
|
(6,105
|
)
|
$
|
(189,579
|
)
|
$
|
(790
|
)
|
$
|
1,511,287
|
$
|
94,698
|
||||||||||
|
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
|
--
|
|||||||||||||||||||||
|
Amortization
of stock comp.
|
--
|
--
|
--
|
--
|
5,895
|
--
|
--
|
--
|
5,895
|
--
|
|||||||||||||||||||||
|
Cancellation
of restricted stock
|
--
|
--
|
(9
|
)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||||
|
Reclassification
adjustment
|
|||||||||||||||||||||||||||||||
|
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
|
||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
71
MACK-CALI
REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS (in
thousands)
|
Year
Ended December 31,
|
||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
2006
|
2005
|
2004
|
|||||||
|
Net
income
|
$
|
144,666
|
$
|
95,488
|
$
|
102,453
|
||||
|
Adjustments
to reconcile net income to net cash provided by
|
||||||||||
|
Operating
activities:
|
||||||||||
|
Depreciation
and amortization
|
160,859
|
143,593
|
117,097
|
|||||||
|
Depreciation
and amortization on discontinued operations
|
7,090
|
12,506
|
15,477
|
|||||||
|
Stock
options expense
|
465
|
448
|
415
|
|||||||
|
Amortization
of stock compensation
|
5,895
|
4,661
|
3,489
|
|||||||
|
Amortization
of deferred financing costs and debt discount
|
3,157
|
3,271
|
4,163
|
|||||||
|
Equity
in earnings of unconsolidated joint venture, net
|
5,556
|
(248
|
)
|
3,886
|
||||||
|
Gain
on sale of investment in unconsolidated joint ventures
|
(10,831
|
)
|
(35
|
)
|
(720
|
)
|
||||
|
Gain
on sale of marketable securities available for sale
|
(15,060
|
)
|
--
|
--
|
||||||
|
Loss
on sale of land and other assets
|
416
|
--
|
--
|
|||||||
|
(Realized
gains) unrealized losses on disposition of rental property
|
||||||||||
|
(net
of minority interest)
|
(47,715
|
)
|
(4,426
|
)
|
619
|
|||||
|
Distributions
of cumulative earnings from unconsolidated joint ventures
|
2,302
|
--
|
--
|
|||||||
|
Minority
interest in Operating Partnership
|
20,533
|
18,758
|
25,776
|
|||||||
|
Minority
interest in consolidated joint ventures
|
(218
|
)
|
74
|
--
|
||||||
|
Minority
interest in income from discontinued operations
|
2,603
|
2,777
|
2,869
|
|||||||
|
Changes
in operating assets and liabilities:
|
||||||||||
|
Increase
in unbilled rents receivable, net
|
(15,989
|
)
|
(13,283
|
)
|
(11,230
|
)
|
||||
|
Increase
in deferred charges and other assets, net
|
(40,084
|
)
|
(40,566
|
)
|
(48,306
|
)
|
||||
|
Decrease
(increase) in accounts receivable, net
|
3,162
|
(1,237
|
)
|
(106
|
)
|
|||||
|
Increase
in accounts payable, accrued expenses and
|
4,598
|
15,674
|
15,579
|
|||||||
|
other
liabilities
|
||||||||||
|
(Decrease)
increase in rents received in advance and security
deposits
|
(1,713
|
)
|
(253
|
)
|
7,839
|
|||||
|
Increase
(decrease) in accrued interest payable
|
6,235
|
5,727
|
(860
|
)
|
||||||
|
Net
cash provided by operating activities
|
$
|
235,927
|
$
|
242,929
|
$
|
238,440
|
||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||
|
Additions
to rental property, related intangibles and service
companies
|
$
|
(217,804
|
)
|
$
|
(451,335
|
)
|
$
|
(200,033
|
)
|
|
|
Repayment
of mortgage note receivable
|
150
|
81
|
850
|
|||||||
|
Investment
in unconsolidated joint ventures
|
(163,428
|
)
|
(17,788
|
)
|
(27,945
|
)
|
||||
|
Distributions
from unconsolidated joint ventures
|
39,982
|
--
|
25,942
|
|||||||
|
Proceeds
from sale of investment in unconsolidated joint venture
|
16,324
|
2,676
|
720
|
|||||||
|
Acquisition
of minority interest in consolidated joint venture
|
--
|
(7,713
|
)
|
--
|
||||||
|
Proceeds
from sales of rental property and service company
|
338,546
|
102,980
|
110,141
|
|||||||
|
Purchase
of marketable securities available for sale
|
(11,912
|
)
|
(51,637
|
)
|
--
|
|||||
|
Proceeds
from sale of marketable securities available for sale
|
78,609
|
--
|
--
|
|||||||
|
Funding
of note receivable
|
--
|
--
|
(13,042
|
)
|
||||||
|
(Increase)
decrease in restricted cash
|
(6,227
|
)
|
1,256
|
(2,388
|
)
|
|||||
|
Net
cash provided by (used in) investing activities
|
$
|
74,240
|
$
|
(421,480
|
)
|
$
|
(105,755
|
)
|
||
|
CASH
FLOW FROM FINANCING ACTIVITIES
|
||||||||||
|
Proceeds
from senior unsecured notes
|
$
|
199,914
|
$
|
398,480
|
$
|
202,363
|
||||
|
Borrowings
from revolving credit facility
|
983,250
|
1,041,560
|
612,475
|
|||||||
|
Proceeds
from mortgages
|
--
|
58,500
|
--
|
|||||||
|
Repayment
of senior unsecured notes
|
--
|
--
|
(300,000
|
)
|
||||||
|
Repayment
of revolving credit facility
|
(1,104,643
|
)
|
(921,560
|
)
|
(505,475
|
)
|
||||
|
Repayment
of mortgages, loans payable and other obligations
|
(160,626
|
)
|
(169,935
|
)
|
(58,553
|
)
|
||||
|
Payment
of financing costs
|
(646
|
)
|
(5,071
|
)
|
(5,648
|
)
|
||||
|
Proceeds
from stock options exercised
|
10,445
|
16,603
|
40,520
|
|||||||
|
Proceeds
from stock warrants exercised
|
--
|
--
|
4,925
|
|||||||
|
Payment
of dividends and distributions
|
(197,035
|
)
|
(191,899
|
)
|
(189,397
|
)
|
||||
|
Net
cash (used in) provided by financing activities
|
$
|
(269,341
|
)
|
$
|
226,678
|
$
|
(198,790
|
)
|
||
|
Net
increase (decrease) in cash and cash equivalents
|
$
|
40,826
|
$
|
48,127
|
$
|
(66,105
|
)
|
|||
|
Cash
and cash equivalents, beginning of period
|
60,397
|
12,270
|
78,375
|
|||||||
|
Cash
and cash equivalents, end of period
|
$
|
101,223
|
$
|
60,397
|
$
|
12,270
|
||||
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
||||||||||
72
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. As of December 31, 2006, the Company owned or had interests
in 300 properties plus developable land (collectively, the “Properties”). The
Properties aggregate approximately 34.3 million square feet, which are comprised
of 289 buildings, primarily office and office/flex buildings totaling
approximately 33.9 million square feet (which include 44 buildings, primarily
office buildings aggregating approximately 5.4 million square feet owned by
unconsolidated joint ventures in which the Company has investment interests),
six industrial/warehouse buildings totaling approximately 387,400 square feet,
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 seven 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.
Certain
reclassifications have been made to prior period amounts in order to conform
with current period presentation.
| 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 and development in-progress of $116,151,000 and $118,815,000
(including land of $63,136,000 and $58,883,000) as of December 31,
2006
and 2005, 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.
73
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.
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. Management does
not
believe that the value of any of the Company’s rental properties is
impaired.
74
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
7: Discontinued Operations.
|
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.
|
The
Company has evaluated its joint ventures with regards to FIN 46. The adoption
and application of FIN 46 and FIN 46R has not had a material impact on the
Company’s consolidated financial statements.
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. Management does not believe
that the value of any of the Company’s investments in unconsolidated joint
ventures is impaired. See Note 4: Investments in Unconsolidated Joint
Ventures.
Cash
and Cash
|
Equivalents
|
All
highly liquid investments with a maturity of three months or less
when
purchased are considered to be cash
equivalents.
|
75
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’s marketable securities at December 31, 2005 carried a value of $50.8
million and consisted of 1,468,300 shares of common stock in CarrAmerica Realty
Corporation, which were all acquired in 2005. The Company’s marketable
securities at December 31, 2005 were all classified as available-for-sale and
were carried at fair value based on quoted market prices. The Company recorded
an unrealized holding loss of $790,000 as other comprehensive loss in 2005.
From
January 1, 2006 through January 25, 2006, the Company purchased an additional
336,500 shares of common stock in CarrAmerica for a total purchase price of
$11.9 million.
The
Company received dividend income of approximately $902,000 from its holdings
in
CarrAmerica stock during the three months ended March 31, 2006, which is
included in interest and other investment income. During the three months ended
March 31, 2006, the Company sold all of its 1,804,800 shares of CarrAmerica
common stock realizing a gain of approximately $15.1 million.
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 $3,157,000, $3,271,000 and $4,163,000
for the years ended December 31, 2006, 2005 and 2004,
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 $3,749,000, $3,855,000 and
$3,907,000 for the years ended December 31, 2006, 2005 and 2004,
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.
|
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
|
76
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 15: 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.
|
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.
|
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, 2006 represents
dividends payable to preferred shareholders (10,000 shares) and common
shareholders (62,925,271 shares), and distributions payable to minority
interest common unitholders of the Operating
Partnership
|
77
(15,342,283
common
units) for all such holders of record as of January 4, 2007 with respect to
the
fourth quarter 2006. The fourth quarter 2006 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 5,
2006. The common stock dividends and common unit distributions payable were
paid
on January 12, 2007. The preferred stock dividends payable were paid on January
16, 2007.
The
dividends and distributions payable at December 31, 2005 represents dividends
payable to preferred shareholders (10,000 shares) and common shareholders
(62,028,306 shares), and distributions payable to minority interest common
unitholders of the Operating Partnership (13,650,439 common units) for all
such
holders of record as of January 5, 2006 with respect to the fourth quarter
2005.
The fourth quarter 2005 preferred stock dividends of $50.00 per share, common
stock dividends and common unit distributions of $0.63 per common share and
unit
were approved by the Board of Directors on December 6, 2005. The common stock
dividends and common unit distributions payable were paid on January 13, 2006.
The preferred stock dividends payable were paid on January 17,
2006.
The
Company has determined that 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; the
$2.52 dividend per common share paid during the year ended December 31, 2005
represented 100 percent ordinary income to its stockholders; and the $2.52
dividend per common share paid during the year ended December 31, 2004
represented approximately 91 percent ordinary income and approximately 9 percent
capital gain to its stockholders.
Costs
Incurred
For
Preferred
|
Stock
Issuances
|
Costs
incurred in connection with the Company’s preferred 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.
|
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, 2006,
2005
and 2004, the Company recorded restricted stock and stock options expense of
$6,360,000, $5,109,000 and $5,432,000, respectively. FASB No. 148, Accounting
for Stock-Based Compensation - Transition and Disclosure, was issued in December
2002 and amends FASB No. 123, Accounting for Stock Based Compensation. FASB
No.
148 provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock based compensation. In addition,
this Statement amends the disclosure requirements of FASB No. 123 to require
prominent disclosures in both annual and interim financial statements about
the
method of accounting for stock-based employee compensation and the effect of
the
method used on reported results. FASB No. 148 disclosure requirements are
presented below:
78
The
following table illustrates the effect on net income and earnings per share
if
the fair value based method had been applied to all outstanding and unvested
stock awards in each period: (dollars
in thousands)
|
Year
Ended December 31,
|
|||||||
|
2005
|
2004
|
||||||
|
Net
income, as reported
|
$
|
95,488
|
$
|
102,453
|
|||
|
Add:
Stock-based
compensation expense included in reported
|
|||||||
|
net
income (net of minority interest)
|
4,260
|
4,813
|
|||||
|
Deduct: Total
stock-based compensation expense determined
|
|||||||
|
under
fair value based method for all awards
|
(5,391
|
)
|
(6,308
|
)
|
|||
|
Add: Minority
interest on stock-based compensation expense
|
|||||||
|
under
fair value based method
|
896
|
719
|
|||||
|
Pro
forma net income
|
95,253
|
101,677
|
|||||
|
Deduct: Preferred
stock dividends
|
(2,000
|
)
|
(2,000
|
)
|
|||
|
Pro
forma net income available to common shareholders - basic
|
$
|
93,253
|
$
|
99,677
|
|||
|
Earnings
Per Share:
|
|||||||
|
Basic
- as reported
|
$
|
1.52
|
$
|
1.66
|
|||
|
Basic
- pro forma
|
$
|
1.52
|
$
|
1.65
|
|||
|
Diluted
- as reported
|
$
|
1.51
|
$
|
1.65
|
|||
|
Diluted
- pro forma
|
$
|
1.51
|
$
|
1.64
|
|||
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. |
REAL
ESTATE TRANSACTIONS
|
Gale/Green
Transactions
On
May 9,
2006, the Company completed the acquisitions of: (i) The Gale Company and
certain of its related businesses, which engage in construction, property
management, facilities management, and leasing services (collectively, the
“Gale
Company”); (ii) three office properties; and (iii) indirect interests in a
portfolio of office properties, located primarily in New Jersey, which were
owned indirectly by The Gale Company and its affiliates (“Gale”) and affiliates
of SL Green Realty Corp. (“SL Green”). The agreements (“Gale/Green Agreements”)
to complete the aforementioned acquisitions (collectively, the “Gale/Green
Transactions”) required that the Company complete all of the acquisitions.
Simultaneous with the completion of the Gale/Green Transactions, The Gale
Company’s President, Mark Yeager, was named an executive vice president of the
Company.
Under
the
Gale/Green Agreements, the Company acquired 100 percent of the ownership
interests in three office properties located in New Jersey, aggregating 518,257
square feet (the “Wholly-Owned Properties”).
Also,
as
part of the Gale/Green Agreements, the Company entered into a joint venture
with
an entity controlled by SL Green (in which Stanley C. Gale has an interest),
known as Mack-Green-Gale LLC (“Mack-Green”), to hold an approximate 96 percent
interest and act as general partner of Gale SLG NJ Operating Partnership, L.P.
(the “OP LP”). The
OP LP
owns 100 percent of entities which own 25 office properties (collectively,
the“OP
LP
Properties”) which aggregate 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.
Mr.
Gale
has agreed to pay Mark Yeager, an executive officer of the Company, 49 percent
of any payments he receives on account of Mr. Gale’s interest with SL Green in
Mack-Green.
79
The
Gale
Company, the Wholly-Owned Properties, and the interest in Mack-Green were
acquired by the Company for a total initial acquisition cost of approximately
$245 million consisting of: (i) the issuance by the Company of 224,719 common
units of the Operating Partnership; (ii) the payment of a total of approximately
$194 million in cash, which was primarily funded through borrowing under the
Company’s revolving credit facility; and (iii) the assumption of $39.9 million
in existing mortgage indebtedness on two of the Wholly-Owned Properties. Mr.
Gale has agreed to transfer to Mark Yeager 33,700 of his common units of the
Operating Partnership on April 30, 2009, provided that Mr. Yeager’s employment
with the Company has not been terminated involuntarily without cause
(“Employment Continuation”) prior to such date. Additionally, the agreement to
acquire the Gale Company (“Gale Agreement”) contains earn-out provisions
providing for the payment of contingent purchase consideration of up to $18
million in cash based upon the achievement of Gross Income and NOI (as such
terms are defined in the Gale Agreement) targets and other events for The Gale
Company for the three years following the closing date.
Mr.
Gale
has agreed to pay to Mr. Yeager 49 percent of all amounts he receives pursuant
to the Gale Agreement earn-out provisions, subject to certain conditions
including Mr. Yeager’s Employment Continuation.
The
Company has not yet obtained all the information necessary to finalize its
estimates to complete the purchase price allocations related to the Gale/Green
Transactions. The purchase price allocations will be finalized once the
information identified by the Company has been received, which should not be
longer than one year from the date of acquisition.
In
addition, the Gale Agreement provides for the Company to acquire certain other
ownership interests in up to 11 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 will 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.
Mr.
Gale
has agreed to pay to Mr. Yeager 49 percent of any payments he receives with
respect to the Gale Participation Rights, subject to adjustments for payments
Mr. Yeager receives from his direct interests in such rights and subject to,
in
certain cases, Mr. Yeager’s Employment Continuation. Mr. Gale has also agreed to
pay to Mr. Yeager 49 percent of the distributions he receives with respect
to
Mr. Gale’s interest in certain land located in Florham Park, New Jersey, which
is one of the Non-Portfolio Properties not yet acquired by the Company. Such
distribution may include the amounts Mr. Gale receives from the conveyance
of
his interest in the Florham Park land to the Company.
With
respect to the arrangements between Mr. Gale and Mr. Yeager regarding the Gale
Agreement earn-out provisions and the Florham Park land, they have agreed to
consider offering payments to certain persons that have been employed by certain
subsidiaries of The Gale Company, which may include current employees of the
Company.
Through
December 31, 2006, the Company has completed acquisitions of eight of the
interests in the Non-Portfolio Properties, which included the acquisitions
of
interests in: a 527,015 square foot, mixed-use office/retail complex; a 416,429
square-foot multi-tenanted office property; a 139,750 square-foot fully-leased
office property; an office property in development; two vacant land parcels
(one
of which Mr. Yeager has a 16.49 percent interest in the Participation Rights)
and two pre-developed projects. The aggregate cost of the completed acquisitions
was approximately $25.6 million.
Pursuant
to Mr. Gale’s agreements with Mr. Yeager, as described herein, Mr. Yeager
received approximately $5.6 million during the year ended December 31,
2006.
In
connection with the Company’s acquisition of the Gale Company, Mr. Gale and
certain other affiliates of Gale are restricted from competing with the Company
or hiring the Company’s employees for a period of four years expiring on May 9,
2010.
80
Property
Acquisitions
The
Company acquired the following office properties during the year ended December
31, 2006: (dollars
in thousands)
|
Acquisition
|
#
of
|
Rentable
|
Acquisition
|
||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Square
Feet
|
Cost
|
|
02/28/06
|
Capital
Office Park (a)
|
Greenbelt,
Maryland
|
7
|
842,258
|
$166,011
|
|
05/09/06
|
35
Waterview Boulevard (b) (c)
|
Parsippany,
New Jersey
|
1
|
172,498
|
33,586
|
|
05/09/06
|
105
Challenger Road (b) (d)
|
Ridgefield
Park, New Jersey
|
1
|
150,050
|
34,960
|
|
05/09/06
|
343
Thornall Street (b) (e)
|
Edison,
New Jersey
|
1
|
195,709
|
46,193
|
|
07/31/06
|
395
W. Passaic Street (f)
|
Rochelle
Park, New Jersey
|
1
|
100,589
|
22,219
|
|
Total
Property Acquisitions:
|
11
|
1,461,104
|
$302,969
|
||
|
(a) This
transaction was funded primarily through the assumption of $63.2
million
of mortgage debt and the issuance of 1.9 million common operating
partnership units valued at $87.2 million.
|
|||||
|
(b) The
property was acquired as part of the Gale/Green
Transactions.
|
|||||
|
(c) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $20.4 million of mortgage
debt.
|
|||||
|
(d) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $19.5 million of mortgage
debt.
|
|||||
|
(e) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility.
|
|||||
|
(f) Transaction
was funded primarily through borrowing on the Company’s revolving credit
facility and the assumption of $13.1 million of mortgage
debt.
|
|||||
Property
Sales
The
Company sold the following office properties during the year ended December
31,
2006: (dollars
in thousands)
|
Rentable
|
Net
|
Net
|
Realized
|
||||
|
Sale
|
#
of
|
Square
|
Sales
|
Book
|
Gain/
|
||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Feet
|
Proceeds
|
Value
|
(Loss)
|
|
06/28/06
|
Westage
Business Center
|
Fishkill,
New York
|
1
|
118,727
|
$
14,765
|
$
10,872
|
$
3,893
|
|
06/30/06
|
1510
Lancer Drive
|
Moorestown,
New Jersey
|
1
|
88,000
|
4,146
|
3,134
|
1,012
|
|
11/10/06
|
Colorado
portfolio
|
Various
cities, Colorado
|
19
|
1,431,610
|
193,404
|
165,072
|
28,332
|
|
12/21/06
|
California
portfolio
|
San
Francisco, California
|
2
|
450,891
|
124,182
|
97,814
|
26,368
|
|
Total
Sales:
|
23
|
2,089,228
|
$336,497
|
$276,892
|
$59,605
|
||
On
November 7, 2006, the Company sold 10.1 acres of developable land adjacent
to
its Horizon Center properties in Hamilton Township, New Jersey for net sales
proceeds of approximately $1.5 million, realizing a gain of approximately $1.1
million.
| 4. |
INVESTMENTS
IN UNCONSOLIDATED JOINT
VENTURES
|
The
debt
of the Company’s unconsolidated joint ventures aggregating $571.7 million as of
December 31, 2006 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.
MEADOWLANDS
XANADU
On
November 25, 2003, the Company and affiliates of The Mills Corporation (“Mills”)
entered into a joint venture agreement (“Meadowlands Xanadu Venture Agreement”)
to form Meadowlands Mills/Mack-Cali Limited Partnership (“Meadowlands Venture”)
for the purpose of developing a $1.3 billion family entertainment, recreation
and retail complex with an office and hotel component to be built at the
Meadowlands sports complex in East Rutherford, New Jersey (“Meadowlands
Xanadu”). The First Amendment to the Meadowlands Xanadu Venture Agreement was
entered into as of June 30, 2005. Meadowlands Xanadu’s approximately 4.76
million-square-foot complex is expected to feature a family entertainment,
recreation and retail destination comprising five themed zones: sports;
entertainment; children’s education; fashion; and food and home, in addition to
four office buildings, aggregating approximately 1.8 million square feet, and
a
520-room hotel.
81
On
December 3, 2003, the Meadowlands Venture entered into a redevelopment agreement
(the “Redevelopment Agreement”) with the New Jersey Sports and Exposition
Authority (“NJSEA”) for the redevelopment of the area surrounding the
Continental Airlines Arena in East Rutherford, New Jersey and the construction
of the Meadowlands Xanadu project. The Redevelopment Agreement provides for
a
75-year ground lease and requires the
Meadowlands Venture to pay the NJSEA a $160 million development rights fee
and
fixed
rent over the term. Fixed rent will be in the amount of $1,000 per year for
the
first 15 years, increasing to $7.5 million from the 16th
to the
18th
years,
increasing to $8.4 million in the 19th
year,
increasing to $8.7 million in the 20th
year,
increasing to $9.0 million in the 21st
year,
then to $9.2 million in the 23rd
to
26th
years,
with additional increases over the remainder of the term, as set forth in the
ground lease. The ground lease also allows for the potential for participation
rent payments by the Meadowlands Venture, as described in the ground lease
agreement. The First Amendment to the Redevelopment Agreement and the ground
lease, itself, were signed on October 5, 2004. The Meadowlands Venture received
all necessary permits and approvals from the NJSEA and U.S. Army Corps of
Engineers in March 2005 and commenced construction in the same month. As a
condition to fill wetlands pursuant to the permit issued by the U.S. Army Corps
of Engineers and pursuant to the Redevelopment Agreement, as amended, Mills
conveyed certain vacant land, known as the Empire Tract, to a conservancy trust.
On June 30, 2005, the $160 million development rights fee was deposited into
an
escrow account by the Meadowlands Venture in accordance with the terms of the
First Amendment to the Redevelopment Agreement. On such date, the following
amounts were paid from escrow: (i) approximately $37.2 million to defease
certain debt obligations of the NJSEA; and (ii) $26.8 million to the NJSEA,
which, in turn, paid such amount to the Meadowlands Venture for the Empire
Tract. Subsequently, the remainder of the monies were released from the escrow
account to the NJSEA.
The
Company and Mills owned a 20 percent and 80 percent interest, respectively,
in
the Meadowlands Venture. These interests were subject to certain participation
rights by The New York Giants, which were subsequently terminated in April
2004.
The Meadowlands Xanadu Venture Agreement required the Company to make an equity
contribution up to a maximum of $32.5 million, which it fulfilled in April
2005.
Pursuant to the Meadowlands Xanadu Venture Agreement, Mills received
subordinated capital credit in the venture of approximately $118.0 million,
which represented certain costs incurred by Mills in connection with the Empire
Tract prior to the creation of the Meadowlands Venture. However, under the
First
Amendment to the Meadowlands Xanadu Venture Agreement, the Company and Mills
agreed that due to the expected receipt by the Meadowlands Venture of certain
other sums and certain development costs savings in connection with Meadowlands
Xanadu, Mills’ subordinated capital credit in the venture for the Empire Tract
should be reduced to $60.0 million as of the date of the First Amendment to
the
Meadowlands Xanadu Venture Agreement. The Meadowlands Xanadu Venture Agreement
required Mills to contribute the balance of the capital required to complete
the
entertainment phase, subject to certain limitations. The Company was to receive
a 9 percent preferred return on its equity investment, only after Mills received
a 9 percent preferred return on its equity investment. Residual returns, subject
to participation by other parties, were to be in proportion to each partner’s
respective percentage interest.
Mills
was
to develop, lease and operate the entertainment phase of the Meadowlands Xanadu
project. The Meadowlands Venture has formed and owns, directly and indirectly,
all of the partnership interests in and to the component ventures which were
formed for the future development of the office and hotel phases, which the
Company may develop, lease and operate. Upon the Company’s exercise of its
rights under the Meadowlands Xanadu Venture Agreement to develop the office
and
hotel phases, the Meadowlands Venture was to convey ownership of the component
ventures to the Company and Mills or its affiliate, and the Company or its
affiliate was to own an 80 percent interest and Mills or its affiliate was
to
own a 20 percent interest in such component ventures. However, under the First
Amendment to the Meadowlands Xanadu Venture Agreement, if the Meadowlands
Venture developed a hotel that had video lottery terminals (or “slots”), or any
other legalized form of gaming on or in its premises, then the Company or its
affiliate would own a 50 percent interest in such component venture and Mills
or
its affiliate would own a 50 percent interest. The Meadowlands Xanadu Venture
Agreement required that the Company exercise its rights with respect to the
first office and hotel phase no later than four years after the grand opening
of
the entertainment phase, and required that the Company exercise all of its
rights with respect to the office and hotel phases no later than 10 years from
such date, but did not require that any or all components be developed. However,
under the Meadowlands Xanadu Venture Agreement, Mills had the right to
accelerate such exercise schedule, subject to certain conditions. Should the
Company fail to meet the time schedule described above for the exercise of
its
rights with respect to the office and hotel phases, the Company would forfeit
its rights to control future development. If this occurs, Mills will have the
right to develop the additional phases, subject to the Company’s right to
participate, or to cause the Meadowlands Venture to sell such components to
a
third party, subject to a sales price limitation of 95 percent of the value
that
would have been required to form such component ventures.
Commencing
three years after the grand opening of the entertainment phase of the
Meadowlands Xanadu project, either Mills or the Company could sell its
partnership interest to a third party subject to the following provisions:
82
| · |
Mills
had certain “drag-along” rights and the Company had certain “tag-along”
rights in connection with such sale of interest to a third party;
and
|
| · |
Mills
had a right of first refusal with respect of a sale by the Company
of its
partnership interests.
|
In
addition, commencing on the sixth anniversary of the opening, the Company could
cause Mills to purchase, and Mills may cause the Company to sell to Mills,
all
of the Company’s partnership interests at a price based on the then fair market
value of the project. Notwithstanding the exercise by Mills or the Company
of
any of the foregoing rights with respect to the sale of the Company’s
partnership interest to Mills or a third party, the Company would retain its
right to component ventures for the future development of the office and hotel
phases.
On
August
21, 2006, The Mills Corporation (“TMC”) announced that it had signed a
non-binding letter of intent with Colony Capital Acquisitions, LLC (“Colony”)
and Kan Am USA Management XXII Limited Partnership (“Kan Am”) under which Colony
would arrange for construction financing for Meadowlands Xanadu and make a
significant equity infusion into the Meadowlands Venture, and TMC would not
have
any financial obligations post closing (“Colony Transaction”). Kan Am has been a
partner with Mills in the Meadowlands Venture.
On
November 22, 2006, the Company entered into and consummated a Redemption
Agreement (the “Redemption Agreement”) with the Meadowlands Venture, Meadowlands
Developer Holding Corp., a limited partner in the Meadowlands Venture, and
the
Meadowlands Limited Partnership (f/k/a Meadowlands/Mills Limited Partnership,
and hereafter “MLP”), a general partner and a limited partner in the Meadowlands
Venture. Immediately prior to entering into the Redemption Agreement, the
investors in MLP undertook a restructuring of MLP whereby Colony became an
indirect owner of MLP.
In
connection with the Colony Transaction and pursuant to the Redemption Agreement,
the Meadowlands Venture redeemed (the “Redemption”) the Company’s entire
interest in the Meadowlands Venture and its right to participate in the
development of the ERC Component in exchange for (i) $22.5 million in cash
and
(ii) a non-economic partner interest in each of the office and hotel components
of Meadowlands Xanadu. In connection with the Redemption, the Operating
Partnership also received a non-interest bearing promissory note for an
additional $2.5 million, which note is payable in full by MLP only at such
time
as the Operating Partnership exercises one of its options to develop the first
of the office and hotel components of Meadowlands Xanadu. The Company’s
remaining investment of approximately $11.9 million is included in deferred
charges and other assets, net, as of December 31, 2006.
Concurrent
with the execution of the Redemption Agreement, the Company also entered into
the Mack-Cali Rights, Obligations and Option Agreement (the “Rights Agreement”)
by and among the Meadowlands Venture, MLP, Meadowlands Mack-Cali GP, L.L.C.,
Mack-Cali, Baseball Meadowlands Limited Partnership, A-B Office Meadowlands
Mack-Cali Limited Partnership, C-D Office Meadowlands Limited Partnership,
Hotel
Meadowlands Mack-Cali Limited Partnership and ERC Meadowlands Mills/Mack-Cali
Limited Partnership. Pursuant to the Rights Agreement, the Operating Partnership
retained certain rights and obligations it held under the Meadowlands Xanadu
Venture Agreement with respect to the development of the office and hotel
components of Meadowlands Xanadu, including an option to develop any of the
office or hotel components of Meadowlands Xanadu (each, a “Take Down Option”).
Upon the exercise of an initial Take Down Option, the Operating Partnership
will
receive economic interests in each of the office or hotel component partnerships
as both a general partner and a limited partner in the applicable office or
hotel component, and following receipt of $2.5 million in full payment of the
note from MLP, the Operating Partnership’s ownership interest in each of the
office or hotel component partnerships will be reduced from 80 percent (as
provided in the Meadowlands Xanadu Venture Agreement) to 75
percent.
In
October 2006, Mills, the then manager of the Meadowlands Venture, provided
the
Company information regarding the restatements of financial information it
had
previously presented to the Company for the period from November 25, 2003 (the
inception of the Meadowlands Venture) through December 31, 2005. Included in
the
Company’s equity in loss of unconsolidated joint ventures from the Meadowlands
Venture of $1.8 million for the three and nine months ended September 30, 2006
is $1.4 million related to the Company’s allocated share of the loss arising
from the restatement for the period referenced above.
83
On
February 12, 2003, the NJSEA selected The Mills Corporation and the Company
to
redevelop the Continental Airlines Arena site (“Arena Site”) for mixed uses,
including retail. In March 2003, Hartz Mountain Industries, Inc., (“Hartz”),
filed a lawsuit in the Superior Court of New Jersey, Law Division, for Bergen
County, seeking to enjoin NJSEA from entering into a contract with the
Meadowlands Venture for the redevelopment of the Continental Airlines Arena
site. In May 2003, the court denied Hartz’s request for an injunction and
dismissed its suit for failure to exhaust administrative remedies. In June
2003,
the NJSEA held hearings on Hartz’s protest, and on a parallel protest filed by
another rejected developer, Westfield, Inc. (“Westfield”). On September 10,
2003, the NJSEA ruled against Hartz’s and Westfield’s protests. Hartz and
Westfield, as well as Elliot Braha and three other taxpayers (collectively
“Braha”), thereafter filed appeals from the NJSEA’s final decision. By decision
dated May 14, 2004, the Appellate Division of the Superior Court of New Jersey
rejected the appellants’ contention that the NJSEA lacks statutory authority to
allow retail development of its property. The Appellate Division also remanded
Hart’s claim under the Open Public Records Acts, seeking disclosure of
additional documents from NJSEA, to the Law Division for further proceedings.
The Supreme Court of New Jersey declined to review the Appellate Division’s
decision. On August 19, 2004, the Law Division issued a decision resolving
Hartz’s Open Public Records Act claim and ordered NJSEA to disclose some, but
not all, of the documents Hartz was seeking. The Appellate Division, in a
decision rendered on November 24, 2004, upheld the findings of the Law Division
in the remand proceeding. The Supreme Court of New Jersey declined to review
the
Appellate Division’s decision. At Hartz’s request, the NJSEA thereafter held
further hearings on December 15 and 16, 2004, to review certain additional
facts
in support of Hartz’s and Westfield’s bid protest. Braha, as a taxpayer, did not
have standing to participate in the supplemental protest hearing. On March
4,
2005, the Hearing Officer rendered his Supplemental Report and Recommendation
to
the NJSEA, finding no merit in the protests presented by Hartz and Westfield.
The NJSEA accepted the Hearing Officer’s Supplemental Report and Recommendation
on March 30, 2005 and Hartz and Braha have appealed that decision to the
Appellate Division.
In
January 2004, Hartz and Westfield also appealed to the Appellate Division of
the
Superior Court of New Jersey from the NJSEA’s December 2003 approval and
execution of the Redevelopment Agreement with the Meadowlands
Venture.
In
November 2004, Hartz and Westfield filed additional appeals in the Appellate
Division challenging NJSEA’s resolution authorizing the execution of the First
Amendment to the Redevelopment Agreement with Meadowlands Venture and the ground
lease with the Meadowlands Venture.
All
of
the above appeals were consolidated by the Appellate Division. On August 17,
2006, the Appellate Division issued an opinion affirming NJSEA’s selection of
the Meadowlands Venture and rejecting the appellants’ arguments in all respects.
On August 28, 2006, Hartz made a motion before the Appellate Division for
reconsideration of this decision and for supplementation of the record. That
motion was denied, and neither Hartz nor Braha has sought review in the New
Jersey Supreme Court. These consolidated appeals are now resolved.
On
September 30, 2004, the Borough of Carlstadt filed an action in the Superior
Court of New Jersey Law Division, challenging Meadowlands Xanadu, which asserted
claims that are substantially the same as claims asserted by Hartz and Braha
in
the above appeals. By Order dated November 19, 2004, the Law Division
transferred that matter to the Superior Court of New Jersey, Appellate Division.
This matter was voluntarily dismissed by Carlstadt in accordance with a March
22, 2006, Settlement Agreement and Release between Carlstadt and the Meadowlands
Venture.
Several
appeals filed by Hartz, the Sierra Club and others, including certain
environmental groups, that challenge certain approvals received by the
Meadowlands Venture from the NJSEA, the New Jersey Meadowlands Commission
(“NJMC”) and the New Jersey Department of Environmental Protection (“NJDEP”)
remain pending before the Appellate Division. Some of these appeals challenge
NJDEP’s issuance of a stream encroachment permit, waterfront development permit,
and coastal zone consistency determination for Meadowlands Xanadu. Other of
these appeals are from NJDEP’s and NJMC’s issuance of reports in connection with
a consultation process the NJSEA was statutorily required to undertake in
connection with any NJSEA-development project.
A
Hartz
affiliate and a trade association have filed an appeal from an advisory opinion
favorable to the Meadowlands Venture issued by the Director of the Division
of
Alcoholic Beverage Control concerning the availability of special concessionaire
permits. That appeal is also pending in the Appellate Division of the Superior
Court of New Jersey.
Three
separate lawsuits have been filed in the United States District Court for the
District of New Jersey, challenging a permit issued by the U.S. Army Corps
of
Engineers (“USACE”) in connection with the project. The first suit was filed on
March 30, 2005, by the Sierra Club, the New Jersey Public Interest Research
Group, Citizen Lobby, Inc. and the New Jersey Environmental Federation.
Additional suits were filed on May 16 and May 31, 2005, respectively, by Hartz
(together with one of its officers as an individually-named plaintiff) and
the
Borough of Carlstadt. The Sierra Club also filed a motion for a
84
preliminary
injunction to stop certain construction activities on the project, which the
Court denied on July 6, 2005. On October 26, 2005, the court granted the motions
of the Meadowlands Venture and the USACE to dismiss the Hartz complaint for
lack
of standing. The deadline for appealing that decision has passed, so the Hartz
action is ended. On October 31, 2005, the USACE filed a motion to dismiss the
complaint filed by the Borough of Carlstadt for lack of standing. On February
7,
2006, the Court granted the motion and dismissed the Borough of Carlstadt’s
complaint in its entirety. On March 9, 2006, Carlstadt filed a notice of appeal
of this decision to the United States Court of Appeals for the Third Circuit.
This appeal has been dismissed pursuant to the Settlement Agreement and Release
executed by Carlstadt and the Meadowlands Venture.
On
April
5, 2005, the New York Football Giants (“Giants”) filed an emergent application
with the Supreme Court of New Jersey, Chancery Division, seeking an injunction
stopping all work on the Meadowlands Xanadu project as being in violation of
its
existing lease with the NJSEA. After hearing oral argument on the application
on
August 5, 2005, the court denied the Giants’ motion for preliminary injunctive
relief. On June 22, 2006, the court entered a Stipulation and Consent Order
that
dismissed without prejudice the parties’ respective claims.
The
New
Jersey Builders’ Association (“NJBA”) has commenced an action, which is pending
in the Appellate Division, alleging that the NJSEA has failed to meet a
purported obligation to provide affordable housing at the Meadowlands Complex
and seeking, among other relief, an order enjoining the construction of
Meadowlands Xanadu. NJBA filed an application for preliminary injunctive relief
seeking to enjoin further construction of Meadowlands Xanadu, which the
Appellate Division denied on July 28, 2005. The Meadowlands Venture is not
a
party to that action.
On
January 25, 2006, the Bergen Cliff Hawks Baseball Club, LLC (the “Cliff Hawks”),
filed a complaint against the Company and Mills, alleging that the Company
and
Mills breached an agreement to provide the Cliff Hawks with a minor league
baseball park as part of the Xanadu Project. This matter is
pending.
The
Company believes that the Meadowlands Venture’s proposal and the planned project
comply with applicable laws, and the Meadowlands Venture intends to continue
its
vigorous defense of its rights under the Redevelopment Agreement and Ground
Lease. Although there can be no assurance, the Company does not believe that
the
pending lawsuits will have any material affect on its ability to develop the
Meadowlands Xanadu project.
G&G
MARTCO (Convention Plaza)
The
Company held a 50 percent interest in G&G Martco, which owns Convention
Plaza, a 305,618 square foot office building, located in San Francisco,
California. On November 6, 2006, the Company sold substantially all of its
interest in the venture to an affiliate of its joint venture partner for
approximately $16.3 million, realizing a gain on the sale of approximately
$10.8
million. The Company performed management and leasing services for the property
owned by the joint venture through the date of sale and recognized $132,000,
$161,000 and $143,000 in fees for such services in the years ended December
31,
2006, 2005 and 2004, respectively.
PLAZA
VIII AND IX ASSOCIATES, L.L.C./AMERICAN FINANCIAL EXCHANGE
L.L.C.
On
May
20, 1998, the Company entered into a joint venture with Columbia Development
Company, L.L.C. (“Columbia”) to form American Financial Exchange L.L.C. (“AFE”).
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. 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.
AFE
distributed its interests in Plaza VIII and IX Associates, L.L.C., which owned
the undeveloped land currently used as a parking facility, to its then partners,
the Company and Columbia. The Company and Columbia subsequently entered into
a
new joint venture to own and manage the undeveloped land and related parking
operations through Plaza VIII and IX Associates, L.L.C. The Company and Columbia
each hold a 50 percent interest in the new venture.
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 has a mortgage loan with a $14.9 million balance
at
December 31, 2006 secured by
85
its
office/flex property. The mortgage bears interest at a rate of LIBOR plus 175
basis points and was scheduled to mature in January 2007, with one two-year
extension option, subject to certain conditions. In November 2006, the venture
exercised its option to extend the term of the loan until January 2009.
The
Company performs management, leasing and other services for the property owned
by the joint venture and recognized $100,000, $93,000 and $165,000 in fees
for
such services in the years ended December 31, 2006, 2005 and 2004,
respectively.
ASHFORD
LOOP ASSOCIATES L.P. (1001 South Dairy Ashford/2100 West Loop
South)
On
September 18, 1998, the Company entered into a joint venture with Prudential
to
form Ashford Loop Associates L.P. The venture was formed to own, manage and
operate 1001 South Dairy Ashford, a 130,000 square foot office building acquired
on September 18, 1998, and 2100 West Loop South, a 168,000 square foot office
building acquired on November 25, 1998, both located in Houston, Texas. The
Company held a 20 percent interest in the joint venture. On February 25, 2005,
the Company sold its interest in the venture to Prudential for $2.7
million.
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.
On
October 12, 2006, the venture obtained a $70.0 million mortgage loan
collateralized by the hotel property using the proceeds principally to retire
$38.9 million of floating-rate debt and to make distributions to partners.
The
new 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, 2006 of $7.3 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 $7.3 million letter of credit in support of this loan, $3.6 million of which
is indemnified by Hyatt.
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, which has been fully pre-leased to Hovnanian Enterprises, Inc. for
a
10-year term. 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. PRC and the Company each funded development costs of the venture of
$1.1 million in excess of their initial capital contributed.
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, 2006 of $8.7 million), carries an
interest rate of LIBOR plus 130 basis points and matures in April 2008. The
loan
currently has three one-year extension options subject to certain conditions,
each of which requires payment of a fee.
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, 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 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 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 own
25
office properties (the “OP LP Properties”) which aggregate 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.
86
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:
| (i) |
99
percent of Mack-Green’s share of the profits and losses from 10 specific
OP LP Properties allocable to the Company and one percent allocable
to SL
Green;
|
| (ii) |
one
percent of Mack-Green’s share of the profits and losses from eight
specific OP LP Properties and its minor interest in four office properties
allocable to the Company and 99 percent allocable to SL Green;
and
|
| (iii) |
50
percent of all other profits and losses allocable to the Company
and 50
percent allocable to SL Green.
|
Substantially
all of the OP LP Properties are encumbered by mortgage loans with an aggregate
outstanding principal balance of $358.1 million. $189.8 million of the mortgage
loans bear interest at a weighted average fixed interest rate of 6.32 percent
per annum and mature at various times through May 2016. $168.3 million of the
mortgage loans bear interest at a floating rate ranging from LIBOR plus 185
basis points to LIBOR plus 275 basis points per annum and mature at various
times through August 2008. Included in the floating rate mortgage loans are
$90.3 million provided by an affiliate of SL Green.
On
August
9, 2006, $69.7 million of mortgage loans were refinanced. The new loan has
a
maximum principal amount of $90.0 million with $78.0 million drawn at December
31, 2006. The loan provides the ability to draw funds for qualified leasing
and
capital improvement costs. The loan bears interest at a rate of LIBOR plus
185
basis points and matures on August 8, 2008 with a two-year extension
option.
The
Company performs management, leasing, and construction services for the
properties owned by the joint venture and recognized $2.3 million in income
(net
of $2.2 million in direct costs) for such services in the year ended December
31, 2006.
GE/GALE
FUNDING LLC (PFV)
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 in an amount not to exceed $52.8 million, which has a
balance at December 31, 2006, of $47.8 million. The loan provides the venture
the ability to draw funds for qualified leasing and capital improvement costs.
The loan bears interest at a rate of LIBOR plus 275 basis points and matures
on
January 9, 2009, with an extension option through January 9, 2011.
The
Company performs management, leasing, and construction services for PFV and
recognized $956,000 in income (net of $7.0 million in direct costs) for such
services in the year ended December 31, 2006.
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.
87
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 until the investment yields an 11 percent IRR,
then sharing will shift to 50/50.
The
Route
93 Ventures have mortgage loans with an amount not to exceed $58.6 million,
with
a $39.4 million balance at December 31, 2006 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, 2008, with three
one-year extension options.
The
Company performs management and construction services for the properties owned
by the Route 93 Ventures and recognized $17,800 for such services in the year
ended December 31, 2006.
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 is developing a 175,000 square foot office property
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 Mr. Yeager 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 JP Morgan (“JPM”). The
operating agreement of 100 Kimball provides, among other things, for the
distributions to be made in the following order:
| (i) |
first,
to JPM, such that JPM is provided with an annual 12 percent compound
preferred return on Preferred Equity Capital Contributions (as such
term
is defined in the operating agreement of 100 Kimball and largely
comprised
of development and construction
costs);
|
| (ii) |
second,
to JPM, as return of Preferred Equity Capital Contributions until
complete
repayment of such Preferred Equity Capital Contributions;
|
| (iii) |
third,
to each of JPM and Gale Kimball in proportion to their respective
membership interests until each member is provided, as a result of
such
distributions, with an annual twelve percent compound return on the
Member’s Capital Contributions (as defined in the operating agreement of
100 Kimball, and excluding Preferred Equity Capital Contributions,
if
any); and
|
| (iv) |
fourth,
50 percent to each of JPM and Gale
Kimball.
|
100
Kimball has a construction loan in an amount not to exceed $29 million, with
a
balance at December 31, 2006 of $15.3 million. The loan bears interest at a
rate
of LIBOR plus 195 basis points and matures on December 8, 2008 with a one-year
extension option.
The
Company performs construction and development services for the property owned
by
100 Kimball for which it recognized $271,000 in income (net of $6.6 million
in
direct costs) in the year ended December 31, 2006.
88
55 CORPORATE PARTNERS, LLC
On
June
9, 2006,
the
Company entered into a joint venture with a Gale Affiliate to form 55 Corporate
Partners, LLC (“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 indirectly holding a condominium interest in a
vacant land parcel located in Bridgewater, New Jersey, which can accommodate
development of an approximately 200,000 square foot office building.
Sanofi-Aventis, which occupies neighboring buildings, has an option to cause
the
venture to construct the building, which it would lease on a long-term basis.
Sanofi-Aventis is required to pay a penalty of $7 million, subject to certain
conditions, in the event it fails to exercise the option by November 2007.
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”).
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 July 1, 2012, in the initial amount of
$18.1 million bearing interest at 6.9 percent per annum. As of December 31,
2006
the outstanding balance on the mortgage note was $10.3 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-FILENES
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. In January 2007, the Company funded an additional $9.6 million in the
venture. The Vornado JV LLC acquired the Filenes Property on January 29, 2007,
for approximately $100 million.
As
a
result of the foregoing transactions, as of January 29, 2007, (i) the Filenes
Property 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, 70 percent by JPM and managed by Gale/426, which has no ownership
interest in JPM JV LLC, and (iv) MC/Gale JV 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 the Vornado JV LLC and the Filenes
Property.
89
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.
The
joint
venture’s current plans for the development of the Filenes Property include over
1.2 million square feet consisting of office, retail, condominium apartments,
hotel and a garage. The project is subject to governmental
approvals.
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. The Company and a joint venture partner agreed to loan up to $3 million
in total to the venture from time to time until December 28, 2009, which shall
be funded by each of the Company and the joint venture partner on a pro-rata
basis in an amount not to exceed $1.5 million, respectively. The joint venture
operating agreement provides for, among other things, profits and losses
generally to be allocated in proportion to each member’s interest. In connection
with the Contribution, the Company recognized a loss of approximately $1.5
million, which is included in gain (loss) on sale of land and other assets
for
the year ended December 31, 2006.
90
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, 2006
and 2005: (dollars
in thousands)
|
December
31, 2006
|
|||||||||||||||
|
Plaza
|
Red
Bank
|
Mack-
|
Princeton
|
NKFGMS
|
|||||||||||
|
Meadowlands
|
G&G
|
VIII
& IX
|
Ramland
|
Harborside
|
Corporate
|
Gale-
|
Forrestal
|
Route
93
|
Gale
|
55
|
12
|
Boston-
|
Owners
|
Combined
|
|
|
Xanadu
|
Martco
|
Associates
|
Realty
|
South
Pier
|
Plaza
|
Green
|
Village
|
Portfolio
|
Kimball
|
Corporate
|
Vreeland
|
Filenes
|
LLC
|
Total
|
|
|
Assets:
|
|||||||||||||||
|
Rental
property, net
|
--
|
--
|
$
11,404
|
$
12,029
|
$
69,302
|
$
12,462
|
$
480,905
|
$
39,549
|
$
54,620
|
$
26,601
|
$
8,500
|
$
8,221
|
--
|
$
239
|
$
723,832
|
|
Other
assets
|
--
|
--
|
1,408
|
950
|
11,485
|
3,309
|
75,392
|
25,015
|
7,189
|
654
|
--
|
909
|
$
10,500
|
2,638
|
139,449
|
|
Total
assets
|
--
|
--
|
$
12,812
|
$
12,979
|
$
80,787
|
$
15,771
|
$
556,297
|
$
64,564
|
$
61,809
|
$
27,255
|
$
8,500
|
$
9,130
|
$
10,500
|
$
2,877
|
$
863,281
|
|
Liabilities
and
|
|||||||||||||||
|
partners’/members’
|
|||||||||||||||
|
capital
(deficit):
|
|||||||||||||||
|
Mortgages,
loans
|
|||||||||||||||
|
payable
and other
|
|||||||||||||||
|
obligations
|
--
|
--
|
--
|
$
14,936
|
$
77,217
|
$
8,673
|
$
358,063
|
$
47,761
|
$
39,435
|
$
15,350
|
--
|
$
10,253
|
--
|
--
|
$
571,688
|
|
Other
liabilities
|
--
|
--
|
$
532
|
254
|
1,045
|
8
|
39,525
|
6,553
|
836
|
--
|
--
|
--
|
--
|
$
1,329
|
50,082
|
|
Partners’/members’
|
|||||||||||||||
|
capital
(deficit)
|
--
|
--
|
12,280
|
(2,211)
|
2,525
|
7,090
|
158,709
|
10,250
|
21,538
|
11,905
|
$
8,500
|
(1,123)
|
$
10,500
|
1,548
|
241,511
|
|
Total
liabilities and
|
|||||||||||||||
|
partners’/members’
|
|||||||||||||||
|
capital
(deficit)
|
--
|
--
|
$
12,812
|
$
12,979
|
$
80,787
|
$
15,771
|
$
556,297
|
$
64,564
|
$
61,809
|
$
27,255
|
$
8,500
|
$
9,130
|
$
10,500
|
$
2,877
|
$
863,281
|
|
Company’s
|
|||||||||||||||
|
investment
|
|||||||||||||||
|
in
unconsolidated
|
|||||||||||||||
|
joint
ventures, net
|
--
|
--
|
$
6,060
|
--
|
--
|
$
3,647
|
$
119,061
|
$
2,560
|
$
6,669
|
$
1,024
|
$
8,500
|
$
7,130
|
$
5,250
|
$
400
|
$
160,301
|
|
December
31, 2005
|
|||||||||||||||
|
Plaza
|
Red
Bank
|
Mack-
|
Princeton
|
NKFGMS
|
|||||||||||
|
Meadowlands
|
G&G
|
VIII
& IX
|
Ramland
|
Harborside
|
Corporate
|
Gale-
|
Forrestal
|
Route
93
|
Gale
|
55
|
12
|
Boston-
|
Owners
|
Combined
|
|
|
Xanadu
|
Martco
|
Associates
|
Realty
|
South
Pier
|
Plaza
|
Green
|
Village
|
Portfolio
|
Kimball
|
Corporate
|
Vreeland
|
Filenes
|
LLC
|
Total
|
|
|
Assets:
|
|||||||||||||||
|
Rental
property, net
|
$390,488
|
$
10,628
|
$12,024
|
$
12,511
|
$
74,466
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$500,117
|
|
Other
assets
|
171,029
|
6,427
|
1,661
|
1,188
|
11,393
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
191,698
|
|
Total
assets
|
$561,517
|
$
17,055
|
$13,685
|
$
13,699
|
$
85,859
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
691,815
|
|
Liabilities
and
|
|||||||||||||||
|
partners’/members’
|
|||||||||||||||
|
capital
(deficit):
|
|||||||||||||||
|
Mortgages,
loans
|
|||||||||||||||
|
payable
and other
|
|||||||||||||||
|
obligations
|
--
|
$
46,588
|
--
|
$
14,936
|
$
56,970
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$118,494
|
|
Other
liabilities
|
$
60,447
|
876
|
$
1,358
|
220
|
4,341
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
67,242
|
|
Partners’/members’
|
|||||||||||||||
|
capital
(deficit)
|
501,070
|
(30,409)
|
12,327
|
(1,457)
|
24,548
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
506,079
|
|
Total
liabilities and
|
|||||||||||||||
|
partners’/members’
|
|||||||||||||||
|
capital
(deficit)
|
$561,517
|
$
17,055
|
$13,685
|
$
13,699
|
$
85,859
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$691,815
|
|
Company’s
|
|||||||||||||||
|
investment
|
|||||||||||||||
|
in
unconsolidated
|
|||||||||||||||
|
joint
ventures, net
|
$
34,640
|
$
6,438
|
$
6,084
|
$
--
|
$
14,976
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$
62,138
|
91
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, 2006, 2005 and 2004: (dollars
in thousands)
|
Year
Ended December 31, 2006
|
||||||||||||||||
|
Plaza
|
Red
Bank
|
Mack-
|
Princeton
|
|||||||||||||
|
Meadowlands
|
G&G
|
VIII
& IX
|
Ramland
|
Ashford
|
Harborside
|
Corporate
|
Green-
|
Forrestal
|
Route
93
|
Gale
|
55
|
12
|
Combined
|
|||
|
Xanadu
|
HPMC
|
Martco
|
Associates
|
Realty
|
Loop
|
South
Pier
|
Plaza
|
Gale
|
Village
|
Portfolio
|
Kimball
|
Corporate
|
Vreeland
|
Total
|
||
|
Total
revenues
|
--
|
--
|
$
5,990
|
$
755
|
$
2,158
|
--
|
$
39,268
|
$
15
|
$
44,121
|
$
8,904
|
$
3,609
|
$
4
|
--
|
$
2,102
|
$106,926
|
|
|
Operating
and
|
||||||||||||||||
|
other
expenses
|
--
|
--
|
(2,702)
|
(186)
|
(1,497)
|
--
|
(23,533)
|
--
|
(19,639)
|
(5,832)
|
(1,502)
|
(1)
|
--
|
(76)
|
(54,968)
|
|
|
Depreciation
and
|
||||||||||||||||
|
amortization
|
--
|
--
|
(1,216)
|
(616)
|
(836)
|
--
|
(5,853)
|
--
|
(21,129)
|
(2,883)
|
(811)
|
--
|
--
|
(352)
|
(33,696)
|
|
|
Interest
expense
|
--
|
--
|
(2,499)
|
--
|
(1,029)
|
--
|
(3,962)
|
--
|
(17,117)
|
(3,059)
|
(1,890)
|
--
|
--
|
(755)
|
(30,311)
|
|
|
Net
income
|
--
|
--
|
$
(427)
|
$
(47)
|
$
(1,204)
|
--
|
$
5,920
|
$
15
|
$(13,764)
|
$
(2,870)
|
$
(594)
|
$
3
|
--
|
$
919
|
$
(12,049)
|
|
|
Company’s
equity
|
||||||||||||||||
|
in
earnings (loss)
|
||||||||||||||||
|
of
unconsolidated
|
||||||||||||||||
|
joint
ventures
|
$(1,876)
|
--
|
$
(930)
|
$
(24)
|
$
(225)
|
$
2,820
|
--
|
$
(4,945)
|
$
(436)
|
$
(148)
|
--
|
$
208
|
$
(5,556)
|
|||
|
Year
Ended December 31, 2005
|
|||||||||||||||||
|
Plaza
|
Red
Bank
|
Mack-
|
Princeton
|
||||||||||||||
|
Meadowlands
|
G&G
|
VIII
& IX
|
Ramland
|
Ashford
|
Harborside
|
Corporate
|
Green-
|
Forrestal
|
Route
93
|
Gale
|
55
|
12
|
Combined
|
||||
|
Xanadu
|
HPMC
|
Martco
|
Associates
|
Realty
|
Loop
|
South
Pier
|
Plaza
|
Gale
|
Village
|
Portfolio
|
Kimball
|
Corporate
|
Vreeland
|
Total
|
|||
|
Total
revenues
|
--
|
--
|
$
6,767
|
$
396
|
$
2,028
|
--
|
$
35,198
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$
44,389
|
||
|
Operating
and
|
|||||||||||||||||
|
other
expenses
|
--
|
--
|
(3,662)
|
(169)
|
(1,407)
|
--
|
(22,251)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(27,489)
|
||
|
Depreciation
and
|
|||||||||||||||||
|
amortization
|
--
|
--
|
(1,205)
|
(616)
|
(638)
|
--
|
(5,778)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(8,237)
|
||
|
Interest
expense
|
--
|
--
|
(2,270)
|
--
|
(759)
|
--
|
(4,176)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(7,205)
|
||
|
Net
income
|
--
|
$
(370)
|
$
(389)
|
$
(776)
|
--
|
$
2,993
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$
1,458
|
|||
|
Company’s
equity
|
|||||||||||||||||
|
in
earnings (loss)
|
|||||||||||||||||
|
of
unconsolidated
|
|||||||||||||||||
|
joint
ventures
|
--
|
--
|
$(1,219)
|
$
(196)
|
--
|
$
(30)
|
$
1,693
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$
248
|
||
|
Year
Ended December 31, 2004
|
|||||||||||||||||
|
Plaza
|
Red
Bank
|
Mack-
|
Princeton
|
||||||||||||||
|
Meadowlands
|
G&G
|
VIII
& IX
|
Ramland
|
Ashford
|
Harborside
|
Corporate
|
Green-
|
Forrestal
|
Route
93
|
Gale
|
55
|
12
|
Combined
|
||||
|
Xanadu
|
HPMC
|
Martco
|
Associates
|
Realty
|
Loop
|
South
Pier
|
Plaza
|
Gale
|
Village
|
Portfolio
|
Kimball
|
Corporate
|
Vreeland
|
Total
|
|||
|
Total
revenues
|
--
|
$
10,755
|
$
7,113
|
$
91
|
$
1,958
|
$
2,937
|
$
30,345
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$
53,199
|
||
|
Operating
and
|
|||||||||||||||||
|
other
expenses
|
--
|
(259)
|
(3,676)
|
(166)
|
(1,516)
|
(3,403)
|
(19,613)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(28,633)
|
||
|
Depreciation
and
|
|||||||||||||||||
|
amortization
|
--
|
--
|
(1,002)
|
(616)
|
(630)
|
(25,550)
|
(5,767)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(33,565)
|
||
|
Interest
expense
|
--
|
--
|
(1,342)
|
--
|
(479)
|
--
|
(3,146)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(4,967)
|
||
|
Net
income
|
--
|
$
10,496
|
$
1,093
|
$
(691)
|
$
(667)
|
$(26,016)
|
$
1,819
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$(13,966)
|
||
|
Company’s
equity
|
|||||||||||||||||
|
in
earnings (loss)
|
|||||||||||||||||
|
of
unconsolidated
|
|||||||||||||||||
|
joint
ventures
|
--
|
$
661
|
$
730
|
$
(346)
|
$
(600)
|
$
(5,203)
|
$
872
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
$
(3,886)
|
||
92
| 5. |
DEFERRED
CHARGES AND OTHER
ASSETS
|
|
December
31,
|
||
|
(dollars
in thousands)
|
2006
|
2005
|
|
Deferred
leasing costs
|
$184,175
|
$182,975
|
|
Deferred
financing costs
|
21,252
|
21,764
|
|
205,427
|
204,739
|
|
|
Accumulated
amortization
|
(76,407)
|
(73,410)
|
|
Deferred
charges, net
|
129,020
|
131,329
|
|
Notes
receivable
|
11,769
|
11,919
|
|
In-place
lease values and related intangible assets, net
|
58,495
|
37,028
|
|
Prepaid
expenses and other assets, net
|
41,353
|
17,358
|
|
Total
deferred charges and other assets, net
|
$240,637
|
$197,634
|
| 6. |
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,
|
||
|
2006
|
2005
|
|
|
Security
deposits
|
$
8,496
|
$8,398
|
|
Escrow
and other reserve funds
|
6,952
|
823
|
|
Total
restricted cash
|
$15,448
|
$9,221
|
| 7. |
DISCONTINUED
OPERATIONS
|
On
March
23, 2006, the Company entered into an agreement to sell its 118,727 square-foot
office building located at 300 Westage Business Center Drive in Fishkill, New
York. On June 28, 2006, the Company completed the sale of the building, received
net sales proceeds of approximately $14.8 million, and recognized a gain of
approximately $3.9 million on the sale.
On
June
30, 2006, the Company sold 1510 Lancer Drive, an 88,000 square-foot office/flex
building located in Moorestown, New Jersey, for $4.2 million, and recognized
a
gain of approximately $1.0 million on the sale.
On
August
9, 2006, the Company entered into an agreement to sell its entire Colorado
portfolio, which consists of 19 office buildings totaling approximately 1.4
million square feet, plus 7.1 acres of vacant land and a 1.6 acre site being
developed for additional parking at one of the office buildings. On November
10,
2006, the Company completed the sale of the portfolio, received net sales
proceeds of approximately $193.4 million, and recognized a gain of approximately
$28.3 million on the sale.
On
September 25, 2006, the Company entered into an agreement to sell its California
portfolio, which consists of two office buildings totaling approximately 450,891
square feet. On December 21, 2006, the Company completed the sale of the
portfolio, received net sales proceeds of $124.2 million, and recognized a
gain
of approximately $26.4 million on the sale.
As
the
Company sold 111 East Shore Road and 600 Community Drive in North Hempstead,
New
York; 210 South 16th
Street
in Omaha, Nebraska; 3600 South Yosemite in Denver, Colorado; 201 Willowbrook
Boulevard in Wayne, New Jersey; 1122 Alma Road in Richardson, Texas; and 3
Skyline Drive in Hawthorne, New York during the year ended December 31, 2005;
and 3030 L.B.J. Freeway in Dallas, Texas; 84 N.E. Loop 410 in San Antonio,
Texas; and 340 Mt. Kemble Avenue in Morris Township, New Jersey during the
year
ended December 31, 2004; the Company has presented these assets as discontinued
operations in the statement of operations for all periods
presented.
93
There
are
no properties identified as held for sale as of December 31, 2006.
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, 2006, 2005 and 2004: (dollars
in thousands)
|
Year
Ended December 31,
|
|||
|
2006
|
2005
|
2004
|
|
|
Total
revenues
|
$
35,348
|
$
48,527
|
$
65,916
|
|
Operating
and other expenses
|
(15,166)
|
(18,818)
|
(24,871)
|
|
Depreciation
and amortization
|
(7,090)
|
(12,506)
|
(15,477)
|
|
Interest
expense (net of interest income)
|
102
|
42
|
(407)
|
|
Minority
interest
|
(2,603)
|
(2,777)
|
(2,869)
|
|
Income
from discontinued operations (net of minority interest)
|
$
10,591
|
$
14,468
|
$
22,292
|
|
Year
Ended December 31,
|
|||
|
2006
|
2005
|
2004
|
|
|
Realized
gains (losses) on disposition of rental property, net
|
$
59,605
|
$
7,136
|
$
11,130
|
|
Unrealized
losses on disposition of rental property
|
--
|
(1,613)
|
(11,856)
|
|
Minority
interest
|
(11,890)
|
(1,097)
|
107
|
|
Realized
gains (losses) and unrealized losses on disposition
|
|||
|
of
rental property (net of minority interest), net
|
$
47,715
|
$
4,426
|
$
(619)
|
| 8. |
SENIOR
UNSECURED NOTES
|
A
summary
of the Company’s senior unsecured notes as of December 31, 2006 and 2005 is as
follows: (dollars
in thousands)
|
December
31,
|
Effective
|
|||||||||
|
2006
|
2005
|
Rate
(1)
|
||||||||
|
7.250%
Senior Unsecured Notes, due March 15, 2009
|
$
|
299,481
|
$
|
299,246
|
7.49
|
%
|
||||
|
5.050%
Senior Unsecured Notes, due April 15, 2010
|
149,819
|
149,765
|
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
|
299,295
|
299,122
|
7.93
|
%
|
||||||
|
5.250%
Senior Unsecured Notes, due January 15, 2012
|
99,015
|
--
|
5.46
|
%
|
||||||
|
6.150%
Senior Unsecured Notes, due December 15, 2012
|
91,981
|
91,488
|
6.89
|
%
|
||||||
|
5.820%
Senior Unsecured Notes, due March 15, 2013
|
25,420
|
25,309
|
6.45
|
%
|
||||||
|
4.600%
Senior Unsecured Notes, due June 15, 2013
|
99,815
|
99,787
|
4.74
|
%
|
||||||
|
5.125%
Senior Unsecured Notes, due February 15, 2014
|
201,708
|
201,948
|
5.11
|
%
|
||||||
|
5.125%
Senior Unsecured Notes, due January 15, 2015
|
149,256
|
149,164
|
5.30
|
%
|
||||||
|
5.800%
Senior Unsecured Notes, due January 15, 2016
|
200,692
|
99,680
|
5.81
|
%
|
||||||
|
Total
Senior Unsecured Notes
|
$
|
1,631,482
|
$
|
1,430,509
|
6.28
|
%
|
||||
|
(1) Includes
the cost of terminated treasury lock agreements (if any), offering
and
other transaction costs and the discount on the notes, as
applicable.
|
||||||||||
94
On
January 24, 2006, the Company issued $100 million face amount of 5.80 percent
senior unsecured notes due January 15, 2016 with interest payable semi-annually
in arrears, and $100 million face amount of 5.25 percent senior unsecured notes
due January 15, 2012 with interest payable semi-annually in arrears. The total
proceeds from the issuances, including accrued interest on the 5.80 percent
notes, of approximately $200.8 million were used to reduce outstanding
borrowings under the Company’s unsecured facility.
On
November 15, 2005, the Company issued $100 million face amount of 5.80 percent
senior unsecured notes due January 15, 2016 with interest payable semi-annually
in arrears. The proceeds from the issuance (net of selling commissions and
discount) of approximately $99 million were used to reduce outstanding
borrowings under the Company’s unsecured facility.
On
April
15, 2005, the Company issued $150 million face amount of 5.05 percent senior
unsecured notes due April 15, 2010 with interest payable semi-annually in
arrears. The proceeds from the issuance (net of selling commissions and
discount) of approximately $148.8 million were used to reduce outstanding
borrowings under the Company’s unsecured facility.
On
January 25, 2005, the Company issued $150 million face amount of 5.125 percent
senior unsecured notes due January 15, 2015 with interest payable semi-annually
in arrears. The proceeds from the issuance (including premium and net of selling
commissions) of approximately $148.1 million were used primarily to reduce
outstanding borrowings under the Company’s unsecured facility.
| 9. |
UNSECURED
REVOLVING CREDIT
FACILITY
|
The
Company has an unsecured revolving credit facility with a borrowing capacity
of
$600 million, (expandable to $800 million). The interest rate on outstanding
borrowings (not electing the Company’s competitive bid feature) under the
unsecured facility is currently LIBOR plus 65 basis points. 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 65 basis point spread. As of December 31, 2006, the Company’s
outstanding borrowings carried a weighted average interest rate of LIBOR plus
41
basis points. 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, which also requires a 15 basis point facility
fee on the current borrowing capacity payable quarterly in arrears, is scheduled
to mature in November 2009 and has an
extension option of one year, which would require a payment of 25 basis points
of the then borrowing capacity of the facility upon exercise.
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
|
Interest
Rate -
|
|
|
Unsecured
Debt Ratings:
|
Applicable
Basis Points
|
Facility
Fee
|
|
S&P
Moody’s/Fitch (a)
|
Above
LIBOR
|
Basis
Points
|
|
No
ratings or less than BBB-/Baa3/BBB-
|
112.5
|
25.0
|
|
BBB-/Baa3/BBB-
|
80.0
|
20.0
|
|
BBB/Baa2/BBB
(current)
|
65.0
|
15.0
|
|
BBB+/Baa1/BBB+
|
55.0
|
15.0
|
|
A-/A3/A-
or higher
|
50.0
|
15.0
|
|
(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
95
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, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common
stock
or other common equity interests in an aggregate amount in excess of 90 percent
of funds from operations (as defined in the facility agreement) for such period,
subject to certain other adjustments.
The
lending group for the credit facility consists of: JPMorgan Chase Bank, N.A.,
as
administrative agent; Bank of America, N.A., as syndication agent; The Bank
of
Nova Scotia, New York Agency; 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.; UFJ Bank Limited, New York
Branch; The Governor and Company of the Bank of Ireland; Bank Hapoalim B.M.;
Comerica Bank; Chang Hwa Commercial Bank, Ltd., New York Branch; First
Commercial Bank, New York Agency; Chiao Tung Bank Co., Ltd., New York Agency;
Deutsche Bank Trust Company Americas; and Hua Nan Commercial Bank, New York
Agency.
SUMMARY
As
of
December 31, 2006 and 2005, the Company had outstanding borrowings of $145
million and $227 million, respectively, under its unsecured revolving credit
facility.
| 10. |
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, 2006, 20 of the Company’s properties, with a
total book value of approximately $600.9 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.
96
A
summary
of the Company’s mortgages, loans payable and other obligations as of December
31, 2006 and 2005 is as follows: (dollars
in thousands)
|
Effective
|
Principal
Balance at
|
|||||||
|
Interest
|
December
31,
|
|||||||
|
Property
Name
|
Lender
|
Rate
(a)
|
2006
|
2005
|
Maturity
|
|||
|
Mack-Cali
Airport
|
Allstate
Life Insurance Co.
|
7.05%
|
$
9,422
|
$
9,644
|
04/01/07
(b)
|
|||
|
6303
Ivy Lane
|
State
Farm Life Insurance Co.
|
5.57%
|
6,020
|
--
|
07/01/07
(c)
|
|||
|
6404
Ivy Lane
|
TIAA
|
5.58%
|
13,665
|
--
|
08/01/08
|
|||
|
Assumed
obligations
|
Various
|
4.90%
|
38,742
|
53,241
|
05/01/09
(d)
|
|||
|
Various
(e)
|
Prudential
Insurance Co.
|
4.84%
|
150,000
|
150,000
|
01/15/10
|
|||
|
105
Challenger Road
|
Archon
Financial CMBS
|
6.24%
|
18,748
|
--
|
06/06/10
|
|||
|
2200
Renaissance Boulevard
|
TIAA
|
5.89%
|
17,819
|
18,174
|
12/01/12
|
|||
|
Soundview
Plaza
|
TIAA
|
6.02%
|
18,013
|
18,427
|
01/01/13
|
|||
|
9200
Edmonston Road
|
Principal
Commercial Funding, L.L.C.
|
5.53%
|
5,232
|
--
|
05/01/13
|
|||
|
6305
Ivy Lane
|
John
Hancock Life Insurance Co.
|
5.53%
|
7,285
|
--
|
01/01/14
|
|||
|
395
West Passaic
|
State
Farm Life Insurance Co.
|
6.00%
|
12,996
|
--
|
05/01/14
|
|||
|
6301
Ivy Lane
|
John
Hancock Life Insurance Co.
|
5.52%
|
6,821
|
--
|
07/01/14
|
|||
|
35
Waterview
|
Wachovia
CMBS
|
6.35%
|
20,318
|
--
|
08/11/14
|
|||
|
500
West Putnam Avenue
|
New
York Life Ins. Co.
|
5.57%
|
25,000
|
25,000
|
01/10/16
|
|||
|
23
Main Street
|
JP
Morgan CMBS
|
5.59%
|
33,396
|
33,500
|
09/01/18
|
|||
|
Harborside
- Plaza 2 and 3
|
Northwestern/Principal
|
--
|
--
|
144,642
|
01/01/06
(f)
|
|||
|
Monmouth
Executive Center
|
Lehman
Brothers CMBS
|
--
|
--
|
16,044
|
09/01/06
(g)
|
|||
|
Total
Mortgages, loans payable and other obligations:
|
$383,477
|
$468,672
|
||||||
|
(a) 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
February 5, 2007, the Company repaid this mortgage loan at par, using
available cash.
|
||||||||
|
(c) On
February 15, 2007, the Company repaid this mortgage loan at par,
using
available cash.
|
||||||||
|
(d) The
obligations mature at various times through May 2009.
|
||||||||
|
(e) Mortgage
is collateralized by seven properties.
|
||||||||
|
(f) On
January 3, 2006, the Company repaid this mortgage loan at par, using
borrowings under the Unsecured Facility.
|
||||||||
|
(g) On
August 1, 2006, the Company repaid the loan at par, using borrowings
under
the Company’s revolving credit
facility.
|
||||||||
97
SCHEDULED
PRINCIPAL PAYMENTS
Scheduled
principal payments and related weighted average annual interest rates for the
Company’s senior unsecured notes (see Note 8), unsecured revolving credit
facility and mortgages, loans payable and other obligations as of December
31,
2006 are as follows: (dollars
in thousands)
|
Weighted
Avg.
|
|||||||||||||
|
Scheduled
|
Principal
|
Interest
Rate of
|
|||||||||||
|
Period
|
Amortization
|
Maturities
|
Total
|
Future
Repayments (a)
|
|||||||||
|
2007
|
$
|
19,126
|
$
|
15,152
|
$
|
34,278
|
5.67
|
%
|
|||||
|
2008
|
17,971
|
12,563
|
30,534
|
5.25
|
%
|
||||||||
|
2009
|
10,100
|
445,000
|
455,100
|
6.89
|
%
|
||||||||
|
2010
|
2,795
|
334,500
|
337,295
|
5.26
|
%
|
||||||||
|
2011
|
3,580
|
300,000
|
303,580
|
7.91
|
%
|
||||||||
|
Thereafter
|
11,685
|
993,091
|
1,004,776
|
5.57
|
%
|
||||||||
|
Sub-total
|
65,257
|
2,100,306
|
2,165,563
|
6.11
|
%
|
||||||||
|
Adjustment
for unamortized debt
|
|||||||||||||
|
discount/premium,
net, as of
|
|||||||||||||
|
December
31, 2006
|
(5,604
|
)
|
--
|
(5,604
|
)
|
--
|
|||||||
|
Totals/Weighted
Average
|
$
|
59,653
|
$
|
2,100,306
|
$
|
2,159,959
|
6.11
|
%
|
|||||
| (a) |
Actual
weighted average LIBOR contract rates relating to the Company’s
outstanding debt as of December 31, 2005 of 5.35 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, 2006, 2005 and 2004 was
$132,904,000, $115,359,000 and $110,092,000, respectively. Interest capitalized
by the Company for the years ended December 31, 2006, 2005 and 2004 was
$6,058,000, $5,518,000 and $3,920,000, respectively.
SUMMARY
OF INDEBTEDNESS
As
of
December 31, 2006, the Company’s total indebtedness of $2,159,959,000 (weighted
average interest rate of 6.11 percent) was comprised of $145,000,000 of
revolving credit facility borrowings (weighted average rate of 5.76 percent)
and
fixed rate debt and other obligations of $2,014,959,000 (weighted average rate
of 6.14 percent).
As
of
December 31, 2005, the Company’s total indebtedness of $2,126,181,000 (weighted
average interest rate of 6.15 percent) was comprised of $227,000,000 of
revolving credit facility borrowings (weighted average rate of 4.84 percent)
and
fixed rate debt and other obligations of $1,899,181,000 (weighted average rate
of 6.30 percent).
| 11. |
MINORITY
INTERESTS
|
OPERATING
PARTNERSHIP
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 the Company, and (ii) interests in
consolidated joint ventures for the portion of such properties not owned by
the
Company.
Preferred
Units
The
Operating Partnership has one class of outstanding Preferred Units, the Series
C
Preferred Units, and one class of Preferred Units, the Series B Preferred Units,
which were converted to common units on June 13, 2005, each of which are
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 14: Stockholders’ Equity - Preferred Stock.
98
Series
B
The
Series B Preferred Units had a stated value of $1,000 per unit and were
preferred as to assets over any class of common units or other class of
preferred units of the Company, based on circumstances per the applicable unit
certificates. The quarterly distribution on each Series B Preferred Unit was
an
amount equal to the greater of (i) $16.875 (representing 6.75 percent of the
Series B Preferred Unit stated value of an annualized basis) or (ii) the
quarterly distribution attributable to a Series B Preferred Unit determined
as
if such unit had been converted into common units, subject to adjustment for
customary anti-dilution rights.
On
June
13, 2005, the Operating Partnership caused the mandatory conversion (the
“Conversion”) of all 215,018 outstanding Series B Preferred Units into
6,205,425.72 Common Units. Each Series B Preferred Unit was converted into
whole
and fractional Common Units equal to (x) the $1,000 stated value, divided by
(y)
the conversion price of $34.65. A description of the rights, preferences and
privileges of the Common Units is set forth below.
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.
Unit
Transactions
The
following table sets forth the changes in minority interest which relate to
the
Series B Preferred Units and common units in the Operating Partnership for
the
years ended December 31, 2006, 2005 and 2004: (dollars
in thousands)
|
Series
B
|
Series
B
|
|||||||||||||||
|
Preferred
|
Common
|
Preferred
|
Common
|
|||||||||||||
|
Units
|
Units
|
Unitholders
|
Unitholders
|
Total
|
||||||||||||
|
Balance
at January 1, 2004
|
215,018
|
7,795,498
|
$
|
220,547
|
$
|
207,552
|
$
|
428,099
|
||||||||
|
Net
income
|
--
|
--
|
15,636
|
12,901
|
28,537
|
|||||||||||
|
Distributions
|
--
|
--
|
(15,636
|
)
|
(19,501
|
)
|
(35,137
|
)
|
||||||||
|
Redemption
of common
|
||||||||||||||||
|
units
for shares of
|
||||||||||||||||
|
common
stock
|
--
|
(179,051
|
)
|
--
|
(4,644
|
)
|
(4,644
|
)
|
||||||||
|
Balance
at December 31, 2004
|
215,018
|
7,616,447
|
$
|
220,547
|
$
|
196,308
|
$
|
416,855
|
||||||||
|
Net
income
|
--
|
--
|
3,909
|
18,722
|
22,631
|
|||||||||||
|
Distributions
|
--
|
--
|
(3,909
|
)
|
(30,754
|
)
|
(34,663
|
)
|
||||||||
|
Conversion
of Preferred Units
|
||||||||||||||||
|
into
common units
|
(215,018
|
)
|
6,205,426
|
(220,547
|
)
|
220,547
|
--
|
|||||||||
|
Issuance
of common units
|
--
|
63,328
|
--
|
2,786
|
2,786
|
|||||||||||
|
Redemption
of common
|
||||||||||||||||
|
units
for shares of
|
||||||||||||||||
|
common
stock
|
--
|
(234,762
|
)
|
--
|
(6,790
|
)
|
(6,790
|
)
|
||||||||
|
Balance
at December 31, 2005
|
--
|
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
|
|||||||||
99
Minority
Interest Ownership
As
of
December 31, 2006 and December 31, 2005, the minority interest common
unitholders owned 19.6 percent and 18.0 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 many of these
ventures.
| 12. |
EMPLOYEE
BENEFIT 401(k) PLAN
|
Employees
of the Company, other than those assigned to the Gale Company and affiliated
employers, who meet certain minimum age and period of service requirements
are
eligible to participate in a 401(k) defined contribution plan (the “401(k)
Plan”). The 401(k) Plan allows eligible employees to defer from 1 to 30 percent
of their annual compensation, subject to certain limitations imposed by federal
law. The amounts contributed by employees are immediately vested and
non-forfeitable. The Company, at management’s discretion, may match employee
contributions and/or make discretionary contributions. Total expense recognized
by the Company for the 401(k) Plan for each of the three years ended December
31, 2006, 2005 and 2004 was $400,000.
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 meet certain minimum age and period of
service requirements are eligible to participate in a 401(k) defined
contribution plan (the “Gale Plan”). The Gale Plan allows eligible employees to
defer from their annual compensation, the maximum amount permitted under federal
law. The amounts contributed by employees are immediately vested and
non-forfeitable. The Gale Company or the participant’s employer matches the
employee’s deferral at the rate of 50 percent on 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, may make discretionary contributions.
Participants become 50 percent vested in employer contributions after two years
of service and become 100 percent vested after three years of service. Total
expense recognized after the completion of the Gale/Green Transactions by the
Company for the Gale Plan for the year ended December 31, 2006 was
$370,000.
| 13. |
DISCLOSURE
OF FAIR VALUE OF FINANCIAL
INSTRUMENTS
|
The
following disclosure of estimated fair value was determined by management using
available market information and appropriate valuation methodologies. However,
considerable 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, 2006 and 2005. 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, 2006 and 2005.
The
fair
value of the fixed-rate mortgage debt and unsecured notes as of December 31,
2006 approximated the book value of approximately $2.0 billion. As of December
31, 2005, the fair value of fixed-rate mortgage debt and unsecured notes was
approximately $39.4 million higher than the book value of approximately $1.9
billion. 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, 2006 and 2005. 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, 2006 and current estimates of fair
value
may differ significantly from the amounts presented herein.
100
| 14. |
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:
The
Harborside Plaza 4-A agreement, which commenced in 2000, is for a term of 20
years. The PILOT is equal to two percent of Total Project costs, as defined,
and
increases by 10 percent in years 7, 10 and 13 and by 50 percent in year 16.
Total Project costs, as defined, are $45.5 million. The PILOT totaled $910,000
for each of the years ended December 31, 2006, 2005 and 2004.
The
Harborside Plaza 5 agreement, as amended, which commenced in 2002 upon
substantial completion of the property, as defined, is for a term of 20 years.
The PILOT is equal to two percent of Total Project Costs. Total Project Costs,
as defined, are $159.6 million. The PILOT totaled $3.2, $3.2 and $3.2 million
for each of the years ended December 31, 2006, 2005 and 2004.
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.
OPERATING
LEASE AGREEMENTS
Future
minimum rental payments under the terms of all non-cancelable operating leases
under which the Company is the lessee, as of December 31, 2006, are as follows:
(dollars
in thousands)
|
Year
|
Amount
|
|
2007
|
$412
|
|
2008
|
68
|
|
2009
|
16
|
|
2010
|
3
|
|
Total
|
$499
|
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, 2006, are as follows:
(dollars
in thousands)
|
Year
|
Amount
|
|
2007
|
$ 508
|
|
2008
|
486
|
|
2009
|
501
|
|
2010
|
501
|
|
2011
|
501
|
|
2012
through 2084
|
35,453
|
|
Total
|
$37,950
|
101
Ground
lease expense incurred by the Company during the years ended December 31, 2006,
2005 and 2004 amounted to $698,000, $606,000 and $583,000,
respectively.
OTHER
The
Company may not dispose of or distribute certain of its properties, currently
comprising 50 properties with an aggregate net book value of approximately
$1.3
billion, which were originally contributed by members of either the Mack Group
(which includes William L. Mack, Chairman of the Company’s Board of Directors;
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) or certain
other common unitholders without the express written consent of a representative
of the Mack Group, the Robert Martin Group, the Cali Group or the specific
certain other 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 Mack Group, Robert Martin
Group, Cali Group members or the specific certain other 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 appropriate Mack Group, Robert Martin Group,
Cali Group members or the specific certain other common unitholders. 88 of
our
properties, with an aggregate net book value of approximately $809.0 million,
have lapsed restrictions and are subject to these conditions.
| 15. |
TENANT
LEASES
|
The
Properties are leased to tenants under operating leases with various expiration
dates through 2026. Substantially all of the leases provide for annual base
rents plus recoveries and escalation charges based upon the tenant’s
proportionate share of and/or increases in real estate taxes and certain
operating costs, as defined, and the pass-through of charges for electrical
usage.
Future
minimum rentals to be received under non-cancelable operating leases at December
31, 2006 are as follows:
(dollars in thousands)
|
Year
|
Amount
|
|
2007
|
$550,259
|
|
2008
|
510,918
|
|
2009
|
463,182
|
|
2010
|
408,125
|
|
2011
|
340,610
|
|
2012
and thereafter
|
1,016,936
|
|
|
|
|
Total
|
$3,290,030
|
| 16. |
STOCKHOLDERS’
EQUITY
|
To
maintain its qualification as a REIT, not more than 50 percent in value of
the
outstanding shares of the Company may be owned, directly or indirectly, by
five
or fewer individuals at any time during the last half of any taxable year of
the
Company, other than its initial taxable year (defined to include certain
entities), applying certain constructive ownership rules. To help ensure that
the Company will not fail this test, the Company’s Articles of Incorporation
provide for, among other things, certain restrictions on the transfer of 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.
102
COMMON
STOCK
On
February 7, 2007, the Company completed an underwritten offer and sale of
4,650,000 shares of its common stock and used the net proceeds, which totaled
approximately $252 million (after offering costs), primarily to pay down its
outstanding borrowings under the Company’s revolving credit facility and general
corporate purposes.
PREFERRED
STOCK
On
March
14, 2003, in a publicly registered transaction with a single institutional
buyer, the Company completed the sale and issuance of 10,000 shares of
eight-percent Series C cumulative redeemable perpetual preferred stock (“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 Company received net proceeds of approximately
$24.8 million from the sale. See Note 11: Minority Interests - Operating
Partnership - Preferred Units.
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, 2006, 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.
Except
under certain conditions relating to the Company’s qualification as a REIT, the
Series C Preferred Stock is not redeemable prior to March 14, 2008. On and
after
such date, the Series C Preferred Stock will be redeemable at the option of
the
Company, in whole or in part, at $25 per depositary share, plus accrued and
unpaid dividends.
SHARE
REPURCHASE PROGRAM
The
Company has authorization to repurchase up to $45.5 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, which commenced
in
March 1999.
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, 2006 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
103
both
plans to 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, 2006 and December 31, 2005, the stock
options outstanding had a weighted average remaining contractual life of
approximately 4.7 and 5.7 years, respectively. Stock options exercisable at
December 31, 2006 and December 31, 2005 had a weighted average remaining
contractual life of approximately 4.5 and 5.2 years, respectively.
Information
regarding the Company’s stock option plans is summarized below:
|
Weighted
|
Aggregate
|
||
|
Shares
|
Average
|
Intrinsic
|
|
|
Under
|
Exercise
|
Value
|
|
|
Options
|
Price
|
$(000’s)
|
|
|
Outstanding
at January 1, 2004
|
2,990,135
|
$30.56
|
|
|
Granted
|
10,000
|
$38.07
|
|
|
Exercised
|
(1,250,864)
|
$32.40
|
|
|
Lapsed
or canceled
|
(45,640)
|
$28.49
|
|
|
Outstanding
at December 31, 2004
|
1,703,631
|
$29.31
|
|
|
Granted
|
5,000
|
$45.47
|
|
|
Exercised
|
(574,506)
|
$28.92
|
|
|
Lapsed
or canceled
|
(50,540)
|
$28.60
|
|
|
Outstanding
at December 31, 2005
|
1,083,585
|
$29.63
|
|
|
Exercised
|
(352,699)
|
$29.65
|
|
|
Lapsed
or canceled
|
(40,580)
|
$28.53
|
|
|
Outstanding
at December 31, 2006 ($24.63 - $45.47)
|
690,306
|
$29.68
|
$14,717
|
|
Options
exercisable at December 31, 2005
|
782,905
|
$29.96
|
$10,366
|
|
Options
exercisable at December 31, 2006
|
571,026
|
$29.94
|
$12,017
|
|
Available
for grant at December 31, 2005
|
4,590,098
|
||
|
Available
for grant at December 31, 2006
|
4,547,214
|
--
|
--
|
The
weighted average fair value of options granted during 2005 and 2004 was $3.62
and $3.28 per option. The fair value of each significant option grant is
estimated on the date of grant using the Black-Scholes model. The following
weighted average assumptions are included in the Company’s fair value
calculations of stock options granted in 2005 and 2004:
|
2005
|
2004
|
||
|
Expected
life (in years)
|
6
|
6
|
|
|
Risk-free
interest rate
|
3.97%
|
3.74%
|
|
|
Volatility
|
15.00%
|
19.50%
|
|
|
Dividend
yield
|
5.54%
|
6.65%
|
No
stock
options were granted during the year ended December 31, 2006.
Cash
received from options exercised under all stock option plans was $10.5 million,
$16.6 million and $40.5 million for the years ended December 31, 2006, 2005
and
2004, respectively. The total intrinsic value of options exercised during the
years ended December 31, 2006, 2005 and 2004 was $6.2 million, $9.1 million
and
$12.3 million, respectively. The Company has a policy of issuing new shares
to
satisfy stock option exercises.
104
The
Company recognized stock options expense of $465,000, $448,000 and $415,000
for
the years ended December 31, 2006, 2005 and 2004, respectively. Included in
stock options expense for the year ended December 31, 2006 was a stock option
charge of $323,000, which resulted from the accelerated vesting of 16,840
unvested options during the year ended December 31, 2006. As of December 31,
2006, the Company had 4.4 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 1.8 years.
STOCK
COMPENSATION
The
Company has granted stock awards (“Restricted Stock Awards”) to officers,
certain other employees, and non-employee 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 five-year vesting period
and generally based on time and service, of which 216,620 shares were
outstanding at December 31, 2006. Of the outstanding Restricted Stock Awards
granted to executive officers and senior management, 93,746 are contingent
upon
the Company meeting certain performance and/or stock price appreciation
objectives. All Restricted Stock Awards provided to the officers and certain
other employees were granted under the 2000 Employee Plan and the Employee
Plan.
Restricted Stock Awards granted to directors were granted under the 2000
Director Plan.
Information
regarding the Restricted Stock Awards is summarized below:
|
Weighted-Average
|
||
|
Grant
- Date
|
||
|
Shares
|
Fair
Value
|
|
|
Outstanding
at January 1, 2004
|
280,869
|
$
32.51
|
|
Granted
(a)
|
47,056
|
$
40.51
|
|
Vested
|
(109,938)
|
$
35.17
|
|
Forfeited
|
(19,284)
|
$
29.84
|
|
Outstanding
at December 31, 2004
|
198,703
|
$
33.19
|
|
Granted
(b)
|
165,660
|
$
43.41
|
|
Vested
|
(109,419)
|
$
40.36
|
|
Forfeited
|
(8,000)
|
$
43.85
|
|
Outstanding
at December 31, 2005
|
246,944
|
$
37.17
|
|
Granted
(c)
|
81,034
|
$
52.94
|
|
Vested
|
(102,808)
|
$
43.72
|
|
Forfeited
|
(8,550)
|
$
43.59
|
|
Outstanding
at December 31, 2006
|
216,620
|
$
39.78
|
|
(a) Included
in the 47,056 Restricted Stock Awards granted in 2004 were 34,056
awards
granted to the Company’s four executive officers, Mitchell E. Hersh, Barry
Lefkowitz, Roger W. Thomas and Michael Grossman.
|
||
|
(b) Included
in the 165,660 Restricted Stock Awards granted in 2005 were 37,960
awards
granted to the Company’s four executive officers, Mitchell E. Hersh, Barry
Lefkowitz, Roger W. Thomas and Michael Grossman.
|
||
|
(c) 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.
|
||
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, 2006, 2005 and 2004, 6,266, 6,655 and 6,230
deferred stock units were earned, respectively. As of December 31, 2006 and
2005, there were 37,263 and 30,903 director stock units outstanding,
respectively.
105
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, 2006, 2005 and 2004 in accordance with FASB No. 128: (dollars
in thousands)
|
Year
Ended December 31,
|
||||||||||
|
Computation
of Basic EPS
|
2006
|
2005
|
|
2004
|
||||||
|
Income
from continuing operations
|
$
|
86,360
|
$
|
76,594
|
$
|
80,780
|
||||
|
Deduct:
Preferred stock dividends
|
(2,000
|
)
|
(2,000
|
)
|
(2,000
|
)
|
||||
|
Income
from continuing operations available to common
shareholders
|
84,360
|
74,594
|
78,780
|
|||||||
|
Income
from discontinued operations
|
58,306
|
18,894
|
21,673
|
|||||||
|
Net
income available to common shareholders
|
$
|
142,666
|
$
|
93,488
|
$
|
100,453
|
||||
|
Weighted
average common shares
|
62,237
|
61,477
|
60,351
|
|||||||
|
Basic
EPS:
|
||||||||||
|
Income
from continuing operations
|
$
|
1.35
|
$
|
1.21
|
$
|
1.30
|
||||
|
Income
from discontinued operations
|
0.94
|
0.31
|
0.36
|
|||||||
|
Net
income available to common shareholders
|
$
|
2.29
|
$
|
1.52
|
$
|
1.66
|
||||
|
Year
Ended December 31,
|
||||||||||
|
Computation
of Diluted EPS
|
2006
|
2005
|
2004
|
|||||||
|
Income
from continuing operations available to common
shareholders
|
$
|
84,360
|
$
|
74,594
|
$
|
78,780
|
||||
|
Add: Income
from continuing operations attributable to
|
||||||||||
|
Operating
Partnership - common units
|
20,533
|
14,851
|
10,139
|
|||||||
|
Income
from continuing operations for diluted earnings per share
|
104,893
|
89,445
|
88,919
|
|||||||
|
Income
from discontinued operations for diluted earnings per
share
|
72,799
|
22,765
|
24,435
|
|||||||
|
Net
income available to common shareholders
|
$
|
177,692
|
$
|
112,210
|
$
|
113,354
|
||||
|
Weighted
average common shares
|
77,901
|
74,189
|
68,743
|
|||||||
|
Diluted
EPS:
|
||||||||||
|
Income
from continuing operations
|
$
|
1.35
|
$
|
1.20
|
$
|
1.29
|
||||
|
Income
from discontinued operations
|
0.93
|
0.31
|
0.36
|
|||||||
|
Net
income available to common shareholders
|
$
|
2.28
|
$
|
1.51
|
$
|
1.65
|
||||
106
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,
|
|||
|
2006
|
2005
|
2004
|
|
|
Basic
EPS shares
|
62,237
|
61,477
|
60,351
|
|
Add: Operating
Partnership - common units
|
15,286
|
12,252
|
7,759
|
|
Stock
options
|
310
|
401
|
569
|
|
Restricted
Stock Awards
|
68
|
59
|
58
|
|
Stock
Warrants
|
--
|
--
|
6
|
|
Diluted
EPS Shares
|
77,901
|
74,189
|
68,743
|
Not
included in the computations of diluted EPS were 0, 1,507, and 0 stock options
as such securities were anti-dilutive during the years ended December 31, 2006,
2005 and 2004, respectively. Also excluded from diluted EPS computations were
1,530,105 and 6,205,426 Series B Preferred Units, on an as converted basis
into
common units, as such securities were anti-dilutive during the years ended
December 31, 2005 and 2004, respectively. Unvested restricted stock outstanding
as of December 31, 2006, 2005 and 2004 were 216,620, 246,944 and 198,703,
respectively.
| 17. |
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. Included in the Company’s
revenues for the year end December 31, 2006 was $4,806,000 derived from foreign
countries. The Company had no long lived assets in foreign locations as of
December 31, 2006 and December 31, 2005. 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.
107
Selected
results of operations for the years ended December 31, 2006, 2005 and 2004
and
selected asset information as of December 31, 2006 and 2005 regarding the
Company’s operating segments are as follows: (dollars
in thousands)
|
Real
Estate
|
|
Construction
Services
|
Corporate
&
Other (d)
|
Total
Company
|
||||||||||||
|
Total
revenues:
|
||||||||||||||||
|
2006
|
$
|
676,593
|
$
|
56,582
|
$
|
7,134
|
$
|
740,309
|
||||||||
|
2005
|
597,381
|
--
|
2,750
|
600,131
|
||||||||||||
|
2004
|
533,358
|
--
|
3,881
|
537,239
|
||||||||||||
|
Total
operating and interest expenses (a):
|
||||||||||||||||
|
2006
|
$
|
260,736
|
$
|
55,871
|
$
|
176,087
|
$
|
492,694
|
(e
|
)
|
||||||
|
2005
|
210,445
|
--
|
150,950
|
361,395
|
(f
|
)
|
||||||||||
|
2004
|
168,433
|
--
|
141,987
|
310,420
|
(g
|
)
|
||||||||||
|
Equity
in earnings of unconsolidated
|
||||||||||||||||
|
joint
ventures:
|
||||||||||||||||
|
2006
|
$
|
(5,556
|
)
|
$
|
--
|
$
|
--
|
$
|
(5,556
|
)
|
||||||
|
2005
|
248
|
--
|
--
|
248
|
||||||||||||
|
2004
|
(3,886
|
)
|
--
|
--
|
(3,886
|
)
|
||||||||||
|
Net
operating income (b):
|
||||||||||||||||
|
2006
|
$
|
410,301
|
$
|
711
|
$
|
(168,953
|
)
|
$
|
242,059
|
(e
|
)
|
|||||
|
2005
|
387,184
|
--
|
(148,200
|
)
|
238,984
|
(f
|
)
|
|||||||||
|
2004
|
361,039
|
--
|
(138,106
|
)
|
222,933
|
(g
|
)
|
|||||||||
|
Total
assets:
|
||||||||||||||||
|
2006
|
$
|
4,281,222
|
$
|
28,353
|
$
|
113,314
|
$
|
4,422,889
|
||||||||
|
2005
|
4,097,098
|
--
|
150,404
|
4,247,502
|
||||||||||||
|
Total
long-lived assets (c):
|
||||||||||||||||
|
2006
|
$
|
4,036,393
|
$
|
--
|
$
|
1,550
|
$
|
4,037,943
|
||||||||
|
2005
|
3,921,536
|
--
|
2,066
|
3,923,602
|
||||||||||||
|
(a)
|
Total
operating and interest expenses represent the sum of: real estate
taxes;
utilities; operating services; direct construction costs; real estate
services salaries, wages and other costs; general and administrative
and
interest expense (net of interest income). All interest expense,
net of
interest income, (including for property-level mortgages) is excluded
from
segment amounts and classified in Corporate & Other for all
periods.
|
|
(b)
|
Net
operating income represents total revenues less total operating and
interest expenses [as defined in Note (a)], plus equity in earnings
(loss)
of unconsolidated joint ventures, for the
period.
|
|
(c)
|
Long-lived
assets are comprised of net investment in rental property, unbilled
rents
receivable and investments in unconsolidated joint
ventures.
|
| (d) |
Corporate
& Other represents all corporate-level items (including interest and
other investment income, interest expense and non-property general
and
administrative expense) as well as intercompany eliminations necessary
to
reconcile to consolidated Company
totals.
|
| (e) |
Excludes
$160,859 of depreciation and
amortization.
|
| (f) |
Excludes
$143,593 of depreciation and
amortization.
|
| (g) |
Excludes
$117,097 of depreciation and
amortization.
|
| 18. |
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 2008. The Company
has recognized $228,000, $242,000 and $227,000 in revenue under this lease
for
the years ended December 31, 2006, 2005 and 2004, respectively, and had no
accounts receivable from the corporation as of December 31, 2006 and
2005.
108
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
intends to continue sharing his board seat with Mr. Berger. The business that
the Company has conducted with RMC Entities was as follows:
| (1) |
The
Company provides management, leasing and construction-related services
to
properties in which RMC Entities have an ownership interest. The
Company
recognized approximately $2 million, $1.1 million and $2 million
in
revenue from RMC Entities for the years ended December 31, 2006,
2005 and
2004, respectively. As of December 31, 2006 and 2005, respectively,
the
Company had $131,000 and zero accounts receivable from RMC
Entities.
|
| (2) |
An
RMC Entity leased space at one of the Company’s office properties for
approximately 3,330 square feet, which, after a three-year renewal
and
expansion signed with the Company in 2005, now leases 4,860 square
feet
which is scheduled to expire in October 2008. The Company has recognized
$119,000, $89,000 and $91,000, in revenue under this lease for the
years
ended December 31, 2006, 2005 and 2004, respectively, and had zero
accounts receivable due from the RMC Entity, as of December 31, 2006
and
2005, respectively.
|
Mr.
Berger holds a 24 percent interest, acts as chairman and chief executive
officer, Mr. Weinberg also holds a 24 percent interest and is a director, and
W.
Mack holds a nine percent interest and is a director of City and Suburban
Federal Savings Bank and/or one of its affiliates, which leases a total of
15,879 square feet of space at two of the Company’s office properties, comprised
of 3,037 square feet scheduled to expire in June 2008 and 12,842 square feet
scheduled to expire in April 2013. As of February 13, 2004, City & Suburban
assigned its lease with respect to 3,037 square feet of office space to an
unaffiliated third party and has no continuing obligations under such lease.
The
Company recognized $404,000, $396,000 and $398,000 in revenue under the leases
for the years ended December 31, 2006, 2005 and 2004, respectively, and had
no
accounts receivable from the company as of December 31, 2006 and
2005.
The
son
of Mr. Berger, a former officer of the Company, served as an officer and had
a
financial interest which was sold in 2004 in a company which provides cleaning
and other related services to certain of the Company’s properties. The Company
has incurred costs from this company of approximately $5.9 million and $6.2
million for the years ended December 31, 2004 and 2003, respectively. As of
December 31, 2004, the Company had no accounts payable to this
company.
Pursuant
to an agreement between the Company and certain members and associates of the
Cali family executed June 27, 2000, John J. Cali served as the Chairman Emeritus
and a Board member of the Company, and as a consultant to the Company and was
paid an annual salary of $150,000 from June 27, 2000 through June 27, 2003.
Additionally, the Company provided office space and administrative support
to
John J. Cali, Angelo Cali, his brother, and Ed Leshowitz, his business partner
(the “Cali Group”). Such services were in effect from June 27, 2000 through June
27, 2004. From June 27, 2004 through June 26, 2005, the Company agreed to
provide office space at no cost to the Cali Group, as well as provide
administrative support and related services for which it was reimbursed $184,000
and $115,000 from the Cali Group for the years ended December 31, 2006 and
2005,
respectively. On June 27, 2005, an affiliate of the Cali Group 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 in June 2008. On September 18, 2006,
an
affiliate of the Cali Group 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.
109
Furthermore,
it extended the term of its current lease to expire on that date as well. The
Company recognized approximately $47,000 and $24,000 in total revenue under
this
lease for the year ended December 31, 2006 and 2005, respectively, and had
no
accounts receivable from the affiliate as of December 31, 2006 and 2005.
| 19. |
IMPACT
OF RECENTLY-ISSUED ACCOUNTING
STANDARDS
|
FASB
INTERPRETATION No. 48 (“FIN 48”), Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
109
FIN
48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement
of
a tax position taken or expected to be taken in a tax return. FIN 48 also
provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. FIN 48 is effective
for fiscal years beginning after December 15, 2006. The Company does not expect
that the implementation of FIN 48 will have a material effect on the Company's
consolidated financial position or results of operations.
FINANCIAL
ACCOUNTING STANDARDS BOARD (FASB) STATEMENT NO. 157 (“FASB No.
157”), Fair
Value Measurements
FASB
No.
157 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. FASB No. 157 applies under other accounting
pronouncements that require or permit fair value measurements, FASB having
previously concluded in those accounting pronouncements that fair value is
their
relevant measurement attribute. Accordingly, this statement does not require
any
new fair value measurements. However, for some entities, the application of
this
statement will change current practice. This statement is effective for
financial statements for fiscal years beginning after November 15, 2007. The
Company does not expect that the implementation of FASB No. 157 will have a
material effect on the Company’s consolidated financial position or results of
operations.
STAFF
ACCOUNTING BULLETIN NO. 108 (“SAB No. 108”)
The
interpretations in SAB 108 express the staff’s views regarding the process of
quantifying financial statement misstatements. The SEC staff is aware of
diversity in practice. For example, certain registrants do not consider the
effects of prior year errors on current year financial statements, thereby
allowing improper assets or liabilities to remain unadjusted. While these errors
may not be material if considered only in relation to the balance sheet,
correcting the errors could be material to the current year income statement.
Certain registrants have proposed to the staff that allowing these errors to
remain on the balance sheet as assets or liabilities in perpetuity is an
appropriate application of generally accepted accounting principles. The staff
believes that approach is not in the best interest of the users of financial
statements. The interpretations in this SAB 108 are being issued to address
diversity in practice in quantifying financial statement misstatements and
the
potential under current practice for the build up of improper amounts on the
balance sheet. There have been two widely-recognized methods for quantifying
the
effects of financial statement errors: the “roll-over” method and the “iron
curtain” method. The roll-over method focuses primarily on the impact of a
misstatement on the income statement--including the reversing effect of prior
year misstatements--but its use can lead to the accumulation of misstatements
in
the balance sheet. The iron-curtain method, on the other hand, focuses primarily
on the effect of correcting the period-end balance sheet with less emphasis
on
the reversing effects of prior year errors on the income statement. In SAB
108,
the SEC staff establishes an approach that requires quantification of financial
statement errors based on the effects of the error on each of the company's
financial statements and the related financial statement disclosures. This
model
is commonly referred to as a "dual approach" because it essentially requires
quantification of errors under both the iron-curtain and the roll-over methods.
SAB 108 is effective for financial statements for fiscal years ending after
November 15, 2006. SAB 108 did not have a material effect on the Company’s
consolidated financial position or results of operations.
110
| 20. |
CONDENSED
QUARTERLY FINANCIAL INFORMATION (unaudited)
|
The
following summarizes the condensed quarterly financial information for the
Company: (dollars
in thousands)
|
Quarter
Ended 2006:
|
December
31
|
September
30
|
June
30
|
March
31
|
|
Total
revenues
|
$
198,172
|
$
203,217
|
$
184,953
|
$
153,967
|
|
Operating
and other expenses
|
60,093
|
65,057
|
56,833
|
56,129
|
|
Direct
construction costs
|
18,454
|
22,568
|
12,580
|
--
|
|
Real
estate services, salaries, wages and other costs
|
7,780
|
6,686
|
4,134
|
--
|
|
General
and administrative
|
16,280
|
12,173
|
11,849
|
8,775
|
|
Depreciation
and amortization
|
43,879
|
40,132
|
39,918
|
36,930
|
|
Total
expenses
|
146,486
|
146,616
|
125,314
|
101,834
|
|
Operating
Income
|
51,686
|
56,601
|
59,639
|
52,133
|
|
Interest
expense
|
(35,737)
|
(35,815)
|
(33,382)
|
(31,423)
|
|
Interest
and other investment income
|
696
|
513
|
399
|
1,446
|
|
Equity
in earnings (loss) of unconsolidated
|
||||
|
joint
ventures
|
(200)
|
(4,757)
|
(846)
|
247
|
|
Minority
interest in consolidated joint ventures
|
75
|
113
|
30
|
--
|
|
Gain
on sale of investment in marketable securities
|
--
|
--
|
--
|
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
|
(24,751)
|
(39,946)
|
(33,799)
|
(14,670)
|
|
Income
from continuing operations before minority
|
||||
|
interest
in Operating Partnership
|
26,935
|
16,655
|
25,840
|
37,463
|
|
Minority
interest in Operating Partnership
|
(5,270)
|
(3,241)
|
(5,082)
|
(6,940)
|
|
Income
from continuing operations
|
21,665
|
13,414
|
20,758
|
30,523
|
|
Discontinued
operations (net of minority interest):
|
||||
|
Income
from discontinued operations
|
2,465
|
3,097
|
2,455
|
2,574
|
|
Realized
gains (losses) and unrealized losses
|
||||
|
on
disposition of rental property, net
|
43,794
|
--
|
3,921
|
--
|
|
Total
discontinued operations, net
|
46,259
|
3,097
|
6,376
|
2,574
|
|
Net
income
|
67,924
|
16,511
|
27,134
|
33,097
|
|
Preferred
stock dividends
|
(500)
|
(500)
|
(500)
|
(500)
|
|
Net
income available to common shareholders
|
$
67,424
|
$
16,011
|
$
26,634
|
$
32,597
|
|
Basic
earnings per common share:
|
||||
|
Income
from continuing operations
|
$
0.34
|
$
0.21
|
$
0.33
|
$
0.48
|
|
Discontinued
operations
|
0.74
|
0.05
|
0.10
|
0.04
|
|
Net
income available to common shareholders
|
$
1.08
|
$
0.26
|
$
0.43
|
$
0.52
|
|
Diluted
earnings per common share:
|
||||
|
Income
from continuing operations
|
$
0.34
|
$
0.21
|
$
0.33
|
$
0.48
|
|
Discontinued
operations
|
0.73
|
0.05
|
0.10
|
0.04
|
|
Net
income available to common shareholders
|
$
1.07
|
$
0.26
|
$
0.43
|
$
0.52
|
|
Dividends
declared per common share
|
$
0.64
|
$
0.64
|
$
0.63
|
$
0.63
|
111
|
Quarter
Ended 2005:
|
December
31
|
September
30
|
June
30
|
March
31
|
||||||||||||
|
Total
revenues
|
$
|
153,059
|
$
|
154,193
|
$
|
150,096
|
$
|
142,783
|
||||||||
|
Operating
and other expenses
|
55,132
|
55,421
|
51,409
|
48,511
|
||||||||||||
|
Direct
construction costs
|
--
|
--
|
--
|
--
|
||||||||||||
|
Real
estate services, salaries, wages and other costs
|
--
|
--
|
--
|
--
|
||||||||||||
|
General
and administrative
|
8,991
|
7,952
|
8,187
|
7,311
|
||||||||||||
|
Depreciation
and amortization
|
37,527
|
37,838
|
35,186
|
33,042
|
||||||||||||
|
Total
expenses
|
101,650
|
101,211
|
94,782
|
88,864
|
||||||||||||
|
Operating
Income
|
51,409
|
52,982
|
55,314
|
53,919
|
||||||||||||
|
Interest
expense
|
(30,418
|
)
|
(30,158
|
)
|
(30,363
|
)
|
(28,398
|
)
|
||||||||
|
Interest
and other investment income
|
364
|
308
|
120
|
64
|
||||||||||||
|
Equity
in earnings (loss) of unconsolidated
|
||||||||||||||||
|
joint
ventures
|
(304
|
)
|
322
|
542
|
(312
|
)
|
||||||||||
|
Minority
interest in consolidated joint ventures
|
--
|
--
|
--
|
(74
|
)
|
|||||||||||
|
Gain
on sale of investment in marketable securities
|
--
|
--
|
--
|
--
|
||||||||||||
|
Gain
on sale of investment in unconsolidated
|
||||||||||||||||
|
joint
ventures
|
35
|
|||||||||||||||
|
Total
other (expense) income
|
(30,358
|
)
|
(29,528
|
)
|
(29,701
|
)
|
(28,685
|
)
|
||||||||
|
Income
from continuing operations before minority
|
||||||||||||||||
|
interest
in Operating Partnership
|
21,051
|
23,454
|
25,613
|
25,234
|
||||||||||||
|
Minority
interest in Operating Partnership
|
(3,732
|
)
|
(4,189
|
)
|
(4,622
|
)
|
(6,215
|
)
|
||||||||
|
Income
from continuing operations
|
17,319
|
19,265
|
20,991
|
19,019
|
||||||||||||
|
Discontinued
operations (net of minority interest):
|
||||||||||||||||
|
Income
from discontinued operations
|
2,129
|
1,839
|
5,778
|
4,722
|
||||||||||||
|
Realized
gains (losses) and unrealized losses
|
||||||||||||||||
|
on
disposition of rental property, net
|
(4,547
|
)
|
--
|
9,771
|
(798
|
)
|
||||||||||
|
Total
discontinued operations, net
|
(2,418
|
)
|
1,839
|
15,549
|
3,924
|
|||||||||||
|
Net
income
|
14,901
|
21,104
|
36,540
|
22,943
|
||||||||||||
|
Preferred
stock dividends
|
(500
|
)
|
(500
|
)
|
(500
|
)
|
(500
|
)
|
||||||||
|
Net
income available to common shareholders
|
$
|
14,401
|
$
|
20,604
|
$
|
36,040
|
$
|
22,443
|
||||||||
|
Basic
earnings per common share:
|
||||||||||||||||
|
Income
from continuing operations
|
$
|
0.27
|
$
|
0.30
|
$
|
0.33
|
$
|
0.30
|
||||||||
|
Discontinued
operations
|
(0.04
|
)
|
0.03
|
0.26
|
0.07
|
|||||||||||
|
Net
income available to common shareholders
|
$
|
0.23
|
$
|
0.33
|
$
|
0.59
|
$
|
0.37
|
||||||||
|
Diluted
earnings per common share:
|
||||||||||||||||
|
Income
from continuing operations
|
$
|
0.27
|
$
|
0.30
|
$
|
0.33
|
$
|
0.30
|
||||||||
|
Discontinued
operations
|
(0.04
|
)
|
0.03
|
0.25
|
0.06
|
|||||||||||
|
Net
income available to common shareholders
|
$
|
0.23
|
$
|
0.33
|
$
|
0.58
|
$
|
0.36
|
||||||||
|
Dividends
declared per common share
|
$
|
0.63
|
$
|
0.63
|
$
|
0.63
|
$
|
0.63
|
||||||||
112
|
MACK-CALI
REALTY CORPORATION
|
||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
||||||||||||||||||||||
|
December
31, 2006
|
||||||||||||||||||||||
|
(dollars
in thousands)
|
||||||||||||||||||||||
|
SCHEDULE
III
|
||||||||||||||||||||||
|
Gross
Amount at Which
|
||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
|||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
|||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
||||||||||||
|
NEW
JERSEY
|
||||||||||||||||||||||
|
Atlantic
County
|
||||||||||||||||||||||
|
Egg
Harbor
|
||||||||||||||||||||||
|
100
Decadon Drive (O)
|
1987
|
1995
|
--
|
300
|
3,282
|
458
|
300
|
3,740
|
4,040
|
1,220
|
||||||||||||
|
200
Decadon Drive (O)
|
1991
|
1995
|
--
|
369
|
3,241
|
604
|
369
|
3,845
|
4,214
|
1,192
|
||||||||||||
|
Bergen
County
|
||||||||||||||||||||||
|
Fair
Lawn
|
||||||||||||||||||||||
|
17-17
Rte 208 North (O)
|
1987
|
1995
|
--
|
3,067
|
19,415
|
2,334
|
3,067
|
21,749
|
24,816
|
7,335
|
||||||||||||
|
Fort
Lee
|
||||||||||||||||||||||
|
One
Bridge Plaza (O)
|
1981
|
1996
|
--
|
2,439
|
24,462
|
4,062
|
2,439
|
28,524
|
30,963
|
7,751
|
||||||||||||
|
2115
Linwood Avenue (O)
|
1981
|
1998
|
--
|
474
|
4,419
|
4,293
|
474
|
8,712
|
9,186
|
2,145
|
||||||||||||
|
Little
Ferry
|
||||||||||||||||||||||
|
200
Riser Road (O)
|
1974
|
1997
|
9,422
|
3,888
|
15,551
|
415
|
3,888
|
15,966
|
19,854
|
3,720
|
||||||||||||
|
Montvale
|
||||||||||||||||||||||
|
95
Chestnut Ridge Road (O)
|
1975
|
1997
|
--
|
1,227
|
4,907
|
718
|
1,227
|
5,625
|
6,852
|
1,470
|
||||||||||||
|
135
Chestnut Ridge Road (O)
|
1981
|
1997
|
--
|
2,587
|
10,350
|
2,370
|
2,588
|
12,719
|
15,307
|
3,583
|
||||||||||||
|
Paramus
|
||||||||||||||||||||||
|
15
East Midland Avenue (O)
|
1988
|
1997
|
20,600
|
10,375
|
41,497
|
173
|
10,374
|
41,671
|
52,045
|
9,396
|
||||||||||||
|
461
From Road (O)
|
1988
|
1997
|
--
|
13,194
|
52,778
|
243
|
13,194
|
53,021
|
66,215
|
12,006
|
||||||||||||
|
650
From Road (O)
|
1978
|
1997
|
25,600
|
10,487
|
41,949
|
6,326
|
10,487
|
48,275
|
58,762
|
12,091
|
||||||||||||
|
140
East Ridgewood
|
||||||||||||||||||||||
|
Avenue
(O)
|
1981
|
1997
|
16,100
|
7,932
|
31,463
|
3,784
|
7,932
|
35,247
|
43,179
|
8,054
|
||||||||||||
|
61
South Paramus Avenue (O)
|
1985
|
1997
|
20,800
|
9,005
|
36,018
|
6,114
|
9,005
|
42,132
|
51,137
|
9,598
|
||||||||||||
|
Ridgefield
Park
|
||||||||||||||||||||||
|
105
Challenger Road (O)
|
--
|
2006
|
18,748
|
4,740
|
29,893
|
--
|
4,740
|
29,893
|
34,633
|
706
|
||||||||||||
|
Rochelle
Park
|
||||||||||||||||||||||
|
120
Passaic Street (O)
|
1972
|
1997
|
--
|
1,354
|
5,415
|
102
|
1,357
|
5,514
|
6,871
|
1,260
|
||||||||||||
|
365
West Passaic Street (O)
|
1976
|
1997
|
12,250
|
4,148
|
16,592
|
3,030
|
4,148
|
19,622
|
23,770
|
4,967
|
||||||||||||
|
395
West Passaic Street (O)
|
1979
|
2006
|
12,996
|
2,550
|
17,131
|
23
|
2,550
|
17,154
|
19,704
|
289
|
||||||||||||
|
Upper
Saddle River
|
--
|
|||||||||||||||||||||
|
1
Lake Street (O)
|
1994
|
1997
|
35,550
|
13,952
|
55,812
|
51
|
13,953
|
55,862
|
69,815
|
12,625
|
||||||||||||
|
10
Mountainview Road (O)
|
1986
|
1998
|
--
|
4,240
|
20,485
|
2,300
|
4,240
|
22,785
|
27,025
|
5,070
|
||||||||||||
|
Woodcliff
Lake
|
||||||||||||||||||||||
|
400
Chestnut Ridge Road (O)
|
1982
|
1997
|
--
|
4,201
|
16,802
|
5,080
|
4,201
|
21,882
|
26,083
|
5,089
|
||||||||||||
|
470
Chestnut Ridge Road (O)
|
1987
|
1997
|
--
|
2,346
|
9,385
|
939
|
2,346
|
10,324
|
12,670
|
2,122
|
||||||||||||
|
530
Chestnut Ridge Road (O)
|
1986
|
1997
|
--
|
1,860
|
7,441
|
3
|
1,860
|
7,444
|
9,304
|
1,683
|
||||||||||||
|
300
Tice Boulevard (O)
|
1991
|
1996
|
--
|
5,424
|
29,688
|
3,198
|
5,424
|
32,886
|
38,310
|
9,029
|
||||||||||||
|
50
Tice Boulevard (O)
|
1984
|
1994
|
19,100
|
4,500
|
--
|
27,333
|
4,500
|
27,333
|
31,833
|
15,877
|
||||||||||||
113
|
MACK-CALI
REALTY CORPORATION
|
||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
||||||||||||||||||||||
|
December
31, 2006
|
||||||||||||||||||||||
|
(dollars
in thousands)
|
||||||||||||||||||||||
|
SCHEDULE
III
|
||||||||||||||||||||||
|
Gross
Amount at Which
|
||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
|||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
|||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
||||||||||||
|
Burlington
County
|
||||||||||||||||||||||
|
Burlington
|
||||||||||||||||||||||
|
3
Terri Lane (F)
|
1991
|
1998
|
--
|
652
|
3,433
|
1,636
|
658
|
5,063
|
5,721
|
1,223
|
||||||||||||
|
5
Terri Lane (F)
|
1992
|
1998
|
--
|
564
|
3,792
|
2,026
|
569
|
5,813
|
6,382
|
1,750
|
||||||||||||
|
Moorestown
|
|
|||||||||||||||||||||
|
2
Commerce Drive (F)
|
1986
|
1999
|
--
|
723
|
2,893
|
389
|
723
|
3,282
|
4,005
|
540
|
||||||||||||
|
101
Commerce Drive (F)
|
1988
|
1998
|
--
|
422
|
3,528
|
437
|
426
|
3,961
|
4,387
|
899
|
||||||||||||
|
102
Commerce Drive (F)
|
1987
|
1999
|
--
|
389
|
1,554
|
321
|
389
|
1,875
|
2,264
|
341
|
||||||||||||
|
201
Commerce Drive (F)
|
1986
|
1998
|
--
|
254
|
1,694
|
482
|
258
|
2,172
|
2,430
|
568
|
||||||||||||
|
202
Commerce Drive (F)
|
1988
|
1999
|
--
|
490
|
1,963
|
350
|
490
|
2,313
|
2,803
|
487
|
||||||||||||
|
1
Executive Drive (F)
|
1989
|
1998
|
--
|
226
|
1,453
|
418
|
228
|
1,869
|
2,097
|
494
|
||||||||||||
|
2
Executive Drive (F)
|
1988
|
2000
|
--
|
801
|
3,206
|
733
|
801
|
3,939
|
4,740
|
744
|
||||||||||||
|
101
Executive Drive (F)
|
1990
|
1998
|
--
|
241
|
2,262
|
524
|
244
|
2,783
|
3,027
|
627
|
||||||||||||
|
102
Executive Drive (F)
|
1990
|
1998
|
--
|
353
|
3,607
|
217
|
357
|
3,820
|
4,177
|
919
|
||||||||||||
|
225
Executive Drive (F)
|
1990
|
1998
|
--
|
323
|
2,477
|
427
|
326
|
2,901
|
3,227
|
713
|
||||||||||||
|
97
Foster Road (F)
|
1982
|
1998
|
--
|
208
|
1,382
|
222
|
211
|
1,601
|
1,812
|
399
|
||||||||||||
|
1507
Lancer Drive (F)
|
1995
|
1998
|
--
|
119
|
1,106
|
51
|
120
|
1,156
|
1,276
|
269
|
||||||||||||
|
840
North Lenola Road (F)
|
1995
|
1998
|
--
|
329
|
2,366
|
527
|
333
|
2,889
|
3,222
|
767
|
||||||||||||
|
844
North Lenola Road (F)
|
1995
|
1998
|
--
|
239
|
1,714
|
260
|
241
|
1,972
|
2,213
|
533
|
||||||||||||
|
915
North Lenola Road (F)
|
1998
|
2000
|
--
|
508
|
2,034
|
275
|
508
|
2,309
|
2,817
|
534
|
||||||||||||
|
1245
North Church Street (F)
|
1998
|
2001
|
--
|
691
|
2,810
|
17
|
691
|
2,827
|
3,518
|
406
|
||||||||||||
|
1247
North Church Street (F)
|
1998
|
2001
|
--
|
805
|
3,269
|
203
|
805
|
3,472
|
4,277
|
494
|
||||||||||||
|
1256
North Church (F)
|
1984
|
1998
|
--
|
354
|
3,098
|
528
|
357
|
3,623
|
3,980
|
1,026
|
||||||||||||
|
224
Strawbridge Drive (O)
|
1984
|
1997
|
--
|
766
|
4,335
|
3,464
|
767
|
7,798
|
8,565
|
2,693
|
||||||||||||
|
228
Strawbridge Drive (O)
|
1984
|
1997
|
--
|
766
|
4,334
|
2,208
|
767
|
6,541
|
7,308
|
1,592
|
||||||||||||
|
232
Strawbridge Drive (O)
|
1986
|
2004
|
--
|
1,521
|
7,076
|
1,919
|
1,521
|
8,995
|
10,516
|
423
|
||||||||||||
|
2
Twosome Drive (F)
|
2000
|
2001
|
--
|
701
|
2,807
|
18
|
701
|
2,825
|
3,526
|
400
|
||||||||||||
|
30
Twosome Drive (F)
|
1997
|
1998
|
--
|
234
|
1,954
|
78
|
236
|
2,030
|
2,266
|
500
|
||||||||||||
|
31
Twosome Drive (F)
|
1998
|
2001
|
--
|
815
|
3,276
|
102
|
815
|
3,378
|
4,193
|
502
|
||||||||||||
|
40
Twosome Drive (F)
|
1996
|
1998
|
--
|
297
|
2,393
|
274
|
301
|
2,663
|
2,964
|
685
|
||||||||||||
|
41
Twosome Drive (F)
|
1998
|
2001
|
--
|
605
|
2,459
|
12
|
605
|
2,471
|
3,076
|
370
|
||||||||||||
|
50
Twosome Drive (F)
|
1997
|
1998
|
--
|
301
|
2,330
|
89
|
304
|
2,416
|
2,720
|
616
|
||||||||||||
|
West
Deptford
|
|
|||||||||||||||||||||
|
1451
Metropolitan Drive (F)
|
1996
|
1998
|
--
|
203
|
1,189
|
30
|
206
|
1,216
|
1,422
|
296
|
||||||||||||
|
Essex
County
|
|
|||||||||||||||||||||
|
Millburn
|
||||||||||||||||||||||
|
150
J.F. Kennedy Parkway (O)
|
1980
|
1997
|
--
|
12,606
|
50,425
|
8,705
|
12,606
|
59,130
|
71,736
|
14,234
|
||||||||||||
114
|
MACK-CALI
REALTY CORPORATION
|
||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
||||||||||||||||||||||
|
December
31, 2006
|
||||||||||||||||||||||
|
(dollars
in thousands)
|
||||||||||||||||||||||
|
SCHEDULE
III
|
||||||||||||||||||||||
|
Gross
Amount at Which
|
||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
|||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
|||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
||||||||||||
|
Roseland
|
||||||||||||||||||||||
|
101
Eisenhower Parkway (O)
|
1980
|
1994
|
--
|
228
|
--
|
15,690
|
228
|
15,690
|
15,918
|
9,574
|
||||||||||||
|
103
Eisenhower Parkway (O)
|
1985
|
1994
|
--
|
--
|
--
|
14,293
|
2,300
|
11,993
|
14,293
|
6,882
|
||||||||||||
|
105
Eisenhower Parkway (O)
|
2001
|
2001
|
--
|
4,430
|
42,898
|
5,729
|
3,835
|
49,222
|
53,057
|
8,745
|
||||||||||||
|
Hudson
County
|
||||||||||||||||||||||
|
Jersey
City
|
||||||||||||||||||||||
|
Harborside
Financial Center
|
||||||||||||||||||||||
|
Plaza
1 (O)
|
1983
|
1996
|
--
|
3,923
|
51,013
|
19,786
|
3,923
|
70,799
|
74,722
|
13,109
|
||||||||||||
|
Harborside
Financial Center
|
||||||||||||||||||||||
|
Plaza
2 (O)
|
1990
|
1996
|
--
|
17,655
|
101,546
|
13,990
|
15,039
|
118,152
|
133,191
|
30,698
|
||||||||||||
|
Harborside
Financial Center
|
||||||||||||||||||||||
|
Plaza
3 (O)
|
1990
|
1996
|
--
|
17,655
|
101,878
|
13,659
|
15,040
|
118,152
|
133,192
|
30,698
|
||||||||||||
|
Harborside
Financial Center
|
||||||||||||||||||||||
|
Plaza
4A (O)
|
2000
|
2000
|
--
|
1,244
|
56,144
|
8,683
|
1,244
|
64,827
|
66,071
|
11,516
|
||||||||||||
|
Harborside
Financial Center
|
||||||||||||||||||||||
|
Plaza
5 (O)
|
2002
|
2002
|
--
|
6,218
|
170,682
|
56,321
|
5,705
|
227,516
|
233,221
|
26,797
|
||||||||||||
|
101
Hudson Street (O)
|
1992
|
2004
|
--
|
45,530
|
271,376
|
3,285
|
45,530
|
274,661
|
320,191
|
17,649
|
||||||||||||
|
Mercer
County
|
||||||||||||||||||||||
|
Hamilton
Township
|
||||||||||||||||||||||
|
100
Horizon Drive (F)
|
1989
|
1995
|
--
|
205
|
1,676
|
248
|
294
|
1,835
|
2,129
|
549
|
||||||||||||
|
200
Horizon Drive (F)
|
1991
|
1995
|
--
|
205
|
3,027
|
335
|
327
|
3,240
|
3,567
|
961
|
||||||||||||
|
300
Horizon Drive (F)
|
1989
|
1995
|
--
|
379
|
4,355
|
1,157
|
502
|
5,389
|
5,891
|
1,725
|
||||||||||||
|
500
Horizon Drive (F)
|
1990
|
1995
|
--
|
379
|
3,395
|
767
|
467
|
4,074
|
4,541
|
1,236
|
||||||||||||
|
600
Horizon Drive (F)
|
2002
|
2002
|
--
|
--
|
7,549
|
651
|
685
|
7,515
|
8,200
|
767
|
||||||||||||
|
Princeton
|
|
|||||||||||||||||||||
|
103
Carnegie Center (O)
|
1984
|
1996
|
--
|
2,566
|
7,868
|
1,710
|
2,566
|
9,578
|
12,144
|
2,701
|
||||||||||||
|
100
Overlook Center (O)
|
1988
|
1997
|
--
|
2,378
|
21,754
|
2,163
|
2,378
|
23,917
|
26,295
|
6,064
|
||||||||||||
|
5
Vaughn Drive (O)
|
1987
|
1995
|
--
|
657
|
9,800
|
1,681
|
657
|
11,481
|
12,138
|
3,728
|
||||||||||||
|
Middlesex
County
|
||||||||||||||||||||||
|
East
Brunswick
|
||||||||||||||||||||||
|
377
Summerhill Road (O)
|
1977
|
1997
|
--
|
649
|
2,594
|
374
|
649
|
2,968
|
3,617
|
669
|
||||||||||||
|
Edison
|
|
|||||||||||||||||||||
|
343
Thornall Street (O)
|
1991
|
2006
|
--
|
5,870
|
38,336
|
2,272
|
5,870
|
40,608
|
46,478
|
907
|
||||||||||||
|
Piscataway
|
||||||||||||||||||||||
|
30
Knightsbridge Road,
|
||||||||||||||||||||||
|
Building
3 (O)
|
1977
|
2004
|
--
|
1,030
|
7,269
|
312
|
1,030
|
7,581
|
8,611
|
472
|
||||||||||||
|
30
Knightsbridge Road,
|
||||||||||||||||||||||
|
Building
4 (O)
|
1977
|
2004
|
--
|
1,433
|
10,121
|
348
|
1,433
|
10,469
|
11,902
|
653
|
||||||||||||
115
|
MACK-CALI
REALTY CORPORATION
|
||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
||||||||||||||||||||||
|
December
31, 2006
|
||||||||||||||||||||||
|
(dollars
in thousands)
|
||||||||||||||||||||||
|
SCHEDULE
III
|
||||||||||||||||||||||
|
Gross
Amount at Which
|
||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
|||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
|||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
||||||||||||
|
30
Knightsbridge Road,
|
||||||||||||||||||||||
|
Building
5 (O)
|
1977
|
2004
|
--
|
2,979
|
21,035
|
4,776
|
2,979
|
25,811
|
28,790
|
1,470
|
||||||||||||
|
30
Knightsbridge Road,
|
|
|||||||||||||||||||||
|
Building
6 (O)
|
1977
|
2004
|
--
|
448
|
3,161
|
3,914
|
448
|
7,075
|
7,523
|
205
|
||||||||||||
|
Plainsboro
|
|
|||||||||||||||||||||
|
500
College Road East (O)
|
1984
|
1998
|
--
|
614
|
20,626
|
1,426
|
614
|
22,052
|
22,666
|
4,795
|
||||||||||||
|
South
Brunswick
|
||||||||||||||||||||||
|
3
Independence Way (O)
|
1983
|
1997
|
--
|
1,997
|
11,391
|
1,177
|
1,997
|
12,568
|
14,565
|
2,906
|
||||||||||||
|
Woodbridge
|
||||||||||||||||||||||
|
581
Main Street (O)
|
1991
|
1997
|
--
|
3,237
|
12,949
|
24,225
|
8,115
|
32,296
|
40,411
|
6,280
|
||||||||||||
|
Monmouth
County
|
||||||||||||||||||||||
|
Middletown
|
||||||||||||||||||||||
|
23
Main Street (O)
|
1977
|
2005
|
33,396
|
4,336
|
19,544
|
8,853
|
4,336
|
28,397
|
32,733
|
1,502
|
||||||||||||
|
2
Paragon Way (O)
|
1989
|
2005
|
--
|
999
|
4,619
|
346
|
999
|
4,965
|
5,964
|
376
|
||||||||||||
|
3
Paragon Way (O)
|
1991
|
2005
|
--
|
1,423
|
6,041
|
721
|
1,423
|
6,762
|
8,185
|
307
|
||||||||||||
|
4
Paragon Way (O)
|
2002
|
2005
|
--
|
1,961
|
8,827
|
12
|
1,961
|
8,839
|
10,800
|
703
|
||||||||||||
|
One
River Center,
|
||||||||||||||||||||||
|
Building
1 (O)
|
1983
|
2004
|
--
|
3,070
|
17,414
|
4,659
|
3,054
|
22,089
|
25,143
|
1,510
|
||||||||||||
|
One
River Center,
|
|
|||||||||||||||||||||
|
Building
2 (O)
|
1983
|
2004
|
--
|
2,468
|
15,043
|
663
|
2,452
|
15,722
|
18,174
|
772
|
||||||||||||
|
One
River Center,
|
||||||||||||||||||||||
|
Building
3 (O)
|
1984
|
2004
|
--
|
4,051
|
24,790
|
778
|
4,024
|
25,595
|
29,619
|
1,363
|
||||||||||||
|
100
Willowbrook Road (O)
|
1988
|
2005
|
--
|
1,264
|
5,573
|
748
|
1,264
|
6,321
|
7,585
|
329
|
||||||||||||
|
Neptune
|
||||||||||||||||||||||
|
3600
Route 66 (O)
|
1989
|
1995
|
--
|
1,098
|
18,146
|
1,459
|
1,098
|
19,605
|
20,703
|
5,211
|
||||||||||||
|
Wall
Township
|
||||||||||||||||||||||
|
1305
Campus Parkway (O)
|
1988
|
1995
|
--
|
335
|
2,560
|
482
|
335
|
3,042
|
3,377
|
762
|
||||||||||||
|
1325
Campus Parkway (F)
|
1988
|
1995
|
--
|
270
|
2,928
|
1,203
|
270
|
4,131
|
4,401
|
1,509
|
||||||||||||
|
1340
Campus Parkway (F)
|
1992
|
1995
|
--
|
489
|
4,621
|
1,506
|
489
|
6,127
|
6,616
|
1,587
|
||||||||||||
|
1345
Campus Parkway (F)
|
1995
|
1997
|
--
|
1,023
|
5,703
|
1,591
|
1,024
|
7,293
|
8,317
|
2,103
|
||||||||||||
|
1350
Campus Parkway (O)
|
1990
|
1995
|
--
|
454
|
7,134
|
1,437
|
454
|
8,571
|
9,025
|
2,301
|
||||||||||||
|
1433
Highway 34 (F)
|
1985
|
1995
|
--
|
889
|
4,321
|
924
|
889
|
5,245
|
6,134
|
1,398
|
||||||||||||
|
1320
Wyckoff Avenue (F)
|
1986
|
1995
|
--
|
255
|
1,285
|
68
|
255
|
1,353
|
1,608
|
370
|
||||||||||||
|
1324
Wyckoff Avenue (F)
|
1987
|
1995
|
--
|
230
|
1,439
|
246
|
230
|
1,685
|
1,915
|
456
|
||||||||||||
116
|
MACK-CALI
REALTY CORPORATION
|
||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
||||||||||||||||||||||
|
December
31, 2006
|
||||||||||||||||||||||
|
(dollars
in thousands)
|
||||||||||||||||||||||
|
SCHEDULE
III
|
||||||||||||||||||||||
|
Gross
Amount at Which
|
||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
|||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
|||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
||||||||||||
|
Morris
County
|
||||||||||||||||||||||
|
Florham
Park
|
||||||||||||||||||||||
|
325
Columbia Parkway (O)
|
1987
|
1994
|
--
|
1,564
|
--
|
14,851
|
1,564
|
14,851
|
16,415
|
6,898
|
||||||||||||
|
Morris
Plains
|
||||||||||||||||||||||
|
250
Johnson Road (O)
|
1977
|
1997
|
--
|
2,004
|
8,016
|
1,517
|
2,004
|
9,533
|
11,537
|
2,346
|
||||||||||||
|
201
Littleton Road (O)
|
1979
|
1997
|
--
|
2,407
|
9,627
|
1,063
|
2,407
|
10,690
|
13,097
|
2,567
|
||||||||||||
|
Morris
Township
|
||||||||||||||||||||||
|
412
Mt. Kemble Avenue (O)
|
1985
|
2004
|
--
|
4,360
|
33,167
|
803
|
4,360
|
33,970
|
38,330
|
2,148
|
||||||||||||
|
Parsippany
|
||||||||||||||||||||||
|
4
Campus Drive (O)
|
1983
|
2001
|
--
|
5,213
|
20,984
|
1,485
|
5,213
|
22,469
|
27,682
|
3,419
|
||||||||||||
|
6
Campus Drive (O)
|
1983
|
2001
|
--
|
4,411
|
17,796
|
2,247
|
4,411
|
20,043
|
24,454
|
3,400
|
||||||||||||
|
7
Campus Drive (O)
|
1982
|
1998
|
--
|
1,932
|
27,788
|
107
|
1,932
|
27,895
|
29,827
|
6,196
|
||||||||||||
|
8
Campus Drive (O)
|
1987
|
1998
|
--
|
1,865
|
35,456
|
3,994
|
1,865
|
39,450
|
41,315
|
9,333
|
||||||||||||
|
9
Campus Drive (O)
|
1983
|
2001
|
--
|
3,277
|
11,796
|
17,191
|
5,842
|
26,422
|
32,264
|
5,654
|
||||||||||||
|
4
Century Drive (O)
|
1981
|
2004
|
--
|
1,787
|
9,575
|
917
|
1,787
|
10,492
|
12,279
|
599
|
||||||||||||
|
5
Century Drive (O)
|
1981
|
2004
|
--
|
1,762
|
9,341
|
331
|
1,762
|
9,672
|
11,434
|
471
|
||||||||||||
|
6
Century Drive (O)
|
1981
|
2004
|
--
|
1,289
|
6,848
|
425
|
1,289
|
7,273
|
8,562
|
352
|
||||||||||||
|
2
Dryden Way (O)
|
1990
|
1998
|
--
|
778
|
420
|
13
|
778
|
433
|
1,211
|
105
|
||||||||||||
|
4
Gatehall Drive (O)
|
1988
|
2000
|
--
|
8,452
|
33,929
|
2,232
|
8,452
|
36,161
|
44,613
|
6,379
|
||||||||||||
|
2
Hilton Court (O)
|
1991
|
1998
|
--
|
1,971
|
32,007
|
2,259
|
1,971
|
34,266
|
36,237
|
8,073
|
||||||||||||
|
1633
Littleton Road (O)
|
1978
|
2002
|
--
|
2,283
|
9,550
|
163
|
2,355
|
9,641
|
11,996
|
1,453
|
||||||||||||
|
600
Parsippany Road (O)
|
1978
|
1994
|
--
|
1,257
|
5,594
|
2,262
|
1,257
|
7,856
|
9,113
|
2,504
|
||||||||||||
|
1
Sylvan Way (O)
|
1989
|
1998
|
--
|
1,689
|
24,699
|
394
|
1,021
|
25,761
|
26,782
|
6,985
|
||||||||||||
|
5
Sylvan Way (O)
|
1989
|
1998
|
--
|
1,160
|
25,214
|
1,826
|
1,161
|
27,039
|
28,200
|
6,145
|
||||||||||||
|
7
Sylvan Way (O)
|
1987
|
1998
|
--
|
2,084
|
26,083
|
2,092
|
2,084
|
28,175
|
30,259
|
6,612
|
||||||||||||
|
35
Waterview Boulevard (O)
|
1990
|
2006
|
20,318
|
4,996
|
27,218
|
256
|
4,996
|
27,474
|
32,470
|
685
|
||||||||||||
|
5
Wood Hollow Road (O)
|
1979
|
2004
|
--
|
5,302
|
26,488
|
11,710
|
5,302
|
38,198
|
43,500
|
2,212
|
||||||||||||
|
Passaic
County
|
||||||||||||||||||||||
|
Clifton
|
||||||||||||||||||||||
|
777
Passaic Avenue (O)
|
1983
|
1994
|
--
|
--
|
--
|
7,204
|
1,100
|
6,104
|
7,204
|
3,405
|
||||||||||||
|
Totowa
|
||||||||||||||||||||||
|
1
Center Court (F)
|
1999
|
1999
|
--
|
270
|
1,824
|
713
|
270
|
2,537
|
2,807
|
939
|
||||||||||||
|
2
Center Court (F)
|
1998
|
1998
|
--
|
191
|
--
|
2,459
|
191
|
2,459
|
2,650
|
795
|
||||||||||||
|
11
Commerce Way (F)
|
1989
|
1995
|
--
|
586
|
2,986
|
228
|
586
|
3,214
|
3,800
|
1,028
|
||||||||||||
|
20
Commerce Way (F)
|
1992
|
1995
|
--
|
516
|
3,108
|
52
|
516
|
3,160
|
3,676
|
875
|
||||||||||||
|
29
Commerce Way (F)
|
1990
|
1995
|
--
|
586
|
3,092
|
950
|
586
|
4,042
|
4,628
|
1,280
|
||||||||||||
|
40
Commerce Way (F)
|
1987
|
1995
|
--
|
516
|
3,260
|
356
|
516
|
3,616
|
4,132
|
1,247
|
||||||||||||
|
45
Commerce Way (F)
|
1992
|
1995
|
--
|
536
|
3,379
|
461
|
536
|
3,840
|
4,376
|
1,198
|
||||||||||||
|
60
Commerce Way (F)
|
1988
|
1995
|
--
|
526
|
3,257
|
422
|
526
|
3,679
|
4,205
|
1,099
|
||||||||||||
117
|
MACK-CALI
REALTY CORPORATION
|
||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
||||||||||||||||||||||
|
December
31, 2006
|
||||||||||||||||||||||
|
(dollars
in thousands)
|
||||||||||||||||||||||
|
SCHEDULE
III
|
||||||||||||||||||||||
|
Gross
Amount at Which
|
||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
|||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
|||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
||||||||||||
|
80
Commerce Way (F)
|
1996
|
1996
|
--
|
227
|
--
|
1,567
|
227
|
1,567
|
1,794
|
734
|
||||||||||||
|
100
Commerce Way (F)
|
1996
|
1996
|
--
|
226
|
--
|
1,566
|
226
|
1,566
|
1,792
|
734
|
||||||||||||
|
120
Commerce Way (F)
|
1994
|
1995
|
--
|
228
|
--
|
1,299
|
228
|
1,299
|
1,527
|
372
|
||||||||||||
|
140
Commerce Way (F)
|
1994
|
1995
|
--
|
229
|
--
|
1,299
|
229
|
1,299
|
1,528
|
372
|
||||||||||||
|
999
Riverview Drive (O)
|
1988
|
1995
|
--
|
476
|
6,024
|
2,154
|
1,102
|
7,552
|
8,654
|
2,148
|
||||||||||||
|
Somerset
County
|
||||||||||||||||||||||
|
Basking
Ridge
|
||||||||||||||||||||||
|
106
Allen Road (O)
|
2000
|
2000
|
--
|
3,853
|
14,465
|
3,813
|
4,093
|
18,038
|
22,131
|
4,467
|
||||||||||||
|
222
Mt. Airy Road (O)
|
1986
|
1996
|
--
|
775
|
3,636
|
2,147
|
775
|
5,783
|
6,558
|
1,212
|
||||||||||||
|
233
Mt. Airy Road (O)
|
1987
|
1996
|
--
|
1,034
|
5,033
|
1,646
|
1,034
|
6,679
|
7,713
|
2,101
|
||||||||||||
|
Bridgewater
|
||||||||||||||||||||||
|
721
Route 202/206 (O)
|
1989
|
1997
|
--
|
6,730
|
26,919
|
4,346
|
6,730
|
31,265
|
37,995
|
6,494
|
||||||||||||
|
Union
County
|
||||||||||||||||||||||
|
Clark
|
||||||||||||||||||||||
|
100
Walnut Avenue (O)
|
1985
|
1994
|
--
|
--
|
--
|
16,932
|
1,822
|
15,110
|
16,932
|
8,252
|
||||||||||||
|
Cranford
|
||||||||||||||||||||||
|
6
Commerce Drive (O)
|
1973
|
1994
|
--
|
250
|
--
|
2,791
|
250
|
2,791
|
3,041
|
1,790
|
||||||||||||
|
11
Commerce Drive (O)
|
1981
|
1994
|
--
|
470
|
--
|
6,097
|
470
|
6,097
|
6,567
|
3,485
|
||||||||||||
|
12
Commerce Drive (O)
|
1967
|
1997
|
--
|
887
|
3,549
|
1,662
|
887
|
5,211
|
6,098
|
1,479
|
||||||||||||
|
14
Commerce Drive (O)
|
1971
|
2003
|
--
|
1,283
|
6,344
|
35
|
1,283
|
6,379
|
7,662
|
519
|
||||||||||||
|
20
Commerce Drive (O)
|
1990
|
1994
|
--
|
2,346
|
--
|
21,833
|
2,346
|
21,833
|
24,179
|
9,175
|
||||||||||||
|
25
Commerce Drive (O)
|
1971
|
2002
|
--
|
1,520
|
6,186
|
265
|
1,520
|
6,451
|
7,971
|
1,456
|
||||||||||||
|
65
Jackson Drive (O)
|
1984
|
1994
|
--
|
541
|
--
|
6,169
|
542
|
6,168
|
6,710
|
3,111
|
||||||||||||
|
New
Providence
|
|
|||||||||||||||||||||
|
890
Mountain Road (O)
|
1977
|
1997
|
--
|
2,796
|
11,185
|
4,896
|
3,765
|
15,112
|
18,877
|
3,452
|
||||||||||||
|
NEW
YORK
|
||||||||||||||||||||||
|
Rockland
County
|
||||||||||||||||||||||
|
Suffern
|
||||||||||||||||||||||
|
400
Rella Boulevard (O)
|
1988
|
1995
|
--
|
1,090
|
13,412
|
3,601
|
1,090
|
17,013
|
18,103
|
5,781
|
||||||||||||
|
Westchester
County
|
||||||||||||||||||||||
|
Elmsford
|
||||||||||||||||||||||
|
11
Clearbrook Road (F)
|
1974
|
1997
|
--
|
149
|
2,159
|
392
|
149
|
2,551
|
2,700
|
632
|
||||||||||||
|
75
Clearbrook Road (F)
|
1990
|
1997
|
--
|
2,314
|
4,716
|
107
|
2,314
|
4,823
|
7,137
|
1,179
|
||||||||||||
|
100
Clearbrook Road (O)
|
1975
|
1997
|
--
|
220
|
5,366
|
902
|
220
|
6,268
|
6,488
|
1,736
|
||||||||||||
|
125
Clearbrook Road (F)
|
2002
|
2002
|
--
|
1,055
|
3,676
|
(51)
|
1,055
|
3,625
|
4,680
|
769
|
||||||||||||
|
150
Clearbrook Road (F)
|
1975
|
1997
|
--
|
497
|
7,030
|
951
|
497
|
7,981
|
8,478
|
1,977
|
||||||||||||
118
|
MACK-CALI
REALTY CORPORATION
|
||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
||||||||||||||||||||||
|
December
31, 2006
|
||||||||||||||||||||||
|
(dollars
in thousands)
|
||||||||||||||||||||||
|
SCHEDULE
III
|
||||||||||||||||||||||
|
Gross
Amount at Which
|
||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
|||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
|||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
||||||||||||
|
175
Clearbrook Road (F)
|
1973
|
1997
|
--
|
655
|
7,473
|
877
|
655
|
8,350
|
9,005
|
2,191
|
||||||||||||
|
200
Clearbrook Road (F)
|
1974
|
1997
|
--
|
579
|
6,620
|
1,066
|
579
|
7,686
|
8,265
|
2,052
|
||||||||||||
|
250
Clearbrook Road (F)
|
1973
|
1997
|
--
|
867
|
8,647
|
1,189
|
867
|
9,836
|
10,703
|
2,622
|
||||||||||||
|
50
Executive Boulevard (F)
|
1969
|
1997
|
--
|
237
|
2,617
|
97
|
237
|
2,714
|
2,951
|
678
|
||||||||||||
|
77
Executive Boulevard (F)
|
1977
|
1997
|
--
|
34
|
1,104
|
129
|
34
|
1,233
|
1,267
|
334
|
||||||||||||
|
85
Executive Boulevard (F)
|
1968
|
1997
|
--
|
155
|
2,507
|
536
|
155
|
3,043
|
3,198
|
673
|
||||||||||||
|
101
Executive Boulevard (O)
|
1971
|
1997
|
--
|
267
|
5,838
|
873
|
267
|
6,711
|
6,978
|
1,733
|
||||||||||||
|
300
Executive Boulevard (F)
|
1970
|
1997
|
--
|
460
|
3,609
|
153
|
460
|
3,762
|
4,222
|
953
|
||||||||||||
|
350
Executive Boulevard (F)
|
1970
|
1997
|
--
|
100
|
1,793
|
153
|
100
|
1,946
|
2,046
|
550
|
||||||||||||
|
399
Executive Boulevard (F)
|
1962
|
1997
|
--
|
531
|
7,191
|
66
|
531
|
7,257
|
7,788
|
1,836
|
||||||||||||
|
400
Executive Boulevard (F)
|
1970
|
1997
|
--
|
2,202
|
1,846
|
427
|
2,202
|
2,273
|
4,475
|
684
|
||||||||||||
|
500
Executive Boulevard (F)
|
1970
|
1997
|
--
|
258
|
4,183
|
682
|
258
|
4,865
|
5,123
|
1,396
|
||||||||||||
|
525
Executive Boulevard (F)
|
1972
|
1997
|
--
|
345
|
5,499
|
722
|
345
|
6,221
|
6,566
|
1,625
|
||||||||||||
|
700
Executive Boulevard (L)
|
N/A
|
1997
|
--
|
970
|
--
|
--
|
970
|
--
|
970
|
--
|
||||||||||||
|
3
Odell Plaza (O)
|
1984
|
2003
|
--
|
1,322
|
4,777
|
1,963
|
1,322
|
6,740
|
8,062
|
779
|
||||||||||||
|
5
Skyline Drive (F)
|
1980
|
2001
|
--
|
2,219
|
8,916
|
704
|
2,219
|
9,620
|
11,839
|
1,747
|
||||||||||||
|
6
Skyline Drive (F)
|
1980
|
2001
|
--
|
740
|
2,971
|
23
|
739
|
2,995
|
3,734
|
816
|
||||||||||||
|
555
Taxter Road (O)
|
1986
|
2000
|
--
|
4,285
|
17,205
|
5,451
|
4,285
|
22,656
|
26,941
|
3,974
|
||||||||||||
|
565
Taxter Road (O)
|
1988
|
2000
|
--
|
4,285
|
17,205
|
3,464
|
4,233
|
20,721
|
24,954
|
3,658
|
||||||||||||
|
570
Taxter Road (O)
|
1972
|
1997
|
--
|
438
|
6,078
|
963
|
438
|
7,041
|
7,479
|
2,077
|
||||||||||||
|
1
Warehouse Lane (I)
|
1957
|
1997
|
--
|
3
|
268
|
215
|
3
|
483
|
486
|
111
|
||||||||||||
|
2
Warehouse Lane (I)
|
1957
|
1997
|
--
|
4
|
672
|
189
|
4
|
861
|
865
|
275
|
||||||||||||
|
3
Warehouse Lane (I)
|
1957
|
1997
|
--
|
21
|
1,948
|
526
|
21
|
2,474
|
2,495
|
701
|
||||||||||||
|
4
Warehouse Lane (I)
|
1957
|
1997
|
--
|
84
|
13,393
|
2,837
|
85
|
16,229
|
16,314
|
4,040
|
||||||||||||
|
5
Warehouse Lane (I)
|
1957
|
1997
|
--
|
19
|
4,804
|
1,379
|
19
|
6,183
|
6,202
|
1,636
|
||||||||||||
|
6
Warehouse Lane (I)
|
1982
|
1997
|
--
|
10
|
4,419
|
322
|
10
|
4,741
|
4,751
|
1,153
|
||||||||||||
|
1
Westchester Plaza (F)
|
1967
|
1997
|
--
|
199
|
2,023
|
170
|
199
|
2,193
|
2,392
|
551
|
||||||||||||
|
2
Westchester Plaza (F)
|
1968
|
1997
|
--
|
234
|
2,726
|
182
|
234
|
2,908
|
3,142
|
718
|
||||||||||||
|
3
Westchester Plaza (F)
|
1969
|
1997
|
--
|
655
|
7,936
|
585
|
655
|
8,521
|
9,176
|
2,219
|
||||||||||||
|
4
Westchester Plaza (F)
|
1969
|
1997
|
--
|
320
|
3,729
|
86
|
320
|
3,815
|
4,135
|
962
|
||||||||||||
|
5
Westchester Plaza (F)
|
1969
|
1997
|
--
|
118
|
1,949
|
194
|
118
|
2,143
|
2,261
|
619
|
||||||||||||
|
6
Westchester Plaza (F)
|
1968
|
1997
|
--
|
164
|
1,998
|
167
|
164
|
2,165
|
2,329
|
621
|
||||||||||||
|
7
Westchester Plaza (F)
|
1972
|
1997
|
--
|
286
|
4,321
|
201
|
286
|
4,522
|
4,808
|
1,114
|
||||||||||||
|
8
Westchester Plaza (F)
|
1971
|
1997
|
--
|
447
|
5,262
|
859
|
447
|
6,121
|
6,568
|
1,543
|
||||||||||||
|
Hawthorne
|
||||||||||||||||||||||
|
200
Saw Mill River Road (F)
|
1965
|
1997
|
--
|
353
|
3,353
|
496
|
353
|
3,849
|
4,202
|
993
|
||||||||||||
|
1
Skyline Drive (O)
|
1980
|
1997
|
--
|
66
|
1,711
|
301
|
66
|
2,012
|
2,078
|
509
|
||||||||||||
|
2
Skyline Drive (O)
|
1987
|
1997
|
--
|
109
|
3,128
|
471
|
109
|
3,599
|
3,708
|
1,024
|
||||||||||||
|
4
Skyline Drive (F)
|
1987
|
1997
|
--
|
363
|
7,513
|
1,686
|
363
|
9,199
|
9,562
|
2,254
|
||||||||||||
|
7
Skyline Drive (O)
|
1987
|
1998
|
--
|
330
|
13,013
|
1,407
|
330
|
14,420
|
14,750
|
3,260
|
||||||||||||
119
|
MACK-CALI
REALTY CORPORATION
|
||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
||||||||||||||||||||||
|
December
31, 2006
|
||||||||||||||||||||||
|
(dollars
in thousands)
|
||||||||||||||||||||||
|
SCHEDULE
III
|
||||||||||||||||||||||
|
Gross
Amount at Which
|
||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
|||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
|||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
||||||||||||
|
8
Skyline Drive (F)
|
1985
|
1997
|
--
|
212
|
4,410
|
2,205
|
212
|
6,615
|
6,827
|
2,575
|
||||||||||||
|
10
Skyline Drive (F)
|
1985
|
1997
|
--
|
134
|
2,799
|
563
|
134
|
3,362
|
3,496
|
705
|
||||||||||||
|
11
Skyline Drive (F)
|
1989
|
1997
|
--
|
--
|
4,788
|
430
|
--
|
5,218
|
5,218
|
1,420
|
||||||||||||
|
12
Skyline Drive (F)
|
1999
|
1999
|
--
|
1,562
|
3,254
|
1,597
|
1,320
|
5,093
|
6,413
|
1,786
|
||||||||||||
|
14
Skyline Drive (L)
|
N/A
|
2002
|
--
|
964
|
16
|
980
|
980
|
--
|
||||||||||||||
|
15
Skyline Drive (F)
|
1989
|
1997
|
--
|
--
|
7,449
|
328
|
--
|
7,777
|
7,777
|
2,050
|
||||||||||||
|
16
Skyline Drive (L)
|
N/A
|
2002
|
--
|
850
|
31
|
881
|
881
|
--
|
||||||||||||||
|
17
Skyline Drive (O)
|
1989
|
1997
|
--
|
--
|
7,269
|
716
|
--
|
7,985
|
7,985
|
1,857
|
||||||||||||
|
19
Skyline Drive (O)
|
1982
|
1997
|
--
|
2,355
|
34,254
|
3,612
|
2,356
|
37,865
|
40,221
|
11,041
|
||||||||||||
|
Tarrytown
|
||||||||||||||||||||||
|
200
White Plains Road (O)
|
1982
|
1997
|
--
|
378
|
8,367
|
1,235
|
378
|
9,602
|
9,980
|
2,516
|
||||||||||||
|
220
White Plains Road (O)
|
1984
|
1997
|
--
|
367
|
8,112
|
1,062
|
367
|
9,174
|
9,541
|
2,414
|
||||||||||||
|
230
White Plains Road (R)
|
1984
|
1997
|
--
|
124
|
1,845
|
107
|
124
|
1,952
|
2,076
|
457
|
||||||||||||
|
White
Plains
|
||||||||||||||||||||||
|
1
Barker Avenue (O)
|
1975
|
1997
|
--
|
208
|
9,629
|
1,168
|
207
|
10,798
|
11,005
|
2,813
|
||||||||||||
|
3
Barker Avenue (O)
|
1983
|
1997
|
--
|
122
|
7,864
|
1,976
|
122
|
9,840
|
9,962
|
2,787
|
||||||||||||
|
50
Main Street (O)
|
1985
|
1997
|
--
|
564
|
48,105
|
6,680
|
564
|
54,785
|
55,349
|
14,412
|
||||||||||||
|
11
Martine Avenue (O)
|
1987
|
1997
|
--
|
127
|
26,833
|
4,872
|
127
|
31,705
|
31,832
|
9,291
|
||||||||||||
|
1
Water Street (O)
|
1979
|
1997
|
--
|
211
|
5,382
|
1,211
|
211
|
6,593
|
6,804
|
1,736
|
||||||||||||
|
Yonkers
|
||||||||||||||||||||||
|
100
Corporate Boulevard (F)
|
1987
|
1997
|
--
|
602
|
9,910
|
744
|
602
|
10,654
|
11,256
|
2,865
|
||||||||||||
|
200
Corporate Boulevard
|
|
|||||||||||||||||||||
|
South
(F)
|
1990
|
1997
|
--
|
502
|
7,575
|
445
|
502
|
8,020
|
8,522
|
1,914
|
||||||||||||
|
250
Corporate Boulevard
|
||||||||||||||||||||||
|
South
(L)
|
N/A
|
2002
|
--
|
1,028
|
--
|
171
|
1,139
|
60
|
1,199
|
--
|
||||||||||||
|
1
Enterprise Boulevard (L)
|
N/A
|
1997
|
--
|
1,379
|
--
|
1
|
1,380
|
--
|
1,380
|
--
|
||||||||||||
|
1
Executive Boulevard (O)
|
1982
|
1997
|
--
|
1,104
|
11,904
|
2,355
|
1,105
|
14,258
|
15,363
|
3,951
|
||||||||||||
|
2
Executive Plaza (R)
|
1986
|
1997
|
--
|
89
|
2,439
|
3
|
89
|
2,442
|
2,531
|
605
|
||||||||||||
|
3
Executive Plaza (O)
|
1987
|
1997
|
--
|
385
|
6,256
|
1,624
|
385
|
7,880
|
8,265
|
2,423
|
||||||||||||
|
4
Executive Plaza (F)
|
1986
|
1997
|
--
|
584
|
6,134
|
1,862
|
584
|
7,996
|
8,580
|
2,061
|
||||||||||||
|
6
Executive Plaza (F)
|
1987
|
1997
|
--
|
546
|
7,246
|
318
|
546
|
7,564
|
8,110
|
1,935
|
||||||||||||
|
1
Odell Plaza (F)
|
1980
|
1997
|
--
|
1,206
|
6,815
|
681
|
1,206
|
7,496
|
8,702
|
1,988
|
||||||||||||
|
5
Odell Plaza (F)
|
1983
|
1997
|
--
|
331
|
2,988
|
241
|
331
|
3,229
|
3,560
|
819
|
||||||||||||
|
7
Odell Plaza (F)
|
1984
|
1997
|
--
|
419
|
4,418
|
301
|
419
|
4,719
|
5,138
|
1,190
|
||||||||||||
|
PENNSYLVANIA
|
||||||||||||||||||||||
|
Chester
County
|
||||||||||||||||||||||
|
Berwyn
|
||||||||||||||||||||||
|
1000
Westlakes Drive (O)
|
1989
|
1997
|
--
|
619
|
9,016
|
559
|
619
|
9,575
|
10,194
|
2,489
|
||||||||||||
|
1055
Westlakes Drive (O)
|
1990
|
1997
|
--
|
1,951
|
19,046
|
3,579
|
1,951
|
22,625
|
24,576
|
6,313
|
||||||||||||
120
|
MACK-CALI
REALTY CORPORATION
|
|||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
|||||||||||||||||||||||
|
December
31, 2006
|
|||||||||||||||||||||||
|
(dollars
in thousands)
|
|||||||||||||||||||||||
|
SCHEDULE
III
|
|||||||||||||||||||||||
|
Gross
Amount at Which
|
|||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
||||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
|||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
||||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
|||||||||||||
|
1205
Westlakes Drive (O)
|
1988
|
1997
|
--
|
1,323
|
20,098
|
1,636
|
1,323
|
21,734
|
23,057
|
5,510
|
|||||||||||||
|
1235
Westlakes Drive (O)
|
1986
|
1997
|
--
|
1,417
|
21,215
|
3,357
|
1,418
|
24,571
|
25,989
|
5,974
|
|||||||||||||
|
Delaware
County
|
|||||||||||||||||||||||
|
Lester
|
|||||||||||||||||||||||
|
100
Stevens Drive (O)
|
1986
|
1996
|
--
|
1,349
|
10,018
|
2,817
|
1,349
|
12,835
|
14,184
|
3,666
|
|||||||||||||
|
200
Stevens Drive (O)
|
1987
|
1996
|
--
|
1,644
|
20,186
|
4,668
|
1,644
|
24,854
|
26,498
|
6,948
|
|||||||||||||
|
300
Stevens Drive (O)
|
1992
|
1996
|
--
|
491
|
9,490
|
1,880
|
491
|
11,370
|
11,861
|
3,212
|
|||||||||||||
|
Media
|
|||||||||||||||||||||||
|
1400
Providence Rd,
|
|||||||||||||||||||||||
|
Center
I (O)
|
1986
|
1996
|
--
|
1,042
|
9,054
|
2,209
|
1,042
|
11,263
|
12,305
|
3,335
|
|||||||||||||
|
1400
Providence Rd,
|
|||||||||||||||||||||||
|
Center
II (O)
|
1990
|
1996
|
--
|
1,543
|
16,464
|
2,941
|
1,544
|
19,404
|
20,948
|
5,704
|
|||||||||||||
|
Montgomery
County
|
|||||||||||||||||||||||
|
Bala
Cynwyd
|
|||||||||||||||||||||||
|
150
Monument Road (O)
|
1981
|
2004
|
--
|
2,845
|
14,780
|
2,473
|
2,845
|
17,253
|
20,098
|
818
|
|||||||||||||
|
Blue
Bell
|
|||||||||||||||||||||||
|
4
Sentry Parkway (O)
|
1982
|
2003
|
--
|
1,749
|
7,721
|
189
|
1,749
|
7,910
|
9,659
|
656
|
|||||||||||||
|
16
Sentry Parkway (O)
|
1988
|
2002
|
--
|
3,377
|
13,511
|
1,064
|
3,377
|
14,575
|
17,952
|
2,458
|
|||||||||||||
|
18
Sentry Parkway (O)
|
1988
|
2002
|
--
|
3,515
|
14,062
|
1,699
|
3,515
|
15,761
|
19,276
|
2,478
|
|||||||||||||
|
King
of Prussia
|
|||||||||||||||||||||||
|
2200
Renaissance Blvd (O)
|
1985
|
2002
|
17,819
|
5,347
|
21,453
|
2,242
|
5,347
|
23,695
|
29,042
|
4,897
|
|||||||||||||
|
Lower
Providence
|
|||||||||||||||||||||||
|
1000
Madison Avenue (O)
|
1990
|
1997
|
--
|
1,713
|
12,559
|
2,247
|
1,714
|
14,805
|
16,519
|
3,295
|
|||||||||||||
|
Plymouth
Meeting
|
|||||||||||||||||||||||
|
1150
Plymouth Meeting
|
|||||||||||||||||||||||
|
Mall
(O)
|
1970
|
1997
|
--
|
125
|
499
|
30,808
|
6,219
|
25,213
|
31,432
|
5,951
|
|||||||||||||
|
Five
Sentry Parkway East (O)
|
1984
|
1996
|
--
|
642
|
7,992
|
525
|
642
|
8,517
|
9,159
|
2,164
|
|||||||||||||
|
Five
Sentry Parkway West (O)
|
1984
|
1996
|
--
|
268
|
3,334
|
86
|
268
|
3,420
|
3,688
|
870
|
|||||||||||||
|
CONNETICUT
|
|||||||||||||||||||||||
|
Fairfield
County
|
|||||||||||||||||||||||
|
Greenwich
|
|||||||||||||||||||||||
|
500
West Putnam Avenue (O)
|
1973
|
1998
|
25,000
|
3,300
|
16,734
|
1,755
|
3,300
|
18,489
|
21,789
|
4,588
|
|||||||||||||
|
Norwalk
|
|||||||||||||||||||||||
|
40
Richards Avenue (O)
|
1985
|
1998
|
--
|
1,087
|
18,399
|
3,038
|
1,087
|
21,437
|
22,524
|
4,876
|
|||||||||||||
|
Shelton
|
|||||||||||||||||||||||
|
1000
Bridgeport Avenue (O)
|
1986
|
1997
|
--
|
773
|
14,934
|
2,306
|
744
|
17,269
|
18,013
|
4,632
|
|||||||||||||
|
Stamford
|
|||||||||||||||||||||||
|
1266
East Main Street (O)
|
1984
|
2002
|
18,013
|
6,638
|
26,567
|
2,595
|
6,638
|
29,162
|
35,800
|
4,537
|
|||||||||||||
121
|
MACK-CALI
REALTY CORPORATION
|
|||||||||||||||||||||||
|
REAL
ESTATE INVESTMENTS AND ACCUMULATED
DEPRECIATION
|
|||||||||||||||||||||||
|
December
31, 2006
|
|||||||||||||||||||||||
|
(dollars
in thousands)
|
|||||||||||||||||||||||
|
SCHEDULE
III
|
|||||||||||||||||||||||
|
Gross
Amount at Which
|
|||||||||||||||||||||||
|
Costs
|
Carried
at Close of
|
||||||||||||||||||||||
|
Initial
Costs
|
Capitalized
|
Period
(a)
|
|||||||||||||||||||||
|
Year
|
Related
|
Building
and
|
Subsequent
|
Building
and
|
Accumulated
|
||||||||||||||||||
|
Property
Location (b)
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to
Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation
(c)
|
|||||||||||||
|
419
West Avenue (F)
|
1986
|
1997
|
--
|
4,538
|
9,246
|
1,266
|
4,538
|
10,512
|
15,050
|
2,784
|
|||||||||||||
|
500
West Avenue (F)
|
1988
|
1997
|
--
|
415
|
1,679
|
194
|
415
|
1,873
|
2,288
|
519
|
|||||||||||||
|
550
West Avenue (F)
|
1990
|
1997
|
--
|
1,975
|
3,856
|
22
|
1,975
|
3,878
|
5,853
|
960
|
|||||||||||||
|
600
West Avenue (F)
|
1999
|
1999
|
--
|
2,305
|
2,863
|
833
|
2,305
|
3,696
|
6,001
|
664
|
|||||||||||||
|
650
West Avenue (F)
|
1998
|
1998
|
--
|
1,328
|
--
|
3,929
|
1,328
|
3,929
|
5,257
|
1,590
|
|||||||||||||
|
DISTRICT
OF COLUMBIA
|
|||||||||||||||||||||||
|
Washington,
|
|||||||||||||||||||||||
|
1201
Connecticut Avenue,
|
|||||||||||||||||||||||
|
NW
(O)
|
1940
|
1999
|
--
|
14,228
|
18,571
|
2,732
|
14,228
|
21,303
|
35,531
|
4,071
|
|||||||||||||
|
1400
L Street, NW (O)
|
1987
|
1998
|
--
|
13,054
|
27,423
|
6,643
|
13,054
|
34,066
|
47,120
|
6,196
|
|||||||||||||
|
MARYLAND
|
|||||||||||||||||||||||
|
Prince
George’s County
|
|||||||||||||||||||||||
|
Greenbelt
|
|||||||||||||||||||||||
|
9200
Edmonston Road (O)
|
1973/03
|
2006
|
5,232
|
1,547
|
4,131
|
--
|
1,547
|
4,131
|
5,678
|
149
|
|||||||||||||
|
6301
Ivy Lane (O)
|
1979/95
|
2006
|
6,821
|
5,168
|
14,706
|
2
|
5,168
|
14,708
|
19,876
|
516
|
|||||||||||||
|
6303
Ivy Lane (O)
|
1980/03
|
2006
|
6,020
|
5,115
|
13,860
|
--
|
5,115
|
13,860
|
18,975
|
471
|
|||||||||||||
|
6305
Ivy Lane (O)
|
1982/95
|
2006
|
7,285
|
5,615
|
14,420
|
158
|
5,615
|
14,578
|
20,193
|
539
|
|||||||||||||
|
6404
Ivy Lane (O)
|
1987
|
2006
|
13,665
|
7,578
|
20,785
|
71
|
7,578
|
20,856
|
28,434
|
838
|
|||||||||||||
|
6406
Ivy Lane (O)
|
1991
|
2006
|
--
|
7,514
|
21,152
|
--
|
7,514
|
21,152
|
28,666
|
641
|
|||||||||||||
|
6411
Ivy Lane (O)
|
1984/05
|
2006
|
--
|
6,867
|
17,470
|
16
|
6,867
|
17,486
|
24,353
|
625
|
|||||||||||||
|
Lanham
|
|||||||||||||||||||||||
|
4200
Parliament Place (O)
|
1989
|
1998
|
--
|
2,114
|
13,546
|
626
|
1,393
|
14,893
|
16,286
|
3,749
|
|||||||||||||
|
Projects
Under Development
|
|||||||||||||||||||||||
|
and
Developable Land
|
--
|
98,617
|
25,631
|
--
|
98,617
|
25,631
|
124,248
|
||||||||||||||||
|
Furniture,
Fixtures
|
|||||||||||||||||||||||
|
and
Equipment
|
--
|
--
|
--
|
8,224
|
8,224
|
8,224
|
6,352
|
||||||||||||||||
|
TOTALS
|
344,735
|
645,278
|
3,267,589
|
660,720
|
659,169
|
3,914,418
|
4,573,587
|
796,793
|
|||||||||||||||
|
(a)
|
The
aggregate cost for federal income tax purposes at December 31, 2006
was
approximately $2.9 billion.
|
(b) Legend
of Property Codes:
(O)=Office
Property (R)=Stand-alone
Retail Property
(F)=Office/Flex
Property (L)=Land
Lease
(I)=Industrial/Warehouse
Property
(c) Depreciation
of the buildings and improvements are calculated over lives ranging from the
life of the lease to 40 years.
122
MACK-CALI
REALTY CORPORATION
NOTE
TO SCHEDULE III
Changes
in rental properties and accumulated depreciation for the periods ended December
31, 2006, 2005 and 2004 are as follows: (dollars
in thousands)
|
2006
|
2005
|
2004
|
|
|||||||
|
Rental
Properties
|
||||||||||
|
Balance
at beginning of year
|
$
|
4,491,752
|
$
|
4,160,959
|
$
|
3,954,632
|
||||
|
Additions
|
405,883
|
485,680
|
340,472
|
|||||||
|
Rental
property held for sale -
|
||||||||||
|
before
accumulated depreciation
|
--
|
--
|
(21,929
|
)
|
||||||
|
Properties
sold
|
(313,345
|
)
|
(120,755
|
)
|
(112,179
|
)
|
||||
|
Retirements/disposals
|
(10,703
|
)
|
(34,132
|
)
|
(37
|
)
|
||||
|
Balance
at end of year
|
$
|
4,573,587
|
$
|
4,491,752
|
$
|
4,160,959
|
||||
|
Accumulated
Depreciation
|
||||||||||
|
Balance
at beginning of year
|
$
|
722,980
|
$
|
641,626
|
$
|
546,007
|
||||
|
Depreciation
expense
|
131,848
|
128,814
|
111,975
|
|||||||
|
Rental
property held for sale
|
--
|
--
|
(1,550
|
)
|
||||||
|
Properties
sold
|
(53,037
|
)
|
(16,691
|
)
|
(14,797
|
)
|
||||
|
Retirements/disposals
|
(4,998
|
)
|
(30,769
|
)
|
(9
|
)
|
||||
|
Balance
at end of year
|
$
|
796,793
|
$
|
722,980
|
$
|
641,626
|
||||
123
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 21, 2007 /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
|
Chairman
of the Board
|
February
21, 2007
|
|
William
L. Mack
|
||
|
/s/
Mitchell E. Hersh
|
President
and Chief Executive
|
February
21, 2007
|
|
Mitchell
E. Hersh
|
Officer
and Director
|
|
|
/s/
Barry Lefkowitz
|
Executive
Vice President and
|
February
21, 2007
|
|
Barry
Lefkowitz
|
Chief
Financial Officer
|
|
|
/s/
Alan S. Bernikow
|
Director
|
February
21, 2007
|
|
Alan
S. Bernikow
|
||
|
/s/
John R. Cali
|
Director
|
February
21, 2007
|
|
John
R. Cali
|
||
|
/s/
Kenneth M. Duberstein
|
Director
|
February
21, 2007
|
|
Kenneth
M. Duberstein
|
||
|
/s/
Nathan Gantcher
|
Director
|
February
21, 2007
|
|
Nathan
Gantcher
|
124
|
Name
|
Title
|
Date
|
|
/s/
David S. Mack
|
Director
|
February
21, 2007
|
|
David
S. Mack
|
||
|
/s/
Alan G. Philibosian
|
Director
|
February
21, 2007
|
|
Alan
G. Philibosian
|
||
|
/s/
Irvin D. Reid
|
Director
|
February
21, 2007
|
|
Irvin
D. Reid
|
||
|
/s/
Vincent Tese
|
Director
|
February
21, 2007
|
|
Vincent
Tese
|
||
|
/s/
Robert F. Weinberg
|
Director
|
February
21, 2007
|
|
Robert
F. Weinberg
|
||
|
/s/
Roy J. Zuckerberg
|
Director
|
February
21, 2007
|
|
Roy
J. Zuckerberg
|
125
MACK-CALI
REALTY CORPORATION
EXHIBIT
INDEX
|
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% 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% 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).
|
|
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).
|
|
|
|
|
|
Exhibit
Number
|
|
Exhibit Title
|
|
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).
|
|
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).
|
|
|
|
|
126
|
Exhibit
Number
|
|
Exhibit Title
|
|
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
|
|
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).
|
|
|
|
|
|
10.3
|
|
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).
|
|
|
|
|
|
10.4
|
|
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).
|
|
10.5
|
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).
|
|
|
10.6
|
|
Restricted
Share Award Agreement dated as of July 1, 1999 between Mitchell E.
Hersh and Mack-Cali Realty Corporation (filed as Exhibit 10.8 to the
Company’s Form 10-Q dated June 30, 1999 and incorporated herein
by reference).
|
|
|
|
|
|
10.7
|
|
Restricted
Share Award Agreement dated as of July 1, 1999 between 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).
|
|
10.8
|
|
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).
|
|
|
|
|
|
10.9
|
|
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).
|
|
10.10
|
|
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).
|
|
|
|
|
127
|
Exhibit
Number
|
|
Exhibit Title
|
|
|
|
|
|
10.11
|
|
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).
|
|
|
|
|
|
10.12
|
|
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).
|
|
|
|
|
|
10.13
|
|
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).
|
|
|
|
|
|
10.14
|
|
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).
|
|
|
|
|
|
10.15
|
|
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).
|
|
|
|
|
|
10.16
|
|
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).
|
|
10.17
|
|
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).
|
|
|
|
|
|
10.18
|
|
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).
|
|
10.19
|
|
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).
|
|
10.20
|
|
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).
|
|
10.21
|
|
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).
|
|
|
|
|
|
10.22
|
|
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).
|
|
10.23
|
|
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).
|
|
|
|
|
128
|
Exhibit
Number
|
|
Exhibit Title
|
|
10.24
|
|
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).
|
|
|
|
|
|
10.25
|
|
First
Amendment effective as of January 2, 2003 to the Restricted Share
Award Agreement dated March 12, 2001 between Mack-Cali Realty
Corporation and Michael A. Grossman (filed as Exhibit 10.18 to the
Company’s Form 8-K dated January 2, 2003 and incorporated herein
by reference).
|
|
|
|
|
|
10.26
|
|
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).
|
|
10.27
|
|
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).
|
|
|
|
|
|
10.28
|
|
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).
|
|
|
|
|
|
10.29
|
|
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).
|
|
10.30
|
|
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).
|
|
10.31
|
|
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).
|
|
10.32
|
|
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).
|
|
|
|
|
|
10.33
|
|
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).
|
|
|
|
|
|
10.34
|
|
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).
|
|
|
|
|
|
10.35
|
|
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).
|
|
10.36
|
|
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).
|
|
|
|
|
129
|
Exhibit
Number
|
|
Exhibit Title
|
|
10.37
|
|
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).
|
|
|
|
|
|
10.38
|
|
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).
|
|
|
|
|
|
10.39
|
|
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).
|
|
10.40
|
|
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).
|
|
|
|
|
|
10.41
|
|
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).
|
|
|
|
|
|
10.42
|
|
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).
|
|
|
|
|
|
10.43
|
|
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).
|
|
10.44
|
|
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).
|
|
|
|
|
|
10.45
|
|
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).
|
|
|
|
|
|
10.46
|
|
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).
|
|
|
|
|
|
10.47
|
|
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).
|
|
10.48
|
|
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).
|
|
10.49
|
|
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).
|
130
|
Exhibit
Number
|
|
Exhibit Title
|
|
|
|
|
|
10.50
|
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).
|
|
|
10.51
|
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).
|
|
|
10.52
|
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).
|
|
|
10.53
|
|
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).
|
|
|
|
|
|
10.54
|
|
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).
|
|
|
|
|
|
10.55
|
|
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).
|
|
10.56
|
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).
|
|
|
|
|
|
|
10.57
|
|
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).
|
|
|
|
|
|
10.58
|
|
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).
|
|
|
|
|
|
10.59
|
|
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).
|
|
10.60
|
|
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).
|
|
|
|
|
|
10.61
|
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).
|
|
131
|
Exhibit
Number
|
|
Exhibit Title
|
|
10.62
|
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).
|
|
|
10.63
|
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).
|
|
|
10.64
|
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).
|
|
|
10.65
|
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).
|
|
|
10.66
|
|
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).
|
|
10.67
|
|
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).
|
|
10.68
|
|
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).
|
|
10.69
|
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).
|
|
|
|
|
|
|
10.70
|
|
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).
|
|
|
|
|
|
10.71
|
|
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).
|
|
10.72
|
|
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).
|
132
|
Exhibit
Number
|
|
Exhibit Title
|
|
10.73
|
|
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).
|
|
|
|
|
|
10.74
|
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).
|
|
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10.75
|
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).
|
|
|
10.76
|
|
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).
|
|
|
|
|
|
10.77
|
|
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).
|
|
10.78
|
|
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).
|
|
10.79
|
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).
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|
|
|
|
|
|
10.80
|
|
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).
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|
|
|
|
|
10.81
|
|
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).
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|
|
|
|
|
10.82
|
|
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).
|
|
10.83
|
|
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).
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133
|
Exhibit
Number
|
|
Exhibit Title
|
|
10.84
|
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).
|
|
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10.85
|
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).
|
|
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10.86
|
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).
|
|
|
10.87
|
|
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).
|
|
10.88
|
|
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).
|
|
|
|
|
|
10.89
|
|
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).
|
|
|
|
|
|
10.90
|
|
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).
|
|
|
|
|
|
10.91
|
|
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).
|
|
|
|
|
|
10.92*
|
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.
|
|
|
10.93*
|
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.
|
|
134
|
Exhibit
Number
|
|
Exhibit Title
|
|
10.94
|
|
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).
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|
|
|
|
|
10.95
|
|
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).
|
|
10.96
|
|
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).
|
|
|
|
|
|
10.97
|
|
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).
|
|
10.98
|
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).
|
|
|
10.99
|
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).
|
|
|
10.100
|
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).
|
|
|
10.101
|
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).
|
|
|
10.102
|
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).
|
|
|
10.103
|
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).
|
|
135
|
Exhibit
Number
|
|
Exhibit Title
|
|
10.104
|
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).
|
|
|
10.105
|
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).
|
|
|
10.106
|
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).
|
|
|
10.107
|
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).
|
|
|
10.108
|
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).
|
|
|
10.109
|
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).
|
|
|
10.110
|
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).
|
|
|
10.111
|
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).
|
|
|
10.112
|
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).
|
|
|
10.113
|
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).
|
|
|
10.114
|
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).
|
|
|
10.115
|
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).
|
|
|
10.116
|
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).
|
|
136
|
Exhibit
Number
|
|
Exhibit Title
|
|
10.117*
|
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.
|
|
|
10.118*
|
Operating
Agreement of NKFGMS Owners, LLC.
|
|
|
10.119*
|
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.
|
|
|
10.120*
|
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.
|
|
|
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
137